(Mark One) | ||
þ
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the fiscal year ended December 31, 2004 | ||
OR | ||
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to |
Delaware
|
94-3309549 | |
(State or other jurisdiction of
incorporation of organization) |
(I.R.S. Employer
Identification Number) |
1
ITEM 1. | BUSINESS |
2
ATM Cash Withdrawals |
3
Credit Card Cash Advances and POS Debit Card Transactions |
Check Verification and Warranty Services |
4
Central Credit |
Other |
Cash Access Products and Services | Information Services | Cashless Gaming Products | ||
Casino Cash Plus 3-in-1 ATM |
Central Credit |
TODD |
||
QuikCash |
QuikCash Plus Web |
EDITH |
||
Automated Cashier Machine |
QuikReports |
3-in-1 Enabled QuickJack Plus |
||
Check verification and warranty |
QuikMarketing |
|||
QuikCredit |
||||
Money transfers |
5
6
Improve Credit Decision-Making |
Automate Cashier Operations |
Enhance Patron Marketing |
7
8
9
10
Gaming Regulation |
11
Financial Services Regulation |
12
13
Other Regulation |
ITEM 2. | PROPERTIES |
ITEM 3. | LEGAL PROCEEDINGS |
14
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS |
ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
15
ITEM 6. | SELECTED FINANCIAL DATA |
For the Years Ended December 31, | ||||||||||||||||||||||
2000 | 2001(1) | 2002 | 2003 | 2004 | ||||||||||||||||||
(Dollars in thousands) | ||||||||||||||||||||||
Income Statement Data:
|
||||||||||||||||||||||
Revenues
|
||||||||||||||||||||||
Cash advance
|
$ | 170,792 | $ | 174,787 | $ | 182,754 | $ | 186,547 | $ | 209,962 | ||||||||||||
ATM
|
33,634 | 110,074 | 119,424 | 132,341 | 158,433 | |||||||||||||||||
Check services
|
26,997 | 26,614 | 29,412 | 26,326 | 23,768 | |||||||||||||||||
Central Credit and other
|
10,216 | 10,152 | 10,303 | 10,500 | 10,840 | |||||||||||||||||
Total revenues
|
241,639 | 321,627 | 341,893 | 355,714 | 403,003 | |||||||||||||||||
Cost of revenues
|
147,900 | 203,274 | 216,658 | 232,463 | 270,112 | |||||||||||||||||
Gross profit
|
93,739 | 118,353 | 125,235 | 123,251 | 132,891 | |||||||||||||||||
Operating expenses
|
(38,250 | ) | (54,270 | ) | (57,649 | ) | (45,430 | ) | (45,322 | ) | ||||||||||||
Depreciation and amortization
|
(11,084 | ) | (16,838 | ) | (11,820 | ) | (14,061 | ) | (13,548 | ) | ||||||||||||
Operating income
|
44,405 | 47,245 | 55,766 | 63,760 | 74,021 | |||||||||||||||||
Interest expense, net(2)
|
(1,177 | ) | (5,082 | ) | (4,933 | ) | (5,450 | ) | (32,025 | ) | ||||||||||||
Income before income tax (provision) benefit and minority
ownership loss
|
43,228 | 42,163 | 50,833 | 58,310 | 41,996 | |||||||||||||||||
Income tax (provision) benefit
|
(637 | ) | (442 | ) | (1,451 | ) | (321 | ) | 212,346 | |||||||||||||
Income before minority ownership loss
|
42,591 | 41,721 | 49,382 | 57,989 | 254,342 | |||||||||||||||||
Minority ownership loss(3)
|
| 420 | 1,040 | 400 | 213 | |||||||||||||||||
Net income
|
$ | 42,591 | $ | 42,141 | $ | 50,422 | $ | 58,389 | $ | 254,555 | ||||||||||||
Pro forma computation related to conversion to corporation for
tax purposes
|
||||||||||||||||||||||
Income before provision for income taxes and minority ownership
loss historical
|
$ | 43,228 | $ | 42,163 | $ | 50,833 | $ | 58,310 | $ | 41,996 | ||||||||||||
Income tax provision historical, exclusive of
one-time tax benefit(4)
|
(637 | ) | (442 | ) | (1,451 | ) | (321 | ) | (10,519 | ) | ||||||||||||
Pro forma income tax provision unaudited(5)
|
(17,951 | ) | (16,154 | ) | (16,940 | ) | (20,741 | ) | (4,600 | ) | ||||||||||||
Minority ownership loss historical
|
| 420 | 1,040 | 400 | 213 | |||||||||||||||||
Pro forma net income
|
$ | 24,640 | $ | 25,987 | $ | 33,482 | $ | 37,648 | $ | 27,090 | ||||||||||||
Balance Sheet Data:
|
||||||||||||||||||||||
(at end of period)
|
||||||||||||||||||||||
Cash and cash equivalents
|
$ | 27,448 | $ | 37,500 | $ | 57,584 | $ | 23,423 | $ | 48,877 | ||||||||||||
Total assets
|
291,249 | 276,207 | 287,039 | 243,627 | 495,925 | |||||||||||||||||
Total borrowings
|
| | | | 478,250 | |||||||||||||||||
Stockholders deficiency and members capital
|
220,448 | 205,202 | 202,271 | 199,247 | (57,479 | ) | ||||||||||||||||
Other Data:
|
||||||||||||||||||||||
Net cash used in investing activities(6)
|
$ | 14,348 | $ | 6,295 | $ | 9,750 | $ | 7,047 | $ | 4,861 |
(1) | The increase in revenues and operating expenses during fiscal 2001, as compared to fiscal 2000, is primarily attributable to our acquisitions of the gaming ATM portfolios of Bank of America, N.A. and InnoVentry Corporation. |
16
(2) | Interest expense, net, includes interest income. |
(3) | Minority ownership loss represents the portion of the loss from operations of QuikPlay, LLC that is attributable to the 40% ownership interest in QuikPlay, LLC that is not owned by us. |
(4) | In connection with our conversion to a taxable corporate entity for United States income tax purposes, we recognized a net tax asset created by a step up in the tax basis of our net assets due to the Restructuring of Ownership and the Securities Purchase and Exchange Agreement. For purposes of determining the pro forma net income, the recognition of this one-time step up in basis has been excluded from our pro forma tax computation. |
(5) | The pro forma unaudited income tax adjustments represent the tax effects that would have been reported had the Company been subject to United States federal and state income taxes as a corporation. Pro forma expenses are based upon the statutory income tax rates and adjustments to income for estimated permanent differences occurring during the period. Actual rates and expenses could have differed had the Company been subject to United States federal and state income taxes for all periods presented. Therefore, the unaudited pro forma amounts are for informational purposes only and are intended to be indicative of the results of operations had the Company been subject to United States federal and state income taxes for all periods presented. |
The following table presents the computation of the pro forma income tax expense for all the periods presented (amounts in thousands): |
For the Years Ended December 31, | ||||||||||||||||||||
2000 | 2001 | 2002 | 2003 | 2004 | ||||||||||||||||
Income before income taxes, as reported
|
$ | 43,228 | $ | 42,163 | $ | 50,833 | $ | 58,310 | $ | 41,996 | ||||||||||
Effective pro forma income tax rate
|
43.00 | % | 39.36 | % | 36.18 | % | 36.12 | % | 36.00 | % | ||||||||||
Pro forma income tax expense
|
$ | 18,588 | $ | 16,596 | $ | 18,391 | $ | 21,062 | $ | 15,119 | ||||||||||
(6) | In 2004, net cash used in investing activities includes $1.0 million of non-compete payments to two former executives. |
ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
17
18
19
20
21
22
23
24
25
26
December 31, 2004
December 31, 2003
$
$
%
%
$
209,962
52.1
%
$
186,547
52.4
%
158,433
39.3
132,341
37.2
23,768
5.9
26,326
7.4
10,840
2.7
10,500
3.0
403,003
100.0
355,714
100.0
270,112
67.0
232,463
65.4
132,891
33.0
123,251
34.6
(45,322
)
(11.2
)
(45,430
)
(12.8
)
(13,548
)
(3.4
)
(14,061
)
(4.0
)
74,021
18.4
63,760
17.9
(32,025
)
(7.9
)
(5,450
)
(1.5
)
41,996
10.4
58,310
16.4
212,346
52.7
(321
)
(0.1
)
254,342
63.1
57,989
16.3
213
0.1
400
0.1
$
254,555
63.2
%
$
58,389
16.4
%
$
41,996
10.4
%
$
58,310
16.4
%
(15,119
)
(3.8
)
(21,062
)
(5.9
)
213
0.1
400
0.1
$
27,090
6.7
%
$
37,648
10.6
%
Total Revenues
Table of Contents
Costs and Expenses
Table of Contents
Table of Contents
December 31, 2003
December 31, 2002
$
$
%
%
$
186,547
52.4
%
$
182,754
53.5
%
132,341
37.2
119,424
34.9
26,326
7.4
29,412
8.6
10,500
3.0
10,303
3.0
355,714
100.0
341,893
100.0
232,463
65.4
216,658
63.4
123,251
34.6
125,235
36.6
(45,430
)
(12.8
)
(57,649
)
(16.9
)
(14,061
)
(4.0
)
(11,820
)
(3.5
)
63,760
17.9
55,766
16.3
(5,450
)
(1.5
)
(4,933
)
(1.4
)
58,310
16.4
50,833
14.9
(321
)
(0.1
)
(1,451
)
(0.4
)
57,989
16.3
49,382
14.4
400
0.1
1,040
0.3
$
58,389
16.4
%
$
50,422
14.7
%
$
58,310
16.4
%
$
50,833
14.9
%
(21,062
)
(5.9
)
(18,391
)
(5.4
)
400
0.1
1,040
0.3
$
37,648
10.6
%
$
33,482
9.8
%
Total Revenues
Table of Contents
Costs and Expenses
Table of Contents
Goodwill
Revenue Recognition
Table of Contents
Table of Contents
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
44
Cash Flows
For the Years Ended December 31,
2004
2003
2002
$
75,212
$
33,471
$
81,964
(4,861
)
(7,047
)
(9,750
)
(44,650
)
(63,067
)
(52,333
)
(247
)
2,482
203
25,454
(34,161
)
20,084
23,423
57,584
37,500
$
48,877
$
23,423
$
57,584
December 31,
2004
2003
2002
$
48,877
$
23,423
$
57,584
30,357
20,307
20,829
(42,192
)
(22,968
)
(61,615
)
$
37,042
$
20,762
$
16,798
Table of Contents
Indebtedness
2-3
4-5
After
Contractual Cash Obligations
Total
1 Year
Years
Years
5 Years
(Amounts in thousands)
$
478,250
$
13,000
$
26,000
$
162,500
$
276,750
207,892
32,885
63,753
59,315
51,939
2,926
488
1,001
962
475
$
689,068
$
46,373
$
90,754
$
222,777
$
329,164
Other Liquidity Needs and Resources
Table of Contents
If we are unable to maintain our current customers on terms
that are favorable to us, our business, financial condition and
operating results may suffer a material adverse effect.
Table of Contents
Because of significant concentration among our top customers,
the loss of a top customer could have a material adverse effect
on our revenues and profitability.
Competition in the market for cash access services is intense
which could result in higher commissions or loss of customers to
our competitors.
Table of Contents
If we are unable to protect our intellectual property
adequately, we may lose a valuable competitive advantage or be
forced to incur costly litigation to protect our rights.
Table of Contents
We are subject to extensive rules and regulations of card
associations, including MasterCard International, Visa
International and Visa U.S.A., that are always subject to
change, which may harm our business.
Changes in interchange rates and other fees may affect our
cost of revenues and net income.
Table of Contents
Our substantial indebtedness could materially adversely
affect our operations and financial results and prevent us from
obtaining additional financing, if necessary.
makes it more difficult for us to satisfy our obligations with
respect to either our senior secured debt or our senior
subordinated notes, which, if we fail to do, could result in the
acceleration of all of our debt;
increases our vulnerability to general adverse economic and
industry conditions;
requires us to dedicate a substantial portion (in the case of
our senior secured debt, up to 75% of our excess cash flow,
depending upon our total leverage ratio) of our cash flow from
operations to payments on our indebtedness, which would reduce
the availability of our cash flow to fund working capital,
capital expenditures, expansion efforts and other general
corporate purposes;
limits our flexibility in planning for, or reacting to, changes
in our business and the industry in which we operate;
restricts our ability to pay dividends;
places us at a competitive disadvantage compared to our
competitors that have less debt;
prohibits us from acquiring businesses or technologies that
would benefit our business
restricts our ability to engage in transactions with affiliates
or create liens or guarantees; and
limits, along with the financial and other restrictive covenants
in our other indebtedness, among other things, our ability to
borrow additional funds.
To service our indebtedness we will require a significant
amount of cash, and our ability to generate cash flow depends on
many factors beyond our control.
Table of Contents
Because of our dependence on a few providers, or in some
cases one provider, for some of the financial services we offer
to patrons, the loss of a provider could have a material adverse
effect on our business or our financial performance.
Table of Contents
Certain providers upon whom we are dependent are under common
control with M&C International, the loss of which could have
a material adverse effect on our business.
Our business depends on our ability to introduce new,
commercially viable products and services in a timely manner.
Table of Contents
Our products and services are complex, depend on a myriad of
complex networks and technologies and may be subject to software
or hardware errors or failures that could lead to an increase in
our costs, reduce our revenues or damage our reputation.
We may not successfully enter new markets and therefore not
achieve all of our strategic growth objectives.
Table of Contents
We may encounter difficulties managing our growth, which
could adversely affect our operating results.
We depend on key personnel and they would be difficult to
replace.
Table of Contents
The loss of our sponsorship into the Visa U.S.A., Visa
International and MasterCard card associations could have a
material adverse effect on our business.
Table of Contents
An unexpectedly high level of chargebacks, as the result of
fraud or otherwise, could adversely affect our cash advance
business.
A material increase in market interest rates or changing
regulations could adversely affect our ATM business.
An unexpected increase in check warranty expenses could
adversely affect our check warranty business.
Table of Contents
To execute our growth strategy, we may make acquisitions or
strategic investments, which involve numerous risks that we may
not be able to address without substantial expense, delay or
other operational or financial problems.
difficulty integrating the technologies, operations and
personnel from the acquired business;
overestimation of potential synergies or a delay in realizing
those synergies;
disruption to our ongoing business, including the diversion of
managements attention and of resources from our principal
business;
inability to obtain the desired financial and strategic benefits
from the acquisition or investment;
loss of customers of an acquired business;
assumption of unanticipated liabilities;
loss of key employees of an acquired business; and
entering into new markets in which we have limited prior
experience.
Economic downturns, a decline in the popularity of gaming or
changes in the demographic profile of gaming patrons could
reduce the number of patrons that use our services or the
amounts of cash that they access using our services.
Table of Contents
Changes in consumer willingness to pay a fee to access their
funds could reduce the demand for our cash access products and
services.
The cash access industry is subject to change, and we must
keep pace with the changes to successfully compete.
Table of Contents
Growth of the gaming industry in any market is subject to
political and regulatory developments that are difficult to
anticipate.
We are subject to extensive governmental gaming regulation,
which may harm our business.
Table of Contents
Many of the financial services that we provide are subject to
extensive rules and regulations, which may harm our business.
Table of Contents
If consumer privacy laws change, or if we are required to
change our business practices, the value of our patron marketing
services may be hampered.
Responsible gaming pressures could result in a material
adverse effect on our business and operating results.
