SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. )
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [x]
Check the appropriate box:
[x] Preliminary Proxy Statement [ ] Confidential, For Use of
the Commission Only (as
permitted by Rule 14a-6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
UNIVERSAL SEISMIC ASSOCIATES, INC.
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(Name Of Registrant As Specified In Its Charter)
UNIVERSAL SEISMIC ASSOCIATES, INC. STOCKHOLDERS'
PROTECTIVE COMMITTEE
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(Name Of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
filing fee is calculated and state how it was determined):
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting
fee was paid previously. Identify the previous filing by
registration statement number, or the form or schedule and the date
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<PAGE>
Preliminary Copies
Confidential, For Use of the Commission Only
UNIVERSAL SEISMIC ASSOCIATES, INC.
STOCKHOLDERS' PROTECTIVE COMMITTEE
----------------
CONSENT AND PROXY STATEMENT
IN OPPOSITION
TO THE BOARD OF DIRECTORS
----------------
CONSENT TO REMOVE AND REPLACE DIRECTORS
AND
JANUARY 28, 1997 ANNUAL MEETING OF STOCKHOLDERS
OF
UNIVERSAL SEISMIC ASSOCIATES, INC.
-----------------
To Fellow Stockholders of
Universal Seismic Associates, Inc.:
This Consent and Proxy Statement is being furnished by
the Universal Seismic Associates, Inc. Stockholders'
Protective Committee (the "Committee") to the holders of
shares of common stock, par value $.0001 per share ("Common
Stock"), of Universal Seismic Associates, Inc., a Delaware
corporation (the "Company"), in connection with the
solicitation of consents to remove the Company's current
directors and to replace them with the Committee's nominees
described herein. It is also being furnished in connection
with the solicitation by the Committee of proxies in respect
of the Annual Meeting of Stockholders scheduled to be held
by the Company on January 28, 1997, and at any
adjournment(s) or postponement(s) thereof (the "Annual
Meeting"). The Annual Meeting is to be held at the
Company's principal executive offices, located at 16420 Park
Ten Place, Suite 300, Houston, Texas, at 10:00 a.m., local
time. At the Annual Meeting, the Company's current Board of
Directors is requesting a stockholder vote to elect its
slate of five directors. The Committee is proposing a slate
of directors in opposition to the Board of Directors' slate.
This Consent and Proxy Statement, together with the
enclosed BLUE consent card and the enclosed BLUE proxy card,
are first being mailed or distributed to stockholders of the
Company on or about December [__], 1996.
How to Vote
Reasons to Vote. The Committee believes that it is
necessary to remove the current members of the Company's
Board of Directors and replace such members with the
Committee's nominees described herein in order to revitalize
the Company and steer it toward a more successful future.
The Committee is dissatisfied with the Company's
deteriorating financial performance and certain recent
actions of the Company's Board of Directors and management.
In particular, the Committee believes that the recent
termination of the Company's merger negotiations with
SUELOPETROL c.a., a Venezuelan seismic contractor
("Suelopetrol"), was the responsibility of the Company's
Board and management. In the Committee's opinion, the
Company's failure to consummate the proposed merger with
Suelopetrol has jeopardized the Company's future viability.
See "Background of and Reasons for the Solicitation" below.
Consent Solicitation. The Committee is hereby
soliciting the consent of the Company's stockholders to the
removal of the entire current Board of Directors of the
Company and to the election of the Committee's nominees to
fill the vacancies on the Board created by such removal, all
without a meeting of stockholders (the "Consent
Solicitation"). If, after reading this Consent and Proxy
Statement, you want to join the Committee in seeking to
revitalize the Company and to help maximize stockholder
value:
MARK THE ENCLOSED BLUE CONSENT CARD TO INDICATE YOUR
CONSENT TO THE REMOVAL OF THE CURRENT BOARD OF
DIRECTORS AND YOUR CONSENT TO THE REPLACEMENT OF SUCH
DIRECTORS WITH THE COMMITTEE'S NOMINEES
SIGN THE ENCLOSED BLUE CONSENT CARD
DATE THE ENCLOSED BLUE CONSENT CARD
RETURN THE ENCLOSED BLUE CONSENT CARD IN THE ENCLOSED
ENVELOPE (NO POSTAGE NECESSARY) AS SOON AS POSSIBLE
For further information concerning the Consent Solicitation,
see "Consent Solicitation" and "Consent and Proxy
Procedures" below.
Proxy Solicitation. The Committee is also hereby
soliciting proxies (the "Proxy Solicitation") for use at the
Annual Meeting of the Company in support of:
- an amendment of the Company's By-laws to set the
order of business at the Annual Meeting;
- an amendment of the Company's By-laws to fix the
size of the Board of Directors to be elected at the
Annual Meeting at five; and
- the election of the Committee's five nominees to
the Board of Directors of the Company.
The Committee believes that the Proxy Solicitation is
necessary in the event that the Consent Solicitation is not
successfully completed by the date of the Annual Meeting
(January 28, 1997) in order to help ensure that its nominees
are elected to replace the current Board. See "Consent
Solicitation -- Need for Proxy Solicitation" below. If you
want to help the Committee achieve its goals:
MARK THE ENCLOSED BLUE PROXY CARD TO INDICATE YOUR VOTE
FOR EACH OF THE COMMITTEE'S PROPOSALS
SIGN THE ENCLOSED BLUE PROXY CARD
DATE THE ENCLOSED BLUE PROXY CARD
RETURN THE ENCLOSED BLUE PROXY CARD IN THE ENCLOSED
ENVELOPE (NO POSTAGE NECESSARY) AS SOON AS POSSIBLE
For further information concerning the Proxy Solicitation,
see "Proxy Solicitation" and "Consent and Proxy Procedures"
below.
YOUR VOTE, BY BOTH THE CONSENT AND THE PROXY CARDS, IS
IMPORTANT TO US NO MATTER HOW MANY SHARES YOU OWN.
If you have any questions or require any assistance in
connection with this solicitation, please call the
Committee's solicitation agent, Morrow & Co., Inc.
("Morrow"), toll free, at telephone no. (800) 662-5200.
Record Dates
Consent Solicitation. Section 213(b) of the Delaware
General Corporation Law ("Delaware Law") provides that the
board of directors of a Delaware corporation may set the
record date for determining the stockholders entitled to
consent in writing to a corporate action without a meeting.
However, if no record date has been previously fixed by the
board of directors, the record date for determining the
stockholders entitled to consent in writing to a corporate
action without a meeting shall be the first date on which a
signed written consent setting forth the action to be taken
has been delivered by a proponent to the corporation.
The Board of Directors of the Company has not fixed in
advance a record date for the Consent Solicitation.
Pursuant to Section 213(b) of Delaware Law, and for the
purpose of setting a record date for the Consent
Solicitation, the record holder of shares of Common Stock
beneficially owned by Robert Kecseg, a member of the
Committee, delivered an executed consent on his behalf to
the Company on December 6, 1996. Accordingly, stockholders
of record as of the close of business on December 6, 1996
(the "Consent Record Date") are entitled, and urged by the
Committee, to express their consent to the proposed actions
by marking, dating and signing the enclosed BLUE consent
card and returning it to the Committee, c/o Morrow, AS SOON
AS POSSIBLE.
Proxy Solicitation. The Committee is also soliciting
your proxy for use at the Annual Meeting in order to elect
its nominees for director in opposition to the Company's
nominees should the Committee not receive the requisite
number of consents prior to the scheduled date of such
Meeting (i.e., January 28, 1997). The Company has set
December 13, 1996 as the record date (the "Proxy Record
Date") for determining the stockholders entitled to receive
notice of, and to vote at, the Annual Meeting. You can
grant to the Committee your proxy for use at the Annual
Meeting by marking, signing and dating the enclosed BLUE
proxy card and returning it to the Committee's solicitation
agent, Morrow. So long as you are a stockholder of record
on the Proxy Record Date and have not subsequently revoked
your proxy, your shares will be voted as directed by you on
the BLUE proxy card (or, if no direction is indicated
thereon, for the Committee's proposals).
You will be able to express your consent to the
Committee's consent proposals if you are a stockholder of
record on the Consent Record Date but not on the Proxy
Record Date, even if you sell your shares of Common Stock
after the Consent Record Date. Similarly, if you are a
stockholder of record on the Proxy Record Date, but were not
on the Consent Record Date, you will have voting rights in
respect of the Annual Meeting, even if you sell your shares
of Common Stock after the Proxy Record Date. Even if you
are not sure as to your eligibility to execute a consent
and/or to vote at the Annual Meeting, we urge you to
complete and return BOTH the enclosed BLUE consent card and
the BLUE proxy card so that your shares will be voted if
eligible.
Votes Required
Consent Solicitation. The actions proposed by the
Committee for the consent of the stockholders can be taken
as soon as duly executed consents in favor thereof are
received from the holders of a majority of the shares of
Common Stock outstanding on the Consent Record Date and
delivered to the Company. See "Consent Solicitation--
Consent Required" below. In order for the proposed action
of the Committee to be effective under Delaware Law,
however, the required number of executed consents must be
delivered to the Company by no later than February 4, 1997.
Accordingly, please execute, mark, sign and date the
enclosed BLUE consent card and return it to the Committee
c/o Morrow in the enclosed envelope AS SOON AS POSSIBLE so
that the Committee can deliver such consent cards to the
Company by such date.
The Company has announced that the Annual Meeting will
be held on January 28, 1997. Should the Committee receive,
prior to the Annual Meeting, duly executed, unrevoked
consents representing at least a majority of the outstanding
Common Stock in favor of its proposals to remove the current
members of the Board of Directors and to replace them with
the Committee's nominees, the Committee intends immediately
to deliver such written consents to the Company. Upon such
delivery, the Committee's nominees shall become the
directors of the Company, replacing the Company's current
directors.
According to information provided by the Company, an
aggregate of ____ shares of Common Stock were outstanding as
of the close of business on the Consent Record Date. Each
share of Common Stock outstanding on the Consent Record Date
is entitled to one vote on the Committee's proposals set
forth in this Consent and Proxy Statement in respect of the
Consent Solicitation. Abstentions will have the effect of
withholding consent from such proposals. Accordingly,
approval of the Committee's consent proposals would require
the delivery of written consents in favor thereof by holders
of at least ____ shares of Common Stock. The members of the
Committee beneficially owned an aggregate of 263,000
(approximately [5]%) shares of Common Stock as of the
Consent Record Date, and each has caused to be executed on
his behalf consents in favor of the Committee's proposals.
The Company's stockholders do not have cumulative voting
rights. The Company has no other class of voting
securities.
For further information about the Committee's consent
proposals, see "Consent Solicitation" below.
THE COMMITTEE RECOMMENDS THAT YOU INDICATE YOUR CONSENT
TO ITS PROPOSALS TO REMOVE THE CURRENT MEMBERS OF THE
COMPANY'S BOARD OF DIRECTORS AND TO REPLACE THEM WITH THE
COMMITTEE'S NOMINEES BY EXECUTING AND RETURNING THE
ENCLOSED BLUE CONSENT CARD IN THE ENCLOSED ENVELOPE AS
SOON AS POSSIBLE.
