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
[ ] Definitive proxy statement
[ ] Definitive additional materials
[ ] Soliciting material pursuant to Rule 14a-11(c) or Rule 14a-12
IMSCO, INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in its Charter)
IMSCO, INC.
- --------------------------------------------------------------------------------
(Name of Person filing Proxy Statement)
Payment of filing fee (check the appropriate box):
[X] $125 per Exchange Act Rule O-11(c)(1)(ii), 14a-6(i)(1) or 14a-6(i)(2)
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3)
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)
and O-11
(1) Title of each close 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 O-11:
(4) Proposed maximum aggregate value of transaction:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule O-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: $125
(2) Form, schedule or registration statement no.:
(3) Filing party:
(4) Date filed:
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IMSCO, INC.
40 BAYFIELD DRIVE, NORTH ANDOVER, MASSACHUSETTS 01845 (508) 689-2080
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of IMSCO, Inc.:
Notice is hereby given that the 1996 Annual Meeting of Shareholders of IMSCO,
Inc. will be held at the Ramada Inn - Rolling Green, 311 Lowell Street, Andover,
Massachusetts 01810, on Tuesday, July 9, 1996 at 10:00 a.m. (Eastern Daylight
Time) for the following purposes:
(1) to elect directors of the Corporation;
(2) to consider and vote upon a proposal to reincorporate the Company in
Delaware under the name IMSCO Technologies, Inc. by a merger;
(3) to consider and vote upon a proposal to authorize an additional
12,000,000 shares of Common Stock;
(4) to consider and vote upon a proposal to authorize up to 1,000,000
shares of Preferred Stock;
(5) to consider and vote upon a proposal to limit certain personal
liability of directors for monetary damages;
(6) to consider and vote upon a proposal to establish an Employee
Incentive Stock Option Program; and
(7) to consider and vote upon a proposal to approve appointment of Gordon,
Harrington & Osborn, P.C., as auditors for the Corporation.
Only Shareholders of record at the close of business on June 17, 1996, will
be entitled to notice of, and to vote at, the meeting.
By order of the Board of Directors. Gloria Berg, Secretary June 17, 1996
------------------------------------------------------------------------
IMSCO, INC., 40 Bayfield Drive, North Andover, Massachusetts 01845
(508) 689-2080
PROXY STATEMENT AND ANNUAL REPORT for Annual Meeting of Shareholders-
July 9, 1996
-----------------------------
The proxy which is requested in the foregoing Notice of Annual Meeting of
Shareholders is being solicited by the Board of Directors of IMSCO, Inc.
("Imsco") with respect to the shareholders' meeting to be held on Tuesday, July
9, 1996. The mailing address and principal executive office of Imsco is 40
Bayfield Drive, North Andover, Massachusetts 01845. Any proxy given may be
revoked by the shareholder executing such proxy by notifying the secretary of
the meeting in writing at any time prior to the voting thereof, or by submitting
a duly executed later dated proxy. Unless revoked, or the shareholder attends
the Annual Meeting and votes in person, the shares represented by all such
proxies will be voted. It is expected that the Notice, Proxy Statement and
Annual Report, and form of Proxy will be mailed to shareholders on or about
June 17, 1996.
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The close of business on June 17, 1996 has been fixed as the time for the
determination of the shareholders entitled to vote at the Annual Meeting. Each
share of Imsco' common stock, $.001 par value ("Common Stock"), is entitled to
one vote. There are 2,994,893 shares of Imsco' Common Stock outstanding and
entitled to vote. A quorum for the meeting is the presence of the holders of a
majority of the issued and outstanding Common Stock in person or by proxy.
The Annual Meeting will be held at the Ramada Inn - Rolling Green, 311 Lowell
Street, Andover, Massachusetts 01810, at 3:00 p.m. prevailing local time on
Tuesday, July 9, 1996. The Annual Meeting may be adjourned from time to time
as provided in Imsco's bylaws.
Imsco's Annual Report on Form 10-KSB for the fiscal year ended December 31,
1995, as filed with the Securities and Exchange Commission, including financial
statements and schedules for the fiscal year ended December 31, 1995, is
included as a part of, and delivered with, this Proxy Statement.
ELECTION OF DIRECTORS
Ownership of Securities by Directors, Executive Officers and Certain Beneficial
Owners
The following table identifies each person known to the Company to be the
beneficial owner of more than five percent of the Company's Common Stock, each
director of the Company and all directors and officers of the Company as a
group, and sets forth the number of shares of the Company's Common Stock
beneficially owned by each such person and such group and the percentage of
shares of the Company's outstanding Common Stock owned by each such person and
such group. With respect to natural persons, the person identified individually
or together with his spouse has sole voting power and sole investment power over
the securities.
Name and Address of Amount and Nature of
Beneficial Owner Beneficial Ownership (1) Percent of Class
- ---------------- ------------------------ ----------------
Sol L. Berg (1) 135,000 (2) 4.5%
11 Royal Crest Drive
North Andover, MA 01845
Gloria Berg 115,250 (3) 3.9%
11 Royal Crest Drive
North Andover, MA 01845
Dr. Alan Waldman (1) 70,000 2.3%
184 Seiffert Court
Oceanside, NY 11572
Mrs. Alexander T. Hoffman 323,400 10.8%
1660 Old Country Road
Plainview, NY 11803
KDP Tours Co., Ltd. 200,000 6.7%
Sassoon House
Shirley Street
Nassau, Bahamas
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Dirk Hagge (1)
28a Hinterstrasse 25,000
Elmshorn, Germany
Vic Bauer 10,000(4) *
c/o Imsco, Inc.
40 Bayfield Drive
North Andover, MA 01845
James Yurak (1)
c/o Imsco, Inc.
40 Bayfield Drive
North Andover, MA 01845 0 *
Vernon Oberholtzer (1)
c/o Imsco, Inc.
40 Bayfield Drive
North Andover, MA 01845 0 *
All Officers and Directors 355,250 11.9%
as a group (6 persons)
- -------------------------------------
(1) Denotes a director of the Company.
(2) The shares shown as owned by Sol L. Berg do not include either (i) 115,250
shares owned by his wife, Gloria Berg, or (ii) 150,000 shares owned
directly by Sol L. Berg's three adult children, since Mr. Berg may not be
deemed to have shares voting or investment power over these shares.
(3) The shares shown as owned by Gloria Berg do not include either (i) 135,000
shares owned directly by her husband, Sol L. Berg, or (ii) 150,000 shares
owned directly by Sol L. Berg's three adult children, since Mrs. Berg may
not be deemed to have shares voting or investment power over these shares.
(4) Shares are directly owned by Mr. Bauer's sons, Ian Jason Bauer.
* Less than 1%
There are no known arrangements which may at a subsequent date result in a
change in control of the Company.
Directors of Imsco
The Board of Directors of Imsco currently consists of five directors. At the
Annual Meeting five directors will be elected for a one year term or until their
successors are elected. Mr. Hagge is not standing for re-election and Mr. Vic
Bauer has been nominated by the Board of Directors to fill that position.
Information with respect to the five nominees proposed for election is set forth
below. It is intended that the persons named in the proxy will vote in favor of
the five nominees for election as set forth below.
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The affirmative vote of a plurality of the votes cast by shareholders of Imsco
entitled to notice of and to vote at the Annual Meeting is required for the
election of directors.
YEAR FIRST
ELECTED AS OFFICE WITH
NAME AGE DIRECTOR COMPANY
- ---- --- -------- ------------
Sol L. Berg 61 1986 President and Director
Dr. Alan Waldman 50 1992 Vice President and Director
Mr. James Yurak 60 1995 Director
Vernon Oberholtzer 56 1994 Director
Vic Bauer 53 nominee Proposed Director
Sol L. Berg (age 62)
-----------
Since the latter part of 1984, Mr. Berg has devoted his full-time efforts
to the business of the Company. From 1982 to 1984, Mr. Berg was the Project
Director and Product Manager for United Technologies Packard in Chicago,
Illinois, which is a manufacturer of precision instrumentation. From 1980 to
1982, Mr. Berg was Product Manager for the Hamilton Company in Reno, Nevada.
Hamilton Company is a manufacturer of precision scientific equipment. From 1974
to 1980, Mr. Berg, was the National Accounts Manager for Bio-Rad Laboratories in
Richmond, California, which manufactures diagnostic materials and equipment.
Sol L. Berg is the husband of Gloria Berg.
Alan Waldman (age 50)
------------
Dr. Alan A. Waldman, Ph.D. joined Imsco as Executive Vice President and a
Director in 1992. Since 1988, Dr. Waldman has served as President of Waldman
Biomedical Consultancy, an international advisory group. From 1981 to 1988, Dr.
Waldman was the Technical Director for the New York Blood Center, which is the
largest blood bank in the world having annual sales in excess of $400 million.
Dr. Waldman is a recognized leader in planning, development and automation of
serologic and diagnostic testing related to immunologic and viral markers. He
is the author of over 60 reports and publications. Dr. Waldman is contractually
obligated to devote at least 20% of his time to the Company. Dr. Waldman also
became Chief Executive Officer of the Company's BioElectric Separation &
Testing, Inc. subsidiary in January 1996.
James G. Yurak (age 60)
--------------
Mr. Yurak was elected to the Board in l995 and serves as President and
Chief Executive Officer of the Decaf Products, Inc. ("DPI") subsidiary of the
Company, which was formed in l995 for the express purpose of manufacturing,
marketing and distributing products incorporating the
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Company's patented electrostatic decaffeination separation technologies. He
brings 20 years of direct experience in the marketing and sales of coffee makers
and coffee products to the Company and DPI. He joined Mr. Coffee, Inc. in 1975
as a salesman and rose to become National Sales Manager and from 1986 to 1994
served as its Executive Vice President, where he helped direct the growth of Mr.
