-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, UdyKZLUyN3w1iVjPkiyAb4WmUboxwhlG+BcuQ9KxiGs4zlqYmW7jcsxUJ9dRN6wy Pc4jZZp0vTFZAOpBAgLM1A== 0000950129-95-001483.txt : 19951120 0000950129-95-001483.hdr.sgml : 19951120 ACCESSION NUMBER: 0000950129-95-001483 CONFORMED SUBMISSION TYPE: 424B3 PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19951115 SROS: AMEX FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIGICON INC CENTRAL INDEX KEY: 0000028866 STANDARD INDUSTRIAL CLASSIFICATION: OIL AND GAS FIELD EXPLORATION SERVICES [1382] IRS NUMBER: 760343152 STATE OF INCORPORATION: DE FISCAL YEAR END: 0731 FILING VALUES: FORM TYPE: 424B3 SEC ACT: 1933 Act SEC FILE NUMBER: 033-63875 FILM NUMBER: 95593815 BUSINESS ADDRESS: STREET 1: 3701 KIRBY DR STREET 2: STE 112 CITY: HOUSTON STATE: TX ZIP: 77098 BUSINESS PHONE: 7135265611 MAIL ADDRESS: STREET 1: 3701 KIRBY DRIVE SUITE 112 CITY: HOUSTON STATE: TX ZIP: 77098 424B3 1 DIGICON INC. - 424(B)(3) REG. NO. 033-63875 1 Filed Pursuant to Rule 424(b)(3) Registration No. 033-63875 PROSPECTUS 4,901,701 SHARES DIGICON INC. COMMON STOCK --------------------- The shares of common stock offered hereby are shares of common stock, par value $.01 per share ("Common Stock"), of Digicon Inc. (the "Company") held by certain stockholders of the Company. See "Selling Stockholders" and "Description of Common Stock." The Company will not receive any of the proceeds from the sale of the Common Stock offered hereby. The Company's Common Stock is traded on the American Stock Exchange under the symbol "DGC." On November 9, 1995, the reported closing sale price of the Common Stock on the American Stock Exchange was $5.625 per share. The Common Stock may be offered and sold from time to time by Selling Stockholders through brokers or dealers or directly to one or more purchasers in negotiated transactions, at market prices prevailing at the time of sale or at prices related to such market prices. The Selling Stockholders and brokers executing selling orders on behalf of the Selling Stockholders may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended (the "Securities Act"), in which event commissions received by such brokers may be deemed to be underwriting commissions under the Securities Act. For further information concerning the plan of distribution of the Common Stock, see "Plan of Distribution." The expenses of this offering, estimated at $32,430.17 will be paid by the Company. PROSPECTIVE PURCHASERS OF THE COMMON STOCK OFFERED HEREBY SHOULD CAREFULLY CONSIDER THE MATTERS SET FORTH UNDER THE CAPTION "CERTAIN RISKS." --------------------- THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------- THE DATE OF THIS PROSPECTUS IS NOVEMBER 10, 1995. 2 AVAILABLE INFORMATION The Company has filed with the Securities and Exchange Commission (the "Commission") in Washington, D.C., a Registration Statement on Form S-3 under the Securities Act, with respect to the Common Stock offered by this Prospectus. Certain portions of the Registration Statement have not been included in this Prospectus. For further information, reference is made to the Registration Statement and the Exhibits thereto. Statements made in this Prospectus regarding the contents of any contract or document filed as an exhibit to the Registration Statement are not necessarily complete and, in each instance, reference is hereby made to the copy of such contract or document so filed. Each such statement is qualified in its entirety by such reference. The Company is subject to the information requirements of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance therewith files reports, proxy statements and other information with the Commission. The Registration Statement (with exhibits), as well as such reports, proxy statements and other information can be inspected and copied at the public reference facilities maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and its regional offices at the Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661 and 7 World Trade Center, Suite 13, New York, New York 10048. Copies of such material can be obtained at prescribed rates from the Public Reference Section of the Commission at its principal office at Judiciary Plaza, 450 Fifth Street, N.W., Room 1024, Washington, D.C. 20549. Such materials also can be inspected at the offices of the American Stock Exchange, 86 Trinity Place, New York, New York 10006, on which the Common Stock is listed. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The Company's Annual Report on Form 10-K for the fiscal year ended July 31, 1995, and all other reports filed by the Company pursuant to Section 13(a) or 15(d) of the Exchange Act since July 31, 1995 are hereby incorporated herein by reference. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act after the date of this Prospectus and before the termination of the offering covered hereby will be deemed to be incorporated by reference in this Prospectus and to be a part hereof from the date of filing of such documents. Any statement contained in a document incorporated or deemed to be incorporated by reference in this Prospectus shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained in this Prospectus or in any other subsequently filed document which also is or is deemed to be incorporated by reference modifies or replaces such statement. The Company will provide without charge to each person to whom this Prospectus is delivered, upon the written or oral request of such person, a copy of any or all of the documents incorporated by reference in this Prospectus, other than exhibits to such documents, unless such exhibits are specifically incorporated by reference into the information that this Prospectus incorporates. In addition, a copy of the Company's most recent annual report on Form 10-K will be promptly furnished, without charge, upon written or oral request. All such requests should be directed to Digicon Inc., 3701 Kirby Drive, Suite 112, Houston, Texas 77098, Attention: Corporate Secretary, telephone number (713) 526-5611. 2 3 THE COMPANY Digicon Inc. (the "Company") provides seismic data acquisition and processing services on a worldwide basis to the petroleum industry. Oil and gas companies utilize seismic data for the determination of suitable locations for drilling exploratory wells and, increasingly, in reservoir management for the development and production of oil and gas reserves. The Company acquires seismic data in marine, land and transition zone environments and processes data acquired by its own crews and the crews of other operators. The Company operates both marine seismic crews and land and transition zone seismic crews. Additionally, the Company operates seismic data processing facilities in major petroleum centers around the world. The Company conducts its operations under exclusive contracts with one or more oil companies and also maintains a library of seismic data for later sale to oil companies on a non-exclusive basis. The Company was incorporated in Texas in 1965 and was reincorporated in Delaware in 1969. The Company's executive offices are located at 3701 Kirby Drive, Houston, Texas 77098, and its telephone number is (713) 526-5611. CERTAIN RISKS Prospective purchasers should carefully consider the following factors. DEPENDENCE ON PETROLEUM INDUSTRY SPENDING; COMPETITION FOR SEISMIC BUSINESS Demand for the Company's services depends primarily on the level of spending by oil and gas companies for exploration, production and development activities. Significant increases in foreign exploration and production activity have provided the impetus for the gradual improvement in the market for oilfield services which began in the late 1980's; however, petroleum industry spending for U.S. exploration and production activities has been adversely affected by volatility in oil and natural gas prices. As a result, competition among geophysical services contractors has historically been intense. However, as a result of changing technology and increased capital requirements, the seismic industry has consolidated substantially since the late 1980s. The consolidation has reduced the number of competitors. Although reliable comparative figures are not available in all cases, the Company believes that its major competitors operate more data acquisition crews than the Company, have substantially greater revenues than the Company and are subsidiaries or divisions of major industrial enterprises having far greater financial resources than the Company. Competition for available seismic surveys is based on several competitive factors, including price, performance, dependability and crew availability. HISTORICAL CASH FLOW SHORTFALL; POSSIBLE FUTURE NEED FOR ADDITIONAL FINANCING Historically, the Company's cash flow from operations has been insufficient to fund all of its research and development, capital expenditure and working capital needs, and to service