Proxy Solicitation. The presence at the Annual
Meeting, in person or by proxy, of the holders of a majority
of the outstanding shares of Common Stock entitled to vote
will constitute a quorum. Abstentions and broker non-votes
(i.e., shares held by a broker or nominee which are
represented at the Annual Meeting, but with respect to which
such broker or nominee is not empowered to vote on a
particular proposal) are counted as present for purposes of
determining whether a quorum is present. According to
information provided by the Company, an aggregate of _______
shares of Common Stock were outstanding as of the close of
business on the Proxy Record Date.
Subject to the existence of a quorum, the affirmative
vote of the holders of a majority of the shares of Common
Stock present, in person or by proxy, at the Annual Meeting
will be required to elect the Committee's nominees to the
Board of Directors. Approval of each of the Committee's
other two proposals described herein will also require the
affirmative vote of the holders of a majority of the shares
of Common Stock present, in person or by proxy, at the
Annual Meeting. Each share of Common Stock outstanding on
the Proxy Record Date is entitled to one vote on the
Committee's proposals set forth in this Consent and Proxy
Statement in respect of the Proxy Solicitation. Abstentions
will have the effect of votes in opposition to such
proposals. Broker non-votes will be treated as unvoted for
purposes of determining approval of such proposals and will
not be counted as votes for or against such proposals, but
will have the effect of votes in opposition to them.
For further information about the Committee's proposals
at the Annual Meeting, see "Proxy Solicitation" below.
THE COMMITTEE RECOMMENDS THAT YOU INDICATE YOUR VOTE FOR
ITS PROPOSALS TO AMEND THE COMPANY'S BY-LAWS TO CHANGE
THE ORDER OF BUSINESS AT THE ANNUAL MEETING, TO AMEND THE
COMPANY'S BY-LAWS TO FIX THE NUMBER OF DIRECTORS TO BE
ELECTED AT THE ANNUAL MEETING AT FIVE AND TO ELECT EACH
OF THE COMMITTEE'S NOMINEES AS DIRECTORS OF THE COMPANY
BY EXECUTING AND RETURNING THE ENCLOSED BLUE PROXY CARD
IN THE ENCLOSED ENVELOPE AS SOON AS POSSIBLE.
Revocation
Consent Solicitation. A consent executed and
delivered by a stockholder may subsequently be revoked by
written notice thereof delivered to (i) the Company, at
16420 Park Ten Place, Suite 300, Houston, Texas 77084-5051,
or any other address provided by the Company, or (ii) the
Committee, c/o Morrow & Co., Inc., 909 Third Avenue, 20th
Floor, New York, New York 10022-4799. To be effective, such
notice of revocation must be delivered prior to the time
that consents to the Committee's proposals executed by the
holders of a majority of the outstanding shares of Common
Stock have been delivered to the Company. The Committee
requests that, if a consent revocation is delivered to the
Company, a copy of such revocation also be delivered to the
Committee, c/o Morrow. A later dated BLUE proxy card will
not revoke an earlier dated BLUE consent card.
Proxy Solicitation. Any stockholder who has granted a
proxy to the Company's Board of Directors may revoke it at
any time before it is exercised by voting in person at the
Company's Annual Meeting, by filing with the Secretary of
the Company a written notice of revocation prior to the
voting of such proxy, or by submitting a later-dated proxy
at any time before the vote is taken at the Annual Meeting.
Accordingly, you may revoke any proxy you have previously
given to the Board of Directors of the Company by signing
and dating the enclosed BLUE proxy card and returning it as
indicated herein. The proxy contained in the enclosed BLUE
proxy card of the Committee may also be revoked in the
manner described above. The Committee requests that, if a
revocation of the enclosed BLUE proxy card is delivered to
the Company, a copy of such revocation also be delivered to
the Committee, c/o Morrow. A later dated BLUE consent card
will not revoke an earlier dated BLUE proxy card.
BACKGROUND OF AND REASONS FOR THE SOLICITATION
Background of Solicitation
Recent Company History. The Company was organized in
1985 as a Texas general partnership and was subsequently
incorporated in Delaware in July 1988. Prior to May 1994,
the Company was exclusively a seismic data acquisition
company. In May 1994, the Company acquired a data
processing services company and, in August 1994, it formed a
subsidiary to perform global position system surveys used by
the seismic industry. In January 1996, the Company formed
another subsidiary, UNEXCO, Inc. ("UNEXCO"), to conduct oil
and gas exploration and production activities.
Consistent with its prior public statements that the
market for seismic services in Latin American countries is
likely to be strong for the next five years, the Company has
recently been reviewing the viability of a transaction
between it and a seismic contracting company with a
significant presence in Latin America. In May 1996, largely
as a result of the preexisting relationship between
TechnoFlex, Inc. ("TechnoFlex"), an international marketing
services company of which Michael Kanarellis, a Committee
member, is President and a principal stockholder, the
Company commenced discussions with Suelopetrol concerning a
proposed business combination intended to afford the Company
access to the expanding Venezuelan market. Established in
1984, Suelopetrol is one of the most experienced seismic
contractors in Venezuela. Suelopetrol is believed to be the
only Venezuelan-owned seismic contractor operating in
Venezuela. Suelopetrol's principal clients are affiliates
of Venezuela's national oil company, Petroleos de Venezuela
S.A. As publicly noted by the Company, the recent opening
of the Venezuelan oil industry to the private sector, after
more than 20 years of government ownership, has created
attractive business opportunities for Suelopetrol.
On August 1, 1996, the Company entered into a letter of
intent with Suelopetrol providing for a merger of the two
companies (the "Letter of Intent"). The Letter of Intent
provided for the Company to issue approximately 4.8 million
shares of its Common Stock, and to pay up to $16 million, $4
million of which was to be contingent upon future earnings,
to Suelopetrol's stockholders. Following the proposed
merger, Suelopetrol would have become a wholly-owned
subsidiary of the Company. The terms of the Letter of
Intent provided that, following the merger, Henrique
Rodriguez-Guillen, President of Suelopetrol, would have
overall responsibility for the seismic activities of the
combined company, its core business. The Letter of Intent
expired by its terms on September 1, 1996. Following a
meeting of the Company's Board of Directors on October 24,
1996, the Company publicly announced that, although the
Letter of Intent had expired, the Company was continuing
negotiations with Suelopetrol. The Company stated that the
proposed transaction remained subject to the completion of
due diligence and the resolution of certain business terms.
However, on November 13, 1996, shortly following the filing
of a Schedule 13D by the Committee members (discussed
below), the Company publicly announced that it and
Suelopetrol had terminated negotiations because the two
companies "could not resolve material business and due
diligence issues."
Filing of Schedule 13D. On November 12, 1996, Michael
Kanarellis and Robert Kecseg filed a Schedule 13D (the
"Schedule 13D") with the Securities and Exchange Commission.
In the Schedule 13D, Messrs. Kanarellis and Kecseg,
beneficial owners in the aggregate of then approximately
5.2% of the Company's Common Stock, stated that they had
formed a group for the purpose of reviewing potential
responses to the Company's deteriorating financial
performance and the decline of the trading price of the
Common Stock (the "Group"). They additionally stated that
they were dissatisfied with recent actions of the Company's
current Board of Directors and management, in particular,
the termination of the Letter of Intent with Suelopetrol.
Formation of the Committee. Because they believe that
the policies of the current Board of Directors were and are
not directed towards maximizing stockholder value (see "--
Reasons for Solicitation" below), Messrs. Kanarellis and
Kecseg decided to form the Committee and solicit the written
consent of the Company's stockholders to remove all of the
members of the current Board of Directors and to replace
such directors with the nominees of the Committee. See "The
Nominees" below. As part of their strategy to help ensure
that their nominees were elected, they also decided to
conduct the Proxy Solicitation. See "Consent Solicitation -
- - Need for Proxy Solicitation" below.
Reasons for Solicitation
As discussed below, in reaction to the troubled history
of the Company, and because they believe that recent actions
of the current Board of Directors have seriously jeopardized
the future viability of the Company, the Committee has
decided to conduct the Consent Solicitation and the Proxy
Solicitation.*<F1>
I. The Company has performed poorly over the last
several years. The following facts plainly demonstrate the
poor financial performance of the Company--facts for which
the current Board must take ultimate responsibility.
The Company has incurred net losses in three out of its
last four fiscal years, including a net loss of $(0.19) per
share for the fiscal year ended June 30, 1996. For the four
fiscal year period ended on June 30, 1996, the Company
incurred aggregate net losses of over $(7.6 million). As of
the fiscal year ended June 30, 1996, the Company had an
accumulated deficit of over $5.6 million. For its most
recent completed quarter, the fiscal quarter ended September
30, 1996, the Company would have incurred a net loss of
approximately $(450,000), or ($0.09 per share), except for
an approximately $560,000 gain upon a one-time asset sale by
UNEXCO. Significantly, the gross operating margins of the
Company's core business, seismic data acquisition services,
have been steadily decreasing, as evidenced by the following
table:
Fiscal Period: Gross Operating Margin:
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Year ended
June 30, 1994 27%
Year ended
June 30, 1995 25%
Year ended
June 30, 1996 18%
Quarter ended
September 28, 1996 14%
These declines in gross operating margins have occurred
despite some increase in Company revenue and have been a
principal cause of the Company's net losses.
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<F1>*Three of the five current directors of the Company have
served since 1994, one of whom has served since 1993 and one
of whom has served since 1992. As directors of the Company,
they must take a significant amount of responsibility for
the poor performance of the Company during such period.
The above operational difficulties have, of
course, adversely affected the Company's financial condition
and are reflected on its recent balance sheets. The
consolidated balance sheet of the Company as of September
30, 1996 shows a negative working capital of over $4
million, cash and cash equivalents of only approximately
$875,000 (or less than 3% of the Company's total assets) and
total long and short-term indebtedness of over $11.2
million. The Company's total indebtedness represented an
amount equal to over 97% of its total stockholders' equity
as of such date. Moreover, the Company's September 30, 1996
balance sheet reflects an increase in accounts payable of
over $2.2 million (or approximately 40%), and a decrease in
trade accounts receivable of over $2.4 million (or
approximately 30%), from June 30, 1996. In its Form 10-QSB
for the quarter ended September 30, 1996 (the "Form 10-
QSB"), the Company states that the foregoing accounts
payable balance increase was attributable to "the slow
collection of accounts receivable" and noted that, in
addition to the decrease in its trade accounts receivable
balances, the level of such receivables over 90 days past
due was "materially higher than the Company typically
experiences."
In the Form 10-QSB, the Company states that it
intends to fund its future working capital requirements, in
large part, through cash flow from UNEXCO and under an
accounts receivable credit facility it has established with
a financial institution. However, to date, the Company has
derived limited operating revenue from UNEXCO and, as
indicated above, its accounts receivable balance has
recently substantially decreased and its receivables have
aged. Finally, the Company has never paid a dividend on its
Common Stock and, according to its Form 10-KSB for the
fiscal year ended June 30, 1996 (the "Form 10-KSB"), does
not anticipate paying any dividends for "the foreseeable
future."
II. The Company's current Board of Directors
mismanaged the proposed business combination with
Suelopetrol, resulting in the loss of an opportunity to
improve the Company's financial condition and expand its
operations.
