<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[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-12
INTERNATIONAL META SYSTEMS, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
GEORGE W. SMITH, CHIEF EXECUTIVE OFFICER
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
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 0-11.
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:
------------------------------------------------------------------------
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>
July , 1997
Dear IMS Shareholders:
As we pursue a secondary public offering that is vital to the achievement of
our long term objectives, I want to share some perspectives with you. We view
the proposed secondary public offering for $25,000,000 as a necessary capital
bridge to the continued development of our products. The magnitude of the
technical effort we have undertaken requires a major commitment of resources
in the form of a team of highly skilled personnel and the tools they need to
utilize. We have now assembled most of these technical resources, creating an
ongoing need for the working capital to support them.
Therefore, as we prepare for this critical fund raising, we need to do
everything that we can to make the Company attractive to the capital markets
that will actually provide this working capital to us. Our lead underwriter,
Nichols, Safina, Lerner & Co. (NSL), has also anticipated this need and has
conditioned the firm underwriting on IMS doing a reverse stock split and
qualifying for listing on NASDAQ's National Market System (NMS). Another
objective of a reverse stock split and an NMS listing is the increased appeal
to both institutional investors and the brokerage community. This should
substantially broaden the universe of potential investors in our secondary
offering.
In our situation, these two steps required by NSL really are integrated since
qualification for NMS requires a stock price significantly higher than that
attained by our stock so far this year. Additionally, this required price is
subject to a substantial increase as indicated in proposed listing changes
pending at NASDAQ. This presents us with a "moving target", hence we have
opted to recommend a variable stock split so that the Board can react to both
the realities of IMS' stock price and of NASDAQ's required listing price at
the time we do the secondary offering.
While the above addresses the benefits that the Company hopes to achieve from
a reverse split and an NMS listing, there are other benefits that can accrue
to our stockholders. These potential benefits include a broader, more liquid
market, a marginable security, and increased ease in effecting transactions
in IMS stock. I believe, however, that the most important benefit for everyone
involved is a financially stronger Company that is better able to
successfully complete and market an advanced chip.
Please be assured that we do not approach a reverse stock split lightly. We
understand that there are potential pitfalls. However, in our coordinated
plan that integrates the timing of the steps to be taken with the effective
date of our secondary offering, we feel that the risk/reward ratio is clearly
on the side of the Company and our stockholders.
Your affirmative vote in support of this strategic plan is anticipated, and
is greatly appreciated. Thank you for your continued support of IMS.
<PAGE>
INTERNATIONAL META SYSTEMS, INC.
A DELAWARE CORPORATION
EXECUTIVE OFFICES
100 NORTH SEPULVEDA BOULEVARD
SUITE 601
EL SEGUNDO, CALIFORNIA 90245
310-524-9300
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON AUGUST 26, 1997,
AT THE RADISSON HOTEL, MANHATTAN BEACH, CALIFORNIA
TO THE STOCKHOLDERS OF INTERNATIONAL META SYSTEMS, INC.:
The Annual Meeting of Stockholders (the "Meeting") of International Meta
Systems, Inc., a Delaware corporation (the "Company"), will be held at the
Radisson Hotel, 1400 Park View Avenue, Manhattan Beach, California, on August
26, 1997, at 10:00 a.m., local time, to consider and vote on the following
proposals:
PURPOSE OF MEETING
(1) To ratify the appointment of Singer, Lewak, Greenbaum & Goldstein LLP,
Certified Public Accountants, as independent certified public
accountants of the Company for the fiscal year ending December 31,
1997.
(2) To elect to the Board of Directors seven (7) directors, as follows:
CLASS I - two (2) directors to serve for one-year terms; CLASS II -
two (2) directors to serve for two-year terms; and CLASS III - three
(3) directors to serve for three-year terms, or, in each case, until
their successors are elected and qualify, subject to their prior
death, resignation or removal.
(3) To authorize an amendment to the Company's Certificate of
Incorporation to effect a reverse stock split of the Common Stock on
up to a 1 for 10 basis, at the discretion of the Board of Directors.
(4) To transact such other business as may properly come before the
Meeting and any adjournments thereof.
ONLY STOCKHOLDERS OF RECORD AT THE CLOSE OF BUSINESS ON JULY 9, 1997 (THE
"RECORD DATE") ARE ENTITLED TO NOTICE OF AND TO VOTE AT THE MEETING.
PLEASE FILL IN, SIGN, DATE AND RETURN THE ENCLOSED PROXY TO INTERWEST
TRANSFER CO., INC., P.O. BOX 17136, SALT LAKE CITY, UTAH 84117, WHETHER OR NOT
YOU EXPECT TO ATTEND THE MEETING. A RETURN ENVELOPE IS ENCLOSED FOR YOUR
CONVENIENCE.
By Order of the Board of Directors
INTERNATIONAL META SYSTEMS, INC.
By:/s/ George W. Smith
-------------------------------------
George W. Smith
Chairman and Chief Executive Officer
El Segundo, California
DATED:__________, 1997
<PAGE>
INTERNATIONAL META SYSTEMS, INC.
A DELAWARE CORPORATION
EXECUTIVE OFFICES
100 NORTH SEPULVEDA BOULEVARD
SUITE 601
EL SEGUNDO, CALIFORNIA 90245
310-524-9300
------------------------
PROXY STATEMENT
------------------------
This proxy statement is furnished to the stockholders of International Meta
Systems, Inc., a Delaware corporation (the "Company"), in connection with the
Annual Meeting of Stockholders (the "Meeting") to be held at the Radisson Hotel,
1400 Park View Avenue, Manhattan Beach, California, on August 26, 1997 at 10:00
a.m., local time.
The Meeting will be held to consider and vote on the following proposals:
PURPOSE OF MEETING
(1) To ratify the appointment of Singer, Lewak, Greenbaum & Goldstein LLP,
Certified Public Accountants, as independent certified public
accountants of the Company for the fiscal year ending December 31,
1997.
(2) To elect to the Board of Directors seven (7) directors, as follows:
CLASS I - two (2) directors to serve for one-year terms; CLASS II -
two (2) directors to serve for two-year terms; and CLASS III - three
(3) directors to serve for three-year terms, or, in each case, until
their successors are elected and qualify, subject to their prior
death, resignation or removal.
(3) To authorize an amendment to the Company's Certificate of
Incorporation to effect a reverse stock split of the Common Stock on
up to a 1 for 10 basis, at the discretion of the Board of Directors.
(4) To transact such other business as may properly come before the
Meeting and any adjournments thereof.
The list of all stockholders of record on July 9, 1997, the Record Date,
will be available at the Meeting and at the office of the Company at 100 North
Sepulveda Boulevard, Suite 601, El Segundo, California 90245, for the ten (10)
days preceding the Meeting.
Upon written request, the Company will provide, without charge: (i) a copy
of its Annual Report on Form 10-KSB, for the year ended December 31, 1996 and
Quarterly Report on Form 10-QSB for the quarter ended March 31, 1997, and (ii) a
copy of the exhibits to this Proxy Statement, to any stockholder of record or
any stockholder who owned Common Stock listed in the name of a bank or broker,
as nominee, at the close of business on July 9, 1997. See "Incorporation By
Reference."
