<PAGE> 1
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 (AMENDMENT NO. )
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
InterSystems, 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):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE> 2
HELM RESOURCES, INC.
----------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD JULY 11, 1995
----------------------
TO OUR SHAREHOLDERS:
You are cordially invited to attend the Annual Meeting of Shareholders
of Helm Resources, Inc. (the "Company") to be held on Tuesday, July 11, 1995,
at 2:00 p.m., at the offices of the Company at 537 Steamboat Road, Greenwich,
Connecticut, for the following purposes:
1. to elect six directors;
2. to transact such other business as may properly come before
the meeting or any adjournment of the meeting.
Only shareholders of record at the close of business on May 31, 1995
will be entitled to notice of and to vote at the meeting.
Please sign, date and mail the enclosed proxy in the enclosed
envelope, which requires no postage if mailed in the United States, so that
your shares may be represented at the meeting.
BY ORDER OF THE BOARD OF DIRECTORS
David S. Lawi, Secretary
GREENWICH, CONNECTICUT
JUNE 1, 1995
<PAGE> 3
HELM RESOURCES, INC.
537 STEAMBOAT ROAD
GREENWICH, CONNECTICUT 06830
-------------------
PROXY STATEMENT
-------------------
The accompanying proxy is solicited on behalf of the Board of
Directors of the Company for use at the Annual Meeting of Shareholders to be
held on July 11, 1995 at 2:00 and at any adjournment of the meeting. The proxy
may be revoked at any time before it is exercised by notice, in writing, to the
secretary of the Company.
The Board of Directors has fixed the close of business on May 31, 1995
as the record date for the meeting. On that date, the Company had outstanding
2,160,608 shares of common stock. Only shareholders of record at the close of
business on that date will be entitled to vote at the meeting or at any
adjournment of the meeting. Each such shareholder will be entitled to one vote
for each share held and may vote in person or by proxy authorized in writing.
Holders of the Company's common stock have no cumulative voting rights.
The principal executive offices of the Company are at 537 Steamboat
Road, Greenwich, Connecticut 06830. The proxy statement and form of proxy are
being sent to shareholders on or about June 1, 1995.
ELECTION OF DIRECTORS
At the meeting, six directors are to be elected. The persons named in
the enclosed form of proxy have advised that, unless contrary instructions are
received, they intend to vote for the six nominees named by the Board of
Directors of the Company and listed below. If, by reason of death or other
unexpected occurrence, one or more of these nominees is not available for
election, the persons named in the form of proxy have advised that they will
vote for such substitute nominees as the Board of Directors of the Company may
propose.
<TABLE>
<CAPTION>
NAME, PRINCIPAL OCCUPATION
OVER PAST FIVE YEARS AND DIRECTOR OF
OTHER DIRECTORSHIPS OF NOMINEE AGE COMPANY SINCE
- ------------------------------ --- -------------
<S> <C> <C>
Herbert M. Pearlman................... 62 l980
</TABLE>
Mr. Pearlman has been the Company's president and chief executive
officer since l980 and became the chairman of the Company's Board of Directors
in June 1984. Mr. Pearlman is a co-founder and since l982 has been a director
of Seitel, Inc. ("Seitel"), a New York Stock Exchange company which is engaged
in acquiring and marketing seismic data. In March l987, he was elected as the
chairman of Seitel's Board of Directors. Since l984, Mr. Pearlman has been
chairman of InterSystems, Inc., a public company which is engaged in the
1
<PAGE> 4
business of custom compounding of thermoplastic resins and the design,
manufacture and sale of agricultural and industrial products ("ISI"). In 1990,
Mr. Pearlman became chairman of the board of Unapix Entertainment, Inc., a
public company engaged in the marketing and distribution of television progams
and motion pictures ("Unapix"). In 1994, Mr. Pearlman became chairman of the
board of American Business Computers Corporation ("ABBC"), a public company
which is engaged in the business of designing and manufacturing equipment which
dispenses liquids, solids, gases, pastes and gels. Mr. Pearlman is also a
director of two Helm subsidiaries which are publicly held, Teletrak Advanced
Technology Systems, Inc. ("Teletrak"), which has no operations at the present
time, and Cliff Engle Ltd., which receives limited royalty revenue from an NFL
license it holds ("Cliff Engle"), both of which have been treated as
discontinued operations by the Company. The Company presently holds equity
positions in ISI, Teletrak, Cliff Engle and Unapix.
<TABLE>
<S> <C> <C>
Walter M. Craig, Jr................. 41 1993
</TABLE>
Mr. Craig joined the Company in March 1984 as vice president and
general counsel. In July, 1991, he was appointed senior vice
president--business and legal affairs, and in July 1992 he was appointed
executive vice president and Chief Operating Officer. In August, 1991, he
became president of Cliff Engle. In 1993, he became president of The Mezzanine
Financial Fund, L.P. and President of Professionals' Financial Services, Inc.
He has been a director of Seitel since 1987 and a director of Unapix and ISI
since 1993. Prior to joining the Company, Mr. Craig was engaged in the private
practice of law.
