UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(RULE 13D-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13D-1(A)
AND AMENDMENTS THERETO FILED PURSUANT TO 13D-2(A)
(AMENDMENT NO. )*
International Dispensing Corporation
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(Name of Issuer)
Common Stock, par value $.001 per share
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(Title of Class of Securities)
459407 10 2
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(CUSIP Number)
Harvey R. Miller, Esq. as Trustee for
the Liquidation of Stratton Oakmont, Inc.
c/o Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, New York 10153
(212) 310-8000
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
January 29, 1997 - January 23, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
NOTE: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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13D
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CUSIP NO. 459407 10 2 PAGE 2 OF PAGES
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1 NAME OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
HARVEY R. MILLER, AS TRUSTEE FOR THE LIQUIDATION OF STRATTON OAKMONT, INC.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (A) |_|
(B) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
NOT APPLICABLE
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e) |_|
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
UNITED STATES OF AMERICA
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7 SOLE VOTING POWER
NUMBER OF 210,500
SHARES
BENEFICIALLY ---------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH NONE.
REPORTING
PERSON ---------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
210,500
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10 SHARED DISPOSITIVE POWER
NONE.
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
210,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
2.2%
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14 TYPE OF REPORTING PERSON*
OO
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE,
RESPONSES TO ITEMS 1-7 (INCLUDING EXHIBITS) OF
THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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EXPLANATORY NOTE
On January 29, 1997 (the "Commencement Date"), the Honorable John E.
Sprizzo, United States District Court Judge for the Southern District of New
York, entered an order which, among other things, appointed Harvey R. Miller,
Esquire, as trustee (the "Trustee") to liquidate the business of Stratton
Oakmont, Inc. ("Stratton Oakmont") pursuant to section 5(b)(3) of the Securities
Investor Protection Act of 1970, as amended, 15 U.S.C. ss. 78aaa et seq.
("SIPA"), and removed such liquidation proceeding, SIPA Proceeding No. 97-8074A
(TLB) (the "SIPA Proceeding"), to the United States Bankruptcy Court for the
Southern District of New York (the "Bankruptcy Court") pursuant to section
5(b)(4) of SIPA.
Stratton Oakmont had been a broker/dealer and a member firm of the
National Association of Securities Dealers, Inc. ("NASD"). Over a period of
several years, Stratton Oakmont was the subject of numerous disciplinary actions
brought by the NASD, the Securities and Exchange Commission ("SEC"), and state
regulators involving fraud, market manipulation, sales practice abuses and
failures to adequately supervise its employees. On December 5, 1996, the NASD
announced, among other things, that it had expelled Stratton Oakmont from the
securities industry, and on December 6, 1996, Stratton Oakmont filed a Form BDW
to withdraw its broker-dealer registration.
Stratton Oakmont may have been required to file a statement on Schedule
13G and/or Schedule 13D prior to the date hereof. However, following the
Commencement Date, (i) the employees of Stratton Oakmont knowledgeable in the
affairs of Stratton Oakmont have not been available and (ii) the books and
records of Stratton Oakmont are not sufficiently organized and/or complete.
Accordingly, the information set forth in this statement on Schedule 13D
concerning Stratton Oakmont and its beneficial ownership of securities is to the
best of the Trustee's knowledge and belief.
* * *
In October 1996, Stratton Oakmont was the underwriter for International
Dispensing Corporation (the "Issuer") in connection with the initial public
offering by the Issuer of 833,334 Units (the "Company Units") on a "best
efforts, all-or-none" basis at a price of $12.00 per Unit (the "Offering"). Each
Company Unit consisted of two shares of common stock, par value $0.001 per
share, of the Issuer (the "Common Stock") and two redeemable class A warrants
(the "Class A Warrants"). The offering also included 787,500 Units (the "Bridge
Units," and together with the Company Units, the "Units") owned and offered by
sixteen non-affiliates of the Issuer. The Bridge Units consisted of an aggregate
of 1,575,000 shares of Common Stock and 1,575,000 Class A Warrants. The Common
Stock and the Class A Warrants underlying the Units were detachable and
separately tradeable immediately upon issuance. The Class A Warrants are
exercisable commencing one year after October 3, 1996 (October 3, 1996 being
referred to herein as the "Effective Date"). Each Class A Warrant entitles the
holder thereof to purchase one share of Common Stock at $7.00 per share (subject
to certain adjustments) during the four-year period commencing one year from the
Effective Date. The Class A Warrants are redeemable by the Issuer for $0.05 per
Class A Warrant under certain conditions. The closing of the Offering occurred
on October 23, 1996.
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As set forth in "Underwriting" section of the prospectus, dated October
3, 1996, included in Registration Statement (No. 333-7915) on Form SB-2 relating
to the Offering of the Units (the "Registration Statement"):
The Issuer agreed to pay Stratton Oakmont, in addition to
underwriting discounts and commissions of eight and one-half (8.5%)
percent of the proceeds from sales of Company Units, a non-accountable
expense allowance of $50,000. The Issuer also agreed to pay to Stratton
Oakmont a fee of four (4%) percent of the exercise price of the Class A
Warrants on all Class A Warrants exercised one year after the Effective
Date (not including Class A Warrants exercised by the Stratton
Oakmont), provided, among other things, that the exercising
warrantholder identifies Stratton Oakmont in writing as having
solicited the exercise of such Class A Warrants and that the fees paid
are in compliance with Rule 2710(c)(6)(B)(xi) of the NASD Conduct
Rules.