Table of Contents
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
45
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
Page | ||||
47 | ||||
48 | ||||
49 | ||||
50 | ||||
51 | ||||
52 |
46
DELOITTE & TOUCHE LLP |
47
48
2004 | 2003 | 2002 | ||||||||||||
(Amounts in thousands) | ||||||||||||||
REVENUES:
|
||||||||||||||
Cash advance
|
$ | 209,962 | $ | 186,547 | $ | 182,754 | ||||||||
ATM
|
158,433 | 132,341 | 119,424 | |||||||||||
Check services
|
23,768 | 26,326 | 29,412 | |||||||||||
Central Credit and other revenues
|
10,840 | 10,500 | 10,303 | |||||||||||
Total revenues
|
403,003 | 355,714 | 341,893 | |||||||||||
COST OF REVENUES
|
270,112 | 232,463 | 216,658 | |||||||||||
GROSS PROFIT
|
132,891 | 123,251 | 125,235 | |||||||||||
Operating expenses
|
(45,322 | ) | (45,430 | ) | (57,649 | ) | ||||||||
Amortization
|
(5,672 | ) | (6,508 | ) | (6,512 | ) | ||||||||
Depreciation
|
(7,876 | ) | (7,553 | ) | (5,308 | ) | ||||||||
OPERATING INCOME
|
74,021 | 63,760 | 55,766 | |||||||||||
INTEREST INCOME (EXPENSE), NET
|
||||||||||||||
Interest income
|
1,318 | 1,312 | 1,283 | |||||||||||
Interest expense
|
(33,343 | ) | (6,762 | ) | (6,216 | ) | ||||||||
Total interest income (expense), net
|
(32,025 | ) | (5,450 | ) | (4,933 | ) | ||||||||
INCOME BEFORE INCOME TAX BENEFIT (PROVISION) AND MINORITY
OWNERSHIP LOSS
|
41,996 | 58,310 | 50,833 | |||||||||||
INCOME TAX BENEFIT (PROVISION)
|
212,346 | (321 | ) | (1,451 | ) | |||||||||
INCOME BEFORE MINORITY OWNERSHIP LOSS
|
254,342 | 57,989 | 49,382 | |||||||||||
MINORITY OWNERSHIP LOSS
|
213 | 400 | 1,040 | |||||||||||
NET INCOME
|
254,555 | 58,389 | 50,422 | |||||||||||
Foreign currency translation
|
209 | 2,054 | 20 | |||||||||||
COMPREHENSIVE INCOME
|
$ | 254,764 | $ | 60,443 | $ | 50,442 | ||||||||
PRO FORMA COMPUTATION RELATED TO CONVERSION TO CORPORATION FOR
INCOME TAX PURPOSES
|
||||||||||||||
INCOME BEFORE INCOME TAX BENEFIT (PROVISION) AND MINORITY
OWNERSHIP LOSS HISTORICAL
|
$ | 41,996 | $ | 58,310 | $ | 50,833 | ||||||||
INCOME TAX PROVISION HISTORICAL, EXCLUSIVE OF TAX
BENEFIT, NET
|
(10,519 | ) | (321 | ) | (1,451 | ) | ||||||||
PRO FORMA INCOME TAX PROVISION (UNAUDITED)
|
(4,600 | ) | (20,741 | ) | (16,940 | ) | ||||||||
MINORITY OWNERSHIP LOSS HISTORICAL
|
213 | 400 | 1,040 | |||||||||||
PRO FORMA NET INCOME (UNAUDITED)
|
$ | 27,090 | $ | 37,648 | $ | 33,482 | ||||||||
49
Common Stock | Accumulated | ||||||||||||||||||||||||
Other | |||||||||||||||||||||||||
Number of | Accumulated | Comprehensive | Members | ||||||||||||||||||||||
Shares | Amount | Deficit | Income | Capital | Total | ||||||||||||||||||||
(Amounts in thousands, except shares) | |||||||||||||||||||||||||
BALANCE January 1, 2002
|
| $ | | $ | | $ | (333 | ) | $ | 205,535 | $ | 205,202 | |||||||||||||
Net income
|
50,422 | 50,422 | |||||||||||||||||||||||
Foreign currency translation
|
20 | 20 | |||||||||||||||||||||||
Distributions to members
|
(53,373 | ) | (53,373 | ) | |||||||||||||||||||||
BALANCE December 31, 2002
|
| | | (313 | ) | 202,584 | 202,271 | ||||||||||||||||||
Net income
|
58,389 | 58,389 | |||||||||||||||||||||||
Foreign currency translation
|
2,054 | 2,054 | |||||||||||||||||||||||
Distributions to members
|
(63,467 | ) | (63,467 | ) | |||||||||||||||||||||
BALANCE December 31, 2003
|
| | | 1,741 | 197,506 | 199,247 | |||||||||||||||||||
Net income before change in tax status
|
227,121 | 227,121 | |||||||||||||||||||||||
Foreign currency translation
|
209 | 209 | |||||||||||||||||||||||
Distributions to members
|
(73,728 | ) | (73,728 | ) | |||||||||||||||||||||
Deemed distributions to members
|
(3,166 | ) | (3,166 | ) | |||||||||||||||||||||
Deemed contributions from members
|
964 | 964 | |||||||||||||||||||||||
Redemption of membership units
|
(435,560 | ) | (435,560 | ) | |||||||||||||||||||||
Change in tax status from a limited liability company to a
corporation on June 7, 2004
|
1,000 | (86,863 | ) | 86,863 | | ||||||||||||||||||||
Net income after change in tax status
|
27,434 | 27,434 | |||||||||||||||||||||||
BALANCE December 31, 2004
|
1,000 | $ | | $ | (59,429 | ) | $ | 1,950 | $ | | $ | (57,479 | ) | ||||||||||||
50
51
1. | BUSINESS AND BASIS OF PRESENTATION |
52
53
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
54
2004 | 2003 | 2002 | ||||||||||
Cash Advance
|
$ | 93,230 | $ | 93,167 | $ | 93,054 | ||||||
Credit Reporting
|
39,470 | 39,470 | 39,470 | |||||||||
ATM
|
24,033 | 24,048 | 24,048 | |||||||||
Total
|
$ | 156,733 | $ | 156,685 | $ | 156,572 | ||||||
55
$
4,791
4,135
3,819
1,788
1,151
862
$
16,546
56
57
58
2004
2003
2002
$
254,555
$
58,389
$
50,422
206
$
254,349
$
58,389
$
50,422
59
3. | ATM FUNDING AGREEMENTS |
60
4. | PROPERTY, EQUIPMENT AND LEASEHOLD IMPROVEMENTS |
2004 | 2003 | ||||||||
ATM equipment
|
$ | 26,764 | $ | 24,218 | |||||
Cash advance equipment
|
4,760 | 4,306 | |||||||
Office and computer equipment
|
1,769 | 1,660 | |||||||
Leasehold and building improvements
|
2,115 | 2,115 | |||||||
35,408 | 32,299 | ||||||||
Less accumulated depreciation
|
(25,067 | ) | (17,170 | ) | |||||
Total
|
$ | 10,341 | $ | 15,129 | |||||
5. | BENEFIT PLANS |
6. | COMMITMENTS AND CONTINGENCIES |
2005
|
$ | 488 | ||
2006
|
505 | |||
2007
|
496 | |||
2008
|
487 | |||
2009
|
475 | |||
Thereafter
|
475 | |||
Total
|
$ | 2,926 | ||
61
Litigation Claims and Assessments |
7. | BORROWINGS |
62
2005
|
$ | 13,000 | ||
2006
|
13,000 | |||
2007
|
13,000 | |||
2008
|
13,000 | |||
2009
|
149,500 | |||
Thereafter
|
276,750 | |||
Total
|
$ | 478,250 | ||
63
8. | RELATED PARTY TRANSACTIONS |
64
Related Party
Description of Transaction
2004
2003
2002
Invoices paid by IPS passed through as capitalized items to GCA
$
284
$
215
$
305
Invoices paid by IPS passed through and expensed in operating
expenses by GCA
196
732
493
Check clearing & imaging charges operated by IPS
583
526
569
Other support services including tax, accounting and licensing
departments, corporate insurance coverage and credit card
rewards processing
35
208
208
Interest income earned by GCA on outstanding checks and
short-term cash deposits
(1,128
)
(983
)
(1,017
)
Interest expense recorded by GCA on bailment of ATM cash
6,213
4,335
Check guarantee revenue included in check services revenue
(22,591
)
(25,449
)
(29,287
)
Check cashing warranties
10,144
9,848
9,827
Operating expenses
2,959
6,212
11,626
Money transfer commissions earned
(355
)
(371
)
(477
)
Software development costs and maintenance expense
1,624
3,643
5,993
Transaction processing charges
2,513
3,016
2,117
Pass through billing related to gateway fees, telecom and other
items
1,533
1,986
1,519
Sublease income earned for leasing out corporate office space
for backup servers
(18
)
(51
)
Bank fees and cash preparation fees for cash accounts maintained
982
311
295
Cash usage fee
$
3,145
$
$
65
2004
2003
$
2,454
$
2,058
45
3,166
6
1
$
2,505
$
5,225
$
(3
)
$
(245
)
(325
)
(427
)
(52
)
(137
)
(18
)
$
(517
)
$
(690
)
9. | INCOME TAXES |
66
2004 | 2003 | 2002 | ||||||||||||
Components of pretax income:
|
||||||||||||||
Domestic
|
$ | 37,690 | $ | 53,123 | $ | 48,560 | ||||||||
Foreign
|
4,306 | 5,187 | 2,273 | |||||||||||
Consolidated
|
$ | 41,996 | $ | 58,310 | $ | 50,833 | ||||||||
Benefit (provision) for income taxes:
|
||||||||||||||
Domestic
|
$ | 214,084 | $ | | $ | | ||||||||
Foreign
|
(1,738 | ) | (321 | ) | (1,451 | ) | ||||||||
Consolidated
|
$ | 212,346 | $ | (321 | ) | $ | (1,451 | ) | ||||||
67
10. | PRO FORMA INCOME TAX INFORMATION (UNAUDITED) |
2004 | 2003 | 2002 | ||||||||||
Income before income taxes, as reported
|
$ | 41,996 | $ | 58,310 | $ | 50,833 | ||||||
Effective pro forma income tax rate
|
36.00 | % | 36.12 | % | 36.18 | % | ||||||
Pro forma income tax expense
|
$ | 15,119 | $ | 21,062 | $ | 18,391 | ||||||
11. | SEGMENT INFORMATION |
68
Cash
Check
Credit
Advance
ATM
Services
Reporting
Other
Total
$
209,962
$
158,433
$
23,768
$
9,368
$
1,472
$
403,003
(4,803
)
(7,869
)
(17
)
(364
)
(495
)
(13,548
)
39,981
20,256
9,681
4,100
3
74,021
1,318
1,318
(14,394
)
(16,576
)
(1,630
)
(642
)
(101
)
(33,343
)
129,020
87,434
(2,899
)
(1,245
)
36
212,346
213
213
$
155,925
$
91,114
$
5,152
$
2,213
$
151
$
254,555
$
186,547
$
132,341
$
26,326
$
9,289
$
1,211
$
355,714
(5,872
)
(7,290
)
(364
)
(535
)
(14,061
)
37,611
15,186
9,208
3,557
(1,802
)
63,760
1,312
1,312
(6,673
)
(89
)
(6,762
)
(321
)
(321
)
400
400
$
38,602
$
8,513
$
9,208
$
3,557
$
(1,491
)
$
58,389
$
182,754
$
119,424
$
29,412
$
8,997
$
1,306
$
341,893
(5,953
)
(4,704
)
(623
)
(540
)
(11,820
)
36,398
15,313
7,316
1,583
(4,844
)
55,766
1,283
1,283
(6,110
)
(106
)
(6,216
)
(1,451
)
(1,451
)
1,040
1,040
$
36,230
$
9,203
$
7,316
$
1,583
$
(3,910
)
$
50,422
69
December 31,
December 31,
Total Assets
2004
2003
$
316,904
$
154,497
133,005
44,991
4,223
2,944
41,263
40,764
530
431
$
495,925
$
243,627
12. | SUBSEQUENT EVENTS |
13. | GUARANTOR INFORMATION |
70
71
72
73
74
75
76
77
78
*
Eliminations include intercompany investments and management fees
Table of Contents
*
Eliminations include intercompany investments and management fees
Table of Contents
Combined
Combined Non-
Parent
Guarantors
Guarantors
Eliminations*
Consolidated
(Amounts in thousands)
$
205,677
$
$
4,285
$
$
209,962
158,433
158,433
23,768
23,768
6,081
10,519
72
(5,832
)
10,840
393,959
10,519
4,357
(5,832
)
403,003
267,150
276
2,686
270,112
126,809
10,243
1,671
(5,832
)
132,891
(39,249
)
(3,657
)
(2,971
)
555
(45,322
)
(5,337
)
(335
)
(5,672
)
(7,855
)
(21
)
(7,876
)
74,368
6,230
(1,300
)
(5,277
)
74,021
1,210
108
1,318
(33,343
)
(33,343
)
(32,133
)
108
(32,025
)
42,235
6,230
(1,192
)
(5,277
)
41,996
212,107
239
212,346
254,342
6,230
(953
)
(5,277
)
254,342
213
213
$
254,555
$
6,230
$
(953
)
$
(5,277
)
$
254,555
*
Eliminations include earnings on subsidiaries and management fees
Table of Contents
Combined
Combined Non-
Parent
Guarantors
Guarantors
Eliminations*
Consolidated
(Amounts in thousands)
$
181,982
$
$
4,565
$
$
186,547
132,341
132,341
26,326
26,326
5,016
9,965
23
(4,504
)
10,500
345,665
9,965
4,588
(4,504
)
355,714
229,022
304
3,137
232,463
116,643
9,661
1,451
(4,504
)
123,251
(39,211
)
(4,787
)
(1,432
)
(45,430
)
(6,173
)
(335
)
(6,508
)
(7,524
)
(29
)
(7,553
)
63,735
4,510
19
(4,504
)
63,760
1,017
295
1,312
(6,762
)
(6,762
)
(5,745
)
295
(5,450
)
57,990
4,510
314
(4,504
)
58,310
(321
)
(321
)
57,990
4,510
(7
)
(4,504
)
57,989
400
400
$
58,390
$
4,510
$
(7
)
$
(4,504
)
$
58,389
*
Eliminations include earnings on subsidiaries and management fees
Table of Contents
Combined
Combined Non-
Parent
Guarantors
Guarantors
Eliminations*
Consolidated
(Amounts in thousands)
$
176,599
$
$
6,155
$
$
182,754
119,424
119,424
29,412
29,412
88
9,519
696
10,303
325,523
9,519
6,155
696
341,893
212,348
330
3,980
216,658
113,175
9,189
2,175
696
125,235
(47,529
)
(6,462
)
(3,658
)
(57,649
)
(6,177
)
(335
)
(6,512
)
(5,020
)
(288
)
(5,308
)
54,449
2,104
(1,483
)
696
55,766
1,149
134
1,283
(6,216
)
(6,216
)
(5,067
)
134
(4,933
)
49,382
2,104
(1,349
)
696
50,833
(1,451
)
(1,451
)
49,382
2,104
(2,800
)
696
49,382
1,040
1,040
$
50,422
$
2,104
$
(2,800
)
$
696
$
50,422
*
Eliminations include earnings on subsidiaries and management fees
Table of Contents
*
Eliminations include intercompany investments and management fees
Table of Contents
*
Eliminations include intercompany investments and management fees
Table of Contents
*
Eliminations include intercompany investments and management fees
Table of Contents
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
ITEM 9B. | OTHER INFORMATION |
ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
Name | Age | Position | ||||
Karim Maskatiya
|
52 | Co-Founder, Co-Chairman and Director | ||||
Robert Cucinotta
|
44 | Co-Founder and Director | ||||
Kirk Sanford
|
38 | President, Chief Executive Officer and Director | ||||
Harry C. Hagerty
|
44 | Executive Vice President and Chief Financial Officer | ||||
Diran Kludjian
|
48 | Executive Vice President of North American and International Sales | ||||
Kurt Sullivan
|
53 | Executive Vice President | ||||
Tom Sears
|
45 | Executive Vice President of Business Development | ||||
Walter G. Kortschak
|
45 | Co-Chairman and Director | ||||
Charles J. Fitzgerald
|
37 | Director | ||||
E. Miles Kilburn
|
42 | Director |
79
80
81
ITEM 11. | EXECUTIVE COMPENSATION |
Long-Term | |||||||||||||||||||||||||
Annual Compensation | Compensation | ||||||||||||||||||||||||
Other Annual | Securities | ||||||||||||||||||||||||
Compensation ($) | Underlying | All Other | |||||||||||||||||||||||
Name and Position | Year | Salary ($) | Bonus ($) | (2) | Options (#) | Compensation ($) | |||||||||||||||||||
Kirk Sanford,
|
2004 | $ | 286,532 | $ | 150,000 | $ | | | $ | 9,662 | (3)(4) | ||||||||||||||
Chief Executive Officer(1) | 2003 | 297,500 | 150,000 | | | 6,077 | (3) | ||||||||||||||||||
2002 | 350,000 | 350,000 | | | 6,154 | (3) | |||||||||||||||||||
Harry Hagerty,
|
2004 | 126,923 | 94,247 | | 722,215 | 234 | (4) | ||||||||||||||||||
Chief Financial Officer(5) | 2003 | | | | | | |||||||||||||||||||
2002 | | | | | | ||||||||||||||||||||
Diran Kludjian,
|
2004 | 230,058 | 186,227 | | | 39,968 | (3)(4)(7) | ||||||||||||||||||
Executive Vice President of | 2003 | 200,000 | 123,100 | | | 6,970 | (3) | ||||||||||||||||||
North American | 2002 | 150,000 | 190,781 | | | 6,277 | (3) | ||||||||||||||||||
and International Sales(6) | |||||||||||||||||||||||||
Tom Sears,
|
2004 | 171,538 | 78,000 | | | 13,178 | (3)(4) | ||||||||||||||||||
Executive Vice President of | 2003 | 199,750 | 37,500 | | | 8,000 | (3) | ||||||||||||||||||
Business Development(6) | 2002 | 185,288 | 18,750 | | | 7,371 | (3) | ||||||||||||||||||
Kurt Sullivan,
|
2004 | 174,186 | 34,000 | | | 10,934 | (3)(4) | ||||||||||||||||||
Executive Vice President | 2003 | 215,954 | 12,500 | | | 8,170 | (3) | ||||||||||||||||||
2002 | 240,000 | 12,500 | | | 8,000 | (3) | |||||||||||||||||||
Robert C. Fry(8)
|
2004 | 111,756 | 37,500 | | | 515,328 | (3)(4)(9) | ||||||||||||||||||
2003 | 212,500 | 75,000 | 26,432 | | 6,057 | (3) | |||||||||||||||||||
2002 | 230,769 | 120,000 | 26,442 | | 5,615 | (3) | |||||||||||||||||||
Pamela Shinkle(10)
|
2004 | 100,002 | 37,500 | | | 516,779 | (3)(4)(9) | ||||||||||||||||||
2003 | 168,846 | 37,500 | 55,703 | | 6,127 | (3) | |||||||||||||||||||
2002 | 183,077 | 50,000 | | | 5,508 | (3) |
(1) | In 2004, our Chief Executive Officer received payments in the aggregate amount of approximately $17.3 million and $0.1 million from M&C International and USA Payments, respectively. In 2003 he received payments in aggregate amounts of $1.0 million and $0.1 million, respectively from these entities, and in 2002 he received payments in aggregate amounts of $0.6 million and $0.1 million, respectively, from these entities. A portion of these payments are attributable to Mr. Sanfords 1% ownership interest in M&C International. In addition, Messrs. Maskatiya and Cucinotta maintain an informal arrangement with Mr. Sanford to compensate him through payments from M&C International and USA Payments for advisory services that he performs for those entities. Under the terms of this informal arrangement, Mr. Sanford is paid an amount equal to approximately 4% of the distributions made by us to M&C International. The terms of this arrangement are solely economic, and do not provide Mr. Sanford with any voting rights or rights to participate in the management of either entity. The terms of this arrangement do not provide Mr. Sanford with any rights to proceeds upon the liquidation of M&C International or USA Payments, although Messrs. Maskatiya and Cucinotta |
82
directly or through M&C International, may make payments to Mr. Sanford in connection with such an event. This informal arrangement is terminable at any time at the will of Messrs. Maskatiya and Cucinotta or M&C International and USA Payments. Such payments may or may not continue in the future. | ||
(2) | Represents payout of accrued, but unused vacation time. | |
(3) | Includes company-provided match payments under our 401(k) plan. | |
(4) | Includes reimbursement of out-of-pocket payments incurred by executives for health care. | |
(5) | Mr. Hagerty became our Chief Financial Officer in July 2004 with a base annual salary of $300,000 per year and eligibility for a bonus of $200,000 per year. | |
(6) | In 2004, Messrs. Kludjian and Sears received payments in the aggregate amount of $0.5 million and $0.1 million, respectively, from M&C International for advisory services that they performed for M&C International pursuant to informal arrangements with Messrs. Maskatiya and Cucinotta. Neither Mr. Kludjian nor Mr. Sears received any payments from M&C International in 2003 or 2002. These informal arrangements are terminable at any time at the will of Messrs. Maskatiya and Cucinotta or M&C International. Such payments may or may not continue in the future. | |
(7) | Includes reimbursement of relocation and moving costs incurred by Mr. Kludjian in connection with his relocation to the Las Vegas, Nevada metropolitan area. | |
(8) | Mr. Fry is our former Chief Financial Officer, whose employment terminated on May 28, 2004. | |
(9) | Represents the payment of $500,000 upon the termination of employment of the named executive as partial consideration for a covenant not to compete with us. |
(10) | Ms. Shinkle is our former chief operating officer, whose employment terminated on May 28, 2004. |
Potential Realizable Value | ||||||||||||||||||||||||
Number of Shares | At Assumed Annual Rates | |||||||||||||||||||||||
of Common Stock | Percent of Total | of Stock Price Appreciation | ||||||||||||||||||||||
Underlying | Options Granted | Exercise or | for Option Term | |||||||||||||||||||||
Options Granted | to Employees in | Base Price per | ||||||||||||||||||||||
Name | (#) | Fiscal Year 2004 | Share ($/Sh) | Expiration Date | 5% ($) | 10% ($) | ||||||||||||||||||
Kirk Sanford
|
| | | | | | ||||||||||||||||||
Harry Hagerty
|
722,215 | 100.00 | % | $ | 8.05 | 9/1/2014 | $ | 3,656,287 | $ | 9,265,748 | ||||||||||||||
Diran Kludjian
|
| | | | | | ||||||||||||||||||
Tom Sears
|
| | | | | | ||||||||||||||||||
Kurt Sullivan
|
| | | | | | ||||||||||||||||||
Robert C. Fry
|
| | | | | | ||||||||||||||||||
Pamela Shinkle
|
| | | | | |
83
Number of Securities | ||||||||||||||||||||||||
Underlying Unexercised | Value of Unexercised in-the- | |||||||||||||||||||||||
Shares | Options at Fiscal | Money Options at Fiscal | ||||||||||||||||||||||
Acquired on | Year-End (#) | Year-End ($) | ||||||||||||||||||||||
Exercise | Value | |||||||||||||||||||||||
Name | (#) | Realized ($) | Exercisable | Unexercisable | Exercisable | Unexercisable | ||||||||||||||||||
Kirk Sanford
|
| | | | | | ||||||||||||||||||
Harry Hagerty
|
| | | 722,215 | | $ | 4,289,957 | (1) | ||||||||||||||||
Diran Kludjian
|
| | | | | | ||||||||||||||||||
Tom Sears
|
| | | | | | ||||||||||||||||||
Kurt Sullivan
|
| | | | | | ||||||||||||||||||
Robert C. Fry
|
| | | | | | ||||||||||||||||||
Pamela Shinkle
|
| | | | | |
(1) | Assumes a fair market value of $13.99 per share of our parent companys common stock as of December 31, 2004. |
Compensation of Directors |
Hagerty Employment Agreement |
84
Sanford, Kludjian, Sears and Sullivan Stock Option Agreements |
Compensation Committee Interlocks and Insider Participation in Compensation Decisions |
Report of the Board of Directors on Executive Compensation |
85
MEMBERS OF THE BOARD OF DIRECTORS | |
Karim Maskatiya | |
Robert Cucinotta | |
Kirk Sanford | |
Walter G. Kortschak | |
Charles J. Fitzgerald | |
E. Miles Kilburn |
86
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Equity Compensation Plan Information |
(c) | |||||||||||||
Number of Securities | |||||||||||||
(a) | Remaining Available for | ||||||||||||
Number of Securities | (b) | Future Issuance under | |||||||||||
to be Issued upon | Weighted-Average | Equity Compensation | |||||||||||
Exercise of | Exercise Price of | Plans (Excluding | |||||||||||
Outstanding Options, | Outstanding Options, | Securities Reflected in | |||||||||||
Plan Category | Warrants, and Rights | Warrants, and Rights | Column (a)) | ||||||||||
Equity compensation plans approved by security holders none
|
| | |||||||||||
Equity compensation plans not approved by security holders
|
|||||||||||||
Notice of Stock Option Award and Stock Option Award Agreement
with Harry Hagerty
|
722,215 | $ | 8.05 | | |||||||||
Total
|
722,215 | $ | 8.05 | |
| each person who is known by us to beneficially own more than 5% of our outstanding shares of common stock, | |
| each of our directors, | |
