As filed with the Securities and Exchange Commission on October 1, 1999
SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant |X|
Filed by a Party other than the Registrant |_|
Check the appropriate box:
|_| Preliminary Proxy Statement
|_| Confidential, For Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
|X| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
ROBOCOM SYSTEMS INTERNATIONAL INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person Filing Proxy Statement, Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
|X| No fee required
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed pursuant
to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is
calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials:
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-1l(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the form or schedule and the date of its filing.
(1) Amount Previously Paid: $
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
October 1, 1999
To the Shareholders of Robocom Systems International Inc.:
Notice is hereby given that the Annual Meeting of Shareholders of Robocom
Systems International Inc., a New York corporation (the "Company"), will be held
in the Executive Conference Room of Robocom Systems International Inc., 511
Ocean Ave., Massapequa, NY 11758, on Friday, October 29, 1999 at 2:00 PM., local
time, for the following purposes:
1. Election of seven (7) directors to the Board of Directors to hold
office until the 2000 Annual Meeting of Shareholders or until their
successors shall have been duly elected and qualified;
2. Such other business as may properly come before the Annual Meeting.
Only shareholders of record at the close of business on Monday, September
20, 1999 will be entitled to vote at the Annual Meeting.
Whether or not you expect to attend the Annual Meeting, please mark, sign
and promptly return the enclosed proxy in the postpaid envelope provided. If you
receive more than one proxy because your shares are registered in different
names or addresses, each such proxy should be signed and returned so that all
your shares will be represented at the meeting.
Sincerely,
DAVID DININ
President and Chief Executive Officer
<PAGE>
ROBOCOM SYSTEMS INTERNATIONAL INC.
511 Ocean Avenue
Massapequa, New York 11758
PROXY STATEMENT
GENERAL
This Proxy Statement is furnished to shareholders of Robocom Systems
International Inc., a New York corporation (the "Company"), in connection with
the solicitation, by order of the Board of Directors of the Company (the
"Board"), of proxies to be voted at the Annual Meeting of Shareholders, to be
held on Friday, October 29, 1999 at 2:00 P.M., local time, located in the
Executive Conference Room of Robocom Systems International Inc., 511 Ocean Ave.,
Massapequa, NY 11758, and at any adjournment or adjournments thereof (the
"Annual Meeting"). The accompanying proxy is being solicited on behalf of the
Board. This Proxy Statement and the enclosed proxy card were first mailed to
shareholders of the Company on or about October 1, 1999, accompanied by the
Company's Annual Report on Form 10-KSB for the fiscal year ended May 31, 1999,
and the Company incorporates the contents of such report herein by reference
thereto.
At the Annual Meeting, the following matters will be considered and voted
upon:
(1) Election of seven (7) directors to the Board of Directors to hold
office until the 2000 Annual Meeting of Shareholders or until their
successors shall have been duly elected and qualified;
(2) Such other business as may properly come before the Annual Meeting.
Voting and Revocation of Proxies; Adjournment
All of the voting securities of the Company represented by valid proxies,
unless the shareholder otherwise specifies therein or unless revoked, will be
voted FOR the election of the persons nominated as directors and, at the
discretion of the proxy holders, on any other matters that may properly come
before the Annual Meeting. The Board does not know of any matters to be
considered at the Annual Meeting other than the election of directors.
If a shareholder has appropriately specified how a proxy is to be voted,
it will be voted accordingly. Any shareholder has the power to revoke such
shareholder's proxy at any time before it is voted. A proxy may be revoked by
delivery of a written statement to the Secretary of the Company stating that the
proxy is revoked, by a subsequent proxy executed by the person executing the
prior proxy and presented to the Annual Meeting, or by voting in person at the
Annual Meeting.
A plurality of the votes cast at the Annual Meeting by the shareholders
entitled to vote in the election is required to elect the director nominees and
to take any other action. Although no formal agreement exists, the Company
anticipates that the 1,701,000 shares (approximately 49% of the outstanding
shares) in the aggregate of the Common Stock, $.01 par value per share (the
"Common Stock"), of the Company beneficially owned by Mr. Irwin Balaban, the
Chairman of the Board, Mr. Herbert Goldman, a Director of the Company, and Mr.
