<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 5, 1997.
REGISTRATION NO. 333-36561
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
AMENDMENT NO. 1
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
----------------
OMNI ENERGY SERVICES CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
LOUISIANA 1382 72-1395273
(STATE OR OTHER (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
JURISDICTION CLASSIFICATION CODE NUMBER) IDENTIFICATION NO.)
OF INCORPORATION OR
ORGANIZATION)
4484 NE EVANGELINE THRUWAY
CARENCRO, LOUISIANA 70520
(318) 896-6664
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
DAVID E. CRAYS
VICE PRESIDENT AND CHIEF FINANCIAL OFFICER
OMNI ENERGY SERVICES CORP.
4484 NE EVANGELINE THRUWAY
CARENCRO, LOUISIANA 70520
(318) 896-6664
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
COPIES TO:
W. PHILIP CLINTON JOSHUA DAVIDSON
JONES, WALKER, WAECHTER, POITEVENT, BAKER & BOTTS, L.L.P.
CARRERE & DENEGRE, L.L.P. 910 LOUISIANA STREET
201 ST. CHARLES AVENUE HOUSTON, TEXAS 77002
NEW ORLEANS, LOUISIANA 70170 (713) 229-1234
(504) 582-8000
----------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC:
As soon as practicable after this Registration Statement becomes effective.
----------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [_]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [_]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [_]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [_]
----------------
CALCULATION OF REGISTRATION FEE
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PROPOSED MAXIMUM
AGGREGATE AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE OFFERING REGISTRATION
REGISTERED PRICE(1) FEE(2)
- ------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $0.01 per value per share......... $68,425,000 $20,735
</TABLE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(1) In accordance with Rule 457(o) under the Securities Act of 1933, as
amended, the number of shares being registered and the proposed maximum
offering price per share are not included in this table.
(2) $18,296 of this fee was paid upon the original filing of this Registration
Statement.
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, AS AMENDED, OR UNTIL THE
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION,
ACTING PURSUANT TO SECTION 8(A), MAY DETERMINE.
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated November 5, 1997
PROSPECTUS
3,500,000 SHARES
LOGO
[LOGO OF OMNI ENERGY SERVICES CORP. APPEARS HERE]
COMMON STOCK
-------------
The 3,500,000 shares of common stock, par value $0.01 per share (the "Common
Stock"), of OMNI Energy Services Corp. (the "Company") offered hereby (the
"Offering") are being sold by the Company. Prior to the Offering, there has
been no public market for the Common Stock. It is currently estimated that the
initial public offering price for the Common Stock will be between $13.00 and
$15.00 per share. See "Underwriting" for a discussion of the factors to be
considered in determining the initial public offering price. The Common Stock
has been approved for quotation on the Nasdaq National Market under the symbol
"OMNI," subject to official notice of issuance.
-------------
AN INVESTMENT IN THE COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF
RISK. SEE "RISK FACTORS" BEGINNING ON PAGE 9 FOR CERTAIN CONSIDERATIONS
RELEVANT TO AN INVESTMENT IN THE COMMON STOCK.
-------------
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.
- --------------------------------------------------------------------------------
<TABLE>
- -------------------------------------------------------------------------------
<CAPTION>
Underwriting
Price to Discounts and Proceeds to
Public Commissions(1) Company(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.............. $ $ $
- -------------------------------------------------------------------------------
Total(3)............... $ $ $
- -------------------------------------------------------------------------------
</TABLE>
- --------------------------------------------------------------------------------
(1) The Company has agreed to indemnify the Underwriters against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended. See "Underwriting."
(2) Before deducting expenses payable by the Company estimated at $640,000.
(3) The Company has granted the Underwriters a 30-day option to purchase up to
an aggregate of 525,000 additional shares of Common Stock solely to cover
over-allotments, if any. If such option is exercised in full, the total
Price to Public, Underwriting Discounts and Commissions and Proceeds to
Company will be $ , $ and $ , respectively. See "Underwriting."
-------------
The shares of Common Stock offered by this Prospectus are being offered by
the Underwriters subject to prior sale, to withdrawal, cancellation or
modification of the offer without notice, to delivery to and acceptance by the
Underwriters and to certain further conditions. It is expected that delivery of
the shares of Common Stock offered hereby will be made at the offices of Lehman
Brothers Inc., New York, New York, on or about , 1997.
-------------
LEHMAN BROTHERS
PRUDENTIAL SECURITIES INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
, 1997
<PAGE>
FRONT INSIDE COVER: Company logo; pictures of (i) Company surveyor, (ii)
pontoon drilling units and (iii) facilities under construction; text: Support
Services for Geophysical Exploration, . seismic surveying; . seismic drilling;
. aviation services; Omni Energy Services Corp. is an oilfield service company
specializing in providing an integrated range of onshore seismic drilling,
helicopter support and survey services to geophysical companies operating in
logistically difficult and environmentally sensitive terrain in the United
States; FACILITIES--The Company is constructing two new buildings on
approximately 34 acres. Completion is expected by the end of 1997. When
completed, the new buildings will provide approximately 20,000 square feet of
additional office space and 32,000 square feet of additional covered maintenance
and fabrication space. With the expansion, the Company will be able to expand
operations to include onsite storage and maintenance of its helicopter assets,
which are currently conducted at the Lafayette Airport.
CERTAIN PERSONS PARTICIPATING IN THE OFFERING MAY ENGAGE IN
TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE
PRICE OF THE COMMON STOCK. SUCH TRANSACTIONS MAY INCLUDE THE
PURCHASE OF SHARES OF COMMON STOCK FOLLOWING THE PRICING OF
THE OFFERING TO COVER A SYNDICATE SHORT POSITION IN THE COMMON
STOCK OR FOR THE PURPOSE OF MAINTAINING THE PRICE OF THE
COMMON STOCK, AND THE IMPOSITION OF PENALTY BIDS. FOR A
DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING."
<PAGE>
GATEFOLD INSIDE COVER: Company logo; pictures of the Company's (i) fabrication
activities; (ii) marsh ATV with drill; (iii) swamp ATV & pullboat with drill;
(iv) airboat drill and airboat; (v) surveyor; text: Fabrication--The
Company fabricates much of its specialized Transition Zone seismic drilling and
transportation equipment; Seismic Surveying--Omni survey teams utilize digital
"total station" equipment and Global Positioning Satellite (GPS) instrumentation
which provides accuracy that can be measured in centimeters. Airboat Drills--
Because of their mobility, airboat drilling units are used in shallow waters and
all marsh areas where sufficient water is present. Airboats--The Company owns
and operates 72 single engine airboats to ferry personnel and supplies to
locations throughout the Transition Zone. Marsh ATVs--Marsh ATVs are amphibious
vehicles, supported by pontoons, that are used in environmentally sensitive
marsh areas. Swamp ATVs and Pullboats--Swamp ATVs are smaller, narrower versions
of the marsh ATVs. The smaller unit is needed due to the dense vegetation
typical in swamp areas. Because of its small size, the swamp ATV tows a pullboat
on which the drilling unit is mounted. Pictures of the Company's (i) drilling
personnel; (ii) ground transport unit; (iii) heli-portable rock drill; (iv)
highland drill; (v) pontoon boat with drill; (vi) jack-up rig with drill. Text:
Highland Drilling Units--A highland drilling unit is used for seismic drilling
on dry land areas. Pontoon Drills--Pontoon boats are used in inland bays and
lakes and shallow coastal waters. Each pontoon boat uses a skid-mounted drilling
unit. Jack-Up Rigs--In inland bays or lakes or coastal waters, the Company also
utilizes leased jack-up rigs equipped with one of the Company's skid-mounted
drilling units to perform the seismic drilling. Ground Transports--The Company
maintains a fleet of tractor-trailer trucks and numerous other trucks, trailers
and vehicles to move its equipment and personnel to projects throughout the
Transition Zone. Seismic Rock Drilling Equipment--Seismic rock drilling uses
compressed air rotary/hammer drills that are transported to and from locations
by land, surface vehicle or helicopter.
<PAGE>
PROSPECTUS SUMMARY
The following summary is qualified in its entirety by the more detailed
information and financial statements and the notes thereto included elsewhere
in this Prospectus. Immediately prior to the completion of the Offering, the
holders of common units of OMNI Geophysical, L.L.C. ("OMNI Geophysical") will
exchange (the "Share Exchange") all of such units for newly issued shares of
common stock of OMNI Energy Services Corp. Unless otherwise indicated, the
information in this Prospectus assumes that (i) the Share Exchange has occurred
and (ii) the Underwriters' over-allotment option will not be exercised. As used
herein, unless the context requires otherwise, references to OMNI Geophysical
include OMNI Geophysical, L.L.C. and its predecessors and subsidiaries, while
references to the Company include OMNI Energy Services Corp., OMNI Geophysical
and all of their respective predecessors and subsidiaries.
THE COMPANY
The Company is an oilfield service company specializing in providing an
integrated range of onshore seismic drilling, helicopter support and survey
services to geophysical companies operating in logistically difficult and
environmentally sensitive terrain in the United States. The Company's primary
market is the marsh, swamp, shallow water and contiguous dry land areas along
the U.S. Gulf Coast (the "Transition Zone"), primarily in Louisiana and Texas,
where it is the leading provider of seismic drilling services. From the mid-
1980s to the end of 1996, the majority of three dimensional ("3-D") seismic
data in the Transition Zone has been obtained in Louisiana, where approximately
9,000 square miles have been analyzed. The Company performed the seismic
drilling services on approximately 6,300 of these square miles. The Company
owns and operates an extensive fleet of specialized seismic drilling and
transportation equipment for use in the Transition Zone, much of which is
fabricated by the Company. The Company believes that it is the only company
that currently can both provide an integrated range of seismic drilling,
helicopter support and survey services in all of the varied terrains of the
Transition Zone and simultaneously support operations for multiple, large-scale
seismic projects. The Company has also expanded its seismic drilling operations
into the Rocky Mountain region, where it engages in seismic drilling in hard
rock terrain.
Seismic data generally consists of computer-generated 3-D images or two-
dimensional ("2-D") cross sections of subsurface geologic formations and is
used in the exploration for hydrocarbon reserves and as a tool for enhancing
production from existing reservoirs. Seismic data is acquired by recording
subsurface seismic waves produced by an energy source, usually dynamite, at
various points ("source points") at a project site. The reflected seismic waves
are collected by specialized sensors ("geophones") placed at receiving points
throughout the project site, and the resulting data is recorded by field
recording boxes and then digitized.
Oil and gas companies generally contract with independent geophysical
companies to acquire seismic data. Geophysical companies initially determine
the layout of source and receiving points and secure all necessary permits and
landowner consents. Once the permits and consents are obtained, the source and
receiving points are surveyed and marked, and the source points are drilled and
loaded with dynamite. The geophysical company then positions the geophones at
the receiving points and proceeds with detonation of the dynamite and the
acquisition of the seismic data. During this process, helicopters are sometimes
used to shuttle geophones and field recording boxes between receiving points
("long-line helicopter support") in an efficient manner with minimal
environmental impact. Domestically, seismic drilling, surveying and helicopter
support services are typically contracted to third parties such as the Company,
as geophysical companies have found it more economical to outsource these
services and focus their efforts and capital on the acquisition and
interpretation of seismic data. The use of 3-D seismic data to identify
locations to drill both exploration and development wells has improved the
economics of finding and producing oil and gas reserves, which in turn has
created increased demand for 3-D seismic surveys and seismic support services.
3
<PAGE>
Seismic Drilling Services. Historically, the Company's core business has been
the drilling and loading of source points for seismic projects in the
Transition Zone. The Company's extensive fleet of specialized seismic drilling
and transportation equipment includes all-terrain marsh vehicles ("marsh ATVs")
equipped with on-board drilling units, all-terrain swamp vehicles ("swamp
ATVs"), pull boats equipped with skid-mounted drilling units, airboat drilling
units, support airboats, pontoon boats equipped with on-board drilling units,
highland drilling units used on dry land and skid-mounted drilling units used
on leased jack-up rigs. The Company uses its pontoon boats and leased jack-up
rigs in inland bays and lakes and coastal waters at depths of up to
approximately 20 feet. The Company designs and fabricates much of the
specialized seismic drilling and transportation equipment that it uses in the
Transition Zone. This wide variety of efficient and environmentally appropriate
equipment enables the Company to respond to all of the seismic drilling needs
of its customers throughout the Transition Zone.
Through its acquisition of substantially all of the assets of Wyoming-based
O.T.H. Exploration Services, Inc. ("OTH"), which was completed as of September
1, 1997, the Company provides seismic rock drilling services to geophysical
companies operating in the Rocky Mountain region. Seismic rock drilling
involves the use of compressed air rotary/hammer drills that are transported
from point to point by hand, surface vehicle or helicopter ("heli-portable
drilling"). The Company has also signed a binding agreement to acquire American
Helicopter Drilling, Inc. ("American Helicopter"), which currently has the
dominant share of the heli-portable seismic drilling market in the Rocky
Mountain area and is also engaged in the fabrication, export and servicing of
heli-portable and other types of seismic drilling units. The American
Helicopter acquisition is expected to be completed in December 1997.
Helicopter Support Services. The Company provides helicopter support services
to geophysical companies in the Transition Zone and elsewhere through its
aviation division, which was created through the July 1997 acquisition of
substantially all the assets of American Aviation Incorporated ("American
Aviation"), a company founded by the Company's Chairman and Chief Executive
Officer, David Jeansonne, in late 1995. The Company currently operates 16
helicopters (10 of which are owned and six of which are leased by the Company)
and owns and operates four airplanes to support its operations and to provide
limited charter services. Management believes that the Company is the dominant
provider of helicopter support services to geophysical companies operating in
the Transition Zone.
Survey Services. After a geophysical company has determined the placement of
source and receiving points and obtained all necessary permits and consents for
a seismic project, survey teams are sent into the field to mark each source and
receiving point. In March and August 1997, respectively, the Company acquired
two survey companies, Delta Surveys, Inc. and Leonard J. Chauvin, Jr., Inc.,
and currently has 16 survey crews devoted primarily to the seismic survey
market in the Transition Zone. The Company has also entered into a binding
agreement to acquire Fournier & Associates, Inc. ("Fournier"), which operates
four survey crews in the Transition Zone and adjacent areas. The Fournier
acquisition is expected to be completed in December 1997. The Company also
provides, on a limited basis, civil survey services in south Louisiana to the
oil and gas industry and other industries. The Company's survey crews have
access to the Company's extensive fleet of specialized transportation
equipment, which gives the Company a competitive advantage over most other
survey companies which must rent this equipment.
BUSINESS STRATEGY
The Company's business strategy is to:
Participate in Transition Zone Growth. Seismic data acquisition has been
conducted in the Transition Zone since the 1930s. Within the last decade,
however, improvements in oil and gas drilling and production techniques and the
advent of 3-D imaging have resulted in significantly increased seismic activity
throughout the Transition Zone. In 1996, 3-D seismic data was acquired from
approximately 4,900 square miles of the Transition Zone in Louisiana compared
to 1,500 square miles in 1995 and 1,000 square miles in 1994. Management
anticipates that
4
<PAGE>
demand for seismic data will continue to grow in the Transition Zone as a
result of 3-D seismic acquisition projects on unexplored prospects, time-lapsed
3-D analysis, which is generally used to measure the migration of hydrocarbons
in a producing reservoir to enhance production efforts, and reshoots of
previously-surveyed areas with more advanced seismic technology. The Company
intends to maintain its dominant share of the seismic drilling market in the
Transition Zone by fully participating in this growth.
Integrate and Expand Services. The Company intends to capitalize on its
existing customer relationships and its reputation as a reliable service
provider in the Transition Zone to expand its newly-acquired helicopter support
and survey businesses. Management believes that the Company is the only
operator in the Transition Zone that can provide seismic drilling, helicopter
support and survey services on an integrated basis. Management further believes
that the Company's unique ability to package these services to meet its
customers' needs, together with the economies of scale provided by the size and
integrated nature of its operations, will allow the Company to attract
additional projects in the Transition Zone and elsewhere.
Expand Operations in the Rocky Mountain Region. As a result of its recent
acquisition of substantially all of the assets of OTH, the Company has expanded
from its base in the Transition Zone into the seismic rock drilling market in
the Rocky Mountain region. The Company has also entered into a binding
agreement to acquire American Helicopter and is separately in negotiations to
acquire two heavy-lift helicopters, delivery of which is expected by year end,
which will allow the Company to provide integrated heli-portable seismic
drilling services. Management expects the demand for seismic data in the Rocky
Mountain region to grow over the next five years and believes that many of its
current Transition Zone customers will participate in this growth.
Expand Internationally. Management believes that the Company will be well
positioned to expand internationally based on the comprehensive services it
provides in the Transition Zone, its experience operating in difficult terrains
and its recently acquired heli-portable and seismic rock drilling expertise.
Mexico, Venezuela, Indonesia, Tunisia, the Caspian Sea, South China and West
Africa each have transition zones similar to the U.S. Gulf Coast region where
seismic exploration is in various stages of development. The Company does not
have definitive plans with respect to international transition zone operations;
however, many of the Company's customers also have extensive international
operations and currently perform their own seismic drilling and related
services internationally. The Company believes that these customers would
outsource these services as they have done domestically if reliable and cost-
effective third-party service providers operated in these markets. Management
believes that the Company's strong industry reputation and established
relationships with its customers will facilitate the Company's entrance into
and development in international markets and expects the Company to begin
generating revenue from international transition zone operations in 1998.
Additionally, American Helicopter is currently engaged in seismic rock drilling
in Mexico and Peru.
Acquire Related Businesses. Management intends to evaluate opportunities as
they arise to acquire companies that have related or complementary products or
services to those currently provided by the Company. The Company seeks
acquisitions which would, among other things, capitalize on the Company's
dominant position in the Transition Zone seismic drilling market, expand its
Rocky Mountain presence or facilitate its anticipated international expansion.
Immediately after the Offering, management believes that the Company's capital
structure will enable it to pursue such opportunities. However, the Company
does not intend to enter the seismic data acquisition market at any time.
5
<PAGE>
THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the Company. 3,500,000 shares
Common Stock to be outstanding after
the Offering....................... 15,500,000 shares(a)
Use of Proceeds..................... The estimated net proceeds of the Offering
will be used to repay approximately $33.2
million of indebtedness and to fund the
cash portion of the purchase price of the
acquisitions of American Helicopter and
Fournier (approximately $1.3 million). The
remainder of the proceeds, estimated to be
approximately $10.4 million, will be used
for general corporate purposes, including
acquisitions, capital expenditures and
working capital. See "Use of Proceeds."
Nasdaq National Market Symbol....... OMNI
</TABLE>
- --------
(a) Does not include (i) 1,161,518 shares issuable upon exercise of outstanding
options or options that will be granted in connection with the Offering,
(ii) 456,500 shares reserved for issuance under the Company's Stock
Incentive Plan and (iii) 3,572 shares issuable upon the exercise of
outstanding options granted to a third-party lender. See "Management--Stock
Incentive Plan."
THE SHARE EXCHANGE AND OTHER RELATED TRANSACTIONS
Immediately prior to the Offering, the holders of the common units of OMNI
Geophysical will effect the Share Exchange, pursuant to which such holders will
exchange all of the 113,476 outstanding common units of OMNI Geophysical for
12,000,000 shares of Common Stock and the holders of outstanding options to
purchase common units of OMNI Geophysical will receive options to purchase a
corresponding number of shares of Common Stock. As a result, OMNI Geophysical
will become a wholly-owned subsidiary of the Company. See "The Company."
On September 30, 1997, (i) $5.0 million of undistributed earnings of OMNI
Geophysical was distributed to the current members of OMNI Geophysical and (ii)
OMNI Geophysical repurchased all of its outstanding preferred units for $5.0
million (the "Preferred Unit Repurchase"). Prior to the Share Exchange,
substantially all remaining undistributed earnings of OMNI Geophysical through
the date of the Share Exchange, estimated to be approximately $1.0 million,
will be distributed to the current members of OMNI Geophysical. These
distributions of undistributed earnings are collectively referred to herein as
the "LLC Distribution." See "Change in Tax Status and Related Distributions"
and "Certain Transactions."
RISK FACTORS
An investment in the Common Stock offered hereby involves a high degree of
risk. In particular, prospective investors should be aware of the effect on the
Company of the risks presented by the factors listed under "Risk Factors."
6
<PAGE>
SUMMARY HISTORICAL AND PRO FORMA FINANCIAL DATA
The following table presents for the periods indicated certain summary
historical and pro forma financial data of OMNI Geophysical and its
predecessor, OMNI Geophysical Corporation ("OGC"). OMNI Geophysical acquired
substantially all of the assets and liabilities of OGC on July 19, 1996 (the
"OGC Acquisition"). The OGC Acquisition was accounted for as a purchase, with
the assets acquired and liabilities assumed recorded at their stepped-up fair
value. Financial data for the years ended December 31, 1994 and 1995 and the
201-day period ended July 19, 1996 reflect the results of OGC. Financial data
for the 165-day period ended December 31, 1996, the 73-day period ended
September 30, 1996 and the nine months ended September 30, 1997 reflect the
results of OMNI Geophysical. The following data should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results
of Operations" and the historical and pro forma financial statements and
related notes thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
COMPARISON OF YEAR END PERIODS COMPARISON OF INTERIM PERIODS
------------------------------------------------------- ------------------------------------------------------
PREDECESSOR SUCCESSOR PREDECESSOR SUCCESSOR
------------------------- ------------ ----------- ---------------------------
PRO FORMA
201-DAY PRO FORMA 201-DAY AS ADJUSTED(A)
YEAR ENDED PERIOD 165-DAY AS ADJUSTED(A) PERIOD 73-DAY PERIOD NINE MONTHS NINE MONTHS
DECEMBER 31, ENDED PERIOD ENDED YEAR ENDED ENDED ENDED ENDED ENDED
--------------- JULY 19, DECEMBER 31, DECEMBER 31, JULY 19, SEPTEMBER 30, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996 1996 1996 1996 1997 1997
------ ------- -------- ------------ -------------- ----------- ------------- ------------- --------------
(IN THOUSANDS, EXCEPT PER SHARE DATA) (IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT
DATA:
Operating
revenue........ $7,268 $12,690 $10,020 $10,942 $24,274 $10,020 $5,178 $33,989 $36,335
Operating
expenses(b).... 5,025 8,704 6,810 8,114 17,794 6,810 3,526 24,806 26,912
------ ------- ------- ------- ------- ------- ------ ------- -------
Gross profit.... 2,243 3,986 3,210 2,828 6,480 3,210 1,652 9,183 9,423
General and
administrative
expenses....... 1,079 1,791 792 1,050 2,623 792 376 3,301 3,967
------ ------- ------- ------- ------- ------- ------ ------- -------
Operating
income......... 1,164 2,195 2,418 1,778 3,857 2,418 1,276 5,882 5,456
Interest
expense(b)..... 97 148 151 437 740 151 147 1,226 555
Other expense
(income), net.. (8) 7 (2) (20) (21) (2) (22) (12) (12)
------ ------- ------- ------- ------- ------- ------ ------- -------
Net income...... $1,075 $ 2,040 $ 2,269 $ 1,361 $ 3,138 $ 2,269 $1,151 $ 4,668 $ 4,913
====== ======= ======= ======= ======= ======= ====== ======= =======
UNAUDITED PRO
FORMA DATA:
Net income as
reported above. $1,075 $ 2,040 $ 2,269 $ 1,361 $ 3,138 $ 2,269 $1,151 $ 4,668 $ 4,913
Pro forma
provision for
income
taxes(c)....... 430 816 908 544 1,255 908 460 1,867 1,965
------ ------- ------- ------- ------- ------- ------ ------- -------
Pro forma net
income......... $ 645 $ 1,224 $ 1,361 $ 817 $ 1,883 $ 1,361 $ 691 $ 2,801 $ 2,948
====== ======= ======= ======= ======= ======= ====== ======= =======
Pro forma net
income per
common share... $ 0.06(d) $ 0.12(e) $ 0.22(d) $ 0.19(e)
======= ======= ======= =======
Pro forma
weighted
average common
shares......... 10,780(d) 15,360(e) 10,903(d) 15,483(e)
STATEMENT OF CASH
FLOW DATA:
Cash provided by
(used in)
operating
activities..... $ 806 $ 1,781 $ 1,456 $ 606 $ 1,456 $ 663 $ 2,953
Cash provided by
(used in)
investing
activities..... (830) (1,106) (1,435) (13,462) (1,435) (1,653) (11,547)
Cash provided by
(used in)
financing
activities..... 135 (557) (247) 12,895 (247) 960 10,838
OTHER FINANCIAL
DATA:
Depreciation and
amortization(b). $ 228 $ 372 $ 275 $ 697 $ 1,488 $ 275 $ 230 $ 1,639 $ 1,811
EBITDA(f)....... 1,392 2,567 2,693 2,475 5,345 2,693 1,506 7,521 7,267
Capital
expenditures... 839 1,164 1,438 13,487(g) 1,438 1,661 10,142
Debt repayments. 212 366 2,137 987 2,137 5,910 8,976
</TABLE>
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30,
1997 (UNAUDITED)
-----------------------
PRO FORMA AS
HISTORICAL ADJUSTED(H)
---------- ------------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital........................................ $ 5,595 $24,562
Property, plant and equipment, net..................... 29,156 29,156
Total assets........................................... 55,866 70,082
Long-term debt, less current maturities................ 36,209 10,935
Shareholders' equity................................... 7,232 51,473
</TABLE>
7
<PAGE>
- --------
(a) The unaudited pro forma as adjusted income statement data give effect to
(i) the OGC Acquisition, (ii) the acquisition of substantially all of the
assets of American Aviation, (iii) the additional interest expense
associated with borrowings to finance the Preferred Unit Repurchase and the
LLC Distribution and (iv) the Offering and the application of the estimated
net proceeds therefrom, each as if consummated at January 1, 1996.
(b) The step-up to fair value of the assets acquired in the OGC Acquisition
resulted in increased depreciation reported by OMNI Geophysical, which is
included in operating expenses. In order to finance the OGC Acquisition,
OMNI Geophysical incurred additional indebtedness, which resulted in
additional interest expense being reported. Pro forma amounts also reflect
increased depreciation and amortization as a result of the acquisition of
substantially all of the assets of American Aviation.
(c) Each of OGC, OMNI Geophysical and American Aviation is or was an S
corporation or a limited liability company exempt from income tax at the
entity level, and thus the historical financial statements show no
provision for income taxes. The Company, however, is a corporation that
will pay income taxes at the corporate level. This pro forma adjustment
reflects a provision for income taxes on the Company's net income at a
combined federal and state tax rate of 40%. See "Change in Tax Status and
Related Distributions."
(d) Gives effect to (i) the Share Exchange, (ii) the payment of dividends on
the outstanding preferred units of OMNI Geophysical of approximately
$180,000 for the 165-day period ended December 31, 1996 and approximately
$391,000 for the nine months ended September 30, 1997 and (iii) the
exercise of options to purchase 118,018 shares of Common Stock granted to
employees of the Company outside of the Company's Stock Incentive Plan, as
if each had occurred at the beginning of the period. See "The Company."
(e) Gives effect to (i) the Share Exchange, (ii) the acquisition of
substantially all of the assets of American Aviation, (iii) the Preferred
Unit Repurchase, (iv) the exercise of options to purchase 118,018 shares of
Common Stock granted to employees of the Company outside of the Company's
Stock Incentive Plan and (v) the Offering and the application of the
estimated net proceeds therefrom, as if each had occurred at the beginning
of the period. See "The Company."
(f) The Company calculates EBITDA (earnings before interest expense, income
taxes, depreciation and amortization) as operating income plus depreciation
and amortization. EBITDA should not be considered as an alternative to net
income or any other measure of operating performance determined in
accordance with generally accepted accounting principles. EBITDA is widely
used by financial analysts as a measure of financial performance. The
Company's measurement of EBITDA may not be comparable to similarly titled
measures reported by other companies.
(g) Includes $10.9 million of expenditures related to the OGC Acquisition for
the 165-day period ended December 31, 1996.
(h) The unaudited pro forma as adjusted balance sheet data gives effect to (i)
the Share Exchange, (ii) the LLC Distribution and (iii) the Offering and
the application of the estimated net proceeds therefrom as described
herein. See "Use of Proceeds."
8
<PAGE>
RISK FACTORS
Prospective purchasers of the Common Stock should carefully consider the
investment considerations set forth below, as well as the other information
contained in this Prospectus. All statements, other than statements of
historical fact, included in this Prospectus that address activities, events
or developments that the Company expects, believes or anticipates will or may
occur in the future are based on certain assumptions and analyses made by the
Company in light of its experiences and its perception of historical trends,
current conditions, expected future developments and other factors it believes
are appropriate under the circumstances when such assumptions and analyses
were made. Such statements are subject to a number of assumptions, risks and
uncertainties, including the risk factors discussed below, general economic
and business conditions, the business opportunities (or lack thereof) that may
be presented to and pursued by the Company, changes in laws or regulations and
other factors, many of which are beyond the control of the Company.
Prospective investors are cautioned that any such statements are not
guarantees of future performance and that actual results or developments may
differ materially from those projected in such forward-looking statements.
DEPENDENCE ON ACTIVITY IN THE OIL AND GAS INDUSTRY
Demand for the Company's services depends upon the condition of the oil and
gas industry and, in particular, the level of capital expenditures by oil and
gas companies for seismic data acquisition activities. These activities may be
influenced by prevailing oil and gas prices; expectations about future demand
and prices; the cost of exploring for, producing and developing oil and gas
reserves; the discovery rate of new oil and gas reserves; the availability and
cost of permits and consents from landowners to conduct seismic activity;
political and economic conditions; governmental regulations; and the
availability and cost of capital. Historically, oil and gas prices and the
level of exploration and development activity have fluctuated substantially.
Any significant decline in worldwide demand for oil and gas or prolonged
reduction in oil or gas prices in the future would likely depress exploration
and development activity and, thus, demand for seismic data. Any significant
reduction in seismic data acquisition activity in the areas where the Company
operates would result in a reduction in the demand for the Company's services
and could have a material adverse effect on the Company's financial condition
and results of operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--General--Demand."
SHORTAGE OF LABOR
The Company's ability to remain productive and profitable depends on its
ability to attract and retain workers. The number of employees of the Company
has increased from 172 at December 31, 1995 to 608 at September 30, 1997, and
the Company expects that the total number of employees will increase further
in order to support the Company's anticipated growth. In addition, the Company
has historically experienced a high rate of employee turnover. As a result,
management must devote significant time, effort and expense to hire, train and
retain qualified workers. The Company believes that there are a large number
of trainable workers residing in reasonable proximity to its facilities;
however, there can be no assurance that the Company will be successful in
recruiting, training and retaining such workers due to a variety of factors,
including the potential inability or lack of desire by such workers to either
commute to the Company's facilities and job sites or relocate to areas closer
to the Company's areas of operation and competition for workers from other
industries. While the Company believes that its wage rates are competitive and
that its relationship with its workforce is good, a significant increase in
the wages paid by other employers could result in a reduction in the Company's
workforce, increases in the wage rates paid by the Company, or both. If either
of these events occur for any significant period of time, the production and
profitability of the Company could be diminished and the growth potential of
the Company could be impaired. See "Business--Employees."
