formdef14a.htm
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
PROXY
STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE
ACT OF 1934
Filed by
the Registrant T
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))
T Definitive
Proxy Statement
£ Definitive
Additional Materials
£ Soliciting
Material Under Rule 14a-12
USA
TECHNOLOGIES, INC.
(Name of
Registrant as Specified In Its Charter)
(Name of
Person(s) Filing Proxy Statement, if other than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
T 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:
2)
Aggregate number of securities to which transaction applies:
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):
4)
Proposed maximum aggregate value of transaction:
5) Total
fee paid:
£ 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 filing by
registration statement number, or the Form or Schedule and the date of its
filing.
1) Amount
Previously Paid:
2) Form,
Schedule or Registration Statement No.:
3) Filing
Party:
4) Date
Filed:
[GRAPHIC
OMITTED]
October
27, 2009
Dear
Shareholder:
You are
cordially invited to attend the Annual Meeting of Shareholders of USA
Technologies, Inc. to be held at 10:00 a.m., December 15, 2009, at the Chester
Valley Golf Club, 430 Swedesford Road, Malvern, Pennsylvania 19355. This Proxy
Statement contains information about our Company and the five proposals to be
voted upon by shareholders at the meeting. Please give this information your
careful attention.
We are
pleased to be using the U.S. Securities and Exchange Commission rule allowing
companies to furnish proxy materials to their shareholders over the Internet. On
or about October 27, 2009, we mailed to our shareholders a Notice containing
instructions on how to access our 2010 proxy statement, form of proxy card, and
annual report on Form 10-K and vote online. As more fully described in that
Notice, all shareholders may choose to access our proxy materials on the
Internet or may request to receive paper copies of the proxy materials. We
believe that this process expedites shareholders’ receipt of proxy materials,
while also lowering the costs and reducing the environmental impact of our
Annual Meeting.
Whether
or not you attend the Annual Meeting, it is important that your shares be
represented and voted at the meeting. Therefore, I urge you to authorize your
proxy as soon as possible. You may vote your proxy on the Internet, or, if you
received the proxy materials by mail, you may also vote by mail. If you decide
to attend the Annual Meeting, you will be able to vote in person, even if you
have previously submitted your proxy.
Following
the consideration of the proposals by the shareholders, management will present
a current report on the activities of the Company. At the meeting, we will
welcome your comments on or inquiries about the business of the Company that
would be of interest to shareholders generally.
I look
forward to seeing you at the Annual Meeting. In the meantime, please
feel free to contact me with any questions you may have.
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Sincerely,
/s/ George R. Jensen, Jr.
George
R. Jensen, Jr.
Chairman
and Chief Executive Officer
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USA
TECHNOLOGIES, INC.
NOTICE
OF ANNUAL MEETING OF SHAREHOLDERS
TO
BE HELD ON DECEMBER 15, 2009
To Our
Shareholders:
The
Annual Meeting of Shareholders of USA Technologies, Inc., a Pennsylvania
corporation (the “Company”), will be held at 10:00 a.m., December 15, 2009, at
the Chester Valley Golf Club, 430 Swedesford Road, Malvern, Pennsylvania 19355,
for the following purposes:
1. The
election of two Class I Directors to serve until the next Annual Meeting of
Shareholders following this Annual Meeting;
2. The
election of three Class II Directors to serve until the second Annual Meeting of
Shareholders following this Annual Meeting;
3. The
election of three Class III Directors to serve until the third Annual Meeting of
Shareholders following this Annual Meeting;
4. To act
upon a proposal to ratify the appointment of McGladrey & Pullen, LLP as the
independent registered public accounting firm of the Company for fiscal year
2010;
5. To act
upon a proposal to approve the USA Technologies, Inc. 2010 Stock Incentive Plan;
and
6. To
transact such other business as may properly come before the Annual Meeting and
any and all adjournments thereof.
The Board
of Directors has fixed the close of business on September 30, 2009 as the record
date for the determination of shareholders entitled to notice of, and to vote
at, the Annual Meeting and any and all adjournments thereof.
You are
cordially invited to attend the meeting in person. Whether or not you expect to
attend the meeting in person, we urge you to vote your shares via the Internet
or by requesting a printed copy of the proxy materials and completing and
returning by mail your proxy card you will receive in response to your request.
Submitting your proxy now will not prevent you from voting your shares at the
Annual Meeting if you want to, as your proxy is revocable at your
option.
If you
received a printed copy of the materials, we have enclosed a copy of the
Company’s Report on Form 10-K for the 2009 fiscal year with this notice and
proxy statement.
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By
Order of the Board of Directors,
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/s/ George R. Jensen,
Jr.
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George
R. Jensen, Jr.
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Chairman
and Chief Executive Officer
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IMPORTANT
NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF
SHAREHOLDERS TO BE HELD ON DECEMBER 15, 2009
The proxy
statement, form of proxy card, and annual report on Form 10-K of USA
Technologies, Inc. are available at:
http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=14591
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USA
TECHNOLOGIES, INC.
PROXY
STATEMENT FOR ANNUAL MEETING OF SHAREHOLDERS
December
15, 2009
These
materials are intended to solicit proxies on behalf of the Board of Directors of
USA Technologies, Inc., a Pennsylvania corporation (the “Company”), for use at
the 2010 Annual Meeting of Shareholders (the “Annual Meeting”), to be held at
10:00 a.m., on December 15, 2009, at the Chester Valley Golf Club, 430
Swedesford Road, Malvern, Pennsylvania 19355.
The
Company’s principal executive offices are located at 100 Deerfield Lane, Suite
140, Malvern, Pennsylvania 19355.
We are
providing access to our proxy materials (including this proxy statement,
together with a notice of meeting, form of proxy card, and the Company’s annual
report on Form 10-K) on the Internet pursuant to rules recently adopted by the
Securities and Exchange Commission (“SEC”). Accordingly, we are sending a Notice
of Internet Availability of Proxy Materials (the “Notice”) to shareholders
entitled to vote at the meeting. You may also request a printed copy of the
proxy materials by mail. If you do so, these materials will also include the
proxy card for the Annual Meeting. To request a printed copy of the proxy
materials, please contact us via the Internet (http://www.amstock.com/proxyservices/requestmaterials.asp),
telephone (866-668-8562) or by email (info@amstock.com) on
or before December 2, 2009. If requesting material by email, please send a blank
email with the 12-digit Control Number (located on the Notice) in the subject
line.
All
shareholders will have the ability to access, beginning on or about October 27,
2009, the proxy materials on a website referred to in the Notice or to request
to receive a printed copy of the proxy materials at no charge. If you request a
printed copy of the proxy materials, we will mail them to you within three
business days of your request, at no cost to you. The Notice includes
instructions on how to access the electronic proxy materials, as well as
instructions for requesting a printed copy. In addition, shareholders may
permanently elect to receive future proxy materials in either electronic form by
email or printed form by mail. If you make such an election, we will continue to
send you the materials pursuant to your election, until you notify us
otherwise.
Why
have I been furnished with this proxy statement?
This
Proxy Statement was made available to shareholders on or about October 27, 2009.
You have been furnished with this proxy statement because you owned shares of
Common Stock, no par value (“Common Stock”) or Series A Convertible Preferred
Stock, no par value (“Series A Preferred Stock”) of the Company at the close of
business on September 30, 2009, the record date for the Annual Meeting. Our
Board of Directors has made these materials available to you on the Internet or,
upon your request, has delivered printed versions of these materials to you by
mail, in connection with the Board’s solicitation of proxies on behalf of the
Company for use at our Annual Meeting.
Why
did I receive a one-page notice in the mail regarding the Internet availability
of proxy materials instead of a full set of proxy materials?
Pursuant
to rules adopted by the SEC, we have elected to provide access to our proxy
materials over the Internet. We believe that internet-delivery of our proxy
materials allows us to provide our shareholders with the information they need,
while lowering the costs of delivery and reducing the environmental impact of
our Annual Meeting. Accordingly, we are sending the Notice to our shareholders
and beneficial owners as of the record date. All shareholders will have the
ability to access the proxy materials on a website referred to in the Notice or
request to receive a printed set of the proxy materials. Instructions on how to
access the proxy materials over the Internet or to request a printed copy may be
found on the Notice.
How
can I get electronic access to the proxy materials?
The
Notice provides you with instructions regarding how to view our proxy materials
for the Annual Meeting on the Internet.
What
if I have questions?
If you
have questions, please write them down and send them to the Secretary at the
Company’s principal executive office at 100 Deerfield Lane, Suite 140, Malvern,
Pennsylvania 19355, or call the Company’s Investor Relations Department at
(610)989-0340.
What
will I be voting on?
You will
be voting on:
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1.
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The
election of Steven D. Barnhart and Jack E. Price to serve as Class I
Directors until the next Annual Meeting of Shareholders following this
Annual Meeting;
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2.
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The
election of William L. Van Alen, Jr., Steven Katz and Joel Brooks to serve
as Class II Directors until the second Annual Meeting of Shareholders
following this Annual Meeting;
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3.
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The
election of George R. Jensen, Jr., Stephen P. Herbert and Douglas M. Lurio
to serve as Class III Directors until the third Annual Meeting of
Shareholders following this Annual
Meeting;
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4.
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A
proposal to ratify the appointment of McGladrey & Pullen, LLP as the
independent registered public accounting firm of the Company for fiscal
year 2010;
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5.
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A
proposal to approve the USA Technologies, Inc. 2010 Stock Incentive Plan;
and
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6.
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Such
other business as may properly come before the Annual Meeting and any and
all adjournments thereof.
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Could
other matters be voted on at the Annual Meeting?
As of
October 27, 2009, the items listed in 1 through 5 in the preceding question are
the only matters which the Board intends to present at the Annual Meeting. If
any other matters are properly presented for action, the persons named in the
form of proxy will vote the proxy in accordance with their best judgment and
opinion as to what is in the best interests of the Company.
How
does the Board recommend I vote on the proposals?
The Board
recommends a vote for each of the director nominees identified in Items 1, 2 and
3, and for Items 4 and 5.
How
can I obtain directions to be able to attend the Annual Meeting and vote in
person?
The
Chester Valley Golf Club, where the Annual Meeting will be held, is located at
430 Swedesford Road, Malvern, Pennsylvania 19355. You may obtain directions to
the venue by contacting the Chester Valley Golf Club at (610)647-4007 or by
accessing their website at http://www.chestervalleygc.org/
and clicking on the “Contact Us” link.
Who
is paying for this proxy solicitation?
The cost
of soliciting proxies will be borne by the Company. Such solicitation
may also be made on behalf of the Company by the Company’s Directors, officers
or employees in person or by telephone, facsimile transmission or telegram.
Employees, officers or Directors will not receive any additional compensation
for these solicitation activities.
Where
can I access an electronic copy of the Proxy Statement and Annual Report on Form
10-K for the year ended June 30, 2009?
You may
access an electronic copy of the Proxy Statement, form of proxy card, and the
Annual Report on Form 10-K for the year ended June 30, 2009 at:
http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=14591.
Who
is entitled to vote at or attend the Annual Meeting?
Only
holders of Common Stock or Series A Preferred Stock of record at the close of
business on September 30, 2009 will be entitled to notice of and to vote at the
Annual Meeting. Each share of Common Stock is entitled to one vote
and each share of Series A Preferred Stock is entitled to one-hundredth of a
vote on all matters to come before the Annual Meeting. On September 30, 2009,
the record date for the Annual Meeting, the Company had issued and outstanding
22,709,725 shares of Common Stock and 512,365 shares of Series A Preferred
Stock.
Shareholders
of Record. If, on the record date, your shares were registered
directly in your name with the Company’s transfer agent, American Stock Transfer
& Trust Company, then you are a shareholder of record. As a shareholder of
record, you may vote in person at the meeting or vote by proxy.
Beneficial
Owners. If, on the record date, your shares were not held in your
name, but rather were held in an account at a brokerage firm, bank or other
nominee (commonly referred to as being held in “street name”), you are the
beneficial owner of those shares. The organization holding your account is
considered to be the shareholder of record for purposes of voting at the Annual
Meeting. As a beneficial owner, you have the right to direct your broker or
other nominee regarding how to vote the shares held in your account. You are
also invited to attend the Annual Meeting. However, since you are not the
shareholder of record, you may not vote your shares in person at the meeting
unless you obtain a valid legal proxy from your broker or other nominee and
bring the legal proxy to the Annual Meeting. If you want to attend the Annual
Meeting, but not vote at the Annual Meeting, you must provide proof of
beneficial ownership as of the record date, such as your most recent account
statement prior to the record date.
What
if I receive more than one Notice of Internet Availability of Proxy
Materials?
If you
receive more than one Notice, you hold shares in more than one name or shares in
different accounts. To ensure that all of your shares are voted, you will need
to vote separately by the Internet using the specific control number contained
in each Notice that you receive or by promptly marking,
signing, dating and returning your proxy card.
How
do I vote my shares?
You may
vote either in person at the Annual Meeting or by proxy.
-- At the
Meeting. Shares held in your name as the shareholder of record may be
voted by you in person at the Annual Meeting. Shares held beneficially in street
name may be voted by you in person at the Annual Meeting only if you obtain a
legal proxy from the broker or other agent that holds your shares, giving you
the right to vote the shares, and you bring the legal proxy to the Annual
Meeting.
-- To
vote by proxy, you must select one of the following options:
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1.
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Vote
on the Internet :
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Access
www.voteproxy.com.
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Have
the Notice or proxy card in hand.
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Follow
the instructions provided on the
site.
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Submit
the electronic proxy before the required deadline (11:59 p.m. Eastern Time
on December 14, 2009).
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If
you are not the shareholder of record but hold shares through a custodian,
broker or other agent, such agent may have special voting instructions
that you should follow.
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2.
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Complete
the proxy card:
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Complete
all of the required information on the proxy
card.
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Date
and sign the proxy card.
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Return
the proxy card in the postage-paid envelope provided as soon as
possible.
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If
you are not the shareholder of record and hold shares through a custodian,
broker or other agent, such agent may have special voting instructions
that you should follow.
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If you
vote in a timely manner by the Internet, you do not have to return the proxy
card for your vote to count. The Internet voting procedures appear in the Notice
or proxy card. You may also log on to change your vote or to confirm that your
vote has been properly recorded.
Can
I change my vote or revoke my proxy?
Yes.
Whether you vote by Internet or submit a proxy card with your voting
instructions, you may revoke or change your vote by:
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casting
a new vote on the Internet,
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submitting
another written proxy with a later
date,
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sending
a written notice of the change in your voting instructions to the
Secretary of the Company if received the day before the Annual
Meeting,
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if
you are a beneficial owner, by following the instructions sent to you by
your broker, bank or other agent,
or
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revoking
the grant of a previously submitted proxy and voting in person at the
Annual Meeting. Please note that your attendance at the Annual Meeting
itself will not revoke a proxy.
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How
are votes counted?
Shares of
Common Stock or Series A Preferred Stock represented by properly executed proxy
cards, or voted by proxy by the Internet, and received in time for the Annual
Meeting will be voted in accordance with the instructions specified in the
proxies. Any proxy not specifying to the contrary will be voted in favor of the
adoption of the proposals referred to in the Notice of Annual Meeting and for
the eight nominees for Director listed in Items 1, 2 and 3 below. If you grant a
proxy, either of the officers named as proxy holders, George R. Jensen, Jr., and
Stephen P. Herbert, or their nominees or substitutes, will have the discretion
to vote your shares on any additional matters that are properly presented for a
vote at the Meeting or at any adjournment or postponement that may take place.
If, for any unforeseen reason, any of our nominees is not available as a
candidate for director, the persons named as the proxy holder will vote your
proxy for another candidate or other candidates nominated by our
Board.
The
inspector of elections designated by the Company will use procedures consistent
with Pennsylvania law concerning the voting of shares, the determination of the
presence of a quorum and the determination of the outcome of each matter
submitted for a vote.
What
are the securities entitled to vote at the Annual Meeting?
