<PAGE> 1
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 Section 240.14a-11(c) or Section
240.14a-12
AMERICAN COIN MERCHANDISING, INC.
(Name of Registrant as Specified in its Charter)
(Name of Person(s) Filing Proxy Statement)
<PAGE> 2
AMERICAN COIN MERCHANDISING, INC.
4870 STERLING DRIVE
BOULDER, CO 80301
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON APRIL 30, 1997
TO THE STOCKHOLDERS OF AMERICAN COIN MERCHANDISING, INC.:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of
American Coin Merchandising, Inc., a Delaware corporation (the "Company"), will
be held on Wednesday, April 30, 1997 at 2:00 p.m. local time at the offices of
KPMG Peat Marwick LLP, 4440 Arapahoe Avenue, Suite 280, Boulder, CO 80303, for
the following purposes:
1. To elect directors to serve for the ensuing year and until
their successors are elected.
2. To ratify the selection of KPMG Peat Marwick LLP as
independent auditors of the Company for its fiscal year ending
December 31, 1997.
3. To transact such other business as may properly come before
the meeting or any adjournment or postponement thereof.
The foregoing items of business are more fully described in the Proxy
Statement accompanying this Notice.
The Board of Directors has fixed the close of business on March 24,
1996, as the record date for the determination of stockholders entitled to
notice of and to vote at this Annual Meeting and at any adjournment or
postponement thereof.
By Order of the Board of Directors
/s/ Randall J. Fagundo
Randall J. Fagundo
Secretary
Boulder, Colorado
March 28, 1997
ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE MEETING IN
PERSON. WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE,
DATE, SIGN AND RETURN THE ENCLOSED PROXY AS PROMPTLY AS POSSIBLE IN ORDER TO
ENSURE YOUR REPRESENTATION AT THE MEETING. A RETURN ENVELOPE (WHICH IS POSTAGE
PREPAID IF MAILED IN THE UNITED STATES) IS ENCLOSED FOR THAT PURPOSE. EVEN IF
YOU HAVE GIVEN YOUR PROXY, YOU MAY STILL VOTE IN PERSON IF YOU ATTEND THE
MEETING. PLEASE NOTE, HOWEVER, THAT IF YOUR SHARES ARE HELD OF RECORD BY A
BROKER, BANK OR OTHER NOMINEE AND YOU WISH TO VOTE AT THE MEETING, YOU MUST
OBTAIN FROM THE RECORD HOLDER A PROXY ISSUED IN YOUR NAME.
<PAGE> 3
AMERICAN COIN MERCHANDISING, INC.
4870 STERLING DRIVE
BOULDER, CO 80301
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
APRIL 30, 1997
INFORMATION CONCERNING SOLICITATION AND VOTING
GENERAL
The enclosed proxy is solicited on behalf of the Board of Directors of
American Coin Merchandising, Inc., a Delaware corporation (the "Company"), for
use at the Annual Meeting of Stockholders to be held on April 30, 1997, at 2:00
p.m. local time (the "Annual Meeting"), or at any adjournment or postponement
thereof, for the purposes set forth herein and in the accompanying Notice of
Annual Meeting. The Annual Meeting will be held at the offices of KPMG Peat
Marwick LLP, 4440 Arapahoe Avenue, Suite 280, Boulder, CO 80303. The Company
intends to mail this proxy statement and accompanying proxy card on or about
March 28, 1997 to all stockholders entitled to vote at the Annual Meeting.
SOLICITATION
The Company will bear the entire cost of solicitation of proxies,
including preparation, assembly, printing and mailing of this proxy statement,
the proxy and any additional information furnished to stockholders. Copies of
solicitation materials will be furnished to banks, brokerage houses,
fiduciaries and custodians holding in their names shares of Common Stock
beneficially owned by others to forward to such beneficial owners. The Company
may reimburse persons representing beneficial owners of Common Stock for their
costs of forwarding solicitation materials to such beneficial owners. Original
solicitation of proxies by mail may be supplemented by telephone, telegram or
personal solicitation by directors, officers or other regular employees of the
Company. No additional compensation will be paid to directors, officers or
other regular employees for such services.
