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:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of
the Commission Only (as
permitted by Rule 14a-6(e)(2))
[x] 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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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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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
of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
UNIVERSAL SEISMIC ASSOCIATES, INC.
STOCKHOLDERS' PROTECTIVE COMMITTEE
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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 GOLD consent card and the enclosed BLUE proxy card, are first being
mailed or distributed to stockholders of the Company on or about December 19,
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. In the event that the Company consummates a business
combination with Suelopetrol, Michael T. Kanarellis, a member of the
Committee, will seek to be compensated (subject to the Company's attaining
certain earnings goals) by the Company for services he has rendered in
connection with such transaction. Prior to the termination of the Letter of
Intent, Mr. Kanarellis had an oral understanding with the Company that, upon
the consummation of the transaction with Suelopetrol, he would be entitled to
reimbursement of his expenses and to receive 200,000 shares of the common
stock of the combined company. In the event that Mr. Kanarellis were to
receive all 200,000 shares of such common stock, the value of such shares
would be $650,000 based on the closing price of the Company's Common Stock on
December 18, 1996. See "Background of and Reasons for the Solicitation" and
"The Committee" 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 thereby,
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 GOLD CONSENT CARD TO INDICATE YOUR
CONSENT TO THE REMOVAL OF THE CURRENT BOARD OF DIRECTORS
AND TO THE REPLACEMENT OF SUCH DIRECTORS WITH THE
COMMITTEE'S NOMINEES
SIGN THE ENCLOSED GOLD CONSENT CARD
DATE THE ENCLOSED GOLD CONSENT CARD
RETURN THE ENCLOSED GOLD 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 these solicitations, please call the Committee's solicitation
agent, The Herman Group Inc. ("Herman"), toll free, at telephone no. (800)
647-2536.
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 shall have previously been fixed by the
board of directors, the record date for determining the stockholders entitled
to consent in writing to a corporate action 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 did not fix 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 GOLD consent card and returning it to the Committee, c/o Herman, 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, Herman. 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
execute a proxy or vote at the Annual Meeting, we urge you to complete and
return BOTH the enclosed GOLD consent card and the enclosed 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 actions 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 mark, sign and date the enclosed GOLD consent card and return it to the
Committee c/o Herman in the enclosed envelope (or by facsimile at (214) 999-
9348) AS SOON AS POSSIBLE so that the Committee can deliver 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 consent cards 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, it 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 5,229,109 shares of Common Stock were outstanding as of the close
of business on the Consent Record Date.<F1>* 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 2,614,556 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 MARKING, DATING AND EXECUTING THE ENCLOSED GOLD
CONSENT CARD AND RETURNING IT IN THE ENCLOSED ENVELOPE (OR BY
FACSIMILE AT (214) 999-9348) 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 exists. According to
information provided by the Company, an aggregate of 5,229,109* 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
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<F1>* Based on the number of shares outstanding on November 7, 1996, as
reported by the Company in its Form 10-QSB for the fiscal quarter ended
September 30, 1996. The Committee has demanded a stockholders' list from the
Company as of both the Consent Record DAte and the Proxy Record Date, which it
has not yet received.
<PAGE>
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 each of 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 MARKING, DATING AND
EXECUTING THE ENCLOSED BLUE PROXY CARD AND RETURNING IT IN
THE ENCLOSED ENVELOPE (OR BY FACSIMILE AT (214) 999-9348) 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 The Herman Group Inc., 2121 San Jacinto Street, 26th Floor,
Dallas, Texas 75201, facsimile no. (214) 999-9348. 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 Herman. A later dated
BLUE proxy card will not revoke an earlier dated GOLD 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
Herman. A later dated GOLD 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. On behalf of and as agent for the Company, Mr. Kanarellis has
attended and participated in over 50 meetings with senior management of
Suelopetrol, both in the United States and in Venezuela, and, additionally,
has participated in numerous telephone conversations concerning the proposed
transaction. At such meetings and during such conversations, Mr. Kanarellis
and such representatives of Suelopetrol extensively discussed the financial
condition, operations and prospects of Suelopetrol and the terms of the
proposed transaction.