RISKS OF RAPID GROWTH
The Company has grown rapidly over the last several years through internal
growth and acquisitions of companies engaged in activities other than seismic
drilling in the Transition Zone, the Company's traditional
9
<PAGE>
line of business. Managing the rapid growth experienced by the Company will be
important for the Company's future success and will demand increased
responsibility for management personnel. Several factors, including the lack
of sufficient executive-level personnel, increased administrative burdens and
the increased logistical problems of large, expansive operations, could
present difficulties to the Company, which if not managed successfully, could
have a material adverse effect on the Company's financial condition and
results of operations.
ABSENCE OF COMBINED OPERATING HISTORY
The Company has recently completed acquisitions of several companies whose
operations differ somewhat from the Company's traditional Transition Zone
seismic drilling operations. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--General--Recent Acquisitions."
These entities were operated separately prior to their acquisition by the
Company, and the Company has not fully integrated the operations of these
acquired companies with its own. In addition, the Company has entered into
agreements to acquire two other companies. No assurance can be given that the
Company will be successful in managing and incorporating these businesses into
its existing operations or that the Company will not experience difficulties
or unanticipated expenses as it seeks to integrate their operations. The
Company's failure to successfully incorporate the acquired businesses into its
existing operations, or the occurrence of unexpected costs or liabilities as a
result of these acquisitions, could have a material adverse effect on the
Company. Neither the historical nor the pro forma financial information
included herein is necessarily indicative of the results that would have been
achieved had the Company been operated on a fully integrated basis or the
results that may be realized in the future.
RISKS OF ACQUISITION STRATEGY
Future acquisitions are a key element of the Company's growth and expansion
strategy. The Company intends to use a portion of the net proceeds of the
Offering to pursue acquisitions of other companies with operations related or
complementary to its current operations. See "Use of Proceeds." There can be
no assurance that the Company will be able to complete the acquisitions that
are currently pending or identify and acquire acceptable acquisition
candidates on terms favorable to the Company. There also can be no assurance
that the Company will successfully integrate the operations and assets of any
acquired business with its own or that the Company's management will be able
to effectively manage the increased size of the Company or operate a new line
of business. Any inability on the part of the Company to integrate and manage
acquired businesses could have a material adverse effect on the Company's
results of operations and financial condition.
DEPENDENCE ON SIGNIFICANT CUSTOMERS
The Company's business is dependent on a relatively small number of
geophysical companies and those oil and gas companies operating in the
Transition Zone. A large portion of the Company's revenue has historically
been generated from contracts with a few geophysical companies. The Company's
four largest customers, each of which individually accounted for more than 10%
of revenue in a given year, collectively accounted for 88%, 88% and 70% of
revenue for 1994, 1995 and 1996, respectively. Therefore, the Company is
dependent upon the maintenance of strong working relationships with these
geophysical companies as well as oil and gas companies, which in many cases
participate in determining which drilling, survey or aviation company will be
used on their respective seismic projects. The loss of any significant
customer for any reason could result in a substantial loss of revenue and have
a material adverse effect on the Company's operating performance. See
"Business--Customers; Marketing; Contracting."
BACKLOG
The Company's backlog represents those projects for which a customer has
accepted the Company's bid and has scheduled a start date for the project.
Projects currently included in the Company's backlog are subject to
rescheduling or termination without penalty at the option of the customer,
which could substantially reduce the amount of backlog currently reported.
Delay or termination of a number of large projects in the Company's existing
backlog could have a material adverse effect on the Company's revenue, net
income and cash flow for 1998. As of August 31, 1997, 70% of the Company's
backlog was attributable to 21 projects for two customers. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations--
General--Backlog" and "Business--Backlog."
10
<PAGE>
SEASONALITY AND WEATHER RISKS
The Company's operations are subject to seasonal variations in weather
conditions and daylight hours. Since the Company's activities take place
outdoors, the average number of hours worked per day, and therefore the number
of holes drilled or surveyed per day, generally is less in winter months than
in summer months, due to an increase in rainy, foggy and cold conditions and a
decrease in daylight hours. Furthermore, demand for seismic data acquisition
activity by oil and gas companies in the first quarter is generally lower than
at other times of the year. As a result, the Company's revenue and gross
profit during the first quarter of each year are typically low as compared to
the other quarters. Operations may also be affected by rainy weather,
lightning, hurricanes and other storms prevalent along the Gulf Coast
throughout the year and by seasonal climatic conditions in the Rocky Mountain
area. In addition, prolonged periods of dry weather result in slower drill
rates in marsh and swamp areas as water in the quantities needed to drill is
more difficult to obtain and equipment movement is impeded. Adverse weather
conditions and dry weather could increase maintenance costs for the Company's
equipment and decrease the number of vehicles available for operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--General--Seasonality and Weather" and "Business--Seasonality and
Weather Risks."
OPERATING RISKS
The Company's operations are conducted under hazardous conditions in
difficult terrain that is not easily accessible. Accordingly, its operations
are subject to risks of injury to or death of personnel and loss of equipment.
The Company's aviation division is subject to numerous hazards inherent in the
operation of helicopters and airplanes, such as adverse weather conditions,
crashes, collisions and fires, all of which may result in injury to or death
of personnel or losses of equipment and revenues. The Company maintains hull
and liability insurance which generally insures the Company against certain
legal liabilities to others, as well as to damage to its equipment and
aircraft. The Company also maintains general liability insurance policies that
protect it against liabilities that may be incurred in the ordinary course of
its business. There can be no assurance, however, that the Company's insurance
coverage will be adequate to cover any future losses that may occur, that the
Company will be able to maintain its existing coverages or that the premiums
therefor will not increase substantially. The Company does not carry business
interruption insurance for any of its operations. See "Business--Insurance."
COMPETITION
The Company currently competes with several other providers of seismic
drilling, survey and aviation support services. Because of the size of its
fleet of specialized transportation and seismic drilling equipment, the
Company occupies a market leadership position in the seismic drilling market
in the Transition Zone. However, there are few barriers to entry in the
seismic drilling market, and an increase in competition in the market could
arise from new ventures, expanded operations of existing competitors, an
increase in seismic drilling by geophysical companies or otherwise. Increased
competition in the seismic drilling market in the Transition Zone could have a
material adverse effect on the Company's revenue, gross profit and net income.
See "Business--Competition."
TECHNICAL EVOLUTION
The market for seismic data is characterized by continual technological
developments that have resulted in, and likely will continue to result in,
substantial improvements in the methods of obtaining seismic information and
the scope and quality of seismic information. Whether the Company can continue
to develop equipment and provide seismic services to meet evolving industry
standards and practice, and achieve levels of capability and
11
<PAGE>
price that are acceptable to its customers, will be significant factors in
determining the Company's ability to compete. There also can be no assurance
that the geophysical industry will not develop new methods of seismic data
acquisition that do not require the same seismic drilling and support services
currently offered by the Company. If the Company is unable, for technological
or other reasons, to continue to develop competitive equipment and services in
response to changes in the seismic drilling and support services market, its
results of operations and financial condition could be materially adversely
affected.
RISKS OF INTERNATIONAL EXPANSION
To the extent the Company's future operations involve international
expansion, those operations would be subject to a number of risks inherent in
business operations in foreign countries, including political, social and
economic instability, potential seizure or nationalization of assets, currency
restrictions and exchange rate fluctuations, nullification, modification or
renegotiation of contracts, import-export quotas and other forms of public and
governmental regulation, all of which would be beyond the control of the
Company. Additionally, the ability of the Company to compete in international
markets may be adversely affected by import duties and fees, foreign taxes,
foreign governmental regulations that favor or require the awarding of
contracts to local contractors or regulations requiring foreign contractors to
employ citizens of or purchase supplies from a particular jurisdiction.
REGULATORY AND ENVIRONMENTAL MATTERS
The Company's operations and properties are subject to and affected by
various types of governmental regulation, including laws and regulations
governing the entry into and restoration of wetlands, the handling of
explosives, the operation of commercial aircraft and numerous other federal,
state and local laws and regulations. In addition, the Company's operations
require current licenses from various state, local and federal agencies,
including the Federal Aviation Administration ("FAA") and the Bureau of
Alcohol, Tobacco and Firearms of the U.S. Department of Justice ("ATF").
Violations of various statutory and regulatory programs that apply to the
Company's operations can result in civil penalties, remediation expenses,
monetary damages, potential injunctions, cease and desist orders and criminal
penalties. Some environmental statutes impose strict liability, rendering a
person liable for environmental damage without regard to negligence or fault
on the part of such person. To date the Company's cost of complying with such
laws and regulations has not been material, but because such laws and
regulations are changed frequently, it is not possible for the Company to
accurately predict the cost or impact of such laws and regulations on its
future operations. In addition, the loss by the Company of any of the licenses
required for its operations for any reason could have a material adverse
effect on the Company's operations.
The Company depends on the demand for its services from the oil and gas
industry and is affected by changing taxes, price controls and other laws and
regulations relating to the oil and gas industry generally. The adoption of
laws and regulations curtailing exploration and development drilling for oil
and gas in the Company's areas of operations for economic, environmental or
other policy reasons would adversely affect the Company's operations by
limiting demand for its services. The Company cannot determine to what extent
future operations and earnings of the Company may be affected by new
legislation, new regulations or changes in existing regulations. See
"Business--Governmental Regulation."
DEPENDENCE ON KEY PERSONNEL
The Company's success depends on, among other things, the continued active
participation of David A. Jeansonne, Chairman of the Board and Chief Executive
Officer, Roger E. Thomas, President, and certain of the Company's other
officers and key operating personnel. The loss of the services of any one of
these persons could have a material adverse effect on the Company. The Company
has entered into employment agreements with each of its executive officers,
including Messrs. Jeansonne (through June 2003) and Thomas (through July
1999), and has purchased "key-man" life insurance with respect to Mr.
Jeansonne. See "Management."
12
<PAGE>
SUBSTANTIAL CONTROL BY EXISTING SHAREHOLDER
Upon completion of the Offering, Advantage Capital Corporation, together
with certain of its affiliates (collectively, "Advantage Capital"), will
beneficially own approximately 50.2% (48.6% if the over-allotment option is
exercised in full) of the issued and outstanding shares of Common Stock. In
addition, two members of the Company's Board of Directors are affiliates of
Advantage Capital. The stock ownership and current board representation of
Advantage Capital gives it the ability to control the election of the
Company's directors and other corporate matters requiring shareholder approval
and exert significant influence over the business and affairs of the Company.
This may have the effect of delaying or preventing a change in control of the
Company. The interests of Advantage Capital may not always be the same as the
interests of the Company's other shareholders. See "Principal Shareholders."
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have outstanding
15,500,000 shares of Common Stock (excluding 1,165,090 shares issuable upon
the exercise of outstanding options). All of the 3,500,000 shares of Common
Stock offered hereby will be eligible for sale in the public market without
restriction upon completion of the Offering. All of the remaining outstanding
shares of Common Stock are "restricted securities" as that term is defined in
Rule 144 under the Securities Act of 1933, as amended (the "Securities Act").
The Company, Advantage Capital and each of the Company's directors and
executive officers have agreed not to offer, sell or otherwise dispose of any
shares of Common Stock in the public market for 180 days from the date of this
Prospectus without the prior written consent of Lehman Brothers Inc. See
"Underwriting." In addition, none of the 12,000,000 shares of Common Stock
held by existing shareholders will be eligible for resale pursuant to Rule 144
until one year from the date of the Share Exchange. Although the Company
cannot predict the timing or amount of future sales of Common Stock or the
effect that the availability of such shares for sale will have on the market
price prevailing from time to time, sales of substantial amounts of Common
Stock in the public market following this Offering, including sales in
connection with a registered offering of Common Stock, could adversely affect
the market price of the Common Stock. See "Principal Shareholders" and "Shares
Eligible for Future Sale."
NO PRIOR MARKET; POSSIBLE VOLATILITY OF MARKET PRICE
Prior to the Offering, there has been no public market for the Common Stock.
Although the Common Stock offered hereby has been approved for quotation on
the Nasdaq National Market, subject to official notice of issuance, there can
be no assurance that a market for the Common Stock will develop or, if
developed, will be sustained. The initial public offering price of the Common
Stock will be determined by negotiations between the Company and the
Underwriters. For the factors considered in such negotiations, see
"Underwriting." There can be no assurance that future market prices at which
the Common Stock will sell in the public market after the Offering will not be
lower than the initial public offering price. Following the Offering, the
market price of the Common Stock may fluctuate depending on various factors,
including the general economy, stock market conditions, general trends in the
seismic business, fluctuations in oil and gas prices, announcements by the
Company or its competitors and variations in the Company's quarterly and
annual operating results.
DILUTION
Purchasers of the Common Stock offered hereby will incur immediate dilution
of $11.20 per share in the pro forma net tangible book value of their
investment (assuming an initial public offering price of $14.00 per share).
See "Dilution."
ANTI-TAKEOVER EFFECTS OF CERTAIN PROVISIONS OF THE ARTICLES OF INCORPORATION,
BY-LAWS AND LOUISIANA BUSINESS CORPORATION LAW
Certain provisions of the Company's Articles of Incorporation and By-laws
and of the Louisiana Business Corporation Law may tend to deter potential
unsolicited offers or other efforts to obtain control of the Company
13
<PAGE>
that are not approved by the Board of Directors. Such provisions may therefore
deprive the shareholders of opportunities to sell shares of Common Stock at a
premium to then prevailing market prices in connection with a takeover
attempt. See "Description of Capital Stock--Certain Charter and By-law
Provisions."
LIMITATIONS ON FOREIGN OWNERSHIP OF COMPANY STOCK
Under the Federal Aviation Administration Authorization Act of 1994, as
amended (the "Federal Aviation Act"), it is unlawful to operate certain
commercial aircraft for hire within the United States unless such aircraft are
registered with the FAA and the operator of such aircraft has been issued an
operating certificate by the FAA. As a general rule, aircraft may be
registered under the Federal Aviation Act only if the aircraft is owned or
controlled by one or more citizens of the United States, and an operating
certificate may be granted only to a citizen of the United States. For
purposes of these requirements, a corporation is deemed to be a citizen of the
United States only if, among other things, at least 75% of the voting interest
therein is owned or controlled by United States citizens. To assure the
Company's continued ability to operate commercial aircraft in the United
States, the Company's Articles of Incorporation contain provisions designed to
assure that not more than 24% of the outstanding shares of Common Stock and
other voting securities of the Company are owned by persons who are not U.S.
citizens. The Articles of Incorporation provide that the Company would have
the power to reduce the voting rights with respect to shares held by persons
who are not U.S. citizens to 24% and, at its option, to redeem such shares in
excess of 24%. The restrictions may limit the ability of non-U.S. citizens to
obtain control of the Company and may prevent consummation of a transaction
even if it is favorable to the Company's shareholders. Accordingly, these
restrictions could have an adverse effect upon the value of the Common Stock.
See "Business--Governmental Regulation--Aviation" and "Description of Capital
Stock--Limitation on Foreign Ownership of Company Stock."
DIVIDENDS
The Company currently intends to retain earnings, if any, to meet its
working capital requirements and to finance the future operation and growth of
the Company's business and, therefore, does not plan to declare or pay cash
dividends to holders of its Common Stock in the foreseeable future. See
"Dividend Policy."
14
<PAGE>
THE COMPANY
The Company was originally founded in 1987 by its Chairman and Chief
Executive Officer, David A. Jeansonne, as OMNI Drilling Corporation ("OMNI
Drilling"), to provide drilling services to the geophysical industry. In 1995,
Mr. Jeansonne and R. Patrick Morris, the Company's Vice President and General
Manager of the Aviation Division, formed American Aviation Incorporated
("American Aviation") to provide long-line helicopter services to the
geophysical industry.
In July 1996, OMNI Geophysical, L.L.C. ("OMNI Geophysical") was formed to
facilitate the OGC Acquisition, pursuant to which OMNI Geophysical acquired
substantially all of the assets of OMNI Geophysical Corporation ("OGC"), the
successor to the business of OMNI Drilling. In July 1997, OMNI Geophysical
also acquired substantially all of the assets of American Aviation.
OMNI Energy Services Corp. was formed on September 11, 1997, solely to
facilitate the Offering. Immediately prior to the Offering, the holders of the
common units of OMNI Geophysical will effect the Share Exchange, pursuant to
which such holders will exchange all of the 113,476 outstanding common units
in OMNI Geophysical for 12,000,000 shares of Common Stock and the holders of
outstanding options to purchase common units of OMNI Geophysical will receive
options to purchase a corresponding number of shares of Common Stock. On
September 30, 1997, OMNI Geophysical consummated the Preferred Unit Repurchase
pursuant to which it repurchased all of its outstanding preferred units, which
were held by Advantage Capital, for $5.0 million. See "Certain Transactions."
The Company's principal executive offices are located at 4484 NE Evangeline
Thruway, Carencro, Louisiana, 70520, its mailing address is P.O. Box 3761,
Lafayette, Louisiana 70502 and its telephone number is (318) 896-6664.
CHANGE IN TAX STATUS AND RELATED DISTRIBUTIONS
Since its inception, OMNI Geophysical has been treated as a partnership for
federal and state income tax purposes. As a limited liability company, OMNI
Geophysical is not subject to income tax at the entity level and its income is
reportable by its members on their personal income tax returns, whether or not
earnings and profits are distributed to its members. As a result, the members
of OMNI Geophysical have paid or will incur federal and state income tax
liabilities on all earnings of OMNI Geophysical through the date of the Share
Exchange. Following the Share Exchange, the operations of OMNI Geophysical
will be conducted by the Company, and its earnings will be subject to
corporate level taxation.
On September 30, 1997, $5.0 million of undistributed earnings of OMNI
Geophysical was distributed to the members of OMNI Geophysical. Prior to the
Share Exchange, substantially all remaining undistributed earnings of OMNI
Geophysical through the date of the Share Exchange will be distributed to the
members of OMNI Geophysical in the LLC Distribution. Management estimates that
the Company will have additional undistributed earnings of approximately $1.0
million at the time of the Share Exchange (assuming the Share Exchange is
consummated on November 21, 1997). Purchasers of Common Stock in the Offering
will not receive any portion of the LLC Distribution.
The initial portion of the LLC Distribution and the Preferred Unit
Repurchase were funded with the proceeds of a $10.0 million term loan from
Hibernia National Bank (the "Distribution Loan"), which bears interest at the
London Interbank Offered Rate ("LIBOR") plus 1.0% and is secured by the cash
distributed in the LLC Distribution and the Preferred Unit Repurchase and
collateral securing the Company's other outstanding loans with Hibernia
National Bank. The Company expects to fund the remaining portion of the LLC
Distribution with additional borrowings under its existing credit
arrangements. Following completion of the Offering, amounts outstanding under
the Distribution Loan are expected to be repaid with the proceeds of a new
term loan or revolving credit facility to be entered into by the Company. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources" and "Certain Transactions."
OGC distributed $765,250 and $881,200, respectively, in the year ended
December 31, 1995 and the 201-day period ended July 19, 1996. OMNI Geophysical
made distributions to its members totaling $18,810 during the 165-day period
ended December 31, 1996 and $320,642 since January 1, 1997, other than amounts
distributed as part of the LLC Distribution, in order to fund federal and
state tax liabilities payable by its members. See "Certain Transactions."
15
<PAGE>
USE OF PROCEEDS
The net proceeds to the Company from the sale of Common Stock offered
hereby, after deducting underwriting discounts and commissions and estimated
offering expenses, will be approximately $44.9 million, assuming an initial
public offering price of $14.00 per share ($51.8 million if the Underwriters'
over-allotment option is exercised in full). The Company intends to use
approximately $33.2 million of the estimated net proceeds to repay the
following indebtedness (including prepayment penalties and accrued interest
thereon):
<TABLE>
<CAPTION>
PRINCIPAL INTEREST
OUTSTANDING ON RATE AT
SEPTEMBER 30, SEPTEMBER
NAME OF LENDER 1997 30, 1997
-------------- -------------- ---------
<S> <C> <C>
U. S. Bancorp Leasing and Financial(a)................ $ 4,739,854 8.6%
First National Bank of Lafayette(b)................... 563,267 8.5%
The CIT Group/Equipment Financing, Inc.(c)............ 6,244,992 9.4%
Transamerica Insurance Finance Corporation(d)......... 449,897 7.9%
Hibernia National Bank (Vehicle Financing)(e)......... 716,323 9.0%
Hibernia National Bank (Revolving Line of Credit)(f).. 8,000,000 9.0%
Hibernia National Bank (Construction/Term Loan)(g).... -- --
Hibernia National Bank (American Aviation)(h)......... 6,630,208 9.0%
Hibernia National Bank (Leonard J. Chauvin, Jr.,
Inc.)(i)............................................. 49,517 9.5%
OMNI Geophysical Corporation(j)....................... 1,908,355 8.5%
American Aviation Incorporated(k)..................... 1,000,000 8.5%
Transamerica Insurance Finance Corporation(l)......... 340,695 8.0%
-----------
Total............................................... $30,643,108
===========
</TABLE>
- --------
(a) Bears interest at LIBOR plus 3.0%. Consists of five notes that mature on
December 1, 2001, February 1, 2002, March 1, 2002, May 1, 2002 and August
1, 2002, respectively. Proceeds from these loans were used to purchase,
and the notes are collateralized by, various seismic drilling and support
equipment. The Company will incur a prepayment penalty of 2.0% of the
outstanding balance at the time it repays the indebtedness (approximately
$95,000 at September 30, 1997).
(b) Matures on January 3, 2000. Proceeds from this loan were used to
consolidate financing incurred to purchase 43 trucks, which, together with
bank deposit accounts, serve as collateral for the loan.
(c) Of the principal outstanding, $5,244,992 bears interest at LIBOR plus
3.75% (the "Variable Rate") and matures on July 19, 2001. Prior to August
19, 1998, the Company may elect to pay interest on this portion of the
loan at a fixed rate equal to the interest rate on U.S. Treasury
securities of a comparable maturity to the loan at the time of election
plus 4.25% (the "Fixed Rate"). The Company will incur a prepayment penalty
of up to 5% (up to approximately $262,250 at September 30, 1997) of the
amount of indebtedness prepaid, depending on the date of prepayment. The
proceeds of this portion of the loan were used to finance a portion of the
OGC Acquisition, and the assets acquired serve as collateral for the loan.
The loan agreement was amended on September 19, 1997 to provide an
additional commitment of up to $4,000,000 or 90% of the cost of the
collateral securing amounts advanced under this amendment. As of September
30, 1997, $1,000,000 of this commitment had been advanced. Amounts advanced
under this amendment bear interest at LIBOR plus 3.0%. The Company will
incur a prepayment penalty of 2.0% of the outstanding balance
(approximately $20,000 at September 30, 1997) at the time it repays the
indebtedness. Amounts advanced pursuant to this amendment are
collateralized by various seismic drilling and support equipment.
(d) Matures on April 1, 2000. Proceeds of this loan were used to finance three
years of the Company's insurance premiums.
(e) Consists of 20 separate motor vehicle loans incurred to purchase 34
trucks, which, along with bank deposit accounts, serve as collateral for
the loans. The loans range in maturity from September 17, 1999 to
September 17, 2000 and bear interest at 9.0%, except for one loan of
$18,933 which bears interest at 8.5%.
16
<PAGE>
(f) Bears interest at the lesser of the prime rate as quoted from time to time
by Citibank, N.A. New York ("Citibank Prime") plus 0.5% or LIBOR plus 3.5%
and matures on November 1, 1998. The revolving line of credit provides up
to $8.0 million (subject to a borrowing base limitation of 80% of eligible
trade receivables) that can be used for general working capital
requirements and the issuance of letters of credit. The loan is secured by
the Company's accounts receivable, general intangibles, its Carencro
facilities and by the collateral securing the other Company loans with
Hibernia National Bank. In addition, the Company has granted Hibernia
National Bank a mortgage on the 34 acres of land it owns adjacent to its
Carencro facility. This mortgage also secures the loans described in notes
(g) and (h).
(g) Bears interest at the lesser of Citibank Prime plus 0.75% or LIBOR plus
3.75% and matures five years after conversion to a term loan upon
completion of construction. As of September 30, 1997, the Company had not
borrowed under this loan but expects to borrow the entire $2.0 million
prior to completion of the Offering. Proceeds of this loan will be used to
finance a portion of the construction of the Company's new administrative
and fabrication and maintenance buildings, which collateralize the loan.
(h) Bears interest at the lesser of Citibank Prime plus 0.5% or LIBOR plus
3.0% and matures on August 6, 2002. Proceeds of this loan were used to
fund a portion of the purchase price for substantially all of the assets
of American Aviation. The loan is collateralized by the assets of the
Company's aviation division and by the collateral securing the other
Company loans with Hibernia National Bank. The Company will incur a
prepayment penalty of 1.0% of the prepayment amount (approximately $66,000
at September 30, 1997).
(i) Consists of three separate loans owed by Leonard J. Chauvin, Jr., Inc.,
including a $40,000 note for working capital purposes, a $12,121 loan
incurred to purchase a boat and a $24,161 loan incurred to purchase an
automobile.
(j) Matures on June 30, 2001. This promissory note was issued to OGC as part
of the consideration for the OGC Acquisition. See "Certain Transactions."
(k) Payable on demand. This promissory note was issued in connection with the
acquisition of substantially all of the assets of American Aviation.
(l) Matures on July 1, 1998. Proceeds were used to finance one year of
premiums for seven of the Company's insurance policies.
The Company will use approximately $1.3 million of the estimated net
proceeds to fund the cash portion of the purchase price for the acquisitions
of American Helicopter and Fournier, which are expected to be completed in
December 1997. The Company will use the remainder of the estimated net
proceeds (approximately $10.4 million) and the proceeds of any exercise of the
Underwriters' over-allotment option for general corporate purposes, including
acquisitions, capital expenditures and working capital. Pending application of
the net proceeds, the Company intends to invest the net proceeds in short-
term, investment-grade, interest-bearing securities.
DIVIDEND POLICY
After the Offering, the Company intends to retain earnings, if any, to meet
its working capital requirements and to finance the future operations and
growth of its business and, therefore, does not plan to declare or pay cash
dividends to holders of its Common Stock in the foreseeable future. In
addition, the ability of the Company to make distributions to its shareholders
will be restricted by its credit agreements. See "Risk Factors--Dividends."
17
<PAGE>
DILUTION
Dilution is the difference between the initial public offering price per
share of the Common Stock offered hereby and the pro forma tangible book value
per share value of the Common Stock after giving effect to the Offering. Pro
forma net tangible book value per share of Common Stock represents the amount
of the Company's tangible net worth (total tangible assets less total
liabilities) divided by the total number of shares of Common Stock
outstanding. After giving effect to the Share Exchange and the LLC
Distribution, the pro forma net tangible book value of the Company at
September 30, 1997 would have been a deficit of $1.5 million, or $(0.13) per
share of Common Stock. After giving effect to the Offering (assuming an
initial public offering price of $14.00 per share and deducting the
underwriting discounts and commissions and estimated offering expenses), the
pro forma net tangible book value of the Company at September 30, 1997 would
have been approximately $43.4 million or $2.80 per share of Common Stock. This
represents an immediate increase in net tangible book value of $2.93 per share
of Common Stock to current holders of Common Stock and an immediate dilution
of approximately $11.20 per share to the new investors purchasing shares in
the Offering.
The following table illustrates this per share dilution to new investors:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share........... $14.00
Pro forma net tangible book value per share as of
September 30, 1997..................................... $(0.13)
Increase attributable to new investors.................. 2.93
------
Adjusted pro forma net tangible book value per share after
the Offering............................................. 2.80
------
Dilution per share to new investors....................... $11.20
======
</TABLE>
The following table summarizes, on a pro forma as adjusted basis, at
September 30, 1997, the number of shares of Common Stock to be issued by the
Company in connection with the Share Exchange and the Offering, the total
consideration received by the Company and the average price per share of
Common Stock paid by existing shareholders and by investors in the Offering
(assuming an initial public offering price of $14.00 per share) before
deducting the underwriting discounts and commissions and estimated offering
expenses.
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION
------------------ ------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ------- ----------- ------- -------------
<S> <C> <C> <C> <C> <C>
Existing shareholders...... 12,000,000 77% $ 6,543,000 12% $ 0.55
New investors.............. 3,500,000 23% 49,000,000 88% $14.00
---------- --- ----------- ---
Total.................... 15,500,000 100% $55,543,000 100%
========== === =========== ===
</TABLE>
18
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of OMNI Geophysical as of
September 30, 1997, (i) on an actual basis, (ii) on a pro forma basis giving
effect to the Share Exchange and the LLC Distribution and (iii) on a pro forma
basis as adjusted to reflect the sale by the Company of 3,500,000 of the
shares of Common Stock offered hereby at an assumed initial public offering
price of $14.00 per share and the application of the estimated net proceeds
thereof as described in "Use of Proceeds." The table set forth below should be
read in conjunction with the financial statements and the notes thereto
included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AS OF SEPTEMBER 30, 1997
---------------------------
PRO FORMA
PRO AS
ACTUAL FORMA ADJUSTED(A)
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current maturities of long-term debt............... $ 4,751 $ 4,751 $ --
======= ======= =======
Long-term debt (less current maturities) and
revolving line of credit.......................... $36,209 $36,898 $10,935
------- ------- -------
Equity:
Common units, par value $0.01 per unit; 113,476
units issued and outstanding (actual); no units
issued and outstanding (pro forma and pro forma
as adjusted).................................... 1 -- --
Preferred stock, par value $0.01 per share;
5,000,000 shares authorized; no shares issued
and outstanding................................. -- -- --
Common stock, par value $0.01 per share;
45,000,000 shares authorized; 1,000 shares
issued and outstanding (actual); 12,000,000
shares issued and outstanding (pro forma);
15,500,000 shares issued and outstanding (pro
forma as adjusted)(b)........................... -- 120 155
Additional paid-in capital....................... 6,542 6,423 51,318
Retained earnings................................ 689 -- --
------- ------- -------
Total equity................................... 7,232 6,543 51,473
------- ------- -------
Total capitalization............................... $43,441 $43,441 $62,408
======= ======= =======
</TABLE>
- --------
(a) Adjusted to reflect the Offering and the application of the estimated net
proceeds therefrom to reduce indebtedness by approximately $30.6 million
as of September 30, 1997.
(b) Does not include (i) 1,161,518 shares issuable upon exercise of
outstanding options or options that will be granted in connection with the
Offering, (ii) 456,500 shares reserved for issuance under the Company's
Stock Incentive Plan and (iii) 3,572 shares issuable upon the exercise of
outstanding options granted to a third-party lender. See "Management--
Stock Incentive Plan."