Each
share of Common Stock issued and outstanding on the record date, other than
shares held by the Company, is entitled to one vote on each matter presented at
the Annual Meeting. Each share of Series A Preferred Stock issued and
outstanding on the record date is entitled to one-hundredth of a vote on each
matter presented at the Annual Meeting. As of the record date, 22,709,725 shares
of Common Stock were issued and outstanding and 512,365 shares of Series A
Preferred Stock were issued and outstanding.
What
is a quorum?
The
presence, in person or by proxy, of the holders of a majority of the votes
entitled to be cast on a particular matter by the shareholders at the Annual
Meeting is necessary to constitute a quorum for purposes of consideration and
action on the matter. Votes withheld for director nominees and abstentions on
the other proposals to be considered at the Annual Meeting will be counted in
determining whether a quorum has been reached, but the failure to execute and
return a proxy will result in a shareholder not being considered present at the
meeting. Broker non-votes will be counted as present for purposes of deterring
the existence of a quorum. The holders of the Common Stock and Series
A Preferred Stock vote together, and not as a separate class. If a
quorum is not present at the Annual Meeting, we expect that the Annual Meeting
will be adjourned or postponed to solicit additional proxies.
How
is each proposal to be adopted at the Annual Meeting?
If a
quorum is present, the votes required for the five proposals to be considered at
the Annual Meeting and the treatment of abstentions and broker non-votes in
respect of such proposals are as follows:
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Item 1: The two nominees for Class I Directors receiving the highest
number of votes will be elected Class I
directors.
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Abstentions and broker non-votes will not have any effect on the election of
directors.
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Item 2: The three nominees for Class II Directors receiving the highest
number of votes will be elected Class II
directors.
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Abstentions and broker non-votes will not have any effect on the election of
directors.
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Item 3: The three nominees for Class III Directors receiving the highest
number of votes will be elected Class III
directors.
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Abstentions and broker non-votes will not have any effect on the election of
directors.
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Item 4: The affirmative vote of a majority of the votes cast by all
holders of the issued and outstanding shares of Common Stock and Series A
Preferred Stock voting together is required to approve the ratification of
the selection of our independent auditors. Abstentions will have the same
effect as votes against the proposal and broker non-votes will not have
any effect on the outcome of this
proposal.
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Item 5: The affirmative vote of a majority of the votes cast by
all holders of the issued and outstanding shares of Common Stock and
Series A Preferred Stock voting together is required to approve the 2010
Stock Incentive Plan. Abstentions will have the same effect as votes
against the proposal and broker non-votes will not have any effect on the
outcome of this proposal.
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What
is a broker non-vote?
Brokers
who hold shares of stock in street name for customers and who indicate on a
proxy that the broker does not have discretionary authority to vote those shares
as to a particular matter are referred to as broker non-votes. Broker non-votes
will have no effect in determining whether a proposal will be adopted at the
Annual Meeting although they would be counted as present for purposes of
determining the existence of a quorum.
When
are the votes due?
Proxies
submitted by shareholders by Internet will be counted in the vote only if they
are received by 11:59 p.m. Eastern Time on December 14, 2009. Shares represented
by proxies on the enclosed proxy card will be counted in the vote at the Annual
Meeting only if we receive your proxy card by 9:00 a.m. Eastern Time on December
15, 2009.
COMMON
STOCK
The
following table sets forth, as of September 30, 2009, the beneficial ownership
of the Common Stock of each of the Company's directors and executive officers,
the other employees named in the summary compensation table set forth below, as
well as by the Company's directors and executive officers as a group. Except as
set forth below, the Company is not aware of any beneficial owner of more than
five percent of the Common Stock. Except as otherwise indicated, the Company
believes that the beneficial owners of the Common Stock listed below, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares, subject to community property laws where
applicable:
Name
and Address of
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Number of Shares
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Percent of
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Beneficial Owner(1)
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of Common Stock (2)
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Class
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George
R. Jensen, Jr.
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179,031 |
(3) |
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* |
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100
Deerfield Lane, Suite 140
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Malvern,
Pennsylvania 19355
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Stephen
P. Herbert
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163,872 |
(4) |
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* |
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100
Deerfield Lane, Suite 140
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Malvern,
Pennsylvania 19355
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David
M. DeMedio
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63,219 |
(5) |
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100
Deerfield Lane, Suite 140
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Malvern,
Pennsylvania 19355
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Douglas
M. Lurio
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25,904 |
(6) |
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2005
Market Street, Suite 3320
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Philadelphia,
Pennsylvania 19103
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Steven
Katz
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18,350 |
(7) |
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440
South Main Street
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Milltown,
New Jersey 08850
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William
L. Van Alen, Jr.
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48,440 |
(8) |
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P.O.
Box 727
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Edgemont,
Pennsylvania 19028
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Joel
Brooks
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0 |
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303
George Street Suite 140
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New
Brunswick, New Jersey 08901
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Steven
D. Barnhart
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0 |
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* |
|
1143
N. Sheridan Road
|
|
|
|
|
|
|
|
|
|
Lake
Forest, IL 60045
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
|
|
Jack
E. Price
|
|
|
|
0 |
|
|
|
* |
|
40
Lake Bellevue, Suite 100
|
|
|
|
|
|
|
|
|
|
Bellevue,
WA 98005
|
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
Cary
Sagady
|
|
|
|
3,550 |
|
|
|
* |
|
100
Deerfield Lane, Suite 140
|
|
|
|
|
|
|
|
|
|
Malvern,
Pennsylvania 19355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
Shirey
|
|
|
|
2,000 |
|
|
|
* |
|
100
Deerfield Lane, Suite 140
|
|
|
|
|
|
|
|
|
|
Malvern,
Pennsylvania 19355
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
S.A.C.
Capital Associates, LLC
|
|
|
|
1,950,426 |
(9) |
|
|
12.64% |
|
72
Cummings Point Road
|
|
|
|
|
|
|
|
|
|
Stamford,
Connecticut 06902
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Wellington
Management Company, LLP
|
|
|
|
2,068,400 |
(10) |
|
|
13.41% |
|
75
State Street
|
|
|
|
|
|
|
|
|
|
Boston,
Massachusetts 02109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
All
Directors and Executive Officers
|
|
|
|
|
|
|
|
|
|
As
a Group (9 persons)
|
|
|
|
498,816 |
|
|
|
2.18% |
|
________
*Less
than one percent (1%)
(1)
Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and derives from either voting or investment
power with respect to securities. Shares of Common Stock issuable upon
conversion of the Preferred Stock, or shares of Common Stock issuable upon
exercise of warrants and options currently exercisable, or exercisable within 60
days of September 30, 2009, are deemed to be beneficially owned for purposes
hereof.
(2) The
percentage of common stock beneficially owned is based on 22,709,725 shares
outstanding as of September 30, 2009.
(3)
Includes 2,000 shares of common stock beneficially owned by his spouse, 35,429
shares owned by George R. Jensen, Jr. Grantor Retained Unitrust dated July 14,
2003 over which Mr. Jensen retains beneficial ownership. Includes 75,000 shares
underlying vested stock options, and 800 shares underlying preferred stock. Does
not include the right granted to Mr. Jensen under his Employment Agreement to
receive common stock upon the occurrence of a USA Transaction nor any shares
issuable to the executive officers under the Long Term Equity Incentive Program
on account of the 2010 fiscal year.
(4)
Includes 28,010 shares of common stock beneficially owned by his child and
27,440 shares of common stock beneficially owned by his spouse. Includes 18,000
shares underlying vested stock options. Does not include any shares issuable to
Mr. Herbert under the Long Term Equity Incentive Program on account of the 2010
fiscal year.
(5)
Includes 7,000 shares underlying vested stock options. Does not include any
shares issuable to Mr. DeMedio under the Long-Term Equity Incentive Program on
account of the 2010 fiscal year.
(6)
Includes 12,000 shares underlying vested stock options.
(7)
Includes 12,000 shares underlying vested stock options.
(8)
Includes 100 shares of Common Stock beneficially owned by his spouse. Includes
12,000 shares underlying vested stock options.
(9) Based
upon a Schedule 13G/A filed with the Securities and Exchange Commission on
January 8, 2009, S.A.C. Capital Advisors, L.P., S.A.C. Capital Advisors, Inc.,
S.A.C. Capital Associates, LLC, and Steven A. Cohen, each have shared voting and
investment power with respect to such shares. The address of S.A.C. Capital
Advisors, L.P., S.A.C. Capital Advisors, Inc. and Mr. Cohen is as indicated in
the table. The address of S.A.C. Capital Associates, LLC is P.O. Box 58,
Victoria House, The Valley, Anguilla, British West Indies. Each of S.A.C.
Capital Advisors, L.P., S.A.C. Capital Advisors, Inc. and Mr. Cohen disclaim
beneficial ownership of these shares.
(10)
Based upon a Schedule 13G/A filed with the Securities and Exchange Commission on
February 17, 2009, reflecting the beneficial ownership of our Common Stock by
Wellington Management Company, LLP, which has shared voting authority over
1,214,4000 shares and shared dispositive power over 2,068,400
shares.
SERIES
A PREFERRED STOCK
Other
than the 80,000 shares of preferred stock owned by Mr. Jensen, there were no
shares of preferred stock that were beneficially owned as of September 30, 2009
by the Company’s directors, executive officers, or the other employees named in
the Summary Compensation Table set forth above.
In
October 2009, the Board of Directors amended the Company’s Bylaws to classify
the Board into three classes and to increase the size of the Board from seven
members to eight members. As this is the first annual meeting in which the
shareholders will elect a classified Board, the shareholders are electing the
entire Board consisting of two Class I Directors, three Class II Directors, and
three Class III Directors. All of the nominees are current members of the Board
of Directors. Under applicable Pennsylvania law, each class of directors is to
be considered separately, and the candidates from each class receiving the
highest number of votes up to the number of directors to be elected from each
class, shall be elected.
The
initial term of the Class I Directors to be elected at the Annual Meeting shall
be until the next annual meeting following this Annual Meeting. The initial term
of the Class II Directors to be elected at the Annual Meeting shall be until the
second annual meeting following this Annual Meeting. The initial term of the
Class III Directors to be elected at the Annual Meeting shall be until the third
annual meeting following this Annual Meeting. Following the expiration of each
class of director’s initial term, each class of directors will be elected for a
term expiring at the third annual meeting following the annual meeting at which
such class of directors was elected.
The term
of office of each director will continue until the designated annual meeting for
the directors of his or her class of directors or until a successor has been
elected and qualified, or until the director’s earlier death, resignation or
removal. If any director resigns, dies or is otherwise unable to serve out his
or her term, or if the Board increases the number of directors, the Board may
fill any vacancy by a vote of a majority of the directors then in office. A
director elected to fill a vacancy shall serve for the unexpired term of his or
her predecessor and shall be considered to be a member of the class of his or
her predecessor.
Although the
Board of Directors has no reason to believe any of the
nominees will be unable to accept such nomination, if such should occur, proxies
will be voted (unless marked to the
contrary) for such substitute person or
persons, if any, as shall be recommended by the
Board of Directors. However, proxies will not be voted for more than
eight directors. Shareholders who do not wish their shares to be
voted for a particular nominee may so direct in the space provided in the proxy
card.
Cumulative
voting rights do not exist with respect to the election of
Directors. Pursuant to the Articles of Incorporation and Pennsylvania
law, the Directors of the Company are to be elected by the holders of the Common
Stock and Series A Preferred Stock voting together, with each share of Common
Stock entitled to one vote and each share of Series A Preferred Stock entitled
to one-hundredth of a vote.
ELECTION
OF CLASS I DIRECTORS
The Board
of Directors has nominated, and recommends the election of, the two persons
listed below to serve as Class I Directors of the Company. The following
information is furnished with respect to each nominee for election as a Class I
Director:
Name
|
|
Age
|
|
Position(s) Held
|
Steven
D. Barnhart (1)
|
|
48
|
|
Director
|
Jack
E. Price (2)
|
|
64
|
|
Director
|
(1)
Member of Audit Committee
(2)
Member of Compensation Committee
Each
Class I Director holds office until the next Annual Meeting of Shareholders
following this Annual Meeting, and until his successor has been elected and
qualified.
Steven D.
Barnhart was appointed to the Board of Directors in October 2009 to fill the
vacancy created by the resignation of Stephen McHugh on October 19, 2009. Mr.
Barnhart was Chief Executive Officer and President of Orbitz Worldwide from 2007
to January 2009, after holding other executive positions since 2003, when he
joined the company. Prior to Orbitz Worldwide, he worked for PepsiCo and the
Pepsi Bottling Group from 1990 to 2003, where he was Finance Director for the
Southeast Business Unit of the Pepsi Bottling Group, and also held other
regional and strategic positions for PepsiCo and Frito-Lay. Mr. Barnhart
received a Bachelor of Science degree in Economics in 1984 from the University
of Chicago and a Masters in Business Administration in 1988 from the University
of Chicago.
Jack E.
Price was appointed to the Board of Directors in October 2009 to fill the
vacancy resulting from the increase in the Board of Directors from seven members
to eight members. Mr. Price was President and Chief Executive Officer of NovaRay
Medical Inc. from 2007 to March 2009. Prior to that, he was President and Chief
Executive Officer of VSM MedTech Ltd. from 2003 to 2006, and was President and
Division Chief Executive Officer of Philips Medical Systems, North America from
1996 to 2003, having joined Philips Medical Systems in 1993 as Vice President
and General Manager. He was also with General Electric Medical Systems from 1988
to1993, where he held Vice President and General Manager positions. Mr. Price
received his undergraduate degree from the University of Oregon. Mr. Price is
also a Director of Health Systems Solutions, Inc.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF
ALL CLASS I NOMINEES.
ELECTION
OF CLASS II DIRECTORS
The Board
of Directors has nominated, and recommends the election of, the three persons
listed below to serve as Class II Directors of the Company. The following
information is furnished with respect to each nominee for election as a Class II
Director:
Name
|
|
Age
|
|
Position(s) Held
|
William
L. Van Alen, Jr. (1)(2)
|
|
74
|
|
Director
|
Steven
Katz (1)
|
|
61
|
|
Director
|
Joel
Brooks (2)
|
|
50
|
|
Director
|
(1) Member
of Compensation Committee
(2) Member
of Audit Committee
Each
Class II Director holds office until the second Annual Meeting of Shareholders
following this Annual Meeting, and until his successor has been elected and
qualified.
William
L. Van Alen, Jr., joined the Board of Directors of the Company in May 1993. Mr.
Van Alen is President of Cornerstone Entertainment, Inc., an organization
engaged in the production of feature films of which he was a founder in 1985.
Since 1996 and until March 2006, Mr. Van Alen had been President and a Director
of The Noah Fund, a publicly traded mutual fund. Prior to 1985, Mr. Van Alen
practiced law in Pennsylvania for twenty-two years. Mr. Van Alen received his
undergraduate degree in Economics from the University of Pennsylvania and his
law degree from Villanova Law School.
Steven
Katz joined the Board of Directors in May 1999. He is President of Steven Katz
& Associates, Inc., a management consulting firm specializing in strategic
planning and corporate development for technology and service-based companies in
the health care, environmental, telecommunications and Internet markets. Mr.
Katz’s prior experience includes five years with PriceWaterhouse & Co. in
audit, tax and management advisory services; two years of corporate planning
with Revlon, Inc.; five years with National Patent Development Corporation
(NPDC) in strategic planning, merger and acquisition, technology in-licensing
and out-licensing, and corporate turnaround experience as President of three
NPDC subsidiaries; and two years as a Vice President and General Manager of a
non-banking division of Citicorp, N.A. Mr. Katz is also a Director of Health
Systems Solutions Inc. From November 2006 until September 2008, Mr.
Katz was President and Chairman of the Board of GammaCan International,
Inc.