Requests should be addressed to the Company, to the attention of Mr. Bill
Young, Director of Investor Relations, International Meta Systems, Inc., 100
North Sepulveda Boulevard, Suite 601, El Segundo, California 90245, 310-524-
9300.
<PAGE>
INCORPORATION BY REFERENCE
The Company is currently subject to the reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, files reports, proxy and information statements and other
information with the Securities and Exchange Commission (the "Commission").
Such reports, proxy and information statements and other information may be
inspected and copied at the public reference facilities of the Commission at 450
Fifth Street, N.W. Room 1024, Washington D.C. 20549; at its New York Regional
Office, 7 World Trade Center, Suite 1300, El Segundo, California 10048; and at
its Chicago Regional Office, 500 West Madison Street, Suite 1400, Chicago
Illinois 60661-2511, and copies of such materials can be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington
D.C. 20549 at prescribed rates. The Company furnishes its stockholders with
annual reports containing audited financial statements and such other periodic
reports as the Company may determine to be appropriate or as may be required by
law.
As part of this Proxy Statement, the Company incorporates by reference the
Company's Annual Report on Form 10-KSB in respect of the year ended December 31,
1996 and Quarterly Report on Form 10-QSB for the quarter ended March 31, 1997,
and the following documents filed herewith as exhibits to this Proxy Statement:
1. EXHIBIT "A" - Form of Certificate of Amendment to the Restated
Certificate of Incorporation.
INFORMATION CONCERNING SOLICITATION AND VOTING
The following information is provided to stockholders to explain the use of
this Proxy Statement for the Meeting:
RECORD DATE
Only stockholders of record at the close of business on July 9, 1997 are
entitled to vote at the Meeting. The Company's Common Stock is its only class
of voting securities. On July 9, 1997, the record date (the "Record Date")
fixed by the Board of Directors, the Company had issued and outstanding
___________ shares of Common Stock.
REVOCABILITY OF PROXIES
A PROXY FOR USE AT THE MEETING IS ENCLOSED. ANY STOCKHOLDER WHO EXECUTES
AND DELIVERS A PROXY HAS THE RIGHT TO REVOKE IT AT ANY TIME BEFORE ITS EXERCISE
BY FILING WITH THE SECRETARY OF THE COMPANY AN INSTRUMENT REVOKING IT OR A DULY
EXECUTED PROXY BEARING A LATER DATE. IN ADDITION, A STOCKHOLDER MAY REVOKE A
PROXY PREVIOUSLY EXECUTED BY HIM BY ATTENDING THE MEETING AND ELECTING TO VOTE
IN PERSON.
VOTING AND SOLICITATION
Proxies are being solicited by the Board of Directors of the Company. The
cost of this solicitation will be borne by the Company. Solicitation will be
primarily by mail, but may also be made by telephone, fax transmission or
personal contact by certain officers and directors of the Company, who will not
receive any compensation therefor. Shares of Common Stock represented by
properly executed proxies will, unless such proxies have been previously
revoked, be voted in accordance with the instructions indicated thereon. IN THE
ABSENCE OF SPECIFIC INSTRUCTIONS TO THE CONTRARY, PROPERLY EXECUTED PROXIES WILL
BE VOTED FOR EACH OF THE
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<PAGE>
PROPOSALS DESCRIBED ABOVE. No business other than that set forth in the
accompanying Notice of Annual Meeting of Stockholders is expected to come before
the Meeting. Should any other matter requiring a vote of stockholders properly
arise, the persons named in the enclosed form of proxy will vote such proxy in
accordance with the recommendation of the Board of Directors.
Each share of Common Stock is entitled to one vote for each share held as
of record, and there are no preemptive rights. The Company's Certificate of
Incorporation and Bylaws do not provide for cumulative voting for the election
of directors or any other purpose.
QUORUM; ABSTENTIONS; BROKER NON-VOTES
Shares representing 50% of the combined voting power of the ___________
shares of Common Stock outstanding on the Record Date must be represented at the
Meeting to constitute a quorum for conducting business. In the absence of a
quorum, the stockholders present in person or by proxy, by majority vote and
without further notice, may adjourn the meeting from time to time until a quorum
is attained. At any reconvened meeting following such adjournment at which a
quorum shall be present, any business may be transacted which might have been
transacted at the Meeting as originally notified.
The required quorum for the transaction of business at the Meeting is a
majority of the votes eligible to be cast by holders of shares of Common Stock
issued and outstanding on the Record Date. Shares that are voted "FOR" or
"AGAINST" a matter are treated as being present at the Meeting for purposes of
establishing a quorum and are also treated as shares entitled to vote at the
Meeting (the "Votes Cast") with respect to such matter.
The Company will count abstentions for purposes of determining both: (i)
the presence or absence of a quorum for the transaction of business, and (ii)
the total number of Votes Cast with respect to a proposal (other than the
election of directors). Accordingly, abstentions will have the same effect as a
vote against the proposal.
Further, the Company intends to count broker non-votes for the purpose of
determining the presence or absence of a quorum for the transaction of business,
although broker non-votes will not be counted for purposes of determining the
number of Votes Cast with respect to the particular proposal on which the broker
has expressly not voted. Thus, a broker non-vote will not affect the outcome of
the voting on a proposal, except to the extent that a resolution requires the
approval of a majority of the issued and outstanding shares of Common Stock,
such as Proposal 3 of this Proxy Statement.
DEADLINE FOR RECEIPT OF STOCKHOLDER PROPOSALS
Proposals of stockholders of the Company that are intended to be presented
by such stockholders at the next annual meeting must be received by the Company
no later than December 31, 1997, in order to be considered for inclusion in the
proxy statement and form of proxy relating to such meeting.
3
<PAGE>
VOTING SECURITIES AND PRINCIPAL HOLDERS THEREOF
The following table sets forth, as of ____________, 1997, information
concerning the beneficial ownership of Common Stock of the Company by (i) each
person who is known by the Company to own beneficially more than 5% of the
Company's Common Stock; (ii) each director of the Company; (iii) each executive
officer named in the Summary Compensation Table set forth in this Proxy
Statement (See "Executive Compensation"); and (iv) all directors and executive
officers of the Company as a group.
Name Number Percent#
---- ------ --------
Masahiro Tsuchiya(1) 3,740,583 _____
George W. Smith(2) 2,287,077 _____
Lee W. Hoevel(3) 30,000 *
Martin S. Albert(4) 10,000,000 _____
Paragon Capital Management LLC(4) 2,000,000 _____
Den Norsk Krigsforsikring
for Skib(4) 2,000,000 _____
Investeringsselskapet
Amandus AS(4) 2,000,000 _____
Frank LaChapelle(5) 100,000 *
Sigmund Hartmann(6) 76,667 *
Philip Neches(7) 0 *
All directors and officers as a
group(7 persons)(8) 16,234,327 _____
- --------------------------------
# Pursuant to the rules of the Commission, shares of Common Stock which
an individual or group has a right to acquire within 60 days pursuant to the
exercise of options or warrants are deemed to be outstanding for the purpose of
computing the percentage ownership of such individual or group, but are not
deemed to be outstanding for the purpose of computing the percentage ownership
of any other person shown in the table.