19
<PAGE>
SELECTED FINANCIAL AND OPERATING DATA
The selected financial data as of December 31, 1992 and 1993 and for the
years ended December 31, 1992 and 1993 are derived from the unaudited
financial statements of OGC, substantially all of the assets of which were
acquired by OMNI Geophysical on July 19, 1996. The selected financial data for
the years ended December 31, 1994 and 1995 and the 201-day period ended July
19, 1996 are derived from the audited financial statements of OGC. The
selected financial data as of December 31, 1996 and the 165-day period ended
December 31, 1996 are derived from the audited financial statements of OMNI
Geophysical. The selected financial data as of and for the nine months ended
September 30, 1997 are derived from the unaudited financial statements of OMNI
Geophysical for such periods and the selected financial data for the 73-day
period ended September 30, 1996 are derived from the unaudited statements of
OGC for such period. In the opinion of management, the unaudited financial
statements reflect all adjustments (consisting only of normal recurring
adjustments) necessary for the fair presentation of the financial condition
and results of operations for these periods. The following information should
be read in conjunction with "Management's Discussion and Analysis of Financial
Conditions and Results of Operations" and the financial statements and notes
thereto included elsewhere in this Prospectus.
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------------------------- -------------------------------------------
201-DAY
PERIOD 165-DAY 73-DAY NINE
YEAR ENDED DECEMBER 31, ENDED PERIOD ENDED PERIOD ENDED MONTHS ENDED
--------------------------------------- JULY 19, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1992 1993 1994 1995 1996 1996 1996 1997
----------- ----------- ------ ------- -------- ------------ ------------- -------------
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Operating revenue...... $3,632 $3,972 $7,268 $12,690 $10,020 $ 10,942 $5,178 $ 33,989
Operating expenses(a).. 2,052 2,544 5,025 8,704 6,810 8,114 3,526 24,806
------ ------ ------ ------- ------- ---------- ------ ----------
Gross profit........... 1,580 1,428 2,243 3,986 3,210 2,828 1,652 9,183
General and
administrative
expenses.............. 892 756 1,079 1,791 792 1,050 376 3,301
------ ------ ------ ------- ------- ---------- ------ ----------
Operating income....... 688 672 1,164 2,195 2,418 1,778 1,276 5,882
Interest expense(a).... 36 56 97 148 151 437 147 1,226
Other expense (income),
net................... -- -- (8) 7 (2) (20) (22) (12)
------ ------ ------ ------- ------- ---------- ------ ----------
Net income............. $ 652 $ 616 $1,075 $ 2,040 $ 2,269 $ 1,361 $1,151 $ 4,668
====== ====== ====== ======= ======= ========== ====== ==========
UNAUDITED PRO FORMA
DATA:
Net income as reported
above................. $ 652 $ 616 $1,075 $ 2,040 $ 2,269 $ 1,361 $1,151 $ 4,668
Pro forma provision for
income taxes(b)....... 261 246 430 816 908 544 460 1,867
------ ------ ------ ------- ------- ---------- ------ ----------
Pro forma net income... $ 391 $ 370 $ 645 $ 1,224 $ 1,361 $ 817 $ 691 $ 2,801
====== ====== ====== ======= ======= ========== ====== ==========
Pro forma net income
per common share(c)... $ 0.06 $ 0.22
========== ==========
Pro forma weighted
average common
shares(c)............. 10,779,878 10,903,058
STATEMENT OF CASH FLOW
DATA:
Cash provided by (used
in) operating
activities............ $ 577 $ 463 $ 806 $ 1,781 $ 1,456 $ 606 $ 663 $ 2,953
Cash provided by (used
in) investing
activities............ (850) (236) (830) (1,106) (1,435) (13,462) (1,653) (11,547)
Cash provided by (used
in) financing
activities............ 343 (250) 135 (557) (247) 12,895 960 10,838
OTHER FINANCIAL DATA:
Depreciation and
amortization(a)....... $ 92 $ 151 $ 228 $ 372 $ 275 $ 697 $ 230 $ 1,639
EBITDA(d).............. 780 823 1,392 2,567 2,693 2,475 1,506 7,521
Capital expenditures... 850 236 839 1,164 1,438 13,487 (e) 1,661 10,142
Debt repayments........ -- 110 212 366 2,137 987 5,910 8,976
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
--------------------------------------------- SEPTEMBER 30,
1992 1993 1994 1995 1996(F) 1997
----------- ----------- ------ ------ ------- -------------
(IN THOUSANDS)
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........ $ 473 $ 755 $ 496 $ 997 $ 1,600 $ 5,595
Property, plant and
equipment, net........ 797 882 1,492 2,174 13,780 29,156
Total assets........... 1,491 2,134 4,044 5,429 20,386 55,866
Long-term debt, less
current maturities.... 625 510 434 341 10,575 36,209
Shareholders' equity... 660 1,142 1,588 2,863 5,343 7,232
</TABLE>
20
<PAGE>
- --------
(a) The step-up to fair value of the assets acquired in the OGC Acquisition
resulted in increased depreciation reported by OMNI Geophysical, which is
included in operating expenses. In order to finance the OGC Acquisition,
OMNI Geophysical incurred additional indebtedness, which resulted in
additional interest expenses being reported.
(b) Each of OGC, OMNI Geophysical and American Aviation is or was an S
corporation or a limited liability company exempt from income tax at the
entity level, and thus the historical financial statements show no
provision for income taxes. The Company, however, is a corporation that
will pay income taxes at the corporate level. This pro forma adjustment
reflects a provision for income taxes on the Company's net income at a
combined federal and state tax rate of 40%. See "Change in Tax Status and
Related Distributions."
(c) Gives effect to (i) the Share Exchange, (ii) the payment of dividends on
the outstanding preferred units of OMNI Geophysical of approximately
$180,000 for the 165-day period ended December 31, 1996 and approximately
$391,000 for the nine months ended September 30, 1997, and (iii) the
exercise of options to purchase 118,018 shares of Common Stock granted to
employees of the Company outside of the Company's Stock Incentive Plan, as
if each had occurred as of the beginning of the period. Pro forma net
income per common share would have been $0.12 and $0.19 for the 165-day
period ended December 31, 1996 and the nine months ended September 30,
1997, respectively, giving additional effect to (i) the acquisition of
substantially all of the assets of American Aviation, (ii) the Preferred
Unit Repurchase and (iii) the Offering and the application of the net
proceeds therefrom as described herein, as if each had occurred at the
beginning of the period. See "The Company" and "Use of Proceeds."
(d) The Company calculates EBITDA (earnings before interest expense, income
taxes, depreciation and amortization) as operating income plus
depreciation and amortization. EBITDA should not be considered as an
alternative to net income or any other measure of operating performance
determined in accordance with generally accepted accounting principles.
EBITDA is widely used by financial analysts as a measure of financial
performance. The Company's measurement of EBITDA may not be comparable to
similarly titled measures reported by other companies.
(e) Includes $10.9 million of expenditures related to the OGC Acquisition in
the 165-day period ended December 31, 1996.
(f) Includes the stepped-up fair value of the assets and liabilities purchased
in the OGC Acquisition.
21
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis should be read in conjunction with the
historical consolidated financial statements, the pro forma consolidated
financial statements and the related notes thereto included elsewhere in this
Prospectus. The following information contains certain forward-looking
statements, which are subject to risks and uncertainties that could cause
actual results to differ materially from those expressed in or implied by the
statements. See "Risk Factors."
GENERAL
Demand. Demand for the Company's services is principally affected by
conditions affecting geophysical companies engaged in the acquisition of 3-D
seismic data. The level of activity among geophysical companies is primarily
affected by the level of capital expenditures by oil and gas companies for
seismic data acquisition activities. A number of factors influence the
decision of oil and gas companies to pursue the acquisition of seismic data,
including (i) prevailing and expected oil and gas demand and prices; (ii) the
cost of exploring for, producing and developing oil and gas reserves; (iii)
the discovery rate of new oil and gas reserves; (iv) the availability and cost
of permits and consents from landowners to conduct seismic activity; (v) local
and international political and economic conditions; (vi) governmental
regulations; and (vii) the availability and cost of capital. The ability to
finance the acquisition of seismic data in the absence of oil and gas
companies' interest in obtaining the information is also a factor as some
geophysical companies will acquire seismic data on a speculative basis.
Onshore 3-D seismic data acquisition activity has substantially increased over
the past few years; however, any significant reduction in seismic exploration
activity in the areas where the Company operates would result in a reduction
in the demand for the Company's services and could have a material adverse
effect on the Company's financial condition and results of operations. See
"Risk Factors--Dependence on Activity in the Oil and Gas Industry."
Within the last decade, improvements in drilling and production techniques
and the acceptance of 3-D imaging as an exploration tool have resulted in
significantly increased seismic activity throughout the Transition Zone. Due
to this increased demand, the Company has significantly increased its capacity
as measured by drilling units, support equipment and employees. The additional
capacity and related increase in the Company's workforce have led to
significant increases in the Company's revenue and generally commensurate
increases in operating expenses and selling, general and administrative
expenses. Management expects these expenses to continue to increase as a
direct correlation to anticipated increases in seismic activity.
Backlog. Most of the Company's seismic drilling projects are awarded
pursuant to a competitive bidding process. Once the Company's bid on a
particular project has been accepted and a start date for the project has been
scheduled, the Company will include the project in its backlog. As of August
31, 1997, the Company's backlog was $60.8 million, compared to $29.6 million
at August 31, 1996. Projects currently included in the Company's backlog are
subject to rescheduling or termination without penalty at the option of the
customer, which could substantially reduce the amount of backlog currently
reported and the revenue generated from the backlog. Historically, the Company
has not experienced a large volume of project delay or terminations, and those
projects that have been delayed or terminated have typically been replaced by
unscheduled projects. Nevertheless, delay or termination of a number of large
projects in the Company's existing backlog could have a material adverse
effect on the Company's revenue, net income and cash flow. See "Risk Factors--
Backlog" and "Business--Backlog."
Revenue Recognition. The Company recognizes revenue as services are
rendered. Revenue from the Company's drilling operations is recognized on a
per hole basis. Once the Company has drilled and loaded a source point,
revenue from the drilling of such source point is recognized. Similarly,
revenue is recognized from the Company's seismic survey operations when the
source or receiving point is marked by one of the Company's survey crews. The
Company's aircraft, which are generally chartered for a guaranteed minimum
number of hours per day, generate revenue pursuant to a fixed hourly rate. It
is the general policy of the Company to invoice its customers twice a month.
22
<PAGE>
Seasonality and Weather. The Company's operations are subject to seasonal
variations in weather conditions and daylight hours. Since the Company's
activities take place outdoors, the average number of hours worked per day,
and therefore the number of holes drilled or surveyed per day, is generally
less in the winter months than in summer months. Furthermore, demand for
seismic data acquisition activity by oil and gas companies in the first
quarter is generally lower than at other times of the year. In addition, the
Company's operations in the Rocky Mountain area are subject to the seasonal
climatic conditions of that area. As a result, the Company's revenue and gross
profit during the first quarter of each year are typically less as compared to
the other quarters.
Recent Acquisitions. In 1997, the Company completed several acquisitions
which have expanded both the scope and size of its seismic support operations.
The following table sets forth information with respect to these acquisitions:
<TABLE>
<CAPTION>
EFFECTIVE DATE OF SEISMIC SUPPORT
NAME OF ACQUIRED COMPANY ACQUISITION SERVICES PURCHASE PRICE
- ------------------------ ----------------- --------------------- --------------
<S> <C> <C> <C>
Delta Surveys, Inc. March 21, 1997 Survey $180,000 in cash; $120,000
(asset acquisition) promissory note
American Aviation July 1, 1997 Helicopter Support 10,213 common units in OMNI
Incorporated Geophysical(1); $500,000 in
(asset acquisition) cash; $1.0 million in
subordinated debt; and
assumption of $6.7 million
of debt.
Leonard J. Chauvin, Jr., July 1, 1997 Survey $900,000 in cash(2)
Inc.
(stock acquisition)
O.T.H. Exploration September 1, 1997 Seismic Rock Drilling $600,000 in cash
Services, Inc.
(asset acquisition)
</TABLE>
- --------
(1) The 10,213 common units will be converted into 1,080,017 shares of Common
Stock in the Share Exchange.
(2) Includes $100,000 payable upon attainment of certain performance goals.
Pending Acquisitions. On November 3, 1997, the Company entered into a
binding agreement to acquire American Helicopter for $1,050,000 in cash and
$2.5 million in Common Stock at the initial offering price. American
Helicopter engages in seismic drilling services in the Rocky Mountain area and
in the fabrication, export and servicing of heli-portable and other seismic
drilling units. Additionally, on November 1, 1997, the Company entered into a
binding agreement to acquire Fournier for $206,000 in cash and $544,000 in
Common Stock at the initial offering price. Fournier is a seismic survey
company operating four crews in the Transition Zone and adjacent areas. The
acquisitions of American Helicopter and Fournier are anticipated to be
completed in December 1997. However, there can be no assurance these
acquisitions will be consummated.
RESULTS OF OPERATIONS
The following discussion provides information related to the results of
operations of OMNI Geophysical. OMNI Geophysical acquired substantially all of
the assets and liabilities of OGC in the OGC Acquisition on July 19, 1996. In
order to provide comparable historical periods for 1996, management has
combined the results of operations of OGC for the 201-day period ended July
19, 1996 with the results of operations of OMNI Geophysical for the 165-day
period ended December 31, 1996 (see tables in the following section). The OGC
Acquisition was accounted for as a purchase with the assets acquired and
liabilities assumed recorded at their estimated fair value. As a result of
borrowings incurred to finance the OGC Acquisition and the write up of the
fixed assets purchased from OGC to their fair value at the time of the OGC
Acquisition, the Company has experienced higher interest, depreciation and
amortization expense since July 19, 1996.
23
<PAGE>
Nine Months Ended September 30, 1997 Compared to the Combined Nine Months
Ended September 30, 1996 (OGC 201-day Period Ended July 19, 1996 and OMNI
Geophysical 73-day Period Ended September 30, 1996)
<TABLE>
<CAPTION>
COMBINED
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1997
------------------ ------------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Operating revenues................. $15,198,741 $33,989,114
Operating expenses................. 10,336,225 24,805,772
----------- -----------
Gross profit....................... 4,862,516 9,183,342
General and administrative
expenses.......................... 1,169,351 3,301,117
----------- -----------
Operating income................... 3,693,165 5,882,225
Interest expense................... 297,688 1,226,110
Other income....................... 24,881 12,288
----------- -----------
Net income......................... $ 3,420,358 $ 4,668,403
=========== ===========
</TABLE>
Operating revenues increased 124%, from $15.2 million in the first nine
months of 1996 to $34.0 million in the first nine months of 1997, due to the
increase in industry demand for 3-D seismic data, the acquisition of American
Aviation and the Company's increased capacity as measured by drilling units
and support equipment. The Company had approximately 50 drilling units and 64
support equipment units at September 30, 1996 compared to 123 drilling units
and 200 support equipment units at September 30, 1997. The Company employed
286 employees for both field and administrative operations at September 30,
1996 compared to 608 at September 30, 1997, a 113% increase. The Company's
newly formed survey division generated approximately $1.7 million in revenue
during the first nine months of 1997. The Company's aviation division
generated $2.3 million in revenue during the third quarter of 1997.
Operating expenses increased 141%, from $10.3 million in the first nine
months of 1996 to $24.8 million in the first nine months of 1997. Repair and
maintenance costs increased 127%, from $1.5 million in the first nine months
of 1996 to $3.4 million in the first nine months of 1997, primarily due to the
increase in the use of the Company's seismic drilling and transportation
equipment. Total operating labor costs increased 149%, from $4.3 million in
the first nine months of 1996 to $10.7 million in the first nine months of
1997, primarily due to the significant increase in the Company's workforce.
Explosive costs increased 167%, from $1.2 million in the first nine months of
1996 to $3.2 million in the first nine months of 1997, due primarily to an
increase in the number of projects for which the Company provided explosives.
Depreciation expense increased 200%, from $0.5 million in the first nine
months of 1996 to $1.5 million in the first nine months of 1997, due to the
increased number of seismic drilling and support equipment units, the stepped-
up basis in such units that resulted from the OGC Acquisition and an increase
in the number of aircraft owned by the Company as a result of the acquisiton
of substantially all of the assets of American Aviation. In addition, due to
the increased volume of the Company's operations, supplies expense increased
113%, from $0.8 million in the first nine months of 1996 to $1.7 million in
the first nine months of 1997.
Gross profit increased 88%, from $4.9 million in the first nine months of
1996 to $9.2 million in the first nine months of 1997; however, gross profit
margins fell from 32% in the first nine months of 1996 to 27% in the first
nine months of 1997, primarily due to operating costs of $1.6 million related
to the survey division, an increase in depreciation expense due to the step-up
in value of equipment acquired from OGC and increased revenues from the sale
of explosives, which generally has lower profit margins.
General and administrative expenses increased 175%, from $1.2 million in the
first nine months of 1996 to $3.3 million in the first nine months of 1997,
primarily due to additions of office personnel to support the Company's
expanded operations, resulting increases in payroll taxes and increased
insurance expense. These three items increased 113%, from $0.8 million in the
1996 period to $1.7 million in the first nine months of 1997. Additionally,
other components of general and administrative expenses, such as utilities,
advertising, office and rent increased 350%, from $0.2 million in the first
nine months of 1996 to $0.9 million in the first nine months of 1997. This
24
<PAGE>
increase was primarily due to the expansion of the Company's facilities and
operations. Other increases include professional services and bad debt
expense, which increased $0.1 million and $0.2 million, respectively, in the
first nine months of 1997 compared to the first nine months of 1996. General
and administrative expenses, as a percentage of revenues, increased from 8% in
the first nine months of 1996 to 10% in the first nine months of 1997.
Interest expense increased 300%, from $0.3 million in the first nine months
of 1996 to $1.2 million in the first nine months of 1997, due to the increase
in borrowings to fund the acquisition of additional drilling units and support
equipment and debt incurred in connection with the OGC Acquisition.
Combined Year Ended December 31, 1996 (OGC 201-day Period Ended July 19, 1996
and OMNI Geophysical 165-day Period Ended December 31, 1996) Compared to Year
Ended December 31, 1995
<TABLE>
<CAPTION>
COMBINED
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
(UNAUDITED)
<S> <C> <C>
Operating revenues............................. $12,689,772 $20,962,682
Operating expenses............................. 8,703,559 14,923,958
----------- -----------
Gross profit................................... 3,986,213 6,038,724
General and administrative expenses............ 1,791,365 1,842,717
----------- -----------
Operating income............................... 2,194,848 4,196,007
Interest expense............................... 148,355 587,689
Other income (expense)......................... (6,377) 21,429
----------- -----------
Net income..................................... $ 2,040,116 $ 3,629,747
=========== ===========
</TABLE>
Operating revenues increased 65%, from $12.7 million in 1995 to $21.0
million in 1996, primarily due to an increase in industry demand for 3-D
seismic data in the Transition Zone and to the Company's increased capacity as
measured by drilling units and support equipment. The Company had
approximately 40 drilling units and 32 support equipment units at December 31,
1995 compared to 57 drilling units and 72 support equipment units at December
31, 1996. The Company employed 172 employees for both field and administrative
operations at December 31, 1995 compared to 308 at December 31, 1996, a 79%
increase.
Operating expenses increased 69%, from $8.8 million in 1995 to $14.9 million
in 1996, due to the increase in the volume of the Company's operations from
1995 to 1996. Repair and maintenance costs increased 25%, from $1.6 million in
1995 to $2.0 million in 1996, primarily due to the increase in the use of the
Company's seismic drilling and transportation equipment. Total operating labor
costs increased 45%, from $4.2 million in 1995 to $6.1 million in 1996, due to
the large increase in the number of employees needed to meet the increased
demand for the Company's services. Explosive costs increased 550%, from $0.2
million in 1995 to $1.3 million in 1996, primarily due to an increase in the
number of projects for which the Company provided explosives and a 6% increase
in the price of explosives. Fuel costs increased 60%, from $0.5 million in
1995 to $0.8 million in 1996, due to the increased number and usage of the
Company's drilling and support units. Contract drilling services costs
increased 67%, from $0.3 million in 1995 to $0.5 million in 1996, as the
Company occasionally had to subcontract for equipment and services, including
drilling units and personnel, to meet the increased demand. Equipment rentals
increased 200%, from $0.2 million in 1995 to $0.6 million in 1996.
Gross profit increased 50%, from $4.0 million in 1995 compared to $6.0
million in 1996; however, gross profit margins fell from 31% in 1995 to 29% in
1996, primarily due to the increase in the number of projects for which the
Company provided explosives, as the Company receives lower margins on
explosives than it does from its other operations.
General and administrative expenses remained constant at $1.8 million in
both 1995 and 1996. Included in general and administrative expenses for 1995
are $1.2 million of executive bonuses. The Company paid no
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<PAGE>
corresponding bonuses in 1996. Excluding executive bonuses, general and
administrative expenses as a percentage of operating revenues were 5% and 9%
in 1995 and 1996, respectively. The increase in general and administrative
expenses as a percentage of revenue was primarily due to an increase in office
personnel, insurance costs and bad debt expense. Insurance costs increased
100%, from $0.2 million in 1995 to $0.4 million in 1996, due to expanded
coverage and increased limits of liability on existing policies. Office
personnel costs increased 300%, from $0.2 million in 1995 to $0.8 million in
1996, due to the additional personnel needed to manage the increase in the
Company's operations. There was $0.1 million of bad debt expense in 1996 and
none in 1995.
Interest expense increased 500%, from $0.1 million in 1995 to $0.6 million
in 1996 due to the additional financing costs associated with the OGC
Acquisition and the increase in borrowings to fund purchases and construction
of new drilling units and support equipment. The increased interest expense in
1996 was partially offset by a decrease in the interest rates charged on
current and long-term debt. At December 31, 1995, the interest rates on debt
ranged from 8.25% to 11%. At December 31, 1996, interest rates on the
Company's revolving line of credit, the debt used for the OGC Acquisition and
the subordinated debt issued in connection with the OGC Acquisition were
9.25%, 9.37% and 8.5%, respectively.
Year Ended December 31, 1995 Compared to Year Ended December 31, 1994
Operating revenue increased 74%, from $7.3 million in 1994 to $12.7 million
in 1995. The increase was due to an increase in industry demand for 3-D
seismic data in the Transition Zone. The Company was able to absorb a large
portion of the increase in seismic drilling demand because of the size and
variety of its drilling units and support equipment. In response to the
increased demand for 3-D seismic data, the Company increased its capacity by
buying and building additional drilling units and support equipment. The
Company added 6 drilling units and 11 support equipment units during 1995.
Operating expenses increased 74%, from $5.0 million in 1994 to $8.7 million
in 1995. This increase was primarily attributable to increases in labor costs,
repairs and maintenance, depreciation, fuel expense, and supplies expense.
Total operating labor costs increased 77%, from $2.2 million in 1994 to $3.9
million in 1995, primarily due to a significant increase in the number of
employees. Repair and maintenance costs increased 60%, from $1.0 million in
1994 to $1.6 million in 1995, primarily due to the increase in the use of the
Company's seismic drilling and transportation equipment. Depreciation expense
increased 100%, from $0.2 million in 1994 to $0.4 million in 1995, due to the
increased number of drill and support equipment units. Fuel expense increased
67%, from $0.3 million in 1994 to $0.5 million in 1995. Supplies expense
increased 60%, from $0.5 million in 1994 to $0.8 million in 1995.
Gross profit increased 82%, from $2.2 million in 1994 to $4.0 million in
1995, maintaining gross profit margins of 31% in 1994 and 1995.
General and administrative expenses increased 64%, from $1.1 million in 1994
to $1.8 million in 1995. This increase of $0.7 million was primarily due to
increases in salaries, wages, and employee benefits and insurance. Insurance
expense increased 100%, from $0.1 million in 1994 to $0.2 million in 1995, due
to expanded coverage and increased limits of liability on existing policies.
Salaries, wages and employee benefits increased 71%, from $0.7 million in 1994
to $1.2 million in 1995, primarily as a result of executive bonuses. These
increases were slightly offset by a $0.1 million decrease in consulting fees.
AMERICAN AVIATION RESULTS OF OPERATIONS
American Aviation began operations on November 1, 1995. Since its inception,
American Aviation has focused on growing its operations through the expansion
of its helicopter and fixed wing aircraft fleet. As a result, American
Aviation's operating results have been affected by the normal costs associated
with the start up of an aviation company, such as costs incurred to obtain the
required FAA operating certificates.
26
<PAGE>
Year Ended December 31, 1996 Compared to the Year Ended December 31, 1995.
Operating revenue for the year ended December 31, 1996, the first full year of
operations for American Aviation, was $3.5 million. American Aviation did not
generate any revenue in 1995. Net income, excluding gains on the sale of
equipment, was $0.2 million for the year ended December 31, 1996. American
Aviation had net income of $0.2 million during the first six months of 1996
and no net income for the last six months of 1996. The decrease in net income
during the last six months of 1996 reflects the additional costs related to
the expansion of the aviation fleet.
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996.
Operating revenue increased 228%, from $0.7 million for the six months ended
June 30, 1996 to $2.3 million for the six months ended June 30, 1997. This
increase was primarily attributable to the expansion of the aviation fleet
through the purchase of four fixed wing aircraft at a cost of $1.7 million and
the purchase of five helicopters at a cost of $2.9 million. Net income (loss)
was $(0.4) million for the six months ended June 30, 1997 as compared to $0.2
million for the six months ended June 30, 1996. The net loss incurred in the
six months ended June 30, 1997 was primarily the result of costs associated
with obtaining necessary FAA operating certificates, expenses relating to the
operating cost of the recently acquired King Air fixed wing airplane and
expenses incurred in reserving the accounts receivable for one customer.
LIQUIDITY AND CAPITAL RESOURCES
At September 30, 1997, the Company had approximately $2.3 million in cash as
compared to approximately $39,000 and $300,000 at December 31, 1996 and 1995,
respectively. The Company had working capital of approximately $5.6 million at
September 30, 1997 compared to approximately $1.6 million and $1.0 million at
December 31, 1996 and 1995, respectively. The increase in working capital was
primarily due to increased cash and accounts receivable. Cash generated from
operations was $3.0 million for the nine months ended September 30, 1997
compared to $0.7 million for the 73-day period ended December 31, 1996, $1.5
million for the 201-day period ended July 19, 1996 and $1.8 million for the
year ended December 31, 1995.
Existing Indebtedness. The Company's existing debt arrangements include a
bank credit facility, asset-based financing, subordinated debt and other
indebtedness. The Company intends to utilize a portion of the net proceeds of
the Offering to repay all of such outstanding indebtedness other than (i) the
Distribution Loan (defined below), (ii) $120,000 owed to Delta Surveys, Inc.,
(8.5% interest rate; March 31, 2000 maturity date) which was incurred in
connection with the Company's acquisition of Delta Surveys, Inc., (iii)
$126,000 incurred in connection with the formation of OMNI Geophysical (March
1, 2001 maturity date) and (iv) any amounts borrowed by the Company to fund
the remaining portion of the LLC Distribution.
Distribution Loan. On September 30, 1997, the Company entered into a $10.0
million term loan (the "Distribution Loan") with Hibernia National Bank to
fund the LLC Distribution and the Preferred Unit Repurchase. This loan bears
interest at LIBOR plus 1.0% and is secured by the cash distributed in the LLC
Distribution and Preferred Unit Repurchase and by collateral securing the
Company's other outstanding loans with Hibernia National Bank. The Company is
currently negotiating with several commercial lenders to provide the Company
with a revolving line of credit of a minimum of $25.0 million (the "New
Facility"). Following completion of the Offering, the Company intends to repay
the Distribution Loan with borrowings under the New Facility. The Distribution
Loan will not be paid out of proceeds of the Offering. See "Change in Tax
Status and Related Distributions" and "Certain Transactions."
Capital Expenditures. The Company's capital requirements are primarily for
the purchase or fabrication of new seismic drilling equipment and related
support equipment, the purchase of helicopters and fixed-wing aircraft, and
acquisitions. The Company made capital expenditures of approximately $14.5
million to purchase or construct new assets between July 19, 1996 and December
31, 1996, and made approximately $22.0 million of capital expenditures during
the first nine months of 1997, including $14.6 million for the acquisition of
substantially all the assets of American Aviation, $0.9 million for the
acquisition of Leonard J. Chauvin, Jr., Inc., $0.6 million for the acquisition
of substantially all the assets of OTH, $0.3 million for the acquisition of
Delta Surveys, Inc., $4.9 million for new equipment and $0.4 million for the
expansion of its Carencro facility.
27
<PAGE>
The Company expects to spend approximately $11.3 million during the remainder
of 1997, primarily for the fabrication of additional seismic drilling units,
the purchase of two additional helicopters and the acquisition of American
Helicopter and Fournier. The Company currently expects to make capital
expenditures of approximately $12.0 million in 1998, including $6.5 million
for additional helicopters, $4.5 million for additional seismic drilling
equipment and $1.0 million for support vehicles. The Company also expects to
make additional capital expenditures estimated to be $2.0 million in 1998 to
expand the operations of American Helicopter.
Management believes that the estimated net proceeds from the Offering, cash
generated by operations and funds available under the New Facility, when
established, and the Company's existing financing arrangements will be
sufficient to meet the Company's anticipated capital expenditures and debt
service requirements for the remainder of 1997 and 1998. However, part of the
Company's strategy is to acquire companies with operations related or
complementary to the Company's current operations. Depending on the size of
such future acquisitions, if any, the Company may require additional debt
financing, possibly in excess of the limits of the New Facility, or equity
financing.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENT
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share,"
which simplifies the standards required under current accounting rules for
computing earnings per share and replaces the presentation of primary earnings
per share and fully diluted earnings per share with a presentation of basic
earnings per share ("basic EPS") and diluted earnings per share ("diluted
EPS"). Basic EPS excludes dilution and is determined by dividing income
available to common stockholders by the weighted average number of shares of
common stock outstanding during the period. Diluted EPS reflects the potential
dilution that could occur if securities and other contracts to issue shares of
common stock were exercised or converted into common stock. Diluted EPS is
computed similarly to fully diluted earnings per share under current
accounting rules. The implementation of SFAS No. 128 will be required in the
fourth quarter of 1997 and is not expected to have a material effect on the
Company's earnings per share as determined under current accounting rules.
28
<PAGE>
BUSINESS
GENERAL
The Company is an oilfield service company specializing in providing an
integrated range of onshore seismic drilling, helicopter support and survey
services to geophysical companies operating in logistically difficult and
environmentally sensitive terrain in the United States. The Company's primary
market is the marsh, swamp, shallow water and contiguous dry land areas along
the U.S. Gulf Coast, primarily in Louisiana and Texas, where it is the leading
provider of seismic drilling services. From the mid-1980s to the end of 1996,
the majority of 3-D seismic data in the Transition Zone has been obtained in
Louisiana, where approximately 9,000 square miles have been analyzed. The
Company performed the seismic drilling services on approximately 6,300 of
these square miles. The Company owns and operates an extensive fleet of
specialized seismic drilling and transportation equipment for use in the
Transition Zone, much of which is fabricated by the Company. The Company
believes that it is the only company that currently can both provide an
integrated range of seismic drilling, helicopter support and survey services
in all of the varied terrains of the Transition Zone and simultaneously
support operations for multiple, large-scale seismic projects. The Company has
also expanded its seismic drilling operations into the Rocky Mountain region,
where it engages in seismic rock drilling in hard rock terrain.