<TABLE>
<S> <C> <C>
David S. Lawi......................... 60 l980
</TABLE>
Mr. Lawi has been the Company's executive vice president and secretary
from l980 until 1992, when he was appointed secretary-treasurer. Since l984,
Mr. Lawi has been a director of ISI and since 1986 he has been chairman of
ISI's Executive Committee. Since l982, Mr. Lawi has been a director of Seitel
and in 1989 he was elected Chairman of Seitel's Executive Committee. Since
l983, Mr. Lawi has been a director and the secretary of Teletrak. In 1990, Mr.
Lawi became a director and secretary of Cliff Engle, and a director of Unapix.
In 1993, he became treasurer and secretary of Unapix.
<TABLE>
<S> <C> <C>
Joseph J. Farley...................... 72 l982
</TABLE>
From l982 until February 1991, Mr. Farley served as the Company's vice
president for marketing and engineering. Since January l983, Mr. Farley has
also been a director and the chief executive officer of Teletrak. In May 1990,
he became Chairman of Teletrak's executive committee. Prior to joining the
Company, Mr. Farley had been a senior executive with International Business
Machines Corporation ("IBM") for 32 years, where he held various positions in
engineering, marketing and field engineering. His final assignment at IBM was
corporate director of marketing/standard practices.
2
<PAGE> 5
<TABLE>
<S> <C> <C>
William Lerner........................ 61 l985
</TABLE>
Mr. Lerner is an attorney engaged in the private practice of Law. From
May 1990 until December 1990, he was General Counsel to Hon Development
Company, a California real estate development company. Mr. Lerner has been a
director of Seitel since July l984 and a director of Teletrak since November
l985. Mr. Lerner is also a director of Rent-Way, Inc., the owner of a chain of
retail stores in the rental-purchase industry, a director of Of Counsel
Enterprises, Inc., a provider of contract part-time lawyers and paralegals to
lawfirms and corporations, and a director of Seitel.
<TABLE>
<S> <C> <C>
John E. Stieglitz..................... 62 l986
</TABLE>
Since l976, Mr. Stieglitz has been president of Conspectus, Inc., a
privately held company engaged in providing consulting services in the area of
executive recruiting. Mr. Stieglitz has been a director of Seitel since 1989,
and a director of ISI since 1991.
EXECUTIVE OFFICERS
In addition to Messrs. Pearlman, Craig and Lawi, the Company has two
additional executive officers. Daniel T. Murphy, 56, joined the Company in May
1984 as vice president and chief financial officer. In April 1992 he was
appointed executive vice president-finance. In May 1984 he became vice
president-finance and operations, and in 1985 he became executive vice
president of operations and chief financial officer, of ISI. He became a
director of ISI in 1986, and a director of Teletrak in 1988.
Michael R. Epps, 37, joined the Company in August, 1990, as associate
general counsel. In July, 1992, Mr. Epps was appointed vice president and
general counsel. Prior to joining the Company, Mr. Epps was engaged in the
private practice of law.
All of the Company's executive officers spend a majority of their
work-related time on the various businesses of the Company and its subsidiaries
and affiliates, and allocate their time among these entities according to the
relative need of each for executive assistance.
Section 16 Compliance
Based upon a review of Forms 3, 4 and 5, and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) during, and with respect to,
its most recent fiscal year, and written representations furnished to the
Company, it appears that all such reports required to be filed were filed on a
timely basis, except that Mr. Daniel T. Murphy filed a Form 5 for 1994,
reporting only the expiration of outstanding options, approximately 15 days
late, and Messrs. William Lerner and Joseph Farley made voluntary Form 5
filings for 1994, which merely restated their common stock holdings to give
effect to the reverse stock split, approximately 6 days late.
3
<PAGE> 6
BOARD OF DIRECTORS, COMMITTEES AND ATTENDANCE AT MEETINGS
During 1994, the Company's Board of Directors held two meetings, which
were attended by all of the directors.
The Board of Directors has a standing Audit Committee, Compensation
and Stock Option Committee and Executive Committee. During 1994, the Audit
Committee as well as the Compensation and Stock Option Committee consisted of
Messrs. Lerner, Stieglitz and one former director. The function of the Audit
Committee is to select the independent public accountants of the Company, to
review with them the Company's financial statements, to review the Company's
financial systems amd controls and to oversee other matters relating to the
integrity of the Company's finances and financial statements as the Committee
may consider appropriate. The Audit Committee held one meeting in 1994 at
which all members were present. The function of the Comensation and Stock
Option Committee is to determine the compensation of the officers of the
Company and to administer the Company's stock option plans. The Compensation
and Stock Option Committee held one meeting in 1994. The Executive Committee
is comprised of Messrs. Pearlman, Lawi and Farley, who is the the Chairman.
The function of the Executive Committee is to act on an interim basis for the
full Board. The Executive Committee did not meet during 1994.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is certain information as of May 1, l995 concerning
the beneficial ownership of common stock (the Company's only class of voting
securities) by each director individually, and by all officers and directors of
the Company as a group and by all beneficial owners of more than 5% of the
outstanding shares of the Company's common stock.
