<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>
[X] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-2.
</TABLE>
HELM RESOURCES, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-12.
(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 Statement No.:
------------------------------------------------------------------------
(3) Filing Party:
------------------------------------------------------------------------
(4) Date Filed:
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<PAGE> 2
HELM RESOURCES, INC.
----------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD OCTOBER , 1997
----------------------
TO OUR STOCKHOLDERS:
You are cordially invited to attend the Annual Meeting of Stockholders
of Helm Resources, Inc. (the "Company") to be held on Wednesday, October ,
1997, at 2:00 p.m., at the offices of the Company, 537 Steamboat Road,
Greenwich, Connecticut, for the following purposes:
1. To elect six directors;
2. To authorize the Company's Board of Directors to cause to be
filed an amendment to the Company's Certificate of Incorporation
changing the name of the Company to Helm Capital Group, Inc.; and
3. To transact such other business as may properly come before the
meeting or any adjournment of the meeting.
Only stockholders of record at the close of business on September ,
1997 will be entitled to notice of and to vote at the meeting.
Please sign, date and mail the enclosed proxy card in the return
envelope provided for your convenience.
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE
MARK, DATE, SIGN AND PROMPTLY RETURN THE ENCLOSED PROXY CARD IN THE
ACCOMPANYING ENVELOPE, WHICH REQUIRES NO POSTAGE IF MAILED IN THE
UNITED STATES. PLEASE RETURN YOUR PROXY CARD REGARDLESS OF THE
NUMBER OF SHARES YOU HOLD AND WHETHER OR NOT YOU EXPECT TO ATTEND THE
MEETING. IF YOU ATTEND THE MEETING, YOU MAY REVOKE YOUR PROXY
AND VOTE IN PERSON IF YOU WISH.
BY ORDER OF THE BOARD OF DIRECTORS
David S. Lawi, Secretary
September , 1997
Greenwich, Connecticut
<PAGE> 3
HELM RESOURCES, INC.
537 STEAMBOAT ROAD
GREENWICH, CONNECTICUT 06830
(203) 629-1400
-------------------
PROXY STATEMENT
-------------------
This Proxy Statement is furnished in connection with the solicitation
of proxies by the Board of Directors of the Helm Resources, Inc. (the "Company")
for use at the the Company's Annual Meeting of Stockholders to be held at the
offices of the Company at 537 Steamboat Road, Greenwich, Connecticut on
Wednesday, October , 1997 at 2:00 p.m. Eastern Standard Time, 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 proxy statement and form of proxy are being sent to shareholders on
or about September , 1997.
The Board of Directors has fixed the close of business on September ,
1997 as the record date for the meeting. On that date, the Company had
outstanding 2,540,525 shares of common stock. Only stockholders 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
presence at the meeting, in person or by proxy, of the holders of the majority
of the outstanding shares of common stock entitled to vote is necessary to
constitute a quorum.
Proxies in the accompanying form are solicited on behalf and at the
direction of the Board of Directors. All shares of common stock represented by
properly executed proxies will be voted at the meeting in accordance with the
instructions made on the proxies, unless such proxies have been previously
revoked. If authority to vote a proxy has not been withheld and no instruction
is indicated, the shares will be voted FOR the election of the Board of
Directors' nominees for directors and FOR the change of the Company's name. If
any other matters are properly presented at the meeting for action, including a
question of adjourning the meeting from time to time, the persons named in the
proxies and acting thereunder will have discretion to vote on such matters in
accordance with their best judgment.
VOTE REQUIRED
Directors will be elected by a plurality of the votes cast at the
meeting. 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 the proposal to change the name of the Company,
abstentions may be specified and will be counted as present for
-1-
<PAGE> 4
purposes of the item on which the abstention is noted. Accordingly, since the
change of the Company name requires the approval of a majority of the
outstanding voting shares, present in person or represented by proxy at the
Meeting and entitled to vote, abstentions will have the effect of a negative
vote. 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.
REVOCATION OF PROXIES
A stockholder executing and returning a proxy has the power to revoke
it before it is exercised. A stockholder who wishes to revoke a proxy can do so
by delivering a subsequently signed and dated proxy or other written notice to
the Secretary of the Company at any time prior to the vote at the meeting or by
appearing at the meeting and voting in person the shares to which the proxy
relates. Attendance at the Meeting by a stockholder who has executed and
returned the enclosed proxy does not alone constitute revocation of the proxy.
