<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 1, 1995.
REGISTRATION NO. 33-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------
DIGICON INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
<TABLE>
<S> <C>
DELAWARE 76-0343152
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
</TABLE>
3701 KIRBY DRIVE, SUITE 112
HOUSTON, TEXAS 77098
(713) 526-5611
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA
CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
<TABLE>
<S> <C>
RICHARD W. MCNAIRY WITH COPIES TO:
3701 KIRBY DRIVE, SUITE 112 RICHARD L. WYNNE
HOUSTON, TEXAS 77098 OR KATHY L. TEDORE
(713) 526-5611 PORTER & HEDGES, L.L.P.
(NAME, ADDRESS, INCLUDING ZIP CODE, AND 700 LOUISIANA, 35TH FLOOR
TELEPHONE NUMBER, HOUSTON, TEXAS 77002-2764
INCLUDING AREA CODE, OF AGENT FOR SERVICE) (713) 226-0600
</TABLE>
---------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after the Registration Statement becomes effective.
---------------------
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, please check the following box. /X/
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box.
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
==================================================================================================
PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED BE REGISTERED PER UNIT OFFERING PRICE FEE(1)
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Common Stock, $.01 par
value....................... 4,901,701 $5.875(1) $28,797,493(1) $9,930.17(1)
==================================================================================================
</TABLE>
(1) Pursuant to Rule 457(c), the registration fee is calculated on the basis of
the average of the high and low sale prices for the Common Stock on the
American Stock Exchange on October 26, 1995, $5.875 per share.
---------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION ACTING PURSUANT TO SAID SECTION 8(A)
MAY DETERMINE.
================================================================================
<PAGE> 2
***************************************************************************
* *
* INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A *
* REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED *
* WITH THE SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT *
* BE SOLD NOR MAY OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE *
* REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT *
* CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY *
* NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE IN WHICH *
* SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO *
* REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH *
* STATE. *
* *
***************************************************************************
SUBJECT TO COMPLETION, DATED OCTOBER 31, 1995
PROSPECTUS
4,901,701 SHARES
DIGICON INC.
COMMON STOCK
---------------------
The shares of common stock offered hereby are shares of common stock, par
value $.01 per share ("Common Stock"), of Digicon Inc. (the "Company") held by
certain stockholders of the Company. See "Selling Stockholders" and "Description
of Common Stock." The Company will not receive any of the proceeds from the sale
of the Common Stock offered hereby.
The Company's Common Stock is traded on the American Stock Exchange under
the symbol "DGC." On October 26, 1995, the reported closing sale price of the
Common Stock on the American Stock Exchange was $5.875 per share.
The Common Stock may be offered and sold from time to time by Selling
Stockholders through brokers or dealers or directly to one or more purchasers in
negotiated transactions, at market prices prevailing at the time of sale or at
prices related to such market prices.
The Selling Stockholders and brokers executing selling orders on behalf of
the Selling Stockholders may be deemed to be "underwriters" within the meaning
of the Securities Act of 1933, as amended (the "Securities Act"), in which event
commissions received by such brokers may be deemed to be underwriting
commissions under the Securities Act. For further information concerning the
plan of distribution of the Common Stock, see "Plan of Distribution."
The expenses of this offering, estimated at $32,430.17 will be paid by the
Company.
PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD CAREFULLY
CONSIDER THE MATTERS SET FORTH UNDER THE CAPTION "CERTAIN RISKS."
---------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
---------------------
THE DATE OF THIS PROSPECTUS IS OCTOBER *, 1995.
<PAGE> 3
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C., a Registration Statement on Form S-3 under
the Securities Act, with respect to the Common Stock offered by this Prospectus.
Certain portions of the Registration Statement have not been included in this
Prospectus. For further information, reference is made to the Registration
Statement and the Exhibits thereto. Statements made in this Prospectus regarding
the contents of any contract or document filed as an exhibit to the Registration
Statement are not necessarily complete and, in each instance, reference is
hereby made to the copy of such contract or document so filed. Each such
statement is qualified in its entirety by such reference.
The Company is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Commission. The Registration Statement (with exhibits), as well as such reports,
proxy statements and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024, Judiciary Plaza,
450 Fifth Street, N.W., Washington, D.C. 20549, and its regional offices at the
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661
and 7 World Trade Center, Suite 13, New York, New York 10048. Copies of such
material can be obtained at prescribed rates from the Public Reference Section
of the Commission at its principal office at Judiciary Plaza, 450 Fifth Street,
N.W., Room 1024, Washington, D.C. 20549. Such materials also can be inspected at
the offices of the American Stock Exchange, 86 Trinity Place, New York, New York
10006, on which the Common Stock is listed.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company's Annual Report on Form 10-K for the fiscal year ended July 31,
1995, and all other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since July 31, 1995 are hereby incorporated herein by
reference.
