Fill and Sign the Sec Filingverisign Inc Form

PROPOSAL TO AUTHORIZE AND ISSUE SUBORDINATEDCONVERTIBLE DEBENTURES On August 11, 1988 and on July 18, 1989, the Company's Board of Directors, subject to shareholder approval, authorized the issuance of $1,800,000 of the Company's 8% subordinated convertible debentures (the "Debentures") to certain officers of the Company. The officers include Herbert M. Pearlman ($1,000,000), David S. Lawi ($500,000), Walter M. Craig ($175,000) and Daniel T. Murphy ($125,000 (the "Officers"). The Debentures will bear interest at 8% per annum, payable on a quarterly basis, and are convertible, at the option of the holder, into common stock of the Company at a conversion price of $.44 per share and will mature on August 10, 1999. The Debentures will be purchased by the Officers with their individual promissory notes in the face amount of the Debentures, each bearing interest at 9% per annum and payable in equal annual installments of principal plus interest over 10 years (the "Notes"). Interest and principal on each Note may be repaid in cash or by surrender of securities of the Company or its affiliates held by the issuer of the Note. The value of surrendered securities will be the then current market value of such securities or if no market for such securities then exists, the value of debt securities shall be equal to the principal and accrued interest amounts so surrendered, and the value of equity securities will be determined by an independent firm or individual engaged in performing such services selected and paid by the Company. Securities may not be surrendered in satisfaction of a Note payment if the officer surrendering the securities has material inside information regarding the issuer of the securities which, if known generally in the market, would result in a decrease in the then current market value of the securities to be surrendered. A Debenture shall only be convertible to the extent that principal payments on the Note given in consideration for the Debenture have been made in cash or securities aggregating in value in excess of the cumulative par value of the shares ($. 10 per share) issued to date with respect to the Debenture and to be issued upon the contemplated conversion of the Debenture. To the extent that principal payments on the Note aggregate in value less than the cumulative conversion price of the shares issued to date with respect to the Debenture, some or all of such shares issued upon conversion may be considered partially paid and assessable. In addition, common stock of the Company may not be surrendered in satisfaction of a Note payment if under the applicable law and regulations such a surrender would be a prohibited redemption of the common stock. No collateral will be pledged to secure any of the Notes. Failure of an Officer to make payments on his Note when due will constitute a default and permit the Company to require immediate payment of the entire debt. The debt evidenced by the Debentures will rank on a parity with all of the Company's other unsecured subordinated debt except it will rank behind the Company's outstanding senior subordinated debt. As of June 30, 1989 the Company's subordinated debt which would rank on a parity with the Debentures amounted to $1,613,000, and the balance of the Company's debt, $5,338,000, would be senior in priority to the debt evidenced by the Debentures. As of the date of this Proxy Statement, the Company has no debt which would be subordinate to the debt evidenced by the Debentures. The Debentures are not subject to redemption. No sinking fund or partial retirement payments are to be made during the term of the Debentures. Under the terms of the Debentures, the Company is not restricted from undertaking any activities. The Debentures do not restrict the Company's ability to pay dividends, make acquisitions and finance the Company's operations through the issuance of additional debt. Failure of the Company to pay sums to the Debentureholders when due will constitute a default under the Debentures and will allow the Debentureholders to require immediate payment of the entire debt. The terms of the Debentures cannot be modified without the consent of the holders thereof. The interests of the Debentureholders will not be represented by a trustee or other fiduciary.The issuance of the common stock pursuant to conversion of the Debentures will have a dilutive effect on the holders of the Company's common stock. If all of the Debentures are converted, a maximum of 4,090,909 shares of common stock will be issued. If all of the Officers converted their Debentures (based on the number of shares of common stock outstanding as of the date hereof) (i) Mr. Pearlman would increase his ownership percentage of the Company's common stock from 8.50% to 16.15%; (ii) Mr. Lawi would increase his ownership percentage of the Company's common stock from 4.57% to 8.77%; (iii) Messrs. Murphy and Craig would increase their ownership of the Company's common stock from less than one percent each to 1.29% and 1.87%, respectively; and (iv) the percentage of stock owned by all the Company's officers and directors as a group would increase from 13.46% to 27.97%. The Company will reserve authorized but unissued shares of its common stock in an amount sufficient to cover this maximum issuance. As of the date of this Proxy Statement, the Company has 24,301,228 shares of common stock outstanding with an additional 5,972,858 shares that are issuable upon conversion of the Company's outstanding options, warrants and other convertible securities. As of the date of the Board's authorization of the issuance of the Debentures, the closing price of the Company's common stock on the American Stock Exchange was $375 per share. As of August 29, 1989, the closing price of the Company's common stock on the American Stock Exchange was $.4375 per share. Upon approval of the issuance of the Debentures by the shareholders, the Company intends to apply to the American Stock Exchange for the listing of the shares of common stock into which the Debentures are convertible. The proceeds realized from the sale of the Debentures or the conversion of the Debentures into common stock will be used by the Company for general working capital. Certain Considerations The Board of Directors believes the issuance of the Debentures is advantageous and in the best interest of the Company as an incentive for management to build the Company's assets with a focus towards capital appreciation. The Company believes the issuance of the Debentures provides a preferred vehicle to incentivize management in that (i) it will not increase the amount of compensation payable to management since the Debentures are to be purchased by the Officers at par value, (ii) the Officers are provided with the alternative benefits of debenture income or stock appreciation and (iii) the Notes provide a viable liquidity mechanism for securities held by the Officers which might otherwise be subject to resale restrictions in the public market. In establishing the conversion price, the Board of Directors reviewed and evaluated the current and past market price of the Company's common stock. Although certain members of the Board are to receive the Debentures, the four members of the Board who are not purchasing the Debentures unanimously voted for the terms of the Debenture issuance and believed the purpose for the issuance of the Debentures was warranted. The Board did not seek an outside valuation of the terms of the Debenture issuance or the consideration to be given therefor. The Board approved the issuance of the Debentures by unanimous vote.The Officers' status as Debentureholders and as members of the Company's management may present situations where they will have a conflict of interest. The Company does not have an established policy for dealing with such situations; however the Company does not believe that the Officers' status as Debentureholders will impair their ability to carry out their fiduciary obligations as officers and directors of the Company. See "Election of Directors," "Stock Ownership of Management" and "Executive Officers" for certain information regarding the relationship of the Officers to the Company. The Debentures and the shares of common stock to be issued upon conversion of the Debentures will be issued pursuant to an exemption from registration under Section 4(2) of the Securities Act of 1933, as amended. and the Debentures, as well as the stock certificates issued upon conversion thereof, will bear an appropriate restrictive legend. The financial statements of the Company, Bamberger and Seitel and the management's discussion and analysis of financial condition and results of operations for those companies, which appear in the Company’s 1988 Annual Report to Shareholders. and the Company's Quarterly Report on Form 10-Q for the period ended June 30, 1989 are incorporated by reference to this Proxy Statement. The affirmative vote of the holders of a majority of the outstanding shares of the Company's common stock is required to approve the issuance of the Debentures. The Board of Directors recommends a vote FOR approval of the proposal. If the Company's shareholders do not approve the issuance of the Debentures. the Company will not issue the Debentures. Helm Resources, Inc. 9/26/89