Any written notice revoking a proxy should be sent to the Company, attention:
David S. Lawi, Secretary, at the Company's executive offices which are located
at 537 Steamboat Road, Greenwich, Connecticut 06830.
SOLICITATION
After the initial mailing of this Proxy Statement, proxies may be
solicited by telephone, telegram or personally by directors, officers and other
employees of the Company (who will not receive any additional compensation
therefore). All expenses with respect to this solicitation of proxies will be
borne by the Company. Arrangements will be made with brokers and other
custodians, nominees and fiduciaries to send proxies and the proxy materials to
their principals, and the Company will, upon request, reimburse them their
reasonable expenses in doing so. The Company may engage an outside proxy
soliciting firm to assist in the solicitation of proxies, and reasonable fees
and out of pocket expenses of such firm will be paid by the Company.
No person is authorized to give any information or to make any
representation not contained in this Proxy Statement, and, if given or made,
such information or representation should not be relied upon as having been
authorized by the Company. This Proxy Statement does not constitute the
solicitation of a proxy in any jurisdiction from any person to whom it is
unlawful to make such proxy solicitation in such jurisdiction.
----------------------------
The date of this Proxy Statement is September , 1997.
----------------------------
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<PAGE> 5
PROPOSAL ONE
ELECTION OF DIRECTORS
NOMINEES FOR 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................... 64 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 the board of directors of InterSystems, Inc., a public company
engaged in the design and manufacture of industrial and agricultural equipment
and in chemical and plastics compounding ("ISI"). 1990, Mr. Pearlman became
chairman of the board of directors of Unapix Entertainment, Inc. ("Unapix"), a
Delaware corporation and a public company engaged in the business of marketing
and distributing television programs and motion pictures.
<TABLE>
<S> <C> <C>
Walter M. Craig, Jr.................. 43 1993
</TABLE>
Mr. Craig has been president of Professionals' Financial Services,
Inc., a Delaware corporation which is in the business of financing receivables
of healthcare and other enterprises, since 1993. He has also served as president
and a director of PLB Management Corp., the general partner of The Mezzanine
Financial Fund, L.P. (the "Fund"), a Delaware limited partnership which makes
collateralized loans to companies, and as president of the Fund, since 1993. Mr.
Craig has been a director of Seitel since 1987, a director of Unapix since 1993
and a director of ISI since 1993. He has also served as a director, executive
vice president and chief operating officer of Helm since 1993. Prior thereto,
Mr. Craig served as vice president for business and legal affairs for Helm.
-3-
<PAGE> 6
<TABLE>
<S> <C> <C>
David S. Lawi......................... 62 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 and secretary 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.
In 1990, Mr. Lawi became a director of Unapix, and in 1993, he became treasurer
and secretary of Unapix, and chairman of the Executive Committee of Unapix.
<TABLE>
<S> <C> <C>
Joseph J. Farley...................... 74 l982
</TABLE>
From l982 until February 1991, Mr. Farley served as the Company's vice
president for marketing and engineering. 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.
<TABLE>
<S> <C> <C>
William Lerner........................ 64 l985
</TABLE>
Mr. Lerner is an attorney engaged in the private practice of law in New
York and Pennsylvania. 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 l984. Mr. Lerner is also a director
of Rent-Way, Inc., the owner of a chain of retail stores in the rental-purchase
industry, and a director of Micros-to-Mainframes, Inc., a provider of advanced
technology services and computer equipment to Fortune 2000 companies with
headquarters and significant operations in the states of New Jersey, New York
and Connecticut.
<TABLE>
<S> <C> <C>
John E. Stieglitz..................... 64 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 one
additional executive officer. Daniel T. Murphy, 58, 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.
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.
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<PAGE> 7
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers, directors and persons who own more than 10% of a registered
class of the Company's equity securities to file with the Securities and
Exchange Commission (the "SEC") and the American Stock Exchange initial reports
of ownership and reports of changes of ownership of Common Stock and other
equity securities of the Company. Officers, directors and greater than 10%
stockholders are required by SEC regulation to furnish the Company with copies
of all Section 16(a) reports they file. Based upon a review of reports and
amendments thereto furnished to the Company 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 for that John Stieglitz' Report on Form 4 for January 1996
reporting 16,666 shares issued as directors' fees was filed 18 days late.
ATTENDANCE AT MEETINGS; COMMITTEES
During 1996, 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 1996, the Audit Committee
as well as the Compensation and Stock Option Committee consisted of Messrs.
