REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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TECH-SYM CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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NEVADA 3829 74-1509818
<S> <C> <C>
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
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10500 WESTOFFICE DRIVE
HOUSTON, TEXAS 77042
(713) 785-7790
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
WENDELL W. GAMEL
CHAIRMAN OF THE BOARD AND PRESIDENT
TECH-SYM CORPORATION
10500 WESTOFFICE DRIVE
HOUSTON, TEXAS 77042
(713) 785-7790
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
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COPIES TO:
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ANDREWS & KURTH L.L.P. J. RANKIN TIPPINS BAKER & BOTTS, L.L.P.
4200 TEXAS COMMERCE TOWER GENERAL COUNSEL 3000 ONE SHELL PLAZA
HOUSTON, TEXAS 77002 TECH-SYM CORPORATION 910 LOUISIANA
ATTN: THOMAS P. MASON, ESQ. 10500 WESTOFFICE DRIVE HOUSTON, TEXAS 77002
(713) 220-4200 HOUSTON, TEXAS 77042 ATTN: J. DAVID KIRKLAND, JR., ESQ.
(713) 785-7790 (713) 229-1234
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this registration statement becomes effective and the
conditions to consummation of the Merger have been satisfied or waived.
If the securities being registered on this Form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box.
CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
AMOUNT MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
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Common Stock, par value $0.10 per
share.............................. 964,000 shares with
associated Rights(1) $3.11(1) $8,223,000 $2,836.00
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(1) Up to 964,000 shares of common stock, par value $0.10 per share, of the
registrant ("Tech-Sym Common Stock") (with associated Common Stock Purchase
Rights attached ("Rights")) are to be offered in exchange for 2,645,027
shares of common stock, par value $0.001 per share ("CogniSeis Common
Stock"), of CogniSeis Development, Inc. ("CogniSeis") upon consummation of
the merger described herein. Pursuant to Rule 457(f)(2), the registration
fee was computed on the basis of the book value of the shares of CogniSeis
which will be exchanged for Tech-Sym Common Stock pursuant to the merger
transaction described herein.
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
TECH-SYM CORPORATION
CROSS-REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K
FORM S-4 ITEM NUMBER AND HEADING LOCATION IN PROSPECTUS
------------------------------------- -----------------------------------------
(Information About the Transaction)
1. Forepart of Registration
Statement and
Outside Front Cover Page of
Prospectus..................... Outside Front Cover Page
2. Inside Front and Outside Back
Cover Pages of Prospectus...... Inside Front Cover Page
3. Risk Factors, Ratio of Earnings
to Fixed Charges and Other
Information.................... Summary; The Merger
4. Terms of the Transaction........ Summary; The Merger
5. Pro Forma Financial
Information.................... Summary; Financial Statements
6. Material Contacts with the
Company Being Acquired......... The Merger
7. Additional Information Required
for Reoffering by Persons and
Parties Deemed to be
Underwriters................... *
8. Interests of Named Experts and
Counsel........................ *
9. Disclosure of Commission
Position on Indemnification for
Securities Act Liabilities..... *
(Information About the Registrant)
10. Information with Respect to S-3
Registrants.................... Outside Front Cover Page; Summary;
The Merger; Comparison of Stockholder
Rights
11. Incorporation of Certain
Information by Reference....... Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2
or S-3 Registrants............. *
13. Incorporation of Certain
Information by Reference....... *
14. Information with Respect to
Registrants Other Than S-2 or
S-3 Registrants................ *
(Information About the Company Being Acquired)
15. Information with Respect to S-3
Companies...................... *
16. Information with Respect to S-2
or S-3 Companies............... *
17. Information with Respect to
Companies Other Than S-2 or S-3
Companies...................... Summary; The Merger; CogniSeis Selected
Financial Data; Information Concerning
CogniSeis; Management's Discussion and
Analysis of Financial Condition and
Results of Operations of CogniSeis;
Comparison of Stockholder Rights;
Financial Statements; Beneficial
Ownership of CogniSeis Common Stock
18. Information if Proxies, Consents
or Authorizations are to be
Solicited...................... Summary; The Special Meeting;
The Merger
19. Information if Proxies, Consents
or Authorizations are not to be
Solicited or in an Exchange
Offer.......................... *
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* Not Applicable
COGNISEIS DEVELOPMENT, INC.
2401 PORTSMOUTH
HOUSTON, TEXAS 77098
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ........, 1995
To the Stockholders of CogniSeis Development, Inc.:
Notice is hereby given that a Special Meeting of Stockholders ("Special
Meeting") of CogniSeis Development, Inc., a Delaware corporation
("CogniSeis"), will be held on .........., 1995, at 9:00 a.m., Houston time,
at CogniSeis' principal business office, 2401 Portsmouth, Houston, Texas
77098, to consider and vote upon a proposal to approve and adopt the Agreement
and Plan of Merger dated as of May 11, 1995 (the "Merger Agreement"), among
Tech-Sym Corporation, a Nevada corporation ("Tech-Sym"), CSD Merger, Inc., a
Delaware corporation and wholly-owned subsidiary of Tech-Sym ("CSD"), and
CogniSeis, providing for, among other things, the merger of CSD with and into
CogniSeis (the "Merger") (as a result of the Merger, CogniSeis will become a
wholly-owned subsidiary of Tech-Sym) and the conversion of each of the shares
of common stock of CogniSeis, par value $0.001 per share ("CogniSeis Common
Stock"), outstanding immediately prior to the effectiveness of the Merger
(other than dissenting shares, and shares owned directly or indirectly by
CogniSeis or Tech-Sym, which will be cancelled), into the right to receive (i)
the number of shares of Tech-Sym's common stock, par value $0.10 per share
("Tech-Sym Common Stock"), determined by dividing (A) $20,000,000 by (B) the
Share Market Value (as defined below) and by dividing such quotient by (C) the
total number of shares of CogniSeis Common Stock outstanding immediately prior
to the Effective Time and (ii) an equal number of Tech-Sym Rights (as defined
below). "Share Market Value" means the average of the closing sales price per
share of the Tech-Sym Common Stock on the New York Stock Exchange Composite
Tape, as reported by THE WALL STREET JOURNAL (Southwest Edition) for the
fifteen Trading Days (as defined below) prior to the five Trading Days
immediately preceding the date of the Effective Time, provided that, in the
event that the foregoing computation results in a value of less than $20.75,
then the Share Market Value shall be $20.75 and in the event the foregoing
computation results in a value of more than $30.75, then the Share Market
Value shall be $30.75. As used herein, "Trading Day" means any day on which
the New York Stock Exchange, Inc. is open for business. A "Tech-Sym Right"
means a right to purchase one-half of a share of Tech-Sym Common Stock,
subject to adjustment and subject to the terms and conditions of the Amended
and Restated Rights Agreement, dated as of June 1, 1988, between Tech-Sym and
Continental Stock Transfer & Trust Company. The accompanying Prospectus/Proxy
Statement describes the Merger Agreement and the Merger in more detail.
The Board of Directors has fixed the close of business on ......, 1995, as
the record date for determining stockholders entitled to notice of and to vote
at the Special Meeting and any adjournment or postponement thereof. Only
stockholders of record at the close of business on such date will be entitled to
notice of and to vote at the Special Meeting and any adjournment or postponement
thereof.
The directors and executive officers of CogniSeis and their affiliates, who
collectively hold approximately 55% of the outstanding shares of CogniSeis
Common Stock entitled to vote at the Special Meeting, have indicated their
intention to vote to approve and adopt the Merger Agreement.
When the proxies are returned properly executed, the shares represented
thereby will be voted in accordance with the indicated instructions. However, if
no instructions have been specified on a returned proxy, the shares represented
thereby will be voted FOR approval and adoption of the Merger Agreement. Any
stockholder giving a proxy has the power to revoke it at any time before it is
voted by filing, with the Secretary of CogniSeis, either an instrument revoking
the proxy or a duly executed proxy bearing a later date. Proxies also may be
revoked by attending the meeting and voting in person.
By Order of the Board of Directors,
[SIG]
Secretary
Houston, Texas
.......... .., 1995
YOU ARE CORDIALLY INVITED TO ATTEND THE SPECIAL MEETING; HOWEVER, WHETHER OR
NOT YOU EXPECT TO ATTEND, PLEASE COMPLETE, SIGN, DATE AND RETURN THE
ACCOMPANYING PROXY WITHOUT DELAY IN THE ENCLOSED POSTPAID ENVELOPE. THE PROXY IS
REVOCABLE AND WILL NOT BE USED IF YOU ARE PRESENT AND PREFER TO VOTE IN PERSON.
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FORM OF PROXY, FRONT SIDE
COGNISEIS DEVELOPMENT, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF COGNISEIS
SPECIAL MEETING OF STOCKHOLDERS TO BE HELD ON ........, 1995
The undersigned having received the notice and accompanying Proxy
Statement for said meeting hereby constitutes and appoints Patrick Poe
P and Ronald Warren, and each of them, his true and lawful agents and
R proxies with power of substitution and resubstitution in each, to
O represent and vote at the Special Meeting scheduled to be held on
X .........., 1995 or at any adjournment or postponement thereof on all
Y matters coming before said meeting, all shares of CogniSeis
Development, Inc. ("CogniSeis") which the undersigned may be entitled
to vote. The above proxies are hereby instructed to vote as shown on
the reverse side of this card.
(CONTINUED ON REVERSE SIDE)
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FORM OF PROXY, BACK SIDE
COGNISEIS DEVELOPMENT, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF COGNISEIS
PLEASE MARK VOTE IN SQUARE IN THE FOLLOWING MANNER USING
DARK INK ONLY.
THE BOARD OF DIRECTORS OF COGNISEIS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE PROPOSAL.
P Approval and adoption of Agreement and Plan of Merger among
R CogniSeis, Tech-Sym Corporation and CSD Merger, Inc.
O
X YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICE BY MARKING THE
Y APPROPRIATE BOX ABOVE, BUT YOU NEED NOT MARK ANY BOX IF YOU
WISH TO VOTE IN ACCORDANCE WITH THE BOARD OF DIRECTORS'
RECOMMENDATION. THE PROXIES CANNOT VOTE YOUR SHARES UNLESS YOU
SIGN AND RETURN THIS CARD.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
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NOTE: Please sign exactly as name appears hereon. For joint
accounts, both owners should sign. For corporations, a duly
authorized officer must sign and show full corporate name. When
signing as an executor, administrator, attorney, trustee or
guardian, etc., please sign your full title
Dated: _________________, 1995.
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Signature
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This proxy when properly executed will be voted in the manner
directed herein by the above signed stockholder of Common Stock.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR APPROVAL
AND ADOPTION OF THE AGREEMENT AND PLAN OF MERGER.
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PROSPECTUS/PROXY STATEMENT
PROSPECTUS PROXY STATEMENT
TECH-SYM CORPORATION COGNISEIS DEVELOPMENT, INC.
10500 WESTOFFICE DRIVE 2401 PORTSMOUTH
HOUSTON, TEXAS 77042 HOUSTON, TEXAS 77098
Tech-Sym Corporation, a Nevada corporation ("Tech-Sym"), has filed a
registration statement on Form S-4 (the "Registration Statement") pursuant to
the Securities Act of 1933, as amended (the "Securities Act"), covering up to
964,000 shares of its common stock, par value $0.10 per share (the "Tech-Sym
Common Stock"), each share including a Tech-Sym Right (as defined below),
issuable pursuant to a merger (the "Merger") of CSD Merger, Inc. ("CSD"), a
Delaware corporation and wholly-owned subsidiary of Tech-Sym, with and into
CogniSeis Development, Inc., a Delaware corporation ("CogniSeis"). As a result
of the Merger, CogniSeis will become a wholly-owned subsidiary of Tech-Sym.
This Prospectus/Proxy Statement constitutes the Prospectus of Tech-Sym filed
as a part of the Registration Statement and is being furnished to stockholders
of CogniSeis in connection with the solicitation of proxies by the Board of
Directors of CogniSeis for use at special meeting of stockholders (or any
adjournment or postponement thereof) to be held on ........., 1995 (the
"Special Meeting"). The information contained herein with respect to Tech-Sym
and its subsidiaries has been supplied by Tech-Sym, and the information
contained herein with respect to CogniSeis and its subsidiaries has been
supplied by CogniSeis. This Prospectus/Proxy Statement and the accompanying
form of proxy are first being mailed to stockholders of CogniSeis on or about
.........., 1995.
Pursuant to an Agreement and Plan of Merger dated as of May 11, 1995 among
Tech-Sym, CSD and CogniSeis (the "Merger Agreement"), each share of common
stock, par value $0.001 per share, of CogniSeis ("CogniSeis Common Stock")
outstanding immediately prior to the effectiveness of the Merger (other than
dissenting shares and shares owned immediately prior to the effective time of
the Merger directly or indirectly by CogniSeis or Tech-Sym, which will be
cancelled) will be converted into the right to receive, without interest, (i)
the number of shares of Tech-Sym Common Stock obtained by dividing (A)
$20,000,000 by (B) the Share Market Value (as defined below) and by dividing
such quotient by (C) the total number of shares of CogniSeis Common Stock
outstanding immediately prior to the Effective Time and (ii) an equal number of
Tech-Sym Rights (as defined below). "Share Market Value" means the average of
the closing sales price per share of the Tech-Sym Common Stock on the New York
Stock Exchange Composite Tape, as reported by THE WALL STREET JOURNAL (Southwest
Edition), for the fifteen Trading Days (as defined below) prior to the five
Trading Days immediately preceding the date of the Effective Time provided that,
in the event that the foregoing computation results in a value of less than
$20.75, then the Share Market Value shall be $20.75 and in the event the
foregoing computation results in a value of more than $30.75, then the Share
Market Value shall be $30.75. As used herein, "Trading Day" means any day on
which the New York Stock Exchange, Inc. ("NYSE") is open for business. A
"Tech-Sym Right" means a right to purchase one-half of a share of Tech-Sym
Common Stock, subject to adjustment and subject to the terms and conditions of
the Amended and Restated Rights Agreement, dated as of June 1, 1988, between
Tech-Sym and Continental Stock Transfer & Trust Company. The Tech-Sym Common
Stock and Tech-Sym Rights to be issued per share of CogniSeis Common Stock will
be hereinafter referred to as the "Merger Consideration." Stockholders of
CogniSeis will be entitled to dissenters' rights under Delaware law if they
properly perfect such rights. See "Summary -- The Merger -- Appraisal Rights."
Tech-Sym Common Stock is listed for trading on the NYSE under the symbol
"TSY." On May 18, 1995, the closing sales price of Tech-Sym Common Stock as
reported on the NYSE composite tape was $25 5/8. Based on the closing sales
price of Tech-Sym Common Stock on May 10, 1995 ($25.75), the date immediately
preceding the date of execution of the Merger Agreement, (i) the Merger
Consideration per share of CogniSeis Common Stock to be received by CogniSeis
stockholders pursuant to the Merger would be .2936 shares of Tech-Sym Common
Stock and associated Tech-Sym Rights and (ii) a total of approximately 6,553,558
shares of Tech-Sym Common Stock and associated Tech-Sym Rights would be
outstanding immediately after the Merger is consummated, of which approximately
11.85% would be held by former stockholders of CogniSeis.
THE TECH-SYM COMMON STOCK AND TECH-SYM RIGHTS TO BE ISSUED IN CONNECTION WITH
THE MERGER HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY
OR ADEQUACY OF THIS PROSPECTUS/PROXY STATEMENT. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
The date of this Prospectus/Proxy Statement is .........., 1995.
1
AVAILABLE INFORMATION
Tech-Sym is currently subject to the informational requirements of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
promulgated thereunder (the "Exchange Act") and, in accordance therewith, files
reports, proxy statements and other information with the Securities and Exchange
Commission (the "Commission"). All such information may be inspected and copied
at the public reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Judiciary Plaza, Washington, D.C. 20549, and at the
following Regional Offices of the Commission: Chicago Regional Office, Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621; and New
York Regional Office, 7 World Trade Center, 13th Floor, New York, New York
10048. Copies of such material may also be obtained at prescribed rates from the
Public Reference Section of the Commission at its principal office at 450 Fifth
Street, N.W., Judiciary Plaza, Washington, D.C. 20549. In addition, the Tech-Sym
Common Stock is listed for trading on the NYSE and such information may also be
inspected at the offices of the NYSE, 20 Broad Street, New York, New York 10005.
Tech-Sym has filed with the Commission the Registration Statement on Form
S-4 under the Securities Act with respect to the Tech-Sym Common Stock and
Tech-Sym Rights offered by this Prospectus/Proxy Statement. This
Prospectus/Proxy Statement, which is a part of the Registration Statement, does
not contain all the information set forth in the Registration Statement, certain
parts of which have been omitted in accordance with the rules and regulations of
the Commission. For further information with respect to Tech-Sym and the
Tech-Sym Common Stock and Tech-Sym Rights, reference is made to the Registration
Statement and the schedules and exhibits filed as a part thereof. Statements
made in this Prospectus/Proxy Statement as to the contents of any contract,
agreement or other document referred to are not necessarily complete; with
respect to each such contract, agreement or other document filed as an exhibit
to the Registration Statement, reference is made to the exhibit for a more
complete description of the matter involved, and each such statement is
qualified in its entirety by such reference. The Registration Statement may be
inspected, without charge, at the Commission's principal office in Washington,
D.C., and copies may be obtained from the Commission at the prescribed rates or
may be examined without charge at the public reference facilities of the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Tech-Sym incorporates herein by reference the following documents filed by
it with the Commission (File No. 1-4371) pursuant to the Exchange Act:
(1) Annual Report on Form 10-K for the year ended December 31, 1994;
(2) Current Reports on Form 8-K dated April 13, 1995 and May 15, 1995;
(3) Quarterly Report on Form 10-Q for the quarter ended March 31,
1995; and
(4) The description of the Tech-Sym Common Stock and the Tech-Sym
Rights contained in Tech-Sym's Registration Statements on Form
8-A.
All documents filed by Tech-Sym pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus/Proxy Statement and
prior to the termination of the offering, shall be deemed to be incorporated
herein by reference and to be part hereof from the date of filing of such
document. Any statement contained herein or in a document all or a portion of
which is incorporated or deemed to be incorporated by reference herein shall be
deemed to be modified or superseded for purposes of this Prospectus/Proxy
Statement to the extent that a statement contained herein or in any other
subsequently filed document that also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute a part of this Prospectus/Proxy Statement.
2
THIS PROSPECTUS/PROXY STATEMENT INCORPORATES DOCUMENTS BY REFERENCE WHICH
ARE NOT PRESENTED HEREIN OR DELIVERED HEREWITH. TECH-SYM HEREBY UNDERTAKES TO
PROVIDE WITHOUT CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER, TO WHOM
A COPY OF THIS PROSPECTUS/PROXY STATEMENT HAS BEEN DELIVERED, ON THE WRITTEN
OR ORAL REQUEST OF ANY SUCH PERSON, A COPY OF ANY AND ALL OF THE DOCUMENTS
REFERRED TO ABOVE WHICH HAVE BEEN OR MAY BE INCORPORATED IN THIS
PROSPECTUS/PROXY STATEMENT BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS
(UNLESS SUCH EXHIBITS ARE SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH
DOCUMENTS). SUCH REQUESTS SHOULD BE DIRECTED TO TECH-SYM CORPORATION, 10500
WESTOFFICE DRIVE, HOUSTON, TEXAS 77042-5391, ATTENTION: SECRETARY, TELEPHONE
NUMBER (713) 785-7790. IN ORDER TO ENSURE DELIVERY OF THE DOCUMENTS PRIOR TO
THE SPECIAL MEETING, REQUESTS SHOULD BE RECEIVED BY ........., 1995.
No person is authorized to give any information or to make any
representation not contained or incorporated by reference in this
Prospectus/Proxy Statement, and, if given or made, such information or
representation must not be relied upon as having been authorized. This
Prospectus/Proxy Statement does not constitute an offer to sell, or a
solicitation of an offer to purchase, any of the securities offered by this
Prospectus/Proxy Statement, or the solicitation of a proxy, in any jurisdiction
in which, or to any person to whom, it is unlawful to make such offer or
solicitation of an offer or proxy solicitation. Neither the delivery of this
Prospectus/Proxy Statement nor any distribution of the securities offered hereby
shall, under any circumstances, create any implication that the information
contained herein is correct as of any time subsequent to the date hereof or that
there has been no change in the affairs of the Tech-Sym or CogniSeis since the
date hereof.
3
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TABLE OF CONTENTS
PAGE
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AVAILABLE INFORMATION................ 2
INCORPORATION OF CERTAIN DOCUMENTS BY
REFERENCE.......................... 2
SUMMARY.............................. 5
Parties to the Merger............ 5
Tech-Sym..................... 5
CSD.......................... 6
CogniSeis.................... 6
The Special Meeting............ 6
Time, Date, Place and
Purpose.................... 6
Record Date.................. 6
Vote Required For Merger
Proposal................... 6
The Merger....................... 7
Principal Terms of the
Merger....................... 7
Merger Consideration......... 7
Indemnification Obligations
of CogniSeis Stockholders;
Escrow Agreement........... 7
Reasons for the Merger......... 8
Recommendation of the Board of
Directors of CogniSeis....... 8
Other Terms of the Merger...... 8
Fractional Interests......... 8
Exchange of CogniSeis Stock
Certificates............... 8
Accounting Treatment......... 8
Certain Federal Income Tax
Consequences............... 8
Effective Time of the
Merger..................... 9
Governmental and Regulatory
Approvals.................. 9
Other Conditions to the
Merger..................... 9
Interests of Certain Persons
in the Merger.............. 9
No Solicitation.............. 9
Termination Fee; Expenses.... 9
Termination or Amendment of
the Merger Agreement....... 9
Indemnification.............. 10
Management and Operations After
the Merger................... 10
Appraisal Rights............... 10
Market Price and Dividend Data... 11
Tech-Sym Trading Markets and
Prices....................... 11
Tech-Sym Dividend Policy....... 11
CogniSeis...................... 11
CogniSeis Dividend Policy...... 11
Selected Historical and Pro Forma
Combined Financial
Information.................... 12
Selected Historical Financial
Data........................... 12
Selected Unaudited Pro Forma
Combined Historical Financial
Data........................... 13
Comparative Per Share Data....... 14
THE SPECIAL MEETING.................. 15
Time, Date and Place of the
Special
Meeting........................ 15
Matters to be Considered at the
Special Meeting................ 15
Voting at Meeting; Record Date... 15
Vote Required.................... 15
CogniSeis Proxies................ 15
Solicitation of Proxies.......... 15
THE MERGER........................... 16
General.......................... 16
Merger Consideration............. 16
Indemnification Obligations of
CogniSeis Stockholders; Escrow
Agreement...................... 16
Procedures for Exchange of
Certificates; the Payment
Fund........................... 17
Fractional Interests............. 17
Background of the Merger......... 18
Reasons for the Merger........... 19
Conditions to the Consummation of
the Merger..................... 19
Certain Federal Income Tax
Consequences................... 23
Accounting Treatment............. 24
Governmental and Regulatory
Approvals...................... 24
Effect on CogniSeis Employee
Benefit Plans and Employee
Agreements..................... 24
Restrictions on Resales by
Affiliates..................... 25
Interests of Certain Persons in
the Merger..................... 26
Access to Properties and Records
of CogniSeis................... 26
Conduct of Business of CogniSeis
Prior to the Merger............ 26
No Solicitation.................. 27
Approval of CogniSeis
Stockholders................... 27
Termination...................... 28
Liability for Expenses........... 28
Amendment and Waiver............. 29
Representations and Warranties... 29
Dissenters' Appraisal Rights..... 29
INFORMATION CONCERNING COGNISEIS..... 31
General.......................... 31
Strategy......................... 31
Product Development.............. 32
Software Maintenance/Customer
Support........................ 32
Marketing and Sales.............. 32
Competition...................... 33
Patents, Copyrights, Trademarks
and Licenses................... 33
Legal Proceedings................ 33
Employees........................ 33
COGNISEIS SELECTED FINANCIAL DATA.... 34
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS OF COGNISEIS......... 35
COMPARISON OF STOCKHOLDER
RIGHTS............................. 38
BENEFICIAL OWNERSHIP OF COGNISEIS
COMMON STOCK....................... 46
LEGAL OPINIONS....................... 46
EXPERTS.............................. 47
INDEX TO FINANCIAL STATEMENTS........ F-1
Appendix A _ Agreement and Plan of
Merger............................. A-1
Appendix B _ Section 262 of the
Delaware General Corporation Law... B-1
4
SUMMARY
THE FOLLOWING IS A SUMMARY OF CERTAIN INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS/PROXY STATEMENT AND DOES NOT PURPORT TO BE COMPLETE. REFERENCE
IS MADE TO, AND THIS SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, THE MORE DETAILED
INFORMATION CONTAINED ELSEWHERE OR INCORPORATED BY REFERENCE IN THIS
PROSPECTUS/PROXY STATEMENT. UNLESS OTHERWISE DEFINED HEREIN, CAPITALIZED TERMS
USED IN THIS SUMMARY HAVE THE RESPECTIVE MEANINGS ASCRIBED TO THEM ELSEWHERE IN
THIS PROSPECTUS/PROXY STATEMENT. STOCKHOLDERS ARE URGED TO READ THIS
PROSPECTUS/PROXY STATEMENT IN ITS ENTIRETY. A COPY OF THE MERGER AGREEMENT IS
INCLUDED AS APPENDIX A TO THIS PROSPECTUS/PROXY STATEMENT AND IS INCORPORATED
HEREIN BY REFERENCE. AS USED HEREIN, THE TERMS "TECH-SYM" AND "COGNISEIS" REFER
TO SUCH CORPORATIONS, RESPECTIVELY, INCLUDING, EXCEPT WHERE THE CONTEXT
OTHERWISE REQUIRES, THEIR RESPECTIVE SUBSIDIARIES.
PARTIES TO THE MERGER
TECH-SYM
Tech-Sym is a diversified electronics engineering and manufacturing company
primarily involved in the design, development and production of products used
for communications, seismic exploration for hydrocarbons, defense systems and
environmental monitoring. Tech-Sym operates through seven principal subsidiaries
from its headquarters in Houston, Texas. Products are marketed independently
through each of the Company's operating subsidiaries in the following business
areas:
COMMUNICATIONS. Tech-Sym produces communications products through three
operating subsidiaries: TRAK Microwave Corporation ("TRAK"), Continental
Electronics Corporation ("Continental") and Tecom Industries, Incorporated
("Tecom"). TRAK is an established supplier of active and passive electronic
microwave components, microwave subsystems, ferrite products and precision
timing equipment. TRAK's principal customers are domestic and foreign
manufacturers of communications systems, defense electronics products,
satellites and navigation systems. TRAK conducts operations from its facilities
in Tampa, Florida and through a subsidiary located in Dundee, Scotland.
Continental designs and manufactures radio frequency energy sources used for
radio broadcasts, communications, radar systems and special applications.
Continental's customers include the commercial radio broadcast industry, private
and government agencies that operate radio stations, government agencies that
engage in scientific research, industrial organizations whose applications
include radio frequency heating and government defense agencies. Continental
conducts operations from its facilities in Dallas, Texas and through its
subsidiary located in Santiago, Chile.
Tecom designs and manufactures antennas and computer-controlled
electromechanical positioners for wireless communication, aerospace, navigation,
surveillance and command control applications. Its customers are original
equipment manufacturers and end users in both foreign and domestic markets.
Tecom conducts its operations from its facilities in Chatsworth, California.
SEISMIC EXPLORATION. Syntron, Inc. ("Syntron") designs, manufactures and
repairs data acquisition and control systems used in the exploration and
production of oil and gas. It also makes products which control the depth and
measure the direction and location of each segment of seismic towed arrays.
Syntron's primary customers are companies throughout the world which are engaged
in the exploration for hydrocarbons, including independent oil companies,
national oil companies and service companies. Syntron conducts its operations
from its facilities in Houston, Texas and through its subsidiaries located in
England and Singapore.
DEFENSE SYSTEMS. Metric Systems Corporation ("Metric Systems") designs and
manufactures a variety of electronic systems for industrial customers and for
domestic and foreign government agencies. Metric Systems' products include
systems for training and evaluating military pilots and
5
crews, cargo handling and aerial delivery systems, and electronic control,
monitoring and power distributions systems for naval applications. Metric
Systems conducts its operations from its facilities in Fort Walton Beach,
Florida.
ENVIRONMENTAL MONITORING. Tech-Sym operates its environmental monitoring
business through two operating subsidiaries, Enterprise Electronics Corporation
("EEC") and Anarad, Inc. ("Anarad"). EEC designs and manufactures meteorological
systems that detect, analyze and display information on weather patterns and
events through the use of sophisticated Doppler radars and computer processing.
EEC's customers include meteorology departments of universities and government
agencies, military organizations, television stations and other commercial
organizations which sell weather data. EEC conducts its operations through its
facilities in Enterprise, Alabama.
Anarad designs and manufactures electronic equipment and computer software
used to monitor emissions and to analyze and control industrial processes.
Anarad's customers include utility companies, incinerators and industrial
plants. Anarad conducts its operations from its facilities in Santa Barbara,
California.
The principal executive offices of Tech-Sym are located at 10500 Westoffice
Drive, Suite 200, Houston, Texas 77042-5391, and its telephone
number is (713) 785-7790.
CSD
CSD was incorporated in April 1995 and has conducted no business operations
since its date of incorporation except in connection with the transactions
contemplated by the Merger Agreement. CSD has the same principal office, address
and phone number as Tech-Sym.
COGNISEIS
On February 27, 1987, CogniSeis acquired the Computer Systems Division of
Digicon Inc. and certain of its subsidiaries. CogniSeis produces and markets
seismic processing and geologic interpretation systems consisting of
applications software and specially configured computing equipment. CogniSeis
sells or leases these systems to oil companies, geophysical contractors,
universities and governmental agencies. Geophysicists and geologists use these
systems to process seismic data and to interpret geologic data. In addition to
system sales, CogniSeis also provides software and hardware support,
installation, training, consulting and on-site personnel. CogniSeis' principal
executive offices are located at 2401 Portsmouth, Houston, Texas 77098 and its
telephone number is (713) 526-3273. For a more complete description of CogniSeis
business and operations see "Information Concerning CogniSeis."
THE SPECIAL MEETING
TIME, DATE, PLACE AND PURPOSE. will be held on .........., 1995, at
CogniSeis' principal business office, 2401 Portsmouth, Houston, Texas 77098,
commencing at 9:00 a.m., local time, for the purpose of considering and voting
upon a proposal to approve and adopt the Merger Agreement (the "Merger
Proposal").
RECORD DATE. Only those stockholders of CogniSeis of record at the close
of business on .........., 1995 (the "Record Date") are entitled to notice of,
and to vote at, the Special Meeting.
VOTE REQUIRED FOR MERGER PROPOSAL. Pursuant to the CogniSeis' Restated
Certificate of Incorporation (the "CogniSeis Charter"), the affirmative vote of
the holders of 66 2/3% of the outstanding shares of CogniSeis Common Stock
entitled to vote at the Special Meeting will be required to approve and adopt
the Merger Agreement. Abstentions will have the effect of a vote against the
Merger Proposal, as will the failure of holders of CogniSeis Common Stock to
sign and return their proxy. On the Record Date, there were a total of 2,645,027
shares of CogniSeis Common Stock outstanding and entitled to vote at the Special
Meeting. The directors and executive officers of CogniSeis and their
6
affiliates, who collectively hold approximately 55% of the outstanding shares of
CogniSeis Common Stock entitled to vote at the Special Meeting, have indicated
their intention to vote to approve and adopt the Merger Agreement. In connection
with the Merger, holders of CogniSeis Common Stock will be entitled to demand
appraisal rights under Section 262 of the Delaware General Corporation Law (the
"DGCL"), subject to satisfaction by such stockholders of the conditions for
perfection of appraisal rights established by Section 262. See "The Merger --
Dissenters' Appraisal Rights."
THE MERGER
PRINCIPAL TERMS OF THE MERGER
At the Effective Time (as defined herein), CSD will merge with and into
CogniSeis, with CogniSeis becoming the surviving corporation of such merger
whose corporate existence will continue after the Merger (the "Surviving
Corporation"). As a result of such Merger, CogniSeis will become a wholly-owned
subsidiary of Tech-Sym.
MERGER CONSIDERATION. In the Merger, each share of CogniSeis Common Stock
outstanding immediately prior to the Effective Time (other than shares as to
which appraisal rights have been perfected under Delaware law ("Dissenting
Shares"), and shares owned immediately prior to the Effective Time directly or
indirectly by CogniSeis, Tech-Sym or any subsidiary of either, which will be
cancelled) will be converted into the right to receive (i) the number of shares
of Tech-Sym Common Stock obtained by dividing (A) $20,000,000 by (B) the Share
Market Value and by dividing such quotient by (C) the total number of shares of
CogniSeis Common Stock outstanding immediately prior to the Effective Time and
(ii) an equal number of Tech-Sym Rights. No fractional shares of Tech-Sym Common
Stock will be issued in connection with the Merger. A holder of CogniSeis Common
Stock otherwise entitled to a fractional share of Tech-Sym Common Stock will be
paid cash in lieu of such fractional interest.
See "The Merger -- Fractional Interests."
THERE IS NO ASSURANCE THAT THE SHARE MARKET VALUE (WHICH IS DETERMINED BASED
UPON THE CLOSING SALES PRICES PER SHARE OF THE TECH-SYM COMMON STOCK FOR THE
FIFTEEN TRADING DAYS PRIOR TO THE FIVE TRADING DAYS IMMEDIATELY PRECEDING THE
EFFECTIVE TIME) WILL APPROXIMATE THE ACTUAL VALUE OF TECH-SYM COMMON STOCK AT
THE EFFECTIVE TIME OR AT ANY TIME THEREAFTER.
INDEMNIFICATION OBLIGATIONS OF COGNISEIS STOCKHOLDERS; ESCROW AGREEMENT.
Pursuant to the terms of the Merger Agreement, 8 1/2% of the Merger
Consideration to be received by each former stockholder of CogniSeis will be
placed into an escrow account subject to offset by Tech-Sym in connection with
damages arising from the inaccuracy of any representation made by CogniSeis in
the Merger Agreement or from the failure prior to the Effective Time of
CogniSeis to perform its obligations under the Merger Agreement. The
representations and warranties of CogniSeis will survive for a period of six
months following the Effective Time. Tech-Sym will not be entitled to set-off
against the amount in the escrow account for the first $300,000 of such damages.
The escrow account will be governed by the terms of an Escrow Agreement,
substantially in the form required by the Merger Agreement, by and among
Tech-Sym, Continental Transfer and Trust Company as escrow agent (the "Escrow
Agent") and a representative of the former stockholders of CogniSeis to be
designated prior to the Effective Time (the "Stockholders' Representative"). The
Merger Consideration to be held by the Escrow Agent will be distributed to the
former stockholders of CogniSeis in accordance with the terms of the Merger
Agreement and the Escrow Agreement, subject to the right of offset provided to
Tech-Sym in the Merger Agreement and the Escrow Agreement. For a more complete
description of the escrow arrangement, see "The Merger -- Indemnification
Obligations of CogniSeis Stockholders; Escrow Agreement."
7
REASONS FOR THE MERGER
In reaching its conclusion that the terms of the Merger are fair to, and in
the best interests of, Tech-Sym and the stockholders of Tech-Sym, Tech-Sym's
Board of Directors considered a number of factors, including, among others,
potential business synergies and projected accretion in revenues, earnings and
cash flow resulting from the Merger.
In reaching its conclusion that the Merger is fair to, and in the best
interests of, CogniSeis and its stockholders, CogniSeis' Board of Directors
considered a number of factors, including, among others, the possible
alternatives to the Merger (including an alternate acquisition proposal received
by CogniSeis), the absence of any trading market for the CogniSeis Common Stock
as compared to the liquidity of the Tech-Sym Common Stock, the structure of the
transaction, the terms of the Merger Agreement, the benefit to CogniSeis
stockholders from owning an equity interest in a larger, more diversified
company than CogniSeis on a stand-alone basis, and potential business synergies
resulting from the Merger.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF COGNISEIS
THE BOARD OF DIRECTORS OF COGNISEIS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE CONSUMMATION OF THE OTHER TRANSACTIONS CONTEMPLATED THEREBY
AND UNANIMOUSLY RECOMMENDS THAT COGNISEIS STOCKHOLDERS VOTE FOR THE APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT.
OTHER TERMS OF THE MERGER
FRACTIONAL INTERESTS. No fractional shares of Tech-Sym Common Stock or
associated Tech-Sym Rights will be issued pursuant to the Merger. In lieu of
such fractional securities, each holder who would otherwise receive a fractional
interest will receive cash as described in "The Merger --Fractional Interests."
EXCHANGE OF COGNISEIS STOCK CERTIFICATES. As soon as reasonably practicable
after the Effective Time, a letter of transmittal and instructions for
surrendering stock certificates formerly representing shares of CogniSeis Common
Stock will be mailed to each record holder of CogniSeis Common Stock by
Continental Stock Transfer and Trust Company (the "Exchange Agent"). Upon
surrender of a CogniSeis Common Stock certificate for cancellation, together
with a duly executed letter of transmittal, the holder thereof shall be entitled
to receive the number of whole shares of Tech-Sym Common Stock as is determined
by the terms of the Merger Agreement, together with cash in lieu of fractional
shares as described under "The Merger -- Fractional Interests."
ACCOUNTING TREATMENT. The Merger will be accounted for by Tech-Sym as a
pooling of interests in accordance with generally accepted accounting
principles. Under this accounting treatment, the recorded assets and liabilities
of Tech-Sym and CogniSeis will be carried forward at their recorded amounts.
Results of operations of the combined companies will include those of Tech-Sym
and CogniSeis for the entire fiscal year in which the merger occurred, and the
respective results of operations of the separate companies for prior periods
will be combined and restated as results of the combined company.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES. It is intended that the Merger will
qualify as a reorganization within the meaning of Section 368(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and that, accordingly, for
federal income tax purposes, no gain or loss will be recognized by Tech-Sym, CSD
or CogniSeis as a result of the Merger. Generally, a CogniSeis stockholder who,
pursuant to the Merger, exchanges CogniSeis Common Stock for Tech-Sym Common
Stock and Tech-Sym Rights will not recognize any gain or loss on such exchange.
For a discussion of these and other federal income tax considerations in
connection with the Merger, see "The Merger -- Certain Federal Income Tax
Consequences."
8
EFFECTIVE TIME OF THE MERGER. The Merger will become effective upon the
proper filing of a certificate of merger (the "Certificate of Merger") with the
Secretary of State of Delaware (the "Effective Time"). The Merger Agreement
provides that Tech-Sym and CogniSeis will cause the Effective Time to occur as
promptly as practicable after the approval and adoption of the Merger
Agreement by the stockholders of CogniSeis and the satisfaction (or waiver, if
permissible) of the other conditions set forth in the Merger Agreement.
GOVERNMENTAL AND REGULATORY APPROVALS. The Merger is subject to the
requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as
amended, and the regulations of the Federal Trade Commission (the "FTC")
promulgated thereunder (collectively, the "HSR Act"). The HSR Act requires,
among other things, that certain information regarding the Merger be furnished
to the Antitrust Division of the Department of Justice (the "Antitrust
Division") and the FTC and that certain waiting periods expire or terminate
before the Merger is consummated. On May .., 1995, Tech-Sym and CogniSeis filed
a notification report in connection with the Merger with the Antitrust Division
and the FTC pursuant to the HSR Act.
Neither Tech-Sym nor CogniSeis is aware of any other governmental or
regulatory approvals required for the consummation of the Merger.
OTHER CONDITIONS TO THE MERGER. For a discussion of additional conditions
to the consummation of the Merger, see "The Merger -- Conditions to the
Consummation of the Merger."
INTERESTS OF CERTAIN PERSONS IN THE MERGER. For a description of the
interests of certain persons in the Merger (including pursuant to CogniSeis'
employee plans and indemnification arrangements), see "The Merger -- Interests
of Certain Persons in the Merger" and "The Merger -- Effect on CogniSeis
Employee Benefit Plans and Employee Agreements."
NO SOLICITATION. CogniSeis has agreed, subject to certain exceptions
described below and elsewhere herein, not to, and to use its best efforts to
cause its stockholders, affiliates, employees, agents and representatives not
to, directly or indirectly, encourage, solicit, initiate, engage or participate
in discussions or negotiations with any third party concerning a merger,
consolidation or sale of assets. Such agreement does not prevent CogniSeis from
entering into discussions about such transactions with a third party who
initiates such discussions or, upon the Board of Directors determining that an
alternate proposal is financially superior to the Merger, from withdrawing,
modifying or not making its recommendation in favor of the Merger to the holders
of CogniSeis Common Stock. For a more complete description of this provision,
see "The Merger -- No Solicitation."
TERMINATION FEE; EXPENSES. Except as discussed in the next sentence, whether
or not the Merger is consummated, all costs and expenses incurred in connection
with the Merger, the Merger Agreement and the transactions contemplated thereby
will be paid by the party incurring such cost or expense. Under certain
circumstances, CogniSeis may be required to pay Tech-Sym a fee of $500,000 upon
termination of the Merger Agreement. See "The Merger -- Termination" and "--
Liability for Expenses."
TERMINATION OR AMENDMENT OF THE MERGER AGREEMENT. The Merger Agreement is
subject to termination at the option of either Tech-Sym or CogniSeis if the
Merger is not consummated on or before August 31, 1995 provided that the right
to terminate shall not be available to any party whose material breach of the
Merger Agreement has been the cause of or resulted in the failure of the Merger
to occur on or before such date. The Merger Agreement is also subject to
termination (i) in the event any of the parties thereto fails to perform in any
material respect its obligations under the Merger Agreement, (ii) by mutual
consent of CogniSeis and Tech-Sym, (iii) in the event the CogniSeis Board of
Directors withdraws its recommendation in favor of the Merger as described in
"The Merger -- No Solicitation," (iv) if the CogniSeis stockholders fail to
approve the Merger or (v) in the event a court or other governmental authority
has enjoined the Merger by final and non-appealable
9
action. For a more detailed description of the events which may lead to a
termination of the Merger Agreement, see "The Merger -- Termination."
The Merger Agreement may be amended or supplemented at any time by agreement
of Tech-Sym and CogniSeis, or any provision of the Merger Agreement may be
waived at any time by either Tech-Sym or CogniSeis provided that, after any
stockholder approval of the Merger Agreement, no amendment may be made which,
among other things, alters or changes the Merger Consideration or alters or
changes any other terms of the Merger Agreement without further stockholder
approval if such amendment adversely affects the rights of the holders of
CogniSeis Common Stock.
INDEMNIFICATION. The Merger Agreement provides that from and after the
Effective Time, present and former officers and directors of CogniSeis shall be
indemnified, defended and held harmless by Tech-Sym and the Surviving
Corporation against liabilities and costs for actions or omissions taken in such
capacities on or prior to the Effective Time, to the same extent as provided in
the CogniSeis Charter and the CogniSeis Bylaws in effect prior to the Effective
Time.
MANAGEMENT AND OPERATIONS AFTER THE MERGER
The Merger Agreement sets forth the names of the persons who will serve as
officers of the Surviving Corporation. In accordance therewith, substantially
all of the officers of CogniSeis will continue as the officers of the Surviving
Corporation after the Merger. The Merger Agreement further contemplates that
Richard F. Miles will replace Marshall Turner as Chairman of the Board of
CogniSeis and that Ray F. Thompson and J. Rankin Tippins, each an officer of
Tech-Sym, would become assistant treasurer and assistant secretary,
respectively, of CogniSeis after the Effective Time. The Merger Agreement
provides that the Board of Directors of CSD will be the Board of Directors of
the Surviving Corporation. It is contemplated that Messrs. Miles, Thompson and
Tippins, Patrick H. Poe, President and Chief Executive Officer of CogniSeis, and
Wendell W. Gamel, Chairman of the Board and President of Tech-Sym, will
constitute the Board of Directors of the Surviving Corporation after the
Effective Time.
APPRAISAL RIGHTS
In connection with the Merger, holders of CogniSeis Common Stock will be
entitled to demand appraisal rights under Section 262 of the DGCL, subject to
satisfaction by such stockholders of conditions for appraisal rights established
by Section 262. Section 262 is set forth in full in Appendix B to this
Prospectus/Proxy Statement. See "The Merger -- Dissenters" Appraisal Rights."
