SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
IDM ENVIRONMENTAL CORP.
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(Name of Registrant As Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the 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)(1) and 0-11.
1. Title of each class of securities to which transaction applies:
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2. Aggregate number of securities to which transaction applies:
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3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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4. Proposed maximum aggregate value of transaction:
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5. Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1. Amount Previously Paid:
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2. Form, Schedule or Registration Statement No.:
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3. Filing Party:
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4. Date Filed:
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<PAGE>
IDM ENVIRONMENTAL CORP.
396 Whitehead Avenue
South River, New Jersey 08882
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD TUESDAY, NOVEMBER 4, 1997
To the Shareholders of IDM Environmental Corp.:
A Special Meeting of Shareholders of IDM Environmental Corp. (the
"Company") will be held at the Ramada Inn, 195 Route 18 South, East Brunswick,
New Jersey 08816 at 8:00 a.m., on Tuesday, November 4, 1997 for the following
purposes:
1. To consider a proposal to authorize the issuance of common shares
in excess of 1,997,130 on the conversion of outstanding 7% Convertible
Notes and Warrants.
2. To transact such other business as may properly come before the
meeting or any adjournment thereof.
Shareholders of record at the close of business on September 22, 1997 are
entitled to notice of and to vote at the meeting and any adjournment thereof.
You are cordially invited to attend the meeting. Whether or not you are
planning to attend the meeting, you are urged to complete, date and sign the
enclosed proxy card and return it promptly.
YOUR VOTE IS IMPORTANT! PLEASE PROMPTLY MARK, DATE, SIGN, AND RETURN YOUR
PROXY IN THE ENCLOSED ENVELOPE. IF YOU ARE ABLE TO ATTEND THE MEETING AND WISH
TO VOTE YOUR SHARES PERSONALLY, YOU MAY DO SO AT ANY TIME BEFORE THE PROXY IS
VOTED.
By Order of the Board of Directors
Frank A. Falco
Secretary
South River, New Jersey
September 22, 1997
<PAGE>
IDM ENVIRONMENTAL CORP.
396 Whitehead Avenue
South River, New Jersey 08882
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PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD NOVEMBER 4, 1997
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This Proxy Statement is being furnished in connection with the solicitation
of proxies on behalf of the Board of Directors of IDM Environmental Corp. (the
"Company") for use at Special Meeting of Shareholders of the Company and at any
adjournment thereof (the "Special Meeting"). The Special Meeting is scheduled to
be held at the Ramada Inn, 195 Route 18 South, East Brunswick, New Jersey 08816,
on Tuesday, November 4, 1997 at 8:00 a.m. local time. The Proxy Statement and
the enclosed form of proxy will first be sent to shareholders on or about
September 23, 1997.
Proxies
The shares represented by any proxy in the enclosed form, if such proxy is
properly executed and is received by the Company prior to or at the Special
Meeting prior to the closing of the polls, will be voted in accordance with the
specifications made thereon. Proxies on which no specification has been made by
the shareholder will be voted FOR the authorization of the issuance of common
shares in excess of 1,997,130 on the conversion of outstanding 7% Convertible
Notes and Warrants and as the proxy holders deem advisable on other matters that
may come before the meeting. Proxies are revocable by written notice received by
the Secretary of the Company at any time prior to their exercise or by executing
a later dated proxy. Proxies will be deemed revoked by voting in person at the
Special Meeting.
Voting Securities
Shareholders of record at the close of business on September 22, 1997 (the
"Record Date") are entitled to notice of and to vote at the Special Meeting. On
the Record Date, the total number of shares of common stock of the Company,
$.001 par value per share (the "Common Stock"), outstanding and entitled to vote
was 13,708,492. The holders of all outstanding shares of Common Stock are
entitled to one vote for each share of Common Stock registered in their names on
the books of the Company at the close of business on the Record Date.
Quorum and Other Matters
The presence at the Special Meeting, in person or by proxy, of the holders
of a majority of the outstanding shares of Common Stock entitled to vote at the
Special Meeting is necessary to constitute a quorum. The Board of Directors is
not aware of any matters that are expected to come before the Special Meeting
other than those referred to in this Proxy Statement. If any other matter should
come before the Special Meeting, the persons named in the accompanying proxy
intend to vote such proxies in accordance with their best judgment.
Shares of Common Stock represented by a properly dated, signed and returned
proxy will be counted as present at the Special Meeting for purposes of
determining a quorum, without regard to whether the proxy is marked as casting a
vote or abstaining. Each of the matters scheduled to come before the Special
Meeting requires the approval of a majority of the votes cast at the Special
Meeting. Therefore, abstentions and broker non-votes will have no effect on the
matter.