its debt. Since emerging from Chapter 11 proceedings in July 1991, the Company has required increased working capital, principally as a result of an increase in the level of its operating activities, including foreign operations and participation in nonexclusive data surveys. The Company's foreign operations require greater amounts of working capital than similar domestic activities, as the average collection period for foreign receivables is generally longer than for comparable domestic accounts. Because of the lead time between survey execution and sale, non-exclusive surveys generally require greater amounts of working capital than contract work. If the Company were to expand its operations at a rate not supported by operating cash flow or if the current demand for and pricing of geophysical services were to decrease substantially, additional financing could be required. Additional financing, if so required, may not be obtainable and, in such event, the Company's operating results and financial condition would be adversely affected. 3 4 OPERATING CONDITIONS; HIGH FIXED COSTS; TURNKEY CONTRACTS The Company's data acquisition activities involve operating under extreme weather and other hazardous conditions. Thus, these operations are subject to risks of loss from such causes as fires and accidental explosions resulting from the mishandling of equipment and supplies. The Company carries insurance against the destruction of or damage to its seismic vessels, chartered vessels and its geophysical equipment in amounts that it considers adequate. The Company may not, however, be able to obtain insurance against certain risks or for certain equipment located from time to time in certain areas of the world. Because of the high fixed costs involved in the major components of the Company's business, downtime or low productivity due to reduced demand, weather interruptions, equipment failures or other causes can result in significant operating losses. In recent years, most of the Company's contracts for data acquisition have been on a turnkey or on a combination of turnkey/time basis. Under the turnkey method, payments for data acquisition services are based upon the amount of data collected, and the Company bears substantially all of the risk of business interruption caused by inclement weather and other hazards. When a combination of both turnkey and time methods is used, the risk of business interruptions is shared in an agreed percentage by the Company and the customer. RISKS INHERENT IN INTERNATIONAL OPERATIONS In fiscal years 1994 and 1995, 55% and 54%, respectively, of the Company's revenues were derived from international operations and export sales, which are subject in varying degrees to risks inherent in doing business abroad. Such risks include the possibility of unfavorable changes in tax or other laws; partial or total expropriation; currency exchange rate fluctuations and restrictions on currency repatriation; the disruption of operations from labor and political disturbances, insurrection or war; and the requirements of partial local ownership of operations in certain countries. The Company obtains insurance against war, expropriation, confiscation and nationalization when such insurance is available and when management considers it advisable to do so. Such coverage is not always available, and when available, is subject to unilateral cancellation by the insuring companies on short notice. GOVERNMENTAL REGULATION The Company's operations are subject to a variety of federal, state and local laws and regulations, including laws and regulations relating to the protection of the environment. The Company is required to invest financial and managerial resources to comply with such laws and related permit requirements in its operations and anticipates that it will continue to do so in the future. Although such expenditures historically have not been material to the Company, the fact that such laws or regulations are changed frequently makes it impossible for the Company to predict the cost or impact of such laws and regulations on its future operations. The adoption of laws and regulations which have the effect of curtailing exploration by oil and gas companies could adversely affect the Company's operations by reducing the demand for its geophysical services. 4 5 SELLING STOCKHOLDERS The following table sets forth certain information concerning the Selling Stockholders and reflects share information adjusted for a one for three reverse stock split (the "Reverse Split") effective January 17, 1995:
SHARES OWNED AND TO SHARES SHARES BE TO BE TO BE NAME AND ADDRESS OWNED SOLD OWNED ----------------- -------- -------- ------ Acorn Fund............................................... 940,000 850,000 * c/o Wanger Asset Management L.P.(1) 227 West Monore, Suite 3000 Chicago, Illinois 60606 Artform, N.V............................................. 10,000 10,000 None c/o Tocqueville Asset Management L.P.(2) 1675 Broadway New York, New York 10019 Christian Humann and Francois Sicart Trustees under a deed of trust dated 2/2/88.............. 10,000 10,000 None c/o Tocqueville Asset Management L.P.(2) 1675 Broadway New York, New York 10019 Montber, S.A............................................. 220,000 220,000 None c/o Tocqueville Asset Management L.P.(2) 1675 Broadway New York, New York 10019 Melon Bank, N.A., as trustee for National Intergroup Inc.................................................... 30,000 30,000 None c/o Tocqueville Asset Management L.P.(2) 1675 Broadway New York, New York 10019 Trace Inc................................................ 25,000 25,000 None c/o Tocqueville Asset Management L.P.(2) 1675 Broadway New York, New York 10019 Jomacim, Inc. ........................................... 15,000 15,000 None c/o Tocqueville Asset Management L.P.(2) 1675 Broadway New York, New York 10019 WKDL Investments Ltd. ................................... 15,000 15,000 None c/o Tocqueville Asset Management L.P.(2) 1675 Broadway New York, New York 10019 The Tocqueville Fund..................................... 75,000 75,000 None c/o Tocqueville Asset Management L.P.(2) 1675 Broadway New York, New York 10019 Value Partners, Ltd...................................... 458,497 458,497 None 2200 Ross Avenue, Suite 4660 West Dallas, Texas 75201
5 6
SHARES OWNED AND TO SHARES SHARES BE TO BE TO BE NAME AND ADDRESS OWNED SOLD OWNED ---------------- --------- --------- ----- Quantum Partners LDC ("Quantum")(4)...................... 1,024,263(3) 1,024,263(3) None Kaya Flamboyan 9, Willemstad, Curacao, Netherlands Antilles Soros Fund Management(5) George Soros(5) Soros Capital L.P.(5)(7)................................. 43,200(6) 43,200(6) None c/o Westbroke Limited Richmond House 12 Par-La-Ville Road Hamilton, Bermuda HMDX Jupiter Management Co., Inc.(7)(8)....................... 42,000(6) 42,000(6) None c/o Douglas B. Thompson, President 3535 Briarpark, Suite 200 Houston, TX 77042 Drake & Co.(9)........................................... 33,142(3) 33,142(3) None c/o Neptune Management Company, Inc. 881 Ocean Drive, Unit 20F Key Biscayne, FL 33149 Steven J. Gilbert(5)(10)................................. 3,573 3,573 None Soros Capital L.P. c/o Westbroke Limited Richmond House 12 Par-La-Ville Road Hamilton, Bermuda HMDX JUPITER GROUP:(4)(11) CCF/Jupiter, L.P.(7)(11)(12)........................... 497,561(3)(6) 497,561(3)(6) None DJ Investors, L.P.(11)(12)............................. 108,939(3) 108,939(3) None c/o Cambridge Capital Holdings, Inc. 767 Fifth Ave., Suite 2800 New York, NY 10153 Fund American Investment Subsidiary I, Inc.(11)........ 939,873(3) 939,873(3) None c/o Mike Paquette The 1820 House, Main Street Norwich, VT 05055 J/D Funding Corp.(8)(11)............................... 148,617(3) 148,617(3) None Jupiter Investment Company, Inc.(8)(11)................ 17,774(3) 17,774(3) None c/o Douglas B. Thompson, President 3535 Briarpark, Suite 200 Houston, TX 77042 Ingrid Morsman(11)..................................... 8,515(3) 8,515(3) None 820 Potts Lane Bryn Mawr, PA 19010 Natalie Thompson Defined Benefit Pension Plan(8)(11)... 30,639(3) 30,639(3) None 180 Orchard Way Vero Beach, FL 32963
6 7
SHARES OWNED AND TO SHARES SHARES BE TO BE TO BE NAME AND ADDRESS OWNED SOLD OWNED --------- --------- ---- Neptune Partners-1989A, L.P.(11)....................... 53,819(3) 53,819(3) None Neptune 1989 Investors Limited(11)..................... 35,242(3) 35,242(3) None Neptune 1989C Offshore Investors Limited(11)........... 37,739(3) 37,739(3) None c/o Neptune Management Company, Inc. 881 Ocean Drive, Unit 20F Key Biscayne, FL 33149 Arik Yale Prawer(11)................................... 5,971(3) 5,971(3) None 7150 Shoreline Drive, #3306 San Diego, CA 92122 Restart Partners, L.P.(11)............................. 63,422(3) 63,422(3) None Restart Partners II, L.P.(11).......................... 98,915(3) 98,915(3) None c/o Morgens Waterfall Vintiadis & Company, Inc. --------- --------- 10 East 50th Street - 26th Floor New York, NY 10022 Totals......................................... 4,991,701 4,901,701 ========= =========