* Less than 1%.
1. Dr. Tsuchiya's address is 1585 Kaminaka Drive, Honolulu, Hawaii 96846.
Included in the shares owned by Dr. Tsuchiya are 886,583 shares owned by Sypex
International, of which Dr. Tsuchiya is part owner.
2. Mr. Smith's address is c/o International Meta Systems, Inc., 100 North
Sepulveda Boulevard, Suite 601, El Segundo, California 90245. Mr. Smith's
holdings consist of 1,127,077 shares of Common Stock currently owned and vested
options for 1,160,000 shares.
4
<PAGE>
3. Dr. Hoevel's address is c/o International Meta Systems, Inc., Austin
Design Center, 7718 Wood Hollow Drive, Suite 150, Austin, TX 78731. Dr.
Hoevel's holdings consist of 30,000 shares of Common Stock and unvested options
for 600,000 shares of Common Stock.
4. Mr. Albert's address is c/o AmerScan, 3609 E. Thousand Oaks
Boulevard, Suite 209, Westlake Village, California 91362. Mr. Albert is the
beneficial owner of 133,000 shares, and he is a director of Paragon Capital
Management LLC ("Paragon"), which is the beneficial owner of 2,000,000 shares.
In addition, pursuant to a Shareholders Agreement dated March 26, 1996 and
remaining in effect until April 30, 1998, Paragon (2,000,000 shares), Den Norsk
Krigsforsikring for Skib (2,000,000 shares), Investeringsselskapet Amandus AS
(2,000,000 shares), A/S/ Selvaag Invest (1,500,000 shares), Andreas Ugland
(1,500,000 shares), Woodbridge Asset Management Limited (266,667 shares), Pollex
A/S (200,000 shares), J. Arthur Olafsen (250,000 shares), Filab A/S (100,000
shares), Martin S. Albert (133,333 shares) and Bent Aasnes (50,000 shares)
(collectively "Grantors") have agreed to vote (a) in favor of the election of
Martin S. Albert (or another person designated by Paragon) as a director of the
Company; (b) in favor of each action contemplated by the Shareholders Agreement,
the Subscription Agreements pursuant to which all Grantors, except Paragon,
acquired their shares of the Company's Common Stock, the Stock Purchase
Agreement pursuant to which Paragon acquired its shares of the Company's Common
Stock, and the Placement Agency Agreement (collectively, the "Stock
Agreements"), pursuant to which Paragon placed the shares of Common Stock with
all the Grantors except Paragon itself; and (c) except as specifically requested
by Paragon, against (i) any action which would result in a breach of any
covenant, representation or warranty or other obligation of the Company under
any of the Stock Agreements, (ii) any extraordinary corporate transaction, such
as a merger, consolidation or other business combination involving the Company
or any subsidiary thereof, (iii) any sale, lease or transfer of a material
amount of assets of the Company or subsidiary thereof or any reorganization,
recapitalization, dissolution or liquidation of the Company or subsidiary
thereof, (iv) any change in the majority of the Board of Directors of the
Company, (v) any material change in the present capitalization of the Company
(other than as contemplated by the Stock Agreements), (vi) any amendment of the
Company's Certificate of Incorporation or bylaws, (vii) any other material
change in the Company's corporate structure or business, or (viii) any other
action which is intended, or could reasonably be expected to impede, interfere
with, delay, postpone, discourage or materially affect, the transactions
contemplated by the Stock Agreements or the economic benefit of any of the
foregoing. To effect such Shareholders Agreements, each Grantor grants Paragon
and three of its directors its irrevocable proxy to vote such Grantor's shares
as described in this paragraph. See "Certain Relationships and Related
Transactions."
5. Mr. LaChapelle's address is c/o Interscience Computer Corporation,
5171 Clareton Drive, Agoura Hills, California 91301. In addition, Mr.
LaChapelle holds unvested options for 100,000 shares.
6. Mr. Hartmann's address is c/o International Meta Systems, Inc., 100
North Sepulveda Boulevard, Suite 601, El Segundo, California 90245. In
addition, Mr. Hartmann holds unvested options for 23,333 shares.
7. Dr. Neches' address is 12 Murray Hill Manor, Murray Hill, NJ 07974.
In addition, Dr. Neches holds unvested options for 100,000 shares.
8. Includes 15,074,327 shares of Common Stock and vested options to
purchase up to 1,160,000 shares of Common Stock. Does not include unvested
options to purchase up to 823,333 shares of Common Stock.
5
<PAGE>
EXECUTIVE COMPENSATION
The following table sets forth certain information concerning compensation
of certain of the Company's executive officers, including the Company's Chief
Executive Officer and all executive officers (the "Named Executives") whose
total annual salary and bonus exceeded $100,000, for the years ended December
31, 1996, 1995 and 1994:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
- ----------------------------------------------------------------------------------------------------------------------------------
Annual Compensation Long Term Compensation
----------------------------- ---------------------------------
Awards Payouts
- ----------------------------------------------------------------------------------------------------------------------------------
Name and Restricted Securities
principal Other annual stock underlying LTIP All other
position Year Salary Bonus compensation award(s) Options/SARs payouts compensation
($) ($) (#) ($) ($)
- ----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
George W. 1996 $160,000 0 0 0 0 0 0
Smith, CEO 1995 $130,000 0 0 0 0 0 0
1994 $130,000 0 0 0 0 0 0
- -----------------------------------------
</TABLE>
OPTION EXERCISES AND YEAR-END VALUES
The following table sets forth information with respect to the exercised
and unexercised options to purchase shares of Common Stock for each of the Named
Executives held by them at December 31, 1996:
<TABLE>
<CAPTION>
Value of Unexercised
Shares Number of Unexercised In the Money
Acquired Value Options at Options at
on Exercise Realized(1) December 31, 1996 December 31, 1996(2)
----------- ----------- ----------------- --------------------
Name Exercisable Unexercisable Exercisable Unexercisable
- ---- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
George A. Smith 298,077 $593,173 1,160,000 0 $995,200 0
- -----------------
</TABLE>
(1) Represents the difference between the average of the closing bid and asked
prices for the Common Stock in the Over-the-Counter Market on the date of
exercise, June 24, 1996 ($2.00 per share) and any lesser exercise price.
(2) Represents the difference between the average of the closing bid and asked
prices for the Common Stock in the Over-the Counter Market on December 31,
1996 ($1.22 per share) and any lesser exercise price.
6
<PAGE>
COMPENSATION OF DIRECTORS
Currently, the Company does not compensate directors in cash for services
rendered as directors. Outside directors are issued stock options which vest
over a period of three years. The Company maintains errors and omissions
liability insurance for its directors.