Lawrence B. Klein, the Executive Vice President - Worldwide, Secretary and a
Director of the Company, will be voted as recommended for the director nominees
set forth herein. Accordingly, the Board anticipates that its nominees will be
elected to serve as the Company's directors. In the event that sufficient votes
in favor of any of the matters to come before the meeting are not received by
the date of the Annual Meeting, the persons named as proxies may propose one or
more adjournments of the Annual Meeting to permit further solicitation of
proxies. Any such adjournment will require the affirmative vote of the holders
of a majority of the shares of Common Stock present in person or by proxy at the
Annual Meeting. The persons named as proxies will vote in favor of any such
proposed adjournment or adjournments.
<PAGE>
Abstentions and broker non-votes are counted in determining the existence
of a quorum but are not counted as votes cast for the proposals as to which the
shareholder abstained or the broker withheld authority. Abstentions and broker
non-votes have the effect of reducing the number of affirmative votes required
to achieve a majority of the votes cast.
Solicitation
The solicitation of proxies pursuant to this Proxy Statement will be
primarily by mail. In addition, certain directors, officers or other employees
of the Company may solicit proxies by telephone, telegraph, mail or personal
interviews, and arrangements may be made with banks, brokerage firms and others
to forward solicitation material to the beneficial owners of shares held by them
of record. No additional compensation will be paid to directors, officers or
other employees of the Company for such services. The total cost of any such
solicitation will be borne by the Company and will include reimbursement of
brokerage firms and other nominees.
Quorum and Voting Rights
The Board has fixed Monday, September 20, 1999 as the record date (the
"Record Date") for the determination of shareholders entitled to notice of and
to vote at the Annual Meeting. Holders of record of shares of Common Stock at
the close of business on the Record Date will be entitled to one vote for each
share held. The presence, in person or by proxy, of the holders of a majority of
the outstanding voting securities entitled to vote at the Annual Meeting is
necessary to constitute a quorum at the Annual Meeting.
Security Ownership of Certain Beneficial Owners and Management Ownership
The following table sets forth, as of September 1, 1999, the names,
addresses and number of shares of Common Stock beneficially owned by all persons
known to the management of the Company to be beneficial owners of more than 5%
of the outstanding shares of Common Stock, and the names and number of shares
beneficially owned by all directors and director nominees of the Company and all
executive officers and directors of the Company as a group (except as indicated,
each beneficial owner listed exercises sole voting power and sole dispositive
power over the shares beneficially owned):
<TABLE>
<CAPTION>
Name and Address of Number of Shares Percentage of Outstanding
Beneficial Owner (1) Beneficially Owned(2) Shares Beneficially Owned(2)
-------------------- --------------------- ----------------------------
<S> <C> <C>
Irwin Balaban ............................................. 600,972(3) 17.19%
Mark Behrman ............................................. --(4) --
Herbert Goldman ........................................... 584,000(5) 16.74%
Barry J. Gordon ........................................... 5,000(6) *
William J. Hancock (7) .................................... -- --
Lawrence B. Klein ......................................... 591,972(8) 16.93%
Yacov Shamash (7) ......................................... -- --
All executive officers and directors as a group (7 persons) 1,913,944 53.39%
</TABLE>
- ------------------
* Less than 1%.
(1) Unless otherwise indicated, the address of each beneficial owner of more
than 5% of the outstanding shares of Common Stock is c/o Robocom Systems
International Inc., 511 Ocean Avenue, Massapequa, New York 11758.
(2) Except as indicated in the footnotes to this table, the Company believes
that all persons named in the table have sole voting and investment power
with respect to all Common Stock shown as beneficially owned by them. In
accordance with the rules of the Securities and Exchange Commission (the
"Commission"), a person or entity is deemed to be the beneficial owner of
Common Stock that can be acquired by such person or entity within 60 days
upon the exercise of options or warrants or other rights to acquire Common
Stock. Each beneficial owner's
2
<PAGE>
percentage ownership is determined by assuming that options and warrants
that are held by such person (but not those held by any other person) and
which are exercisable within 60 days have been exercised. The inclusion
herein of such shares listed as beneficially owned does not constitute an
admission of beneficial ownership.
(3) Includes 27,972 shares subject to options that are presently exercisable.
(4) Excludes shares owned by BlueStone Capital Partners, L.P., of which Mr.
Behrman is a Managing Director, as to which shares Mr. Behrman disclaims
beneficial ownership.
(5) Includes 564,000 shares held by the H & N Goldman L.P. and 20,000 shares
subject to options that are presently exercisable.
(6) Represents 5,000 shares subject to options that are presently exercisable.
(7) Nominee for election to the Board of Directors.