- --------------- * Does not exceed one percent. (1) Wanger Asset Management, L.P. is the investment advisor to Acorn Fund. (2) Tocqueville Asset Management L.P. is the investment advisor to these entities. (3) Includes the following shares of Common Stock which may be acquired by the indicated stockholder upon exercise of outstanding warrants: Quantum -- 40,443; Drake & Co. -- 369; CCF/Jupiter, L.P. -- 7,274; DJ Investors, L.P. -- 1,712; Fund American Investment Subsidiary I, Inc. -- 14,978; J/D Funding Corp. -- 2,393; Jupiter Investment Company, Inc. -- 323; Ingrid Morsman -- 149; Natalie Thompson Defined Benefit Pension Plan -- 539; Neptune Partners-1989A, L.P. -- 604; Neptune 1989 Investors Limited -- 396; Neptune 1989C Offshore Investors Limited -- 424; Arik Yale Prawer -- 105; Restart Partners, L.P. -- 1,072; and Restart Partners II, L.P. -- 1,677. These aggregate 72,458 warrants were issued in connection with the Company's 1991 Chapter 11 Reorganization and are presently exercisable through July 5, 1996 at an exercise price of $18.00 per share, as adjusted for the Reverse Split. Both the number of shares purchasable under, and the exercise price of, the warrants are subject to further adjustment in certain events, including stock splits or dividends on, and combinations, subdivisions or reclassifications of the Common Stock. The warrants may not be redeemed by the Company. (4) Under the Company's bylaws and a Funding and Stockholders Agreement dated April 9, 1991, between certain members of the Jupiter Group (see note (11) below), Quantum and the Company (the "Funding and Stockholders Agreement"), Jupiter & Associates, a New York General Partnership ("Jupiter"), (whose rights will, pursuant to the Distribution Agreement (defined in note (11) below), be exercised by the Jupiter Group) and Quantum have, until such time as they no longer collectively own more than 20% of the outstanding Common Stock, the right to (i) designate an aggregate of six nominees for election as directors (out of a present eight positions) at each annual meeting of stockholders, (ii) appoint one additional director to an expanded board of directors if the Company defaults in any payment obligation on any of its then outstanding debt instruments or equity securities, or if the Company incurs losses for any five consecutive fiscal quarters, and (iii) designate two of the three members of the executive committee of the board. Both Jupiter and Quantum have agreed that during such time they will vote their shares in favor of the other's nominees. All entities and individuals listed as part of the Jupiter Group may be deemed to constitute a "group" within the meaning of the Exchange Act; similarly, all entities and individuals listed as part of Quantum (see note (5) below) may be deemed to constitute such a group. If acting together, the Jupiter Group and Quantum would be deemed to beneficially own 3,071,588 shares or approximately 27.3% of outstanding Common Stock. Each entity or individual listed under Quantum or 7 8 the Jupiter Group disclaims beneficial interest in shares owned, controlled or deemed to be owned or controlled by each other entity or individual so listed, except for George Soros who does not disclaim beneficial ownership of Quantum. See Note (5) below. (5) Soros Fund Management is an investment advisor to Quantum, George Soros is the sole proprietor of Soros Fund Management. Soros Capital L.P. is an indirect affiliate of Soros Fund Management. Steven J. Gilbert, a director of the Company, is a managing director of Soros Capital L.P. Mr. Soros, doing business as Soros Fund Management, expressly disclaims beneficial ownership of the shares held by Soros Capital L.P. and Mr. Gilbert. Mr. Gilbert expressly disclaims beneficial ownership of the shares held by Quantum. (6) Represents or includes the shares of Common Stock, which may be acquired by the indicated stockholder (CCF/Jupiter, L.P. -- 34,800) upon exercise of outstanding warrants. These warrants are presently exercisable through July 26, 1999 at an exercise price of $4.50 per share. See note (7) below. (7) In July 1994, CCF Jupiter, L.P., along with Soros Capital L.P. and Jupiter Management Co., Inc., extended a $3,000,000 subordinated, secured