<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of 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-2.
</TABLE>
INTERSYSTEMS, 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:
------------------------------------------------------------------------
<PAGE> 2
INTERSYSTEMS, INC.
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JULY 9, 1998
---------------------
To Our Stockholders:
You are cordially invited to attend the Annual Meeting of Stockholders
of InterSystems, Inc. (the "Company") to be held on Thursday, July 9, 1998, at
10:00 a.m., at the offices of the Company at 537 Steamboat Road, 4th Floor,
Greenwich, Connecticut, for the following purposes:
1. to elect three directors; and
2. 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 May 29, 1998
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
Houston, Texas
June 1, 1998
<PAGE> 3
INTERSYSTEMS, INC.
7115 CLINTON DRIVE
HOUSTON, TEXAS 77020
--------------------
PROXY STATEMENT
--------------------
The accompanying proxy is solicited on behalf of the Board of Directors
of the Company for use at the Annual Meeting of Stockholders to be held on July
9, 1998 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 29, 1998
as the record date for the meeting. On that date, the Company had outstanding
7,916,376 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 thereof. Each such stockholder 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 in the election of
directors.
The principal offices of the Company are located at 7115 Clinton Drive,
Houston, Texas 77020. The proxy statement and form of proxy are being sent to
stockholders on or about June 1, 1998.
ELECTION OF DIRECTORS
In 1988, the Company adopted a classified Board of Directors, which
divided the directors into three classes. At each annual meeting, the successors
to the class of directors whose term expires at that meeting are elected to
serve a three-year term and until their successors are elected and qualified.
Accordingly, the Directors whose terms expire in 1997 are nominees for
re-election at the 1998 Annual Meeting of Stockholders. The nominees named by
the Board of Directors are Messrs. Herbert M. Pearlman, Fred S. Zeidman and John
E. Stieglitz.
The persons named in the enclosed form of proxy have advised that
unless contrary instructions are received, they intend to vote for the nominees
named by the Board of Directors of the Company and listed below. If, by reason
of death or other unexpected occurrence, the nominee is not available for
election, the persons named in the form of proxy have advised that they will
vote for such substitute nominee as the Board of Directors of the Company may
propose.
2
<PAGE> 4
The nominees and directors are presented below by class.
<TABLE>
<CAPTION>
DIRECTOR TERM AS
OF THE DIRECTOR
NAME AGE COMPANY SINCE EXPIRES IN
NOMINEES FOR DIRECTOR
<S> <C> <C> <C>
Herbert M. Pearlman 65 1984 1998
Fred S. Zeidman 51 1993 1998
John E. Stieglitz 64 1991 1998
OTHER DIRECTORS
David S. Lawi 63 1984 1999
Walter M. Craig, Jr. 44 1993 1999
Daniel T. Murphy 59 1986 2000
William Lurie 67 1995 2000
</TABLE>
PRINCIPAL OCCUPATION OVER THE PAST FIVE YEARS AND OTHER DIRECTORSHIPS OF NOMINEE
OR DIRECTOR
HERBERT M. PEARLMAN Mr. Pearlman has been Chairman of the Company's Board of
Directors since March l984. Since 1980, he has served as President, Chief
Executive Officer and a Director of Helm Capital Group, Inc., a public holding
company and the holder of 15.5% of the Company's common stock ("Helm"). Since
June 1984, he has been Chairman of the Board of Helm. Mr. Pearlman is Chairman
of the Board of Directors of Seitel, Inc. ("Seitel"). Seitel is a New York Stock
Exchange company engaged in acquiring and marketing seismic information to the
oil and gas industry. In 1990, Mr. Pearlman became Chairman of the Board of
Unapix Entertainment, Inc. ("Unapix"), an American Stock Exchange company which
is engaged in marketing and distributing films and television products.
FRED S. ZEIDMAN Mr. Zeidman was appointed President, Chief Executive Officer and
a Director of the Company in July 1993. He served as President of Interpak
Terminals, Inc., a wholly-owned subsidiary of Helm engaged in the packaging and
distribution of thermoplastic resins, from July 1993 until July 1997.
Previously, Mr. Zeidman served as Chairman of Unibar Energy Services
Corporation, one of the largest independent drilling fluids company in the
United States, from 1985 to 1991, when it was acquired by Anchor Drilling Fluids
of Norway. From April 1992 until July 1993, Mr. Zeidman served as President of
Service Enterprises, Inc., which is primarily engaged in plumbing, heating, air
conditioning and electrical installation and repair. From 1983 to 1993, Mr.