All documents filed by the Company pursuant to Sections 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date of this Prospectus and before the
termination of the offering covered hereby will be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or deemed to
be incorporated by reference in this Prospectus shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that a statement
contained in this Prospectus or in any other subsequently filed document which
also is or is deemed to be incorporated by reference modifies or replaces such
statement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated by reference in this Prospectus,
other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates. In addition, a copy of the Company's most recent annual report on
Form 10-K will be promptly furnished, without charge, upon written or oral
request. All such requests should be directed to Digicon Inc., 3701 Kirby Drive,
Suite 112, Houston, Texas 77098, Attention: Corporate Secretary, telephone
number (713) 526-5611.
2
<PAGE> 4
THE COMPANY
Digicon Inc. (the "Company") provides seismic data acquisition and
processing services on a worldwide basis to the petroleum industry. Oil and gas
companies utilize seismic data for the determination of suitable locations for
drilling exploratory wells and, increasingly, in reservoir management for the
development and production of oil and gas reserves.
The Company acquires seismic data in marine, land and transition zone
environments and processes data acquired by its own crews and the crews of other
operators. The Company operates both marine seismic crews and land and
transition zone seismic crews. Additionally, the Company operates seismic data
processing facilities in major petroleum centers around the world. The Company
conducts its operations under exclusive contracts with one or more oil companies
and also maintains a library of seismic data for later sale to oil companies on
a non-exclusive basis.
The Company was incorporated in Texas in 1965 and was reincorporated in
Delaware in 1969. The Company's executive offices are located at 3701 Kirby
Drive, Houston, Texas 77098, and its telephone number is (713) 526-5611.
CERTAIN RISKS
Prospective purchasers should carefully consider the following factors.
DEPENDENCE ON PETROLEUM INDUSTRY SPENDING; COMPETITION FOR SEISMIC BUSINESS
Demand for the Company's services depends primarily on the level of
spending by oil and gas companies for exploration, production and development
activities. Significant increases in foreign exploration and production activity
have provided the impetus for the gradual improvement in the market for oilfield
services which began in the late 1980's; however, petroleum industry spending
for U.S. exploration and production activities has been adversely affected by
volatility in oil and natural gas prices. As a result, competition among
geophysical services contractors has historically been intense. However, as a
result of changing technology and increased capital requirements, the seismic
industry has consolidated substantially since the late 1980s. The consolidation
has reduced the number of competitors. Although reliable comparative figures are
not available in all cases, the Company believes that its major competitors
operate more data acquisition crews than the Company, have substantially greater
revenues than the Company and are subsidiaries or divisions of major industrial
enterprises having far greater financial resources than the Company. Competition
for available seismic surveys is based on several competitive factors, including
price, performance, dependability and crew availability.
HISTORICAL CASH FLOW SHORTFALL; POSSIBLE FUTURE NEED FOR ADDITIONAL FINANCING
Historically, the Company's cash flow from operations has been insufficient
to fund all of its research and development, capital expenditure and working
capital needs, and to service its debt. Since emerging from Chapter 11
proceedings in July 1991, the Company has required increased working capital,
principally as a result of an increase in the level of its operating activities,
including foreign operations and participation in nonexclusive data surveys. The
Company's foreign operations require greater amounts of working capital than
similar domestic activities, as the average collection period for foreign
receivables is generally longer than for comparable domestic accounts. Because
of the lead time between survey execution and sale, non-exclusive surveys
generally require greater amounts of working capital than contract work. If the
Company were to expand its operations at a rate not supported by operating cash
flow or if the current demand for and pricing of geophysical services were to
decrease substantially, additional financing could be required. Additional
financing, if so required, may not be obtainable and, in such event, the
Company's operating results and financial condition would be adversely affected.
3
<PAGE> 5
OPERATING CONDITIONS; HIGH FIXED COSTS; TURNKEY CONTRACTS
The Company's data acquisition activities involve operating under extreme
weather and other hazardous conditions. Thus, these operations are subject to
risks of loss from such causes as fires and accidental explosions resulting from
the mishandling of equipment and supplies. The Company carries insurance against
the destruction of or damage to its seismic vessels, chartered vessels and its
geophysical equipment in amounts that it considers adequate. The Company may
not, however, be able to obtain insurance against certain risks or for certain
equipment located from time to time in certain areas of the world. Because of
the high fixed costs involved in the major components of the Company's business,
downtime or low productivity due to reduced demand, weather interruptions,
equipment failures or other causes can result in significant operating losses.