credit facility to the Company. The Company's borrowings under this credit facility bear interest at Bank of America's prime commercial lending rate plus 3% through January 26, 1995, and thereafter, at Bank of America's prime rate plus 6%. The Company repaid all of its borrowings under this credit facility in June 1995. In connection with this credit facility, the Company issued to these lenders warrants exercisable for 120,000 shares of Common Stock at an exercise price of $4.50 per share, as adjusted for the one for three reverse stock split effective January 17, 1995. Both the number of shares purchasable under, and the exercise price of, the warrants are subject to further adjustment in certain events, including stock splits or dividends on, and reclassifications of, the Common Stock. The warrants may not be redeemed by the Company. In November 1993 the Company obtained a secured credit facility from the same affiliated lenders which provided for total borrowings of $3,386,667, an annualized interest rate of 25%, and maturity in May 1994. The Company repaid all of its borrowings under that credit facility in April 1994. (8) Douglas B. Thompson, a director and chairman of the board of the Company, is an affiliate of Jupiter Management Co., Inc., J/D Funding Corp., Jupiter Investment Company, Inc. and Natalie Thompson Defined Benefit Pension Plan. Mr. Thompson disclaims beneficial interest in shares owned, controlled or deemed to be owned or controlled by each such selling stockholders. (9) Represents certain accounts held in the name of Drake & Co. which are managed by Neptune Management Partners, L.P. (10) Steven J. Gilbert is a director of the Company. (11) The Jupiter Group consists of (i) Jupiter Investment Company, Inc., J/D Funding Corp., DN Funding Corp., CCF/Jupiter, L.P., DJ Investors, L.P., and Fund American Investment Subsidiary I, Inc., each of which is a general partner of Jupiter, and (ii) Fund American Enterprises, Inc., Fund American Enterprises Holdings, Inc., Neptune Partners-1989A, L.P., Neptune 1989 Investors Limited, Neptune 1989C Offshore Investors Limited, Restart Partners, L.P., Restart Partners II, L.P., Ingrid Morsman, Natalie Thompson Defined Benefit Pension Plan, Douglas B. Thompson, D. O. Nelson, Edwin H. Morgens, John C. Waterfall, Francisco A. Garcia, A. Torrey Reade and Arik Yale Prawer, each of which is an affiliate of one or more of the Jupiter general partners, previously held an indirect interest in Jupiter or acquired shares of the Company's Common Stock in connection with the Distribution Agreement described below. Pursuant to an agreement effective December 31, 1992 (the "Distribution Agreement"), Jupiter distributed all shares of the Company's Common Stock and Common Stock purchase warrants held by it to its general partners and other parties who held participation interests in Jupiter. The entities or persons listed as members of the Jupiter Group agreed pursuant to the Distribution Agreement that the nominees which Jupiter is entitled under certain circumstances to designate to the Company's Board of Directors will be selected by the vote of such parties, with each such party having a number of votes equal to the number of shares of Common Stock it holds. (12) George F. Baker, a director of the Company, is an affiliate of CCF/Jupiter, L.P. and DJ Investors, L.P. Mr. Baker disclaims beneficial interest in shares owned, controlled or deemed to be owned or controlled by each such selling stockholder. 8 9 PLAN OF DISTRIBUTION All or part of the Common Stock offered hereby may be sold by the Selling Stockholders from time to time (i) on the American Stock Exchange or otherwise at prices current at the time of sale or at prices related to such market prices, either directly or through brokers or to dealers, to the extent that such prices are obtainable and satisfactory to the Selling Stockholders or (ii) to the extent the same may be available, pursuant to Rule 144 under the Securities Act. It is anticipated that any commissions with respect to such sales will not exceed regular brokerage commissions. The Selling Stockholders, and brokers executing selling orders on behalf of the Selling Stockholders and dealers to whom the Selling Stockholders may sell, may be deemed "underwriters" within the meaning of the Securities Act. Any profit represented by the excess of the selling price over the cost of the shares sold in the case of dealers, or any commission received