<PAGE>
Beneficial Ownership of Common Stock
The following table is furnished as of September 22, 1997, to indicate
beneficial ownership of shares of the Company's Common Stock by (1) each
shareholder of the Company who is known by the Company to be a beneficial owner
of more than 5% of the Company's Common Stock, (2) each director and each of the
five highest paid executive officers of the Company, individually, and (3) all
officers and directors of the Company as a group. The information in the
following table was provided by such persons.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of
of Beneficial Owner Beneficial Ownership (1)(2) Percent of Class (2)
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<S> <C> <C>
Joel A. Freedman (3).................................. 597,188 (4) 4.3%
Frank A. Falco (3).................................... 581,053 (5) 4.2%
Michael B. Killeen.................................... 45,029 (6) *
Frank Pasalano........................................ 25,288 (7) *
James R. Harrigan..................................... 25,648 (8) *
Frank Patti........................................... 17,000 (9) *
Robert McGuinness..................................... 17,070 (10) *
Richard Keller........................................ 5,000 (11) *
All executive officers and directors
as a group (14 persons).............................. 1,426,669 (12) 10.0%
</TABLE>
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* Less than 1%.
(1) The persons named in the table have sole voting and investment power with
respect to all shares of Common Stock shown as beneficially owned by them,
subject to community property laws, where applicable, and the information
contained in the footnotes to the table.
(2) Includes shares of Common Stock not outstanding, but which are subject to
options exercisable within 60 days of the date of the information set forth
in this table, which are deemed to be outstanding for the purpose of
computing the shares held and percentage of outstanding Common Stock with
respect to the holder of such options. Such shares are not, however, deemed
to be outstanding for the purpose of computing the percentage of any other
person.
(3) Address is 396 Whitehead Avenue, South River, New Jersey 08882.
(4) Includes 175,000 shares issuable upon exercise of incentive stock options
and non-qualified stock options held by Mr. Freedman. Excludes shares held
by the adult children of Joel Freedman. Mr. Freedman disclaims any
beneficial ownership interest in such shares.
(5) Includes 175,000 shares issuable upon exercise of incentive stock options
and non-qualified stock options held by Mr. Falco. Excludes shares held by
Margaret Mullin, the adult daughter of Frank Falco, and the children of
Mrs. Mullin. Mr. Falco disclaims any beneficial ownership interest in such
shares.
(6) Includes 45,029 shares out of 50,036 shares issuable upon exercise of
incentive stock options held by Mr. Killeen.
(7) Includes 25,288 shares out of 30,360 shares issuable upon exercise of
incentive stock options held by Mr. Pasalano.
(8) Includes 25,648 shares out of 30,810 shares issuable upon exercise of
incentive stock options held by Mr. Harrigan.
(9) Includes 17,000 shares out of 17,500 shares issuable upon exercise of
non-qualified stock options held by Mr. Patti.
(10) Includes 17,000 shares out of 17,500 shares issuable upon exercise of
non-qualified stock options held by Mr. McGuinness. Also includes 70 shares
held by a minor child of Mr. McGuinness, as to which Mr. McGuinness
disclaims any beneficial interest.
(11) Includes 5,000 shares issuable upon exercise of non-qualified stock options
held by Mr. Keller.
(12) Includes 588,858 shares of Common Stock subject to stock options held by
the officers and directors and exercisable within 60 days.
2
<PAGE>
Joel Freedman and Frank Falco have entered into a Voting Agreement pursuant
to which each has agreed to vote for the other in all elections of directors of
the Company. The Voting Agreement also provides that if either of Mr. Freedman
or Mr. Falco determine to vote to remove the then existing board of the
directors or determines to vote against the approval of any matters submitted
for a vote of the shareholders, that the other such person shall also vote in
such manner. The Voting Agreement expires on the earlier of December 31, 1998 or
a vote to terminate by 60% of the shares then covered by such agreement.
PROPOSAL 1
AUTHORIZATION OF THE ISSUANCE OF SHARES OF
COMMON STOCK IN EXCESS OF 1,997,130 ON THE
CONVERSION OF OUTSTANDING 7% CONVERTIBLE NOTES
AND WARRANTS
In August of 1997, the Company completed an offering of $3,025,000 of 7%
Convertible Notes due January 31, 1999 (the "Notes") and warrants (the
"Warrants") to purchase 2,675,000 shares of Common Stock. The Notes are
convertible into Common Stock at the lesser of (i) $2.75 per share or (ii) 75%
of the average closing bid price of the Common Stock over the five trading-day
period preceding conversion. The Warrants are exercisable for a three year
period at the lesser of $3.00 per share or the lowest conversion price of the
Notes. Conversion of the Notes and exercise of the Warrants is subject to the
issuance of a maximum of 1,997,130 shares of Common Stock on conversion unless
the shareholders of the Company have approved issuances beyond that level upon
conversion. In the absence of shareholder approval of issuances above 1,997,130
shares, the holders of Notes and Warrants remaining outstanding if and when
1,997,130 shares have been issued will have the right to demand redemption of
the Notes at 125% of the principal balance outstanding and to demand redemption
of the Warrants at the pre-tax profit such holders would have realized had the
Warrants been exercised at the time redemption is demanded. Further, the Company
has the right, upon notice to the holders, to redeem any Notes submitted for
conversion at a price of $2.75 or less at 125% of the principal amount of such
Notes. The Notes pay interest at 7% payable quarterly or on conversion or
redemption in cash or Common Stock, at the Company's option. The offering of the
Notes and Warrants was made after evaluating various financing options available
to the Company in order to provide adequate working capital to support the
Company's growing backlog of projects under contract and general working capital
needs.