| each of the named executive officers appearing in the summary compensation table below (the Named Executive Officers), and | |
| all current executive officers and directors as a group. |
87
Number of Shares of | ||||||||
Name and Address of Beneficial Owner | Common Stock | Percent of Class | ||||||
Directors
|
||||||||
Karim Maskatiya(1)
|
28,607,150 | 40.01 | % | |||||
Robert Cucinotta(2)
|
28,607,150 | 40.01 | % | |||||
Walter G. Kortschak(3)
|
25,040,808 | 35.02 | % | |||||
Charles J. Fitzgerald(4)
|
25,040,808 | 35.02 | % | |||||
Kirk Sanford(5)
|
28,607,150 | 40.01 | % | |||||
E. Miles Kilburn
|
| | ||||||
Named officers who are not directors
|
||||||||
Harry C. Hagerty
|
| | ||||||
Diran Kludjian
|
| | ||||||
Tom Sears
|
| | ||||||
Kurt Sullivan
|
| | ||||||
Robert C. Fry
|
| | ||||||
Pamela Shinkle
|
| | ||||||
Directors and officers as a group (12 persons)(6)
|
53,647,958 | 75.03 | % | |||||
Persons beneficially owning more than 5% of our common
stock
|
||||||||
M&C International(7)
|
28,607,150 | 40.01 | % | |||||
Summit Partners(8)
|
25,040,808 | 35.02 | % | |||||
Entities affiliated with Tudor Investment Corporation(9)
|
9,315,774 | 13.03 | % |
(1) | Includes 28,607,150 shares of common stock held by M&C International. Mr. Maskatiya disclaims beneficial ownership of shares held by M&C International except to the extent of his pecuniary interest in M&C International. Mr. Maskatiyas address is c/o M&C International, 643 River Oaks Parkway, San Jose, California 95134. |
(2) | Includes 28,607,150 shares of common stock held by M&C International. Mr. Cucinotta disclaims beneficial ownership of shares held by M&C International except to the extent of his pecuniary interest in M&C International. Mr. Cucinottas address is c/o M&C International, 643 River Oaks Parkway, San Jose, California 95134. |
(3) | Consists of 25,040,808 shares of common stock held by Summit Partners. Mr. Kortschak disclaims beneficial ownership of these shares. Mr. Kortschaks address is c/o Summit Partners, L.P., 499 Hamilton Avenue, Suite 200, Palo Alto, California 94301. |
(4) | Consists of 25,040,808 shares of common stock held by Summit Partners. Mr. Fitzgerald disclaims beneficial ownership of these shares. Mr. Fitzgeralds address is c/o Summit Partners, L.P., 499 Hamilton Avenue, Suite 200, Palo Alto, California 94301. |
(5) | Includes 28,607,150 shares of common stock held by M&C International. Mr. Sanford disclaims beneficial ownership of shares held by M&C International except to the extent of his pecuniary interest in M&C International. Mr. Sanfords address is c/o Global Cash Access, Inc., 3525 East Post Road, Suite 120, Las Vegas, Nevada 89120. |
(6) | See notes 1 through 5. |
88
(7) | M&C International is beneficially owned as to 49.5% by Karim Maskatiya, as to 49.5% by Robert Cucinotta and as to 1% by our President and Chief Executive Officer, Kirk Sanford. M&C Internationals address is 643 River Oaks Parkway, San Jose, California 95134. |
(8) | Of these shares, 16,977,131 shares are held by Summit Ventures VI-A, L.P., 7,080,140 shares are held by Summit Ventures VI-B, L.P., 353,078 shares are held by Summit VI Advisors Fund, L.P., 542,090 shares are held by Summit VI Entrepreneurs Fund, L.P. and 88,369 shares are held by Summit Investors VI, L.P. (such entities collectively referred to as Summit Partners). Summit Partners, L.P. is the managing member of Summit Partners VI (GP), LLC, which is the general partner of Summit Partners VI (GP), L.P., which is the general partner of each of Summit Ventures VI-A, L.P., Summit Ventures VI-B, L.P., Summit VI Advisors Fund, L.P., Summit VI Entrepreneurs Fund, L.P. and Summit Investors VI, L.P. Summit Partners, L.P., through a three-person investment committee composed of certain members of Summit Master Company, LLC, has voting and dispositive authority over the shares held by each of these entities and therefore beneficially owns such shares. Decisions of the investment committee are made by a majority vote of its members and, as a result, no single member of the investment committee has voting or dispositive authority over the shares. Gregory M. Avis, John R. Carroll, Peter Y. Chung, Scott C. Collins, Bruce R. Evans, Charles J. Fitzgerald, Walter G. Kortschak, Martin J. Mannion, Kevin P. Mohan, Thomas S. Roberts, E. Roe Stamps, Joseph F. Trustey, Robert V. Walsh and Stephen G. Woodsum are the members of Summit Master Company, LLC, which is the general partner of Summit Partners, L.P., and each disclaims beneficial ownership of the shares held by Summit Partners. The address for each of these entities is 499 Hamilton Avenue, Suite 200, Palo Alto, California 94301. |
(9) | Includes 3,105,258 shares held by Tudor Ventures II, L.P., 547,066 shares held by Tudor Proprietary Trading, L.L.C., 1,020,916 shares held by Tudor BVI Global Portfolio Ltd., 50,466 shares held by The Altar Rock Fund L.P. and 4,592,068 shares held by The Raptor Global Portfolio Ltd. Tudor Investment Corporation acts as investment advisor and/or general partner of Tudor Ventures II, L.P., Tudor BVI Global Portfolio Ltd., The Altar Rock Fund L.P. and The Raptor Global Portfolio Ltd. and as a result may be deemed to share voting and/or investment control over the shares held by each such entity. As a result, Tudor Investment Corporation may be deemed to beneficially own the shares held by each such entity. Tudor Investment Corporation expressly disclaims such beneficial ownership. In addition, Tudor Investment Corporation is an affiliate of Tudor Proprietary Trading, L.L.C. and therefor may be deemed to beneficially own the shares held by Tudor Proprietary Trading, L.L.C. Tudor Investment Corporation expressly disclaims such beneficial ownership. The address of Tudor Investment Corporation is 50 Rowes Wharf, 6th Floor, Boston, Massachusetts 02110. |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
89
Infonox on the Web |
90
91
USA Payments and USA Payment Systems |
92
Sponsorship Agreement |
93
Equity Investment in Global Cash Access Holdings, Inc. |
94
Purchase Agreement |
Registration Rights Agreement |
Senior Secured Credit Facilities |
95
Other |
TRS Recovery Services, Inc. |
Integrated Payment Systems, Inc. and Integrated Payment Systems Canada Inc. |
96
Western Union Financial Services, Inc. |
Chase Merchant Services, L.L.C. |
First Data Loan Company |
First Financial Bank (formerly known as Western Union Bank) |
97
First Data POS, Inc. |
First Data Corporation |
98
NYCE Corporation |
Securities Purchase and Exchange Agreement |
99
Registration Agreement |
Stockholders Agreement |
Investor Rights Agreement |
ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES |
Fiscal 2004 | Fiscal 2003 | |||||||
(Amounts in thousands) | ||||||||
Audit Fees(1)
|
$ | 287 | $ | 165 | ||||
Audit-Related Fees(2)
|
261 | | ||||||
Tax Fees(3)
|
| | ||||||
All Other Fees(4)
|
| |
(1) | Audit Fees consist of fees billed for professional services rendered for the audit of our consolidated annual financial statements and review of the interim consolidated financial statements included in quarterly reports and services that are normally provided by Deloitte & Touche LLP in connection with statutory and regulatory filings or engagements. |
100
(2) | Audit-Related Fees consist of fees billed for assurance and related services that are reasonably related to the performance of the audit or review of our consolidated financial statements and are not reported under Audit Fees. |
(3) | Tax Fees consist of fees billed for professional services rendered for tax compliance, tax advisor and tax planning (domestic and international). These services include assistance regarding federal, state and international tax compliance and tax planning. |
(4) | All Other Fees consist of fees for products and services other than the services reported above. There were no All Other Fees incurred in fiscal 2004 and fiscal 2003. |
ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES |
Report of Deloitte & Touche LLP, Independent Registered Public Accounting Firm | |
Consolidated Balance Sheets as of December 31, 2003 and 2004 | |
Consolidated Statements of Income for the three years ended December 31, 2004 | |
Consolidated Statement of Stockholders (Deficiency) Equity for the three years ended December 31, 2004 | |
Consolidated Statements of Cash Flows for the three years ended December 31, 2004 | |
Notes to Consolidated Financial Statements |
All schedules have been omitted as they are either not required or not applicable or the required information is included in the consolidated financial statements or notes thereto. |
2 | .1 | Restructuring Agreement, dated as of December 10, 2003, by and among Global Cash Access, L.L.C., FDFS Holdings, LLC, First Data Corporation, M&C International, Karim Maskatiya and Robert Cucinotta | ||
2 | .2 | First Amendment to Restructuring Agreement, dated as of January 20, 2004, by and among Global Cash Access, L.L.C., FDFS Holdings, LLC, First Data Corporation, M&C International, Karim Maskatiya and Robert Cucinotta | ||
2 | .3 | Second Amendment to Restructuring Agreement, dated as of February 20, 2004, by and among Global Cash Access, L.L.C., FDFS Holdings, LLC, First Data Corporation, M&C International, Karim Maskatiya, Robert Cucinotta and GCA Holdings, L.L.C. | ||
2 | .4 | Third Amendment to Restructuring Agreement, dated as of March 3, 2004, by and among Global Cash Access, L.L.C., FDFS Holdings, LLC, First Data Corporation, M&C International, Karim Maskatiya, Robert Cucinotta and GCA Holdings, L.L.C. | ||
2 | .5 | Securities Purchase and Exchange Agreement, dated as of April 19, 2004, by and among GCA Holdings, L.L.C., the Purchasers named therein, M&C International, Bank of America Corporation, Karim Maskatiya and Robert Cucinotta | ||
2 | .6 | Amendment, Assignment and Assumption Agreement, dated as of May 13, 2004 | ||
3 | .1 | Certificate of Incorporation of Global Cash Access, Inc. | ||
3 | .2 | Bylaws of Global Cash Access, Inc. |
101
4
.1
Registration Rights Agreement, dated as of March 10, 2004,
by and among Global Cash Access, L.L.C., Global Cash Access
Finance Corporation, CCI Acquisition, LLC, Central Credit, LLC
and Banc of America Securities LLC
4
.2
Indenture relating to $235,000,000 aggregate principal amount of
8
3
/
4
% Senior
Subordinated Notes due 2012
4
.3
Form of
8
3
/
4
% Senior
Subordinated Notes due 2012
4
.4
Assumption Agreement, dated as of June 7, 2004, by Global
Cash Access, Inc. and the Subsidiary Guarantors named therein
10
.1
Lease Agreement, dated as of March 8, 2000, by and between
Global Cash Access, L.L.C. and American Pacific Capital Gateway
Bldg D Co., L.L.C.
10
.2
Credit Agreement dated as of March 10, 2004 among GCA
Holdings, L.L.C., Global Cash Access, L.L.C., the lenders from
time to time party thereto, Bank of America, N.A. as
Administrative Agent, L/ C Issuer and Swingline Lender and Banc
of America Securities LLC, as sole lead arranger and sole book
manager
10
.3
Amendment No. 1 to Credit Agreement, dated as of
April 27, 2004, among GCA Holdings, L.L.C., Global Cash
Access, L.L.C., the lenders from time to time party thereto,
Bank of America, N.A. as Administrative Agent, L/ C Issuer and
Swingline Lender
10
.4
Guaranty, dated as of March 10, 2004, among GCA Holdings,
L.L.C., the guarantors from time to time party hereto and Bank
of America, N.A., as Administrative Agent
10
.5
Security Agreement, dated as of March 10, 2004, among the
loan parties from time to time party thereto and Bank of
America, N.A., as Collateral Agent
10
.6
Pledge Agreement, dated as of March 10, 2004, among the
loan parties from time to time party thereto and Bank of
America, N.A., as Collateral Agent
10
.7
Membership Unit Redemption Agreement, dated as of
March 10, 2004, between FDFS Holdings, LLC and GCA
Holdings, L.L.C.
10
.8
Sponsorship Agreement, dated as of November 1999, by and between
BA Merchant Services, Inc. and Global Cash Access, L.L.C., as
amended by Amendment Number 1 to the Sponsorship Agreement,
dated as of September 2000, among BA Merchant Services, Global
Cash Access, L.L.C. and First Data Corporation
10
.9
Sponsorship Indemnification Agreement, dated as of
March 10, 2004, by and between Global Cash Access, L.L.C.
and First Data Corporation
10
.10
Amended and Restated Software License Agreement, dated as of
March 10, 2004, between Infonox on the Web and Global Cash
Access, L.L.C.
10
.11
Professional Services Agreement, dated as of March 10,
2004, between Infonox on the Web and Global Cash Access, L.L.C.
10
.12
Patent License Agreement, dated as of March 10, 2004,
between USA Payments and Global Cash Access, L.L.C.
10
.13
Amended and Restated Electronic Payment Processing Agreement,
dated as of March 10, 2004, between Global Cash
Access, L.L.C., USA Payments Inc. and USA Payment Systems, Inc.
10
.14
Letter Agreement Relating to Technology, dated May 13,
2004, among Global Cash Access, L.L.C., USA Payments, USA
Payment Systems and Infonox on the Web
10
.15
Automated Teller Machine Sponsorship Agreement by and between
Global Cash Access, L.L.C. and Western Union Bank, dated as of
November 12, 2002, and First Amendment to Automated Teller
Machine Sponsorship Agreement, dated as of March 10,
2004, between Global Cash Access, L.L.C. and First Financial Bank
10
.16
Membership Unit Purchase Agreement, dated as of March 10,
2004, by and among Bank of America Corporation, M&C
International and GCA Holdings, L.L.C.
102
10
.17
Amendment to Treasury Services Terms and Conditions
Booklet ATM Cash Services, dated as of March 8,
2004, by and between Global Cash Access, L.L.C. and Bank of
America, N.A.
10
.18
Limited Liability Company Agreement of QuikPlay, LLC, dated as
of December 6, 2000, between Global Cash Access, L.L.C. and
IGT
10
.19
Registration Agreement, dated as of May 13, 2004, by and
among GCA Holdings, L.L.C., the Investors named therein, M&C
International and Bank of America Corporation
10
.20
Stockholders Agreement, dated as of May 13, 2004, by and
among GCA Holdings, L.L.C., the Investors named therein, M&C
International and Bank of America Corporation
10
.21
Investor Rights Agreement, dated as of May 13, 2004, by and
among GCA Holdings, L.L.C., the Investors named therein and
M&C International
10
.22
Noncompete Agreement, dated as of May 14, 2004, by and
between GCA Holdings, Inc. and Kirk Sanford
*10
.23
Employment Agreement, dated as of July 12, 2004, by and
between Global Cash Access, Inc. and Harry C. Hagerty
*10
.24
Notice of Stock Option Award and Stock Option Award Agreement,
dated as of September 1, 2004, by and between GCA Holdings,
Inc. and Harry C. Hagerty
*10
.25
GCA Holdings, Inc. 2005 Stock Incentive Plan
21
.1
Subsidiaries of Global Cash Access, Inc.
24
.1
Power of Attorney (see page 104)
31
.1
Certification of Kirk E. Sanford, Chief Executive Officer of
Global Cash Access, Inc. dated March 10, 2005 in accordance
with 18 U.S.C. 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31
.2
Certification of Harry C. Hagerty, Chief Financial Officer of
Global Cash Access, Inc. dated March 10, 2005 in accordance
with 18 U.S.C. 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32
.1
Certification of Kirk E. Sanford, Chief Executive Officer of
Global Cash Access, Inc. dated March 10, 2005 in accordance
with 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32
.2
Certification of Harry C. Hagerty, Chief Financial Officer of
Global Cash Access, Inc. dated March 10, 2005 in accordance
with 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
| Incorporated by reference to the same numbered exhibit to the Registration Statement of Global Cash Access, Inc. on Form S-4 (Registration No. 333 -117218) previously filed with the SEC. |
* | Management contracts or compensatory plans or arrangements. |
103
GLOBAL CASH ACCESS, INC. |
By: | /s/ Kirk Sanford |
|
|
Kirk Sanford | |
Chief Executive Officer |
Signature | Title | Date | ||||
/s/ Kirk Sanford
|
President, Chief Executive Officer (Principal Executive
Officer)
and Director |
March 10, 2005 | ||||
/s/ Harry C. Hagerty
|
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer) |
March 10, 2005 | ||||
/s/ Karim Maskatiya
|
Director | March 10, 2005 | ||||
/s/ Robert Cucinotta
|
Director | March 10, 2005 | ||||
/s/ Walter G. Kortschak
|
Director | March 10, 2005 | ||||
/s/ Charles J. Fitzgerald
|
Director | March 10, 2005 | ||||
/s/ E. Miles Kilburn
|
Director | March 10, 2005 |
104
2 | .1 | Restructuring Agreement, dated as of December 10, 2003, by and among Global Cash Access, L.L.C., Holdings, LLC, First Data Corporation, M&C International, Karim Maskatiya and Robert Cucinotta | ||
2 | .2 | First Amendment to Restructuring Agreement, dated as of January 20, 2004, by and among Global Cash Access, L.L.C., FDFS Holdings, LLC, First Data Corporation, M&C International, Karim Maskatiya and Robert Cucinotta | ||
2 | .3 | Second Amendment to Restructuring Agreement, dated as of February 20, 2004, by and among Global Cash Access, L.L.C., FDFS Holdings, LLC, First Data Corporation, M&C International, Karim Maskatiya, Robert Cucinotta and GCA Holdings, L.L.C. | ||
2 | .4 | Third Amendment to Restructuring Agreement, dated as of March 3, 2004, by and among Global Cash Access, L.L.C., FDFS Holdings, LLC, First Data Corporation, M&C International, Karim Maskatiya, Robert Cucinotta and GCA Holdings, L.L.C. | ||
2 | .5 | Securities Purchase and Exchange Agreement, dated as of April 19, 2004, by and among GCA Holdings, L.L.C., the Purchasers named therein, M&C International, Bank of America Corporation, Karim Maskatiya and Robert Cucinotta | ||
2 | .6 | Amendment, Assignment and Assumption Agreement, dated as of May 13, 2004 | ||
3 | .1 | Certificate of Incorporation of Global Cash Access, Inc. | ||
3 | .2 | Bylaws of Global Cash Access, Inc. | ||
4 | .1 | Registration Rights Agreement, dated as of March 10, 2004, by and among Global Cash Access, L.L.C., Global Cash Access Finance Corporation, CCI Acquisition, LLC, Central Credit, LLC and Banc of America Securities LLC | ||
4 | .2 | Indenture relating to $235,000,000 aggregate principal amount of 8 3 / 4 % Senior Subordinated Notes due 2012 | ||
4 | .3 | Form of 8 3 / 4 % Senior Subordinated Notes due 2012 | ||
4 | .4 | Assumption Agreement, dated as of June 7, 2004, by Global Cash Access, Inc. and the Subsidiary Guarantors named therein | ||
10 | .1 | Lease Agreement, dated as of March 8, 2000, by and between Global Cash Access, L.L.C. and American Pacific Capital Gateway Bldg D Co., L.L.C. | ||
10 | .2 | Credit Agreement dated as of March 10, 2004 among GCA Holdings, L.L.C., Global Cash Access, L.L.C., the lenders from time to time party thereto, Bank of America, N.A. as Administrative Agent, L/ C Issuer and Swingline Lender and Banc of America Securities LLC, as sole lead arranger and sole book manager | ||
10 | .3 | Amendment No. 1 to Credit Agreement, dated as of April 27, 2004, among GCA Holdings, L.L.C., Global Cash Access, L.L.C., the lenders from time to time party thereto, Bank of America, N.A. as Administrative Agent, L/ C Issuer and Swingline Lender | ||
10 | .4 | Guaranty, dated as of March 10, 2004, among GCA Holdings, L.L.C., the guarantors from time to time party hereto and Bank of America, N.A., as Administrative Agent | ||
10 | .5 | Security Agreement, dated as of March 10, 2004, among the loan parties from time to time party thereto and Bank of America, N.A., as Collateral Agent | ||
10 | .6 | Pledge Agreement, dated as of March 10, 2004, among the loan parties from time to time party thereto and Bank of America, N.A., as Collateral Agent | ||
10 | .7 | Membership Unit Redemption Agreement, dated as of March 10, 2004, between FDFS Holdings, LLC and GCA Holdings, L.L.C. | ||
10 | .8 | Sponsorship Agreement, dated as of November 1999, by and between BA Merchant Services, Inc. and Global Cash Access, L.L.C., as amended by Amendment Number 1 to the Sponsorship Agreement, dated as of September 2000, among BA Merchant Services, Global Cash Access, L.L.C. and First Data Corporation | ||
10 | .9 | Sponsorship Indemnification Agreement, dated as of March 10, 2004, by and between Global Cash Access, L.L.C. and First Data Corporation | ||
10 | .10 | Amended and Restated Software License Agreement, dated as of March 10, 2004, between Infonox on the Web and Global Cash Access, L.L.C. |
10
.11
Professional Services Agreement, dated as of March 10,
2004, between Infonox on the Web and Global Cash Access, L.L.