10
<PAGE>
MARKET PRICE AND DIVIDEND DATA
TECH-SYM TRADING MARKETS AND PRICES. Tech-Sym Common Stock is traded on the
NYSE under the symbol "TSY." The following table sets forth the range of the
high and low per share sales prices for Tech-Sym Common Stock for the periods
indicated, as reported on the NYSE Composite Trading Tape. Tech-Sym has not paid
any dividends during such periods in respect of its common stock.
TECH-SYM
COMMON STOCK
--------------------
HIGH LOW
---- ------
YEAR ENDED DECEMBER 31, 1992
Quarter ended March 31, 1992 ....................... 14 1/4 12 1/4
Quarter ended June 30, 1992 ........................ 14 11 3/8
Quarter ended September 30, 1992 ................... 11 5/8 10 1/2
Quarter ended December 31, 1992 .................... 14 1/8 10 1/4
YEAR ENDED DECEMBER 31, 1993
Quarter ended March 31, 1993 ....................... 17 1/4 13 1/4
Quarter ended June 30, 1993 ........................ 17 5/8 14 3/8
Quarter ended September 30, 1993 ................... 21 1/2 17
Quarter ended December 31, 1993 .................... 21 3/8 18 1/2
YEAR ENDED DECEMBER 31, 1994
Quarter ended March 31, 1994 ....................... 22 1/2 17 5/8
Quarter ended June 30, 1994 ........................ 21 7/8 19 1/8
Quarter ended September 30, 1994 ................... 22 3/8 19 1/2
Quarter ended December 31, 1994 .................... 24 3/8 20 1/2
YEAR ENDING DECEMBER 31, 1995
Quarter ended March 31, 1995 ....................... 23 5/8 21 1/8
Quarter ending June 30, 1995 (through
May 18, 1995) .................................... 26 1/8 23 1/8
The closing sales price per share of Tech-Sym Common Stock reported on the
NYSE Composite Trading Tape on (i) April 12, 1995 (the date immediately
preceding the public announcement by Tech-Sym of its letter of intent with
CogniSeis) was $24 1/8, (ii) and on May 18, 1995 (the date immediately preceding
the filing of the Registration Statement) was $25 5/8. The number of holders of
record of Tech-Sym Common Stock as of February 28, 1995 was approximately 2,100.
TECH-SYM DIVIDEND POLICY. Tech-Sym does not currently intend to pay
dividends on its outstanding shares of Common Stock, and there can be no
assurance that it will pay dividends at any time in the future. It is
anticipated that for the foreseeable future any earnings generated from
operations will be retained for use in Tech-Sym's business. Any future
determination as to the payment of dividends will be at the discretion of the
Tech-Sym Board of Directors and will depend upon Tech-Sym's operating results,
financial condition and capital requirements, and such other factors as the
Board of Directors may deem relevant.
COGNISEIS. No established public trading market exists for CogniSeis
Common Stock.
COGNISEIS DIVIDEND POLICY. CogniSeis has paid no cash dividends since its
inception.
The number of holders of record of CogniSeis Common Stock as of May 11, 1995
was approximately 89.
11
<PAGE>
SELECTED HISTORICAL AND PRO FORMA COMBINED FINANCIAL INFORMATION
The following tables present selected historical and pro forma combined
financial information, comparative per share data and book value per share data
for Tech-Sym and CogniSeis. The unaudited pro forma combined information is
calculated after giving effect to the Merger (i) utilizing an assumed exchange
ratio of .2936 of a share of Tech-Sym Common Stock for each outstanding share of
CogniSeis Common Stock (equivalent to a Share Market Value of $25.75) and (ii)
using the pooling of interests method of accounting. The assumed exchange ratio
is calculated based on the closing sales price of Tech-Sym Common Stock on May
10, 1995 ($25.75), the date immediately preceding the date of execution of the
Merger Agreement. The historical and pro forma combined financial information
are not necessarily indicative of future operations or the actual results that
would have occurred had the Merger been consummated at the beginning of the
periods presented and should not be construed as representative of future
operations. This information should be read in conjunction with the financial
information for each of Tech-Sym and CogniSeis as well as pro forma combined
financial information contained elsewhere herein. See "Index to Financial
Statements."
SELECTED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
TECH-SYM CORPORATION
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
----------------------------------------------------- --------------------
1990 1991 1992 1993 1994 1994 1995
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF INCOME DATA:
Sales................................ $ 134,770 $ 176,416 $ 179,649 $ 184,310 $ 197,593 $ 43,678 $ 53,812
Costs and expenses................... 122,227 162,504 169,530 167,794 179,258 39,440 49,316
--------- --------- --------- --------- --------- --------- ---------
Income before income taxes........... 12,543 13,912 10,119 16,516 18,335 4,238 4,496
Provision for income taxes........... 4,800 5,300 3,700 6,300 6,100 1,450 1,400
--------- --------- --------- --------- --------- --------- ---------
Net income........................... $ 7,743 $ 8,612 $ 6,419 $ 10,216 $ 12,235 $ 2,788 $ 3,096
========= ========= ========= ========= ========= ========= =========
Earnings per common share............ $ 1.26 $ 1.50 $ 1.13 $ 1.80 $ 2.12 $ .48 $ .54
========= ========= ========= ========= ========= ========= =========
Cash dividends per share............. $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========= ========= ========= ========= ========= ========= =========
<CAPTION>
AT
AT DECEMBER 31, MARCH 31,
----------------------------------------------------- ---------
1990 1991 1992 1993 1994 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL BALANCE SHEET DATA:
Current assets....................... $ 116,256 $ 125,567 $ 116,198 $ 129,868 $ 145,386 $156,710
Current liabilities.................. 35,196 37,524 27,862 34,610 54,302 65,995
Working capital...................... 81,060 88,043 88,336 95,258 91,084 90,715
Property, plant and equipment, net... 32,495 32,470 33,109 32,651 36,699 36,887
Long-term debt....................... 27,624 27,929 26,635 23,317 21,587 18,626
Total assets......................... 158,252 173,282 168,908 184,867 215,238 226,590
Total liabilities.................... 67,925 73,949 65,767 70,323 88,124 95,870
Shareholders' investment............. 90,327 99,333 103,141 114,544 127,114 130,720
</TABLE>
12
<PAGE>
COGNISEIS DEVELOPMENT, INC.
<TABLE>
<CAPTION>
EIGHT MONTHS
ENDED
YEAR ENDED JULY 31, MARCH 31,
----------------------------------------------------- --------------------
1990 1991 1992 1993 1994 1994 1995
--------- --------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF OPERATIONS
DATA:
Sales................................ $ 17,054 $ 23,050 $ 23,741 $ 17,031 $ 15,194 $ 9,234 $ 10,300
Costs and expenses................... 17,041 20,506 21,540 18,246 16,299 10,757 10,904
--------- --------- --------- --------- --------- --------- ---------
Income (loss) before income taxes.... 13 2,544 2,201 (1,215) (1,105) (1,523) (604)
Provision for income taxes........... (185) 777 383 (756) (357) (586) 126
--------- --------- --------- --------- --------- --------- ---------
Net income (loss).................... $ 198 $ 1,767 $ 1,818 $ (459) $ (748) $ (937) $ (730)
========= ========= ========= ========= ========= ========= =========
Earnings (loss) per common share..... $ .08 $ .68 $ .69 $ (.51) $ (.44) $ (1.05) $ (.32)
========= ========= ========= ========= ========= ========= =========
Cash dividends per share............. $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========= ========= ========= ========= ========= ========= =========
<CAPTION>
AT JULY 31, AT
----------------------------------------------------- MARCH 31,
1990 1991 1992 1993 1994 1995
--------- --------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL BALANCE SHEET DATA:
Current assets....................... $ 5,154 $ 9,443 $ 10,285 $ 7,493 $ 6,824 $ 7,939
Current liabilities.................. 2,544 4,465 4,056 1,945 1,956 3,976
Working capital...................... 2,610 4,978 6,229 5,548 4,868 3,963
Property, plant and equipment, net... 3,717 2,681 2,637 2,569 2,155 2,004
Long-term debt....................... 1,379 37 0 0 0 0
Total assets......................... 10,761 13,069 14,777 11,799 10,893 12,204
Total liabilities.................... 4,165 4,691 4,479 2,108 1,968 3,981
Stockholders' equity................. 6,596 8,378 10,298 9,691 8,925 8,223
</TABLE>
SELECTED UNAUDITED PRO FORMA COMBINED HISTORICAL FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------- ----------------------
1992 1993 1994 1994 1995
----------- ----------- ----------- ---------- ----------
<S> <C> <C> <C> <C> <C>
COMBINED STATEMENT OF INCOME DATA:
Sales................................ $ 202,172 $ 199,248 $ 213,605 $ 47,555 $ 57,937
Costs and expenses................... 190,681 184,765 195,172 43,408 53,815
----------- ----------- ----------- ---------- ----------
Income before income taxes........... 11,491 14,483 18,433 4,147 4,122
Provision for income taxes........... 3,952 5,234 6,318 1,387 1,475
----------- ----------- ----------- ---------- ----------
Net income........................... $ 7,539 $ 9,249 $ 12,115 $ 2,760 $ 2,647
=========== =========== =========== ========== ==========
Earnings per common share............ $ 1.16 $ 1.44 $ 1.85 $ 0.42 $ 0.41
=========== =========== =========== ========== ==========
Cash dividends per share............. $ 0 $ 0 $ 0 $ 0 $ 0
=========== =========== =========== ========== ==========
</TABLE>
AT
MARCH 31,
1995
---------
COMBINED BALANCE SHEET DATA:
Current assets .............................................. $164,649
Current liabilities ......................................... 69,971
Working capital ............................................. 94,678
Property, plant and equipment, net .......................... 38,891
Long-term debt .............................................. 18,626
Total assets ................................................ 238,794
Total liabilities ........................................... 99,851
Shareholders' investment .................................... 138,943
13
<PAGE>
COMPARATIVE PER SHARE DATA
The following table sets forth certain historical per share data of Tech-Sym
and CogniSeis and combined per share data on an unaudited pro forma basis. The
unaudited pro forma combined information is calculated after giving effect to
the Merger (i) utilizing an assumed exchange ratio of .2936 of a share of
Tech-Sym Common Stock for each outstanding share of CogniSeis Common Stock and
(ii) using the pooling of interests method of accounting. The assumed exchange
ratio is calculated based on the closing sales price of Tech-Sym Common Stock on
May 10, 1995 ($25.75), the date immediately preceding the date of the Merger
Agreement. The information presented in this tabulation should be read in
conjunction with the pro forma combined financial statements and the separate
financial statements of the respective companies and the notes thereto included
or incorporated by reference elsewhere herein. The unaudited pro forma combined
financial data are not necessarily indicative of the operating results that
would have been achieved had the transaction been in effect as of the beginning
of the periods presented and should not be construed as representative of future
operations. Neither Tech-Sym nor CogniSeis has declared a dividend on its common
stock during the periods presented.
<TABLE>
<CAPTION>
FOR THE
THREE MONTHS
FOR THE YEAR ENDED ENDED
DECEMBER 31, MARCH 31,
-------------------------------------- ----------------------
1992 1993 1994 1994 1995
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
HISTORICAL TECH-SYM:
Net income ................................................ $1.13 $1.80 $2.12 $.48 $.54
PRO FORMA COMBINED -- PER TECH-SYM
SHARE:
Net income ................................................ $1.16 $1.44 $1.85 $.42 $.41
EQUIVALENT PRO FORMA COMBINED -- PER
COGNISEIS SHARE:
Net income ................................................ $ .34 $ .42 $ .54 $.12 $.12
<CAPTION>
FOR THE
FOR THE YEAR ENDED, AND EIGHT MONTHS
AT ENDED, AND AT,
JULY 31, MARCH 31,
-------------------------------------------- ---------------------------
1992 1993 1994 1994 1995
--------- --------- --------- --------- ---------
HISTORICAL COGNISEIS:
Net income (loss) ........................ $.69 $(.51) $(.44) $(1.05) $(.32)
</TABLE>
BOOK VALUE PER COMMON SHARE
On March 31, 1995, the book value of Tech-Sym Common Stock was $22.71 per
share and the book value of CogniSeis Common Stock was $3.11 per share. The pro
forma book value per share for the Tech-Sym Common Stock as of such date after
giving effect to the Merger would be $21.27. The pro forma book value per
equivalent share of CogniSeis Common Stock at such date after the combination
would be $6.24 per share based upon the issuance of 776,699 shares of Tech-Sym
Common Stock for 2,645,027 shares of CogniSeis Common Stock.
On December 31, 1994, the book value of Tech-Sym Common Stock was $22.10 per
share and the book value of CogniSeis Common Stock (after considering the
conversion of preferred stock subsequent to December 31, 1994) was $3.28 per
share. The pro forma book value per share for the Tech-Sym Common Stock as of
such date after giving effect to the Merger would be $20.80. The pro forma book
value per equivalent share of CogniSeis Common Stock at such date after the
Merger would be $6.11 per share based upon the issuance of 776,699 shares of
Tech-Sym for 2,645,027 shares of CogniSeis Common Stock (after considering the
conversion of CogniSeis preferred stock subsequent to December 31, 1994).
14
THE SPECIAL MEETING
TIME, DATE AND PLACE OF THE SPECIAL MEETING
This Prospectus/Proxy Statement is being furnished to the holders of
CogniSeis Common Stock in connection with the solicitation of proxies by the
Board of Directors of CogniSeis for use at the Special Meeting to be held on
.........., 1995, at CogniSeis' principal offices, 2401 Portsmouth, Houston,
Texas 77098, commencing at 9:00 a.m., local time, and at any adjournment or
postponement thereof.
MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING
At the Special Meeting, holders of CogniSeis Common Stock will consider and
vote upon the approval and adoption of the Merger Agreement.
THE BOARD OF DIRECTORS OF COGNISEIS HAS UNANIMOUSLY APPROVED THE MERGER
AGREEMENT AND THE CONSUMMATION OF THE OTHER TRANSACTIONS CONTEMPLATED THEREBY
AND UNANIMOUSLY RECOMMENDS THAT COGNISEIS STOCKHOLDERS VOTE FOR APPROVAL AND
ADOPTION OF THE MERGER AGREEMENT.
VOTING AT MEETING; RECORD DATE
CogniSeis has established .........., 1995, as the Record Date for the
determination of stockholders entitled to notice of and to vote at the Special
Meeting. Only holders of record of CogniSeis Common Stock at the close of
business on the Record Date are entitled to vote at the Special Meeting. On
the Record Date, CogniSeis had outstanding and entitled to vote 2,645,027
shares of CogniSeis Common Stock, each of which is entitled to one vote per
share. On such date, there were approximately 89 holders of record of
CogniSeis Common Stock.
As of .........., 1995, directors and executive officers of CogniSeis and
their affiliates beneficially owned approximately 55% of the outstanding shares
of CogniSeis Common Stock. Each such director and executive officer has advised
CogniSeis that he or she intends to vote or direct the vote of all shares of
CogniSeis Common Stock over which he or she has voting control for the approval
and adoption of the Merger Agreement.
As of .........., 1995, Tech-Sym owned no shares of CogniSeis Common
Stock.
VOTE REQUIRED
Pursuant to the CogniSeis Charter, the affirmative vote of the holders of 66
2/3% of the outstanding shares of CogniSeis Common Stock is required to approve
and adopt the Merger Agreement. Abstentions will have the effect of a vote
against the proposal, as will the failure of holders of CogniSeis Common Stock
to sign and return a proxy. In connection with the Merger, holders of CogniSeis
Common Stock will be entitled to demand appraisal rights under Section 262 of
the DGCL, subject to satisfaction by such stockholders of the conditions for
perfection of appraisal rights established by Section 262. See "The Merger --
Dissenters' Appraisal Rights."
COGNISEIS PROXIES
Shares of CogniSeis Common Stock represented by proxies received by
CogniSeis prior to or at the Special Meeting will be voted in accordance with
the instructions contained therein. Shares of CogniSeis Common Stock represented
by proxies for which no instruction is given will be voted FOR approval and
adoption of the Merger Agreement and the other transactions contemplated
thereby.
Holders of shares of CogniSeis Common Stock are requested to complete, sign,
date and return promptly the enclosed proxy card in the postage paid envelope
provided for this purpose in order to insure that their shares are voted. A
proxy may be revoked at any time prior to the exercise of the authority granted
thereunder. Revocation may be accomplished by the granting of a later dated
proxy with respect to the same shares or by giving notice thereof to CogniSeis
in writing or at the Special Meeting at any time prior to the vote on the
matters to be considered at the Special Meeting. Presence at the Special Meeting
of a stockholder who signed a proxy does not in itself revoke the proxy.
SOLICITATION OF PROXIES
Officers and regular employees of CogniSeis, who will receive no
compensation in excess of their regular salaries for their services, may solicit
proxies from CogniSeis stockholders by mail, telephone, telegram or otherwise.
15
THE MERGER
GENERAL
Tech-Sym, CSD and CogniSeis have entered into the Merger Agreement, which
provides that, subject to the satisfaction of the conditions thereof (see "--
Conditions to the Consummation of the Merger"), CSD will be merged with and into
CogniSeis, and as a result thereof CogniSeis will become a wholly-owned
subsidiary of Tech-Sym. As soon as practicable after the closing under the
Merger Agreement, the Certificate of Merger will be filed with the Secretary of
State of the State of Delaware, and the time of such filing will be the
Effective Time of the Merger unless otherwise provided in the Certificate of
Merger.
THE DESCRIPTION OF THE MERGER AGREEMENT CONTAINED IN THIS PROSPECTUS/PROXY
STATEMENT IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO THE MERGER AGREEMENT,
COPIES OF WHICH ARE INCLUDED AS APPENDIX A TO THIS PROSPECTUS/PROXY STATEMENT
AND WHICH IS INCORPORATED IN ITS ENTIRETY HEREIN BY THIS REFERENCE.
MERGER CONSIDERATION
Except for shares owned by CogniSeis, Tech-Sym or any subsidiary of
CogniSeis or Tech-Sym (which will be cancelled at the Effective Time) and
Dissenting Shares, each share of CogniSeis Common Stock outstanding immediately
prior to the Effective Time will be converted at the Effective Time into the
right to receive (without interest) from Tech-Sym (i) the number of shares of
Tech-Sym Common Stock obtained by dividing (A) $20,000,000 by (B) the Share
Market Value and by dividing such quotient by (C) the total number of shares of
CogniSeis Common Stock outstanding immediately prior to the Effective Time and
(ii) an equal number of Tech-Sym Rights.
INDEMNIFICATION OBLIGATIONS OF COGNISEIS STOCKHOLDERS; ESCROW AGREEMENT
Pursuant to the terms of the Merger Agreement, stock certificates
representing 8 1/2% of the Merger Consideration to be received by each former
stockholder of CogniSeis (the "Security Deposit") shall be retained by the
Escrow Agent pursuant to the Escrow Agreement to be entered into immediately
prior to the Effective Time by and among Tech-Sym, the Escrow Agent and the
Stockholders' Representative. The Security Deposit shall be subject to offset by
Tech-Sym for Indemnifiable Damages. Indemnifiable Damages generally include
damages sustained by Tech-Sym arising from any (i) inaccurate representation or
warranty made by CogniSeis in or pursuant to the Merger Agreement or (ii)
default prior to the Effective Time in the performance of any of the covenants
or agreements made by CogniSeis in or pursuant to the Merger Agreement. Tech-Sym
will not be entitled to set-off for the first $300,000 of Indemnifiable Damages.
Tech-Sym is required to give the Stockholders' Representative notice of any
claim for Indemnifiable Damages together with information relating to the loss
claimed by Tech-Sym relating thereto. If a set-off request for Indemnifiable
Damages arises from a third party claim, Tech-Sym will make available to the
Stockholders' Representative all witnesses, pertinent records and materials
reasonably requested by the Stockholders' Representative with respect to such
claim. Tech-Sym and CSD will not settle any such third party claim without the
consent of the Stockholders' Representative, which consent shall not be
unreasonably withheld. The Security Deposit is also subject to offset by
Tech-Sym for any reasonable out-of-pocket expenses incurred by or on behalf of
the Stockholders' Representative in connection with the investigation,
negotiation, defense or settlement of any claim for Indemnifiable Damages.
Tech-Sym agrees to cause the Escrow Agent to deliver to the former CogniSeis
stockholders no later than six months from the Effective Time any shares of
Tech-Sym Common Stock then on deposit with the Escrow Agent unless there then
remains unresolved any claim as to which notice has been given as provided in
the Escrow Agreement, in which event any shares of Tech-Sym Common Stock
remaining on deposit after such claim shall have been satisfied shall be
returned to the CogniSeis stockholders promptly after the time of satisfaction.
Any such distribution of shares of Tech-Sym Common Stock shall be made on a pro
rata basis in relation to the number of shares of Tech-Sym Common Stock
initially deposited with the Escrow Agent on behalf of each CogniSeis
stockholder.
16
PROCEDURES FOR EXCHANGE OF CERTIFICATES; THE PAYMENT FUND
Upon the surrender, in accordance with the terms of the Letter of
Transmittal and other instructions of the Exchange Agent, of each certificate (a
"Certificate") that prior to the Effective Time represented shares of CogniSeis
Common Stock, the Exchange Agent shall deliver to the holder of such Certificate
the Merger Consideration multiplied by the number of shares of CogniSeis Common
Stock formerly represented by such Certificate in exchange therefor, less the
portion of the Security Deposit allocable thereto, and such Certificate shall
forthwith be cancelled. No interest will be paid or will accrue on Merger
Consideration or the Security Deposit.
As of or promptly after the Effective Time, Tech-Sym shall deposit or cause
to be deposited, in trust with the Exchange Agent, for the benefit of the
holders of shares of CogniSeis Common Stock, for exchange as provided herein,
the aggregate Merger Consideration. The amount of such Merger Consideration to
be available for delivery to tendering CogniSeis' stockholders will be limited
by the terms of the Escrow Agreement, as described above.
Promptly following the date which is six months after the Effective Time,
the Exchange Agent shall deliver to Tech_Sym all cash, shares of Tech-Sym Common
Stock, Certificates and other documents in its possession relating to the Merger
(other than shares of Tech-Sym Common Stock held in its capacity as Escrow Agent
in connection with the Security Deposit), and the Exchange Agent's duties shall
terminate. Thereafter, each holder of a Certificate may surrender such
Certificate to the Surviving Corporation and (subject to applicable abandoned
property, escheat and similar laws and, in the case of Dissenting Shares,
subject to applicable law) receive in exchange therefor the applicable Merger
Consideration, without any interest or dividends or other payments thereon.
After the Effective Time, there shall be no transfers on the stock transfer
books of the Surviving Corporation of any shares of CogniSeis Common Stock
outstanding prior to the Merger. If, after the Effective Time, Certificates
formerly representing shares of CogniSeis Common Stock are presented to the
Surviving Corporation or the Exchange Agent, they will be cancelled and (subject
to applicable abandoned property, escheat and similar laws and, in the case of
Dissenting Shares, subject to applicable law) exchanged for Merger
Consideration.
No dividends or other distributions declared or made after the Effective
Time with respect to shares of Tech-Sym Common Stock will be paid to the holder
of any unsurrendered Certificate with respect to the shares of Tech-Sym Common
Stock such holder is entitled to receive and no cash payment in lieu of
fractional interests shall be paid to any such holder until the surrender of
such Certificate in accordance with the Merger Agreement.
Tech-Sym shall not be liable to any holder of shares of CogniSeis Common
Stock for any Merger Consideration in respect of such shares (or dividends or
distributions with respect thereto) delivered to a public official pursuant to
any applicable abandoned property, escheat or similar law.
FRACTIONAL INTERESTS
No certificates or scrip representing fractional shares of Tech-Sym Common
Stock or Rights shall be issued upon the surrender for exchange of certificates
representing CogniSeis Common Stock, and no dividend or other distribution,
stock split or interest shall relate to any such fractional security, and such
fractional interests shall not entitle the owner thereof to vote or to any
rights of a security holder of Tech-Sym. In lieu of any fractional security,
each holder of shares of CogniSeis Common Stock who would otherwise have been
entitled to a fraction of a share of Tech-Sym Common Stock and fractional Right,
upon surrender of certificates representing CogniSeis Common Stock for exchange,
will be paid an amount in cash (without interest) equal to such holder's
proportionate interest in the sum of (i) the net proceeds from the sale or sales
by the Exchange Agent, on behalf of all such holders, of the aggregate
fractional shares of Tech-Sym Common Stock issued as described below and (ii)
the aggregate dividends or other distributions that are payable with respect to
such shares of Tech-Sym Common Stock as provided in the Merger Agreement (such
dividends and distributions being herein called the "Fractional Dividends"). As
soon as practicable following the
17
Effective Time, the Exchange Agent shall determine the excess of (x) the number
of full shares of Tech-Sym Common Stock issuable as Merger Consideration over
(y) the aggregate number of full shares of Tech-Sym Common Stock to be
distributed to holders of CogniSeis Common Stock (such excess being herein
called the "Excess Securities"), and the Exchange Agent, as agent for the former
holders of CogniSeis Common Stock, shall sell the Excess Securities at the
prevailing prices on the NYSE. The sale of the Excess Securities by the Exchange
Agent shall be executed on the NYSE through one or more member firms of the
NYSE. Tech-Sym shall pay all commissions, transfer taxes and other out-of-pocket
transaction costs, including the expenses and compensation of the Exchange
Agent, incurred in connection with such sale of Excess Securities. Until the net
proceeds of such sale of Excess Securities and the Fractional Dividends have
been distributed to the former stockholders of CogniSeis, the Exchange Agent
will hold such proceeds and dividends in trust for such former stockholders. As
soon as practicable after the determination of the amount of cash to be paid to
former stockholders of CogniSeis in lieu of any fractional interests, the
Exchange Agent shall make available in accordance with the Merger Agreement such
amounts to such former stockholders.
BACKGROUND OF THE MERGER
In May 1992, Mr. Edward H. Koehler, Jr., a Managing Director of The GulfStar
Group, Inc., contacted Mr. Wendell W. Gamel, Chairman and Chief Executive
Officer of Tech-Sym, to determine whether Tech-Sym would be interested in
acquiring CogniSeis. After Tech-Sym executed a Confidentiality Agreement and
received a copy of the Confidential Memorandum prepared by The GulfStar Group as
financial advisor to CogniSeis, Tech-Sym submitted an indication of interest to
acquire a majority interest in CogniSeis, subject to certain terms and
conditions. The proposal was not accepted by CogniSeis, and the discussions were
terminated.
In January 1995, Mr. Koehler informed Mr. Gamel that it might again be
possible to acquire CogniSeis. After Mr. Gamel indicated an interest,
representatives of CogniSeis met with Mr. Gamel, and after Tech-Sym executed a
new Confidentiality Agreement, CogniSeis provided Tech-Sym with certain
information regarding the business of CogniSeis.
After further discussions between representatives of Tech-Sym and CogniSeis,
by letter dated March 7, 1995 to Mr. Marshall Turner, Chairman of CogniSeis, Mr.
Gamel proposed the acquisition of CogniSeis by Tech-Sym at a purchase price of
$15 million, payable in shares of Tech-Sym Common Stock, plus up to $4 million
of additional shares of Tech-Sym Common Stock if the value of the shares of
Tech-Sym initially issued did not increase to $19 million by December 31, 1996,
subject to achievement by CogniSeis of certain earnings levels. The proposal was
subject to Tech-Sym's due diligence review of CogniSeis and its prospects,
negotiation of a definitive agreement, consent of the CogniSeis stockholders and
approval by the Board of Directors of Tech-Sym. Thereafter, Mr. Gamel discussed
the proposal with Mr. Turner and Mr. Koehler. Mr. Gamel also received a letter,
dated March 13, 1995, from Mr. Koehler addressing concerns of the CogniSeis
stockholders and suggesting various changes to Tech-Sym's proposal in order to
alleviate such concerns.
Following additional discussions between the management of Tech-Sym and the
management of CogniSeis, by letters dated March 30, 1995 and March 31, 1995 from
Mr. Gamel to Mr. Turner and Mr. Patrick H. Poe, President and Chief Executive
Officer of CogniSeis, Tech-Sym proposed to acquire CogniSeis for either (i) $20
million, payable in shares of Tech-Sym Common Stock, or (ii) $18 million,
payable in shares of Tech-Sym Common Stock, plus up to $4 million of additional
shares of Tech-Sym Common Stock in the event that the value of the shares of
Tech-Sym Common Stock initially issued did not increase to $22 million by
December 31, 1996. The proposals were subject to Tech-Sym's due diligence review
of CogniSeis, negotiation of a definitive agreement and approval by the Board of
Directors of Tech-Sym.
During the same period, representatives of CogniSeis and a unit of a large,
NYSE-traded company held discussions with respect to the possible acquisition of
CogniSeis by the other company. In connection with the discussions, CogniSeis
provided certain data pursuant to a confidentiality
18
agreement between the parties. After discussions between the representatives,
the other company proposed a tax-free purchase of substantially all the assets
of CogniSeis in exchange for common stock of the acquiror valued at
approximately $20.1 million and the assumption of CogniSeis' ordinary course of
business liabilities that were reflected on CogniSeis' balance sheet. In
discussions with representatives of CogniSeis, the other party was unresponsive
to CogniSeis' request that all of CogniSeis' liabilities be assumed in the
transaction.
On March 31, 1995 and April 1, 1995, management of Tech-Sym, certain members
of the board of CogniSeis and certain stockholders of CogniSeis met to discuss
the proposals. Pursuant to such meetings, a letter of intent dated April 1, 1995
(the "Letter of Intent") was negotiated that, in effect, gave CogniSeis until
April 5, 1995 to make an election between the two purchase price choices, which
choices were essentially the same as outlined in the March 30 and March 31
letters referred to above. The proposal contained in the Letter of Intent also
provided for certain limitations on the liability of CogniSeis stockholders for
breaches of representations, warranties or covenants to be contained in a
definitive agreement. In addition, the Letter of Intent provided that the
acquisition would be subject to Tech-Sym's due diligence review, negotiation of
a definitive agreement and approval of the Board of Directors of Tech-Sym. Mr.
Gamel signed the Letter of Intent on behalf of Tech-Sym on April 1, 1995 and,
after consideration by the Board of Directors of CogniSeis on April 3, 1995, Mr.
Turner signed the Letter of Intent on behalf of CogniSeis. On April 5, 1995,
CogniSeis indicated that it preferred the first purchase price choice described
above.
During April 1995, Tech-Sym and CogniSeis and their legal advisors conducted
due diligence investigations and negotiated the terms of a definitive merger
agreement. At a meeting on April 20, 1995, the Board of Directors of Tech_Sym
approved the Merger Agreement and related transactions. At a meeting on April
20, 1995, the Board of Directors of CogniSeis met to consider the proposed terms
of the Merger and a draft of the Merger Agreement provided by Tech-Sym. At that
time, the Board of Directors of CogniSeis gave preliminary approval to the
Merger and authorized representatives to negotiate the final terms of the Merger
and the definitive Merger Agreement. By unanimous written consent dated May 11,
1995, the Board of Directors of CogniSeis approved the final form of Merger
Agreement, the Merger and related transactions. The Merger Agreement was
executed and delivered on behalf of Tech-Sym, CSD and CogniSeis as of May 11,
1995.
REASONS FOR THE MERGER
TECH-SYM REASONS FOR THE MERGER. The Board of Directors of Tech-Sym believes
that the terms of the Merger are fair to, and in the best interests of, Tech-Sym
and the stockholders of Tech-Sym. In reaching its conclusion, Tech-Sym's Board
of Directors considered a number of factors, including:
(i) the financial performance, operations, assets, business condition
and business prospects of CogniSeis and the business prospects of Tech-Sym
and CogniSeis on a combined basis;
(ii) the terms of the Merger Agreement;
(iii) an analysis of the opportunities for customer growth from
combining seismic hardware and software suppliers into a single source;
(iv) an analysis of the potential business synergies to be achieved by
the matching of relative strengths of the two companies, particularly in
respect of customer base, geographic areas and operational strengths, thus
creating opportunities for revenue and profit margin enhancement; and
(v) an analysis of the increased competitiveness produced by
combining operations.
The Board of Directors of Tech-Sym did not attach specific weights to any of
the foregoing factors.
COGNISEIS REASONS FOR THE MERGER. The Board of Directors of CogniSeis has
unanimously determined that the Merger is fair to, and in the best interests
of, CogniSeis and its stockholders. Accordingly, it recommends approval and
adoption of the Merger Agreement to the CogniSeis
19
stockholders. In reaching its determination, the Board of Directors of
CogniSeis considered a number of factors, including:
(i) the familiarity of the Board of Directors of CogniSeis with
CogniSeis' business, operations, financial performance, financial condition
and prospects and its review of the business, operations, financial
performance, financial condition and prospects of Tech-Sym, including its
prospects after giving effect to the Merger;
(ii) the possible alternatives to the Merger, including the prospects of
continuation of CogniSeis as an independent entity, a review of the other
acquisition proposal described under "-- Background of the Merger" and the
likelihood of other persons that might desire to acquire CogniSeis, and the
Board's determination that the Merger with Tech-Sym would be the transaction
most likely to maximize stockholder value;
(iii) the absence of any trading market for the CogniSeis Common Stock
as compared to the liquidity of the Tech-Sym Common Stock, which is publicly
traded on the NYSE;
(iv) the structure of the transaction and terms of the Merger Agreement,
which were the results of arm's length negotiations between CogniSeis and
Tech-Sym, including the limited nature of the stockholders' indemnification
obligations and the fact that all of CogniSeis' existing obligations would
be assumed in the Merger;
(v) the expectation that the Merger will afford CogniSeis' stockholders
the opportunity to receive Tech-Sym Common Stock in a transaction that is
non-taxable for federal income tax purposes;
(vi) the terms of the Merger Agreement that permit the Board of
Directors of CogniSeis, in the exercise of its fiduciary duties and subject
to certain conditions, to respond to inquiries regarding potential business
combination transactions, to provide information to, and to negotiate with,
third parties making an unsolicited proposal to acquire CogniSeis and to
terminate the Merger Agreement if the CogniSeis Board of Directors
determines to recommend an alternative business combination transaction; in
this regard, the CogniSeis Board of Directors noted that the Merger
Agreement provides that if, under certain circumstances, the Merger
Agreement is terminated, CogniSeis will be obligated to pay Tech-Sym a fee
of $500,000, which the CogniSeis Board of Directors did not view as
unreasonably impeding any interested third party from proposing a superior
transaction;
(vii) the benefit to CogniSeis stockholders from owning an equity
interest in a larger, more diversified company than CogniSeis on a
stand-alone basis;
(viii) due to the greater resources available to Tech-Sym, the ability
of CogniSeis to compete more effectively as part of a larger, more
integrated company than a smaller independent company; and
(ix) the benefit to CogniSeis from access to Syntron's knowledge of
certain markets and technologies important to CogniSeis and Tech-Sym's
established customer relationships.
The Board of Directors of CogniSeis did not attach specific weights to any
of the factors enumerated above.
RECOMMENDATION OF THE BOARD OF DIRECTORS OF COGNISEIS. FOR THE FOREGOING
REASONS, THE BOARD OF DIRECTORS OF COGNISEIS BELIEVES THAT THE MERGER IS FAIR
TO, AND IN THE BEST INTERESTS OF, COGNISEIS AND ITS STOCKHOLDERS AND HAS
UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND THE OTHER TRANSACTIONS
CONTEMPLATED THEREBY AND UNANIMOUSLY RECOMMENDS THAT COGNISEIS STOCKHOLDERS VOTE
FOR THE APPROVAL AND ADOPTION OF THE MERGER AGREEMENT.
CONDITIONS TO THE CONSUMMATION OF THE MERGER
The consummation of the Merger is subject to the satisfaction of a number
of other conditions, including, among others, the following conditions: (i)
the Merger Agreement and the transactions
20
contemplated thereby shall have been approved by CogniSeis' stockholders in
accordance with applicable law and the CogniSeis Charter, (ii) all necessary
regulatory approvals required to consummate the Merger Agreement and the
transactions contemplated thereby shall have been obtained and remain in full
force and effect and all waiting periods in respect thereof shall have expired
and (iii) none of Tech-Sym, CSD, CogniSeis or any CogniSeis stockholder shall be
subject to any order, decree or injunction of a court or agency of competent
jurisdiction which enjoins or prohibits the consummation of the Merger.
The obligation of CogniSeis to consummate the Merger also is subject to the
fulfillment at or prior to the Closing Date (as defined in the Merger Agreement)
of the following additional conditions, any one or more of which may be waived
by CogniSeis:
(i) Each of the obligations of Tech-Sym and CSD required to be performed
by either party at or prior to the Closing (as defined in the Merger
Agreement) pursuant to the terms of the Merger Agreement shall have been
duly performed and complied with in all material respects, and the
representations and warranties of Tech-Sym and CSD contained in the Merger
Agreement shall be true and correct in all material respects as of the date
of the Merger Agreement and as of the Effective Time as though made at and
as of the Effective Time, and CogniSeis shall have received a certificate to
that effect signed by an authorized officer of Tech-Sym and CSD;
(ii) All action required to be taken by, or on the part of, Tech-Sym and
CSD to authorize the execution, delivery and performance of the Merger
Agreement by Tech-Sym and CSD and the consummation by Tech-Sym and CSD of
the transactions contemplated thereby shall have been duly and validly taken
by the boards of directors of Tech-Sym and CSD, and CogniSeis shall have
received certified copies of the resolutions evidencing such authorizations;
(iii) Any and all permits, consents, waivers, clearances, approvals and
authorizations of all third parties and governmental bodies required to be
obtained by Tech-Sym or CSD shall have been obtained by Tech-Sym and CSD
which are necessary in connection with the consummation of the Merger and
the other transactions contemplated thereby;
(iv) CogniSeis shall have received an opinion from Andrews & Kurth
L.L.P., counsel for Tech-Sym, dated the date of the Closing, substantially
in the form required by the Merger Agreement; and
(v) CogniSeis shall have received an opinion of Baker & Botts, L.L.P.,
counsel to CogniSeis, to the effect that, if the Merger is consummated in
accordance with the terms of the Merger Agreement, the Merger will be
treated for federal income tax purposes as a reorganization within the
meaning of Section 368(a) of the Code, CogniSeis, Tech-Sym and CSD will each
be a party to that reorganization within the meaning of Section 368(b) of
the Code and no gain or loss will be recognized by a stockholder of
CogniSeis as a result of the Merger upon the conversion of shares of
CogniSeis Common Stock into Tech-Sym Common Stock.
The obligation of Tech-Sym and CSD to consummate the Merger also is subject
to the fulfillment at or prior to the Closing Date of the following additional
conditions, any one or more of which may be waived by Tech-Sym:
(i) Each of the obligations of CogniSeis required to be performed by it
at or prior to the Closing pursuant to the terms of the Merger Agreement
shall have been duly performed and complied with in all material respects,
and the representations and warranties of CogniSeis contained in the Merger
Agreement shall be true and correct in all material respects as of the date
of the Merger Agreement and as of the Effective Time as though made at and
as of the Effective Time, and Tech-Sym and CSD shall have received a
certificate to that effect signed by the chief executive officer and senior
accounting officer of CogniSeis;
(ii) All action required to be taken by or on the part of CogniSeis and
the CogniSeis stockholders to authorize the execution, delivery and
performance of the Merger Agreement by CogniSeis and the consummation by
CogniSeis of the transactions contemplated thereby shall
21
have been duly and validly taken by the board of directors of CogniSeis and
its stockholders, and Tech-Sym and CSD shall have received certified copies
of the resolutions evidencing such authorization;
(iii) Any and all permits, consents, waivers, clearances, approvals and
authorizations of all third parties and governmental bodies required to be
obtained by CogniSeis or its stockholders to consummate the transactions
contemplated by the Merger Agreement shall have been obtained by CogniSeis
or its stockholders;
(iv) Tech-Sym shall have received an opinion from Baker & Botts, L.L.P.,
counsel to CogniSeis, dated the date of the Closing, substantially in the
form required by the Merger Agreement;
(v) Each of Patrick H. Poe, Diana McSherry and David Judson shall
have executed and delivered to Tech-Sym noncompetition agreements
substantially in the form required by the Merger Agreement;
(vi) Each director of CogniSeis and each officer of CogniSeis holding
such position on the date of execution of the Merger Agreement shall have
executed and delivered to Tech-Sym a general release of claims in the form
required by the Merger Agreement;
(vii) each stockholder so required by the Merger Agreement shall have
executed and delivered to Tech-Sym a Stockholder Agreement and the
beneficiaries of each stockholder so required by the Merger Agreement shall
have signed a Beneficiary Agreement, each such agreement to be substantially
in the form required by the Merger Agreement (and each as more fully
described below);
(viii) each person so required by the Merger Agreement shall have
executed and delivered to Tech-Sym an Affiliates Agreement substantially in
the form required by the Merger Agreement (for a more complete description
of the terms and provisions of the Affiliates Agreement, see " --
Restrictions on Resales by Affiliates");
(ix) the Stockholders' Representative shall have executed and delivered
the Escrow Agreement substantially in the form required by the Merger
Agreement;
(x) Tech-Sym shall have received a copy of a letter to the Board of
Directors of CogniSeis from Ernst & Young LLP to the effect that CogniSeis
has not taken any action prior to the Effective Time that would prevent
Tech-Sym from treating the Merger as a pooling of interests for accounting
purposes; and
(xi) stockholders of CogniSeis holding not more than 5% of the
outstanding shares of CogniSeis Common Stock shall have properly exercised
and perfected (and not withdrawn) dissenters' rights in accordance with the
requirements of Section 262(d)(1) of the DGCL.
The Stockholder Agreement and Beneficiary Agreement referenced at paragraph
(vii) above require that the stockholder or beneficiary executing such agreement
represent and warrant to Tech-Sym that such stockholder or beneficiary has no
plan or intention to sell or otherwise dispose, or cause the sale or disposal
of, any of the shares of Tech-Sym Common Stock to be received in the Merger,
which sale or disposition would, together with sales or dispositions by any
other stockholder of CogniSeis, reduce the aggregate number of shares of
Tech-Sym Common Stock received by all CogniSeis stockholders to less than 50% of
the fair market value of CogniSeis Common Stock outstanding immediately prior to
the Effective Time. The Stockholder Agreement and Beneficiary Agreement further
require the waiver, discharge and release of all claims, demands, actions,
judgments and executions such stockholder or beneficiary may have against
CogniSeis, subject to certain limitations specified therein.
22
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a summary of the principal United States federal
income tax consequences of the Merger and is not intended to be a complete
discussion of all potential tax effects that might be relevant to the CogniSeis
stockholders as a result of the Merger. This summary assumes that the CogniSeis
Common Stock will be held as a capital asset as of the Effective Time. The
summary may not be applicable to certain classes of taxpayers, including,
without limitation, insurance companies, tax-exempt organizations, financial
institutions, securities dealers, broker-dealers, foreign persons, persons who
hold CogniSeis Common Stock as part of a conversion transaction and persons who
acquired CogniSeis Common Stock pursuant to an exercise of employee stock
options or rights or otherwise as compensation. Moreover, the state, local,
foreign and estate tax consequences to CogniSeis stockholders of the Merger are
not discussed herein.
This summary is based on the Code, existing and proposed Treasury
regulations under the Code, the legislative history of the Code, rulings and
pronouncements of the Internal Revenue Service ("IRS") and judicial decisions in
effect at the date of this Prospectus/Proxy Statement. However, legislative,
judicial or administrative changes or interpretations may be forthcoming that
could alter or modify the statements and conclusions set forth herein. Any such
changes or interpretations may have retroactive application. EACH STOCKHOLDER IS
URGED TO CONSULT WITH SUCH STOCKHOLDER'S OWN TAX ADVISOR AS TO THE PARTICULAR
TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE TRANSACTIONS DESCRIBED HEREIN,
INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS,
AND OF POSSIBLE FUTURE CHANGES IN APPLICABLE TAX LAWS.
GENERAL. It is intended that the Merger will qualify as a reorganization
within the meaning of Section 368(a) of the Code and that, for federal income
tax purposes, no gain or loss will be recognized by Tech-Sym, CSD or CogniSeis
as a result of the Merger.