(8) Includes 27,972 shares subject to options that are presently exercisable.
3
<PAGE>
PROPOSAL 1 - ELECTION OF DIRECTORS
The Amended and Restated Bylaws of the Company provide that the number of
directors of the Company shall be at least three and not more than seven, except
that where all the shares are owned beneficially and of record by fewer than
three shareholders, the number of directors may be less than three, but not less
than the number of shareholders. Subject to the foregoing limitation, such
number may be fixed from time to time by action of the Board or of the
shareholders. The Board currently consists of six directors. On September 27,
1999, the Board of Directors approved an increase in the number of directors to
seven. The term of office of the directors is one year, expiring on the date of
the next annual meeting, or when their respective successors shall have been
elected and shall qualify, or upon their prior death, resignation or removal.
Except where the authority to do so has been withheld, it is intended that
the persons named in the enclosed proxy will vote for the election of the
nominees to the Board listed below to serve until the date of the next annual
meeting of the shareholders of the Company and until their successors are duly
elected and qualified. Although the directors of the Company have no reason to
believe that the nominees will be unable or decline to serve, in the event that
such a contingency should arise, the accompanying proxy will be voted for a
substitute (or substitutes) designated by the Board.
The following table sets forth certain information regarding the director
nominees, all of whom currently serve as directors of the Company:
Principal Occupation for Past Five Years and
Name Age Current Public Directorships or Trusteeships
- ---- --- --------------------------------------------
Irwin Balaban 67 Mr. Balaban is a co-founder of the Company and has
been Chairman of the Board since 1983. He also was
President and Chief Executive Officer of the
Company until his retirement in March 1999 and,
since that time, has provided consulting services
to the Company. Prior thereto Mr. Balaban was the
Manager of Logistics for the Systems Management
Division of Sperry Corporation.
Mark Behrman 37 Mr. Behrman has been a Director of the Company
since April 1998. Since 1996, he has been a
Managing Director of BlueStone Capital Partners,
L.P. ("BlueStone"), a full service investment bank
focused on the emerging growth and small-cap
market; prior thereto, Mr. Behrman served as
Managing Director and Head of Corporate Finance
for Commonwealth Associates. He currently serves
on the Board of Directors of Noble International,
Ltd., a publicly traded Tier II automotive
components supplier.
David Dinin 53 Mr. Dinin has been a Director and President and
Chief Executive Officer of the Company since April
1999. From 1997 to March 1999, he was Senior Vice
President of Paramount Financial Corporation, a
financial services company that also provides IT
solutions. From 1986 to 1994 and from 1996 to
1997, Mr. Dinin was President - North America of
Linotype-Hell Corporation, a manufacturer of
pre-press hardware and software for the publishing
industry, responsible for creating new
distribution direction for its North American
operations. From 1994 to 1995, Mr. Dinin was
Senior Vice President - Marketing, Business
Development of Olsten Corporation, a staffing
services company. Mr. Dinin currently serves as
the President of the Long Island Sales & Marketing
Executives (SME) International and as a member of
the board of advisors for several privately-held
companies. He is a member of the CW Post College
of Management's Executive Board of Advisors and
the Anti-Defamation League.
4
<PAGE>
Principal Occupation for Past Five Years and
Name Age Current Public Directorships or Trusteeships
- ---- --- --------------------------------------------
Herbert Goldman 68 Mr. Goldman is a co-founder of the Company and has
been a director of the Company since 1983. He has
provided consulting services to the Company since
his retirement in 1996. From 1991 until his
retirement, Mr. Goldman had been Executive Vice
President - Operations of the Company.
William J. Hancock 57 Mr. Hancock is an independent consultant
specializing in defense logistics, infrastructure
outsourcing and privatization, and global
logistics process reengineering. From September
1996 to August 1998, in the rank of Vice Admiral,
Mr. Hancock served as the Deputy Chief of Naval
Operations for the Logistics Department of the
Navy. From June 1994 to September 1996, in the
rank of Rear Admiral, Mr. Hancock served as the
Director, Office of Budget, Department of the
Navy. Prior thereto, he served with the Navy
Department in a variety of positions in the
Pentagon as well as at sea in the Pacific.
Lawrence B. Klein 65 Mr. Klein is a co-founder of the Company and has
been a director of the Company since 1991. Mr.