VOTING RIGHTS AND OUTSTANDING SHARES
Only holders of record of Common Stock at the close of business on
March 24, 1997 will be entitled to notice of and to vote at the Annual Meeting.
At the close of business on March 24, 1997 the Company had outstanding and
entitled to vote 5,284,923 shares of Common Stock.
Each holder of record of Common Stock on such date will be entitled to
one vote for each share held on all matters to be voted upon at the Annual
Meeting.
All votes will be tabulated by the inspector of election appointed for
the meeting, who will separately tabulate affirmative and negative votes,
abstentions and broker non-votes. Abstentions will be counted towards the
tabulation of votes cast on proposals presented to the stockholders and will
have the same effect as negative votes. Broker non-votes are counted towards a
quorum, but are not counted for any purpose in determining whether a matter has
been approved.
REVOCABILITY OF PROXIES
Any person giving a proxy pursuant to this solicitation has the power
to revoke it at any time before it is voted. It may be revoked by filing with
the Secretary of the Company at the Company's principal executive office, 4870
Sterling Drive, Boulder, CO 80301, a written notice of revocation or a duly
executed proxy bearing a later date, or it may be revoked by attending the
meeting and voting in person. Attendance at the meeting will not, by itself,
revoke a proxy.
STOCKHOLDER PROPOSALS
Proposals of stockholders that are intended to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by the Company
not later than November 28, 1997 in order to be included in the proxy statement
and proxy relating to that Annual Meeting.
<PAGE> 4
PROPOSAL 1
ELECTION OF DIRECTORS
There are seven nominees for the seven Board positions presently
authorized in the Company's By-laws. Each director to be elected will hold
office until the next annual meeting of stockholders and until his successor is
elected and has qualified, or until such director's earlier death, resignation
or removal. Each nominee listed below is currently a director of the Company,
all having been elected by the stockholders.
Shares represented by executed proxies will be voted, if authority to
do so is not withheld, for the election of the seven nominees named below. In
the event that any nominee should be unavailable for election as a result of an
unexpected occurrence, such shares will be voted for the election of such
substitute nominee as management may propose. Each person nominated for
election has agreed to serve if elected and management has no reason to believe
that any nominee will be unable to serve.
Directors are elected by a plurality of the votes present in person or
represented by proxy and entitled to vote.
NOMINEES
The names of the nominees and certain information about them are set
forth below:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE POSITION HELD WITH THE COMPANY
---- --- ------------------------------
<S> <C> <C>
Jerome M. Lapin ....................... 67 President, Chief Executive Officer and Chairman of
the Board of Directors
Randall J. Fagundo .................... 37 Vice President of Operations, Secretary and
Director
Abbe M. Stutsman (1) .................. 44 Vice President of Purchasing and Product Development
and Director
Richard D. Jones ...................... 55 President, T.R. Baron & Associates, Inc.
J. Gregory Theisen .................... 51 Vice President of Lorac, Inc.
Jim D. Baldwin (1) (2) ................ 64 Investor
John A. Sullivan (1) (2)............... 42 Investment Banker, Batchelder & Partners, Inc.
</TABLE>
- ------------------
(1) Member of the Audit Committee.
(2) Member of the Compensation Committee.
Jerome M. Lapin has served as President, Chief Executive Officer and a
director since January 1994 and as chairman of the Board since July 1995.
Prior to joining the Company, he was the Managing Director for World Hosts Pty.
Ltd., a restaurant leasing consulting business, from July 1991 to January 1994.
From June 1989 to June 1990, Mr. Lapin was the President of Sanwa Foods, Inc.,
a soup manufacturer and marketer ("Sanwa"), and from June 1990 to June 1991 he
was a consultant for Sanwa. Mr. Lapin was a co-founder of the International
House of Pancakes, Inc. in 1958.
Randall J. Fagundo, a co-founder of the Company, has served as Vice
President of Operations and Secretary since May 1991 and as a director since
August 1988. Prior to joining the Company, he was one of the founders of
Southwest Coin Company.
Abbe M. Stutsman, a co-founder of the Company, has served as a Vice
President since January 1994 and as a director since December 1989. Ms.
Stutsman served as the Company's Secretary from August 1988 until May 1991,
Treasurer from January 1994 until July 1995 and President from May 1991 until
January 1994. Prior to joining the Company, she was the Business Manager of
Colorado Coin from April 1988 to August 1988.