Joel
Brooks joined the Board of Directors of the Company during March
2007. Since December 2000, Mr. Brooks has served as the Chief
Financial Officer and Treasurer of Senesco Technologies, Inc., a biotechnology
company whose shares are traded on the American Stock Exchange. From September
1998 until November 2000, Mr. Brooks was the Chief Financial Officer of Blades
Board and Skate, LLC, a retail establishment specializing in the action sports
industry. Mr. Brooks was Chief Financial Officer from 1997 until 1998 and
Controller from 1994 until 1997 of Cable and Company Worldwide, Inc. He also
held the position of Controller at USA Detergents, Inc. from 1992 until 1994,
and held various positions at several public accounting firms from 1983 through
1992. Mr. Brooks received his Bachelor of Science degree in Commerce with a
major in Accounting from Rider University in February 1983.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF
ALL CLASS II NOMINEES.
ELECTION
OF CLASS III DIRECTORS
The Board
of Directors has nominated, and recommends the election of, the three persons
listed below to serve as Class III Directors of the Company. The following
information is furnished with respect to each nominee for election as a Class
III Director:
Name
|
|
Age
|
|
Position(s) Held
|
George
R. Jensen, Jr.
|
|
61
|
|
Chief
Executive Officer, Chairman of the Board of Directors
|
Stephen
P. Herbert
|
|
46
|
|
Chief
Operating Officer and President, Director
|
Douglas
M. Lurio
|
|
52
|
|
Director
|
Each
Class III Director holds office until the third Annual Meeting of Shareholders
following this Annual Meeting, and until his successor has been elected and
qualified.
George R.
Jensen, Jr., has been our Chief Executive Officer and a Director since our
inception in January 1992. Mr. Jensen was Chairman, Director, and Chief
Executive Officer of American Film Technologies, Inc. ("AFT") from 1985 until
1992. AFT was in the business of creating color imaged versions of
black-and-white films. From 1979 to 1985, Mr. Jensen was Chief Executive Officer
and President of International Film Productions, Inc. Mr. Jensen was the
Executive Producer of the twelve hour miniseries, "A.D.", a $35 million dollar
production filmed in Tunisia. Procter and Gamble, Inc., the primary source of
funds, co-produced and sponsored the epic, which aired in March 1985 for five
consecutive nights on the NBC network. Mr. Jensen was also the Executive
Producer for the 1983 special for public television, "A Tribute to Princess
Grace". From 1971 to 1978, Mr. Jensen was a securities broker, primarily for the
firm of Smith Barney, Harris Upham. Mr. Jensen was chosen as the 1989
Entrepreneur of the Year in the high technology category for the Philadelphia,
Pennsylvania area by Ernst & Young LLP and Inc. Magazine. Mr. Jensen
received his Bachelor of Science Degree from the University of Tennessee and is
a graduate of the Advanced Management Program at the Wharton School of the
University of Pennsylvania.
Stephen
P. Herbert was elected a Director in April 1996, and joined the Company on a
full-time basis on May 6, 1996 as Executive Vice President. During August 1999,
Mr. Herbert was appointed President and Chief Operating Officer of the
Company. Prior to joining us and since 1986, Mr. Herbert had been employed
by Pepsi-Cola, the beverage division of PepsiCo, Inc. From 1994 to April 1996,
Mr. Herbert was a Manager of Market Strategy. In such position he was
responsible for directing development of market strategy for the vending channel
and subsequently the supermarket channel for Pepsi-Cola in North America. Prior
thereto, Mr. Herbert held various sales and management positions with
Pepsi-Cola. Mr. Herbert graduated with a Bachelor of Science degree from
Louisiana State University.
Douglas
M. Lurio joined the Board of Directors of the Company in June 1999. Mr. Lurio is
President of Lurio & Associates, P.C., attorneys-at-law, which he founded in
1991. He specializes in the practice of corporate and securities law. Prior
thereto, he was a partner with Dilworth, Paxson LLP. Mr. Lurio received a
Bachelor of Arts Degree in Government from Franklin & Marshall College, a
Juris Doctor Degree from Villanova Law School, and a Masters in Law (Taxation)
from Temple Law School.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF
ALL CLASS III NOMINEES.
The Board
of Directors has affirmatively determined that William L. Van Alen, Steven Katz,
Joel Brooks, Steven D. Barnhart and Jack E. Price, which members constitute a
majority of the Board of Directors, are independent in accordance with the
applicable listing standards of The NASDAQ Stock Market LLC.
The Board
of Directors of the Company held a total of six meetings during the fiscal year
ended June 30, 2009 (not including actions adopted by unanimous
consent). Each member of the Board of Directors attended at least 75%
of the aggregate number of meetings of the Board and Board Committees of which
he was a member during the 2009 fiscal year. The Company does not
have a policy with regard to Board members’ attendance at annual
meetings. Five of our directors attended the 2009 Annual
Meeting.
The Board
of Directors has a standing Audit Committee and Compensation Committee. In
addition, all nominees for election or appointment to the Board must be
recommended to the Board by a majority of our independent directors (as such
term is defined in the listing standards of The NASDAQ Stock Market
LLC).
The Audit
Committee of the Board of Directors presently consists of Mr. Brooks (Chairman),
Mr. Van Alen, and Mr. Barnhart. The Board of Directors has determined that each
member of the Audit Committee is independent as defined under the listing
standards of The NASDAQ Stock Market LLC and under Rule 10A-3 of the Securities
Exchange Act of 1934 (“Exchange Act”). The Board of
Directors has also determined that Mr. Brooks is an “audit committee financial
expert” as defined in Item 407(d)(5)(ii) of Regulation S-K. Our Audit Committee
held four meetings during the 2009 fiscal year. The Audit Committee recommends
the engagement of the Company’s independent accountants and is primarily
responsible for approving the services performed by the Company’s independent
accountants, for reviewing and evaluating the Company’s accounting principles,
reviewing the independence of independent auditors, and reviewing the adequacy
and effectiveness of the Company’s internal controls. The Audit Committee
operates pursuant to a charter that was last amended and restated by the Board
of Directors on April 11, 2006, a copy of which is accessible on the Company’s
website, www.usatech.com. The
Audit Committee’s report appears on page 15 of this Proxy
Statement.
The
Compensation Committee of the Board of Directors presently consists of Mr. Katz
(Chairman), Mr. Van Alen, Jr., and Mr. Price. The Board of Directors has
determined that each of the current members of the Compensation Committee is
independent in accordance with the applicable listing standards of The Nasdaq
Stock Market LLC. The Committee reviews and recommends compensation and
compensation changes for the executive officers and directors of the Company and
administers the Company’s stock option and restricted stock grant plans as they
pertain to the executive officers and directors. The Compensation Committee met
two times during the 2009 fiscal year. The Compensation Committee
operates pursuant to a charter that was adopted by the Board of Directors in
September 2007, a copy of which is not accessible on the Company’s website, but
was an appendix to the proxy statement for our annual meeting held on February
28, 2008.
Our
independent directors are required to recommend to the entire Board of Directors
for selection any nominees for director. The foregoing applies to the election
of Directors at any annual or special meeting of shareholders as well as in the
case of a vacancy on the Board of Directors resulting from resignation, death,
or otherwise. The current independent members of our Board are William Van Alen,
Jr., Steven Katz, Joel Brooks, Steven D. Barnhart and Jack E. Price. During the
fiscal year ended June 30, 2009, the independent members of our Board met one
time. There is no written charter governing the selection of our director
nominees by the independent directors.
Our
independent directors have not established any specific minimum qualifications
for recommending membership on our Board of Directors. Rather, the independent
directors will generally consider all relevant factors, which may include
independence, expertise that is useful to the Company and complementary to the
background, skills and experience of the other Board members, a commitment to
ethics and integrity, a commitment to personal and organizational
accountability, a history of achievement that reflects superior standards for
themselves and others, and a willingness to express alternate points of view
while, at the same time, being respectful of the opinions of others and working
collaboratively as a team player.
The
independent directors use their available network of contacts when compiling a
list of potential director candidates. The independent directors also consider
potential director candidates recommended by shareholders and other parties and
all potential candidates are evaluated based upon the above criteria. Because
the independent directors make no distinction in their evaluation of candidates
based on whether such candidates are recommended by shareholders or other
parties, no formal policy or procedure has been established for the
consideration of director candidates recommended by shareholders. Mr.
Barnhart was recommended as a director nominee to the independent directors by
our Chief Executive Officer and Mr. Price was recommended as a director nominee
to the independent directors by a non-management director.
Shareholders
who wish to propose a potential director candidate may submit a recommendation
in writing to the Secretary, USA Technologies, Inc., 100 Deerfield Lane, Suite
140, Malvern, PA 19355, specifying the name of the candidates and stating in
detail the qualifications of such persons for consideration by the independent
directors. A written statement from the candidate consenting to be named as a
candidate and, if nominated and elected, to serve as a director, should
accompany any such recommendation.
Members
of the Board of Directors receive cash and equity compensation for serving on
the Board of Directors, as determined from time to time by the Compensation
Committee with subsequent approval thereof by the Board of
Directors.
The table
below summarizes the compensation paid by the Company to non-employee Directors
during the fiscal year ended June 30, 2009.
Name
|
|
Fees Earned or Paid in Cash
($)
|
|
|
Stock Awards ($)
|
|
|
Option Awards ($)
|
|
|
Non-Equity Incentive Compensation Plan
($)
|
|
|
Change in Pension Value and Nonqualified Deferred
Compensation Earnings ($)
|
|
|
All Other Compensation ($)
|
|
|
Total ($)
|
|
(a)
|
|
(b)
|
|
|
(c)
|
|
|
(d)
|
|
|
(e)
|
|
|
(f)
|
|
|
(g)
|
|
|
(h)
|
|
Joel
Brooks
|
|
|
30,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
30,000 |
|
Steven
Katz
|
|
|
30,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
30,000 |
|
Douglas
M. Lurio
|
|
|
20,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
20,000 |
|
Stephen
W. McHugh
|
|
|
30,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
30,000 |
|
William
L. Van Alen Jr.
|
|
|
40,000 |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
|
40,000 |
|
During
fiscal year 2009, we paid each of Messrs. Brooks, Van Alen, Katz, McHugh and
Lurio $20,000 for serving as a Director during the fiscal year. The
Company paid Mr. McHugh, Mr. Brooks and Mr. Van Alen $10,000 for serving on the
Audit Committee during the fiscal year. The Company paid Mr. Katz and Mr. Van
Alen $10,000 for serving on the Compensation Committee.
On April
21, 2006, we granted 12,000 Common Stock Options to each of Messrs. Van Alen,
Katz, and Lurio all with an exercise price of $7.50 per share and all
exercisable at any time within five years following the date of vesting. The
options granted to Mr. Van Alen were fully vested. Of the options granted to Mr.
Katz and Mr. Lurio, 6,000 vested immediately, 3,000 vested on April 1, 2007, and
3,000 vested on April 1, 2008. In conjunction with the appointment of Stephen
McHugh to the Board of Directors on June 20, 2006, the Company granted Mr.
McHugh 6,000 Common Stock Options with an exercise price of $8.00 per share. The
options vested as follows: 3,000 on June 20, 2007 and 3,000 on June 20, 2008.
The options are exercisable at any time within five years of vesting. During the
2007 fiscal year, the Company granted to each Director piggy back registration
rights in connection with the shares underlying these options.
We
believe that our shareholders are currently provided a reasonable means to
communicate with our Board of Directors and individual directors. As a result,
our Board of Directors has not established a formal process for shareholders to
send communications to the Board of Directors or individual directors. However,
the Board of Directors will consider, from time to time, whether adoption of a
formal process for such shareholder communications has become necessary or
appropriate. Shareholders may send communications to the Board of Directors or
individual directors by mail at 100 Deerfield Lane, Suite 140, Malvern,
Pennsylvania 19355, Attn: Board of Directors.
During
the fiscal year 2009, Steven Katz and William Van Alen, Jr., served as members
of the Compensation Committee of our Board of Directors. No member of the
Compensation Committee was an employee or former employee of our company or any
of our subsidiaries, or had any relationship with us requiring disclosure
herein.
From
October 2007 through September 2008, our Chief Financial Officer, David M.
DeMedio, was a Director and a member of the Compensation Committee of the Board
of Directors of GammaCan International, Inc. Steven Katz, a Director and a
member of our Compensation Committee, was also the Chairman of the Board and
President of GammaCan International, Inc. during such period of time. Except as
set forth in the prior sentence, during the last fiscal year, none of our
executive officers served as: (i) a member of the compensation committee (or
other committee of the board of directors performing equivalent functions or, in
the absence of any such committee, the entire board of directors) of another
entity, one of whose executive officers served on our Compensation Committee;
(ii) a director of another entity, one of whose executive officers served on our
Compensation Committee; or (iii) a member of the compensation committee (or
other committee of the board of directors performing equivalent functions or, in
the absence of any such committee, the entire board of directors) of another
entity, one of whose executive officers served as a director on our Board of
Directors.
RATIFICATION
OF APPOINTMENT OF INDEPENDENT AUDITORS
The firm
of McGladrey & Pullen, LLP has been selected by the Board of Directors to
serve as the Company’s independent registered public accounting firm for fiscal
year 2010. The shareholders will be asked to ratify this appointment at the
Annual Meeting. A representative of McGladrey & Pullen, LLP is
expected to be present at the Annual Meeting and will have the opportunity to
make a statement if desired and is expected to be available to respond to
appropriate questions.
The
following resolution concerning the appointment of the independent registered
public accounting firm will be presented to the shareholders at the Annual
Meeting:
RESOLVED, that
the appointment by the Board of Directors of
the Company of McGladrey & Pullen,
LLP, independent registered
public accounting firm, to examine the
books, accounts and records of the Company for
the fiscal year ending June 30, 2010 is hereby ratified
and approved.
The
affirmative vote of a majority of the votes cast by all holders of
the outstanding shares of Common Stock and
Series A Preferred Stock voting together (with each share
of Common Stock entitled to one vote and each share of Series A Preferred Stock
entitled to one-hundredth of a vote) is required for ratification of this
proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE RATIFICATION
OF THE PROPOSAL SET FORTH ABOVE.
Goldstein
Golub Kessler LLP had served as our independent registered accounting firm since
July 2005. During October 2007, we were notified that the partners of Goldstein
Golub Kessler LLP became partners of McGladrey & Pullen, LLP in a limited
asset purchase agreement. Effective November 16, 2007, Goldstein Golub Kessler
LLP’s position as our independent registered public accounting firm ceased, and
we appointed McGladrey & Pullen, LLP as our independent registered public
accounting firm. Accordingly, the Company was billed for professional
services rendered by each of Goldstein Golub Kessler LLP and McGladrey &
Pullen, LLP in connection with the fiscal year ended June 30, 2008.
During
the fiscal years ended June 30, 2009 and 2008, fees in connection with services
rendered by McGladrey & Pullen, LLP were as set forth below:
|
|
Fiscal
2009
|
|
|
Fiscal
2008
|
|
Audit
Fees
|
|
$ |
360,000 |
|
|
$ |
300,000 |
|
Audit-Related
Fees
|
|
|
— |
|
|
|
— |
|
Tax
Fees
|
|
|
— |
|
|
|
— |
|
All
Other Fees
|
|
|
— |
|
|
|
— |
|
TOTAL
|
|
$ |
360,000 |
|
|
$ |
300,000 |
|
During
the fiscal year ended June 30, 2008, fees in connection with services rendered
by Goldstein Golub Kessler LLP were as set forth below:
|
|
Fiscal
2008
|
|
Audit
Fees
|
|
$ |
60,000 |
|
Audit-Related
Fees
|
|
|
— |
|
Tax
Fees
|
|
|
— |
|
All
Other Fees
|
|
|
— |
|
TOTAL
|
|
$ |
60,000 |
|
Audit
fees consisted of fees for the audit of our annual financial statements and
review of quarterly financial statements as well as services normally provided
in connection with statutory and regulatory filings or engagements, consents and
assistance with and review of Company documents filed with the SEC.
There
were no fees categorized as Audit-related, Tax, or Other fees during fiscal
years 2008 and 2009.
The Audit
Committee's policy is to pre-approve all audit and permissible non-audit
services provided by the independent registered public accounting firm on a
case-by-case basis.