Throughout 1995 and 1996, the Company has been
seeking to develop international business in the Middle East
and South America. In September 1994, the Company engaged
TechnoFlex, of which Mr. Kanarellis is the President and a
principal stockholder, to assist it in certain of its
international marketing efforts. In May 1996, as a result
of its relationship with TechnoFlex, the Company began
discussions with Suelopetrol to combine forces in order to
obtain significant market share of the emerging Venezuelan
seismic acquisition and processing market and to position
the Company to participate in marginal field development in
Venezuela. As a result of their discussions, Suelopetrol
and the Company decided that a business combination was in
their best interests, culminating in the execution of the
Letter of Intent on or about August 1, 1996. In publicly
announcing the execution of the Letter of Intent, Michael J.
Pawelek, President of the Company, described several
important benefits of the proposed combination,
enthusiastically stating that:
Suelopetrol is a superb fit to our company's short
range and long range strategic plan. It will allow
Universal access to a growing and profitable market
which is driven by long range contracts. . . .Universal
and Suelopetrol utilize the same acquisition equipment,
which will allow us to mobilize equipment to Venezuela
immediately to support the significant backlog of work
to be undertaken by Suelopetrol. I believe that this
relationship will make Universal Seismic a
significantly stronger company with a combined backlog
for the year of approximately $100 million and position
us to take advantage of major opportunities on both the
seismic and energy sides of our business.
In apparent recognition, in part, of the
Company's deteriorating financial condition, particularly
the declining gross operating margins of its core business,
the Company determined that a combination with Suelopetrol
was in its best interests. Specifically, the Company
recognized that the significant backlog of Suelopetrol and
the ability of the Company and Suelopetrol to share
equipment in the emerging Venezuelan seismic acquisition
market would provide an opportunity for the Company to
improve its gross operating margins and profitability.
Following the execution of the Letter of Intent, the Company
commenced certain due diligence activities in respect of
Suelopetrol's operations and financial condition. In
connection therewith, the Company engaged Raymond James &
Associates, Inc. ("Raymond James"), an investment banking
firm, to evaluate and issue an opinion as to the fairness of
the proposed acquisition. In addition, Suelopetrol engaged
Coopers & Lybrand to audit Suelopetrol's financial
statements for the fiscal year ended June 30, 1996 on a
United States generally accepted accounting principles basis
and discussed the results of such audit with Company
management.
While the Company conducted some due diligence
review of Suelopetrol, it failed to complete such activities
prior to the expiration of the Letter of Intent on September
1, 1996. On October 29, 1996, the Company publicly
announced that, although the Letter of Intent had expired,
"the Company remains committed to pursue a transaction with
Suelopetrol. . . .subject to completion of due diligence and
resolution of material terms and definitive documents." The
Committee believes that the Company, notwithstanding its
contrary indications, did not satisfactorily complete the
due diligence review of Suelopetrol. On November 13, 1996,
only slightly more than two weeks following its October 29
announcement, the Company issued another press release
stating that it had terminated negotiations with
Suelopetrol. The Company stated that it terminated
negotiations with Suelopetrol because the two companies
"could not resolve various material business and due
diligence issues."
On behalf of and as agent for the Company, Mr.
Kanarellis, through TechnoFlex, had many discussions with
representatives of both the Company and Suelopetrol and was
actively involved in both the negotiation and due diligence
processes. Based on their involvement and knowledge, the
Committee members believe that the Company did not fully
commit itself to, or satisfactorily complete, its due
diligence review of Suelopetrol. For example, they believe
that the Company did not have any substantive discussions
with representatives of Suelopetrol concerning the proposed
combination, or send any Company representatives to
Venezuela to further review the operations of Suelopetrol,
during the approximately two-week period following the
Company's October 29, 1996 press release discussed above.
Furthermore, the Committee members believe that Raymond
James discontinued its work in connection with the fairness
opinion to be rendered by it in respect of the proposed
business combination.
During the due diligence review process, Mr.
Kanarellis made a presentation in respect of the proposed
transaction to the Board of Directors of the Company. After
such presentation, the Company's Chief Executive Officer and
Chief Financial Officer demanded that in connection with the
proposed combination they each receive five-year employment
agreements, a condition that was not reflected in the Letter
of Intent. At the time of the termination of the Letter of
Intent, it is believed that Suelopetrol would have agreed to
three-year employment agreements. The Committee members
believe that the failure of the Company to complete the due
diligence process, a process which began in June 1996, and
resulted in the expenditure of significant Company funds and
time, was wasteful and destructive and appears to have
resulted, in large part, from disagreement as to who would
exercise control over the combined company.
Based on their review of the operations and
financial condition of Suelopetrol, the Committee members
believe that a business combination with Suelopetrol would
be beneficial to the Company. There are many factors which
persuasively indicate that a combination with Suelopetrol
would be in the long-term interests of the Company and its
stockholders. In particular, Suelopetrol appears to have a
strong presence in the expanding Venezuelan seismic
acquisition and processing market; its current backlog
significantly exceeds that of the Company; much of its
seismic acquisition activities appear to be more efficient
than those of the Company, resulting in better gross
operating margins; and the audit of its 1996 fiscal year
financial statements revealed that it had significant net
income, in contrast to the Company's net loss in fiscal year
1996.
In addition, as the Company had itself previously
stated, a combination with Suelopetrol would be an
attractive strategic fit for the Company. It would enable
the combined company to diversify geographically and, in
particular, take advantage of the emerging Venezuelan
market. As noted by the Company, the two companies utilize
the same seismic acquisition equipment which, when combined
with the sizable backlog of the combined company, could
likely lead to improved operating efficiencies and, in turn,
enhanced profitability. Furthermore, it is believed that
Suelopetrol performs certain surveying and drilling
functions internally for projects in Venezuela and could be
helpful in causing the Company to develop such functions
internally, thereby increasing efficiency and decreasing
costs. In sum, the Committee believes that there are
several attractive features of Suelopetrol's operations and
that a combination with Suelopetrol would be a particularly
favorable strategic fit for the Company.
Following its announcement that it had terminated
negotiations with Suelopetrol, the Company disclosed that it
was continuing its efforts to pursue Latin American and
other international opportunities for its seismic data
acquisition, seismic data processing and oil exploration
business areas. Thus, after the expenditure of substantial
time and resources, the Company is apparently recommencing a
search for a suitable acquisition candidate after rejecting
a candidate which the Committee believes was particularly
attractive. In the Form 10-KSB, the Company stated that it
is committed to hiring the necessary personnel and raising
the funds required to expand its seismic data processing and
oil exploration businesses, which have not historically
generated substantial revenues for the Company and in which
the Company has relatively limited experience. While the
Committee agrees that expanding into the Latin American
market would be in the best interests of the Company, it
believes that a combination with Suelopetrol represents a
particularly attractive opportunity for the Company to
effect such expansion. As discussed above, the Committee
believes that a combination with Suelopetrol would improve
the profitability of the Company's seismic acquisition
business, its core business area. Also, while the Company
desires to further develop its seismic data processing and
oil exploration businesses, the Company has conceded that it
requires additional funds for such development. The
Committee believes that a combination with Suelopetrol would
strengthen the Company's core business while generating the
funds necessary for the expansion of its emerging
businesses.
In light of the Company's announced strategy of
expanding its operations internationally, the Committee
believes that the Company would have been well served by
attempting to consummate a transaction with Suelopetrol, a
transaction it believes would have been demonstrably
beneficial to the Company. Apparently, the marketplace
agrees, as evidenced by the trading price of the Company's
Common Stock at as high as $8.875 per share following the
announcement of the execution of the Letter of Intent, up
from $5.75 on July 31, 1996, the day prior to such
announcement. From the date of the announcement that the
Company had terminated negotiations with Suelopetrol on
November 13, 1996, through the date hereof, the Common Stock
has traded between $3.50 and $[4.625].
III. The Committee's relationship with
Suelopetrol will enable it to attempt to recommence
negotiations between the Company and Suelopetrol regarding a
business combination.
Michael Kanarellis, a member of the Committee and
President and a principal stockholder of TechnoFlex, was
actively involved in the negotiation of the proposed
transaction between the Company and Suelopetrol and has a
constructive working relationship with Suelopetrol.
Following the Company's termination of negotiations with
Suelopetrol, Mr. Kanarellis has had several discussions with
representatives of Suelopetrol. Mr. Kanarellis conducted
such discussions in his individual capacity and not on
behalf of the Company or its present management. During
their discussions, Mr. Kanarellis reviewed with
Suelopetrol's representatives the possibility of effecting a
transaction if the Committee succeeded in replacing the
Company's current Board of Directors and management as
sought by this Consent and Proxy Solicitation. Mr.
Kanarellis is hopeful that, in the event that the Company's
current Board and management were replaced, Suelopetrol
would consider pursuing a transaction with the Company.
There can be no assurance that Suelopetrol would actively
pursue negotiations with the new Company management or that
a transaction could be consummated on mutually agreeable
terms.
In the event that this Consent and Proxy
Statement is successful, the Committee will recommend that
the reconstituted Board and management of the Company seek
to effect a transaction with Suelopetrol. However, if such
Board and management are unable to consummate a transaction
with Suelopetrol on terms favorable to the Company, the
Committee will recommend that they seek to effect a
transaction with another company with a significant presence
in Latin America on terms that are in the best interests of
the Company's stockholders. The Committee believes that its
contacts in Latin America would enable it to identify
potential alternative candidates for acquisition by the
Company which could improve the Company's financial
condition and future prospects. In any event, the Committee
believes that even if the Company were unable to consummate
a transaction with Suelopetrol or any other entity, the poor
performance of the Company's current Board and management,
and particularly its management of the Suelopetrol
transaction, as discussed above, indicates that they should
be replaced.
THE COMMITTEE
The Committee consists of Michael T. Kanarellis
and Robert J. Kecseg, who beneficially own an aggregate of
263,000 shares of Common Stock, representing approximately
[5]% percent of the outstanding shares of Common Stock.
Mr. Kanarellis is President and a principal
stockholder of TechnoFlex, an international marketing
services company. Through TechnoFlex, Mr. Kanarellis was
actively involved in the introduction of the Company to
Suelopetrol, and was closely involved in facilitating the
negotiation of the proposed merger transaction. While Mr.
Kanarellis has no formal understanding with either the
Company or Suelopetrol as to compensation for such services,
he expects that in the event of the ultimate consummation of
the merger he would be compensated by one or both of the
Company and Suelopetrol. The specific amount and terms of
any such compensation has not been determined, but is
expected to be based on any future profits earned by the
combined company.
Mr. Kecseg's occupation is Supervisory Analyst at
First Research Financial, Inc., a company that provides
financial analysis services. In such capacity, Mr. Kecseg
provides financial and investment advice to various
stockholders of the Company, who beneficially own an
aggregate of approximately 9% of the outstanding shares of
Common Stock. Mr. Kecseg believes, although there can be no
such assurance, that all or substantially all of such
stockholders will vote in favor of the Committee's proposals
pursuant to the Consent Solicitation and the Proxy
Solicitation, but he has not contacted or solicited any of
such clients with respect thereto other than certain general
discussions in the performance of his services and in
accordance with applicable proxy rules.
The Committee intends to solicit consents and
proxies directly from certain Company stockholders after the
distribution of this Consent and Proxy Statement and to
coordinate its solicitation efforts with those of Morrow.
Other than as discussed herein, neither the Committee nor
its members will earn any profits, commissions or other fees
from the Company or otherwise in the event that its
proposals to remove the current directors of the Company and
replace them with the Committee's nominees are approved.
TechnoFlex has provided international marketing services to
the Company since September 1994. From December 1995
through February 1996, The Offshore Group, Inc.