2
<PAGE> 5
Richard D. Jones, a co-founder of the Company, has served as a director
since August 1988 and served as Chairman of the Board from August 1988 to July
1995 and as President of the Company from August 1988 to April 1991. Mr. Jones
has served as President of T.R. Baron & Associates, Inc., a marketing and
consulting business, since May 1975. Mr. Jones was a co-founder of Colorado
Coin in 1987.
J. Gregory Theisen, a co-founder of the Company, has served as a director
since August 1988. Mr. Theisen has served as a Vice President of Lorac, Inc.,
an investment consulting company, since December 1989. Mr. Theisen served as
Vice President of the Company from August 1988 to December 1993. Prior to
joining the Company, Mr. Theisen was a co-founder of Colorado Coin and served
as its Operations Manager from January 1987 to October 1988.
Jim D. Baldwin, has served as a director since October 1995. Mr. Baldwin
served as President and Chief Executive Officer of King Soopers, a
supermarket/combination store retailer, from 1979 until his retirement in
February 1990. Mr. Baldwin served as a consultant with Knight, Roth and
Associates, a consulting firm, from February 1990 to July 1994. Mr. Baldwin
has served as Chairman of the Board of KRMA Ch 6 TV since July 1996. Mr.
Baldwin also serves as a director of Grease Monkey Holding Corp.
John A. Sullivan, has served as a director since October 1995. Mr.
Sullivan has been employed by Batchelder & Partners, Inc., an investment
advisory and consulting firm, since May 1996. Mr. Sullivan also served as a
Senior Vice President of The Seidler Companies Incorporated ("Seidler"), the
underwriter of the Company's initial public offering, from August 1993 to April
1996. Prior to being elected Senior Vice President at Seidler, Mr. Sullivan
served as a Vice President from October 1990 to August 1993. Mr. Sullivan also
serves as a director of the Farr Company.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF EACH NAMED NOMINEE.
BOARD COMMITTEES AND MEETINGS
During the fiscal year ended December 31, 1996, the Board of Directors
held four meetings. Each director attended at least 75% of the total number of
Board meetings and meetings of Board Committees on which the director served
during the time they served on the Board or committees. The Board of Directors
has an Audit Committee and a Compensation Committee.
The Audit Committee is comprised of Messrs. Baldwin and Sullivan and Ms.
Stutsman. The Audit Committee held two meetings during 1996. The functions
performed by the Audit Committee include recommending to the Board of Directors
independent auditors to serve the Company for the ensuing year, reviewing with
the independent auditors and management, the scope and results of the audit,
assuring that the independent auditors act independently, reviewing and
approving any substantial change in the Company's accounting policies and
practices, reviewing with management and the independent auditors the adequacy
of the Company's system of internal controls and reviewing the Company's annual
report.
The Compensation Committee is comprised of Messrs. Baldwin and Sullivan.
The Compensation Committee held one meeting during 1996. The functions
performed by the Compensation Committee include reviewing and approving
management's recommendations as to executive compensation and reviewing,
approving and administering the Company's executive compensation and stock
option plans.
3
<PAGE> 6
PROPOSAL 2
RATIFICATION OF SELECTION OF INDEPENDENT AUDITORS
The Board of Directors has selected KPMG Peat Marwick LLP as the Company's
independent auditors for the fiscal year ending December 31, 1997 and has
further directed that management submit the selection of independent auditors
for ratification by the stockholders at the Annual Meeting. KPMG Peat Marwick
LLP has audited the Company's financial statements since December 31, 1993.
Representatives of KPMG Peat Marwick LLP are expected to be present at the
Annual Meeting, will have an opportunity to make a statement if they so desire
and will be available to respond to appropriate questions.
Stockholder ratification of the selection of KPMG Peat Marwick LLP as the
Company's independent auditors is not required by the Company's By-laws or
otherwise. However, the Board is submitting the selection of KPMG Peat Marwick
LLP to the stockholders for ratification as a matter of good corporate
practice. If the stockholders fail to ratify the selection, the Audit
Committee and the Board will reconsider whether or not to retain that firm.