Established in 1984, Suelopetrol is one of the most
experienced seismic contractors in Venezuela. Suelopetrol is 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 issues. 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 various
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.<F2>*
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), or $ (.68) per share (assuming 5,229,109 shares outstanding as of
December 13, 1996)<F1>**. As of the fiscal year ended June 30, 1996, the
Company had an accumulated deficit of over $(5.6 million). For its most
____________
<F2>* Three of the five current directors of the Company, two of whom are
members of the Company's senior management, 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 substantial degree of the
responsibility for the poor performance of the Company during such period.
<F1>** See footnote on page 6 hereof.
<PAGE>
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:
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.
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. In addition,
the Company announced in December 1996 that UNEXCO had executed a commitment
letter providing for a $3 million credit facility to be used to finance
UNEXCO'S exploration and production activities, which will result in
additional Company indebtedness. Based on the Company's Form 10-QSB for the
quarter ended September 30, 1996 (the "Form 10-QSB"), the Company appears to
be in breach of financial covenants under certain of its existing loan
agreements. Furthermore, the Company's September 30, 1996 balance sheet
reflects an increase in accounts payable of over $2.3 million (or
approximately 40%) to over $7.8 million, and a decrease in trade accounts
receivable of over $2.5 million (or approximately 30%), from June 30, 1996.
In 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 nominal (if any) 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 business
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 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 transaction. 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 through a press release 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. In this connection, Mr. Kanarellis
attended and participated in over 50 meetings with senior management of
Suelopetrol, both in the United States and in Venezuela, and, additionally,
participated in numerous telephone conversations concerning the proposed
transaction. At such meetings and during such conversations, Mr. Kanarellis
and such representatives of Suelopetrol extensively discussed the financial
condition, operations and prospects of Suelopetrol and the terms and
conditions of the proposed transaction. Also, Mr. Kanarellis met with
representatives of Raymond James and discussed with them the results of their
due diligence review of Suelopetrol. He also met with representatives of the
Venezuelan office of Coopers & Lybrand and discussed with them the results of
their audit of Suelopetrol's financial statements for the fiscal year ended
June 30, 1996. In addition, Mr. Kanarellis discussed with senior management
of Suelopetrol financial projections which they prepared for the fiscal year
1997, and reviewed, among other things, certain of Suelopetrol's contracts and
reports of Suelopetrol's operating crews.
Based on Mr. Kanarellis's involvement as discussed above
and the Committee Members' 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 demanded that in connection with the proposed combination he
and the Company's Chief Financial Officer 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 to obtain a
fairness opinion resulted in the wasteful expenditure of significant Company
funds (approximately $300,000) and time, and appear 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, financial
condition and prospects 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, to 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 ostensibly 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 develop further its seismic data processing and oil exploration
businesses, the Company has conceded that it requires additional funds for
such development. In fact, in December 1996, the Company announced that
UNEXCO had executed a commitment letter providing for a $3 million credit
facility to be used to finance its exploration and production activities. In
the press release announcing such credit facility, the Company stated that
such facility would assist UNEXCO in participating as a working interest owner
in "promising" oil and gas exploration "prospects". In the opinion of the
Committee, it is imprudent for the Company at this time to incur additional
indebtedness to participate in oil and gas drilling projects which are not
presently generating revenue and which have no clear assurance of generating
future revenue for the Company. The Committee believes that a business
combination with Suelopetrol, an operating company with substantial revenue,
would strengthen the Company's core business while, at the same time,
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 $3.125 and $4.375.
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. Prior to the termination of the Letter of Intent, Mr. Kanarellis
had an oral understanding with the Company that, upon the consummation of the
transaction with Suelopetrol, he would be entitled to reimbursement of his
expenses and to receive 200,000 shares of the common stock of the combined
company. If the Company consummates a transaction with Suelopetrol, Mr.