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Name Ownership(1)(2) Class(2)
- ---- --------------- ----------
<S> <C> <C>
Gerson I. Fox.......................... 557,993 (3) 22.6%
111 West Monrovia
Monrovia, CA 91016
Clarence Y. Palitz..................... 562,500 (4) 21.0%
650 Allamuchy Road
Allamuchy, NJ 07820
</TABLE>
4
<PAGE> 7
<TABLE>
<CAPTION>
Amount and Nature
of Beneficial Percent of
Name Ownership(1)(2) Class(2)
- ---- --------------- ----------
<S> <C> <C>
Directors and Officers
- ----------------------
Herbert M. Pearlman*.................... 796,197 (5) 28.3%
David S. Lawi*.......................... 412,742 (6) 16.2
Walter M. Craig, Jr..................... 27,711 (7) 1.3
Joseph J. Farley........................ 9,342 **
John E. Stieglitz....................... 667 **
William Lerner ......................... 200 **
Daniel T. Murphy........................ 21,353 (8) **
Michael Epps............................ 3,000 (9) **
All officers and directors
as a group (7 persons).................. 1,271,212 (5)-(9) 39.0
</TABLE>
* address is 93 Mason Street, Greenwich, CT 06830
** less than 1%
(1) Except as otherwise indicated, each named holder has, to the best of
the Company's knowledge, sole voting and investment power with respect
to the shares indicated.
(2) Includes shares that may be acquired within 60 days by any of the
named persons upon exercise of any contractual right.
(3) Includes 312,766 shares that may be acquired from the Company within
60 days upon conversion of Series B 8% Cumulative Convertible
Preferred Stock (212,766) and 1993 Class B warrants (100,000). Does
not include shares held by Mr. Fox's wife, as to which he disclaims
beneficial ownership.
(4) Includes 520,833 shares that may be acquired from the Company within
60 days upon conversion of Series A 8% Cumulative Convertible
Preferred Stock held by Mr. Palitz (104,166) and by a limited
partnership as to which Mr. Palitz is the president of the corporate
general partner (416,667).
(5) Includes 671,202 shares that may be acquired from the Company within
60 days upon exercise of options (13,334) and Class A Warrants
(66,145), and conversion of Series A Preferred Stock (18,333), Series
A 8% Cumulative Convertible Preferred Stock (421,875) and 8%
debentures (151,515). Does not include shares held by Mr. Pearlman's
wife, as to which he disclaims beneficial ownership.
5
<PAGE> 8
(6) Includes 383,938 shares that may be acquired from the Company within
60 days upon exercise of options (6,667) and 1993 Class A Warrants
(27,763), and conversion of Series A Preferred Stock (13,333), Series
A 8% Cumulative Convertible Preferred Stock (260,417) and 8%
debentures (75,758).
(7) Includes 27,031 shares which may be acquired from the Company within
60 days upon exercise of options (7,667), and conversion of 8%
debentures (19,364).
(8) Includes 20,152 shares which may be acquired from the Company within
60 days upon exercise of options (5,000) and conversion of 8%
debentures (15,152).
(9) Represents shares that may be acquired within 60 days upon exercise of
options.
EXECUTIVE COMPENSATION
Set forth below is certain information with respect to cash and
noncash compensation awarded to, earned by or paid to the Chief Executive
Officer of the Company and the next most highly compensated individuals who
served as executive officers of the Company for services rendered to the
Company and its subsidiaries during 1994. Each of the named officers (except
Mr. Epps) has been a party to an employment agreement with ISI during the years
ended December 3l, 1994, 1993 and l992. See "Certain Relationships and Related
Party Transactions--The Company and InterSystems, Inc."
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
--------------------------- ALL
NAME AND OTHER
PRINCIPAL COMPEN-
POSITION YEAR SALARY(1) BONUS SATION(2)
- --------- ---- --------- ----- ---------
<S> <C> <C> <C> <C>
Herbert M. 1994 $340,000(3) - $ 16,800
Pearlman, 1993 257,083(3) - 12,600
CEO and Chairman 1992 266,913 - 35,236
Daniel T. 1994 140,000 - 15,812
Murphy, 1993 143,790 - 13,516
Executive Vice 1992 149,769 - 5,725
President, Finance
David S. Lawi, 1994 170,000(3) - 16,769
Secretary- 1993 128,541(3) - 14,027
Treasurer 1992 134,557 - 19,060
Walter M. Craig, 1994 138,167 20,000 10,064
Jr., Executive 1993 127,577 19,566 8,828
Vice President 1992 120,608 15,000 1,048
Michael R. Epps, 1994 116,000 4,000 -
Vice President, 1993 110,000 8,500 -
General Counsel 1992 100,000 12,500 -
</TABLE>
6
<PAGE> 9
_______________________
(1) includes the following amounts paid by the Company's subsidiary,
InterSystems, Inc., during 1994, 1993 and 1992, respectively: MR. PEARLMAN:
$100,000, $66,667 and $132,031; MR. MURPHY: $90,953, $94,743 and $90,953; MR.
