<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A)
OF THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. __)
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
<TABLE>
<S> <C>
/ / Preliminary Proxy Statement / / Confidential, for Use of Commission Only (as
/X/ Definitive Proxy Statement permitted by Rule 14a-6(e)(2))
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
ABC DISPENSING TECHNOLOGIES, INC.
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT IF OTHER THAN THE REGISTRANT)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11
(1) Title of each class of securities to which transaction applies:
-----------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-----------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
-----------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-----------------------------------------------------------------------
(5) Total fee paid:
-----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. 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 No.:
------------------------------
(3) Filing Party:
------------------------------
(4) Date Filed:
------------------------------
<PAGE> 2
ABC DISPENSING TECHNOLOGIES, INC.
(F/K/A) AMERICAN BUSINESS COMPUTERS CORPORATION
451 KENNEDY ROAD
AKRON, OHIO 44305
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON SEPTEMBER 27, 1996
To the Shareholders of ABC Dispensing Technologies, Inc.:
The Annual meeting of Shareholders of ABC Dispensing Technologies, Inc.
will be held at the Sheraton Suites, 1989 Front Street, Cuyahoga Falls, Ohio, on
Friday, September 27, 1996, at 1:30 p.m., local time, for the following
purposes:
1. To elect five (5) directors; and
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
The Board of Directors of the Company has fixed the close of business on
August 23, 1996 as the record date for the determination of stockholders
entitled to notice of, and to vote at, the meeting.
It is important that all shares be represented at the meeting. The Board of
Directors extends a cordial invitation to all shareholders to attend the
meeting. However, if you are unable to attend the meeting, you are requested to
sign, date and return the enclosed Proxy in the return envelope. You may revoke
your Proxy and vote in person if you decide to attend the meeting.
By Order of the Board of Directors
William Lerner, Secretary
Akron, Ohio
August 30, 1996
<PAGE> 3
ABC DISPENSING TECHNOLOGIES, INC.
(F/K/A) AMERICAN BUSINESS COMPUTERS CORPORATION
451 KENNEDY ROAD
AKRON, OHIO 44305
PROXY STATEMENT
1996 ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD SEPTEMBER 27, 1996
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of ABC Dispensing Technologies, Inc.
("Company") to be used at the Annual Meeting of Shareholders of the Company to
be held on Friday, September 27, 1996 at 1:30 p.m., local time, or at any
adjournment, for the purposes set forth in the foregoing Notice of Annual
Meeting. If because of a disability you will need auxiliary aids or services to
attend the Meeting, please contact the Secretary of the Company prior to the
Meeting.
If the enclosed Proxy is properly executed and returned, the shares
represented will be voted by the proxies in accordance with the shareholders'
directions. If the Proxy is signed and returned without choices having been
specified, the shares will be voted FOR the proposals set forth in the Notice of
Annual Meeting of Shareholders. The Proxy may be revoked by the person giving it
at any time prior to its use by a written revocation delivered to the Secretary
of the Company, submission of a later dated Proxy, or in person at the meeting.
The Proxy Statement and Proxy are being mailed to Shareholders commencing
on or about September 5, 1996.
Officers and employees of the Company may, by letter, telephone, or in
person, request the return of proxies. The cost of this solicitation will be
paid by the Company. The Company will reimburse brokerage houses, custodians,
nominees, and others for reasonable expenses in connection with this
solicitation.
The Company has 17,109,160 shares of common stock ("Common Stock")
outstanding and entitled to vote as of the record date, August 23, 1996.
Shareholders of record, at the close of business on that date, will be the only
person to receive notice of, and to be entitled to vote, at the Meeting or any
adjournment of the Meeting. Holders of common stock are entitled to one vote per
share on all matters to be brought before the Meeting. For the purposes of
counting votes, abstentions will be treated as shares that are present and
entitled to vote for purposes of determining the presence of a quorum, but as
unvoted for purposes of determining the approval of any proposal by the
shareholders. If a broker or nominee indicates that it does not have
discretionary authority to vote on a proposal as to certain shares, those shares
will be counted for general quorum purposes but will not be considered as
present and entitled to vote with respect to such proposals.