In recent years, most of the Company's contracts for data acquisition have been
on a turnkey or on a combination of turnkey/time basis. Under the turnkey
method, payments for data acquisition services are based upon the amount of data
collected, and the Company bears substantially all of the risk of business
interruption caused by inclement weather and other hazards. When a combination
of both turnkey and time methods is used, the risk of business interruptions is
shared in an agreed percentage by the Company and the customer.
RISKS INHERENT IN INTERNATIONAL OPERATIONS
In fiscal years 1994 and 1995, 55% and 54%, respectively, of the Company's
revenues were derived from international operations and export sales, which are
subject in varying degrees to risks inherent in doing business abroad. Such
risks include the possibility of unfavorable changes in tax or other laws;
partial or total expropriation; currency exchange rate fluctuations and
restrictions on currency repatriation; the disruption of operations from labor
and political disturbances, insurrection or war; and the requirements of partial
local ownership of operations in certain countries. The Company obtains
insurance against war, expropriation, confiscation and nationalization when such
insurance is available and when management considers it advisable to do so. Such
coverage is not always available, and when available, is subject to unilateral
cancellation by the insuring companies on short notice.
GOVERNMENTAL REGULATION
The Company's operations are subject to a variety of federal, state and
local laws and regulations, including laws and regulations relating to the
protection of the environment. The Company is required to invest financial and
managerial resources to comply with such laws and related permit requirements in
its operations and anticipates that it will continue to do so in the future.
Although such expenditures historically have not been material to the Company,
the fact that such laws or regulations are changed frequently makes it
impossible for the Company to predict the cost or impact of such laws and
regulations on its future operations. The adoption of laws and regulations which
have the effect of curtailing exploration by oil and gas companies could
adversely affect the Company's operations by reducing the demand for its
geophysical services.
4
<PAGE> 6
SELLING STOCKHOLDERS
The following table sets forth certain information concerning the Selling
Stockholders and reflects share information adjusted for a one for three reverse
stock split (the "Reverse Split") effective January 17, 1995:
<TABLE>
<CAPTION>
SHARES
OWNED
AND TO SHARES SHARES
BE TO BE TO BE
NAME AND ADDRESS OWNED SOLD OWNED
---------------- --------- -------- ------
<S> <C> <C> <C>
Acorn Fund............................................... 940,000 850,000 *
c/o Wanger Asset Management L.P.(1)
227 West Monore, Suite 3000
Chicago, Illinois 60606
Artform, N.V............................................. 10,000 10,000 None
c/o Tocqueville Asset Management L.P.(2)
1675 Broadway
New York, New York 10019
Christian Humann and Francois Sicart
Trustees under a deed of trust dated 2/2/88.............. 10,000 10,000 None
c/o Tocqueville Asset Management L.P.(2)
1675 Broadway
New York, New York 10019
Montber, S.A............................................. 220,000 220,000 None
c/o Tocqueville Asset Management L.P.(2)
1675 Broadway
New York, New York 10019
Melon Bank, N.A., as trustee for National Intergroup
Inc.................................................... 30,000 30,000 None
c/o Tocqueville Asset Management L.P.(2)
1675 Broadway
New York, New York 10019
Trace Inc................................................ 25,000 25,000 None
c/o Tocqueville Asset Management L.P.(2)
1675 Broadway
New York, New York 10019
Jomacim, Inc. ........................................... 15,000 15,000 None
c/o Tocqueville Asset Management L.P.(2)
1675 Broadway
New York, New York 10019
WKDL Investments Ltd. ................................... 15,000 15,000 None
c/o Tocqueville Asset Management L.P.(2)
1675 Broadway
New York, New York 10019
The Tocqueville Fund..................................... 75,000 75,000 None
c/o Tocqueville Asset Management L.P.(2)
1675 Broadway
New York, New York 10019
Value Partners, Ltd...................................... 458,497 458,497 None
2200 Ross Avenue, Suite 4660 West
Dallas, Texas 75201
</TABLE>
5
<PAGE> 7
<TABLE>
<CAPTION>
SHARES
OWNED
AND TO SHARES SHARES
BE TO BE TO BE
NAME AND ADDRESS OWNED SOLD OWNED
---------------- --------- --------- -----
<S> <C> <C> <C>
Quantum Partners LDC ("Quantum")(4)...................... 1,024,263(3) 1,024,263(3) None
Kaya Flamboyan 9, Willemstad, Curacao,
Netherlands Antilles
Soros Fund Management(5)
George Soros(5)
Soros Capital L.P.(5)(7)................................. 43,200(6) 43,200(6) None
c/o Westbroke Limited
Richmond House
12 Par-La-Ville Road
Hamilton, Bermuda HMDX
Jupiter Management Co., Inc.(7)(8)....................... 42,000(6) 42,000(6) None
c/o Douglas B. Thompson, President
3535 Briarpark, Suite 200
Houston, TX 77042
Drake & Co.(9)........................................... 33,142(3) 33,142(3) None
c/o Neptune Management Company, Inc.