Klein has been Executive Vice President -
Worldwide since May 1999. From 1991 to May 1999,
he was the Executive Vice President, Marketing and
Sales and from 1987 to 1991, Mr. Klein served as
Vice President - Automated Factory Systems and
Sales of the Company. Prior thereto he was an
Engineering Section Manager of Computer
Applications Equipment and Facilities at Sperry
Corporation.
Yacov Shamash 49 Mr. Shamash has been Dean of the College of
Engineering and Applied Sciences and the Harriman
School for Management and Policy at SUNY Stony
Brook since 1992. He was recently appointed Vice
President for Economic Development, SUNY Stony
Brook. Since 1989, Mr. Shmash has served as a
director and chair of the audit committee of Key
Tronic Corporation, a keyboard manufacturing
company. Mr. Shamash also serves as a director of
Long Island High Technology Incubator (LIHTI), the
Long Island Forum for Technology (LIFT), and the
Long Island Software Technology Network (LISTnet),
which are not-for-profit organizations. He is a
Fellow of the Institute of Electronic and
Electrical Engineers (IEEE) and was a member of
the Board of Governors of the IEEE Aerospace and
Electronics Systems Society (AESS) from 1989 to
1995.
The term of office of the directors is one year, expiring on the date of
the next annual meeting and thereafter until their respective successors shall
have been elected and shall qualify.
Board Meetings and Committees
The Board of Directors met three times during the fiscal year ended May
31, 1999. Each director attended at least 75% of the Board and Committee
meetings of which he was a member during such time as he served as a director.
From time to time, the members of the Board act by unanimous written consent
pursuant to the Business Corporation Law of the State of New York, as amended.
The Board has an Audit Committee, which currently consists of Mark Behrman
and Barry J. Gordon. Mr. Gordon is not standing for re-election to the Board of
Directors. The Audit Committee recommends engagement of the Company's auditors
for approval and is responsible for determining that management fulfills its
responsibilities
5
<PAGE>
in the preparation of financial statements and financial control of operations.
The Audit Committee was established in September 1997 and held two meetings
during the fiscal year ended May 31, 1999.
The Board has a Compensation Committee, which currently consists of
Messrs. Behrman and Gordon. The Compensation Committee reviews and makes
recommendations to the Company's Board of Directors relating to the compensation
of executives and administers the Company's stock option and incentive plans.
The compensation Committee was established in September 1997 and held two
meetings during the fiscal year ended May 31, 1999.
Board of Directors Compensation
Each non-employee director receives $500 for each Board meeting attended
and is reimbursed for all out-of-pocket expenses incurred in connection with his
attendance at meetings of the Board or any committee thereof. On June 26, 1997,
the Board of Directors authorized the grant to each non-employee director on
such date of five-year options to purchase 5,000 shares of Common Stock at the
exercise price of $6.50 per share.
Vote Required
A plurality of the votes cast at the Annual Meeting by the shareholders
entitled to vote in the election is required to elect the director nominees.
THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE DIRECTOR
NOMINEES.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary of Cash and Certain Other Compensation
The following table sets forth all compensation awarded to, earned by or
paid to the chief executive officers ("CEO") of the Company and all other
executive officers of the Company whose salary and bonus exceeded $100,000 in
compensation for the last three fiscal years (collectively, the "Named
Executives"):
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation Awards
-------------------------------- -------------------------------
Securities
Name and Fiscal Other Annual Underlying All Other
Principal Position Year Salary Compensation(1) Options/SARs Compensation(2)
------------------ ---- ------ --------------- ------------ ---------------
<S> <C> <C> <C> <C> <C>
David Dinin(3)
President and Chief Executive
Officer 1999 $ 38,462 $ 2,568 140,000 $ 0
Irwin Balaban (4)
Chairman of the Board, 1999 203,461 9,597 0 4,777
President and Chief Executive 1998 240,366 7,192 50,000 4,837
Officer 1997 140,625(5) 13,188 0 2,925
Lawrence B. Klein 1999 187,500 10,508 0 3,900
Executive Vice President - 1998 203,817 7,172 45,000 4,106
Worldwide 1997 122,363(6) 12,216 0 2,545
Robert O'Connor 1999 125,786 11,570 0 2,776
Vice President - 1998 133,077 10,114 30,000 2,580
Systems Development 1997 100,833 5,748 0 1,892
Elizabeth A. Burke (7)
Vice President - Finance, 1999 125,577 0 0 2,509
Chief Financial Officer and 1998 121,023 0 30,000 1,554
Treasurer 1997 18,333 0 0 0
Martin Liebross 1999 100,000 31,404 0 2,251
Director - Network Systems 1998 100,000 8,766 5,000 2,147
Group 1997 100,000 4,800 0 2,000
</TABLE>
- ----------
(1) Represents amounts paid for automobile expenses, certain non-accountable
expenses and commissions paid.