CogniSeis expects to receive a tax opinion of Baker & Botts, L.L.P., counsel
to CogniSeis (the "Tax Opinion"), dated immediately prior to the Effective Time,
to the effect that the Merger will be treated as a reorganization within the
meaning of Section 368(a)(1)(A) and (2)(E) of the Code and that CogniSeis,
Tech-Sym and CSD will each be a party to such reorganization within the meaning
of Section 368(b) of the Code. An opinion of counsel is not binding on the IRS
or the courts, and, therefore, the delivery of the Tax Opinion does not assure
that the IRS or the courts will treat the Merger as a reorganization or that any
of the tax consequences of a reorganization that are described below will be
applicable to the CogniSeis stockholders. The Tax Opinion will be based, among
other things, on assumptions relating to certain facts and circumstances of, and
the intentions of the parties to, the Merger, which assumptions will have been
made on the basis of representations contained in certificates of CogniSeis and
Tech-Sym (including, in the case of CogniSeis, a representation to the effect
that a sufficient number of CogniSeis stockholders do not intend to dispose of
the shares of Tech-Sym Common Stock to be received as a result of the Merger, so
as to satisfy a "continuity of interest" requirement).
The remainder of this summary assumes that the Merger will qualify as a
reorganization under the Code.
EXCHANGE OF COGNISEIS COMMON STOCK FOR TECH-SYM COMMON STOCK AND TECH-SYM
RIGHTS. A CogniSeis stockholder who, pursuant to the Merger, exchanges CogniSeis
Common Stock for Tech-Sym Common Stock and Tech-Sym Rights will not recognize
any gain or loss on such exchange (except with respect to cash received in lieu
of a fractional interest). The aggregate adjusted tax basis of the shares of
Tech-Sym Common Stock (including a fractional share and shares allocable to such
stockholder that are retained by the Escrow Agent pursuant to the Escrow
Agreement) received by such stockholder in such exchange will equal such
stockholder's aggregate adjusted tax basis in the CogniSeis Common Stock
surrendered therefor. The holding period of such shares of Tech-Sym Common Stock
will include the holding period of the CogniSeis Common Stock surrendered.
23
FRACTIONAL SHARES. A CogniSeis stockholder who, pursuant to the Merger,
receives cash in lieu of a fractional share of Tech-Sym Common Stock in
accordance with the procedures set forth in the Merger Agreement will recognize
gain or loss equal to the difference between the cash received in lieu of such
fractional share and the adjusted basis of such fractional share. Such gain or
loss generally will be capital gain or loss and will be long-term capital gain
or loss if the holding period for such stockholder's CogniSeis Common Stock
exceeds one year as of the Effective Time.
ESCROWED SHARES. If any shares of Tech-Sym Common Stock allocable to a
CogniSeis stockholder that had been deposited with the Escrow Agent pursuant to
the Escrow Agreement ("Escrowed Shares") are subsequently distributed by the
Escrow Agent to such stockholder, such stockholder will not recognize income,
gain or loss upon such distribution. If any such Escrowed Shares are
subsequently returned by the Escrow Agent to Tech-Sym, such stockholder will not
recognize gain or loss upon such return and the adjusted basis of such Escrowed
Shares will be added to the adjusted basis of the remaining shares of Tech-Sym
Common Stock received by such stockholder in connection with the Merger.
APPRAISAL RIGHTS. In the case of a CogniSeis stockholder who exercises
dissenters' rights with respect to such stockholder's shares of CogniSeis Common
Stock and who receives payment for such shares in cash (see "-- Dissenters'
Appraisal Rights"), the IRS can be expected to take the position that such
stockholder received such cash as a distribution in redemption of such shares
subject to Section 302 of the Code. Therefore, such a dissenting stockholder who
does not own, actually or constructively in accordance with Section 318 of the
Code, any shares of Tech-Sym Common Stock immediately after the Merger would
recognize gain or loss measured by the difference between the cash received and
the adjusted basis of such stockholder's CogniSeis Common Stock. Such gain or
loss generally would be capital gain or loss and would be long-term capital gain
or loss if the holding period for such stockholder's CogniSeis Common Stock
exceeds one year as of the Effective Time.
ACCOUNTING TREATMENT
The Merger will be treated for accounting purposes as a pooling of
interests. See the Notes to the Unaudited Pro Forma Combined Financial
Statements included elsewhere in this Prospectus/Proxy Statement.
GOVERNMENTAL AND REGULATORY APPROVALS
The Merger is subject to the requirements of the HSR Act. The HSR Act
requires, among other things, that certain information regarding the Merger be
furnished to the Antitrust Division and the FTC and that certain waiting periods
have expired or been terminated before the Merger is consummated. On May ..,
1995, Tech-Sym and CogniSeis filed notification reports in connection with the
Merger with the Antitrust Division and the FTC pursuant to the HSR Act. There
can be no assurance that a challenge to the Merger will not be made or, if such
a challenge is made, that Tech-Sym and CogniSeis will prevail.
Neither Tech-Sym nor CogniSeis is aware of any other governmental or
regulatory approvals required for the consummation of the Merger.
EFFECT ON COGNISEIS EMPLOYEE BENEFIT PLANS AND EMPLOYEE AGREEMENTS
SERVICE CREDIT. The Merger Agreement generally provides that the employees
of the Surviving Corporation will be given credit for service with CogniSeis and
its subsidiaries under all employee benefits plans of Tech-Sym in which they
become participants, to the extent the terms of such plans permit, with respect
to vesting and participation requirements in such plans.
INDEMNIFICATION. The Merger Agreement provides that from and after the
Effective Time, Tech-Sym will, and will cause the Surviving Corporation to,
indemnify, defend and hold harmless present and former officers and directors of
CogniSeis against liabilities and costs for actions taken in such
24
capacities, to the same extent as provided in the CogniSeis Charter in effect
prior to the Effective Time.
VESTING OF RESTRICTED STOCK. CogniSeis has periodically issued shares of
CogniSeis Common Stock to employees, including officers of CogniSeis. Such
shares are issued subject to CogniSeis' option to repurchase the shares on
termination of employment. The repurchase option lapses ratably over a period of
time (generally 50 months), and lapses entirely on certain merger transactions.
Consummation of the Merger will cause most of such repurchase options to lapse.
As of June 30, 1995, a total of not more than 31,068 shares of CogniSeis Common
Stock (including 10,557 shares owned by officers) will be subject to repurchase
options that will lapse as a result of the Merger.
RESTRICTIONS ON RESALES BY AFFILIATES
Tech-Sym has registered the issuance of the shares of Tech-Sym Common Stock
that the stockholders of CogniSeis will be entitled to receive upon consummation
of the Merger under the Securities Act. Those CogniSeis stockholders who are not
deemed to be "affiliates" of CogniSeis may freely sell the shares of Tech-Sym
Common Stock they receive in the Merger, without additional registration under
the Securities Act or an exemption from the registration requirements thereunder
(including Rule 145 promulgated under the Securities Act). Stockholders of
CogniSeis who are deemed to be "affiliates" of CogniSeis at the time of the
Special Meeting may resell the shares of Tech-Sym Common Stock received in the
Merger in transactions in compliance with Rule 145 under the Securities Act,
pursuant to an effective registration statement under the Securities Act or in
transactions exempt from registration, and may not use this Prospectus/Proxy
Statement to effect resales of the shares of Tech-Sym Common Stock they receive.
Rule 145, as currently in effect, imposes restrictions on the manner in
which such affiliates may make resales and also on the volume of resales that
such affiliates, and others with whom they may act in concert, may make in any
three-month period. The term "affiliates" is defined in the Securities Act to
include any person who, directly or indirectly, controls, is controlled by, or
is under common control with, CogniSeis at the time the Merger is submitted to a
vote of the stockholders of CogniSeis. Tech-Sym has been advised by CogniSeis
that Patrick H. Poe, Diana H. McSherry and Ronald Warren (each a CogniSeis
executive officer), Marshall Turner, Marshall Payne, David Hull and L. C. Lawyer
(each a director of CogniSeis) and certain partnerships affiliated with them may
be deemed "affiliates" of CogniSeis for purposes of the Securities Act. Pursuant
to the Merger Agreement, each such person has executed and delivered an
Affiliates Agreement to Tech-Sym on or prior to the Closing Date in
substantially the form attached as an exhibit to the Merger Agreement.
The Affiliates Agreement provides that any sales of Tech-Sym Common Stock by
those persons who may be deemed affiliates under the Securities Act will be made
only (i) in compliance with Rule 145 under the Securities Act, (ii) in
accordance with some other exemption or exclusion from the Securities Act which
does not require a filing by Tech-Sym with the Commission and which is supported
by an opinion of counsel to Tech-Sym that such exemption or exclusion is
available, or (iii) pursuant to a registration filed by Tech-Sym under the
Securities Act (Tech-Sym has no obligation, however, to make such a filing). The
Affiliates Agreement also requires the signing stockholder to agree (i) to
comply with the holding requirements of Rule 145 and to provide evidence of such
compliance as is reasonably requested by Tech-Sym, (ii) to accept certificates
representing Tech-Sym Common Stock which bear a legend indicating that the sale
of such shares is subject to the provisions of Rule 145, and (iii) to represent
that such stockholder has not sold, transferred, pledged or granted a security
interest in or otherwise disposed of any Tech-Sym Common Stock during the period
commencing 30 days prior to the Effective Time and continuing to the Effective
Time, and will not sell, transfer, pledge, grant a security interest in or
otherwise dispose of any shares of Tech-Sym Common Stock held by such
Stockholder until after the public release of earnings of Tech-Sym and CogniSeis
on a combined basis for a period of at least 30 days following the Effective
Time. Pursuant to the Merger Agreement, Tech-Sym has agreed to make a public
release of earnings of Tech-Sym and CogniSeis on a combined basis with respect
to at least 30 days of operations after the
25
Effective Time, provided, that at Tech-Sym's option, such period may be either
(i) the first full month following the Effective Time, or (ii) the period from
the Effective Time to the end of the calendar quarter in which the Effective
Time occurs if such period covers a period of at least 30 days. Such release
shall be made as soon as reasonably practicable following the period selected by
Tech-Sym, but in no event later than 45 days following the end of such period.
INTERESTS OF CERTAIN PERSONS IN THE MERGER
For a discussion of certain agreements by Tech-Sym to provide
indemnification of certain officers and directors of CogniSeis and to provide
credit for tenure with CogniSeis and a discussion of the effect of the Merger on
certain shares of CogniSeis Common Stock held by officers, see "-- Effect on
CogniSeis Employee Benefit Plans and Employee Agreements."
ACCESS TO PROPERTIES AND RECORDS OF COGNISEIS
Pursuant to the Merger Agreement, CogniSeis is required to give Tech-Sym and
its representatives, from and after the date of execution of the Merger
Agreement, reasonable access during normal business hours to all of the
properties, books, contracts, documents and records of CogniSeis, the
opportunity to make reasonable investigation of CogniSeis, and to furnish to
Tech-Sym and its representatives any additional financial statements of, and all
information with respect to the business and affairs of, CogniSeis that Tech-Sym
may reasonably request.
CONDUCT OF BUSINESS OF COGNISEIS PRIOR TO THE MERGER
CogniSeis has agreed that, prior to the Effective Time, unless Tech-Sym
shall otherwise consent in writing, CogniSeis shall carry on its respective
businesses only in the ordinary course and consistent with past practice. In
addition, to the extent consistent with such undertaking and with the specific
terms of the Merger Agreement, CogniSeis will preserve intact its current
business organizations, and use all reasonable efforts to keep available the
services of its key employees and, consistent with good business judgment, use
all reasonable efforts to preserve their relationships with customers, suppliers
and others having business dealings with them. CogniSeis will also refrain from
any acts having the effect of dissuading any of such employees, agents,
customers, clients, representatives, agents, creditors and suppliers from
remaining associated with, or having the effect of inducing them to terminate an
association with Tech-Sym or CogniSeis. In addition, CogniSeis has agreed that,
prior to the Effective Time, subject to certain exceptions, except as expressly
contemplated by the Merger Agreement or unless Tech-Sym shall otherwise consent
in writing, CogniSeis will not, and will cause each of its subsidiaries not to,
among other things:
(1) declare or make any payments of dividends or other
distributions;
(2) lend, advance or pay any monies to or on behalf of any stockholder
of CogniSeis in connection with the transactions contemplated by the Merger
Agreement, or otherwise (other than payments to employees and directors for
salary, bonus payments or directors fees, advances or reimbursements or
other payments or reimbursements to employees and directors, in each case in
the ordinary course of business consistent with past practices);
(3) purchase or redeem any shares of capital stock of CogniSeis or
evidences of indebtedness;
(4) sell, grant, issue or otherwise dispose of any shares of capital
stock of CogniSeis or other securities of CogniSeis or rights therein or
otherwise change its capital structure;
(5) merge or consolidate with any other business;
(6) change its present telephone number;
(7) amend or modify any existing employee benefit plans or adopt any
new employee benefit plans, except for renewals of health plans in the
ordinary course of business or as required by law;
26
(8) increase the compensation of any officer or key employee;
(9) amend the CogniSeis Charter or the Bylaws of CogniSeis;
(10) engage in any activities or transactions which are outside the
ordinary course of business of CogniSeis which in the aggregate would be
material; or
(11) make any tax elections (other than those required to be made by
applicable law or regulation).
CogniSeis shall not, by action or inaction, cause any of the representations
and warranties made by CogniSeis in the Merger Agreement not to be true and
correct in all material respects on and as of the Effective Time or in any way
impair or prevent the full and timely satisfaction of the conditions, terms and
provisions of the Merger Agreement or the consummation of the transactions
contemplated thereby.
NO SOLICITATION
CogniSeis has agreed not to, and to use its best efforts to cause its
affiliates, stockholders, officers, directors, employees, representatives and
agents not to, directly or indirectly, encourage, solicit, initiate, engage or
participate in discussions or negotiations with, or provide any information to,
any corporation, partnership, person or other entity or group other than
Tech-Sym, CSD or their affiliates (a "Third Party") concerning CogniSeis or
concerning the business of CogniSeis in connection with any tender offer
(including a self-tender offer), exchange offer, merger, consolidation, sale of
all or any substantial amount of assets, sale of securities, acquisition of
beneficial ownership of or to vote securities representing 1% or more of the
total voting power of CogniSeis, liquidation, dissolution or similar
transactions involving CogniSeis, or any division of CogniSeis (any such
proposal, announcement or transaction being referred to herein as a "Acquisition
Proposal"); provided, however, that notwithstanding the foregoing, (i) CogniSeis
may engage in discussions or negotiations with a Third Party who seeks to
initiate such discussions and negotiations and may furnish such Third Party
information concerning CogniSeis and its business, properties and assets, (ii)
CogniSeis' Board of Directors may take and disclose to the CogniSeis
stockholders a position with respect to any Acquisition Proposal and (iii)
following receipt of an Acquisition Proposal that the Board of Directors
determines is financially superior to the Merger, the Board of Directors may
withdraw, modify or not make its recommendation to its stockholders in support
of the Merger or terminate the Merger Agreement, but in each case only to the
extent that the Board of Directors of CogniSeis shall conclude in good faith,
after considering the advice of outside counsel, that such action is necessary
in order for the Board of Directors to act in a matter that is consistent with
its fiduciary obligations under applicable law. CogniSeis shall promptly inform
Tech-Sym of any inquiry (including the terms thereof and the identity of the
Third Party making such inquiry) which it may receive in respect of an
Acquisition Proposal and furnish to Tech-Sym a copy of any such written inquiry.
APPROVAL OF COGNISEIS STOCKHOLDERS
In accordance with the terms of the Merger Agreement, CogniSeis is required
to (a) take all steps necessary to duly call, give notice of, convene and hold
the Special Meeting for the purpose of approving and adopting the Merger
Agreement and for such other purposes as may be necessary or desirable in
connection with the transactions contemplated by the Merger Agreement on or
before June 30, 1995, (b) recommend to CogniSeis stockholders the approval and
adoption of the Merger Agreement and such other matters as may be submitted to
CogniSeis stockholders as specified in clause (a) above, and (c) cooperate and
consult with Tech-Sym with respect to each of the foregoing matters.
Additionally, CogniSeis has agreed to use its best efforts to obtain the
necessary approvals by its stockholders of the Merger Agreement and the
transactions contemplated thereby, subject to limitations following the receipt
of an Acquisition Proposal as described above under " -- No Solicitation."
27
TERMINATION
The Merger Agreement may be terminated and the Merger contemplated thereby
may be abandoned at any time prior to the Effective Time, whether before or
after approval of the Merger by the CogniSeis stockholders:
(a) by mutual consent of Tech-Sym and CogniSeis;
(b) by Tech-Sym if CogniSeis fails to perform in any material respect
any of its material obligations or fulfill any of the conditions imposed on
it under the Merger Agreement and such failure shall not have been remedied
within ten business days after receipt by CogniSeis of notice in writing
from Tech-Sym or CSD specifying the nature of such breach and requesting
that it be remedied;
(c) by CogniSeis if Tech-Sym or CSD fails to perform in any material
respect any of their respective material obligations or fulfill any of the
conditions imposed on them under the Merger Agreement and such failure shall
not have been remedied within ten business days after receipt by Tech-Sym
and CSD of notice in writing from CogniSeis specifying the nature of such
breach and requesting that it be remedied;
(d) by CogniSeis if the Board of Directors of CogniSeis determines that
it will not recommend approval and adoption of the Merger Agreement by the
CogniSeis stockholders, or if such recommendation is modified or withdrawn,
based upon the Board's determination that such action is necessary for it to
comply with its fiduciary duties to the CogniSeis stockholders under
applicable law, as more completely described above under the caption " -- No
Solicitation" above; or
(e) by either Tech-Sym or CogniSeis:
(i) if a court of competent jurisdiction or governmental, regulatory
or administrative agency or commission shall have issued an order, decree
or ruling or taken any other action (which order, decree or ruling the
parties hereto shall use their best efforts to lift), in each case
permanently restraining, enjoining or otherwise prohibiting the
transactions contemplated by the Merger Agreement, and such order,
decree, ruling or other action shall have become final and nonappealable;
(ii) if the Closing has not occurred on or before August 31, 1995;
provided, that the right to terminate the Merger Agreement shall not be
available to any party whose material breach of the Merger Agreement has
been the cause of, or resulted in, the failure of the Merger to occur on
or before such date; or
(iii) if the CogniSeis stockholders fail to approve the Merger by the
required affirmative vote of the outstanding shares of CogniSeis Common
Stock at the meeting held for that purpose.
In the event of termination of the Merger Agreement by either Tech-Sym or
CogniSeis, the Merger Agreement will become void and there will be no liability
or obligation on the part of either CogniSeis or Tech-Sym or their respective
officers or directors, other than under certain specified provisions of the
Merger Agreement relating to payments of fees and expenses and confidentiality
agreements, and other than the liability of any party arising from any breach of
the Merger Agreement.
LIABILITY FOR EXPENSES
Each of Tech-Sym, CSD and CogniSeis will pay all expenses incurred by it in
connection with the negotiation, execution and performance of the Merger
Agreement, whether or not the Merger is consummated, including the fees and
expenses of its counsel and auditors. The Merger Agreement further provides that
in the event (i) of a termination of the Merger Agreement by the Board of
Directors of CogniSeis by reason of receipt of an Acquisition Proposal that
results in the termination
28
of the Merger Agreement as described in clause (d) under the caption " --
Termination" above, or (ii) that the CogniSeis stockholders do not approve the
Merger at the Special Meeting or stockholders holding more than 5% of the
outstanding shares of CogniSeis Common Stock have perfected dissenters' rights
in accordance with the requirements of the DGCL, and prior to the Special
Meeting CogniSeis has received an Acquisition Proposal that is pending at the
time of the Special Meeting and that, if consummated, would result in a
transaction more favorable to CogniSeis stockholders from a financial point of
view than the Merger, CogniSeis will be obligated to promptly pay to Tech-Sym a
termination fee of $500,000.
AMENDMENT AND WAIVER
The Merger Agreement may be amended by the parties by a written instrument
at any time before or after approval thereof by the stockholders of CogniSeis;
provided that, an amendment made subsequent to the adoption of the Merger
Agreement by the stockholders of CogniSeis shall not, without the further
approval of such stockholders, (i) alter or change the amount or kind of shares,
securities, cash, property and/or rights to be received in exchange for or on
conversion of all or any of the shares of any class or series thereof of
CogniSeis, (ii) alter or change any term of the certificate of incorporation of
the Surviving Corporation, or (iii) alter or change any of the terms and
conditions of the Merger Agreement if such alteration or change would adversely
affect the holders of any class or series thereof of CogniSeis. Any failure of
any party to the Merger Agreement to comply with any obligation, covenant,
agreement or condition contained therein may be waived in writing by the other
parties, but such waiver or failure to insist upon strict compliance with such
obligation, covenant, agreement or condition shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains representations and warranties of CogniSeis
relating to, among other things, (a) organization, good standing, qualification
to do business and other corporate matters, (b) capitalization, (c)
subsidiaries, (d) the authorization, execution, delivery and enforceability of
the Merger Agreement, the actions taken by its Board of Directors with respect
thereto and related matters, (e) financial statements, (f) the absence of
undisclosed liabilities, (g) the absence of certain changes or events since
March 31, 1995, (h) tax matters, (i) contractual matters, (j) the absence of
certain litigation, and (k) property rights. The Merger Agreement also contains
representations and warranties of Tech-Sym relating to, among other things (a)
organization of Tech-Sym and CSD; (b) the authorization, execution,
deliverability and enforceability of the Merger Agreement, the action taken by
each of Tech-Sym's and CSD's Board of Directors with respect thereto and other
matters; (d) the absence of the retention by Tech-Sym or CSD of a broker or
other person in connection with the Merger; (e) the due authorization, validity
and registration under the Securities Act of 1933, as amended, of the Merger
Consideration; (f) the delivery of the Prospectus/Proxy Statement at least
twenty business days prior to the date of the Special Meeting; (g) Tech-Sym's
fulfillment of its reporting responsibilities pursuant to the requirements of
the Securities Exchange Act of 1934, as amended; and (h) the absence of certain
changes or events since December 31, 1994.
DISSENTERS' APPRAISAL RIGHTS
Record holders of CogniSeis Common Stock are entitled to appraisal rights
under Section 262 of the DGCL. This discussion is not a complete statement of
the law pertaining to appraisal rights under the DGCL and is qualified in its
entirety by the full text of Section 262, which is reprinted as Appendix B to
this Prospectus/Proxy Statement. A person having a beneficial interest in shares
of CogniSeis Common Stock held of record in the name of another person, such as
a broker or nominee, must act promptly to cause the record holder to follow the
steps summarized below properly and in a timely manner to perfect the appraisal
rights provided under Section 262.
29
Under Section 262, where a merger is to be submitted for approval at a
meeting of stockholders, as in the case of the CogniSeis Special Meeting, not
less than 20 days prior to the meeting, a constituent corporation must notify
each of the holders of its stock for which appraisal rights are available that
such appraisal rights are available and include in each such notice a copy of
Section 262. THIS PROSPECTUS/PROXY STATEMENT SHALL CONSTITUTE SUCH NOTICE TO THE
RECORD HOLDERS OF COGNISEIS COMMON STOCK. ANY SUCH STOCKHOLDER WHO WISHES TO
EXERCISE SUCH APPRAISAL RIGHTS SHOULD REVIEW THE FOLLOWING DISCUSSION AND
APPENDIX B CAREFULLY, BECAUSE FAILURE TO TIMELY AND PROPERLY COMPLY WITH THE
PROCEDURES SPECIFIED WILL RESULT IN THE LOSS OF APPRAISAL RIGHTS UNDER THE DGCL.
Under the DGCL, record holders of CogniSeis Common Stock who follow the
procedures set forth in Section 262 will be entitled to have their shares of
CogniSeis Common Stock appraised by the Delaware Court of Chancery and to
receive payment of the "fair value" of such shares, EXCLUSIVE OF ANY ELEMENT OF
VALUE ARISING FROM THE ACCOMPLISHMENT OR EXPECTATION OF THE MERGER, together
with a fair rate of interest, if any, as determined by such court. A holder of
shares of CogniSeis Common Stock wishing to exercise his appraisal rights must
deliver to the Secretary of CogniSeis, before the vote on the Merger Agreement
at the CogniSeis Special Meeting, a written demand for appraisal of his shares
of CogniSeis Common Stock. In addition, a holder of shares of CogniSeis Common
Stock wishing to exercise his appraisal rights must not vote in favor of the
Merger and must hold such shares of record on the date the written demand for
appraisal is made and must hold such shares continuously through the Effective
Time. Stockholders who hold their shares of CogniSeis Common Stock in nominee
forms and who wish to exercise appraisal rights must take all necessary steps in
order that a demand for appraisal is made by the record holder of such shares
and are urged to consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by the record holder.
Within 10 days after the Effective Time of the Merger, CogniSeis, as the
Surviving Corporation in the Merger, must send a notice as to the effectiveness
of the Merger to each person who has satisfied the appropriate provisions of
Section 262 and who is entitled to appraisal rights under Section 262. Within
120 days after the Effective Time, but not thereafter, any holder of shares of
CogniSeis Common Stock who has complied with the foregoing procedures and who is
entitled to appraisal rights under Section 262, may file a petition in the
Delaware Court of Chancery demanding a determination of the "fair value" of such
shares. CogniSeis is not under any obligation, and has no present intention, to
file a petition with respect to the appraisal of the "fair value" of the shares
of CogniSeis Common Stock. Accordingly, it is the obligation of the stockholders
to initiate all necessary action to perfect their appraisal rights within the
time prescribed in Section 262. A holder of shares of CogniSeis Common Stock
will fail to perfect, or effectively lose, his right to appraisal if no petition
for appraisal of shares of CogniSeis Common Stock is filed within 120 days after
the Effective Time.
If any holder of shares of CogniSeis Common Stock who demands appraisal of
his shares under Section 262 fails to perfect, or effectively withdraws or
loses, his right to appraisal, as provided in the DGCL, the shares of CogniSeis
Common Stock of such stockholder will be automatically converted into the Merger
Consideration in accordance with the Merger Agreement. A holder may withdraw his
demand for appraisal by delivering to Tech-Sym a written withdrawal of his
demand for appraisal and acceptance of the Merger, except that any such attempt
to withdraw made more than 60 days after the Effective Time will require the
written approval of CogniSeis. Failure to follow the steps required by Section
262 of the DGCL for perfecting appraisal rights may result in the loss of such
rights.
Any holder of shares of CogniSeis Common Stock who has duly demanded an
appraisal in compliance with Section 262 will not, after the Effective Time, be
entitled to vote the shares of CogniSeis Common Stock subject to such demand for
any purpose or be entitled to the payment of dividends or other distributions on
those shares (except dividends or other distributions payable to holders of
record of shares of CogniSeis Common Stock as of a date prior to the Effective
Time). Pursuant to the Merger Agreement, CogniSeis shall not, except with the
prior written consent of Tech-Sym, voluntarily make any payment with respect to
any demands for appraisals of CogniSeis Common Stock, offer to settle or settle
any such demands or approve any withdrawal of any such demands.
30
INFORMATION CONCERNING COGNISEIS
GENERAL
CogniSeis produces and markets seismic processing and geologic
interpretation systems consisting of applications software and specially
configured computing equipment. CogniSeis sells or leases these systems to oil
companies, geophysical contractors, universities and governmental agencies.
Geophysicists and geologists use these systems to process seismic data and to
interpret geologic data.
The business now conducted by CogniSeis was originally formed in 1978 as the
computer systems division ("CSD") of Digicon Inc. ("Digicon"), a U.S. seismic
contractor. CSD was formed by Digicon for the purpose of developing seismic
software for the company's processing service offices and also with the
responsibility of marketing the same technology. Beginning in the early 1980's,
CSD became a leading seller of seismic processing systems. In February 1987, CSD
management and outside investors purchased CSD from Digicon.
CogniSeis' processing software, DISCO, gained wide acceptance since the
first delivery in 1980 and is now generally regarded as an industry standard for
seismic processing. In 1990 CogniSeis released Interactive DISCO, the first
phase of Second Generation DISCO. In fiscal 1991, CogniSeis' product offerings
were broadened with the introduction of two new geological interpretation
products. The second phase of Second Generation DISCO, released in fiscal 1992,
included substantial new capabilities in networking and distributed processing.
In fiscal 1993, CogniSeis released Focus, a new workstation interactive
processing software with special graphical capabilities. In fiscal 1994,
CogniSeis continued development of geologic products under its strategic plan to
expand sales in the geologic marketplace. In fiscal 1994 Focus 3D was released,
extending CogniSeis' capabilities in its core business of seismic processing and
bringing quality control and interpretation tools to the processing
geophysicist.
In August 1994, CogniSeis began marketing VoxelGeo, a leading-edge product
for high speed voxel (3D pixel) rendering of three-dimensional ("3D") seismic
data with embedded geometries, owned by Vital Images, Inc. Links between the
products have been completed with resultant enhanced visualization for users of
linked products.
STRATEGY
CogniSeis' strategy is to provide state of the art computer-aided
exploration systems ("CAEX") consisting of integrated geologic and geophysical
applications to aid in the exploration and production of hydrocarbons. In the
last few years the marine market has shifted to 3D seismic. CogniSeis believes
that the integration of 3D seismic processing and geologic interpretation
software, coupled with enhanced 3D visualization, will provide essential
functionality to geophysicists and geologists. CogniSeis is also committed to be
responsive to the needs of its customers and to provide effective solutions to
their changing requirements.
CogniSeis continues to add major new functionality to its Focus 3D seismic
processing product line through internal software development as well as through
joint development efforts with third parties. 3D geologic applications have
assumed increasing importance in processing and interpretation. CogniSeis
recently released GeoSec 3D, which features the ability to develop structural
models in three dimensions and to perform true 3D restoration. CogniSeis also
recently released GeoStrat, a new application for performing sequence
stratigraphic interpretation. CogniSeis has initiated an integration data
strategy with VoxelGeo to rapidly display 3D information for interpretation and
quality control.
CogniSeis actively works with its customers in the direction of new software
development through user meetings around the world, an on-line system for
submission of suggestions, customer surveys, and through a consortium of major
oil companies who have participated in the direction of 3D geologic
applications.
31
CogniSeis evaluates and sells new hardware which it supports. Software is
ported to new platforms when it is perceived that there is strong customer
demand for such platforms. CogniSeis supports a variety of computer types
including vector computers (Cray, Convex) and workstations (IBM, Silicon
Graphics, Sun, Hewlett Packard).
With the advent of multi-CPU shared memory RISC systems, the implementation
of parallel processing has become a practical necessity. Processing throughput
of 8 to 12 times faster for a single job are now feasible on a number of
modestly priced Unix RISC servers. Increases in throughput of this magnitude
significantly decrease the time required to reach an interpretation and drilling
decision. CogniSeis has recently released software for processing seismic
information using several CPUs in a parallel fashion.
PRODUCT DEVELOPMENT
CogniSeis is committed to providing state of the art CAEX tools to its
customers which permit ease of exchange of information within CogniSeis product
lines as well as with products from other industry providers.
CogniSeis intends to concentrate an increasing portion of its development
resources toward further expansion of its 3D software products for geologic,
geophysical and visualization usage. Management believes that, in the future,
there will be an increased demand for seismic data acquired in a 3D fashion,
along with associated processing, visualization and interpretation, and that
this technology is fundamental to the proper management of existing hydrocarbon
reserves.
CogniSeis' main development center is at its Houston headquarters. Geologic
development is centered at the CogniSeis Boulder, Colorado offices. As of May
15, 1995, CogniSeis employed approximately 65 people in product development.
During the fiscal year ended July 31, 1994 CogniSeis expended approximately
$5,312,000 on research and development (net of $345,000 of capitalized software
development costs).
SOFTWARE MAINTENANCE / CUSTOMER SUPPORT
CogniSeis provides software maintenance, training and consulting services to
its customers. It believes that customer satisfaction is a primary determinant
of CogniSeis' success. CogniSeis maintains a core Customer Support Group in its
Houston headquarters which, together with support personnel in its other
offices, respond to customer inquiries. CogniSeis maintains an on-line Customer
Action Request system to monitor customer requests and problems, which can be
directly accessed by customers. Customer support is provided by telephone,
through modems and e-mail. CogniSeis periodically solicits feedback from its
customers and believes that there is a high level of satisfaction.
Software licenses are customarily sold with three or twelve month
warranties, the longer warranties being associated with Far East and South
American sales. At the expiration of warranty periods customers normally enter
into annual contracts for software updates and maintenance. Such contracts are
typically renewed from year to year. CogniSeis issues updates to its products on
a continuing basis.
In the fiscal year ended July 31, 1994, software maintenance, training and
consulting revenues approximated $4,384,000, representing 29% of total revenues.
MARKETING AND SALES
CogniSeis markets its products through a direct sales force located in
Houston, Crawley, England, Singapore and Beijing, China. Sales efforts are
assisted by agents in a number of foreign countries. Additionally, CogniSeis has
re-marketing arrangements with a few companies which provide for re-licensing of
CogniSeis' products.
32
COMPETITION
The market for CAEX systems and software is highly competitive. Many of
CogniSeis' existing and potential competitors have substantially greater
marketing, financial and technical resources than CogniSeis. Competitors include
oil and gas service companies and specialized software companies (primarily
Landmark Graphics Corporation). CogniSeis also experiences competition from
certain of the major oil and gas companies which use internally developed
software for their own processing. Internal development of CAEX systems may
continue.
CogniSeis believes that product functionality and performance, ease of use,
customer support, price, commitment to new product development and installed
base are principal competitive factors.
PATENTS, COPYRIGHTS, TRADEMARKS AND LICENSES
CogniSeis generally relies on license and non-disclosure agreements,
copyright and trademark laws, and technical measures to protect its rights in
its software products. All employees of CogniSeis are required to sign an
Invention and Secrecy Agreement that they will not disclose proprietary
CogniSeis information. Software licenses are licensed to specific computer
processing units and may provide for a specific number of active users.
CogniSeis has U.S. trademarks for CogniSeis Development, Inc., CogniSeis' 3D
block design logo, DISCO, Discovery, GeoSec, and GeoStat. CogniSeis uses trade
names CogniSeis and CSD.
CogniSeis has acquired licenses from third-party software vendors to sell
certain software applications developed by those vendors under revenue sharing
or fixed fee bases.
LEGAL PROCEEDINGS
CogniSeis filed suit against Titan Geophysical Services, Inc., individually
and D/B/A Titan Geophysical Resources, Inc., Titan Geophysical Resources, Rod
Kelly, John Brian O'Sullivan, Michael J. Ledger and Keith L. Thompson on March
17, 1995 for failure to pay for software and software maintenance. The
defendants filed a counterclaim for $100,000 plus unspecified damages on March
27, 1995 alleging that they had negligently been named as defendants in the
suit. CogniSeis believes the counterclaim is without merit.
EMPLOYEES
At May 15, 1995 CogniSeis had approximately 138 employees, including 118
professionals.
33
<PAGE>
COGNISEIS SELECTED FINANCIAL DATA
The following selected consolidated financial data should be read in
conjunction with the consolidated financial statements for CogniSeis and the
notes thereto and "Management's Discussion and Analysis of Financial Condition
and Results of Operations of CogniSeis" included elsewhere herein. The selected
consolidated financial data set forth below for each of the years in the
five-year period ended July 31, 1994 are derived from the audited consolidated
financial statements of CogniSeis. The CogniSeis consolidated financial
statements as of July 31, 1993 and 1994 and for each of the three years in the
period ended July 31, 1994, have been audited by Ernst & Young LLP, independent
auditors, and are included elsewhere in this Prospectus/Proxy Statement. The
selected consolidated financial data for the eight months ended March 31, 1995
and 1994 and as of March 31, 1995 and 1994 are derived from unaudited financial
statements of CogniSeis which in the opinion of management reflect all
adjustments, consisting only of normal recurring adjustments, necessary for a
fair statement of the results of the interim periods. Historical operating
results are not necessarily indicative of results that may be expected in any
future period.
(in thousands except per share amounts)
<TABLE>
<CAPTION>
EIGHT MONTHS
ENDED
YEAR ENDED JULY 31, MARCH 31,
---------------------------------------------------------- ----------------------
1990 1991 1992 1993 1994 1994 1995
---------- ---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
HISTORICAL STATEMENT OF OPERATIONS
DATA:
Sales................................ $ 17,054 $ 23,050 $ 23,741 $ 17,031 $ 15,194 $ 9,234 $ 10,300
Costs and expenses................... 17,041 20,506 21,540 18,246 16,299 10,757 10,904
---------- ---------- ---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes.. 13 2,544 2,201 (1,215) (1,105) (1,523) (604)
Provision for income taxes........... (185) 777 383 (756) (357) (586) 126
---------- ---------- ---------- ---------- ---------- ---------- ----------
Net income (loss).................... $ 198 $ 1,767 $ 1,818 $ (459) $ (748) $ (937) $ (730)
========== ========== ========== ========== ========== ========== ==========
Earnings (loss) per common share.. $ .08 $ .68 $ .69 $ (.51) $ (.44) $ (1.05) $ (.32)
========== ========== ========== ========== ========== ========== ==========
Cash dividends per common share...... $ 0 $ 0 $ 0 $ 0 $ 0 $ 0 $ 0
========== ========== ========== ========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
AT JULY 31, AT
---------------------------------------------------------- MARCH 31,
1990 1991 1992 1993 1994 1995
---------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
HISTORICAL BALANCE SHEET DATA:
Current assets....................... $ 5,154 $ 9,443 $ 10,285 $ 7,493 $ 6,824 $ 7,939
Current liabilities.................. 2,544 4,465 4,056 1,945 1,956 3,976
Working capital...................... 2,610 4,978 6,229 5,548 4,868 3,963
Property and equipment, net.......... 3,717 2,681 2,637 2,569 2,155 2,004
Long-term debt....................... 1,379 37 0 0 0 0
Total assets......................... 10,761 13,069 14,777 11,799 10,893 12,204
Total liabilities.................... 4,165 4,691 4,479 2,108 1,968 3,981
Stockholders' equity................. 6,596 8,378 10,298 9,691 8,925 8,223
</TABLE>
34
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF COGNISEIS
COMPARISON OF EIGHT MONTHS ENDED MARCH 31, 1995 AND MARCH 31, 1994
LIQUIDITY AND CAPITAL RESOURCES
Total capitalization was $8.2 million at March 31, 1995, reflecting 100%
common equity. This compares with a capitalization of $8.7 million at March 31,
1994, consisting entirely of common and preferred equity. During 1995 and 1994,
CogniSeis remained debt free while having a $4 million committed bank line of
credit available. The bank line currently provides for interest at prime plus 1%
and imposes certain borrowing base limitations. Given the level of liquid assets
and projected cash flows from operations, CogniSeis does not presently
anticipate the need for future borrowings in excess of such limitations.
CogniSeis' operating activities provided cash in the amount of $.8 million
for the eight months ended March 31, 1995, and used cash in the amount of $.8
million for the eight months ended March 31, 1994. After working capital, the
chief use of CogniSeis' funds has been capital expenditures. Total capital
expenditures for property and equipment were $.7 million for the eight months
ended March 31, 1995, and $.6 million for the eight months ended March 31, 1994.
RESULTS OF OPERATIONS
Total revenues of $10.3 million for the eight months ended March 31, 1995
increased $1.1 million from total revenues of $9.2 million for the eight months
ended March 31, 1994 due to increases in software sales, which increased to $5.0
million in the 1995 period from $3.9 million in the prior period. About $.4
million of the 1995 increase was due to sales of new third party software not
available for sale during the same period in 1994 (see " -- Other Financial
Information" below). Geophysical software sales and lease revenues increased 14%
for the eight months ended March 31, 1995 compared to the same period in 1994,
while geological software sales and lease revenues increased 28%. Hardware sales
and lease revenues were $.8 million for both periods. Contract service revenue
remained at $4.5 million for the eight-month period in both years, and includes
processing center revenues of $.5 million in 1995 and $.4 million in 1994.
Cost of sales and contract services increased $.2 million for the eight
months ended March 31, 1995 as compared to the same period in 1994. Third party
software costs increased to $.3 million in 1995 from $.2 million in 1994.
Research and development expenses decreased by $.8 million for the eight
months ended March 31, 1995 as compared to the same period in 1994, reflecting
sizable staff reductions and capitalization of $.3 million in software
development costs to conform to FASB Statement No. 86, "Accounting for the Costs
of Computer Software to be Sold, Leased or Otherwise Marketed" (see " -- Other
Financial Information" below). The monthly average number of employees engaged
in research and development activities dropped from 89 for the eight-month
period for 1994 to 65 for the same period in 1995.
Selling, general and administrative costs increased by $.7 million for the
eight-month period ended March 31, 1995 as compared to the same period in 1994,
due primarily to a provision for uncollectible accounts of $.4 million, and
expenses associated with an executive search and strategic planning of $.2
million.
OTHER FINANCIAL INFORMATION
Effective August 1, 1994, CogniSeis entered into an agreement with Vital
Images, Inc. to provide marketing and support for their voxel-based 3D imaging
software, VoxelGeo. CogniSeis became the exclusive worldwide distributor of
VoxelGeo, except in Australia. CogniSeis and Vital Images, Inc. share equally
all revenues derived from VoxelGeo sales and service.
35
Capitalized costs for internally developed software were $.3 million for the
eight months ended March 31, 1995 compared to $.2 million for the eight months
ended March 31, 1994.
COMPARISON OF FISCAL YEARS ENDED JULY 31, 1994 AND 1993
LIQUIDITY AND CAPITAL RESOURCES
Total capitalization was $8.9 million at July 31, 1994, consisting entirely
of common and preferred equity. This compares with a capitalization of $9.7
million at July 31, 1993, also consisting entirely of common and preferred
equity. During 1994 and 1993 CogniSeis remained debt free and had no advances
against the line of credit.
CogniSeis' operating activities provided cash in the amount of $.2 million
for the twelve months ended July 31, 1994, and used cash in the amount of $.1
million for the twelve months ended July 31, 1993. Total capital expenditures
for property and equipment were $.5 million for the twelve months ended July 31,
1994, and $1.0 million for the twelve months ended July 31, 1993.
RESULTS OF OPERATIONS
Total revenues of $15.2 million for fiscal 1994 decreased $1.8 million from
the fiscal 1993 total revenues of $17.0 million, principally reflecting a
downturn in foreign markets, offset partially by an increase in domestic sales.
Foreign hardware and software sales and leases of $5.7 million for fiscal 1994
decreased $2.4 million from the fiscal 1993 total of $8.1 million. Domestic
hardware and software sales and leases of $2.6 million for fiscal 1994 increased
$1.2 million from the fiscal 1993 total of $1.4 million. Hardware sales and
leases of $1.8 million for 1994 decreased $1.0 million from the 1993 total of
$2.8 million with a corresponding gross profit decrease of $.6 million. Software
sales and leases of $6.5 million in 1994 decreased $.2 million from the 1993
total of $6.7 million. Geological software sales and leases experienced a 25%
increase in 1994 over 1993 while geophysical software sales and leases dropped
11% due to the downturn in the foreign markets. Contract service revenue in 1994
of $6.9 million decreased $.6 million from the 1993 total of $7.5 million
primarily due to hardware maintenance contracts not being renewed. Processing
center revenues (included in contract service revenue) of $.7 million in 1994
increased $.2 million over the 1993 total of $.5 million as a new dedicated
center began operation in November 1993.
Cost of sales and contract services decreased $1.0 million in 1994 from 1993
due to decreases in hardware cost of sales of $.6 million coupled with a
decrease in expenses associated with contract hardware maintenance revenues of
$.5 million. Software cost of sales increased slightly in 1994 reflecting a
higher volume of third party software product sales. Third party software sales
are generally made subject to royalty arrangements with third party software
developers pursuant to which CogniSeis pays the developer a share of the
revenues generated from their products. Such royalty payments are accounted for
as a cost of sale.
Research and development expenses decreased by $.8 million in 1994 from 1993
reflecting staff reductions and capitalization of software development costs of
$.3 million to conform to FASB Statement No. 86, "Accounting for the Costs of
Computer Software to be Sold, Leased or Otherwise Marketed." Salaries and
benefits related to research and development decreased 9% in 1994 from 1993
levels. Decreased usage of consumable parts and supplies also contributed to
lower research and development costs.
Selling, general and administrative costs decreased by $.2 million from
fiscal 1993 due to the continuation of a cost containment program initiated in
fiscal 1993. Decreases in depreciation, travel and entertainment, taxes and
licenses and office supplies contributed to the overall decrease of selling,
general and administrative costs.