Even if the selection is ratified, the Audit Committee and the Board in their
discretion may direct the appointment of different independent auditors at any
time during the year if they determine that such a change would be in the best
interests of the Company and its stockholders.
The affirmative vote of the holders of a majority of the shares present in
person or represented by proxy and entitled to vote at the Annual Meeting will
be required to ratify the selection of KPMG Peat Marwick LLP.
THE BOARD OF DIRECTORS RECOMMENDS
A VOTE IN FAVOR OF PROPOSAL 2.
4
<PAGE> 7
SECURITY OWNERSHIP OF
CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information regarding the ownership
of the Company's Common Stock as of March 24, 1997 by: (i) each director; (ii)
each of the executive officers named in the Summary Compensation Table employed
by the Company in that capacity on March 24, 1997; (iii) all executive officers
and directors of the Company as a group; and (iv) all those known by the
Company to be beneficial owners of more than five percent of its Common Stock.
<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP (1)
------------------------
NUMBER OF PERCENT OF
BENEFICIAL OWNER SHARES TOTAL
---------------- --------- ----------
<S> <C> <C>
Richard D. and Melinda K. Jones (2) ................................................ 1,150,774 21.8
4870 Sterling Drive
Boulder, CO 80301
J. Gregory Theisen ................................................................. 1,150,774 21.8
4870 Sterling Drive
Boulder, CO 80301
SAFECO Asset Management Company (3) ................................................ 886,800 16.8
Safeco Plaza
Seattle, WA 98185
Jerome M. Lapin (4) ................................................................ 523,132 9.6
4870 Sterling Drive
Boulder, CO 80301
Abbe M. Stutsman (5) ............................................................... 368,104 7.0
4870 Sterling Drive
Boulder, CO 80301
Randall J. Fagundo ................................................................. 367,391 7.0
4870 Sterling Drive
Boulder, CO 80301
W. John Cash (6) ................................................................... 5,000 *
4870 Sterling Drive
Boulder, CO 80301
Jim D. Baldwin (7) ................................................................. 8,500 *
901 Chestnut Trail
Greenwood Village, CO 80121
John A. Sullivan (7) (8) ........................................................... 30,000 *
Batchelder & Partners, Inc.
4330 La Jolla Village Drive
San Diego, CA 92122
All directors and executive officers as a group
(8 persons) (4) (6) (7) ........................................................ 4,490,475 82.0
</TABLE>
- ----------------------
* Less than one percent.
(1) This table is based upon information supplied by officers, directors and
principal stockholders and Schedules filed with the Securities and Exchange
Commission (the "SEC"). Unless otherwise indicated in the footnotes to
this table and subject to community property laws where applicable, the
Company believes that each of the stockholders named in this table has sole
voting and investment power with respect to the shares indicated as
beneficially owned. Applicable
5
<PAGE> 8
percentages are based on 5,284,923 shares outstanding on March 24, 1997,
adjusted as required by rules promulgated by the SEC.
(2) Includes 42,464 shares held by T.R. Baron and Associates, Inc. Defined
Benefit Pension Plan, of which Mr. Jones is the Trustee.
(3) Safeco Asset Management Company is a subsidiary of Safeco Corporation and
holds such shares on behalf of its clients, including Safeco Common Stock
Trust, which holds 500,000 shares.
(4) Includes 161,648 shares of Common Stock subject to options that are fully
exercisable.
(5) Includes 50,519 shares of Common Stock held jointly with Ms. Stutsman's
spouse.
(6) Consists of Common Stock purchasable by Mr. Cash within 60 days of March
24, 1997 upon exercise of outstanding stock options.
(7) Includes options to purchase 3,500 shares of Common Stock granted under the
Directors' Plan which are exercisable within 60 days of March 24, 1997 and
a warrant held by Mr. Sullivan exercisable to purchase 17,500 shares of
Common Stock.
(8) Common Stock is held jointly with Mr. Sullivan's spouse.
COMPLIANCE WITH THE REPORTING REQUIREMENTS OF SECTION 16(A)
Section 16(a) of the Securities Exchange Act of 1934 requires the Company's
directors and executive officers, and persons who own more than ten percent of
a registered class of the Company's equity securities, to file with the SEC
initial reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company. Officers, directors and
greater than ten percent stockholders are required by SEC regulation to furnish
the Company with copies of all Section 16(a) forms they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors and
greater than ten percent beneficial owners were complied with, except for
Jerome M. Lapin who failed to file a timely Form 4 related to the exercise of
stock options for 9,500 shares of common stock.