(2) Represents matching contributions made by the Company pursuant to the
Company's 401(k) Plan.
(3) Mr. Dinin became President and Chief Executive Officer on April 1, 1999.
(4) Mr. Balaban retired in March 1999.
(5) Reflects a voluntary reduction in salary since fiscal 1996 of $48,750.
(6) Reflects a voluntary reduction in salary since fiscal 1996 of $42,419.
(7) Ms. Burke became an executive officer of the Company in April 1997.
7
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
The following table sets forth individual grants of stock options and
stock appreciation rights ("SARs") made by the Company during fiscal 1999 to
each of the Named Executives:
<TABLE>
<CAPTION>
Number of Percent of Total Exercise or
Securities Underlying Options/SARs Granted to Base Price Expiration
Name Options/SARs Granted(1) Employees in Fiscal Year(2) ($/Share) Date
---- ----------------------- --------------------------- --------- ----
<S> <C> <C> <C> <C>
David Dinin 140,000 90.32% 2.00 04/01/04
</TABLE>
- ------------------
(1) Mr. Dinin's options were granted effective on April 1, 1999. The Company
granted no SARs in fiscal 1999.
(2) In fiscal 1999, the Company granted options to purchase 155,000 shares of
Common Stock to an aggregate of three employees.
Stock Option Exercises
The following table contains information relating to the exercise of the
Company's stock options by the Named Executives in fiscal 1999, as well as the
number and value of their unexercised options as of May 31, 1999:
Aggregated Option Exercises in Last Fiscal Year
and Fiscal Year-End Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Unexercised Value of Unexercised
Shares Acquired Options at In-the-Money Options
on Value Fiscal Year-End(#)(1) at Fiscal Year End($)
---------------------
Name Exercise(#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
---- ----------- ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Irwin Balaban 0 0 27,972 22,028 0 0
David Dinin 0 0 0 140,000 0 0
Lawrence B. Klein 0 0 27,972 17,028 0 0
Robert O'Connor 0 0 10,000 20,000 0 0
Elizabeth A. Burke 0 0 10,000 20,000 0 0
Martin Liebross 0 0 1,667 3,333 0 0
</TABLE>
- ----------------
(1) The sum of the numbers under the Exercisable and Unexercisable columns of
this heading represents each Named Executive's total outstanding options
to purchase shares of Common Stock.
8
<PAGE>
Key Employees
In addition to the nominees for Directors listed above, set forth below is
a brief description of certain other key employees of the Company:
Elizabeth A. Burke has been Vice President - Finance, Chief Financial
Officer and Treasurer of the Company since April 1997. From July 1994 to January
1997, Ms. Burke was Vice President of Finance/Controller of Marvel Comics Group,
a division of Marvel Entertainment Group, Inc. ("Marvel"). From November 1991 to
July 1994, Ms. Burke was Corporate Controller of Marvel. From 1981 to November
1991, Ms. Burke was employed at Arthur Andersen LLP.
Judy Frenkel has been Vice-President - Systems Development since September
1999 and from September 1992 until that time, as the Manager of Systems Analysis
of the Company. From October 1998 to September 1992, Ms. Frenkel was a Senior
Systems Analyst at the Company and from April 1986 to October 1988 was a Systems
Analyst at the Company.
Chung Hsin Lee has been the Manager of Software Development of the Company
since November 1994. From September 1985 to November 1994, Mr. Lee served as the
technical leader in the development of radio frequency subsystems for the
Company's products.
Martin Liebross has been Director of the Network Systems Group of the
Company since September 1993. From August 1989 to September 1993, Mr. Liebross
was President of Soma Lan Technologies, Inc., a computer network integrator.
C. Kenneth Morrelly has been Senior Vice President of the Company since
June 1999. Prior thereto, Mr. Morrelly was Senior Vice President of Dayton T.
Brown, Inc., a company which performs research, development and testing for the
Department of Defense, for more than 15 years. Mr. Morrelly has over 30 years
experience in information technology and over 10 years on advanced supply chain
management research and implementation.
Robert O'Connor has been Vice President - Technology since September 1999
and from October 1991 until that time, as the Vice President - Systems
Development of the Company. Prior thereto, Mr. O'Connor was employed as a
programming group leader by Sperry Corporation.