The Issuer agreed to sell to Stratton Oakmont, or its
designees, for a purchase price of $.001 per underlying Unit, an option
to purchase up to an aggregate of 83,333 Units (the "Underwriter's Unit
Purchase Option"). The Underwriter's Unit Purchase Option shall be
exercisable for a term of four (4) years commencing twelve (12) months
after the Effective Date. The Underwriter's Unit Purchase Option may
not be assigned, transferred, sold or hypothecated by the Stratton
Oakmont until twelve (12) months after the Effective Date, except to
officers of Stratton Oakmont. Any profits realized by Stratton Oakmont
upon the sale of the Units issuable upon exercise of the Underwriter's
Unit Purchase Option may be deemed to be additional underwriting
compensation. The exercise price of the Units issuable upon exercise of
the Underwriter's Unit Purchase Option during the period of
exercisability shall be 165% of the initial public offering price of
the Units ($19.80 per Unit). The exercise price of the Class A Warrants
included in the Units issuable upon exercise of the Underwriter's Unit
Purchase Option during the period of exercisability shall be 165% of
the exercise price of the Class A Warrants included in the Company
Units and the Bridge Units ($11.55 per Unit). The exercise price of the
Underwriter's Unit Purchase Option and the Class A Warrants included
thereunder, as well as the number of shares covered thereby, are
subject to adjustment in certain events to prevent dilution.
For a period of five (5) years following the Effective Date,
if the Issuer enters into a transaction (including a merger, joint
venture or the acquisition of another entity) introduced to the Issuer
by Stratton Oakmont, the Issuer has agreed to pay Stratton Oakmont a
finder's fee equal to (i) 5.0% of the first $3,000,000 of consideration
involved in the transaction, (ii) 4.0% of the next $3,000,000 of such
consideration, (iii) 3.0% of the next $2,000,000 of such consideration,
(iv) 2.0% of the next $2,000,000 of such consideration and (v) 1.0% of
such consideration in excess of $10,000,000.
As of the Effective Date, all of the Issuer's stockholders
have agreed that with respect to all of the shares held by them, they
will not sell, transfer, pledge or otherwise encumber any securities of
the Issuer for a period of 24 months from the Effective Date, without
Stratton Oakmont's prior written consent. Moreover, except for the
issuance of shares of capital stock by the Issuer in connection with a
dividend, recapitalization, reorganization or similar transaction or as
a result of the exercise of warrants or outstanding options disclosed
in the Registration Statement, the Issuer shall not, for a period of 24
months following the Effective Date, directly or indirectly, offer,
sell or issue any shares of its Common Stock, or any security
exchangeable or exercisable for, or convertible into, shares of Common
Stock, without the prior written consent of Stratton Oakmont.
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In accordance with the Underwriting Agreement, Stratton
Oakmont is entitled to designate an observer (the "Board Observer") to
the Board of Directors of the Issuer, who will be kept apprised of all
material activities conducted by the Board, including being in
attendance at all meetings of the Board.
Following the completion of the Offering, Stratton Oakmont made a
market in or otherwise effected transactions in the Issuer's securities.
However, as indicated above, Stratton Oakmont ceased to be a registered
broker-dealer on December 6, 1996, and therefore ceased to be a market maker in
the Issuer's securities at that time.
On December 23, 1997, Stratton Oakmont transferred 995,705 shares of
Common Stock of the Issuer and securities of other public companies to Joseph
Daniel Card as collateral security for the payment of a judgment in Mr. Card's
favor against Stratton Oakmont. On December 23, 1996, the total indebtedness of
Stratton Oakmont to Mr. Card was approximately $600,000. In connection with the
transfer of the securities to Mr. Card by Stratton Oakmont, Mr. Card agreed that
none of the securities transferred to Mr. Card would be disposed of before
January 15, 1997. Thereafter, if any of Mr. Card's judgment against Stratton
Oakmont remains unsatisfied, Mr. Card may liquidate no more than $20,000 per day
in securities transferred to Mr. Card, including shares of Common Stock of the
Issuer, until the full amount of the judgment against Stratton Oakmont is
satisfied. Such liquidation must be done in cooperation with Stratton Oakmont.
Any securities, including shares of Common Stock of the Issuer, remaining after
the judgment has been fully satisfied are to be returned to Stratton Oakmont.
* * *
ITEM 1. SECURITY AND ISSUER
The title and class of equity security to which this statement on
Schedule 13D relates is the common stock, $.001 par value per share (the "Common
Stock"), of International Dispensing Corporation, a Delaware corporation (the
"Issuer"). The address of the Issuer's principal executive office is 342 Madison
Avenue, Suite 1034, New York, New York 10173.
ITEM 2. IDENTITY AND BACKGROUND
(a) The name of the person filing this statement is Harvey R.
Miller, Esq. as trustee for the liquidation of Stratton Oakmont, Inc. (the
"Trustee").
(b) The Trustee's business address is Weil, Gotshal & Manges LLP, 767
Fifth Avenue, New York, New York 10153.
(c) The Trustee's present principal occupation is as a partner in the
law firm of Weil, Gotshal & Manges LLP, whose principal office is located at 767
Fifth Avenue, New York, New York 10153.
(d) During the last five years, the Trustee has not been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors).