LAWI: $50,000, $33,333 and $77,140; and Mr. Craig: $17,500, $17,500 and
$41,388; also includes $33,667, $29,615 and $12,115 paid by the Company's
subsidiary, Cliff Engle Ltd., during 1994, 1993 and 1992, respectively, to MR.
CRAIG and $100,000, $50,000 and $24,500 paid during 1994, $100,000, $50,000 and
$20,462 paid during 1993 and $42,308, $21,154 and $7,404 paid during 1992 by
the Company's subsidiary, Interpak Holdings, Inc., to MR. PEARLMAN, MR. LAWI
AND MR. CRAIG, respectively.
(2) The employment agreements between ISI and its executive officers
originally provided for deferred compensation, in lieu of a pension plan,
payable upon reaching age sixty-five (65), for fifteen (15) years, provided the
officer has remained employed pursuant to the agreement through its original
term. See "Certain Relationships and Related Party Transactions--InterSystems,
Inc." Each year, ISI accrued an amount payable per employee pursuant to this
obligation, which amounts for 1992 are as follows: MR. PEARLMAN: $35,236;
MR. MURPHY: $5,725; MR. LAWI: $19,060; and MR. CRAIG: $1,048. Commencing in
1992, this obligation was terminated and no additional amounts were accrued.
Amounts shown for 1993 and 1994 include automobile allowances and taxable
fringe benefits.
(3) Includes amounts payable in common stock of the Company as follows:
<TABLE>
<S> <C> <C>
Herbert M. Pearlman 1994 $100,000
1993 33,333
David S. Lawi 1994 $ 50,000
1993 16,666
</TABLE>
[The rest of this page intentionally left blank.]
7
<PAGE> 10
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth aggregated option exercises in the last
fiscal year, the number of unexercised options and fiscal year-end values of
in-the-money options for the Chief Executive Officer and the next most
highly-compensated executives.
<TABLE>
<CAPTION>
Value of
Number of Unexercised
Shares Unexercised In-the-money
Acquired Options at Options at
on Fiscal year-end fiscal year end
Exercise Value Exercisable/ Exercisable/
Name (#) Realized ($) Unexercisable Unexercisable (1)
- ---- -------- ------------ ------------- -----------------
<S> <C> <C> <C> <C>
Herbert M. - - 13,334/0 n/a
Pearlman
Walter M - - 7,667/0 n/a
Craig, Jr.
David S. - - 6,667/0 n/a
Lawi
Daniel T. - - 5,000/0 n/a
Murphy
Michael R. - - 3,000/0 n/a
Epps
</TABLE>
___________________
(1) All options are out-of-the-money.
COMPENSATION OF DIRECTORS
Outside directors receive fees of $10,000 for services they render to
the Company, payable $5,000 in cash and $5,000 in common stock of the Company.
Mr. Farley receives an additional $5,000 for his services as Chairman of the
Executive Committee. Expenses reasonably incurred in the furtherance of their
duties are reimbursed by the Company. The portion of the fee to be paid in
common stock has not yet been made for 1993 and 1994 pending listing on the
American Stock Exchange. Accordingly, Messrs. Lerner and Farley are entitled
to 9,999 shares as of December 31, 1994.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
PEARLMAN EMPLOYMENT AGREEMENT
On January 1, 1990, the Company entered into an employment contract
with Herbert M. Pearlman, as the Company's President and Chief Executive
Officer, with a continuous five-year term (the "Pearlman Agreement"). The
Pearlman Agreement, as amended, provides for (a) a base salary, payable by the
Company or its subsidiaries, of $404,475 a year (subject to annual upward
adjustments in relation to
8
<PAGE> 11
the increase in the consumer price index) (the "Base Salary") and (b)
additional fees ("Additional Fees") each year equal to 5% of the Company's
consolidated pre-tax profits and 5% of the annual pre-tax profits of each
unconsolidated subsidiary of the Company attributable to the Company for such
year. To the extent Mr. Pearlman receives a portion of his salary from a
subsidiary, the amount of salary he receives from the Company is similarly
reduced.
Mr. Pearlman has agreed to voluntarily reduce his base salary.
Effective September 1, 1993, the annual base salary payable to Mr. Pearlman was
$340,000, of which $200,000 in the aggregate is paid by two of the Company's
subsidiaries. An additional $100,000 is payable in common stock of the Company
based upon certain average stock prices, and $40,000 is payable in cash by the
Company. As an inducement to the salary reduction, Mr. Pearlman also will
receive such number of common stock purchase warrants as is equal to 50% of the
number of shares of stock he receives on account of salary. The warrants will
have a term of 7 years and an exercise price equal to 50% above the price at
which the salary shares are issued.
If Mr. Pearlman is unable to discharge his duties for a period of six
consecutive months, the Company may terminate the Pearlman Agreement, in which
event Mr. Pearlman will be entitled to receive the Base Salary for two years
from the date of termination. Thereafter, until age 65 Mr. Pearlman shall
receive annual disability payments in an amount equal to the greater of 60% of
his final Base Salary or $10,000 per month. Under the Pearlman Agreement, Mr.