Kanarellis will seek the reimbursement of expenses he has incurred in
connection with the transaction (presently approximately $60,000) and will
request that the combined company issue to him 200,000 shares of its common
stock, which will vest upon the combined company's attainment of certain
earnings goals. However, there is presently no agreement in effect with
respect to any compensation, and the actual terms thereof would have to be
mutually agreed upon between Mr. Kanarellis and 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 are brokerage clients of his and
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.
In the event that the Committee succeeds in replacing
the current directors of the Company and the reconstituted Board consummates a
transaction with Suelopetrol, Messrs. Kanarellis and Kecseg believe that the
value of their respective stockholdings of the Company may appreciate. In
addition, if the transaction with Suelopetrol is consummated, Mr. Kanarellis
may, as a condition to such transaction or otherwise, serve as a member of the
Company's senior management, and as such be entitled to compensation therefor.
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 Herman. 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 above in "Background of and
Reasons for the Solicitation" 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 L. 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 (and
Section 3.3 of the Company's By-Laws) 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 1997. 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 appointment 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 and 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 serving 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 whole 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 otherwise 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 L. 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 L.
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 hereafter unable or unwilling to stand for election, but, in such event,
the shares represented by the enclosed GOLD 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 L. Garmendia 47
Gordon M. Greve 61
Donald B. Caldwell 66
Michael T. Kanarellis has been the President of TechnoFlex, the Vice President
of Offshore since 1992 and the Manager of Offshore Gas Partners since 1993.
He has also been the Treasurer of Ayeyarwady Resources, a British Virgin
Islands company through which TechnoFlex is engaged in an oil and gas project
in Myanmar, since November 1996. From 1990 to 1992 Mr. Kanarellis 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.
Pedro L. Garmendia has been President of Seguros Nuevo Mundo, S.A., a
Venezuelan financing company, since June 1995. From January 1987 through June
1995, Mr. Garmendia was Vice President of Projects Consultants, S.A., a
Venezuelan project management company involved in projects relating to the
government of Venezuela as well as oil and gas projects. Mr. Garmendia has a
Commercial Administration Degree from the University of Central Venezuela and
studied Operational and Management Science at Warwich University.
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. Dr. Greve was the President of the Society of
Exploration Geophysicists from November 1995 to November 1996. He is
currently a director of Mitcham Industries, a company engaged in the sale and
rental of seismic equipment. Dr. Greve has a B.S. in Electrical Engineering,
and an M.S. 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. Also since 1982, Mr. Caldwell has been President and a
principal stockholder of Longwood Resources, Inc., a company that holds
interests in oil and gas properties. 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 thereby cause options to
purchase 10,000 shares of Common Stock granted thereunder to Calvin G. Cobb,
currently a director, 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 November 7, 1996 (the latest date as of which the Company has
publicly disclosed the number of shares of Common Stock outstanding), 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 security 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 which such person has the
right to acquire (including through options and warrants) 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) 24.41%
Rick E. Trapp(3) 1,180,700(4) 22.13%
Michael J. Pawelek(3) 1,172,000(5) 21.97%
Ronald L. England(3) 1,172,000(6) 21.97%
Kentex Holdings, Inc.(7) 1,170,000(8) 21.93%
The Group(9) 263,000 5.03%
Michael T. Kanarellis(10) 215,900 4.13%
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 0(15) *
Gordon M. Greve 0(15) *
Donald B. Caldwell 0(15) *
Directors and executive 1,324,000(14)(16) 24.17%
officers as a group
(five 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) Represents (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) Represents 10,700 shares owned beneficially and of record by Mr. Trapp
and 1,170,000 shares owned beneficially by Kentex Holdings, Inc. ("Kentex").
The principal asset of Kentex consists of all the outstanding capital stock of
Sierra Management, Inc. (see footnote 8 below). 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) Represents 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
President and Chief Executive Officer of Kentex and may therefore be deemed to
beneficially own all of the Common Stock owned by Kentex.