The presence, in person or by proxy, of the holders of a majority of the
outstanding shares of common stock entitled to vote at the Meeting is necessary
to constitute a quorum at the Meeting. Business at the Meeting will be conducted
in accordance with the procedures determined by the Chairman of the Meeting and
will be limited to matters properly brought before the Meeting pursuant to the
procedures prescribed in the Company's By-Laws.
PROPOSAL NO. 1--ELECTION OF FIVE DIRECTORS
The By-Laws of the Company provide for a Board of Directors consisting of
up to nine members. The Board of Directors currently has five members. At the
meeting, five individuals will be elected to serve as directors until the next
annual meeting of shareholders, and until their successors are elected and
qualified. The Board of Directors has nominated five individuals, all of whom
comprise the current Board of Directors. In the event all such nominees are
elected, the Board will have four vacancies. Board members are elected annually
by shareholders; however, vacancies may be filled at any time by the existing
Board of Directors. The Board may fill some of the four vacancies prior to the
next annual meeting, but has no present plans to do so.
1
<PAGE> 4
If elected, each nominee will hold office until the Annual Meeting to be
held in 1997 and until his successor is elected and shall qualify. The Board of
Directors recommends the election of the five nominees listed below.
Unless a shareholder withholds authority, a properly signed and dated proxy
will be voted for the election of the persons named below. If a duly executed
and dated proxy is returned without instructions, it will be voted for the five
nominees proposed below. Management has no reason to believe that any of the
nominees will not be a candidate or will be unable to serve as a director.
However, in the event any nominee is not a candidate or is unable or unwilling
to serve as a director at the time of the election, unless the shareholder
withholds authority from voting, the proxy will be voted for any nominee who
shall be designated by the present Board of Directors to fill such vacancy.
NOMINEES FOR ELECTION
The names and biographical summaries of the five persons who have been
nominated by the Board of Directors to stand for election as Directors at the
Meeting are:
<TABLE>
<CAPTION>
NAME AGE PRINCIPAL OCCUPATION OF EMPLOYMENT
- ---- --- ----------------------------------
<S> <C> <C>
Herbert L. Luxenburg 61 President and Chief Executive Officer of
University Inn and Days Inn of Kent, Ohio;
Director of the Company
C. Rand Michaels 58 Vice Chairman of Lomak Petroleum, Inc.;
Director of the Company
Herbert M. Pearlman 63 Chairman of Seitel, Inc. and several other
companies (see below); Chairman of the Company
John E. Stieglitz 64 President of Conspectus, Inc.; Director of the
Company
Charles M. Stimac, Jr. 45 President, Chief Executive Officer and
Director of the Company
</TABLE>
HERBERT L. LUXENBURG has been a Director of the Company since September 1988.
Mr. Luxenburg has been a proprietor in the hospitality industry since 1965 and
is President and Chief Executive Officer of both the University Inn and the Days
Inn of Kent, Ohio.
C. RAND MICHAELS has been a director of the Company since September 1986. Mr.
Michaels is Vice Chairman of Lomak Petroleum, Inc. a public corporation engage
in exploration for, and in the development and production of, crude oil and
natural gas. Mr. Michaels has held executive positions with Lomak since 1976.
Mr. Michaels also serves as a Director of Lynx Exploration, Inc., an oil and gas
exploration company.
HERBERT M. PEARLMAN has been a Director of the Company since May 1994. Mr.
Pearlman has extensive experience in helping companies develop and execute
strategic plans for future growth. Mr. Pearlman serves as Chairman of several
public and private companies including: Seitel, Inc. ("Seitel"), a diversified
energy company, Intersystems, Inc. ("Intersystems"), a provider of specialty
industrial equipment and processing, Helm Resources, Inc., ("Helm"), a holding
company with diversified business interests, and Unapix Entertainment, Inc., a
multimedia-entertainment marketing and distribution company.
JOHN E. STIEGLITZ has been President of Conspectus, Inc., a privately held
company engaged in providing services in the area of executive recruitment for
the brokerage and investment banking industry since 1976. Mr. Stieglitz is a
Director of Seitel, Helm and Intersystems.