Pearlman is not required to devote his full time to the Company and may seek to
acquire businesses for enterprises other than the Company as long as he obtains
the prior approval of the Board of Directors of the Company before acquiring
any business with sales, net income before taxes and stockholders equity of
more than $4,000,000, $600,000 and $750,000, respectively.
If, at any time during the term of the Pearlman Agreement the majority
of the Company's Board of Directors are comprised of members recommended by a
party not supported by the Company's present Chairman (hereinafter "Change of
Control"), Mr. Pearlman, at his option, will receive, no later than the date
upon which such Change of Control occurs, the following (hereafter the "Change
in Control Payments"):
(i) a lump sum cash payment equal to 2.99 times the average of
all forms of compensation paid to Mr. Pearlman by the Company and all
of its subsidiaries and affiliates during the prior five years reduced
by the amounts received pursuant to terms (ii) and (iii) below;
(ii) a lump sum cash payment equal to the difference between
the exercise price of all stock options, warrants, convertible
preferred stock and convertible debentures held by Mr. Pearlman and
the then current market price for the Company's common stock; and
9
<PAGE> 12
(iii) a continuation of all medical and disability insurances
and benefits for Mr. Pearlman (and his family) for a period of five
years.
Messrs. Lawi, Murphy and Craig have similar Change of Control Payment
provisions pursuant to their employment arrangements (see descriptions below).
By way of illustration, if a Change in Control occurred during 1995, it is
estimated that Messrs. Pearlman, Lawi, Murphy and Craig would receive Change
of Control Payments of $1,080,000, $540,000, $489,000, and $423,000,
respectively. The Company believes that the Change in Control Payment
provisions in these officers' agreements may tend to discourage attempts to
acquire a controlling interest in the Company and may also tend to make the
removal of management more difficult; however, the Company believes such
provisions provide security and decision making independence for its executive
officers.
The Pearlman Agreement further provides (i) that upon the expiration
of the term, if Mr. Pearlman's employment is not continued, he will be entitled
to a severance payment of two years' salary and (ii) for certain company-paid
fringe benefits such as life insurance, with the beneficiary to be specified by
Mr. Pearlman, disability insurance and health insurance providing one hundred
(100%) per cent coverage of most medical expenses.
LAWI EMPLOYMENT AGREEMENT
On January 1, 1990, the Company entered into an employment agreement
whereby David S. Lawi is presently employed as the Company's
Secretary-Treasurer with a continuous five year term (the "Lawi Agreement").
The Lawi Agreement, as amended, provides for Mr. Lawi to receive a salary,
payable by the Company or its subsidiaries, of $202,238 a year (subject to
annual adjustment in proportion to the increase in the consumer price index or
as determined by the Board of Directors), plus an annual bonus equal to 2.5% of
the Company's consolidated pre-tax profits and 2.5% of the annual pre-tax
profits of each unconsolidated subsidiary of the Company attributable to the
Company for such year. To the extent Mr. Lawi receives a portion of his salary
from a subsidiary, the amount of salary he receives from the Company is
similarly reduced.
Mr. Lawi has agreed to voluntarily reduce his base salary. Effective
September 1, 1993, the annual base salary payable to Mr. Lawi was $170,000, of
which $100,000 in the aggregate is paid by two of the Company's subsidiaries.
An additional $50,000 is payable in common stock of the Company based upon
certain average stock prices, and $20,000 is payable in cash by the Company.
As an inducement to the salary reduction, Mr. Lawi also will receive such
number of common stock purchase warrants as is equal to 50% of the number of
shares of stock he receives on account of salary. The warrants will have a
term of 7 years and an exercise price equal to 50% above the price at which the
salary shares are issued.
If Mr. Lawi is unable to discharge his duties for a period of six
consecutive months, the Company may terminate the Lawi Agreement but will be
required to pay Mr. Lawi's base salary for two additional
10
<PAGE> 13
years. Thereafter, until age 65, Mr. Lawi will receive annual disability
payments in an amount equal to the greater of 60% of his final base salary or
$10,000 per month.
The Lawi Agreement contains Change in Control Payment provisions and
provisions permitting him to devote his time to other business enterprises,
severance arrangements and provisions regarding Company-paid fringe benefits
which are similar to those described above for Mr. Pearlman. See "Pearlman
Employment Agreement" for additional information concerning these provisions.
MURPHY AND CRAIG EMPLOYMENT AGREEMENTS
The Board of Directors also has authorized employment agreements for
Daniel T. Murphy, Executive Vice President and Chief Financial Officer, and
Walter M. Craig, Jr., Executive Vice President and Chief Operating Officer.
Both agreements require the officers to devote their full time to the Company,
its affiliates and subsidiaries. Pursuant to Mr. Murphy's agreement, he
receives an annual salary of approximately $165,000, which he has voluntarily
reduced to $140,000 and which is subject to annual increases based on a
cost-of-living index. Mr. Craig receives an annual salary of approximately
$155,000, which is also subject to annual cost-of-living increases. The
salaries payable under these agreements are reduced by the compensation
received by the officer from any of the Company's subsidiaries or affiliates.