(6) Represents 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 and an officer 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) Represents 1,065,000 shares owned beneficially and of record by Sierra
Management, Inc., a Texas corporation ("Sierra"), and 105,000 shares subject
to warrants exercisable within 60 days, 100,000 of which are exercisable at
$3.75 per share and 5,000 of which are exercisable at $2.50 per share.
Between November 1987 and January 1992, Mr. Pawelek was an officer and a
director of a subsidiary of Sierra that conducted oil and gas operations.
(9) See Schedule 13D filed with the Commission by the Group on
November 12, 1996. The business address of such entity, 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) Represents 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 granted to Mr.
Cobb. 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 THE INSTRUCTIONS BELOW FOR BOTH THE CONSENT SOLICITATION AND THE
PROXY SOLICITATION:
1. Consent Solicitation.
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED GOLD CONSENT CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE (NO POSTAGE NECESSARY)
OR BY FACSIMILE AT (214) 999-9348 TO THE COMMITTEE C/O THE
HERMAN GROUP 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 GOLD 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 GOLD
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
GOLD 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 GOLD 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 AND DATE THE ENCLOSED BLUE PROXY CARD
AND RETURN IT IN THE ENCLOSED ENVELOPE (NO POSTAGE NECESSARY)
OR BY FACSIMILE AT (214) 999-9348 TO THE COMMITTEE C/O THE
HERMAN GROUP 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 THE HERMAN GROUP INC., FACSIMILE NO. (214) 999-
9348, 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
Herman to assist it in the solicitation of consents and proxies in connection
herewith. The Committee has agreed to pay Herman a management service fee of
$5,000 and customary mailing, tabulation and related fees in connection with
both solicitations and to reimburse it for its expenses. The Committee has
also agreed to indemnify Herman against certain liabilities and expenses in
connection with its engagement, including certain liabilities under the
Federal securities laws. Approximately eight employees of Herman 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 consents, 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 $150,000 (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 $95,000. 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 June 22, 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
COMPLETING, SIGNING AND DATING THE ENCLOSED GOLD CONSENT
CARD AND THE ENCLOSED BLUE PROXY CARD AND RETURNING THEM
IN THE DESIGNATED ENCLOSED ENVELOPE(S) (NO POSTAGE
NECESSARY) OR BY FACSIMILE AT (214) 999-9348 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 The Herman Group Inc., 2121 San Jacinto Street, 26th
Floor, Dallas, Texas 75201, or call, toll free, telephone no. (800) 647-2536.
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 GOLD consent
card and the enclosed BLUE proxy card to Herman.
The Universal Seismic
Associates, Inc. Stockholders'
Protective Committee.
December 19, 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>
[GOLD]
WRITTEN CONSENT BY STOCKHOLDERS OF
UNIVERSAL SEISMIC ASSOCIATES, INC.
TO ACTION WITHOUT A MEETING SOLICITED BY
THE UNIVERSAL SEISMIC ASSOCIATES, INC.
STOCKHOLDERS' PROTECTIVE COMMITTEE
The undersigned, a stockholder of record of Universal
Seismic Associates, Inc., a Delaware corporation (the
"Company"), on December 6, 1996 (the "Consent 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 ("Common Stock"),
of the Company held by the undersigned to the taking of each
of the following actions without a meeting:
THE UNIVERSAL SEISMIC ASSOCIATES, INC. STOCKHOLDERS'
PROTECTIVE COMMITTEE (THE "COMMITTEE") RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY CONSENT TO EACH OF THE FOLLOWING
PROPOSALS. APPROVAL OF EACH OF THE PROPOSALS REQUIRES THE
CONSENT OF THE HOLDERS OF A MAJORITY OF THE COMMON STOCK
OUTSTANDING ON THE CONSENT RECORD DATE.
PLEASE MARK AND SIGN AND DATE THIS CONSENT CARD ON THE
REVERSE SIDE BEFORE RETURNING IT IN THE ENCLOSED ENVELOPE.