OTHER FINANCIAL INFORMATION
Effective with the beginning of fiscal year 1993, CogniSeis changed its
method of accounting for income taxes to the liability method as required by
Financial Accounting Standards Board Statement No. 109, "Accounting for Income
Taxes." Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are
36
expected to reverse. Deferred tax assets, net of valuation allowances, increased
in 1994 by $.4 million over 1993, while deferred tax liabilities increased $.2
million in 1994 over 1993. Deferred tax assets relate primarily to research and
development credit carryforwards. Deferred tax liabilities relate primarily to
fixed asset basis differences and capitalization of research and development
costs for book purposes.
In fiscal year 1994, CogniSeis capitalized research and development costs of
$.3 million on new processes and products. No amounts were capitalized in fiscal
1993.
COMPARISON OF FISCAL YEARS ENDED JULY 31, 1993 AND 1992
LIQUIDITY AND CAPITAL RESOURCES
Total capitalization was $9.7 million at July 31, 1993, reflecting 100%
common and preferred equity. This compares with a capitalization of $10.3
million at July 31, 1992, also reflecting 100% common and preferred equity. In
October 1992, CogniSeis elected to reduce its $5 million committed bank line of
credit, available at the prime rate, to $4 million. During fiscal 1993,
CogniSeis had no borrowings against the line of credit, while in fiscal 1992,
average monthly borrowings were $.3 million.
CogniSeis' operating activities used cash in the amount of $.1 million for
the twelve months ended July 31, 1993, and provided cash in the amount of $3.8
million for the twelve months ended July 31, 1992. Total capital expenditures
for property, plant and equipment were $1.0 million for the twelve months ended
July 31, 1993, and $1.2 million for the twelve months ended July 31, 1992.
RESULTS OF OPERATIONS
Total revenues of $17.0 million for fiscal 1993 decreased $6.7 million from
the fiscal 1992 total revenues of $23.7 million principally reflecting
significant decreases in hardware sales and leases due to the decrease in market
share of mainframe computers (Convex, DEC, etc.) and a shift toward the lower
cost workstations. Total hardware sales and leases of $2.8 million for fiscal
1993 decreased $4.5 million from the fiscal 1992 total of $7.3 million. Total
software sales and leases of $6.7 million for fiscal 1993 decreased $1.6 million
from the fiscal 1992 total of $8.3 million. Third party software sales and
leases decreased $1.9 million from $2.2 million in fiscal 1992 to $.3 million in
fiscal 1993 due to a reduction in third party sales arising in part from the
acquisition of a third party software provider (see " -- Other Financial
Information" below). Geophysical software sales and leases dropped 10% from 1992
to 1993 while geological software sales and leases fell 46% from 1992 to 1993.
Contract service revenue in 1993 of $7.5 million decreased $.7 million from the
1992 total of $8.2 million primarily due to hardware maintenance contracts not
being renewed. Processing center revenues of $.5 million in 1993 increased $.1
million over the 1992 total of $.4 million.
Cost of sales and contract services decreased $4.5 million in 1993 from 1992
due to decreases in hardware cost of sales of $2.6 million coupled with
decreased expenses associated with lower contract hardware maintenance revenues.
Third party software costs decreased to $.1 million in 1993 from $.9 million in
1992.
Research and development expenses increased by $1.2 million in 1993 from
1992 reflecting the additional costs incurred from the operations of GeoLogic
Systems, Inc. ("GLS"), which was acquired in April 1992 (see " -- Other
Financial Information" below).
Selling, general and administrative costs in 1993 decreased by $.2 million
from fiscal 1992 due to the beginning of a cost containment program initiated in
fiscal 1993. Decreases in depreciation, taxes and licenses and computer room
supplies contributed to the general decrease of selling, general and
administrative costs.
OTHER FINANCIAL INFORMATION
CogniSeis purchased all the outstanding stock of GLS, a Boulder, Colorado
software development company, in April 1992. Before the acquisition, CogniSeis
maintained an arrangement with GLS under which products developed by GLS were
exclusively marketed by CogniSeis. Operating costs related to the Boulder
operation amounted to $1.2 million in 1993 and $.2 million in 1992.
37
COMPARISON OF STOCKHOLDER RIGHTS
GENERAL
As a result of the Merger, holders of CogniSeis Common Stock will become
stockholders of Tech-Sym and the rights of such former CogniSeis stockholders
will thereafter be governed by the Tech-Sym's Articles of Incorporation (the
"Tech-Sym Charter"), Tech-Sym's Bylaws (the "Tech-Sym Bylaws") and the Nevada
General Corporation Law (the "NGCL"). The rights of the holders of CogniSeis
Common Stock are currently governed by the CogniSeis Charter, the bylaws of
CogniSeis (the "CogniSeis Bylaws") and the DGCL. The following summary, which
does not purport to be a complete statement of the general difference among the
rights of the stockholders of Tech-Sym and CogniSeis, sets forth certain
differences between NGCL and DGCL, between the Tech-Sym Charter and the
CogniSeis Charter and between the Tech-Sym Bylaws and the CogniSeis Bylaws. This
summary is qualified in its entirety by reference to the full text of each of
such documents, the NGCL and DGCL.
STOCKHOLDER RIGHTS PLAN
On June 1, 1988, the Board of Directors of Tech-Sym created and declared a
dividend of one Tech-Sym Right for each outstanding share of Tech-Sym Common
Stock. The dividend was paid on June 13, 1988 ("Rights Record Date") to the
stockholders of record on that date. Each Tech-Sym Right entitled the registered
holder to purchase from Tech-Sym one-half share of Tech-Sym Common Stock at a
price of $60 per whole share, subject to adjustment, following the occurrence of
certain events. The description and terms of the Tech-Sym Rights are set forth
in the Amended and Restated Rights Agreement dated as of June 1, 1988 ("Rights
Agreement") between the Company and Continental Stock Transfer and Trust
Company, as rights agent ("Rights Agent"). Each CogniSeis stockholder who
receives Tech-Sym Common Stock in connection with the Merger will also receive
associated Tech-Sym Rights.
Until the earlier of (i) ten days following the date ("Stock Acquisition
Date") of a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has become the beneficial owner of 20
percent or more of the outstanding Tech-Sym Common Stock and (ii) ten days
following the commencement of, or announcement of an intention to make, a tender
offer or exchange offer the consummation of which would result in the beneficial
ownership by a person or group of 30 percent or more of the outstanding Tech-Sym
Common Stock (the earlier of such dates, subject to extension upon Board
Approval as hereinafter defined, being called the "Distribution Date"), the
Tech-Sym Rights will be evidenced by certificates for Tech-Sym Common Stock.
"Board Approval" means the approval of a majority of the directors of
Tech-Sym, including a majority of the continuing directors, provided that at the
time of such approval there are at least three continuing directors and a
majority of the directors of Tech-Sym are "continuing directors."
The Rights Agreement provides that, until the Distribution Date, the Rights
will be transferred with and only with the Tech-Sym Common Stock. Until the
Distribution Date (or earlier redemption or expiration of the Tech-Sym Rights),
new Tech-Sym Common Stock certificates issued after the Rights Record Date, upon
transfer or new issuance of Tech-Sym Common Stock (including shares of Tech-Sym
Common Stock issued in connection with the Merger), will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for Tech-Sym Common Stock outstanding as of the Rights Record
Date, even without such notation, will also constitute the transfer of the
Tech-Sym Rights associated with Tech-Sym Common Stock represented by such
certificate. As soon as practicable following the Distribution Date, separate
certificates evidencing the Tech-Sym Rights ("Right Certificates") will be
mailed to holders of record of Tech-Sym Common Stock as of the close of business
on the Distribution Date, and such separate Right Certificates alone will
evidence Tech-Sym Rights.
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Tech-Sym Rights are not exercisable until the Distribution Date. Tech-Sym
Rights will expire on May 31, 1998 ("Expiration Date"), unless the Expiration
Date is extended or Tech-Sym Rights are earlier redeemed by Tech-Sym, in each
case as described below.
The Purchase Price payable, and the number of shares of Tech-Sym Common
Stock or other securities or property issuable, upon exercise of the Tech-Sym
Rights are subject to adjustment from time to time to prevent dilution (i) in
the event of a stock dividend on, or a subdivision, combination or
reclassification of, Tech-Sym Common Stock, (ii) upon the grant to holders of
Tech-Sym Common Stock of certain rights or warrants to subscribe for or purchase
shares of Tech-Sym Common Stock at a price, or securities convertible into
Tech-Sym Common Stock with a conversion price, less than the then current market
price of the Tech-Sym Common Stock or (iii) upon the distribution to holders of
Tech-Sym Common Stock of evidences of indebtedness or assets (excluding regular
periodic cash dividends paid out of earnings or retained earnings or dividends
payable in Tech-Sym Common Stock) or of subscription rights or warrants (other
than those referred to above).
If following a Stock Acquisition Date Tech-Sym is acquired in a merger or
other business combination transaction or 50 percent or more of its consolidated
assets or earning power are sold, proper provision will be made so that each
holder of a Tech-Sym Right will thereafter have the right to receive, upon the
exercise thereof at the then current exercise price of the Tech-Sym Right, the
number of shares of common stock of the acquiring company (or, in the event
there is more than one purchaser, the purchaser receiving the greatest portion
of the assets or earning power transferred) which at the time of such
transaction will have a market value (as defined in the Rights Agreement) of two
times the exercise price of the Tech-Sym Right ("Flip-Over Right").
If (i) Tech-Sym is the surviving corporation in a merger or other business
combination transactions and Tech-Sym Common Stock is not changed or exchanged,
(ii) a person becomes the beneficial owner of 25 percent or more of the
outstanding shares of Tech-Sym Common Stock (except pursuant to an all cash
tender offer for all outstanding shares of Tech-Sym Common Stock not owned by
such person, which offer remains open for a minimum of 50 days and pursuant to
such offer such person acquires beneficial ownership of 85 percent or more of
the outstanding shares of Tech-Sym Common Stock not owned by such person at the
time such offer is commenced) or (iii) an Acquiring Person engages in one of a
number of self-dealing transactions specified in the Rights Agreement or, under
certain circumstances, increases his beneficial ownership of Tech-Sym Common
Stock by one percent or more, proper provision shall be made so that each holder
of a Tech-Sym Right, other than the Acquiring Person and its affiliates and
associates and certain transferees of such persons whose Tech-Sym Rights will
thereafter be void), will for a 60-day period thereafter have the right to
receive upon exercise that number of shares of Tech-Sym Common Stock (or, under
certain circumstances, other securities or consideration of the Company) having
a market value (as defined in the Rights Agreement) equal to two times the
exercise price of the Tech-Sym Right ("Flip-In Right").
The holder of a Tech-Sym Right will continue to have the Flip-Over Right
whether or not such holder exercises the Flip-In Right.
With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least one
percent in such Purchase Price. Upon exercise of the Tech-Sym Rights, no
fractional shares of Tech-Sym Common Stock will be issued; cash will be paid in
lieu of fractional shares of Tech-Sym Common Stock.
At any time prior to the earlier to occur of (i) the tenth day after the
Stock Acquisition Date and (ii) the expiration of the Tech-Sym Rights, Tech-Sym
may, upon Board Approval, redeem the Tech-Sym Rights in whole, but not in part,
at a price of $0.50 per Tech-Sym Right ("Redemption Price"). The period for
redemption may, upon Board Approval, be extended for successive periods of ten
days commencing on the tenth day after the Stock Acquisition Date. Upon any
redemption of the Tech-Sym Rights described in this paragraph, the right to
exercise the Tech-Sym Rights will terminate, and the only right of the holders
of Tech-Sym Rights will be to receive the Redemption Price.
39
In addition, upon Board Approval, Tech-Sym may redeem the then outstanding
Tech-Sym Rights in whole, but not in part, at the Redemption Price, provided
that such redemption follows an event giving rise to, and the expiration of the
60-day exercise period for, the Flip-In Right, so long as the Acquisition Person
whose ownership gave rise to such Flip-In Event beneficially owns securities
having less than 20 percent of the voting power of the Tech-Sym voting
securities and there is not then any other Acquiring Person. Tech-Sym's rights
to redeem the Tech-Sym Rights would also be reinstated if an Acquiring Person
reduces his beneficial ownership to less than five percent of the then
outstanding voting securities in a transaction or series of transactions not
involving Tech-Sym. The redemption of Tech-Sym Rights described in this
paragraph will be effective only if the Flip-In Right is not then exercisable,
and in any event, only after ten business days prior notice.
The terms of the Tech-Sym Rights may be amended by Board Approval without
the consent of the holders of the Tech-Sym Rights at any time and from time to
time, provided that such amendment does not adversely affect the interests of
the holders of the Tech-Sym Rights. In addition, during any time that the
Tech-Sym Rights are subject to redemption, the terms of the Tech-Sym Rights may
be amended by Board Approval in any manner, including an amendment that
adversely affects the interests of the holders of the Tech-Sym Rights, without
the consent of the holders of Tech-Sym Rights; PROVIDED, HOWEVER, that no such
amendment may be made that changes the Purchase Price or the Redemption Price.
Until a Tech-Sym Right is exercised, the holder thereof, as such, will have
no rights as a stockholder of Tech-Sym, including, without limitation, the right
to vote or to receive dividends.
The form of Rights Agreement between Tech-Sym and the Rights Agent
specifying the terms of the Tech-Sym Rights is an exhibit to the Registration
Statement of which this Prospectus forms a part.
Because the Tech-Sym Rights will cause substantial dilution to any person or
group that attempts to acquire Tech-Sym without conditioning the offer on a
substantial number of Tech-Sym Rights being acquired, the rights have an
anti-takeover effect. The Tech-Sym Rights should not interfere with any merger
or other business combination approved by the Board of Directors of Tech-Sym
since the Board of Directors may, at its option, at any time prior to the
earlier to occur of (i) the tenth day after the Stock Acquisition Date and (ii)
the expiration of the Tech-Sym Rights, redeem all, but not less than all, the
then outstanding Tech-Sym Rights at $0.50 per Tech-Sym Right. The period for
redemption may, upon Board Approval, be extended for successive periods of
ten-days commencing on the tenth day after the Stock Acquisition Date.
CogniSeis does not have a stockholder rights plan.
NUMBER OF DIRECTORS; REMOVAL; FILLING VACANCIES
Under the NGCL, a director may be removed by the vote of the holders of not
less than 66 2/3% of the voting power of the shares entitled to vote, subject to
certain restrictions concerning cumulative voting. However, a Nevada corporation
may include in its articles of incorporation a provision requiring the approval
of a larger percentage of the stockholders to remove a director. Any vacancy in
the board of directors may be filled by a majority of the remaining directors,
though less than a quorum, even if the vacancy is due to an increase in the
number of directors.
The Tech-Sym Charter and Bylaws provide that the Board of Directors shall be
composed of not less than three nor more than 20 members elected annually by the
stockholders. The number of Directors may be increased or decreased by Whole
Board Approval (defined in the Tech-Sym Bylaws as the approval of the Board of
Directors by unanimous written consent or by a majority of the entire Board at a
meeting at which a quorum was present and acting throughout) within this limit.
Subject to any rights of Tech-Sym preferred stock, vacancies may be filled by
either an affirmative vote of a majority of the Board of Directors, although
less than a quorum, or an election at the next annual meeting or at a special
meeting of stockholders called for that purpose. A director elected to fill a
vacancy shall be elected for the unexpired term of his predecessor in office.
40
The Tech-Sym Charter and Bylaws do not permit cumulative voting and provide
that any director or directors, including the entire Board, may be removed for
cause by the affirmative votes of 66 2/3% of the shares of the Company entitled
to vote in the election of directors at any special meeting of stockholders
called expressly for that purpose; stockholders may not remove any director
without cause. The Board may not remove any director for or without cause, and
no recommendation by the Board that a director be removed for cause may be made
to the stockholders, except upon Whole Board Approval.
Under the DGCL, any director or the entire board of directors may be
removed, with or without cause, by the holders of a majority of the shares
entitled to vote at an election of directors, except (i) in the case of a
corporation having a classified board, stockholders may effect such removal only
for cause, unless the certificate of incorporation otherwise provides and (ii)
in the case of a corporation having cumulative voting, if less than the entire
board is to be removed, no director may be removed without cause if the votes
against his removal would be sufficient to elect him if then cumulatively voted
at an election of the entire board of directors, or if there be classes of
directors, at an election of the class of directors of which he is a part.
CogniSeis does not have a classified board or cumulative voting and the
CogniSeis Charter and Bylaws provide that, subject to any rights of CogniSeis
preferred stock, the Board of Directors shall consist of not less than five nor
more than seven members, the exact number of which shall be fixed from time to
time by holders of a majority of the outstanding shares entitled to vote in the
election of directors. Currently, the CogniSeis board consists of five members.
In the event of vacancies, a majority of the remaining directors may designate
the individual to fill such vacancies who will be approved by a majority of the
stockholders entitled to vote in the election of directors prior to their taking
office. Moreover, directors may be removed from office (i) with cause by the
affirmative vote of a majority of the stockholders of the class of shares
entitled to vote in the election of directors that originally elected such
director or (ii) without cause by (a) the affirmative vote of a majority of all
directors then in office at any regular or special meeting of the Board called
for that purpose or (b) the affirmative vote of the holders of a majority of the
voting power of the class of shares entitled to vote in the election of
directors that originally elected such director.
ACTION BY WRITTEN CONSENT; SPECIAL MEETINGS
The NGCL provides that meetings of stockholders may be held as provided in
the bylaws. The Tech-Sym Bylaws provide that an annual meeting of stockholders
shall be held in each year on the last Tuesday in April (unless that day is a
legal holiday, in which event the annual meeting will be held on the next
succeeding business day) for the election of directors and for the transaction
of such other business as may properly be brought before the meeting. The annual
meeting date, however, is subject to change (with certain limitations as
specified in the Tech-Sym Bylaws) by Whole Board Approval. The Tech-Sym Bylaws
also provide that unless otherwise prescribed by law or by the Tech-Sym Charter,
special meetings of the stockholders for any purpose may be called by (i) the
Chairman of the Board, if one shall be elected, (ii) the President, if a
Chairman of the Board is not elected, (iii) a majority of the Whole Board (a
majority of the entire Board at a meeting at which a quorum was present and
acting throughout) or (iv) the holders of record of at least a majority of all
of the shares entitled to vote at the special meeting. Moreover, business
transacted at all special meetings shall be confined to the purpose or purposes
stated in the notice of such meeting.
The NGCL also provides that, unless otherwise provided by the articles of
incorporation or the bylaws, an action may be authorized by the stockholders by
means of a written consent signed by the holders of a majority of the
corporation's outstanding voting stock. The Tech-Sym Bylaws state that any
action which may be taken at a meeting of the stockholders may be taken without
a meeting if a consent in writing, setting forth the action so taken, shall be
signed by stockholders holding at least a majority of the voting power entitled
to vote with respect to the subject matter thereof, except (i) to the extent
that any greater proportion of written consents is required and (ii) as
otherwise specifically provided by the NGCL.
41
The DGCL provides that an annual meeting of stockholders shall be held as
provided in the bylaws and special meetings of the stockholders may be called by
the board of directors or by such person or persons as may be authorized by the
certificate of incorporation or by the bylaws. The CogniSeis Bylaws provide that
special meetings of the stockholders may be called at the request in writing of
the Chairman or the President, a majority of the Board of Directors or at the
request in writing of stockholders owning a majority of the capital stock of the
CogniSeis issued and outstanding and entitled to vote. The CogniSeis Bylaws also
provide that any action required or permitted to be taken at any annual or
special meeting of stockholders of the corporation, may be taken without a
meeting, without prior notice and without a vote, if a consent in writing,
setting forth the action so taken, shall be signed by the holders of outstanding
stock having not less than the minimum number of votes that would be necessary
to authorize to take such action at a meeting at which all shares entitled to
vote thereon were present and voted.
ADVANCE NOTICE PROVISIONS FOR STOCKHOLDER NOMINATIONS AND STOCKHOLDER
PROPOSALS
The Tech-Sym Bylaws provide an advance notice procedure for stockholders to
make nominations of candidates for election as directors, or bring other
business before an annual meeting of stockholders, of Tech-Sym (the "Stockholder
Notice Procedure").
The Stockholder Notice Procedure provides that, subject to the rights of any
holders of Tech-Sym preferred stock, only persons who are nominated by Whole
Board Approval, or by any stockholder entitled to vote for the election of
directors who has given timely written notice to the Secretary of Tech-Sym prior
to the meeting at which directors are to be elected, will be eligible for
election as directors of Tech-Sym. The Stockholder Notice Procedure provides
that at an annual meeting only such business may be conducted as has been
brought before the meeting (i) by Whole Board Approval or (ii) by any
stockholder who has given timely written notice to the Secretary of Tech-Sym
prior to the meeting; PROVIDED, HOWEVER, that only such business shall be
conducted as the Board determines is a proper matter for stockholder vote. Under
the Stockholder Notice Procedure, to be timely, notice of stockholder
nominations or proposals to be made at an annual meeting must be received at
Tech-Sym's principal place of business not less than 30 days prior to the
meeting; PROVIDED, HOWEVER, that in the event that less than 40-days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be received not later
than the close of the business day on the tenth day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure made.
Under the Stockholder Notice Procedure, a stockholder's notice to Tech-Sym
proposing to nominate a person for election as a director must contain certain
information, including, without limitation, the identity and address of the
nominating stockholder, the class and number of shares of stock of Tech-Sym
which are owned by such stockholder and all information regarding the proposed
nominee that would be required to be included in a proxy statement soliciting
proxies for the proposed nominee together with evidence that the proposed
nominee is eligible for election as a director. Under the Stockholder Notice
Procedure, a stockholder's notice relating to the conduct of business other than
the nomination of directors must contain certain information about such business
and about the proposing stockholder, including, without limitation, a brief
description of the business the stockholder proposes to bring before the
meeting, the reasons for conducting such business at such meeting, the name and
address of such stockholder, the class and number of shares of stock of Tech-Sym
beneficially owned by such stockholder, and any material interest of such
stockholder in the business so proposed. If the Board determines that a person
was not nominated, or other business was not brought before the meeting, in
accordance with the Stockholder Notice Procedure, such person will not be
eligible for election as a director or such business will not be conducted at
such meeting, as the case may be.
By requiring advance notice of nominations by stockholders, the Stockholder
Notice Procedure affords the Tech-Sym Board an opportunity to consider the
qualifications of the proposed nominees and, to the extent deemed necessary or
desirable by the Tech-Sym Board, to inform stockholders
42
about such qualifications. By requiring advance notice of other proposed
business, the Stockholder Notice Procedure also provides a more orderly
procedure for conducting annual meetings of stockholders and, to the extent
deemed necessary or desirable by the Tech-Sym Board, provides the Tech-Sym Board
with an opportunity to inform stockholders, prior to such meetings, of any
business proposed to be conducted at such meetings, together with any
recommendations as to the Tech-Sym Board's position regarding action to be taken
with respect to such business, so that stockholders can better decide whether to
attend such a meeting or to grant a proxy regarding the disposition of any such
business.
The Tech-Sym Bylaws do not give the Tech-Sym Board any power to approve or
disapprove stockholder nominations for the election of directors. However, the
Tech-Sym Board may determine that a proposal for action is not a proper matter
for stockholder vote. The foregoing provisions may have the effect of (i)
precluding (a) a contest for the election of directors if the proper procedures
are not followed or (b) the consideration of stockholder proposals if the proper
procedures are not followed or the Board determines that the proposal is not a
proper matter for stockholder vote and (ii) of discouraging or deterring a third
party from conducting a solicitation of proxies to elect its own slate of
directors or to approve its own proposal, without regard to whether
consideration of such nominees or proposals might be harmful or beneficial to
Tech-Sym and its stockholders.
The CogniSeis Charter and Bylaws contains no provisions similar to the
Stockholder Notice Procedure.
PREFERRED STOCK
Pursuant to the Tech-Sym Charter, the Tech-Sym Board is authorized, subject
to the limitations prescribed by law, to provide for the issuance of shares of
Tech-Sym preferred stock in one or more series, to establish the number of
shares of each such series, and to fix the designations, powers, preferences and
rights of the shares of each such series, and any qualifications, limitations or
restrictions thereof. Tech-Sym has no preferred stock currently outstanding. The
CogniSeis Charter contains similar provisions.
Tech-Sym believes that the ability of the Tech-Sym Board to issue one or
more series of Tech-Sym preferred stock provides Tech-Sym with flexibility in
structuring possible future financing and acquisitions, and in meeting other
corporate needs that might arise. The authorized shares of Tech-Sym preferred
stock, as well as shares of Tech-Sym Common Stock, are available for issuance
without further action by Tech-Sym's stockholders, unless such action is
required by applicable law or the rules of any stock exchange or automated
quotation system on which Tech-Sym's securities may be listed or traded. The
NYSE currently requires stockholder approval as a prerequisite to listing shares
in several instances, including where the present or potential issuance of
shares could result in an increase of at least 20% in the number of shares of
common stock or in the amount of voting securities outstanding.
Although the Tech-Sym Board has no intention at the present time of doing
so, it could issue a series of Tech-Sym preferred stock that could, depending on
the terms of such series, impede the completion of a merger, tender offer or
other takeover attempt. The Tech-Sym Board will make any determination to issue
such shares based on its judgment as to the best interests of Tech-Sym and its
stockholders. The Tech-Sym Board, in so acting, could issue Tech-Sym Preferred
Stock having terms that could discourage an acquisition attempt through which an
acquirer may be able to change the composition of the Tech-Sym Board, including
a tender offer or other transaction that some, or a majority, of Tech-Sym's
stockholders might believe to be in their best interests or in which
stockholders might receive a premium for their stock over the then current
market price of such stock.
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AMENDMENT OF THE ARTICLES OF INCORPORATION AND BYLAWS
The NGCL requires most amendments to the articles of incorporation to be
approved by the board of directors, then by the vote of the holders of a
majority of outstanding securities entitled to vote, unless the articles of
incorporation require a greater percentage of votes. If an amendment would alter
any preferences or relative rights of a class or series of outstanding shares,
it must be approved by a majority of the outstanding shares of each class or
series so affected, regardless of limitations or restrictions on the voting
power thereof. The Tech-Sym Charter does not contain any provisions requiring a
greater percentage of votes for its amendment. The NGCL gives the board of
directors the power to amend bylaws, subject to any limitations contained in
bylaws adopted by the stockholders. The Tech-Sym Bylaws may be amended by either
Whole Board Approval or by the affirmative vote of not less than 50% of
Tech-Syms shares of capital stock outstanding and entitled to vote generally in
the election of directors.
Under the DGCL, an amendment to a corporation's certificate of incorporation
requires (i) the board of directors to adopt a resolution setting forth the
proposed amendment, declaring its advisability, and either calling a special
meeting or directing that the proposed amendment be considered at the next
annual meeting and (ii) the affirmative vote of the holders of the majority of
the outstanding stock of the corporation entitled to vote thereon and a majority
of the outstanding stock of each class entitled to vote thereon as a class,
unless the corporation's certificate of incorporation requires a higher
percentage. The CogniSeis Charter does not require a higher percentage. The
CogniSeis Bylaws may be amended by an affirmative vote of the holders of a
majority of the outstanding shares of CogniSeis' capital stock entitled to vote
in the election of directors.
BUSINESS COMBINATIONS
The NGCL prohibits certain business combinations between a corporation and
an "interested stockholder" (one beneficially holding, directly or indirectly,
at least ten percent of the outstanding voting stock) for five years after such
person became an interested stockholder unless such interested stockholder,
prior to becoming an interested stockholder, obtained the approval of the board
of directors of either the business combination or the transaction that resulted
in such person becoming an interested stockholder. Notwithstanding the
foregoing, NGCL permits business combinations that meet all requirements of the
corporations articles of incorporation and (i) are approved by the board of
directors before the interested stockholder became an interested stockholder (or
as to which the purchase of shares made by the interested stockholder had been
approved by the board of directors before the date of purchase), (ii) are
approved by the affirmative vote of the holders of stock representing a majority
of the voting stock (excluding voting stock of the interested stockholder and
its affiliates and associates) at a meeting called for such purpose no earlier
than five years after the interested stockholder became an interested
stockholder, or (iii) the form and amount of consideration to be received by
stockholders (excluding the interested stockholder) of the corporation satisfy
certain tests and, with limited exceptions, the interested stockholder has not
become the beneficial owner of additional voting shares of the corporation after
becoming an interested stockholder and before the business combination is
consummated. A corporation may expressly exclude itself from application of the
foregoing business combination provisions of the NGCL but Tech-Sym has not done
so.
Although Section 203 of the DGCL contains provisions analogous to those
described in the NGCL above, the analogous provisions do not apply to CogniSeis.
However, the CogniSeis Charter requires that 66 2/3% of the CogniSeis
stockholders approve a merger that requires a stockholder vote, including the
Merger.
LIMITATION OF LIABILITY OF DIRECTORS
Both the NGCL and the DGCL permit a corporation to include a provision in
its articles or certificate of incorporation eliminating or limiting the
personal liability of a director or officer to the
44
corporation or its stockholders for damages for breach of the directors
fiduciary duty, subject to certain limitations.
The Tech-Sym Charter provides that any person who may become a director or
officer of the corporation is relieved from any liability that might otherwise
exist from contracting with the corporation for the benefit of himself or any
firm, association or corporation in which he may be interested.
The CogniSeis Charter provides that a director will not be personally liable
to the corporation or any of its stockholders for monetary damages for breach of
fiduciary duty as a director, except for liability (i) for any breach of such
directors duty of loyalty to the corporation or its stockholders, (ii) for acts
or omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the DGCL, which concerns
unlawful payments of dividends, stock purchases or redemptions or (iv) for any
transaction from which such director derived any improper personal benefit.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Both the NGCL and the DGCL permit a corporation to indemnify officers,
directors, employees and agents for actions taken in good faith and in a manner
they reasonably believed to be in, or not opposed to, the best interests of the
corporation, and with respect to any criminal action, which they had no
reasonable cause to believe was unlawful. Both states' laws provide that a
corporation may advance expenses of defense (upon receipt of a written
undertaking to reimburse the corporation if indemnification is not appropriate)
and must reimburse a successful defendant for expenses, including attorney's
fees, actually and reasonably incurred, and both states permit a corporation to
purchase and maintain liability insurance for its directors and officers. Both
the NGCL and the DGCL provide that indemnification may not be made for any
claim, issue or matter as to which a person has been adjudged by a court of
competent jurisdiction, after exhaustion of all appeals therefrom, to be liable
to the corporation, unless and only to the extent a court determines that the
person is entitled to indemnity for such expenses as the court deems proper.
The Tech-Sym Bylaws and CogniSeis Bylaws provide that each person who is
involved in any actual or threatened action, suit or proceeding, whether civil,
criminal, administrative or investigative, by reason of the fact that he or she
is or was a director, officer, employee or agent of the corporation, or is or
was serving at the request of the corporation as a director, officer, employee
or agent of another corporation or of a partnership, joint venture, trust or
other enterprise, including service with respect to an employee benefit plan,
will be indemnified by the corporation to the full extent permitted by,
respectively, the NGCL and the DGCL, as the same exists or may hereafter be
amended or by other applicable laws then in effect. The indemnification rights
conferred by both bylaws are not exclusive of any other right to which a person
seeking indemnification may be entitled under any law, bylaw, agreement, vote of
stockholders or disinterested directors or otherwise.
Each of Tech-Sym and CogniSeis are authorized to purchase and maintain
insurance on behalf of its directors, officers, employees and agent.
Additionally, the Merger Agreement requires Tech-Sym and the Surviving
Corporation to indemnify present and former officers and directors of CogniSeis
against liabilities and costs for actions taken in such capacities to the same
extent provided in the CogniSeis Charter in effect prior to the Effective Time.
45
BENEFICIAL OWNERSHIP OF COGNISEIS COMMON STOCK
The following table sets forth certain information with respect to the
ownership of CogniSeis Common Stock as of May 15, 1995 by all persons who are
known to CogniSeis to be beneficial owners of 5% or more of the CogniSeis Common
Stock, each director or executive officer of CogniSeis and all directors and
executive officers of CogniSeis as a group. Unless otherwise indicated, the
beneficial owners have sole voting and investment power over the shares of
CogniSeis Common Stock set forth below.
BENEFICIAL OWNERSHIP OF
COGNISEIS COMMON STOCK
----------------------------
NUMBER OF PERCENTAGE OF
NAME SHARES CLASS
------------------------------------- --------- -------------
Patrick Poe(1)....................... 583,500 22.1%
2401 Portsmouth
Houston, Texas 77098
Marshall Turner(2)................... 325,000 12.3
220 Montgomery Street, Pent. 10
San Francisco, California 94104
Taylor & Turner...................... 249,000 9.4
220 Montgomery Street, Pent. 10
San Francisco, California 94104
David Hull(3)........................ 350,000 13.2
5 Post Oak Park, Suite 2650
Houston, Texas 77027
Criterion Venture Partners L.P....... 210,000 7.9
5 Post Oak Park, Suite 2650
Houston, Texas 77027
Criterion Venture Capital Partners
(Bermuda).......................... 140,000 5.3
5 Post Oak Park, Suite 2650
Houston, Texas 77027
Equus II Incorporated................ 225,000 8.5
2929 Allen Parkway, Suite 2500
Houston, Texas 77019
Edward W. Rose....................... 160,000 6.0
500 Cresent Court, Suite 250
Dallas, Texas 75201
Marshall Payne(4).................... 65,000 2.5
L.C. Lawyer.......................... -- --
Diana McSherry(1).................... 250,250 9.5
Ronald Warren........................ 32,500 1.2
All directors and executive officers
as a group (7 persons)............. 1,456,250 55.1
---------
(1) Includes 150,000 shares held by Patrick Poe and Diana McSherry as tenants in
common.
(2) Consists of the 249,000 shares held by Taylor & Turner and 76,000 shares
held by Rotan Mosle Technology Partners with respect to which Mr. Turner has
shared dispositive power and sole voting power.
(3) Consists of the 210,000 shares owned by Criterion Venture Capital Partners
L.P. and the 140,000 shares owned by Criterion Venture Capital Partners
(Bermuda).
(4) Includes 20,000 shares held by Scout Ventures with respect to which Mr.
Payne has shared dispositive and voting power.
LEGAL OPINIONS
Certain legal matters with respect to the securities offered hereby will be
passed upon for Tech-Sym by Andrews & Kurth L.L.P., Houston, Texas. Certain tax
consequences of the Merger will be passed upon for CogniSeis by Baker & Botts,
L.L.P., Houston, Texas.
46
EXPERTS
The consolidated financial statements of Tech-Sym incorporated by reference
in this Prospectus/Proxy Statement have been so incorporated in reliance upon
the report of Price Waterhouse LLP, independent accountants, given on the
authority of said firm as experts in accounting and auditing.
The consolidated financial statements of CogniSeis as of July 31, 1994 and
1993 and for each of the three fiscal years in the period ended July 31, 1994
included in this Prospectus/Proxy Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing.
47
INDEX TO FINANCIAL STATEMENTS
I. Audited Consolidated Financial Statements of CogniSeis Development, Inc.
Report of Independent Auditors .................................... F-2
Consolidated Balance Sheets as of July 31, 1994 and 1993 .......... F-3
Consolidated Statements of Operations for the Years Ended
July 31, 1994, 1993 and 1992 .................................... F-4
Consolidated Statements of Stockholders' Equity for the
Years Ended July 31, 1994, 1993 and 1992 ........................ F-5
Consolidated Statements of Cash Flows for the Years Ended
July 31, 1994, 1993 and 1992 .................................... F-6
Notes to Consolidated Financial Statements ........................ F-7
II. Unaudited Consolidated Financial Statements of CogniSeis
Development, Inc.
Consolidated Condensed Balance Sheets as of March 31, 1995
and July 31, 1994 ............................................... F-13
Consolidated Condensed Statements of Operations for the
Eight Months Ended March 31, 1995 and 1994 ......................
Consolidated Condensed Statements of Cash Flows for the
Eight Months Ended March 31, 1995 and 1994 ...................... F-15
Notes to Consolidated Financial Statements ........................ F-16
III. Unaudited Pro Forma Combined Financial Statements of Tech-Sym
Corporation and CogniSeis Development, Inc.
Unaudited Pro Forma Combined Financial Statements ................. F-17
Unaudited Pro Forma Combined Balance Sheet as of
March 31, 1995 .................................................. F-18
Unaudited Pro Forma Combined Statement of Income
for the Three Months Ended March 31, 1995
and 1994 ........................................................ F-19
Unaudited Pro Forma Combined Statement of Income for the
Years Ended December 31, 1994, 1993 and 1992 .................... F-21
Notes to Unaudited Pro Forma Combined Financial Statements ........ F-24
F-1
REPORT OF INDEPENDENT AUDITORS
Board of Directors
CogniSeis Development, Inc.
We have audited the accompanying consolidated balance sheets of CogniSeis
Development, Inc., as of July 31, 1994 and 1993, and the related consolidated
statements of operations, stockholders' equity, and cash flows for each of the
three years in the period ended July 31, 1994. These financial statements are
the responsibility of the Company' s management. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the consolidated financial position
of CogniSeis Development, Inc., at July 31, 1994 and 1993, and the
consolidated results of its operations and its cash flows for each of the
three years in the period ended July 31, 1994, in conformity with generally
accepted accounting principles.
ERNST & YOUNG LLP
Houston, Texas
September 9, 1994,
except as to Note 9 as to which the date is
May 19, 1995
F-2
<PAGE>
COGNISEIS DEVELOPMENT, INC.
CONSOLIDATED BALANCE SHEETS
JULY 31
-----------------------------
1994 1993
------------ ------------
ASSETS
Current assets:
Cash and cash equivalents (NOTE 7) ....... $ 1,338,747 $ 2,063,151
Accounts receivable (net of
allowance for doubtful accounts
of $44,923 and $81,235 in 1994
and 1993, respectively) (NOTE 4) ....... 3,853,012 3,853,915
Inventory (NOTE 4) ....................... 163,281 119,648
Prepaid expenses and other
assets ................................. 297,919 421,222
Income and franchise tax refunds
receivable (NOTE 6) .................... 564,106 669,032
Current portion of notes
receivable (NOTES 2 AND 4) ............. 607,107 366,115
------------ ------------
Total current assets ................. 6,824,172 7,493,083
Property and equipment:
Data processing equipment (NOTE 4) ....... 5,058,873 5,287,043
Computer boards .......................... 1,204,395 1,244,120
Furniture and fixtures ................... 1,409,311 1,208,789
------------ ------------
7,672,579 7,739,952
Less accumulated depreciation ............ (5,517,093) (5,171,103)
------------ ------------
2,155,486 2,568,849
Software development costs (net of
accumulated amortization of
$2,614,626 and $2,308,791 in 1994
and 1993, respectively) (NOTE 4) ........... 1,292,165 1,069,918
Long-term notes receivable (NOTES 2 AND 4) ... 454,465 243,936
Deferred charges and other assets ............ 167,001 422,963
------------ ------------
Total assets ......................... $ 10,893,289 $ 11,798,749
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable ......................... $ 152,930 $ 329,860
Accrued liabilities:
Compensation ......................... 41,338 66,418
Taxes other than income
taxes .............................. 75,725 43,272
Other ................................ 651,231 587,409
Unearned revenue ......................... 965,103 761,284
Income tax payable (NOTE 6) .............. 70,163 156,902
------------ ------------
Total current liabilities ............ 1,956,490 1,945,145
------------ ------------
Deferred federal income tax (NOTE 6) ......... 11,503 162,247
Commitments (NOTE 7)
Stockholders' equity (NOTE 5):
Preferred stock to be converted
to common stock:
Convertible, mandatory
redeemable preferred stock,
$.01 par value:
Authorized
shares -- 3,000,000
Issued and outstanding
shares -- Series
A -- 440,100 and
1,735,000 in 1994 and
1993, respectively
(redeemable at $440,100
and $1,735,000 in 1994
and 1993,
respectively) .................. 4,401 17,350
Common stock, $.001 par value:
Authorized
shares -- 5,000,000
Issued and outstanding
shares -- 2,172,427 and
855,139 in 1994 and 1993,
respectively ....................... 2,172 855
Capital in excess of par value ........... 2,341,976 2,347,957
Retained earnings ........................ 6,576,747 7,325,195
------------ ------------
Total stockholders' equity ........... 8,925,296 9,691,357
------------ ------------
Total liabilities and
stockholders' equity ............... $ 10,893,289 $ 11,798,749
============ ============
See accompanying notes.
F-3
<PAGE>
COGNISEIS DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
YEAR ENDED JULY 31
---------------------------------------------
1994 1993 1992
-------------- -------------- ------------
(RESTATED)
<S> <C> <C> <C>
Revenues:
Hardware and software sales...... $ 8,288,823 $ 9,522,666 $ 15,589,295
Contract services................ 6,905,389 7,508,155 8,152,088
-------------- -------------- ------------
15,194,212 17,030,821 23,741,383
Cost of sales and contract
services........................... 5,450,139 6,471,642 10,947,331
-------------- -------------- ------------
Gross profit......................... 9,744,073 10,559,179 12,794,052
Research and development costs....... 5,312,938 6,071,899 4,826,778
Selling, general, and administrative
expenses........................... 5,616,890 5,811,967 6,037,704
-------------- -------------- ------------
10,929,828 11,883,866 10,864,482
-------------- -------------- ------------
Income (loss) from operations........ (1,185,755) (1,324,687) 1,929,570
Other income and (expense):
Interest income.................. 117,589 153,212 235,281
Other income (expense)........... (36,751) (43,748) 36,287
-------------- -------------- ------------
80,838 109,464 271,568
-------------- -------------- ------------
Income (loss) before income taxes.... (1,104,917) (1,215,223) 2,201,138
Expense (benefit) for income taxes
(NOTE 6):
Current.......................... (205,725) (496,599) 438,300
Deferred......................... (150,744) (259,845) (55,432)
-------------- -------------- ------------
(356,469) (756,444) 382,868
-------------- -------------- ------------
Net income (loss).................... $ (748,448) $ (458,779) $ 1,818,270
============== ============== ============
Net income (loss) per share.......... $ (.44) $ (.51) $ .69
============== ============== ============
Shares used to compute net income
(loss) per share................... 1,688,801 894,328 2,620,188
</TABLE>
See accompanying notes.
F-4
<PAGE>
COGNISEIS DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
PREFERRED STOCK COMMON
SERIES A STOCK CAPITAL IN
-------------------------- --------------------- EXCESS OF RETAINED
SHARES AMOUNT SHARES AMOUNT PAR VALUE EARNINGS
------------- ----------- ------------ ------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance at July 31, 1991.. 1,745,000 $ 17,450 835,988 $ 836 $ 2,394,214 $ 5,965,704
Repurchases and retirement of
preferred and common stock....... (10,000) (100) (12,745) (13) (79,893) --
Issuance of common stock........... -- -- 68,499 69 181,929 --
Net income......................... -- -- -- -- -- 1,818,270
------------- ----------- ------------ ------- ------------- -------------
Balance at July 31, 1992.. 1,735,000 17,350 891,742 892 2,496,250 7,783,974
Repurchases and retirement of
common stock..................... -- -- (50,603) (51) (176,279) --
Issuance of common stock........... -- -- 14,000 14 27,986 --
Net loss........................... -- -- -- -- -- (458,779)
------------- ----------- ------------ ------- ------------- -------------
Balance at July 31, 1993.. 1,735,000 17,350 855,139 855 2,347,957 7,325,195
Conversion of preferred stock
to common stock
at par........................... (1,294,900) (12,949) 1,294,900 1,295 (8,953) --
Repurchases and retirement of
common stock..................... -- -- (12,612) (13) (59,993) --
Issuance of common stock........... -- -- 35,000 35 62,965 --
Net loss........................... -- -- -- -- -- (748,448)
------------- ----------- ------------ ------- ------------- -------------
Balance at July 31, 1994.. 440,100 $ 4,401 2,172,427 $ 2,172 $ 2,341,976 $ 6,576,747
============= =========== ============ ======== ============= =============
</TABLE>
TOTAL
STOCKHOLDERS'
EQUITY
-------------
Balance at July 31, 1991.. $ 8,378,204
Repurchases and retirement of
preferred and common stock....... (80,006)
Issuance of common stock........... 181,998
Net income......................... 1,818,270
-------------
Balance at July 31, 1992.. 10,298,466
Repurchases and retirement of
common stock..................... (176,330)
Issuance of common stock........... 28,000
Net loss........................... (458,779)
-------------
Balance at July 31, 1993.. 9,691,357
Conversion of preferred stock
to common stock
at par........................... (20,607)
Repurchases and retirement of
common stock..................... (60,006)
Issuance of common stock........... 63,000
Net loss........................... (748,448)
-------------
Balance at July 31, 1994.. $ 8,925,296
=============
See accompanying notes.