Under Delaware law, an officer or director of the Company may be entitled
to indemnification from the Company against expenses (including attorneys fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
in connection with a pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative. Under the Company's
Certificate of Incorporation, no director of the Company shall be liable to the
Company or its stockholders for monetary damages for breach of fiduciary duty as
a director, except for liability: (i) for any breach of the director's duty of
loyalty to the Company or its stockholders; (ii) for acts or omissions not in
good faith or which involve intentional misconduct or a knowing violation of
law; (iii) under Section 174 of the Delaware General Corporation Law; or (iv)
for any transaction from which the director derives an improper personal
benefit.
COMPLIANCE WITH SECTION 16 OF THE
SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers and the holders of more than 10% of the Company's Common
Stock to file with the Commission initial reports of ownership and reports of
changes in ownership of equity securities of the Company. Based solely upon a
review of such forms, or on written representations form certain reporting
persons that no other reports were required for such persons, the Company
believes that all reports required pursuant to Section 16(a) with respect to its
executive officers, directors and 10% stockholders for the 1996 fiscal year were
timely filed, except as set forth below.
Sigmund Hartmann, a director of the Company, inadvertently failed to file
on a timely basis a Form 4 with the Commission disclosing his change in
beneficial ownership when he acquired 53,334 shares of the Company's Common
Stock pursuant to the exercise of a stock option. The Form 3 disclosing his
initial beneficial ownership of the option was filed on a timely basis. Mr.
Hartmann subsequently filed a Form 4 disclosing the transaction.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 1, 1995, the Company entered into a consulting agreement with
Universal Microtechnology, Inc. ("Universal"), all of the shares of which are
beneficially owned by its President, Sigmund Hartmann, who is also a director of
the Company, for the provision to the Company of services related to the
development of speech and voice technology. The consulting agreement was
amended on November 27, 1996 pursuant to which Universal agreed to provide
additional technical and administrative services to the Company and the Company
agreed to pay Universal the sum of $8,000 per month in fees during the term
commencing January 1, 1997 through May 1, 1998.
Pursuant to the terms of a Stock Purchase Agreement with Paragon Capital
Management LLC, ("Paragon"), a principal beneficial stockholder of the Company,
Martin S. Albert, a director of Paragon, was elected to the Company's board of
directors on March 19, 1996. Paragon has a right of first refusal to purchase
or cause to be purchased from the Company any securities of the Company which
may be offered in a private placement pursuant to an exemption from registration
under the Securities Act of 1933, as amended, on the same terms and conditions
as may be offered to any third party. See "Voting Securities and Principal
Holders Thereof."
7
<PAGE>
MATTERS FOR CONSIDERATION BY STOCKHOLDERS
PROPOSAL 1. RATIFICATION OF APPOINTMENT OF INDEPENDENT CERTIFIED PUBLIC
ACCOUNTANT
The Board of Directors of the Company has appointed the firm of Singer,
Lewak, Greenbaum & Goldstein LLP as independent certified public accountants of
the Company for the fiscal year ending December 31, 1997 subject to stockholder
approval. The Company has been advised by Singer, Lewak, Greenbaum & Goldstein
LLP that neither that firm nor any of its partners has any material relationship
with the Company or any affiliate of the Company.
A representative of Singer, Lewak, Greenbaum & Goldstein LLP is expected to
be present at the Annual Meeting and make a statement if he or she desires to do
so. He or she will be available to respond to appropriate questions. Should
the appointment of Singer, Lewak, Greenbaum & Goldstein LLP be disapproved by
the stockholders, the Board of Directors will review its selection.
Approval of the appointment of Singer Lewak Greenbaum & Goldstein LLP as
independent certified public accountants for the Company for the year ending
December 31, 1997 requires the affirmative vote of a majority of the combined
Votes Cast.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
PROPOSAL 2. ELECTION OF THE BOARD OF DIRECTORS
General
The Company's Restated Certificate of Incorporation provides that at the
first annual meeting of the Company's stockholders after the authorized number
of directors is six (6) or more, the Board of Directors shall be divided into
three (3) classes with staggered terms, Class I, Class II and Class III. The
Company's Bylaws provide that the authorized number of directors shall be not
less than three (3) members and not more than eleven (11) members. As the
authorized number of directors currently exceeds more than six (6) members, the
Board of Directors has been divided into the three (3) classes.
To initiate these staggered terms, seven (7) directors will be elected at
the Meeting, as follows: (i) CLASS I - two (2) directors to serve for one-year
terms; (ii) CLASS II - two (2) directors to serve for two-year terms; and (iii)
CLASS III - three (3) directors to serve for three-year terms, or, in each case,
until a successor has been duly elected and qualified. In the absence of
instructions to the contrary, shares of Common Stock represented by properly
executed proxies will be voted for the seven (7) nominees listed hereinbelow,
all of whom are recommended by management of the Company and who have consented
to be named and to serve if elected. Each nominee is presently serving as a
director of the Company.
The Board of Directors met five (5) times during the year ended December
31, 1996. All directors standing for reelection attended 100% of the meetings
of the Board, except for Frank LaChapelle and Masahiro Tsuchiya, who attended
three (3) and four (4) meetings, respectively. The Board has a compensation
committee comprised of the following members of the Board of Directors: Sigmund
Hartmann, Frank LaChapelle and Masahiro Tsuchiya, the latter two (2) of whom may
be deemed to be outside/non-employee directors. The Board has no standing
committee on nominations, audit, or any other committees performing equivalent
functions.
8
<PAGE>
The Board knows of no reason why any of the nominees will be unavailable or
unable to serve as a director. The information presented below is as of July 9,
1997 and is based in part on information furnished by the nominees and, in part,
from the records of the Company.
Directors are elected by the affirmative vote of a plurality of the
combined Votes Cast at the Meeting.
THE BOARD OF DIRECTORS RECOMMENDS VOTING "FOR" THE ELECTION OF THE NOMINEES
TO THE TERMS SPECIFIED BELOW.
NOMINEES FOR ELECTION AS DIRECTOR
NAME AGE DIRECTOR SINCE:
---- --- ---------------
CLASS I (ONE-YEAR TERM)
George W. Smith 57 December, 1985
Chairman of the Board,
Chief Executive Officer
and Chief Financial
Officer (acting)
Sigmund Hartmann 67 August, 1995
Director
CLASS II (TWO-YEAR TERM)
Frank LaChapelle 55 September, 1993
Director
Philip Neches 47 November, 1996
Director
CLASS III (THREE-YEAR TERM)
Martin S. Albert 64 March, 1996
Director
Lee W. Hoevel 47 April, 1997
Director, President and
Secretary
Masahiro Tsuchiya 47 August, 1992
Director
9
<PAGE>
GEORGE W. SMITH, Chairman of the Board and Chief Executive Officer, has
served the Company in these offices since election by the shareholders since
December 31, 1988. He has served as the Company's acting Chief Financial
Officer since April 3, 1997. Prior to December 31, 1988, he founded the entity
which entered into a reorganization agreement (the "Merger") with the Company on
December 31, 1988, and served as its President and Chief Executive Officer and
Director from its inception in December 1985 until the Merger. From October,
1967 to August, 1985, he was employed by the Aerospace Corporation, where his
positions included Principal Director for DOD Space Shuttle Operations and
Systems Director for Development and Operations of several classified Air Force
programs. While employed by the Aerospace Corporation, he managed programs with
budgets exceeding $300 million. He has an extensive background in managing the
design, development and manufacturing of complex high-tech products. His awards
include the Trustees' Distinguished Achievement Award granted by the Aerospace
Corporation in recognition of his technical leadership and management and the
Air Force Outstanding Service Award. He received a Bachelor of Science degree
in electrical engineering from the University of Nevada and has performed
graduate work at U.C.L.A.