Coffee from a concept to a company with sales of approximately $200 million per
year. Mr. Yurak is a graduate of Colgate University.
Vernon S. Oberholtzer (age 56)
---------------------
Vernon S. Oberholtzer has been a Director of Imsco since 1994. Since 1978,
Mr. Oberholtzer has been President of his own financial consulting firm,
Fletcher Capital Corporation. He has had over thirty years of diversified
business experience with both major corporations and in the securities field,
having worked with such firms as Herzog, Heine, Geduld & Company, Spencer Trask
Securities, Inc. and Donaldson, Lufkin and Jenrette. From 1964 to 1975, Mr.
Oberholtzer was employed by Shell Oil Company, where he held various managerial
assignments. He holds a Master of Science Degree in Business Financial
Management from George Washington University and a National Association of
Securities Dealers, Inc. Series 7, 39 and 63 Licenses. He is a member of the
Financial Analysts and Money Managers Society of New York.
Vic Bauer (age 53)
---------
Mr. Bauer is nominated to become a Director by the Board of Directors. Mr.
Bauer has over 25 years experience in establishing product sales, marketing and
distribution organizations. Since l994, he has been President and chief
Executive Officer of BIJ Enterprises, Ltd., St. James, New York, which entity
serves as an Agent/Broker for Stone Container Corporation and Formosa Plastics.
From 1991 to 1994 he was President and Chief Executive Officer of Royal
Beverages of New York, Ltd., which was the exclusive franchised bottler and
distributor of Royal Crown Cola Company for the New York and Long Island
metropolitan area, excluding Manhattan. At Royal Beverages, Mr Bauer recruited
and supervised management teams consisting of sales manager, directors of chain
sales, controller and operations specialists, warehouse managers plus in excess
of 100 additional employees. From 1971 to 1991, Mr. Bauer was the President of
wholesale beverage distribution companies. He received a Bachelor of Science in
Business Administration from New York University in l964 and a Masters Degree in
Education from Brooklyn College in 1967.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES LISTED ABOVE.
Directors do not receive any compensation for services as directors. During
fiscal year 1995 there were two meetings of the Board of Directors of Imsco.
During fiscal year 1995, Imsco's Board of Directors performed the functions of a
compensation committee of the Board in reviewing the compensation paid to
employees, and of an audit committee in reviewing financial statements,
management and internal audits. Imsco does not have a separate
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Nominating or Compensation Committee. During fiscal year 1995, each director
(except Dirk Hagge, who is not standing for re-election) attended at least 75%
of the aggregate of (1) the total number of meetings of the Board of Directors,
and (2) the total number of meetings held by all committees of the Board on
which he served.
EXECUTIVE OFFICERS OF IMSCO
Gloria Berg, the Secretary of Imsco, is the only executive officer who is not a
director of Imsco. she serves at the pleasure of the Board of Directors and has
been the Secretary of Imsco since 1986. Her age is 57. Gloria Berg is the wife
of Sol L. Berg, the President and a Director of Imsco.
EXECUTIVE COMPENSATION
The following table sets for the annual and long-term compensation of the chief
executive officer for services in all capacities for the fiscal year ended
December 31, 1993, 1994 and 1995. No employee's annual salary and bonus
exceeded $100,000 in any of those fiscal years.
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SUMMARY COMPENSATION TABLE
Capacity in
Name of Individual which served Year Salary Additional Compensation
(DPI Shares)
Sol L. Berg President and 1995 $ 75,300 $75,300
Chief Executive 1994 $ 51,944
Officer 1993 $ 0
In November, 1995, Mr. Berg also received 150,000 shares of common
stock of the DPI subsidiary of the Company for services rendered. The Board of
Directors of the Company determined without independent valuation, the fair
market value of each share of DPI to be approximately $.50 per share, based
on the fact that (i) DPI is a newly formed, start up entity with no assets or
revenue, (ii) DPI is a closely held, non-pulic company with no established
market for its shares and (iii) the DPI shares were issued with restrictive
legends on transfer. He received no other form of compensation, bonus,
restricted stock awards, stock appreciation rights or options or long-term
incentive plans.
Mr. James Yurak, a Director of the Company and the President and Chief
Executive Officer of DPI, was granted 125,000 of the outstanding shares of
DPI in November, 1995, and performance based escrowed stock for up to
375,000 additional shares of DPI for nominal par value. Under the stock
escrow arrangement, 125,000 shares of the escrowed stock will be released if
the sales of DPI reach $10 million in a fiscal year, 125,000 will be released
if the sales of DPI reach $20 million in a fiscal year and 125,000 will be
released after one year of service to DPI. Additionally, under his Employment
Agreement with DPI, Mr. Yurak is to receive a base salary of $75,000 for 1996,
$125,000 for 1997 and $150,000 for 1998.
The Company has a year to year consulting agreement with Dr. Alan Waldman
entered into on July 1, 1992 as amended on July 1, 1994. The consulting
agreement with Dr. Waldman is in lieu of an employment contract. Dr. Waldman
was issued 50,000 shares of DPI common stock in November, 1995, as compensation
under his consulting agreement. Dr. Waldman has agreed to serve as the President
and Chief Executive Officer of the Company's recently formed BioElectric
Separation and Testing, Inc. ("BEST") subsidiary. The Company is currently
negotiating Dr. Waldman's compensation package in connection with his role at
BEST.
There are no arrangements known to the Company which may at a subsequent
date result in a change in control of the Company.
If the reincorporation of the Company as New Imsco in the State of Delaware
and the proposed increase in the authorized shares of common stock from
3,000,000 to 15,000,000 as set forth in this Proxy Statement is approved by the
requisite vote of the shareholders, Mr. Berg, Mr. Yurak, Dr. Waldman have
agreed to return the shares of DPI owned by each of them to DPI in exchange for
shares of New Imsco, which shares will be issued from restricted shares of
Common Stock reserved for in the Non-Qualified Stock Option Plan, on a
one-for-one basis, as determined by DPI and the Company, such that DPI will
be a consolidated subsidiary of New Imsco for financial and tax reporting
purposes. Upon the issuance of the 325,000 shares of New Imsco to Messrs. Berg,
Yurak and Waldman from the Non-Qualified Stock Option Plan, which will result in
additional compensation to them in 1996, based on the difference between the
fair market value of the DPI shares, which was estimated by Imsco's Board of
Directors to be $.50 per share in 1995, and the New Imsco shares, that will be
unregistered under the Securities Act of 1933, as amended, and will have a
discounted fair market value of approximately $1.25 (based on the current market
value of Imsco's registered common stock, less a discount of approximately 30%
due to their unregistered, restricted nature). In addition, there will be
dilution to the existing Imsco shareholders who exchange their shares for New
Imsco shares of approximately 9.8% based on approximately 2,994,893 shares
currently outstanding and 3,319,893 which would be outstanding after the
exchange and the issuance of the 325,000 shares from the Non-Qualified Stock
Option Plan.
There are presently no pension or other plans or arrangements pursuant to
which renumeration is proposed to be paid in the future to any of the officers
or directors of the Company other than as set forth above. At the present time,
the directors do not receive compensation of any form. Non-Cash Compensation
for all of the executive officers of the Company as a group (3 persons) did not
exceed the lesser of $25,000.00 per person or Ten (10%) Percent of such person's
cash compensation. The Company does not provide life, health or medical plans
to officers that are not available to all employees. Except as provided above,
the Company has no other employment contracts with any executive officers or
other employees.
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REINCORPORATION OF IMSCO IN DELAWARE BY MERGER
Imsco is currently incorporated in the Commonwealth of Massachusetts, and
the rights of its shareholders are governed by Massachusetts law and federal
law. Many U.S. corporations, including a number of the largest and most
successful enterprises as well as many technology firms, have chosen Delaware
for their state of incorporation, initially or by reincorporation. The law of
Delaware imposes fewer procedural requirements on the day-to-day actions of
corporations and is well suited for efficient operation. Because of the large
number of corporations that are incorporated in Delaware and the policies of
Delaware that encourage incorporation there, the Delaware judiciary has become
particularly familiar with corporate issues. A substantial body of decisions
has construed the law of Delaware and established public policies applicable to
corporate law issues. As a consequence, the Delaware law has been and
presumably will continue to be interpreted and tested in a number of significant
cases. This tends to assure a large measure of predictability with respect to
the legal aspects of corporate affairs.
The Board of Directors accordingly is recommending to the shareholders that
a reincorporation in Delaware be effected by merging Imsco into a new wholly-
owned Delaware subsidiary corporation named "IMSCO Technologies, Inc." (herein
"New Imsco"). Each share of Imsco Common Stock would be converted into one
share of New Imsco common stock, $.001 par value. Therefore, no shareholder's
ownership of common stock would change.
All rights and obligations of Imsco would be assumed by New Imsco. The
directors, officers and employees of Imsco at the time of the merger, including
the directors to be elected in this Annual Meeting, would act in the same
capacities for New Imsco.
Counsel to Imsco and New Imsco, Campbell & Fleming, P.C., 250 Park Avenue,
New York, New York, has given its opinion to Imsco that the reincorporation
merger will not be a taxable event for either Imsco, New Imsco, or their
shareholders. This opinion is not binding on the Internal Revenue Service.