("Offshore"), an independent oil and gas operator of which
Mr. Kanarellis is Vice President and a principal
stockholder, was an equal partner with the Company and,
after its formation, UNEXCO, in a seismic shooting project
in Texas. Offshore and UNEXCO sold their interests in such
project to a third party on March 1, 1996, although each
maintained a 9% holding therein. In 1994, Offshore engaged
the Company to provide it with seismic acquisition services.
In exchange for such services, Offshore paid approximately
$300,000 to the Company. Except as previously discussed
herein, neither (i) Mr. Kanarellis or Mr. Kecseg nor (ii)
any other participant in the solicitation of this Consent
and Proxy Statement or any associate thereof was or is a
party to any transaction or series of similar transactions
since July 1, 1995, or any currently proposed transaction or
series of similar transactions, to which the Company or any
subsidiary thereof was or is to be a party in which the
amount involved exceeded $60,000.
Additional information with respect to each of
the members of the Committee is set forth on Appendix A
hereto.
CONSENT SOLICITATION
Proposals: (A) The Removal of the Existing Board
of Directors of the Company and (B) The Election
of the Committee's Nominees
For the reasons stated in "Background of and
Reasons for the Solicitation" above and in order to effect a
change in the management of the Company at the earliest
practicable time, the Committee is proposing that the entire
Board of Directors of the Company, currently consisting of
Michael J. Pawelek, Ronald L. England, Calvin G. Cobb,
Stephen F. Oakes and Gary J. Milavec, be removed from office
and replaced by the Committee's nominees. Pursuant to
Section 228(a) of Delaware Law, any action which may be
taken at a meeting of stockholders may be taken without a
meeting by written consent. The Committee is hereby
soliciting your written consent to the immediate removal of
the entire Board of Directors of the Company, including any
persons elected or appointed to the Board in order to fill
any vacancies created by resignations, incapacity or other
reasons or by newly created positions on the Board, and to
the replacement of such existing directors with the
Committee's nominees, Michael T. Kanarellis, Robert J.
Kecseg, Pedro Garmendia, Gordon M. Greve and Donald B.
Caldwell. Messrs. Kanarellis and Kecseg are members of the
Committee. For information about the Committee's nominees,
see "The Nominees" below.
Consent Required. Section 141(k) of Delaware Law
provides that the entire board of directors of a Delaware
corporation may be removed, with or without cause, by the
holders of a majority of the shares then entitled to vote at
an election of directors. Pursuant to Section 223(a) of
Delaware Law, the stockholders of a Delaware corporation all
of whose directors have been removed may fill the vacancies
created thereby with replacement directors. Section 2.7 of
the Company's By-laws provides that the affirmative vote of
the holders of a majority of the Company's voting stock
present at a meeting is required for the election of
directors. Section 228(a) of Delaware Law provides that any
action which may be taken at an annual or special meeting of
stockholders of a Delaware corporation may be taken without
a meeting if written consents are signed by holders of
outstanding stock having not less than the minimum number of
votes that would be required to take such action at a
meeting at which all shares entitled to vote thereupon were
present and voted. Accordingly, the written consent of the
holders of a majority of the shares of the Company's Common
Stock outstanding on the Consent Record Date is required to
approve the Committee's proposal to remove all of the
current members of the Company's Board of Directors and its
proposal to replace such members with the Committee's
nominees.
Section 228(c) of Delaware Law provides that no
written consent will be effective to take the corporate
action referred to therein unless, within 60 days of the
earliest dated consent delivered to the corporation, written
consents duly executed by holders of a number of shares
sufficient to approve such action are delivered to the
corporation. On behalf of Robert Kecseg, a member of the
Committee, the record holder of shares of Common Stock
beneficially owned by him delivered the first consent
solicited hereby, dated December 6, 1996, to the Company on
such date. Accordingly, in order for the Committee's
proposals to remove the current Board members and replace
them with its nominees to be effective, written consents
signed by holders of a majority of the outstanding shares of
Common Stock must be received by the Committee and delivered
to the Company by no later than February 4, 1997.
Expectations After Removal and Replacement.
RIMCO Partners, L.P., RIMCO Partners, L.P. II, RIMCO
Partners, L.P. III and RIMCO Partners, L.P. IV, each a
Delaware limited partnership (collectively, "RIMCO"), are,
in the aggregate, significant stockholders and creditors of
the Company. See "Principal Stockholders" below. Pursuant
to that certain Stock Ownership and Registration Rights
Agreement, dated as of January 19, 1996, as amended on May
28, 1996, between the Company, UNEXCO and RIMCO, the Company
is obligated to use its best efforts to elect or cause to be
elected to the Board of Directors two members designated by
RIMCO, so long as RIMCO has certain debt outstanding or owns
at least 2.5% of the Company's outstanding Common Stock.
Pursuant to such Agreement, Stephen F. Oakes and Gary J.
Milavec are currently the designees of RIMCO as directors of
the Company. If the Consent Solicitation is successful and
the Committee's nominees replace the current members of the
Company's Board of Directors, the reconstituted Board will
review its legal obligations with respect to RIMCO's right
to designate two directors. The Committee presently expects
that, if its proposals to replace the current Board members
were approved through either the Consent Solicitation or the
Proxy Solicitation, the reconstituted Board would shortly
thereafter increase the size of the Board to seven members
and appoint two designees of RIMCO to fill the vacancies
created thereby, which designees, if so desired by RIMCO,
would be Messrs. Oakes and Milavec.
If, pursuant to the Consent Solicitation, the
current directors were replaced by the Committee's nominees,
the Committee believes that the reconstituted Board would
have the right under Delaware Law to adjourn and reschedule
the Annual Meeting and it will recommend to such Board that
the Annual Meeting be adjourned and rescheduled to a date no
later than July 1996. At such rescheduled Meeting, the
Company's stockholders would have an opportunity to vote
upon the reconstituted Board's slate of directors, including
any of the Committee's nominees named herein who may then be
on such slate.
In addition, in the event that the Consent
Solicitation is successful, the Committee will recommend
that the reconstituted Board immediately terminate the
present senior management of the Company, particularly Mr.
Pawelek, the Company's President and Chief Executive
Officer, and Ronald L. England, the Company's Chief
Financial Officer and Treasurer. Both Messrs. Pawelek and
England are currently directors of the Company. The
Committee will recommend that the reconstituted Board
conduct a search for qualified individuals to serve as the
interim and/or permanent Chief Executive Officer and Chief
Financial Officer of the Company.
The Committee will also recommend to the
reconstituted Board that, following the termination of the
Company's present senior management, the Company attempt to
recommence negotiations with Suelopetrol concerning the
proposed business combination. See "Background of and
Reasons for the Solicitation" above. If the reconstituted
Board and the new Company management were able to reach an
agreement with Suelopetrol concerning a proposed business
combination, such proposal would thereafter be submitted to
the Company's stockholders for their consideration and
approval.
THE COMMITTEE RECOMMENDS THAT YOU CONSENT TO ITS
PROPOSALS TO REMOVE THE ENTIRE CURRENT BOARD OF DIRECTORS OF
THE COMPANY AND TO ELECT THE COMMITTEE'S NOMINEES TO THE
BOARD AS REPLACEMENT DIRECTORS. ANY EXECUTED CONSENT
RECEIVED BY THE COMMITTEE AS TO WHICH NO DIRECTION HAS BEEN
GIVEN OR AS TO WHICH A DIRECTION IS GIVEN WITH RESPECT TO
ONLY ONE OF THE PROPOSALS WILL BE DEEMED TO BE A CONSENT TO
EACH PROPOSAL FOR WHICH A CONTRARY DIRECTION HAS NOT BEEN
GIVEN.
Need for Proxy Solicitation. The Committee is
conducting the Proxy Solicitation at the same time as the
Consent Solicitation because there can be no assurance that
it will obtain the necessary consents to replace any or all
of the current directors of the Company prior to the date of
the Annual Meeting (if at all). However, because the
Committee believes that it is important to replace the
current Board as soon as practicable, it is conducting the
Consent Solicitation with the hope and intention that it can
replace the current Board well before the holding of the
Annual Meeting. If the Committee does not obtain the
necessary consents to replace the current directors pursuant
to the Consent Solicitation prior to the date of the Annual
Meeting, it will continue to solicit consents through and
after such date (but no later than February 4, 1997) unless
its nominees shall be elected at the Annual Meeting. If the
nominees of the current Board of Directors are elected at
the Annual Meeting, the Committee will continue to solicit
consents to effect the removal of the current Board's
nominees, and, if it obtains the necessary consents prior to
February 4, 1997, such nominees would be removed and
replaced as of the date it obtains such necessary consents.
The Committee will also recommend the termination
of the Company's present senior management and the
recommencement of negotiations with Suelopetrol if it
replaces the current Board members pursuant to the Proxy
Solicitation.
PROXY SOLICITATION
PROPOSAL 1: AMENDMENT OF BY-LAWS TO CHANGE THE ORDER
OF BUSINESS AT THE ANNUAL MEETING
Section 2.10 of the By-laws of the Company
presently provides that the Chairman of the Board, the
President or such other person who is elected to be chairman
of a meeting of the Company's stockholders may determine the
order of business at such meeting and that, unless otherwise
determined, the order will be as set forth in said Section
2.10. To prevent the Chairman from setting the order of
business at the Annual Meeting such that the Committee's
proposal to fix the number of directors of the Company to be
elected at the Annual Meeting at five (see Proposal 2 below)
would not be voted on prior to the election of directors,
the Committee is proposing that Section 2.10 of the By-laws
be amended to read as follows:
"SECTION 2.10. Conduct of Meetings. The
meetings of the stockholders shall be presided over by a
chairman of the meeting, who shall be the Chairman of the
Board, or if he is not present, by the President, or if
neither the Chairman of the Board nor the President is
present, by a chairman elected at the meeting. The
Secretary of the Corporation, if present, shall act as
secretary of such meetings, or if he is not present, an
Assistant Secretary shall so act, and if neither the
Secretary nor an Assistant Secretary is present, then a
secretary shall be appointed by the chairman of the meeting.
The chairman of any meeting of stockholders shall determine
the order of business and the procedure at the meeting,
including such regulation of the manner of voting and the
conduct of discussion as seem to him in order, except that,
at the Company's 1997 Annual Meeting of Stockholders, items
(a) through (f) below shall be the order of business, and
the first order of business immediately after item (f) below
shall be the proposal to amend Section 3.2 of the Company's
By-laws. In all other cases, unless the chairman of the
meeting of stockholders shall otherwise determine, the order
of business shall be as follows:
(a) Calling of meeting to order.
(b) Election of a chairman and the appoint-
ment of a secretary if necessary.
(c) Presentation of proof of the due calling
of the meeting.
(d) Presentation and examination of proxies
and determination of a quorum.
(e) Reading of settlement of the minutes of
the previous meeting.
(f) Reports of officers and committees.
(g) The election of directors if an annual
meeting, or a meeting called for that purpose.
(h) Unfinished business.
(i) New business.
(j) Adjournment."