SIGMUND HARTMANN, Director, previously held the positions of Vice President
and Assistant General Manager of TRW Incorporated, President, Software Division
of Commodore Business Machines, and President of Software of Atari Corporation.
At Commodore, Mr. Hartmann directed the company from a $300 million, low end
computer business to a $1.2 billion systems company. At Atari, he reversed the
fortunes of that entity from losing $500 million a year to a profitable
operation.
FRANK LACHAPELLE, Director, is a founder of Interscience Computer
Corporation and has served as the Chairman of the Board since its formation in
1983. Mr. LaChapelle served as President of Interscience Computer Corporation
from 1983 until January, 1991, and has served as Chief Executive Officer since
September, 1991. Interscience Computer Corporation filed for protection under
Chapter 11 of the U.S. Bankruptcy Act on March 6, 1997.
PHILIP NECHES, Director, previously held positions as Founder, Chief
Scientist and Vice President, Teradata Corporation, Sr. Vice President and Chief
Scientist, NCR Corporation and Vice President and Group Technical Officer,
Multimedia Products and Services, AT&T Corporation. At present, Dr. Neches is
an outside consultant and investor in several companies. Dr. Neches holds a
Bachelor of Science degree (with honors) from the California Institute of
Technology, a Masters Degree in Engineering Science from the California
Institute of Technology and a Ph.D. in Computer Science from the California
Institute of Technology.
MARTIN S. ALBERT, Director, is the President and Chief Executive Officer of
Dolphin Interconnect Solutions, Inc. and has been a director since its
incorporation. He also is a shareholder of Amerscan A.S., Dolphin's largest
shareholder and a shareholder and director of Amerscan Capital Management, the
general partner and investment advisor of Amerscan Partners II. Mr. Albert has
a bachelor's degree in Physics from the City College of New York and carried out
post graduate studies in Philosophy of Science and Business at the University of
California, Los Angeles and Columbia University. He has previously been
involved in corporate investment and consultancy work and has served as a
director of numerous companies during his career, particularly being involved
with a number of small-to medium sized technology companies seeking funding to
expand their strategic and operational capabilities. He has also been involved
in developing and managing disk-drive test and development systems companies and
other companies involved in computer disk and tape technologies. Mr. Albert has
led several high technology companies through their original public offerings
and oversaw their future acquisition by substantially larger firms.
10
<PAGE>
LEE W. HOEVEL, Director, President and Secretary, received his
undergraduate degrees in mathematics and economics at Rice University. He
received graduate degrees in electrical engineering and computer science at
Johns Hopkins University. Dr. Hoevel's career spans nearly twenty years of
technology development and executive management. During his tenure at AT&T/NCR,
he held numerous positions of increased responsibility including director of
Advanced Architecture, chief architect for Workstation Products Division, vice
president for Research and Development Division, and chief technical officer for
AT&T Global Information Solutions. Dr. Hoevel holds seven U.S. Patents in
technology design and is the author of 39 technical papers.
MASAHIRO TSUCHIYA, Director and acting marketing representative of the
Company in Japan, received his Ph.D. degree in computer sciences from the
University of Texas at Austin. Currently he is president of Sypex International
Company, based in the U.S. and Japan. As founder and president of Sypex, he has
served as consultant to several startup and major corporations in the U.S.,
Japan and Korea on high technology product development and marketing plans.
From 1980 to 1988, he worked on systems engineering of several major U.S.
missile and space defense programs at TRW Defense Systems Group, Redondo Beach,
California. His academic career includes a research associate at the University
of California, Berkeley in 1991, and an adjunct professor of computer science at
the University of Southern California, Los Angeles, in 1986. From 1973 to 1979,
he was an associate professor at the University of Hawaii at Manoa, Honolulu, an
assistant professor at the University of California, Irvine, and at Northwestern
University, Evanston, Illinois. In 1975, he was a visiting computer scientist
for research in computer architecture at Arhus University, Arhus, Denmark, and
in 1972, he was a visiting lecturer at Konan University, Japan.
PROPOSAL 3 REVERSE SPLIT OF COMMON STOCK
GENERAL
The Board of Directors, by unanimous vote, has approved, and recommends
that the Company's stockholders approve a proposal to effect a reverse exchange
(the "Reverse Share Exchange") of the Company's Common Stock at up to a 1 for 10
ratio, at the discretion of the Company's Board of Directors. The Reverse Share
Exchange will not alter the number of shares of the Company's Common Stock
authorized for issuance, but will simply reduce the number of shares of Common
Stock issued and outstanding.
The principal purpose of the proposed Reverse Share Exchange is to satisfy
certain conditions set forth in a letter of intent for a proposed secondary
public offering of the Company's securities.
The Board of Directors also believes that it is desirable to have
additional authorized shares of Common Stock available for possible future
financing and acquisition transactions and other general corporate purposes.
Because the need to raise additional capital or the opportunity to effect an
acquisition can arise when it would be inconvenient to hold a shareholders'
meeting or when there would not be time for such a meeting, the Board of
Directors believes that it would be prudent business planning for the number of
authorized shares of Common Stock to remain at 70,000,000 following the Reverse
Share Exchange.
11
<PAGE>
PURPOSE AND EFFECT OF PROPOSED REVERSE SHARE EXCHANGE; LETTER OF INTENT FOR
SECONDARY PUBLIC OFFERING
On May 7, 1997, the Company entered into a letter of intent with a group of
underwriters proposed to be led by Nichols, Safina, Lerner and Company, Inc. as
representative (the "Representative") with respect to a proposed secondary
public offering (the "Proposed Offering") of the Company's Common Stock of up to
$25,000,000. The letter of intent requires that the Company effect a reverse
split of the Company's Common Stock and obtain a listing on the NASDAQ National
Market System ("NASDAQ/NMS") as conditions of closing the Proposed Offering.
The Company will only effect the Reverse Share Exchange, if adopted by the
Company's stockholders, on the effective date of the registration statement for
the Proposed Offering. There can be no assurances that the Proposed Offering
will be completed on the terms set forth in the letter of intent or at all.