Shareholders will not be required to surrender their Certificate for Imsco
Common Stock; instead, after the merger each outstanding certificate will
represent the same number of shares of New Imsco' common stock. Shareholders
should not destroy their share certificates for Imsco' Common Stock or send them
to Imsco or the transfer agent.
Summarized below are certain significant differences between the
Massachusetts Business Corporation Law ("Massachusetts BCL") and the Delaware
General Corporation Law ("Delaware GCL") which may affect the interests of
shareholders and stockholders. This summary does not purport to be a complete
statement of the differences between the Massachusetts BCL and the Delaware GCL
and related laws affecting shareholders' and stockholders' rights, and the
summary is qualified in its entirety by reference to the provisions of these
laws.
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Provision Massachusetts BCL Delaware GCL
--------- ----------------- ------------
Corporate Action may be taken by written Action may be taken by written
Action consent signed by all consent signed by holders of
without a shareholders entitled to vote. required majority of shares,
Share- unless the certificate of
holders' incorporation expressly
Meeting provides otherwise. The New
Imsco certificate does not so
provide.
Inspection of Any stockholder may inspect the Any stockholder may inspect the
Shareholders' stockholder's list for a stockholder's list for a
List purpose relative to the purpose reasonably related to
officers of the corporation. such person's interest as a
stockholder and, during the 10
days preceding the
stockholder's meeting, for any
purpose germane to that
meeting.
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Provision Massachusetts BCL Delaware GCL
--------- ----------------- ------------
Shareholder Requirements: (i) a plan of Requirements: (i)
Vote for consolidation or merger (or in other approval by both
Mergers, cases, a plan or agreement) adopted corporations' boards and
Consoli- by the boards of both the acquiring (ii) approval by a
dations, and and the acquired corporations; and simple majority (as
Sales of (ii) adoption of the plan or opposed to two-thirds
Substantially agreement by the holders of two- under Massachusetts Law)
all Assets thirds of all outstanding shares of all outstanding
Outside entitled to vote at a special meeting shares entitled to vote.
Ordinary unless the articles of incorporation No stockholder action is
Course of so provide, the vote of a lesser required by stockholders
Business proportion but not less than a of the surviving
majority of each class of stock of corporation in a merger
the Corporation is necessary for the if (a) the existing
approval of the plan. If the plan certificate of
adversely affect the right of any incorporation is not
class of stock of the Massachusetts amended, (b) each
Corporation, the vote of two-thirds outstanding share of the
of all outstanding shares of each surviving corporation
class, voting separately, is before the merger is
required. No stockholder action is unchanged or becomes a
required by stockholder of the treasury share of the
surviving corporation, unless surviving corporation,
required by the corporate charter, and (c) the number of
if: a) the plan does not change the shares to be issued by
name, amount of shares of authorized the surviving
stock or provisions of the charter; corporation in the
b) the number of shares to be issued merger does not exceed
by the surviving corporation does not 20% of the shares
exceed 15% of the shares outstanding outstanding immediately
immediately prior to such issuances; prior to such issuance.
and c) the issue by vote of directors Delaware does not
of any unissued stock issued pursuant provide for share
to the plan has been properly exchanges.
authorized.
Massachusetts Law recognizes a share
exchange as a merger alternative.
Dissenters Upon compliance with the applicable A dissenting stockholder
Rights requirements and procedures, a has appraisal rights
dissenting shareholder has the right only with respect to
to receive the fair value of his certain mergers or
shares if he objects to (i) certain consolidations, and such
mergers, (ii) a consolidation, (iii) appraisal rights do not
a disposition of assets requiring apply (i) to
shareholder approval or (iv) certain stockholders of the
amendments to the certificate of surviving corporation in
incorporation which adversely affect a merger if stockholder
the rights of such shareholder. approval of the merger
is not required or (ii)
to any class of stock
which is either listed
on a national securities
exchange or held of
record by more than
2,000 holders; unless
stockholders are
required to accept for
their shares in the
merger or consolidation
anything other than
common stock of the
surviving or resulting
corporation or common
stock of another
corporation that is so
listed or held (and cash
in lieu of fractional
shares).
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Provision Massachusetts BCL Delaware GCL
--------- ----------------- ------------
Business A "business combination" A "business combination"
Combination between a Massachusetts between a Delaware
Statutes corporation and an corporation and an
"interested shareholder" "interested stockholder"
is prohibited for three is prohibited for three
years after the date that years after the date that
the interested the interested
shareholder becomes an stockholder became an
interested shareholder, interested stockholder,
unless: (a) prior to such unless (i) prior to that
date, the board of date the board approved
directors of the domestic the business combination
corporation approved the or the transaction that
business combination or resulted in the interested
the transaction that stockholder's becoming an
resulted in the interested stockholder,
interested shareholder's (ii) upon consummation of
becoming an interested the transaction that
shareholder, (b) upon resulted in the interested
consummation of the stockholder's becoming an
transaction which interested stockholder,
resulted in the the interested stockholder
shareholder becoming an held at least 85% of the
interest shareholder, the outstanding voting stock
interested shareholder of the corporation (not
owned at least ninety counting shares owned by
percent of the officers and directors and
outstanding voting stock certain shares in employee
at the time the stock plans), or (iii) on
transaction commenced, or or subsequent to such date
(c) on or subsequent to the business combination
such date, the business is approved by the board
combination is approved and at least two-thirds of
by the Board of Directors the outstanding shares of
and authorized at a voting stock not owned by
meeting of shareholders the interested
by the affirmative vote stockholder. An
of two-thirds of the "interested stockholder"
outstanding voting stock is any person who
which is not owned by beneficially owns,
such interested directly or indirectly,
shareholder. This 15% or more of the
section covers any outstanding voting stock
corporation that (i) is of the corporation.
incorporated in Unlike Massachusetts,
Massachusetts, (ii) has Delaware does not require
its principal executive that the corporation's
offices and significant principal executive
business operations in offices or significant
Massachusetts or has at operations be located in
least 250 or 25% of its Delaware in order to be
employees in covered by this law.
Massachusetts (including
employees of its 80% The business combination
subsidiaries, and (iii) statute exempts any
has at least 10% of its corporation that has no
stock beneficially owned class of voting stock that
by Massachusetts is: (i) listed on a
residents. An national securities
"interested shareholder" exchange, (ii) authorized
is any person who for quotation on an Inter-
beneficially owns, dealer quotation system of
directly or indirectly, a registered national
5% or more of the securities association, or
outstanding voting stock (iii) held of record by
of the corporation. more than 2,000
shareholders. The statute
A resident Massachusetts does not allow exempt
corporation can by companies to elect to be
amendment to its bylaws, bound by its provisions.
elect to avoid New Imsco would therefore
application of the be exempt from the statute
business combination until any of (i), (ii) or
restrictions outlined (iii) occurs.
above. Imsco has not so
elected, and is
therefore fully subject to
Massachusetts' business
combination restrictions.
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Provision Massachusetts BCL Delaware GCL
--------- ----------------- ------------
Number of At least three directors The minimum is one
Directors are required in most director. The specific
circumstances. Any number may be fixed in the
higher number may be certificate of
fixed by the by-laws, or incorporation; if so, it
by shareholder or board may be changed only by
action under specific amendment approved by the
provisions of a by-law directors and
adopted by the stockholders. Otherwise,
shareholders, either of the number may be
which may be amended determined under the by-
subject to certain laws or by the board of
limitations. directors under authority
of a by-law adopted by
either the board or the
stockholders. The New
Imsco certificate of
incorporation has no
provision specifying the
number of directors.
Classifi- The certificate of The certificate of
cation of incorporation or a by-law incorporation, an initial
Directors adopted by the by-law or a by-law adopted
shareholders may divide by the stockholders may
the board into as many as classify the board of
three classes if the size directors into as many as
of each class is as equal three classes. The term
as possible. The terms of one class of directors
of one class must expire must expire each year.
each year. If the board New Imsco has made no
increases the number of provision to have a
directors and fills the classified board. If the
newly created board files vacant or
directorships, the newly created
additional directors may directorships, it may
not be classified until designate the class of
the next annual meeting each directorship and the
of shareholders. director elected by the
board holds office until
the next election for that
class.
Loans to The Board of Directors The Board of Directors may
Directors may authorize loans to authorize loans to
directors, provided that directors who are also
all directors will officers or employees,
thereafter have personal without stockholder
liability for repayment approval, if the loan is
of the loan until paid in reasonably expected to
full. benefit the corporation.
Employee Shareholders must approve Stockholder approval of
Rights any plan pursuant to such plans is not
and which rights or options required, although various
Options are to be granted to other applicable legal
directors, officers or requirements, such as
employees. S.E.C. rules or rules of
the New York Stock
Exchange, may make
stockholder approval of
certain rights or option
plans necessary or
desirable in the future.
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<PAGE>
Provision Massachusetts BCL Delaware GCL
--------- ----------------- ------------
Liability Directors are not liable Directors are not liable
of and to the corporation or its to the corporation or its
Indemnif- stockholders for actions stockholders in the
ication of taken in good faith on absence of bad faith or
Directors behalf of the corporation intentional, reckless or
so long as they do not grossly negligent
act in violation of their behavior. By provision in
duties in an intentional, the certificate of
reckless or grossly incorporation, a
negligent fashion. A corporation may eliminate
corporation may indemnify or limit the personal
any director made a party monetary liability of
to any suit or directors to the
proceeding, whether corporation or its
criminal, civil, stockholders for any
administrative or breach of the duty of care
investigative, by reason in such capacity unless
of service as a director. the acts or omissions were
The director must have in bad faith, involved
acted in good faith and intentional misconduct or
in a manner reasonably knowing violation of law,
believed to be in or not resulted in personal
opposed to the profit or advantage,
corporation's best violated certain other
interests. In respect to corporate law provisions,
any criminal action, the or occurred prior to 1987.
director must have had no The certificate of
reasonable cause to Incorporation of New Imsco
believe the conduct was contains this limitation
unlawful. However, the on directors' liability.
corporation may not See the proposed
indemnify in respect of "Limitation on Certain
any matter as to which Personal Liability of
the director is adjudged Directors for Monetary
liable to the Damages" below for
corporation, unless a additional information.
court orders such
indemnification.