Employment and Consulting Agreements
The Company has entered into employment agreements with Messrs. Dinin,
Klein, and O'Connor. Mr. Dinin's agreement is effective as of April 1, 1999 and
has a three-year term. Messrs. Klein and O'Connor's employment agreements are
effective as of May 15, 1997, and have a three-year term. Under each employment
agreement, the employee receives an annual base salary and is entitled to
participate in all benefit programs generally available to executive officers of
the Company.
Pursuant to their respective employment agreements, Mr. Dinin serves as
President and Chief Executive Officer of the Company and receives an annual base
salary of $250,000; Mr. Klein serves as Executive Vice President - Worldwide of
the Company and receives an annual base salary of $195,000; and Mr. O'Connor
serves as Vice President - Systems Development of the Company and receives an
annual base salary of $132,000. Pursuant to their respective employment
agreements, on November 30,1999, Messrs. Klein and O'Connor's base salary will
automatically increase by 10%; however, Mr. Klein has waived the 10% increase
that would have become effective on November 30, 1999.
Under the employment agreements, each employee was granted incentive stock
options to purchase shares of Common Stock. On June 26, 1997, Mr. Klein received
options to purchase 45,000 shares at $7.15 per share, and Mr. O'Connor received
options to purchase 30,000 shares at $6.50 per share. The options granted to Mr.
Klein fully vest over four years and the options granted to Mr. O'Connor vest
over three years. On April 1, 1999, Mr.
9
<PAGE>
Dinin received options to purchase 140,000 shares at $2.00 per share; 90,000 of
such options fully vest subject to the Company's net profit, as defined, for
each of the next five years; the remaining 50,000 options fully vest over three
years. All of Mr. Dinin's options will also immediately vest upon a change of
control (as defined) of the Company. All options expire on the fifth anniversary
of the date of grant.
In their employment agreements, each of Messrs. Klein and O'Connor has
agreed that during the term of his employment agreement and for a period of one
year thereafter (in the event of termination of employment for other than
"cause" or "good reason") or two years thereafter (in the event of termination
of employment for "cause"), he will not, without the prior written consent of
the Company, compete with the Company by engaging in any capacity in any
business that is competitive with the business of the Company. In his employment
agreement, Mr. Dinin has agreed that during his employment and for a period of
one year thereafter he will not, without the prior written consent of the
Company, compete with the Company by engaging in any capacity in any business
that is competitive with the business of the Company in any geographical area in
which the Company then conducts business.
On April 1, 1999, Irwin Balaban, Chairman of the Board and a principal
shareholder of the Company, entered into a three-year consulting agreement with
the Company to provide consulting services with respect to new product
development and related technical matters. Pursuant to this agreement, Mr.
Balaban is paid an annual retainer of $12,000 plus a per diem of $1,000 for each
day Mr. Balaban performs consulting services at the Company's request. For the
fiscal year ended May 31, 1999, Mr. Balaban received approximately $3,000 for
providing consulting services under his consulting agreement. Under Mr.
Balaban's former employment agreement with the Company pursuant to which he
served as President and Chief Executive Officer prior to April 1, 1999, Mr.
Balaban was granted on June 26, 1997 options to purchase 50,000 shares of Common
Stock at $7.15 per share. Such options fully vest over four years.
On May 15, 1997, Herbert Goldman, a director and principal shareholder of
the Company, entered into a three-year consulting agreement with the Company to
provide consulting services with respect to new product development and related
technical matters. Pursuant to this agreement, Mr. Goldman is paid an annual
retainer of $12,000 plus a per diem of $1,000 for each day Mr. Goldman performs
consulting services at the Company's request. In addition, on June 26, 1997, Mr.
Goldman was granted five-year stock options to purchase up to 15,000 shares of
Common Stock at a purchase price equal to $7.15 per share. For the fiscal year
ended May 31, 1999 and 1998, Mr. Goldman received approximately $23,000 and
$12,000, respectively, for providing consulting services under his consulting
agreement.