Further, this Proposal 3 grants to the Company's Board of Directors the
discretion to effect the Reverse Share Exchange at up to a 1 for 10 ratio. If
this Proposal 3 is adopted by the Company's stockholders and a registration
statement for the Proposed Offering becomes effective, the Company intends to
effect the Reverse Share Exchange on the effective date of such a registration
statement. Management intends to determine the ratio of the Reverse Share
Exchange based on negotiations with the Representative. There can be no
assurances as to the ratio of the Reverse Share Exchange which may be finally
determined, if at all, although the number of "old" shares which may be
exchanged for one "new" share of Common Stock will be no greater than 10 shares.
The Company believes that the total number of shares of the Company's
Common Stock outstanding is disproportionately large in relation to the
Company's level of sales, net income and net worth. Additionally, the Company's
Common Stock has had a low market value per share in recent months, which in the
opinion of the Board of Directors tends to reduce stockbroker and investor
interest in the Company.
The Board believes that the current per share price of the Common Stock may
limit the effective marketability of the Common Stock because of the reluctance
of many brokerage firms and institutional investors to recommend lower-priced
stocks to their clients or to hold them in their own portfolios. In addition,
certain policies and practices of the securities industry may tend to discourage
individual brokers within those firms from dealing in lower-priced stocks. Some
of those policies and practices involve time-consuming procedures that make the
handling of lower-priced stocks economically unattractive. The Board believes
that a decrease in the number of shares of Common Stock outstanding without any
material alterations of the proportionate economic interest in the Company
represented by individual stockholdings may increase the trading price of such
shares, although no assurance can be given that the market price of the Common
Stock will rise in proportion to the reduction in the number of outstanding
shares resulting from the Reverse Share Exchange. If, as a result of the
Reverse Share Exchange and other factors, the market price per share of the
Common Stock is increased sufficiently, the Company believes that the
marketability of the Common Stock may be enhanced. However, there can be no
assurances to this effect.
The market price of the Common Stock also may be based on Company
performance and other factors, some of which may be unrelated to the number of
shares outstanding. Accordingly, there can be no assurance that the market
price of the Common Stock after the Reverse Share Exchange will actually
increase in an amount proportionate to the decrease in the number of outstanding
shares.
Although the Board of Directors has no present intention of doing so, the
additional shares of authorized but unissued Common Stock which may result from
the proposed Reverse Share Exchange could also be used by the Board of Directors
to defeat or delay a hostile takeover. Faced with an actual or proposed hostile
takeover, the directors could issue shares of Common Stock, in a private
transaction, to a friendly party who might align themselves with the Board of
Directors in opposing a hostile takeover. Accordingly, the
12
<PAGE>
proposed amendment could be considered to have the effect of discouraging a
takeover of the Company. The directors are not aware, however, of any current
proposals by any party to acquire control of the Company and the Reverse Share
Exchange is not intended to be an anti-takeover device.
As of _____________, 1997, the Company had _________ shares of Common Stock
issued and outstanding. Further, the Company had issued and outstanding
warrants and options to purchase up to an additional _________ shares of
Common Stock.
The Company's Common Stock is listed for trading on the OTC Electronic
Bulletin Board maintained by the National Association of Securities Dealers,
Inc. ("NASD") or in the "pink sheets" maintained by the National Quotation
Bureau, Inc. (the "Over-The-Counter Market") under the symbol "IMES." The
following table sets forth quotations for the bid and asked prices for the
Common Stock for the periods indicated below, based upon quotations between
dealers, without adjustments for stock splits, dividends, retail mark-ups, mark-
downs or commissions, and therefore, may not represent actual transactions:
BID PRICES ASKED PRICES
HIGH LOW HIGH LOW
Year Ending December 31, 1996
1st Quarter 2 3/8 1 5/16 2 7/16 1 3/8
2nd Quarter 2 5/16 1 5/8 2 7/16 1 23/32
3rd Quarter 2 7/32 1 5/16 2 5/16 1 1/2
4th Quarter 1 23/32 31/32 1 25/32 1 1/16
Year Ending December 31, 1997
1st Quarter 2 1 1/8 2 1/16 1 1/4
On _________ , 1997, the closing bid market price for the Company's
Common Stock in the Over-The-Counter Market was approximately $________ per
share.
The minimum market price per share required for initial inclusion in the
NASDAQ/NMS is $3.00 per share. The NASDAQ/NMS has proposed certain changes to
the minimum market price for initial inclusion, which may increase the requisite
minimum market price therefor. There can be no assurances that the Reverse
Share Exchange will result in the market price of the Common Stock meeting the
requirement as is currently constituted or as it may be increased by such
proposal.
No dividend has been declared or paid by the Company since inception on the
Company's Common Stock. The Company does not anticipate that any dividends will
be declared or paid in the future on the Company's Common Stock.
13
<PAGE>
EFFECT OF PROPOSED REVERSE EXCHANGE UPON HOLDERS OF COMMON STOCK
On July 9, 1997, there were ___________ shares of Common Stock
outstanding. Consummation of the Reverse Share Exchange, assuming that the
Company effects the Reverse Share Exchange on a 1 for 10 ratio, would decrease
the number of outstanding shares of Common Stock to approximately ____________
shares. The par value of the Common Stock will remain as $0.0001 per share and
the authorized number of shares of Common Stock will be 70,000,000. As a
consequence, the aggregate par value of the outstanding Common Stock will be
reduced, while the aggregate capital in excess of par value attributable to the
outstanding Common Stock for statutory and accounting purposes will be
correspondingly increased. The resolution approving the Reverse Share Exchange
provides that this increase in capital in excess of par value will be treated as
capital for statutory purposes. However, under Delaware law, the Board of
Directors of the Company will have the authority, subject to various
limitations, to transfer some or all of such increased capital in excess of par
value from capital to surplus, which additional surplus could be distributed to
stockholders as dividends or used by the Company to repurchase outstanding
stock. The Company currently has no plans to use any surplus so created to pay
any such dividend or to repurchase stock.
Subject to the provisions for elimination of fractional shares as described
below, consummation of the Reverse Share Exchange will not result in a change in
the relative equity position or voting power of the holders of Common Stock.
No fractional shares of Common Stock will be issued to any stockholder.
Accordingly, stockholders of record who would otherwise be entitled to receive
fractional shares of Common Stock, will, upon surrender of their certificates
representing shares of the Company's Common Stock, receive a cash payment in
lieu thereof equal to the value of such fractional share determined by reference
to the average closing bid prices of the Common Stock for a period of ten (10)
trading days immediately preceding the effective date of the Reverse Share
Exchange (the "Effective Date"), as reported in the Over-the-Counter Market (as
defined hereinafter). Holders of less than one share of Common Stock as a
result of the Reverse Share Exchange no longer will be stockholders of the
Company as of the effective date of the Reverse Share Exchange (the "Effective
Date").
Stockholders should be aware that as a general rule, a stock split will, in
and of itself, neither increase nor decrease the intrinsic value of a
stockholder's investment. Except for holders of a very small number of shares
who receive cash in lieu of a fractional share, the smaller number of shares
resulting from a reverse split generally leaves stockholders with approximately
the same proportionate ownership as before the reverse split. The issuance of
cash in lieu of a fractional share will increase the proportionate interest of
some stockholders and decrease the proportionate interest of others.