881 Ocean Drive, Unit 20F
Key Biscayne, FL 33149
Steven J. Gilbert(5)(10)................................. 3,573 3,573 None
Soros Capital L.P.
c/o Westbroke Limited
Richmond House
12 Par-La-Ville Road
Hamilton, Bermuda HMDX
JUPITER GROUP:(4)(11)
CCF/Jupiter, L.P.(7)(11)(12)........................... 497,561(3)(6) 497,561(3)(6) None
DJ Investors, L.P.(11)(12)............................. 108,939(3) 108,939(3) None
c/o Cambridge Capital Holdings, Inc.
767 Fifth Ave., Suite 2800
New York, NY 10153
Fund American Investment Subsidiary I, Inc.(11)........ 939,873(3) 939,873(3) None
c/o Mike Paquette
The 1820 House, Main Street
Norwich, VT 05055
J/D Funding Corp.(8)(11)............................... 148,617(3) 148,617(3) None
Jupiter Investment Company, Inc.(8)(11)................ 17,774(3) 17,774(3) None
c/o Douglas B. Thompson, President
3535 Briarpark, Suite 200
Houston, TX 77042
Ingrid Morsman(11)..................................... 8,515(3) 8,515(3) None
820 Potts Lane
Bryn Mawr, PA 19010
Natalie Thompson Defined Benefit Pension Plan(8)(11)... 30,639(3) 30,639(3) None
180 Orchard Way
Vero Beach, FL 32963
</TABLE>
6
<PAGE> 8
<TABLE>
<CAPTION>
SHARES
OWNED
AND TO SHARES SHARES
BE TO BE TO BE
NAME AND ADDRESS OWNED SOLD OWNED
---------------- ------- ------- -----
<S> <C> <C> <C>
Neptune Partners-1989A, L.P.(11)....................... 53,819(3) 53,819(3) None
Neptune 1989 Investors Limited(11)..................... 35,242(3) 35,242(3) None
Neptune 1989C Offshore Investors Limited(11)........... 37,739(3) 37,739(3) None
c/o Neptune Management Company, Inc.
881 Ocean Drive, Unit 20F
Key Biscayne, FL 33149
Arik Yale Prawer(11)................................... 5,971(3) 5,971(3) None
7150 Shoreline Drive, #3306
San Diego, CA 92122
Restart Partners, L.P.(11)............................. 63,422(3) 63,422(3) None
Restart Partners II, L.P.(11).......................... 98,915(3) 98,915(3) None
--------- ---------
c/o Morgens Waterfall Vintiadis & Company, Inc.
10 East 50th Street - 26th Floor
New York, NY 10022
Totals......................................... 4,991,701(2)(5) 4,901,701(2)(5)
========= =========
</TABLE>
- ---------------
* Does not exceed one percent.
(1) Wanger Asset Management, L.P. is the investment advisor to Acorn Fund.
(2) Tocqueville Asset Management L.P. is the investment advisor to these
entities.
(3) Includes the following shares of Common Stock which may be acquired by the
indicated stockholder upon exercise of outstanding warrants:
Quantum -- 40,443; Drake & Co. -- 369; CCF/Jupiter, L.P. -- 7,274; DJ
Investors, L.P. -- 1,712; Fund American Investment Subsidiary I,
Inc. -- 14,978; J/D Funding Corp. -- 2,393; Jupiter Investment Company,
Inc. -- 323; Ingrid Morsman -- 149; Natalie Thompson Defined Benefit
Pension Plan -- 539; Neptune Partners-1989A, L.P. -- 604; Neptune 1989
Investors Limited -- 396; Neptune 1989C Offshore Investors Limited -- 424;
Arik Yale Prawer -- 105; Restart Partners, L.P. -- 1,072; and Restart
Partners II, L.P. -- 1,677. These aggregate 72,458 warrants were issued in
connection with the Company's 1991 Chapter 11 Reorganization and are
presently exercisable through July 5, 1996 at an exercise price of $18.00
per share, as adjusted for the Reverse Split. Both the number of shares
purchasable under, and the exercise price of, the warrants are subject to
further adjustment in certain events, including stock splits or dividends
on, and combinations, subdivisions or reclassifications of the Common
Stock. The warrants may not be redeemed by the Company.