(e) During the last five years, the Trustee has not been a party to a
civil proceeding of a judicial or administrative body of competent jurisdiction
and as a result of such proceeding was or is
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subject to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities laws
or finding any violation with respect to such laws.
(f) The Trustee is a citizen of the United States of America.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
The Trustee does not know the source and amount of funds used by
Stratton Oakmont in making the purchases of shares of Common Stock for which the
Trustee beneficially owns.
ITEM 4. PURPOSE OF TRANSACTION
The Trustee has no plan for or intention of acquiring additional
securities of the Issuer. The Trustee presently intends to dispose of the
securities of the Issuer at any time and from time to time in the open market or
otherwise, including dispositions contemplated by the Sale and Assignment
Agreement (as defined in Item 6). The response to Item 6 is incorporated herein
by reference. Although the foregoing represents the range of activities
presently contemplated by Trustee with respect to the Issuer, it should be noted
that the possible activities of the Trustee are subject to change at any time.
Except as set forth above, the Trustee has no present plans or
intentions which relate to or would result in any of the actions described in
subparagraphs (a) through (j) of Item 4 of Schedule 13D.
ITEM 5. INTEREST IN SECURITIES OF ISSUER
(a) As of the close of business on January 23, 1998, the Trustee
beneficially owned in the aggregate 210,500 shares of the Common Stock of the
Issuer, representing approximately 2.2% of the outstanding shares of the Common
Stock of the Issuer (based on the number of shares of Common Stock reported to
be outstanding as of November 12, 1997, as set forth in the Issuer's Form 10-QSB
for the quarterly period ended September 30, 1997 (9,566,668 shares)).
(b) The responses of the Trustee to (i) Rows (7) through (10) of the
cover page of this statement on Schedule 13D and (ii) Item 5(a) hereof are
incorporated herein by reference.
(c) On January 15, 1998, the Trustee sold 177,778 shares of Common
Stock to Mr. Card for $1.125 per share pursuant to a Settlement Agreement (as
defined in Item 6). On January 23, 1998, the Trustee sold 617,927 shares of
Common Stock to the IDC Purchasers (as defined in Item 6) for $0.60 per share
and assigned all of Stratton Oakmont's rights under the Underwriting Agreement
and Underwriter's Unit Purchase Option to the Issuer, in each case, pursuant to
a Sale and Assignment Agreement (as defined in Item 6). See Explanatory Note and
the response to Item 6.
There have been no other transactions in Common Stock that were
effected during the past 60 days by the Trustee.
(d) Not applicable.
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(e) On January 23, 1998, the Trustee ceased to be the beneficial owner
of more than five percent of the Common Stock of the Issuer.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF THE ISSUER
The Explanatory Note is incorporated herein by reference.
On November 19, 1997, the Trustee and Mr. Card entered into a
Settlement Agreement (the "Settlement Agreement") pursuant to which Mr. Card
agreed to transfer to the Trustee, or to the Trustee's designee, (i) all of the
securities, including 995,705 shares of Common Stock of the Issuer, that had
been pledged by Stratton Oakmont as collateral to Mr. Card and (ii) all of Mr.
Card's right, title and interest in such securities, in exchange for, at the
discretion of the Trustee, either (x) payment by the Trustee to Mr. Card of
$200,000 or (y) Mr. Card retaining a number of shares of Common Stock of the
Issuer having a value equal to $200,000 (the "Card Shares"). The closing of the
transactions contemplated by the Settlement Agreement is subject to the approval
of the Settlement Agreement by the Bankruptcy Court.
On November 19, 1997, the Trustee and the Issuer entered into a Sale
and Assignment Agreement (the "Sale and Assignment Agreement") pursuant to which
the Trustee agreed to sell to the Issuer or to no more that ten qualified
designees of the Issuer (the "IDC Designees" and together with the Issuer, the
"IDC Purchasers"), (a) on the closing date an aggregate number of shares of
Common Stock of the Issuer equal to or greater than 995,705 shares minus (1) the
number of shares, if any retained by Mr. Card pursuant to the Settlement
Agreement and (2) 200,000 shares (the "Reserved Shares"), and (b) all of the
remaining shares of Common Stock held by the Trustee on or prior to the first
business day that is 180 days after the closing date. The Trustee also agreed to
assign to the Issuer on the closing date all of Stratton Oakmont's right, title
and interest in, to and under the Underwriting Agreement, including, without
limitation, all of its right, title and interest in, to and under the
Underwriter's Unit Purchase Option. In consideration for the agreements of the
Trustee contained in the Sale and Assignment Agreement, the IDC Purchasers
agreed to pay the Trustee $0.60 for each share of Common Stock tendered by the
Trustee, and in the event of the failure of an IDC Designee to tender such
purchase price, the Issuer is obligated to pay such price immediately. The
closing of the transactions contemplated by the Sale and Assignment Agreement is
subject to the approval of the Sale and Assignment Agreement by the Bankruptcy
Court.
On January 9, 1998, the Bankruptcy Court entered an order, which among
other things, authorized the Trustee: to enter into the Settlement Agreement and
the Sale and Assignment Agreement; to sell or transfer the shares of Common
Stock of the Issuer and assign Stratton Oakmont's rights under the Underwriting
Agreement pursuant to the Settlement Agreement and the Sale and Assignment
Agreement, as the case may be; and to sell the Reserved Shares in the public
market at such times and in such amounts as the Trustee deems advisable. As set
forth in the order, the Bankruptcy Court found: the Reserved Shares and the Card
Shares were not acquired from the Issuer, but rather were acquired through
trading in the public securities markets; the Trustee is not an issuer,
underwriter or dealer in respect if the sale of the Reserved Shares or the Card
Shares for purposes of the Securities Act; and the Trustee is not a person
directly or indirectly controlling or controlled by the Issuer or any of its
affiliates.