Zeidman served as President of Enterprise Capital Corporation, a federally
licensed small business investment company specializing in venture capital
financings.
JOHN E. STIEGLITZ Mr. Stieglitz is Chairman Emeritus of Conspectus, Inc., a
privately-held company engaged in providing consulting services to the
professional investment communities in the area of executive recruiting. Mr.
Stieglitz has been a director of Helm since 1986 and a director of Seitel since
1989.
WALTER M. CRAIG, JR. Mr. Craig has been President of Core Capital, Inc.
(formerly Professionals' Financial Services, Inc.), a Delaware corporation which
is in the business of financing receivables of healthcare and other enterprises,
since 1993. He also serves 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
3
<PAGE> 5
Seitel since 1987 and a director of Unapix 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.
DAVID S. LAWI Mr. Lawi has been Secretary of the Company since March 1984. He
was elected Chairman of the Executive Committee in October 1986. He has been
Secretary and a Director of Helm since 1980, and served as Executive Vice
President of Helm from 1980 until 1992. Since l982 he has been a Director of
Seitel and has been Chairman of Seitel's Executive Committee since 1989. In 1993
he became Secretary and Treasurer of Unapix, and a Director and Chairman of the
Executive Committee of Unapix.
WILLIAM LURIE Mr. Lurie is presently serving as Co-Chairman and a Director of
The Foundation for Prevention & Early Resolution of Conflicts. He also serves as
a Director of Mineral Technologies, Inc. Since May 1997, Mr. Lurie has served as
Chairman of the Board of Eagle Geophysical, Inc., a public company engaged in
the business of the acquisition of seismic information. Prior thereto, he spent
almost 20 years with General Electric Company and ten years with International
Paper Company in legal and management positions, including General Counsel, and
thereafter served as President of The Business Roundtable for ten years.
DANIEL T. MURPHY Mr. Murphy joined the Company in May 1984 as Vice
President-Finance and Operations and served as Executive Vice President of
Operations and Chief Financial Officer of the Company from 1985 until September
1997. Mr. Murphy joined Helm in May 1984 as Vice President and Chief Financial
Officer. In January 1996, he was appointed Vice President and Chief Financial
Officer of Unapix.
COMMITTEES AND ATTENDANCE
During 1997, the Company's Board of Directors held four meetings, which
were attended by all of the directors then in office.
The Board of Directors has an Executive Committee, an Audit Committee,
a Compensation and Stock Option Committee and an Acquisition Committee. The
Executive Committee is comprised of Messrs. Pearlman, Lawi and Zeidman. The
function of the Executive Committee is to act on an interim basis for the full
Board. The Executive Committee did not meet separately from the full Board of
Directors during 1997. The Audit Committee and the Compensation and Stock Option
Committee presently are comprised of Mr. Stieglitz and Mr. Lurie. The Audit
Committee and the Compensation and Stock Option Committee did not meet
separately from the full Board of Directors during 1997. The Acquisition
Committee presently is comprised of Mr. Lurie. Mr. Lurie held several meetings
during 1997 in connection with the proposed acquisition of Interpak Holdings,
Inc. from Helm which did not take place.
COMPENSATION OF DIRECTORS
Non-employee directors receive a fee of $6,000 in cash and $6,000 of
common stock for services they render to the Company, payable on December 31 of
each year, except that for 1997, Mr. Lurie, who also served as Chairman of the
Acquisition Committee, received a fee of $12,000 in cash and $12,000 in common
stock for services rendered. All 1997 compensation to Mr. Lurie was paid on a
deferred basis. Expenses reasonably incurred in the furtherance of the
directors' duties are reimbursed by the Company.
SIGNIFICANT EMPLOYEES
In addition to Messrs. Pearlman, Zeidman and Lawi, the Company has
three additional significant employees. Wm. Chris Mathers, 38, joined the
Company in January 1994 as controller. In September 1997, he was appointed Chief
Financial Officer of the Company.
4
<PAGE> 6
Kenneth Schrader, 59, has served as President of InterSystems Nebraska
since 1978.
Scott Owens, 34, has served as President of Chemtrusion since 1993. He
divides his time between the Houston and Mytex facilities.
Messrs. Pearlman and Lawi allocate their work-related time, and the
other executive officers of the Company spend all of their work-related time, on
the various businesses of the Company and its subsidiaries and affiliates.