(4) Under the Company's bylaws and a Funding and Stockholders Agreement dated
April 9, 1991, between certain members of the Jupiter Group (see note (11)
below), Quantum and the Company (the Funding and Stockholders Agreement ),
Jupiter & Associates, a New York General Partnership ("Jupiter"), (whose
rights will, pursuant to the Distribution Agreement (defined in note (11)
below), be exercised by the Jupiter Group) and Quantum have, until such
time as they no longer collectively own more than 20% of the outstanding
Common Stock, the right to (i) designate an aggregate of six nominees for
election as directors (out of a present eight positions) at each annual
meeting of stockholders, (ii) appoint one additional director to an
expanded board of directors if the Company defaults in any payment
obligation on any of its then outstanding debt instruments or equity
securities, or if the Company incurs losses for any five consecutive fiscal
quarters, and (iii) designate two of the three members of the executive
committee of the board. Both Jupiter and Quantum have agreed that during
such time they will vote their shares in favor of the other's nominees. All
entities and individuals listed as part of the Jupiter Group may be deemed
to constitute a group within the meaning of the Exchange Act; similarly,
all entities and individuals listed as part of Quantum (see note (5) below)
may be deemed to constitute such a group. If acting together, the Jupiter
Group and Quantum would be deemed to beneficially own 3,071,289 shares or
approximately 27.3% of outstanding Common Stock. Each entity or individual
listed under Quantum or
7
<PAGE> 9
the Jupiter Group disclaims beneficial interest in shares owned,
controlled or deemed to be owned or controlled by each other entity or
individual so listed, except for George Soros who does not disclaim
beneficial ownership of Quantum. See Note (5) below.
(5) Soros Fund Management is an investment advisor to Quantum, George Soros is
the sole proprietor of Soros Fund Management. Soros Capital L.P. is an
indirect affiliate of Soros Fund Management. Steven J. Gilbert, a director
of the Company, is a managing director of Soros Capital L.P. Mr. Soros,
doing business as Soros Fund Management, expressly disclaims beneficial
ownership of the shares held by Soros Capital L.P. and Mr. Gilbert. Mr.
Gilbert expressly disclaims beneficial ownership of the shares held by
Quantum.
(6) Represents or includes the shares of Common Stock, which may be acquired by
the indicated stockholder (CCF/Jupiter, L.P. -- 34,800) upon exercise of
outstanding warrants. These warrants are presently exercisable through July
26, 1999 at an exercise price of $4.50 per share. See note (7) below.
(7) In July 1994, CCF Jupiter, L.P., along with Soros Capital L.P. and Jupiter
Management Co., Inc., extended a $3,000,000 subordinated, secured credit
facility to the Company. The Company's borrowings under this credit
facility bear interest at Bank of America's prime commercial lending rate
plus 3% through January 26, 1995, and thereafter, at Bank of America's
prime rate plus 6%. The Company repaid all of its borrowings under this
credit facility in June 1995. In connection with this credit facility, the
Company issued to these lenders warrants exercisable for 120,000 shares of
Common Stock at an exercise price of $4.50 per share, as adjusted for the
one for three reverse stock split effective January 17, 1995. Both the
number of shares purchasable under, and the exercise price of, the warrants
are subject to further adjustment in certain events, including stock splits
or dividends on, and reclassifications of, the Common Stock. The warrants
may not be redeemed by the Company. In November 1993 the Company obtained a
secured credit facility from the same affiliated lenders which provided for
total borrowings of $3,386,667, an annualized interest rate of 25%, and
maturity in May 1994. The Company repaid all of its borrowings under that
credit facility in April 1994.
(8) Douglas B. Thompson, a director and chairman of the board of the Company,
is an affiliate of Jupiter Management Co., Inc., J/D Funding Corp., Jupiter
Investment Company, Inc. and Natalie Thompson Defined Benefit Pension Plan.
Mr. Thompson disclaims beneficial interest in shares owned, controlled or
deemed to be owned or controlled by each such selling stockholders.
(9) Represents certain accounts held in the name of Drake & Co. which are
managed by Neptune Management Partners, L.P.
(10) Steven J. Gilbert is a director of the Company.