F-5
<PAGE>
COGNISEIS DEVELOPMENT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEAR ENDED JULY 31
-------------------------------------
1994 1993 1992
----------- ----------- -----------
(RESTATED)
OPERATING ACTIVITIES
Net income (loss).................... $ (748,448) $ (458,779) $ 1,818,270
Adjustments to reconcile net income
(loss) to net cash provided by
(used in) operating activities:
Depreciation..................... 899,729 1,007,257 1,166,336
Amortization..................... 305,835 400,578 491,736
Stock compensation expense....... 78,000 43,000 50,750
Deferred taxes................... (150,744) (259,845) (55,432)
Loss on disposal of property and
equipment...................... 42,338 97,535 109,680
Changes in assets and
liabilities:
Accounts receivable.......... 903 1,995,237 (302,993)
Inventory.................... (43,633) 10,832 99,650
Prepaid expenses and other
assets..................... 143,604 (221,458) 10,797
Income tax refund
receivable................. 104,926 (539,427) 97,681
Notes receivable............. (451,521) (98,883) 167,345
Accounts payable............. (176,930) (814,496) 109,188
Accrued liabilities.......... 71,195 (1,361,429) 527,619
Unearned revenue............. 203,819 469,013 (273,547)
Income tax payable........... (86,739) (403,870) (225,107)
----------- ----------- -----------
Net cash provided by (used in)
operating activities............... 192,334 (134,735) 3,791,973
INVESTING ACTIVITIES
Capital expenditures................. (528,704) (1,031,904) (1,231,970)
Additions to computer software and
deferred charges................... (438,082) (281,678) (125,730)
Proceeds from disposal of other
assets............................. 130,661 -- --
Acquisition of company............... -- -- (750,045)
----------- ----------- -----------
Net cash used in investing
activities......................... (836,125) (1,313,582) (2,107,745)
FINANCING ACTIVITIES
Principal payments on long-term
debt............................... -- -- (583,726)
Costs of preferred stock
conversion......................... (20,607) -- --
Repurchase and retirement of
preferred and common stock......... (60,006) (176,330) (80,006)
----------- ----------- -----------
Net cash used in financing
activities......................... (80,613) (176,330) (663,732)
----------- ----------- -----------
Net (decrease) increase in cash and
cash equivalents................... (724,404) (1,624,647) 1,020,496
Cash and cash equivalents at
beginning of year.................. 2,063,151 3,687,798 2,667,302
----------- ----------- -----------
Cash and cash equivalents at end of
year $ 1,338,747 $ 2,063,151 $ 3,687,798
=========== =========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Noncash investing activity:
Deferred charges transferred to
computer software.............. $ 90,000 $ -- $ --
=========== =========== ===========
Accounts receivable used to
acquire property and
equipment...................... $ -- $ -- $ 55,597
=========== =========== ===========
Noncash financing activity:
Issuance of common stock as part
of GLS acquisition............. $ -- $ -- $ 60,000
=========== =========== ===========
Deferred compensation for
unvested shares of common
stock.......................... $ -- $ -- $ 71,248
=========== =========== ===========
Issuance of common stock as
compensation expense........... $ 78,000 $ 43,000 $ --
=========== =========== ===========
Cash paid during the year for:
Interest......................... $ -- $ -- $ 62,694
=========== =========== ===========
Income taxes..................... $ -- $ 339,042 $ 626,541
=========== =========== ===========
See accompanying notes.
F-6
COGNISEIS DEVELOPMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JULY 31, 1994
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ORGANIZATION
CogniSeis Development, Inc. (the "Company") develops and markets seismic
processing and geologic interpretation systems consisting of proprietary
software installed on computers configured with specialized peripheral
equipment. The Company's primary customers are petroleum exploration and
service companies throughout the world.
PRINCIPLES OF CONSOLIDATION
The Company conducts operations through a home office in Houston, Texas, a
branch office in the United Kingdom, a representative office in Singapore, a
registered office in Beijing, China, and through a Canadian subsidiary. The
consolidated financial statements include the accounts of the Company and its
wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.
CASH AND CASH EQUIVALENTS
The Company considers all cash accounts and highly liquid investments
having original maturities of three months or less to be cash and cash
equivalents.
INVENTORY
Inventory consists of purchased computer equipment and parts held for sale
and is stated at the lower of cost or market calculated on the specific
identification method.
PROPERTY AND EQUIPMENT
Property and equipment are recorded at cost. Software purchased for
in-house use is recorded as property and equipment at cost. Depreciation is
computed on the straight-line method over an estimated useful life of five
years for data processing equipment, furniture and fixtures, and in-house
software, and six years for computer boards. Depreciation for tax reporting
purposes is computed using the Accelerated Cost Recovery System.
SOFTWARE DEVELOPMENT COSTS
Software development costs are amortized over the greater of five years
using the straight-line method or the projected revenues to be derived
therefrom. In the year ended July 31, 1994, the Company capitalized $345,000
in development costs in accordance with the requirements for capitalization
under Statement of Financial Accounting Standards No. 86, "Accounting for the
Costs of Computer Software to be Sold, Leased or Otherwise Marketed."
Amortization of capitalized software development costs for the years ended
July 31, 1994, 1993, and 1992 is $308,226, $400,578, and $367,264,
respectively, and is included in cost of sales.
DEFERRED CHARGES AND OTHER ASSETS
Deferred charges and other assets are primarily deposits and other prepaid
expenses that will be recognized when the events to which they relate occur.
REVENUE RECOGNITION
Generally, sales are recognized when equipment or software is shipped or
when services are performed. Revenue from maintenance contracts is recognized
as income over the life of the contract
F-7
COGNISEIS DEVELOPMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
using the straight-line method. Unearned revenue consists of payments received
in advance from customers.
PER SHARE INFORMATION
Income (loss) per share has been computed using the weighted-average
number of common and dilutive common equivalent shares outstanding during the
period. Dilutive common equivalent shares consist of the incremental shares
issuable upon conversion of the convertible preferred stock and common stock
equivalent shares from the exercise of stock options (using the treasury stock
method). Common Stock equivalent shares from stock options and convertible
preferred stock are excluded from the computations if their effect is
antidilutive.
2. NOTES RECEIVABLE
Notes receivable at July 31, 1994 and 1993 consist of amounts due from
customers for the sale of computer software. The notes bear interest primarily
at 10%, are secured by the computer software, and mature as follows:
1995 -- $607,107; 1996 -- $293,052; 1997 -- $154,545; and 1998 -- $6,868.
3. PENSION PLANS
The Company has a defined-benefit pension plan covering substantially all
United Kingdom employees. The benefits are based on years of service and
employee compensation. The Company's funding policy provides for a monthly
pension contribution based on a proportion of participants' salaries. The
assets of the plan are maintained in a diversified fund consisting of equity,
fixed income securities, and short-term investments.
The plan's funded status and amounts recognized in the Company's balance
sheets and statements of operations for the years ended July 31, 1994, 1993,
and 1992 are as follows:
<TABLE>
<CAPTION>
1994 1993 1992
------------- -------------- --------------
<S> <C> <C> <C>
Actuarial present value of:
Vested benefit obligation........ $ 850,542 $ 1,033,746 $ 984,686
============= ============== ==============
Accumulated benefit obligation... $ 866,558 $ 1,047,185 $ 986,616
============= ============== ==============
Projected benefit obligation......... $ (976,052) $ (1,123,591) $ (1,295,030)
Plan assets at fair value............ 1,233,540 1,226,271 1,225,357
------------- -------------- --------------
Projected benefit obligation less
than plan assets................... 257,488 102,680 (69,673)
Unrecognized net (gain) loss......... (166,320) (14,194) 189,719
------------- -------------- --------------
Prepaid pension cost included in
other assets....................... $ 91,168 $ 88,486 $ 120,046
============= ============== ==============
Net pension cost included the
following components:
Service cost-benefits earned
during the period.............. $ 48,582 $ 65,301 $ 62,422
Interest cost on projected
benefit obligation............. 89,250 103,831 106,731
Actual return on assets.......... (140,100) (315,405) 9,558
Net amortization and deferral.... 27,000 204,728 (127,263)
Members' contributions........... (22,050) (26,895) (30,267)
------------- -------------- --------------
Net pension cost..................... $ 2,682 $ 31,560 $ 21,181
============= ============== ==============
</TABLE>
The weighted-average discount rate and increase in future compensation
levels used in determining the actuarial present value of the projected
benefit obligation were 8% and 6%, respectively. The expected long-term rate
of return on assets was 9%, 10%, and 10.5% for 1994, 1993, and 1992,
F-8
COGNISEIS DEVELOPMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
respectively. Plan assets and liabilities are denoted in pounds sterling and
were converted into U.S. dollars at the rate of $1.54, $1.63, and $1.93 to
5/81 in 1994, 1993, and 1992, respectively.
Substantially all remaining employees are covered by a 401(k) plan. The
Company's contributions are determined by the Board of Directors. No
contributions were expensed for 1994 or 1993, respectively, and $52,000 was
expensed by the Company for 1992.
4. NOTE PAYABLE
The Company has a $4,000,000 line of credit which expires in October 1994.
Borrowings at any one time shall not exceed the lesser of 1) the borrowing
base (defined as 85% of eligible accounts receivable plus 50% of eligible
inventories plus 70% of the discounted value of eligible notes receivable) or
2) $4,000,000. Borrowings bear interest at the bank's prime rate. A commitment
fee is payable at the rate of 1/4% per annum on the unused line of credit and,
in addition, an up-front facility fee of $5,000 was paid. The agreement
requires the maintenance of several financial ratios which the Company met
during 1994, 1993, and 1992.
At July 31, 1994 and throughout the year then ended, the Company had no
borrowings outstanding under the $4,000,000 line of credit, and under the
terms of the line of credit, the Company had the entire balance available for
its use. This line is secured by accounts and notes receivable, certain
inventory, and computer hardware and software.
5. STOCKHOLDERS' EQUITY
The following shares of common stock are reserved for issuance at July 31:
1994 1993 1992
---------- ------------ ------------
Shares for issuance for grants to
directors, employees, and
consultants and for exercise of
options as determined from time to
time by the Board of Directors..... 52,472 82,360 45,757
Shares for conversion of Series A
preferred stock to
common............................. 440,100 1,735,000 1,735,000
---------- ------------ ------------
Total common shares reserved......... 492,572 1,817,360 1,780,757
========== ============ ============
Holders of Series A preferred stock vote share for share with common stock
shareholders and have the option to convert their stock into common shares at
any time prior to the mandatory redemption date of February 27, 1995. Upon the
sale of the Company's common stock in a public offering, at an offering price
of not less than $10 per share with total proceeds of not less than
$5,000,000, any such preferred shares then outstanding shall automatically be
converted. Conversion rights include antidilution provisions.
Series A preferred stock must be redeemed by the Company by paying $1.00
per share on the eighth anniversary (February 27, 1995) of the issuance of the
stock.
In the event of liquidation of the Company, preferred shareholders will be
entitled to receive $1.00 per share for Series A preferred stock then
outstanding prior to any distribution to the common shareholders.
6. INCOME TAXES
Effective August 1, 1992, the Company changed its method of accounting for
income taxes to the liability method required by FASB Statement No. 109,
"Accounting for Income Taxes." As permitted under the new rules, the prior
year's financial statements have been restated.
F-9
COGNISEIS DEVELOPMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
The July 31, 1992 Statement of Operations has been restated to reflect the
accounting of Statement 109. This restatement did not change previously
reported net income. Statement 109 requires that assets acquired in prior
business combinations be recorded at their gross amounts; therefore, the
acquisition of GLS (see Note 8) has been restated to reflect this change. The
increased amortization on the new valuation of the acquisition has also been
reflected in the restatement.
Under Statement 109, the liability method is used in accounting for income
taxes. Under this method, deferred tax assets and liabilities are determined
based on differences between financial reporting and tax bases of assets and
liabilities and are measured using the enacted tax rates and laws that will be
in effect when the differences are expected to reverse.
The Company's deferred tax asset relates primarily to research and
development credit carryforwards. The Company's deferred tax liability relates
primarily to fixed asset basis differences and capitalization of research and
development for book purposes.
The following is a summary of deferred tax assets and liabilities at July
31:
1994 1993
------------ ------------
Deferred tax assets:
R&D credit carryforward.......... $ 918,109 $ 422,373
Other............................ 88,182 --
------------ ------------
Total deferred tax assets............ 1,006,291 422,373
Valuation allowance.................. (441,553) (230,520)
------------ ------------
Net deferred tax assets.............. 564,738 191,853
Deferred tax liabilities:
Tax over book basis
differences.................... 349,154 326,082
Amortization..................... 48,352 19,050
Deductions for tax not for
book........................... 61,735 8,968
Capitalized software............. 117,000 --
------------ ------------
Total deferred tax liabilities....... 576,241 354,100
------------ ------------
Net deferred tax liabilities......... $ 11,503 $ 162,247
============ ============
During the years ended July 31, 1994 and 1993, the Company increased its
valuation allowance by $211,033 and $230,520 to offset the deferred tax asset
related primarily to the current year net operating loss.
Significant components of the provision for income taxes attributable to
continuing operations are as follows:
1994 1993 1992
------------ ------------ -----------
Current:
Federal.......................... $ (391,725) $ (839,599) $ 431,800
Foreign.......................... 186,000 343,000 6,500
------------ ------------ -----------
Total current........................ (205,725) (496,599) 438,300
Deferred:
Federal.......................... (150,744) (259,845) (55,432)
------------ ------------ -----------
Total deferred....................... (150,744) (259,845) (55,432)
------------ ------------ -----------
$ (356,469) $ (756,444) $ 382,868
============ ============ ===========
F-10
COGNISEIS DEVELOPMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
A reconciliation of effective income tax rate to the amounts calculated by
applying the federal statutory tax rate is as follows for the year ended July
31:
1994 1993 1992
--------- --------- ----
U.S. federal statutory income tax
rate............................... (34)% (34)% 34%
FSC tax benefit...................... (1) (5) (7)
Disallowed R&D expenses.............. 9 9 --
R&D credits.......................... (10) (36) (5)
Amortization of goodwill............. 8 5 --
Other................................ (4) (1) (5)
--- --- ----
Effective income tax rate............ (32)% (62)% 17%
==== === ====
At July 31, 1994, the Company has available R&D credit carryforwards of
approximately $918,000, all of which will expire starting in 1995 through
2000.
The Company is subject to both United States and foreign income taxes. The
current benefit for income taxes includes $186,000, $343,000 and $6,500 for
foreign income taxes for 1994, 1993, and 1992, respectively. In addition,
$7,000, $18,000, and $7,000 of the 1994, 1993, and 1992 current provision is
attributable to the income of the Company's foreign sales corporation
subsidiary.
7. COMMITMENTS
The Company leases certain real estate for its corporate offices as well
as certain equipment and automobiles under noncancelable lease agreements
which expire at various dates through 2011.
The aggregate minimum lease obligations under real estate, equipment, and
automobile noncancelable operating leases are as follows:
Year ending July 31
1995................................. $ 777,085
1996................................. 709,279
1997................................. 658,902
1998................................. 343,974
1999................................. 142,748
Thereafter........................... 1,494,396
-----------
$ 4,126,384
===========
Total rent expense for all operating leases for the years ended July 31,
1994, 1993, and 1992 was $903,320, $905,011, and $865,026, respectively.
The aggregate minimum rentals to be received under a noncancelable real
estate operating sublease and converted from pounds sterling to U.S. dollars
at the July 31, 1994 exchange rate of $1.54 to 5/81 are as follows:
Year ending July 31
1995................................. $ 47,184
Thereafter........................... $ --
---------
$ 47,184
=========
Total sublease rental income for the operating lease for the years ended
July 31, 1994, 1993, and 1992 was $70,771, $75,366, and $81,340, respectively.
The Company enters into forward contracts to manage the risks of changing
foreign exchange rates. These contracts represent commitments to purchase
foreign currency at a future date and at a
F-11
COGNISEIS DEVELOPMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
specified price. The gross contract amount represents the Company's maximum
commitment. Depending on cash flow needs for operations, the Company may close
out open positions prior to settlement. As of July 31, 1994, the gross
contract amount of forward contracts was $378,110.
As security for performance on certain bids and contracts, the Company is
contingently liable in the amount of $86,757, under various credit facilities
including standby letters of credit which will mature during the next year.
Certain of these facilities are secured by deposits aggregating $72,327.
8. ACQUISITION AND MERGER
On January 14, 1992, the Company agreed to purchase all of the outstanding
stock of GeoLogic Systems, Inc. ("GLS"), a software development company. On
April 27, 1992, those shares were acquired for $848,948, and GLS was merged
into the Company. Such merger was accounted for as a purchase and the purchase
price was primarily allocated to software development costs. The purchase
price of $848,948 consisted primarily of cash payments and the issuance of
7,500 shares of common stock with an $8 per share put option. The put is
exercisable for 30 days beginning 18 months from the date of the purchase
agreement (September 27, 1993). The put option was exercised on October 13,
1993.
9. SUBSEQUENT EVENT
In February 1995, 440,100 shares of preferred stock were converted to
common stock as required by the Company's Restated Certificate of
Incorporation.
In May 1995, the Company entered into an Agreement and Plan of Merger with
another company. The merger will be effected by the issuance of new shares by
the acquiring company in exchange for all of the capital stock of CogniSeis
Development, Inc., and is subject to the approval by the stockholders of the
Company. Each share of common stock of the Company issued and outstanding
immediately prior to the consummation of the merger will be converted into the
common stock of the acquiring company according to the formula stipulated in
the merger agreement.
F-12
COGNISEIS DEVELOPMENT, INC.
CONSOLIDATED CONDENSED BALANCE SHEETS
(UNAUDITED)
MARCH 31, JULY 31,
1995 1994
--------- ----------
(DOLLARS IN THOUSANDS)
ASSETS
Current Assets:
Cash and cash equivalents........ $ 1,483 $ 1,339
Accounts receivable, net......... 4,102 3,853
Inventory........................ 1,455 163
Current portion of notes
receivable..................... 490 607
Prepaid expenses and other
assets......................... 409 862
--------- ----------
Total current assets......... 7,939 6,824
Property and equipment, net.......... 2,004 2,156
Software development costs, net...... 1,326 1,292
Long-term notes receivable........... 758 454
Deferred charges and other assets.... 177 167
--------- ----------
Total assets................. $ 12,204 $ 10,893
========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable................. $ 1,547 $ 153
Unearned revenue................. 1,389 965
Income tax payable............... 85 70
Accrued liabilities.............. 955 768
--------- ----------
Total current liabilities.... 3,976 1,956
Other liabilities................ 5 0
Deferred federal income tax...... 0 12
--------- ----------
Total liabilities............ 3,981 1,968
Stockholders' equity:
Preferred stock to be converted
to common stock................ 0 4
Common stock..................... 3 2
Capital in excess of par value... 2,373 2,342
Retained earnings................ 5,847 6,577
--------- ----------
Total stockholders' equity... 8,223 8,925
--------- ----------
Total liabilities and
stockholders' equity....... $ 12,204 $ 10,893
========= ==========
See accompanying notes.
F-13
COGNISEIS DEVELOPMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(UNAUDITED)
EIGHT MONTHS ENDED
MARCH 31,
----------------------
1995 1994
---------- ----------
(DOLLARS IN THOUSANDS
EXCEPT PER SHARE DATA)
Revenues............................. $ 10,300 $ 9,234
Costs and expenses:
Cost of sales and contract
services....................... 3,546 3,347
Selling, general, and
administrative expenses........ 4,210 3,500
Research and development costs... 3,330 3,915
Interest and other income, net... (182) (5)
---------- ----------
10,904 10,757
---------- ----------
Loss before income taxes..... (604) (1,523)
Provision (benefit) for income
taxes.......................... 126 (586)
---------- ----------
Net loss..................... $ (730) $ (937)
========== ==========
Net loss per common share........ $ (0.32) $ (1.05)
========== ==========
Shares used to compute net loss
per share...................... 2,274 890
========== ==========
See accompanying notes.
F-14
COGNISEIS DEVELOPMENT, INC.
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
EIGHT MONTHS ENDED
MARCH 31,
--------------------
1995 1994
--------- ---------
(DOLLARS IN
THOUSANDS)
OPERATING ACTIVITIES
Net loss......................... $ (730) $ (937)
Adjustments to reconcile net loss
to net cash provided by (used
in) operating activities
Depreciation and
amortization............... 831 813
Changes in assets and
liabilities:
Accounts receivable.......... (249) (635)
Inventory.................... (1,292) (260)
Accounts payable............. 1,581 (162)
Unearned revenue............. 424 111
Income tax payable........... 15 (93)
Notes receivables............ (187) 74
Other........................ 420 288
--------- ---------
Net cash provided by (used in)
operating activities........... 813 (801)
INVESTING ACTIVITIES
Capital expenditures............. (714) (575)
Other investing activities....... 17 15
--------- ---------
Net cash used in investing
activities..................... (697) (560)
FINANCING ACTIVITIES
Repurchase of treasury stock..... -- (60)
Issuance of common stock......... 28 56
--------- ---------
Net cash provided by (used in)
financing activities........... 28 (4)
Net increase (decrease) in cash and
cash equivalents................... 144 (1,365)
Cash and cash equivalents at
beginning of period............ 1,339 2,063
--------- ---------
Cash and cash equivalalents at
end of period.................. $ 1,483 $ 698
========= =========
SUPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the year for:
Income taxes..................... $ 126 $ 72
========= =========
See accompanying notes.
F-15
COGNISEIS DEVELOPMENT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
1. The unaudited consolidated financial statements include the accounts
of CogniSeis Development, Inc. and its subsidiaries ("the Company") for the
eight-month periods ended March 31, 1995 and 1994 and should be read in
conjunction with the audited financial statements and the notes thereto for
the year ended July 31, 1994. In the opinion of management, all adjustments
(consisting of normal recurring accruals) necessary for a fair presentation of
these unaudited statements have been included. Such financial results,
however, should not be construed as necessarily indicative of future
operations.
2. Inventories are valued at the lower of cost or market. Cost is
determined on the first-in, first-out method. Inventory for resale
(principally computers, computer parts and peripherals) was $1,455,000 at
March 31, 1995.
3. At March 31, 1995, 19,972 shares of common stock were reserved and
were available for grant or for grants of options to directors, employees, and
consultants as determined from time to time by the Board of Directors.
In February 1995, 440,100 shares of preferred stock were converted to
common stock as required by the Company's Restated Certificate of
Incorporation.
4. The Company established a valuation allowance during the eight months
ended March 31, 1995 for 100% of net deferred tax assets. The Company has
incurred $126,000 and $72,000 of foreign taxes for the eight-month period
ended March 31, 1995 and 1994, respectively.
F-16
TECH-SYM AND COGNISEIS
UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
The following unaudited pro forma combined financial statements give
effect to the merger of Tech-Sym and CogniSeis to be accounted for as a
pooling of interests. The unaudited pro forma combined balance sheet presents
the combined financial position of Tech-Sym and CogniSeis as of March 31, 1995
assuming that the proposed merger had occurred as of March 31, 1995. Such pro
forma information is based upon the historical balance sheet data of Tech-Sym
and CogniSeis as of that date. The unaudited pro forma combined statements of
income give effect to the proposed merger of Tech-Sym and CogniSeis by
combining the unaudited historical results of operations of Tech-Sym for the
three years ended December 31, 1994 and for the three months ended March 31,
1994 and 1995 with the unaudited historical results of operations of CogniSeis
for the three years ended December 31, 1994 (restated from a July 31 fiscal
year basis) and the three months ended March 31, 1994 and 1995, respectively,
on a pooling of interests basis. These unaudited pro forma combined financial
statements should be read in conjunction with the historical financial
statements and notes thereto of Tech-Sym and CogniSeis incorporated by
reference or included elsewhere in this Prospectus/Proxy Statement.
F-17
<PAGE>
UNAUDITED PRO FORMA COMBINED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
AS OF MARCH 31, 1995
--------------------------------------------------
HISTORICAL
---------------------- PRO FORMA
TECH-SYM COGNISEIS ADJUSTMENTS COMBINED
--------- --------- ----------- ---------
<S> <C> <C> <C> <C>
Current assets:
Cash and cash equivalents........ $ 23,046 $ 1,483 -- $ 24,529
Marketable securities............ 255 0 -- 255
Accounts receivable, net......... 44,056 4,592 -- 48,648
Unbilled revenue................. 36,975 0 -- 36,975
Inventories...................... 47,268 1,455 -- 48,723
Other............................ 5,110 409 -- 5,519
--------- --------- ----- ---------
Total current assets......... 156,710 7,939 $ 0 164,649
Property, plant and equipment, net... 36,887 2,004 -- 38,891
Long-term receivables, net........... 9,428 758 -- 10,186
Goodwill and other assets............ 23,565 1,503 -- 25,068
--------- --------- ----- ---------
Total assets................. $ 226,590 $ 12,204 $ 0 $ 238,794
========= ========= ===== =========
Current liabilities:
Notes payable.................... $ 15,772 $ 0 -- $ 15,772
Current maturities of long-term
debt........................... 3,912 0 -- 3,912
Accounts payable................. 15,399 1,547 -- 16,946
Billings in excess of revenues... 6,256 1,389 -- 7,645
Taxes on income.................. 5,243 85 -- 5,328
Other accrued liabilities........ 19,413 955 -- 20,368
--------- --------- ----- ---------
Total current liabilities.... 65,995 3,976 $ 0 69,971
Long-term debt....................... 18,626 0 -- 18,626
Deferred income taxes................ 196 0 -- 196
Other liabilities and deferred
credits............................ 11,053 5 -- 11,058
--------- --------- ----- ---------
Total liabilities............ 95,870 3,981 0 99,851
--------- --------- ----- ---------
Shareholders' Investment:
Common stock, Tech-Sym
Corporation,
$.10 par value................. 706 -- 78 784
Common stock, CogniSeis
Development, Inc.,
$.001 par value................ -- 3 (3) 0
Additional capital............... 35,144 2,373 (75) 37,442
Accumulated earnings............. 106,619 5,847 -- 112,466
Cumulative translation
adjustments.................... (735) 0 -- (735)
Common stock held in treasury.... (11,014) 0 -- (11,014)
--------- --------- ----- ---------
Total shareholders'
investment................. 130,720 8,223 0 138,943
--------- --------- ----- ---------
Total liabilities and
shareholders' investment... $ 226,590 $ 12,204 $ 0 $ 238,794
========= ========= ===== =========
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.
F-18
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, 1995
--------------------------------------
HISTORICAL
----------------------- PRO FORMA
TECH-SYM COGNISEIS COMBINED
-------- --------- ---------
Sales................................ $ 53,812 $ 4,125 $ 57,937
Costs and expenses:
Cost of sales.................... 36,197 1,402 37,599
Selling, general and
administrative expenses........ 10,981 1,823 12,804
Company-sponsored product
development.................... 2,051 1,339 3,390
Interest expense................. 878 0 878
Interest and other income, net... (791) (65) (856 )
-------- --------- ---------
49,316 4,499 53,815
-------- --------- ---------
Income (loss) before taxes... 4,496 (374) 4,122
Provision for income taxes........... 1,400 75 1,475
-------- --------- ---------
Net income (loss)............ $ 3,096 $ (449) $ 2,647
======== ========= =========
Earnings (loss) per share............ $ 0.54 $ (0.19) $ 0.41
======== ========= =========
Cash dividends per share............. -- -- --
======== ========= =========
Average common and common equivalent
shares outstanding (See Note 4).... 5,755 2,387 6,521
======== ========= =========
See accompanying notes to unaudited pro forma combined financial statements.
F-19
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
THREE MONTHS ENDED MARCH 31, 1994
--------------------------------------
HISTORICAL
----------------------- PRO FORMA
TECH-SYM COGNISEIS COMBINED
-------- --------- ---------
Sales................................ $ 43,678 $ 3,877 $ 47,555
Costs and expenses:
Cost of sales.................... 27,853 1,234 29,087
Selling, general and
administrative expenses........ 9,588 1,217 10,805
Company-sponsored product
development.................... 1,718 1,515 3,233
Interest expense................. 661 0 661
Interest and other income, net... (380) 2 (378 )
-------- --------- ---------
39,440 3,968 43,408
-------- --------- ---------
Income (loss) before taxes... 4,238 (91) 4,147
Provision for income taxes........... 1,450 (63) 1,387
-------- --------- ---------
Net income (loss)............ $ 2,788 $ (28) $ 2,760
======== ========= =========
Earnings (loss) per share............ $ 0.48 $ (.03) $ 0.42
======== ========= =========
Cash dividends per share............. -- -- --
======== ========= =========
Average common and common equivalent
shares outstanding (See Note 4).... 5,760 892 6,531
======== ========= =========
See accompanying notes to unaudited pro forma combined financial statements.
F-20
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1994
---------------------------------------
HISTORICAL
------------------------ PRO FORMA
TECH-SYM COGNISEIS COMBINED
--------- --------- ---------
Sales................................ $ 197,593 $ 16,012 $ 213,605
Costs and expenses:
Cost of sales.................... 129,804 5,481 135,285
Selling, general and
administrative expenses........ 41,292 5,721 47,013
Company-sponsored product
development.................... 7,357 4,903 12,260
Interest expense................. 2,956 0 2,956
Interest and other income, net... (2,151) (191) (2,342)
--------- --------- ---------
179,258 15,914 195,172
--------- --------- ---------
Income (loss) before taxes... 18,335 98 18,433
Provision for income taxes........... 6,100 218 6,318
--------- --------- ---------
Net income (loss)............ $ 12,235 $ (120) $ 12,115
========= ========= =========
Earnings (loss) per share............ $ 2.12 $ (.06) $ 1.85
========= ========= =========
Cash dividends per share............. -- -- --
========= ========= =========
Average common and common equivalent
shares outstanding (See Note 4).... 5,760 1,975 6,536
========= ========= =========
See accompanying notes to unaudited pro forma combined financial statements.
F-21
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1993
---------------------------------------
HISTORICAL
------------------------ PRO FORMA
TECH-SYM COGNISEIS COMBINED
--------- --------- ---------
Sales................................ $ 184,310 $ 14,938 $ 199,248
Costs and expenses:
Cost of sales.................... 117,851 5,447 123,298
Selling, general and
administrative expenses........ 40,134 5,744 45,878
Company-sponsored product
development.................... 7,276 5,858 13,134
Interest expense................. 3,515 0 3,515
Interest and other income, net... (982) (78) (1,060)
--------- --------- ---------
167,794 16,971 184,765
--------- --------- ---------
Income (loss) before taxes... 16,516 (2,033) 14,483
Provision for income taxes........... 6,300 (1,066) 5,234
--------- --------- ---------
Net income (loss)............ $ 10,216 $ (967) $ 9,249
========= ========= =========
Earnings (loss) per share............ $ 1.80 $ (1.09) $ 1.44
========= ========= =========
Cash dividends per share............. -- -- --
========= ========= =========
Average common and common equivalent
shares outstanding (See Note 4).... 5,672 888 6,442
========= ========= =========
See accompanying notes to unaudited pro forma combined financial statements.
F-22
<PAGE>
UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
YEAR ENDED DECEMBER 31, 1992
---------------------------------------
HISTORICAL
------------------------ PRO FORMA
TECH-SYM COGNISEIS COMBINED
--------- --------- ---------
Sales................................ $ 179,649 $ 22,523 $ 202,172
Costs and expenses:
Cost of sales.................... 123,466 10,130 133,596
Selling, general and
administrative expenses........ 38,300 5,975 44,275
Company-sponsored product
development.................... 6,065 5,270 11,335
Interest expense................. 3,426 43 3,469
Interest and other income --
net............................ (1,727) (267) (1,994)
--------- --------- ---------
169,530 21,151 190,681
--------- --------- ---------
Income before taxes.......... 10,119 1,372 11,491
Provision for income taxes........... 3,700 252 3,952
--------- --------- ---------
Net income................... $ 6,419 $ 1,120 $ 7,539
========= ========= =========
Earnings per share................... $ 1.13 $ 0.42 $ 1.16
========= ========= =========
Cash dividends per share............. -- -- --
========= ========= =========
Average common and common equivalent
shares outstanding (See Note 4).... 5,697 2,640 6,472
========= ========= =========
See accompanying notes to unaudited pro forma combined financial statements.
F-23
NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS
NOTE 1 BASIS OF PRESENTATION
The Unaudited Pro Forma Combined Financial Statements include the
Unaudited Pro Forma Combined Balance Sheet at March 31, 1995 and the Unaudited
Pro Forma Combined Statements of Income for the three years ended December 31,
1994 and the three months ended March 31, 1995 and 1994 of Tech-Sym
Corporation and its subsidiaries ("Tech-Sym") and CogniSeis Development, Inc.
and its subsidiaries ("CogniSeis").
CogniSeis previously reported its financial results on a July 31 fiscal
year-end basis. In connection with the business combination, CogniSeis'
year-end will be changed to December 31. In addition to the adjustments made
to effect the change in fiscal years, certain pooling adjustments were made to
the Unaudited Pro Forma Combined Balance Sheet to give effect to the exchange
of shares (See Note 2 and Note 4). No adjustments were necessary to conform
the accounting principles of Tech-Sym and CogniSeis.
The Unaudited Pro Forma Combined Statements of Income may not necessarily
be indicative of the results which would actually have occurred if the
combination had been effected on the date indicated or which may result in the
future. The pro forma adjustments are based upon available information and
upon certain assumptions that management believe are reasonable under the
circumstances. The Unaudited Pro Forma Combined Financial Statements should be
read in conjunction with the financial statements of Tech-Sym included in its
1994 Annual Report on Form 10-K and its March 31, 1995 Quarterly Report on
Form 10-Q, which are incorporated by reference in this Prospectus/Proxy
Statement, and the financial statements of CogniSeis included elsewhere
herein.
NOTE 2 PRO FORMA ADJUSTMENT TO THE COMBINED BALANCE SHEET AND
COMBINED STATEMENT OF INCOME
The Unaudited Pro Forma Combined Balance Sheet gives effect to the
proposed merger of Tech-Sym and CogniSeis by combining the respective balance
sheets of the two entities at March 31, 1995 on a pooling of interests basis.
The capital accounts have been adjusted to reflect the issuance of 776,699
shares of common stock of Tech-Sym in exchange for all of the outstanding
shares of CogniSeis (see Note 4). The excess of the par value of Tech-Sym
shares received in exchange over the par value of CogniSeis shares, in the
amount of $75,000, has been charged to additional capital.
The Unaudited Pro Forma Combined Statements of Income give effect to the
proposed merger of Tech-Sym and CogniSeis by combining the respective income
statements of the two entities for the three years ended December 31, 1994 and
the three months ended March 31, 1995 and 1994. There are no pro forma
adjustments necessary to the Unaudited Pro Forma Combined Statements of
Income.
NOTE 3 NON-RECURRING COSTS
The combined company expects to incur accounting, legal and other costs
relating to the business combination of approximately $400,000, which amounts
will be charged to expense. No effect has been given to these non-recurring
costs in the Unaudited Pro Forma Combined Financial Statements.
NOTE 4 PRO FORMA EARNINGS PER SHARE
Earnings (loss) per share amounts are based on the average number of
common and common equivalent shares outstanding of the combined companies.
Average common and equivalent shares outstanding for CogniSeis do not include
anti-dilutive common stock equivalents (related to convertible preferred
stock). Pro forma combined shares give effect to the conversion of each
CogniSeis common share into .2936 Tech-Sym common shares (assumed based upon a
price per share of Tech-Sym Common Stock of $25.75, the closing price on May
10, 1995) and assume that Tech-Sym shares were issued for the CogniSeis
convertible preferred stock outstanding during the periods, which on a
combined basis is no longer anti-dilutive. The average number of anti-dilutive
CogniSeis convertible preferred shares outstanding for each of the periods
presented were: 222,000 and 1,735,000 for the three months ended March 31,
1995 and 1994, respectively and 667,000 and 1,735,000 for the years ended
December 31, 1994 and 1993 respectively.
F-24
APPENDIX A
AGREEMENT AND PLAN OF MERGER
DATED AS OF
MAY 11, 1995
AMONG
COGNISEIS DEVELOPMENT, INC.,
TECH-SYM CORPORATION
AND CSD MERGER, INC.
<PAGE>
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER, dated as of May 11, 1995 (the
"Agreement"), by and among CogniSeis Development, Inc., a Delaware corporation
(the "Company"), Tech-Sym Corporation, a Nevada corporation ("Tech-Sym"), and
CSD Merger, Inc., a Delaware corporation and a wholly-owned subsidiary of
Tech-Sym ("Newco"). The Company and Newco are sometimes herein collectively
referred to as the "Constituent Corporations."
WHEREAS, the boards of directors of the Company, Tech-Sym and Newco
deem it advisable and in the best interests of the stockholders of such
corporations to effect a merger of Newco and the Company (the "Merger") pursuant
to the terms of this Agreement; and
WHEREAS, the boards of directors of the Company, Tech-Sym and Newco
have approved the transactions provided for in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants, representations, warranties and agreements herein contained, the
parties hereto agree as follows:
ARTICLE ONE
THE MERGER
SECTION 1.01 THE MERGER. Upon the terms and subject to the conditions
hereof, and in accordance with the provisions of the Delaware General
Corporation Law (the "DGCL"), Newco shall be merged with and into the Company on
the date of the Closing (as defined below) or as soon as practicable thereafter.
Following the Merger, the separate existence of Newco shall cease, and the
Company shall continue as the surviving corporation in the Merger (the
"Surviving Corporation").
SECTION 1.02 EFFECT OF THE MERGER. The Merger shall have the effects
set forth in the DGCL and particularly Section 259 of the DGCL.
SECTION 1.03 RESTATED CERTIFICATE OF INCORPORATION AND BYLAWS OF THE
SURVIVING CORPORATION. At the Effective Time (as defined below) and without any
further action on the part of the Constituent Corporations, the Restated
Certificate of Incorporation and the Bylaws of the Company shall be the
Certificate of Incorporation and the Bylaws of the Surviving Corporation and
thereafter may be amended or repealed in accordance with their terms and as
provided by law.
SECTION 1.04 BOARDS OF DIRECTORS AND OFFICERS OF THE SURVIVING
CORPORATION. At the Effective Time, the directors of Newco immediately prior to
the Effective Time shall be the directors of the Surviving Corporation and the
persons set forth on Exhibit 1.04 hereto shall be the officers of the Surviving
Corporation in the offices set forth next to their names. Each of such directors
and officers shall hold office in accordance with the Restated Certificate of
Incorporation and Bylaws of the Surviving Corporation.
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SECTION 1.05 EFFECTIVE TIME OF THE MERGER. As part of the Closing, the
Constituent Corporations will cause a certificate of merger (the "Merger
Certificate") to be duly filed with the Secretary of State of the State of
Delaware. The Merger shall become effective upon the filing of the Merger
Certificate with the Secretary of State of the State of Delaware in accordance
with the requirements of the DGCL (the time of completion of such filing being
the "Effective Time").
SECTION 1.06 SUPPLEMENTARY ACTION. If at any time after the Effective
Time, any further assignments or assurances in law or any other things are
necessary or desirable to vest or to perfect or confirm of record or otherwise
in the Surviving Corporation the title to any property or rights of either of
the Constituent Corporations or to carry out the provisions of this Agreement,
the officers and directors of the Surviving Corporation are hereby authorized
and empowered on behalf of the respective Constituent Corporations, in the name
of and on behalf of the appropriate Constituent Corporation, to execute and
deliver any and all things necessary or proper to vest or to perfect or confirm
title to such property or rights in the Surviving Corporation, and otherwise to
carry out the purposes and provisions of this Agreement.
ARTICLE TWO
CONVERSION OF SHARES
SECTION 2.01 MERGER CONSIDERATION. As of the Effective Time, by virtue
of the Merger and without any action on the part of any holder of shares of
common stock, par value $0.001 per share, of the Company ("Company Common
Stock") or shares of capital stock of Newco:
(a) All shares of Company Common Stock which are held in the treasury
of the Company or by any wholly-owned subsidiary of the Company and any
shares of Company Common Stock owned by Tech-Sym or any wholly-owned
subsidiary of Tech-Sym shall be cancelled.
(b) Subject to the provisions of Section 2.03 hereof, at the Effective
Time each share of Company Common Stock outstanding immediately prior to
the Effective Time (other than shares to be cancelled pursuant to Section
2.01(a)) shall be converted into the right to receive (i) such portion of a
share of common stock, par value $0.01 per share, of Tech-Sym (each full
share herein referred to as a "Share") as is determined by dividing (A)
$20,000,000 by (B) the Share Market Value (as defined below) and by
dividing such quotient by (C) the total number of shares of Company Common
Stock outstanding immediately prior to the Effective Time (other than
shares to be cancelled pursuant to Section 2.01(a)) and (ii) a
corresponding portion of a Tech-Sym Right (as defined below) (such portion
of a Share and portion of a Tech-Sym Right to be hereinafter referred to as
the "Merger Consideration"). "Share Market Value" means the average of the
closing sales price of the Shares on the New York Stock Exchange Composite
Tape, as reported by THE WALL STREET JOURNAL (Southwest Edition) for the
fifteen (15) Trading Days (as defined below) prior to the five (5) Trading
Days immediately preceding the date of the Effective Time; provided that,
in the event that the foregoing computation results in a value of less than
$20.75, then the Share Market Value shall be $20.75 and in the event the
foregoing computation results in a value of more than $30.75, then the
Share Market Value shall be $30.75. As used herein, "Trading Day" means any
day on which the New York Stock Exchange, Inc. ("NYSE") is open for
business. A "Tech-Sym Right" means a right to purchase one-half of a share
of Tech-Sym
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Common Stock, subject to adjustment and subject to the terms
and conditions of the Amended and Restated Rights Agreement, dated as of
June 1, 1988, between Tech-Sym and Continental Stock Transfer & Trust
Company.
(c) At the Effective Time, all issued and outstanding shares of
capital stock of Newco immediately prior to the Effective Time shall be
converted into and become an aggregate of 1,000 fully paid and
nonassessable shares of common stock, par value $0.001 per share, of the
Surviving Corporation, which shall constitute all the issued and
outstanding capital stock of the Surviving Corporation.
(d) If, after the date hereof and prior to the Effective Time,
Tech-Sym shall declare or pay to its stockholders of record as of a date
after the date hereof and prior to the Effective Time, a stock dividend
upon the Shares, or subdivide, split up, reclassify or combine the Shares,
or make any other distribution of securities or property in respect of the
Shares, or otherwise effect any capital reorganization, then an appropriate
adjustment shall be made to the Merger Consideration.
SECTION 2.02 EXCHANGE OF CERTIFICATES. (a) EXCHANGE PROCEDURES. As
soon as reasonably practicable after the Effective Time, Continental Stock
Transfer & Trust Company, as exchange agent (the "Exchange Agent"), shall mail
to each holder of record of a certificate or certificates which, immediately
prior to the Effective Time, represented outstanding shares of Company Common
Stock (the "Certificates"), which holder's shares of Company Common Stock were
converted into the right to receive Shares pursuant to Section 2.01: (i) a
letter of transmittal (which shall specify that delivery shall be effected and
risk of loss and title to the Certificates shall pass only upon delivery of the
Certificates to the Exchange Agent); and (ii) instructions for use in effecting
the surrender of the Certificates in exchange for certificates representing
Shares. Upon surrender of a Certificate for cancellation to the Exchange Agent,
together with such letter of transmittal, duly executed, and any other required
documents, the holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole Shares which
such holder has the right to receive pursuant to the provisions of this Article
II and cash in lieu of fractional Shares as contemplated by Section 2.02(e),
subject to the provisions of Section 2.02(b) below, and the Certificate so
surrendered shall forthwith be canceled. In the event of a transfer of ownership
of Company Common Stock which is not registered in the transfer records of the
Company, a certificate representing the proper number of Shares may be issued to
a transferee, subject to the provisions of Section 2.02(b) below, if the
Certificate representing such Company Common Stock is presented to the Exchange
Agent, accompanied by all documents required to evidence and effect such
transfer and by evidence that any applicable stock transfer taxes have been
paid. Until surrendered as contemplated by this Section 2.02, each Certificate
shall be deemed at any time after the Effective Time to represent only the right
to receive Merger Consideration upon such surrender.