MANAGEMENT
EXECUTIVE OFFICERS
The following table sets forth certain information concerning the executive
officers of the Company as of March 28, 1997:
<TABLE>
<CAPTION>
PRINCIPAL OCCUPATION
NAME AGE POSITION HELD WITH THE COMPANY
---- --- ------------------------------
<S> <C> <C>
Jerome M. Lapin ............................... 67 President, Chief Executive Officer and
Chairman of the Board of Directors
W. John Cash .................................. 49 Vice President, Chief Financial Officer and
Treasurer
Randall J. Fagundo ............................ 37 Vice President of Operations, Secretary and
Director
Abbe M. Stutsman .............................. 44 Vice President of Purchasing and Product
Development and Director
</TABLE>
W. John Cash has served as Vice President and Chief Financial Officer since
July 1995. Prior to joining the Company he was Vice President and Chief
Financial Officer of Kasler Holding Company, a diversified construction
company, from May 1991 to March 1995. From July 1984 to April 1991, Mr. Cash
served as a partner of KPMG Peat Marwick LLP.
See "Proposal 1--Election of Directors" for biographies of the other
executive officers.
6
<PAGE> 9
EXECUTIVE COMPENSATION
COMPENSATION OF DIRECTORS
Each non-employee director of the Company, other than Messrs. Jones and
Theisen, receives $2,500 for each regular or special meeting of the Board of
Directors or committee meeting which is held on a date other than the date of a
board meeting. Directors also receive reimbursement for their reasonable
out-of-pocket expenses related to such attendance. In the fiscal year ended
December 31, 1996, the total compensation paid to non-employee directors was
$10,000.
Each non-employee director of the Company, other than Messrs. Jones and
Theisen, are eligible to receive stock option grants under the 1995
Non-Employee Director Stock Option Plan (the "Directors' Plan"). Only
non-employee directors of the Company or an affiliate of such directors (as
defined in the Code) are eligible to receive options under the Directors' Plan.
Options granted under the Directors' Plan are intended by the Company not to
qualify as incentive stock options under the Code. Option grants under the
Directors' Plan are non-discretionary.
During 1996, the Company did not grant options to non-employee directors of
the Company. As of March 24, 1997, no options had been exercised under the
Directors' Plan.
COMPENSATION OF EXECUTIVE OFFICERS
SUMMARY COMPENSATION TABLE
The following table shows for the fiscal years ended December 31, 1994
,1995 and 1996, compensation awarded or paid to, or earned by, the Company's
Chief Executive Officer and its three other most highly compensated executive
officers for the year ended December 31, 1996 (the "Named Executive Officers"):
<TABLE>
<CAPTION> LONG-TERM
COMPENSATION
ANNUAL COMPENSATION AWARDS
------------------------------------- ------
OTHER SECURITIES
BONUS ANNUAL UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY(1) EARNED COMPENSATION OPTIONS COMPENSATION
- --------------------------- ---- --------- ------ ------------ ------- ------------
<S> <C> <C> <C> <C> <C> <C>
Jerome M. Lapin 1996 $ 155,833 -- -- -- $ 6,757(2)
President and Chief 1995 156,250 -- -- -- 7,074(2)
Executive Officer 1994 150,000 -- $ 16,689(3) 548,132 --
W. John Cash 1996 112,320 -- -- -- 9,128(5)
Vice President, Chief Financial 1995(4) 50,416 -- -- 20,000 4,051(5)
Officer and Treasurer
Randall J. Fagundo 1996 111,837 -- -- -- 9,550(5)
Vice President of 1995 80,411 $ 98,469(6) -- -- 6,445(5)
Operations and Secretary 1994 64,835 144,819(6) -- -- 2,030(5)
Abbe M. Stutsman 1996 111,837 -- -- -- 9,824(5)
Vice President of Purchasing 1995 79,167 203,870(6) -- -- 6,445(5)
and Product Development 1994 67,085 255,224(6) -- -- 2,030(5)
</TABLE>
- ----------------
(1) Includes amounts deferred pursuant to Section 401(k) of the Internal
Revenue Code of 1986, as amended.