(11) The Jupiter Group consists of (i) Jupiter Investment Company, Inc., J/D
Funding Corp., DN Funding Corp., CCF/Jupiter, L.P., DJ Investors, L.P., and
Fund American Investment Subsidiary I, Inc., each of which is a general
partner of Jupiter, and (ii) Fund American Enterprises, Inc., Fund American
Enterprises Holdings, Inc., Neptune Partners-1989A, L.P., Neptune 1989
Investors Limited, Neptune 1989C Offshore Investors Limited, Restart
Partners, L.P., Restart Partners II, L.P., Ingrid Morsman, Natalie Thompson
Defined Benefit Pension Plan, Douglas B. Thompson, D. O. Nelson, Edwin H.
Morgens, John C. Waterfall, Francisco A. Garcia, A. Torrey Reade and Arik
Yale Prawer, each of which is an affiliate of one or more of the Jupiter
general partners, previously held an indirect interest in Jupiter or
acquired shares of the Company's Common Stock in connection with the
Distribution Agreement described below. Pursuant to an agreement effective
December 31, 1992 (the "Distribution Agreement"), Jupiter distributed all
shares of the Company's Common Stock and Common Stock purchase warrants
held by it to its general partners and other parties who held participation
interests in Jupiter. The entities or persons listed as members of the
Jupiter Group agreed pursuant to the Distribution Agreement that the
nominees which Jupiter is entitled under certain circumstances to designate
to the Company's Board of Directors will be selected by the vote of such
parties, with each such party having a number of votes equal to the number
of shares of Common Stock it holds.
(12) George F. Baker, a director of the Company, is an affiliate of CCF/Jupiter,
L.P. and DJ Investors, L.P. Mr. Baker disclaims beneficial interest in
shares owned, controlled or deemed to be owned or controlled by each such
selling stockholder.
8
<PAGE> 10
PLAN OF DISTRIBUTION
All or part of the Common Stock offered hereby may be sold by the Selling
Stockholders from time to time (i) on the American Stock Exchange or otherwise
at prices current at the time of sale or at prices related to such market
prices, either directly or through brokers or to dealers, to the extent that
such prices are obtainable and satisfactory to the Selling Stockholders or (ii)
to the extent the same may be available, pursuant to Rule 144 under the
Securities Act. It is anticipated that any commissions with respect to such
sales will not exceed regular brokerage commissions. The Selling Stockholders,
and brokers executing selling orders on behalf of the Selling Stockholders and
dealers to whom the Selling Stockholders may sell, may be deemed underwriters
within the meaning of the Securities Act. Any profit represented by the excess
of the selling price over the cost of the shares sold in the case of dealers, or
any commission received in the case of brokers, may be deemed to be underwriting
discounts or commissions under the Securities Act.
The Funding and Stockholders Agreement, as modified as to the Jupiter Group
by the Distribution Agreement, imposes certain restrictions on transfers to
third parties of shares of Common Stock owned by the Jupiter Group and Quantum.
These restrictions include rights of first refusal and participation rights
which apply (i) to any transfer of Common Stock which would exceed the then
applicable volume limitations of Rule 144(e)(1) under the Securities Act and
(ii) until either the Jupiter Group or Quantum ceases to own beneficially 5% of
then outstanding Common Stock. The Jupiter Group has such a right of first
refusal in respect of shares which Quantum desires to sell, and Quantum has such
a right of first refusal in respect of shares which any member of the Jupiter
Group desires to sell. The Jupiter Group also has a right to include shares of
Common Stock in a sale of Common Stock which Quantum desires to consummate, and
Quantum likewise has a right to include its shares of Common Stock in a proposed
sale by any member of the Jupiter Group. Given these restrictions, any sales of
Common Stock by the Jupiter Group or Quantum which at any given time would
exceed Rule 144's volume limitations would necessarily have to involve direct
transactions with purchasers, rather than sales through brokers or to dealers in
ordinary regular way open market transactions on the American Stock Exchange.
DESCRIPTION OF COMMON STOCK
The Company has only one class of stock outstanding, Common Stock, par
value $.01 per share. At October 31, 1995, of the 20,000,000 authorized shares
of Common Stock, there were 11,134,939 shares outstanding. Each share of Common
Stock has one vote on all matters presented to the stockholders. Subject to the
rights and preferences of any Preferred Stock which may be designated and
issued, the holders of Common Stock are entitled to receive dividends, if and
when declared by the board of directors, and are entitled on liquidation to all
assets remaining after the payment of liabilities. The Common Stock has no
preemptive or other subscription rights. Outstanding shares of Common Stock are,
and the shares of Common Stock offered hereby when issued and paid for will be,
fully paid and nonassessable. Since the Common Stock does not have cumulative
voting rights, the holders of more than 50% of the shares may, if they choose to
do so, elect all of the directors and, in that event, the holders of the
remaining shares will not be able to elect any directors. Chemical Shareholder
Services Group, Inc., Dallas, Texas, is the transfer agent and registrar for the
Common Stock.