The Committee believes that changing the order of
business at the Annual Meeting so that its proposal to fix
the number of directors to be elected thereat at five would
be voted on immediately prior to the election of directors
will operate to prevent the possibility of a "short slate"
of nominees by the Committee caused by the Company,
following the distribution of this Consent and Proxy
Statement, increasing the number of directors to more than
five (the present number of sitting directors). A "short
slate" occurs when the number of nominees is less than the
number of directors to be elected at a meeting. In such an
event, the shares of Common Stock represented by proxies
granted to the Committee could be voted for only the
Committee's five nominees. Accordingly, shares represented
by proxies granted to the Committee would not be eligible to
participate in the election of any additional directors. As
a result, even if all of the Committee's nominees were
elected, persons not nominated by the Committee could serve
as directors of the Company if properly elected at the
Annual Meeting. To avoid the problems associated with a
"short slate," including resulting stockholder confusion,
the Committee is proposing that Section 2.10 of the
Company's By-laws be amended to change the order of business
at the Annual Meeting so that the Committee's proposal to
amend the Company's By-laws regarding the number of
directors will be acted upon by the stockholders immediately
prior to the election of directors.
Vote Required
In accordance with Sections 109 and 216 of
Delaware Law and Section 2.7 of the Company's By-laws, the
affirmative vote of the holders of a majority of the shares
of Common Stock present, in person or by proxy, at the
Annual Meeting is required in order to approve this proposal
to amend the Company's By-laws.
THE COMMITTEE RECOMMENDS A VOTE FOR THE PROPOSAL
TO AMEND THE COMPANY'S BY-LAWS TO CHANGE THE ORDER OF
BUSINESS AT THE ANNUAL MEETING. THE COMMITTEE MEMBERS WILL
VOTE ALL SHARES OWNED BY THEM, AND VOTE ALL SHARES
REPRESENTED BY PROXIES GRANTED TO THEM AND AS TO WHICH A
CONTRARY DIRECTION HAS NOT BEEN MADE, FOR SUCH PROPOSAL.
PROPOSAL 2: AMENDMENT OF BY-LAWS TO FIX THE NUMBER
OF DIRECTORS OF THE COMPANY AT FIVE
Section 3.2 of the Company's By-laws presently
provides that the number of directors constituting the whole
Board shall be determined by resolution of the Board of
Directors. The Company's Certificate of Incorporation is
silent on this matter. To the Committee's knowledge, the
number of Company directors currently in office is five. To
ensure that the Committee's nominees constitute the entire
Board in the event that they are elected at the Annual
Meeting, the Committee is proposing to amend Section 3.2 of
the By-laws to read as follows:
"SECTION 3.2. Number, Election and Term. The number
of directors which shall constitute the entire Board shall
be five (5), provided, that following the Corporation's 1997
Annual Meeting of Stockholders, the number shall be such as
from time to time may be fixed and determined by resolution
of the Board of Directors, and shall be set forth in the
notice of any meeting of stockholders held for the purpose
of electing directors (provided that no decrease in the
number of directors which would have the effect of
shortening the term of an incumbent director may be made by
the Board of Directors, and further provided that the number
of directors shall never be less than one (1)). If the
Board of Directors makes no such determination, the number
of directors shall be the number set forth in the
Certificate of Incorporation. Each director shall hold
office for the term for which he is elected, and until his
successor shall have been elected and qualified or until his
earlier death, resignation or removal. The directors shall
be elected at the annual meeting of stockholders, except as
provided in Section 3.3 of these By-laws. Unless otherwise
provided in the Certificate of Incorporation, directors need
not be residents of Delaware or stockholders of the
Corporation."
As described under Proposal 1 above, the Committee
is proposing to amend the Company's By-laws to change the
order of business at the Annual Meeting so that its proposal
to fix the number of directors at five (equal to the number
of the Committee's nominees) will be voted on immediately
prior to the election of directors. If the Committee's
proposal to fix the number of directors were approved by the
Company's stockholders prior to the election of directors,
and if all of the Committee's nominees were elected as
directors of the Company at the Annual Meeting, then the
Board of Directors of the Company would be comprised solely
of the Committee's nominees.
In the event that the number of directors to be
elected to the Company's Board of Directors were greater
than five, the shares of Common Stock represented by proxies
granted to the Committee could be voted for only the
Committee's five nominees. As described under Proposal 1
above, shares represented by proxies granted to the
Committee would not be eligible to participate in the
election of the additional directors. Therefore, in order
to address any possible "short slating" by the Company's
current Board and to help ensure that the Committee's
nominees, if elected, will constitute the entire Board of
Directors of the Company, the Committee is proposing that
the By-laws be amended to fix the number of directors at
five for purposes of election at the Annual Meeting.
Thereafter, the number of Company directors shall be as
determined by the Board of Directors.
Vote Required
In accordance with Sections 109 and 216 of
Delaware Law and Section 2.7 of the Company's By-laws, the
affirmative vote of the holders of a majority of the shares
of Common Stock present, in person or by proxy, at the
Annual Meeting is required in order to approve this proposal
to amend the Company's By-laws.
THE COMMITTEE RECOMMENDS A VOTE FOR THE PROPOSAL
TO AMEND THE BY-LAWS TO FIX THE NUMBER OF DIRECTORS OF THE
COMPANY AT FIVE. THE COMMITTEE MEMBERS WILL VOTE ALL SHARES
OWNED BY THEM, AND VOTE ALL SHARES REPRESENTED BY PROXIES
GRANTED TO THEM AND AS TO WHICH A CONTRARY DIRECTION HAS NOT
BEEN MADE, FOR SUCH PROPOSAL.
PROPOSAL 3: ELECTION OF DIRECTORS
As described under Proposals 1 and 2 above, the
Committee is proposing to amend the Company's By-laws to
change the order of business at the Annual Meeting so that
the stockholders vote on the Committee's proposal to fix the
number of directors of the Company at five immediately prior
to the election of directors. If such proposals are
approved (or even if not, if the Company's Board size
remains at five), five directors of the Company will be
elected at the Annual Meeting to serve until the next annual
meeting of stockholders, or until their successors are
elected and qualified.
For the reasons set forth above under "Background
of and Reasons for the Solicitation," the Committee is
proposing a slate of five candidates for election by the
stockholders to the Board of Directors of the Company in
opposition to the incumbent Board. The slate, comprised of
Messrs. Michael T. Kanarellis, Robert J. Kecseg, Pedro
Garmendia, Gordon M. Greve and Donald B. Caldwell,
represents, in the Committee's view, a group of successful
persons who have the knowledge, expertise and varied
experience to better serve the interests of the Company's
stockholders. For information about the Committee's
nominees, see "The Nominees" below.
Vote Required
In accordance with Section 216 of Delaware Law and
Section 2.7 of the Company's By-laws, the affirmative vote
of the holders of a majority of the shares of Common Stock
present, in person or by proxy, at the Annual Meting is
required in order to elect each of the Committee's nominees
for director.
If the Committee succeeds through the Consent
Solicitation in removing the current Board members and
replacing them with its nominees, it does not intend to make
the proposals to amend the Company's By-laws set forth in
Proposals 1 and 2 above.
THE COMMITTEE RECOMMENDS THAT YOU VOTE FOR EACH OF
ITS FIVE NOMINEES FOR DIRECTOR NAMED IN THIS CONSENT AND
PROXY STATEMENT. THE COMMITTEE MEMBERS WILL VOTE ALL SHARES
OWNED BY THEM FOR EACH OF THEIR NOMINEES. SHARES OF COMMON
STOCK REPRESENTED BY PROXIES GRANTED TO THE COMMITTEE
MEMBERS WILL BE VOTED FOR THE ELECTION TO THE COMPANY'S
BOARD OF DIRECTORS OF THE FIVE NOMINEES DESCRIBED HEREIN,
UNLESS THE STOCKHOLDER SIGNING SUCH PROXY SPECIFICALLY
WITHHOLDS AUTHORITY TO VOTE FOR ONE OR MORE OF SUCH NOMINEES
IN THE MANNER DESCRIBED ON THE ENCLOSED BLUE PROXY CARD.
THE NOMINEES
The Committee's nominees for election to the Board
of Directors of the Company are Michael T. Kanarellis,
Robert J. Kecseg, Pedro Garmendia, Gordon M. Greve and
Donald B. Caldwell. As previously noted, each of Mr.
Kanarellis and Mr. Kecseg is a member of the Committee.
Each of such five individuals has consented to serve as a
director of the Company if elected pursuant to the Consent
Solicitation or the Proxy Solicitation and to be named
herein. The Committee does not expect that any of the
nominees will be unable or unwilling to stand for election,
but, in such event, the shares represented by the enclosed
BLUE consent card and the enclosed BLUE proxy card will be
voted for a substitute candidate or candidates selected by
the Committee members, who are the persons named as proxies
on the proxy card, in their discretion. If, for any reason,
the number of directors to be elected at the Annual Meeting
of the Company is less than five, the Committee will
designate which of its five nominees shall be its candidates
for election as directors, and the persons named as proxies
on the enclosed BLUE proxy card will have the discretionary
authority to vote all proxies granted to them FOR such
nominees. The directors so elected would hold office until
the next annual meeting of stockholders or until their
successors have been duly elected and qualified. See
"Consent Solicitation--Expectations After Removal and
Replacement" above.
The following sets forth the name, age (as of
December 2, 1996) and certain biographical information of
each of the Committee's nominees:
Name Age
---- ---
Michael T. Kanarellis 43
Robert J. Kecseg 44
Pedro Garmendia 47
Gordon M. Greve [ ]
Donald B. Caldwell 66
- -------------------------
Michael T. Kanarellis has been the President of TechnoFlex
and the Vice President of Offshore since 1992. From 1991 to
1992 he was the Senior Vice President of Wellstream
Corporation, a flexible pipe manufacturing company, and from
1975 to 1991 he was employed by McDermott International,
Inc., an international marine oil and gas contractor. Mr.
Kanarellis has a B.S. in Civil Engineering Technology from
the University of Houston.
Robert J. Kecseg has been a Registered Principal--
Supervisory Analyst at First Research Financial, Inc. since
1995. From 1984 to 1995, he served as a Registered
Principal--Supervisory Analyst at Southwest Securities, Inc.
and from 1981 to 1984 he served as a Registered Principal at
Eppler, Guerin & Turner, Inc. Mr. Kecseg has a B.A. in
Aeronautical Engineering from Arizona State University and
an M.B.A. from Georgia College.
Gordon M. Greve has been an independent consultant since
August 1994. From 1963 through August 1994, he was employed
by Amoco Corporation and certain subsidiaries thereof,
serving as Acting Vice President--Exploration Technology and
Services from February 1994 to August 1994 and Manager--
Exploitation from 1991 through January 1994. Mr. Greve has
been the President of the Society of Exploration
Geophysicists since 1995. Mr. Greve has a B.S. in
Electrical Engineering, an M.S. in Geophysics and a Ph.D. in
Geophysics from Stanford University.
Donald B. Caldwell has been a consultant, since 1982, to
Callon Petroleum, an oil company which he formed in 1959 and
of which he served as an officer from 1959 through 1982.
Mr. Caldwell is a graduate of the School of Geology at
Louisiana State University.
Except as set forth in this Consent and Proxy
Statement, none of the Committee's nominees holds or has
held any position or office with the Company, serves or has
served as a director of the Company or has any other
interest in respect of the Consent Solicitation or in any
matter to be acted on at the Annual Meeting.
The Company has an Audit Committee to review
internal controls and recommend to the Board the engagement
of the Company's independent certified public accountants,
review with such accountants the results of their
examinations of the financial statements and determine the
independence of such accountants. The Company also has a
Compensation Committee to set compensation policy for all
employees, and a Stock Option Committee to award stock
options under the Company's 1994 Employee Stock Option Plan.