(2) Consists of value of Company provided automobile and health insurance
premiums paid by the Company.
(3) Includes value of Company provided automobile, health insurance premiums
paid by the Company and a relocation reimbursement of $9,683.
(4) Mr. Cash joined the Company in July 1995.
(5) Includes value of Company provided automobile, health insurance premiums
paid by the Company and funds contributed by the Company as matching
contributions to the Named Executive Officers' 401(k) Plan
account.
(6) Consists of S Corporation Distributions.
7
<PAGE> 10
STOCK OPTION GRANTS AND EXERCISES
The Company grants options to its executive officers under its Stock Option
Plan (the "Option Plan"). As of March 24, 1997, options to purchase a total of
258,148 shares were outstanding under the Plans and options to purchase 205,500
shares remained available for grant thereunder.
During the Fiscal year ended December 31, 1996, there were no options
granted to the Named Executive Officers.
The following table shows for the fiscal year ended December 31, 1996
certain information regarding options exercised and held at year-end by the
Named Executive Officers:
AGGREGATE EXERCISES IN 1996 AND
12/31/96 OPTION VALUES
<TABLE>
<CAPTION>
NUMBER
OF SECURITIES
UNDERLYING
UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY
SHARES 12/31/96(#) OPTIONS AT
ACQUIRED VALUE EXERCISABLE/ 12/31/96 EXERCISABLE/
NAME ON EXERCISE(#) REALIZED($)(1) UNEXERCISABLE(#) UNEXERCISABLE($)(2)
---- -------------- -------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Jerome M. Lapin ................ 41,666 $263,287 323,297/0 $1,608,726/0
W. John Cash ................... -- -- 5,000/15,000 $2,500/7,500
Randall J. Fagundo ............. -- -- -- --
Abbe M. Stutsman ............... -- -- -- --
</TABLE>
- -----------------
(1) Based on the fair market value of the Common Stock as of the date of
exercise, minus the exercise price , multiplied by the number of shares
acquired.
(2) Based on the fair market value of the Common Stock as of December 31, 1996
of $5.00 per share, minus the exercise price of "in-the-money" unexercised
options, multiplied by the number of shares represented by such options.
EMPLOYMENT AGREEMENTS
The Company entered into employment agreements with Jerome M. Lapin, W.
John Cash and Abbe Stutsman (each an "Executive") as of June 1, 1996 (the
"Employment Agreements"). The Employment Agreement with Mr. Lapin provides
that he will receive an annual salary of $160,000 and the Employment Agreements
with Mr. Cash and Ms. Stutsman provides that they will each receive an annual
salary of $110,000, with each Executive being eligible to receive a bonus or
salary increase as determined by the Compensation Committee. The Employment
Agreements also provide that each Executive will be entitled to (i) participate
in any employee benefits plans the Company makes available to its other
employees, (ii) four weeks vacation, and (iii) use of an automobile provided by
the Company. The Employment Agreement with Mr. Lapin expires on December 31,
1999 and the Employment Agreements with Mr. Cash and Ms. Stutsman expire on
December 31, 1998. Each Employment Agreement also provides that the Company
may terminate the Executive's employment at any time for cause and with 60 days
written notice without cause. If the Executive is terminated without cause,
the Company is obligated to pay the Executive's salary for 12 months after the
termination date. The Employment Agreements provide that after a change of
control of the Company, if the Executive is terminated without cause, required
to move outside the Boulder, Colorado area or experiences a material reduction
in his or
8
<PAGE> 11
her responsibilities then the Executive will be entitled to receive the salary
set forth in the respective Employment Agreement for the remaining term of the
Agreement. The Employment Agreements also contain confidentiality and
noncompete provisions which prohibit the Executives from soliciting employees
of the Company, engaging in business similar to the Company's or disclosing
confidential information for a period of three years after the termination of
the Executive's employment with the Company.
CERTAIN TRANSACTIONS
S CORPORATION DISTRIBUTIONS
During the fiscal year ended December 31, 1996, the Company paid the
following distributions to the former S corporation shareholders of the
Company, representing 40% of the estimated amount of net income of the Company
from January 1, 1995 through October 12, 1995.