As of September 22, 1997, all of the Notes and Warrants remained issued and
outstanding.
Pursuant to Nasdaq corporate governance rules applicable to the Company,
the Company may not permit issuance of shares in excess of 20% of the shares
outstanding prior to the issuance unless shareholder approval of such issuance
is first obtained. In order to assure compliance with such rules, the shares
issuable upon conversion of the Notes and Warrants has been limited to 1,997,130
subject to shareholder approval of conversions beyond such level.
The shareholders are being asked to approve the issuance of shares above
the 1,997,130 limit imposed on the conversion of Notes and Warrants, if such
limit should be reached. Approval of such conversions and issuance will result
in the holders of outstanding Notes and Warrants being able to convert, at their
election, all of the Notes and Warrants outstanding subject to the Company's
continuing ability to redeem Notes submitted for conversion at a price of less
than $2.75 per share. Based on a closing bid price for the Company's Common
Stock of $5.375 at September 22, 1997, conversion of the Notes and Warrants
would result in the issuance of 3,775,000 shares of Common Stock. Because of
uncertainty as to the time of conversion of the Notes and Warrants, if ever, and
the price of the Common Stock at the time of such conversion, there can be no
assurance as to the actual number of shares which will be issued on the
conversion of the Notes and Warrants.
3
<PAGE>
If the shareholders do not approve the issuance of shares in excess of the
cap, the Notes and Warrants remaining outstanding if and when the cap is reached
will be subject to redemption by the Company at the holders' option. The Company
does not presently have sufficient capital resources or alternative financing
sources to redeem the Notes and Warrants and support the Company's current level
of operations should the shareholders reject this proposal. Based on the
Company's financing requirements and the absence of other acceptable financing
sources, management believes that the approval of this proposal which would
permit the possible issuance of shares beyond the cap on the terms described is
in the best interest of the Company.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE FOR APPROVAL OF THE
AUTHORIZATION OF THE ISSUANCE OF COMMON SHARES IN EXCESS OF 1,997,130 ON THE
CONVERSION OF OUTSTANDING NOTES AND WARRANTS.
EXPENSES OF SOLICITATION
All of the expenses of soliciting proxies from shareholders, including the
reimbursement of brokerage firms and others for their expenses in forwarding
proxies and proxy statements to the beneficial owners of the Company's Common
Stock, will be borne by the Company.
OTHER MATTERS
The Board of Directors does not intend to bring any other matters before
the Special Meeting and has not been informed that any other matters are to be
presented by others. In the event any other matters properly come before the
Special Meeting, the persons named in the enclosed form of proxy will vote all
such proxies in accordance with their best judgment on such matters.
Whether or not you are planning to attend the Special Meeting, you are
urged to complete, date and sign the enclosed proxy and return it in the
enclosed stamped envelope at your earliest convenience.
By Order of the Board of Directors
Frank A. Falco
Secretary
South River, New Jersey
September 22, 1997
4
<PAGE>
IDM ENVIRONMENTAL CORP.
396 Whitehead Avenue
South River, New Jersey 08882
Proxy for Special Meeting of Shareholders
to be held on November 4, 1997
This Proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Joel A. Freedman and Frank A. Falco, and
each of them, as Proxies, with full power of substitution in each of them, in
the name, place and stead of the undersigned, to vote at a Special Meeting of
Shareholders (the "Meeting") of IDM Environmental Corp., a New Jersey
corporation (the "Company"), on November 4, 1997, at 8:00 a.m., or at any
adjournment or adjournments thereof, in the manner designated below, all of the
shares of the Company's common stock that the undersigned would be entitled to
vote if personally present.
1. Proposal to authorize the issuance of common shares in excess of
1,997,130 on the conversion of outstanding 7% Convertible Notes and Warrants.
FOR AGAINST ABSTAIN
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2. In their discretion, the Proxies are authorized to vote upon such other
business as may properly come before the Meeting or any adjournments thereof.
THIS PROXY WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS GIVEN ABOVE. IF NO
INSTRUCTIONS ARE GIVEN, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND AS THE
PROXIES DEEM APPROPRIATE WITH RESPECT TO ANY OTHER BUSINESS WHICH MAY BEFORE THE
MEETING.
Please sign exactly as your name appears hereon.
When shares are held by joint tenants, both
should sign. When signing as an attorney,
executor, administrator, trustee, guardian, or
corporate officer, please indicate the capacity
in which signing.
DATED: , 199
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Signature
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Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE ENCLOSED
ENVELOPE