INDUSTRY OVERVIEW
Seismic data generally consists of computer-generated 3-D images or 2-D
cross sections of subsurface geologic formations and is used in the
exploration for new hydrocarbon reserves and as a tool for enhancing
production from existing reservoirs. Seismic data is acquired by recording
subsurface seismic waves produced by an energy source, usually dynamite, at
various source points at a project site. Historically, 2-D surveys were the
primary technique used to acquire seismic data. However, advances in computer
technology in the last five to ten years have made 3-D seismic data, which
provides a more comprehensive geophysical image, a practical and capable oil
and gas exploration and development tool. 3-D seismic data has proven to be
more accurate and effective than 2-D data at identifying potential
hydrocarbon-bearing geological formations. The use of 3-D seismic data to
identify locations to drill both exploration and development wells has
improved the economics of finding and producing oil and gas reserves, which in
turn has created increased demand for 3-D seismic surveys and seismic support
services.
Oil and gas companies generally contract with independent geophysical
companies to acquire seismic data. Once an area is chosen for seismic
analysis, permits and landowner consents are obtained, either by the
geophysical company or special permitting agents, and the geophysical company
determines the layout of the source and receiving points. For 2-D data, the
typical configuration of source and receiving points is a straight line with a
source point and small groups of geophones, or geophone stations, placed
evenly every few hundred feet along the line. For 3-D data, the configuration
is generally a grid of perpendicular lines spaced a few hundred to a few
thousand feet apart, with geophone stations spaced evenly every few hundred
feet along one set of parallel lines, and source points spaced evenly every
few hundred feet along the perpendicular lines. This configuration is designed
by the geophysical company to provide the best imaging of the targeted
geological structures while taking into account surface obstructions such as
water wells and oil and gas wells, pipelines and areas where landowner
consents cannot be obtained. The source points and geophone locations are then
marked by a survey team, and the source points are drilled and loaded with
dynamite.
After the source points have been drilled and loaded and the network of
geophones and field recording boxes deployed over a portion of the project
area, the dynamite is detonated at a source point. Seismic waves generated by
the blast move through the geological formations under the project area and
are reflected by various subsurface strata back to the surface where they are
detected by geophones. The signals from the geophones are collected and
digitized by recording boxes and transmitted to a central recording system. In
the case of 2-D data, the geophones and recording devices from one end of the
line are then shuttled, or "rolled forward," to the other end of the line and
the process is repeated. In the case of 3-D data, numerous source points,
typically
29
<PAGE>
located between the first two lines of a set of three or four parallel lines
of geophone stations are activated in sequence. The geophone stations and
recording boxes from the first of those lines are then rolled forward to form
the next line of geophone stations. The process is repeated, moving a few
hundred feet at a time, until the entire area to be analyzed has been covered.
Long-line helicopter support services are frequently used to shuttle the
geophones and recording devices in an efficient manner with minimal
environmental impact.
After the raw seismic data has been acquired, it is sent to a data
processing facility. The processed data can then be manipulated and viewed on
computer work stations by geoscientists to map the subsurface structures to
identify formations where hydrocarbons are likely to have accumulated and to
monitor the movement of hydrocarbons in known reservoirs. Domestically,
seismic drilling, helicopter support and survey services are typically
contracted to companies such as the Company, as geophysical companies have
found it more economical to outsource these services and focus their efforts
and capital on the acquisition and interpretation of seismic data.
DESCRIPTION OF OPERATIONS
The Company provides an integrated range of onshore seismic drilling,
helicopter support and survey services to geophysical companies operating in
logistically difficult and environmentally sensitive terrain in the United
States.
Seismic Drilling Services. The Company's primary activity is the drilling
and loading of source points for seismic analysis. Once the various source
points have been plotted by the geophysical company and a survey crew has
marked their locations, drill crews are deployed to drill and load the source
points. In the Transition Zone, the Company uses water pressure rotary drills
mounted on various types of vehicles to drill the source holes. The type of
vehicle used is determined by the nature, accessibility and environmental
sensitivity of the terrain surrounding the source point. Transition Zone
source holes are generally drilled to depths of 40-180 feet depending on the
nature of the terrain and the needs of the geophysical company, using ten-foot
sections of drill pipe which are carried with the drilling unit. The Company's
vehicles are manned with a driver and one or two helpers. The driver is
responsible for maneuvering the vehicle into position and operating the
drilling unit, while the helper sets and guides the drill into position,
attaches the drilling unit's water source, if drilling in dry areas, and loads
the drill pipe sections used in the drilling process.
In seismic rock drilling, the Company uses compressed air rotary/hammer
drills to drill holes that are typically shallower than Transition Zone holes.
Rock drills are manned by a two- or three-man crew and are transported to and
from locations by hand, surface vehicle or helicopter.
Once the hole has been drilled to the desired depth, it is loaded with
dynamite, which is carried onboard the Company's vehicles in special
containers. The explosive charge is set at the bottom of the drill hole and
then tested to ensure that the connection has remained intact. Once the charge
has been tested, the hole is plugged in accordance with local, state and
federal regulations and marked so that it can be identified for detonation by
the geophysical company at a later date. This process is repeated throughout
the survey area until all source points have been drilled and loaded.
Helicopter Support Services. Through its aviation division, created upon the
acquisition of American Aviation, the Company provides helicopter support
services to geophysical companies in the Transition Zone and elsewhere. The
Company uses long-line helicopters to shuttle geophones and recorders used to
collect seismic data between receiving points. Once seismic data has been
acquired from a portion of the project site, the geophones and recorders must
be moved into position to collect data from the next area to be analyzed. By
using helicopters, the Company is able to reduce delays in completing stages
of a seismic project by transporting the geophones and recording boxes to
their next receiving point in the surveyed area in an efficient manner with
minimal environmental impact.
30
<PAGE>
Helicopters are also used to transport heli-portable drilling units into
remote or otherwise inaccessible terrain in an efficient and environmentally
sensitive manner. The Company expects delivery of two heavy-lift helicopters
by year end, which it anticipates will be used to transport rock drilling
units in the Rocky Mountain region.
The Company operates 16 helicopters, 10 of which are owned and six of which
are leased by the Company, with pilots who have an average of over 10,000
flight hours. The Company also owns four airplanes (including one float-plane)
which currently are used to support its operations and to provide limited
charter services. The Company performs all routine maintenance and repairs on
its aircraft at its facilities at the Lafayette Airport.
Survey Services. In March and August 1997, respectively, the Company
acquired two survey companies, Delta Surveys, Inc. and Leonard J. Chauvin,
Jr., Incorporated, for an aggregate of $1.2 million in cash and notes, and
currently has 16 survey crews devoted primarily to the seismic survey market
in the Transition Zone. Through these acquisitions, the Company also acquired
personnel with significant experience in land surveying, with a large
percentage of those years having been spent in Transition Zone surveying. The
Company also provides, on a limited basis, non-seismic, civil survey services
in south Louisiana to the oil and gas industry and other industries. In
October 1997, the Company entered into a binding agreement to acquire Fournier
& Associates, Inc., which operates four survey crews in the Transition Zone
and adjacent areas. The Fournier acquisition is expected to be completed in
December 1997.
Once all permits and landowner consents for a seismic project have been
obtained and the geophysical company has determined the placement of source
and receiving points, survey crews are sent into the field to plot each source
and receiving point prior to drilling. The Company employs both GPS (global
positioning satellite) equipment, which is more efficient for surveying in
open areas, and conventional survey equipment, which is generally used to
survey wooded areas. The Company has successfully integrated both types of
equipment in order to complete projects throughout the varied terrain of the
Transition Zone and elsewhere. In addition, the Company's survey crews have
access to the Company's extensive fleet of specialized transportation
equipment, which gives the Company a competitive advantage over most other
survey companies which must rent this equipment.
Fabrication and Maintenance. At its Carencro facilities, the Company
performs all routine repairs and maintenance for its Transition Zone
equipment. The Company designs and fabricates aluminum marsh ATVs, a number of
its support boats and pontoon boats, and the drilling units it uses on all its
Transition Zone equipment. The Company does not fabricate highland rigs and
purchases airboats directly from the manufacturer and then modifies the
airboats to install the drilling equipment. The Company has the capability to
fabricate other key equipment, such as swamp ATVs, but currently has limited
available fabrication space. The Company has signed a binding agreement to
acquire American Helicopter, a company that, among other things, fabricates
rock drilling equipment. Because of its ability to fabricate and maintain much
of its equipment, the Company does not believe that it is dependent on any one
supplier for its drilling equipment or parts.
BUSINESS STRATEGY
The Company's business strategy is to:
Participate in Transition Zone Growth. Seismic data acquisition has been
conducted in the Transition Zone since the 1930s. Within the last decade,
however, improvements in oil and gas drilling and production techniques and
the advent of 3-D imaging have resulted in significantly increased seismic
activity throughout the Transition Zone. In 1996, 3-D seismic data was
acquired from approximately 4,900 square miles of the Transition Zone in
Louisiana compared to 1,500 square miles in 1995 and 1,000 square miles in
1994. Management anticipates that demand for seismic data will continue to
grow in the Transition Zone as a result of 3-D seismic acquisition projects on
unexplored prospects, time-lapsed 3-D analysis, which is generally used to
measure the migration of hydrocarbons in a producing reservoir to enhance
production efforts, and reshoots of previously-surveyed areas
31
<PAGE>
with more advanced seismic technology. The Company intends to maintain its
dominant share of the seismic drilling market in the Transition Zone by fully
participating in this growth.
Integrate and Expand Services. The Company intends to capitalize on its
existing customer relationships and its reputation as a reliable service
provider in the Transition Zone to expand its newly-acquired helicopter
support and survey businesses. Management believes that the Company is the
only operator in the Transition Zone that can provide seismic drilling,
helicopter support and survey services on an integrated basis. Management
further believes that the Company's unique ability to package these services
to meet its customers' needs, together with the economies of scale provided by
the size and integrated nature of its operations, will allow the Company to
attract additional projects in the Transition Zone and elsewhere.
Expand Operations in the Rocky Mountain Region. As a result of its recent
acquisition of substantially all of the assets of OTH, the Company has
expanded from its base in the Transition Zone into the seismic rock drilling
market in the Rocky Mountain region. The Company has also entered into a
binding agreement to acquire American Helicopter and is separately in
negotiations to acquire two heavy-lift helicopters, delivery of which is
expected by year end, which will allow the Company to provide integrated heli-
portable seismic drilling services. Management expects the demand for seismic
data in the Rocky Mountain region to grow over the next five years and
believes that many of its current Transition Zone customers will participate
in this growth.
Expand Internationally. Management believes that the Company will be well
positioned to expand internationally based on the comprehensive services it
provides in the Transition Zone, its experience operating in difficult
terrains and its recently acquired heli-portable and seismic rock drilling
expertise. Mexico, Venezuela, Indonesia, Tunisia, the Caspian Sea, South China
and West Africa each have transition zones similar to the U.S. Gulf Coast
region where seismic exploration is in various stages of development. The
Company does not have definitive plans with respect to international
transition zone operations; however, many of the Company's customers also have
extensive international operations and currently perform their own seismic
drilling and related services internationally. The Company believes that these
customers would outsource these services as they have done domestically if
reliable and cost-effective third-party service providers operated in these
markets. Management believes that the Company's strong industry reputation and
established relationships with its customers will facilitate the Company's
entrance into and development in international markets and expects the Company
to begin generating revenue from international transition zone operations in
1998. Additionally, American Helicopter is currently engaged in seismic rock
drilling in Mexico and Peru.
Acquire Related Businesses. Management intends to evaluate opportunities as
they arise to acquire companies that have related or complementary products or
services to those currently provided by the Company. The Company seeks
acquisitions which would, among other things, capitalize on the Company's
dominant position in the Transition Zone seismic drilling market, expand its
Rocky Mountain presence or facilitate its anticipated international expansion.
Immediately after the Offering, management believes that the Company's capital
structure will enable it to pursue such opportunities. However, the Company
does not intend to enter the seismic data acquisition market at any time.
FACILITIES AND EQUIPMENT
Facilities. The Company's corporate headquarters, fabrication facility and
primary maintenance facility are located in Carencro, Louisiana, near
Lafayette, Louisiana, in facilities leased from OGC. The Company's current
facilities include two buildings that provide approximately 2,500 square feet
of office space and 19,000 square feet of covered maintenance, fabrication and
warehouse space. In connection with the OGC Acquisition, the Company also
acquired a five-year option from OGC to purchase this facility for $500,000.
The Company is constructing two new buildings on approximately 34 acres of
land owned by the Company adjacent to its facilities in Carencro, Louisiana.
Completion is expected by the end of 1997. When completed, the new buildings
will provide approximately 20,000 square feet of additional office space and
32,000 square feet of additional covered maintenance and fabrication space.
With the expansion of its main facility, the
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Company will be able to expand operations to include on-site storage and
maintenance of its helicopter assets, which are currently conducted at the
Lafayette Airport.
The Company also leases an operations base in Victoria, Texas which is used
to store parts and equipment for use in Texas and a base in Big Piney,
Wyoming, to support the rock drilling assets recently acquired from OTH.
Following the acquisition of American Helicopter, the Company will also lease
a rock drilling operations base in Loveland, Colorado.
Transition Zone Transportation and Drilling Equipment. Because of the varied
terrain throughout the Transition Zone and the prevalence of environmentally
sensitive areas, the Company employs a wide variety of drilling vehicles (see
inside front and back cover pages for photographs of selected equipment).
Management believes that it is the only company currently operating in the
Transition Zone that owns and operates all of the following types of
equipment:
<TABLE>
<CAPTION>
NUMBER OF
UNITS AS OF
SEPTEMBER 30,
TYPES OF EQUIPMENT 1997
------------------ -------------
<S> <C>
Highland Drilling Units..................................... 22
Water Buggies............................................... 15
Aluminum Marsh ATVs......................................... 13
Steel Marsh ATVs............................................ 8
Airboat Drilling Units...................................... 28
Swamp ATVs.................................................. 25
Pullboats................................................... 20
Pontoon Boats............................................... 12
Skid-Mounted Drilling Units................................. 34
</TABLE>
Because of its extensive fleet of Transition Zone transportation and seismic
drilling equipment, much of which is fabricated by the Company, the Company
believes that it is the only company that currently can both provide an
integrated range of seismic drilling, helicopter support and survey services
in all of the varied terrains of the Transition Zone and simultaneously
support operations for multiple, large-scale seismic projects.
Highland Drilling Units and Water Buggies. The Company owns and operates 22
highland drilling units for seismic drilling in dry land areas. These units
generally consist of a tractor-like vehicle with a drilling unit mounted on
the rear of the vehicle. A highland drilling unit can be driven over land from
point to point and is accompanied by a unit referred to as a "water buggy"
that carries water required for seismic drilling. This type of vehicle is used
around the world for this type of terrain.
Marsh ATVs. The environmentally sensitive wetlands along the U.S. Gulf Coast
containing water grasses on dry land and in shallow water and areas mixed with
open water are referred to as marsh areas. When there is a minimum amount of
water in these areas, marsh ATVs, which are amphibious vehicles supported by
pontoons that are surrounded by tracks, are used to provide seismic drilling
services. The pontoons enable the marsh ATV to float while the tracks propel
the vehicle through the water and over dry marsh areas. Each marsh ATV is
equipped with a drilling unit and a small backhoe for digging a small hole to
collect water necessary for drilling.
Some marsh areas have sufficient surrounding water to support drilling
without an external water source, but often water must be pumped into the area
from a remote water source or a portable supply must be carried by the marsh
ATV. Recently the Company has experimented with several innovative methods of
obtaining a water supply in marsh areas. On some occasions the Company deploys
a vehicle to the source point a few days prior to drilling to dig holes near
the drill sites, which may collect water naturally, either through seepage or
rainfall.
The Company owns and operates 21 marsh ATVs, of which eight are made of
stainless steel and 13 are made of aluminum. The aluminum ATVs are lighter
than steel vehicles and are specifically designed for the
33
<PAGE>
environmentally sensitive areas typically found in marsh terrain. Often
landowner consents will require the use of aluminum ATVs in an effort to
reduce the environmental impact of seismic drilling. The aluminum marsh ATV is
the most widely accepted marsh vehicle for drilling operations in all
Louisiana state and federal refuges. The Company fabricates its own aluminum
marsh ATVs at its facilities in Carencro, Louisiana, and currently owns and
operates a majority of the aluminum marsh ATVs used in seismic drilling in the
Transition Zone.
Airboat Drilling Units. The Company owns and operates 28 airboat drilling
units, which represent a majority of the airboat drilling units operating in
the Transition Zone. An airboat drilling unit consists of a drilling unit
fabricated and installed by the Company on a large, three-engine airboat.
Because of their better mobility, airboat drilling units are used in shallow
waters and all marsh areas where sufficient water is present.
Swamp ATVs and Pullboats. Wooded lowland areas typically covered with water
are referred to as the "swamp areas" of the Transition Zone. The Company's
swamp ATVs are used to provide drilling services in these areas. Swamp ATVs
are smaller, narrower versions of the marsh ATVs. The smaller unit is needed
in swamp areas due to the dense vegetation typical in the terrain. Because of
its smaller size, the swamp ATV uses a skid-mounted drilling unit installed in
a pullboat, a non-motorized craft towed behind the swamp ATV. The Company owns
and operates 25 swamp ATVs and 20 pullboats. Swamp ATVs are also used in
connection with survey operations in swamp areas.
Pontoon Boats. The Company owns and operates 12 pontoon boats that are
generally used in shallow or protected inland bays and lakes and shallow
coastal waters. Each pontoon boat uses a skid-mounted drilling unit installed
on board.
Jack-Up Rigs. When a seismic survey requires source points to be drilled in
deeper inland bays or lakes or in deeper coastal waters, the Company utilizes
leased jack-up rigs equiped with one of the Company's skid-mounted drilling
units. Any seismic activity in water deeper than approximately 20 feet is
generally conducted by using offshore seismic techniques which do not include
the drilling and loading of source points.
Skid-Mounted Drilling Units. A skid-mounted drilling unit is a drilling unit
mounted on I-beam supports, which allows the drilling unit to be moved easily
between pull boats, pontoon boats, jack-up rigs and other Company operated
equipment based on customer needs. The Company manufactures its skid-mounted
drilling units at its plant in Carencro and owns 34 of these units.
Miscellaneous. The Company owns and operates 72 single engine airboats and
22 outboard powered boats, which it uses to ferry personnel and supplies to
locations throughout the Transition Zone. The Company also maintains a fleet
of six tractor-trailer trucks and numerous other trucks, trailers and vehicles
to move its equipment and personnel to projects throughout the Transition
Zone.
Heli-portable and Seismic Rock Drilling Equipment. Through its acquisition
of OTH in August 1997, the Company entered the heli-portable seismic rock
drilling market. The acquisition of OTH and American Helicopter, when
consummated, will provide the Company with 40 heli-portable and man-portable
drilling units and 12 highland drilling units, the ability to manufacture its
own heli-portable and man-portable seismic rock drilling units and an
experienced workforce in this market. American Helicopter also exports and
services heli-portable and man-portable drilling units.
34
<PAGE>
Aviation Equipment. The following table sets forth the type and number of
aircraft that are operated by the Company's aviation division:
<TABLE>
<CAPTION>
NUMBER OF
AIRCRAFT AS
OF
SEPTEMBER 30,
HELICOPTERS 1997
----------- -------------
<S> <C>
Bell Jet Ranger 206 B-III(a)................................ 10
Hughes MD-500(a)............................................ 4
Bell 407(b)................................................. 1
Bell B-47 G3................................................ 1
<CAPTION>
AIRPLANES
---------
<S> <C>
Beech King Air 300.......................................... 1
Cessna 172.................................................. 2
Cessna 185-Amphibian........................................ 1
</TABLE>
- --------
(a) Five of the Bell Jet Ranger 206 B-IIIs and one Hughes MD-500 are leased by
the Company.
(b) The Bell 407 is currently configured for corporate charter.
The Company is in negotiations to purchase two Eurocopter Lama helicopters
configured for the heavy lifting required in heli-portable drilling at an
aggregate cost of approximately $1.5 million. Delivery is expected in late
1997.
MATERIALS
The principal materials used by the Company in its operations, which include
drills, heli-portable and man-portable drills, drill casings, drill bits,
engines, gasoline and diesel fuel, dynamite, aluminum and steel plate, welding
gasses, aviation fuel, trucks and other vehicles, are currently in adequate
supply from many sources. The Company does not depend upon any single supplier
or source for such materials.
SAFETY AND QUALITY ASSURANCE
Management is concerned with the safety and health of the Company's
employees and maintains a stringent safety assurance program to reduce the
possibility of costly accidents. The Company's health, safety and
environmental ("HSE") department establishes guidelines to ensure compliance
with all applicable state and federal safety regulations and provides training
and safety education through orientations for new employees, which includes
first aid and CPR training. The Company's Vice President--Health, Safety,
Environment & Training reports directly to the Company's President and
supervises ten HSE field advisors. The Company believes that its safety
program and commitment to quality are vital to attracting and retaining
customers and employees.
Each drilling crew is supervised at the project site by a field supervisor
and an assistant supervisor, together with a powderman who is in charge of all
explosives. For large projects or when required by a customer, a separate
advisor from the Company's HSE department is also located at the project site.
Management is provided with daily updates for each project and believes that
its daily review of field performance together with the on-site presence of
supervisory personnel helps ensure high quality performance for all of its
projects.
All Company pilots are trained to FAA FAR 135 or 133 (non-scheduled
commercial passenger) standards and must satisfy annual FAA check-rides.
Certified maintenance personnel are deployed to each project site at which
aircraft are used.
CUSTOMERS; MARKETING; CONTRACTING
Customers. The Company's customers are primarily geophysical companies with
operations in the Transition Zone as well as oil and gas companies, which in
many cases participate in determining which drilling, survey or aviation
company will be used on their respective seismic projects.
35
<PAGE>
A large portion of the Company's revenue has historically been generated by
a few customers. For example, the Company's largest customers (those which
individually accounted for more than 10% of revenue in a given year, listed
alphabetically) collectively accounted for 88% (Digicon/GFS, Eagle
Geophysical, Grant Geophysical and Seismic Exchange), 88% (Digicon/GFS, Eagle
Geophysical, Grant Geophysical and Western Geophysical) and 70% (Eagle
Geophysical, Grant Geophysical, Universal Seismic and Western Geophysical), of
revenue for fiscal 1994, 1995 and 1996, respectively. In addition, as of
August 31, 1997, 70% of the Company's backlog was attributable to two
customers (Eagle Geophysical and Western Geophysical).
Marketing. The Company's services traditionally have been marketed by the
Company's principal executive officers, in particular, Messrs. Jeansonne,
Thomas, Woodard and Morris. After the Offering, the Company intends to
maintain this marketing approach in order to preserve long-term relationships
established by the Company's executive officers. As the Company's geographical
and service capabilities expand, the Company intends to continue implementing
its marketing efforts in the Transition Zone from its principal offices in
Carencro, Louisiana and intends to establish a sales office for the Rocky
Mountain region in Denver, Colorado.
Contracting--Seismic Drilling. The Company generally contracts for seismic
drilling services with its customers on a fixed-price basis, either on a per
hole or per foot basis. These contracts are often awarded on a competitive bid
basis. The Company prices its contracts based on detailed project
specifications provided by the customer, including the number, location and
depth of source holes and the project's completion schedule. As a result, the
Company is generally able to make a relatively accurate determination prior to
pricing a contract of the type and amount of equipment required to complete
the contract on schedule.
Because of fixed-priced contracting, the Company generally bears the risk of
delays that are beyond its control, such as those caused by adverse weather.
The Company often bills the customer standby charges if the Company's
operations are delayed due to delays in permitting or surveying or for other
reasons within the geophysical company's control.
Contracting--Helicopter Support Services. The Company's aircraft are
chartered on an hourly rate basis, with a guaranteed minimum number of hours
per day. The Company primarily provides aviation services in connection with
projects for which the Company also provides seismic drilling services, and
also charters its aircraft to customers for use with other seismic projects.
Contracting--Survey Services. The Company contracts for seismic services
with its customers on a day rate basis. Contracts are often awarded to the
Company only after competitive bidding. In each case, the price is determined
by the Company after it has taken into account such factors as the number of
surveyors and other employees, the type of terrain and transportation
equipment, and the precision required for the project based on detailed
project specifications provided by the customer.
COMPETITION
Seismic Drilling Services. The principal competitive factors for seismic
drilling services are price and the ability to meet customer schedules,
although other factors, including safety, capability, reputation and
environmental sensitivity are also considered by customers. The Company has
numerous competitors in the Transition Zone and in particular in the highland
areas in which its operates. The Company believes there are numerous
competitors offering rock and heli-portable drilling in the Rocky Mountain
region and internationally.
Management believes that no other company operating in the Transition Zone
owns a fleet of Transition Zone seismic drilling equipment as extensive or as
large as that operated by the Company. The Company's extensive and diverse
equipment base allows it to provide drilling services to its customers
throughout the Transition Zone with the most efficient and environmentally
appropriate equipment. Management believes that the Company has a significant
competitive advantage in the Transition Zone because of the size and diversity
of its equipment base, the Company's financial resources and economies of
scale.
36
<PAGE>
Helicopter Support Services. The Company has numerous competitors that
provide helicopter support services to geophysical companies operating in the
Transition Zone; however, none of these competitors currently provides long-
line helicopter services with a comparable number of aircraft. In addition,
the Company believes that it is the only company offering both seismic
drilling and long-line support services in the Transition Zone. The Company
believes that there are numerous companies offering helicopter services in
rock drilling and other mountain areas, as well as internationally. All of
these companies have greater experience in these areas and several operate
more aircraft than the Company in these areas.
Survey Services. The Company's competitors include a number of established
companies with a comparable number of crews to the Company and numerous
smaller companies.
SEASONALITY AND WEATHER RISKS
The Company's operations are subject to seasonal variations in weather
conditions and daylight hours. Since the Company's activities take place
outdoors, the average number of hours worked per day, and therefore the number
of holes drilled or surveyed per day, generally is less in winter months than
in summer months, due to an increase in rainy, foggy and cold conditions and a
decrease in daylight hours. Furthermore, demand for seismic data acquisition
activity by oil and gas companies in the first quarter is generally lower than
at other times of the year. As a result, the Company's revenue and gross
profit during the first quarter of each year are typically low as compared to
the other quarters. Operations may also be affected by the rainy weather,
lightning, hurricanes and other storms prevalent along the Gulf Coast
throughout the year and by seasonal climatic conditions in the Rocky Mountain
area. In addition, prolonged periods of dry weather result in slower drill
rates in marsh and swamp areas as water in the quantities needed to drill is
more difficult to obtain and equipment movement is impeded. Adverse weather
conditions and dry weather could increase maintenance costs for the Company's
equipment and decrease the number of vehicles available for operations. See
"Management's Discussion and Analysis of Financial Condition and Results of
Operations--General--Seasonality and Weather" and "Risk Factors--Seasonality
and Weather Risks."
BACKLOG
The Company's backlog represents those projects for which a customer has
hired the Company and has scheduled a start date for the project. Projects
currently included in the Company's backlog are subject to termination without
penalty at the option of the customer, which could substantially reduce the
amount of backlog currently reported. Historically, the Company has not
experienced a large volume of project terminations, and terminations from its
backlog have typically been replaced by unscheduled projects. See "Risk
Factors--Backlog."
As of August 31, 1997, the Company's backlog was approximately $60.8 million
compared to $29.6 million at August 31, 1996. The Company expects that $45.5
million of its backlog at August 31, 1997 will be completed within the next
twelve months. The backlog at August 31, 1997 and August 31, 1996 includes
seismic drilling projects in the Transition Zone, and the backlog at August
31, 1997 also includes survey projects. At such dates there was no backlog
attributable to the Company's seismic drilling projects in the Rocky Mountain
region. The Company's aviation division historically has not measured backlog
due to the nature of the business.
GOVERNMENTAL REGULATION
The Company's operations and properties are subject to and affected by
various types of governmental regulation, including laws and regulations
governing the entry into and restoration of wetlands, the handling of
explosives, the operation of commercial aircraft and numerous other federal,
state and local laws and regulations. To date the Company's cost of complying
with such laws and regulations has not been material, but because such laws
and regulations are changed frequently, it is not possible for the Company to
accurately predict the cost or impact of such laws and regulations on its
future operations.
37
<PAGE>
Furthermore, the Company depends on the demand for its services by the oil
and gas industry and is affected by changing taxes, price controls and other
laws and regulations relating to the oil and gas industry generally. The
adoption of laws and regulations curtailing exploration and development
drilling for oil and gas in the Company's areas of operations for economic,
environmental or other policy reasons would adversely affect the Company's
operations by limiting demand for its services. The Company cannot determine
to what extent future operations and earnings of the Company may be affected
by new legislation, new regulations or changes in existing regulations. See
"Risk Factors--Regulatory and Environmental Matters."
Aviation. As a commercial operator of small aircraft, the Company is subject
to regulations pursuant to the Federal Aviation Act and other statutes. The
FAA regulates the flight operations of the Company, and in this respect,
exercises jurisdiction over personnel, aircraft, ground facilities and other
aspects of the Company's operations.
The Company carries persons and property in its aircraft pursuant to
authority granted by the FAA. Under the Federal Aviation Act, it is unlawful
to operate certain aircraft for hire within the United States unless such
aircraft are registered with the FAA and the operator of such aircraft has
been issued an operating certificate by the FAA. The Company has all FAA
certificates required to conduct its helicopter and aviation operations, and
all of its aircraft are registered with the FAA.
As a general rule, aircraft may be registered under the Federal Aviation Act
only if the aircraft is owned or controlled by one or more citizens of the
United States, and an operating certificate may be granted only to a citizen
of the United States. For purposes of these requirements, a corporation is
deemed to be a citizen of the United States only if, among other things, at
least 75% of the voting interest therein is owned or controlled by United
States citizens. In the event that persons other than United States citizens
should come to own or control more than 25% of the voting interest in the
Company, the Company has been advised that its aircraft may be subject to
deregistration under the Federal Aviation Act and loss of the privilege of
operating within the United States. The Company's Articles of Incorporation
include provisions that are designed to ensure compliance with this
requirement. See "Risk Factors--Limitations on Foreign Ownership of Company
Stock" and "Description of Capital Stock--Limitations on Foreign Ownership of
Company Stock."
Explosives. Because the Company loads the holes that it drills with
dynamite, the Company is subject to various local, state and federal laws and
regulations concerning the handling and storage of explosives and is
specifically regulated by the ATF. The Company must take daily inventories of
the dynamite and blasting caps that it keeps for its seismic drilling and is
subject to random checks by state and federal officials. The Company is
licensed by the Louisiana State Police as an explosives handler. Any loss or
suspension of this license would result in a material adverse effect on the
Company's results of operations and financial condition. The Company believes
that it is in compliance with all material laws and regulations with respect
to its handling and storage of explosives.