COMPLIANCE WITH SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING
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 that a report on Form 4 for John Stieglitz reporting the receipt
of 1,964 shares of common stock upon conversion of outstanding debentures was
filed five days late.
EXECUTIVE COMPENSATION
Set forth below is certain information with respect to cash and non-cash
compensation awarded to, earned by or paid to the Company's Chief Executive
Officer during 1997. With the exception of Mr. Pearlman and Mr. Zeidman, no
executive officers of the Company earned over $100,000 for the fiscal year ended
December 31, 1997. See "Employment Arrangements" below.
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
NAME AND
PRINCIPAL ANNUAL COMPENSATION ALL OTHER
POSITION YEAR SALARY COMPENSATION(1)
<S> <C> <C>
FRED S. ZEIDMAN, 1997 $115,000 -
President and 1996 50,000 -
Chief Executive 1995 50,000 -
Officer
HERBERT M. PEARLMAN, 1997 100,000 $57,496
Chairman 1996 100,000 57,300
1995 100,000 19,344
</TABLE>
(1) Represents premiums on life insurance policies and auto allowance.
5
<PAGE> 7
INDIVIDUAL OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
NUMBER OF PERCENT OF
SECURITIES TOTAL OPTIONS/
UNDERLYING SARS GRANTED
OPTIONS/ TO EMPLOYEES EXERCISE OR EXPIRATION
SARS GRANTED IN FISCAL YEAR BASE PRICE DATE
NAME (#) (%) ($/SH)
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRED S. 100,000 18.6 $2.125 9/3/02
ZEIDMAN
HERBERT M. 100,000 18.6 $2.125 9/3/02
PEARLMAN
</TABLE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND
FISCAL YEAR-END OPTION/SAR VALUE TABLE
The following table sets forth aggregated option exercises in the last
fiscal year, the number of unexercised options and fiscal year-end values of in
the money options for the Chief Executive Officer. All options were out of the
money at December 31, 1997.
<TABLE>
<CAPTION>
VALUE OF
NUMBER OF UNEXERCISED
SHARES UNEXERCISED IN-THE-MONEY
ACQUIRED OPTIONS AT OPTIONS AT
ON FISCAL Y/E FISCAL Y/E
EXERCISE VALUE EXERCISABLE/ EXERCISABLE/
NAME (#) REALIZED ($) UNEXERCISABLE UNEXERCISABLE
- --------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
FRED S.
ZEIDMAN - - 500,000/- - / -
HERBERT M.
PEARLMAN - - 100,000/ - - / -
</TABLE>
EMPLOYMENT ARRANGEMENTS
The specific material terms of the agreements for the current executive officers
of the Company are set forth below.
ZEIDMAN AGREEMENT
In 1993, Mr. Zeidman and the Company entered into a three-year
employment agreement pursuant to which Mr. Zeidman would serve as President and
Chief Executive Officer of the Company. The agreement is renewable on a year to
year basis thereafter provided that notice of termination is not given. Pursuant
to the employment agreement, Mr. Zeidman is entitled to a base salary of
$150,000 per year and a bonus of 2% of the first $1 million in net income of the
Company, 3% of the second $1 million of net income and 4% of all net
6
<PAGE> 8
income in excess of $2 million, not to exceed 150% of salary. Upon execution of
the employment agreement, Mr. Zeidman also received options to purchase 200,000
shares of Common Stock at $2.00 per share and options to purchase 200,000 shares
of Common Stock at $3.00 per share which are fully vested. These options, which
expire in June 1998, have recently been extended for an additional five years.
Until July 31, 1997, Mr. Zeidman also served as President and Chief
Executive Officer of Interpak Terminals, Inc. ("Interpak"), a wholly-owned
subsidiary of Helm Capital Group, Inc. ("Helm"). Mr. Zeidman allocated his time
between the Company and Interpak, and Interpak contributed a portion of the
Company's contracted salary directly to Mr. Zeidman in compensation of his
services based upon the relative amount of time spent at each company, thereby
reducing the amount of salary payable by the Company. During 1997, Mr. Zeidman
received $45,769 in compensation from Interpak, which was sold in July 1997.
The Company's agreement with Mr. Zeidman also provides that the Board of
Directors will continue to cause Mr. Zeidman to be elected as a member of the
Board of Directors of the Company, until the earlier of such time as his
ownership in the common stock of the Company is under 100,000 shares, or his
death or voluntary resignation.