(b) ESCROW. As security for the payment of Indemnifiable Damages (as
defined in Section 7.01 hereof) and Claims Defense Expenses (as defined in
Section 7.01 hereof), stock certificates for Shares representing eight and
one-half percent (8 1/2%) of the Merger Consideration issuable to each holder of
Certificates shall be retained by Continental Stock Transfer & Trust Company, in
its capacity as escrow agent ("Escrow Agent") pursuant to the terms of an escrow
agreement to be entered into by and among Tech-Sym, the Escrow Agent and one
person designated by the Company prior to the Effective Time (or if the Board of
Directors of the Company does not designate a person prior to the Effective
Time, a Stockholder designated by Tech-Sym), as representative of
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the stockholders (the "Stockholders' Representative") in the form attached
hereto as Exhibit 2.02 (the "Escrow Agreement"). The Shares represented by the
stock certificates to be held by the Escrow Agent are collectively referred to
herein as the "Escrow Shares".
(c) DISTRIBUTIONS WITH RESPECT TO UNEXCHANGED SHARES. No dividends or
other distributions declared or made after the Effective Time with respect to
Shares with a record date after the Effective Time shall be paid to the holder
of any unsurrendered Certificate with respect to the Shares represented thereby
until the holder of record of such Certificate shall surrender such Certificate.
Subject to the effect of applicable laws, following surrender of any such
Certificate in exchange for Merger Consideration, there shall be paid to the
record holder of the certificates representing whole Shares issued in exchange
therefor, without interest, (i) at the time of such surrender, the amount of
dividends or other distributions with a record date after the Effective Time
theretofore paid with respect to such whole Shares, and (ii) at the appropriate
payment date, the amount of dividends or other distributions with a record date
after the Effective Time but prior to surrender and a payment date subsequent to
surrender payable with respect to such whole Shares. No holder of an
unsurrendered Certificate shall be entitled, until the surrender of such
Certificate in exchange for Share Consideration, to vote the Shares into which
his Company Common Stock shall have been converted.
(d) NO FURTHER OWNERSHIP RIGHTS IN COMPANY COMMON STOCK. At and after
the Effective Time, the holders of Certificates to be exchanged for Merger
Consideration pursuant to this Agreement shall cease to have any rights as
stockholders of the Company, except for the right to surrender such holder's
Certificates in exchange for Shares, and after the Effective Time no transfer of
shares shall be made on the stock transfer books of the Company. Any
Certificates presented after the Effective Time to the Exchange Agent for
transfer shall be cancelled and exchanged for Merger Consideration as provided
in this Article Two.
(e) NO FRACTIONAL SHARES. No certificates or scrip representing
fractional Shares shall be issued upon the surrender for exchange of
Certificates pursuant to this Article II, and, except as provided in this
Section 2.02(e), no dividend or other distribution, stock split or interest
shall relate to any such fractional security, and such fractional interests
shall not entitle the owner thereof to vote or to any rights of a security
holder of Tech-Sym. In lieu of any fractional security, each holder of shares of
Company Common Stock who would otherwise have been entitled to a fraction of a
Share upon surrender of Certificates for exchange pursuant to this Article II
will be paid an amount in cash (without interest) equal to such holder's
proportionate interest in the sum of (i) the net proceeds from the sale or sales
by the Exchange Agent in accordance with the provisions of this Section 2.02(e),
on behalf of all such holders, of the aggregate fractional Shares issued
pursuant to this Article II and (ii) the aggregate dividends or other
distributions that are payable with respect to such Shares pursuant to Section
2.02(c) (such dividends and distributions being herein called the "Fractional
Dividends"). As soon as practicable following the Effective Time, the Exchange
Agent shall determine the excess of (x) the number of full Shares issuable
pursuant to Section 2.02(a) over (y) the aggregate number of full Shares to be
distributed to holders of Company Common Stock pursuant to Section 2.02(a) (such
excess being herein called the "Excess Securities"), and the Exchange Agent, as
agent for the former holders of Company Common Stock, shall sell the Excess
Securities at the prevailing prices on the NYSE. The sale of the Excess
Securities by the Exchange Agent shall be executed on the NYSE through one or
more member firms of the NYSE. Tech-Sym shall pay all commissions, transfer
taxes and other out-of-pocket transaction costs, including the expenses and
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compensation of the Exchange Agent, incurred in connection with such sale of
Excess Securities. Until the net proceeds of such sale of Excess Securities and
the Fractional Dividends have been distributed to the former stockholders of the
Company, the Exchange Agent will hold such proceeds and dividends in trust for
such former stockholders. As soon as practicable after the determination of the
amount of cash to be paid to former stockholders of the Company in lieu of any
fractional interests, the Exchange Agent shall make available in accordance with
this Agreement such amounts to such former stockholders.
SECTION 2.03 DISSENTING SHARES. Notwithstanding anything in this
Agreement to the contrary, shares of the Company which immediately prior to the
Effective Time are held by stockholders who have properly exercised and
perfected dissenters' rights under Section 262 of the DGCL (the "Dissenting
Shares") shall not be converted into the right to receive Merger Consideration
as provided in Section 2.01 hereof, but the holders of Dissenting Shares shall
be entitled to receive such consideration as shall be determined pursuant to
Section 262 of the DGCL; PROVIDED, HOWEVER, that, if any such holder shall have
failed to perfect or shall withdraw or lose his dissenters' rights under the
DGCL, such holder's shares (i) shall thereupon be deemed to have been converted
as of the Effective Time into the right to receive the Merger Consideration,
without any dividends or interest thereon, as provided in Section 2.01, (ii)
shall thereupon be subject to the provisions of Section 2.02 and (iii) shall
thereupon no longer be Dissenting Shares.
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to Tech-Sym and Newco that:
SECTION 3.01 CORPORATE ORGANIZATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the state of
Delaware, with all requisite corporate power and authority to own, operate and
lease its properties and to carry on its business as it is now being conducted
and is qualified or licensed to do business and is in good standing in each
jurisdiction in which the ownership or leasing of property by it or the conduct
of its business requires such licensing or qualification except for any such
failure to be licensed or qualified which would not have a material adverse
effect on the financial position, results of operation or business of the
Company (a "Material Adverse Effect"). The Company has delivered to Tech-Sym
complete and correct copies of its Restated Certificate of Incorporation and its
Bylaws and has made available for inspection complete and correct copies of the
minutes of all meetings of the board of directors, committees thereof and the
stockholders of the Company.
SECTION 3.02 AUTHORIZATION; NO VIOLATION. The Company has full
corporate power and authority to execute and deliver this Agreement and to carry
out its obligations hereunder. The execution and delivery of this Agreement by
the Company, the performance by the Company of its obligations hereunder and the
consummation by the Company of the transactions contemplated hereby have been
duly authorized by the Company's board of directors and no other corporate
proceeding on the part of the Company is necessary to authorize this Agreement
or to consummate the transactions contemplated hereby other than the approval
and adoption of this Agreement by holders of Company Common Stock. This
Agreement has been duly and validly executed and delivered by the Company and,
subject, with respect to consummation of the Merger, to the approval and
adoption of this Agreement by holders of Company Common Stock,
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constitutes a valid and binding obligation of the Company, enforceable against
it in accordance with its terms. Neither the execution and delivery of this
Agreement by the Company nor the performance by the Company of its obligations
hereunder nor the consummation by the Company of the transactions contemplated
hereby will (i) conflict with or result in any breach of any provision of the
Restated Certificate of Incorporation or Bylaws of the Company, (ii) except as
set forth in Schedule 3.02 of the disclosure schedules provided by the Company
to Tech-Sym concurrently with the execution and delivery of this Agreement (the
"Disclosure Schedules"), result in a violation or breach of, or constitute (with
or without due notice or lapse of time or both) a default under, or permit the
termination of, or result in the acceleration of, or entitle any party to
accelerate (whether as a result of a change in control of the Company or
otherwise) or give rise to the creation of any lien, charge, security interest
or encumbrance upon any of the properties or assets of the Company under any of
the terms, conditions or provisions of any note, bond, mortgage, indenture, deed
of trust, license, lease, agreement or other instrument or obligation to which
the Company is a party or by which they or its properties or assets may be bound
or affected, or (iii) violate any order, writ, judgment, injunction, decree,
statute, rule or regulation of any court or governmental authority applicable to
the Company or any of its properties or assets.
SECTION 3.03 CAPITALIZATION; STOCKHOLDERS. The authorized, issued and
outstanding capital stock of the Company as of the date of this Agreement, and
the owners thereof (listed by principal place of business or residence address,
as the case may be, provided to the Company and number of shares owned) (the
"Stockholders") are as set forth in Schedule 3.03 of the Disclosure Schedules.
The outstanding shares of Company Common Stock shown on Schedule 3.03 as owned
by the Stockholders are legally and validly authorized and issued, fully paid
and nonassessable. Other than the Company Common Stock, the Company has no
outstanding equity securities or other securities convertible into, exercisable
for or exchangeable for any equity securities of the Company. The Company has no
shares in treasury as of the date of this Agreement.
SECTION 3.04 AGREEMENTS WITH RESPECT TO CAPITAL STOCK. There are no
existing options, subscriptions, calls, warrants, rights, contracts,
commitments, understandings, arrangements, or agreements of any nature to which
the Company, or, to the best knowledge of the Company as of the date hereof, any
of the Stockholders, are a party or by which any of them are bound, relating to
the issuance, sale, delivery or transfer of any shares of capital stock of the
Company or any other equity interest, except as set forth in Schedule 3.04 of
the Disclosure Schedules. No person, entity or other party has any preemptive
right to acquire any shares of Company Common Stock, and the Company has not
issued any shares of Company Common Stock in violation of any preemptive right
of any person, entity or other party.
SECTION 3.05 SUBSIDIARIES. Except as set forth in Schedule 3.05(a) of
the Disclosure Schedules, the Company has no subsidiaries and does not own any
equity security or have any investment in, loans or advances to, or other
interest in, directly or indirectly, any partnership, firm, corporation or other
business organization and has no right or obligation to acquire any such
interest. Except as set forth in Schedule 3.05(b), the Company does not have any
material liabilities or commitments, contractual or otherwise, to any of the
partnerships, firms, corporations or other business entities listed on Schedule
3.05(a) other than any wholly-owned subsidiary of the Company.
SECTION 3.06 CONSENTS AND APPROVALS. Except for the filing of the
Merger Certificate pursuant to the DGCL, approval and adoption of this Agreement
by the Stockholders pursuant to the DGCL and the Company's Restated Certificate
of Incorporation, the filing of a premerger notification report under the
Hart-Scott-Rodino
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Antitrust Improvements Act of 1976, as amended, and the expiration or
termination of the applicable waiting period with respect thereto, and any
filings required by applicable tax law, no filing or registration with, no
notice to and no permit, authorization, consent or approval of any third party
or any public or governmental body or authority is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
or to enable the Surviving Corporation to continue to conduct the Company's
business after the Effective Time in a manner which is consistent with that in
which it is presently conducted, except as may be set forth on Schedule 3.06 of
the Disclosure Schedules.
SECTION 3.07 FINANCIAL STATEMENTS. Schedule 3.07 of the Disclosure
Schedules contains (i) audited balance sheets as of July 31, 1992, 1993 and 1994
and the related statements of operations, stockholders' equity and cash flows
for each of the years then ended (the "Audited Financial Statements"),
accompanied by the audit reports of Ernst & Young LLP covering the Audited
Financial Statements and (ii) an unaudited balance sheet, certified by the
Company's Chief Financial Officer, as of March 31, 1995 (the "Last Balance
Sheet"), and related statements of operations and cash flows for the eight-month
period then ended (the "Interim Financial Statements," and, together with the
Audited Financial Statements, the "Financial Statements"). Such Financial
Statements (i) were prepared in accordance with generally accepted accounting
principles consistently applied (subject to exceptions, if any, specified in
Schedule 3.07 or such Financial Statements or in the notes thereto) and (ii)
fairly reflect, in all material respects, the financial position of the Company
as of such dates and the results of operations of the Company for the periods
ended on such dates, subject in the case of the Interim Financial Statements to
normal year-end audit adjustments that do not result in (i) material decreases
to the revenues, operating income or net income reflected in the statement of
operations or (ii) material decreases in total assets or stockholders' equity.
The books and records of the Company have been, and are being, maintained in
accordance with applicable legal and accounting requirements and reflect only
actual transactions. All reserves and allowances included on the Last Balance
Sheet are adequate in accordance with generally accepted accounting principles.
SECTION 3.08 ABSENCE OF UNDISCLOSED LIABILITIES. (a) There are no
liabilities of the Company of any kind whatsoever (whether absolute, accrued,
contingent, or otherwise, and whether due or to become due), and the Company
knows of no valid basis for the assertion of any such liabilities, whether or
not accrued and whether or not contingent or absolute, determined or
determinable, nor any existing condition, situation or set of circumstances
which is reasonably likely to result in such a liability, other than:
(i) liabilities adequately reflected or reserved against on the Last
Balance Sheet;
(ii) liabilities disclosed in Schedule 3.08(a) of the Disclosure
Schedules; or
(iii) liabilities incurred in the ordinary course of business
consistent with past practice since March 31, 1995.
(b) Schedule 3.08(b) of the Disclosure Schedules sets forth the dollar
amount of deferred revenues on each uncompleted contract of the Company which
has been awarded and signed as of March 31, 1995 which involves the payment to
the Company of an amount in excess of $5,000.
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(c) Schedule 3.08(c) of the Disclosure Schedules sets forth, with
respect to each uncompleted contract of the Company which involves the payment
to the Company of an amount in excess of $5,000, the amount of billings in
excess of earned revenues for such contract, if any, in each case as of March
31, 1995.
SECTION 3.09 ACCOUNTS RECEIVABLE. All accounts receivable of the
Company reflected in the Last Balance Sheet or arising since the date of the
Last Balance Sheet are valid.
SECTION 3.10 TAX RETURNS. The Company has filed all federal, state and
other tax returns and reports required to be filed by it on or before the due
dates thereof (as extended by any valid extensions of time) and has paid all
taxes shown to be due by said returns. Except as set forth in Schedule 3.10 of
the Disclosure Schedules, such returns reflect all taxes due and payable with
respect to the periods covered thereby and there are no liabilities, claims,
interest or penalties pending, assessed, asserted or, to the Company's knowledge
as of the date hereof, threatened against the Company in connection with any
such taxes and any basis therefor. Except as set forth in Schedule 3.10, the
reserves for taxes (federal, state and local) reflected in the Last Balance
Sheet are adequate to cover any and all taxes, including deferred taxes, and any
interest and penalties in connection therewith which may be assessed with
respect to the property, business and operations of the Company up to the date
of the Last Balance Sheet. As of the date of this Agreement, except as set forth
in Schedule 3.10, the federal income tax, state income tax and state franchise
tax returns of the Company within the past five taxable years have not been
audited. As of the date of this Agreement, the Company has not given and there
is no pending request to give waivers of any statutes of limitations relating to
the payment of taxes for any taxable period, and no fact exists which would
constitute grounds for assessment of any further tax liability with respect to
any period ending on or prior to the date of the Last Balance Sheet. Set forth
in Schedule 3.10 hereto is a description of all currently effective elections
made prior to the date of this Agreement which may affect any future tax
liability of the Company.
SECTION 3.11 INSURANCE. Set forth in Schedule 3.11(a) of the
Disclosure Schedules is a list of all policies of liability, property damage,
fire, workers' compensation/employer's liability, title or other forms of
insurance owned or carried by the Company and insurance carriers providing such
insurance coverage (and the agents and/or brokers arranging such insurance
coverage). The Company has maintained substantially similar insurance coverage
for each of the last four years with the same carriers, except as set forth in
Schedule 3.11(b) of the Disclosure Schedules. Except as set forth in Schedule
3.11(c) of the Disclosure Schedules, the Company has during the last five years
carried insurance which the Company believed to be adequate in character and
amount, with reputable insurers in respect of its properties, assets and
business and has provided all required performance bonds, and has complied with
all material terms and conditions, including payment of premiums, with respect
to such insurance policies and performance bonds. As of the date of this
Agreement, the Company has no claim pending or anticipated against any of the
insurance carriers under any of such policies and there has been no actual or
alleged occurrence of any kind which may give rise to any such claim, except as
described in Schedule 3.11(d) of the Disclosure Schedules. As of the date of
this Agreement, the Company had received no notification from any insurance
carrier denying or disputing any claim made by the Company, denying or disputing
any coverage for any such claim, denying or disputing the amount of any claim,
or regarding the possible cancellation of or premium increases with respect to
any policies. Schedule 3.11(e) of the Disclosure Schedules is a list of all
performance bonds and letters of credit securing any obligations of the Company
maintained by the Company in the conduct of its business as of the date hereof.
The Company has
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delivered to Tech-Sym all policies, bonds, letters of credit and all other
documents described in Schedules 3.11(a) and (e).
SECTION 3.12 PERSONAL PROPERTY. (a) Set forth in Schedule 3.12(a) of
the Disclosure Schedules is a schedule which lists, by various groupings, all of
the furniture, fixtures and equipment (including vehicles) owned or leased from
third parties by the Company (collectively "Personal Property").
(b) For owned Personal Property, Schedule 3.12(b) of the Disclosure
Schedules shows, by various groupings, the original acquisition price and date,
method of depreciation used and current book and tax value (if different).
(c) For leased Personal Property for which the annual lease payment is
more than $10,000, Schedule 3.12(c) of the Disclosure Schedules indicates the
name of the lessor, the date of the lease, the initial term of the lease and the
annual payments made thereunder.
(d) Schedules 3.12(a), (b) and (c) are complete and correct and,
except as set forth on each respective Schedule, the assets listed in response
to applicable items of this Section (excluding items held as inventory and
leased to customers) are in good operating condition and repair, ordinary wear
and tear excepted, and are fully licensed for operation in the jurisdictions
where they are operated in the normal course of business, if such licensing is
required. Except as set forth in Schedule 3.12(d) of the Disclosure Schedules,
there are no material items of tangible personal property used or required by
the Company for the conduct of its business which are not either owned or leased
by it.
SECTION. 3.13 REAL PROPERTY. Schedule 3.13 of the Disclosure Schedules
contains a complete and accurate list or description of all real property which
the Company leases or has agreed (or has an option) to purchase or lease and any
guaranty policies, zoning and special permits with respect thereto, and such
description includes the name of the lessor, the location of the property
covered by the lease, the current annual rent and the amount of any security
deposits. True and complete copies of all leases described in Schedule 3.13 have
been delivered or made available to Tech-Sym. The leases described in Schedule
3.13 are in full force and effect and there are no material defaults thereunder
by the Company. There are no underground storage tanks (i) existing on real
estate leased by the Company as of the date hereof, or (ii) of which the Company
is or was the owner or operator.
SECTION 3.14 OWNERSHIP OF PROPERTY. The Company has good title to or a
valid leasehold interest in all of the properties and assets reflected in
Schedules 3.12(a), (b) and (c) and Schedule 3.13 of the Disclosure Schedules;
all such properties and assets are owned or held by the Company free and clear
of all title defects or objections, mortgages, claims, liens, pledges, charges,
security interests, options to purchase or other encumbrances of any kind or
character, except:
(a) liens for current taxes, assessments and governmental charges not
yet due and payable;
(b) liens, imperfections of title and easements referenced in title
insurance policies previously provided to Tech-Sym or which do not, either
individually or in the aggregate, materially detract from the value of, or
interfere with the present use of, properties subject thereto;
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(c) mortgages and liens securing debts which are reflected as
liabilities in the Last Balance Sheet; and
(d) as set forth in Schedule 3.14 of the Disclosure Schedules.
SECTION 3.15 ACCOUNTS, CONTRACTS, OTHER INSTRUMENTS AND INFORMATION.
(a) Schedule 3.15(a)(i) of the Disclosure Schedules contains a list of the
following as they relate to the Company as of the date hereof, and, except as
set forth in Schedule 3.15(a)(ii) of the Disclosure Schedules, true, correct and
complete copies of which listed items have previously been delivered to Tech-Sym
(except with respect to (1) and (4) below, copies of which have previously been
made available to Tech-Sym in the office of the Company's Contract Administrator
located at the Company's headquarters in Houston, Texas):
(1) all the Company's current commercial accounts and other agreements
(including therein a copy of the Company's standard form service agreement
and all service agreements not in material conformity therewith) for which
the Company has had billings during the year ended July 31, 1994 exceeding
$50,000;
(2) all agreements, contracts or other commitments which contain terms
providing for the termination, default, loss of rights or privileges,
acceleration of payment or any other change in the terms or conditions of
such document upon the sale or exchange of a majority of voting stock of
the Company or upon any merger or change in control of the Company;
(3) all material permits, licenses, franchises, authorizations,
approvals, public utility permits and other certificates of need or
authority;
(4) all promissory notes, indentures, guarantees, letters of credit,
installment obligations, bonds, mortgages, liens, pledges, security
agreements, or other instruments relating to the borrowing of money or the
guarantee of any obligation for the borrowing of money or the creation of
any security interests;
(5) all collective bargaining or union agreements;
(6) all employment or consulting agreements (except for employment
agreements for persons employed in the United Kingdom which do not contain
provisions that prohibit the termination of employment except as required
by applicable law or result in the payment of any amount upon such
termination other than amounts required to be paid by applicable law);
(8) all agreements, contracts or other commitments that would limit
the ability of the Company to compete in any line of business or with any
person or in any geographical area or otherwise to conduct its business as
presently conducted or to use or disclose any information in its
possession;
(9) all bank accounts and other depositories including authorized
signers for such accounts and depositories;
(10) all pension, retirement, bonus, deferred compensation, stock
purchase, profit sharing or similar plans;
(11) any other material contract not described or referred to in any
other part of this Section 3.15; and
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(12) to the best knowledge of the Company's current officers,
directors and key employees, all records concerning environmental testing
or past contamination of any properties owned or leased by the Company.
SECTION 3.16 CHANGES SINCE LAST BALANCE SHEET. Other than described on
Schedule 3.16 of the Disclosure Schedules, since the date of the Last Balance
Sheet, there has not been (except as otherwise contemplated or permitted by this
Agreement):
(a) Any adverse change in the financial condition, results of
operations, business, business organization or personnel of the Company or
in the relationships of the Company with suppliers, customers, or others,
other than changes occurring in the ordinary course of business, which,
individually or in the aggregate, have not been materially adverse;
(b) Any disposition or redemption by the Company of any of its capital
stock or other securities or any grant of any option or any other right to
acquire any of its capital stock;
(c) Any sale or other disposition of any asset owned by the Company at
the close of business on the date of the Last Balance Sheet, or acquired
by it since that date, other than in the ordinary course of business
consistent with past practices;
(d) Any expenditure or commitment by the Company for the acquisition
of assets of any kind, other than in the ordinary course of business
consistent with past practices;
(e) Any damage, destruction, loss or other material change (whether
or not insured) resulting in a Material Adverse Effect;
(f) Any bonus or increase in the compensation payable or to become
payable by the Company to any officer or key employee;
(g) Any loans or advances by or to the Company, other than renewals or
extensions of existing indebtedness or under existing lines of credit in
the ordinary course of business for working capital purposes;
(h) Any declaration or payment of any dividend or other distribution
by the Company with respect to its capital stock or other securities;
(i) Any change in accounting methods, principles or practices of the
Company;
(j) Any amendment to the Restated Certificate of Incorporation or the
Bylaws of the Company;
(k) Any labor trouble having a Material Adverse Effect; or
(l) The commencement of any litigation or administrative or judicial
proceeding of any nature involving the Company that could reasonably be
expected to have a Material Adverse Effect.
SECTION 3.17 LEGAL COMPLIANCE. (a) As of the date of this
Agreement, all pending litigation and administrative or judicial
proceedings of any nature involving the
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Company, its assets, liabilities or, to the knowledge of the Company as of the
date of this Agreement, shares of capital stock of the Company are described in
Schedule 3.17(a) of the Disclosure Schedules. As of the date of this Agreement,
the Company is not aware of any other facts or circumstances which may result in
any future civil, administrative or criminal proceedings against the Company. To
the Company's knowledge, the insurance coverages of the Company are adequate to
the extent applicable in character and amount to pay all damages, losses,
liabilities and expenses relating to or arising from the litigation and
proceedings described in Schedule 3.17(a).
(b) Except as specifically provided in Schedule 3.17(b) of the
Disclosure Schedules, the Company is not in default under any law or ordinance,
under any order of any court or federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality wherever
located (limited, in the case of a default which does not result in a penalty or
fine against the Company, to such defaults as would have a Material Adverse
Effect). There are no claims, actions, suits or proceedings pending or
threatened, against or affecting the Company or the Stockholders at law or in
equity, or before or by any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, wherever
located, or before any arbitrator, arbitration panel or other dispute resolution
panel, including, those described in Schedule 3.17(a) hereto, which may result
in a Material Adverse Effect or which may question the validity or propriety of
this Agreement or of any action taken or to be taken in accordance with or in
connection with this Agreement; and the Company has received no notice of any
asserted past or present failure to comply with any law, ordinance, regulation,
permit, order or requirement.
(c) Except as specifically provided in Schedule 3.17(c) of the
Disclosure Schedules, the Company has operated from its inception legally and in
compliance with all conditions and requirements of all applicable zoning laws,
federal, state and local statutes, ordinances, rules, regulations, permits,
policies, guidelines, orders, franchises, authorizations and consents.
(d) Except as specifically provided in Schedule 3.17(d) of the
Disclosure Schedules, the Company has not transported, stored, treated or
disposed, nor has it allowed or arranged for any third person to transport,
store, treat or dispose waste to or at (1) any location other than a site
lawfully permitted to receive such waste for such purposes or (2) any location
designated for remedial action pursuant to the Comprehensive Environmental
Response, Compensation and Liability Act, as from time to time amended, or any
similar federal or state statute assigning responsibility for the cost of
investigating or remediating releases of contaminants into the environment.
(e) The Company is not currently subject to any judgment, writ,
injunction, decree or other judicial order.
(f) Except as set forth in Schedule 3.17(f) of the Disclosure
Schedules and except for matters generally affecting the industry in which the
Company's business competes or generally affecting the economy, the Company
knows of no proposed law or regulation or any event or condition of any
character which could reasonably be expected to materially and adversely affect
the business of the Company or the future prospects of such business.
SECTION 3.18 EMPLOYEE MATTERS. (a) As of the date of this Agreement,
Schedule 3.18(a)(1) of the Disclosure Schedules contains the name, social
security number (if applicable), present position and current rate of
compensation of each of the Company's present employees. Except as set forth on
Schedule 3.18(a)(2), to the
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Company's knowledge as of the date of this Agreement, all of such employees will
be available for employment by the Company after the Effective Time on
substantially the same terms as described in Schedule 3.18.
(b) As of the date of this Agreement, there is no unfair labor
practice complaint pending or threatened against the Company, nor is there any
strike, slowdown, dispute or stoppage pending or threatened against or involving
the Company, or that may interfere with the Company's continued operations, and
none has occurred in the two-year period prior to the date of this Agreement. As
of the date of this Agreement, no representation question exists respecting the
employees of the Company and no collective bargaining agreement is being
currently negotiated by the Company.
SECTION 3.19 ABSENCE OF BROKER. No agent or broker or other person
acting pursuant to authority of the Company, or, to the Company's knowledge, any
Stockholder, is entitled to any commission or finder's fee payable by the
Company in connection with the transactions contemplated by this Agreement
except as set forth in the fee letter between the Company and The GulfStar
Group, Inc., dated April 26, 1995, previously provided to TechSym.
SECTION 3.20 PATENTS, INTELLECTUAL PROPERTY. Schedule 3.20(a) of the
Disclosure Schedules contains a list of all Intellectual Property (defined
below) owned or licensed by the Company and utilized in products licensed or
sublicensed by the Company. With respect to all Intellectual Property set forth
in Schedule 3.20(a), (i) the Company has good and indefeasible title thereto or
a legal, valid and enforceable license to use such Intellectual Property, in
each case free and clear of all liens or encumbrances of any nature whatsoever
and (ii) the license or sublicense thereof to third parties does not infringe on
the Intellectual Property of any other party or violate any agreement to which
the Company is a party. The conduct of the business of the Company as heretofore
carried on is free from any illegal use of Intellectual Property and any known
infringement of patents, trademarks, trade names, copyrights or publication
rights of others. The Company has no liability for any indemnification for
patent, trademark or copyright infringement as to any equipment, materials or
supplies manufactured, produced, used or sold by the Company. Set forth in
Schedule 3.20(b) of the Disclosure Schedules is (x) a list of all written
agreements of the Company for the development of Intellectual Property and (y) a
full and accurate description of all other arrangements, understandings or oral
agreements of the Company for the development of Intellectual Property. The
Company has the right to use, and the right to sell or market all Intellectual
Property developed pursuant to any such agreement, arrangement, understanding or
working arrangement, subject to limitations with respect to geographic areas,
types of customers, sales price or duration that are set forth in the written
agreements listed on Schedule 3.20(b) and except as set forth on Schedule
3.20(c). The Company has provided Tech-Sym complete and accurate copies of all
agreements listed on Schedule 3.20 pursuant to clause (x) of the preceding
sentence. As used herein, "Intellectual Property" means any and all software,
patents, patent applications, trademarks, trade names, copyrights, service
marks, engineering and design information, unpatented inventions, know-how,
trade secrets and other intellectual property.
SECTION 3.21 ABSENCE OF CONFLICT OF INTERESTS. Except as set forth in
Schedule 3.21, neither the Company nor, to the best knowledge of the Company,
any of its officers, directors or key employees, has any direct or indirect
interest in any competitor of the Company within the geographical area in which
it currently conducts business, or in any supplier or customer of the Company or
in any person from whom or to whom the Company leases any real or personal
property, or in any other person with whom the Company is doing business.
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SECTION 3.22 NO UNTRUE STATEMENT. The information to be provided by
the Company and its representatives for inclusion in the Prospectus/Proxy
Statement will not contain any untrue statement of a material fact, or omit to
state a material fact required to be stated therein or necessary to make the
statements contained therein not misleading.
SECTION 3.23 REMEDIAL ACTION CLAIM NOTICES RECEIVED. The Company has
not received any notification (including requests for information directed to
the Company) from any governmental agency or any other person asserting that
Company is or may be a "potentially responsible person" or otherwise liable with
respect to a remedial action or the payment of response costs at a waste
storage, treatment or disposal facility, pursuant to the provisions of the
Comprehensive Environmental Response, Compensation and Liability Act, as from
time to time amended, or any similar federal or state statute assigning
responsibility for the costs of investigating or remediating releases of
contaminants into the environment.
SECTION 3.24 PRODUCT AND SERVICE WARRANTIES. Schedule 3.24 of the
Disclosure Schedules sets forth, as of the date of this Agreement, (i) each
pending warranty or service claim made against the Company involving an amount
in excess of $10,000, together with a description of such claim, the status of
such claim and the expense incurred to date with respect to such claim and (ii)
any outstanding warranties that impose materially increased warranty obligations
over those disclosed in Schedule 3.15. The reserves reflected on the Last
Balance Sheet for claims made under product and service warranties of the
Company provided to its customers are adequate in accordance with generally
accepted accounting principles.
SECTION 3.25 EMPLOYEE BENEFIT PLANS. (a) Schedule 3.25 of the
Disclosure Schedules contains an accurate description of each employee benefit
plan, policy, program or arrangement, formal or informal, maintained, assumed or
contributed to by the Company for the benefit of any current, former or retired
employee of the Company, including, but not limited to (i) each employee welfare
benefit plan (as defined in Section 3(1) of the Employee Retirement Income
Security Act of 1974 ("ERISA")), (ii) each bonus, stock option, deferred
compensation and oral or written severance plan or policy; (iii) each pension,
profit sharing, thrift or other retirement plan or arrangement; and (iv) each
employment agreement relating to the employment by the Company of any employee
of the Company (the plans, arrangements and agreements referred to in clauses
(i) through (iv) referred to individually as a "Plan" and collectively as the
"Plans").
(b) With the exception of the Plans, the Company does not maintain or
have an obligation to contribute to any "employee pension benefit plan" (as
defined in Section 3(2) of ERISA). Each Plan intended to be "qualified" within
the scope of Section 401(a) of the Internal Revenue Code (the "Code") has been
determined to be "qualified" within Section 401(a) of the Code. Each Plan has
been operated in compliance with applicable provisions of ERISA and the Code and
no fact or event has occurred with respect to any such Plan that could adversely
affect the tax qualified status of any such Plan or that could subject the
Company to liability for any tax under Section 4980B of the Code.
(c) All contributions, reserves or premium payments required to be
made to the Plans (and with respect to workers' compensation) have been made or
provided for in the Last Balance Sheet.
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SECTION 3.26 INVENTORY. The Company's inventory held for resale has
values in the aggregate at least equal to the values at which such items are
carried on its books. Except as set forth in Schedule 3.26 of the Disclosure
Schedules, the values of obsolete or slow-moving resale inventory and resale
inventory of below standard quality, if any, have been written down to the lower
of cost or realizable market values or have been written off. The value at which
the resale inventory is carried on the Last Balance Sheet reflects the normal
inventory valuation policies of the Company, stating inventories at the lower of
cost or market on a first-in first-out basis, all determined in accordance with
generally accepted accounting principles.
SECTION 3.27 CUSTOMERS AND SUPPLIERS. Except as set forth in Schedule
3.27(a) of the Disclosure Schedules, the Company knows of no written or oral
communication, fact, event or action which exists or has occurred within 90 days
prior to the date of this Agreement which would make it reasonably likely that:
(i) any current customer of the Company which accounted for over 10% of the
total net sales of the Company for the year ended July 31, 1994 or for the
eight-month period ended March 31, 1995, or (ii) any current supplier to the
Company of items essential to the conduct of its business (which items cannot be
replaced by the Company at comparable cost to the Company) will terminate its
business relationship with the Company. Except as set forth in Schedule 3.27(a)
of the Disclosure Schedules, the Company is not restricted by agreement from
carrying on its business anywhere in the world.
ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF
TECH-SYM
Tech-Sym represents, warrants and covenants to the Company that:
SECTION 4.01 ORGANIZATION. Tech-Sym is a corporation duly organized
and legally existing in good standing under the laws of the State of Nevada.
Newco is a corporation duly organized and legally existing in good standing
under the laws of the State of Delaware. Newco was formed by Tech-Sym solely for
the purpose of engaging in the transactions contemplated hereby, has engaged in
no other business or activities, has incurred no other obligations or
liabilities, has no other assets and has conducted its operations only as
contemplated hereby. All the issued and outstanding capital stock of Newco is
owned directly by Tech-Sym.
SECTION 4.02 AUTHORIZATION; NO VIOLATION. Each of Tech-Sym and Newco
has full corporate power and authority to execute and deliver this Agreement and
to carry out its obligations hereunder. The execution and delivery of this
Agreement by Tech-Sym and Newco, the performance by each of Tech-Sym and Newco
of its obligations hereunder and the consummation by Tech-Sym and Newco of the
transactions contemplated hereby have been duly authorized by each of Tech-Sym's
and Newco's board of directors, respectively, and by Tech-Sym as the sole
stockholder of Newco, and no other corporate proceeding on the part of Tech-Sym
or Newco is necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by each of Tech-Sym and Newco and constitutes a valid and
binding obligation of each of Tech-Sym and Newco, enforceable against each in
accordance with its terms. Neither the execution and delivery of this Agreement
by Tech-Sym or Newco nor the performance by Tech-Sym or Newco of its obligations
hereunder nor the consummation by Tech-Sym or Newco of the transactions
contemplated hereby will (i) conflict with or result in any breach of any
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provision of the Certificate of Incorporation or Bylaws of Tech-Sym or Newco,
respectively, (ii) result in a violation or breach of, or constitute (with or
without due notice or lapse of time or both) a default under, or permit the
termination of, or require the consent of any other party to, or result in the
acceleration of, or entitle any party to accelerate or give rise to the creation
of any lien, charge, security interest or encumbrance upon any of the properties
or assets of Tech-Sym or Newco, respectively, under any of the terms, conditions
or provisions of any note, bond, mortgage, indenture, deed of trust, license,
lease, agreement or other instrument or obligation to which Tech-Sym or Newco is
a party or by which either of them or the properties or assets of either of them
may be bound or affected, or (iii) violate any order, writ, judgment,
injunction, decree, statute, rule or regulation of any court or governmental
authority applicable to Tech-Sym or Newco or any of their respective properties
or assets.
SECTION 4.03 ABSENCE OF BROKER. No agent, broker or other person
acting pursuant to either Tech-Sym's or Newco's authority will be entitled to
make any claim against the Company for any commission or finder's fee in
connection with the transactions contemplated by this Agreement.
SECTION 4.04 VALIDITY OF SHARES. The Shares will, upon the issuance
and delivery thereof in accordance with this Agreement, constitute legally and
validly authorized and issued, fully paid and nonassessable shares of common
stock, $0.01 par value, of TechSym. The Shares delivered in accordance with this
Agreement will have been registered under the Securities Act of 1933, as amended
(the "Securities Act"), at the time of the Special Meeting and at the time of
delivery pursuant to a registration statement (the "Registration Statement")
which has been declared effective by the Securities and Exchange Commission (the
"SEC") and which remains effective, with no stop order pending or threatened, at
the time of the delivery of such Shares. The Shares delivered under this
Agreement will be freely tradable under the Securities Act except for compliance
with Rule 145 by persons who are affiliates (as defined under the Securities
Act) of the Company at the time of such delivery. The Shares to be delivered in
accordance with this Agreement will have been duly registered, or will be exempt
from registration, under the Texas Securities Act.
SECTION 4.05 DELIVERY OF PROSPECTUS/PROXY STATEMENT; NO UNTRUE
STATEMENT. At least 20 business days prior to the date of the Special Meeting,
Tech-Sym will deliver to the Company sufficient copies of a prospectus/proxy
statement (the "Prospectus/Proxy Statement") for delivery by the Company to its
stockholders with respect to the Special Meeting of the stockholders of the
Company to vote with respect to the approval and adoption of this Agreement. The
Prospectus/Proxy Statement will constitute part of the Registration Statement.
The Prospectus/Proxy Statement, other than the information relating to the
Company contained therein, at the time of delivery to the Company and at the
time of the Special Meeting, will not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements contained therein not misleading, in the light of the
circumstances under which such statements were made.
SECTION 4.06 SEC FILINGS. Tech-Sym has heretofore filed all
statements, forms, reports and other documents with the SEC required to be filed
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since January 1, 1993, and has made available to the Company copies of
all such statements, forms, reports and other documents, including without
limitation each Current Report on Form 8-K, proxy or information statement,
Annual Report on Form 10-K and Quarterly Report on Form 10-Q filed with the SEC
during such period (in the case of each such report, including all exhibits
thereto) (the "SEC Documents"). The SEC Documents, as of their
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respective filing dates, complied as to form in all material respects with all
applicable requirements of the Exchange Act and did not (as of their respective
filing dates) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading. The audited and unaudited consolidated financial
statements, together with the notes thereto, of Tech-Sym included (or
incorporated by reference) in the SEC Documents present fairly, in all material
respects, the financial position of Tech-Sym and its consolidated subsidiaries
as of the dates thereof and the results of their operations and changes in
financial position for the periods then ended in accordance with generally
accepted accounting principles applied on a consistent basis (except as stated
in such financial statements), subject in the case of the unaudited financial
statements, to normal year-end audit adjustments.
SECTION 4.07 ABSENCE OF CERTAIN CHANGES. Except as disclosed in the
SEC Documents or as disclosed to the Company by Tech-Sym in a writing which
makes express reference to this Section 4.07 prior to the date hereof, since
December 31, 1994, Tech-Sym and its subsidiaries have conducted their respective
businesses only in the ordinary course, and there has not been any event or
change having or that is reasonably expected to have a material adverse effect
on the business, financial condition or results of operations of TechSym and its
subsidiaries, taken as a whole.
SECTION 4.08 NO LITIGATION. As of the date of this Agreement, all
pending litigation or administrative or judicial proceedings of any nature
involving Tech-Sym or its subsidiaries or their respective assets or liabilities
required to be described in the SEC Documents by the rules and regulations of
the SEC have been described in the SEC Documents in the manner required thereby.
Tech-Sym is not aware of any other facts or circumstances which may result in
any other future civil, administrative or criminal proceedings against Tech-Sym.
ARTICLE FIVE
ADDITIONAL AGREEMENTS OF THE COMPANY
The Company covenants and agrees with Tech-Sym as follows:
SECTION 5.01 ACCESS TO PROPERTIES AND RECORDS OF THE COMPANY. The
Company will give to Tech-Sym and its representatives, from and after the date
of execution of this Agreement, reasonable access during normal business hours
to all of the properties, books, contracts, documents and records of the
Company, the opportunity to make reasonable investigation of the Company, and
will furnish to Tech-Sym and its representatives any additional financial
statements of, and all information with respect to the business and affairs of,
the Company that Tech-Sym may reasonably request.
SECTION 5.02 CONDUCT OF BUSINESS PENDING THE CLOSING. The Company,
until the Effective Time, without making any new commitments on behalf of the
Company (except commitments made in the ordinary course of business, consistent
with past practice) or Tech-Sym, will use all reasonable efforts to preserve its
business organization intact and will use commercially reasonable efforts to
keep available to Tech-Sym the present key employees of the Company. The Company
hereby agrees that until the Effective Time, except as set forth on Schedule
5.02 of the Disclosure Schedules, as otherwise permitted by this Agreement or as
consented to by Tech-Sym in writing:
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(a) the business of the Company will be conducted only in the ordinary
course which, without limitation, shall include compliance with all
applicable laws, regulations and administrative orders of any federal,
state or municipal authority, and the maintenance in force of all
insurance policies, fidelity bonds and performance bonds currently in
force and effect;
(b) consistent with conducting its business in accordance with good
business judgment, the Company shall use all reasonable efforts to keep
available to the Company the goodwill of suppliers, customers and others
having business relations with the Company;
(c) the Company shall refrain from any acts having the effect of
dissuading any of such employees, agents, customers, clients,
representatives, agents, creditors and suppliers from remaining associated
with, or having the effect of inducing them to terminate an association
with Tech-Sym or the Company;
(d) the Company will not:
(1) declare or make any payments of dividends or other
distributions;
(2) lend, advance or pay any monies to or on behalf of any
stockholder of the Company in connection with the transactions
contemplated by this Agreement or otherwise (other than payments to
employees and directors for salary, bonus payments or director fees,
advances or reimbursements for travel or other business expenses and
other payments or reimbursements to employees and directors, in each
case in the ordinary course of business consistent with past
practices);
(3) purchase or redeem any shares of capital stock of the Company
or evidences of indebtedness;
(4) sell, grant, issue or otherwise dispose of any shares of
capital stock of the Company or other securities of the Company or
rights therein or otherwise change its capital structure;
(5) merge or consolidate with any other business;
(6) change its present telephone number;
(7) amend or modify any existing employee benefit plans or adopt
any new employee benefit plans, except for (i) renewals of health
plans in the ordinary course of business or (ii) as required by law;
(8) increase the compensation of any officer or key employee;
(9) amend its Restated Certificate of Incorporation or its
Bylaws;
(10) engage in any activities or transactions which are outside
the ordinary course of business of the Company which in the aggregate
would be material;
(11) make any tax elections (other than those required to be made
by applicable law or regulation); or
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(12) make any commitments to take any of the actions specified in
this Section; and
(e) The Company shall not, by action or inaction, cause any of the
representations and warranties made by the Company in this Agreement not to
be true and correct in all material respects on and as of the Effective
Time or in any way impair or prevent the full and timely satisfaction of
the conditions, terms and provisions of this Agreement or the consummation
of the transactions contemplated hereby.
SECTION 5.03 DOCUMENTS TO BE DELIVERED PRIOR TO CLOSING. The
Company will deliver or cause to be delivered to Tech-Sym at or prior to
the Effective Time:
(a) A copy of the Company's Restated Certificate of Incorporation, as
amended, certified as true and correct by the Secretary of the State of
Delaware, dated within ten days prior to Closing;
(b) A copy of the Bylaws of the Company, in force and effect at the
Closing, certified as true and correct by the Secretary of the Company;
(c) The complete minute books of the Company, containing all records
required to be set forth with respect to all meetings, proceedings,
consents and actions of the stockholders and board of directors of the
Company, certified as true and correct by the Secretary of the Company; and
(d) The complete stock issuance and transfer books of the Company
setting forth the issuance and all transfers of any capital stock of the
Company, certified as true and correct by the Secretary of the Company.