10
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company leases approximately 10,000 square feet of office space, which
functions as its corporate headquarters, in Massapequa, New York, pursuant to a
lease between the Company and Robocom Properties Inc. ("Robocom Properties")
that expires on December 31, 2010. The shareholders of Robocom Properties are
Messrs. Balaban, Goldman, Klein and O'Connor. The total rental expense payable
by the Company to Robocom Properties in each of the fiscal years ended May 31,
1997, 1998, and 1999 was $168,000, $173,090 and $168,000, respectively. Since
January 1, 1998, the annual base rental of $168,000 payable under the lease has
been adjusted and thereafter will be adjusted each year by the ratio of the
prime rate as published in the Wall Street Journal on January 2 of such year to
the prime rate as published in the Wall Street Journal on January 2 of the
previous year, which for fiscal 1998 was the ratio of 8.5% to 8.25%. The prime
rate on January 2, 1999 was 7.75%. However, the parties have agreed that rent
will not be less than $14,000 per month. The Company believes that these rental
terms are at least as favorable to the Company as could be obtained from an
unaffiliated third party.
In connection with the purchase by Robocom Properties in 1989 of the
Company's corporate headquarters building, the Company guaranteed three mortgage
loans in an aggregate original principal amount of $1,053,000 that mature in
2010 and bear interest at rates ranging from 8.25% to 8.877% per annum. At May
31, 1999, the outstanding aggregate principal amount of the mortgage loans was
approximately $762,000.
Irwin Balaban, Chairman of the Board, has been acting as a consultant to
the Company since his retirement as President and Chief Executive Officer of the
Company effective April 1, 1999. On April 1, 1999, the Company and Mr. Balaban
entered into a three-year agreement pursuant to which Mr. Balaban is to receive
$12,000 per year for providing consulting services and will continue to provide
consulting services to the Company on an as-needed basis. For the fiscal year
ended May 31, 1999, Mr. Balaban received approximately $3,000 under this
agreement.
Herbert Goldman, a director of the Company, has been acting as a
consultant to the Company since his retirement as Executive Vice President -
Operations of the Company effective July 1, 1996. On May 15, 1997, the Company
and Mr. Goldman entered into a three-year agreement pursuant to which Mr.
Goldman is to receive $12,000 per year for providing consulting services and
will continue to provide consulting services to the Company on an as-needed
basis. For the fiscal years ended May 31, 1999 and 1998, Mr. Goldman received
approximately $23,000 and $12,000, respectively, under this agreement.
The Company made distributions to its S Corporation shareholders of
$850,000 in fiscal 1993, did not make any such distributions in fiscal 1994,
1995 or 1996, and made distributions to such shareholders aggregating $900,000
in the fourth quarter of fiscal 1997. The Company paid the final S Corporation
distribution of $1,600,000 on July 1, 1997 using a portion of the net proceeds
received by the Company in its initial public offering (the "Offering"). In June
1997, prior to the consummation of the Offering, the Company entered into an
indemnity agreement with its then-existing shareholders, including Messrs.
Balaban, Klein, Goldman and O'Connor, pursuant to which the Company will
indemnify such shareholders against additional income taxes resulting from
adjustments made (as a result of a final determination made by a competent tax
authority) to the taxable income reported by the Company as an S Corporation for
periods prior to the Offering, but only to the extent those adjustments result
in a decrease in income taxes otherwise payable by the Company.
Between November 1993 and January 1997, Messrs. Balaban, Klein and Goldman
made demand loans to the Company from time to time in the aggregate amounts of
$265,000, $115,000 and $265,000, respectively. Interest rates on the loans
ranged from 6% per annum to 8% per annum. All of such loans were paid in full in
January 1997.
Mark Behrman, a director of the Company, is a Managing Director of
BlueStone Capital Partners, L.P., which was the managing underwriter for the
Offering of its Common Stock in June 1997. In connection with such transaction,
BlueStone earned underwriting discounts and commissions of approximately
$424,000, was reimbursed for expenses in the amount of $183,000 and received
five-year warrants to purchase up to 150,000 shares of Common Stock at an
exercise price of $7.80 per share. In addition, in connection with such
transaction, the
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Company agreed to indemnify the underwriters, including BlueStone, against
certain civil liabilities in connection with the Company's registration
statement filed with the Commission under the Securities Act of 1933, as
amended.
INDEPENDENT AUDITORS
Ernst & Young LLP ("E&Y"), served as the Company's independent auditors
for the fiscal year ended May 31, 1999. A representative of E&Y is expected to
attend the Annual Meeting and such representative will have the opportunity to
make a statement if he/she so desires and will be available to respond to
appropriate questions from shareholders.