CHARLES M. STIMAC, JR., has been a Director of the Company since July 15, 1996
when he was elected to fill the vacancy created by the resignation of Mr. Robert
A. Cutting, and has been President and Chief Executive Officer of the Company
since July 15, 1996. Mr. Stimac has more than twenty years in the investment
banking
2
<PAGE> 5
and brokerage industry with extensive experience in sales and marketing, and
formerly was a Vice President with Roney & Company, a member firm of The New
York Stock Exchange, Inc.
BOARD MEETING AND COMMITTEES
The Board of Directors of the Company met 3 times during the fiscal year
ended April 27, 1996 ("fiscal 1996") and also transacted business without a
meeting in the form of Unanimous Consent Resolutions.
The Audit Committee members were C. Rand Michaels and Herbert L. Luxenburg
during fiscal 1996. The Audit Committee held one meeting during fiscal 1996 and
both members attended the meeting. The Audit Committee is responsible for the
review of evaluating and approving the services performed by the Company's
independent accountants as well as reviewing and evaluation the Company's
accounting practices and internal controls.
The Compensation Committee during fiscal 1996 was comprised of Herbert M.
Pearlman. The Committee makes recommendations with respect to amount of key
officers' salaries and key employee compensation and benefit programs.
The Stock Option Committee member during fiscal 1996 was Robert A. Cutting.
This committee is responsible for administering the Company's existing stock
option plans.
No directors attended fewer than all of the meetings of the Board of
Directors during fiscal 1996 or of all meetings of any committee upon which such
director served during fiscal 1996.
Non-employee directors receive no cash compensation for their service as
Directors or to attend any meetings, including meetings of any committees or
sub-committees. However, all Directors are reimbursed for their expenses in
connection with the meetings. Non-employee directors receive on the date of each
annual meeting an option to purchase 5,000 shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock on the date of grant.
In addition, each non-employee director who is elected or appointed to the Board
of Directors for the first time is granted on the date of such election or
appointment an option to purchase 20,000 shares of Common Stock at an exercise
price equal to the fair market value of the Common Stock on the date of grant.
Options are issued under the Company's non-qualified stock option plan.
IDENTIFICATION OF EXECUTIVE OFFICERS
The Company's executive officers are elected annually at the first meeting
of the Board of Directors following each annual shareholders' meeting. The
Company's executive officers as of April 27, 1996 were as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
- ---- --- --------
<S> <C> <C>
Herbert M. Pearlman 63 Chairman
Robert A. Cutting 48 President and Chief Executive Officer. (Mr.
Cutting resigned his position effective July
15, 1996 and was replaced by Charles M.
Stimac, Jr.)
Gary T. Salhany 41 Treasurer and Chief Financial Officer
William Lerner 63 Secretary
</TABLE>
Information about Mr. Pearlman is set forth in the Board of Directors
section of this Proxy Statement.
Robert A. Cutting had been Chief Executive Officer of the Company since May
1993 and President of the Company since April 1990. He resigned his positions
with the Company effective July 15, 1996 and was replaced by Charles M. Stimac,
Jr. as President and Chief Executive Officer. (See the Board of Directors
section of this Proxy Statement for information as to Mr. Stimac).
Gary T. Salhany, CPA, MBA, has served as Treasurer of the Company since
August 1986. He served as Secretary of the Company from September 1988 to
September 1994.