The Company does not have a nominating committee to consider
the election of the Committee's nominees as directors.
Except as previously set forth in this Consent and
Proxy Statement, none of the Committee's nominees has any
arrangement or understanding pursuant to which he is to be
elected as a director of the Company. In addition, except
as previously set forth herein, none of such individuals has
been indebted to the Company, at any time since July 1,
1995, in an amount in excess of $60,000 or, except as
previously set forth herein, is or has had, at any time
since July 1, 1995, an interest in any transaction or series
of transactions to which the Company is or will be a party
which exceeds $128,000 in amount, 5% of the Company's gross
revenues for its fiscal year ended June 30, 1996.
Compensation of Directors
The Company pays each director who is not an
officer or employee of the Company a $5,000 annual fee and
an attendance fee of $500 for each meeting of the Board of
Directors or any committee thereof that such director
actually attends. In addition, the Company reimburses
directors for their reasonable expenses incurred in
attending meetings of the Board of Directors and its
committees. Directors' compensation may be changed at any
time by the Board of Directors, subject to applicable
fiduciary duties.
The Company has, prior to the adoption of the
Directors' Plan (as defined below), issued options to
purchase shares of Common Stock to non-employee directors.
The Company also issues options to each non-employee
director under the Company's 1995 Non-Employee Directors'
Stock Option Plan (the "Directors' Plan"). In accordance
with the Directors' Plan, adopted by the Board of Directors
in June 1995, each non-employee director of the Company on
November 21, 1995, the date of the approval of the
Directors' Plan by the Company's stockholders, was granted
an option to purchase 10,000 shares of Common Stock. In
addition, any non-employee director thereafter elected at
any annual meeting of stockholders during the term of the
Directors' Plan will automatically receive an option to
purchase 10,000 shares of Common Stock under the Directors'
Plan. The Directors' Plan will automatically terminate
effective on the date of the Annual Meeting of Stockholders
for the year 2000. If elected, all nominees of the
Committee who remain non-employees of the Company would be
eligible to participate in the Directors' Plan.
The Company's Board of Directors has authorized
the reservation of 150,000 shares of Common Stock of the
Company for issuance in accordance with the provisions of
the Directors' Plan. Options to be granted under the
Directors' Plan are exercisable at a price equal to 125% of
the last sales price of the Company's Common Stock, as
reported on the Nasdaq National Market, on the date of the
annual meeting of stockholders on which such options shall
have been granted.
All options granted under the Directors' Plan will
be fully exercisable upon the earlier to occur of November
15 or the date of the annual meeting of stockholders in the
year following the date of grant (such earlier date being
hereinafter referred to as the "Vesting Date"), provided
that at such date the optionee has served as a director of
the Company at all times from the date of grant up to the
date preceding the Vesting Date. Thereafter, options are
fully exercisable for five years following the Vesting Date,
except that if for any reason a director ceases to be a
director on or prior to the date four years from the Vesting
Date, any unexercised portion of an option will expire on
the first anniversary of the date that such director ceased
to be a director. Options granted under the Directors' Plan
become exercisable in full automatically upon any change in
control of the Company, as defined in the Plan, including
(but not limited to) an acquisition by any person of 40% or
more of the voting power of the stock of the Company, a
change in the majority of the members of the Board at a
meeting of the stockholders of the Company, or a merger in
which the stockholders of the Company own less than 50% of
the ownership in the surviving entity. The Committee's
proposals described herein to replace the entire Board of
Directors with its slate of nominees will apparently
constitute a change of control under the terms of the
Directors' Plan and would cause the options to purchase
10,000 shares of Common Stock granted to each of Calvin G.
Cobb and Matthew R. Bob under the Directors' Plan at the
Company's 1995 Annual Meeting of Stockholders to vest fully.
Options granted under the Directors' Plan are not
transferable, except by will, or by the laws of descent and
distribution.
PRINCIPAL STOCKHOLDERS
The following table sets forth, as of the close of
business on [October 25], 1996, the beneficial ownership of
Common Stock by (i) each of the Committee's nominees to
replace the Company's Board of Directors, (ii) each person
or group known by the Committee to be the beneficial owner
of more than 5% of the Common Stock, (iii) each of the
current members of the Board of Directors of the Company,
(iv) the Chief Executive Officer of the Company and (v) all
current directors and executive officers of the Company as a
group. Under the rules of the Securities and Exchange
Commission (the "Commission"), a person is deemed to be a
beneficial owner of a security if such person has or shares
the power to vote or direct the voting of such securities or
the power to dispose of or to direct the disposition of such
security. In general, a person is also deemed to be a
beneficial owner of any securities (including options and
warrants) which such person has the right to acquire within
60 days. Accordingly, more than one person may be deemed to
be a beneficial owner of the same securities.
Beneficial Owner Shares Percentage (%)
and Address Beneficially Beneficially
Owned Owned
- ---------------- ------------ --------------
RIMCO Associates, Inc.(1) 1,384,612(2)
Rick E. Trapp(3) 1,180,700(4)
Michael J. Pawelek(3) 1,172,000(5)
Ronald L. England(3) 1,172,000(6)
Kentex Holdings, Inc.(7) 1,170,000(8)
The Group(9) 263,000
Michael T. Kanarellis(10) 215,900
Robert J. Kecseg(11) 47,100(12)
Calvin G. Cobb(3) 35,000(13)
Stephen F. Oakes(3) 0(14) *
Gary J. Milavec(3) 0(14) *
Pedro Garmendia (15)
Gordon M. Greve 0(15) *
Donald B. Caldwell 0(15) *
Directors and executive 1,324,000(14)(16)
officers as a group
(six persons)
- ----------------------------
* Less than one (1%) percent of the outstanding shares of
Common Stock.
(1) The business address of such entity, for purposes
hereof, is 600 Travis Street, Suite 6875, Houston, Texas
77002.
(2) Includes (i) 50,823 shares held of record, and 233,300
shares subject to warrants exercisable within 60 days, by
RIMCO Partners, L.P., (ii) 488,488 shares held of record,
and 89,516 shares subject to warrants exercisable within 60
days, by RIMCO Partners, L.P. II, (iii) 61,510 shares held
of record, and 6,600 shares subject to warrants exercisable
within 60 days, by RIMCO Partners, L.P. III and (iv) 340,141
shares held of record, and 114,234 shares subject to
warrants exercisable within 60 days, by RIMCO Partners, L.P.
IV. RIMCO Associates, Inc. is the sole general partner of
Resource Investors Management Company Limited Partnership,
which is the sole general partner of RIMCO Partners, L.P.
and RIMCO Partners, L.P. II, III and IV. Therefore, RIMCO
Associates, Inc. and Resource Investors Management Company
Limited Partnership may be deemed to beneficially own all of
the Common Stock owned by RIMCO Partners L.P. and RIMCO
Partners, L.P. II, III and IV.
(3) The business address of such person, for purposes
hereof, is c/o Universal Seismic Associates, Inc., 16420
Park Ten Place, Suite 300, Houston, Texas 77084-5051.
(4) Includes 10,700 shares owned beneficially and of record
by Mr. Trapp and 1,170,000 shares owned beneficially by
Kentex Holdings, Inc. ("Kentex"). Mr. Trapp owns 40% of
Kentex's outstanding voting securities and is the Chairman
of the Board of Kentex and may therefore be deemed to
beneficially own all of the Common Stock owned by Kentex.
(5) Includes 2,000 shares owned beneficially and of record
by Mr. Pawelek and 1,170,000 shares owned beneficially by
Kentex. Mr. Pawelek owns 40% of Kentex's outstanding voting
securities and is a director and officer of Kentex and may
therefore be deemed to beneficially own all of the Common
Stock owned by Kentex.
(6) Includes 2,000 shares owned beneficially and of record
by Mr. England and 1,170,000 shares owned beneficially by
Kentex. Mr. England owns 20% of Kentex's outstanding voting
securities and is a director of Kentex and may therefore be
deemed to beneficially own all of the Common Stock owned by
Kentex.
(7) The address of such entity is 3926 Brynmawr, Richmond,
Texas 77469.
(8) Includes 1,065,000 shares owned beneficially and of
record by Sierra Management, Inc. and 105,000 shares subject
to warrants exercisable within 60 days.
(9) See Schedule 13D filed with the Commission by the Group
on November 12, 1996. The business address for the Group,
for purposes hereof, is c/o TechnoFlex, Inc., 10000
Memorial, Suite 250, Houston, Texas 77024.
(10) Mr. Kanarellis is a member of the Committee. His
business address is c/o TechnoFlex, Inc., 10000 Memorial,
Suite 250, Houston, Texas 77024.
(11) Mr. Kecseg is a member of the Committee. His business
address is c/o First Research Financial, Inc., 6210 Beltline
Road, Suite 155, Irving, Texas 75063.
(12) Includes 9,800 shares with respect to which Mr. Kecseg
shares beneficial ownership.
(13) Includes 10,000 shares subject to options exercisable
within 60 days granted to Mr. Cobb pursuant to the Company's
1992 Stock Incentive Plan, 10,000 shares subject to options
exercisable within 60 days granted to Mr. Cobb pursuant to
the Company's Directors' Plan and 15,000 shares subject to
other options exercisable within 60 days. Does not include
shares subject to options which would be granted to Mr. Cobb
under the Directors' Plan in the event that he is elected to
the Board of Directors at the Annual Meeting.
(14) Excludes 1,384,612 shares beneficially owned by RIMCO
Associates, Inc. (see footnote 2 above), with respect to
which Messrs. Oakes and Milavec have disclaimed beneficial
ownership. Messrs. Oakes and Milavec are the current
designees of RIMCO to the Company's Board of Directors.
Does not include shares subject to options which would be
granted to each of Mr. Oakes and Mr. Milavec under the
Directors' Plan in the event that he is elected to the Board
of Directors at the Annual Meeting.
(15) Does not include shares subject to options which would
be granted to such person under the Directors' Plan in the
event that he is elected to the Board of Directors pursuant
to the Consent Solicitation or the Proxy Solicitation. The
business address of such person, for purposes hereof, is c/o
TechnoFlex, Inc., 10000 Memorial, Suite 250, Houston, Texas
77024.
(16) Includes 145,000 shares subject to options exercisable
within 60 days granted to various directors and executive
officers, and 1,170,000 shares owned beneficially by Kentex.
Messrs. Pawelek and England collectively own 60% of the
outstanding voting securities of Kentex and may therefore be
deemed to beneficially own all of the Common Stock owned by
Kentex.
Certain of the information contained in the above
table as well as the information contained in the section
herein entitled "The Nominees--Compensation of Directors,"
has been taken from or is based upon documents and records
on file with the Commission, including Schedule 13Ds and
amendments thereto (other than the Schedule 13D filed by the
Group), the Form 10-KSB and the Company's Proxy Statement
for the Annual Meeting. Neither the Committee nor either
member thereof has or takes any responsibility for the
accuracy or completeness of the information contained in
such documents and records.
Change in Control
Except as otherwise described herein, neither of
the members of the Committee knows of any arrangement, the
operation of which may at a subsequent date result in a
change of control of the Company, or of any change of
control that has occurred since July 1, 1995.