The Trustee is not a party to any other contracts, arrangements,
understandings or relationships (legal or otherwise) with respect to the
securities of the Issuer.
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
Exhibit A. Form of Underwriting Agreement (incorporated herein by
reference to Exhibit 1.1 to Amendment No. 2 to the Issuer's
Registration Statement on Form SB-2 (Registration
No. 333-7915), (the "Form SB-2 #2")).
Exhibit B. Form of Underwriter's Unit Purchase Option (incorporated
herein by reference to Exhibit 4.3 to the Form SB-2 #2).
Exhibit C. Settlement Agreement, dated as of November 19, 1997, by and
between the Trustee and Joseph Daniel Card (filed herewith).
Exhibit D. Sale and Assignment Agreement, dated as of November 19,
1997, by and between the Trustee and the Issuer (filed
herewith).
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: January 26, 1998
/s/ Harvey R. Miller
-----------------------------
Harvey R. Miller,
as Trustee for the Liquidation
of Stratton Oakmont, Inc.
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EXHIBIT INDEX
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Exhibit
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A. Form of Underwriting Agreement (incorporated herein by reference to
Exhibit 1.1 to Amendment No. 2 to the Registration Statement on Form
SB-2 (Registration No. 333-7915) filed by International Dispensing
Corporation, (the "Form SB-2 #2")).
B. Form of Underwriter's Unit Purchase Option (incorporated herein by
reference to Exhibit 4.3 to the Form SB-2 #2).
C. Settlement Agreement, dated as of November 19, 1997, by and between the
Trustee and Joseph Daniel Card (filed herewith).
D. Sale and Assignment Agreement, dated as of November 19, 1997, by and
between the Trustee and the Issuer (filed herewith).
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SETTLEMENT AGREEMENT
SETTLEMENT AGREEMENT, dated as of November 19, 1997 (the
"Agreement"), by and between HARVEY R. MILLER, AS TRUSTEE FOR THE LIQUIDATION OF
STRATTON OAKMONT, INC. under the Securities Investor Protection Act (the
"Trustee") and JOSEPH DANIEL CARD ("Card").
W I T N E S S E T H:
WHEREAS, on January 29, 1997, in the SIPA liquidation proceeding of
Stratton Oakmont, Inc. ("Stratton Oakmont"), pending in United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") SIPA
Proceeding No. 97-8074A(TLB) (the "SIPA Proceeding"), the Trustee was appointed
pursuant to the provisions of the Securities Investor Protection Act of 1970, 15
U.S.C. ss. 78aaa et seq. ("SIPA"), to administer the liquidation of Stratton
Oakmont; and
WHEREAS, on November 6, 1995, an arbitration award was entered in favor
of Card, as complainant in a National Association of Securities Dealers ("NASD")
arbitration proceeding, against Stratton Oakmont, as respondent, and certain
co-respondents with Stratton Oakmont in the amount of $1,552,200.86 (the "NASD
Award"); and
WHEREAS, to secure its obligation to pay the NASD Award, Stratton
Oakmont transferred to Card, inter alia, the shares of stock and warrants set
forth in Schedule I annexed hereto (the "Pledged Securities"); and
WHEREAS, Card filed a claim against Stratton Oakmont in the SIPA
Proceeding based upon the NASD Award (the "SIPA Claim");
WHEREAS, the Trustee has asserted that certain transfers by Stratton
Oakmont to Card, including the transfer of the Pledged Securities, are voidable
preferences pursuant to section 547 of title 11 of the United States Code (the
"Bankruptcy Code"), and Card has disputed such assertion; and
WHEREAS the parties to this Agreement desire to amicably resolve,
compromise, and settle all claims as provided in this Agreement;
NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES, CONDITIONS AND
COVENANTS STATED HEREIN, THE PARTIES, INTENDING TO BE LEGALLY BOUND, HEREBY
AGREE AS FOLLOWS:
1. Transfer and Payment - Card agrees to transfer to the
Trustee, or to the Trustee's designee, on or before the Closing Date (as such
term is hereinafter defined), the Pledged Securities and all of Card's right,
title, and interest in the Pledged Securities, in exchange for payment by the
Trustee to Card of two hundred thousand dollars ($200,000.00) (the "Settlement
<PAGE>
Amount"). Notwithstanding the foregoing, the Trustee shall have the right, in
his sole discretion, to direct that the Settlement Amount be paid to Card
through Card's retention of shares the Pledged Securities consisting of shares
of International Dispensing Corporation ("IDC") as shall be equal to $200,000 at
the price quoted on a national exchange for such shares as of the close of
business on the business day preceding the Closing Date (as such term is
hereinafter defined).