Lerner and Stieglitz. 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 and 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 function of
the Compensation 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 Executive Committee is comprised of Messrs. Pearlman, Lawi and Farley, who
is the Chairman. The function of the Executive Committee is to act on an interim
basis for the full Board. The Audit Committee, the Compensation and Stock Option
Committee and the Executive Committee did not meet separate from the entire
Board of Directors during 1996.
In addition, the Board of Directors has appointed a Special Committee
to evaluate and negotiate acquisitions and dispositions. The Special Committee
is chaired by Mr. William Lerner, and Messrs. Herbert M. Pearlman and David S.
Lawi also serve on this Committee. During 1996, the Special Committee met
several times concerning the sale of Interpak, and all members of the
Committee attended these meetings.
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<PAGE> 8
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is certain information as of June 1, l997 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.......................... 745,917(3) 26.2%
1230 Huntington Drive
Duarte, CA 91010
Clarence Y. Palitz..................... 562,500(4) 18.4%
650 Allamuchy Road
Allamuchy, NJ 07820
</TABLE>
<TABLE>
<CAPTION>
DIRECTORS AND OFFICERS
- ----------------------
<S> <C> <C>
Herbert M. Pearlman*................... 856,453(5) 26.8%
David S. Lawi*......................... 432,539(6) 14.8%
Walter M. Craig, Jr.................... 7,347(7) **
Joseph J. Farley....................... 33,929 1.3%
John E. Stieglitz...................... 25,254 **
William Lerner ........................ 24,787 **
Daniel T. Murphy....................... 13,777(8) **
All officers and directors
as a group (7 persons).................. 1,394,086(5)-(8) 38.8%
</TABLE>
- --------------------
* address is 537 Steamboat Road, Greenwich, CT 06830
** less than 1%
(l) 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 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.
-6-
<PAGE> 9
(4) Includes 520,833 shares that may be acquired from the Company 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 657,869 shares that may be acquired from the Company upon
exercise of options (13,334) and Class A Warrants (66,145), and
conversion of Series A Preferred Stock (5,000), 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.
(6) Includes 380,605 shares that may be acquired from the Company upon
exercise of options (6,667) and 1993 Class A Warrants (27,763), and
conversion of Series A Preferred Stock (10,000), Series A 8% Cumulative
Convertible Preferred Stock (260,417) and 8% debentures (75,758).
(7) Includes 6,667 shares which may be acquired from the Company exercise of
options.
(8) Includes 12,576 shares which may be acquired from the Company upon
exercise of options (5,000) and conversion of 8% debentures (7,576).
[The rest of this page intentionally left blank.]
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<PAGE> 10
EXECUTIVE COMPENSATION
Set forth below is certain information with respect to compensation
awarded to, earned by or paid to the Chief Executive Officer of the Company. No
other executive officers of the Company earned in excess of $100,000 for
services rendered to the Company and its subsidiaries during 1996.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-----------------------------------------------
NAME AND OTHER
PRINCIPAL ANNUAL
POSITION YEAR SALARY(1),(2) COMPENSATION(3)
- -------- ---- ------------- ---------------
<S> <C> <C> <C>
Herbert M. 1996 $100,000 $84,320
Pearlman, 1995 100,000 33,742
CEO and Chairman 1994 100,000 33,742
</TABLE>
- ----------------
(1) Represents salary paid by the Company's wholly-owned subsidiary, Interpak
Holdings, Inc. to Mr. Pearlman.
(2) Does not include $100,000 payable to Mr. Pearlman in common stock of the
Company, which will be issued pending listing of the shares on the American
Stock Exchange, and $40,000, which has been accrued but not yet paid. See
"Employment Agreements and Termination of Employment Arrangements."
(3) Includes life insurance premiums paid by Interpak and automobile allowances.
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL
YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth aggregated option exercises in the last
fiscal year, the number of unexercised options and fiscal year-end values of
in-the-money options for the Chief Executive Officer. All options were
out-of-the-money at December 31, 1996.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT OPTIONS AT
ON FISCAL YEAR-END FISCAL YEAR-END
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- ---- -------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Herbert M. -- -- 13,334/0 n/a
Pearlman
</TABLE>
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<PAGE> 11
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.