A corporation may provide The corporation may
additional indemnify directors in any
indemnification through a action against the
by-law, agreement, or corporation or in he
vote of shareholders or corporation's name,
disinterested directors. provided the directors
acted in good faith in a
manner reasonably believed
to be in or not opposed to
the best interests of the
corporation, and with
respect to any criminal
action, the directors had
no reasonable cause to
believe that their conduct
was unlawful.
15
<PAGE>
Consideration Shares of stock may be Shares of stock may be
for Shares or issued, and deemed to be issued, and deemed to be
Corporate fully paid and non- fully paid and non-
Bonds assessable, if the assessable, if the
corporation received corporation received
consideration (in the consideration (in the form
form of cash, tangible or of cash, services
intangible property, rendered, personal
services, or for a debt, property, real property,
note or expenses, or a leases of real property,
combination thereof) or a combination thereof)
having a value not less having a value not less
than the par value of than the par value of
stated capital of such stated capital of such
shares and the shares and the corporation
corporation receives a receives a binding
binding obligation of the obligation of the
subscriber to pay the subscriber to pay the
balance of the balance of the
subscription price. If subscription price.
paid for in installments,
the stock certificates
shall contain a legend
reflecting the
installment obligations.
There are no restrictions There are no restrictions
on the issuance of bonds. on the issuance of bonds.
16
<PAGE>
<TABLE>
Provision Massachusetts BCL Delaware GCL
--------- ----------------- ------------
<S> <C> <C>
Payment of Dividends may be declared and Dividends may be paid
Dividends and distributions may be made out of out of surplus or, if
Distributions surplus only, so that the net assets there is no surplus, out
of the corporation remaining after of net profits for the
such declaration, payment or current and preceding
distribution shall at least equal the fiscal years (provided
amount of its stated capital. It is that the amount of
illegal for the corporation to declare capital of the
a dividend or make a distribution when corporation is not less
the corporation is insolvent or is than the aggregate
rendered insolvent upon the making of amount of the capital
the dividend payment or distribution. represented by the
If such a dividend or distribution is issued and outstanding
made, the stockholder receiving such stock of all classes
payment is liable to the corporation having a preference
for return of the amount of such under the distribution
distribution which exceeds that which of assets). In general,
could have been made without rendering a corporation may redeem
the corporation insolvent. or repurchase its shares
only if such redemption
or repurchase would not
impair the capital of
the corporation.
-----------------------------------------------------------------------------------------------
Redeemable Generally shares may be issued as Shares issued as
Shares redeemable shares at the option of the redeemable shares may be
corporation or of the shareholder. redeemed at the option
of the corporation or of
the stockholder.
================================================================================================
</TABLE>
Federal Income Tax Consequences
Holders of Imsco Common Stock will not recognize gain or loss for federal
income tax purposes as a result of the Merger and the conversion of their shares
into shares of New Imsco. The basis of the shares of New Imsco in the hands of
each stockholder will be the same as the basis of the holder's shares of Imsco,
and the holding period for shares of New Imsco will include the holding period
for shares of Imsco, provided that the shares of Imsco were held as capital
assets at the date of the merger.
Counsel to Imsco and New Imsco, Campbell & Fleming, P.C., 250 Park Avenue,
New York, New York, has given its opinion to Imsco that the reincorporation
merger will not be a taxable event for either Imsco, New Imsco, or their
shareholders. This opinion is not binding on the Internal Revenue Service.
A dissenting Imsco stockholder who receives only cash for his shares of
Imsco Common Stock will recognize gain or loss for federal income tax
purposes measured by the difference, if any, between such holder's basis in the
stock and the amount received by him for his stock. The gain or loss will be
characterized for federal income tax purposes as capital gain or loss as
ordinary income. The gain or loss will be charaterized as capital (i) the
holder's shares of Imsco Common Stock are held as capital assets, and (ii)
the holder receives cash with respect to all shares of Imsco Common Stock which
he owns, including shares owned by application of the attribution rules of
Section 318 of the Code.
Section 318 of the Code provides, in part, that a stockholder will be
considered to be the owner of shares which are owned by certain corporations,
partnerships, trust and estates in which the stockholder has a beneficial
ownership interest, shares which such stockholder has an option to acquire, and
shares owned by certain members of family (not including brothers and sisters).
Under certain circumstances, the attribution rules with respect to shares
attributed from a family member may be waived.
Dissenters' Rights
If approved by a two-thirds majority of the Imsco shareholders, Imsco may
be merged into its wholly-owned subsidiary, New Imsco. Massachusetts law
provides that under these circumstances: if the merger proposed is approved by
the Imsco shareholders at the Annual Meeting and effected by Imsco, any Imsco
shareholder (1) who files with the Company before the taking of the vote on the
approval of such action, written objection to the proposed action stating that
he intends to demand payment for his shares if the merger action is taken, and
(2) whose shares are not voted in favor of such action, has or may have the
right to demand in writing from the Company (or in the case of a consummated
merger, New Imsco), within twenty days after the date of mailing to him of
notice in writing that the corporate action has become effective, payment for
his shares and an appraisal thereof. Such Company and any such stockholder shall
in such cases have the rights and duties and shall follow the procedure set
forth in sections 88 to 98, inclusive, of Chapter 156B of the Massachusetts
Business Corporation Law.
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<PAGE>
Anti-takeover Effects
New Imsco will not be subject to any business combination statute limiting
the ability of corporations to merge with or enter into transactions involving
interested stockholders, although Imsco is currently subject to the
Massachusetts business combination statute described above. If in the future
New Imsco were to have a class of voting stock that were listed on a national
securities exchange or quoted on an inter-dealer quotation system or that had
more than 2,000 holders of record, and if New Imsco did not elect to forego the
provisions of the Delaware business combination statute, it would be subject to
that statute as described above. Imsco does not currently anticipate any events
that would bring New Imsco within the scope of the Delaware business combination
statute. In any event, the provisions of the Delaware statute generally permit
an interested stockholder to consummate a business combination somewhat sooner
than does the Massachusetts statute and accordingly the reincorporation may not
create additional impediments to takeovers.
General
Financial statements and management's discussion and analysis of financial
condition and results of operation are contained in the "Form 10-KSB Annual
Report" of the Company which is being provided to the shareholders before or at
the same time that this Proxy Statement is being delivered.
Approval of the reincorporation merger requires the affirmative vote of the
holders of at least two-thirds of all of the issued and outstanding Common Stock
of Imsco.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE REINCORPORATION
OF IMSCO IN DELAWARE AS "IMSCO TECHNOLOGIES, INC." BY MERGING IMSCO INTO NEW
IMSCO.
AUTHORIZATION OF AN ADDITIONAL 12,000,000 SHARES OF COMMON STOCK
Imsco's Certificate of Incorporation currently permits the issuance of a
maximum of 3,000,000 share of Common Stock. Currently approximately 3,000,000
shares are issued and outstanding; accordingly, no shares are available for
issuance. In particular, up to 1,500,000 shares of Common Stock must be
reserved for issuance under the Employees Incentive Stock Option Program
described below if that Program is to function. The Board of Directors
accordingly has provided that the Certificate of Incorporation of New Imsco will
authorize the issuance of a maximum of 15 million shares of common stock, an
increase of 12,000,000 shares over the number issued by Imsco. The New Imsco
common stock will have voting rights of one vote per share on all matters
requiring a vote of all shareholders. Upon liquidation, the holders of New
Imsco common stock will share ratably in the assets of New Imsco remaining after
all obligations of New Imsco have been satisfied or reserved for and all amounts
payable to holders of senior classes of stock have been paid. Holders of the
New Imsco common stock will be entitled to receive dividends thereon in amounts
declared by the Board of Directors and at times determined by the Board of
Directors, in each case in its sole discretion.
18
<PAGE>
There are no preemptive rights appertaining to the New Imsco common stock.
The unissued shares of New Imsco common stock after the merger may be issued for
cash or such other consideration permitted by law as the Board of Directors may
determine.
In addition to issuances under the Employee Incentive Stock Option Program,
the additional common stock may be issued for general corporate purposes from
time to time or in connection with acquisitions, divestitures and other
extraordinary corporate transactions. The Board of Directors does not intend to
solicit further approval from shareholders for the issuance of any of the New
Imsco common stock to be authorized by the proposed amendment.
Increasing the number of authorized shares of common stock could render it
more difficult for persons not favored by management to effect a business
combination or similar transaction (often referred to as a "takeover"), even if
the transaction is favored by the holders of a majority of the Common Stock that
is not controlled by the management of Imsco. Management could impede a
takeover if the newly authorized stock were issued to management or persons
aligned with management. Because a significant amount of common stock is owned
by the directors and officers of Imsco, Imsco believes that the increase in
authorized shares will not have any material anti-takeover effect at this time.