2. Claims Released - Upon payment of the Settlement Amount to
Card and transfer of the Pledged Securities to and receipt of such shares by the
Trustee as set forth in the immediately preceding paragraph, (a) Card, his
heirs, successors, and assigns, hereby forever release and discharge Stratton
Oakmont and the Trustee from any and all claims (as such term is defined in
section 101(5) of the Bankruptcy Code), demands, causes of action, suits, debts,
judgments, decrees, controversies, agreements, or reimbursements of any kind
whatsoever on any theory whatsoever arising on or before the date of this
Agreement, including but not limited to claims arising from the NASD Award or
the SIPA Claim (collectively, the "Card Claims"); and (b) the Trustee, on behalf
of Stratton Oakmont, hereby forever releases and discharges Card, his heirs,
successors, and assigns from any and all claims (as such term is defined in
section 101(5) of the Bankruptcy Code), demands, causes of action, suits, debts,
judgments, decrees, controversies, agreements, or reimbursements of any kind
whatsoever on any theory whatsoever arising on or before the date of this
Agreement, including but not limited to claims arising under section 547 of the
Bankruptcy Code (collectively, the "Trustee Claims" and, collectively with the
Card Claims, the "Released Claims").
3. Conditions Precedent - This Agreement is subject to
approval by the Bankruptcy Court, and shall be of no force or effect unless and
until such condition is satisfied. In the event that the Bankruptcy Court does
not approve this Agreement, this Agreement (except for this paragraph) shall be
null and void and shall not be binding upon the parties hereto, and the parties
reserve their rights, claims, and defenses without prejudice by reason of this
Agreement or any statement made, or action or position taken, document prepared
or executed in connection herewith or at the hearing, if any, before the
Bankruptcy Court to consider authorization of this Agreement (none of which, in
such event, be referred to, or relied upon, by any party for any purpose except
as shall be specifically agreed to in writing by the parties).
4. Closing Date - Upon the satisfaction of the conditions
stated, the transfers and payments set forth in this Agreement shall take place
on or before the close of business of the first business day (the "Closing
Date") after the Bankruptcy Court has entered orders approving this Agreement.
The Closing Date may be modified by the mutual written consent of the parties to
this Agreement.
5. Representations and Warranties - Each party to this
Agreement hereby represents and warrants to the other party to this Agreement
that (a) such party has all power and authority necessary to enter into this
Agreement, to bind all parties, persons, or entities for whom such party acts,
and to carry out and perform this Agreement according to its terms; (b) this
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Agreement is binding and enforceable upon such party; (c) no consent, approval,
authorization, or order of, and no notice to, or filing with, any court,
governmental authority, person, or entity is required for the execution,
delivery, and performance by such party of this Agreement that has not been
obtained; (d) the execution, delivery, and performance of this Agreement will
not conflict or contravene any contract obligations that such party has; (e)
such party is not relying on, and expressly disclaims the existence of or any
reliance upon any oral or written representation, promise, statement, opinion,
or other act or omission made to such party other than those expressly set forth
in writing in this Agreement, such party has received all information that is
material to such party related to this Agreement, and such party has had the
benefit of counsel of such party's own choice and has been afforded the
opportunity to independently review and understand this Agreement, with such
party's chosen counsel; (f) the parties have entered into this Agreement freely
and without duress after having independently consulted with their own counsel;
and (g) this Agreement has been actually negotiated by and between the parties,
is jointly drafted by their respective attorneys, and shall not be construed
against any party hereto.
6. Governing Law - This Agreement is made and performable in
New York County, New York. This Agreement will be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws rules of New York.
7. Venue and Jurisdiction - All actions against any party to
this Agreement arising under or relating in any way to this Agreement shall be
brought exclusively in the United States Bankruptcy Court for the Southern
District of New York. Each of the parties agrees to submit to the personal
jurisdiction of, and to waive any objection to venue in, such court.
8. Waiver of Jury Trial - TO THE FULL EXTENT PERMITTED BY LAW,
EACH OF THE PARTIES KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHT
IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS
AGREEMENT, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES' ENTRY INTO THIS AGREEMENT.
9. Successors and Assigns - This Agreement shall continue
perpetually and shall be binding upon the parties hereto and their respective
heirs, personal representatives, administrators, successors and assigns
(collectively, "Successors") and shall inure to the benefit of the Parties'
respective Successors.
10. Good Faith Cooperation - The parties to this Agreement
agree to cooperate in good faith to take all necessary steps to effectuate all
terms and conditions of this Agreement.
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11. Counterparts - This Agreement may be executed by the
parties hereto in separate counterparts, each of which, when so executed and
delivered by one or more parties shall be deemed an original, and all of which
counterparts shall together constitute one and the same instrument.
12. Entire Agreement - This Agreement represents the entire
agreement of the parties hereto and the terms are contractual and not mere
recitals. This Agreement may not be amended, altered, or modified or changed in
any way except in a writing signed by each of the parties to this Agreement. The
parties hereto further agree that in the event of any subsequent litigation,
controversy, or dispute concerning any of the terms, conditions, or provisions
of this Agreement, neither party shall be permitted to offer or introduce any
oral evidence concerning other oral promises or oral agreements between the
parties relating to the subject matter of this Agreement not included or
referred to herein and not reflected by a writing signed by each of the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first written above.
/s/ Harvey R. Miller /s/ Joseph Daniel Card
- ------------------------------------ ------------------------------
Harvey R. Miller, Joseph Daniel Card
As Trustee for Stratton Oakmont, Inc.