3
<PAGE> 6
William Lerner, an attorney engaged in the private practice of Law
specializing in corporate and securities law, has served as Secretary of the
Company since September 1994. He is a director of several public companies
including Seitel (since July 1984), of Rent-Way, Inc., the operator of a chain
of retail stores in the rental-purchase industry, of Co-Counsel, Inc., a
provider of contract or temporary lawyers and paralegal personnel to law firms
and corporations, and Micros-to Mainframes, Inc., a reseller of computer and
communications equipment and services to Fortune 2000 companies with
headquarters in Connecticut, New Jersey and New York.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a)of the Securities Exchange Act of 1934 requires the Company's
directors, officers and persons who own more than ten percent (10%) of a
registered class of the Company's equity securities to file with the Securities
and Exchange Commission ("SEC") and NASDAQ initial reports of ownership and
reports to changes of ownership of Common Stock and other equity securities of
the Company. Officers, directors and greater than ten percent (10%) shareholders
are required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file. Based solely upon its review of copies of the forms
received by it, or on written representations from reporting persons, the
Company believes that there were no late or delinquent filings on forms 3, 4 or
5 or unreported transactions, during fiscal 1996.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth a summary of the last three fiscal years
ended April 27, 1996, April 29, 1995 and April 30, 1994 of the compensation of
the Company's Chief Executive Officer in Fiscal 1996. No disclosure is provided
as to compensation by the Company to other executive officers of the Company
since the compensation paid to each such executive officer was less than
$100,000 in the fiscal year ended April 27, 1996.
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------- ----------------------------
NAME AND PRINCIPAL FISCAL OTHER ANNUAL OPTIONS
POSITION YEAR SALARY BONUS COMPENSATION (1) # OF SHARES ALL OTHER (2)
- ----------------------- ------ -------- ----- ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert A. Cutting 1996 $122,000 -0- -- -0- $ 490
President & CEO (3) 1995 $115,000 -0- -- -0- $ 490
1994 $ 99,000 -0- -- -0- $ 732
</TABLE>
- ---------
(1) Perquisites for each of the three fiscal years did not exceed 10% of Mr.
Cutting's salary and bonus, combined.
(2) These amounts represent the Company's matching contributions for Mr.
Cutting's account in the Company's 401(k) retirement plan.
(3) Mr. Cuttings employment with the Company terminated effective July 14, 1996.
BOARD COMPENSATION COMMITTEE REPORT
ON EXECUTIVE COMPENSATION
The Compensation Committee recommends to the Board of Directors the
compensation to be paid to the Chief Executive Officer ("CEO"). In performing
that function, the Committee reviews the range and components of compensation
paid to CEO's of other public companies in the industry or of comparable
revenues. The Company's policies are intended to reward executives for long-term
strategic management and the enhancement of shareholder value, support a
performance-oriented environment that rewards achievement of internal Company
goals and recognizes the Company's performance compared to performance levels of
comparable companies in the industry, and attract and retain executives whose
abilities are critical to the long-term success and competitiveness of the
Company.
4
<PAGE> 7
The key components of executive officer compensation are: (1) salary, which
is based on factors such as the individual officer's level of responsibility and
comparisons to similar positions in the Company and comparable companies in the
industry, (2) cash bonus awards, which are based on individual performance, (3)
stock option awards, which are intended to increase the interest in the
long-term success of the Company as measured by the share price and book value
per share; and (4) stock awards.
The compensation of Robert A. Cutting, the Company's President and Chief
Executive Officer, was increased from $115,000 in fiscal 1995 to $122,000 in
fiscal 1996.
The Compensation Committee
COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
No members of the Compensation Committee are employees or former employees
of the Company.
COMPARISON OF FIVE YEAR CUMULATIVE TOTAL RETURN
The following graph shows the cumulative return experienced by the holders
of Common Stock during the period from April 30, 1991 through April 27, 1996 as
compared to the NASDAQ Stock Market Index (U.S. Companies) and the total return
of domestic issuers having the same Standard Industrial Classification Industry
Group Numbers as the Company (SIC 355) and traded on the NASDAQ Stock Market
Index. Such yearly percentage change has been measured by dividing, (i) the sum
of (a) the amount of dividends for the measurement period, assuming dividend
reinvestment and (b) the difference between the price per share at the end and
at the beginning of the measurement period, by (ii) the price per share at the
beginning of the measurement period.
The graph assumes the investment of $100 on April 30, 1991 in the Common
Stock and each of the indices, and the reinvestment of all dividends paid during
the period.