SECTION 5.04 NO SOLICITATION. The Company shall not, and the
Company shall use its best efforts to cause its affiliates and each of its
Stockholders, officers, directors, employees, representatives and agents
not to, directly or indirectly, encourage, solicit, initiate, engage or
participate in discussions or negotiations with, or provide any information
to, any corporation, partnership, person or other entity or group other
than Tech-Sym, Newco or their affiliates (a "Third Party") concerning the
Company or concerning the business of the Company in connection with any
tender offer (including a self-tender offer), exchange offer, merger,
consolidation, sale of all or any substantial amount of assets, sale of
securities, acquisition of beneficial ownership of or to vote securities
representing 1% or more of the total voting power of the Company,
liquidation, dissolution or similar transactions involving the Company, or
any division of the Company (any such proposal, announcement or transaction
being referred to herein as a "Acquisition Proposal"); provided, however,
that notwithstanding the foregoing, (i) the Company may engage in
discussions or negotiations with a Third Party who seeks to initiate such
discussions and negotiations and may furnish such Third Party information
concerning the Company and its business, properties and assets, (ii) the
Company's Board of Directors may take and disclose to the Company's
stockholders a position with respect to any Acquisition Proposal and (iii)
following receipt of an Acquisition Proposal that the Board of Directors
determines is financially superior to the Merger, the Board of Directors
may withdraw, modify or not make its recommendation referred to Section
5.05 or terminate this Agreement in accordance with Section 10.01(d), but
in each case only to the extent that the Board of Directors of the Company
shall conclude in good faith, after considering the advice of outside
counsel, that such action is necessary in
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order for the Board of Directors to act in a matter that is consistent with its
fiduciary obligations under applicable law. The Company shall promptly inform
Tech-Sym of any inquiry (including the terms thereof and the identity of the
Third Party making such inquiry) which it may receive in respect of an
Acquisition Proposal and furnish to Tech-Sym a copy of any such written inquiry.
SECTION 5.05 APPROVAL OF STOCKHOLDERS. Subject to Section 5.04, the
Company will (a) take all steps necessary to duly call, give notice of, convene
and hold a meeting of Stockholders for the purpose of approving and adopting
this Agreement and for such other purposes as may be necessary or desirable in
connection with the transactions contemplated by this Agreement on or before
June 30, 1995 (the "Special Meeting"), (b) recommend to Stockholders the
approval and adoption of this Agreement and such other matters as may be
submitted to Stockholders as specified in clause (a) above, and (c) cooperate
and consult with Tech-Sym with respect to each of the foregoing matters. Subject
to Section 5.04, the Company will use its best efforts to obtain the necessary
approvals by Stockholders of this Agreement and the transactions contemplated
hereby.
SECTION 5.06 COMPLIANCE WITH THE SECURITIES ACT. The Company has
informed Tech-Sym, after consultation with its counsel, that no one other than
the persons identified on Schedule 5.06 of the Disclosure Schedules is, at the
time of the Special Meeting, expected to be an affiliate of the Company as that
term is used in Rule 145 under the Securities Act and who will become the
beneficial owner of Shares pursuant to the Merger. The Company agrees to update
such information as necessary in the opinion of its counsel until the Closing.
SECTION 5.07 SUPPLEMENTS. From time to time prior to the Effective
Time, the Company will promptly supplement or amend the Schedules delivered in
connection herewith with respect to any matter hereafter arising which, if
existing, occurring or known at the date of this Agreement, would have been
required to be set forth or described in such Schedules or which is necessary to
correct any information in such Schedules which has been rendered inaccurate
thereby. No supplement or amendment to such Schedules shall have any effect for
the purpose of determining satisfaction of the condition set forth in Section
8.02(a) hereof, or the compliance by the Company with the covenant set forth in
Section 5.02 hereof.
ARTICLE SIX
ADDITIONAL AGREEMENTS
SECTION 6.01 NO EMPLOYEE SOLICITATION; CONFIDENTIAL INFORMATION. Until
three years after the date of this Agreement, (i) neither Tech-Sym nor Newco on
the one hand, nor the Company on the other hand, shall solicit for employment
any employee of the other party, or request, entice or advise any such employee
to leave the employ of the other party, and any information and documentation
furnished by one party to the other and treated as confidential by the party
furnishing the information (the "Confidential Information") shall be kept
confidential by the representatives of the other and shall be used by the
examining party only in connection with this Agreement and the transactions
contemplated hereby, except to the extent the Confidential Information (x) was
already known to the representatives of the examining party when received, (y)
hereafter becomes lawfully obtainable from other sources, or (z) is disclosed by
Tech-Sym or the Company in any document filed with any government agency or
authority and such document is available for public inspection.
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SECTION 6.02 PUBLIC ANNOUNCEMENTS. Each of Tech-Sym and the Company
will mutually approve the issuance of any press release or the making of any
public statements with respect to the Merger or this Agreement and will not
issue any such press release or make any such public statement prior to such
mutual approval, except as may be required by law.
SECTION 6.03 REGULATORY MATTERS. (a) Tech-Sym and the Company each
will cooperate with one another and use their best efforts to prepare all
necessary documentation, to effect all necessary filings and to obtain all
necessary permits, consents, approvals and authorizations of all third parties
and governmental bodies necessary to consummate the transactions contemplated by
this Agreement. Each of Tech-Sym and the Company shall have the right to review
and approve in advance all characterizations of the information relating to it,
as the case may be, and any of its subsidiaries, which appear in any filing made
in connection with the transactions contemplated by this Agreement with any
governmental body. In exercising the foregoing right, Tech-Sym and the Company
shall act as promptly as practicable, recognizing that time is of the essence to
the transactions contemplated by this Agreement.
(b) Tech-Sym and the Company will furnish each other with all
information concerning themselves, their subsidiaries, directors, officers and
stockholders and such other matters as may be necessary or advisable in
connection with filings with the SEC, the NYSE, or under any state Blue Sky laws
or any other statement or application made by or on behalf of Tech-Sym or the
Company to any governmental body in connection with the Merger and the other
transactions contemplated by this Agreement.
(c) Each party will keep the other party apprised of the status of any
inquiries made of such party by the Federal Trade Commission, the Antitrust
Division of the U.S. Department of Justice or any other governmental agency or
authority or members of their respective staffs with respect to this Agreement
or the transactions contemplated hereby. The foregoing applies to any filings
that are required under the Hart-Scott-Rodino Antitrust Improvement Act of 1976
in order to effect the transaction contemplated by this Agreement.
SECTION 6.04 QUALITY OF INFORMATION SUPPLIED IN CONNECTION WITH
REGULATORY FILLINGS. The Company agrees that all information pertaining to the
Company, and Tech-Sym agrees that all information pertaining to Tech-Sym and its
subsidiaries, which is proposed by such respective party to be set forth in any
documents to be filed with or submitted to any federal or state regulatory
agency in connection with the transactions contemplated herein will (a) be true
and correct in all material respects, (b) comply in all material respects to the
extent relevant with the requirements of all applicable securities laws, and (c)
not include any statement which, on the date made, is false or misleading with
respect to any material fact, or omit to include any material fact necessary to
make the statements set forth therein not false or misleading.
SECTION 6.05 NOTICES. The Company shall promptly notify Tech-Sym in
writing of any claims, legal, administrative or other proceedings, suits,
investigations, complaints, notices of violation or other process, or other
judgments, orders, directives or injunctions which have been made or asserted
from the date of this Agreement through the Effective Time of which any
executive officer of the Company has knowledge, against or involving the Company
or any affiliate or against or involving any officer, director, employee,
consultant or Stockholder, which could result in a Material Adverse Effect.
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SECTION 6.06 TAX COVENANT. Each of the Company and Tech-Sym intends
that the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code (and any comparable provision of applicable state or local
tax law) and agrees that neither it nor any of its affiliates will take or omit
to take any action (whether before, at or after the Effective Time) inconsistent
therewith. The parties will characterize the Merger as such a reorganization
within the meaning of Section 368(a) of the Code for purposes of all tax returns
and other filings. Each of the Company and Tech-Sym has relied upon its own
professional advice and counsel with respect to the qualification and treatment
of the transactions contemplated under this Agreement for federal and state
income tax purposes.
SECTION 6.07 LIABILITY FOR EXPENSES. Each of Tech-Sym, Newco and the
Company will pay all expenses incurred by it in connection with the negotiation,
execution and performance of this Agreement, whether or not the transaction
contemplated hereby is consummated, including the fees and expenses of its
counsel and auditors; provided, however, that in the event (i) of a termination
of this Agreement by the Company pursuant to Section 10.01(d) hereof or (ii)
that any condition to closing specified in Section 8.01(a) or Section 8.02(l) is
not satisfied and prior to the Special Meeting CogniSeis shall have received an
Acquisition Proposal that is pending at the time of the Special Meeting and
that, if consummated, would result in a transaction more favorable to the
Stockholders from a financial point of view than the Merger, the Company will be
obligated to promptly pay to Purchaser a termination fee of $500,000.
SECTION 6.08 ADDITIONAL AGREEMENTS. Subject to the terms and
conditions of this Agreement, each of the parties hereto agrees to use all
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement.
SECTION 6.09 COMPANY EMPLOYEES. Tech-Sym agrees that employees of the
Company at the Effective Time, to the extent they participate in employee
benefit plans of Tech-Sym after the Effective Time and to the extent the terms
of such plans permit, shall be given credit for service rendered as an employee
of the Company towards vesting and participation requirements contained in
Tech-Sym' plans, provided that nothing contained in this Section 6.09 shall (i)
make any employees of the Company anything other than "employees at will" of the
Surviving Corporation or be considered as a guaranty of continued employment for
a specified term, (ii) require Tech-Sym to substitute any of its employee
benefit plans for those of the Company, or (iii) be deemed as a representation
or warranty by Tech-Sym as to the equivalency of its employee benefit plans as
compared to those of the Company.
SECTION 6.10 INDEMNIFICATION OF OFFICERS AND DIRECTORS OF THE COMPANY.
After the Effective Time, Tech-Sym will, and will cause the Surviving
Corporation to, indemnify, defend and hold harmless the present and former
officers and directors of the Company (an "Indemnified CogniSeis Party") against
all losses, claims, damages or liabilities arising out of actions or omissions
occurring on or prior to the Effective Time to the full extent provided under
the Restated Certificate of Incorporation and Bylaws of the Company in effect at
the date of this Agreement, including without limitation provisions relating to
advances of expenses incurred in the defense of any action or suit (including
without limitation attorneys' fees of counsel selected by the Indemnified
CogniSeis Party).
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SECTION 6.11 PREPARATION OF REGISTRATION STATEMENT AND
PROSPECTUS/PROXY STATEMENT. Tech-Sym shall promptly file with the SEC the
Registration Statement, in which the Prospectus/Proxy Statement will be included
as a prospectus. Each of Tech-Sym and the Company shall use its best efforts to
have the Registration Statement declared effective under the Securities Act as
promptly as practicable after such filing. Each of the Company and Tech-Sym
shall use its best efforts to cause the Prospectus/Proxy Statement to be mailed
to stockholders of the Company at the earliest practicable date. Tech-Sym shall
use its best efforts to obtain all necessary state securities laws or "blue sky"
permits, approvals and registrations in connection with the issuance of Shares.
SECTION 6.12 COMBINED EARNINGS RELEASE. Tech-Sym shall make a public
release of earnings of Tech-Sym and the Company on a combined basis with respect
to at least 30 days of operations following the Effective Time, provided that,
at Tech-Sym's option, such period may be either (i) the first full calendar
month following the Effective Time or (ii) the period from the Effective Time to
the end of the calendar quarter in which the Effective Time occurs if such
period covers a period of at least 30 days. Such release shall be made as soon
as reasonably practicable following the end of the period selected by Tech-Sym
but in no event later than 45 days following the end of such period.
ARTICLE SEVEN
INDEMNIFICATION OBLIGATIONS OF STOCKHOLDERS
SECTION 7.01. RIGHT OF SET-OFF. From and after the Effective Time and
subject to the limitations set forth herein, the Escrow Shares (the "Security
Deposit") shall be subject to offset by Tech-Sym for any and all Indemnifiable
Damages (as defined below). For this purpose, "Indemnifiable Damages" means the
aggregate of all expenses, losses, costs, deficiencies, liabilities and damages
(including reasonable attorneys' fees and court costs) incurred or suffered by
Tech-Sym or Newco or any of their directors, agents, employees or affiliates or
their affiliates' directors, agents or employees (collectively, the "Indemnified
Tech-Sym Parties") as a result of or in connection with any (i) inaccurate
representation or warranty made by the Company in or pursuant to this Agreement
or (ii) default prior to the Effective Time in the performance of any of the
covenants or agreements made by the Company in or pursuant to this Agreement. In
addition, the Security Deposit shall be subject to offset by Tech-Sym for Claims
Defense Expenses that Tech-Sym is obligated to pay pursuant to Section 7.04.
"Claims Defense Expenses" means any reasonable out-of-pocket expenses incurred
by or on behalf of the Stockholders' Representative in connection with the
investigation, negotiation, defense or settlement of any Claim (as defined in
Section 7.03).
SECTION 7.02 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS.
The representations and warranties made by the Company pursuant to this
Agreement will survive for a period of six months following the Effective Time;
PROVIDED, THAT Claims first asserted in writing pursuant to Section 7.03(b)
hereof within such six-month period (whether or not judicial action has
commenced or the amount of any such Claim has become ascertainable within such
period) shall not thereafter be barred.
SECTION 7.03. PROCEDURES FOR SET-OFF. Tech-Sym may set-off against the
Security Deposit any Indemnifiable Damages subject, however, to the following
terms and conditions and such other terms and conditions as provided in the
Escrow Agreement:
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(a) Such right of set-off shall not apply to the first $300,000 of
Indemnifiable Damages.
(b) Tech-Sym shall give written notice to the Stockholders'
Representative of any claim of breach of any such representation or
warranty made or claim of default in the performance of any such covenant
or agreement (each, a "Claim"), which notice shall set forth the amount of
loss, damage, cost or expense which Tech-Sym claims the Indemnified Parties
have sustained by reason thereof.
(c) Tech-Sym shall give notice to the Stockholders' Representative
promptly after receipt of a claim from a third party that may result in a
Claim for Indemnifiable Damages (a "Third Party Claim"), and Tech-Sym
shall, and shall cause the Surviving Corporation to, make available to the
Stockholders' Representative all witnesses, pertinent records, materials
and information in the possession of Tech-Sym or the Surviving Corporation
reasonably related to such Third Party Claim and reasonably requested by
the Stockholders' Representative. Tech-Sym shall not, and shall cause the
Surviving Corporation not to, settle any Third Party Claim without the
prior written consent of the Stockholders' Representative, which consent
shall not be unreasonably withheld.
(d) Set-off by Tech-Sym with respect to a Claim shall be effected on
the later to occur of the expiration of 30 days from the date of the notice
of such Claim (the "Notice of Contest Period") or, if such Claim is
contested by written notice from the Stockholders' Representative given to
Tech-Sym on or prior to the expiration of the Notice of Contest Period, the
date the dispute relating to such Claim is resolved by either (i) written
agreement between Tech-Sym and the Stockholders' Representative, (ii) any
final and nonappealable judgment rendered in a court of competent
jurisdiction or (iii) a written arbitration decision rendered pursuant to
the procedures specified in subsection (e) below, and any set-off
determined by any of such methods, upon delivery to the Escrow Agent of a
copy of such written agreement, judgment or arbitration decision, shall be
immediately charged against the Security Deposit pro rata in proportion to
the Stockholders' respective deposits of Shares. Any written agreement
between Tech-Sym and the Stockholders' Representative pursuant to clause
(i) of the preceding sentence shall be binding and conclusive with respect
to the subject matter thereof and its effect on the Shares comprising the
Security Deposit held by the Escrow Agent.
(e) If, prior to the expiration of the Notice of Contest Period with
respect to a Claim, the Stockholders' Representative shall notify Tech-Sym
in writing of its determination to contest such Claim and if the dispute
relating to such Claim is not resolved within 30 days after expiration of
the Notice of Contest Period with respect to such Claim (the "Resolution
Period"), then such dispute shall be resolved by a panel of three
arbitrators (one appointed by the Stockholders' Representative, one
appointed by Tech-Sym and one appointed by the other two so appointed),
which shall be appointed within 30 days after the expiration of the
Resolution Period. The arbitration shall take place in Houston, Texas. The
arbitrators shall abide by the rules of the American Arbitration
Association and shall render a written decision within 45 days of the
commencement of such arbitration. Any written decision rendered by the
arbitrators shall be final and binding on all parties.
(f) For purposes of this Article Seven, Shares shall be valued at the
Share Market Value.
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(g) Except with respect to Shares transferred to Tech-Sym pursuant to
its right of set-off, all Shares deposited with the Escrow Agent on behalf
of a Stockholder pursuant to the provisions of Section 2.02 hereof shall be
deemed to be owned by such Stockholder and such Stockholder shall be
entitled to vote the same and to receive all dividends declared thereon;
PROVIDED, HOWEVER, that there shall also be deposited with Tech-Sym,
subject to the terms of this Article 7, all Shares issuable to such
Stockholder as a result of any stock dividend or stock split with respect
to the Shares then on deposit with the Escrow Agent pursuant to the Escrow
Agreement.
(h) Tech-Sym agrees to cause the Escrow Agent to deliver to the
Stockholders no later than six months from the Effective Time any Shares
then on deposit with the Escrow Agent unless there then remains unresolved
any claim as to which notice has been given as provided in this Section
7.03, in which event any Shares remaining on deposit after such Claim shall
have been satisfied shall be returned to the Stockholders promptly after
the time of satisfaction. Any such distribution of Shares shall be made on
a pro rata basis in relation to the number of Shares initially deposited
with the Escrow Agent on behalf of each Stockholder pursuant to the
provisions of Section 2.02 hereof.
(i) The Stockholders' Representative shall not be liable for any error
of judgment or for any act done or omitted by it in good faith or for any
mistake in fact or law, except its own willful misconduct or gross
negligence.
SECTION 7.04 PAYMENT OF CLAIMS DEFENSE EXPENSES. Tech-Sym shall pay
Claims Defense Expenses as to which Tech-Sym has been provided copies of
invoices or other billing documentation evidencing that the expenses reflected
therein are Claims Defense Expenses; provided that Tech-Sym shall not be
obligated to pay any Claim Defense Expense to the extent that the Shares and any
cash remaining in Escrow, at the time of Tech-Sym's receipt of any invoice or
other billing documentation therefor, would be insufficient, if delivered to
Tech-Sym pursuant to its right to offset for Claims Defense Expenses paid by it,
to reimburse Tech-Sym in full for such payment (for this purpose giving each
Share held in Escrow a value equal to the Share Market Value).
SECTION 7.05 SOLE REMEDY FOR INDEMNIFIABLE DAMAGES. The remedy
provided for in this Article Seven shall be the only remedy available to
Tech-Sym or Newco following the Effective Time with respect to Claims for
Indemnifiable Damages under this Agreement or otherwise with respect to the
representations and warranties made by the Company pursuant to this Agreement.
ARTICLE EIGHT
CLOSING CONDITIONS
SECTION 8.01 CONDITIONS TO EACH PARTY'S OBLIGATIONS UNDER THIS
AGREEMENT. The respective obligations of each party to consummate the Merger
shall be subject to the fulfillment at or prior to the Effective Time of the
following conditions:
(a) This Agreement and the transactions contemplated hereby shall have
been approved by the affirmative action of the Stockholders in accordance
with applicable law and the Company's Restated Certificate of
Incorporation.
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(b) All necessary regulatory approvals required to consummate the
transactions contemplated hereby shall have been obtained and shall remain
in full force and effect and all statutory waiting periods in respect
thereof shall have expired.
(c) None of Tech-Sym, Newco, the Company or any Stockholder shall be
subject to any order, decree or injunction of a court or agency of
competent jurisdiction which enjoins or prohibits the consummation of the
Merger.
SECTION 8.02 CONDITIONS TO THE OBLIGATIONS OF TECH-SYM AND NEWCO UNDER
THIS AGREEMENT. The obligations of Tech-Sym and Newco to consummate the Merger
shall be further subject to the satisfaction, at or prior to the Effective Time,
of the following conditions, any one or more of which may be waived in writing
by Tech-Sym:
(a) Each of the obligations of the Company required to be performed by
it at or prior to the Closing pursuant to the terms of this Agreement shall
have been duly performed and complied with in all material respects, and
the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Effective Time as though made at and as of
the Effective Time (except as to any representation or warranty which
specifically relates to an earlier date), and Tech-Sym and Newco shall have
received a certificate to that effect signed by the chief executive officer
and senior accounting officer of the Company.
(b) All action required to be taken by or on the part of the Company
and the Stockholders to authorize the execution, delivery and performance
of this Agreement by the Company and the consummation by the Company of the
transactions contemplated hereby shall have been duly and validly taken by
the board of directors and the Stockholders, and Tech-Sym and Newco shall
have received certified copies of the resolutions evidencing such
authorization.
(c) Any and all permits, consents, waivers, clearances, approvals and
authorizations of all third parties and governmental bodies required to be
obtained by the Company or the Stockholders to consummate the transactions
contemplated hereby shall have been obtained by the Company or the
Stockholders. None of the approvals referred to in Schedule 3.06 hereto
shall contain any term or condition which would materially impair the value
of the Company to Tech-Sym.
(d) Tech-Sym shall have received an opinion from Baker & Botts,
L.L.P., counsel to the Company, dated the date of the Closing, in form
reasonably satisfactory to Tech-Sym, covering the matters set forth in
Exhibit 8.02(d) attached hereto.
(e) Each of Patrick H. Poe, Diana McSherry and David Judson shall have
executed and delivered to Tech-Sym noncompetition agreements substantially
in the form of Exhibit 8.02(e) attached hereto.
(f) Each of the persons set forth in Schedule 5.06 shall have executed
and delivered to TechSym an Affiliates Letter substantially in the form of
Exhibit 8.02(f) attached hereto.
(g) Each director of the Company and each officer of the Company on
the date hereof shall have executed, and delivered to Tech-Sym, a general
release of claims in the form of Exhibit 8.02(g) attached hereto.
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(h) Each Stockholder identified in Group 1 in Exhibit 8.02(h)(i)
attached hereto shall have executed and delivered to Tech-Sym a Stockholder
Agreement in the form of Exhibit 8.02(h)(ii) attached hereto (except with
respect to changes to Section 2 thereof that are satisfactory to the
Company), and the beneficiary of each Stockholder identified in Group 2 in
Exhibit 8.02(h)(i) attached hereto shall have executed and delivered to
Tech-Sym a Beneficiary Agreement in the form of Exhibit 8.02(h)(iii)
attached hereto.
(i) The Stockholders' Representative shall have executed and delivered
the Escrow Agreement substantially in the form of Exhibit 2.02 attached
hereto.
(j) Tech-Sym shall have received a letter from Ernst & Young LLP,
accountants for the Company, in the form previously provided to Tech-Sym by
the Company, to the effect that the Company has not taken any action prior
to the Effective Time that would prevent Tech-Sym from treating the Merger
as a "pooling of interests" for accounting purposes.
(k) Stockholders of the Company holding not more than five percent
(5%) of the outstanding shares of Company Common Stock immediately prior to
the Effective Time shall have properly exercised and perfected (and not
withdrawn) dissenters' rights pursuant to Section 262(d)(1) of the DGCL as
of the time of the Special Meeting.
The Company will furnish Tech-Sym and Newco with such other
certificates of its officers or others and such other documents to evidence
fulfillment of the conditions set forth in this Section 8.02 as TechSym and
Newco may reasonably request.
SECTION 8.03 CONDITIONS TO THE OBLIGATIONS OF THE COMPANY UNDER THIS
AGREEMENT. The obligations of the Company to consummate the Merger shall be
further subject to the satisfaction, at or prior to the Effective Time, of the
following conditions, any one or more of which may be waived in writing by the
Company:
(a) Each of the obligations of Tech-Sym and Newco required to be
performed by either at or prior to the Closing pursuant to the terms of
this Agreement shall have been duly performed and complied with in all
material respects, and the representations and warranties of Tech-Sym and
Newco contained in this Agreement shall be true and correct in all material
respects as of the date of this Agreement and as of the Effective Time as
though made at and as of the Effective Time (except as to any
representation or warranty which specifically relates to an earlier date),
and the Company shall have received a certificate to that effect signed by
an authorized officer of Tech-Sym and Newco.
(b) All action required to be taken by, or on the part of, Tech-Sym
and Newco to authorize the execution, delivery and performance of this
Agreement by Tech-Sym and Newco and the consummation by Tech-Sym and Newco
of the transactions contemplated hereby shall have been duly and validly
taken by the boards of directors of Tech-Sym and Newco, and the Company
shall have received certified copies of the resolutions evidencing such
authorizations.
(c) Any and all permits, consents, waivers, clearances, approvals and
authorizations of all third parties and governmental bodies required to be
obtained by Tech-Sym or Newco shall have been obtained by Tech-Sym and
Newco which are
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necessary in connection with the consummation of the Merger and the other
transactions contemplated hereby.
(d) The Company shall have received an opinion from Andrews & Kurth
L.L.P., counsel for Tech-Sym, dated the date of the Closing, in form
reasonably satisfactory to the Company, substantially in the form of
Exhibit 8.03(d) attached hereto.
(e) The Company shall have received an opinion, satisfactory to the
Company, of Baker & Botts, L.L.P., counsel to the Company, to the effect
that, if the Merger is consummated in accordance with the terms of this
Agreement, the Merger will be treated for federal income tax purposes as a
reorganization within the meaning of Section 368(a) of the Code, the
Company, Tech-Sym and Newco will each be a party to that reorganization
within the meaning of Section 368(b) of the Code and no gain or loss will
be recognized by a stockholder of the Company as a result of the Merger
upon the conversion of shares of Company Common Stock into Shares, which
opinion shall not have been withdrawn or modified in any material respect.
In rendering such opinion, such counsel may receive and rely upon
representations of fact contained in certificates of the Company, Tech-Sym
and Newco.
Tech-Sym and Newco will furnish the Company with such certificates of
their officers or others and such other documents to evidence fulfillment of the
conditions set forth in this Section 8.03 as the Company may reasonably request.
ARTICLE NINE
CLOSING
SECTION 9.01 CLOSING. The closing of the transactions contemplated by
this Agreement (the "Closing") shall take place at the offices of Andrews &
Kurth L.L.P., 4200 Texas Commerce Tower, Houston, Texas, at 10:00 a.m., local
time, on the date of the Special Meeting, or at such other time and place and on
such other date as Tech-Sym and the Company shall agree (the "Closing Date").
SECTION 9.02 DELIVERIES AT THE CLOSING. Subject to the provisions of
Articles Eight and Ten hereof, at the Closing there shall be delivered to
Tech-Sym, Newco and the Company the opinions, certificates and other documents
and instruments to be delivered under Article Eight hereof.
SECTION 9.03 FILINGS AT THE CLOSING. Subject to the provisions of
Articles Eight and Ten hereof, Newco and the Company shall, as part of the
Closing, cause the Merger Certificate to be filed in accordance with the
provisions of Section 103 of the DGCL, and shall take any and all other lawful
actions and do any and all other lawful things necessary to cause the Merger to
become effective.
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ARTICLE TEN
TERMINATION AND ABANDONMENT
SECTION 10.01 TERMINATION. This Agreement may be terminated and the
Merger contemplated hereby may be abandoned at any time prior to the Effective
Time, whether before or after approval of the Merger by the Stockholders:
(a) by mutual consent of Tech-Sym and the Company;
(b) by Tech-Sym if the Company fails to perform in any material
respect any of its material obligations or fulfill any of the conditions
imposed on it under this Agreement and such failure shall not have been
remedied within ten business days after receipt by the Company of notice in
writing from Tech-Sym or Newco specifying the nature of such breach and
requesting that it be remedied;
(c) by the Company if Tech-Sym or Newco fails to perform in any
material respect any of their respective material obligations or fulfill
any of the conditions imposed on them under this Agreement and such failure
shall not have been remedied within ten business days after receipt by
TechSym and Newco of notice in writing from the Company specifying the
nature of such breach and requesting that it be remedied;
(d) by the Company if the Board of Directors of the Company
determines that it will not recommend approval and adoption of this
Agreement by the Stockholders, or if such recommendation is withdrawn, as
provided in Section 5.04; or
(e) by either Tech-Sym or the Company:
(i) if a court of competent jurisdiction or governmental,
regulatory or administrative agency or commission shall have issued an
order, decree or ruling or taken any other action (which order, decree
or ruling the parties hereto shall use their best efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting
the transactions contemplated by this Agreement, and such order,
decree, ruling or other action shall have become final and
nonappealable;
(ii) if the Closing has not occurred on or before August 31,
1995; PROVIDED, that the right to terminate this Agreement shall not
be available to any party whose material breach of this Agreement has
been the cause of, or resulted in, the failure of the Merger to occur
on or before such date; or
(iii) if the Stockholders fail to approve the Merger by the
required affirmative vote of the outstanding shares of Company Common
Stock at the meeting held for that purpose.
SECTION 10.02 PROCEDURE AND EFFECT OF TERMINATION. In the event of
termination and abandonment of the Merger by the Company or Tech-Sym or each of
them pursuant to Section 9.01 hereof, written notice thereof shall forthwith be
given to the other and this Agreement shall terminate and the Merger shall be
abandoned, without further action by any of the parties hereto. If this
Agreement is terminated as provided herein:
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(a) Upon request therefor, each party will redeliver all documents,
work papers and other material of any other party relating to the
transactions contemplated hereby, whether obtained before or after the
execution hereof, to the party furnishing the same; and
(b) No party hereto shall have any liability or further obligation to
any other party to this Agreement, except as set forth in Sections 6.01 and
6.07 hereof, provided that nothing contained herein shall relieve any party
from liability for any material breach of this Agreement.
ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.01 INVESTIGATION; SURVIVAL OF WARRANTIES. The respective
representations and warranties of the parties contained herein or in any
certificates or other documents delivered prior to or at the Closing shall not
be deemed waived or otherwise affected by any investigation made by any party
hereto. Each and every such representation and warranty shall survive the Merger
for a period of six months following the Effective Time.
SECTION 11.02 AMENDMENT AND MODIFICATION. This Agreement may be
amended by the parties by an instrument in writing signed on behalf of all the
parties, at any time before or after approval of this Agreement by the
Stockholders, provided that an amendment made subsequent to the adoption of this
Agreement by the stockholder of Newco and the stockholders of the Company shall
not, without the further approval of such stockholders, (1) alter or change the
amount or kind of shares, securities, cash, property and/or rights to be
received in exchange for or on converison of all or any of the shares of any
class or series thereof of Newco or the Company, (2) alter or change any term of
the certificate of incorporation of the Surviving Corporation, or (3) alter or
change any of the terms and conditions of this Agreement if such alteration or
change would adversely affect the holders of any class or series thereof of
Newco or the Company.
SECTION 11.03 WAIVER OF COMPLIANCE; CONSENTS. Any failure of a party
to comply with any obligation, covenant, agreement or condition contained herein
may be waived in writing by the other parties, but such waiver or failure to
insist upon strict compliance with such obligation, covenant, agreement or
condition shall not operate as a waiver of, or estoppel with respect to, any
subsequent or other failure. Whenever this Agreement requires or permits consent
by or on behalf of any party hereto, such consent shall be given in writing in a
manner consistent with the requirements for a waiver of compliance as set forth
in this Section 11.03.
SECTION 11.04 VALIDITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provisions of this Agreement, which shall remain in full force and
effect.
SECTION 11.05 PARTIES IN INTEREST. This Agreement shall be binding
upon and inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to confer upon any other person any
rights or remedies of any nature whatsoever under or by reason of this
Agreement, except with respect to the provisions of Sections 6.09 and 6.10.
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SECTION 11.06 NOTICES. All notices and other communications hereunder
shall be in writing and shall be deemed given when delivered, whether
personally, by telegram, telex, facsimile transmission (followed by first class
mail, postage prepaid) or registered or certified mall (return receipt
requested) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Tech-Sym or Newco, to:
Tech-Sym Inc.
10500 Westoffice Drive, Suite 200
Houston, Texas 77042-5391
Attention: J. Rankin Tippins
Telecopy: (713) 780-3524
and a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: Thomas P. Mason, Esq.
Telecopy: (713) 220-4285
(b) if to the Company, to:
CogniSeis Development, Inc.
2401 Portsmouth
Houston, Texas 77098
Attention: Patrick H. Poe
Telecopy: (713) 630-6368
with a copy to the Stockholders' Representative at such address
as specified by the Stockholders' Representative by giving notice
as provided herein
and a copy to:
Baker & Botts, L.L.P.
One Shell Plaza
Houston, Texas 77002
Attention: J. David Kirkland, Jr., Esq.
Telecopy: (713) 229-1522
SECTION 11.07. ENTIRE AGREEMENT. This Agreement, including the
exhibits attached hereto and the Disclosure Schedules provided to Tech-Sym by
the Company
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concurrently with the execution and delivery of this Agreement,
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersedes all prior agreements and undertakings, both written
or oral, among the parties, or any of them, with respect to the subject matter
hereof.
TECH-SYM CORPORATION
By:
---------------------------------
Wendell W. Gamel, Chairman and
Chief Executive Officer
CSD MERGER, INC.
By:
--------------------------------
Wendell W. Gamel, President
COGNISEIS DEVELOPMENT, INC.
By:
---------------------------------
<PAGE>
EXHIBITS
Exhibit 1.04 Officers of Surviving Corporation
Exhibit 2.02 Form of Escrow Agreement
Exhibit 8.02(d) Form of Legal Opinion of Counsel for Company
Exhibit 8.02(e) Form of Non-Competition Agreement
Exhibit 8.02(f) Form of Affiliates Agreement
Exhibit 8.02(g) Form of General Release
Exhibit 8.02(h)(i) List of Stockholders
Exhibit 8.02(h)(ii) Form of Stockholder Agreement
Exhibit 8.02(h)(iii) Form of Beneficiary Agreement
Exhibit 8.03(d) Form of Legal Opinion of Counsel for Tech-Sym and Newco
<PAGE>
EXHIBIT 1.04
COGNISEIS DEVELOPMENT, INC. OFFICER LIST
Richard Miles Chairman of the Board
Patrick Poe President and Chief Executive Officer
Diana McSherry Chief Operating Officer and Secretary
Ronald Warren Vice President and Chief Financial Officer
Luis Canales Vice President Geophysical Development
Duane Dopkin Vice President Applied Geophysics
Don Duyka Vice President Development
David Judson Vice President Systems Development
John Wearing Vice President Sales Western Hemisphere
Ray Thompson Assistant Treasurer
Rankin Tippins Assistant Secretary
<PAGE>
EXHIBIT 2.02
ESCROW AGREEMENT
ESCROW AGREEMENT (this "Escrow Agreement") dated as
of ______________, 1995 among Tech-Sym Corporation, a Nevada corporation
("Tech-Sym"), Continental Stock Transfer & Trust Company, a ____________
corporation (the "Escrow Agent"), and ___________________________________ (the
"Stockholders' Representative"). (All of such entities and individuals are
sometimes referred to herein as the "Parties.")
R E C I T A L S
WHEREAS, Tech-Sym, CSD Merger, Inc., a Delaware corporation and a
wholly-owned subsidiary of Tech-Sym, and CogniSeis Development, Inc., a Delaware
corporation ("CogniSeis"), entered into an Agreement and Plan of Merger, dated
as of May 11, 1995 (the "Merger Agreement"), a copy of which is attached as
Exhibit A;
WHEREAS, Section 2.02 of the Merger Agreement provides for the deposit
of a portion of the shares of common stock, par value $0.10 per share, of
Tech-Sym (the "Tech-Sym Common Shares"), to be received by the stockholders of
CogniSeis in connection with the merger contemplated by the Merger Agreement
(the "Merger") with the Escrow Agent pursuant to this Escrow Agreement; and
WHEREAS, Continental Stock Transfer & Trust Company is the exchange
agent (the "Exchange Agent") with respect to the issuance of Tech-Sym Common
Shares to the stockholders of CogniSeis in connection with the Merger;
NOW, THEREFORE, the Parties hereto, intending to be legally bound and
in consideration of the mutual covenants herein contained, hereby agree as
follows:
1. RECEIPT OF ESCROW SHARES BY ESCROW AGENT. Certificates representing
the Tech-Sym Common Shares to be received by the Escrow Agent from the Exchange
Agent pursuant to Section 2.02 of the Merger Agreement (collectively, the
"Escrow Shares") shall be held by the Escrow Agent in escrow (the "Escrow") upon
the terms and conditions specified in this Escrow Agreement and the Merger
Agreement. In addition, any dividends or other distributions made by Tech-Sym in
respect of the Escrow Shares shall also be held in Escrow by the Exchange Agent
upon the terms and conditions specified in this Escrow Agreement and the Merger
Agreement. The Escrow Shares and any such dividends or distributions are
collectively referred to herein as the "Security Deposit."
2. TERMS OF ESCROW. The Security Deposit shall be distributed by the
Escrow Agent to either Tech-Sym or to the stockholders of CogniSeis in
accordance with the terms and conditions of the Merger Agreement.
3. TERMINATION. The Escrow Agent shall deliver all Tech-Sym Common
Shares then held by it on the Termination Date (as defined below) to Tech-Sym or
to the stockholders of CogniSeis, as provided in the Merger Agreement, unless
there remains unresolved any claim as to which notice has been given as provided
in the Merger Agreement, in which event any Tech-Sym Common Shares remaining
after such claim shall have been satisfied shall be returned to Tech-Sym or to
the stockholders of CogniSeis, as provided in the Merger Agreement, promptly
after the time of satisfaction. Any such distribution of Tech-Sym Common Shares
shall be made on a pro rata basis in relation to the number of Tech-Sym Common
Shares initially deposited with the Escrow
-1-
Agent on behalf of each stockholder of CogniSeis. "Termination Date" shall mean
six months after the date of this Escrow Agreement, or such earlier date as may
be mutually agreed upon by the Parties (other than the Escrow Agent) hereunder.
4. EXPENSES. The reasonable expenses of the Escrow Agent in carrying
out the provisions of the Escrow, including attorneys fees and such other costs
as may be reasonably incurred by it, shall be paid by Tech-Sym in accordance
with the Schedule attached hereto as Exhibit B.
5. INDEMNITY. The Escrow Agent shall not be liable for any error of
judgment or for any act done or omitted by it in good faith or for any mistake
in fact or law, except its own willful misconduct or negligence. The Escrow
Agent shall be protected in acting upon any notice, certificate or other
instrument believed by it to be genuine and to have been properly executed. The
Escrow Agent may consult its legal counsel on any questions as to the
construction and provisions of this Escrow, or its duties hereunder, and it
shall be fully protected in acting in accordance with the advice of such
counsel.
6. TEXAS LAW TO GOVERN. This Escrow Agreement shall be governed by and
interpreted in accordance with the laws of the State of Texas applicable to
contracts made and to be performed therein, without regard to the conflicts of
laws principles thereof.
7. NOTICES. All notices, requests and demands and other communications
hereunder shall be in writing, and shall be deemed to have been duly given if
delivered by hand or mailed, first class, postage prepaid, to the Parties at the
following addresses (or at such other address for a party as shall be specified
by like notice):
(a) if to Tech-Sym, to:
Tech-Sym Inc.
10500 Westoffice Drive, Suite 200
Houston, Texas 77042-5391
Attention: J. Rankin Tippins
Telecopy: (713) 780-3524
and a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: Thomas P. Mason, Esq.
Telecopy: (713) 220-4285
(c) if to the Stockholders' Representative, to:
-2-
with a copy to:
Baker & Botts, L.L.P.
One Shell Plaza
Houston, Texas 77002
Attention: J. David Kirkland, Jr., Esq.
Telecopy: (713) 229-1522
(d) if to the Escrow Agent, to:
Continental Stock Transfer & Trust Company
2 Broadway
New York, New York 10004
Attention: Compliance Department
Telecopy: (212) 509-5150
8. COUNTERPARTS. This Agreement may be executed by the Parties in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument. Each counterpart may consist of a number of copies hereof each
signed by less than all, but together signed by all the Parties. Facsimile
signatures or signatures received by electronic transmissions shall be
acceptable.
9. TAX REPORTING. Unless otherwise required by Treasury Regulations
issued in the future, the Parties will treat the Escrow Shares for purposes of
Section 468B(g) of the Internal Revenue Code of 1986, as amended, and for all
other income tax purposes as being owned by the former stockholders of the
Company during the period the Escrow Shares are held in Escrow, and therefore
any income earned on the Escrow Shares during such period will be allocated and
reported to the former stockholders of the Company as such income is earned. The
Parties will make any elections or filings required to characterize the Escrow
Shares in a manner consistent with the preceding sentence.
IN WITNESS WHEREOF, the Parties have executed this Escrow Agreement as
of the day and year first above written.
TECH-SYM CORPORATION
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
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CONTINENTAL STOCK TRANSFER &
TRUST COMPANY
By:
-------------------------------
Name:
-------------------------------
Title:
-------------------------------
STOCKHOLDERS' REPRESENTATIVE
--------------------------------------
-4-
<PAGE>
EXHIBIT 8.02(d)
The following opinions are to be provided by Baker & Botts, L.L.P.,
subject to customary assumptions, limitations and qualifications. All
capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Agreement to which this exhibit is attached.
(i) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the state of Delaware, with all requisite
corporate power and authority to own, operate and lease its properties and to
carry on its business as described in the Registration Statement.
(ii) The Company has all requisite corporate power and authority to
execute and deliver this Agreement and to carry out its obligations hereunder.
The execution and delivery of this Agreement by the Company, the performance by
the Company of its obligations hereunder and the consummation by the Company of
the transactions contemplated hereby have been duly authorized by the Company's
board of directors, this Agreement has been approved and adopted by the
stockholders of the Company in accordance with the DGCL and the Restated
Certificate of Incorporation and Bylaws of the Company, and no other corporate
proceeding on the part of the Company is necessary to authorize this Agreement
or to consummate the transactions contemplated hereby.
(iii) This Agreement has been duly and validly executed and delivered
by the Company and constitutes a valid and binding obligation of the Company,
enforceable against it in accordance with its terms. Neither the execution and
delivery of this Agreement by the Company and the performance by the Company of
its obligations hereunder nor the consummation by the Company of the
transactions contemplated hereby (i) will conflict with or result in any breach
of any provision of the Restated Certificate of Incorporation or Bylaws of the
Company or (ii) to our knowledge, will violate any order, writ, judgment,
injunction, decree, statute, rule or regulation of any court or governmental
authority applicable to the Company or any of its properties or assets.
(iv) The authorized, issued and outstanding capital stock of the
Company as of the date of this Agreement is as set forth in Schedule 3.03 of the
Disclosure Schedules. The outstanding shares of Company Common Stock shown on
Schedule 3.03 as owned by the Shareholders are legally and validly authorized
and issued, fully paid and nonassessable. To the knowledge of such counsel, the
Company has no outstanding securities convertible into, exercisable for or
exchangeable for any equity securities of the Company.
(v) Except for the filing of the Merger Certificate pursuant to the
DGCL, no filing or registration with, no notice to and no permit, authorization,
consent or approval of any third party or any public or governmental body or
authority is necessary for the consummation by the Company of the Merger.
-1-
<PAGE>
EXHIBIT 8.02(e)
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is entered into as of May 11, 1995
between Tech-Sym Corporation, a Nevada corporation ("Tech-Sym"), and ___________
__________________________ (the "Employee").
RECITALS
Tech-Sym, CSD Merger, Inc., a Delaware corporation and wholly-owned
subsidiary of Tech- Sym ("Newco"), and CogniSeis Development, Inc., a Delaware
corporation ("CogniSeis"), are parties to an Agreement and Plan of Merger dated
as of May 11, 1995 (the "Merger Agreement"), pursuant to which Newco will merge
with and into CogniSeis, shareholders of CogniSeis will exchange their CogniSeis
shares for shares of Tech-Sym, and CogniSeis will become a wholly-owned
subsidiary of Tech-Sym.
Employee has been a shareholder and key employee of CogniSeis and
possesses extensive knowledge and experience regarding CogniSeis' business and
operations.
This Agreement is being entered into concurrently with the Merger
Agreement as an inducement to Tech-Sym to enter into the Merger Agreement and
serves to protect, enhance and add value to the business being acquired by
Tech-Sym.
Tech-Sym and Employee desire to set forth the terms and conditions
of their mutual understanding with respect to Employee's non-competition
commitments.