APPROVAL
OF 2010 STOCK INCENTIVE PLAN
On
October 19, 2009, the Board of Directors adopted, subject to shareholder
approval, the USA Technologies, Inc. 2010 Stock Incentive Plan (“2010 Plan”).
The 2010 Plan provides for the granting of up to 300,000 shares of Common
Stock.
Subject
to shareholder approval, our Board of Directors has reserved a total of 300,000
shares of Common Stock for issuance in connection with the 2010 Plan. All of the
Company’s future and current employees, directors and consultants are eligible
for awards under the 2010 Plan. A summary of the 2010 Plan is set forth below.
This summary is qualified in its entirety by the full text of the 2010 Plan,
which is attached to this proxy statement as Appendix “A”.
The
purpose of the 2010 Plan is to promote the Company’s success by linking the
personal interests of its employees, officers and directors to those of the
Company’s shareholders, and by providing participants with an incentive for
outstanding performance. The 2010 Plan is further intended to provide
flexibility to the Company in its ability to motivate, attract and retain the
services of employees, officers and directors upon whose judgment, interest and
special efforts the successful conduct of the Company’s operation largely
depends.
The 2010
Plan authorizes the granting of up to 300,000 shares of Common Stock. The number
of shares authorized to be issued under the 2010 Plan is subject to adjustment
for stock dividends, stock splits, recapitalizations, mergers, or similar
corporate events.
The 2010
Plan is administered by a committee designated by the Board of Directors. The
Board has appointed Messrs. Jensen, Herbert and Lurio as the committee. In the
event that any awards would be made under the 2010 Plan to any executive officer
or director of the Company, the Compensation Committee would act as the
committee, and any awards to any such executive officer or director shall be
recommended by the Compensation Committee and approved by the Board of
Directors. Subject to the terms of the 2010 Plan, the committee has full
authority to select the employees, consultants or Directors who will receive
awards, to determine the amount of each award, to determine the terms and
conditions of the awards, and the terms of any agreements which will be entered
into in connection with such award. The shares of Common Stock may be awarded
outright to the recipient with no vesting or forfeiture provisions. The 2010
Plan provides that the grant of shares of Common Stock to the recipient may be
subject to various vesting or forfeiture provisions such as performance goals or
continued employment with the Company. The 2010 Plan also authorizes any award
of Shares under the 2010 Plan to be subject to the recipient’s agreement not to
compete for a period of time with the Company following the termination of
employment with the Company.
The Board
of Directors of the Company has the power to amend, suspend, or terminate the
2010 Plan at any time without the approval of the shareholders of the Company,
unless such approval is required by applicable law, regulation or rule of any
stock exchange on which the shares of Common Stock are listed.
The 2010
Plan provides that promptly after the approval thereof by the shareholders, all
of the shares issuable under the 2010 Plan shall be registered under the 1933
Act pursuant to a Form S-8 registration statement at the Company’s cost and
expense.
Awards,
if any, will be granted under the 2010 Plan only after the 2010 Plan is approved
by the shareholders. All awards under the 2010 Plan will be made at the
discretion of the committee appointed by the Board, or the Compensation
Committee, as the case may be. Therefore, it is not possible to determine the
benefits or amounts that will be received by any individuals or groups pursuant
to the 2010 Plan in the future, or the benefits or amounts that would have been
received by any individuals or groups for the last completed fiscal year if the
2010 Plan had been in effect.
The
affirmative vote of a majority of the votes cast by all holders of the
outstanding shares of Common Stock and Series A Preferred Stock voting together
(with each share of Common Stock entitled to one vote and each share of Series A
Preferred Stock entitled to one-hundredth of a vote) is required for approval of
this proposal.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PROPOSAL TO
APPROVE THE 2010 STOCK INCENTIVE PLAN.
The
following report of the Audit Committee does not constitute soliciting material
and shall not be deemed filed or incorporated by reference into any other
Company filing under the Securities Act or the Exchange Act, except to the
extent the Company specifically incorporates this report by
reference.
Management
has the primary responsibility for the preparation of the financial statements
and the reporting process. The Company’s management has represented to the Audit
Committee that the consolidated financial statements for the fiscal year ended
June 30, 2009 were prepared in accordance with generally accepted accounting
principles. The Company’s independent registered public accounting firm is
responsible for auditing these consolidated financial statements. In the
performance of its oversight function, the Audit Committee reviewed and
discussed the audited consolidated financial statements with management and the
independent registered public accounting firm. The Audit Committee discussed
with the independent registered public accounting firm the matters required to
be discussed by Statement on Auditing Standards No. 61, as amended, as adopted
by the Public Company Accounting Oversight Board.
In
addition, the Audit Committee received from the independent registered public
accounting firm the written disclosures required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and discussed
with such firm its independence from the Company and the Company’s
management.
In
reliance on the reviews and discussions referred to above, the Audit Committee
recommended to the Board, and the Board approved, that the audited consolidated
financial statements be included in the Company’s Annual Report on Form 10-K for
the year ended June 30, 2009 for filing with the SEC.
Joel
Brooks (Chairman)
William
L. Van Alen, Jr.
Steven D.
Barnhart
October
27, 2009
Our
executive officers are as follows:
|
Name
|
|
Age
|
|
Position(s) Held
|
|
George
R. Jensen, Jr.
|
|
61
|
|
Chief
Executive Officer, Chairman of the Board of Directors
|
|
Stephen
P. Herbert
|
|
46
|
|
Chief
Operating Officer and President, Director
|
|
David
M. DeMedio
|
|
38
|
|
Chief
Financial Officer
|
Certain
information concerning the foregoing executive officers who are also directors
of the Company is set forth elsewhere in this Proxy Statement. See
“Item 3 - Election of Class III Directors.” The following description contains
certain information concerning the foregoing executive officer who is not also a
Director of the Company.
David M.
DeMedio joined USA Technologies on a full-time basis in March 1999 as
Controller. In the Summer of 2001, Mr. DeMedio was promoted to Director of
Financial Services where he was responsible for the sales and financial data
reporting to customers, the Company's turnkey banking services and maintaining
and developing relationships with credit card processors and card associations.
In July 2003, Mr. DeMedio served as interim Chief Financial Officer through
April, 2004. From April, 2004 until April 12, 2005, Mr. DeMedio served as Vice
President - Financial & Data Services. On April 12, 2005, he was appointed
as the Company's Chief Financial Officer. From 1996 to March 1999, prior to
joining the Company, Mr. DeMedio had been employed by Elko, Fischer, Cunnane and
Associates, LLC as a supervisor in its accounting and auditing and consulting
practice. Prior thereto, Mr. DeMedio held various accounting positions with
Intelligent Electronics, Inc., a multi-billion reseller of computer hardware and
configuration services. Mr. DeMedio graduated with a Bachelor of Science in
Business Administration from Shippensburg University and is a Certified Public
Accountant. From October 2007 until September 2008, Mr. DeMedio was a Director
of GammaCan International, Inc.
Our
Compensation Committee is currently comprised of two non-employee directors. The
Compensation Committee is responsible for reviewing and recommending
compensation and compensation changes for the executive officers of the Company.
The compensation of the two other employees named in the Summary Compensation
Table is determined by the executive officers. The Chief Executive Officer
assists the Committee in determining the compensation of all other executive
officers and the other executive officers do not have a role in determining
their own compensation. Our Chief Executive Officer regularly provides
information to the Compensation Committee. The Compensation Committee considers
each component of executive compensation in light of total compensation. In
considering adjustments to the total compensation of the executive officers, the
Compensation Committee also considers the value of previous
compensation.
We have
developed a compensation policy that is designed to attract and retain key
executives responsible for our success and motivate management to enhance
long-term shareholder value. The Compensation Committee believes that
compensation of the Company’s executive officers should encourage creation of
shareholder value and achievement of strategic corporate objectives and the
Committee seeks to align the interests of the Company’s shareholders and
management by integrating compensation with the Company’s annual and long-term
corporate and financial objectives. We believe that providing our executive
officers who have responsibility for the Company’s management and growth with an
opportunity to increase their ownership of Company stock aligns the interests of
the executive officers with those of the shareholders. During the 2007 fiscal
year, we adopted the Long Term Equity Incentive Program for our executive
officers in order to provide them with the opportunity to further increase the
number of shares owned by them. In order to be competitive with compensation
offered by other technology companies and to motivate and retain executive
officers, the Company intends to offer a total compensation package competitive
with other technology companies as well as take into account individual
responsibilities and performance. The annual compensation package for our
executives primarily consists of:
|
●
|
restricted
stock awards
|
|
●
|
long-term
stock incentive awards
|
Base
Salary
Base
salary is the fixed component of our executive officer’s annual cash
compensation and is set with the goal of attracting talented executives and
adequately compensating and rewarding them for services rendered during the
fiscal year. Our executive officers’ employment agreements specify the level of
salary to which the officer is entitled, subject to review of our board of
directors or Compensation Committee from time to time. During September 2008,
and in connection with the execution of amendments to their employment
agreements, we increased each of Messrs. Jensen’s and Herbert’s base salary by
approximately twelve percent. The base salaries of our executive officers
reflect the individual’s level of responsibility and performance. In
recommending base salaries of our executive officers to the board of directors,
the Compensation Committee also considers changes in duties and
responsibilities, our business and financial results, the relationship among
base salaries paid to others within our Company, and its knowledge of base
salaries paid to executive officers of other technology companies. The base
salaries for each of Messrs. Sagady and Shirey are set forth in their respective
employment agreements, and were established by our President after discussions
with each employee.
Stock
Options
Stock
options serve to ensure that executive management is properly focused on
shareholder value. Stock options align management incentives with shareholder’s
objectives because options granted at fair value have value only if the stock
price increases over time. A vesting schedule also keeps the executives focused
on long term performance and not short term gains. During the 2009 fiscal year,
no stock options were issued to our executive officers or employees and no
previously issued stock options became vested. For the fiscal years 2008 and
2007, various stock options became vested that were granted to our executive
officers at the time the officers entered into their employment agreements in
May 2006. During fiscal year 2007, the Company granted to our executive officers
piggy back registration rights in connection with the shares underlying the
options granted to them in their employment agreements.
Restricted
Stock Awards
During
the 2009 fiscal year, no shares of restricted stock were granted to our
executive officers or employees. During fiscal year 2007, shares of restricted
stock became vested that had been issued to Messrs. Jensen and Herbert at the
time they entered into their May 2006 employment agreements. During fiscal year
2007, the Company granted to our executive officers piggy back registration
rights in connection with the restricted shares granted to them in their
employment agreements.
Cash
and Stock Bonuses
In
addition to base salary, we may award variable cash bonus awards to our
executives as well as shares available under our stock compensation programs.
The shares awarded under our stock compensation plans are registered under the
Securities Act of 1933, as amended. During September 2008, and based upon past
performance and in consideration of the execution of amendments to their
employment agreements, we awarded an aggregate of 220,000 shares to our
executive officers under our stock plans. All of these shares become vested
during the 2009 fiscal year. Shares were awarded under our stock plans to Mr.
Sagady during the 2009 fiscal year upon the recommendation of our President and
based on his performance, and each of Messrs. Sagady and Shirey received shares
pursuant to the terms of their employment agreements. In addition, based upon
performance, Messrs. Sagady and Shirey earned cash bonuses during fiscal year
2009. In December 2007, the board of directors approved the recommendation of
the Compensation Committee that Messrs. Jensen, Herbert, and DeMedio receive
cash bonuses based upon each of their performance during the first six months of
the fiscal year.
Long-Term
Equity Incentive Program
During
February 2007, at the recommendation of the Compensation Committee, the board of
directors adopted the Long-Term Equity Incentive Program covering the Company’s
executive officers – Messrs. Jensen, Herbert and DeMedio. The purpose of the
Plan is to ensure continuity of the Company’s executives, encourage stock
ownership by the executives, align the interests of the executives with those of
the shareholders, and provide incentives and rewards to the executives who are
largely responsible for the management and growth of the Company.
Under the
Plan, each executive officer will be awarded common stock of the Company in the
event the Company achieves target goals relating to each of revenues, gross
profit and EBITDA during each of the fiscal years ending June 30, 2007, June 30,
2008, and June 30, 2009. EBITDA is defined as earnings before interest, taxes,
depreciation, and amortization, and excludes non-cash stock payments/awards and
stock options granted to officers and members of the board of directors. During
each such fiscal year, the number of eligible shares to be awarded to the
executive is based upon the following weightings: 40% of eligible shares are
determined by revenues; 30% of eligible shares are determined by gross profit;
and 30% of eligible shares are determined by EBITDA.
If the
target goals (100%) for revenues, gross profit, and EBITDA are achieved by the
Company during the applicable fiscal year, the executive officers would be
awarded the following number of shares:
|
|
Fiscal
Year Ended June 30,
|
|
|
|
2007
|
|
|
2008
|
|
|
2009
|
|
George
R. Jensen, Jr.
|
|
|
178,570 |
|
|
|
178,570 |
|
|
|
178,570 |
|
Stephen
P. Herbert
|
|
|
53,713 |
|
|
|
53,713 |
|
|
|
53,714 |
|
David
M. DeMedio
|
|
|
21,663 |
|
|
|
21,663 |
|
|
|
21,664 |
|
On
February 4, 2009, the board of directors approved the recommendation of the
Compensation Committee that the final twelve month measuring period under the
Plan be changed from the fiscal year ending June 30, 2009 to the fiscal year
ending June 30, 2010. The foregoing was approved by the board of directors as
the board of directors did not believe it would be appropriate to reward senior
management with bonuses during the current economic slowdown.
If actual
revenues, gross profit, or EBITDA for a particular fiscal year exceed the target
goals, each executive would be awarded additional eligible shares, up to an
amount no greater than 125% of the number of eligible shares. If the actual
revenues, gross profit, or EBITDA for a particular fiscal year are less than the
target goals, each executive would be awarded a lesser pro rata portion of the
number of eligible shares. If minimum target goals for revenues, gross profit,
or EBITDA for a particular fiscal year are not achieved, no eligible shares will
be awarded to each executive. Up to 952,298 shares of common stock were reserved
for issuance under the Plan.
Based
upon the financial results of the Company for the fiscal year ended June 30,
2007, the target goal (100%) relating to revenues was met and the minimum target
goals relating to gross profit and EBITDA were not met. Substantially all of the
e-Port® units sold during the fiscal year consisted of units pertaining to the
MasterCard PayPass seeding program with substantially reduced selling prices
resulting in reduced gross profit and EBITDA.
Management’s
goal was to have the maximum number of units deployed in the field as quickly as
possible. The Compensation Committee agreed with management that given the
current stage of the Company’s business, it was more beneficial to the Company
to maximize the number of e-Ports® in the field as soon as
possible.
As a
result, during September 2007, the Compensation Committee recommended to the
board of directors that the selling price of all the e-Ports® sold during the
fiscal year be “normalized” to the current retail price. This normalization
resulted in increased revenues, gross profit and EBITDA for the e-Port® units
sold in the MasterCard PayPass seeding program. The board of directors has
approved the recommendation of the Compensation Committee.
As a
result of the normalization, a higher than target revenue hurdle was met (110%),
and lower than target hurdles for each of gross profit (85%) and EBITDA (85%)
were also met, resulting in the issuance to the executive officers of a total of
241,249 shares under the Plan for the 2007 fiscal year rather than a total of
101,578 shares prior to the normalization. The specific allocation of the shares
among the executive officers is as follows: Mr. Jensen-169,641 shares; Mr.
Herbert- 51,028 shares; and Mr. DeMedio- 20,580 shares.
Based
upon the financial results of the Company for the fiscal year ended June 30,
2008, a higher amount than the target revenue hurdle was met (125%) and the
minimum target hurdles relating to gross profit and EBITDA were not met,
resulting in the vesting of a total of 126,973 shares under the Plan as of June
30, 2008. The specific allocation of the shares among the executive officers is
as follows: Mr. Jensen-89,285 shares; Mr. Herbert- 26,857 shares; and Mr.
DeMedio- 10,831 shares.