10
.12
Patent License Agreement, dated as of March 10, 2004,
between USA Payments and Global Cash Access, L.L.C.
10
.13
Amended and Restated Electronic Payment Processing Agreement,
dated as of March 10, 2004, between Global Cash
Access, L.L.C., USA Payments Inc. and USA Payment Systems, Inc.
10
.14
Letter Agreement Relating to Technology, dated May 13,
2004, among Global Cash Access, L.L.C., USA Payments, USA
Payment Systems and Infonox on the Web
10
.15
Automated Teller Machine Sponsorship Agreement by and between
Global Cash Access, L.L.C. and Western Union Bank, dated as of
November 12, 2002, and First Amendment to Automated Teller
Machine Sponsorship Agreement, dated as of March 10,
2004, between Global Cash Access, L.L.C. and First Financial Bank
10
.16
Membership Unit Purchase Agreement, dated as of March 10,
2004, by and among Bank of America Corporation, M&C
International and GCA Holdings, L.L.C.
10
.17
Amendment to Treasury Services Terms and Conditions
Booklet ATM Cash Services, dated as of March 8,
2004, by and between Global Cash Access, L.L.C. and Bank of
America, N.A.
10
.18
Limited Liability Company Agreement of QuikPlay, LLC, dated as
of December 6, 2000, between Global Cash Access, L.L.C. and
IGT
10
.19
Registration Agreement, dated as of May 13, 2004, by and
among GCA Holdings, L.L.C., the Investors named therein, M&C
International and Bank of America Corporation
10
.20
Stockholders Agreement, dated as of May 13, 2004, by and
among GCA Holdings, L.L.C., the Investors named therein, M&C
International and Bank of America Corporation
10
.21
Investor Rights Agreement, dated as of May 13, 2004, by and
among GCA Holdings, L.L.C., the Investors named therein and
M&C International
10
.22
Noncompete Agreement, dated as of May 14, 2004, by and
between GCA Holdings, Inc. and Kirk Sanford
*10
.23
Employment Agreement, dated as of July 12, 2004, by and
between Global Cash Access, Inc. and Harry C. Hagerty
*10
.24
Notice of Stock Option Award and Stock Option Award Agreement,
dated as of September 1, 2004, by and between GCA Holdings,
Inc. and Harry C. Hagerty
*10
.25
GCA Holdings, Inc. 2005 Stock Incentive Plan
21
.1
Subsidiaries of Global Cash Access, Inc.
24
.1
Power of Attorney (see page 104)
31
.1
Certification of Kirk E. Sanford, Chief Executive Officer of
Global Cash Access, Inc. dated March , 2005 in
accordance with 18 U.S.C. 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
31
.2
Certification of Harry C. Hagerty, Chief Financial Officer of
Global Cash Access, Inc. dated March , 2005 in
accordance with 18 U.S.C. 1350, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002
32
.1
Certification of Kirk E. Sanford, Chief Executive Officer of
Global Cash Access, Inc. dated March , 2005 in
accordance with 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
32
.2
Certification of Harry C. Hagerty, Chief Financial Officer of
Global Cash Access, Inc. dated March , 2005 in
accordance with 18 U.S.C. 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
| Incorporated by reference to the same numbered exhibit to the Registration Statement of Global Cash Access, Inc.s on Form S-4 (Registration No. 333 -117218) previously filed with the SEC. |
* | Management contracts or compensatory plans or arrangements. |
Exhibit 4.3
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ( DTC ), TO THE CO-OBLIGORS OR THEIR AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE, OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
THIS GLOBAL NOTE IS HELD BY THE DEPOSITARY (AS DEFINED IN THE INDENTURE GOVERNING THIS NOTE) OR ITS NOMINEE IN CUSTODY FOR THE BENEFIT OF THE BENEFICIAL OWNERS HEREOF, AND IS NOT TRANSFERABLE TO ANY PERSON UNDER ANY CIRCUMSTANCES EXCEPT THAT (1) THE TRUSTEE MAY MAKE SUCH NOTATIONS HEREON AS MAY BE REQUIRED PURSUANT TO SECTION 2.07 OF THE INDENTURE, (2) THIS GLOBAL NOTE MAY BE EXCHANGED IN WHOLE BUT NOT IN PART PURSUANT TO SECTION 2.07(a) OF THE INDENTURE, (3) THIS GLOBAL NOTE MAY BE DELIVERED TO THE TRUSTEE FOR CANCELLATION PURSUANT TO SECTION 2.12 OF THE INDENTURE AND (4) THIS GLOBAL NOTE MAY BE TRANSFERRED TO A SUCCESSOR DEPOSITARY WITH THE PRIOR WRITTEN CONSENT OF THE CO-OBLIGORS.
CUSIP 37944FAB3
No. 1 | $235,000,000 |
GLOBAL CASH ACCESS, INC.
GLOBAL CASH ACCESS FINANCE CORPORATION
8¾% Senior Subordinated Notes due 2012
Global Cash Access, Inc., a Delaware corporation (the Company ) and Global Cash Access Finance Corporation, a Delaware corporation ( Finance Corp. , and together with the Company, the Co-Obligors ), which terms include any successor under the Indenture hereinafter referred to, for value received, promise to pay to CEDE & CO., or its registered assigns, the principal sum of TWO HUNDRED THIRTY FIVE MILLION UNITED STATES DOLLARS ($235,000,000) on March 15, 2012.
Interest Payment Dates: March 15 and September 15 of each year, commencing September 15, 2004.
Regular Record Dates: March 1 and September 1 of each year.
Reference is hereby made to the further provisions of this Note set forth on the reverse hereof, which further provisions shall for all purposes have the same effect as if set forth at this place.
Issue Date: October 14, 2004
IN WITNESS WHEREOF, the Co-Obligors have caused this Note to be signed manually or by facsimile by their duly authorized officers.
GLOBAL CASH ACCESS, INC.
|
||||
By: | /s/ Kirk Sanford | |||
Name: | Kirk Sanford | |||
Title: | President | |||
By: | /s/ Harry Hagerty | |||
Name: | Harry Hagerty | |||
Title: | Chief Financial Officer | |||
GLOBAL CASH ACCESS FINANCE CORPORATION
|
||||
By: | /s/ Kirk Sanford | |||
Name: | Kirk Sanford | |||
Title: | President | |||
By: | /s/ Harry Hagerty | |||
Name: | Harry Hagerty | |||
Title: | Chief Financial Officer | |||
TRUSTEES CERTIFICATE OF AUTHENTICATION
This is one of the 8¾% Senior Subordinated Notes due 2012 described in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee |
||||
By: | ||||
Authorized Signatory | ||||
Date: October 14, 2004
GLOBAL CASH ACCESS, INC.
GLOBAL CASH ACCESS FINANCE CORPORATION
8¾% Senior Subordinated Notes due 2012
Capitalized terms used herein shall have the meanings assigned to them in the Indenture referred to below unless otherwise indicated.
1. Interest . The Co-Obligors promise to pay interest on the principal amount of this Note at 8 3 / 4 % per annum from the date hereof until maturity and shall pay the Liquidated Damages, if any, payable pursuant to the Registration Rights Agreement, dated March 10, 2004, referred to below. The Co-Obligors shall pay interest and Liquidated Damages, if any, semi-annually in arrears on March 15 and September 15 of each year, or if any such day is not a Business Day, on the next succeeding Business Day (each an Interest Payment Date ). Interest on the Notes shall accrue from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance; provided that if there is no existing Default in the payment of interest, and if this Note is authenticated between a record date referred to on the face hereof and the next succeeding Interest Payment Date, interest shall accrue from such next succeeding Interest Payment Date; provided further that the first Interest Payment Date shall be September 15, 2004. The Co-Obligors shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue principal and premium, if any, from time to time on demand at a rate that is 1% per annum in excess of the rate then in effect; they shall pay interest (including post-petition interest in any proceeding under any Bankruptcy Law) on overdue installments of interest and Liquidated Damages (without regard to any applicable grace periods) from time to time on demand at the same rate to the extent lawful. Interest shall be computed on the basis of a 360-day year of twelve 30-day months. If a payment date is not a Business Day, payment may be made on the next succeeding day that is a Business Day, and no interest shall accrue on such payment for the intervening period.
2. Method of Payment . The Co-Obligors shall pay interest on the Notes (except defaulted interest) and Liquidated Damages, if any, to the Persons who are registered Holders of Notes at the close of business on the 15th day of the month next preceding the Interest Payment Date, even if such Notes are canceled after such record date and on or before such Interest Payment Date, except as provided in Section 2.13 of the Indenture with respect to defaulted interest. The Co-Obligors shall pay all Liquidated Damages, if any, on the Interest Payment Dates and in the amounts set forth in the Registration Rights Agreement. The Notes shall be payable as to principal, premium and Liquidated Damages, if any, and interest at the office or agency of the Co-Obligors maintained for such purpose in The City of New York, or, at the option of the Company, payment of interest and Liquidated Damages, if any, may be made by check mailed to the Holders at their addresses set forth in the register of Holders, and provided that payment
by wire transfer of immediately available funds shall be required with respect to principal of and interest, premium and Liquidated Damages, if any, on, all Global Notes and all other Notes the Holders of which shall have provided wire transfer instructions to the Co-Obligors or the Paying Agent. Such payment shall be in such coin or currency of the United States of America as at the time of payment is legal tender for payment of public and private debts.
3. Paying Agent and Registrar . Initially, The Bank of New York, the Trustee under the Indenture, shall act as Paying Agent and Registrar. The Co-Obligors may change any Paying Agent or Registrar without notice to any Holder. The Company or any of its Subsidiaries may act in any such capacity.
4. Indenture . The Co-Obligors issued the Notes under an Indenture dated as of March 10, 2004 (the Indenture ) among the Co-Obligors, the Subsidiary Guarantors and the Trustee. The terms of the Notes include those stated in the Indenture and those made part of the Indenture by reference to the Trust Indenture Act of 1939, as amended. The Notes are subject to all such terms, and Holders are referred to the Indenture and such Act for a statement of such terms. To the extent any provision of this Note conflicts with the express provisions of the Indenture, the provisions of the Indenture shall govern and be controlling. The Indenture pursuant to which this Note is issued provides that an unlimited amount of Additional Notes may be issued thereunder, subject to compliance with the covenants therein.
5. Optional Redemption . (a) At any time prior to March 15, 2008, the Co-Obligors may redeem all or a portion of the Notes, on not less than 30 nor more than 60 days prior notice, in amounts of $1,000 or an integral multiple thereof, at a price equal to the greater of:
(A) | 100% of the aggregate principal amount of the Notes to be redeemed, together with accrued and unpaid interest, if any, and Liquidated Damages, if any, to the date of redemption, and | |||
(B) | as determined by an Independent Investment Banker, the sum of the present values of the remaining scheduled payments of principal and interest on the Notes being redeemed (not including any portion of such payments of interest accrued as of the date of redemption) from the date of redemption to March 15, 2008 discounted to the redemption date on a semiannual basis (assuming a 360-day year consisting of twelve 30-day months) at the Adjusted Treasury Rate plus 50 basis points, together with accrued and unpaid interest, if any, and Liquidated Damages, if any, to the date of redemption. |
(b) On or after March 15, 2008, the Co-Obligors may redeem all or a portion of the Notes, on not less than 30 nor more than 60 days prior notice, in amounts of $1,000 or an integral multiple thereof at the following redemption prices (expressed as percentages of the principal amount), if redeemed during the 12-month period beginning March 15 of the years indicated below:
Year | Redemption Price | |||
2008
|
104.375% | |||
2009
|
102.188% | |||
2010
|
100.000% |
and thereafter at 100% of the principal amount, in each case, together with accrued and unpaid interest, if any, to the redemption date (subject to the rights of holders of record on relevant record dates to receive interest due on an interest payment date).
(c) At any time prior to March 15, 2007, the Co-Obligors may use the Net Cash Proceeds of one or more Equity Offerings (1) by the Company or (2) by Holdings to the extent the Net Cash Proceeds thereof are contributed to the Company or used to purchase Capital Stock (other than Disqualified Capital Stock) of the Company from the Company, to redeem up to an aggregate of 35% of the aggregate principal amount of Notes issued under the Indenture (including the principal amount of any Additional Notes issued under the Indenture) at a redemption price equal to 108.750% of the aggregate principal amount of the Notes redeemed, plus accrued and unpaid interest, if any, and Liquidated Damages, if any, to the redemption date (subject to the rights of holders of record on relevant record dates to receive interest due on an interest payment date); provided that this redemption provision shall not be applicable with respect to any transaction that results in a Change of Control. At least 65% of the aggregate principal amount of Notes issued under the Indenture (including the principal amount of any Additional Notes issued under the Indenture) must remain outstanding immediately after the occurrence of such redemption. In order to effect this redemption, the Co-Obligors must mail a notice of redemption no later than 30 days after the closing of the related Equity Offering and must complete such redemption within 60 days of the closing of the Equity Offering.
6. Mandatory Redemption . Except as set forth in paragraph 8 below, the Company shall not be required to make mandatory redemption or sinking fund payments with respect to the Notes.
7. Special Redemption . If a Holder or Beneficial Owner of a Note is required to be licensed, qualified or found suitable under applicable Gaming Laws and is not so licensed, qualified or found suitable within any time period specified by the applicable Gaming Authority, the Co-Obligors shall have the right, at their election, (1) to require the Holder or Beneficial Owner to dispose of all or a portion of the Holders or Beneficial Owners Notes within 120 days after the Holder or Beneficial Owner receives notice of the finding by the applicable Gaming Authorities, or any other different time period as may be prescribed by those authorities or (2) to redeem such Notes at a redemption price equal to the lesser of:
(1) | such Holders or Beneficial Owners cost, plus accrued and unpaid interest and Liquidated Damages, if any, to the earlier of the redemption date or the date of the finding of unsuitability; | |||
(2) | 100% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, to the earlier of the redemption date or the date of the finding of unsuitability; or | |||
(3) | such other lesser amount as may be required by any governmental Gaming Authority. |
8. Repurchase at Option of Holders .
(a) Upon the occurrence of a Change of Control, each Holder may require the Co-Obligors to purchase such Holders Notes in whole or in part in integral multiples of $1,000, at a purchase price in cash in an amount equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to the date of purchase, pursuant to a Change of Control Offer in accordance with the procedures set forth in the Indenture.
(b) Under certain circumstances described in the Indenture, the Co-Obligors will be required to apply the proceeds of Asset Sales to the repayment of the Notes and Pari Passu Indebtedness.
9. Selection and Notice of Redemption . If less than all of the Notes are to be redeemed or purchased in an offer to purchase at any time, the Trustee shall select the Notes to be redeemed or purchased among the Holders of the Notes not more than 90 days prior to the redemption date in compliance with the requirements of the principal national securities exchange, if any, on which the Notes are listed or, if the Notes are not so listed, on a pro rata basis, by lot or in accordance with any other method the Trustee considers fair and appropriate. Redemptions pursuant to Section 3.07(c) hereof shall be made on a pro rata basis or on as nearly a pro rata basis as practicable (subject to the provisions of DTC or other depositary). In the event of partial redemption by lot, the particular Notes to be redeemed shall be selected, unless otherwise provided herein, not
less than 30 nor more than 60 days prior to the redemption date by the Trustee from the outstanding Notes not previously called for redemption. Notices of redemption may not be conditional. If any Note is to be redeemed in part only, the notice of redemption that relates to that Note will state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion of the original Note will be issued in the name of the Holder thereof upon cancellation of the original Note. Notes called for redemption become due on the date fixed for redemption. On and after the redemption date, interest and Liquidated Damages, if any, cease to accrue on Notes or portions of them called for redemption.
10. Denominations, Transfer, Exchange . The Notes are in registered form without coupons in denominations of $1,000 and integral multiples of $1,000. The transfer of Notes may be registered and Notes may be exchanged as provided in this Indenture. The Registrar and the Trustee may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and the Co-Obligors may require a Holder to pay any taxes and fees required by law or permitted by the Indenture. The Co-Obligors are not required to transfer or exchange any Note selected for redemption. Also, the Co-Obligors are not required to transfer or exchange any Note for a period of 15 days before the mailing of a notice of redemption of Notes to be redeemed.
11. Persons Deemed Owners . The registered Holder of a Note will be treated as its owner for all purposes.
12. Amendment, Supplement and Waiver . The Indenture or the Notes may be amended or supplemented only as provided in the Indenture.
13. Defaults . In the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to the Co-Obligors, all outstanding Notes will become due and payable immediately without further action or notice. If any other Event of Default occurs and is continuing, the Trustee or the Holders of at least 25% in principal amount of the then outstanding Notes may declare all the Notes to be due and payable immediately by notice in writing to the Co-Obligors specifying the respective Event of Default; provided , however , that so long as any Indebtedness under the Credit Agreement shall be outstanding, no such acceleration shall be effective until the earlier of (x) acceleration of any such Indebtedness under the Credit Agreement and (y) five Business Days after the giving of notice to the Co-Obligors and the Agent Bank of such acceleration. The Trustee may withhold from Holders of the Notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest) if it determines that withholding notice is in their interest. The Holders of not less than a majority in aggregate principal amount of the Notes outstanding by notice to the Trustee may on behalf of the Holders of all outstanding Notes waive any past Default and its consequences under the Indenture except a Default (1) in the payment of the principal of, premium, if any, or interest on any Note (which may only be waived with the consent of each Holder of Notes affected) or
(2) in respect of a covenant or provision which under the Indenture cannot be modified or amended without the consent of the Holder of each Note affected by such modification or amendment.
14. Subordination . The Notes are subordinated to Senior Indebtedness, as defined in the Indenture. To the extent provided in the Indenture, Senior Indebtedness must be paid before the Notes may be paid. Each of the Co-Obligors and the Subsidiary Guarantors agrees, and each Holder by accepting a Note agrees, to the subordination provisions contained in the Indenture and authorizes the Trustee to give them effect and appoints the Trustee as attorney-in-fact for such purpose.
15. Trustee Dealings with Company . The Trustee, in its individual or any other capacity, may make loans to, accept deposits from, and perform services for the Company or its Affiliates, and may otherwise deal with the Company or its Affiliates, as if it were not the Trustee.
16. No Recourse Against Others . No director, officer, employee, member or stockholder of either of the Co-Obligors or any Subsidiary Guarantor, as such, will have any liability for any obligations of the Co-Obligors or the Subsidiary Guarantors under the Notes, the Indenture, the Guarantees or the Registration Rights Agreement, or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each holder of Notes by accepting a Note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the Notes. The waiver may not be effective to waive liabilities under the federal securities laws.