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 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 $100,000 is paid by Interpak Holdings, Inc., the Company's
wholly owned subsidiary. An additional $100,000 is paid by the Company's
affiliate, InterSystems, Inc., with respect to which Mr. Pearlman serves as
Chairman of the Board. Since 1994, an additional $100,000 has been accrued
annually representing amounts payable in common stock of the Company based upon
certain average stock prices, and $40,000 has been accrued annually as payable
in cash by the Company. This stock will be issued upon its listing on the
American Stock Exchange.
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.
-9-
<PAGE> 12
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
(iii) a continuation of all medical and disability insurances
and benefits for Mr. Pearlman (and his family) for a period of five
years.
By way of illustration, if a Change in Control occurred during 1996, it
is estimated that Mr. Pearlman would receive Change of Control Payments of
$920,000. 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.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
THE COMPANY, ITS SUBSIDIARIES AND THE FUND
Messrs. Herbert M. Pearlman and David S. Lawi are principal
shareholders of, and control, PLB Management Corp. ("PLB"), 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. Walter M. Craig, Jr. is President of PLB
and of the Fund.
In December 1994, the Fund made available a line of credit to the
Company which has been increased to $750,000. The line matures on December 31,
1997, bears interest at 15% per annum, entitles the Fund to the option to
receive an additional 10% interest per annum or to
-10-
<PAGE> 13
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, 1996, $628,000 was
outstanding under the loan.
In August 1994, the Fund made available a $250,000 line of credit to
ISI, which was increased to $450,000 in 1995 and paid in full in February 1996.
In February 1993, the Fund made available a $750,000 line of credit to
Healthcare Financial Services, Inc. ("HC"), a wholly-owned subsidiary of
Professionals' Financial Services, Inc. ("PFS"), to enable HC to initiate its
business activity. The line, which was increased to $1,350,000 but subsequently
reduced to $500,000 during 1996, matures on December 31, 1997 and bears interest
at 15% per annum. At December 31, 1996, $900,000 was outstanding under the loan.
Messrs. Pearlman, Lawi and Craig are directors of PFS, and Mr. Craig serves as
President of PFS. In addition, Helm owns approximately 14% of the outstanding
common stock of PFS.
In January, 1995, PFS made a $100,000 accounts receivable line of
credit available to The Tropical Manufacturing Group, Inc.("TMG"), which was a
party to an operating agreement and a letter of intent for the purchase of
assets with Tropical Systems, Inc.("TSI"), a subsidiary of InterSystems, Inc., a
Nebraska corporation and a subsidiary of ISI ("InterSystems Nebraska").
Effective upon the execution of the operating agreement in October 1995, no
further accounts receivable of TMG were purchased under the line of credit, and
PFS entered into a substitute accounts receivable line of credit in the amount
of $250,000 with TSI. On October 31, 1996, an involuntary petition under Chapter
7 of the federal bankruptcy laws was filed against TMG. The filing was later
converted to a voluntary petition and the operating agreement between TMG and
TSI terminated. TSI has guaranteed the amounts owing by TMG to PFS. At December
31, 1996, $70,000 was outstanding under the TMG line of credit and $49,000 was
outstanding under the TSI line of credit.
THE COMPANY AND INTERSYSTEMS, INC.
Messrs. Pearlman, Lawi, Murphy and Craig are parties to employment
agreements with InterSystems, Inc., a 22% owned affiliate of the Company. 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.
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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 1996, ISI paid a total of $51,000
during, and accrued an additional $32,000 at December 31, 1996, to the Company
pursuant to this arrangement. At December 31, 1996, the Company had net advances
due to ISI of $244,000.
In connection with the August 1993 purchase by ISI of 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 in March 1996,
which is the last of such payments, 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 Payment due in March 1996 will reflect a credit of the
payments previously made, if any, 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 1995, 1994, 1993 and 1992 was
$567,000, $507,000, $666,000 and $420,000, respectively. No Earnout Payment was
due for March 1994, March 1995 or March 1996.
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<PAGE> 15
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 1996 sales were approximately $13,300, which
remained unpaid at December 31, 1996.
IN GENERAL
Messrs. Pearlman, Lawi and Murphy (the "Officers") are the holders of
an aggregate $1,550,000 principal amount of the Company's unsecured 8%
subordinated convertible debentures, due 1999 (the "Debentures"), holding
$1,000,000, $500,000 and $50,000, respectively, in principal amount at December
31, 1996. 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 December 31, 1996, the outstanding
principal balance under the notes for each of Messrs. Pearlman and Lawi was
$300,000 and $150,000, respectively. In addition, as of such date, the Company
owes Messrs. Pearlman, Lawi and Murphy interest on their Debentures, net of
interest on the notes, in the amounts of $122,000, $61,000 and $11,000,
respectively.