As was
the case in fiscal year 2007, during the 2008 fiscal year a portion of the
e-Port® units sold consisted of units pertaining to the MasterCard PayPass
seeding program with reduced selling prices resulting in reduced gross profit
and EBITDA. As a result, during September 2008, the Compensation Committee
recommended to the board of directors that the selling price of all the e-Ports®
sold during the fiscal year ended June 30, 2008 as part of the seeding program
be “normalized” to the current retail price. This normalization resulted in
increased gross profit and EBITDA for the e-Port® units sold in the MasterCard
PayPass seeding program. The board of directors has approved the recommendation
of the Compensation Committee.
As a
result of the normalization, a lower than target hurdle was met for gross profit
(85%), resulting in the issuance to the executive officers of a total of 191,729
shares under the Plan for the 2008 fiscal year rather than a total of 126,973
shares prior to the normalization. The specific allocation of the shares among
the executive officers is as follows: Mr. Jensen-134,820 shares; Mr. Herbert-
40,553 shares; and Mr. DeMedio- 16,356 shares.
It is
difficult for management to fully predict our unit sales for e-Ports® for the
2010 fiscal year. Based upon our current estimates, management believes that it
is likely that the Company would not meet the target (100%) goals established
under the Plan for the 2010 fiscal year relating to gross profit and EBITDA but
would meet the target (100%) goal established under the Plan for the 2010 fiscal
year relating to revenue.
Other
Benefits
During
the 2009 fiscal year, our health care, insurance and other employee benefits are
substantially the same for all our employees, including our executive officers.
We do maintain an automobile allowance program for each of our executive
officers as well as for Messrs. Sagady and Shirey.
Impact
of Taxation and Accounting Considerations on Executive Compensation
The
Compensation Committee and the Board of directors take into account tax and
accounting consequences of the compensation program and weigh these factors when
setting total compensation and determining the individual elements of any
executive officer’s compensation package.
As a
result of the normalization of the selling prices of the e-Ports® described
above in September 2007, certain target hurdles were met resulting in the
vesting of a total of 241,249 shares under the Plan for the 2007 fiscal year
rather than a total of 101,578 shares prior to the normalization. The value of
the number of the shares the executives may apply to tax withholding was in
excess of the minimum statutory obligation and, as a result the Plan is
classified as a liability award rather than an equity award. As such, during the
first quarter of fiscal year 2008, the Company reclassified the $599,311 related
to the 101,578 shares that was previously recorded in common stock to a
short-term share-based payment liability. As the price of the Company’s shares
was $8.45 on the date of the approval of the normalization, a charge of
$1,180,220 was also recorded to compensation expense, related to the additional
139,671 additional shares, with a corresponding amount to the short-term
share-based payment liability for a total share-based payment liability of
$1,779,531 as of September 21, 2007. On September 28, 2007, as the Company’s
share price was $8.38, the total share-based payment liability related to fiscal
year 2007 was $1,769,754 ($599,311 compensation expense in fiscal year 2007 and
$1,170,443 in the three months ended September 30, 2007). Of the 241,249 shares
vested for fiscal year 2007, the Company issued 225,249 shares of common stock
and the remaining 16,000 shares were exchanged by the executives and redeemed by
the Company to settle tax withholding obligations paid by the Company totaling
$134,080 in connection with the restricted stock bonuses previously awarded and
issued to them under their employment agreements. As a result of the fact that a
portion of the remaining 225,249 shares were subject to redemption at September
30, 2007, the Company had recorded the entire fair value of those remaining
shares as a short-term share-based payment liability as of September 30, 2007
totaling $1,635,674. On December 30, 2007 the redemption provision lapsed, no
further shares were redeemed and the final settlement resulted in a reduction of
the short-term share-based payment liability of $1,635,674, a reduction of
compensation expense of $446,452 and a credit to common stock of $1,189,222
(123,671 shares at $4.77 and 101,578 shares at $5.90), as the share price on the
date of settlement was $4.77.
As a
result of the normalization of the selling price of the e-Ports® described above
in September 2008, there is an additional charge of $287,517, as of September 3,
2008, required to be taken by our Company in connection with the additional
shares issued to our executives under the Plan. Of the total charge of
$1,043,006 to be taken by the Company on account of the shares awarded in
connection with the 2008 fiscal year, $755,489 is reflected in our financial
statements for the 2008 fiscal year and the balance of $287,517, as of September
3, 2008, is to be reflected in our financial statements in the first quarter of
the 2009 fiscal year. The Company will adjust the compensation expense related
to this award for changes in the fair value of this award until final settlement
occurs.
As a
result of the change of the last twelve month measuring period under the Plan
from the fiscal year ending June 30, 2009 to the fiscal year ending June 30,
2010, the short-term accrued share-based payment liability of $107,458 as of
December 31, 2008 was reversed, with a corresponding reduction to compensation
expense during the three months ended March 31, 2009.
The Plan
permits the executives to satisfy any income tax withholding obligations by
electing to reduce the number of shares otherwise issuable to them under the
Plan. For the fiscal year 2007 award, the executives did not elect to reduce the
number of shares issued under the Plan related to the income tax withholding
obligations on the Plan shares, however, Mr. Jensen and Mr. Herbert did elect to
exchange 16,000 shares to settle tax withholding obligations paid by the Company
totaling $134,080 in connection with the restricted stock bonuses previously
awarded and issued to them under their employment agreements. In connection with
the fiscal year 2008 award, on December 30, 2008, the executives elected to
cancel 57,118 of the 191,729 shares awarded to them to satisfy $113,093 of
related income tax withholding obligations in connection with the
shares.
The following table sets forth certain
information with respect to compensation paid or accrued by the Company during
the fiscal years ended June 30, 2009, June 30, 2008 and June 30, 2007 to each of
the executive officers and employees of the Company named
below:
Name and Principal Position
(a)
|
|
Fiscal Year
(b)
|
|
Salary
($)(3)
(c)
|
|
|
Bonus
($)(4)
(d)
|
|
|
Stock Awards
($)(5)
(e)
|
|
|
Option Awards
($)(6)
(f)
|
|
|
Non- Equity Incentive Plan
Compensation
($)
(g)
|
|
|
Change in Pension Value and Nonqualified Deferred
Compensation Earnings
($)
(h)
|
|
|
All Other Compensation
($)(7)
(i)
|
|
|
Total
($)
(j)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George
R. Jensen, Jr., Chief Executive Officer & Chairman of the
Board
|
|
2009
|
|
$ |
354,231 |
|
|
$ |
— |
|
|
$ |
578,559 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
27,075 |
|
|
$ |
959,865 |
|
|
|
2008
|
|
$ |
325,000 |
|
|
$ |
171,000 |
|
|
$ |
1,039,994 |
|
|
$ |
68,851 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
26,875 |
|
|
$ |
1,631,720 |
|
|
|
2007
|
|
$ |
325,000 |
|
|
$ |
— |
|
|
$ |
821,424 |
|
|
$ |
137,750 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,875 |
|
|
$ |
1,302,049 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
P. Herbert, Chief Operating Officer & President
|
|
2009
|
|
$ |
310,577 |
|
|
$ |
— |
|
|
$ |
404,518 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
27,075 |
|
|
$ |
742,170 |
|
|
|
2008
|
|
$ |
285,000 |
|
|
$ |
61,000 |
|
|
$ |
312,827 |
|
|
$ |
16,524 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
26,875 |
|
|
$ |
702,226 |
|
|
|
2007
|
|
$ |
285,000 |
|
|
$ |
— |
|
|
$ |
393,426 |
|
|
$ |
33,060 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,875 |
|
|
$ |
729,361 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
M. DeMedio, Chief Financial Officer
|
|
2009
|
|
$ |
195,000 |
|
|
$ |
— |
|
|
$ |
121,940 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
26,352 |
|
|
$ |
343,292 |
|
|
|
2008
|
|
$ |
187,499 |
|
|
$ |
18,000 |
|
|
$ |
126,170 |
|
|
$ |
6,425 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
24,849 |
|
|
$ |
362,943 |
|
|
|
2007
|
|
$ |
165,000 |
|
|
$ |
— |
|
|
$ |
51,124 |
|
|
$ |
26,355 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
17,875 |
|
|
$ |
260,354 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cary
Sagady, Sr. VP Network Solutions (1)
|
|
2009
|
|
$ |
187,084 |
|
|
$ |
29,839 |
|
|
$ |
65,003 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
18,242 |
|
|
$ |
300,168 |
|
|
|
2008
|
|
$ |
130,800 |
|
|
$ |
90,822 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
9,108 |
|
|
$ |
230,730 |
|
|
|
2007
|
|
$ |
125,400 |
|
|
$ |
— |
|
|
$ |
27,675 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
7,800 |
|
|
$ |
160,875 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
Shirey, VP ePort Connect Services (2)
|
|
2009
|
|
$ |
180,000 |
|
|
$ |
35,630 |
|
|
$ |
10,917 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
80,976 |
|
|
$ |
307,523 |
|
|
|
2008
|
|
$ |
145,385 |
|
|
$ |
— |
|
|
$ |
38,112 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
45,103 |
|
|
$ |
228,600 |
|
|
(1)
|
Employment
as Sr. VP of Network Solutions commenced on July, 2 2008. Prior to that
date, Mr. Sagady was VP of
Engineering.
|
|
(2)
|
Employment
as VP ePort Connect Services commenced on August 14,
2007.
|
|
(3)
|
Includes
Mr. Jensen’s election to receive one-half of his base salary in common
stock during the 2007 fiscal year. As a result, 22,080 restricted shares
were issued to Mr. Jensen on June 30, 2006 and recorded at $7.36 per share
of common stock for a total value of $162,500 during the fiscal year.
These shares vested as follows: 5,520 on July 1, 2006; 5,520 on October 1,
2006; 5,520 on January 1, 2007; and 5,520 on April 1,
2007
|
|
(4)
|
Represents
cash bonuses paid based upon such person’s performance during the fiscal
year.
|
|
(5)
|
Amounts
reported for fiscal year 2009 for Messrs. Jensen, Herbert and DeMedio
represent amounts earned under USA Technologies, Inc. Long-term Equity
Incentive Program as follows: 45,535 shares, 13,696 shares and 5,525
shares valued at $1.98 earned by Messrs. Jensen, Herbert and DeMedio,
respectively, in September 2008 on account of the 2008 fiscal year and
110,000 shares, 85,000 shares and 25,000 shares valued at $4.44 earned by
Messrs. Jensen, Herbert and DeMedio, respectively, related to the
execution of amendments to the respective officer’s employment agreement.
Fiscal year 2009 also includes 5,000 shares and 2,000 shares for Messrs.
Sagady and Shirey, respectively, per the terms of their employment
agreements, and 11,115 shares valued at $3.50 for Mr. Sagady issued as a
bonus.
|
Fiscal
year 2008 for Messrs. Jensen, Herbert and DeMedio represent amounts earned under
USA Technologies, Inc. Long-term Equity Incentive Program as follows: 88,613 and
9,601 shares valued at $4.77 and $8.38, respectively, earned by Mr. Jensen in
September 2007 on account of the 2007 fiscal year and 89,285 shares valued at
$5.95 earned by Mr. Jensen on June 30, 2008 on account of the 2008 fiscal year;
23,143 and 6,399 shares valued at $4.77 and $8.38, respectively, earned by Mr.
Herbert in September 2007 and 26,857 shares valued at $5.95 earned Mr. Herbert
on June 30, 2008 on account of the 2008 fiscal year; and 11,915 shares valued at
$4.77 earned by Mr. DeMedio in September 2007 and 10,831 shares valued at $5.95
earned by Mr. DeMedio on June 30, 2008 on account of the 2008 fiscal year.
Fiscal year 2008 also includes 2,000 shares for Mr. Shirey per the terms of his
employment agreement. Fiscal year 2007 includes 50,000 shares (25,000 vested on
January 1, 2007 and 25,000 vested on June 1, 2007) valued at $8.00 per share and
71,428 shares valued at $5.90 per share relating to the Long-Term Equity
Incentive Program for Mr. Jensen; 33,333 shares (16,666 vested on January 1,
2007 and 16,666 vested on June 1, 2007) valued at $8.00 and 21,485 shares valued
at $5.90 per share relating to the Long-Term Equity Incentive Program for Mr.
Herbert; 8,665 shares valued at $5.90 relating to the Long-Term Equity Incentive
Program for Mr. DeMedio; 4,500 shares for Mr. Sagady as a bonus.
|
(6)
|
Amounts
reported represent the dollar amount recognized for financial statement
reporting purposes in accordance with SFAS 123(R). The amounts may include
amounts from awards granted in prior years. The amounts shown exclude the
impact of estimated forfeitures related to service based vesting
conditions. See Note 12 to the Consolidated Financial
Statements.
|
|
(7)
|
All
other compensation for fiscal year 2009 includes the following: amounts
for Messrs. Jensen and Herbert include car allowance payments of $17,875
and Company matching contributions under our 401(k) Plan of $9,200;
amounts for Mr. DeMedio include car allowance payments of $17,875 and
Company matching contributions under our 401(k) Plan of $8,477; amounts
for Mr. Sagady include car allowance payments of $7,800 and Company
matching contributions under our 401(k) Plan of $10,442; and amounts for
Mr. Shirey include car allowance payments of $15,000 and relocation
payments of $65,976. Amounts reported for fiscal years 2007 and 2008
represent cash payments for car
allowances.
|
The table
below summarizes the amounts of awards granted to our named executive officers
during the fiscal year ended June 30, 2009:
|
|
|
|
Estimated Future Payouts Under Non-Equity
Incentive Plan Awards
|
|
Estimated Future Payouts Under Equity Incentive
Plan Awards
|
|
All Other Stock Awards: Number of Shares of Stock
or
|
|
All Other Option Awards: Number of Secur- ities
Under- lying
|
|
Exercise or Base Price of
Option
|
|
Grant Date Fair Value of Stock and Option
(1)
|
|
Name
(a)
|
|
Grant Date
(b)
|
|
Threshold
($)(c)
|
|
Target
($)(d)
|
|
Maximum
($)(e)
|
|
Threshold
(#)(f)
|
|
Target
(#)(g)
|
|
Maximum
(#)(h)
|
|
Units
(#)(i)
|
|
Options
(#)(j)
|
|
Awards
($)(k)
|
|
Awards
($)(l)
|
|
George
R. Jensen, Jr.
|
|
9/3/2008
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
110,000 |
|
|
— |
|
|
— |
|
$ |
488,400 |
|
Stephen
P. Herbert
|
|
9/3/2008
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
85,000 |
|
|
— |
|
|
— |
|
$ |
377,400 |
|
David
M. DeMedio
|
|
9/3/2008
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
25,000 |
|
|
— |
|
|
— |
|
$ |
111,000 |
|
Cary
Sagady
|
|
7/2/2008
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,000 |
|
|
— |
|
|
— |
|
$ |
26,100 |
|
|
|
4/30/2009
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,000 |
|
|
— |
|
|
— |
|
$ |
14,750 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
Amount represents the grant date fair value determined in accordance with FAS
123(R).