17. Authentication . This Note shall not be valid until authenticated by the manual signature of the Trustee or an authenticating agent.
18. Additional Rights of Holders of Restricted Global Notes and Restricted Definitive Notes . In addition to the rights provided to Holders under the Indenture, Holders of Restricted Global Notes and Restricted Definitive Notes shall have all the rights set forth in the Registration Rights Agreement, dated as of March 10, 2004, between the Co-Obligors, the Subsidiary Guarantors and the parties named on the signature pages thereof.
19. CUSIP Numbers . Pursuant to a recommendation promulgated by the Committee on Uniform Security Identification Procedures, the Co-Obligors have caused CUSIP numbers to be printed on the Notes and the Trustee may use CUSIP numbers in notices of redemption as a convenience to Holders. No representation is made as to the accuracy of such numbers either as printed on the Notes or as contained in any notice of redemption and reliance may be placed only on the other identification numbers placed thereon.
20. Governing Law . This Note shall be governed by and construed in accordance with the laws of the State of New York, without regard to conflicts of laws principles thereof.
The Co-Obligors shall furnish to any Holder upon written request and without charge a copy of the Indenture and/or the Registration Rights Agreement. Requests may be made to:
GLOBAL CASH ACCESS, INC.
GLOBAL CASH ACCESS FINANCE CORPORATION
3525 E. Post Road
Suite 120
Las Vegas, Nevada 89120
Attention: Chief Financial Officer
Facsimile: 702-262-5039
ASSIGNMENT FORM
To assign this Note, fill in the form below:
(I) or (we) assign and transfer this Note to: | |
(Insert assignees legal name) |
(Insert assignees soc. sec. or tax I.D. no.)
(Print or type assignees name, address and zip code)
and irrevocably appoint |
to transfer this Note on the books of the Company. The agent may substitute another to act for him.
Date:
Your Signature: | ||||
(Sign exactly as your name appears on the face of this Note) | ||||
Tax Identification No.: |
||||
Signature Guarantee*: _________
* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Co-Obligors pursuant to Section 4.10 or 4.15 of the Indenture, check the appropriate box below:
o Section 4.10 | o Section 4.15 |
If you want to elect to have only part of the Note purchased by the Co-Obligors pursuant to Section 4.10 or Section 4.15 of the Indenture, state the amount you elect to have purchased:
$ ________________
Date:
Your Signature: | ||||
(Sign exactly as your name appears on the face of this Note) | ||||
Tax Identification No.: |
||||
Signature Guarantee*:
* Participant in a recognized Signature Guarantee Medallion Program (or other signature guarantor acceptable to the Trustee).
SCHEDULE OF EXCHANGES OF INTERESTS IN THE GLOBAL NOTE
The following exchanges of a part of this Global Note for an interest in another Global Note
or for a Definitive Note, or exchanges of a part of another Global Note or Definitive Note for an
interest in this Global Note, have been made:
Principal Amount at
Maturity of this
Amount of Decrease
Amount of Increase
Global Note
in Principal Amount
in Principal Amount
Following such
at Maturity of this
at Maturity of this
Decrease (or
Date of Exchange
Global Note
Global Note
Increase)
Exhibit 10.25
GCA HOLDINGS, INC.
2005 STOCK INCENTIVE PLAN
1. Purposes of the Plan . The purposes of this Plan are to attract and retain the best available personnel, to provide additional incentives to Employees, Directors and Consultants and to promote the success of the Companys business.
2. Definitions . The following definitions shall apply as used herein and in the individual Award Agreements except as defined otherwise in an individual Award Agreement. In the event a term is separately defined in an individual Award Agreement, such definition shall supercede the definition contained in this Section 2.
(a) Administrator means the Board or any of the Committees appointed to administer the Plan.
(b) Affiliate and Associate shall have the respective meanings ascribed to such terms in Rule 12b-2 promulgated under the Exchange Act.
(c) Applicable Laws means the legal requirements relating to the Plan and the Awards under applicable provisions of federal securities laws, state corporate and securities laws, the Code, the rules of any applicable stock exchange or national market system, and the rules of any non-U.S. jurisdiction applicable to Awards granted to residents therein.
(d) Assumed means that pursuant to a Corporate Transaction either (i) the Award is expressly affirmed by the Company or (ii) the contractual obligations represented by the Award are expressly assumed (and not simply by operation of law) by the successor entity or its Parent in connection with the Corporate Transaction with appropriate adjustments to the number and type of securities of the successor entity or its Parent subject to the Award and the exercise or purchase price thereof which at least preserves the compensation element of the Award existing at the time of the Corporate Transaction as determined in accordance with the instruments evidencing the agreement to assume the Award.
(e) Award means the grant of an Option, SAR, Dividend Equivalent Right, Restricted Stock, Restricted Stock Unit or other right or benefit under the Plan.
(f) Award Agreement means the written agreement evidencing the grant of an Award executed by the Company and the Grantee, including any amendments thereto.
(g) Board means the Board of Directors of the Company.
(h) Cause means, with respect to the termination by the Company or a Related Entity of the Grantees Continuous Service, that such termination is for Cause as such term is expressly defined in a then-effective written agreement between the Grantee and the Company or such Related Entity, or in the absence of such then-effective written agreement and definition, is based on, in the determination of the Administrator, the Grantees: (i) performance of any act or failure to perform any act in bad faith and to the detriment of the Company or a Related Entity; (ii) dishonesty, intentional misconduct or material breach of any agreement with
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the Company or a Related Entity; or (iii) commission of a crime involving dishonesty, breach of trust, or physical or emotional harm to any person.
(i) Change in Control means a change in ownership or control of the Company after the Registration Date effected through either of the following transactions:
(i) the direct or indirect acquisition by any person or related group of persons (other than an acquisition from or by the Company or by a Company-sponsored employee benefit plan or by a person that directly or indirectly controls, is controlled by, or is under common control with, the Company) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Companys outstanding securities pursuant to a tender or exchange offer made directly to the Companys stockholders which a majority of the Continuing Directors who are not Affiliates or Associates of the offeror do not recommend such stockholders accept, or
(ii) a change in the composition of the Board over a period of thirty-six (36) months or less such that a majority of the Board members (rounded up to the next whole number) ceases, by reason of one or more contested elections for Board membership, to be comprised of individuals who are Continuing Directors.
(j) Code means the Internal Revenue Code of 1986, as amended.
(k) Committee means any committee composed of members of the Board appointed by the Board to administer the Plan.
(l) Common Stock means the Class A Common Stock of the Company.
(m) Company means GCA Holdings, Inc., a Delaware corporation, or any successor entity that adopts the Plan in connection with a Corporate Transaction.
(n) Consultant means any person (other than an Employee or a Director, solely with respect to rendering services in such persons capacity as a Director) who is engaged by the Company or any Related Entity to render consulting or advisory services to the Company or such Related Entity.
(o) Continuing Directors means members of the Board who either (i) have been Board members continuously for a period of at least thirty-six (36) months or (ii) have been Board members for less than thirty-six (36) months and were elected or nominated for election as Board members by at least a majority of the Board members described in clause (i) who were still in office at the time such election or nomination was approved by the Board.
(p) Continuous Service means that the provision of services to the Company or a Related Entity in any capacity of Employee, Director or Consultant is not interrupted or terminated. In jurisdictions requiring notice in advance of an effective termination as an Employee, Director or Consultant, Continuous Service shall be deemed terminated upon the actual cessation of providing services to the Company or a Related Entity notwithstanding any required notice period that must be fulfilled before a termination as an Employee, Director or
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Consultant can be effective under Applicable Laws. A Grantees Continuous Service shall be deemed to have terminated either upon an actual termination of Continuous Service or upon the entity for which the Grantee provides services ceasing to be a Related Entity. Continuous Service shall not be considered interrupted in the case of (i) any approved leave of absence, (ii) transfers among the Company, any Related Entity, or any successor, in any capacity of Employee, Director or Consultant, or (iii) any change in status as long as the individual remains in the service of the Company or a Related Entity in any capacity of Employee, Director or Consultant (except as otherwise provided in the Award Agreement). An approved leave of absence shall include sick leave, military leave, or any other authorized personal leave. For purposes of each Incentive Stock Option granted under the Plan, if such leave exceeds three (3) months, and reemployment upon expiration of such leave is not guaranteed by statute or contract, then the Incentive Stock Option shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the expiration of such three (3) month period.
(q) Corporate Transaction means any of the following transactions, provided, however, that the Administrator shall determine under parts (iv) and (v) whether multiple transactions are related, and its determination shall be final, binding and conclusive:
(i) a merger or consolidation in which the Company is not the surviving entity, except for a transaction the principal purpose of which is to change the state in which the Company is incorporated;
(ii) the sale, transfer or other disposition of all or substantially all of the assets of the Company;
(iii) the complete liquidation or dissolution of the Company;
(iv) any reverse merger or series of related transactions culminating in a reverse merger (including, but not limited to, a tender offer followed by a reverse merger) in which the Company is the surviving entity but (A) the shares of Common Stock outstanding immediately prior to such merger are converted or exchanged by virtue of the merger into other property, whether in the form of securities, cash or otherwise, or (B) in which securities possessing more than fifty percent (50%) of the total combined voting power of the Companys outstanding securities are transferred to a person or persons different from those who held such securities immediately prior to such merger or the initial transaction culminating in such merger, but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction; or
(v) acquisition in a single or series of related transactions by any person or related group of persons (other than the Company or by a Company-sponsored employee benefit plan) of beneficial ownership (within the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more than fifty percent (50%) of the total combined voting power of the Companys outstanding securities but excluding any such transaction or series of related transactions that the Administrator determines shall not be a Corporate Transaction.
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(r) Covered Employee means an Employee who is a covered employee under Section 162(m)(3) of the Code.
(s) Director means a member of the Board or the board of directors of any Related Entity.
(t) Disability means as defined under the long-term disability policy of the Company or the Related Entity to which the Grantee provides services regardless of whether the Grantee is covered by such policy. If the Company or the Related Entity to which the Grantee provides service does not have a long-term disability plan in place, Disability means that a Grantee is unable to carry out the responsibilities and functions of the position held by the Grantee by reason of any medically determinable physical or mental impairment for a period of not less than ninety (90) consecutive days. A Grantee will not be considered to have incurred a Disability unless he or she furnishes proof of such impairment sufficient to satisfy the Administrator in its discretion.
(u) Dividend Equivalent Right means a right entitling the Grantee to compensation measured by dividends paid with respect to Common Stock.
(v) Employee means any person, including an Officer or Director, who is in the employ of the Company or any Related Entity, subject to the control and direction of the Company or any Related Entity as to both the work to be performed and the manner and method of performance. The payment of a directors fee by the Company or a Related Entity shall not be sufficient to constitute employment by the Company.
(w) Exchange Act means the Securities Exchange Act of 1934, as amended.
(x) Fair Market Value means, as of any date, the value of Common Stock determined as follows:
(i) If the Common Stock is listed on one or more established stock exchanges or national market systems, including without limitation The Nasdaq National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its Fair Market Value shall be the closing sales price for such stock (or the closing bid, if no sales were reported) as quoted on the principal exchange or system on which the Common Stock is listed (as determined by the Administrator) on the date of determination (or, if no closing sales price or closing bid was reported on that date, as applicable, on the last trading date such closing sales price or closing bid was reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable;
(ii) If the Common Stock is regularly quoted on an automated quotation system (including the OTC Bulletin Board) or by a recognized securities dealer, its Fair Market Value shall be the closing sales price for such stock as quoted on such system or by such securities dealer on the date of determination, but if selling prices are not reported, the Fair Market Value of a share of Common Stock shall be the mean between the high bid and low asked prices for the Common Stock on the date of determination (or, if no such prices were reported on that date, on the last date such prices were reported), as reported in The Wall Street Journal or such other source as the Administrator deems reliable; or
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(iii) In the absence of an established market for the Common Stock of the type described in (i) and (ii), above, the Fair Market Value thereof shall be determined by the Administrator in good faith.
(y) Grantee means an Employee, Director or Consultant who receives an Award under the Plan.
(z) Incentive Stock Option means an Option intended to qualify as an incentive stock option within the meaning of Section 422 of the Code.
(aa) Non-Qualified Stock Option means an Option not intended to qualify as an Incentive Stock Option.
(bb) Officer means a person who is an officer of the Company or a Related Entity within the meaning of Section 16 of the Exchange Act and the rules and regulations promulgated thereunder.
(cc) Option means an option to purchase Shares pursuant to an Award Agreement granted under the Plan.
(dd) Parent means a parent corporation, whether now or hereafter existing, as defined in Section 424(e) of the Code.
(ee) Performance-Based Compensation means compensation qualifying as performance-based compensation under Section 162(m) of the Code.
(ff) Plan means this 2005 Stock Incentive Plan.
(gg) Registration Date means the first to occur of (i) the closing of the first sale to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, of (A) the Common Stock or (B) the same class of securities of a successor corporation (or its Parent) issued pursuant to a Corporate Transaction in exchange for or in substitution of the Common Stock; and (ii) in the event of a Corporate Transaction, the date of the consummation of the Corporate Transaction if the same class of securities of the successor corporation (or its Parent) issuable in such Corporate Transaction shall have been sold to the general public pursuant to a registration statement filed with and declared effective by the Securities and Exchange Commission under the Securities Act of 1933, as amended, on or prior to the date of consummation of such Corporate Transaction.
(hh) Related Entity means any Parent or Subsidiary of the Company and any business, corporation, partnership, limited liability company or other entity in which the Company or a Parent or a Subsidiary of the Company holds a substantial ownership interest, directly or indirectly.
(ii) Replaced means that pursuant to a Corporate Transaction the Award is replaced with a comparable stock award or a cash incentive program of the Company, the successor entity (if applicable) or Parent of either of them which preserves the compensation
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element of such Award existing at the time of the Corporate Transaction and provides for subsequent payout in accordance with the same (or a more favorable) vesting schedule applicable to such Award. The determination of Award comparability shall be made by the Administrator and its determination shall be final, binding and conclusive.
(jj) Restricted Stock means Shares issued under the Plan to the Grantee for such consideration, if any, and subject to such restrictions on transfer, rights of first refusal, repurchase provisions, forfeiture provisions, and other terms and conditions as established by the Administrator.
(kk) Restricted Stock Units means an Award which may be earned in whole or in part upon the passage of time or the attainment of performance criteria established by the Administrator and which may be settled for cash, Shares or other securities or a combination of cash, Shares or other securities as established by the Administrator.
(ll) Rule 16b-3 means Rule 16b-3 promulgated under the Exchange Act or any successor thereto.
(mm) SAR means a stock appreciation right entitling the Grantee to Shares or cash compensation, as established by the Administrator, measured by appreciation in the value of Common Stock.
(nn) Share means a share of the Class A Common Stock.
(oo) Subsidiary means a subsidiary corporation, whether now or hereafter existing, as defined in Section 424(f) of the Code.
3. Stock Subject to the Plan .
(a) Subject to the provisions of Section 10, below, the maximum aggregate number of Shares which may be issued pursuant to all Awards (including Incentive Stock Options) is 3,841,615 Shares, plus an annual increase to be added on the first business day of each fiscal year beginning with the fiscal year commencing on January 1, 2006 equal to three percent (3%) of the number of Shares outstanding as of such date or a lesser number of Shares determined by the Administrator. Notwithstanding the foregoing, subject to the provisions of Section 10, below, of the number of Shares specified above, the maximum aggregate number of Shares available for grant of Incentive Stock Options shall be 3,800,000 Shares, plus an annual increase to be added on the first day of each fiscal year beginning with the fiscal year commencing on January 1, 2006 equal to the lesser of (x) 3,800,000 Shares, (y) three percent (3%) of the number of Shares outstanding as of such date, or (z) a lesser number of Shares determined by the Administrator. The Shares to be issued pursuant to Awards may be authorized, but unissued, or reacquired Common Stock.
(b) Any Shares covered by an Award (or portion of an Award) which is forfeited, canceled or expires (whether voluntarily or involuntarily) shall be deemed not to have been issued for purposes of determining the maximum aggregate number of Shares which may be issued under the Plan. Shares that actually have been issued under the Plan pursuant to an Award shall not be returned to the Plan and shall not become available for future issuance under
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the Plan, except that if unvested Shares are forfeited or repurchased by the Company, such Shares shall become available for future grant under the Plan. To the extent not prohibited by the listing requirements of The Nasdaq National Market (or other established stock exchange or national market system on which the Common Stock is traded) and Applicable Law, any Shares covered by an Award which are surrendered (i) in payment of the Award exercise or purchase price or (ii) in satisfaction of tax withholding obligations incident to the exercise of an Award shall be deemed not to have been issued for purposes of determining the maximum number of Shares which may be issued pursuant to all Awards under the Plan, unless otherwise determined by the Administrator.
4. Administration of the Plan .
(a) Plan Administrator .
(i) Administration with Respect to Directors and Officers . Prior to the Registration Date, with respect to grants of Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws. On or after the Registration Date, with respect to grants of Awards to Directors or Employees who are also Officers or Directors of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws and to permit such grants and related transactions under the Plan to be exempt from Section 16(b) of the Exchange Act in accordance with Rule 16b-3. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.
(ii) Administration With Respect to Consultants and Other Employees . With respect to grants of Awards to Employees or Consultants who are neither Directors nor Officers of the Company, the Plan shall be administered by (A) the Board or (B) a Committee designated by the Board, which Committee shall be constituted in such a manner as to satisfy the Applicable Laws. Once appointed, such Committee shall continue to serve in its designated capacity until otherwise directed by the Board.
(iii) Administration With Respect to Covered Employees . Notwithstanding the foregoing, as of and after the date that the exemption for the Plan under Section 162(m) of the Code expires, as set forth in Section 18 below, grants of Awards to any Covered Employee intended to qualify as Performance-Based Compensation shall be made only by a Committee (or subcommittee of a Committee) which is comprised solely of two or more Directors eligible to serve on a committee making Awards qualifying as Performance-Based Compensation. In the case of such Awards granted to Covered Employees, references to the Administrator or to a Committee shall be deemed to be references to such Committee or subcommittee.
(iv) Officer Authorization to Grant Awards . The Board may authorize one or more Officers to grant Awards subject to such limitations as the Board determines from time to time.
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(b) Multiple Administrative Bodies . The Plan may be administered by different bodies with respect to Directors, Officers, Consultants, and Employees who are neither Directors nor Officers.
(c) Powers of the Administrator . Subject to Applicable Laws and the provisions of the Plan (including any other powers given to the Administrator hereunder), and except as otherwise provided by the Board, the Administrator shall have the authority, in its discretion:
(i) to select the Employees, Directors and Consultants to whom Awards may be granted from time to time hereunder;
(ii) to determine whether and to what extent Awards are granted hereunder;
(iii) to determine the number of Shares or the amount of other consideration to be covered by each Award granted hereunder;
(iv) to approve forms of Award Agreements for use under the Plan;
(v) to determine the terms and conditions of any Award granted hereunder;
(vi) to grant Awards to Employees, Directors and Consultants employed outside the United States on such terms and conditions different from those specified in the Plan as may, in the judgment of the Administrator, be necessary or desirable to further the purpose of the Plan;
(vii) to amend the terms of any outstanding Award granted under the Plan, provided that (A) any amendment that would adversely affect the Grantees rights under an outstanding Award shall not be made without the Grantees written consent, (B) the reduction of the exercise price of any Option awarded under the Plan shall be subject to stockholder approval and (C) canceling an Option at a time when its exercise price exceeds the Fair Market Value of the underlying Shares, in exchange for another Option, Restricted Stock, or other Award shall be subject to stockholder approval, unless the cancellation and exchange occurs in connection with a Corporate Transaction.
(viii) to construe and interpret the terms of the Plan and Awards, including without limitation, any notice of award or Award Agreement, granted pursuant to the Plan; and
(ix) to take such other action, not inconsistent with the terms of the Plan, as the Administrator deems appropriate.