<TABLE>
<CAPTION>
ABC
Dispensing Nasdaq Stock Nasdaq Stock
Measurement Period Technologies, Market (SIC 3550-3559
(Fiscal Year Covered) Inc. (US Companies) US Companies)
<S> <C> <C> <C>
04/30/91 100.0 100.0 100.0
04/30/92 18.9 121.2 113.0
04/30/93 25.9 139.4 207.2
04/29/94 17.5 155.1 387.8
04/28/95 38.5 180.3 868.0
04/30/96 21.0 257.0 690.1
</TABLE>
5
<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information as of August 26, 1996,
with respect to the Common Stock held by the only person or entity which owns of
record, or is know by the Company to own beneficial more than five percent (5%)
of any class of securities of the Company:
<TABLE>
<CAPTION>
NUMBER OF SHARES
NAME AND ADDRESS OF OF COMMON STOCK PERCENT
BENEFICIAL OWNERSHIP BENEFICIALLY OWNED (1) OF CLASS
- -------------------- ---------------------- --------
<S> <C> <C>
The Pepsi-Cola Company, 1,500,000(2) 8.76%
a division of PepsiCo, Inc.
Somers, New York 10589
</TABLE>
- ---------
(1) Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consits of sole or shred voting
power (including the power to dispose or direct its disposition) with
respect to a security, whether through a contract arrangement,
understanding, relationship or otherwise. Unless otherwise indicated herein,
each person has sole power to vote or dispose or direct the disposition of
shares owend benefically.
(2) Includes 500,000 shares of common stock which The Pepsi-Cola Company has the
right to acquire within sixty (60) days upon the exercise of common stock
purchase warrants granted by the Company on November 15, 1995.
SECURITY OWNERSHIP OF DIRECTORS AND MANAGEMENT
The following table sets forth certain information as of August 26, 1996,
except as noted, regarding the Common Stock held by Directors and the Chief
Executive Officer and former Chief Executive Officer of the Company, including
each nominee for election as a Director and all directors and executive officers
as a group:
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK PERCENT
NAME AND BENEFICIAL OWNERSHIP BENEFICIALLY OWNED OF CLASS
- ----------------------------- ------------------ --------
<S> <C> <C>
Robert A. Cutting, former President,
Chief Executive Officer and Director 239,037(1) *
Herbert L. Luxenburg, Director 202,500(2) *
C. Rand Michaels, Director 65,000(2) *
Herbert M. Pearlman, Director 657,500(3) *
John E. Stieglitz, Director 20,000 *
Charles M. Stimac, President and Director 346,886(4) *
Directors and Officers as a Group (7
persons) 1,368,251(5) 6.82%
</TABLE>
- ---------
* The percentage of shares beneficially owned by any of these directors or
nominees does not exceed one (1%) percent of the class so owned.
(1) Robert A. Cutting owns 83,037 shares of Common Stock and common stock
purchase warrants to purchase 56,000 shares of Common Stock at the exercise
price of $2.00 per share, all of which are exercisable within 60 days. These
warrants expire between August 17, 1999 and September 13, 1999. Mr. cutting
also owns common stock purchase warrants to purchase 100,000 shares of
Common Stock at the exercise price of $3.00 per share all of which are
exercisable within 60 days. These warrants expire August 1, 2000.
(2) Herbert I. Luxenburg and C. Rand Michaels each own stock option rights to
purchase 65,000 shares of Common Stock under the Company's 1990
Non-Qualified Stock Option Plan, all of which are exercisable within 60
days. For each Director, 25,000 stock options are exercisable at $3.25 per
share and 40,000 stock options are exercisable at $1.25 per share. Mr.
Luxenburg also retains common stock
6
<PAGE> 9
purchase warrants to purchase 50,000 shares of Common Stock at the exercise
price of $2.00 per share, all of which are exercisable within 60 days and
12,500 shares of Common Stock at the exercise price of $2.00 per share, all
of which are exercisable with 60 days. These warrants expire on August 17,
1999 and June 1, 1998, respectively. Mr. Luxenburg also owns 75,000 shares
of Common Stock.
(3) Herbert M. Pearlman owns 125,000 shares of Common Stock and warrants to
purchase 530,000 shares of Common Stock received for services rendered as a
Director of the Company. Warrants for 150,000 shares of Common Stock were
issued at $1.25 per share and 100,000 of the warrants were issued at $3.25
per share. All of these warrants expire on May 27, 1999 and are exercisable
within 60 days. There were 80,000 warrants issued at $2.00 per share and
200,000 of the warrants issued at $3.00 per share. These warrants expire on
August 17, 1999 and August 1, 2000 respectively, and all of the warrants are
exercisable within 60 days.