The issuance of additional common stock may have the effect of diluting the
equity interests of current shareholders in New Imsco. Aside from the 1,500,000
shares of New Imsco common stock that will be reserved to cover options granted
under the Employee Incentive Stock Option Program and the shares to be issued to
Mr. Yurak, Mr. Berg, and Dr. Waldman in the exchange of their DPI common stock
for shares of common stock of New Imsco, there are no current commitments to
issue additional common stock.
Approval of the increase in the authorized number of shares of common stock
for New Imsco requires the affirmative vote of the holders of at least two-
thirds of all of the issued and outstanding Common Stock. If for any reason the
proposal to reincorporate in Delaware were not approved by the Imsco
shareholders or even if approved by the shareholders but the Board of Imsco
elected not to proceed with the merger into New Imsco for any reason, including
but not limited to dissenting shareholders of Imsco exercising their rights to
have their shares appraised and purchased by the consolidated company, New
Imsco, the affirmative vote of the holders of at least a majority of all of the
issued and outstanding Common Stock would be required for approval of this
proposal. In that event, the certificate of incorporation of Imsco in
Massachusetts would be amended to increase the authorized number of shares of
Common Stock to 15,000,000.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AUTHORIZATION OF
AN ADDITIONAL 12,000,000 SHARES OF COMMON STOCK.
AUTHORIZATION TO ISSUE UP TO 1,000,000 SHARES OF PREFERRED STOCK
Imsco's Certificate of Incorporation currently does not provide for the
issuance of any class of preferred stock. As noted in the Company's Annual
Report on Form 10-KSB for the year ending December 31, 1995 at "Management's
Discussion and Analysis", Imsco will require additional equity investments in
order to continue its current operations. The Board of Directors believes that
authorizing the issuance of preferred stock by New Imsco would create more
opportunities to raise capital by allowing New Imsco to structure an equity
security in accordance with the wishes of
19
<PAGE>
investors. Furthermore, preferred stock could be used instead of common stock
to effectuate extraordinary corporate transactions or to finance general
corporate purposes.
Therefore, the Board of Directors has provided that the Certificate of
Incorporation of New Imsco will authorize the issuance of a maximum of 1,000,000
shares of preferred stock with a par value of $.01 per share. The preferred
stock would be issued for cash or such order consideration permitted by law as
the Board of Directors may determine. The terms, rights, preferences and other
conditions of the preferred stock, as well as the consideration for its
issuance, would be determined by the Board of Directors from time to time, as
permitted by Delaware law. As a result, holders of New Imsco common stock will
not have the right to be notified prior to the issuance of any class or series
of preferred stock authorized by the Board of Directors and will not be
requested to vote on or consent to the issuance of any preferred stock or the
terms, rights, preferences and conditions of that stock. As preferred stock,
any shares issued can have preferences over the common stock in matters such as
voting rights, dividend rights, liquidation rights, anti-dilution rights
features and other terms. Accordingly, creating a class of preferred stock with
terms to be determined by the Board of Directors could render it more difficult
for persons not favored by management to effect a business combination or
similar transaction (often referred to as a "takeover"), even if the transaction
is favored by the holders of a majority of the Common Stock that is not
conducted by the management of Imsco. This would occur if the newly authorized
preferred stock were issued to management or persons aligned with management.
The equity interests of the holders of common stock in New Imsco will be diluted
by the issuance of preferred stock. There are no current commitments to issue
any preferred stock.
Approved of the authorization for preferred stock for New Imsco requires
the affirmative vote of the holders of at least two-thirds of all of the issued
and outstanding Common Stock. If for any reason the proposal to reincorporate
in Delaware were not approved or the Board of Directors of Imsco elected not to
proceeds with the merger into New Imsco for any reason, the affirmative vote of
the holders of at least two-thirds of all of the issued and outstanding Common
Stock would be required for approval of this proposal. In that event, the
certificate of incorporation of Imsco in Massachusetts would be amended to
authorize the issuance of up to 1,000,000 shares of preferred stock.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE AUTHORIZATION TO
ISSUE UP TO 1,000,000 SHARES OF PREFERRED STOCK.
LIMITATION ON CERTAIN PERSONAL LIABILITY OF DIRECTORS FOR MONETARY DAMAGES
As permitted by Delaware law, the certificate of incorporation of New Imsco
contains a provision that eliminates the personal liability of directors for
damages to the corporation or its stockholders for any breach of the duty of
care in such capacity unless the acts or omissions were in bad faith, involved
intentional misconduct or knowing violation of law, resulted in improper
personal benefits, involved the payment of a dividend or the authorization of a
stock repurchase that would impair the corporation's capital, or occurred prior
to the adoption of the provision.
Under Delaware law, unless the certificate of incorporation contains the
provision described above, the directors of a corporation have fiduciary duties
to the corporation and its stockholders which include without limitation a duty
to take care and a duty of loyalty. Directors are required
20
<PAGE>
to perform these duties in good faith and with the degree of care that an
ordinarily prudent person in a like position would use under similar
circumstances. Massachusetts law, which currently governs Imsco, is almost
identical.
The limitation of personal monetary liability of directors included in the
New Imsco certificate of incorporation does not eliminate all fiduciary duties
but does effectively limit the duty of care to only the situations involving
directors' bad faith, intentional misconduct or knowing violation of law,
improper personal benefits or authorizing certain excessive dividends or
distributions. The provision would also not apply to directors' acts or
omissions prior to the effective date of the reincorporation. In all other
cases of a breach of the duty of care, directors would not be liable to New
Imsco or its stockholders for money damages under the Delaware law.
If adopted, the provision would not affect directors' liability under
federal law, such as the federal securities law, or liability to persons who are
not stockholders, or claims against directors arising out of acts or omissions
taken in another capacity, such as claims arising out of the actions of a
director while acting as an officer of New Imsco. Further, the provision would
not affect any right New Imsco or a stockholder might have to seek equitable
relief under Delaware law, such as an injunction or rescission of a transaction
involving a breach of the duty of care. Such equitable relief may be
unavailable as a practical matter in many situations or may be of limited
usefulness in many circumstances.
Imsco believes that limiting the personal monetary liability of directors
as described above will make it easier in the future to attract and retain
capable and experienced directors by providing additional protection to
directors against challenges ostensibly based on a breach of the procedural duty
of care but actually challenging business judgments of the board. Adoption of
the provision might also enable New Imsco in the future to receive more
favorable insurance rates for directors' liability coverage. Further, adoption
of the provision may give directors some protection in situations where New
Imsco may be unable to find its indemnification or defense obligations to them.
No director or potential nominee has left the board or indicated his or her
reluctance to serve on the board because Imsco did not limit directors'
liability in this fashion, and the board of Imsco does not know of any threat by
Imsco or any of its shareholders to sue any director. Although to date Imsco
believes that it has been able to find qualified directors, the poor financial
condition of Imsco makes it wise to take all reasonable steps to encourage other
qualified persons to serve as directors in the future.
Approval of the provision to limit the personal monetary liability of
directors of New Imsco requires the affirmative vote of the holders of at least
two-thirds of all of the issued and outstanding Common Stock. The Massachusetts
BCL also permits Massachusetts corporations to amend their certificates of
incorporation in this fashion. If for any reason the proposal to reincorporate
in Delaware were not approved, the affirmative vote of the holders of at least a
majority of all of the issued and outstanding Common Stock would be required for
approval of this proposal. In that event, the certificate of incorporation of
Imsco would be amended to limit the personal liability of directors to exactly
the same extent as would have been provided by the Certificate of incorporation
of New Imsco.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE PROVISION TO
LIMIT THE MONETARY LIABILITY OF DIRECTORS.
21
<PAGE>
APPROVAL OF EMPLOYEE INCENTIVE STOCK OPTION PROGRAM
On May 21, 1996, the Board of Directors adopted the Employee Incentive
Stock Option Program (the "Option Program"), which provides for the issuance of
up to the lesser of 24% of the issued and outstanding Common Stock
or 1,500,000 shares of Common Stock with a current market value of approximately
$2,625,000 based on the closing bid price of the Company's Common Stock on
June 5, 1996, as quoted on the OTC Bulletin Board) through the grant of
incentive and non-qualified stock options. Stock options will be issued by
action of the Board of Directors or its Compensation Committee (the
"Administrator") to key employees of Imsco as a long-term incentive.
Key employees, as described in the Non-Qualified Stock Option Plan, will be
designated by the Administrator in its sole discretion; there are currently
three employees so designated. All current employees, officers and directors
of the Company are eligible to be designated as "key employees". After the
reincorporation of Imsco in Delaware, the Option Program would be a benefit
plan of New Imsco.
Stock options under the Option Program will provide for an exercise price
per share determined by the Administrator (but not less than the par value of
$.001), subject to tax requirements described below in connection with incentive
stock options. No payment will be required from participants in connection with
grants. The options will be exercisable as specified by the Administrator at the
time of grant, although the tax benefits of incentive stock options described
below will be unavailable if the option is exercised less than one year after
grant. Options will be exercisable for a period determined by the Administrator
but not in excess of 10 years after grant.
Tax Consequences of Stock Options
Imsco believes that the following discussion summarizes federal income tax
consequences of the stock options to be granted under the Option Program under
present law.
Non-Qualified Stock Options
---------------------------
Generally an employee will not be taxed upon grant of any non-qualified
option under the Option Program, but rather, at the time of the exercise of the
option, the employee will realize ordinary income for federal income tax
purposes in an amount equal to the excess of the fair market value of the shares
purchased over the option price, except as noted below. Imsco will generally be
entitled to a federal income tax deduction at such time and in the same amount
as the employee recognized ordinary income. If stock so acquired is later sold
or exchanged, then the difference between the sale price and the fair market
value of the stock on the date the option was exercised is generally taxable as
long-term or short-term capital gain or loss depending upon whether the stock
has been held for more than one year after exercise.