COUNSEL
The validity of the Common Stock offered hereby has been passed upon for
the Company by Porter & Hedges, L.L.P., Houston, Texas.
EXPERTS
The financial statements incorporated in this Prospectus by reference from
the Company's Annual Report on Form 10-K for the year ended July 31, 1995 have
been audited by Deloitte and Touche LLP, independent auditors as stated in their
report, which is incorporated herein by reference, and has been so incorporated
in reliance upon the report of such firm given their authority as experts in
accounting and auditing.
9
<PAGE> 11
================================================================================
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION
NOT CONTAINED IN THIS PROSPECTUS; ANY INFORMATION OR REPRESENTATION NOT
CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER
THAN THOSE TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY STATE WHERE SUCH
OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE
HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS
BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF.
---------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
---
<S> <C>
Available Information.................. 2
Incorporation of Certain Documents by
Reference............................ 2
The Company............................ 3
Certain Risks.......................... 3
Selling Stockholders................... 5
Plan of Distribution................... 9
Description of Common Stock............ 9
Counsel................................ 9
Experts................................ 9
</TABLE>
================================================================================
================================================================================
4,901,701 SHARES
DIGICON INC.
COMMON STOCK
------------------------------
P R O S P E C T U S
------------------------------
OCTOBER , 1995
================================================================================
<PAGE> 12
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTIONS.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee.............. $ 9,930.17
Legal Fees and Expenses.......................................... 16,000.00
Accounting Fees and Expenses..................................... 2,500.00
Blue Sky and Related Expenses.................................... 2,000.00
Miscellaneous.................................................... 2,000.00
----------
Total.................................................. $32,430.17
==========
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware permits
a corporation to indemnify any person who was or is a party or is threatened to
be made a party to any threatened pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director, officer, employee or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by him in connection with such action.
In a suit brought to obtain a judgment in the corporation's favor, whether
by the corporation itself or derivatively by a stockholder, the corporation may
only indemnify for expenses, including attorney's fees, actually and reasonably
incurred in connection with the defense or settlement of the case, and the
corporation may not indemnify for amounts paid in satisfaction of a judgment or
in settlement of the claim. In any such action, no indemnification may be paid
in respect of any claim, issue or matter as to which such persons shall have
been adjudged liable to the corporation except as otherwise approved by the
Delaware Court of Chancery or the court in which the claim was brought. In any
other type of proceeding, the indemnification may extend to judgments, fines and
amounts paid in settlement, actually and reasonably incurred in connection with
such other proceeding, as well as to expenses (including attorneys' fees).
The statute does not permit indemnification unless the person seeking
indemnification has acted in good faith and in a manner he reasonably believed
to be in, or not opposed to, the best interests of the corporation and, in the
case of criminal actions or proceedings, the person had no reasonable cause to
believe his conduct was unlawful. There are additional limitations applicable to
criminal actions and to actions brought by or in the name of the corporation.
The determination as to whether a person seeking indemnification has met the
required standard of conduct is to be made (1) by a majority vote of a quorum of
disinterested members of the board of directors, or (2) by independent legal
counsel in a written opinion, if such a quorum does not exist or if the
disinterested directors so direct, or (3) by the stockholders.
The certificate of incorporation and bylaws of the Company require the
Company to indemnify the Company's directors and officers to the fullest extent
permitted under Delaware law, and to implement such provisions the Company has
entered into contractual indemnity agreement with its directors and executive
officers. The Company's Certificate of Incorporation limits the personal
liability of a director to the corporation or its stockholders to damages for
breach of the director's fiduciary duty.
The Company has purchased insurance on behalf of its directors and officers
against certain liabilities that may be asserted against, or incurred by, such
persons in their capacities as directors or officers of the registrant, or that
may arise out of their status as directors or officers of the registrant,
including liabilities under the federal and state securities laws.
II-1
<PAGE> 13
ITEM 16. EXHIBITS.
The following exhibits are filed with this Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
5 -- Opinion of Porter & Hedges, L.L.P. with respect to legality of
securities.
23-A -- Consent of Porter & Hedges, L.L.P. (included in Exhibit 5).
23-B -- Consent of Deloitte & Touche LLP.
24 -- Powers of Attorney (included on signature page of this Registration
Statement).