CONSENT AND PROXY PROCEDURES
NO MATTER HOW MANY SHARES OF COMMON STOCK YOU OWN,
WE URGE YOU TO HELP REPLACE THE CURRENT BOARD OF DIRECTORS
OF THE COMPANY BY FOLLOWING THESE INSTRUCTIONS FOR BOTH THE
CONSENT SOLICITATION AND THE PROXY SOLICITATION:
1. Consent Solicitation.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
BLUE CONSENT CARD IN THE ENCLOSED ENVELOPE (NO POSTAGE
NECESSARY) TO THE COMMITTEE C/O MORROW & CO., INC. AS
SOON AS POSSIBLE
You may consent to, withhold consent from or
abstain from voting on the Committee's proposal to remove
all of the current members of the Company's Board of
Directors by marking the appropriate box on the enclosed
BLUE consent card. You may also withhold your consent from
the removal of one or more of the Company's current
directors individually by writing the name(s) of such
director(s) in the space provided on the BLUE consent card.
If no marking at all is made or a marking is made with
respect to only one of the proposals for which the Committee
is seeking your consent, you will be deemed to have
CONSENTED TO each proposal for which a contrary indication
has not been marked.
THE COMMITTEE RECOMMENDS THAT YOU CONSENT TO THE
REMOVAL OF ALL OF THE CURRENT MEMBERS OF THE COMPANY'S BOARD
OF DIRECTORS.
You may consent to the election of the Committee's
slate of nominees for director, withhold consent to the
election of such nominees or abstain from voting thereon by
marking the appropriate box on the enclosed BLUE consent
card. You may also withhold your consent to the election of
one or more of the Committee's nominees individually by
writing the name(s) of such nominee(s) in the space provided
on the BLUE consent card. If no marking at all is made or a
marking is made with respect to only one of the proposals
for which the Committee is seeking your consent, you will be
deemed to have CONSENTED TO each proposal for which a
contrary indication has not been marked.
THE COMMITTEE RECOMMENDS THAT YOU CONSENT TO THE
ELECTION OF EACH OF THE COMMITTEE'S NOMINEES AS DIRECTORS OF
THE COMPANY.
2. Proxy Solicitation.
PLEASE COMPLETE, SIGN, DATE AND RETURN THE ENCLOSED
BLUE PROXY CARD IN THE ENCLOSED ENVELOPE (NO POSTAGE
NECESSARY) TO THE COMMITTEE C/O MORROW & CO., INC. AS
SOON AS POSSIBLE
You may vote for, against or abstain from voting
on the Committee's proposal to amend the Company's By-laws
to change the order of business at the Annual Meeting by
marking the appropriate box on the enclosed BLUE proxy card.
If no marking is made, you will be deemed to have voted FOR
the amendment of the By-laws to change the order of business
at the Annual Meeting.
THE COMMITTEE RECOMMENDS THAT YOU VOTE FOR THE
AMENDMENT OF THE COMPANY'S BY-LAWS TO CHANGE THE ORDER OF
BUSINESS AT THE ANNUAL MEETING.
You may vote for, against or abstain from voting
on the Committee's proposal to amend the Company's By-laws
to fix the number of directors to be elected at the Annual
Meeting at five by marking the appropriate box on the
enclosed BLUE proxy card. If no marking is made, you will
be deemed to have voted FOR the amendment of the By-laws to
fix the number of directors to be elected at the Annual
Meeting at five.
THE COMMITTEE RECOMMENDS THAT YOU VOTE FOR THE
AMENDMENT OF THE COMPANY'S BY-LAWS TO FIX THE NUMBER OF
DIRECTORS TO BE ELECTED AT THE ANNUAL MEETING AT FIVE.
You may vote for, against or withhold your vote on
the election of the Committee's slate of nominees for
director by marking the appropriate box on the enclosed BLUE
proxy card. You may also withhold your vote from the
election of one or more of the Committee's nominees
individually be writing the name(s) of such nominee(s) in
the space provided on the BLUE proxy card. If no marking is
made, you will be deemed to have voted FOR the election of
all of the Committee's nominees.
THE COMMITTEE RECOMMENDS THAT YOU VOTE FOR THE
ELECTION OF EACH OF THE COMMITTEE'S NOMINEES FOR DIRECTORS
OF THE COMPANY.
IF YOU HAVE ALREADY SIGNED THE PROXY CARD FOR THE
ANNUAL MEETING SENT TO YOU BY THE BOARD OF DIRECTORS OF THE
COMPANY, YOU CAN REVOKE SUCH PROXY BY SIGNING AND DATING THE
ENCLOSED BLUE PROXY CARD AND RETURNING THE CARD TO THE
COMMITTEE C/O MORROW & CO., INC. AS SOON AS POSSIBLE. ONLY
THE LATEST DATED PROXY CARD WILL COUNT AT THE ANNUAL
MEETING.
SOLICITATION; EXPENSES
The accompanying consent and proxy in the forms
enclosed herewith are being solicited by and on behalf of
the Committee. The solicitation of consents and proxies
will be made principally by mail and, in addition, may be
made by the members of the Committee personally, or by
telephone or telegraph, without compensation. The Committee
has also retained Morrow to assist it in the solicitation of
consents and proxies in connection herewith. The Committee
has agreed to pay Morrow a fee of $______ in connection with
both solicitations and to reimburse it for its expenses.
The Committee has also agreed to indemnify Morrow against
certain liabilities and expenses in connection with its
engagement, including certain liabilities under the Federal
securities laws. Approximately [25] employees of Morrow
will solicit stockholders on behalf of the Committee.
Brokers, nominees and fiduciaries will be reimbursed by the
Committee for their out-of-pocket and clerical expenses in
transmitting proxies and related materials to beneficial
owners. The entire cost of soliciting consents and proxies
in connection herewith, estimated by the Committee to be
approximately $________ (excluding the costs of potential
litigation), will be borne by the members of the Committee
in a manner to be determined by them. The total
expenditures to date in connection herewith have been
approximately $________. The Committee may seek
reimbursement from the Company for all or some of its
expenses and, in such event, does not intend to seek
stockholder approval for such reimbursement at a subsequent
meeting unless such approval is required under Delaware Law.
SUBMISSION OF STOCKHOLDER PROPOSALS
Any proposal which is intended to be presented by
any stockholder for action at the Company's 1998 Annual
Meeting of Stockholders must be received in writing by the
Secretary of the Company, at 16420 Park Ten Place, Suite
300, Houston, Texas 77084-5051, not later than ___________,
1997 in order for such proposal to be considered for
inclusion in the proxy statement and form of proxy relating
to the 1998 Annual Meeting of Stockholders. In the event
that another meeting of stockholders is held prior to the
1998 Annual Meeting of Stockholders, including the
rescheduled 1997 meeting if this Consent and Proxy
Solicitation is successful and the reconstituted Board
adjourns the Annual Meeting, reasonable prior notice thereof
will be provided to the Company's stockholders.
OTHER MATTERS
Reference is hereby made to the Company's Proxy
Statement for the Annual Meeting for additional information
concerning the Company's current management and directors.
YOUR VOTE IS IMPORTANT. PLEASE INDICATE YOUR
SUPPORT FOR EACH OF THE COMMITTEE'S PROPOSALS
DESIGNED TO REPLACE THE CURRENT BOARD OF DIRECTORS
OF THE COMPANY BY MARKING, SIGNING AND DATING THE
ENCLOSED BLUE CONSENT CARD AND THE ENCLOSED BLUE
PROXY CARD AND RETURNING THEM IN THE DESIGNATED
ENCLOSED ENVELOPE[S] (NO POSTAGE NECESSARY) AS
SOON AS POSSIBLE.
If you have any questions, or require any
additional information, concerning this Consent and Proxy
Statement or the Annual Meeting, please contact Morrow &
Co., Inc. at 909 Third Avenue, 20th Floor, New York, New
York 10022-4799, or call, toll free, telephone no. (800)
662-5200. If any of your shares of Common Stock are held in
the name of a brokerage firm, bank, bank nominee or other
institution, only it may vote such shares and only upon
receipt of your specific instructions. Accordingly, please
contact the person responsible for your account as soon as
possible and instruct that person to indicate a vote FOR
each of the Committee's proposals and promptly to mark,
sign, date and return BOTH the enclosed BLUE consent card
and the enclosed BLUE proxy card to Morrow.
The Universal Seismic
Associates, Inc. Stockholders'
Protective Committee.
December [__], 1996
<PAGE>
APPENDIX A
UNIVERSAL SEISMIC ASSOCIATES, INC.
STOCKHOLDERS' PROTECTIVE COMMITTEE
1. Name of Member: Michael T. Kanarellis
Business Address: c/o TechnoFlex, Inc.
10000 Memorial, Suite 250
Houston, Texas 77024
Present Occupation: President of TechnoFlex, Inc., an
international marketing services
company.
Shares of Common Stock Beneficially Owned: 215,900
Shares of Common Stock Owned of Record: 0
Shares of Common Stock Purchased and Sold Within the
Past Two Years:
Date Purchased or Sold No. of Shares
---- ----------------- -------------
February 28, 1995 Purchased 5,000
March 1, 1995 Purchased 5,000
June 19, 1995 Purchased 4,000
June 20, 1995 Purchased 6,000
December 5, 1995 Purchased 15,000
December 15, 1995 Purchased 10,000
April 9, 1996 Purchased 5,000
June 25, 1996 Purchased 6,400
June 27, 1996 Purchased 26,000
June 28, 1996 Purchased 12,500
July 1, 1996 Purchased 10,000
July 8, 1996 Purchased 2,000
July 9, 1996 Purchased 14,000
July 11, 1996 Purchased 10,000
July 12, 1996 Purchased 10,000
July 15, 1996 Purchased 15,000
July 16, 1996 Purchased 4,000
July 17, 1996 Purchased 6,000
August 1, 1996 Purchased 8,000
October 18, 1996 Sold 8,000
2. Name of Member: Robert J. Kecseg
Business Address: c/o First Research Financial, Inc.
6210 Beltline Road, Suite 155
Irving, Texas 75063
Present Occupation: Supervisory Analyst at First
Research Financial, Inc., a company
that provides financial analysis
services.
Shares of Common Stock Beneficially Owned: 47,100
Shares of Common Stock Owned of Record: 0
Shares of Common Stock Purchased and Sold Within the
Past Two Years:
Date Purchased or Sold No. of Shares
---- ----------------- -------------
December 15, 1994 Purchased 1,000
January 18, 1995 Sold 10,000
January 20, 1995 Sold 10,000
March 28, 1995 Purchased 7,000
April 7, 1995 Purchased 5,000
May 3, 1995 Purchased 1,700
May 8, 1995 Purchased 3,600
May 19, 1995 Purchased 3,000
May 24, 1995 Purchased 3,000
June 1, 1995 Purchased 7,000
June 6, 1995 Purchased 5,000
September 7, 1995 Sold 5,000
December 29, 1995 Purchased 2,100
May 15, 1996 Purchased 2,000
May 28, 1996 Purchased 3,000
June 5, 1996 Sold 400
June 6, 1996 Sold 2,300
June 10, 1996 Sold 200
June 12, 1996 Sold 1,300
September 4, 1996 Purchased 500
September 20, 1996 Sold 3,500
October 18, 1996 Purchased 1,000
October 30, 1996 Purchased 12,100
October 30, 1996 Sold 10,000
November 11, 1996 Purchased 1,000
Except as set forth in this Consent and Proxy
Statement, no participant in the Consent Solicitation or
Proxy Solicitation has any substantial interest in any
matter to be acted on in connection with the Consent
Solicitation or at the Annual Meeting. With the exception
of George Stapleton, an officer of TechnoFlex who
beneficially owns 18,000 shares of the Company's Common
Stock, no associate of the participants in such solicitation
beneficially owns any securities of the Company and no
participant owns any securities of any subsidiary of the
Company. Robert Kecseg purchased 13,000 of the shares of
Common Stock beneficially owned by him on margin. As of
December 5, 1996, the aggregate margin debt with respect to
such shares is approximately $25,000. None of the shares of
Common Stock owned by Michael Kanarellis were purchased with
borrowed funds.