As stated above, income is generally realized by an employee upon exercise
of a non-qualified stock option. If an exercise of an option by an employee
could subject an employee to suit under Section 16(b) of the Securities Exchange
Act of 1934, the determination of the income realized and the realization of
that income is postponed so long as a sale of the shares would expose the
employee to that suit, unless the employee elects within 30 days after exercise
to be taxed as of the exercise date. If realization is postponed, the
determination is made based on fair market value of the shares as of the first
date on which liability under Section 16(b) ends and both the employee and Imsco
would compute their tax items on that basis.
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Incentive Stock Options
-----------------------
The Administrator in its discretion may grant incentive stock options as
defined by the Code. No taxable income will be realized by an optionee upon the
grant or exercise of an incentive stock option; provided, however, that the
amount by which the fair market value of the shares on the date of exercise of
an incentive stock option exceeds the option price will be a tax preference item
subject to the alternative minimum tax. If the option is exercised by delivery
of previously-owned shares of Imsco Common Stock or New Imsco common stock in
partial or full payment of the option price, no gain or loss will normally be
recognized by the optionee on the transfer of such previously-owned shares.
If the stock received upon exercise of an incentive stock option is held
for more than one year after the date of transfer (the "One-Year Holding
Period") and more than two years after the option is granted (the "Two-Year
Holding Period"), the optionee will have a long-term capital gain or loss on the
sale of such stock measured by the difference between the amount realized and
his or her basis in such shares. If an optionee disposes of any shares acquired
upon the exercise of an Incentive Stock Option prior to the expiration of the
One-Year and Two-Year Holding Periods, including a disposition by delivering
those shares in full or partial payment of the price of another incentive stock
option, this will be a "disqualifying disposition." Generally, upon a
disqualifying disposition, the optionee will realize compensation taxable as
ordinary income in an amount equal to the excess of the fair market value of the
shares at the time of exercise over the option price paid by the optionee for
such shares, limited, however, to the gain realized on the sale. Any further
gain would be taxable as a long-term or short-term capital gain.
Imsco generally will not be entitled to claim a Federal income tax
deduction with respect to the grant or exercise of an incentive stock option
unless the optionee realized ordinary income by making a disqualifying
disposition. In the event of a disqualifying disposition, Imsco will be
entitled to a deduction at the same and in the same amount that the optionee
realizes compensation taxable as ordinary income.
Options issued under the Option Program are intended to comply with the
requirements of Rule 16b-3 under the Securities Exchange Act of 1934, as
amended. Massachusetts law also requires shareholder approval if the Option
Plan is to be effective. No commitments or proposals to grant options or
designate other participants have been made by the Administrator.
Approval of the Option Program requires the affirmation vote of at least a
majority of the shares voted on the proposal. Because essentially all of
Imsco's authorized shares of Common Stock have been issued and are outstanding,
no options can be exercised until Imsco's shareholders increase the authorized
number of shares of Common Stock. A copy of the Option Program is attached as
Exhibit A to this Proxy Statement.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" APPROVAL OF THE OPTION PROGRAM
23
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INDEPENDENT PUBLIC ACCOUNTANTS
Gordon, Harrington & Osborn, P.C., Certified Public Accountants of North
Andover, Massachusetts, were engaged as Imsco' independent accountants on March
27, l996. At its meeting held April 25, 1996 the Board of Directors of Imsco
ratified the appointment of Gordon Harrington & Osborn as auditors for Imsco for
fiscal year 1995. Gordon Harrington & Osborn, P.C. replaced David Miller &
Company, Certified Public Accountants, who had been the prior auditors for the
Company. At the Annual Meeting it is the intention of the persons named in the
proxy enclosed herewith to vote in favor of the ratification, confirmation and
approval of such action by the Board of Directors to the engagement of Gordon,
Harrington & Osborn, P.C.. A majority of all of the votes cast on the proposal
is required in order to approve the selection of auditors. A representative of
Gordon, Harrington & Osborn, P.C. will attend the meeting and, if he so desires,
make a statement; he will also respond to appropriate questions.
On March 25, 1996, Imsco was advised that a principal of David Miller & Company,
Certified Public Accountants, had recently acquired shares of the Company's
Common Stock and was recently approached in 1996 to consider being Chief
Financial Officer of the Company. This purchase of Common Stock was recently
made since the date of David Miller & Company's last audit of the Company
for fiscal 1994 and the rendering of his accountant's report at that time.
Accordingly, because of such new interest in the equity securities of the
Company, the accounting firm would no longer be independent within the
definition of the SEC's rules and regulations, and consequently the accounting
firm could not provide the Company with independent audited financial statements
for the year ended December 31, 1995.
To Imsco's knowledge, at the time David Miller & Company ceased to act as its
independent accountants, there were no disagreements that would have been
referred to in their report on Imsco' financial statements. Imsco or person on
its behalf have not consulted Gordon Harrington & Osborn, P.C. regarding the
application of accounting principles to a specific completed or contemplated
transaction or the type of audit opinion that might be rendered on Imsco'
financial statements.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF GORDON,
HARRINGTON & OSBORN, P.C. AS AUDITORS FOR IMSCO.
COST OF PROXY SOLICITATION
The cost of preparing, assembling and mailing of this Proxy Statement and
Annual Report, the Notice of Annual Meeting and form of Proxy will be borne by
Imsco. Imsco will also solicit proxies by telephone without any payment of
additional compensation. Imsco will request brokerage houses, custodians,
nominees and fiduciaries to forward the proxy material to the beneficial owner
of the stock held of record by such persons, and Imsco will reimburse them,
upon request, for reasonable expenses incurred in connection therewith.
OTHER MATTERS FOR THE MEETING
No other business is to be presented to the meeting so far as is now known
or foreseen, but in the event that any other matter is properly presented by
person other than the Board of Directors, it is intended that the enclosed proxy
will be voted upon it according to the judgment of the person or persons voting
the proxy to the extent permitted by regulations of the Securities and Exchange
Commission.
VOTING PROCEDURES
Votes made by proxies returned prior to the date of the Annual Meeting will
be counted by Imsco's transfer agent. Votes made by proxies returned on the
date of the Annual Meeting to the secretary to the meeting and votes cast by
shareholders attending or represented by proxy holders (other than those named
by management) will be counted by inspectors of election appointed by the
chairman of the meeting and who are expected to be employees of Imsco. Those
votes will be added to those counted by the transfer agent and the last vote or
proxy will control. Abstentions and failure by record holders represented at
the meeting to vote the shares owned by beneficial owners (including "broker
non-votes") on any proposal will be counted as being represented at the meeting
24
<PAGE>
for purposes of determining the existence of a quorum but those shares will not
be counted as voting on the proposal in question. Abstentions and failures to
vote therefore will have no effect on proposals that must be adopted by a
majority of the votes cast and on proposals requiring approval by a percentage
of all outstanding shares, abstentions and failures to vote will not affect the
number of votes needed to carry the proposal.
PROPOSALS FOR 1997 ANNUAL MEETING
Shareholder proposals for the 1997 Annual Meeting of Imsco must be received
at the executive offices of Imsco at 40 Bayfield Drive, North Andover,
Massachusetts 01845 no later than June 17, 1997 for inclusion in the 1997 proxy
statement and form of proxy.
On behalf of the Board of Directors: Dr. Alan Waldman - Proxy Committee
ANNUAL REPORT TO SHAREHOLDERS
FOR THE YEAR ENDED DECEMBER 31, 1995
See Form 10-KSB of the Company for the year ended December 31, l995 accompanying
this Proxy Statement.
25
<PAGE>
Please complete, sign, date and fold this Proxy and return it to the Company in
the self-addressed envelope provided.
IMSCO, INC.
PROXY PROXY FOR ANNUAL MEETING OF SHAREHOLDERS
July 9, 1996
The undersigned shareholder of Imsco, a Massachusetts corporation (the
"Company"), hereby constitutes and appoints Mr. Sol L. Berg, Dr. Alan Waldman or
Mr. James Yurak, or any of them, the attorneys and proxies of the undersigned,
with full power of substitution and revocation, for and in the name of the
undersigned, to attend the Annual Meeting of Shareholders of the Company to be
held at Ramada Inn - Rolling Green, 311 Lowell Street, Andover, Massachusetts
01810, on Thursday, July 9, l996, at 10:00 a.m. local time, and any adjournment
or adjournments thereof, receipt of the notice of said meeting stating the
purpose thereof being hereby acknowledged, to vote all of the shares of Common
Stock of the Company that the undersigned would be entitled to vote if then
personally present, as follows:
1. ELECTION OF DIRECTORS. FOR all nominees listed WITHHOLD AUTHORITY to vote
for (except as marked to the contrary below): [ ] for all nominees below [ ]
The nominees are: Vic Bauer, Sol L. Berg, Vernon Oberholtzer, Alan Waldman and
James Yurak.