TOTAL OPTION EXERCISES AND STOCK VESTED
The
following table sets forth information regarding options exercised and shares of
common stock acquired upon vesting by our named executive officers and one
employee during fiscal 2009:
|
|
Option Awards
|
|
|
Stock Awards
|
|
Name
(a)
|
|
Number of Shares Acquired on Exercise
(#)
(b)
|
|
|
Value Realized on Exercise ($)
(c)
|
|
|
Number of Shares Acquired on Vesting
(#)
(d)
|
|
|
Value Realized on Vesting
($)(1)
(e)
|
|
George
R. Jensen, Jr.(2)
|
|
|
— |
|
|
$ |
— |
|
|
|
155,535 |
|
|
$ |
451,939 |
|
Stephen
P. Herbert(3)
|
|
|
— |
|
|
$ |
— |
|
|
|
98,696 |
|
|
$ |
307,078 |
|
David
M. DeMedio(4)
|
|
|
— |
|
|
$ |
— |
|
|
|
30,525 |
|
|
$ |
93,100 |
|
Cary
Sagady(5)
|
|
|
— |
|
|
$ |
— |
|
|
|
5,000 |
|
|
$ |
13,938 |
|
Bruce
Shirey(6)
|
|
|
— |
|
|
$ |
— |
|
|
|
2,000 |
|
|
$ |
8,900 |
|
(1)
|
For
awards classified as equity, the value equals number of shares multiplied
by the market value on the vesting date. For awards classified as
liabilities, the value equals the number of shares multiplied by the
market value on the settlement
date.
|
(2)
|
Represents
45,535 shares valued at $1.98 that vested on September 3, 2008; 36,000
shares valued at $4.15 that vested on September 22, 2008; 37,000 shares
valued at $2.70 that vested on January 15, 2009; and 37,000 shares valued
at $3.04 that vested on June 30,
2009.
|
(3)
|
Represents
13,696 shares valued at $1.98 that vested on September 3, 2008; 28,000
shares valued at $4.15 that vested on September 22, 2008; 28,000 shares
valued at $2.70 that vested on January 15, 2009; and 29,000 shares valued
at $3.04 that vested on June 30,
2009.
|
(4)
|
Represents
5,525 shares valued at $1.98 that vested on September 3, 2008; 8,000
shares valued at $4.15 that vested on September 22, 2008; 8,000 shares
valued at $2.70 that vested on January 15, 2009; and 9,000 shares valued
at $3.04 that vested on June 30,
2009.
|
(5)
|
Represents
1,250 shares valued at $4.14 that vested on September 30, 2008; 1,250
shares valued at $2.11 that vested on December 31, 2008; 1,250 shares
valued at $1.86 that vested on March 31, 2009; and 1,250 shares valued at
$3.04 that vested on June 30, 2009.
|
(6)
|
Represents
2,000 shares valued at $4.45 that vested on September 1,
2008.
|
The
following table shows information regarding unexercised stock options and
unvested equity awards granted to the executive officers as of the fiscal year
ended June 30, 2009:
Option Awards
|
|
Stock Awards
|
|
Name
(a)
|
|
Number of Securities Underlying Unexercised
Options(#) Exercisable
(b)
|
|
Number of Securities Underlying Unexer- cised
Options(#) Unexercis- able
(c)
|
|
Equity Incentive Plan Awards: Number of Securities
Underlying Unexercised Unearned Options(#)
(d)
|
|
Option Exercise Price($)
(e)
|
|
Option Expiration Date
(f)
|
|
Number of Shares or Units of Stock That Have Not
Vested(#)
(g)
|
|
Market Value of Shares or Units of Stock That Have
Not Vested($)
(h)
|
|
Equity Incentive Plan Awards: Number of Unearned
Shares, Units or Other Rights That Have Not Vested(#)
(i)
|
|
Equity Incentive Plan Awards: Market or Payout
Value of Unearned Shares, Units or Other Rights That Have Not
Vested($)
(j)
|
|
George
R. Jensen, Jr., Chief Executive Officer & Chairman of the Board
(1)
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
318,570 |
|
$ |
968,453 |
|
|
|
|
25,000 |
|
|
— |
|
|
— |
|
$ |
7.50 |
|
05/10/2011
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
25,000 |
|
|
— |
|
|
— |
|
$ |
7.50 |
|
06/28/2012
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
25,000 |
|
|
— |
|
|
— |
|
$ |
7.50 |
|
06/29/2013
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stephen
P. Herbert, Chief Operating Officer &
President
(1)
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
53,713 |
|
$ |
163,288 |
|
|
|
|
6,000 |
|
|
— |
|
|
— |
|
$ |
7.50 |
|
05/10/2011
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
6,000 |
|
|
— |
|
|
— |
|
$ |
7.50 |
|
06/28/2012
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
6,000 |
|
|
— |
|
|
— |
|
$ |
7.50 |
|
06/29/2013
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
David
M. DeMedio, Chief Financial Officer (1)
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
21,663 |
|
$ |
65,856 |
|
|
|
|
2,334 |
|
|
— |
|
|
— |
|
$ |
7.50 |
|
05/10/2011
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
2,333 |
|
|
— |
|
|
— |
|
$ |
7.50 |
|
06/28/2012
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
2,333 |
|
|
— |
|
|
— |
|
$ |
7.50 |
|
06/29/2013
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cary
Sagady, Sr. VP Network
Solutions
(1)
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
5,000 |
|
$ |
15,200 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bruce
Shirey, VP ePort Connect Services (1)
|
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
2,000 |
|
$ |
6,080 |
|
(1)
|
Reflects
178,570 shares issuable to Mr. Jensen under the Long Term Equity Incentive
Program on account of fiscal year 2010 assuming the target performance
goals are attained, and 140,000 shares issuable to Mr. Jensen under his
employment agreement upon the occurrence of a USA Transaction. Reflects
53,713 shares issuable to Mr. Herbert and 21,663 shares issuable to Mr.
DeMedio on account of fiscal year 2010 under the Long Term Equity
Incentive Program assuming the target performance goals are attained. The
options expiring on May 10, 2011, June 28, 2012, and June 29, 2013 vested
on May 11, 2006, June 30, 2007 and June 29, 2008, respectively. Reflects
shares issuable under Messrs. Sagady and Shirey’s employment agreements
that have not vested as of June 30,
2009.
|
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION
PLANS
As of
June 30, 2009, equity securities authorized for issuance by the Company with
respect to compensation plans were as follows:
Plan category
|
|
Number of Securities to be issued upon exercises
of outstanding options and warrants
(a)
|
|
|
Weighted average exercise price of outstanding
options and warrants
(b)
|
|
|
Number of securities remaining available for
future issuance (excluding securities reflected in
column(a))
(c)
|
|
Equity
compensation plans approved by security holders
|
|
|
— |
|
|
|
— |
|
|
|
60,747 |
(3) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Equity
compensation plans not approved by security holders
|
|
|
160,000 |
(1) |
|
$ |
7.52 |
|
|
|
457,433 |
(2) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
160,000 |
|
|
$ |
7.52 |
|
|
|
518,180 |
|
1)
Represents stock options outstanding as of June 30, 2009 for the purchase of
shares of Common Stock of the Company expiring at various times from April 2011
through June 2013. All such options were granted to employees and directors of
the Company. Exercise prices for all the options outstanding were at prices that
were either equal to or greater than the market price of the Company’s Common
Stock on the dates the options were granted. Shareholder approval of these
options was not required because the options were granted prior to the Company’s
shares being listed on the NASDAQ Stock Market LLC.
2)
Represents 140,000 shares of Common Stock issuable to the Company’s Chief
Executive Officer under the terms of his employment agreement plus 317,433
shares of Common Stock issuable under the Long-Term Equity Incentive Program
adopted in February 2007. Shareholder approval of the foregoing was not required
because each of the foregoing was adopted by the Company prior to the Company’s
shares being listed on the NASDAQ Stock Market LLC.
3)
Represents shares of Common Stock issuable under the Company’s 2008 Stock
Incentive Plan as approved by shareholders on February 28, 2008 for use in
compensating employees, directors and consultants through the issuance of shares
of Common Stock of the Company. The shares have been registered with the
Securities and Exchange Commission as an employee benefit plan under Form
S-8.
George R. Jensen,
Jr.
On May
11, 2006, the Company and Mr. Jensen entered into an Amended and Restated
Employment Agreement pursuant to which the term of Mr. Jensen’s employment with
the Company was extended to June 30, 2009. Effective May 11, 2006, Mr. Jensen’s
base salary was increased to $325,000 per annum. The Agreement requires Mr.
Jensen to devote his full time and attention to the business and affairs of the
Company, and obligates him not to engage in any investments or activities which
would compete with the Company during the term of the Agreement and for a period
of one year thereafter. Mr. Jensen was granted the right (exercisable at any
time prior to the 60th day following the commencement of each fiscal year) to
elect to have one-half of his base salary for each of the fiscal years ending
June 30, 2007, June 30, 2008, and June 30, 2009 paid in shares of common stock
rather than cash. Mr. Jensen has elected to receive shares in lieu of cash for
one-half of his base salary for the fiscal year ending June 30, 2007. As a
result of such election, 22,080 shares will be issued to him, which will vest as
follows: 5,520 on July 1, 2006; 5,520 on October 1, 2006; 5,520 on January 1,
2007; and 5,520 on April 1, 2007. Mr. Jensen was also granted 75,000 shares of
common stock and an additional amount of options to purchase up to 75,000 shares
of common stock at $7.50 per share. The 75,000 shares of common stock vest as
follows: 25,000 on June 1, 2006; 25,000 on January 1, 2007; and 25,000 on June
1, 2007. The options vest as follows: 25,000 on May 11, 2006; 25,000 on June 30,
2007; and 25,000 on June 30, 2008. The options may be exercised at any time
within 5 years of vesting. In October 2006, the Company granted to Mr. Jensen
piggyback registration rights under the 1933 Act for the shares described above
for a period of five years following the vesting of any such shares and the
shares underlying any of the options described above for a period of five years
following the vesting of any such options.
During
September 2008, Mr. Jensen and the Company entered into an amendment to his
employment agreement pursuant to which the term of Mr. Jensen’s employment with
the Company was extended from June 30, 2009 until June 30, 2011, and his annual
base salary was increased to $365,000 effective October 1, 2008. In addition,
Mr. Jensen was also granted 110,000 shares of common stock under the 2008 Stock
Incentive Plan which vest as follows: 36,000 on September 15, 2008; 37,000 on
January 15, 2009; and 37,000 on June 30, 2009.
On
September 24, 2009, Mr. Jensen and the Company entered into an Amended and
Restated Employment Agreement which replaced his prior employment agreement. The
Agreement extended the term of Mr. Jensen’s employment with the Company from
June 30, 2011 until September 30, 2012 and will automatically continue from year
to year thereafter unless terminated as of the end of the original term or any
such one year renewal period by the Company or Mr. Jensen by at least 90-days
notice. The period during which Mr. Jensen has agreed not to compete with the
Company following his termination of employment has been increased from one year
to two years. Mr. Jensen was granted 30,000 shares of common stock under the
2008 Stock Incentive Plan which vest as follows: 10,000 on October 1, 2009;
10,000 on April 1, 2010; and 10,000 on September 30, 2010. The Company has
agreed to obtain and pay the premiums for a term life insurance policy in the
amount of $2,000,000 on the life of Mr. Jensen while he is employed by the
Company. Mr. Jensen has the right to designate the beneficiary of the policy.
The Company has agreed to obtain and pay the premiums for a supplemental long
term disability policy covering Mr. Jensen over and above the existing long-term
group disability plan of the Company. If he shall become disabled while employed
by the Company, the policy would provide for monthly disability coverage of up
to 65% of his monthly base compensation payable to age 65 or death. If the
policy would not provide at least 65% of his monthly base salary, then the
Company has agreed to make monthly payments to Mr. Jensen in an amount equal to
the difference between the monthly benefit provided under such policy and 65% of
Mr. Jensen’s monthly base salary; provided, however, that the Company’s total
obligation shall not exceed $110,000. Mr. Jensen’s base salary was not changed
from the prior employment agreement.
The
September 24, 2009 Agreement also provides that if Mr. Jensen would terminate
his employment with the Company for good reason (as defined in the Agreement),
or if the Company would terminate his employment without cause (as defined in
the Agreement), then the Company would continue to pay to him his then annual
base salary for a period of two years following the termination of his
employment (or, if greater, the remaining term of his employment). In addition,
upon any such termination of Mr. Jensen’s employment, the Company has agreed, at
its cost, to continue to provide Mr. Jensen with health insurance benefits for a
period of 2 years substantially similar to those which he had been receiving
immediately prior to the date of termination. The term good reason as defined in
the Agreement, includes: (A) a material breach of the terms of the Agreement by
the Company; (B) the assignment by the Company to Mr. Jensen of duties
materially inconsistent with his authorities, duties, responsibilities, and
status as the Chief Executive Officer of the Company, or a material reduction or
alteration in the nature or status of his authority, duties, or
responsibilities; (C) the Company materially reduces Mr. Jensen’s rate of annual
base salary below the level in effect immediately before such reduction; or (D)
a material reduction by the Company in the kind or level of employee benefits to
which Mr. Jensen is entitled immediately prior to such reduction with the result
that his overall benefit package is significantly reduced unless such failure to
continue a plan, policy, practice or arrangement pertains to all plan
participants generally. As a condition to Mr. Jensen receiving any payments or
benefits upon his termination of his employment for good reason, Mr. Jensen
shall have executed and delivered (and not revoked) a release of any and all
claims, suits, or causes of action against the Company and its affiliates in
form reasonably acceptable to the Company.
The
September 24, 2009 Agreement also provides that as a condition of the
consummation of a USA Transaction (as defined in the Agreement), the successor
to the Company’s business or assets would agree to assume and perform Mr.
Jensen’s employment agreement. If any such successor would not do so, Mr.
Jensen’s employment would terminate on the date of the consummation of the USA
Transaction, and the Company would continue to pay to Mr. Jensen his then annual
base salary for a period of two years following the termination of his
employment (or, if greater, the remaining term of his employment) and, at its
cost, for a period of two years would continue to provide Mr. Jensen with health
insurance benefits substantially similar to those which he is receiving
immediately prior to the date of termination.
As
provided in his prior employment agreement, upon the occurrence of a USA
Transaction, the Company will issue to Mr. Jensen 140,000 shares of common stock
subject to adjustment for stock splits or combinations (“Jensen Shares”). Mr.
Jensen is not required to pay any additional consideration for the Jensen
Shares. At the time of any USA Transaction, all of the Jensen Shares are
automatically deemed to be issued and outstanding immediately prior to any USA
Transaction, and are entitled to be treated as any other issued and outstanding
shares of common stock in connection with such USA Transaction. The Jensen
Shares are irrevocable and fully vested, have no expiration date, and will not
be affected by the termination of Mr. Jensen’s employment with the Company for
any reason whatsoever.
The term
USA Transaction is defined as (i) the acquisition of fifty-one percent or more
of the then outstanding voting securities entitled to vote generally in the
election of Directors of the Company by any person, entity or group, or (ii) the
approval by the shareholders of the Company of a reorganization, merger,
consolidation, liquidation, or dissolution of the Company, or the sale,
transfer, lease or other disposition of all or substantially all of the assets
of the Company, or (iii) a change in the composition of the Board of Directors
of the Company over a period of twelve (12) months or less such that the
continuing directors fail to constitute a majority of the
Board.
Stephen P.
Herbert
On May
11, 2006, the Company and Mr. Herbert entered into an Amended and Restated
Employment Agreement pursuant to which the term of Mr. Herbert’s employment with
the Company was extended to June 30, 2009. Effective May 11, 2006, Mr. Herbert’s
base salary was increased to $285,000 per annum. The Agreement requires Mr.
Herbert to devote his full time and attention to the business and affairs of the
Company and obligates him not to engage in any investments or activities which
would compete with the Company during the term of the agreement and for a period
of one year thereafter. In the event that a USA Transaction (as defined in Mr.
Herbert’s employment agreement) shall occur, then Mr. Herbert has the right to
terminate his agreement upon 30 days notice to USA. Mr. Herbert was granted
50,000 shares of common stock and an additional amount of options to purchase up
to 18,000 shares of common stock at $7.50 per share. The 50,000 shares of common
stock vest as follows: 16,667 on June 1, 2006; 16,667 on January 1, 2007; and
16,666 on June 1, 2007. The options vest as follows: 6,000 on May 11, 2006;
6,000 on June 30, 2007; and 6,000 on June 30, 2008. The options may be exercised
at any time within 5 years of vesting. In October 2006, the Company granted to
Mr. Herbert piggyback registration rights under the 1933 Act for the shares
described above for a period of five years following the vesting of any such
shares and the shares underlying any of the options described above for a period
of five years following the vesting of any such options.