(d) Indemnification . In addition to such other rights of indemnification as they may have as members of the Board or as Officers or Employees of the Company or a Related Entity, members of the Board and any Officers or Employees of the Company or a Related Entity to whom authority to act for the Board, the Administrator or the Company is delegated
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shall be defended and indemnified by the Company to the extent permitted by law on an after-tax basis against all reasonable expenses, including attorneys fees, actually and necessarily incurred in connection with the defense of any claim, investigation, action, suit or proceeding, or in connection with any appeal therein, to which they or any of them may be a party by reason of any action taken or failure to act under or in connection with the Plan, or any Award granted hereunder, and against all amounts paid by them in settlement thereof (provided such settlement is approved by the Company) or paid by them in satisfaction of a judgment in any such claim, investigation, action, suit or proceeding, except in relation to matters as to which it shall be adjudged in such claim, investigation, action, suit or proceeding that such person is liable for gross negligence, bad faith or intentional misconduct; provided, however, that within thirty (30) days after the institution of such claim, investigation, action, suit or proceeding, such person shall offer to the Company, in writing, the opportunity at the Companys expense to defend the same.
5. Eligibility . Awards other than Incentive Stock Options may be granted to Employees, Directors and Consultants. Incentive Stock Options may be granted only to Employees of the Company or a Parent or a Subsidiary of the Company. An Employee, Director or Consultant who has been granted an Award may, if otherwise eligible, be granted additional Awards. Awards may be granted to such Employees, Directors or Consultants who are residing in non-U.S. jurisdictions as the Administrator may determine from time to time.
6. Terms and Conditions of Awards .
(a) Types of Awards . The Administrator is authorized under the Plan to award any type of arrangement to an Employee, Director or Consultant that is not inconsistent with the provisions of the Plan and that by its terms involves or might involve the issuance of (i) Shares, (ii) cash or (iii) an Option, a SAR, or similar right with a fixed or variable price related to the Fair Market Value of the Shares and with an exercise or conversion privilege related to the passage of time, the occurrence of one or more events, or the satisfaction of performance criteria or other conditions. Such awards include, without limitation, Options, SARs, sales or bonuses of Restricted Stock, Restricted Stock Units or Dividend Equivalent Rights, and an Award may consist of one such security or benefit, or two (2) or more of them in any combination or alternative.
(b) Designation of Award . Each Award shall be designated in the Award Agreement. In the case of an Option, the Option shall be designated as either an Incentive Stock Option or a Non-Qualified Stock Option. However, notwithstanding such designation, an Option will qualify as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded. The $100,000 limitation of Section 422(d) of the Code is calculated based on the aggregate Fair Market Value of the Shares subject to Options designated as Incentive Stock Options which become exercisable for the first time by a Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company). For purposes of this calculation, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the Shares shall be determined as of the grant date of the relevant Option.
9
(c) Conditions of Award . Subject to the terms of the Plan, the Administrator shall determine the provisions, terms, and conditions of each Award including, but not limited to, the Award vesting schedule, repurchase provisions, rights of first refusal, forfeiture provisions, form of payment (cash, Shares, or other consideration) upon settlement of the Award, payment contingencies, and satisfaction of any performance criteria. The performance criteria established by the Administrator may be based on any one of, or combination of, the following: (i) increase in share price, (ii) earnings per share, (iii) total stockholder return, (iv) operating margin, (v) gross margin, (vi) return on equity, (vii) return on assets, (viii) return on investment, (ix) operating income, (x) net operating income, (xi) pre-tax profit, (xii) cash flow, (xiii) revenue, (xiv) expenses, (xv) earnings before interest, taxes and depreciation, (xvi) economic value added and (xvii) market share. The performance criteria may be applicable to the Company, Related Entities and/or any individual business units of the Company or any Related Entity. Partial achievement of the specified criteria may result in a payment or vesting corresponding to the degree of achievement as specified in the Award Agreement.
(d) Acquisitions and Other Transactions . The Administrator may issue Awards under the Plan in settlement, assumption or substitution for, outstanding awards or obligations to grant future awards in connection with the Company or a Related Entity acquiring another entity, an interest in another entity or an additional interest in a Related Entity whether by merger, stock purchase, asset purchase or other form of transaction.
(e) Deferral of Award Payment . The Administrator may establish one or more programs under the Plan to permit selected Grantees the opportunity to elect to defer receipt of consideration upon exercise of an Award, satisfaction of performance criteria, or other event that absent the election would entitle the Grantee to payment or receipt of Shares or other consideration under an Award. The Administrator may establish the election procedures, the timing of such elections, the mechanisms for payments of, and accrual of interest or other earnings, if any, on amounts, Shares or other consideration so deferred, and such other terms, conditions, rules and procedures that the Administrator deems advisable for the administration of any such deferral program.
(f) Separate Programs . The Administrator may establish one or more separate programs under the Plan for the purpose of issuing particular forms of Awards to one or more classes of Grantees on such terms and conditions as determined by the Administrator from time to time.
(g) Individual Option and SAR Limit . Following the date that the exemption from application of Section 162(m) of the Code described in Section 18 (or any exemption having similar effect) ceases to apply to Awards, the maximum number of Shares with respect to which Options and SARs may be granted to any Grantee in any fiscal year of the Company shall be 2,000,000 Shares. In connection with a Grantees commencement of Continuous Service, a Grantee may be granted Options and SARs for up to an additional 2,000,000 Shares which shall not count against the limit set forth in the previous sentence. The foregoing limitations shall be adjusted proportionately in connection with any change in the Companys capitalization pursuant to Section 10, below. To the extent required by Section 162(m) of the Code or the regulations thereunder, in applying the foregoing limitations with respect to a Grantee, if any Option or SAR is canceled, the canceled Option or SAR shall continue to count against the maximum number of
10
Shares with respect to which Options and SARs may be granted to the Grantee. For this purpose, the repricing of an Option (or in the case of a SAR, the base amount on which the stock appreciation is calculated is reduced to reflect a reduction in the Fair Market Value of the Common Stock) shall be treated as the cancellation of the existing Option or SAR and the grant of a new Option or SAR.
(h) Early Exercise . The Award Agreement may, but need not, include a provision whereby the Grantee may elect at any time while an Employee, Director or Consultant to exercise any part or all of the Award prior to full vesting of the Award. Any unvested Shares received pursuant to such exercise may be subject to a repurchase right in favor of the Company or a Related Entity or to any other restriction the Administrator determines to be appropriate.
(i) Term of Award . The term of each Award shall be the term stated in the Award Agreement, provided, however, that the term of an Incentive Stock Option shall be no more than ten (10) years from the date of grant thereof. However, in the case of an Incentive Stock Option granted to a Grantee who, at the time the Option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the term of the Incentive Stock Option shall be five (5) years from the date of grant thereof or such shorter term as may be provided in the Award Agreement. Notwithstanding the foregoing, the specified term of any Award shall not include any period for which the Grantee has elected to defer the receipt of the Shares or cash issuable pursuant to the Award.
(j) Transferability of Awards . Incentive Stock Options may not be sold, pledged, assigned, hypothecated, transferred, or disposed of in any manner other than by will or by the laws of descent or distribution and may be exercised, during the lifetime of the Grantee, only by the Grantee. Non-Qualified Stock Options and other Awards shall be transferable (i) by will or by the laws of descent and distribution and (ii) during the lifetime of the Grantee, to the extent and in the manner authorized by the Administrator. Notwithstanding the foregoing, the Grantee may designate one or more beneficiaries of the Grantees Award in the event of the Grantees death on a beneficiary designation form provided by the Administrator.
(k) Time of Granting Awards . The date of grant of an Award shall for all purposes be the date on which the Administrator makes the determination to grant such Award, or such other later date as is determined by the Administrator.
7. Award Exercise or Purchase Price, Consideration and Taxes .
(a) Exercise or Purchase Price . The exercise or purchase price, if any, for an Award shall be as follows:
(i) In the case of an Incentive Stock Option:
(A) granted to an Employee who, at the time of the grant of such Incentive Stock Option owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company or any Parent or Subsidiary of the Company, the per Share exercise price shall be not less than one hundred ten percent (110%) of the Fair Market Value per Share on the date of grant; or
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(B) granted to any Employee other than an Employee described in the preceding paragraph, the per Share exercise price shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(ii) In the case of a Non-Qualified Stock Option, the per Share exercise price shall be not less than eighty-five percent (85%) of the Fair Market Value per Share on the date of grant unless otherwise determined by the Administrator.
(iii) In the case of Awards intended to qualify as Performance-Based Compensation, the exercise or purchase price, if any, shall be not less than one hundred percent (100%) of the Fair Market Value per Share on the date of grant.
(iv) In the case of other Awards, such price as is determined by the Administrator.
(v) Notwithstanding the foregoing provisions of this Section 7(a), in the case of an Award issued pursuant to Section 6(d), above, the exercise or purchase price for the Award shall be determined in accordance with the provisions of the relevant instrument evidencing the agreement to issue such Award.
(b) Consideration . Subject to Applicable Laws, the consideration to be paid for the Shares to be issued upon exercise or purchase of an Award including the method of payment, shall be determined by the Administrator. In addition to any other types of consideration the Administrator may determine, the Administrator is authorized to accept as consideration for Shares issued under the Plan the following provided that the portion of the consideration equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law:
(i) cash;
(ii) check;
(iii) delivery of Grantees promissory note with such recourse, interest, security, and redemption provisions as the Administrator determines as appropriate (but only to the extent that the acceptance or terms of the promissory note would not violate an Applicable Law);
(iv) if the exercise or purchase occurs on or after the Registration Date, surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require which have a Fair Market Value on the date of surrender or attestation equal to the aggregate exercise price of the Shares as to which said Award shall be exercised, provided, however, that Shares acquired under the Plan or any other equity compensation plan or agreement of the Company must have been held by the Grantee for a period of more than six (6) months (and not used for another Award exercise by attestation during such period);
(v) with respect to Options, if the exercise occurs on or after the Registration Date, payment through a broker-dealer sale and remittance procedure pursuant to
12
which the Grantee (A) shall provide written instructions to a Company designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company sufficient funds to cover the aggregate exercise price payable for the purchased Shares and (B) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction; or
(vi) any combination of the foregoing methods of payment.
The Administrator may at any time or from time to time, by adoption of or by amendment to the standard forms of Award Agreement described in Section 4(c)(iv), or by other means, grant Awards which do not permit all of the foregoing forms of consideration to be used in payment for the Shares or which otherwise restrict one or more forms of consideration.
(c) Taxes . No Shares shall be delivered under the Plan to any Grantee or other person until such Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of any non-U.S., federal, state, or local income and employment tax withholding obligations, including, without limitation, obligations incident to the receipt of Shares. Upon exercise or vesting of an Award the Company shall withhold or collect from Grantee an amount sufficient to satisfy such tax obligations, including, but not limited too, by surrender of the whole number of Shares covered by the Award sufficient to satisfy the minimum applicable tax withholding obligations incident to the exercise or vesting of an Award.
8. Exercise of Award .
(a) Procedure for Exercise; Rights as a Stockholder
(i) Any Award granted hereunder shall be exercisable at such times and under such conditions as determined by the Administrator under the terms of the Plan and specified in the Award Agreement.
(ii) An Award shall be deemed to be exercised when written notice of such exercise has been given to the Company in accordance with the terms of the Award by the person entitled to exercise the Award and full payment for the Shares with respect to which the Award is exercised has been made, including, to the extent selected, use of the broker-dealer sale and remittance procedure to pay the purchase price as provided in Section 7(b)(v).
(b) Exercise of Award Following Termination of Continuous Service .
(i) An Award may not be exercised after the termination date of such Award set forth in the Award Agreement and may be exercised following the termination of a Grantees Continuous Service only to the extent provided in the Award Agreement.
(ii) Where the Award Agreement permits a Grantee to exercise an Award following the termination of the Grantees Continuous Service for a specified period, the Award shall terminate to the extent not exercised on the last day of the specified period or the last day of the original term of the Award, whichever occurs first.
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(iii) Any Award designated as an Incentive Stock Option to the extent not exercised within the time permitted by law for the exercise of Incentive Stock Options following the termination of a Grantees Continuous Service shall convert automatically to a Non-Qualified Stock Option and thereafter shall be exercisable as such to the extent exercisable by its terms for the period specified in the Award Agreement.
9. Conditions Upon Issuance of Shares .
(a) Shares shall not be issued pursuant to the exercise of an Award unless the exercise of such Award and the issuance and delivery of such Shares pursuant thereto shall comply with all Applicable Laws, and shall be further subject to the approval of counsel for the Company with respect to such compliance.
(b) As a condition to the exercise of an Award, the Company may require the person exercising such Award to represent and warrant at the time of any such exercise that the Shares are being purchased only for investment and without any present intention to sell or distribute such Shares if, in the opinion of counsel for the Company, such a representation is required by any Applicable Laws.
10. Adjustments Upon Changes in Capitalization . Subject to any required action by the stockholders of the Company, the number of Shares covered by each outstanding Award, and the number of Shares which have been authorized for issuance under the Plan but as to which no Awards have yet been granted or which have been returned to the Plan, the exercise or purchase price of each such outstanding Award, the maximum number of Shares with respect to which Options and SARs may be granted to any Grantee in any fiscal year of the Company, as well as any other terms that the Administrator determines require adjustment shall be proportionately adjusted for (i) any increase or decrease in the number of issued Shares resulting from a stock split, reverse stock split, stock dividend, combination or reclassification of the Shares, or similar transaction affecting the Shares, (ii) any other increase or decrease in the number of issued Shares effected without receipt of consideration by the Company, or (iii) as the Administrator may determine in its discretion, any other transaction with respect to Common Stock including a corporate merger, consolidation, acquisition of property or stock, separation (including a spin-off or other distribution of stock or property), reorganization, liquidation (whether partial or complete) or any similar transaction; provided, however that conversion of any convertible securities of the Company shall not be deemed to have been effected without receipt of consideration. Such adjustment shall be made by the Administrator and its determination shall be final, binding and conclusive. Except as the Administrator determines, no issuance by the Company of shares of stock of any class, or securities convertible into shares of stock of any class, shall affect, and no adjustment by reason hereof shall be made with respect to, the number or price of Shares subject to an Award.
11. Corporate Transactions and Changes in Control .
(a) Termination of Award to Extent Not Assumed in Corporate Transaction . Effective upon the consummation of a Corporate Transaction, all outstanding Awards under the Plan shall terminate. However, all such Awards shall not terminate to the extent they are Assumed in connection with the Corporate Transaction.
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(b) No Acceleration of Award Upon Corporate Transaction or Change in Control . Except as provided otherwise in an individual Award Agreement, in the event of any Corporate Transaction or Change in Control, there will not be any acceleration of vesting or exercisability of any Award.
12. Effective Date and Term of Plan . The Plan shall become effective upon the earlier to occur of its adoption by the Board or its approval by the stockholders of the Company. It shall continue in effect for a term of ten (10) years unless sooner terminated. Subject to Section 17 below, and Applicable Laws, Awards may be granted under the Plan upon its becoming effective.
13. Amendment, Suspension or Termination of the Plan .
(a) The Board may at any time amend, suspend or terminate the Plan; provided, however, that no such amendment shall be made without the approval of the Companys stockholders to the extent such approval is required by Applicable Laws, or if such amendment would lessen the stockholder approval requirements of Section 4(c)(vii) or this Section 13(a).
(b) No Award may be granted during any suspension of the Plan or after termination of the Plan.
(c) No suspension or termination of the Plan (including termination of the Plan under Section 12, above) shall adversely affect any rights under Awards already granted to a Grantee.
14. Reservation of Shares .
(a) The Company, during the term of the Plan, will at all times reserve and keep available such number of Shares as shall be sufficient to satisfy the requirements of the Plan.
(b) The inability of the Company to obtain authority from any regulatory body having jurisdiction, which authority is deemed by the Companys counsel to be necessary to the lawful issuance and sale of any Shares hereunder, shall relieve the Company of any liability in respect of the failure to issue or sell such Shares as to which such requisite authority shall not have been obtained.
15. No Effect on Terms of Employment/Consulting Relationship . The Plan shall not confer upon any Grantee any right with respect to the Grantees Continuous Service, nor shall it interfere in any way with his or her right or the right of the Company or any Related Entity to terminate the Grantees Continuous Service at any time, with or without Cause, and with or without notice. The ability of the Company or any Related Entity to terminate the employment
15
of a Grantee who is employed at will is in no way affected by its determination that the Grantees Continuous Service has been terminated for Cause for the purposes of this Plan.
16. No Effect on Retirement and Other Benefit Plans . Except as specifically provided in a retirement or other benefit plan of the Company or a Related Entity, Awards shall not be deemed compensation for purposes of computing benefits or contributions under any retirement plan of the Company or a Related Entity, and shall not affect any benefits under any other benefit plan of any kind or any benefit plan subsequently instituted under which the availability or amount of benefits is related to level of compensation. The Plan is not a Retirement Plan or Welfare Plan under the Employee Retirement Income Security Act of 1974, as amended.
17. Stockholder Approval . The grant of Incentive Stock Options under the Plan, excluding Incentive Stock Options issued in substitution for outstanding Incentive Stock Options pursuant to Section 424(a) of the Code, shall be subject to approval of the Plan by the stockholders of the Company within twelve (12) months before or after the date the Plan is adopted. Such stockholder approval shall be obtained in the degree and manner required under Applicable Laws. The Administrator may grant Incentive Stock Options under the Plan prior to approval by the stockholders, but until such approval is obtained, no such Incentive Stock Option shall be exercisable. In the event that stockholder approval is not obtained within the twelve (12) month period provided above, all Incentive Stock Options previously granted under the Plan shall be exercisable as Non-Qualified Stock Options.
18. Effect of Section 162(m) of the Code . Section 162(m) of the Code does not apply to the Plan prior to the Registration Date or such earlier time that the Company first becomes subject to the reporting obligations of Section 12 of the Exchange Act. Following the Registration Date or such earlier time that the Company first becomes subject to the reporting obligations of Section 12 of the Exchange Act, the Plan, and all Awards (except Awards of Restricted Stock that vest over time) issued thereunder, are intended to be exempt from the application of Section 162(m) of the Code, which restricts under certain circumstances the Federal income tax deduction for compensation paid by a public company to named executives in excess of $1 million per year. The exemption is based on Treasury Regulation Section 1.162-27(f), in the form existing on the effective date of the Plan, with the understanding that such regulation generally exempts from the application of Section 162(m) of the Code compensation paid pursuant to a plan that existed before a company becomes publicly held. Under such Treasury Regulation, this exemption is available to the Plan for the duration of the period that lasts until the earliest of (i) the expiration of the Plan, (ii) the material modification of the Plan, (iii) the exhaustion of the maximum number of shares of Common Stock available for Awards under the Plan, as set forth in Section 3(a), (iv) the first meeting of shareholders at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which the Company first becomes subject to the reporting obligations of Section 12 of the Exchange Act, or (v) such other date required by Section 162(m) of the Code and the rules and regulations promulgated thereunder. To the extent that the Administrator determines as of the date of grant of an Award that (i) the Award is intended to qualify as Performance-Based Compensation and (ii) the exemption described above is no longer available with respect to such Award, such Award shall not be effective until any stockholder approval required under Section 162(m) of the Code has been obtained.
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19. Unfunded Obligation . Grantees shall have the status of general unsecured creditors of the Company. Any amounts payable to Grantees pursuant to the Plan shall be unfunded and unsecured obligations for all purposes, including, without limitation, Title I of the Employee Retirement Income Security Act of 1974, as amended. Neither the Company nor any Related Entity shall be required to segregate any monies from its general funds, or to create any trusts, or establish any special accounts with respect to such obligations. The Company shall retain at all times beneficial ownership of any investments, including trust investments, which the Company may make to fulfill its payment obligations hereunder. Any investments or the creation or maintenance of any trust or any Grantee account shall not create or constitute a trust or fiduciary relationship between the Administrator, the Company or any Related Entity and a Grantee, or otherwise create any vested or beneficial interest in any Grantee or the Grantees creditors in any assets of the Company or a Related Entity. The Grantees shall have no claim against the Company or any Related Entity for any changes in the value of any assets that may be invested or reinvested by the Company with respect to the Plan.
20. Construction . Captions and titles contained herein are for convenience only and shall not affect the meaning or interpretation of any provision of the Plan. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term or is not intended to be exclusive, unless the context clearly requires otherwise.