Environmental. The Company's operations and properties are subject to a wide
variety of increasingly complex and stringent federal, state and local
environmental laws and regulations, including those governing discharges into
the air and water, the handling and disposal of solid and hazardous wastes,
the remediation of soil and groundwater contaminated by hazardous substances
and the health and safety of employees. In addition, certain areas where the
Company operates are federally-protected or state-protected wetlands or
refuges where environmental regulation is particularly strict. These laws may
provide for "strict liability" for damages to natural resources and threats to
public health and safety, rendering a party liable for the environmental
damage without regard to negligence or fault on the part of such party.
Sanctions for noncompliance may include revocation of permits, corrective
action orders, administrative or civil penalties and criminal prosecution.
Certain environmental laws provide for strict, joint and several liability for
remediation of spills and other releases of hazardous substances, as well as
damage to natural resources. In addition, the Company may be subject to claims
alleging personal injury or property damage as a result of alleged exposure to
hazardous substances. Such laws and regulations may also expose the Company to
liability for the conduct of, or conditions caused by, others, or for acts of
the Company that were in compliance with all applicable laws at the time such
acts were performed.
38
<PAGE>
The Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, and similar laws provide for responses to and liability for
releases of hazardous substances into the environment. Additionally, the Clean
Air Act, the Clean Water Act, the Resource Conservation and Recovery Act, the
Safe Drinking Water Act, the Emergency Planning and Community Right to Know
Act, each as amended, and similar state or local counterparts to these federal
laws, regulate air emissions, water discharges, hazardous substances and
wastes, and require public disclosure related to the use of various hazardous
substances. Compliance with such environmental laws and regulations may
require the acquisition of permits or other authorizations for certain
activities and compliance with various standards or procedural requirements.
The Company believes that its facilities are in substantial compliance with
current regulatory standards.
Worker Safety. The Company's operations are governed by laws and regulations
relating to workplace safety and worker health, primarily the Occupational
Safety and Health Act and regulations promulgated thereunder. In addition,
various other governmental and quasi-governmental agencies require the Company
to obtain certain permits, licenses and certificates with respect to its
operations. The kind of permits, licenses and certificates required in the
Company's operations depend upon a number of factors. The Company believes
that it has all material permits, licenses and certificates necessary to the
conduct of its existing business.
INSURANCE
The Company's operations are subject to the inherent risks of inland marine
activity, aviation services, heavy equipment operations and the transporting
and handling of explosives, including accidents resulting in personal injury,
the loss of life or property, environmental mishaps, mechanical failures and
collisions. The Company maintains insurance coverage against certain of these
risks, which management considers to be customary in the industry. The Company
also maintains insurance coverage against property damage caused by fire,
flood, explosion and similar catastrophic events that may result in physical
damage or destruction to the Company's equipment or facilities. All policies
are subject to deductibles and other coverage limitations. The Company
believes its insurance coverage is adequate. The Company has not experienced a
loss in excess of its policy limits; however, there can be no assurance that
the Company will be able to maintain adequate insurance at rates which
management considers commercially reasonable, nor can there be any assurance
such coverage will be adequate to cover all claims that may arise. See "Risk
Factors--Operating Risks."
EMPLOYEES
As of September 30, 1997, the Company had 608 employees, including 557
operating personnel and 51 corporate, administrative and management personnel.
These employees are not unionized or employed pursuant to any collective
bargaining agreement or any similar agreement. The Company believes its
relationship with its employees is strong.
LEGAL PROCEEDINGS
The Company is involved in various legal and other proceedings which are
incidental to the conduct of its business. The Company believes that none of
these proceedings, if adversely determined, would have a material adverse
effect on the Company's financial condition, results of operations or cash
flows.
39
<PAGE>
MANAGEMENT
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth, as of the date of this Prospectus, certain
information with respect to the Company's directors and executive officers.
<TABLE>
<CAPTION>
NAME AGE POSITIONS WITH THE COMPANY
---- --- --------------------------
<S> <C> <C>
David A. Jeansonne................ 37 Chairman of the Board and Chief Executive
Officer
Roger E. Thomas................... 55 Director and President
Allen R. Woodard.................. 35 Director, Vice President--Marketing &
Business Development and Secretary
David E. Crays.................... 36 Director, Vice President--Finance, Chief
Financial Officer and Treasurer
R. Patrick Morris................. 31 Vice President and General Manager of the
Aviation Division
Crichton W. Brown................. 40 Director
Steven T. Stull................... 38 Director
William W. Rucks, IV.............. 40 Director
</TABLE>
The following biographies describe the business experience of the directors
and executive officers of the Company during the past five years. Directors
are elected at the Company's annual meeting of shareholders and serve for a
one-year term or until their successors are elected and qualified or until
their earlier resignation or removal in accordance with the Company's Articles
of Incorporation and Bylaws. For the respective terms of office of Messrs.
Jeansonne, Thomas, Woodard, Crays and Morris, as Company officers, see "--
Executive Employment Agreements" below.
David A. Jeansonne founded the Company in 1987 and has been Chairman of the
Board and Chief Executive Officer of the Company since its inception. Mr.
Jeansonne has also been Chairman of the Board, President and Chief Executive
Officer of American Aviation, which he co-founded, since its inception in
1995.
Roger E. Thomas is President and a director of the Company and has held
those positions since July 1996. Mr. Thomas was Chief Financial Officer of
Gulf Coast Marine Divers, Inc., a provider of offshore diving services, from
1995 to 1996. He was President of Toth Aluminum Corp., an aluminum processor,
from 1994 to 1995. Mr. Thomas was President of Melamine Technologies, Inc., a
marketer and developer of technology, from 1992 to 1994. He was President of
Melamine Chemicals, Inc., a publicly-traded producer and seller of melamine
crystal, from 1987 to 1992. Mr. Thomas graduated from the University of
Florida in 1965 with a B.S. degree in chemical engineering.
Allen R. Woodard is Vice President--Marketing & Business Development and a
director of the Company and has held these positions since July 1996. He was
an exploration field inspector with The Louisiana Land & Exploration Company,
a natural resources company, from 1988 to 1996. Mr. Woodard is a professional
land surveyor and graduated from Nicholls State University in 1987 with a
degree in engineering technology.
David E. Crays is Vice President--Finance and Chief Financial Officer and a
director of the Company and has held these positions since April 1997. He was
Controller of Iteq, Inc., a publicly-traded equipment manufacturer, from 1996
to 1997 and manager of financial accounting and external reporting at
Petroleum Helicopters, Inc., a provider of aviation transportation services,
from 1993 to 1996. He was Assistant Treasurer of XCL, Ltd., an independent oil
and gas exploration company, from 1990 to 1993. Mr. Crays is a certified
public accountant and graduated from the University of Texas in 1983 with a
B.B.A. degree in honors business.
40
<PAGE>
R. Patrick Morris is Vice President and General Manager of the Aviation
Division of the Company and has held that position since the acquisition of
American Aviation by the Company in July 1997. He has been Vice President and
General Manager of American Aviation, which he co-founded with Mr. Jeansonne,
since its inception in 1995. Mr. Morris has been a licensed pilot since 1987
and was in the United States Army from 1984 to 1992.
Crichton W. Brown has been a director of the Company since July 1996. Mr.
Brown is an executive officer and a director of each of the Advantage Capital
companies. From 1988 to 1994, Mr. Brown was Senior Vice President and
Director--Corporate Development of The Reily Companies, Inc., a private
holding company with interests in consumer goods manufacturing and corporate
venture capital investing. From 1984 to 1988, Mr. Brown served as principal of
Criterion Venture Partners, an institutional venture capital firm. Mr. Brown
graduated from Stanford University in 1980 with a B.A. in Business
Administration and a B.S. in Engineering Management. He subsequently graduated
from the University of Pennsylvania Wharton School of Finance in 1984 with an
M.B.A.
Steven T. Stull has been a director of the Company since July 1996. Mr.
Stull is a founding partner of Advantage Capital, which was founded in 1992,
and is an executive officer and a director of each of the Advantage Capital
companies. From 1985 through 1992, Mr. Stull was employed by General American
Life Insurance Company in various positions, including Vice President of the
Securities Division. He is a chartered financial analyst and a securities
registered representative. Mr. Stull graduated from Washington University in
1981 with a B.S. in Business Administration and in 1985 with an M.B.A.
William W. Rucks, IV, joined the Company's Board of Directors in September
1997. From September 1996, Mr. Rucks has been a private venture capitalist-
investor. He served as President and Vice Chairman of Ocean Energy, Inc.
(formerly Flores & Rucks, Inc.) from July 1995 until September 1996 and as
President and Chief Executive Officer from its inception in 1992 until July
1995. He remains as a director of Ocean Energy, Inc. From 1985 to 1992, Mr.
Rucks served as President of FloRuxco, Inc. Prior thereto, Mr. Rucks worked as
a petroleum landman with Union Oil Company of California in its Southwest
Louisiana District, serving as Area Land Manager from 1981 to 1984. Mr. Rucks
is also a director of First Commerce Corporation.
BOARD COMMITTEES
The Company's Board of Directors has established an Audit Committee, a
Compensation Committee and an Executive Committee. The Audit Committee reviews
the Company's financial statements and annual audit and meets with the
Company's independent public accountants to review the Company's internal
controls and financial management practices. The current members of the Audit
Committee are Messrs. Brown and Stull, neither of whom is an officer or
employee of the Company or any of its subsidiaries.
The Compensation Committee recommends to the Board of Directors compensation
for the Company's executive officers and other key employees, administers the
Company's long-term incentive plan and performs such other similar functions
as may be prescribed by the Board of Directors. The current members of the
Compensation Committee are Messrs. Brown, Stull and Rucks, none of whom is an
officer or employee of the Company or any of its subsidiaries.
The Executive Committee performs certain duties delegated to it by the Board
of Directors when it is not possible or practical to convene the full Board of
Directors. The current members of the Executive Committee are Messrs.
Jeansonne, Stull and Thomas.
DIRECTOR COMPENSATION
Each director who is not an employee of the Company is paid an attendance
fee of $2,000 for each board meeting attended and $500 for each committee
meeting attended. All directors are reimbursed for reasonable out-of-pocket
expenses incurred by them in attending board and committee meetings.
41
<PAGE>
Each director who is not an employee of the Company shall be entitled to
receive non-qualified stock options under the Stock Incentive Plan of the
Company. For information with respect to such grants, see "- Stock Incentive
Plan" below.
EXECUTIVE COMPENSATION
The following table presents certain information regarding the compensation
awarded, earned or paid for services rendered in 1996 to the Company by David
A. Jeansonne, the Chief Executive Officer of the Company, and the Company's
other executive officers who were employed by the Company in 1996
(collectively, the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
----------------------
NAME AND POSITION SALARY BONUS
----------------- -------- ----------
<S> <C> <C>
David A. Jeansonne...................................... $111,764 $1,163,478
Chairman of the Board and Chief Executive Officer
Roger E. Thomas......................................... $ 78,125(a) $ 0
President
R. Patrick Morris....................................... $ 39,000 $ 155,000
Vice President and General Manager of the Aviation
Division
Allen R. Woodard........................................ $ 38,042(a) $ 0
Vice President--Marketing & Business Development and
Secretary
</TABLE>
- --------
(a) Mr. Thomas joined the Company in May 1996, and Mr. Woodard joined the
Company effective July 19, 1996.
EXECUTIVE EMPLOYMENT AGREEMENTS
All of the executive officers have entered into employment agreements with
the Company. All such contracts also contain agreements of each of the
executive officers to refrain from using or disclosing proprietary information
of the Company, as defined therein, and to refrain from competing with the
Company in specified geographic areas during such officer's employment and for
two years thereafter, respectively, except that, with respect to Messrs.
Thomas and Woodard, such covenant will remain in effect for five years after
termination of employment, respectively.
The term of Mr. Jeansonne's employment agreement is from July 1, 1997 to
June 30, 2003 and provides that Mr. Jeansonne will serve as Chairman of the
Board and Chief Executive Officer of the Company during such term at a base
salary of $150,000 per year as long as he serves as Chairman of the Board and
Chief Executive Officer of the Company. Mr. Jeansonne's employment agreement
may be terminated at any time by the Company for cause or for breach of such
agreement by Mr. Jeansonne.
The term of Mr. Thomas' employment agreement is from July 19, 1996 to July
19, 1999 and provides that he will serve as a director and President of the
Company and perform such other duties as may be assigned to him by the Board
of Directors of the Company. In accordance with the provisions of his
employment agreement, Mr. Thomas will be paid a base salary of $150,000 per
year throughout the term of such agreement. Mr. Thomas' employment agreement
may be terminated at any time by the Company for cause or for breach of such
agreement by Mr. Thomas. Depending upon the circumstances of termination, Mr.
Thomas may be entitled to specified cash payments calculated in accordance
with the terms of his agreement.
The term of Mr. Morris' employment agreement is from July 1, 1997 to June
30, 2000 and provides that Mr. Morris will serve as Vice President and General
Manager of the Aviation Division of the Company and will perform such other
duties as may be assigned to him by the Board of Directors and officers of the
Company. In accordance with the provisions of his employment agreement, Mr.
Morris will be paid a base salary of $100,000 per year throughout the term of
his employment agreement. Mr. Morris' employment agreement may be terminated
at any time by the Company for cause or for breach of such agreement by Mr.
Morris.
42
<PAGE>
The term of Mr. Woodard's employment agreement is from July 19, 1996 to July
19, 1999 and provides that he shall serve as a director and the Vice
President--Marketing & Business Development and Secretary of the Company and
will perform such other duties as may be assigned to him by the Board of
Directors of the Company. In accordance with the provisions of his employment
agreement, Mr. Woodard will be paid a base salary of $100,000 per year
throughout the term of such agreement. Mr. Woodard's employment agreement may
be terminated at any time by the Company for cause or for breach of such
agreement by Mr. Woodard. Depending upon the circumstances of termination, Mr.
Woodard may be entitled to specified cash payments calculated in accordance
with the terms of his agreement.
The term of Mr. Crays' employment agreement is from April 24, 1997 to April
24, 1999 and will automatically be renewed for a one-year term each year
thereafter unless terminated by either party upon sixty days' notice. The
Company also retains the right to terminate Mr. Crays' agreement at any time
upon his disability, or with or without cause, and Mr. Crays retains the right
to terminate his agreement with or without good reason or in the event of a
change in control of the Company. Depending on the circumstances of an early
termination, Mr. Crays may be entitled to specified cash payments calculated
in accordance with the terms of his agreement. Mr. Crays' agreement provides
that he will serve as Vice President and Chief Financial Officer of the
Company and will perform such other duties as may be assigned to him by the
Board of Directors or President of the Company. Mr. Crays is paid a base
salary of $85,000 per year throughout the term of such agreement. Mr. Crays'
employment agreement also provides that, after any increase in his salary,
such salary may not be subsequently decreased during the remaining term of
such agreement.
STOCK INCENTIVE PLAN
In September 1997, the Company adopted and its shareholders approved the
Stock Incentive Plan (the "Incentive Plan") to provide long-term incentives to
its key employees, officers, directors who are employees of the Company and
consultants and advisors to the Company (the "Eligible Persons") and non-
employee directors. Under the Incentive Plan, which is administered by the
Compensation Committee of the Board of Directors, the Company may grant
incentive stock options, non-qualified stock options, restricted stock, other
stock-based awards or any combination thereof (the "Incentives") to Eligible
Persons. The Compensation Committee will establish the exercise price of any
stock options granted to Eligible Persons under the Incentive Plan, but the
exercise price may not be less than the fair market value of the Common Stock
on the date of grant. The option exercise price may be paid in cash, in Common
Stock, in a combination of cash and Common Stock, or through a broker-assisted
exercise arrangement approved by the Compensation Committee.
A total of 1,500,000 shares of Common Stock are available for issuance under
the Incentive Plan. Incentives with respect to no more than 400,000 shares of
Common Stock may be granted to any single Eligible Person in one calendar
year. Proportionate adjustments will be made to the number of shares subject
to the Incentive Plan, including the shares subject to outstanding Incentives,
in the event of any recapitalization, stock dividend, stock split, combination
of shares or other change in the Common Stock. In the event of such
adjustments, the purchase price of any outstanding option, the performance
objectives of any Incentive, and the shares of Common Stock issuable pursuant
to any Incentive will be adjusted as and to the extent appropriate, in the
reasonable discretion of the Compensation Committee, to provide participants
with the same relative rights before and after such adjustment.
Restricted stock consists of shares of Common Stock that are transferred to
a participant for past services but subject to restrictions regarding their
sale, pledge or other transfer by the participant for a specified period (the
"Restricted Period"). The Compensation Committee has the power to determine
the number of shares to be transferred to a participant as restricted stock.
All shares of restricted stock will be subject to such restrictions as the
Compensation Committee may designate in the incentive agreement with the
participant, including, among other things, that the shares of Common Stock
are required to be forfeited or resold to the Company in the event of
termination of employment or in the event specified performance goals or
targets are not met. A Restricted Period of at least three years is required,
except that if vesting is subject to the attainment of performance goals, a
minimum Restricted Period of one year is required. Subject to the restrictions
provided in the incentive agreement, each participant receiving restricted
stock will have the rights of a shareholder with respect thereto,
43
<PAGE>
including voting rights and rights to receive dividends. To the extent that
restricted stock is intended to vest based upon the achievement of pre-
established performance goals rather than solely upon continued employment
over a period of time, the performance goals pursuant to which the restricted
stock shall vest shall be any or a combination of the following performance
measures: earnings per share, return on assets, an economic value added
measure, shareholder return, earnings, stock price, return on equity, return
on total capital, safety performance, reduction of expenses or increase in
cash flow of the Company, a division of the Company or a subsidiary. For any
performance period, such performance objectives may be measured on an absolute
basis or relative to a group of peer companies selected by the Compensation
Committee, relative to internal goals or relative to levels attained in prior
years.
The Compensation Committee is authorized to grant to Eligible Persons
another stock-based award ("Other Stock-Based Award"), which consists of an
award, the value of which is based in whole or in part on the value of shares
of Common Stock, other than a stock option or a share of restricted stock.
Other Stock-Based Awards may be awards of shares of Common Stock or may be
denominated or payable in, valued in whole or in part by reference to, or
otherwise based on or related to, shares of Common Stock. The Compensation
Committee shall determine the terms and conditions of any such Other Stock-
Based Award and may provide that such awards would be payable in whole or in
part in cash. Except in the case of an Other Stock-Based Award granted in
assumption of or in substitution for an outstanding award of a company
acquired by the Company or with which the Company combines, the price at which
securities may be purchased pursuant to any Other Stock-Based Award or the
provision, if any, of any such award that is analogous to the purchase or
exercise price, shall not be less than 100% of the fair market value of the
securities to which such award relates on the date of grant. In the sole and
complete discretion of the Compensation Committee, an Other Stock-Based Award
may provide the holder thereof with dividends or dividend equivalents, payable
in cash or shares of Common Stock on a current or deferred basis. Other Stock-
Based Awards intended to qualify as "performance-based compensation" shall be
paid based upon the achievement of pre-established performance goals. The
performance goals pursuant to which Other Stock-Based Awards shall be earned
shall be any or a combination of the following performance measures: earnings
per share, return on assets, an economic value added measure, shareholder
return, earnings, stock price, return on equity, return on total capital,
safety performance, reduction of expenses or increase in cash flow of the
Company, a division of the Company or a subsidiary. For any performance
period, such performance goals may be measured on an absolute basis or
relative to a group of peer companies selected by the Compensation Committee,
relative to internal goals or relative to levels attained in prior years. The
grant of an Other Stock-Based Award to a participant shall not create any
rights in such participant as a shareholder of the Company, until the issuance
of shares of Common Stock with respect to such Other Stock-Based Award.
To assist a participant in acquiring shares of Common Stock pursuant to an
Incentive granted under the Incentive Plan, the Compensation Committee may
authorize the extension of a loan by the Company to the participant to cover
the aggregate purchase price of such shares and the maximum tax liability that
arises in connection with the Incentive. The terms of any such loan will be
determined by the Compensation Committee.
The Compensation Committee may also grant a tax benefit right to a
participant under the Incentive Plan. A tax benefit right entitles the holder
thereof to receive from the Company an amount in cash not to exceed the
product of (i) any ordinary income that the participant may realize as the
result of the exercise of an option granted under the Incentive Plan or the
grant or vesting of restricted stock or Other Stock-Based Awards under the
Incentive Plan, including any income realized as a result of the receipt of
such tax benefit right, and (ii) the then applicable highest stated federal
and state tax rate for individuals. The terms of any such tax benefit right
will be determined by the Compensation Committee.
Upon consummation of the Offering, each director who is not an employee of
the Company (an "Outside Director") will be granted under the Incentive Plan a
non-qualified stock option to purchase 10,000 shares of Common Stock at an
exercise price equal to the initial per share public offering price. Each
person who subsequently becomes an Outside Director will be granted under the
Incentive Plan, effective as of the date that he or she becomes an Outside
Director, a non-qualified stock option to purchase 10,000 shares of Common
Stock
44
<PAGE>
at an exercise price equal to the fair market value of a share of Common Stock
as of that date. In 1998 and in each subsequent year during which the
Incentive Plan is in effect and a sufficient number of shares of Common Stock
are available thereunder, each person who is an Outside Director as of the day
following the annual meeting of Company stockholders in such year will be
granted under the Incentive Plan a non-qualified stock option to purchase
5,000 shares of Common Stock at an exercise price equal to the fair market
value of a share of Common Stock as of such date. Each non-qualified stock
option granted to an Outside Director shall become fully exercisable on the
first anniversary of its grant and shall expire on the tenth anniversary of
its grant, unless such Outside Director terminates his position as a Company
director, in which event such Outside Director's then exercisable non-
qualified stock options will expire within three months after his termination
or, if his termination is a result of his death, disability or retirement
after the age of 65, within eighteen months after his termination, but in no
event later than the tenth anniversary of the grant thereof.
All outstanding stock options granted under the Incentive Plan will
automatically become fully exercisable, all restrictions or limitations on any
Incentives will lapse and all performance criteria and other conditions
relating to the payment of Incentives will be deemed to be achieved or waived
by the Company upon (i) approval by the shareholders of the Company of a
reorganization, merger or consolidation of the Company or sale of all or
substantially all of the assets of the Company, unless (x) all or
substantially all of the individuals and entities who were the beneficial
owners of the Company's outstanding Common Stock and voting securities
entitled to vote generally in the election of directors immediately prior to
such transaction have direct or indirect beneficial ownership, respectively,
of more than 50% of the then outstanding shares of common stock and more than
50% of the combined voting power of the then outstanding voting securities
entitled to vote generally in the election of directors of the resulting
corporation; (y) except to the extent that such ownership existed prior to the
transaction, no person (excluding any corporation resulting from the
transaction or any employee benefit plan or related trust of the Company or
the resulting corporation) beneficially owns, directly or indirectly, 30% or
more of the then outstanding shares of common stock of the resulting
corporation or 30% or more of the combined voting power of the then
outstanding voting securities of the resulting corporation; or (z) a majority
of the board of directors of the resulting corporation were members of the
Company's board of directors at the time of the execution of the initial
agreement or of the action of the Board providing for the transaction; (ii)
approval by the shareholders of the Company of a complete liquidation or
dissolution of the Company; (iii) a person or group of persons becoming the
beneficial owner of more than 50% of the Company's Common Stock (subject to
certain exceptions); or (iv) the individuals who as of the adoption of the
Incentive Plan constitute the Board (the "Incumbent Board") or who
subsequently become a member of the Board with the approval of at least a
majority of the directors then comprising the Incumbent Board other than in
connection with an actual or threatened election contest cease to constitute
at least a majority of the Board (each, a "Significant Transaction").
The Compensation Committee also has the authority to take several actions
regarding outstanding Incentives upon the occurrence of a Significant
Transaction, including (i) requiring that all outstanding options remain
exercisable only for a limited time, (ii) making equitable adjustments to
Incentives as the Compensation Committee deems in its discretion necessary to
reflect the Significant Transaction or (iii) providing that an option under
the Incentive Plan shall become an option relating to the number and class of
shares of stock or other securities or property (including cash) to which the
participant would have been entitled in connection with the Significant
Transaction if the participant had been immediately prior to the Significant
Transaction the holder of record of the number of shares of Common Stock then
covered by such options.
When an optionee exercises a non-qualified option, the difference between
the exercise price and any higher fair market value of the Common Stock on the
date of exercise will be ordinary income to the optionee (subject to
withholding) and will generally be allowed as a deduction at that time for
federal income tax purposes to the Company.
Any gain or loss recognized by an optionee on disposition of the Common
Stock acquired upon exercise of a non-qualified option will generally be
capital gain or loss to the optionee. Under recent amendments to the Code, the
maximum capital gains rate for individuals on gain on certain assets, such as
shares of Common Stock,
45
<PAGE>
which are sold after July 28, 1997 and which are held for more than eighteen
months is reduced to 20%. The optionee's basis in the Common Stock for
determining gain or loss on the disposition will be the fair market value of
the Common Stock determined generally at the time of exercise. The disposition
by an optionee of Common Stock acquired upon exercise of a non-qualified
option will not result in any additional federal income tax consequences to
the Company.
When an optionee exercises an incentive stock option while employed by the
Company or a subsidiary or within three months after termination of employment
by reason of retirement or death (one year for disability), no ordinary income
will be recognized by the optionee at that time, but the excess (if any) of
the fair market value of the Common Stock acquired upon such exercise over the
option price will be an adjustment to taxable income for purposes of the
federal alternative minimum tax applicable to individuals. If the Common Stock
acquired upon exercise of the incentive stock option is not disposed of prior
to the expiration of one year after the date of acquisition and two years
after the date of grant of the option, the excess (if any) of the sale
proceeds over the aggregate option exercise price of such Common Stock will be
long-term capital gain, but the Company will not be entitled to any tax
deduction with respect to such gain. Generally, if the Common Stock is
disposed of prior to the expiration of such periods (a "Disqualifying
Disposition"), the excess of the fair market value of such Common Stock at the
time of exercise over the aggregate option exercise price (but not more than
the gain on the disposition if the disposition is a transaction on which a
loss, if realized, would be recognized) will be ordinary income at the time of
such Disqualifying Disposition (and the Company will generally be entitled to
a federal income tax deduction in a like amount). Any gain realized by the
optionee as the result of a Disqualifying Disposition that exceeds the amount
treated as ordinary income will be capital gain. If an incentive stock option
is exercised more than three months after termination of employment (one year
for disability), the federal income tax consequences are the same as described
above for non-qualified stock options.
If the exercise price of an option is paid by the surrender of previously
owned shares, the basis of the previously owned shares carries over to the
shares received in replacement therefor. If the option is a non-qualified
option, the income recognized on exercise is added to the basis. If the option
is an incentive stock option, the optionee will recognize gain if the shares
surrendered were acquired through the exercise of an incentive stock option
and have not been held for the applicable holding period. This gain will be
added to the basis of the shares received in replacement of the previously
owned shares.
Awards under the Incentive Plan that are granted, accelerated or enhanced
upon the occurrence of a change of control may give rise, in whole or in part,
to excess parachute payments within the meaning of Section 280G of the
Internal Revenue Code of 1986 (the "Code") to the extent that such payments,
when aggregated with other payments subject to Section 280G, exceed the
limitations contained therein. Such excess parachute payments will be
nondeductible to the Company and subject the recipient of the payments to a
20% excise tax.
If permitted by the Compensation Committee, at any time that a participant
is required to pay the Company the amount required to be withheld under
applicable tax laws in connection with the exercise of a stock option, the
participant may elect to have the Company withhold from the shares that the
participant would otherwise receive shares of Common Stock having a value
equal to the amount to be withheld. This election must be made prior to the
date on which the amount of tax to be withheld is determined.
The foregoing discussion summarizes the federal income tax consequences
pertaining to stock options granted under the Incentive Plan based on current
provisions of the Code, which are subject to change. This summary does not
cover any foreign, state or local tax consequences of participation in the
Incentive Plan.
The following table sets forth information about the stock options that are
anticipated to be granted pursuant to the provisions of the Incentive Plan in
1997 to (i) each of the Named Executive Officers, (ii) all executive officers
as a group, (iii) all directors who are not executive officers as a group and
(iv) all employees other than the executive officers as a group (which
includes all non-executive officers). Each such stock option will have an
exercise price equal to the initial per share public offering price.
46
<PAGE>
NEW PLAN BENEFITS
STOCK INCENTIVE PLAN
<TABLE>
<CAPTION>
NUMBER OF SHARES
OF COMMON STOCK
NAME AND POSITION UNDERLYING OPTIONS
----------------- ------------------
<S> <C>
David A. Jeansonne, Chairman of the Board and Chief
Executive Officer.......................................... 0
Roger E. Thomas, President.................................. 300,000(a)
Allen R. Woodard, Vice President--Marketing & Business
Development and Secretary.................................. 300,000(a)
R. Patrick Morris, Vice President and General Manager of the
Aviation Division.......................................... 25,000(b)
Executive Officer Group..................................... 625,000
Non-Executive Officer Director Group........................ 30,000(c)
Non-Executive Officer Employee Group........................ 388,500(b)
</TABLE>
- --------
(a) These options will become exercisable in equal installments on each of
July 18, 1998 and 1999 and will remain exercisable until the tenth
anniversary of the grant date thereof.
(b) These options generally will become exercisable in four equal installments
on each of the first four anniversaries of the grant date thereof and will
remain exercisable until the tenth anniversary of such grant date.
(c) Each such stock option will become exercisable in full on the first
anniversary of the grant date thereof and will remain exercisable until
the tenth anniversary of such grant date.
OTHER STOCK OPTIONS
Prior to the adoption of the Incentive Plan, individual grants of options on
Company securities were made in 1997 to four employees of the Company who are
not Named Executive Officers. The grants, as adjusted in connection with the
Share Exchange, cover a total of 118,018 shares of Common Stock at an option
exercise price of $2.28 per share, including an award to Mr. Crays for 54,567
shares of Common Stock at such exercise price. The options granted to the four
employees in 1997 are exercisable in three equal installments on the first,
second and third anniversaries of the date of grant and remain exercisable
until the tenth anniversary of the date of grant, provided the holder is
employed by the Company.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Board of Directors had no Compensation Committee or other committee
performing similar functions in 1996. Max B. Hoyt and Ted W. Hoyt, who were
former officers of the Company, and Messrs. Jeansonne, Thomas and Woodard
participated in deliberations of the Board of Directors during 1996 concerning
executive officer compensation.
LIMITATION OF DIRECTORS' AND OFFICERS' LIABILITY AND INDEMNIFICATION
As permitted by Louisiana Law, the Company's Articles of Incorporation
contain certain provisions eliminating the personal liability of the directors
and officers to the Company and its shareholders for monetary damages for
breaches of their fiduciary duties as directors or officers, except for (i) a
breach of a director's or officer's duty of loyalty to the Company or to its
shareholders, (ii) acts or omissions not in good faith or that involve
intentional misconduct or a knowing violation of law, (iii) dividends or stock
repurchases or redemptions that are illegal under Louisiana law and (iv) any
transaction from which he or she receives an improper personal benefit. In
addition, the Articles of Incorporation provide that if Louisiana law is
amended to authorize the further elimination or limitation of the liability of
a director or officer, then the liability of the directors or officers shall
be eliminated or limited to the fullest extent permitted by Louisiana law, as
amended. These provisions pertain only to breaches of duty by directors or
officers in such capacities and limit liability only for breaches of fiduciary
duties under Louisiana corporate law and not for violations of other laws such
as the federal securities laws.