(Instruction: To withhold authority to vote for any individual, write the
nominee's name in the space provided below:)
- ----------------------------------------------------------------------------
2. REINCORPORATION IN DELAWARE BY MERGER
UNDER THE NAME IMSCO TECHNOLOGIES, INC. [ ] FOR [ ] AGAINST [ ] ABSTAIN
3. AUTHORIZATION OF 12,000,000 SHARES OF
ADDITIONAL COMMON STOCK [ ] FOR [ ] AGAINST [ ] ABSTAIN
4. AUTHORIZATION OF "BLANK CHECK"
PREFERRED STOCK. [ ] FOR [ ] AGAINST [ ] ABSTAIN
5. APPROVAL OF LIMITATION ON CERTAIN
PERSONAL LIABILITY OF DIRECTORS
FOR DAMAGES. [ ] FOR [ ] AGAINST [ ] ABSTAIN
6. APPROVAL OF EMPLOYEE INCENTIVE
STOCK OPTION PROGRAM. [ ] FOR [ ] AGAINST [ ] ABSTAIN
7. APPROVAL OF AUDITORS. [ ] FOR [ ] AGAINST [ ] ABSTAIN
and to vote all of such shares as they or he may deem proper upon all other
matters that may properly come before the meeting and any adjournment or
adjournments of the meeting.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
This proxy is given and is to be construed under the laws of the Commonwealth
of Massachusetts and will be voted "FOR" the nominees named herein and "FOR" the
above proposals, if in either case the undersigned has not specified a choice in
the space provided therefore. This proxy when properly executed will be voted
in the manner directly in this Proxy by the undersigned.
Please date and sign exactly as name
appears hereon. Date , 1996
------------------------------- -----------
When shares are held by joint tenants, both should (shareholder sign here)
sign. Executors, administrators,
trustees, etc. Date , 1996
------------------------------- -----------
should so indicate (shareholder sign here)
<PAGE>
Imsco, Inc.
1996 Non-Qualified Stock Option Plan
1. Name and Purpose. This Plan shall be known as the Imsco,
----------------
Inc.1996 Non-Qualified Stock Option Plan (the "Plan").The purpose of the Plan is
to advance the interests of Imsco, Inc., a Massachusetts corporation (the
"Company"), and its subsidiaries, by providing incentive, through the grant of
nontransferable options to acquire common shares ("Stock Options") of the
Company and the granting of shares of the Company's common stock ("Common
Shares") subject to temporal restrictions on transfer and substantial risks of
forfeiture ("Restricted Stock"), for the continued services of key employees,
directors, consultants, and other service providers, and by attracting able
individuals to employment with, or the performance of services for, the Company
and its subsidiaries. The Plan is intended to conform to the extent necessary
with all provisions of the Securities Act of 1933, as amended (the "Securities
Act"), and the Securities Exchange Act of 1934, as amended (the "Exchange Act")
and any and all regulations and rules promulgated by the Securities and Exchange
Commission thereunder, including without limitation Rule 16b-3. Notwithstanding
anything herein to the contrary, the Plan shall be administered, and Stock
Options shall be granted and may be exercised, only in such a manner as to
conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan and Stock Options granted hereunder shall be deemed
amended to the extent necessary to conform to such laws, rules and regulations.
2. Administration. The Plan shall be administered by the Board of
--------------
Directors of the Company (the "Board") or a Committee of the Board consisting of
no less two directors (all references to the "Board" herein shall mean
"Committee" if applicable). The Board may establish, subject to the provisions
of the Plan, such rules and regulations as it deems necessary for the proper
administration of the Plan, and make such determination and take such action in
connection therewith or in relation to the Plan as it deems necessary or
advisable, consistent with the Plan.
3. Eligibility. All regular employees of the Company and
-----------
individuals who perform services for the Company shall be eligible to
participate in the Plan. Directors who are members of the administrative
committee described in Section 3 of the Imsco, Inc. 1996 Stock Plan are not
eligible to participate in the Plan while they are serving in that capacity.
4. Shares Subject to the Plan.
--------------------------
(a) The shares to be issued and delivered by the Company upon
the exercise of stock options shall be the Company's shares of common stock,
$.001 par value ("Common Shares"), which may be either authorized but unissued
shares or treasury shares.
(b) The aggregate number of Common Shares of the Company which
may be issued under the Plan shall not exceed 1,500,000 shares; subject,
however, to the adjustment provided in Paragraph 7 in the event of stock splits,
stock dividends, exchanges of shares or the like occurring after the effective
date of this Plan. No stock option may be granted under this Plan which could
cause such maximum limit to be exceeded.
<PAGE>
(c) Common Shares covered by a stock option which is no longer
exercisable with respect to such shares shall again be available for issuance
under this Plan.
5. Grant of options. The Board may from time to time, in its
----------------
discretion and subject to the provisions of the Plant grant options to eligible
individuals described in Paragraph 3 hereof. Individuals to whom options have
been granted are herein referred to as "Optionees." Each option shall be
embodied in an option agreement signed by the Optionee and the Company providing
that the option shall be subject to the provisions of this Plan and containing
such other provisions as the Board may prescribe not inconsistent with the Plan.
6. Terms and Conditions of Option. All options granted under the
------------------------------
Plan shall contain such terms and conditions as the Board from time to time
determines, subject to the foregoing and following limitations and requirements:
(a) Option prices: The option price per Common Share for any
-------------
option granted under the Plan shall be the price determined by the Board.
(b) Period within which option may be exercised: The period of
-------------------------------------------
each option shall be fixed by the Board, but in no event may any option be
exercised after the expiration of ten years from the date the option is granted.
The Board may, in its discretion, determine as a condition of any option that
all or a stated percentage of the Common Shares covered by such option shall
become exercisable in installments or otherwise, only after the completion of a
specified service requirement by the Optionee.
(c) Method of exercise: An option granted under the Plan may be
------------------
exercised, in whole or in part, by submitting a written notice to the Board,
signed by the Optionee or such other person who may be entitled to exercise such
option, and specifying the number of Common Shares as to which the option is
being exercised. Such notice shall be accompanied by the payment of the full
option price for such Common Shares, which made be paid in cash (or check or
other instrument acceptable to the Board), or with the consent of the Board, in
Common Shares valued at the fair market value of such shares on the date of
exercise. In addition, any amount necessary to satisfy applicable federal,
state or local tax requirements shall be paid promptly by the Optionee upon
notification of the amount due. A certificate or certificates for the Common
Shares purchased shall be issued by the Company after the exercise of the option
and payment therefore.
The Company may make loans to an Optionee in connection with the
exercise of an option as the Board, in its sole discretion, may determine. Any
such loan shall be subject to the terms and conditions determined by the Board;
provided what no such loan shall have an initial term of more than five (5)
years. Any such loans may be renewed at the end of such fine (5) year period
with the consent of the Board.
(d) Termination of option by reason of termination of
-------------------------------------------------
employment: Unless the Board in its discretion determines otherwise, if an
- ----------
Optionee's employment with the Company terminates, all options granted under
this Plan to such Optionee which are not exercisable on the date of such
termination of employment shall immediately terminate, and any
2
<PAGE>
remaining options shall terminate if not exercised before the expiration of the
following periods, or at such earlier time as may be applicable under Paragraph
6(b) above: (1) three (3) months following such termination of employment, if
such termination was not a result of death or disability (within the meaning of
Section 22(e)(3) of The Internal Revenue Code of 1986, as amended), or (i) one
(1) year following the date of death or commencement of disability, if the
Optionee was employed by the Company at the time of death or the commencement of
disability.
(e) Change in Control: Unless the Board determines otherwise,
-----------------
upon a Change in Control of the Company, all options shall become immediately
exercisable. For purposes of this Plan, a Change in Control means: (i) the
first purchase of Common Shares pursuant to a tender offer or exchange offer
(other than an offer by the Company or any of its subsidiaries) for all, or any
part of, the Common Stock ("Offer"), (ii) a change in control of the Company (as
defined in this paragraph), (iii) approval by the Company's stockholders of a
merger in which the Company does not survive as an independent, publicly owned
corporation, except for a merger by the Company into its wholly owned subsidiary
corporation where the subsidiary is the surviving corporation, a consolidation,
or a sale, exchange or other disposition of all or substantially all the
Company's assets, or (iv) a change in the composition of the Board of Directors
during any period of two consecutive years such that individuals who at the
beginning of such period were members of the Board of Directors cease for any
reason to constitute at least a majority whereof, unless the election, or the
nomination for election by the Company's stockholders, of each new director was
approved by a vote of at least two-thirds of the directors then still in office
who were directors at the beginning of the period. A "change in control" is
deemed to occur at the time of any acquisition of voting securities of the
Company by any person or group (as such term is used in Sections 13(d) and 14(d)
of the Exchange Act), but excluding (A) the Company or any of its subsidiaries,
(B) any person who was an officer or director of the Company on the date
following adoption of the Plan by the Board of Directors of the Company or (C)
any savings, pension or other benefits plan for the benefit of employees of the
Company or any of its subsidiaries, which theretofore did not beneficially own
voting securities representing more than 30% of the voting power of any class of
outstanding voting securities of the Company, if such acquisition results in
such entity, person or group owning beneficially voting securities representing
more than 30% of the voting power of any class of outstanding voting securities
of the Company.
(f) Non-transferability: Each option and all rights thereunder
-------------------
shall be exercisable during the Optionee's lifetime only by him and shall be
non-assignable and non-transferable by the Optionee except, in the event of the
Optionee's death, by will or by the laws of descent and distribution. In the
event the death of an Optionee occurs, the representative or representatives of
the Optionee's estate, or the person or persons who acquired (by bequest or
inheritance) the rights to exercise the Optionee's options in whole or in part
may exercise the option prior to the expiration of the applicable exercise
period, as specified in Paragraph 6(d) above.