COVENANTS
1. In addition to and not in limitation of any other restrictive
covenant which may be binding on Employee, and in consideration of Tech-Sym's
acquisition of Employee's substantial interest in CogniSeis, Employee agrees as
follows:
(a) For the purpose of this Agreement, "confidential information"
means any information not generally known outside of CogniSeis or
information entrusted to CogniSeis by third parties, and includes
information known to Employee as confidential or secret or which Employee
shall have reason to know or reasonably should know is confidential or
secret. This information may relate, for example, to business or marketing
plans, computer programming, research, development, purchasing,
accounting, selling, marketing, costs, profits, sales, products,
personnel, pricing policies and other business affairs and methods and
other information not readily available to the public, and plans for
future development. This information may be contained in material such as
data reports, agreements, correspondence, customer lists, specifications
or computer programs, or may be in the nature of, or consist of, unknown
knowledge, techniques, processes, practices or know-how.
(b) Employee acknowledges that, during Employee's employment with
CogniSeis, Employee has been given, and in the future may be given, access
to or become acquainted with confidential information. Employee agrees
that such confidential information is of great value to CogniSeis and
agrees not to use or
-1-
disclose any confidential information in any manner during Employee's
employment with CogniSeis or thereafter other than as expressly required
by CogniSeis in Employee's work for CogniSeis, without CogniSeis' prior
written consent. Employee agrees that all confidential information,
documents or other materials relating to CogniSeis's business, whether
prepared or conceived by Employee or by any other person during Employee's
employment with CogniSeis or pursuant to any consulting arrangement or
other association or business relationship with CogniSeis, or which may be
in Employee's possession or control, are CogniSeis' sole and exclusive
property, and may be removed from CogniSeis' premises only if permitted by
CogniSeis in accordance with its rules and regulations. Employee agrees to
immediately return all confidential materials to CogniSeis when no longer
required in order for Employee to perform Employee's services for
CogniSeis, when Employee is terminated, or whenever CogniSeis may
otherwise require.
(c) Without CogniSeis' express prior written approval, Employee
shall not (i) while employed by CogniSeis, plan for, acquire any
substantial financial interest in, or perform any services for any entity
not affiliated with CogniSeis that is or would be competitive with any of
the business of CogniSeis of developing and selling computer software for
geoscientific purposes; (ii) for a period of two (2) years following the
date on which Employee ceases employment with CogniSeis, accept employment
or render service to any person, firm or corporation that is engaged in a
business competitive with the businesses then engaged in by CogniSeis of
developing and selling computer software for the geoscientific market, or
directly or indirectly enter into or in any manner take part in or lend
his or her name, counsel or assistance to any venture, enterprise,
business or endeavor, either as proprietor, principal, investor, partner,
director, officer, employee, consultant, advisor, agent, independent
contractor, or in any other capacity whatsoever, for any purpose that
currently is, or in the twelve (12) month period following the date on
which Employee ceases employment with CogniSeis would be, competitive with
the business of CogniSeis of developing and selling computer software for
the geoscientific market in those geographic areas in which the businesses
engaged in by CogniSeis are conducted or have been conducted within one
(1) year prior to the date hereof; (iii) employ, attempt to employ or
solicit for employment by others, any of CogniSeis' employees while
employed by CogniSeis and for a period of two (2) years thereafter, (iv)
solicit, or cause to be solicited, any of CogniSeis' customers with
respect to the sale of products or services which are competitive with
those of CogniSeis while employed by CogniSeis and for a period of two (2)
years thereafter; or (v) at any time when not employed by CogniSeis,
solicit, cause to be solicited, or accept the disclosure of any
confidential information relating to CogniSeis or its business, operations
or activities, for any purpose whatsoever not expressly authorized by
CogniSeis.
(d) Employee acknowledges that a breach by Employee of any provision
of this Paragraph 1 will cause CogniSeis great and irreparable harm and
that CogniSeis shall be entitled to injunctive and other equitable relief
to prevent a breach or threatened breach of any provision hereof, in
addition to any other remedies CogniSeis may have, and that the provisions
of this Paragraph 1 shall be specifically enforceable against Employee in
accordance with its terms. Nothing herein contained shall prohibit
Employee from becoming employed by a competitor of CogniSeis subsequent to
the termination of his employment by CogniSeis so long as Employee has not
violated the provisions of this Paragraph 1. Employee acknowledges that in
the event the scope of the covenants set forth in this
-2-
Paragraph 1 is deemed to be too broad in any court proceeding, the court
may reduce such scope to that which it deems reasonable under the
circumstances.
2. For purpose of this Agreement, the term "CogniSeis" shall include
any corporation, joint venture, partnership or other person or entity that is in
control, controlled by or under common control with CogniSeis, whether or not
Employee is directly employed by such other corporation or corporations, and
that is involved in the development and sale of computer software for
geoscientific purposes.
3. This Agreement shall be governed by and interpreted in accordance
with the laws of the State of Texas (the state of the principal place of
business of each of Tech-Sym and CogniSeis) applicable to contracts made and to
be performed therein, without regard to the conflicts of laws principles
thereof.
4. The provisions of this Agreement are severable, and if one or
more provisions shall be deemed to be judicially unenforceable, in whole or in
part, the remaining provisions shall nevertheless be binding and enforceable.
The provisions of this Agreement shall be construed as separate provisions
covering their subject matter in each of the separate counties and states in the
United States in which transacts its business; to the extent that any provision
shall be judicially unenforceable in any one or more of these counties or
states, that provision shall not be affected with respect to each other county
or state, each provision with respect to each county and state being construed
as severable and independent. If any provision(s) of this Agreement is
determined to be unenforceable because it unreasonably restricts or unreasonably
limits Employee's right or ability to seek new or competitive business
opportunities, the parties hereto expressly agree that the reviewing court,
tribunal, administrative agency or board, or arbitrator may rewrite such
unenforceable provision(s) so as to make it enforceable.
5. Notices under this Agreement shall be deemed to have been given
if delivered in person or by electronic facsimile (hardcopy by regular mail) or
mailed, certified or registered mail with postage prepaid,
if to Employee at:
---------------------------------
---------------------------------
---------------------------------
if to Tech-Sym at:
Tech-Sym, Inc.
10500 Westoffice Drive, Suite 200
Houston, Texas 77042
Attention: J. Rankin Tippins
Telecopy No.: (713) 780-3524
with a copy to:
Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Attention: Thomas P. Mason, Esq.
Telecopy No.: (713) 220-4285
-3-
6. This Agreement shall become effective as of the Effective Time
(as defined in the Merger Agreement). In the event that the Merger Agreement is
terminated in accordance with its terms, then this Agreement will also terminate
without any action on the part of Tech-Sym or the Employee.
7. This Agreement contains the entire agreement of the parties and
supersedes any and all oral or written understandings and agreements between
them.
TECH-SYM CORPORATION
By:
----------------------------
Name:
----------------------------
Title:
----------------------------
EMPLOYEE
-----------------------------------
-4-
<PAGE>
EXHIBIT 8.02(f)
AFFILIATES AGREEMENT
This Affiliates Agreement ("Affiliates Agreement"), dated as
of____________, 1995, is executed and delivered by the undersigned (the
"Stockholder") and Tech-Sym Corporation, a Nevada corporation ("TechSym"),
pursuant to Section 8.02(f) of the Agreement and Plan of Merger, dated May 11,
1995 (the "Merger Agreement"), by and among CogniSeis Development, Inc., a
Delaware corporation (the "Company"), Tech-Sym and CSD Merger, Inc., a Delaware
corporation and a wholly-owned subsidiary of Tech-Sym.
WHEREAS, it is a condition to the closing of the merger contemplated
by the Merger Agreement that the Stockholder execute and deliver to Tech-Sym
this Affiliates Agreement;
NOW, THEREFORE, in consideration of the premises and the transactions
contemplated by the Merger Agreement, the Stockholder and Tech-Sym hereby agree
as follows:
SECTION 1. DEFINITIONS. All capitalized terms used herein shall have the
meanings ascribed thereto in the Merger Agreement except as otherwise provided
herein.
SECTION 2. SECURITIES LAW MATTERS. It is understood that the Shares have
been registered by Tech-Sym pursuant to a registration statement filed with the
SEC in accordance with the provisions of the Securities Act of 1933, as amended,
and the rules and regulations promulgated thereunder (the "1933 Act"). The
Stockholder agrees as follows with respect to the sale or other disposition of
the Shares by the Stockholder after the Effective Time:
(a) AFFILIATE REPRESENTATIONS. The Stockholder represents and warrants
that the Shares will not be sold or otherwise disposed of except pursuant
to (i) the provisions of Rule 145 under the 1933 Act, as in effect at the
time of sale, (ii) some other exemption or exclusion from the registration
requirements under the 1933 Act, which does not require the filing by
Tech-Sym with the SEC of any registration statement, offering circular or
other document, in which case the Stockholder shall first supply to
Tech-Sym an opinion of counsel (which opinion and counsel shall be
reasonably satisfactory to Tech-Sym) that such exemption or exclusion is
available, or (iii) a registration statement filed by Tech- Sym with the
SEC under the 1933 Act (which the Stockholder acknowledges Tech-Sym has no
obligation to file).
(b) COMPLIANCE WITH RULE 145(D). (i) The Stockholder hereby
acknowledges that under current SEC interpretations of Rule 145, the
Stockholder is subject to certain restrictions on transfer of the Shares
for a period of two years following the Effective Time and that during such
period one exemption from registration of the Shares upon public resale by
the Stockholder is provided by Rule 145(d).
(ii) The Stockholder further covenants and agrees that Tech-Sym will
be supplied with such written evidence of compliance by him and his broker
with Rule 145(d), as in effect at the time of any sale by him pursuant
thereto, as Tech-Sym may reasonably request.
-1-
(c) RESTRICTIVE STOCK LEGENDS. The Stockholder agrees that the
certificates for the Shares received by such Stockholder shall bear the
following legend:
The Shares represented by this certificate are subject to the
provisions of Rule 145 promulgated under the Securities Act of 1933,
and may not be transferred or disposed of by the holder without
compliance with said Rule or an otherwise available exemption from
registration.
and that Tech-Sym may place stop transfer orders with its transfer agents
with respect to such certificates.
SECTION 3. RESTRICTIONS ON TRANSFER. The Stockholder represents
and warrants to Tech-Sym and Newco that the Stockholder has not sold,
transferred, pledged, granted a security interest in or otherwise disposed
of any Shares during the period commencing 30 days prior to the Effective
Time and continuing to and including the Effective Time. From and after the
Effective Time until after the public release of earnings for Tech-Sym and
the Company on a combined basis for a period of at least 30 days following
the Effective Time, the Stockholder shall not sell, transfer, pledge, grant
a security in or otherwise dispose of any Shares held by the Stockholder.
SECTION 4. EFFECTIVENESS; TERMINATION. This Affiliates Agreement
shall become effective as of the Effective Time (as defined in the Merger
Agreement). In the event that the Merger Agreement is terminated in
accordance with its terms, then this Affiliates Agreement will also
terminate without any action on the part of Tech-Sym or the Stockholder.
IN WITNESS WHEREOF, the Stockholder has executed this Affiliates
Agreement as of the day and year first above written.
TECH-SYM CORPORATION
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
STOCKHOLDER
----------------------------------
Print Name:
-----------------------
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<PAGE>
EXHIBIT 8.02(g)
GENERAL RELEASE
GENERAL RELEASE dated as of_____________, 1995 (this "Release") by the
officer or director of CogniSeis Development, Inc., a Delaware corporation (the
"Company"), whose name is set forth on the signature page hereof (the "CogniSeis
Party"), and Tech-Sym Corporation, a Nevada corporation ("Tech-Sym").
WHEREAS, the Company, Tech-Sym and CSD Merger, Inc., a Delaware
corporation and a wholly-owned subsidiary of Tech-Sym ("Newco"), have previously
entered into an Agreement and Plan of Merger dated May 11, 1995 (the "Merger
Agreement");
WHEREAS, it is a condition to the closing of the Merger contemplated
by the Merger Agreement that the CogniSeis Party execute, and deliver to
Tech-Sym, this Release;
NOW, THEREFORE, in consideration of the premises and the transactions
contemplated by the Merger Agreement, the CogniSeis Party and Tech-Sym hereby
agree as follows:
SECTION 1. DEFINITIONS. All capitalized terms used herein shall have
the same meanings as ascribed thereto in the Merger Agreement except as
otherwise provided herein.
SECTION 2. RELEASE OF CLAIMS. The CogniSeis Party, with the intention
of binding the CogniSeis Party and the CogniSeis Party's heirs, executors,
administrators, successors and assigns, does hereby expressly waive, discharge
and release all claims, demands, actions, judgments and executions, except for
(i) the right to cash payments of salary, bonus, if any, that (a) are unpaid to
the CogniSeis Party as of the date of this Agreement, and (b) accrued from and
after April 1, 1995 in the ordinary course of the Company's business consistent
with prior cash payments of salary, bonus and/or directors fees or required to
be paid under employment or consulting agreements listed on Schedule 3.15(a) in
response to Section 3.15(a)(6) of the Merger Agreement, (ii) reimbursement of
expenses incurred after April 1, 1995 in the ordinary course of the Company's
business, (iii) any claims for indemnification or advancement of expenses
pursuant to the Merger Agreement or the Restated Certificate of Incorporation or
Bylaws of the Company, (iv) claims for reimbursement for medical expenses under
the Company's health plan and (v) the right to unused vacation time in
accordance with the Company's vacation policy which the CogniSeis Party or the
CogniSeis Party's heirs, executors, administrators, successors or assigns have,
may have, or claim to have, against the Company existing as of the date of this
Agreement.
SECTION 3. EFFECTIVENESS; TERMINATION. This Release shall become
effective as of the Effective Time (as defined in the Merger Agreement). In the
event that the Merger Agreement is terminated in accordance with its terms, then
this Release will also terminate without any action on the part of Tech-Sym or
the Stockholder.
IN WITNESS WHEREOF, Tech-Sym and the CogniSeis Party have executed
this Agreement as of the day and year first above written.
TECH-SYM CORPORATION COGNISEIS PARTY
By:
--------------------------- -----------------------------
Name:
---------------------------
Title:
---------------------------
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<PAGE>
EXHIBIT 8.02(h)(i)
LIST OF STOCKHOLDERS
Group 1
------- Number of
Name Shares Owned
---- ------------
Cornelius, Glenn 46,000
Criterion V.C. Partners 210,000
Equus II Incorporated 225,000
Judson, David 70,250
McSherry, Diana 100,250
Nickelson, Donald E. 80,000
Payne, Marshall 45,000
Perco 140,000
Poe, Patrick 433,500
Poe, Patrick and McSherry, 150,000
Diana (as tenants in common)
Rose, Edward W., III 160,000
Rotan Mosle Tech, Partners 76,000
Stanton , John, Jr. 40,000
Taylor & Turner 249,000
Trude C. Taylor, Jr. 28,750
Group 1
------- Number of
Name Shares Owned
---- ------------
PaineWebber Incorporated., 40,000
Trustee F/B/O Stuart Hellman,
IRA Rollover,
Acct. #PJ-90121-SH
PaineWebber Incorporated, 40,000
Trustee F/B/O Stephen A.
Lasher, IRA Rollover,
Acct. #PL-E8-00278-14
PaineWebber Incorporated, 26,250
Trustee F/B/O Trude C. Taylor,
Jr., IRA Rollover,
Acct. #PL-10506-96
-1-
<PAGE>
EXHIBIT 8.02(h)(ii)
STOCKHOLDER AGREEMENT
STOCKHOLDER AGREEMENT dated as of _____________, 1995 (this
"Agreement") by the shareholder of CogniSeis Development, Inc., a Delaware
corporation (the "Company"), whose name is set forth on the signature page
hereof (the "Stockholder"), and Tech-Sym Corporation, a Nevada corporation
("Tech- Sym").
WHEREAS, the Company, Tech-Sym and CSD Merger, Inc., a Delaware
corporation and a wholly-owned subsidiary of Tech-Sym ("Newco"), have previously
entered into an Agreement and Plan of Merger dated May 11, 1995 (the "Merger
Agreement");
WHEREAS, it is a condition to the closing of the Merger contemplated
by the Merger Agreement that the Stockholder execute, and deliver to Tech-Sym,
this Agreement;
NOW, THEREFORE, in consideration of the premises and the transactions
contemplated by the Merger Agreement, the Stockholder and Tech-Sym hereby agree
as follows:
SECTION 1. DEFINITIONS. All capitalized terms used herein shall have
the same meanings as ascribed thereto in the Merger Agreement except as
otherwise provided herein.
SECTION 2. TAX COVENANT. Stockholder represents and warrants to
Tech-Sym and Newco that the Stockholder has no present plan or intention to sell
or otherwise dispose of any of the Shares to be received pursuant to the Merger
Agreement, which sale or disposition would, together with sales or dispositions
by any other Stockholder of the Company, reduce the aggregate number of Shares
received by all Stockholders pursuant to the Merger Agreement and retained by
the Stockholders to an amount that would be equal in value as of the Effective
Time to less than 50% of the fair market value of the Company Common Stock
outstanding immediately prior to the Effective Time.
SECTION 3. RELEASE OF CLAIMS. The Stockholder, with the intention of
binding the Stockholder and the Stockholder's heirs, executors, administrators,
successors and assigns, does hereby expressly waive, discharge and release all
claims, demands, actions, judgments and executions, except for (i) the right to
cash payments of salary, bonus and/or directors fees, if any, that (a) are
unpaid to the Stockholder as of the date of this Agreement, and (b) accrued from
and after April 1, 1995 in the ordinary course of the Company's business
consistent with prior cash payments of salary, bonus and/or directors fees or
required to be paid under employment or consulting agreements listed on Schedule
3.15(a) in response to Section 3.15(a)(6) of the Merger Agreement, (ii)
reimbursement of expenses incurred after April 1, 1995 in the ordinary course of
the Company's business, (iii) any claims for indemnification or advancement of
expenses pursuant to the Merger Agreement or the Restated Certificate of
Incorporation or Bylaws of the Company, (iv) claims for reimbursement for
medical expenses under the Company's health plan and (v) the right to unused
vacation time in accordance with the Company's vacation policy which the
Stockholder or the Stockholder's heirs, executors, administrators, successors or
assigns have, may have, or claim to have, against the Company existing as of the
date of this Agreement.
-1-
SECTION 4. EFFECTIVENESS; TERMINATION. This Agreement shall become
effective as of the Effective Time (as defined in the Merger Agreement). In the
event that the Merger Agreement is terminated in accordance with its terms, then
this Agreement will also terminate without any action on the part of Tech-Sym or
the Stockholder.
IN WITNESS WHEREOF, Tech-Sym and the Stockholder have executed this
Agreement as of the day and year first above written.
TECH-SYM CORPORATION STOCKHOLDER
BY:
------------------------------ ---------------------------------
NAME:
------------------------------
TITLE:
------------------------------
-2-
<PAGE>
EXHIBIT 8.02(h)(iii)
BENEFICIARY AGREEMENT
BENEFICIARY AGREEMENT dated as of _____________, 1995 (this
"Agreement") by the sole beneficiary (the "Beneficiary") of the stockholder of
CogniSeis Development, Inc., a Delaware corporation (the "Company"), whose name
is set forth on the signature page hereof (the "Stockholder"), and Tech-Sym
Corporation, a Nevada corporation ("Tech-Sym").
WHEREAS, the Company, Tech-Sym and CSD Merger, Inc., a Delaware
corporation and a wholly-owned subsidiary of Tech-Sym ("Newco"), have previously
entered into an Agreement and Plan of Merger dated May 11, 1995 (the "Merger
Agreement");
WHEREAS, it is a condition to the closing of the Merger contemplated
by the Merger Agreement that the Stockholder execute, and deliver to Tech-Sym,
this Agreement;
NOW, THEREFORE, in consideration of the premises and the transactions
contemplated by the Merger Agreement, the Stockholder and Tech-Sym hereby agree
as follows:
SECTION 1. DEFINITIONS. All capitalized terms used herein shall have
the same meanings as ascribed thereto in the Merger Agreement except as
otherwise provided herein.
SECTION 2. The Beneficiary represents that the Stockholder is an
Individual Retirement Account for which the Beneficiary is the sole beneficiary
and who is the only person entitled to direct the actions of the Stockholder
with respect to such Individual Retirement Account.
SECTION 3. TAX COVENANT. Beneficiary represents and warrants to
Tech-Sym and Newco that the Beneficiary has no present plan or intention to
cause the Stockholder to sell or otherwise dispose of any of the Shares to be
received pursuant to the Merger Agreement, which sale or disposition would,
together with sales or dispositions by any other Stockholder of the Company,
reduce the aggregate number of Shares received by all Stockholders pursuant to
the Merger Agreement and retained by the Stockholders to an amount that would be
equal in value as of the Effective Time to less than 50% of the fair market
value of the Company Common Stock outstanding immediately prior to the Effective
Time.
SECTION 4. RELEASE OF CLAIMS. The Beneficiary, with the intention of
binding the Beneficiary, the Stockholder and the heirs, executors,
administrators, successors and assigns of the Beneficiary and the Stockholder,
does hereby expressly waive, discharge and release all claims, demands, actions,
judgments and executions, except for (i) the right to cash payments of salary,
bonus and/or directors fees, if any, that (a) are unpaid to the Stockholder as
of the date of this Agreement, and (b) accrued from and after April 1, 1995 in
the ordinary course of the Company's business consistent with prior cash
payments of salary, bonus and/or directors fees or required to be paid under
employment or consulting agreements listed on Schedule 3.15(a) in response to
Section 3.15(a)(6) of the Merger Agreement, (ii) reimbursement of expenses
incurred after April 1, 1995 in the ordinary course of the Company's business,
(iii) any claims for indemnification or advancement of expenses pursuant to the
Merger Agreement or the
-1-
Restated Certificate of Incorporation or Bylaws of the Company, (iv) claims for
reimbursement for medical expenses under the Company's health plan and (v) the
right to unused vacation time in accordance with the Company's vacation policy
which the Beneficiary or the Stockholder or the heirs, executors,
administrators, successors or assigns of the Beneficiary or the Stockholder
have, may have, or claim to have, against the Company existing as of the date of
this Agreement.
SECTION 4. EFFECTIVENESS; TERMINATION. This Agreement shall become
effective as of the Effective Time (as defined in the Merger Agreement). In the
event that the Merger Agreement is terminated in accordance with its terms, then
this Agreement will also terminate without any action on the part of Tech-Sym or
the Beneficiary.
IN WITNESS WHEREOF, Tech-Sym and the Beneficiary have executed this
Agreement as of the day and year first above written.
TECH-SYM CORPORATION BENEFICIARY
BY:
------------------------------ -----------------------------------
NAME:
------------------------------
TITLE:
------------------------------
-2-
<PAGE>
EXHIBIT 8.03(d)
The following opinions are to be provided by Andrews & Kurth L.L.P.,
subject to customary assumptions, limitations and qualifications. All
capitalized terms used herein without definition shall have the meanings
ascribed thereto in the Agreement to which this exhibit is attached.
(i) Tech-Sym is a corporation duly organized and legally existing in good
standing under the laws of the State of Nevada. Newco is a corporation duly
organized and legally existing in good standing under the laws of the State of
Delaware.
(ii) Each of Tech-Sym and Newco has all requisite corporate power and
authority to execute and deliver this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement by Tech-Sym and Newco,
the performance by each of Tech-Sym and Newco of its obligations hereunder and
the consummation by Tech-Sym and Newco of the transactions contemplated hereby
have been duly authorized by each of Tech-Sym's and Newco's board of directors,
respectively, the sole stockholder of Newco has approved and adopted this
Agreement, and no other corporate proceeding on the part of Tech-Sym or Newco is
necessary to authorize this Agreement or to consummate the transactions
contemplated hereby.
(iii) This Agreement has been duly and validly executed and delivered by
each of Tech-Sym and Newco and constitutes a valid and binding obligation of
each of Tech-Sym and Newco, enforceable against it in accordance with its terms.
Neither the execution and delivery of this Agreement by Tech-Sym or Newco and
the performance by Tech-Sym or Newco of its obligations hereunder nor the
consummation by Tech-Sym or Newco of the transactions contemplated hereby (i)
will conflict with or result in any breach of any provision of the Certificate
of Incorporation or Bylaws of Tech-Sym or Newco, respectively, or (ii) to our
knowledge, will violate any order, writ, judgment, injunction, decree, statute,
rule or regulation of any court or governmental authority applicable to Tech-Sym
or Newco or any of its properties or assets.
(iv) The Shares will, upon the issuance and delivery thereof in accordance
with this Agreement, constitute legally and validly authorized and issued, fully
paid and nonassessable shares of common stock, $0.01 par value, of Tech-Sym. The
Shares delivered in accordance with this Agreement have been registered under
the Securities Act of 1933, as amended, pursuant to a registration statement
which has been declared effective by the Securities and Exchange Commission and
which remains effective, with no stop order pending or threatened.
-1-
<PAGE>
APPENDIX B
SECTION 262 OF THE DELAWARE
GENERAL CORPORATION LAW
The following is a reproduction of Section 262 of the General Corporation
Law, as amended, of the State of Delaware (Title 8, Chapter 1 of the Delaware
Code):
262. APPRAISAL RIGHTS.
(a) Any stockholder of a corporation of this State who holds shares of
stock on the date of the making of a demand pursuant to subsection (d) of this
section with respect to such shares, who continuously holds such shares through
the effective date of the merger or consolidation, who has otherwise complied
with subsection (d) of this section and who has neither voted in favor of the
merger or consolidation nor consented thereto in writing pursuant to ss. 228 of
this title shall be entitled to an appraisal by the Court of Chancery of the
fair value of his shares of stock under the circumstances described in
subsections (b) and (c) of this section. As used in this section, the word
"stockholder" means a holder of record of stock in a stock corporation and also
a member of record of a nonstock corporation; the words "stock" and "share" mean
and include what is ordinarily meant by those words and also membership or
membership interest of a member of a nonstock corporation; and the words
"depository receipt" mean a receipt or other instrument issued by a depository
representing an interest in one or more shares, or fractions thereof, solely of
stock of a corporation, which stock is deposited with the depository.
(b) Appraisal rights shall be available for the shares of any class or
series of stock of a constituent corporation in a merger or consolidation to be
effected pursuant to ss. 251, 252, 254, 257, 258, 263 or 264 of this title:
(1) Provided, however, that no appraisal rights under this section
shall be available for the shares of any class or series of stock, which
stock, or depository receipts in respect thereof, at the record date fixed
to determine the stockholders entitled to receive notice of and to vote at
the meeting of stockholders to act upon the agreement of merger or
consolidation, were either (i) listed on a national securities exchange or
designated as a national market system security on an interdealer
quotation system by the National Association of Securities Dealers, Inc.
or (ii) held of record by more than 2,000 holders; and further provided
that no appraisal rights shall be available for any shares of stock of the
constituent corporation surviving a merger if the merger did not require
for its approval the vote of the holders of the surviving corporation as
provided in subsection (f) of ss. 251 of this title.
(2) Notwithstanding paragraph (1) of this subsection, appraisal
rights under this section shall be available for the shares of any class
or series of stock of a constituent corporation if the holders thereof are
required by the terms of an agreement of merger or consolidation pursuant
to ss.ss. 251, 252, 254, 257, 258, 263 and 264 of this title to accept for
such stock anything except:
a. Shares of stock of the corporation surviving or resulting
from such merger or consolidation, or depository receipts in respect
thereof;
b. Shares of stock of any other corporation, or depository
receipts in respect thereof, which shares of stock or depository
receipts at the effective date of the merger or consolidation will
be either listed on a national securities exchange or designated as
a national market system security on an interdealer quotation system
by the National Association of Securities Dealers, Inc. or held of
record by more than 2,000 holders;
B-1
c. Cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a. and b. of this
paragraph; or
d. Any combination of the shares of stock, depository receipts
and cash in lieu of fractional shares or fractional depository
receipts described in the foregoing subparagraphs a., b. and c. of
this paragraph.
(3) In the event all of the stock of a subsidiary Delaware
corporation party to a merger effected under ss. 253 of this title is not
owned by the parent corporation immediately prior to the merger, appraisal
rights shall be available for the shares of the subsidiary Delaware
corporation.
(c) Any corporation may provide in its certificate of incorporation that
appraisal rights under this section shall be available for the shares of any
class or series of its stock as a result of an amendment to its certificate of
incorporation, any merger or consolidation in which the corporation is a
constituent corporation or the sale of all or substantially all of the assets of
the corporation. If the certificate of incorporation contains such a provision,
the procedures of this section, including those set forth in subsections (d) and
(e) of this section, shall apply as nearly as is practicable.
(d) Appraisal rights shall be perfected as follows:
(1) If a proposed merger or consolidation for which appraisal rights
are provided under this section is to be submitted for approval at a
meeting of stockholders, the corporation, not less than 20 days prior to
the meeting, shall notify each of its stockholders who was such on the
record date for such meeting with respect to shares for which appraisal
rights are available pursuant to subsection (b) or (c) hereof that
appraisal rights are available for any or all of the shares of the
constituent corporations, and shall include in such notice a copy of this
section. Each stockholder electing to demand the appraisal of his shares
shall deliver to the corporation, before the taking of the vote on the
merger or consolidation, a written demand for appraisal of his shares.
Such demand will be sufficient if it reasonably informs the corporation of
the identity of the stockholder and that the stockholder intends thereby
to demand the appraisal of his shares. A proxy or vote against the merger
or consolidation shall not constitute such a demand. A stockholder
electing to take such action must do so by a separate written demand as
herein provided. Within 10 days after the effective date of such merger or
consolidation, the surviving or resulting corporation shall notify each
stockholder of each constituent corporation who has complied with this
subsection and has not voted in favor of or consented to the merger or
consolidation of the date that the merger or consolidation has become
effective; or
(2) If the merger or consolidation was approved pursuant to ss. 228
or 253 of this title, the surviving or resulting corporation, either
before the effective date of the merger or consolidation or within 10 days
thereafter, shall notify each of the stockholders entitled to appraisal
rights of the effective date of the merger or consolidation and that
appraisal rights are available for any or all of the shares of the
constituent corporation, and shall include in such notice a copy of this
section. The notice shall be sent by certified or registered mail, return
receipt requested, addressed to the stockholder at his address as it
appears on the records of the corporation. Any stockholder entitled to
appraisal rights may, within 20 days after the date of mailing of the
notice, demand in writing from the surviving or resulting corporation the
appraisal of his shares. Such demand will be sufficient if it reasonably
informs the corporation of the identity of the stockholder and that the
stockholder intends thereby to demand the appraisal of his shares.
(e) Within 120 days after the effective date of the merger or
consolidation, the surviving or resulting corporation or any stockholder who has
complied with subsections (a) and (d) hereof and who is otherwise entitled to
appraisal rights, may file a petition in the Court of Chancery demanding a
determination of the value of the stock of all such stockholders.
Notwithstanding the foregoing, at any time within 60 days after the effective
date of the merger or consolidation, any stockholder shall have the right to
withdraw his demand for appraisal and to accept the terms offered upon the
merger or consolidation. Within 120 days after the effective date of the merger
or consolidation, any stockholder
B-2
who has complied with the requirements of subsections (a) and (d) hereof, upon
written request, shall be entitled to receive from the corporation surviving the
merger or resulting from the consolidation a statement setting forth the
aggregate number of shares not voted in favor of the merger or consolidation and
with respect to which demands for appraisal have been received and the aggregate
number of holders of such shares. Such written statement shall be mailed to the
stockholder within 10 days after his written request for such a statement is
received by the surviving or resulting corporation or within 10 days after
expiration of the period for delivery of demands for appraisal under subsection
(d) hereof, whichever is later.
(f) Upon the filing of any such petition by a stockholder, service of a
copy thereof shall be made upon the surviving or resulting corporation, which
shall within 20 days after such service file in the office of the Register in
Chancery in which the petition was filed a duly verified list containing the
names and addresses of all stockholders who have demanded payment for their
shares and with whom agreements as to the value of their shares have not been
reached by the surviving or resulting corporation. If the petition shall be
filed by the surviving or resulting corporation, the petition shall be
accompanied by such a duly verified list. The Register in Chancery, if so
ordered by the Court, shall give notice of the time and place fixed for the
hearing of such petition by registered or certified mail to the surviving or
resulting corporation and to the stockholders shown on the list at the addresses
therein stated. Such notice shall also be given by 1 or more publications at
least 1 week before the day of the hearing, in a newspaper of general
circulation published in the City of Wilmington, Delaware or such publication as
the Court deems advisable. The forms of the notices by mail and by publication
shall be approved by the Court, and the costs thereof shall be borne by the
surviving or resulting corporation.
(g) At the hearing on such petition, the Court shall determine the
stockholders who have complied with this section and who have become entitled to
appraisal rights. The Court may require the stockholders who have demanded an
appraisal for their shares and who hold stock represented by certificates to
submit their certificates of stock to the Register in Chancery for notation
thereon of the pendency of the appraisal proceedings; and if any stockholder
fails to comply with such direction, the Court may dismiss the proceedings as to
such stockholder.
(h) After determining the stockholders entitled to an appraisal, the Court
shall appraise the shares, determining their fair value exclusive of any element
of value arising from the accomplishment or expectation of the merger or
consolidation, together with a fair rate of interest, if any, to be paid upon
the amount determined to be the fair value. In determining such fair value, the
Court shall take into account all relevant factors. In determining the fair rate
of interest, the Court may consider all relevant factors, including the rate of
interest which the surviving or resulting corporation would have had to pay to
borrow money during the pendency of the proceeding. Upon application by the
surviving or resulting corporation or by any stockholder entitled to participate
in the appraisal proceeding, the Court may, in its discretion, permit discovery
or other pretrial proceedings and may proceed to trial upon the appraisal prior
to the final determination of the stockholder entitled to an appraisal. Any
stockholder whose name appears on the list filed by the surviving or resulting
corporation pursuant to subsection (f) of this section and who has submitted his
certificates of stock to the Register in Chancery, if such is required, may
participate fully in all proceedings until it is finally determined that he is
not entitled to appraisal rights under this section.
(i) The Court shall direct the payment of the fair value of the shares,
together with interest, if any, by the surviving or resulting corporation to the
stockholders entitled thereto. Interest may be simple or compound, as the Court
may direct. Payment shall be so made to each such stockholder, in the case of
holders of uncertificated stock forthwith, and the case of holders of shares
represented by certificates upon the surrender to the corporation of the
certificates representing such stock. The Court's decree may be enforced as
other decrees in the Court of Chancery may be enforced, whether such surviving
or resulting corporation be a corporation of this State or of any state.
(j) The costs of the proceeding may be determined by the Court and taxed
upon the parties as the Court deems equitable in the circumstances. Upon
application of a stockholder, the Court may order all or a portion of the
expenses incurred by any stockholder in connection with the appraisal
B-3
proceeding, including, without limitation, reasonable attorney's fees and the
fees and expenses of experts, to be charged pro rata against the value of all
the shares entitled to an appraisal.
(k) From and after the effective date of the merger or consolidation, no
stockholder who has demanded his appraisal rights as provided in subsection (d)
of this section shall be entitled to vote such stock for any purpose or to
receive payment of dividends or other distributions on the stock (except
dividends or other distributions payable to stockholders of record at a date
which is prior to the effective date of the merger of consolidation); provided,
however, that if no petition for an appraisal shall be filed within the time
provided in subsection (e) of this section, or if such stockholder shall deliver
to the surviving or resulting corporation a written withdrawal of his demand for
an appraisal and an acceptance of the merger or consolidation, either within 60
days after the effective date of the merger or consolidation as provided in
subsection (e) of this section or thereafter with the written approval of the
corporation, then the right of such stockholder to an appraisal shall cease.
Notwithstanding the foregoing, no appraisal proceeding in the Court of Chancery
shall be dismissed as to any stockholder without the approval of the Court, and
such approval may be conditioned upon such terms as the Court deems just.
(l) The shares of the surviving or resulting corporation to which the
shares of such objecting stockholders would have been converted had they
assented to the merger or consolidation shall have the status of authorized and
unissued shares of the surviving or resulting corporation. (Last amended by Ch.
262, L.'94, eff. 7-1-94)
B-4
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Section 78.751 of the Nevada Business Corporation Act (the "Act") provides
that a corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses, including attorneys' fees, judgments,
fines and amounts paid in settlement actually and reasonably incurred by him
in connection with such action, suit or proceeding if he acted in good faith
and in a manner which he reasonably believed to be in or not opposed to the
best interests of the corporation, and, with respect of any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful.
Further, such Act provides that a corporation may indemnify any person was or
is a party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise
against expenses, including attorney's fees, actually and reasonably incurred
by him in connection with the defense or settlement of such action or suit if
he acted in good faith and in a manner which he reasonably believed to be in
or not opposed to the best interests of the corporation, but no
indemnification shall be made in respect of any claim, issue or matter as to
which such person has been adjudged to be liable for negligence or misconduct
in the performance of his duty to the corporation unless and only to the
extent that the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is a fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
Section 35 of Tech-Sym's Bylaws provides, in general, that Tech-Sym shall
indemnify its officers an directors to the fullest extent permissible under
Nevada law.
Tech-Sym provides liability insurance for each director or officer for
certain losses arising from claims or charges made against them while acting
in their capacities as directors or officers of Tech-Sym. Such expenses
incurred by other employees and agents may be so paid upon such terms and
conditions, if any, as the Board of Directors deems appropriate.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement:
<TABLE>
<CAPTION>
EXHIBIT
------------------------
<S> <C>
*2.1 -- Agreement and Plan of Merger dated as of May 11, 1995 (the "Merger Agreement"), among
Tech-Sym Corporation ("Tech-Sym"), CSD, Inc. ("CSD") and CogniSeis Development, Inc.
("CogniSeis") (included as Appendix A to the Joint Proxy Statement/Prospectus included
herein).
3.1 -- Articles of Incorporation of Tech-Sym, as amended (filed as Exhibit 3(a) to Annual Report
on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference).
3.3 -- Bylaws of Tech-Sym, as amended (filed as Exhibit 3(b) to Tech-Sym's Annual Report on Form
10-K for the year ended December 31, 1993 and incorporated herein by reference).
II-1
4.1 -- Amended and Restated Rights Agreement dated as of June 1, 1988, between Tech-Sym and
Continental Stock Transfer and Trust Company, as Rights Agent (filed as Exhibit 4(a) to
Tech-Sym's Annual Report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference).
**5.1 -- Opinion of Andrews & Kurth L.L.P. as to the legality of the securities being registered.
**8.1 -- Opinion of Baker & Botts, L.L.P. as to certain federal income tax matters.
*23.1 -- Consent of Ernst & Young LLP, Independent Auditors
*23.2 -- Consent of Independent Accountants
**23.3 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1).
**23.4 -- Consent of Baker & Botts, L.L.P. (included in Exhibit 8.1).
*24.1 -- Powers of Attorney (included in Part II of this Registration Statement).
</TABLE>
* Filed herewith.
** To be filed by amendment.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the registrant pursuant to the foregoing provisions, or otherwise, the
registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Act, and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the Act
and will be governed by the final adjudication of such issue.
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial BONA FIDE offering
thereof.
The undersigned registrant hereby undertakes as follows:
(1) that, prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within
the meaning of Rule 145(c), such reoffering prospectus will contain the
information called for by the applicable registration form with respect to
reofferings by persons who may be deemed underwriters, in addition to the
information called for by the other items of the applicable form;
(2) that every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of
Section 10(a)(3) of the Act and is used in connection with an offering of
securities subject to Rule 415, will be filed as a part of an amendment to the
registration statement and will not be used until such amendment is effective,
and that, for purposes of determining any liability under the Securities Act
of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
BONA FIDE offering thereof;
(3) to respond to requests for information that is incorporated by
reference into the prospectus pursuant to Items 4, 10(b), 11 or 13 of this
form, within one business day of receipt of such request,
II-2
and to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the
date of responding to the request; and
(4) to supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein,
that was not the subject of and included in the registration statement when it
became effective.
II-3
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THE REGISTRANT HAS DULY CAUSED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS
BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF HOUSTON,
STATE OF TEXAS, ON THE 19TH DAY OF MAY, 1995.
TECH-SYM CORPORATION
By: WENDELL W. GAMEL
PRESIDENT AND CHIEF EXECUTIVE
OFFICER
POWER OF ATTORNEY
Each person whose signature appears below appoints Wendell W. Gamel and J.
Rankin Tippins, and each of them acting alone, as his true and lawful
attorney-in-fact and agent, with full power of substitution and
resubstitution, for him and in his name, place and stead, in any and all
capacities, to sign any and all amendments (including post-effective
amendments) to this Registration Statement, and to file the same, with all
exhibits thereto, and all other documents in connection therewith, with the
Securities and Exchange Commission, and grants unto said attorney-in-fact and
agent full power and authority to do and perform each and every act and thing
requisite and necessary to be done, as fully to all intents and purposes as he
might or would do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his or her substitute and substitutes, may
lawfully do or cause to be done by virtue hereof.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED,
THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
------------------------------------------------------------------------------------- ---------------
<S> <C> <C>
Chairman of the Board, President and May 19, 1995
WENDELL W. GAMEL Chief Executive Officer;
Director (Principal Executive
Officer)
RAY F. THOMPSON Vice President, Treasurer, Controller May 19, 1995
and Chief Financial Officer
(Principal Financial and Accounting
Officer)
COY J. SCRIBNER Vice President, Director May 19, 1995
W. L. CREECH Director May 19, 1995
A. A. GALLOTTA, JR. Director May 19, 1995
CHRISTOPHER C. KRAFT, JR. Director May 19, 1995
ROBERT E. MOORE Director May 19, 1995
ROLLIN J. SLOAN Director May 19, 1995
JOAL A. TERESKO Director May 19, 1995
CHARLES K. WATT Director May 19, 1995
</TABLE>
II-4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
------------------------
<S> <C>
*2.1 -- Agreement and Plan of Merger dated as of May 11, 1995 (the "Merger Agreement"), among
Tech-Sym Corporation ("Tech-Sym"), CSD, Inc. ("CSD") and CogniSeis Development, Inc.
("CogniSeis") (included as Appendix A to the Joint Proxy Statement/Prospectus included
herein).
3.1 -- Articles of Incorporation of Tech-Sym, as amended (filed as Exhibit 3(a) to Annual Report
on Form 10-K for the year ended December 31, 1989 and incorporated herein by reference).
3.3 -- Bylaws of Tech-Sym, as amended (filed as Exhibit 3(b) to Tech-Sym's Annual Report on Form
10-K for the year ended December 31, 1993 and incorporated herein by reference).
II-1
4.1 -- Amended and Restated Rights Agreement dated as of June 1, 1988, between Tech-Sym and
Continental Stock Transfer and Trust Company, as Rights Agent (filed as Exhibit 4(a) to
Tech-Sym's Annual Report on Form 10-K for the year ended December 31, 1993 and
incorporated herein by reference).
**5.1 -- Opinion of Andrews & Kurth L.L.P. as to the legality of the securities being registered.
**8.1 -- Opinion of Baker & Botts, L.L.P. as to certain federal income tax matters.
*23.1 -- Consent of Ernst & Young LLP, Independent Auditors
*23.2 -- Consent of Independent Accountants
**23.3 -- Consent of Andrews & Kurth L.L.P. (included in Exhibit 5.1).
**23.4 -- Consent of Baker & Botts, L.L.P. (included in Exhibit 8.1).
*24.1 -- Powers of Attorney (included in Part II of this Registration Statement).
</TABLE>
* Filed herewith.
** To be filed by amendment.
EXHIBIT 23.1
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the captions "Experts" and
"CogniSeis Selected Financial Data" and to the use of our report dated
September 9, 1994, except for Note 9 as to which the date is May 19, 1995,
with respect to the consolidated financial statements of CogniSeis
Development, Inc. included in the Registration Statement (Form S-4 No.
33-......) of Tech-Sym Corporation for the registration of up to 964,000
shares of its common stock.
ERNST & YOUNG LLP
Houston, Texas
May 19, 1995
EXHIBIT 23.2
CONSENT OF INDEPENDENT ACCOUNTANTS
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Tech-Sym
Corporation of our report dated February 23, 1995, which appears on page 36 of
the issuer's 1994 Annual Report to Shareholders, which is incorporated by
reference in its Annual Report on Form 10-K for the year ended December 31,
1994. We also consent to the incorporation by reference of our report on the
Financial Statement Schedules, which appears on page S-2 of such Annual Report
on Form 10-K. We also consent to the reference to us under the heading
"Experts" in such Prospectus.
PRICE WATERHOUSE LLP
Houston, Texas
May 19, 1995