(4) Charles M. Stimac, Jr. owns 36,886 shares of Common Stock and warrants to
purchase 310,000 shares of Common Stock. Warrants for 10,000 shares of
Common Stock were issued at $3.00 per share and expire on August 1, 2000.
Ten year warrants for 300,000 shares at a price of $1.375 per share were
issued in connection with the engagement of Mr. Stimac as President and
Chief Executive Officer of the Company. Warrants for 50,000 shares are
vested, warrants for 25,000 shares vest on July 11, 1997 and 25,000 vest on
July 11, 1998. Warrants for 100,000 shares vest when the share price of the
Common Stock of the Company on NASDAQ is at $5 or better for 90 consecutive
days and 100,000 vest when the NASDAQ price is $10 or better for 90
consecutive days.
(5) Directors and Officers as a group retain stock option rights to purchase
130,000 shares under the 1990 Non-Qualified Stock Option Plan and warrants
to purchase 858,000 shares of Common Stock.
CERTAIN TRANSACTIONS INVOLVING MANAGEMENT
In June 1994, the Company purchase its headquarters facility in Akron, Ohio
for $490,000 from Joseph W. Shannon, who at the time was Chairman of the
Company's Board of Directors. The purchase price was based on an independent
appraisal of the property done by the Spalding/Emig Company.
The Company leases office space for Herbert M. Pearlman, Chairman of the
Board of Directors, from Helm Resources, Inc. ("Helm") for approximately $21,000
per year. The lease is a month-to-month lease cancelable by the Company at any
time. Mr. Pearlmam is the Chairman and Chief Executive Officer and a principal
shareholder of Helm.
In January 1996 the Company obtained a $500,000 working capital
asset-secured loan ("Loan") from The Mezzanine Financial Fund, L.P.
("Mezzanine") to be used for working capital purposes. The Loan matures in three
years and bears an interest rate of 18% per annum. The terms of the Loan require
a $100,000 repayment of principal on each of the first and second anniversaries
of the closing of the Loan. the balance of $300,000 is due on the third
anniversary. Mezzanine, at its option, may convert the principal amount of the
loan into common stock at a price of $3.00 per share, or, if the entire loan is
converted, 166,666 shares of common stock (including standard anti-dilution
provisions). In consideration for providing the Loan, Mezzanine received a five
(5) year warrant to acquire shares of common stock at a price equal to the lower
of seventy (70%) percent of the 30-day average trading price prior to closing of
the Loan, or $2.50 (the "Price"). The warrant exercise price was therefore
determined to be $2.04 per share. The number of shares subject to the warrant
will be determined by dividing the Price into an amount equal to 10% of the
average annual loan balance multiplied by the number of years the loan is
outstanding (the "Warrant Fee"). The resulting maximum number of warrants that
could be issued are 58,910. At Mezzanine's election, all or any part of the
Warrant Fee may be Put to the Company upon repayment of the loan for payment in
cash in the amount equal to 70% of such Warrant Fee, paid in equal monthly
payments over the same number of months that the loan was outstanding.
Additionally, Mezzanine received a Closing Fee equal to 2% of the amount of the
loan and reimbursement for expenses associated with the making of the loan. On
June 24, 1996 the Company distributed 125,000 shares of common stock to
Mezzanine in satisfaction of $38,000 of interest charges from May through
September due Mezzanine under the Loan. Mezzanine will credit the principal owed
on the
7
<PAGE> 10
Loan to the extent that proceeds from the sale of these shares or the market
value of the shares at September 30, 1996 exceeds the amount of interest due on
the Loan.
Herbert M. Pearlman, Chairman of the Board of Directors of the Company, is
a director, officer and principal shareholder of the general partner of
Mezzanine. Mr. Pearlman is also Chairman, Chief Executive Officer and a
principal shareholder of Helm, a publicly traded company that holds an
approximately 14% equity interest in Mezzanine.