(A) REMOVAL OF THE ENTIRE EXISTING BOARD OF DIRECTORS
OF THE COMPANY.
RESOLVED, that the following directors of the Company,
and any other person(s) elected or appointed to the
Company's Board of Directors 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 /__/ ABSTAINS
INSTRUCTION:
To consent, abstain or withhold consent to the removal
of all the above-named directors, and to any other person(s)
who is a director of the Company at the time the action
taken by this written consent shall become 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 SUCH DIRECTOR YOU DO NOT WISH TO BE 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.
(B) ELECTION OF NEW DIRECTORS TO THE BOARD.
RESOLVED, that the following persons are hereby elected
as directors of the Company to serve until the next annual
meeting of stockholders or until their successors are duly
elected and qualified:
Michael T. Kanarellis
Robert J. Kecseg
Pedro L. Garmendia
Gordon M. Greve
Donald B. Caldwell
/__/CONSENTS /__/ CONSENT WITHHELD /__/ ABSTAINS
INSTRUCTION:
To consent, abstain 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 TO BE ELECTED 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 ELECTION OF ANY PERSON WHOSE NAME
IS WRITTEN IN THE SPACE PROVIDED ABOVE.
An executed BLUE proxy card distributed by the Committee
will not revoke an executed GOLD consent card.
Please sign exactly as name appears on stock
certificate(s) 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: ________________________, 199_
______________________________________
(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 COMPLETE, SIGN AND
DATE YOUR CONSENT AND MAIL IT PROMPTLY IN THE
ENCLOSED POSTAGE-PAID ENVELOPE. FAILURE TO
EXECUTE A CONSENT WILL HAVE THE SAME EFFECT
AS WITHHOLDING A CONSENT.
<PAGE>
[BLUE]
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, 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 ("Common Stock"), of the Company held by
the undersigned at the Company's Annual Meeting of
Stockholders (the "Annual Meeting") scheduled to be held on
January 28, 1997, and any adjournment(s) or postponement(s)
thereof.
THE UNIVERSAL SEISMIC ASSOCIATES, INC. STOCKHOLDERS'
PROTECTIVE COMMITTEE (THE "COMMITTEE") RECOMMENDS THAT THE
STOCKHOLDERS OF THE COMPANY VOTE "FOR" EACH OF THE FOLLOWING
PROPOSALS. APPROVAL OF EACH OF THE PROPOSALS REQUIRES THE
AFFIRMATIVE VOTE OF THE HOLDERS OF A MAJORITY OF THE COMMON
STOCK PRESENT, IN PERSON OR BY PROXY, AT THE ANNUAL MEETING.
PLEASE MARK AND SIGN AND DATE THIS PROXY CARD ON THE
REVERSE SIDE BEFORE RETURNING IT 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 PERSONS TO THE COMPANY'S
BOARD OF DIRECTORS TO SERVE UNTIL THE NEXT ANNUAL MEETING OF
STOCKHOLDERS OR UNTIL THEIR SUCCESSORS ARE DULY ELECTED AND
QUALIFIED.
Michael T. Kanarellis
Robert J. Kecseg
Pedro L. Garmendia
Gordon M. Greve
Donald B. Caldwell
/__/ FOR /__/ WITHHELD /__/ ABSTAIN
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 AS DIRECTOR 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 TO VOTE FOR IN THE FOLLOWING SPACE:
- ------------------------------------------------------------
IF NO BOX IS MARKED ABOVE WITH RESPECT TO ANY
PARTICULAR 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 PERSON WHOSE NAME IS
WRITTEN IN THE SPACE PROVIDED ABOVE.
An executed GOLD consent card distributed by the Committee
will not revoke an executed BLUE proxy card.
Please sign exactly as name appears
on stock certificate(s) 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: ________________________,199_
_____________________________________
(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 COMPLETE,
SIGN AND DATE YOUR PROXY AND MAIL IT
PROMPTLY IN THE ENCLOSED POSTAGE-PAID
ENVELOPE.