In September 1997, Mr. Zeidman agreed to an amendment to his employment
agreement which provides for a base salary of $100,000, increasing to $125,000
when earnings before taxes ("EBT") exceeds $1 million and $150,000 when EBT
exceeds $1.5 million. In addition, his bonus will be 4% of EBT, reducing to 3%
of EBT when his salary reaches $150,000. For the years 1998, 1999 and 2000, EBT
means EBT over $0; for the years 2001, 2002 and 2003, EBT means EBT over
$250,000 and thereafter, EBT will increase by $250,000 every three years.
In addition, in September 1997, the Company granted Mr. Zeidman 55,000
incentive stock options under the Company's newly adopted 1997 Stock Option Plan
with an exercise price of $2.125 and an expiration date of September 2002 (the
"Plan"), and 45,000 non-Plan options with identical terms.
PEARLMAN AGREEMENT
Mr. Pearlman is a party to an employment agreement which provides for his
employment as Chairman of the Company for a term ending December 31, 1997, and
renewable thereafter at the Company's option on a year to year basis. The
agreement, as amended, provides for a base salary of approximately $240,000,
which has been voluntarily reduced to $100,000. In addition, Mr. Pearlman is
entitled to an annual bonus equal to 5% of the Company's consolidated pre-tax
profits, less the amount paid to Mr. Pearlman by Helm for the Company's
consolidated earnings for the year, which are reflected in Helm's financial
statements as a result of Helm's ownership in the Company.
Upon a change in Helm's control of the Board, the agreement provides
that each officer may terminate his employment under the agreement upon 18
months notice and receive, upon conclusion of that period, after diligently
carrying out his duties, a lump sum severance payment equal to 18 months salary.
The agreement 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 continuation (unless employment is secured elsewhere).
If employment continuation is offered but declined by the officer, the
officer must act as a consultant for two years at 50% of his latest salary,
during which time he may not provide services for any competitors.
In September 1997, the Company and Mr. Pearlman agreed to an amendment
to his employment agreement which provides for a bonus of 5% of EBT and an
increase in base salary to $125,000 when EBT exceeds $1 million, $150,000 when
EBT exceeds $1.5 million, $175,000 when EBT exceeds $2.0 million and $200,000
when EBT exceeds $2.5 million. In addition, the contract was extended for five
years until June 30,
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<PAGE> 9
2002, with a two year evergreen renewal feature thereafter. In September 1997,
the Company granted to Mr. Pearlman 55,000 incentive stock options under the
Plan, and 45,000 non-Plan options with identical terms.
DAVID S. LAWI
Mr. Lawi's contract contains essentially the same provisions as Mr.
Pearlman's agreement, except that it provides for a current base salary of
$130,000, which has been voluntarily reduced to $50,000, and a bonus of 2.5% of
the Company's consolidated pre-tax profits for each fiscal year, less the amount
paid to Mr. Lawi by Helm for the Company's consolidated earnings for the year
which are reflected in Helm's financial statements as a result of Helm's
ownership in the Company.
In September 1997, the Company and Mr. Lawi agreed to an amendment to
his employment agreement which provides for a bonus of 2.5% of EBT and an
increase in base salary to $62,500 when EBT exceeds $1 million, $75,000 when EBT
exceeds $1.5 million, $87,500 when EBT exceeds $2.0 million and $100,000 when
EBT exceeds $2.5 million. In addition, the contract was extended for five years
until June 30, 2002, with a two year evergreen renewal feature thereafter. In
September 1997, the Company granted to Mr. Lawi 25,000 incentive stock options
under the Plan, and 25,000 non-Plan options with identical terms.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Set forth below is certain information as of May 1, 1998 concerning the
beneficial ownership of Common Stock (the Company's only class of voting
securities) held by each person who is the beneficial owner of more than 5% of
the Common Stock, and by each director and by all executive officers and
directors of the Company as a group.
<TABLE>
<CAPTION>
AMOUNT AND NATURE
OF BENEFICIAL PERCENT OF
NAME OWNERSHIP (1)(2) CLASS (2)
- ---- ----------------- ---------
<S> <C> <C>
BENEFICIAL HOLDERS
Helm Capital Group, Inc. 1,226,621(3) 15.5%
537 Steamboat Road
Greenwich, CT 06830
Strategic Growth 678,000(4) 8.1%
International, Inc.