</TABLE>
ITEM 17. UNDERTAKINGS.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the Calculation of
Registration Fee table in the effective registration statement;
(iii) To include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Exchange Act that is incorporated by reference in the registration statement
shall be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-2
<PAGE> 14
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the Company
pursuant to the foregoing provisions, or otherwise, the Company has been advised
that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Company of expenses
incurred or paid by a director, officer or controlling person of the Company in
the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-3
<PAGE> 15
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Stephen J. Ludlow and Richard W. McNairy, and
each of them, either of whom may act without joinder of the other, his true and
lawful attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any or all pre-and post-effective amendments to this
Registration Statement, and to file the same, with all exhibits thereto and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto such attorneys-in-fact and agents, and each of them,
full power and authority to do and perform each and every act and thing
requisite and necessary to be done in and about the premises, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, and each of them, or the
substitute or substitutes of either of them, may lawfully do or cause to be done
by virtue hereof.
SIGNATURES
Pursuant to the requirements of the Securities Act, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Houston, State of Texas, on October 31, 1995.
DIGICON INC.
By: /s/ STEPHEN J. LUDLOW
------------------------------------
Stephen J. Ludlow, President and
Chief Executive Officer
Pursuant to the requirements of the Securities Act, this Registration
Statement has been signed by the following persons in the indicated capacities
and on the 31st day of October, 1995.
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ DOUGLAS B. THOMPSON Director and Chairman of the Board
- --------------------------------------------
Douglas B. Thompson
/s/ STEPHEN J. LUDLOW Director, President and Chief Executive
- -------------------------------------------- Officer
Stephen J. Ludlow
/s/ RICHARD W. MCNAIRY Chief Financial Officer
- --------------------------------------------
Richard W. McNairy
/s/ CHARLES H. ACKERMAN Principal Accounting Officer
- --------------------------------------------
Charles H. Ackerman
Director
- --------------------------------------------
George F. Baker
/s/ JAMES B. CLEMENT Director
- --------------------------------------------
James B. Clement
</TABLE>
II-4
<PAGE> 16
<TABLE>
<CAPTION>
SIGNATURE TITLE
--------- -----
<S> <C>
/s/ CLAYTON P. CORMIER Director
- --------------------------------------------
Clayton P. Cormier
Director
- --------------------------------------------
Steven J. Gilbert
/s/ EDWARD R. PRINCE, Jr. Director
- --------------------------------------------
Edward R. Prince, Jr.
/s/ JACK C. THREET Director
- --------------------------------------------
Jack C. Threet
</TABLE>
II-5
<PAGE> 17
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<S> <C>
* 5 -- Opinion of Porter & Hedges, L.L.P. with respect to
legality of securities.
*23-A -- Consent of Porter & Hedges, L.L.P. (included in Exhibit
5).
*23-B -- Consent of Deloitte & Touche LLP
*24 -- Powers of Attorney (included on signature page).
</TABLE>
- ---------------
* Filed herewith
<PAGE> 1
EXHIBIT 5
October 31, 1995
Digicon Inc.
3701 Kirby Drive, Suite 112
Houston, Texas 77098
Re: DIGICON INC. REGISTRATION STATEMENT ON FORM S-3;
SHELF RESALE PROSPECTUS
Gentlemen:
At your request, we have examined the Certificate of Incorporation of
Digicon Inc., a Delaware corporation (the "Company"), the bylaws and all
corporate proceedings of the Company in connection with the proposed sale to the
public by certain Selling Stockholders of the Company of up to 4,901,701 shares
of Common Stock, par value $.01 per share (the "Shares"), and have reviewed such
other matters as we deem relevant in the premises, and based upon such review
and examination, we are of the opinion that the Shares have been duly authorized
and are, or when issued in accordance with the terms of outstanding warrants and
upon the Company's receipt of the exercise price thereunder, will be validly
issued, fully-paid and nonassessable outstanding shares of Common Stock of the
Company.
We hereby consent to the reference to our firm under the caption "Counsel"
in the Prospectus included in the Registration Statement on Form S-3 being filed
by the Company with the Securities and Exchange Commission in connection with
the offering of the Shares.
Very truly yours,
PORTER & HEDGES, L.L.P.
<PAGE> 1
EXHIBIT 23-B
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in this Registration Statement of
Digicon, Inc. on Form S-3 of our report dated October 12, 1995, appearing in the
Annual Report on Form 10-K of Digicon Inc. for the year ended July 31, 1995 and
to the reference to us under the heading "Experts" in the Prospectus, which is
part of this Registration Statement.
DELOITTE & TOUCHE LLP
Houston, Texas
October 31, 1995