In addition, Mr. Murphy receives a bonus to be determined on an annual basis by
the Company's Board of Directors, and Mr. Craig receives a bonus from the
general partner of the Fund based upon the Fund's profitability. Both
agreements provide for Change of Control Payments, severance benefits and
fringe benefits similar to those provided for Messrs. Lawi and Pearlman. As of
the date hereof, formal contracts have not been entered into by the Company
with Messrs. Murphy and Craig.
EPPS EMPLOYMENT AGREEMENT
On November 4, 1994, the Company entered into an agreement employing
Mr. Epps as the Company's Vice President and General Counsel for a term of two
years, at a current base salary of $125,000, subject to adjustment for
increases in the consumer price index, plus an annual bonus equal to 10% of his
current base salary. The agreement also provides for fringe benefits similar
to those available to the other executive officers of the Company.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
IN GENERAL
Messrs. Herbert M. Pearlman and David S. Lawi are principal
shareholders of, and control, PLB Management Corp., a Delaware corporation
serving as general partner to The Mezzanine Financial Fund, L.P. (the "Fund").
In addition, they hold 5.5% and 1%, respectively, limited partnership interests
in the Fund. Mr. Craig is President of the Fund and the Company holds an 8%
limited parternship interest in the Fund.
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<PAGE> 14
In December 1994, the Fund made available a $250,000 line of credit to
the Company. The line matures on December 31, 1995, bears interest at 15% per
annum, entitles the Fund to the option to receive an additional 10% interest
per annum or to purchase from the Company shares of common stock of Helm,
Unapix and ISI in equal amounts based upon the annual outstanding loan balance.
This loan is secured by the assets of the Company. At December 31, 1994,
$250,000 was outstanding under the loan.
In 1994, the Fund made available a $150,000 line of credit to Cliff
Engle. The line matures on December 31, 1995 and bears interest at 24% per
annum. The Fund also received 200,000 shares of Cliff Engle common stock as an
incentive for making the loan. At March 31, 1995, $119,000 was outstanding
under the loan.
The Fund has made available a $600,000 line of credit to Arcadian
Financial Corp., a private company 61% owned by Helm which is engaged in the
business of financing accounts receivable. In 1994, the maturity date of this
line was extended until December 31, 1995. The line bears interest at 15% per
annum, and, in consideration for the extension of the maturity date, requires
the payment of a management fee of $2,000 per month to the general partner of
the Fund. At April 15, 1995, $415,000 was outstanding under the loan.
In March 1995, Professionals' Financial Services, Inc. ("PFS"), a
private company 33% owned by Helm which is engaged in the business of finacing
receivables of health care related enterprises, acquired from the Company a
$200,000 limited partnership interest in the Fund in exchange for 400,000
shares of common stock of PFS.
In February 1993, the Fund initially made available a $750,000 line of
credit to a wholly-owned subsidiary of PFS. The line, which has been increased
to $1,500,000, matures on December 31, 1996 and bears interest at 15% per annum
om the first $750,000 outstanding under the facility, and 24% per annum on
amounts in excess of $750,000. At March 31, 1995, $1,525,000 was outstanding
under the loan. PFS is currently undertaking a private placement of which
$500,000 to $750,000 of the proceeds therefrom will be used to repay its
subsidiary's line.
Since 1988, Messrs. Pearlman, Lawi, Murphy and Craig (the "Officers")
have been the holders of an aggregate $1,800,000 principal amount of the
Company's unsecured 8% subordinated convertible debentures, due 1999 (the
"Debentures"), holding $1,000,000, $500,000, $125,000 and $175,000,
respectively, in principal amount. The Debentures were purchased at face value
by the Officers with individual promissory notes, each bearing interest at 9%
per annum, and payable in annual installments over 10 years. Interest and
principal on each note may be repaid in cash or by the Officer's surrender to
the Company of securities of the Company, or any affiliated company. As of
April 15, 1995, the outstanding principal balance under the notes for each of
Messrs. Pearlman, Lawi. Murphy and Craig was $400,000, $200,000, $50,000 and
$84,500, respectively.
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Messrs. Pearlman and Lawi are limited partners of a Texas limited
partnership known as Partnership 102 Limited, and control the corporation which
serves as general partner to the limited partnership. Partnership 102 Limited
is the landlord at a facility in Houston, Texas leased by Interpak Terminals,
Inc. (a subsidiary of the Company). Interpak had been a tenant in this
facility for over four years prior to the 1989 acquisition of the facility by
Partnership 102 Limited. The lease provides for minimum annual payments of
$429,000 through the year 2005, which lease payments are the same as Interpak
paid prior to the acquisition of the facility. This facility is subject to a
contract for sale, and upon the consummation of this sale, the lease with
Interpak Terminals will be terminated.
THE COMPANY AND INTERSYSTEMS, INC.