Pursuant to an arrangement with Intersystems, Inc., a publicly traded
company of which Mr. Pearlman is Chairman of the Board of Directors an in which
Mr. Pearlman has a significant equity interest, the Company received certain
shareholder relations services from an employee of Intersystems in return for
which the Company reimbursed Intersystems, Inc. for one-third of the salary and
other expenses allocated to such employee. During fiscal 1995, the aggregate
amount paid by the Company pursuant to this arrangement was approximately
$20,000. This arrangement has been terminated.
INDEPENDENT PUBLIC ACCOUNTANTS
The Company's independent public accountants for fiscal 1996 were Ernst &
Young LLP. Management expects to reappoint this firm for fiscal 1997. However,
it will not seek shareholder approval or ratification. Representatives of Ernst
& Young LLP are expected to be present at the Shareholders Meeting and will have
an opportunity to make a statement if they desire to do so. They are also
expected to be available to respond to appropriate questions.
OTHER MATTERS
As of the date of this Proxy Statement, Management does not intend to
present, and has not been informed that any other person intends to present, any
matter for action at the meeting other than those described above. If any other
matters properly comes before the meeting, it is intended that the persons named
in the enclosed Proxy will vote the Proxy on such matters in accordance with
their best judgment.
ANNUAL REPORT
The Annual report on Form 10-K for fiscal 1996 accompanies this Proxy
Statement in the intial mailing to Shareholders. The Form 10-K is not to be
regarded as Proxy solicitation material.
PROPOSALS FOR NEXT YEAR'S ANNUAL MEETING
Shareholder proposals for inclusion in the Proxy Statement for the next
Annual Meeting of Shareholders must be received by the Secretary of the Company
at the executive offices of the Company on or before August 1, 1997.
BY ORDER OF THE BOARD OF DIRECTORS
William Lerner, Secretary
Akron, Ohio
August 30, 1996
8
<PAGE> 11
[ X ] Please mark your
votes as in this
example.
<TABLE>
<CAPTION>
<S> <C> <C> <C>
WITHHOLD
FOR all nominees AUTHORITY
listed at right to vote for nominee(s)
1. ELECTION [ ] [ ] Nominees: Herbert L. Luxenburg
OF C. Rand Michaels
DIRECTORS Herbert M. Pearlman
John E. Stieglitz
INSTRUCTIONS: To withhold your vote for any individual Charles M. Stimac, Jr.
nominee(s), write the name of the person(s) for whom
your vote is withheld on the line immediately below:
- ------------------------------------------------------
2. In their discretion, on such other business as may properly come
before the Annual Meeting or any adjournment.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED
HEREIN BY THE UNDERSIGNED. IF NO DIRECTION IS MADE, THE SHARES WILL BE
VOTED "FOR" THE ELECTION OF THE LISTED NOMINEES FOR DIRECTOR.
PLEASE SIGN, DATE AND RETURN THIS PROXY IN THE ENCLOSED ENVELOPE.
SIGNATURE DATED , 1996
------------------------------- --------------------------- -------------------
SIGNATURE IF JOINTLY OWNED
Note: Please sign your name exactly as it appears hereon. When signing as attorney-in-fact, executor, administrator, trustee or
guardian, please add your title as such. When signing as joint tenants, all parties in the joint tenancy must sign. If signer is a
corporation, please sign in full corporate name by duly authorized officer or officers and affix the corporate seal.
</TABLE>
PROXY
ABC DISPENSING TECHNOLOGIES, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Charles M. Stimac, Jr. and William
Lerner, and each of them, as proxies of the undersigned, with full power of
substitution, to represent and to vote at the Annual Meeting of Stockholders
to be held at Sheraton Suites, 1989 Front Street, Cuyahoga Falls, Ohio, on
September 27, 1996, and any adjournment or postponement thereof, and thereat to
vote all shares of Common Stock of ABC DISPENSING TECHNOLOGIES, INC., held by
the undersigned which the undersigned would be entitled to vote if personally
present, with respect to the matters described on the reverse side of this
proxy card:
(CONTINUED AND TO BE SIGNED ON REVERSE SIDE)