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GCA HOLDINGS, INC. 2005 STOCK INCENTIVE PLAN
NOTICE OF STOCK OPTION AWARD
Grantees Name and Address:
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You (the Grantee) have been granted an option to purchase shares of Class A Common Stock,
subject to the terms and conditions of this Notice of Stock Option Award (the Notice), the GCA
Holdings, Inc. 2005 Stock Incentive Plan, as amended from time to time (the Plan) and the Stock
Option Award Agreement (the Option Agreement) attached hereto, as follows. Unless otherwise
defined herein, the terms defined in the Plan shall have the same defined meanings in this Notice.
Award Number
Date of Award
Vesting Commencement Date
Exercise Price per Share
$
Total Number of Shares Subject
to the Option (the Shares)
Total Exercise Price
$
Type of Option:
Incentive Stock Option
Non-Qualified Stock Option
Expiration Date:
Post-Termination Exercise Period:
Three (3) Months
Vesting Schedule :
Subject to the Grantees Continuous Service and other limitations set forth in this Notice, the Plan and the Option Agreement, the Option may be exercised, in whole or in part, in accordance with the following schedule:
25% of the Shares subject to the Option shall vest twelve months after the Vesting Commencement Date, and 1/36th of the remaining number of Shares subject to the Option shall vest on each monthly anniversary of the Vesting Commencement Date thereafter.
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[START OF INSERT IF OPTIONEE TO RECEIVE ACCELERATION:
Acceleration of Option Upon Corporate Transaction . In the event of a Corporate Transaction:
(A) for the portion of the Option that is Assumed or Replaced, the Option (if Assumed), the replacement Award (if Replaced), or the cash incentive program (if Replaced) automatically shall become fully vested, exercisable and payable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value) for all of the Shares at the time represented by such Assumed or Replaced portion of the Option, immediately upon termination of the Grantees Continuous Service if such Continuous Service is terminated by the successor company or the Company without Cause within eighteen (18) months after the Corporate Transaction; and
(B) for the portion of the Option that is neither Assumed nor Replaced, such portion of the Option shall automatically become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value) for all of the Shares at the time represented by such portion of the Option, immediately prior to the specified effective date of such Corporate Transaction, provided that the Grantees Continuous Service has not terminated prior to such date.
Acceleration of Option Upon Change in Control . Following a Change in Control (other than a Change in Control which also is a Corporate Transaction) and upon the termination of the Continuous Service of a Grantee if such Continuous Service is terminated by the Company or Related Entity without Cause within eighteen (18) months after a Change in Control, the Option automatically shall become fully vested and exercisable and be released from any repurchase or forfeiture rights (other than repurchase rights exercisable at Fair Market Value), immediately upon the termination of such Continuous Service.
Effect of Acceleration on Incentive Stock Option . To the extent that the Option is an Incentive Stock Option and is accelerated in connection with a Corporate Transaction or Change in Control, the Option shall remain exercisable as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded.
END OF INSERT IF OPTIONEE TO RECEIVE ACCELERATION]
During any authorized leave of absence, the vesting of the Option as provided in this schedule shall be suspended after the leave of absence exceeds a period of ninety (90) days. Vesting of the Option shall resume upon the Grantees termination of the leave of absence and return to service to the Company or a Related Entity. The Vesting Schedule of the Option shall be extended by the length of the suspension.
In the event of termination of the Grantees Continuous Service for Cause, the Grantees right to exercise the Option shall terminate concurrently with the termination of the Grantees Continuous Service, except as otherwise determined by the Administrator.
IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice and
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agree that the Option is to be governed by the terms and conditions of this Notice, the Plan, and the Option Agreement.
GCA Holdings, Inc. | ||||
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THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEES CONTINUOUS SERVICE (NOT THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS NOTICE, THE OPTION AGREEMENT, OR THE PLAN SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEES CONTINUOUS SERVICE, NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEES RIGHT OR THE RIGHT OF THE COMPANY OR RELATED ENTITY TO WHICH THE GRANTEE PROVIDES SERVICES TO TERMINATE THE GRANTEES CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEES STATUS IS AT WILL.
The Grantee acknowledges receipt of a copy of the Plan and the Option Agreement, and represents that he or she is familiar with the terms and provisions thereof, and hereby accepts the Option subject to all of the terms and provisions hereof and thereof. The Grantee has reviewed this Notice, the Plan, and the Option Agreement in their entirety, has had an opportunity to obtain the advice of counsel prior to executing this Notice, and fully understands all provisions of this Notice, the Plan and the Option Agreement. The Grantee hereby agrees that all questions of interpretation and administration relating to this Notice, the Plan and the Option Agreement shall be resolved by the Administrator in accordance with Section 18 of the Option Agreement. The Grantee further agrees to the venue selection and waiver of a jury trial in accordance with Section 19 of the Option Agreement. The Grantee further agrees to notify the Company upon any change in the residence address indicated in this Notice.
Dated:
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Signed: | |||||||
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Grantee |
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Award Number: ___________
GCA HOLDINGS, INC. 2005 STOCK INCENTIVE PLAN
STOCK OPTION AWARD AGREEMENT
1. Grant of Option . GCA Holdings, Inc., a Delaware corporation (the Company), hereby grants to the Grantee (the Grantee) named in the Notice of Stock Option Award (the Notice), an option (the Option) to purchase the Total Number of Shares of Common Stock subject to the Option (the Shares) set forth in the Notice, at the Exercise Price per Share set forth in the Notice (the Exercise Price) subject to the terms and provisions of the Notice, this Stock Option Award Agreement (the Option Agreement) and the Companys 2005 Stock Incentive Plan, as amended from time to time (the Plan), which are incorporated herein by reference. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Option Agreement.
If designated in the Notice as an Incentive Stock Option, the Option is intended to qualify as an Incentive Stock Option as defined in Section 422 of the Code. However, notwithstanding such designation, the Option will qualify as an Incentive Stock Option under the Code only to the extent the $100,000 dollar limitation of Section 422(d) of the Code is not exceeded. The $100,000 limitation of Section 422(d) of the Code is calculated based on the aggregate Fair Market Value of the Shares subject to options designated as Incentive Stock Options which become exercisable for the first time by the Grantee during any calendar year (under all plans of the Company or any Parent or Subsidiary of the Company). For purposes of this calculation, Incentive Stock Options shall be taken into account in the order in which they were granted, and the Fair Market Value of the shares subject to such options shall be determined as of the grant date of the relevant option.
2. Exercise of Option .
(a) Right to Exercise . The Option shall be exercisable during its term in accordance with the Vesting Schedule set out in the Notice and with the applicable provisions of the Plan and this Option Agreement. The Option shall be subject to the provisions of Section 11 of the Plan [INSERT IF OPTIONEE TO RECEIVE ACCELERATION: and the Notice] relating to the exercisability or termination of the Option in the event of a Corporate Transaction or Change in Control. The Grantee shall be subject to reasonable limitations on the number of requested exercises during any monthly or weekly period as determined by the Administrator. In no event shall the Company issue fractional Shares.
(b) Method of Exercise . The Option shall be exercisable by delivery of an exercise notice (a form of which is attached as Exhibit A) or by such other procedure as specified from time to time by the Administrator which shall state the election to exercise the Option, the whole number of Shares in respect of which the Option is being exercised, and such other provisions as may be required by the Administrator. The exercise notice shall be delivered in person, by certified mail, or by such other method (including electronic transmission) as
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determined from time to time by the Administrator to the Company accompanied by payment of the Exercise Price. The Option shall be deemed to be exercised upon receipt by the Company of such notice accompanied by the Exercise Price, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 4(d), below.
(c) Taxes . No Shares will be delivered to the Grantee or other person pursuant to the exercise of the Option until the Grantee or other person has made arrangements acceptable to the Administrator for the satisfaction of applicable income tax and employment tax withholding obligations, including, without limitation, such other tax obligations of the Grantee incident to the receipt of Shares. Upon exercise of the Option, the Company or the Grantees employer may offset or withhold (from any amount owed by the Company or the Grantees employer to the Grantee) or collect from the Grantee or other person an amount sufficient to satisfy such tax withholding obligations.
3. Grantees Representations . The Grantee understands that neither the Option nor the Shares exercisable pursuant to the Option have been registered under the Securities Act of 1933, as amended or any United States securities laws. In the event the Shares purchasable pursuant to the exercise of the Option have not been registered under the Securities Act of 1933, as amended, at the time the Option is exercised, the Grantee shall, if requested by the Company, concurrently with the exercise of all or any portion of the Option, deliver to the Company his or her Investment Representation Statement in the form attached hereto as Exhibit B.
4. Method of Payment . Payment of the Exercise Price shall be made by any of the following, or a combination thereof, at the election of the Grantee; provided, however, that such exercise method does not then violate any Applicable Law, provided further, that the portion of the Exercise Price equal to the par value of the Shares must be paid in cash or other legal consideration permitted by the Delaware General Corporation Law:
(a) cash;
(b) check;
(c) if the exercise occurs on or after the Registration Date, surrender of Shares or delivery of a properly executed form of attestation of ownership of Shares as the Administrator may require which have a Fair Market Value on the date of surrender or attestation equal to the aggregate Exercise Price of the Shares as to which the Option is being exercised, provided, however, that Shares acquired under the Plan or any other equity compensation plan or agreement of the Company must have been held by the Grantee for a period of more than six (6) months (and not used for another Award exercise by attestation during such period); or
(d) if the exercise occurs on or after the Registration Date, payment through a broker-dealer sale and remittance procedure pursuant to which the Grantee (i) shall provide written instructions to a Company-designated brokerage firm to effect the immediate sale of some or all of the purchased Shares and remit to the Company sufficient funds to cover the
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aggregate exercise price payable for the purchased Shares and (ii) shall provide written directives to the Company to deliver the certificates for the purchased Shares directly to such brokerage firm in order to complete the sale transaction.
5. Termination or Change of Continuous Service . In the event the Grantees Continuous Service terminates, other than for Cause, the Grantee may, but only during the Post-Termination Exercise Period, exercise the portion of the Option that was vested at the date of such termination (the Termination Date). The Post-Termination Exercise Period shall commence on the Termination Date. In the event of termination of the Grantees Continuous Service for Cause, the Grantees right to exercise the Option shall, except as otherwise determined by the Administrator, terminate concurrently with the termination of the Grantees Continuous Service (also the Termination Date). In no event, however, shall the Option be exercised later than the Expiration Date set forth in the Notice. In the event of the Grantees change in status from Employee, Director or Consultant to any other status of Employee, Director or Consultant, the Option shall remain in effect and the Option shall continue to vest in accordance with the Vesting Schedule set forth in the Notice; provided, however, with respect to any Incentive Stock Option that shall remain in effect after a change in status from Employee to Director or Consultant, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following such change in status. Except as provided in Sections 6 and 7 below, to the extent that the Option was unvested on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the Post-Termination Exercise Period, the Option shall terminate.
6. Disability of Grantee . In the event the Grantees Continuous Service terminates as a result of his or her Disability, the Grantee may, but only within twelve (12) months commencing on the Termination Date (but in no event later than the Expiration Date), exercise the portion of the Option that was vested on the Termination Date; provided, however, that if such Disability is not a disability as such term is defined in Section 22(e)(3) of the Code and the Option is an Incentive Stock Option, such Incentive Stock Option shall cease to be treated as an Incentive Stock Option and shall be treated as a Non-Qualified Stock Option on the day three (3) months and one (1) day following the Termination Date. To the extent that the Option was unvested on the Termination Date, or if the Grantee does not exercise the vested portion of the Option within the time specified herein, the Option shall terminate. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
7. Death of Grantee . In the event of the termination of the Grantees Continuous Service as a result of his or her death, or in the event of the Grantees death during the Post-Termination Exercise Period or during the twelve (12) month period following the Grantees termination of Continuous Service as a result of his or her Disability, the person who acquired the right to exercise the Option pursuant to Section 8 may exercise the portion of the Option that was vested at the date of termination within twelve (12) months commencing on the date of death (but in no event later than the Expiration Date). To the extent that the Option was unvested on the
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date of death, or if the vested portion of the Option is not exercised within the time specified herein, the Option shall terminate.
8. Transferability of Option . The Option, if an Incentive Stock Option, may not be transferred in any manner other than by will or by the laws of descent and distribution and may be exercised during the lifetime of the Grantee only by the Grantee. The Option, if a Non-Qualified Stock Option, may not be transferred in any manner other than by will or by the laws of descent and distribution, provided, however, that a Non-Qualified Stock Option may be transferred during the lifetime of the Grantee to the extent and in the manner authorized by the Administrator. Notwithstanding the foregoing, the Grantee may designate one or more beneficiaries of the Grantees Incentive Stock Option or Non-Qualified Stock Option in the event of the Grantees death on a beneficiary designation form provided by the Administrator. Following the death of the Grantee, the Option, to the extent provided in Section 7, may be exercised (a) by the person or persons designated under the deceased Grantees beneficiary designation or (b) in the absence of an effectively designated beneficiary, by the Grantees legal representative or by any person empowered to do so under the deceased Grantees will or under the then applicable laws of descent and distribution. The terms of the Option shall be binding upon the executors, administrators, heirs, successors and transferees of the Grantee.
9. Term of Option . The Option must be exercised no later than the Expiration Date set forth in the Notice or such earlier date as otherwise provided herein. After the Expiration Date or such earlier date, the Option shall be of no further force or effect and may not be exercised.
10. Companys Right of First Refusal .
(a) Transfer Notice . Neither the Grantee nor a transferee (either being sometimes referred to herein as the Holder) shall sell, hypothecate, encumber or otherwise transfer any Shares or any right or interest therein without first complying with the provisions of this Section 10 or obtaining the prior written consent of the Company. The Holder may not sell, hypothecate, encumber or otherwise transfer any Shares or any right or interest therein unless such Shares are Mature Shares (as defined below). Mature Shares shall mean the Shares that have been held by the Holder (and any successor Holder) for a period of more than six (6) months . In the event the Holder desires to accept a bona fide third-party offer for any or all of the Shares that are Mature Shares, the Holder shall provide the Company with written notice (the Transfer Notice) of:
(i) The Holders intention to transfer;
(ii) The name of the proposed transferee;
(iii) The number of Shares to be transferred; and
(iv) The proposed transfer price or value and terms thereof.
If the Grantee proposes to transfer any Shares to more than one transferee, the Grantee shall provide a separate Transfer Notice for the proposed transfer to each transferee. The Transfer Notice shall be signed by both the Grantee and the proposed transferee and must constitute a
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binding commitment of the Grantee and the proposed transferee for the transfer of the Shares to the proposed transferee subject to the terms and conditions of this Option Agreement.
(b) Bona Fide Transfer . If the Company determines that the information provided by the Grantee in the Transfer Notice is insufficient to establish the bona fide nature of a proposed voluntary transfer, the Company shall give the Grantee written notice of the Grantees failure to comply with the procedure described in this Section 10, and the Grantee shall have no right to transfer the Shares without first complying with the procedure described in this Section 10. The Grantee shall not be permitted to transfer the Shares if the proposed transfer is not bona fide.
(c) First Refusal Exercise Notice . The Company shall have the right to purchase (the Right of First Refusal) all but not less than all, of the Shares which are described in the Transfer Notice (the Offered Shares) at any time within ninety (90) days after receipt of the Transfer Notice (the Option Period). The Offered Shares shall be repurchased at (i) the per share price or value and in accordance with the terms stated in the Transfer Notice (subject to Section 10(d) below) or (ii) the Fair Market Value of the Shares on the date on which the purchase is to be effected if no consideration is paid pursuant to the terms stated in the Transfer Notice, which Right of First Refusal shall be exercised by written notice (the First Refusal Exercise Notice) to the Holder. During the Option Period or the 45-day period specified in Section 10(f) below, the Company may exercise its Repurchase Right (as set forth in Section 11 below) in lieu of or in addition to its Right of First Refusal if the Repurchase Right is or becomes exercisable during the Option Period or such 45-day period.
(d) Payment Terms . The Company shall consummate the purchase of the Offered Shares on the terms set forth in the Transfer Notice within 30 days after delivery of the First Refusal Exercise Notice; provided, however, that in the event the Transfer Notice provides for the payment for the Offered Shares other than in cash, the Company and/or its assigns shall have the right to pay for the Offered Shares by the discounted cash equivalent of the consideration described in the Transfer Notice as reasonably determined by the Administrator. Upon payment for the Offered Shares to the Holder or into escrow for the benefit of the Holder, the Company or its assigns shall become the legal and beneficial owner of the Offered Shares and all rights and interest therein or related thereto, and the Company shall have the right to transfer the Offered Shares to its own name or its assigns without further action by the Holder.
(e) Assignment . Whenever the Company shall have the right to purchase Shares under this Right of First Refusal, the Company may designate and assign one or more employees, officers, directors or stockholders of the Company or other persons or organizations, to exercise all or a part of the Companys Right of First Refusal.
(f) Non-Exercise . If the Company and/or its assigns do not collectively elect to exercise the Right of First Refusal within the Option Period or such earlier time if the Company and/or its assigns notifies the Holder that it will not exercise the Right of First Refusal, then the Holder may transfer the Shares upon the terms and conditions stated in the Transfer Notice, provided that:
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(i) | The transfer is made within forty-five (45) days of the earlier of (A) the date the Company and/or its assigns notify the Holder that the Right of First Refusal will not be exercised or (B) the expiration of the Option Period; and | |||
(ii) | The transferee agrees in writing that such Shares shall be held subject to the provisions of this Option Agreement. |
The Company shall have the right to demand further assurances from the Grantee and the transferee (in a form satisfactory to the Company) that the transfer of the Offered Shares was actually carried out on the terms and conditions described in the Transfer Notice. No Offered Shares shall be transferred on the books of the Company until the Company has received such assurances, if so demanded, and has approved the proposed transfer as bona fide.
(g) Expiration of Transfer Period . Following such 45-day period, no transfer of the Offered Shares and no change in the terms of the transfer as stated in the Transfer Notice (including the name of the proposed transferee) shall be permitted without a new written Transfer Notice prepared and submitted in accordance with the requirements of this Right of First Refusal.
(h) Termination of Right of First Refusal . The provisions of this Right of First Refusal shall terminate as to all Shares upon the Registration Date.
(i) Additional Shares or Substituted Securities . In the event of any transaction described in Sections 10 or 11 of the Plan, any new, substituted or additional securities or other property which is by reason of any such transaction distributed with respect to the Shares shall be immediately subject to the Right of First Refusal, but only to the extent the Shares are at the time covered by such right.
11. Companys Repurchase Right .
(a) Grant of Repurchase Right . The Company is hereby granted the right to purchase all or any portion of the Shares (the Repurchase Right), exercisable at any time (i) during the ninety (90) day period commencing on the Termination Date, or (ii) during the ninety (90) day period commencing upon any exercise of the Option that occurs after the Termination Date (together, the Share Repurchase Period), provided, however, that if the Shares to be repurchased are not Mature Shares then the Share Repurchase Period shall be extended by the number of days necessary for the such Shares to become Mature Shares. The Repurchase Right may only be exercised with respect to Mature Shares.
(b) Exercise of the Repurchase Right . The Repurchase Right shall be exercisable by written notice delivered to each Holder of the Shares prior to the expiration of the Share Repurchase Period. The notice shall indicate the number of Shares to be repurchased and the date on which the repurchase is to be effected, such date to be not later than the last day of the Share Repurchase Period. On the date on which the repurchase is to be effected, the Company and/or its assigns shall pay to the Holder in cash or cash equivalents (including the cancellation of any purchase-money indebtedness) an amount equal to (i) the Fair Market Value
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on the date on which the repurchase is to be effected of the Shares which are to be repurchased from the Holder, in the event of termination of the Grantees Continuous Service other than for Cause, or (ii) the lesser of the Exercise Price or the Fair Market Value on the date on which the repurchase is to be effected of the Shares which are to be repurchased from the Holder, in the event of termination of the Grantees Continuous Service for Cause. Upon such payment or deposit into escrow for the benefit of the Holder, the Company and/or its assigns shall become the legal and beneficial owner of the Shares being repurchased and all rights and interest thereon or related thereto, and the Company shall have the right to transfer to its own name or its assigns the number of Shares being repurchased, without further action by the Holder.
(c) Assignment . Whenever the Company shall have the right to purchase Shares under this Repurchase Right, the Company may designate and assign one or more employees, officers, directors or stockholders of the Company or other persons or organizations, to exercise all or a part of the Companys Repurchase Right.