Messrs. Pearlman, Lawi, Murphy and Craig are parties to employment
agreements with ISI. All salary amounts paid under the ISI agreements reduce
the amount of salary the Company is responsible to pay to said officers. The
agreements, as amended, provide for current annual salaries of approximately
$238,000, $130,000, $90,000 and $17,500 to Messrs. Pearlman, Lawi, Murphy and
Craig, respectively. Beginning in 1992, however, Messrs. Pearlman and Lawi
agreed to significant voluntary salary reductions and are currently receiving
$100,000 and $50,000, respectively, from ISI. Each of the four individuals is
also entitled to an annual bonus from ISI computed on the basis of ISI's
earnings, if any. Specifically, Messrs. Pearlman and Lawi are entitled to 5%
and 2.5%, respectively, of ISI's consolidated pre-tax profits (as defined),
less the amount, if any, paid to such officer by the Company as a result of the
inclusion in the Company's earnings of ISI's income for that year. Messrs.
Murphy and Craig receive a discretionary bonus determined by ISI's Board of
Directors.
If at any time the Company no longer is able to elect a majority of
ISI's Board of Directors, any of the officers may terminate their employment
under his respective agreement upon 18 months' notice and receive upon the
conclusion of that period a lump sum severance payment equal to 18 months'
salary. Each agreement also provides that upon the expiration of the term, if
the officer's employment is not continued, he will be entitled to a severance
payment of two years' salary (unless employment is secured elsewhere). If,
upon expiration of the employment term, continuation is offered but declined by
the officer, the officer is obligated to act as a consultant for two years at
50% of his then current salary, during which time he will not provide services
for any competitor of ISI.
The Company has an arrangement with ISI whereby ISI pays the Company
an amount equal to the expenses incurred by the Company and allocable to the
business of ISI. These expenses consist primarily of office-related and
administrative expenses and rent. During 1994, ISI paid a total of $44,000 to
the Company pursuant to this arrangement.
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In connection with the August 1993 purchase by ISI of InterSystems,
Inc., a Nebraska corporation ("InterSystems Nebraska"), certain ongoing
contractual relationships exist between Helm and ISI. In addition to the base
purchase price paid to Helm, additional consideration will be paid in the form
of an earnout and a royalty.
PERFORMANCE EARNOUT. Helm is entitled to a performance earnout payable in the
event that InterSystems Nebraska's average earnings before federal income
taxes, related party management fees and non-recurring or extraordinary expense
("EBTME") in 1992 through 1995 inclusive, exceeds $550,000. If during this
period, the average EBTME of InterSystems Nebraska exceeds $550,000, ISI is
required to pay to Helm an amount equal to six (6) times such excess (the
"Earnout Payments"). Earnout Payments are required to be made commencing March
1994 (for any Earnout Payment payable under the formula for 1992 and 1993), and
each successive year thereafter, as necessary, until March 1996. The March
1994 Earnout Payment covers average EBTME for 1992 and 1993. The March 1995
Earnout Payment covers average EBTME for 1992 through and including 1994. The
March 1996 Earnout Payment covers average EBTME for 1992 through and including
1995. In the event of a reduction of average EBTME for any period from the
average EBTME for previous periods, no refund of Earnout Payments will be made.
However, the Payments due in March 1995 and 1996 will reflect a credit of the
payments previously made toward the total earnout payment owed. Earnout
Payments may be made, at ISI's option, by delivering cash, shares of common
stock (valued at the average closing sale price on the American Stock Exchange
for the 60 days preceding delivery), by delivering to Helm shares of ISI's
common stock having an aggregate value of such Earnout Payment or other agreed
upon consideration or by the retirement of indebtedness of Helm to ISI.
InterSystems Nebraska's EBTME for the years 1994, 1993 and 1992 was $506,000,
$644,000 and $411,000, respectively. No Earnout Payment was due for March 1994
or March 1995.
ROYALTY ARRANGEMENTS. In addition to the base purchase price and the earnout
payments, Helm also is entitled to receive royalties on three classes of
InterSystems Nebraska products that were developed with the assistance of Helm,
and that have not yet had a material impact on InterSystems Nebraska's sales to
date. These three products are: a sampler used to sample, among other things,
wood chips and coal; a higher capacity sampler used to sample, among other
things, wood pulp, cement and coal; and a radius bottom conveyor. With respect
to each of these three products, Helm will receive a royalty of 5% of all net
sales of such products exceeding certain established thresholds (which
thresholds approximated the highest annual net sales for each of the products
during the last three years), payable on an annual basis for the 15-year period
following the closing (the "Royalties"). In no case can the annual Royalties
paid to Helm in any year with respect any of the products licensed exceed 10%
of the annual gross profit of such product, calculated in accordance with the
accounting procedures and practices currently employed by InterSystems
Nebraska. Royalties to Helm on account of 1994 sales were approximately
$5,000, which remained unpaid at December 31, 1994.