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Based solely upon a review of Forms 3 and 4 furnished to the Company
pursuant to Rule 16a-3(e) and written statements from directors and executive
officers that no report on Form 5 is due, no reporting person failed to file
reports required under Section 16(a) of the Securities and Exchange Act of 1934,
as amended (the "Exchange Act") with respect to the Company's securities.
SHAREHOLDER PROPOSALS
Proposals of shareholders intended for presentation at the 2000 Annual
Meeting of Shareholders and intended to be included in the Company's Proxy
Statement and form of proxy relating to that meeting in accordance with Rule
14a-8(e), promulgated under the Exchange Act, must be received at the address
appearing on the first page of this Proxy Statement by May 28, 2000. The proxy
rules of the Securities and Exchange Commission limit the circumstances under
which the proxy card distributed by registered companies to their shareholders
may permit those companies to cast the votes represented by the proxy voting
cards in their sole discretion. As applied to the Company, the most important
limitation is that for proposals made by a shareholder at the 2000 annual
meeting that are not properly submitted by the shareholder for inclusion in the
Company's own proxy materials, the Company may vote proxies in its discretion
with respect to those proposals only if it has not received notice from the
shareholder by August 14, 2000 at the latest that the shareholder intends to
make those proposals at the annual meeting.
OTHER BUSINESS
Other than as described above, the Board knows of no matters to be
presented at the Annual Meeting, but it is intended that the persons named in
the proxy will vote all proxies according to their best judgment if any matters
not included in this Proxy Statement do properly come before the meeting or any
adjournment thereof.
EXPENSES
The expenses of printing and mailing proxy material, including expenses
involved in forwarding materials to beneficial owners of stock, will be borne by
the Company. No solicitation other than by mail is contemplated, except that
officers or employees of the Company may solicit the return of proxies from
certain stockholders by telephone, personal solicitation or facsimile.
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ANNUAL REPORT
The Company's Annual Report on Form 10-KSB for the year ended May 31,
1999, including financial statements, is being mailed herewith. If, for any
reason, you do not receive your copy of the Annual Report, please contact
Robocom Systems International Inc., 511 Ocean Avenue, Massapequa, New York
11758, Attention: Shareholder Relations, and another copy will be sent to you.
By Order of the Board of Directors,
David Dinin,
President and Chief Executive Officer
Dated: October 1, 1999
Massapequa, New York
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REVOCABLE PROXY
ROBOCOM SYSTEMS INTERNATIONAL INC.
|X| PLEASE MARK VOTES AS IN THIS EXAMPLE
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned hereby appoint(s) David Dinin, Elizabeth A. Burke and
Lawrence B. Klein or any of them, lawful attorneys and proxies of the
undersigned with full power of substitution, for and in the name, place and
stead of the undersigned to attend the Annual Meeting of Shareholders of Robocom
Systems International Inc. to be held in the Executive Conference Room of
Robocom Systems International Inc., 511 Ocean Avenue, Massapequa, New York 11758
on Friday, October 29, 1999 at 2:00 p.m., local time, and any adjournment(s) or
postponement(s) thereof, with all powers the undersigned would possess if
personally present and to vote the number of votes the undersigned would be
entitled to vote if personally present.
The Board of Directors recommends a vote "FOR" the proposal set forth
below.
With- For All
For hold Except
PROPOSAL 1: ----- ----- ------
| | | | | |
The Election of Directors: ----- ----- ------
Irwin Balaban, Mark Behrman, David Dinin, Herbert Goldman, William J. Hancock,
Lawrence B. Klein and Yacov Shamash.
INSTRUCTION: To withhold authority to vote for any individual nominee, mark "For
All Except" and write that nominee's name in the space provided below.
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In accordance with their discretion, said Attorneys and Proxies are
authorized to vote upon such other matters or proposals not known at the time of
solicitation of this proxy which may properly come before the meeting.
This proxy when properly executed will be voted in the manner described
herein by the undersigned shareholder. If no direction is made, this proxy will
be voted for each of the Proposals set forth herein. Any prior proxy is hereby
revoked.
Please be sure to sign and date Date ----------------------------------------
this Proxy in the box below.
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Shareholder sign above Co-holder (if any) sign above
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ROBOCOM SYSTEMS INTERNATIONAL INC.
Please sign exactly as your name appears on this proxy card. When shares are
held by joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or corporation, please sign in full corporate name by
president or other authorized person. If a partnership, please sign in
partnership name by authorized person.
PLEASE ACT PROMPTLY
SIGN, DATE & MAIL YOUR PROXY CARD TODAY
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