During
September 2008, Mr. Herbert and the Company entered into an amendment to his
employment agreement pursuant to which the term of Mr. Herbert’s employment with
the Company was extended from June 30, 2009 until June 30, 2011, and his annual
base salary was increased to $320,000 effective October 1, 2008. In addition,
Mr. Herbert was also granted 85,000 shares of common stock under the 2008 Stock
Incentive Plan which vest as follows: 28,000 on September 15, 2008; 28,000 on
January 15, 2009; and 29,000 on June 30, 2009.
On
September 24, 2009, Mr. Herbert and the Company entered into an Amended and
Restated Employment Agreement which replaced his prior employment agreement. The
Agreement extended the term of Mr. Herbert’s employment with the Company from
June 30, 2011 until September 30, 2012 and will automatically continue from year
to year thereafter unless terminated as of the end of the original term or any
such one year renewal period by the Company or Mr. Herbert by at least 90-days
notice. The period during which Mr. Herbert has agreed not to compete with the
Company following his termination of employment has been increased from one year
to two years. Mr. Herbert was granted 9,000 shares of common stock under the
2008 Stock Incentive Plan which vest as follows: 3,000 on October 1, 2009; 3,000
on April 1, 2010; and 3,000 on September 30, 2010. The Company has agreed to
obtain and pay the premiums for a term life insurance policy in the amount of
$1,500,000 on the life of Mr. Herbert while he is employed by the Company. Mr.
Herbert has the right to designate the beneficiary of the policy. The Company
has agreed to obtain and pay the premiums for a supplemental long term
disability policy covering Mr. Herbert over and above the existing long-term
group disability plan of the Company. If he shall become disabled while employed
by the Company, the policy would provide for monthly disability coverage of up
to 65% of his monthly base compensation payable to age 65 or death. Mr.
Herbert’s base salary was not changed from the prior employment
agreement.
The
September 24, 2009 Agreement also provides that if Mr. Herbert would terminate
his employment with the Company for good reason (as defined in the Agreement),
or if the Company would terminate his employment without cause (as defined in
the Agreement), then the Company would continue to pay to him his then annual
base salary for a period of two years following the termination of his
employment (or, if greater, the remaining term of his employment). In addition,
upon any such termination of Mr. Herbert’s employment, the Company has agreed,
at its cost, to continue to provide Mr. Herbert with health insurance benefits
for a period of 2 years substantially similar to those which he had been
receiving immediately prior to the date of termination. The term good reason as
defined in the Agreement, includes: (A) a material breach of the terms of the
Agreement by the Company; (B) the assignment by the Company to Mr. Herbert of
duties materially inconsistent with his authorities, duties, or
responsibilities, or a material reduction or alteration in the nature or status
of his authority, duties, or responsibilities; (C) the Company materially
reduces Mr. Herbert’s rate of annual base salary below the level in effect
immediately before such reduction; or (D) a material reduction by the Company in
the kind or level of employee benefits to which Mr. Herbert is entitled
immediately prior to such reduction with the result that his overall benefit
package is significantly reduced unless such failure to continue a plan, policy,
practice or arrangement pertains to all plan participants generally. As a
condition to Mr. Herbert receiving any payments or benefits upon his termination
of his employment for good reason, Mr. Herbert shall have executed and delivered
(and not revoked) a release of any and all claims, suits, or causes of action
against the Company and its affiliates in form reasonably acceptable to the
Company.
The
September 24, 2009 Agreement also provides that as a condition of the
consummation of a USA Transaction (as defined in the Agreement), the successor
to the Company’s business or assets would agree to assume and perform Mr.
Herbert’s employment agreement. If any such successor would not do so, Mr.
Herbert’s employment would terminate on the date of consummation of the USA
Transaction, and the Company would continue to pay to Mr. Herbert his then base
salary for a period of two years following the termination of his employment
(or, if greater, the remaining term of his employment), and, at its cost, for a
period of two years would continue to provide Mr. Herbert with health insurance
benefits substantially similar to those which he is receiving immediately prior
to the date of termination. The provision of Mr. Herbert’s prior employment
agreement that granted him the right to terminate his employment with the
Company in the event of a USA Transaction has been revoked.
David M.
DeMedio
On May
11, 2006, the Company and Mr. DeMedio entered into an amendment to his
Employment Agreement pursuant to which the term of Mr. DeMedio’s employment with
the Company was extended to June 30, 2008. Effective May 11, 2006, Mr. DeMedio’s
base salary was increased to $165,000 per annum and effective October 1, 2007,
his base salary was increased to $195,000 per annum. Mr. DeMedio was granted
options to purchase up to 7,000 shares of common stock at $7.50 per share. The
options vest as follows: 2,334 on May 11, 2006; 2,333 on June 30, 2007; and
2,333 on June 30, 2008. The options may be exercised at any time within 5 years
of vesting. In October 2006, the Company granted to Mr. DeMedio piggyback
registration rights under the 1933 Act for the shares underlying any of the
options described above for a period of five years following the vesting of any
such options. In the event that a USA Transaction (as defined in Mr. Jensen’s
employment agreement) shall occur, then Mr. DeMedio has the right to terminate
his agreement upon 30 days notice to the Company.
During
September 2008, Mr. DeMedio and the Company entered into an amendment to his
employment agreement pursuant to which he was granted 25,000 shares of common
stock under the 2008 Stock Incentive Plan which vest as follows: 8,000 on
September 15, 2008; 8,000 on January 15, 2009; and 9,000 on June 30,
2009.
On
September 24, 2009, the Company agreed to obtain and pay the premiums for a term
life insurance policy in the amount of $750,000 on the life of Mr. DeMedio while
he is employed by the Company. Mr. DeMedio has the right to designate the
beneficiary of the policy. The Company has agreed to obtain and pay the premiums
for a supplemental long term disability policy covering Mr. DeMedio over and
above the existing long-term group disability plan of the Company. If he shall
become disabled while employed by the Company, the policy would provide for
monthly disability coverage of up to 65% of his monthly base compensation
payable to age 65 or death. If Mr. DeMedio’s employment with the Company would
be terminated without cause, the Company has agreed, at its cost, to continue to
provide Mr. DeMedio with health insurance benefits substantially similar to
those which he is receiving immediately prior to the date of termination for a
one year period following such termination.
As
described above and herein, each of the employment agreements of our executive
officers include provisions for the payment and/or the provision of benefits to
the executives upon termination of employment under certain conditions or a USA
Transaction.
The term
USA Transaction means: (i) the acquisition of fifty-one percent or more of the
then outstanding voting securities entitled to vote generally in the election of
Directors of the Company by any person, entity or group, or (ii) the approval by
the shareholders of the Company of a reorganization, merger, consolidation,
liquidation, or dissolution of the Company, or the sale, transfer, lease or
other disposition of all or substantially all of the assets of the Company, or
(iii) a change in the composition of the Board of Directors of the Company over
a period of twelve (12) months or less such that the continuing directors fail
to constitute a majority of the Board.
Each of
the executive officer’s employment agreements provides that upon the occurrence
of a USA Transaction, each such executive officer shall be awarded a specified
number of shares under the Long Term Equity Incentive Program for each of the
fiscal years that has not been completed as of the date of such USA Transaction
provided that each such executive officer is an employee of the Company on the
date of the USA Transaction. In addition, each executive officer’s employment
agreement provides that upon the executive officer’s termination of employment
for any reason other than for cause, including death, disability, or voluntary
resignation, the executive officer will be eligible to earn shares under the
Plan for the fiscal year during which such termination occurred, but will not be
eligible to earn shares for any fiscal year following the fiscal year during
which the termination occurred.
The
following table describes the stock awards issuable by us to each of our
executive officers upon the occurrence of a USA Transaction assuming that such
USA Transaction occurred on June 30, 2009, when the closing price per share of
the Company’s common stock was $3.04:
Name
|
|
Upon Occurrence Of USA
Transaction
|
|
George
R. Jensen, Jr.
|
|
$ |
968,453 |
(1) |
Stephen
P. Herbert
|
|
$ |
163,291 |
(2) |
David
M. DeMedio
|
|
$ |
65,859 |
(3) |
|
(1)
|
Represents
(i) 178,570 shares issuable to Mr. Jensen for the fiscal year ending June
30, 2010 pursuant to the Long-Term Equity Incentive Program; and (ii)
140,000 shares issuable to Mr. Jensen upon the occurrence of a USA
Transaction.
|
|
(2)
|
Represents
53,714 shares issuable to Mr. Herbert for the fiscal year ending June 30,
2010 pursuant to the Company’s Long-Term Equity Incentive
Program.
|
|
(3)
|
Represents
21,664 shares issuable to Mr. DeMedio for the fiscal year ending June 30,
2010 pursuant to the Company’s Long-Term Equity Incentive
Program.
|
As
described above under “Executive Employment Agreements”, the September 24, 2009
employment agreement between the Company and Mr. Jensen provides that the
Company is required to provide Mr. Jensen with certain payments and benefits
upon the termination by the Company of his employment without cause or upon the
termination by Mr. Jensen of his employment for good reason or upon termination
of his employment if a successor to the Company’s business or assets does not
agree to assume and perform his employment agreement as a condition to the
consummation of a USA Transaction. Assuming that any such termination occurred
on June 30, 2009, and these provisions had been in effect on such date, and
assuming there would be less than two years remaining in his term of employment,
Mr. Jensen would receive an aggregate cash payment of twice his annual base
salary or $730,000, and the Company would pay health insurance premiums for a
two year period following termination in the aggregate amount of $28,296. The
aforesaid premium amount is based on an estimated monthly premium of
$1,179.
As
described above under “Executive Employment Agreements”, the September 24, 2009
employment agreement between the Company and Mr. Herbert provides that the
Company is required to provide Mr. Herbert with certain payments and benefits
upon the termination by the Company of his employment without cause or upon the
termination by Mr. Herbert of his employment for good reason or upon termination
of his employment if a successor to the Company’s business or assets does not
agree to assume and perform his employment agreement as a condition to the
consummation of a USA Transaction. Assuming that any such termination occurred
on June 30, 2009, and these provisions had been in effect on such date, and
assuming there would be less than two years remaining in his term of employment,
Mr. Herbert would receive an aggregate cash payment of twice his annual base
salary or $640,000, and the Company would pay health insurance premiums for a
two year period following termination in the aggregate amount of $54,744. The
aforesaid premium amount is based on an estimated monthly premium of
$2,281.
As
described above under “Executive Employment Agreements”, if Mr. DeMedio’s
employment with the Company would be terminated by the Company without cause,
the Company would pay health insurance premiums for a one year period following
termination in the aggregate amount of $14,148. The aforesaid premium amount is
based on an estimated monthly premium of $1,179.
The
August 2007 employment agreement of Bruce Shirey provides that upon the
termination or expiration of his employment with the Company for any reason
whatsoever (other than his voluntary resignation), he is entitled to receive a
severance payment equal to one times his then annual base salary payable in
twelve equal monthly installments. Assuming that Mr. Shirey’s employment with
the Company had so terminated as of June 30, 2009, the Company would be
obligated to pay him an aggregate of $180,000.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Exchange Act requires the Company’s directors and executive
officers, and persons who own more than 10% of the Company’s Common Stock, to
file with the Securities and Exchange Commission reports of ownership and
changes in ownership of Common Stock. Officers, directors and greater than 10%
beneficial owners are required by Securities and Exchange Commission regulations
to furnish the Company with copies of all Section 16(a) forms they
file.
Stephen
P. Herbert and George R. Jensen, Jr. each filed two late Form 4s, and David M.
DeMedio filed one late Form 4 during the 2009 fiscal year.
During
the years ended June 30, 2009 and 2008, the Company incurred approximately
$438,000 and $317,000, respectively, in connection with legal services provided
by Lurio & Associates, P.C. Douglas Lurio is the President and owner of
Lurio & Associates, P.C. and is a member of the Company’s board of
directors. At June 30, 2009 and 2008, approximately $30,000 and $27,000,
respectively, of the Company’s accrued expenses were due to this Board
member.
REVIEW,
APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED
PERSONS
Our
policy is that all related party transactions, which are required to be
disclosed under Item 404 of Regulation S-K promulgated under the Securities Act
of 1933, as amended, are to be reviewed and approved by the Audit Committee for
any possible conflicts of interest. This policy is evidenced in the Charter of
the Audit Committee of the Board of Directors of the Company.
Shareholder proposals submitted pursuant to
Rule 14a-8 under the Exchange Act for
inclusion in the Company’s proxy statement for its 2011
Annual Meeting of Shareholders must be received by the
Secretary of the Company at the principal offices of the Company no later than
June 30, 2010, which is 120 days prior to the first anniversary of the mailing
date of this proxy statement. However, if the date of the 2011 Annual Meeting
shall be changed by more than 30 days from the date of the previous year’s
meeting, then the deadline is a reasonable time before the Company begins to
print and send its proxy materials.
If a
shareholder who wishes to present a proposal at the 2011 Annual Meeting but does
not intend to have such proposal included in the Company’s proxy statement, and
such proposal is properly brought before the 2011 Annual Meeting, then under the
Rule 14a-4 under the Exchange Act, the proxies solicited by management with
respect to the 2011 Annual Meeting will confer discretionary voting authority
with respect to the proposal if the shareholder has not provided notice of the
proposal by September 13, 2010 (or if the date of the meeting has changed more
than 30 days from the prior year, a reasonable time before the Company sends its
proxy materials). The persons designated in the Company’s proxy card will be
granted discretionary voting authority with respect to any shareholder proposal
with respect to which the Company does not receive timely notice.
In
addition to the SEC’s proxy rules, our Bylaws provide certain requirements that
must be met for business (including nomination of directors) to be properly
brought before an annual meeting of shareholders. Under the Company’s Bylaws,
for shareholder proposals to be properly brought before an annual meeting by a
shareholder, a shareholder’s notice must be received by the secretary at the
principal executive offices of the corporation not later than the 60th day nor
earlier than the 90th day prior to the first anniversary of the preceding year’s
annual meeting; provided, however, that in the event that the date of the annual
meeting is more than 30 days before or more than 60 days after such anniversary
date, notice by the shareholder must be so received not earlier than the 90th
day prior to the annual meeting and not later than the later of (i) the 60th day
prior to the annual meeting, or (ii) the 10th day following (x) the date on
which public announcement of the date of the meeting is first made by the
corporation or (y) the date notice of the meeting is first mailed to
shareholders.
HOUSEHOLDING OF ANNUAL MEETING MATERIALS
The
Company may satisfy SEC rules regarding delivery of the Notice of Internet
Availability, proxy statements and annual reports by delivering a single copy of
these materials to an address shared by two or more Company shareholders. This
delivery method is referred to as "householding" and can result in meaningful
cost savings for the Company. In order to take advantage of this opportunity,
the Company has delivered only one Notice of Internet Availability to multiple
shareholders who share an address and one proxy statement and annual report to
multiple shareholders who share an address, and who do not participate in
electronic delivery of proxy materials, unless contrary instructions were
received from impacted shareholders prior to the mailing date. We undertake to
deliver promptly upon written or oral request a separate copy of the proxy
statement and/or annual report, as requested, to a shareholder at a shared
address to which a single copy of these documents was delivered. If you hold
shares as a registered shareholder and prefer to receive separate copies of a
proxy statement or annual report either now or in the future, please contact us
at 100 Deerfield Lane, Suite 140, Malvern, Pennsylvania 19355, or phone number,
610-989-0340. If your shares are held through a broker or bank and you prefer to
receive separate copies of a proxy statement or annual report either now or in
the future, please contact such broker or bank.
We
will provide without charge to each person solicited by this proxy statement,
upon the written request of any such person, a copy of our Annual Report on Form
10-K for the fiscal year ended June 30, 2009, as filed with the Securities and
Exchange Commission, including the financial statements and exhibits to the Form
10-K. Requests for copies of the Form 10-K should be directed to Investor
Relations Department, USA Technologies, Inc., Suite 140, 100 Deerfield Lane,
Malvern, Pennsylvania 19355.