111 Great Neck Road
Great Neck, N.Y. 11021
John V. Winfield 576,000(5) 7.1%
2121 Avenue of the Stars
Los Angeles, CA 90067
OFFICERS AND DIRECTORS
Fred S. Zeidman ............ 780,000(6) 9.3%
7115 Clinton Drive
Houston, Texas 77020
</TABLE>
8
<PAGE> 10
<TABLE>
<S> <C> <C>
Herbert M. Pearlman ........ 731,549(7) 8.7%
537 Steamboat Road
Greenwich, CT 06830
David S. Lawi .............. 504,847(8) 6.1%
537 Steamboat Road
Greenwich, CT 06830
Walter M. Craig, Jr......... 17,220(9) *
Daniel T. Murphy ........... 25,232(10) *
John E. Stieglitz........... 27,388(11) *
William Lurie............... 20,000(12) *
All executive officers
and directors
as a group (7 persons) .... 2,009,361(13) 21.4%
</TABLE>
- ----------------------
* 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 right.
(3) Includes shares issuable upon exercise of Common Stock Purchase
Warrants expiring December 31, 1999 at $3.50 per share (the "Dividend
Warrants")(6,035).
(4) Includes 60,000 shares held by each of two principals of Strategic
Growth International, Inc. ("SGII"), Stanley Altschuler and Richard
Cooper. Also includes 450,000 shares that are issuable upon exercise of
a like amount of Common Stock Purchase Warrants expiring June 11, 2002
at $1.125 per share held by SGII, and 30,000 shares that are issuable
upon exercise of a like amount of Common Stock Purchase Warrants
expiring June 11, 2002 at $1.375 per share held each of Messrs.
Altschuler and Cooper.
(5) Includes 192,000 shares held by Intergroup Corporation, 2121 Avenue of
the Americas, Los Angeles, CA 90067, with respect to which Mr. Winfield
is Chairman of the Board. Also includes 192,000 shares that are
issuable upon exercise of a like amount of Common Stock Purchase
Warrants expiring January 15, 2000 at $1.80 per share, 96,000 of which
are held by Mr. Winfield directly and 96,000 of which are held by
Intergroup Corporation.
(6) Includes shares issuable upon exercise of stock options (400,000),
Common Stock Purchase Warrants expiring June 30, 2000 at $1.50 per
share (the "Warrants") (15,000) and Common Stock Purchase Warrants
expiring October 29, 2001 at $1.375 per share (the "1996 Warrants")
(30,000) and 100,000 stock options expiring September 2002 with an
exercise price of $2.125 (the "1997 Options").
(7) Includes shares issuable upon exercise of 1997 Options (100,000),
Dividend Warrants (77,551), Warrants (45,000), Common Stock Purchase
Warrants expiring July 11, 2000 at $1.125 per share issued in lieu of
compensation (the "Employment Warrants") (100,000), 1996 Warrants
(60,000) and upon conversion of Series A 10% Debentures due June 30,
2001 at $1.27 per share (157,480).
9
<PAGE> 11
(8) Includes shares issuable upon exercise of 1997 Options (50,000),
Dividend Warrants (73,875), Employment Warrants (50,000), 1996 Warrants
(60,000) and upon conversion of Series A 10% Debentures (157,480).
(9) Includes shares issuable upon exercise of Dividend Warrants (4,000).
(10) Includes shares issuable upon exercise of Dividend Warrants (3,750).
(11) Includes shares issuable upon exercise of Warrants (5,000) and 1997
Warrants (10,000).
(12) Includes 20,000 shares issuable upon exercise of stock options.
(13) Includes shares issuable upon exercise of stock options (430,000), 1997
Options (250,000), Dividend Warrants (159,176), Warrants (65,000),
Employment Warrants (150,000), 1996 Warrants (150,000) and upon
conversion of Series A 10% Debentures (314,960).
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
During 1997, management of Helm provided various administrative,
managerial, financial, legal and accounting services to the Company for which
the Company is charged direct costs and expenses. Certain indirect
administrative and managerial costs are allocated to the Company based upon
certain formulas which management deems to be reasonable. During 1997, Helm had
net advances due to the Company of $400,000 which included a $250,000 down
payment for the acquisition by the Company of Interpak Terminals, Inc. which
never took place. This amount was repaid in 1997 by cancellation of a $30,000
InterSystems debenture held by Helm, transferring $117,000 of the Company's
common stock, or 70,060 shares at $1.67 per share, held by Helm to the Company,
issuing $117,000 of Helm common stock, or 169,565 shares at $.69 per share, to
the Company, and the payment of $136,000 in cash. For purposes of computing the
number of shares to be issued, the average stock price for the 30 days following
the date of the June 6, 1997 Helm board meeting at which the transaction was
approved was used.