47
<PAGE>
As a result of the inclusion of such provisions, shareholders may be unable
to recover monetary damages against directors or officers for actions taken by
them that constitute negligence or gross negligence or that are in violation
of their fiduciary duties, although it may be possible to obtain injunctive or
other equitable relief with respect to such actions. If equitable remedies are
found not to be available to shareholders in any particular case, shareholders
may not have any effective remedy against the challenged conduct. These
provisions may have the effect of reducing the likelihood of derivative
litigation against directors or officers that might have benefitted the
Company.
The Company believes that such provisions are necessary to attract and
retain qualified individuals to serve as directors and officers. In addition,
such provisions will allow directors and officers to perform their duties in
good faith without undue concern about personal liability if a court finds
their conduct to have been negligent or grossly negligent. On the other hand,
the potential remedies available to a Company shareholder will be limited, and
it is possible, although unlikely, that directors and officers protected by
these provisions may not demonstrate the same level of diligence or care that
they would otherwise demonstrate.
The Company's By-laws require the Company to indemnify its directors and
officers against certain expenses and costs, judgments, settlements and fines
incurred in the defense of any claim, including any claim brought by or in the
right of the Company, to which they were made parties by reason of being or
having been directors and officers, subject to certain conditions and
limitations.
In addition, each of the Company's directors and executive officers has
entered into an indemnity agreement with the Company, pursuant to which the
Company has agreed under certain circumstances to purchase and maintain
directors' and officers' liability insurance. The agreements also provide that
the Company will indemnify the directors and executive officers against any
costs and expenses, judgments, settlements and fines incurred in connection
with any claim involving a director or executive officer by reason of his
position as a director or executive officer that are in excess of the coverage
provided by such insurance; provided that the director or executive officer
meets certain standards of conduct. A form of indemnity agreement containing
such standards of conduct is included as an exhibit to the Registration
Statement of which this Prospectus forms a part. Under the indemnity
agreements, the Company is not required to purchase and maintain directors'
and officers' liability insurance if it is not reasonably available or, in the
reasonable judgment of the Board of Directors, there is insufficient benefit
to the Company from the insurance.
48
<PAGE>
PRINCIPAL SHAREHOLDERS
The following table sets forth, as of September 30, 1997, certain
information regarding beneficial ownership of the Common Stock (assuming the
Share Exchange had occurred on such date) by (i) each of the Named Executive
Officers, (ii) each director of the Company who beneficially owns shares,
(iii) all of the Company's directors and executive officers as a group and
(iv) each shareholder known by the Company to be the beneficial owner of more
than 5% of the outstanding Common Stock. Unless otherwise indicated, the
Company believes that the shareholders listed below have sole investment and
voting power with respect to their shares based on information furnished to
the Company by such shareholders.
<TABLE>
<CAPTION>
PERCENT OF
OUTSTANDING
COMMON STOCK
-----------------
NUMBER OF
SHARES BEFORE AFTER
BENEFICIALLY THE THE
NAME OF BENEFICIAL OWNER OWNED OFFERING OFFERING
------------------------ ------------ -------- --------
<S> <C> <C> <C>
Advantage Capital(a).......................... 7,787,162(b) 64.9% 50.2%
Steven T. Stull(c)............................ 7,787,162(d) 64.9% 50.2%
David A. Jeansonne(e)......................... 1,379,922(f) 11.5% 8.9%
Roger E. Thomas(e)............................ 1,286,333(g) 10.7% 8.3%
Allen R. Woodard(e)........................... 1,392,083(h) 11.6% 9.0%
R. Patrick Morris............................. --(i) -- --
All directors and executive officers as a
group (8 persons)............................ 11,845,500(j) 98.7% 76.4%
</TABLE>
- --------
(a) Advantage Capital consists of a series of institutional venture capital
funds under common ownership and control. The address of Advantage Capital
is 909 Poydras Street, Suite 2230, New Orleans, Louisiana 70112.
(b) Of such 7,787,162 shares, 293,983 are held by Advantage Capital Partners
Limited Partnership, of which Advantage Capital Corporation is the general
partner; 993,831 are held by Advantage Capital Partners II Limited
Partnership, of which Advantage Capital Corporation is the general
partner; 1,616,060 are held by Advantage Capital Partners III Limited
Partnership, of which Advantage Capital Management Corporation is the
general partner; 3,025,697 are held by Advantage Capital Partners IV
Limited Partnership, of which Advantage Capital Financial Company, L.L.C.
is the general partner; and 1,857,591 are held by Advantage Capital
Partners V Limited Partnership, of which Advantage Capital Advisors,
L.L.C. is the general partner.
(c) The address of Mr. Stull is c/o Advantage Capital, 909 Poydras Street,
Suite 2230, New Orleans, Louisiana 70112.
(d) All shares are held by the Advantage Capital companies referred to in note
(b). Mr. Stull is the majority shareholder of each of the general partners
referred to in note (b).
(e) The address of Messrs. Jeansonne, Thomas, Morris and Woodard is c/o OMNI
Energy Services Corp., 4484 NE Evangeline Thruway, Carencro, Louisiana
70520.
(f) Of such shares, 1,080,017 are held by American Aviation of which Mr.
Jeansonne owns 90% of the common stock.
(g) Includes a total of 158,625 shares of Common Stock held by Mr. Thomas's
adult children. Mr. Thomas disclaims beneficial ownership of such shares.
(h) Includes a total of 105,750 shares of Common Stock held by Mr. Woodard's
minor children.
(i) Not included are any of the shares referred to in note (f) above as held
by American Aviation, of which Mr. Morris is a 10% stockholder and an
officer.
(j) See notes (d), (f), (g), (h) and (i) above.
49
<PAGE>
CERTAIN TRANSACTIONS
On July 19, 1996, OMNI Geophysical acquired substantially all of the assets
of OGC, of which Mr. Jeansonne is a director, executive officer and principal
shareholder. The purchase price was approximately $13.3 million, of which
$11.0 million was paid in cash and $2.3 million was paid by the delivery of a
subordinated note. The cash portion was financed through the issuance by OMNI
Geophysical of 4,000 of its 10% participating preferred units to Advantage
Capital for $4.0 million and the proceeds from a $7.0 million asset-based
loan. Since the OGC Acquisition, Advantage Capital purchased additional common
units and 1,000 15% participating preferred units of OMNI Geophysical for an
aggregate of $1.1 million. On September 30, 1997, OMNI Geophysical repurchased
all of the outstanding preferred units of OMNI Geophysical, which were held by
Advantage Capital, for $5.0 million. See "Principal Shareholders."
OGC and OMNI Geophysical have made cash dividends and distributions to
provide cash returns to their securityholders as well as to fund federal and
state income tax liabilities. Dividends to OGC shareholders totaled $765,250
during 1995 and $881,200 during the 201-day period ended July 19, 1996.
Distributions to OMNI Geophysical members totaled $18,810 during the 165-day
period ended December 31, 1996 and $320,642 (excluding amounts distributed as
part of the LLC Distribution) during the nine months ended September 30, 1997.
On September 30, 1997, OMNI Geophysical distributed $5.0 million of
undistributed earnings to its members. Prior to the Share Exchange,
substantially all remaining undistributed earnings of OMNI Geophysical through
the date of the Share Exchange will be distributed to the current members of
OMNI Geophysical. Management estimates that it will have additional
undistributed earnings of approximately $1.0 million at the time of the Share
Exchange (assuming the Share Exchange is consummated on November 21, 1997).
The Company expects to fund the remaining portion of the LLC Distribution with
additional borrowings under its existing credit arrangements.
Effective July 1, 1997, the Company purchased substantially all of the
assets of American Aviation, a corporation of which Mr. Jeansonne is the
president and chief executive officer and holder of 90% of the outstanding
shares and Mr. Morris is a vice president and holder of 10% of the outstanding
shares. American Aviation was formed on November 1, 1995. In connection with
the transaction, American Aviation received 10,213 common units of OMNI
Geophysical, $0.5 million in cash and a $1.0 million subordinated note that
bears interest at 8.5% and is payable upon demand by the note holder subject
to certain restrictions included in the Company's primary lending agreements.
This note will be repaid with a portion of the net proceeds of the Offering.
The Company also assumed approximately $6.7 million of indebtedness of
American Aviation, including $3.4 million owed to Mr. Jeansonne for working
capital advances. All of the assumed indebtedness was repaid at the time of
the acquisition with borrowings from Hibernia National Bank, which will be
repaid with a portion of the net proceeds of the Offering. Prior to such
transaction, OMNI Geophysical had purchased a Bell 206B-III helicopter from
American Aviation for $526,000. Management believes that both the acquisition
of substantially all of the assets of American Aviation and the helicopter
purchase were completed at prices that approximate those that the Company
would have paid to unaffiliated third parties for similar assets.
The Company was formed on September 11, 1997, solely to facilitate the
Offering. Immediately prior to completion of the Offering, the holders of
common units in OMNI Geophysical and the Company will consummate the Share
Exchange, pursuant to which such unitholders will exchange all of their common
units for 12,000,000 shares of Common Stock and the holders of outstanding
options to acquire common units of OMNI Geophysical will receive options to
acquire a corresponding number of shares of Common Stock.
Since the OGC Acquisition, OMNI Geophysical has leased the land and building
in which the Company's headquarters are located under an agreement with OGC
that also contains an option to buy such property. OMNI Geophysical paid
$25,000 under this lease during 1996 and $30,000 in the six months ended June
30, 1997.
The Company was paid $147,000 and $3.2 million during 1996 and the nine
month period ended September 30, 1997, respectively, by Ocean Energy, Inc.
(formerly Flores & Rucks, Inc.), a corporation of which Mr. Rucks served as
President and Chief Executive Officer from July 1995 until September 1996 and
continues to serve as a director. See "Management."
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<PAGE>
DESCRIPTION OF CAPITAL STOCK
The authorized capital stock of the Company consists of 45,000,000 shares of
Common Stock, $0.01 par value per share, and 5,000,000 shares of preferred
stock, $0.01 par value per share, issuable in series (the "Preferred Stock").
Upon completion of the Share Exchange immediately prior to the consummation of
the Offering, the Company will have 12,000,000 shares of Common Stock
outstanding, which will be held of record by approximately 15 persons. No
shares of Preferred Stock will be outstanding. Prior to the Offering, there
has been no public market for the Common Stock. Although the Common Stock has
been approved for quotation on the Nasdaq National Market, subject to official
notice of issuance, there can be no assurance that a market for the Common
Stock will develop or, if developed, will be sustained. See "Risk Factors--No
Prior Market; Possible Volatility of Market Price." The following summary
description of the capital stock of the Company is qualified in its entirety
by reference to the Company's Articles of Incorporation and By-laws, copies of
which are filed as exhibits to the Registration Statement of which this
Prospectus forms a part.
COMMON STOCK
Holders of Common Stock are entitled to one vote per share in the election
of directors and on all other matters submitted to a vote of shareholders;
shareholders may not cumulate votes for the election of directors. Subject to
any preferences accorded to the holders of the Preferred Stock, if and when
issued by the Board of Directors, holders of Common Stock are entitled to
dividends at such times and in such amounts as the Board of Directors may
determine. The Company currently does not intend to declare or pay dividends
for the foreseeable future. In addition, several of the Company's credit
arrangements restrict distributions to the Company's shareholders. See "Risk
Factors--Dividends" and "Dividend Policy." Upon the dissolution, liquidation
or winding up of the Company, after payment of debts, expenses and the
liquidation preference plus any accrued dividends on any outstanding shares of
Preferred Stock, the holders of Common Stock will be entitled to receive all
remaining assets of the Company ratably in proportion to the number of shares
held by them. Holders of Common Stock have no preemptive, subscription or
conversion rights and are not subject to further calls or assessments or
rights of redemption by the Company. The shares of Common Stock to be issued
in the Share Exchange and in the Offering will be validly issued, fully paid
and nonassessable.
PREFERRED STOCK
The Company's Board of Directors has the authority, without approval of the
shareholders, to issue shares of Preferred Stock in one or more series and to
fix the number of shares and rights, preferences and limitations of each
series. Among the specific matters with respect to the Preferred Stock that
may be determined by the Board of Directors are the dividend rights, the
redemption price, if any, the terms of a sinking fund, if any, the amount
payable in the event of any voluntary liquidation, dissolution or winding up
of the affairs of the Company, conversion rights, if any, and voting powers,
if any.
One of the effects of the existence of authorized but unissued Common Stock
and undesignated Preferred Stock may be to enable the Board of Directors to
make more difficult or to discourage an attempt to obtain control of the
Company by means of a merger, tender offer, proxy contest or otherwise, and
thereby to protect the continuity of the Company's management. If, in the
exercise of its fiduciary obligations, the Board of Directors were to
determine that a takeover proposal was not in the Company's best interest,
such shares could be issued by the Board of Directors without shareholder
approval in one or more transactions that might prevent or make more difficult
or costly the completion of the takeover transaction by diluting the voting or
other rights of the proposed acquiror or insurgent shareholder group, by
creating a substantial voting block in institutional or other hands that might
undertake to support the position of the incumbent Board of Directors, by
effecting an acquisition that might complicate or preclude the takeover, or
otherwise. In this regard, the Company's Articles of Incorporation grant the
Board of Directors broad power to establish the rights and preferences of the
authorized and unissued Preferred Stock, one or more series of which could be
issued that would entitle holders (i) to vote separately as a class on any
proposed merger or consolidation, (ii) to cast a proportionately larger vote
together with the Common Stock on any such transaction or for all purposes,
(iii) to elect directors having terms
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<PAGE>
of office or voting rights greater than those of other directors, (iv) to
convert Preferred Stock into a greater number of shares of Common Stock or
other securities, (v) to demand redemption at a specified price under
prescribed circumstances related to a change of control or (vi) to exercise
other rights designated to impede a takeover. The issuance of shares of
Preferred Stock pursuant to the Board of Directors' authority described above
may adversely effect the rights of holders of the Common Stock.
In addition, certain other charter provisions that are described below may
have the effect of, either alone or in combination with each other or with the
existence of authorized but unissued capital stock, of making more difficult
or discouraging an acquisition of the Company deemed undesirable by the Board
of Directors.
CERTAIN CHARTER AND BY-LAW PROVISIONS
Advance Notice of Intention to Nominate a Director. The Articles of
Incorporation and By-laws permit a shareholder to nominate a person for
election as a director only if written notice of such shareholder's intent to
make a nomination has been given to the Secretary of the Company not less than
45 days or more than 90 days prior to an annual meeting; however, if less than
55 days notice is given of the meeting, notice by the shareholder must be
received on the 10th day after notice of the meeting was given. This provision
also requires that the shareholder's notice set forth, among other things, a
description of all arrangements or understandings between the nominee and the
shareholder pursuant to which the nomination is to be made or the nominee is
to be elected and such other information regarding the nominee as would be
required to be included in a proxy statement filed pursuant to the proxy rules
promulgated under the Securities Exchange Act of 1934 (the "Exchange Act"), as
amended, had the nominee been nominated by the Board of Directors of the
Company. Any nomination that fails to comply with these requirements may be
disqualified.
Shareholders' Right to Call Special Meeting. The Articles of Incorporation
and By-laws provide that a special shareholders' meeting may be requested by a
shareholder or group of shareholders holding in the aggregate 50% or more of
the Company's total voting power.
Shareholder Action by Unanimous Consent. Under Louisiana law, unless a
corporation's articles of incorporation specify otherwise, shareholders may
only act at a duly called meeting or by unanimous written consent. The
Company's Articles of Incorporation do not contain a provision permitting
action by a consent signed by less than all shareholders.
Removal of Directors; Filling Vacancies on Board of Directors. The Articles
of Incorporation and By-laws provide that any director elected by holders of
the Common Stock may be removed at any time, with or without cause, by a
majority vote of the entire Board of Directors. In addition, any director or
the entire Board may be removed at any time with or without cause by a vote of
the holders of not less than two-thirds of the total voting power held by all
holders of voting stock present or represented at a special stockholders'
meeting called for that purpose. "Cause" is defined for these purposes as
conviction of a felony involving moral turpitude or adjudication of gross
negligence or misconduct in the performance of duties in a matter of
substantial importance to the Company. The Articles of Incorporation and By-
laws also provide that any vacancies on the Board of Directors (including any
resulting from an increase in the authorized number of directors) may be
filled by the affirmative vote of two-thirds of the directors remaining in
office, provided the shareholders shall have the right, at any special meeting
called for that purpose prior to such action by the Board, to fill the
vacancy.
Adoption and Amendment of By-laws. The Articles of Incorporation provide
that the By-laws may be (i) adopted only by a majority vote of the Board of
Directors and (ii) amended or repealed by either a majority vote of the entire
Board of Directors or the holders of two-thirds of the total voting power
present or represented at any shareholders' meeting. Any provisions amended or
repealed by the shareholders may be re-amended or re-adopted by the Board of
Directors.
Consideration of Tender Offers and Other Extraordinary Transactions. Under
Louisiana law, the Board of Directors, when considering a tender offer,
exchange offer, merger or consolidation, may consider, among other
52
<PAGE>
factors, the social and economic effects of the proposal on the Company, its
subsidiaries and their respective employees, customers, creditors and
communities.
Amendment of Certain Provisions of the Articles of Incorporation; Other
Corporate Action. The Company's Articles of Incorporation require, unless the
action has been approved by a majority vote of the entire Board of Directors,
the affirmative vote of not less than 80% of the total voting power of the
Company to amend, alter or repeal the provisions of the Articles of
Incorporation relating to (i) the filling of vacancies and removal of the
Board of Directors, (ii) amendments to the By-laws, (iii) the Company's
election not to be governed by certain Louisiana laws relating to business
combinations, (iv) limitation of liability and indemnification of directors
and officers, (v) amendments to the Articles of Incorporation and (vi) the
calling of meetings of shareholders. An amendment to the Articles of
Incorporation not affecting any of such provisions may be approved by vote of
a majority of the voting power present or represented at a meeting of
shareholders. The Articles of Incorporation also require the vote of 80% of
the total voting power to approve an amendment or a repeal of any provisions
of the Articles of Incorporation in a way that would reduce the limitation of
liability or indemnification of any person or power of the Board of Directors
with respect thereto provided for in the Articles of Incorporation. Unless
approved by a vote of at least a majority of the Board of Directors, a merger,
consolidation, sale of all or substantially all of the assets or a voluntarily
dissolution of the Company may be authorized only by the affirmative vote of
the holders of 80% of the total voting power. If approved by two-thirds of the
entire Board of Directors, any such action may be authorized by vote of a
majority of the voting power present or represented at a meeting of
shareholders.
The provisions of the Company's Articles of Incorporation and By-laws
summarized in the preceding paragraphs may have anti-takeover effects and may
delay, defer or prevent a tender offer or takeover attempt that a shareholder
might consider in such shareholder's best interest, including those attempts
that might result in the payment of a premium over the market price for the
shares of Common Stock held by such shareholder.
Louisiana Control Share Acquisition Statute. The Louisiana Control Share
Acquisition Statute provides that any shares acquired by a person or group (an
"Acquiror") in an acquisition that causes such person or group to have the
power to direct the exercise of voting power in the election of directors in
excess of 20%, 33 1/3% or 50% thresholds shall have only such voting power as
shall be accorded by the holders of all shares other than "interested shares,"
as defined below, at a meeting called for the purpose of considering the
voting power to be accorded to such shares. "Interested shares" include all
shares as to which the Acquiror, any officer of a company and any director of
a company who is also an employee of a company may exercise or direct the
exercise of voting power. If a meeting of shareholders is held to consider the
voting rights to be accorded to any Acquiror and the shareholders do not vote
to accord voting rights to such shares, a company may have the right to redeem
the shares held by the Acquiror for their fair value. The statute permits the
articles of incorporation or by-laws of a company to exclude from the
statute's application acquisitions occurring after the adoption of the
exclusion. The Company's By-laws do contain such an exclusion; however, the
Company's Board of Directors or shareholders, by amendment to this provision
of the By-laws, could reverse this election.
LIMITATIONS ON FOREIGN OWNERSHIP OF COMPANY STOCK
The Company's Articles of Incorporation contain provisions designed to
assure that not more than 24% of its outstanding shares of Common Stock or
other voting securities of the Company are owned by persons who are not U.S.
citizens. The Articles of Incorporation provide that the Company has the power
to reduce the voting rights with respect to shares held by persons who are not
U.S. citizens to 24% if more than 24% of the then outstanding voting
securities of the Company are held by such persons, and, at its option, to
redeem such shares in excess of 24%. Additionally, the Company's By-laws
provide that no greater than one-third of the directors or officers may be
non-U.S. citizens and that at no time may the Company's president be a non-
U.S. citizen. See "Risk Factors--Limitations on Foreign Ownership of Company
Stock."
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is Harris Trust and
Savings Bank.
53
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 15,500,000 shares of
Common Stock outstanding (excluding 1,165,090 shares issuable upon the
exercise of outstanding options). The 3,500,000 shares of Common Stock sold in
the Offering (plus any additional shares sold upon the Underwriters' exercise
of their over-allotment option) will be freely transferable without
restriction under the Securities Act by persons who are not deemed to be
affiliates of the Company or acting as underwriters, as those terms are
defined in the Securities Act. The remaining 12,000,000 shares of Common Stock
held by existing shareholders were acquired in transactions not requiring
registration under the Securities Act and will be "restricted" stock within
the meaning of Rule 144. Consequently, such shares may not be resold unless
they are registered under the Securities Act or are sold pursuant to an
applicable exemption from registration, such as Rule 144 under the Securities
Act.
In general, under Rule 144, as currently in effect, if at least one year has
elapsed since shares of Common Stock that constitute restricted stock were
last acquired from the Company or an affiliate of the Company, the holder is
entitled to sell within any three-month period a number of shares that does
not exceed the greater of one percent of the total shares of Common Stock then
outstanding or the average weekly trading volume of the Common Stock in the
over-the-counter market during the four calendar weeks preceding the date on
which notice of the sale is filed with the Securities and Exchange Commission.
Sales under Rule 144 are subject to certain manner of sale provisions, notice
requirements and the availability of current public information about the
Company. If at least two years have elapsed since the shares were last
acquired from the Company or an affiliate, a person who has not been an
affiliate of the Company at any time during the three months preceding the
sale is entitled to sell such shares under Rule 144(k) without regard to
volume limitations, manner of sale provisions, notice requirements or the
availability of current public information concerning the Company. None of the
12,000,000 shares of restricted stock within the meaning of Rule 144 held by
existing shareholders of the Company will be eligible for sale in reliance on
Rule 144 until one year after the date of the Share Exchange.
The Company, Advantage Capital and each of its directors and its executive
officers have agreed that they will not, with certain limited exceptions,
issue, offer for sale, sell, or otherwise dispose of any shares of Common
Stock for 180 days following the date of this Prospectus without the prior
written consent of Lehman Brothers Inc. See "Underwriting."
Prior to the Offering, there has been no public market for the Common Stock,
and there can be no assurance that a significant public market for the Common
Stock will develop or be sustained after the Offering. Any future sale of
substantial amounts of Common Stock in the open market may adversely affect
the market price of the Common Stock offered hereby.
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<PAGE>
UNDERWRITING
Under the terms and subject to the conditions contained in the Underwriting
Agreement, the form of which is filed as an exhibit to the Registration
Statement of which this Prospectus forms a part, the Underwriters named below
(the "Underwriters"), for whom Lehman Brothers Inc., Prudential Securities
Incorporated and Raymond James & Associates, Inc. are acting as
representatives (the "Representatives"), have severally agreed to purchase
from the Company, and the Company has agreed to sell to each Underwriter, the
aggregate number of shares of Common Stock set forth opposite the name of such
Underwriter below:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITERS SHARES
------------ ---------
<S> <C>
Lehman Brothers Inc..............................................
Prudential Securities Incorporated...............................
Raymond James & Associates, Inc..................................
---------
Total.......................................................... 3,500,000
=========
</TABLE>
The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Common Stock to the public at the initial
public offering price set forth on the cover page hereof, and to certain
dealers at such initial public offering price less a selling concession not in
excess of $ per share. The Underwriters may allow, and such dealers may
reallow, a concession not in excess of $ per share to certain other
Underwriters or to certain other brokers or dealers. After the initial
offering to the public, the offering price and other selling terms may be
changed by the Representatives.
The Underwriting Agreement provides that the obligations of the Underwriters
to pay for and accept delivery of the shares of Common Stock offered hereby
are subject to approval of certain legal matters by counsel and to certain
other conditions, including the condition that no stop order suspending the
effectiveness of the Registration Statement is in effect and no proceedings
for such purpose are pending or threatened by the Commission and that there
has been no material adverse change or development involving a prospective
material adverse change in the condition of the Company from that set forth in
the Registration Statement otherwise than as set forth or contemplated in this
Prospectus, and that certain certificates, opinions and letters have been
received from the Company and its counsel. The Underwriters are obligated to
take and pay for all of the above shares of Common Stock if any such shares
are taken.
The Company and the Underwriters have agreed in the Underwriting Agreement
to indemnify each other against certain liabilities, including liabilities
under the Securities Act, and to contribute to payments that such parties may
be required to make in respect thereof.
The Company has granted to the Underwriters an option to purchase up to an
additional 525,000 shares of Common Stock, exercisable solely to cover over-
allotments, at the initial public offering price, less the underwriting
discounts and commissions shown on the cover page of this Prospectus. Such
option may be exercised at any time until 30 days after the date of the
Underwriting Agreement. To the extent that the option is exercised, each
Underwriter will be committed, subject to certain conditions, to purchase a
number of the additional shares of Common Stock that is proportionate to such
Underwriter's initial commitment as indicated on the preceding table.
The Company, Advantage Capital and the executive officers and directors of
the Company have agreed that they will not, without the prior written consent
of Lehman Brothers Inc., during the 180 days following the date of this
Prospectus, (i) offer for sale, sell, pledge or otherwise dispose of (or enter
into any transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of)
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<PAGE>
any shares of Common Stock or securities convertible into or exchangeable for
shares of Common Stock, other than in the case of the Company, shares issued
or options granted pursuant to the Stock Incentive Plan or (ii) enter into any
swap or other derivatives transaction that transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of such shares of
Common Stock; provided, however, that the Company may issue shares of Common
Stock in connection with the acquisitions of American Helicopter and Fournier.
See "Management's Discussion and Analysis of Financial Condition and Results
of Operations--General--Pending Acquisitions."
The Representatives have informed the Company that the Underwriters do not
intend to confirm sales in excess of five percent of the total number of
shares offered hereby to accounts over which they exercise discretionary
authority.
Until the distribution of the Common Stock is completed, the rules of the
Commission may limit the ability of the Underwriters and certain selling group
members to bid for and purchase shares of Common Stock. As an exception to
these rules, the Representatives are permitted to engage in certain
transactions that stabilize the price of the Common Stock. Such transactions
may consist of bids or purchases for the purpose of pegging, fixing or
maintaining the price of the Common Stock.
In addition, if the Representatives over-allot (i.e., if they sell more
shares of Common Stock than are set forth on the cover page of this
Prospectus), and thereby create a short position in the Common Stock in
connection with the Offering, the Representatives may reduce that short
position by purchasing Common Stock in the open market. The Representatives
may also elect to reduce any short position by exercising all or part of the
over-allotment option described herein.
The Representatives may also impose a penalty bid on certain Underwriters
and selling group members. This means that if the Representatives purchase
shares of Common Stock in the open market to reduce the Underwriters' short
position or to stabilize the price of the Common Stock, they may reclaim the
amount of the selling concession from the Underwriters and selling group
members who sold those shares as part of the Offering.
In general, purchases of a security for the purpose of stabilization or to
reduce a syndicate short position could cause the price of the security to be
higher than it might otherwise be in the absence of such purchases. The
imposition of a penalty bid might have an effect on the price of a security to
the extent that it were to discourage resales of the security by purchasers in
the Offering.
Prior to the Offering, there has been no public market for the Common Stock.
The initial public offering price will be negotiated between the Company and
the Representatives. Among the factors considered in determining the initial
public offering price of the Common Stock, in addition to prevailing market
conditions, are recent financial and operating results of the Company, the
proposed capital structure, assets and liabilities of the Company, estimates
of the business potential and earnings prospects of the Company, the prospects
for the industry in which the Company operates, an assessment of the Company's
management, consideration of the above factors in relation to market valuation
of companies in related businesses and other factors deemed relevant. The
initial public offering price set forth on the cover page of this Prospectus
should not, however, be considered an indication of the actual value of the
Common Stock. Such price will be subject to change as a result of market
conditions and other factors. There can be no assurance that an active trading
market will develop for the Common Stock or that the Common Stock will trade
in the public market subsequent to the Offering at or above the initial public
offering price.
Neither the Company nor any of the Underwriters makes any representation or
prediction as to the direction or magnitude of any effect that the
transactions described above may have on the price of the Common Stock. In
addition, neither the Company nor any of the Underwriters makes any
representation that the Representatives will engage in such transactions or
that such transactions, once commenced, will not be discontinued without
notice.
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<PAGE>
LEGAL MATTERS
The legality of the shares of Common Stock offered hereby will be passed
upon for the Company by Jones, Walker, Waechter, Poitevent, Carrere & Denegre,
L.L.P., New Orleans, Louisiana. Certain legal matters in connection with the
Common Stock offered hereby will be passed upon for the Underwriters by Baker
& Botts, L.L.P., Houston, Texas.
EXPERTS
The balance sheet of OMNI Energy Services Corp. as of September 15, 1997;
the financial statements of OMNI Geophysical as of December 31, 1996 and for
the 165-day period ending December 31, 1996; the financial statements of OGC
as of December 31, 1995 and for the 201-day period ending July 19, 1996 and
the years ended December 31, 1994 and 1995; and the financial statements of
American Aviation as of December 31, 1996 and for the year ended December 31,
1996 and the 61-day period ending December 31, 1995 included in this
Prospectus have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their reports with respect thereto and are
included herein in reliance upon the authority of such firm as experts in
giving said reports.
ADDITIONAL INFORMATION
The Company has filed with the Securities and Exchange Commission a
Registration Statement on Form S-1 under the Securities Act with respect to
the Common Stock being offered pursuant to this Prospectus. This Prospectus
does not contain all information set forth in the Registration Statement,
certain parts of which are omitted in accordance with the rules and
regulations of the Commission. Statements contained herein concerning the
provisions of any documents are not necessarily complete and, in each
instance, reference is made to the copy of such document filed as an exhibit
to the Registration Statement. Each such statement is qualified in its
entirety by such reference. The Registration Statement, including exhibits
filed therewith, may be inspected and copied at the public reference
facilities maintained by the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's regional offices at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-
2511 and 7 World Trade Center, Suite 1300, New York, New York 10048. Copies of
such materials may also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549. The Commission maintains a World Wide Web site on the Internet
that contains reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission
(http://www.sec.gov).
The Company will be required to file reports and other information with the
Commission pursuant to the Securities Exchange Act of 1934, as amended. The
Company intends to furnish its shareholders with annual reports containing
audited financial statements certified by independent public accountants.