You may
review our filings with the Securities and Exchange Commission by visiting our
website at www.usatech.com.
|
By
Order of the Board of Directors,
|
|
|
October
27, 2009
|
/s/ George R. Jensen,
Jr.
|
|
GEORGE
R. JENSEN, JR.
|
|
Chairman
and Chief Executive Officer
|
APPENDIX
“A”
USA
TECHNOLOGIES, INC.
2010
STOCK INCENTIVE PLAN
1.
Purpose.
The purpose of the USA Technologies, Inc. 2010 Stock Incentive Plan is to
provide an incentive to Employees, Consultants and Directors of the Company who
are in a position to contribute materially to the long-term success of the
Company, to increase their interest in the Company’s welfare, and to aid in
gaining the services of Employees, Consultants and Directors of outstanding
ability who will contribute to the Company’s success.
2.
Definitions.
2.1
"Award" means an award of Stock under the
Plan.
2.2
"Board" means the Board of Directors of
USA.
2.3
"Code" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code shall include any successor to such
section.
2.4
"Committee" means the committee designated by the Board to
administer the Plan under Section 4; provided, however, that if an Award is to
be made to an Employee who is an executive officer of USA or to a Director of
USA, the term “Committee” shall mean the compensation committee of USA and any
award to be made to any such executive officer or Director shall be recommended
by the compensation committee and approved by the Directors of USA.
2.5
"Common Stock" means USA common stock, no par value per share, or such
other class or kind of shares of capital stock or other securities as may result
from the application of Section 7 hereof.
2.6
"Company" means USA and any successor thereof.
2.7
"Consultant" means a consultant retained to provide bona fide services to, and
who is not an employee of USA.
2.8
"Director" means each director of USA who is not an employee of
USA.
2.9
"Employee" means an officer or employee of the Company including a director who
is such an employee.
2.10 "Fair
Market Value" means, on any given date, the mean between the high and low prices
of actual sales of Common Stock on the principal national securities exchange on
which the Common Stock is listed on such date, or, if the Common Stock was not
so listed, the average closing bid price of the stock for each of the five
trading days prior to such date.
2.11 "Holder"
means an Employee, Director or Consultant to whom an Award is made.
2.12 "USA"
means USA Technologies, Inc., a Pennsylvania corporation and any successor
thereto.
2.13 "1933
Act" means the Securities Act of 1933, as amended.
2.14 "Plan"
means the USA 2010 Stock Incentive Plan herein set forth, as amended from time
to time.
2.15 "Stock"
means Common Stock awarded by the Committee under Section 6 of the
Plan.
2.16 "SEC"
means the United States Securities and Exchange Commission.
2.17 “Stock
Award Agreement” means a Stock Award Agreement evidencing an Award granted under
the Plan.
3.
Eligibility.
Any Employee, Director or Consultant is eligible to receive an
Award.
4.
Administration
of Plan.
4.1
The Plan shall be administered and interpreted by the Committee, which shall
have full authority to act in selecting Employees, Directors and Consultants to
whom Awards will be made, in determining the type and amount of Awards to be
granted to each such Holder, the terms and conditions of Awards and the terms of
agreements which will be entered into with Holders in connection with Awards.
The Committee shall be appointed by the Board and shall have at least one member
and shall act unanimously in all matters.
4.2
The Committee’s powers shall include, but not be limited to, the power to
determine whether, to what extent and under what circumstances an Award is
made.
4.3
The Committee shall have the power to adopt regulations for carrying out the
Plan and to make such changes in such regulations as it shall from time to time
deem advisable. The Committee shall have the power unilaterally and without
approval of a Holder to amend any existing Award in order to carry out the
purposes of the Plan so long as such amendment does not deprive the Holder of
any benefit granted by the Award and so long as the amended Award comports with
the terms of the Plan. Amendments adverse to the interests of the Holder must be
approved by the Holder. Any interpretation by the Committee of the terms and
provisions of the Plan and the administration thereof, and all action taken by
the Committee, shall be final and binding on Plan participants.
5.
Shares of
Stock Subject to the Plan.
5.1
Subject to adjustment as provided in Section 7, the
total number of shares of Common Stock available for Awards under the Plan shall
be 300,000 shares.
5.2
Any shares issued hereunder may consist, in whole or in part,
of authorized and unissued shares or treasury shares. If any shares subject to
any Award granted hereunder are forfeited or such Award otherwise terminates
without the issuance of such shares, the shares subject to such Award, to the
extent of any such forfeiture or termination, shall again be available for
Awards under the Plan.
6.
Stock.
An Award
of Stock is a grant by the Company of a specified number of shares of Common
Stock to the Holder, which shares may be subject to forfeiture upon the
happening of specified events. Such an Award may be subject to the following
terms and conditions:
6.1
An Award of Stock may be evidenced by a Stock Award Agreement.
Such agreements shall conform to the requirements of the Plan and may contain
such other provisions as the Committee shall deem advisable.
6.2
Upon determination of the number of shares of Stock to be granted to
the Holder, the Committee shall direct that a certificate or certificates
representing the number of shares of Common Stock be issued to the Holder with
the Holder designated as the registered owner.
6.3
The Committee may condition the grant of an Award of Stock upon the
Holder’s achievement of one or more performance goal(s) specified in the Stock
Award Agreement. If the Holder fails to achieve the specified performance
goal(s), the Committee shall not grant the Stock to the Holder, or the Holder
shall forfeit the Award of Stock and the Common Stock shall be forfeited to the
Company.
6.4
The Stock Award Agreement, if any, shall specify the performance, employment or
other conditions (including termination of employment on account of death,
disability, retirement or other cause) under which the Stock may be forfeited to
the Company.
6.5
The Stock Award Agreement may also contain (a) an agreement not to compete with
the Company and its subsidiaries which shall become effective as of the date of
the grant of the Award and remain in effect for a specified period of time
following termination of the Holder’s employment with or affiliation with the
Company; (b) an agreement to cancel any employment agreement, fringe benefit or
compensation arrangement in effect between the Company and the Holder; and (c)
an agreement to retain the confidentiality of certain information.
7.
Adjustments
Upon Changes in Capitalization. In the event of a reorganization,
recapitalization, stock split, spin-off, split-off, split-up, stock dividend,
issuance of stock rights, combination of shares, merger, consolidation or any
other change in the corporate structure of USA affecting the Common Stock, or
any distribution to shareholders other than a cash dividend, the Board shall
make appropriate adjustment in the number and kind of shares authorized by the
Plan as it determines appropriate. No fractional shares of stock shall be issued
pursuant to such an adjustment, but an amount equivalent to the portion of Fair
Market Value attributable to any such fractional shares shall, where
appropriate, be paid in cash to the Holder.
8.
Termination
and Amendment. The Plan shall remain in full force and effect until
terminated by the Board. The Board shall have the power to amend, suspend or
terminate the Plan at any time without the approval of the shareholders of the
Company, unless such approval is required by applicable law, regulation or rule
of any stock exchange on which the shares of Common Stock are
listed.
9.
Form
S-8.
9.1
Promptly upon the approval of this Plan by the Board of Directors of USA and the
shareholders, the Company shall, at its cost and expense, register all of the
Stock under the 1933 Act pursuant a to Form S-8 registration
statement.
9.2
Notwithstanding anything else set forth herein, an Award shall not be made
to any Director, Consultant or Employee unless such person is eligible to
receive Stock which has been registered under a Form S-8 registration statement.
In this regard, any Stock issuable to a Consultant or Director shall be issued
to an individual who provided bona fide services to USA and such services shall
not be in connection with the offer or sale of securities in a capital-raising
transaction, and shall not directly or indirectly promote or maintain a market
for USA’s securities.
9.3
In connection with the issuance of any Stock pursuant to the Plan, USA shall at
its expense, use its best efforts to have any such Stock exempted from the
registration requirements under applicable state securities laws.
9.4
The documents incorporated by reference in Item 3 of Part II of the Form S-8
registration statement, and any additional information about the Company, the
Plan and the Plan administrators may be obtained, without charge, upon written
request made to the Company at 100 Deerfield Lane, Suite 140, Malvern, PA 19355,
Attn: Stephen P. Herbert, President, or by calling
610-989-0340.
10. General
Provisions.
10.1 The
Plan shall become effective upon its approval by the Board, subject to the
approval of the Plan by the shareholders of the Company at the Company’s annual
meeting of shareholders held on December 15, 2009, and any adjournment or
postponement thereof.
10.2 Nothing
contained in the Plan, or an Award granted pursuant to the Plan, shall confer
upon an Employee any right with respect to continuance of employment by the
Company or upon any Director or Consultant any right with respect to continuance
of Board service or the consulting arrangement (as the case may be), nor
interfere in any way with the right of the Company to terminate such
relationships at any time.
10.3 Holders
shall be responsible to make appropriate provision for all taxes required to be
withheld in connection with any Award. Such responsibility shall extend to all
applicable federal, state, local or foreign withholding taxes. Stock Award
Agreements evidencing Awards may contain appropriate provisions to effect
withholding, including providing for the withholding of Stock by USA otherwise
deliverable to a Holder having a Fair Market Value equal to the minimum amount
required to be withheld by the Company. The Plan is not qualified under Section
401(a) of the Code.
10.4 To
the extent that federal laws (such as the 1934 Act, the Code or the Employee
Retirement Income Security Act of 1974) do not otherwise control, the Plan and
all determinations made and actions taken pursuant hereto shall be governed by
the law of the Commonwealth of Pennsylvania and construed
accordingly.
Dated:
October 19, 2009
Important
Notice of Availability of Proxy Materials for the Shareholder Meeting
of
Tuesday, December
15, 2009, at 10:00 a.m. EST
Chester
Valley Golf Club, 430 Swedesford Road, Malvern, PA 19355
This
communication presents only an overview of the more complete proxy materials
that are available to you on the Internet. We encourage you to access and review
all of the important information contained in the proxy materials before
voting.
If
you want to receive a paper or e-mail copy of the proxy materials you must
request one. There is no charge to you for requesting a copy. To facilitate
timely delivery please make the request as instructed below before
12/02/09.
Please visit http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=14591, where the following materials are
available for view:
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•
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Notice
of Annual Meeting of
stockholders
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•
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Form
of Electronic Proxy Card
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•
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Annual
Report on Form 10-K
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TO
REQUEST MATERIAL:
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TELEPHONE:
888-Proxy-NA (888-776-9962) 718-921-8562 (for international
callers)
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WEBSITE:
http://www.amstock.com/proxyservices/requestmaterials.asp
TO VOTE:
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ONLINE: To access your
online proxy card, please visit www.voteproxy.com and follow the
on-screen instructions. You may enter your voting instructions at www.voteproxy.com
up until 11:59 PM Eastern Time the day before the cut-off or meeting
date.
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IN PERSON:
You may vote your shares
in person by attending the Annual Meeting. You may obtain directions to be able
to attend the meeting by contacting the Chester Valley Golf Club at (610)
647-4007 or by accessing their website at www.chestervalleygc.org and clicking on the "Contact Us"
link.
MAIL: You may request a card
by following the instructions above.
1,
2 & 3. Election of Directors of Classes I, II, and
III:
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4. Ratification
of the appointment of McGladrey & Pullen, LLP as the independent
registered public accounting firm of the Company for fiscal year ending
June 30, 2010.
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Stephen
D. Barnhart
Jack
E. Price
William
L. Van Alen, Jr.
Steven
Katz
Joel
Brooks
George R. Jensen, Jr.
Stephen P. Herbert
Douglas M. Lurio
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Class
I Director
Class
I Director
Class
II Director
Class
II Director
Class
II Director
Class III Director
Class III Director
Class III Director
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5. Approval
of 2010 Stock Incentive Plan.
6. In
their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting and any
adjournment thereof.
This
proxy when properly executed will be voted in the manner directed by the
undersigned. If no contrary direction is made, this proxy will be voted
"FOR" all of the proposals set forth herein, including all the nominees
listed in Items 1, 2 and 3 (or, if any such nominees should be unable
to accept such nomination, for such other substitute person or persons as
may be recommended by the Board of Directors), and in accordance with the
proxies' best judgment upon other matters properly coming before the
Annual Meeting and any adjournments thereof.
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Please
note that you cannot use this notice to vote by mail.
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PROXY
SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS -
ANNUAL
MEETING OF SHAREHOLDERS - December 15, 2009
As
an alternative to completing this form, you may enter your vote instruction via
the Internet at WWW.VOTEPROXY.COM and follow the simple instructions. Use the
Company Number and Account Number shown on your proxy card.
The
undersigned, revoking all prior proxies, hereby appoint(s) George R. Jensen,
Jr., and Stephen P. Herbert, or either of them, with full power of substitution,
as proxies to represent and vote, as designated below, all shares of Common
Stock and Series A Preferred Stock of USA Technologies, Inc., at the Annual
Meeting of Shareholders to be held on December 15, 2009, and at any
adjournment thereof.
(Continued
and to be signed on the reverse side)
ANNUAL
MEETING OF SHAREHOLDERS OF
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PROXY
VOTING INSTRUCTIONS
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INTERNET -
Access “www.voteproxy.com” and follow the
on-screen instructions. Have your proxy card available when you
access the web page, and use the Company Number and Account Number shown
on your proxy card.
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Vote
online until 11:59 PM EST the day before the meeting.
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MAIL - Sign, date and mail
your proxy card in the envelope provided as soon as
possible.
IN
PERSON -
You may vote your shares in person by attending the Annual
Meeting.
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NOTICE
OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of Meeting,
proxy statement, proxy card and annual report on Form 10-K are available
at –
http://www.amstock.com/ProxyServices/ViewMaterial.asp?CoNumber=14591
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Please
detach along perforated line and mail in the envelope provided IF you are not
voting via the Internet.
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¢20830300000000000000
8
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121509
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PLEASE SIGN, DATE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN
HERE T
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FOR
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AGAINST
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ABSTAIN
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1,
2 & 3. Election of Directors of Classes I, II and
III:
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4.
Ratification of the appointment of McGladrey & Pullen, LLP as the
independent registered public accounting firm of the Company for fiscal
year ending June 30, 2010.
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£
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£
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£
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5.
Approval of 2010 Stock Incentive Plan |
£
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£
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£
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£ WITHHOLD
AUTHORITY FOR ALL NOMINEES
£ FOR ALL EXCEPT (See
instructions below)
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Stephen D.
Barnhart Class III
Director
Jack
E. Price
Class III Director
William
L. Van Alen, Jr. Class III Director
Steven
Katz
Class III Director
Joel
Brooks
Class III Director
George
R. Jensen, Jr. Class III
Director
Stephen
P. Herbert
Class III Director
Douglas M.
Lurio
Class III Director
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6.
In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the Annual Meeting and any
adjournment thereof.
This
proxy when properly executed will be voted in the manner directed by
the undersigned. If no contrary direction is made, this proxy will be
voted "FOR" all of the proposals set forth herein, including all the
nominees listed in Items 1, 2 and 3 (or, if any such nominees should
be unable to accept such nomination, for such other substitute person or
persons as may be recommended by the Board of Directors), and in
accordance with the proxies' best judgment upon other matters properly
coming before the Annual Meeting and any adjournments
thereof.
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INSTRUCTIONS: To withhold
authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and
fill in the circle next to each nominee you wish to withhold, as shown
here: ˜
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IF
YOU SIGN THIS PROXY WITHOUT OTHERWISE MARKING THE FORM, THIS PROXY WILL BE
VOTED AS RECOMMENDED BY THE BOARD OF DIRECTORS ON ALL MATTERS TO BE
CONSIDERED AT THE ANNUAL MEETING.
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To
change the address on your account, please check the box at right and
indicate your new address in the address space above. Please note that
changes to the registered name(s) on the account may not be submitted via
this method.
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Signature
of Shareholder
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Date:
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Signature
of Shareholder
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Date:
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¢
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Note: Please
sign exactly as your name or names appear on this Proxy. When shares are
held jointly, each holder should sign. When signing as executor,
administrator, attorney, trustee or guardian, please give full title as
such. If the signer is a corporation, please sign full corporate name by
duly authorized officer, giving full title as such. If signer is a
partnership, please sign in partnership name by authorized
person.
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¢
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