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SCHEDULE I
LIST OF PLEDGED SECURITIES
Modular Vision Systems, Inc. - 41,800 shares
Childrobics - 83,900 shares
United Restaurants - 186,650 Warrants A
United Restaurants - 233,360 Warrants B
Dualstar - 63,440 shares
International Dispensing Corporation- 995,705 shares
5
SALE AND ASSIGNMENT AGREEMENT
SALE AND ASSIGNMENT AGREEMENT, dated as of November 19,
1997 (the "Agreement"), by and between HARVEY R. MILLER, AS TRUSTEE FOR THE
LIQUIDATION OF STRATTON OAKMONT, INC. under the Securities Investor Protection
Act (the "Trustee") and INTERNATIONAL DISPENSING CORPORATION, a Delaware
corporation ("IDC").
R E C I T A L S:
A. On January 29, 1997, in the SIPA liquidation proceeding of Stratton
Oakmont, Inc. ("Stratton Oakmont"), pending in the United States Bankruptcy
Court for the Southern District of New York (the "Bankruptcy Court") SIPA
Proceeding No. 97-8074A(TLB) (the "SIPA Proceeding"), the Trustee was appointed
pursuant to the provisions of the Securities Investor Protection Act of 1970, 15
U.S.C. ss. 78aaa et seq. ("SIPA"), to administer the liquidation of Stratton
Oakmont; and
B. As trustee for Stratton Oakmont, the Trustee is the owner of 995,705
shares of the common stock of IDC (the "Shares"), subject to a pledge of the
Shares (the "Pledge") by Stratton Oakmont in favor of Joseph Daniel Card
("Card") to secure certain obligations of Stratton Oakmont to Card; and
C. The Shares are currently registered in the name of Card solely for
purposes of perfection of the Pledge; and
D. The Trustee has entered into a settlement agreement with Card (the
"Card Agreement," the form of which is annexed hereto as Exhibit "1") providing
for, inter alia, the release by Card of all right, title, and interest in the
Shares, and providing further, that in consideration for such release, the
Trustee may allow Card to retain, in lieu of a cash settlement payment by the
Trustee, certain of the Shares (the "Card Shares") as are equal in value to
$200,000, all as more fully set forth in the Card Agreement; and
E. The Trustee has been advised that Stratton Oakmont and Reseal Food
Dispensing Systems, Inc. ("RFDS") entered into an underwriting agreement
pursuant to which Stratton Oakmont agreed to serve as underwriter for the sale
of certain common stock and common stock purchase warrants to be issued by RFDS
to the public (the "Underwriting Agreement," the form of which is annexed hereto
as Exhibit "2"); and
F. The Trustee has been advised that RFDS subsequently changed its name
to IDC; and
G. The Trustee desires to sell to IDC, or to no more than ten designees
of IDC, subject to the qualification of such designees as provided herein (the
"IDC Designees" and, collectively with IDC, the "IDC Purchasers"), some or all
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of the Shares, and the IDC Purchasers desire to purchase from the Trustee, such
Shares free and clear of all liens, claims, encumbrances, and interests upon the
terms and conditions hereinafter set forth; and
H. The Trustee desires to assign to IDC, and IDC desires to acquire
from the Trustee, all of Stratton Oakmont's rights and interests in the
Underwriting Agreement (the transferred Shares and the Underwriting Agreement
are hereinafter referred to as the "Transferred Assets") free and clear of all
liens, claims, encumbrances, and interests, upon the terms and conditions
hereinafter set forth;
NOW, THEREFORE, IN CONSIDERATION OF THE PROMISES, CONDITIONS, AND
COVENANTS STATED HEREIN, THE PARTIES, INTENDING TO BE LEGALLY BOUND, HEREBY
AGREE AS FOLLOWS:
1. Transfer of Shares - Upon the terms and subject to the
conditions contained herein:
(a) On the Closing Date (as such term is hereinafter defined), the
Trustee shall convey to the IDC Purchasers the first delivery (the "First
Delivery") of the Shares, which number of Shares shall be equal to or greater
than the total amount of Shares (995,705) minus: (i) the Card Shares, and (ii)
200,000 of the Shares.
(b) On the Final Date (as such term is hereinafter defined), the
Trustee shall convey to the IDC Purchasers all of the remaining Shares then held
by the Trustee (the "Final Delivery").
2. Assignment of Rights - Upon the terms and subject to the
conditions contained herein, on the Closing Date (as such term is hereinafter
defined) the Trustee shall assign to IDC all of Stratton Oakmont's right, title,
and interest in its agreement with IDC evidenced by the Underwriting Agreement,
including, without limitation, provisions that (i) Stratton Oakmont has an
option to acquire certain securities of IDC (the Underwriter's Purchase Option
as defined in the prospectus annexed hereto as Exhibit "2"); (ii) shareholders
of IDC are barred from selling or otherwise trading in their stock in IDC
without the prior written consent of IDC for the two years after the Effective
Date as such term is defined in the Underwriting Agreement (Underwriting
Agreement at P. 3(l)(1)); (iii) IDC is barred from issuing new stock (except in
connection with a dividend or similar transaction) for the two years after the
Effective Date (Underwriting Agreement at P. 3(l)(2)); (iv) Stratton Oakmont has
the right to appoint an observer to attend meetings of IDC's board of directors
for the three years after the Effective Date (Underwriting Agreement at P.