The greatest possible increase in ownership will accrue to any stockholder
holding a number of shares evenly divisible by 10, if any so exist. Those
current holders of a number of shares of Common Stock not evenly divisible by
10, assuming a Reverse Share Exchange at a 1 for 10 ratio, will receive cash in
lieu of fractional shares, and will correspondingly suffer a dilution in
ownership. The difference in the ownership interest of each stockholder
resulting from the Reverse Share Exchange will generally be inversely
proportional to the number of shares held by such stockholder, with large
stockholders generally affected the least.
The Reverse Share Exchange may leave stockholders with one or more "odd
lots" of the Company's stock, i.e. stock holdings in amounts of less than 100
shares. These shares may be more difficult to sell, or require a greater
commission per share to sell, than shares in lots of 100.
14
<PAGE>
The Company believes that the Reverse Share Exchange will have no
detrimental effect on the total value of the Company's Common Stock. However,
to the extent that a stockholder's holding is reduced by reason of the Reverse
Share Exchange to less than 100 shares of Common Stock, the brokerage fees for
the sale of his or her shares may in all likelihood be higher than the brokerage
fees applicable to the sale of round lots of shares.
MANNER OF EFFECTING THE REVERSE SHARE EXCHANGE: EXCHANGE OF CERTIFICATES AND
ELIMINATION OF FRACTIONAL SHARE INTERESTS
The Reverse Share Exchange will be effected by the filing with the
Secretary of State of Delaware, in the event of the approval of the Reverse
Share Exchange by the Company's stockholders, a Certificate of Amendment to the
Certificate of Incorporation (the "Amended Certificate of Incorporation") of the
Company in substantially the form attached as Exhibit "A" to this Proxy
Statement, in order to complete the transactions contemplated by the Reverse
Share Exchange. The Reverse Share Exchange will become effective on the date of
filing of the Amended Certificate of Incorporation unless the Company specifies
otherwise (the "Effective Date"). Assuming stockholder approval of the proposed
Reverse Share Exchange is obtained, the Company intends to file the Amended
Certificate of Incorporation on the effective date of the registration statement
which may be filed in connection with the Proposed Offering.
In addition to the discretion of the Board of Directors to negotiate the
ratio of the Reverse Share Exchange with the Representative up to a 1 for 10
ratio, the Board of Directors of the Company reserves the right, in its absolute
discretion, to abandon the proposed Reverse Share Exchange at any time prior to
the effectuation of the Reverse Share Exchange. The Board of Directors may
choose to exercise such discretion in certain situations, including, without
limitation negotiations with respect to the Proposed Offering in which the
Representative requests that the Company not proceed with the Reverse Share
Exchange.
On the Effective Date, assuming a Reverse Share Exchange at a 1 for 10
ratio, each 10 shares of the "old" Common Stock will automatically be combined
and changed into one share of "new" Common Stock. No additional action on the
part of the Company or any stockholder will be required in order to effect the
Reverse Share Exchange. Stockholders will be requested to exchange their
certificates representing shares of Common Stock held prior to the Reverse Share
Exchange for new certificates representing shares of "new" Common Stock issued
as a result of the Reverse Share Exchange. Stockholders will be furnished the
necessary materials and instructions to effect such exchange promptly following
the Effective Date by the Company's transfer agent.
CERTIFICATES REPRESENTING SHARES OF THE "OLD" COMMON STOCK SUBSEQUENTLY
PRESENTED FOR TRANSFER WILL NOT BE TRANSFERRED ON THE BOOKS AND RECORDS OF THE
COMPANY UNTIL THE CERTIFICATES REPRESENTING THE SHARES OF "OLD" COMMON STOCK
HAVE BEEN EXCHANGED FOR CERTIFICATES REPRESENTING SHARES OF "NEW" COMMON STOCK.
Stockholders should not submit any certificates until requested to do so.
In the event any certificate representing shares of the "old" Common Stock is
not presented for exchange upon request by the Company, any dividends that may
be declared after the Effective Date with respect to the Common Stock
represented by such certificate will be withheld by the Company until such
certificate has been properly presented for exchange, at which time all such
withheld dividends which have not yet been paid to the public official pursuant
to relevant abandoned property laws will be paid to the holder thereof or his
designee, without interest.
15
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES OF THE REVERSE STOCK SPLIT
The following description of federal income tax consequences is based on
the Internal Revenue Code of 1986, as amended, and applicable Treasury
regulations promulgated thereunder, judicial authority and current
administrative rulings and practices as in effect on the date of this Proxy
Statement. This discussion should not be considered tax or investment advice,
and the tax consequences of the reverse stock split may not be the same for all
stockholders. In particular, this discussion does not address the tax treatment
of special classes of stockholders, such as banks, insurance companies, tax-
exempt entities and foreign persons. Stockholders desiring to know their
individual federal, state, local and foreign tax consequences should consult
their own tax advisors.
The combination and change of up to each 10 shares of "old" Common Stock
into one share of "new" Common Stock will be a tax-free transaction, and the
holding period and tax basis of the "old" Common Stock will be carried over to
the "new" Common Stock received in exchange therefor.
Generally, cash received in lieu of fractional shares will be treated as
received in exchange for the fractional shares (although in unusual
circumstances, a portion of such cash may possibly be deemed a dividend), and
stockholders will recognize gain or loss based upon the difference between the
amount of cash received and the tax basis in the surrendered fractional shares.
If the fractional shares surrendered have been held as capital assets by such
stockholder, then any gain or loss recognized by such stockholder will be a
capital gain or loss.
AVAILABILITY OF DISSENTERS' RIGHTS
The Company believes there are no dissenters' or appraisal rights available
to stockholders with respect to the proposed reverse stock split.
VOTE REQUIRED; RECOMMENDATION OF THE BOARD OF DIRECTORS
Under the Company's Certificate of Incorporation and Delaware law, this
Proposal 3 to effect the Reverse Share Exchange must be approved by the
affirmative vote of the holders of a majority of the issued and outstanding
shares of the Company's Common Stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THIS PROPOSAL.
16
<PAGE>
OTHER MATTERS
The Company knows of no other matters to be submitted at the Meeting. If
any other matters properly come before the Meeting, it is the intention of the
persons named in the enclosed proxy card to vote the shares they represent as
the Board of Directors may recommend.
By Order of the Board of Directors of
INTERNATIONAL META SYSTEMS, INC.
By:/s/George W. Smith
-------------------------------------
George W. Smith
Chairman and Chief Executive Officer
El Segundo, California
_____________, 1997
17
<PAGE>
EXHIBIT A
CERTIFICATE OF AMENDMENT
TO THE
CERTIFICATE OF INCORPORATION
OF
INTERNATIONAL META SYSTEMS, INC.
a Delaware corporation
The undersigned, the Chief Executive Officer of International Meta Systems,
Inc., a Delaware corporation (the "Corporation"), hereby certifies that the
following Certificate of Amendment to the Certificate of Incorporation has been
duly adopted by its Board of Directors and stockholders, in accordance with
Sections 141(f), 211 and 242 of the Delaware General Corporation Law, as set
forth below:
1. The Board of Directors unanimously adopted a resolution dated
________, 1997, setting forth the then proposed Certificate of Amendment to the
Certificate of Incorporation, declaring the advisability thereof, and pursuant
to action taken by written consent, adopted this Certificate of Amendment to the
Certificate of Incorporation pursuant to Sections 141(f) and 242 of the Delaware
General Corporation Law.