57
<PAGE>
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
<TABLE>
<S> <C>
OMNI Energy Services Corp.
Report of Independent Public Accountants................................ F-2
Balance Sheet as of September 15, 1997.................................. F-3
Note to Balance Sheet................................................... F-3
OMNI Geophysical, L.L.C. (Successor) and OMNI Geophysical Corporation
(Predecessor)
Report of Independent Public Accountants................................ F-4
Consolidated Balance Sheets as of December 31, 1996 and 1995 and
September 30, 1997 (unaudited)......................................... F-5
Consolidated Statements of Income for the 165-day period ended December
31, 1996, the 201-day period ended July 19, 1996, the years ended
December 31, 1994 and 1995, the nine months ended September 30, 1997
(unaudited) and the 73-day period ended September 30, 1996 (unaudited). F-7
Consolidated Statements of Changes in Equity for the 165-day period
ended December 31, 1996, the 201-day period ended July 19, 1996, the
years ended December 31, 1994 and 1995, and the nine months ended
September 30, 1997 (unaudited)......................................... F-8
Consolidated Statements of Cash Flows for the 165-day period ended
December 31, 1996, the 201-day period ended July 19, 1996, the years
ended December 31, 1994 and 1995, the nine months ended September 30,
1997 (unaudited) and the 73-day period ended September 30, 1996
(unaudited)............................................................ F-9
Notes to Financial Statements........................................... F-10
American Aviation Incorporated
Report of Independent Public Accountants................................ F-17
Balance Sheets as of December 31, 1996 and 1995 and June 30, 1997
(unaudited)............................................................ F-18
Statements of Income for the year ended December 31, 1996, the period
from inception (November 1, 1995) through December 31, 1995, and the
six months ended June 30, 1997 and 1996 (unaudited).................... F-19
Statements of Changes in Equity for the year ended December 31, 1996,
the period from inception (November 1, 1995) through December 31, 1995,
and the six months ended June 30, 1997 (unaudited)..................... F-20
Statements of Cash Flows for the year ended December 31, 1996, the
period from inception (November 1, 1995) through December 31, 1995, and
the six months ended June 30, 1997 and 1996 (unaudited)................ F-21
Notes to Financial Statements........................................... F-22
Pro Forma Statements (unaudited)
Headnote to Pro Forma Statements........................................ F-25
Pro Forma Condensed Consolidated Statement of Income for the nine months
ended
September 30, 1997..................................................... F-26
Pro Forma Condensed Consolidated Statement of Income for the year ended
December 31, 1996...................................................... F-27
Pro Forma Condensed Consolidated Balance Sheet as of September 30, 1997. F-28
Notes to Pro Forma Condensed Consolidated Financial Statements.......... F-29
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To OMNI Energy Services Corp.:
We have audited the accompanying balance sheet of OMNI Energy Services Corp.
(a Louisiana corporation) as of September 15, 1997. This balance sheet is the
responsibility of the Company's management. Our responsibility is to express
an opinion on this balance sheet based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the balance sheet is free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the balance sheet. 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 audit provides a reasonable basis for our
opinion.
In our opinion, the balance sheet referred to above presents fairly, in all
material respects, the financial position of OMNI Energy Services Corp. as of
September 15, 1997, in conformity with generally accepted accounting
principles.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
September 16, 1997
F-2
<PAGE>
OMNI ENERGY SERVICES CORP.
BALANCE SHEET
SEPTEMBER 15, 1997
<TABLE>
<CAPTION>
ASSETS
------
<S> <C>
Cash.................................................................... $1,000
======
<CAPTION>
SHAREHOLDER'S EQUITY
--------------------
<S> <C>
Preferred stock, par value $0.01 per share, 5,000,000 shares authorized,
no shares issued and outstanding....................................... --
Common stock, par value $0.01 per share, 45,000,000 shares authorized,
1,000 shares issued and outstanding.................................... $ 10
Additional paid-in capital.............................................. 990
------
Total shareholder's equity............................................ $1,000
======
</TABLE>
The accompanying note is an integral part of this financial statement.
NOTE TO BALANCE SHEET
OMNI Energy Services Corp. (the "Company") was formed on September 11, 1997
and will issue 12,000,000 shares of its common stock in exchange for all of
the outstanding common units of OMNI Geophysical, L.L.C. (the "Share
Exchange") and options to purchase 118,018 shares of its common stock in
exchange for outstanding options to acquire common units of Omni Geophysical,
L.L.C. Furthermore, at the completion of the Share Exchange, the Company will
publicly offer for sale 3,500,000 shares of common stock. The Company will
have no significant operations or assets prior to the Share Exchange.
In September 1997, the Company adopted a Stock Incentive Plan (the "Plan")
under which both qualified and nonqualified stock options, restricted stock,
and other stock-based compensation awards may be granted. A total of 1,500,000
shares of common stock may be issued under the Plan. The Plan will be
administered by a committee of the Board which selects the individuals
eligible for the various incentives, and, as applicable, determines the number
of shares, option price, vesting schedule, performance measurements and
duration of the award. In the case of qualified options, the exercise price
cannot be less than the fair market value on the date of grant. In connection
with the Offering, the Company will issue options with exercise prices equal
to the initial public offering price to purchase 1,047,072 shares of Common
Stock to employees, directors, consultants and advisors of the Company and to
a third-party lender.
The Company plans to account for employee stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees." Accordingly, the
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," will
not affect the Company's reported results of operations and will be included
as separate pro forma disclosures only.
F-3
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Managers of Omni Geophysical, L.L.C.:
We have audited the accompanying consolidated balance sheets of Omni
Geophysical, L.L.C., a Louisiana limited liability company (the "Company") and
successor to Omni Geophysical Corporation ("predecessor"), and subsidiaries as
of December 31, 1996, and the related consolidated statements of income, cash
flows and changes in equity for the 165-day period ended December 31, 1996. In
addition, we have audited the consolidated balance sheets of the predecessor
and its subsidiaries as of December 31, 1995 and their consolidated statements
of income, cash flows and changes in equity for each of the two years in the
period then ended and the 201-day period ended July 19, 1996. 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 financial statements referred to above present fairly,
in all material respects, (a) the financial position of Omni Geophysical,
L.L.C. and subsidiaries as of December 31, 1996 and the results of their
operations and cash flows for the 165-day period then ended and (b) the
financial position of the predecessor and its subsidiaries as of December 31,
1995 and their results of operations and cash flows for each of the two years
in the period then ended and for the 201-day period ended July 19, 1996, all
in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
February 7, 1997
F-4
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996 AND SEPTEMBER 30, 1997
The purchase method of accounting was used to record assets acquired and
liabilities assumed by the Company. Such accounting generally results in
increased depreciation and amortization expense reported in future periods.
Accordingly, the accompanying financial statements of the predecessor and the
Company are not comparable in all material respects since those financial
statements report the financial position, results of operations and cash flows
of these two separate entities.
<TABLE>
<CAPTION>
(NOTE 2)
PREDECESSOR SUCCESSOR SUCCESSOR
------------ -------------------------- -------------
SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, 1997
ASSETS 1995 1996 1997 PRO FORMA
------ ------------ ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash................................................................. $ 299,901 $ 38,611 $ 2,318,028 $ 2,318,028
Accounts receivable.................................................. 2,457,423 4,565,399 12,315,714 12,315,714
Parts and supply inventory........................................... 246,853 706,140 2,316,748 2,316,748
Prepaid expenses .................................................... 216,393 758,808 1,069,258 1,069,258
---------- ----------- ----------- -----------
Total current assets............................................... 3,220,570 6,068,958 18,019,748 18,019,748
---------- ----------- ----------- -----------
PROPERTY AND EQUIPMENT, (Note 2):
Land................................................................. 32,400 -- 358,514 358,514
Building and improvements............................................ 322,679 32,325 99,307 99,307
Drilling, field and support equipment................................ 1,862,906 11,929,801 18,607,158 18,607,158
Shop equipment....................................................... 38,648 120,964 214,267 214,267
Aircraft............................................................. -- 526,000 7,542,606 7,542,606
Vehicles............................................................. 747,203 1,384,715 2,853,771 2,853,771
Construction in progress............................................. 138,040 461,264 1,641,175 1,641,175
---------- ----------- ----------- -----------
3,141,876 14,455,069 31,316,798 31,316,798
Less: accumulated depreciation....................................... 967,727 674,958 2,161,271 2,161,271
---------- ----------- ----------- -----------
2,174,149 13,780,111 29,155,527 29,155,527
---------- ----------- ----------- -----------
OTHER ASSETS:
Goodwill, net of amortization........................................ -- 217,802 7,594,586 7,594,586
Other................................................................ 33,892 319,165 1,095,890 1,095,890
---------- ----------- ----------- -----------
33,892 536,967 8,690,476 8,690,476
---------- ----------- ----------- -----------
Total assets....................................................... $5,428,611 $20,386,036 $55,865,751 $55,865,751
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-5
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1995 AND 1996 AND SEPTEMBER 30, 1997
The purchase method of accounting was used to record assets acquired and
liabilities assumed by the Company. Such accounting generally results in
increased depreciation and amortization expense reported in future periods.
Accordingly, the accompanying financial statements of the predecessor and the
Company are not comparable in all material respects since those financial
statements report the financial position, results of operations and cash flows
of these two separate entities.
<TABLE>
<CAPTION>
(NOTE 2)
PREDECESSOR SUCCESSOR SUCCESSOR
------------ -------------------------- -------------
SEPTEMBER 30,
DECEMBER 31, DECEMBER 31, SEPTEMBER 30, 1997
LIABILITIES AND EQUITY 1995 1996 1997 PRO FORMA
---------------------- ------------ ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT LIABILITIES:
Lines of credit (Note 4)............................................. $1,002,551 $ -- $ -- $ --
Current maturities of long-term debt................................. 514,294 2,500,409 4,751,173 4,751,173
Accounts payable..................................................... 331,687 1,378,699 6,316,843 6,316,843
Accrued expenses..................................................... 305,599 560,113 1,356,606 1,356,606
Due to affiliates and shareholders................................... 69,710 29,471 -- --
---------- ----------- ----------- -----------
Total current liabilities........................................... 2,223,841 4,468,692 12,424,622 12,424,622
---------- ----------- ----------- -----------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities (Note 3)..................... 341,466 8,458,227 28,209,053 28,898,523
Revolving line of credit (Note 4).................................... -- 2,116,394 8,000,000 8,000,000
EQUITY:
Predecessor--
Common stock, no par value; 25,000,000 shares authorized; 2,000
issued and outstanding.............................................. 6,000 -- -- --
Successor--
Preferred units; $1,000 par value; 4,000 units, 10% participating,
issued and outstanding at December 31, 1996 (liquidation preference
of $4.2 million at December 31, 1996) (Note 8)...................... -- 4,000,000 -- --
Common units, $.01 par value; 101,263 and 113,476 units issued and
outstanding at December 31, 1996 and September 30, 1997,
respectively........................................................ -- 1,013 1,135 --
Additional paid-in capital........................................... -- -- 6,541,471 --
Retained earnings.................................................... 2,857,304 1,341,710 689,470 --
PRO FORMA SHAREHOLDERS' EQUITY:
Preferred Stock, $.01 par value, 5,000,000 shares authorized; none
issued and outstanding.............................................. -- -- -- --
Common Stock, $.01 par value, 45,000,000 shares authorized;
12,000,000 issued and outstanding................................... -- -- -- 120,000
Additional paid-in capital........................................... -- -- -- 6,422,606
---------- ----------- ----------- -----------
Total equity........................................................ 2,863,304 5,342,723 7,232,076 6,542,606
---------- ----------- ----------- -----------
Total liabilities and equity........................................ $5,428,611 $20,386,036 $55,865,751 $55,865,751
========== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-6
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
CONSOLIDATED STATEMENTS OF INCOME FOR THE 165-DAY PERIOD ENDED
DECEMBER 31, 1996, THE 201-DAY PERIOD ENDED JULY 19, 1996, THE YEARS ENDED
DECEMBER 31, 1994 AND 1995, THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE 73-DAY PERIOD ENDED SEPTEMBER 30, 1996
The purchase method of accounting was used to record assets acquired and
liabilities assumed by the Company. Such accounting generally results in
increased depreciation and amortization expense reported in future periods.
Accordingly, the accompanying financial statements of the predecessor and the
Company are not comparable in all material respects since those financial
statements report the financial position, results of operations and cash flows
of these two separate entities.
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
-------------------------------------- -----------------------------------------
201-DAY
PERIOD 165-DAY 73-DAY PERIOD NINE MONTHS
YEAR ENDED YEAR ENDED ENDED PERIOD ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, JULY 19, DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1994 1995 1996 1996 1996 1997
------------ ------------ ----------- ------------ ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Operating revenue....... $7,267,640 $12,689,772 $10,020,259 $10,942,423 $5,178,482 $33,989,114
Operating expenses...... 5,024,215 8,703,559 6,809,823 8,114,135 3,526,402 24,805,772
---------- ----------- ----------- ----------- ---------- -----------
Gross profit.......... 2,243,425 3,986,213 3,210,436 2,828,288 1,652,080 9,183,342
General and
administrative
expenses............... 1,079,323 1,791,365 792,866 1,049,851 376,485 3,301,117
---------- ----------- ----------- ----------- ---------- -----------
Operating income...... 1,164,102 2,194,848 2,417,570 1,778,437 1,275,595 5,882,225
Interest expense........ 96,624 148,355 150,552 437,137 147,136 1,226,110
Other income (expense).. 7,305 (6,377) 2,209 19,220 22,672 12,288
---------- ----------- ----------- ----------- ---------- -----------
(89,319) (154,732) (148,343) (417,917) (124,464) (1,213,822)
---------- ----------- ----------- ----------- ---------- -----------
Net income........... $1,074,783 $ 2,040,116 $ 2,269,227 1,360,520 1,151,131 4,668,403
========== =========== =========== ----------- ---------- -----------
Preferred dividend
requirements........... $ (180,328) $ (80,000) $ (390,822)
----------- ---------- -----------
Income applicable to
common units........... $ 1,180,192 $1,071,131 $ 4,277,581
=========== ========== ===========
UNAUDITED PRO FORMA DATA
(Note 2)
Net income, reported
above.................. $1,074,783 $ 2,040,116 $ 2,269,227 $ 1,360,520 $1,151,131 $ 4,668,403
Pro forma provision for
income taxes related to
operations as a non-
taxable corporate
entity................. (430,000) (816,000) (908,000) (544,000) (460,000) (1,867,000)
---------- ----------- ----------- ----------- ---------- -----------
Pro forma net income.... $ 644,783 $ 1,224,116 $ 1,361,227 $ 816,520 $ 691,131 $ 2,801,403
========== =========== =========== =========== ========== ===========
Preferred dividend
requirements........... $ (180,328) $ (80,000) $ (390,822)
----------- ---------- -----------
Income applicable to
common shares.......... $ 636,192 $ 611,131 $ 2,410,581
=========== ========== ===========
Pro forma net income per
share.................. $ 0.06 $ 0.22
=========== ===========
Pro forma weighted
average common shares.. 10,779,878 10,903,058
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-7
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE 165-DAY PERIOD ENDED
DECEMBER 31, 1996, THE 201-DAY PERIOD ENDED JULY 19, 1996, THE YEARS ENDED
DECEMBER 31, 1994 AND 1995, AND THE NINE MONTHS ENDED SEPTEMBER 30, 1997
The purchase method of accounting was used to record assets acquired and
liabilities assumed by the Company. Such accounting generally results in
increased depreciation and amortization expense reported in future periods.
Accordingly, the accompanying financial statements of the predecessor and the
Company are not comparable in all material respects since those financial
statements report the financial position, results of operations and cash flows
of these two separate entities.
<TABLE>
<CAPTION>
COMMON STOCK
(PREDECESSOR)
UNITS
(SUCCESSOR) PREFERRED UNITS ADDITIONAL
--------------- ------------------- PAID-IN RETAINED
SHARES AMOUNT SHARES AMOUNT CAPITAL EARNINGS TOTAL
------- ------ ------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR:
BALANCE, December 31,
1994................... 2,000 $6,000 -- $ -- $ -- $ 1,582,438 $ 1,588,438
Add--net income........ -- -- -- -- -- 2,040,116 2,040,116
Deduct--distributions
to shareholders....... -- -- -- -- -- (765,250) (765,250)
------- ------ ------ ----------- ---------- ----------- -----------
BALANCE, December 31,
1995................... 2,000 6,000 -- -- -- 2,857,304 2,863,304
Add--net income for the
period ended
July 19, 1996..... -- -- -- -- -- 2,269,227 2,269,227
Deduct--distributions
to shareholders....... -- -- -- -- -- (881,200) (881,200)
------- ------ ------ ----------- ---------- ----------- -----------
BALANCE, July 19, 1996.. 2,000 6,000 -- -- -- 4,245,331 4,251,331
SUCCESSOR:
BALANCE, July 19, 1996.. 2,000 6,000 -- -- -- 4,245,331 4,251,331
Deduct adjustments to
reflect purchase of
predecessor........... (2,000) (6,000) -- -- -- (4,245,331) (4,251,331)
Add--initial capital
contribution.......... 101,263 1,013 4,000 4,000,000 -- -- 4,001,013
--net income........... -- -- -- -- -- 1,360,520 1,360,520
Deduct--distributions
to members............ -- -- -- -- -- (18,810) (18,810)
------- ------ ------ ----------- ---------- ----------- -----------
BALANCE, December 31,
1996................... 101,263 1,013 4,000 4,000,000 -- 1,341,710 5,342,723
Add--sale of common
units................. 2,000 20 -- -- 77,980 -- 78,000
--sale of preferred
units................. -- -- 1,000 1,000,000 -- -- 1,000,000
--issuance of common
units............... 10,213 102 6,415,199 -- 6,415,301
--deferred
compensation
expense............. -- -- -- -- 48,292 -- 48,292
--net income for the
period ended
September 30, 1997.. -- -- -- -- -- 4,668,403 4,668,403
Deduct--distributions
to common unitholders. -- -- -- -- -- (4,749,493) (4,749,493)
--payment of
preferred dividends
.................... -- -- -- -- -- (571,150) (571,150)
--retirement of
preferred units..... -- -- (5,000) (5,000,000) -- -- (5,000,000)
------- ------ ------ ----------- ---------- ----------- -----------
BALANCE, September 30,
1997 (Unaudited)....... 113,476 $1,135 -- $ -- $6,541,471 $ 689,470 $ 7,232,076
======= ====== ====== =========== ========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-8
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE 165-DAY PERIOD ENDED
DECEMBER 31, 1996, THE 201-DAY PERIOD ENDED JULY 19, 1996, THE YEARS ENDED
DECEMBER 31, 1994 AND 1995, THE NINE MONTHS ENDED SEPTEMBER 30, 1997
AND THE 73-DAY PERIOD ENDED SEPTEMBER 30, 1996
The purchase method of accounting was used to record assets acquired and
liabilities assumed by the Company. Such accounting generally results in
increased depreciation and amortization expense reported in future periods.
Accordingly, the accompanying financial statements of the predecessor and the
Company are not comparable in all material respects since those financial
statements report the financial position, results of operations and cash flows
of these two separate entities.
<TABLE>
<CAPTION>
PREDECESSOR
--------------------------------------
<CAPTION>
SUCCESSOR
-----------------------------------------
201-DAY
PERIOD
YEAR ENDED YEAR ENDED ENDED
DECEMBER 31, DECEMBER 31, JULY 19,
1994 1995 1996
------------ ------------ -----------
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................. $1,074,783 $ 2,040,116 $ 2,269,227
Adjustments to reconcile net income to net
cash provided by operating activities--
Depreciation and amortization.............. 227,754 371,874 274,971
(Gain) loss on fixed asset disposition..... (6,615) 53,392 558
Deferred compensation...................... -- -- --
Provision for bad debts.................... -- -- --
Other...................................... -- (24,490) --
Changes in operating assets and
liabilities--
Decrease (increase) in assets--
Receivables-
Trade.................................... (955,121) (471,335) (1,896,159)
Other.................................... (4,607) (6,512) 22,387
Due from affiliates....................... (20,723) 21,723 --
Inventory................................. (90,025) (75,897) (157,240)
Prepaid expenses.......................... 56,479 (53,009) 93,239
Other..................................... -- (140) 19,259
Increase (decrease) in liabilities-
Accounts payable.......................... 425,382 (249,560) 807,738
Accrued expenses.......................... 53,420 168,575 64,424
Due to affiliates and
stockholders/members..................... 44,800 6,734 (42,650)
---------- ----------- -----------
Net cash provided by operating
activities............................. 805,527 1,781,471 1,455,754
---------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of assets from American Aviation,
Inc., Delta Surveys, and Over the Hill,
net of cash received...................... -- -- --
Purchase of assets from OMNI Geophysical
Corporation, net of cash received......... -- -- --
Purchase of Leonard Chauvin................ -- -- --
Proceeds from disposal of fixed assets..... 10,411 58,138 3,700
Purchase of fixed assets................... (838,970) (1,163,925) (1,438,433)
Other investments.......................... (956) -- --
---------- ----------- -----------
Net cash used in investing activities... (829,515) (1,105,787) (1,434,733)
---------- ----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt... 168,344 514,674 2,771,243
Principal payments on long-term debt....... (211,645) (366,129) (1,134,642)
Net borrowings/(payments) on line of
credit.................................... 805,866 59,897 (1,002,551)
Capital contributions...................... -- -- --
Distributions to stockholders/members...... (628,000) (765,250) (881,200)
Retirement of preferred units.............. -- -- --
---------- ----------- -----------
Net cash provided by (used in) financing
activities............................. 134,565 (556,808) (247,150)
---------- ----------- -----------
NET INCREASE (DECREASE) IN CASH............. 110,577 118,876 (226,129)
CASH, at beginning of year.................. 70,448 181,025 299,901
---------- ----------- -----------
CASH, at end of year........................ $ 181,025 $ 299,901 $ 73,772
========== =========== ===========
CASH PAID FOR INTEREST...................... $ 89,753 $ 163,400 $ 133,278
- --------------------------------------------------
========== =========== ===========
165-DAY 73-DAY PERIOD NINE MONTHS
PERIOD ENDED ENDED ENDED
DECEMBER 31, SEPTEMBER 30, SEPTEMBER 30,
1996 1996 1997
------------- ------------- -------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................. $ 1,360,520 $1,151,131 $ 4,668,403
Adjustments to reconcile net income to net
cash provided by operating activities--
Depreciation and amortization.............. 697,200 229,625 1,639,017
(Gain) loss on fixed asset disposition..... 16,642 (1,000) 28,228
Deferred compensation...................... -- -- 48,292
Provision for bad debts.................... 110,000 -- 150,000
Other...................................... -- -- --
Changes in operating assets and
liabilities--
Decrease (increase) in assets--
Receivables-
Trade.................................... (340,813) (702,469) (5,984,515)
Other.................................... -- 430 (189,668)
Due from affiliates....................... -- -- --
Inventory................................. (302,047) (54,961) (1,425,609)
Prepaid expenses.......................... (639,045) (544,281) (271,248)
Other..................................... (492,489) (241,925) (705,184)
Increase (decrease) in liabilities-
Accounts payable.......................... 76,903 735,436 4,602,104
Accrued expenses.......................... 118,991 92,786 422,667
Due to affiliates and
stockholders/members..................... -- (1,914) (29,471)
------------- ------------- -------------
Net cash provided by operating
activities............................. 605,862 662,858 2,953,016
------------- ------------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of assets from American Aviation,
Inc., Delta Surveys, and Over the Hill,
net of cash received...................... -- -- (1,280,000)
Purchase of assets from OMNI Geophysical
Corporation, net of cash received......... (10,948,278) -- --
Purchase of Leonard Chauvin................ -- -- (668,538)
Proceeds from disposal of fixed assets..... 25,280 8,410 543,461
Purchase of fixed assets................... (2,538,966) (1,661,084) (10,142,235)
Other investments.......................... -- -- --
------------- ------------- -------------
Net cash used in investing activities... (13,461,964) (1,652,674) (11,547,312)
------------- ------------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt... 9,539,627 819,765 23,209,066
Principal payments on long-term debt....... (986,884) (5,909,978) (8,976,316)
Net borrowings/(payments) on line of
credit.................................... 359,767 2,049,422 5,883,606
Capital contributions...................... 4,001,013 4,001,013 1,078,000
Distributions to stockholders/members...... (18,810) -- (5,320,643)
Retirement of preferred units.............. -- -- (5,000,000)
------------- ------------- -------------
Net cash provided by (used in) financing
activities............................. 12,894,713 960,222 10,837,713
------------- ------------- -------------
NET INCREASE (DECREASE) IN CASH............. 38,611 (29,594) 2,279,417
CASH, at beginning of year.................. -- 73,772 38,611
------------- ------------- -------------
CASH, at end of year........................ $ 38,611 $ 44,178 $ 2,318,028
============= ============= =============
CASH PAID FOR INTEREST...................... $ 443,282 $ 152,480 $ 1,127,259
- --------------------------------------------------
============= ============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-9
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO SEPTEMBER 30, 1997 IS UNAUDITED)
1. NATURE OF BUSINESS AND OPERATIONS:
Omni Geophysical, L.L.C. (the Company) was formed in 1996 as a Louisiana
limited liability company. The Company acquired substantially all of the
assets and liabilities of OMNI Geophysical Corporation (predecessor) on July
19, 1996. The acquisition was accounted for as a purchase with the assets
acquired and liabilities assumed recorded at their estimated fair value. The
purchase price of approximately $13,300,000 was financed through the sale of
preferred units for $4,000,000, the proceeds from a $7,000,000 asset-based
loan and a $2,300,000 subordinated note issued to the predecessor. The
allocation of the purchase price to the estimated fair values of assets
acquired and liabilities assumed resulted in goodwill of approximately
$219,000 which is being amortized over a 25-year period on a straight-line
basis. The accompanying financial statements include the predecessor's balance
sheet as of December 31, 1995, and results of operations for the two years
ended December 31, 1995 and 201-day period ended July 19, 1996.
The Company is an oilfield service company specializing in providing an
integrated range of onshore seismic drilling, helicopter support and survey
services to geophysical companies operating in logistically difficult and
environmentally sensitive terrain in the United States. The Company's primary
market is the marsh, swamp, shallow water and contiguous dry land areas along
the U.S. Gulf Coast, where the Company is the leading provider of seismic
drilling services.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Recent Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share,"
which simplifies the standards required under current accounting rules for
computing earnings per share and replaces the presentation of primary earnings
per share and fully diluted earnings per share with a presentation of basic
earnings per share ("basic EPS") and diluted earnings per share ("diluted
EPS"). Basic EPS excludes dilution and is determined by dividing income
available to common stockholders by the weighted average number of shares of
common stock outstanding during the period. Diluted EPS reflects the potential
dilution that could occur if securities and other contracts to issue shares of
common stock were exercised or converted into common stock. Diluted EPS is
computed similarly to fully diluted earnings per share under current
accounting rules. The implementation of SFAS No. 128 will be required in the
fourth quarter of 1997 and is not expected to have a material effect on the
Company's earnings per share as determined under current accounting rules.
Revenue Recognition
The Company recognizes revenues as services are rendered. Revenue from the
Company's drilling operations is recognized on a per hole basis. Once the
Company has drilled and loaded a source point, revenue from the drilling of
such source point is recognized. Similarly, revenue is recognized from the
Company's seismic survey operations when the source or receiving point is
marked by one of the Company's survey crews. The Company's aircraft, which are
usually chartered for a guaranteed minimum number of hours per day, generate
revenue pursuant to a fixed hourly rate. Generally, the Company invoices its
customers twice a month.
F-10
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO SEPTEMBER 30, 1997 IS UNAUDITED)
Accounts Receivable
Trade and other receivables are stated at net realizable value and the
allowance for uncollectible accounts was approximately $375,010 as of
September 30, 1997, $125,000 as of December 31, 1996, and $15,000 as of
December 31, 1995 and 1994. The Company grants credit to its customers on a
short-term basis.
Inventories
Inventories consist of parts and supplies used for drilling equipment and
services. All inventories are valued at lower of cost or market.
Property and Equipment
Property and equipment are stated at cost less accumulated depreciation. The
Company provides for depreciation by charges to operations in amounts
estimated to allocate the cost of the assets over their estimated useful lives
and salvage values as follows:
<TABLE>
<CAPTION>
USEFUL SALVAGE
ASSET CLASSIFICATION LIFE VALUE
-------------------- ---------- -------
<S> <C> <C>
Drilling, field and support equipment.................. 10 years 10%
Shop equipment......................................... 10 years --
Vehicles............................................... 4-10 years --
Helicopters............................................ 10 years 25%
</TABLE>
Additions to property and equipment and major replacements are capitalized.
Gains and losses on dispositions, maintenance, repairs and minor replacements
are reflected in current operations. Drilling equipment which is fabricated is
comprised of direct and indirect costs incurred during fabrication. Costs
include materials and labor consumed during fabrication. Interest is also
capitalized during the fabrication period.
In March 1995, the Financial Accounting Standards Board issued SFAS No. 121,
"Accounting for Impairment of Long-Lived Assets and for Long-Lived Assets to
be Disposed Of." This statement requires that long-lived assets be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying value of an asset may not be realizable. The Company adopted SFAS No.
121 effective January 1, 1996. The adoption of this statement did not have an
effect on the Company's consolidated financial statements.
Income Taxes
The Company is treated as a partnership for income tax purposes. Income
taxes are the responsibility of the individual members. Accordingly, no
provision for income taxes has been made in the accompanying financial
statements.
As discussed in Note 10, the members of the Company will exchange (the
"Share Exchange") all of their common units in the Company (113,476 as of
September 30, 1997) for 12,000,000 shares of common stock of OMNI Energy
Services Corp. ("OMNI"). The Share Exchange will be accounted for as a
reorganization whereby the assets and liabilities transferred will be
accounted for at their historical cost in a manner similar to that in a
pooling-of-interest. OMNI will then be subject to federal and state income
taxes. This will result in OMNI providing income taxes beginning in the fourth
quarter of 1997.
The pro forma provision for income taxes is the result of the application of
a combined federal and state income tax rate (40%) to income before income
taxes.
F-11
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO SEPTEMBER 30, 1997 IS UNAUDITED)
Unaudited Pro Forma September 30, 1997 Balance Sheet Data and Unaudited Pro
Forma Earnings Per Share
The pro forma financial information reflects (i) the Share Exchange, and
(ii) the distribution by the Company to its members all of its retained
earnings, approximately $689,000 as of September 30, 1997. The unaudited pro
forma balance sheet data as of September 30, 1997, reflects the effects of the
above transactions as if they had occurred as of that date. The unaudited pro
forma balance sheet data should not be considered indicative of actual balance
sheet data subsequent to such transactions. The pro forma weighted average
number of shares of common stock, for all periods presented, gives effect to
the Share Exchange and the exercise of 118,018 options granted outside of the
Company's stock incentive plan (Note 9).