3(t)); (v) a finder's fee of 5% for the first $3 million, 4% for the next $3
million, 3% for the next $2 million, 2% for the next $2 million and 1% of the
excess, if any, over $10 million will be paid to Stratton Oakmont by IDC if
Stratton Oakmont introduces a merger partner (or partner to a similar
transaction) to IDC for the five years after the Effective Date (Underwriting
Agreement at P. 3(u)); (vi) IDC must pay Stratton Oakmont a warrant solicitation
fee of 4% of the exercise price of IDC's warrants exercised at least one year
after the Effective Date, subject to certain conditions and restrictions
(Underwriting Agreement at P. 3(v)); (vii) Stratton Oakmont and IDC each
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indemnify the other against misrepresentations made in connection with the
registration or the prospectus (Underwriting Agreement at P. 6); and (viii) for
a period of 24 months from the date the offering under the prospectus was
complete neither IDC nor shareholders of IDC may offer or dispose of shares of
IDC common stock without the prior written consent of Stratton Oakmont
(Underwriting Agreement P. 3(l)). Such sale and transfer of the Transferred
Assets shall be free and clear of all liens, claims, encumbrances, and
interests.
3. Payments for Transferred Assets - In consideration for the
agreements contained herein, the IDC Purchasers shall pay the Trustee sixty
cents ($0.60) (the "Purchase Price") for each Share tendered by the Trustee
pursuant to the terms of this Agreement. In the event of the failure of an IDC
Designee to tender the Purchase Price, IDC shall be obligated to tender such
price immediately.
4. Qualification of IDC Designees - In order to qualify as an
IDC Designee entitled to act as an IDC Purchaser hereunder, each IDC Designee
shall enter into an agreement with the Trustee pursuant to which such IDC
Designee shall represent, acknowledge and agree as follows: (a) such IDC
Designee is acquiring the Shares for its own account, for investment purposes
only and not with a view to the distribution (as such term is used in Section
2(11) of the Securities Act of 1933, as amended (the "Securities Act")) thereof;
(b) such IDC Designee understands that such Shares have not been registered
under the Securities Act and cannot be sold unless subsequently registered under
the Securities Act and any applicable state securities laws, or an exemption
from such registration is available; (c) such IDC Designee is an "accredited
investor" within the meaning of subparagraph (a) of Rule 501 under the
Securities Act; (d) such IDC Designee is aware that it may be required to bear
the economic risk of an investment in such Shares for an indefinite period of
time, and it is able to bear such risk for an indefinite period; (e) such IDC
Designee has received adequate information, and has had an opportunity to ask
questions of IDC, concerning the legal, business, and financial condition of IDC
in order to make an informed decision regarding an investment in the Shares; and
(f) such IDC Designee will provide such other information as is requested by the
Trustee to enable the Trustee to conclude that the sale of Shares by the Trustee
to such person or entity will be exempt from the registration provisions of the
Securities Act and any applicable state securities laws. The IDC Designees may
appoint one entity to act as their nominee for the purpose of receiving the
Shares purchased by the IDC Designees hereunder and making payment therefor, and
the IDC Designees shall provide the Trustee with a written representation as to
such appointment with an acknowledgment by such nominee.
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5. Releases - Effective upon the transfer of the First
Delivery of Shares, the payment of the Purchase Price therefor by the IDC
Purchasers, and the assignment of the Underwriting Agreement (a) the Trustee
hereby waives, releases, and relinquishes any and all claims, rights, or causes
of action that the Trustee or Stratton Oakmont may have against IDC, its agents,
principals, and affiliates, whether known or unknown, arising after January 29,
1997 through and including the date hereof, except claims arising under this
Agreement; and (b) IDC hereby waives, releases, relinquishes any and all claims,
rights, or causes of action that IDC may have against the Trustee or Stratton
Oakmont, or their respective agents, principals, and affiliates, whether known
or unknown, arising after January 29, 1997 through and including the date
hereof, except claims arising under this Agreement. Notwithstanding anything in
the preceding sentence to the contrary, the Trustee waives, releases, and
relinquishes all claims, rights, or causes of action arising under the
Underwriting Agreement and/or the remaining Transferred Assets from the date of
such agreement through and including the date hereof.
6. Conditions Precedent - This Agreement is subject to
approval by the Bankruptcy Court, and shall be of no force or effect unless and
until such condition is satisfied. The Trustee shall apply to the Bankruptcy
Court for approval of this Agreement as soon as is practicable following
execution by both parties. In the event that the Bankruptcy Court does not
approve this Agreement, this Agreement (except for this paragraph) shall be null
and void and shall not be binding upon the parties hereto, and the parties
reserve their rights, claims, and defenses without prejudice by reason of this
Agreement or any statement made, or action or position taken, document prepared
or executed in connection herewith or at the hearing, if any, before the
Bankruptcy Court to consider authorization of this Agreement (none of which, in
such event, be referred to, or relied upon, by any party for any purpose except
as shall be specifically agreed to in writing by the parties).
7. Closing Date - Upon the satisfaction of the conditions
herein and the receipt by the Trustee of the qualification documentation set
forth in section 4 herein, the Trustee shall, on a business day (the "Closing
Date") as soon as practicable following the entry by the Bankruptcy Court of an
order approving this Agreement, tender the First Delivery of Shares and execute
documentation evidencing the assignment of the Underwriting Agreement as
provided for herein, and the IDC Purchasers shall tender the Purchase Price
provided herein. The payment of the Purchase Price shall be made by wire
transfer of funds to the Trustee's account.