<TABLE>
<CAPTION>
AMOUNT
--------
<S> <C>
Richard D. Jones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $228,519
J. Gregory Theisen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 228,519
Randall J. Fagundo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85,550
Jerome M. Lapin . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24,499
Abbe M. Stutsman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66,433
</TABLE>
INTEREST EXPENSE RELATED TO NOTES PAYABLE TO CONTROL GROUP
On August 31, 1995, the Company acquired substantially all of the
inventory, property and equipment and assumed certain facilities leases and
contracts of Performance Merchandising, Inc., Inland Merchandising, Inc.,
Chicago Toy Company, Georgia Toy Company, Lehigh Valley Toy Company, and
Southwest Coin Company (the "Entities") for an aggregate purchase price of
$3,351,417. The Entities were owned in varying percentages by Greg Theisen,
Abbe Stutsman, Richard Jones and Randall Fagundo and their respective spouses
(the "Founders").
The purchase price for the Entities was paid with cash in the amount of
$2,002,795 and three year promissory notes with an aggregate principal amount
of $1,348,622 with an interest rate on the principal amount of 8% per annum
(the "Notes"). During the fiscal year ended December 31, 1996, the Company
made the following interest payments on the Notes held by the Founders:
<TABLE>
<CAPTION>
AMOUNT
-------
<S> <C>
Richard D. Jones . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $19,090
J. Gregory Theisen . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16,169
Randall J. Fagundo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22,709
Abbe M. Stutsman . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 49,921
</TABLE>
Management believes the terms of the foregoing transactions were fair to
the Company. All future transactions with affiliates will be subject to the
approval of the Company's disinterested directors and will be on terms believed
by such directors to be no less favorable to the Company than those available
from unaffiliated third parties.
9
<PAGE> 12
OTHER MATTERS
The Board of Directors knows of no other matters that will be presented for
consideration at the Annual Meeting. If any other matters are properly brought
before the meeting, it is the intention of the persons named in the
accompanying proxy to vote on such matters in accordance with their best
judgment.
By Order of the Board of Directors
/s/ Randall J. Fagundo
Randall J. Fagundo
Secretary
Boulder, Colorado
March 28, 1997
10
<PAGE> 13
PROXY
AMERICAN COIN MERCHANDISING, INC.
ANNUAL MEETING OF STOCKHOLDERS -- APRIL 30, 1997
The undersigned hereby appoints Jerome M. Lapin and W. John Cash (the
"Proxies"), each with the power to appoint his substitute, and hereby authorizes
them to represent and to vote, as designated below, all the shares of Common
Stock of American Coin Merchandising, Inc., held of record by the undersigned on
March 24, 1997, at the ANNUAL MEETING OF STOCKHOLDERS to be held on April 30,
1997, or any adjournment thereof.
(1) ELECTION OF [ ] FOR all nominees [ ] WITHHOLD AUTHORITY
DIRECTORS: (except as marked to vote for nominees
below) listed
JEROME M. LAPIN RANDALL J. FAGUNDO ABBE M. STUTSMAN RICHARD D. JONES
J. GREGORY THEISEN JIM D. BALDWIN JOHN A. SULLIVAN
(INSTRUCTION: To withhold authority to vote for any individual nominee write
that nominee's name on the space provided below.)
- --------------------------------------------------------------------------------
(2) The proposal to ratify and approve the appointment of KPMG Peat Marwick LLP.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
(Continued, and to be completed and signed on the reverse side)
<PAGE> 14
(Continued from the other side)
(3) In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR EACH PROPOSAL.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THE PROXY WILL BE VOTED IN
FAVOR OF THE PROPOSALS.
Dated: ___________________, 1997
Signed: ________________________
Signature of Stockholder
Signed: ________________________
Signature of Stockholder
Please vote, date and sign this
proxy as your name is printed
hereon. When signing as
attorney, executory
administrator, trustee,
guardian, etc. give full title
as such. If the stock is held
jointly, each owner should sign.
If a corporation, please sign in
full corporate name by President
or other authorized officer. If
a partnership, please sign in
partnership name by authorized
person.