In January, 1995, Core Capital, Inc. ("CCI") (formerly known as
Professionals' Financial Services, Inc.), which is controlled by Messrs. Herbert
Pearlman, David Lawi and Walter M. Craig, Jr., 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 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 CCI 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 guaranteed the amounts owing by
TMG to PFS. At June 30, 1997, TSI was indebted to CCI in the amount of $109,000
under the TMG line of credit and pursuant to the TSI line of credit. In full
settlement of all amounts owing to CCI, the Company issued 109,000 shares of its
common stock, at $1.00 per share to CCI after completion of the bankruptcy
proceedings.
During 1996, the Company had borrowings outstanding under a line of
credit with an affiliated company, which were repaid in 1996 and the agreement
was terminated. The line of credit provided a maximum borrowing of $450,000 and
bore interest at 25%. During 1996, the Company incurred interest expense of
$3,000. At December 31, 1996, the Company had accrued interest payable totaling
$34,000 under this line of credit which was repaid in 1997 by issuance of 36,000
shares of the Company's common stock.
10
<PAGE> 12
VOTING ON THE PROPOSALS
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 any other proposal, abstentions may be
specified and will have the effect of a negative vote. Likewise, broker
non-votes are counted for the 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.
INDEPENDENT PUBLIC ACCOUNTANTS
The Board of Directors has selected BDO Seidman, LLP as independent
auditors for the Company for the year ended December 31, 1998. BDO Seidman, LLP
has served as independent auditors for the Company since 1985.
PROPOSALS BY STOCKHOLDERS
Proposals that the 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 7115 Clinton Drive, Houston,
Texas 77020, Attention: David S. Lawi, Secretary, prior to March 10, 1999.
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
facsimile. The company may reimburse brokers, custodians and nominees for their
expenses in sending proxies and proxy material to beneficial owners.
Houston, Texas
June 1, 1998
11
<PAGE> 13
FORM OF PROXY
INTERSYSTEMS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS TO BE HELD JULY 9, 1998
Revoking all prior proxies, the undersigned, a stockholder of
InterSystems, Inc. (the "Company"), hereby appoints DAVID S. LAWI and Walter M.
Craig, JR., and each of them, attorneys and agents of the undersigned, with full
power of substitution, to vote all shares of common stock, par value $.01 per
share (the "Common Stock") of the Company owned by the undersigned at the Annual
Meeting of Stockholders of the Company to be held at the Company's offices
located at 537 Steamboat Road, Greenwich, Connecticut 06830 on July 9, 1998 at
10:00 a.m., local time, and at any adjournment thereof, as fully and effectively
as the undersigned could do if personally present and voting, hereby approving,
ratifying and confirming that all said attorneys and agents or their substitutes
may lawfully do in place of the undersigned as indicated on the reverse.
IMPORTANT: SIGNATURE REQUIRED ON REVERSE SIDE
<PAGE> 14
1. Election of Directors
NOMINEES: Herbert M. Pearlman
Fred S. Zeidman
John E. Stieglitz
FOR ALL NOMINEES [ ]
LISTED TO THE RIGHT
(EXCEPT AS MARKED TO
THE CONTRARY)
WITHHOLD AUTHORITY [ ]
TO VOTE FOR
NOMINEES LISTED
FOR, except votes withheld for the following nominees:
_________________________________________________________________
IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
WHICH MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED. IF NO DIRECTION
IS INDICATED, THIS PROXY WILL BE VOTED FOR THE ELECTION OF THE LISTED NOMINEES
AS DIRECTORS.
PLEASE SIGN, DATE AND RETURN THIS PROXY CARD PROMPTLY, USING THE ENCLOSED
ENVELOPE.
PLEASE CHECK HERE IF YOU PLAN TO ATTEND THE ANNUAL MEETING OF STOCKHOLDERS AT
10:00 A.M. ON JULY 9, 1998. [___]
SIGNATURE______________________________________ DATE__________________, 1998
SIGNATURE______________________________________ DATE__________________, 1998
NOTE: Please sign your name exactly as it appears hereon. When shares are held
by joint tenants, both should sign. When signing as attorney, agent, executor,
administrator, trustee, guardian or corporate officer, please give your full
title as such. 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.