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8. Outside Date and Final Date - On, or at any time prior to,
the first business day (the "Outside Date") that is 180 days after the Closing
Date, the Trustee may tender the Final Delivery of Shares and the IDC Purchasers
shall tender the Purchase Price provided herein, provided, however, that if the
Trustee proposes to tender the Final Delivery on a date prior to the Outside
Date, he shall give the IDC Purchasers notice of such proposed tender no fewer
than twenty days prior to such tender. Notwithstanding the foregoing, the
Trustee shall tender the Final Delivery on the Outside Date if not tendered
prior to such date. The payment of the Purchase Price shall be made by wire
transfer of funds to the Trustee's account. The date of the Final Tender shall
be the "Final Date" hereunder.
9. Representations - General - Each party to this Agreement
hereby represents and warrants to the other parties to this Agreement that (a)
such party has all power and authority necessary to enter into this Agreement,
to bind all parties, persons, or entities for whom such party acts, and to carry
out and perform this Agreement according to its terms; (b) this Agreement is
binding and enforceable upon such party; (c) no consent, approval,
authorization, or order of, and no notice to, or filing with, any court,
governmental authority, person, or entity is required for the execution,
delivery, and performance by such party of this Agreement that has not been
obtained; (d) the execution, delivery, and performance of this Agreement will
not conflict or contravene any contract obligations that such party has; (e)
such party is not relying on, and expressly disclaims the existence of or any
reliance upon any oral or written representation, promise, statement, opinion,
or other act or omission made to such party other than those expressly set forth
in writing in this Agreement, such party has received all information that is
material to such party related to this Agreement, and such party has had the
benefit of counsel of such party's own choice and has been afforded the
opportunity to independently review and understand this Agreement, with such
party's chosen counsel; (f) the parties have entered into this Agreement freely
and without duress after having independently consulted with their own counsel;
and (g) this Agreement has been actually negotiated by and between the parties,
is jointly drafted by their respective counsel, and shall not be construed
against any party hereto.
10. Representations - Other (a) The Trustee represents that,
as of the date of the execution of this Agreement, he is unaware of any claims
or causes of action held by Stratton Oakmont against IDC, its predecessors and
successors, or its officers, representatives, and agents that arose on or before
January 29, 1997. (b) IDC represents that, as of the date of the execution of
this Agreement, (i) no amounts are currently due, owing, or payable to Stratton
Oakmont under the Underwriting Agreement in respect of finders' fees,
solicitation fees, or otherwise, and (ii) IDC has no plans or intention as of
the date of the execution of this Agreement to undertake a merger or similar
transaction with a person or entity introduced by Stratton Oakmont as would have
given rise to a finders' fee payable to Stratton Oakmont under the Underwriting
Agreement.
11. Rule 144(c) Reporting - From the date this Agreement is
approved by the Bankruptcy Court through the Final Date, IDC agrees to use its
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best efforts to make and keep adequate public information regarding IDC
available (as those terms are used in Rule 144(c) under the Securities Act) and
file with the Securities and Exchange Commission in a timely manner all reports
and other documents required of IDC under the Securities Act and the Securities
Exchange Act of 1934, as amended.
12. Governing Law - This Agreement is made and performable in
New York County, New York. This Agreement will be governed and construed in
accordance with the laws of the State of New York, without giving effect to the
conflict of laws rules of New York.
13. Venue and Jurisdiction - All actions against any party to
this Agreement arising under or relating in any way to this Agreement shall be
brought exclusively in the United States Bankruptcy Court for the Southern
District of New York. Each of the parties agrees to submit to the personal
jurisdiction of, and to waive any objection to venue in, such court.
14. Waiver of Jury Trial - TO THE FULL EXTENT PERMITTED BY
LAW, EACH OF THE PARTIES KNOWINGLY, VOLUNTARILY, AND INTENTIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED ON THIS
AGREEMENT, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH THIS AGREEMENT, OR
ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN)
OR ACTIONS OF ANY PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
PARTIES' ENTRY INTO THIS AGREEMENT.
15. Successors and Assigns - This Agreement shall continue
perpetually and shall be binding upon the parties hereto and their respective
heirs, personal representatives, administrators, successors and assigns
(collectively, "Successors") and shall inure to the benefit of the Parties'
respective Successors.
16. Good Faith Cooperation - The parties to this Agreement
agree to cooperate in good faith to take all necessary steps to effectuate all
terms and conditions of this Agreement.
17. Counterparts - This Agreement may be executed by the
parties hereto in separate counterparts, each of which, when so executed and
delivered by one or more parties shall be deemed an original, and all of which
counterparts shall together constitute one and the same instrument.
18. Entire Agreement - This Agreement represents the entire
agreement of the parties hereto and the terms are contractual and not mere
recitals. This Agreement may not be amended, altered, or modified or changed in
any way except in a writing signed by each of the parties to this Agreement. The
parties hereto further agree that in the event of any subsequent litigation,
controversy, or dispute concerning any of the terms, conditions, or provisions
6
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of this Agreement, neither party shall be permitted to offer or introduce any
oral evidence concerning other oral promises or oral agreements between the
parties relating to the subject matter of this Agreement not included or
referred to herein and not reflected by a writing signed by each of the parties.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the day and year first written above.
/s/ Harvey R. Miller /s/ Jon Silverman
- -------------------------------------- ------------------------------------
Harvey R. Miller, International Dispensing Corporation
As Trustee for Stratton Oakmont, Inc. By: Jon Silverman
Title: President