(g) No rights as stockholder: The Optionee shall have no rights
------------------------
as a stockholder with respect to any Common Shares subject to this option prior
to the date of issuance of a certificate or certificates for such Common Shares.
3
<PAGE>
(h) Compliance with securities laws: Options granted and Common
-------------------------------
Shares issued by the Company upon exercise of options shall be granted and
issued only in full compliance with all applicable securities laws, including
laws, rules and regulations of the Securities and Exchange Commission and
applicable state Blue Sky Laws. With respect thereto, the Board may impose such
conditions on transfer, restrictions and limitations as it may deem necessary
and appropriate to assure compliance with such applicable securities laws.
(i) Modification or cancellation of options: The Board shall
---------------------------------------
have the authority to effect, at any time and from time to time, with the
consent of the affected Optionee or Optionees, the modification of the terms of
any option (subject to the limitations hereof), including the acceleration of
the exercisability of any option for any reason, or the cancellation of any or
all outstanding options granted under this Plan. In substitution for cancelled
options, the Board may grant new options (subject to the limitations hereof)
covering the same or different numbers of Common Shares at an option price per
share in all events not less than fair market value on the date of the new
grant.
(j) Restrictions on transfer: Any disposition at any time of
------------------------
the Common Shares acquired pursuant to the exercise of an option by the Optionee
or legal representative shall be subject to any and all restrictions on transfer
of the Company's Common Stock as then contained in the Company's Articles of
Incorporation, or by-laws, if any.
7. Share Adjustments. In the event there is any change in the
-----------------
Company's Common Shares resulting from stock splits, stock dividends,
combinations or exchanges of shares, or other similar capital adjustments,
equitable proportionate adjustments shall automatically be made without further
action by the Board in (i) the number of Common Shares available for award under
this Plan, (ii) the number of Common Shares subject to options granted under
this Plan, and (iii) the option price of options granted under this Plan.
In the event of a Change in Control as defined in Paragraph 6(e)
above, the Board may, but shall not be required to, make any adjustment in
respect of outstanding options as it shall determine in its sole discretion,
including but not limited, to the acceleration of the exercisability of options,
or the cancellation of options if not exercised within a period determined by
the Board, provided what the Board shall exercise its discretion under this
paragraph on a uniform and consistent basis with respect all outstanding options
at the time of such Change in Control.
8. Amendment or Termination. The Board may terminate this Plan at
------------------------
any time, and may amend the Plan at any time or from time to time. If the Plan
is terminated, any unexercised option shall continue to be exercisable in
accordance with its terms, except as provided in Paragraph 7 above.
9. Company Responsibility. All expenses of this Plan, including the
----------------------
cost of maintaining records, shall be borne by the Company. The Company shall
have no responsibility or liability (other than under applicable securities
laws) for any act or thing done or left undone with respect to the price, time,
quantity, or other condition and circumstances of the purchase of Common Shares
under the terms of the Plan, so long as the Company acts in good faith.
4
<PAGE>
10. Implied Consent. Every Optionee, by acceptance of an option
---------------
under this Plan, shall be deemed to have consented to be bound, on his or her
own behalf and on behalf of his or her heirs, assigns, and legal
representatives, by all of the terms and conditions of this Plan.
11. No Effect on Employment Status. The fact that an individual has
------------------------------
been granted an option under this Plan shall not limit or otherwise qualify the
right of the Company to terminate the individual's employment or contract at any
time.
12. Duration and Termination of the Plan. The Plan shall became
------------------------------------
effective upon its adoption by the Board of Directors, subject to approval by
holders of a majority of the outstanding shares of voting capital stock of the
Company (the "Effective Date"). No option shall be granted subsequent to the
tenth anniversary of the Effective Date, or subsequent to any earlier date as of
which the Plan is terminated pursuant to Paragraph 8 hereof.
13. Restricted Stock.
----------------
(a) The Administrator shall determine the key employees to whom, and the
time or times at which, grants of Restricted Stock will be made, the number of
shares of Restricted Stock to be granted, the price (if any) to be paid by such
employees, subject to Section 14(b)(i), the time or times within which such
Restricted Stock may be subject to forfeiture, and the other terms and
conditions of the grants in addition to those set forth in Section 13(b). The
administrator may condition the grant of Restricted Stock upon the attainment of
specified performance goals or such other factors as the Administrator may
determine in its sole discretion.
(b) Restricted Stock granted under the Plan shall contain any terms and
conditions, not inconsistent with the provisions of the Plan, which are deemed
desirable by the Administrator. A key employee who receives a grant of
Restricted Stock shall not have any rights with respect to such Grant unless and
until such key employee has executed an agreement evidencing such Grant in the
form approved from time to time by the Administrator, has delivered a fully
executed copy thereof to the Company, and has otherwise complied with the
applicable terms and conditions of such Grant. In addition, Restricted Stock
granted under the Plan shall be subject to the following terms and conditions:
(i) the purchase price for Common Shares consisting of Restricted Stock, if any,
will be specified by the Administrator; (ii) grants of Restricted Stock shall
only be accepted by executing a Restricted Stock agreement and paying in cash or
by check, whatever price (if any) if required under Section 13(b)(i); (iii) each
key employee granted Restrictive Stock shall be issued a stock certificate in
respect of such shares of Restricted Stock. Such certificate shall be
registered in the name of such key employee and shall bear an appropriate legend
referring to the terms, conditions, and restrictions applicable to such Grant;
(iv) any stock certificate evidencing Common Shares consisting of Restricted
Stock shall either (A) be held in custody by the Company until the employment
and other restrictions thereon shall all have lapsed; or (B) be affixed with a
legend, identifying such Shares as Restricted Stock and expressly prohibiting
the sale, transfer, tender, pledge, assignment or encumbrance of such Shares, as
the Administrator shall determine (With respect to any Restricted Stock held in
custody by the Company, the key employee granted such Restricted Stock shall
deliver to the Company's stock power, endorsed in blank, relating to the Common
5
<PAGE>
Shares represented by such Stock. With respect to an Restricted Stock held by a
key employee under legend, the key employee granted such Restricted Stock shall
deliver tot he Company an acknowledgement that such Stock remains subject to a
substantial risk of forfeiture in the event of termination of employment under
certain circumstances, and that the certificates representing ownership of such
Stock will be surrendered to the Company immediately upon any such termination
of employment); (v) Subject to the provisions of the Plan and the Restricted
Stock agreement, during a temporal period set by the Administrator and
commencing with the date of such grant (the Restriction Period), a key employee
shall not be permitted to sell, transfer, tender, pledge, assign or otherwise
encumber any Restricted Stock granted under the Plan. However, the
Administrator, in its sole discretion, may provide for the lapse of such
transfer or other restrictions in installments, or accelerate or waive such
restrictions in whole or in part, based on service, performance or other factors
and criteria selected by the Administrator; (vi) except as provided in this
Section 13(b)(vi) and in Section 13(b)(v), a key employee shall have, with
respect to shares of Restricted Stock granted to him, all of the rights of a
shareholder of the Company, including the right to vote such Stock and the right
to receive any dividends thereon (The Administrator, in its sole discretion and
as determined at the time of a grant of Restricted Stock, may permit or require
such dividends otherwise due and payable to be deferred and, if the
Administrator so determines, reinvested either in additional Restricted Stock
(to the extent Common Shares are available), or otherwise. Stock dividends
issued with respect to Restricted Stock shall be treated as additional shares of
Restricted Stock. As Restricted Stock, each additional Common Shares will be
subject to the same restrictions, terms and conditions applicable to the
Restricted Stock. As Restricted Stock, each additional Common Shares will be
subject to the same restrictions, terms and conditions applicable to the
Restricted Stock with respect to which such additional Common Shares were
issued; (vii) so Restricted Stock shall be transferrable by a key employee
other than by will or by the laws of descent and distribution; (viii) in the
event Restricted Stock is forfeited by a key employee, the Company will refund
to such key employee any payment(s) made by such key employee to purchase such
Stock, promptly upon such forfeiture (and any corresponding surrender of stock
certificates).
(c) To ensure that Grants of Restricted Stock actually reflects the
performance of the Company and service of the key employee, the Administrator
may provide, in its sole-discretion, for a random performance-based award, or
other grant, designed to guarantee a minimum value, payable in cash or Common
Shares, to the recipient of a Restricted Stock Grant, subject to such
performance, future service, deferral and other terms and conditions as may be
specified by the Administrator.
14. Investment Representations, Approvals and Listings.
--------------------------------------------------
The Administrator may, if it deems appropriate, condition its grant of any
Stock Option hereunder upon receipt of the following investment representation
from the optionee and any other representation or covenant reasonably necessary
for compliance with law:
"I agree that any Common Shares of Imsco, Inc., which I may acquire by virtue of
this Stock Option shall be acquired for investment purposes only and not with a
view to distribution or resale, and may not be transferred, sold, assigned,
pledged, hypothecated or otherwise disposed of by me unless (i) a registration
statement or post-effective amendment to a registration
6
<PAGE>
statement under the Securities Act with respect to said Common Shares has become
effective so as to permit the sale or other disposition of said shares by me; or
(ii) there is presented to the Company, an opinion of counsel satisfactory to
the Company and its counsel to the effect that the sale or either proposed
disposition of said Common Shares by me may lawfully be made otherwise than
pursuant to an effective registration statement or post-effective amendment to a
registration statement relating to the said shares under the Securities Act of
1933, as amended."
15. Massachusetts Law to Govern. This Plan shall be construed and
---------------------------
administered in accordance with and governed by the laws of the Commonwealth of
Massachusetts.
7