2. Thereafter, the stockholders of record owning a majority of the issued
and outstanding shares, at a duly authorized and convened meeting of the
stockholders, adopted the proposed Certificate of Amendment to the Certificate
of Incorporation on _________, 1997, pursuant to Sections 211 and 242 of the
Delaware General Corporation Law. The vote of the stockholders of the
Corporation by which the foregoing Certificate of Amendment to the Certificate
of Incorporation was adopted and approved was _______ shares in favor, _______
shares opposed and _______ abstaining or not voting, out of the Corporation's
total of ______ shares issued and outstanding.
3. The resolution by which the Corporation's directors and stockholders
adopted the Certificate of Amendment to the Certificate of Incorporation, as set
forth above, provides that the FOURTH Article, Paragraph 1, of the Corporation's
Restated Certificate of Incorporation, as amended to date, be amended to provide
in its entirety as follows:
<PAGE>
"FOURTH: 1. The total number of shares of stock which the
Corporation shall have authority to issue is Seventy One
Million (71,000,000) shares, consisting of Seventy Million
(70,000,000) shares of Common Stock, par value $0.0001 per
share (the "Common Stock") and One Million (1,000,000)
shares of Preferred Stock, par value $0.0001 per share (the
"Preferred Stock")." Upon the date of the effectiveness of
the amendment of this Article (the "Effective Date"), each
________ (____) issued and outstanding shares of Common
Stock or issued and held in the treasury of the Corporation
shall be converted into one (1) share of Common Stock. No
fractional shares shall be issued pursuant to such
conversion. The Corporation shall pay to each stockholder
who would otherwise be entitled to a fractional share as a
result of such conversion, the cash value of such fractional
share determined by reference to the average of the high and
low closing bid and asked prices of the Common Stock for a
period of ten trading days immediately preceding the
Effective Date, as reported in the principal market for the
Company's Common Stock. Each certificate for Common Stock
outstanding or held in treasury on the Effective Date shall
thereupon and thereafter evidence the number of shares of
Common Stock, and/or the right to receive cash into which
such shares shall have been converted, and may be
surrendered to the Corporation for cancellation in exchange
for new certificates representing such number of shares
and/or cash.
4. This amendment shall be effective as of the date of filing of this
Certificate of Amendment with the Secretary of State of Delaware.
2
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate of
Amendment to the Certificate of Incorporation to be executed by its Chief
Executive Officer as of _________, 1997.
INTERNATIONAL META SYSTEMS, INC.
By:
-------------------------------------
George A. Smith
Chief Executive Officer
3
<PAGE>
P R O X Y
INTERNATIONAL META SYSTEMS, INC.
THIS PROXY IS BEING SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON AUGUST 26, 1997
The undersigned stockholder appoints George W. Smith and Sigmund Hartmann,
or either of them, as proxy with full power of substitution, to vote the shares
of voting securities of International Meta Systems, Inc. (the "Company") which
the undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held at the Radisson Hotel, 1400 Park View Avenue, Manhattan Beach, California,
on August 26, 1997, at 10:00 a.m., local time, and at any adjournments thereof,
upon matters properly coming before the meeting, as set forth in the Notice of
Annual Meeting and Proxy Statement, both of which have been received by the
undersigned. Without otherwise limiting the general authorization given hereby,
such proxy is instructed to vote as follows:
THIS PROXY WILL BE VOTED AS DIRECTED, OR IF NO CONTRARY DIRECTION IS
INDICATED, WILL BE VOTED FOR THE PROPOSALS INDICATED ON THIS CARD AND AS SUCH
PROXIES DEEM ADVISABLE WITH DISCRETIONARY AUTHORITY ON SUCH OTHER BUSINESS AS
MAY PROPERLY COME BEFORE THE MEETING AND ANY ADJOURNMENT OR ADJOURNMENTS
THEREOF.
(1) To ratify the appointment of Singer, Lewak, Greenbaum & Goldstein LLP,
Certified Public Accountants, as independent certified public accountants of
the Company for the fiscal year ending December 31, 1997.
/ / FOR / / AGAINST / / ABSTAIN
(2) To elect to the Board of Directors seven (7) directors, as follows: CLASS I
-- two (2) directors to serve for one-year terms; CLASS II -- two (2)
directors to serve for two-year terms; and CLASS III -- three (3) directors
to serve for three-year terms, or, in each case, until their successors are
elected and qualify, subject to their prior death, resignation or removal:
/ / FOR ALL NOMINEES LISTED HEREIN (EXCEPT AS MARKED UP TO THE CONTRARY
BELOW).
/ / WITHHOLD AUTHORITY TO VOTE FOR ALL NOMINEES LISTED BELOW.
(INSTRUCTIONS: TO WITHHOLD AUTHORITY TO VOTE FOR ANY INDIVIDUAL NOMINEE, STRIKE
A LINE THROUGH THE NOMINEE'S NAME LISTED BELOW)
<TABLE>
<CAPTION>
CLASS I -- (ONE-YEAR CLASS II -- (TWO-YEAR CLASS III -- (THREE-YEAR
TERM) TERM) TERM)
<S> <C> <C>
GEORGE W. SMITH FRANK LACHAPPELLE MARTIN S. ALBERT
SIGMUND HARTMANN PHILIP NECHES LEE W. HOEVEL
MASAHIRO TSUCHIYA
</TABLE>
<PAGE>
(3) To authorize an amendment to the Company's Certificate of Incorporation to
effect a reverse stock split of the Common Stock on up to a 1 for 10 basis,
at the discretion of the Board of Directors.
/ / FOR / / AGAINST / / ABSTAIN
In his discretion, the proxy is authorized to vote upon such other business
as may properly come before the meeting.
DATED:
- --------------------------------------------------------------------------------
----------------------------
Signature
----------------------------
Signature (if held jointly)
----------------------------
Print Names
(Please sign exactly as your
name appears hereon. When
signing as attorney,
executor, administrator,
trustee or guardian, please
give your full title. If
shares are jointly held,
each holder must sign. If a
corporation, please sign in
full corporate name by
President or other
authorized officer. If a
partnership, please sign in
partnership name by
authorized person).
PLEASE CHECK THE BOXES ABOVE AND ON THE REVERSE SIDE, SIGN, DATE AND RETURN THIS
PROXY TO
INTERWEST TRANSFER CO., INC.,P.O. BOX 17136, SALT LAKE CITY, UTAH 84117, IN THE
SELF-ADDRESSED ENVELOPE PROVIDED.