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<PAGE> 17
In August 1994, the Fund made available a $250,000 line of credit to
ISI. The loan matures on December 31, 1995, bears interest at 24% through
December 31, 1994, and 15% per annum plus a 10% enhancement fee thereafter
which fee is payable in common stock of ISI, enables the Fund to receive 2,000
common stock purchase warrants for each month that the loan is outstanding and
is secured by a note receivable from the sale of the Trading Business. At
December 31, 1994, $100,000 remained outstanding under the line.
THE COMPANY AND UNAPIX ENTERTAINMENT, INC.
In 1992 and 1993, Mr. Pearlman loaned Unapix an aggregate of $117,200.
These loans were made to enable Unapix to acquire distribution rights to
certain properties. These loans accrued interest at Chemical Bank's prime rate
and were payable from the first revenues received by Unapix from such
properties, and if not so paid, then payable by July 1995. Unapix repaid
$57,000 of this loan during 1993. In March 1994, the remaining balance was
exchanged for 44,999 shares of preferred stock as part of the private placement
described below.
In 1993, Helm loaned Unapix from time to time a total of $105,000.
This loan is payable by July 1995, together with interest accrued thereon, from
April 1, 1993, at a variable rate per annum equal to the prime rate of Chemical
Bank. At December 31, 1994, there were no amounts outstanding under the loan.
In August 1994, Unapix obtained an up to $300,000 six month term loan
from the Fund secured by all of Unapix' assets. Outstanding amounts of
principal were charged interest at 2% per month. An additional one month's
interest was payable upon principal repayment. In addition, the Fund was
entitled to receive 1,000 Class B Common Stock Purchase Warrants of Unapix for
each $100,000 drawn down under the loan agreement, with a minimum of 10,000
such warrants. The borrowings under this credit facility were repaid in full
during the fourth quarter of 1994, and Unapix issued warrants to the
Company.
In December 1993 Unapix formed a joint venture with certain investors,
including Mr. Pearlman and Mr. Lawi, in order to fund A Pix's acquisition of
independently produced films. Messrs. Pearlman and Lawi invested $100,000 and
$50,000, respectively, in the venture out of initial funds totalling $250,000.
Initial investment agreements were signed whereby Unapix agreed to treat each
venturer's investment as a promissory demand note until such time as the formal
venture agreement is completed and executed. The formal agreement is intended
to provide for: (i) a term of 3 years; (ii) the venture to receive the
aggregate of its investment in any one film property plus 10% thereof from
first dollars of gross receipts for such property; (iii) the venture's receipt
of 20% of the net profits from each film in which it invests; (iv) the
venture's investment in film properties not acquired through ACI by A Pix; (v)
a rollover of venture funds into other film properties; (vi) any shortfall of
investment to be paid in the common stock of Unapix at market, or if market is
less than $3.00 a share, at the lower of $3.00 or 125% of market.
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<PAGE> 18
In March 1994, Unapix completed a private placement of Preferred Stock
totalling approximately $2,000,000 or 667,000 shares at $3.00 per share.
Messrs. Pearlman and Lawi purchased 44,999 and 16,666 shares, respectively.
Mr. Pearlman paid approximately $75,000 in cash of the $134,997 purchase price
for his shares; the balance of approximately $60,000 was set off against
indebtedness owing to him with respect to prior loans he extended to Unapix.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected BDO Seidman as independent
auditors for the Company for the year ended December 31, 1995. BDO Siedman has
served as independent auditors for the Company since 1985. The Company has
been advised that representatives of BDO Seidman will attend the Annual Meeting
of Shareholders, will have an opportunity to make a statement if they desire to
do so and will be available to respond to appropriate questions.
VOTING ON PROPOSALS
With regard to the election of directors, votes may be cast in favor
or withheld; votes that are withheld will be excluded entirely from the vote
and will have no effect. With respect to any other proposal properly brouhgt
before the meeting, abstentions may be specified and will be counted as present
for purposes of the item on which the abstention is noted, but will have the
effect of a negative vote. Likewise, broker non-votes are counted for purposes
of determining the presence or absence of a quorum with respect to a given
proposal, but they are not counted for purposes of determining whether the
proposal has been approved.
PROPOSALS BY SHAREHOLDERS
Proposals that shareholders wish to include in the Company's proxy
statement and form of proxy for presentation at the next Annual Meeting of
Shareholders must be received by the Company at 537 Steamboat Road, Greenwich,
Connecticut 06830, Attention David S. Lawi, prior to March 13, 1996.
MISCELLANEOUS
The Board of Directors knows of no other matters that are to be
brought before the meeting. However, if any other matters do come before the
meeting, the persons named on the enclosed form of proxy or their substitutes
will vote in accordance with their judgment on those matters.
The cost of solicitation of proxies, including expenses in connection
with preparing, assembling and mailing this proxy statement, will be borne by
the Company. The solicitation will be made by mail, and may also be made by
officers or regular employees of the Company personally or by telephone or
telegram, or by professional proxy solicitors acting on behalf of the Company.
The Company may reimburse brokers, custodians and nominees for their expenses
in sending proxies and proxy material to beneficial owners.
Greenwich, Connecticut
June 1, 1995
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