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.
of Texas. 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. See Note 13 to Consolidated Financial Statements in the 1996 Annual
Report to Shareholders accompanying this Proxy Statement.
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<PAGE> 16
During 1996, management of the Company provided various administrative,
managerial, financial, legal and accounting services to Unapix Entertainment,
Inc. ("Unapix"), for which the Company was paid $182,000 by Unapix in 1996.
Messrs. Pearlman, Lawi and Craig are directors of Unapix, and Mr. Murphy is the
Chief Financial Officer of Unapix.
PROPOSAL TWO
CHANGE OF THE NAME OF THE COMPANY
With the completed sale of Interpak Terminals, Inc., historically our
Company's principal operating subsidiary, the Company will concentrate its
primary business focus on the financial services industry, utilizing the
management experience gained over the past few years in developing two niche
finance businesses -- The Mezzanine Financial Fund, L.P. and Professionals
Financial Services, Inc. Both experiences give the Company reason to believe the
ground work has been laid for the Company to become a successful operating
financial services company. The Company's present name, long associated with its
historical operating interests, does not reflect the new direction in which its
primary business focus is headed. Accordingly, the following resolutions will be
proposed at the Meeting for the consideration of the Company's stockholders:
RESOLVED, that the Board of Directors is hereby authorized, in
its sole discretion, to cause to be filed a Certificate of Amendment to
this Corporation's Certificate of Incorporation causing Article First
to read in its entirety as set forth below:
"FIRST: The name of the corporation is Helm Capital Group,
Inc."
RESOLVED, that the directors and officers of the Corporation
are hereby authorized and directed to execute and file all documents
with the Secretary of State of Delaware and such other federal, state
and local authorities, and to take such other steps, as are in their
sole judgment necessary or appropriate, to give effect to such
amendment and to reflect the change of the name of this Corporation to
Helm Capital Group, Inc."
The Board of Directors unanimously recommends a vote FOR the adoption
of the foregoing resolutions.
-----------------------
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected BDO Seidman, LLP as independent
auditors for the Company for the year ended December 31, 1997. BDO Seidman, LLP
has served as independent auditors for the Company since 1985. The Company has
been advised that representatives of BDO Seidman, LLP will attend the Annual
Meeting of Stockholders, will have an opportunity to make a statement if they
desire to do so and will be available to respond to appropriate questions.
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<PAGE> 17
PROPOSALS BY STOCKHOLDERS
Proposals that stockholders wish to include in the Company's proxy
statement and form of proxy for presentation at the next Annual Meeting of
Stockholders must be received by the Company at 537 Steamboat Road, Greenwich,
Connecticut 06830, Attention David S. Lawi, prior to July , 1998.
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.
Greenwich, Connecticut
September , 1997
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<PAGE> 18
HELM RESOURCES, INC.
FORM OF PROXY
The undersigned hereby appoints HERBERT M. PEARLMAN and DAVID S. LAWI,
and each of them with full power of substitution, proxies to vote all shares of
common stock of Helm Resources, Inc. (the "Company") owned by the undersigned at
the Annual Meeting of Stockholders on October , 1997 and at any adjournment
thereof on the items of business set forth below and on such other business as
may properly come before the meeting.
ELECTION of Messrs. Herbert M. Pearlman, David S. Lawi, Joseph J.
Farley, William Lerner, John E. Stieglitz and Walter M. Craig, Jr. as directors
until their successors shall be duly elected.
FOR [ ] WITHHOLD AUTHORITY [ ]
TO WITHHOLD AUTHORITY TO VOTE FOR ANY NOMINEE(S), PRINT NAMES BELOW
- --------------------------------------------------------------------------------
ADOPTION of the Amendment to the Company's Certificate of
Incorporation to change the corporate name to Helm Capital
Group, Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
This proxy is solicited on behalf of the Board of Directors. If the
undersigned fails to specify how the proxy is to be voted, it will be voted FOR
the election of the nominees and FOR the Proposal.
---------------
Date: , 1997 (L.S.)
----------------------------
Signature of Stockholder
(L.S.)
----------------------------
Signature of Stockholder
(Please sign your name exactly as
it appears on the proxy. When
signing as attorney, agent,
executor, administrator, trustee,
guardian or corporate officer,
please give your full title as
such. Each joint owner should sign
the consent).
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