(d) Termination of the Repurchase Right . The Repurchase Right shall terminate with respect to any Shares for which it is not timely exercised. In addition, the Repurchase Right shall terminate and cease to be exercisable with respect to all Shares upon the Registration Date.
(e) Additional Shares or Substituted Securities . In the event of any transaction described in Sections 10 or 11 of the Plan, any new, substituted or additional securities or other property which is by reason of any such transaction distributed with respect to the Shares shall be immediately subject to the Repurchase Right, but only to the extent the Shares are at the time covered by such right.
12. Stop-Transfer Notices . In order to ensure compliance with the restrictions on transfer set forth in this Option Agreement, the Notice or the Plan, the Company may issue appropriate stop transfer instructions to its transfer agent, if any, and, if the Company transfers its own securities, it may make appropriate notations to the same effect in its own records.
13. Refusal to Transfer . The Company shall not be required (i) to transfer on its books any Shares that have been sold or otherwise transferred in violation of any of the provisions of this Option Agreement or (ii) to treat as owner of such Shares or to accord the right to vote or pay dividends to any purchaser or other transferee to whom such Shares shall have been so transferred.
14. Tax Consequences . Set forth below is a brief summary as of the date of this Option Agreement of some of the federal tax consequences of exercise of the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE SHARES.
(a) Exercise of Incentive Stock Option . If the Option qualifies as an Incentive Stock Option, there will be no regular federal income tax liability upon the exercise of the
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Option, although the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price will be treated as income for purposes of the alternative minimum tax for federal tax purposes and may subject the Grantee to the alternative minimum tax in the year of exercise.
(b) Exercise of Incentive Stock Option Following Disability . If the Grantees Continuous Service terminates as a result of Disability that is not permanent and total disability as such term is defined in Section 22(e)(3) of the Code, to the extent permitted on the date of termination, the Grantee must exercise an Incentive Stock Option within three (3) months of such termination for the Incentive Stock Option to be qualified as an Incentive Stock Option. Section 22(e)(3) of the Code provides that an individual is permanently and totally disabled if he or she is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than twelve (12) months.
(c) Exercise of Non-Qualified Stock Option . On exercise of a Non-Qualified Stock Option, the Grantee will be treated as having received compensation income (taxable at ordinary income tax rates) equal to the excess, if any, of the Fair Market Value of the Shares on the date of exercise over the Exercise Price. If the Grantee is an Employee or a former Employee, the Company will be required to withhold from the Grantees compensation or collect from the Grantee and pay to the applicable taxing authorities an amount in cash equal to a percentage of this compensation income at the time of exercise, and may refuse to honor the exercise and refuse to deliver Shares if such withholding amounts are not delivered at the time of exercise.
(d) Disposition of Shares . In the case of a Non-Qualified Stock Option, if Shares are held for more than one year, any gain realized on disposition of the Shares will be treated as long-term capital gain for federal income tax purposes. In the case of an Incentive Stock Option, if Shares transferred pursuant to the Option are held for more than one year after receipt of the Shares and are disposed more than two years after the Date of Award, any gain realized on disposition of the Shares also will be treated as capital gain for federal income tax purposes and subject to the same tax rates and holding periods that apply to Shares acquired upon exercise of a Non-Qualified Stock Option. If Shares purchased under an Incentive Stock Option are disposed of prior to the expiration of such one-year or two-year periods, any gain realized on such disposition will be treated as compensation income (taxable at ordinary income rates) to the extent of the difference between the Exercise Price and the lesser of (i) the Fair Market Value of the Shares on the date of exercise, or (ii) the sale price of the Shares.
15. Lock-Up Agreement .
(a) Agreement . The Grantee, if requested by the Company and the lead underwriter of any public offering of the Common Stock (the Lead Underwriter), hereby irrevocably agrees not to sell, contract to sell, grant any option to purchase, transfer the economic risk of ownership in, make any short sale of, pledge or otherwise transfer or dispose of any interest in any Common Stock or any securities convertible into or exchangeable or exercisable for or any other rights to purchase or acquire Common Stock (except Common Stock included in
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such public offering or acquired on the public market after such offering) during the 200-day period following the effective date of a registration statement of the Company filed under the Securities Act of 1933, as amended, or such shorter or longer period of time as the Lead Underwriter shall specify. The Grantee further agrees to sign such documents as may be requested by the Lead Underwriter to effect the foregoing and agrees that the Company may impose stop-transfer instructions with respect to such Common Stock subject to the lock-up period until the end of such period. The Company and the Grantee acknowledge that each Lead Underwriter of a public offering of the Companys stock, during the period of such offering and for the lock-up period thereafter, is an intended beneficiary of this Section 15.
(b) No Amendment Without Consent of Underwriter . During the period from identification of a Lead Underwriter in connection with any public offering of the Companys Common Stock until the earlier of (i) the expiration of the lock-up period specified in Section 15(a) in connection with such offering or (ii) the abandonment of such offering by the Company and the Lead Underwriter, the provisions of this Section 15 may not be amended or waived except with the consent of the Lead Underwriter.
16. Entire Agreement: Governing Law . The Notice, the Plan and this Option Agreement constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in the Notice, the Plan and this Option Agreement (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties. The Notice, the Plan and this Option Agreement are to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada to the rights and duties of the parties. Should any provision of the Notice, the Plan or this Option Agreement be determined to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.
17. Construction . The captions used in the Notice and this Option Agreement are inserted for convenience and shall not be deemed a part of the Option for construction or interpretation. Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term or is not intended to be exclusive, unless the context clearly requires otherwise.
18. Administration and Interpretation . Any question or dispute regarding the administration or interpretation of the Notice, the Plan or this Option Agreement shall be submitted by the Grantee or by the Company to the Administrator. The resolution of such question or dispute by the Administrator shall be final and binding on all persons.
19. Venue and Waiver of Jury Trial . The Company, the Grantee, and the Grantees assignees pursuant to Section 8 (the parties) agree that any suit, action, or proceeding arising out of or relating to the Notice, the Plan or this Option Agreement shall be brought in the United
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States District Court for the District of Nevada (or should such court lack jurisdiction to hear such action, suit or proceeding, in a Nevada state court in the County of Clark) and that the parties shall submit to the jurisdiction of such court. The parties irrevocably waive, to the fullest extent permitted by law, any objection the party may have to the laying of venue for any such suit, action or proceeding brought in such court. THE PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this Section 19 shall for any reason be held invalid or unenforceable, it is the specific intent of the parties that such provisions shall be modified to the minimum extent necessary to make it or its application valid and enforceable.
20. Notices . Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown in these instruments, or to such other address as such party may designate in writing from time to time to the other party.
END OF AGREEMENT
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EXHIBIT A
GCA HOLDINGS, INC. 2005 STOCK INCENTIVE PLAN
EXERCISE NOTICE
Attention: Secretary |
1. Effective as of today, ______, the undersigned (the Grantee) hereby elects to exercise the Grantees option to purchase ______shares of the Common Stock (the Shares) of GCA Holdings, Inc., (the Company) under and pursuant to the Companys 2005 Stock Incentive Plan, as amended from time to time (the Plan) and the [ ] Incentive [ ] Non-Qualified Stock Option Award Agreement (the Option Agreement) and Notice of Stock Option Award (the Notice) dated ______, ______. Unless otherwise defined herein, the terms defined in the Plan shall have the same defined meanings in this Exercise Notice.
2. Representations of the Grantee . The Grantee acknowledges that the Grantee has received, read and understood the Notice, the Plan and the Option Agreement and agrees to abide by and be bound by their terms and conditions.
3. Rights as Stockholder . Until the stock certificate evidencing such Shares is issued (as evidenced by the appropriate entry on the books of the Company or of a duly authorized transfer agent of the Company), no right to vote or receive dividends or any other rights as a stockholder shall exist with respect to the Shares, notwithstanding the exercise of the Option. The Company shall issue (or cause to be issued) such stock certificate promptly after the Option is exercised. No adjustment will be made for a dividend or other right for which the record date is prior to the date the stock certificate is issued, except as provided in Section 10 of the Plan.
The Grantee shall enjoy rights as a stockholder until such time as the Grantee disposes of the Shares or the Company and/or its assignee(s) exercises the Right of First Refusal or the Repurchase Right. Upon such exercise, the Grantee shall have no further rights as a holder of the Shares so purchased except the right to receive payment for the Shares so purchased in accordance with the provisions of the Option Agreement, and the Grantee shall forthwith cause the certificate(s) evidencing the Shares so purchased to be surrendered to the Company for transfer or cancellation.
4. Delivery of Payment . The Grantee herewith delivers to the Company the full Exercise Price for the Shares, which, to the extent selected, shall be deemed to be satisfied by use of the broker-dealer sale and remittance procedure to pay the Exercise Price provided in Section 4(d) of the Option Agreement.
5. Tax Consultation . The Grantee understands that the Grantee may suffer adverse tax consequences as a result of the Grantees purchase or disposition of the Shares. The Grantee represents that the Grantee has consulted with any tax consultants the Grantee deems advisable
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in connection with the purchase or disposition of the Shares and that the Grantee is not relying on the Company for any tax advice.
6. Taxes . The Grantee agrees to satisfy all applicable federal, state and local income and employment tax withholding obligations and herewith delivers to the Company the full amount of such obligations or has made arrangements acceptable to the Company to satisfy such obligations. In the case of an Incentive Stock Option, the Grantee also agrees, as partial consideration for the designation of the Option as an Incentive Stock Option, to notify the Company in writing within thirty (30) days of any disposition of any shares acquired by exercise of the Option if such disposition occurs within two (2) years from the Date of Award or within one (1) year from the date the Shares were transferred to the Grantee.
7. Restrictive Legends . The Grantee understands and agrees that the Company shall cause the legends set forth below or legends substantially equivalent thereto, to be placed upon any certificate(s) evidencing ownership of the Shares together with any other legends that may be required by the Company or by state or federal securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE ACT) OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE OPINION OF COUNSEL SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER, PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER, A RIGHT OF FIRST REFUSAL AND A REPURCHASE RIGHT HELD BY THE ISSUER OR ITS ASSIGNEE(S) AS SET FORTH IN THE OPTION AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH TRANSFER RESTRICTIONS, RIGHT OF FIRST REFUSAL AND REPURCHASE RIGHT ARE BINDING ON TRANSFEREES OF THESE SHARES.
8. Successors and Assigns . The Company may assign any of its rights under this Exercise Notice to single or multiple assignees, and this agreement shall inure to the benefit of the successors and assigns of the Company. Subject to the restrictions on transfer herein set forth, this Exercise Notice shall be binding upon the Grantee and his or her heirs, executors, administrators, successors and assigns.
9. Construction . The captions used in this Exercise Notice are inserted for convenience and shall not be deemed a part of this agreement for construction or interpretation.
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Except when otherwise indicated by the context, the singular shall include the plural and the plural shall include the singular. Use of the term or is not intended to be exclusive, unless the context clearly requires otherwise.
10. Administration and Interpretation . The Grantee hereby agrees that any question or dispute regarding the administration or interpretation of this Exercise Notice shall be submitted by the Grantee or by the Company to the Administrator. The resolution of such question or dispute by the Administrator shall be final and binding on all persons.
11. Governing Law; Severability . This Exercise Notice is to be construed in accordance with and governed by the internal laws of the State of Nevada without giving effect to any choice of law rule that would cause the application of the laws of any jurisdiction other than the internal laws of the State of Nevada to the rights and duties of the parties. Should any provision of this Exercise Notice be determined by a court of law to be illegal or unenforceable, such provision shall be enforced to the fullest extent allowed by law and the other provisions shall nevertheless remain effective and shall remain enforceable.
12. Notices . Any notice required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery, upon deposit for delivery by an internationally recognized express mail courier service or upon deposit in the United States mail by certified mail (if the parties are within the United States), with postage and fees prepaid, addressed to the other party at its address as shown below beneath its signature, or to such other address as such party may designate in writing from time to time to the other party.
13. Further Instruments . The parties agree to execute such further instruments and to take such further action as may be reasonably necessary to carry out the purposes and intent of this agreement.
14. Entire Agreement . The Notice, the Plan and the Option Agreement are incorporated herein by reference and together with this Exercise Notice constitute the entire agreement of the parties with respect to the subject matter hereof and supersede in their entirety all prior undertakings and agreements of the Company and the Grantee with respect to the subject matter hereof, and may not be modified adversely to the Grantees interest except by means of a writing signed by the Company and the Grantee. Nothing in the Notice, the Plan, the Option Agreement and this Exercise Notice (except as expressly provided therein) is intended to confer any rights or remedies on any persons other than the parties.
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EXHIBIT B
GCA HOLDINGS, INC. 2005 STOCK INCENTIVE PLAN
INVESTMENT REPRESENTATION STATEMENT
GRANTEE:
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COMPANY:
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GCA HOLDINGS, INC. | |||
SECURITY:
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CLASS A COMMON STOCK | |||
AMOUNT:
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DATE:
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In connection with the purchase of the above-listed Securities, the undersigned Grantee represents to the Company the following:
(a) Grantee is aware of the Companys business affairs and financial condition and has acquired sufficient information about the Company to reach an informed and knowledgeable decision to acquire the Securities. Grantee is acquiring these Securities for investment for Grantees own account only and not with a view to, or for resale in connection with, any distribution thereof within the meaning of the Securities Act of 1933, as amended (the Securities Act).
(b) Grantee acknowledges and understands that the Securities constitute restricted securities under the Securities Act and have not been registered under the Securities Act in reliance upon a specific exemption therefrom, which exemption depends upon among other things, the bona fide nature of Grantees investment intent as expressed herein. Grantee further understands that the Securities must be held indefinitely unless they are subsequently registered under the Securities Act or an exemption from such registration is available. Grantee further acknowledges and understands that the Company is under no obligation to register the Securities. Grantee understands that the certificate evidencing the Securities will be imprinted with a legend which prohibits the transfer of the Securities unless they are registered or such registration is not required in the opinion of counsel satisfactory to the Company.
(c) Grantee is familiar with the provisions of Rule 701 and Rule 144, each promulgated under the Securities Act, which, in substance, permit limited public resale of restricted securities acquired, directly or indirectly from the issuer thereof, in a non-public offering subject to the satisfaction of certain conditions. Rule 701 provides that if the issuer qualifies under Rule 701 at the time of the grant of the Option to the Grantee, the exercise will be exempt from registration under the Securities Act. In the event the Company becomes subject to the reporting requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90) days thereafter (or such longer period as any market stand-off agreement may require) the Securities exempt under Rule 701 may be resold, subject to the satisfaction of certain of the conditions specified by Rule 144, including: (1) the resale being made through a broker in an unsolicited brokers transaction or in transactions directly with a market maker (as said term is defined under the Securities Exchange Act of 1934); and, in the case of an affiliate, (2) the availability of certain public information about the Company, (3) the amount of Securities being
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sold during any three month period not exceeding the limitations specified in Rule 144(e), and (4) the timely filing of a Form 144, if applicable.
In the event that the Company does not qualify under Rule 701 at the time of grant of the Option, then the Securities may be resold in certain limited circumstances subject to the provisions of Rule 144, which requires the resale to occur not less than one year after the later of the date the Securities were sold by the Company or the date the Securities were sold by an affiliate of the Company, within the meaning of Rule 144; and, in the case of acquisition of the Securities by an affiliate, or by a non-affiliate who subsequently holds the Securities less than two (2) years, the satisfaction of the conditions set forth in sections (1), (2), (3) and (4) of the paragraph immediately above.
(d) Grantee further understands that in the event all of the applicable requirements of Rule 701 or 144 are not satisfied, registration under the Securities Act, compliance with Regulation A, or some other registration exemption will be required; and that, notwithstanding the fact that Rules 144 and 701 are not exclusive, the Staff of the Securities and Exchange Commission has expressed its opinion that persons proposing to sell private placement securities other than in a registered offering and otherwise than pursuant to Rules 144 or 701 will have a substantial burden of proof in establishing that an exemption from registration is available for such offers or sales, and that such persons and their respective brokers who participate in such transactions do so at their own risk. Grantee understands that no assurances can be given that any such other registration exemption will be available in such event.
(e) Grantee represents that Grantee is a resident of the state of ______.
Signature
of Grantee:
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Date: |
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2
EXHIBIT 21.1
SUBSIDIARIES OF GLOBAL CASH ACCESS, INC.
Name
Jurisdiction of Incorporation or Organization
Canada
Delaware
Delaware
British Virgin Islands
EXHIBIT 31.1
GLOBAL CASH ACCESS, INC.
I, Kirk E. Sanford, certify that:
1.
I have reviewed this annual report on Form 10-K of Global Cash Access, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4.
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
b)
evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
c)
disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting.
5.
The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions):
a)
all significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the
registrants ability to record, process, summarize and report financial information; and
b)
any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting.
By:
/s/ Kirk E. Sanford
Kirk E. Sanford
Chief Executive Officer
EXHIBIT 31.2
GLOBAL CASH ACCESS, INC.
CERTIFICATION
I, Harry C. Hagerty, certify that:
1.
I have reviewed this annual report on Form 10-K of Global Cash Access, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements made, in light of the
circumstances under which such statements were made, not misleading with respect to the period
covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in
this report, fairly present in all material respects the financial condition, results of
operations and cash flows of the registrant as of, and for, the periods presented in this
report;
4.
The registrants other certifying officer and I are responsible for establishing and
maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)) for the registrant and have:
a)
designed such disclosure controls and procedures, or caused such disclosure controls
and procedures to be designed under our supervision, to ensure that material information
relating to the registrant, including its consolidated subsidiaries, is made known to us by
others within those entities, particularly during the period in which this report is being
prepared;
b)
evaluated the effectiveness of the registrants disclosure controls and procedures and
presented in this report our conclusions about the effectiveness of the disclosure controls
and procedures, as of the end of the period covered by this report based on such
evaluation; and
c)
disclosed in this report any change in the registrants internal control over financial
reporting that occurred during the registrants most recent fiscal quarter (the
registrants fourth fiscal quarter in the case of an annual report) that has materially
affected, or is reasonably likely to materially affect, the registrants internal control
over financial reporting.
5.
The registrants other certifying officer and I have disclosed, based on our most recent
evaluation of internal control over financial reporting, to the registrants auditors and the
audit committee of the registrants board of directors (or persons performing the equivalent
functions):
a)
all significant deficiencies and material weaknesses in the design or operation of
internal control over financial reporting which are reasonably likely to adversely affect
the registrants ability to record, process, summarize and report financial information;
and
b)
any fraud, whether or not material, that involves management or other employees who
have a significant role in the registrants internal control over financial reporting.
By:
/s/ Harry C. Hagerty
Harry C. Hagerty
Chief Financial Officer
EXHIBIT 32.1
GLOBAL CASH ACCESS, INC.
CERTIFICATION
In connection with the periodic report of Global Cash Access, Inc. (the Company) on Form 10-K for
the period ended December 31, 2004 as filed with the Securities and Exchange Commission (the
Report), I, Kirk E. Sanford, Chief Executive Officer of the Company, hereby certify as of the
date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code,
that to the best of my knowledge:
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d), as
applicable, of the Securities Exchange Act of 1934, and
(2)
the information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company at the dates and for the
periods indicated.
By:
/s/ Kirk E. Sanford
Kirk E. Sanford
Chief Executive Officer
EXHIBIT 32.2
GLOBAL CASH ACCESS, INC.
CERTIFICATION
In connection with the periodic report of Global Cash Access, Inc. (the Company) on Form 10-K for
the period ended December 31, 2004 as filed with the Securities and Exchange Commission (the
Report), I, Harry C. Hagerty, Chief Financial Officer of the Company, hereby certify as of the
date hereof, solely for purposes of Title 18, Chapter 63, Section 1350 of the United States Code,
that to the best of my knowledge:
(1)
the Report fully complies with the requirements of Section 13(a) or 15(d), as
applicable, of the Securities Exchange Act of 1934, and
(2)
the information contained in the Report fairly presents, in all material respects, the
financial condition and results of operations of the Company at the dates and for the
periods indicated.
By:
/s/ Harry C. Hagerty
Harry C. Hagerty
Chief Financial Officer