in the case of brokers, may be deemed to be underwriting discounts or commissions under the Securities Act. The Funding and Stockholders Agreement, as modified as to the Jupiter Group by the Distribution Agreement, imposes certain restrictions on transfers to third parties of shares of Common Stock owned by the Jupiter Group and Quantum. These restrictions include rights of first refusal and participation rights which apply (i) to any transfer of Common Stock which would exceed the then applicable volume limitations of Rule 144(e)(1) under the Securities Act and (ii) until either the Jupiter Group or Quantum ceases to own beneficially 5% of then outstanding Common Stock. The Jupiter Group has such a right of first refusal in respect of shares which Quantum desires to sell, and Quantum has such a right of first refusal in respect of shares which any member of the Jupiter Group desires to sell. The Jupiter Group also has a right to include shares of Common Stock in a sale of Common Stock which Quantum desires to consummate, and Quantum likewise has a right to include its shares of Common Stock in a proposed sale by any member of the Jupiter Group. Given these restrictions, any sales of Common Stock by the Jupiter Group or Quantum which at any given time would exceed Rule 144's volume limitations would necessarily have to involve direct transactions with purchasers, rather than sales through brokers or to dealers in ordinary "regular way" open market transactions on the American Stock Exchange. DESCRIPTION OF COMMON STOCK The Company has only one class of stock outstanding, Common Stock, par value $.01 per share. At October 31, 1995, of the 20,000,000 authorized shares of Common Stock, there were 11,134,939 shares outstanding. Each share of Common Stock has one vote on all matters presented to the stockholders. Subject to the rights and preferences of any Preferred Stock which may be designated and issued, the holders of Common Stock are entitled to receive dividends, if and when declared by the board of directors, and are entitled on liquidation to all assets remaining after the payment of liabilities. The Common Stock has no preemptive or other subscription rights. Outstanding shares of Common Stock are, and the shares of Common Stock offered hereby when issued and paid for will be, fully paid and nonassessable. Since the Common Stock does not have cumulative voting rights, the holders of more than 50% of the shares may, if they choose to do so, elect all of the directors and, in that event, the holders of the remaining shares will not be able to elect any directors. Chemical Shareholder Services Group, Inc., Dallas, Texas, is the transfer agent and registrar for the Common Stock. COUNSEL The validity of the Common Stock offered hereby has been passed upon for the Company by Porter & Hedges, L.L.P., Houston, Texas. EXPERTS The financial statements incorporated in this Prospectus by reference from the Company's Annual Report on Form 10-K for the year ended July 31, 1995 have been audited by Deloitte and Touche LLP, independent auditors as stated in their report, which is incorporated herein by reference, and has been so incorporated in reliance upon the report of such firm given their authority as experts in accounting and auditing. 9 10 =============================================================================== NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT CONTAINED IN THIS PROSPECTUS; ANY INFORMATION OR REPRESENTATION NOT CONTAINED HEREIN MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT RELATES OR AN OFFER TO ANY PERSON IN ANY STATE WHERE SUCH OFFER WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE HEREUNDER SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF. --------------------- TABLE OF CONTENTS
PAGE --- Available Information.................. 2 Incorporation of Certain Documents by Reference............................ 2 The Company............................ 3 Certain Risks.......................... 3 Selling Stockholders................... 5 Plan of Distribution................... 9 Description of Common Stock............ 9 Counsel................................ 9 Experts................................ 9
4,901,701 SHARES DIGICON INC. COMMON STOCK ------------------------------ P R O S P E C T U S ------------------------------ NOVEMBER 10, 1995 ============================================================================== -----END PRIVACY-ENHANCED MESSAGE-----