Mr. Kanarellis, in his capacity as President of
TechnoFlex, was actively involved in the introduction of the
Company to Suelopetrol, and was closely involved in
facilitating the negotiation of the proposed merger. Mr.
Kecseg provides financial advisory services to various
stockholders of the Company. See "The Committee" above.
Except as previously indicated in this Consent and Proxy
Statement, no participant or associate of any participant in
the Consent Solicitation or the Proxy Solicitation has any
arrangement or understanding with any person with respect to
any future employment by the Company or its affiliates or
with respect to any future transactions to which the Company
or its affiliates will or may be a party, nor is any such
person a party adverse to the Company in any legal
proceeding, and none of such persons has a material interest
adverse to the Company in any such proceeding.
<PAGE>
WRITTEN CONSENT BY STOCKHOLDERS OF
UNIVERSAL SEISMIC ASSOCIATES, INC.
TO ACTION WITHOUT A MEETING SOLICITED BY
THE UNIVERSAL SEISMIC ASSOCIATES, INC.
STOCKHOLDERS' PROTECTIVE COMMITTEE IN OPPOSITION
TO THE BOARD OF DIRECTORS OF
UNIVERSAL SEISMIC ASSOCIATES, INC.
Unless otherwise indicated below, the undersigned, a
stockholder of record of Universal Seismic Associates, Inc.,
a Delaware corporation (the "Company"), on December 6, 1996
(the "Record Date"), hereby consents pursuant to Section
228(a) of the Delaware General Corporation Law with respect
to all shares of common stock, par value $.0001 per share
(the "Common Stock"), of the Company held by the
undersigned, to the taking of each of the following actions
without a meeting, without prior notice and without a vote:
THE UNIVERSAL SEISMIC ASSOCIATES, INC. STOCKHOLDERS'
PROTECTIVE COMMITTEE RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY CONSENT TO EACH OF THE FOLLOWING PROPOSALS. EACH OF
THE PROPOSALS REQUIRES THE APPROVAL OF HOLDERS OF A MAJORITY
OF THE COMMON STOCK OUTSTANDING ON THE RECORD DATE.
THIS CONSENT CARD IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK, SIGN AND DATE THIS CONSENT CARD ON THE REVERSE
SIDE BEFORE RETURNING THIS CONSENT CARD IN THE ENCLOSED
ENVELOPE.
1(A) REMOVAL OF THE EXISTING BOARD OF DIRECTORS OF THE
COMPANY.
RESOLVED, that the following directors of the Company,
and any other person elected or appointed to the Board to
fill any vacancy or newly created directorship, are hereby
removed from such directorships:
Michael J. Pawelek
Ronald L. England
Calvin G. Cobb
Stephen F. Oakes
Gary J. Milavec
___ CONSENTS ___ CONSENT WITHHELD
INSTRUCTION:
To consent or withhold consent to the removal of all
the above-named directors and any other person who is a
director of the Company at the time the action taken by this
written consent becomes effective, check the appropriate box
above. IF YOU WISH TO CONSENT TO THE REMOVAL OF CERTAIN OF
THE ABOVE-NAMED DIRECTORS BUT NOT ALL OF THEM, CHECK THE
"CONSENTS" BOX ABOVE AND WRITE THE NAME OF EACH PERSON YOU
DO NOT WISH REMOVED IN THE FOLLOWING SPACE:
____________________________________________________________
IF NO BOX IS MARKED ABOVE WITH RESPECT TO THIS
PROPOSAL, THE UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH
PROPOSAL, EXCEPT THAT THE UNDERSIGNED WILL NOT BE DEEMED TO
CONSENT TO THE REMOVAL OF ANY DIRECTOR WHOSE NAME IS WRITTEN
IN THE SPACE PROVIDED ABOVE.
1(B) ELECTION OF NEW DIRECTORS TO THE BOARD.
RESOLVED, that the following persons (the "Nominees")
are hereby elected as directors of the Company to hold
office until their successors are elected and qualified:
Michael T. Kanarellis
Robert J. Kecseg
Gordon M. Greve
Pedro Garmendia
Donald B. Caldwell
___ CONSENTS ___ CONSENT WITHHELD
INSTRUCTION:
To consent or withhold consent to the election of all
the above-named persons, check the appropriate box above.
IF YOU WISH TO CONSENT TO THE ELECTION OF CERTAIN OF THE
ABOVE-NAMED PERSONS, BUT NOT ALL OF THEM, CHECK THE
"CONSENTS" BOX ABOVE AND WRITE THE NAME OF EACH SUCH PERSON
YOU DO NOT WISH ELECTED IN THE FOLLOWING SPACE:
____________________________________________________________
IF NO BOX IS MARKED ABOVE WITH RESPECT TO ANY PROPOSAL,
THE UNDERSIGNED WILL BE DEEMED TO CONSENT TO SUCH PROPOSAL,
EXCEPT THAT THE UNDERSIGNED WILL NOT BE DEEMED TO CONSENT TO
THE ELECTION OF ANY NOMINEE WHOSE NAME IS WRITTEN IN THE
SPACE PROVIDED ABOVE.
The invalidity, illegality or unenforceability of any
particular provision of this Consent shall be construed in
all respects as if such invalid, illegal or unenforceable
provision were omitted without affecting the validity,
legality or enforceability of the remaining provisions
thereof.
Please sign exactly as name appears on stock
certificates or on label affixed hereto.
When shares are registered in more than one
name, all such persons should sign. When
signing as attorney, executor, administrator,
trustee, guardian, corporate officer,
partner, etc. sign in official capacity,
giving full title as such. If a corporation,
please sign in the full corporate name by
president or other authorized officer. If a
partnership, please sign in the partnership
name by authorized person.
Dated: _______________________ , 1996
________________________________________
(Signature)
________________________________________
(Print Name)
________________________________________
(Signature, if held jointly)
________________________________________
(Title or authority (if applicable))
IN ORDER FOR YOUR CONSENT TO BE VALID, IT
MUST BE DATED. PLEASE SIGN, DATE AND MAIL
YOUR CONSENT PROMPTLY IN THE POSTAGE-PAID
ENVELOPE ENCLOSED. FAILURE TO EXECUTE A
CONSENT WILL HAVE THE SAME EFFECT AS
WITHHOLDING A CONSENT.
<PAGE>
UNIVERSAL SEISMIC ASSOCIATES, INC.
PROXY
THIS PROXY IS BEING SOLICITED BY
THE UNIVERSAL SEISMIC ASSOCIATES, INC.
STOCKHOLDERS' PROTECTIVE COMMITTEE IN OPPOSITION
TO THE BOARD OF DIRECTORS OF
UNIVERSAL SEISMIC ASSOCIATES, INC.
The undersigned, a stockholder of record of Universal
Seismic Associates, Inc., a Delaware corporation (the
"Company"), on December 13, 1996 (the "Record Date"), hereby
appoints Michael T. Kanarellis and Robert J. Kecseg as
proxies of the undersigned, with full power of substitution,
to vote, as specified herein, all shares of common stock,
par value $.0001 per share (the "Common Stock"), of the
Company held by the undersigned at the Annual Meeting of
Stockholders, scheduled to be held on January 28, 1997, and
any adjournment(s) or postponement(s) thereof.
THE UNIVERSAL SEISMIC ASSOCIATES, INC. STOCKHOLDERS'
PROTECTIVE COMMITTEE RECOMMENDS THAT THE STOCKHOLDERS OF THE
COMPANY VOTE "FOR" EACH OF THE FOLLOWING PROPOSALS. EACH OF
THE PROPOSALS REQUIRES THE AFFIRMATIVE VOTE OF HOLDERS OF A
MAJORITY OF THE COMMON STOCK OUTSTANDING ON THE RECORD DATE.
THIS PROXY CARD IS CONTINUED ON THE REVERSE SIDE.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD ON THE REVERSE
SIDE BEFORE RETURNING THIS PROXY CARD IN THE ENCLOSED
ENVELOPE.
1. PROPOSAL TO AMEND THE COMPANY'S BY-LAWS TO CHANGE THE
ORDER OF BUSINESS AT THE ANNUAL MEETING.
___ FOR ___ AGAINST ___ ABSTAIN
2. PROPOSAL TO AMEND THE COMPANY'S BY-LAWS TO FIX THE
NUMBER OF DIRECTORS OF THE COMPANY AT FIVE.
___ FOR ___ AGAINST ___ ABSTAIN
3. PROPOSAL TO ELECT THE FOLLOWING DIRECTORS TO THE BOARD
TO SERVE UNTIL THE NEXT ANNUAL MEETING OF STOCKHOLDERS OR
UNTIL THEIR SUCCESSORS ARE ELECTED AND QUALIFIED.
Michael T. Kanarellis
Robert J. Kecseg
Gordon M. Greve
Pedro Garmendia
Donald B. Caldwell
___ FOR ___ WITHHELD
INSTRUCTION:
To withhold your vote to the election of all the above-
named persons, check the appropriate box above. IF YOU WISH
TO VOTE FOR THE ELECTION OF CERTAIN OF THE ABOVE-NAMED
PERSONS, BUT NOT ALL OF THEM, CHECK THE "FOR" BOX ABOVE AND
WRITE THE NAME OF EACH SUCH PERSON YOU DO NOT WISH ELECTED
IN THE FOLLOWING SPACE:
- ------------------------------------------------------------
IF NO BOX IS MARKED ABOVE WITH RESPECT TO ANY PROPOSAL,
THE UNDERSIGNED WILL BE DEEMED TO VOTE "FOR" SUCH PROPOSAL,
EXCEPT THAT THE UNDERSIGNED WILL NOT BE DEEMED TO VOTE FOR
THE ELECTION OF ANY NOMINEE WHOSE NAME IS WRITTEN IN THE
SPACE PROVIDED ABOVE.
Please sign exactly as name appears on stock
certificates or on label affixed hereto.
When shares are registered in more than one
name, all such persons should sign. When
signing as attorney, executor, administrator,
trustee, guardian, corporate officer,
partner, etc. sign in official capacity,
giving full title as such. If a corporation,
please sign in the full corporate name by
president or other authorized officer. If a
partnership, please sign in the partnership
name by authorized person.
Dated: _______________________ , 1996
______________________________________
(Signature)
______________________________________
(Print Name)
______________________________________
(Signature, if held jointly)
______________________________________
(Title or authority (if applicable))
IN ORDER FOR YOUR PROXY TO BE VALID, IT MUST
BE DATED. PLEASE SIGN, DATE AND MAIL YOUR
PROXY PROMPTLY IN THE POSTAGE-PAID ENVELOPE
ENCLOSED. FAILURE TO EXECUTE A PROXY WILL
HAVE THE SAME EFFECT AS WITHHOLDING A VOTE.