3. LONG-TERM DEBT:
Long-term debt consists of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
-------------------- SEPTEMBER 30,
1995 1996 1997
-------- ----------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Notes payable to a finance company, variable
interest rate (8.6% at September 30, 1997)
with monthly principal and interest
payments of $82,611; maturing December 2001
to May 2002; secured by various property
and equipment.............................. $ -- $ 1,340,945 $ 4,739,854
Note payable to a finance company, variable
interest rate (9.4% at September 30, 1997)
with monthly principal payments of
$116,667; maturing July 2001; secured by
various property and equipment............. -- 6,416,667 6,244,992
Notes payable to finance companies, interest
payable at 8.99% with varying maturities to
September 1999, to finance insurance
premiums................................... 124,301 543,662 859,139
Note payable to an individual, monthly
payments of $3,000 through April 1, 2001... -- 150,000 126,000
Subordinated promissory note payable to
shareholder, interest payable at interest
rates ranging from 7.7% to 9.1% (8.5% at
September 30, 1997), quarterly principal
payments beginning in March 1997 of
$75,000; unsecured; due June 2001.......... -- 2,058,355 1,908,355
Notes payable to various banks, interest
rates at 9%, due on demand and, if no
demand is made, maturing from September
1997 to June 2001, collateralized by
vehicles and equipment..................... 322,261 449,007 768,411
Note payable to a bank with floating
interest rate based on the prime rate, plus
2.25% (11% at December 31, 1995), due in
monthly installments of $9,084, including
interest, through November 2001,
collateralized by property, equipment,
inventory, accounts receivable and a key
man life insurance policy.................. 409,198 -- --
Note payable to a company; annual payments
of $40,000 through March 2000.............. -- -- 120,000
Note payable to a bank, interest payable at
8.5%, maturing January 2000................ -- -- 563,267
Note payable to a bank with interest payable
at LIBOR plus 1.00%........................ -- -- 10,000,000
Note payable to a bank, variable interest
rate (9% at September 30, 1997) with
monthly principal payments of $69,792,
maturing August 2002....................... -- -- 6,630,208
Note payable to a shareholder; interest
payable at 8.5%............................ -- -- 1,000,000
-------- ----------- -----------
Total....................................... 855,760 10,958,636 32,960,226
Less: Current maturities.................... 514,294 2,500,409 4,751,173
-------- ----------- -----------
Long-term debt less current maturities...... $341,466 $ 8,458,227 $28,209,053
======== =========== ===========
</TABLE>
F-12
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO SEPTEMBER 30, 1997 IS UNAUDITED)
Annual maturities of long-term debt during each of the following years ended
December 31, are as follows:
<TABLE>
<S> <C>
1997.......................................................... $ 2,500,409
1998.......................................................... 2,271,860
1999.......................................................... 2,155,947
2000.......................................................... 2,029,910
2001.......................................................... 1,442,155
Thereafter.................................................... 558,355
-----------
$10,958,636
===========
</TABLE>
The subordinated note payable requires in addition to the $75,000 quarterly
principal payments, additional principal payments equal to the lower of
$700,000 or one-third of the Company's net income in excess of $4,000,000 if
the Company's net income exceeds $4,000,000 in any year.
The estimated fair value of long-term debt, based on borrowing rates
currently available to the Company for notes with similar terms and average
maturities, approximated the carrying value as of December 31, 1996 and 1995.
During the 165-day period ended December 31, 1996, interest in the amount of
approximately $44,000 was capitalized to drilling equipment. There was no
interest capitalized in the 201-day period ended July 19, 1996, or for the
years ended December 31, 1994 and 1995.
4. LINES OF CREDIT:
Lines of credit consist of the following:
<TABLE>
<CAPTION>
DECEMBER 31,
--------------------- SEPTEMBER 30,
1995 1996 1997
---------- ---------- -------------
(UNAUDITED)
<S> <C> <C> <C>
Line of credit agreement with a bank up to
the lower of $2,500,000 or eligible
accounts receivable; interest rate based
on Chase Manhattan prime rate plus 1.25%
(9.75% at December 31, 1995), payable upon
demand, collateralized by accounts
receivable, equipment, and unlimited
personal guarantees of the members of the
Company................................... $ 748,272 $ -- $ --
Line of credit agreement with a bank up to
$500,000; interest rate based on Chase
Manhattan prime rate plus 1.75% (10.25% at
December 31, 1995), due on demand, or if
no demand is made, in nine monthly
installments of $9,000 including interest,
beginning November 20, 1995 and one
irregular last payment, collateralized by
equipment, property, inventory, accounts
receivable, and a key man life insurance
policy.................................... 254,279 -- --
Revolving line of credit agreement with a
bank up to the lower of $8,000,000 or 80%
of eligible accounts receivable; interest
rate based on Chase Manhattan prime rate
plus 0.5%, collateralized by accounts
receivable, certain equipment of the
Company and personal guarantees of the
members of the Company.................... -- 2,116,394 8,000,000
---------- ---------- ----------
Total...................................... $1,002,551 $2,116,394 $8,000,000
========== ========== ==========
</TABLE>
5. RELATED PARTY TRANSACTIONS:
During the 165-day period ended December 31, 1996, the Company purchased a
Bell 206B-III helicopter from American Aviation Incorporated, an entity
affiliated through common ownership, for $526,000.
F-13
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO SEPTEMBER 30, 1997 IS UNAUDITED)
6. CUSTOMER CONCENTRATION:
Substantially all of the Company's revenues are derived from companies in
the geophysical industry. During the nine months ended September 30, 1997,
four customers accounted for approximately 67% (28%, 15%, 13% and 11%,
respectively) of the Company's total revenues. Included in accounts receivable
as of September 30, 1997, are amounts owed from one of these customers
totaling approximately $1,895,000, which was approximately 15% of total
accounts receivable. The weighted average days outstanding of this account was
approximately 42 days at September 30, 1997.
During the 165-day period ended December 31, 1996, four customers accounted
for approximately 67% (24%, 21%, 11% and 11%, respectively) of the Company's
total revenues. Included in accounts receivable as of December 31, 1996, are
amounts owed from one of these customers totaling approximately $1,069,000,
which was approximately 23% of total accounts receivable. The weighted average
days outstanding of this account was approximately 71 days at December 31,
1996.
During the 201-day period ended July 19, 1996, four customers accounted for
approximately 72% (26%, 16%, 15% and 15%, respectively) of the predecessor's
total revenues for that period. During the years ended December 31, 1995 and
1994, four customers accounted for approximately 88% (35%, 24%, 16% and 13%,
respectively) of the predecessor's total revenues. Included in accounts
receivable as of December 31, 1995, are amounts owed from one of these
customers totaling approximately $2,047,000, which was approximately 83% of
total accounts receivable. The weighted average days outstanding of this
account was approximately 67 days at December 31, 1995.
7. COMMITMENTS AND CONTINGENCIES:
In connection with the acquisition of the assets of OMNI Geophysical
Corporation discussed in Note 1, the Company also entered into a five-year
lease agreement with OMNI Geophysical Corporation to lease the main office
facility. The monthly lease payment under the agreement is $5,000 through July
2001. The agreement also allows the Company to renew the lease for two
additional five-year periods.
The Company carries workers compensation insurance coverage with a
deductible amount of $200,000 per incident for claims incurred in 1996. This
deductible was raised to $250,000 in 1997. Management of the Company is not
aware of any significant workers compensation claim or an incurred but not
reportable claim as of September 30, 1997,
8. PREFERRED UNITS:
In connection with the Company's acquisition of OMNI Geophysical Corporation
on July 19, 1996 (Note 1), the Company issued 4,000, 10% cumulative
participating preferred units in the 165-day period ended December 31, 1996
and, on February 19, 1997, 1,000, 15% cumulative participating preferred
units. On September 30, 1997, the Company redeemed the outstanding preferred
units at a redemption price of $1,000 per unit and paid the holders of the
preferred units cumulative unpaid dividends totalling approximately $391,000.
Cumulative unpaid dividends totaled approximately $180,000 at December 31,
1996.
F-14
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO SEPTEMBER 30, 1997 IS UNAUDITED)
9. STOCK OPTIONS:
In April and June 1997, the Company issued options to purchase 516 and 600
common units, respectively, (equivalent to 54,567 and 63,451 shares of Common
Stock calculated on the pro forma share basis described in Note 2). The
exercise price of each option is $2.28 (on the pro forma share basis described
in Note 2) and expire if unexercised after ten years. The Company will
recognize pro rata over the three-year vesting period approximately $432,000
of compensation expense related to these options. The deferred compensation to
be recognized by the Company is based on the estimated fair value of the
Company's common units on the date of issuance. Compensation expense related
to the options totaled approximately $48,000 for the nine months ended
September 30, 1997.
The Company plans to account for employee stock-based compensation using the
intrinsic value method prescribed in Accounting Principles Board (APB) Opinion
No. 25, "Accounting for Stock Issued to Employees." Accordingly, the
provisions of SFAS No. 123, "Accounting for Stock-Based Compensation," will
not affect the Company's reported results of operations and will be included
as separate pro forma disclosures only.
The Company has entered into employment agreements with its key executive
officers which include respective base salaries and terms of employment.
10. SUBSEQUENT EVENTS:
The members of the Company intend to undertake the Share Exchange as
described in Note 2 to facilitate an initial public offering of the common
stock of OMNI during 1997. Proceeds are intended to be used to retire
outstanding debt and for general corporate purposes, including acquisitions,
capital expenditures and working capital. There can be no assurance, however,
that the offering will occur or that the proceeds, if any, will be sufficient
for their intended use.
11. ACQUISITIONS:
On March 21, 1997, the Company acquired the assets and assumed certain
liabilities of Delta Surveys, Inc., a surveying business, for $180,000 in cash
and a $120,000, 8.5%, three year promissory note. This acquisition was
accounted for using the purchase method of accounting. The excess of cost of
approximately $200,000 over the estimated fair value of the net assets
acquired is included in goodwill and is being amortized over twenty-five years
using the straight-line method.
Effective July 1, 1997, the Company acquired substantially all of the assets
and liabilities of American Aviation Incorporated (American Aviation), a
company that operates aircraft for various seismic drilling support services.
In consideration for the acquisition of substantially all the assets of
American Aviation, the Company issued to American Aviation 10,213 common units
of the Company (equivalent to 1,080,017 shares of Common Stock) valued at
approximately $6.4 million and a $1.0 million promissory note bearing interest
at 8.5%, paid $500,000 cash and assumed approximately $6.7 million in debt.
The excess cost of approximately $6.7 million over the estimated fair value of
the net assets acquired is included in goodwill and is being amortized over
twenty-five years using the straight-line method.
F-15
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO SEPTEMBER 30, 1997 IS UNAUDITED)
The following summarized unaudited income statement data reflects the impact
the above acquisitions would have had on the Company's results of operations
as if the American Aviation transaction had taken place on January 1, 1996.
<TABLE>
<CAPTION>
UNAUDITED PRO-FORMA
RESULTS FOR THE NINE
MONTHS ENDED SEPTEMBER
30,
-----------------------
1996 1997
----------- -----------
<S> <C> <C>
Gross Revenue..................................... $17,120,310 $36,335,126
=========== ===========
Net Income........................................ $ 2,256,354 $ 2,479,204
=========== ===========
</TABLE>
Effective July 1, 1997, the Company acquired Leonard J. Chauvin, Jr., Inc.
("Chauvin"), a surveying company, for $788,000 cash and up to an additional
$100,000 based on the future earnings of Chauvin through August 31, 1999. The
excess cost of approximately $650,000 over the estimated fair value of the net
assets acquired is included in goodwill and is being amortized over twenty-
five years using the straight-line method.
Effective September 1, 1997, the Company acquired substantially all the
assets of O.T.H. Exploration Services, Inc., a seismic rock drilling company,
headquartered in the Rocky Mountain region. The aggregate purchase price was
$600,000 cash, which approximated the fair value of the net assets acquired.
The operating results of each of the acquired companies have been included
in consolidated statements of income from the effective dates of acquisition.
On November 3, 1997, the Company entered into a binding agreement to acquire
American Helicopter Drilling, Inc. ("American Helicopter") for $1,050,000 in
cash and $2.5 million in common stock at the initial offering price. American
Helicopter engages in seismic drilling services in the Rocky Mountain area and
in the fabrication, export and servicing of heli-portable and other seismic
drilling units. On November 1, 1997, the Company entered into a binding
agreement to acquire Fournier & Associates ("Fournier") for $206,000 in cash
and $544,000 in common stock at the initial offering price. Fournier is a
seismic survey company operating four crews in the Transition Zone and
adjacent areas. The acquisition of American Helicopter and Fournier are
anticipated to occur in December 1997. However, there can be no assurance
these acquisitions will be consummated.
F-16
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
American Aviation Incorporated:
We have audited the accompanying balance sheets of American Aviation
Incorporated (a Louisiana corporation) as of December 31, 1996 and 1995, and
the related statements of income, changes in equity and cash flows for the
years ended December 31, 1996 and for the period from inception (November 1,
1995) to December 31, 1995. 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. These 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 financial statements referred to above present fairly,
in all material respects, the financial position of American Aviation
Incorporated as of December 31, 1996 and 1995, and the results of its
operations and cash flows for the year ended December 31, 1996 and for the
period from inception (November 1, 1995) to December 31, 1995, in conformity
with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
July 11, 1997
F-17
<PAGE>
AMERICAN AVIATION INCORPORATED
BALANCE SHEETS
AS OF DECEMBER 31, 1996 AND 1995 AND JUNE 30, 1997
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30,
ASSETS 1995 1996 1997
------ ------------ ------------ -----------
(UNAUDITED)
<S> <C> <C> <C>
CURRENT ASSETS:
Cash................................... $ 4,115 $ 104,634 $ --
Accounts receivable, net allowance for
doubtful accounts of $215,000 at June
30, 1997.............................. 278 1,222,782 1,316,094
Deposits and prepaid leases (Note 3)... 9,000 1,491,286 42,655
Inventory.............................. -- -- 184,999
Prepaid insurance...................... 10,814 87,772 40,546
Amounts due from employees............. -- 25,316 33,952
-------- ---------- ----------
Total current assets................. 24,207 2,931,790 1,618,246
FIXED ASSETS:
Aircraft............................... -- 1,765,922 5,348,073
Equipment.............................. -- 43,731 125,666
Autos and trucks....................... 20,743 192,307 255,725
Office equipment....................... -- 5,830 46,427
Less: Accumulated depreciation......... (1,037) (85,372) (243,585)
-------- ---------- ----------
Total fixed assets................... 19,706 1,922,418 5,532,306
OTHER ASSETS............................. 565 446 26,115
-------- ---------- ----------
Total assets......................... $ 44,478 $4,854,654 $7,176,667
======== ========== ==========
<CAPTION>
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Accounts payable....................... $ -- $ 128,759 $ 385,771
Accrued interest....................... -- 26,492 78,926
Accrued payroll and payroll taxes...... -- 63,048 76,855
Current maturities of long-term debt
(Note 4).............................. 2,341 308,754 636,700
-------- ---------- ----------
Total current liabilities............ 2,341 527,053 1,178,252
LONG-TERM DEBT, less current maturities
(Note 4)................................ 13,402 897,052 2,703,106
NOTES PAYABLE--SHAREHOLDER (Note 5)...... 49,100 3,020,000 3,370,000
-------- ---------- ----------
Total liabilities.................... 64,843 4,444,105 7,251,358
-------- ---------- ----------
SHAREHOLDERS' EQUITY:
Common stock, no par value, 1,000
shares authorized, issued and
outstanding........................... 1,000 1,000 1,000
Retained earnings (deficit)............ (21,365) 409,549 (75,691)
-------- ---------- ----------
Total shareholders' equity........... (20,365) 410,549 (74,691)
-------- ---------- ----------
Total liabilities and shareholders'
equity.............................. $ 44,478 $4,854,654 $7,176,667
======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-18
<PAGE>
AMERICAN AVIATION INCORPORATED
STATEMENTS OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996, THE PERIOD FROM INCEPTION
(NOVEMBER 1, 1995) THROUGH DECEMBER 31, 1995,
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1995 1996 1996 1997
------------ ------------ ----------- ----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Operating revenues........... $ -- $3,311,563 $693,869 $2,346,012
Gain on sale of helicopter
(Note 5).................... -- 220,644 -- --
-------- ---------- -------- ----------
Total gross revenues....... -- 3,532,207 693,869 2,346,012
Operating expenses........... 12,300 2,622,280 439,358 2,068,617
-------- ---------- -------- ----------
Gross profit (loss)........ (12,300) 909,927 254,511 277,395
General and administrative
expenses.................... 9,065 318,143 27,048 499,789
-------- ---------- -------- ----------
Income (loss) from
operations................ (21,365) 591,784 227,463 (222,394)
Interest expense............. -- 160,870 25,299 192,846
-------- ---------- -------- ----------
Net income (loss).......... $(21,365) $ 430,914 $202,164 $ (415,240)
======== ========== ======== ==========
UNAUDITED PRO FORMA DATA
(Note 2):
Net income (loss), reported
above..................... $(21,365) $ 430,914 $202,164 $ (415,240)
Pro forma benefit
(provision) for income
taxes related to
operations as an S Corp... 9,000 (172,000) (81,000) 166,000
-------- ---------- -------- ----------
Pro forma net income
(loss).................... $(12,365) $ 258,914 $121,164 $ (249,240)
======== ========== ======== ==========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-19
<PAGE>
AMERICAN AVIATION INCORPORATED
STATEMENTS OF CHANGES IN EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1996, THE PERIOD FROM INCEPTION
(NOVEMBER 1, 1995) THROUGH DECEMBER 31, 1995,
AND THE SIX MONTHS ENDED JUNE 30, 1997
<TABLE>
<CAPTION>
COMMON STOCK RETAINED
------------- EARNINGS
SHARES AMOUNT (DEFICIT) TOTAL
------ ------ --------- --------
<S> <C> <C> <C> <C>
INITIAL CAPITAL CONTRIBUTIONS, November 1,
1995......................................... 1,000 $1,000 $ -- $ 1,000
Net loss, period from inception (November 1,
1995) to December 31, 1995................. -- -- (21,365) (21,365)
----- ------ -------- --------
BALANCE, December 31, 1995.................... 1,000 1,000 (21,365) (20,365)
Net income for the year ended December 31,
1996....................................... -- -- 430,914 430,914
----- ------ -------- --------
BALANCE, December 31, 1996.................... 1,000 1,000 409,549 410,549
Net loss for the six months ended June 30,
1997 (Unaudited)........................... -- -- (415,240) (415,240)
Distribution to shareholders (Unaudited).... -- -- (70,000) (70,000)
----- ------ -------- --------
BALANCE, June 30, 1997 (Unaudited)............ 1,000 $1,000 $(75,691) $(74,691)
===== ====== ======== ========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-20
<PAGE>
AMERICAN AVIATION INCORPORATED
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1996, THE PERIOD FROM INCEPTION
(NOVEMBER 1, 1995) THROUGH DECEMBER 31, 1995,
AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 1996
<TABLE>
<CAPTION>
DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30,
1995 1996 1996 1997
------------ ------------ ----------- -----------
(UNAUDITED) UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income (loss)......... $(21,365) $ 430,914 $ 202,164 $ (415,240)
Adjustments to reconcile
net income to net cash
provided by operating
activities:
Depreciation and
amortization............ 1,056 98,367 14,371 158,213
Gain on fixed asset
disposition............. -- (220,644) -- --
Changes in operating
assets and liabilities:
Decrease (increase) in
assets:
Receivables.............. (278) (1,222,504) (493,039) (93,312)
Deposits and prepaid
leases.................. (9,000) (1,482,286) (25,000) 1,448,631
Prepaid insurance....... (10,814) (76,958) (27,037) 47,226
Inventory............... -- (184,999)
Other................... (584) (25,316) (26,370) (34,305)
Increase in liabilities:
Accounts payable........ -- 128,759 146,921 257,012
Accrued expenses........ -- 89,540 27,595 66,241
Due to stockholder...... 49,100 2,970,900 430,000 350,000
-------- ----------- ----------- -----------
Net cash provided by
operating activities.. 8,115 690,772 249,605 1,599,467
-------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING
ACTIVITIES:
Proceeds from disposal of
fixed assets............. -- 485,000 -- --
Purchase of fixed assets.. (20,743) (2,265,316) (1,099,027) (3,768,101)
-------- ----------- ----------- -----------
Net cash used in
investing activities.. (20,743) (1,780,316) (1,099,027) (3,768,101)
-------- ----------- ----------- -----------
CASH FLOWS FROM FINANCING
ACTIVITIES:
Additions to long-term
debt..................... 15,743 1,557,354 745,456 2,152,088
Principal payments on
long-term debt........... -- (467,291) (50,149) (1,453,898)
Net borrowings on line of
credit................... -- 100,000 150,000 1,435,810
Shareholder contributions
(distribution)........... 1,000 -- -- (70,000)
-------- ----------- ----------- -----------
Net cash provided by
financing activities.. 16,743 1,190,063 845,307 2,064,000
-------- ----------- ----------- -----------
NET INCREASE (DECREASE) IN
CASH...................... 4,115 100,519 (4,115) (104,634)
CASH, at beginning of peri-
od........................ -- 4,115 4,115 104,634
-------- ----------- ----------- -----------
CASH, at end of period..... $ 4,115 $ 104,634 $ -- $ --
======== =========== =========== ===========
CASH PAID FOR INTEREST..... $ -- $ 134,378 $ 19,420 $ 127,166
======== =========== =========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
F-21
<PAGE>
AMERICAN AVIATION INCORPORATED
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996 AND 1995
(DATA WITH RESPECT TO JUNE 30, 1997 AND 1996 IS UNAUDITED)
1. NATURE OF BUSINESS AND OPERATIONS:
American Aviation Incorporated (the Company) was formed on November 1, 1995,
as a Louisiana corporation. The Company primarily operates aircraft for
various seismic drilling support services to the geophysical segment of the
oil and gas exploration and production industry.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Use of Estimates in the Preparation of Financial Statements
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and the
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenue and expenses during the
reporting period. Actual results could differ from those estimates.
Revenue Recognition
The Company recognizes revenues as services are rendered. The Company's
aircraft, which are usually chartered for a guaranteed minimum number of hours
per day, generate revenue pursuant to a fixed hourly rate.
Accounts Receivable
Accounts receivable are stated at net realizable value. The Company grants
credit to its customers on a short-term basis.
Fixed Assets
Aircraft, vehicles and other equipment are carried at cost. Major additions,
betterments, and renewals are capitalized. Maintenance and repairs, including
major overhauls, are charged to earnings as incurred. Depreciation and
amortization to estimated residual values are computed on the straight-line
basis over the estimated useful lives and salvage values as follows:
<TABLE>
<CAPTION>
USEFUL SALVAGE
ASSET CLASSIFICATION LIFE VALUE
-------------------- --------- -------
<S> <C> <C>
Aircraft................................................ 10 years 25%
Equipment............................................... 5-7 years --
Autos and trucks........................................ 5 years --
Office Equipment........................................ 5-7 years --
</TABLE>
Long-lived assets to be held and used are reviewed for impairment whenever
events or changes in circumstances indicate that the related carrying amount
may not be recoverable. When required, impairment losses on assets to be held
and used are recognized based on the fair value of the asset.
Income Taxes
The Company is treated as a Subchapter S corporation for income tax
purposes. Income taxes are the responsibility of the individual members.
Accordingly, no provision for income taxes has been made in the accompanying
financial statements.
F-22
<PAGE>
AMERICAN AVIATION INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1995
(DATA WITH RESPECT TO JUNE 30, 1997 AND 1996 IS UNAUDITED)
As discussed in Note 8, the Company was acquired by OMNI Geophysical, L.L.C.
(OMNI Geophysical) on July 1, 1997. The members of OMNI Geophysical will
exchange (the Share Exchange) all of their common units in OMNI Geophysical
(103,263 as of June 30, 1997) for 10,919,983 shares of common stock of newly-
formed OMNI Energy Services Corp. (OMNI). The Share Exchange will be completed
in order to facilitate an initial public offering of the common stock of OMNI
in 1997. Upon completion of the Share Exchange, OMNI Geophysical will cease to
be treated as a partnership for federal and state income tax purposes, and
will become subject to federal and state income taxes. This will result in
OMNI providing income taxes beginning in the fourth quarter of 1997.
The pro forma provision for income taxes is the result of the application of
a combined federal and state rate (40%) to income before taxes.
3. DEPOSITS AND PREPAID LEASES:
Included in deposits and prepaid leases is a lease deposit on a King-Air 300
airplane totaling approximately $1,401,500 at December 31, 1996. The plane was
subsequently purchased for $1,323,750 and placed into fixed assets in February
1997.
4. LONG-TERM DEBT:
Long-term debt is summarized as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
------------------ JUNE 30,
1995 1996 1997
------- ---------- -----------
(UNAUDITED)
<S> <C> <C> <C>
$400,000 line of credit with a bank, interest
payable at prime plus 1.5% (9.75% at June 30,
1997).......................................... $ -- $ 100,000 $ 225,370
Notes payable to banks, interest payable at
8.25% to 10% and 8.75% for 1996 and 1995,
respectively, payable in varying installments
to November 2003, and December 1998, for 1996
and 1995, respectively, secured by aircraft and
automobiles.................................... 15,743 1,048,879 3,106,304
Note payable to finance company to finance
insurance premiums, interest rate of 7.76%, due
July 1997...................................... -- 56,927 8,132
------- ---------- ----------
15,743 1,205,806 3,339,806
Less current maturities......................... 2,341 308,754 636,700
------- ---------- ----------
$13,402 $ 897,052 $2,703,106
======= ========== ==========
</TABLE>
Annual maturities of long-term debt during each of the following years ended
December 31, are as follows:
<TABLE>
<S> <C>
1997.......................................................... $ 308,754
1998.......................................................... 167,150
1999.......................................................... 160,653
2000.......................................................... 139,208
2001.......................................................... 154,160
Thereafter.................................................... 275,881
----------
$1,205,806
==========
</TABLE>
F-23
<PAGE>
AMERICAN AVIATION INCORPORATED
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996 AND 1995
(DATA WITH RESPECT TO JUNE 30, 1997 AND 1996 IS UNAUDITED)
5. RELATED PARTY TRANSACTIONS:
Notes payable to shareholder represent advances made by a shareholder to the
Company to fund working capital requirements. The advance bears interest at 8
percent, payable quarterly, with varying maturities through December 1997.
Accrued interest payable at December 31, 1996 is approximately $20,000.
During the year, the Company purchased a Bell 206B-III helicopter. The
aircraft was sold to OMNI Geophysical LLC, a company affiliated through common
ownership, for $526,000, resulting in a gain to the Company of $220,644.
6. CUSTOMER CONCENTRATION:
Substantially all of the Company's revenues are derived from customers in
the geophysical industry. During the fiscal year ended December 31, 1996, five
customers accounted for approximately 86% (26%, 25%, 13%, 11%, and 11%,
respectively) of the Company's total revenues. Included in accounts receivable
are amounts owed from these five customers totaling approximately $1,089,000,
which is approximately 89% of total receivables.
7. OPERATING LEASES:
The Company leases aircraft for use on its jobs under agreements classified
as operating leases. The leases are short-term in nature. The Company also
leases a hangar and office space at the Lafayette Regional Airport under an
operating lease.
Operating lease expense in 1996 was approximately $885,000. The future
minimum lease payments are $182,126 and $50,000 for the years ended December
31, 1997 and 1998, respectively.
8. SUBSEQUENT EVENTS:
Subsequent to year end, the Company was purchased by OMNI Geophysical,
L.L.C. The combination was accounted for under the purchase method, and the
effective date of the purchase was July 1, 1997.
F-24
<PAGE>
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Set forth in the following pages are the unaudited pro forma condensed
consolidated statements of income of OMNI Geophysical for the nine months
ended September 30, 1997 and the year ended December 31, 1996 and the
unaudited pro forma condensed consolidated balance sheet of OMNI Geophysical
as of September 30, 1997. The balance sheet gives effect to (i) the Share
Exchange, (ii) the LLC Distribution and (iii) this Offering, as if all such
events had occurred on September 30, 1997. The statements of income reflect
the historical financial results of OMNI Geophysical giving effect to (i) the
OGC Acquisition, (ii) the acquisition of substantially all the assets of
American Aviation, (iii) the change in tax status of OMNI Geophysical, OGC and
American Aviation from a non-taxable entity to a taxable entity, (iv) the
Share Exchange, (v) the Preferred Unit Repurchase, (vi) the LLC Distribution
and (vii) this Offering, as if all such events had occurred on January 1,
1996. Other recent or pending acquisitions are not included herein on a pro
forma basis as the impact on the historical financial results of OMNI
Geophysical for the year ended December 31, 1996 and the period ended
September 30, 1997 are not significant. The acquisition of substantially all
the assets of American Aviation was accounted for using the purchase method of
accounting.
The following unaudited pro forma condensed consolidated financial
statements should be read in conjunction with the historical consolidated
financial statements of the Company and American Aviation and the related
notes thereto included elsewhere herein. The following pro forma information
is not necessarily indicative of the results that might have occurred had the
transactions taken place at the beginning of any periods specified and is not
intended to be a projection of future results.
F-25
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------- PRO FORMA
OMNI AMERICAN PRO FORMA AS ADJUSTED
GEOPHYSICAL, AVIATION ACQUISITION NINE MONTHS
L.L.C. INCORPORATED AND ENDED
SEPTEMBER 30, JUNE 30, OFFERING SEPTEMBER 30,
1997 1997 ADJUSTMENTS 1997
------------- ------------ ----------- -------------
<S> <C> <C> <C> <C>
Operating revenue....... $33,989,114 $2,346,012 $ -- $36,335,126
Operating expenses...... 24,805,772 2,068,617 37,749 (a) 26,912,138
----------- ---------- ----------- -----------
Gross profit............ 9,183,342 277,395 (37,749) 9,422,988
Selling, general and
administrative
expenses............... 3,301,117 499,789 134,037 (b) 3,966,780
31,837 (c)
----------- ---------- ----------- -----------
Operating income (loss). 5,882,225 (222,394) (203,623) 5,456,208
Interest expense........ 1,226,110 192,846 (1,418,956)(d) 555,248
555,248 (e)
Other income............ 12,288 -- -- 12,288
----------- ---------- ----------- -----------
Pro forma income (loss)
before income tax
expense................ 4,668,403 (415,240) 660,085 4,913,248
Pro forma income tax
(expense) benefit...... (1,867,000)(f) 166,000 (f) (1,965,000)(f)
----------- ---------- -----------
Pro forma net income
(loss)................. $ 2,801,403 $ (249,240) $ 2,948,248
=========== ========== ===========
Pro forma net income per
share.................. $ 0.22 $ 0.19
=========== ===========
Pro forma weighted
average number of
common shares
outstanding............ 10,903,058 15,483,075(g)
</TABLE>
F-26
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE YEAR ENDED DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------ ------------
OMNI OMNI
GEOPHYSICAL GEOPHYSICAL, AMERICAN
CORP. L.L.C. ADJUSTMENTS AS ADJUSTED AVIATION PRO FORMA
201-DAY 165-DAY TO COMBINE FOR THE YEAR INCORPORATED ACQUISITION
PERIOD ENDED PERIOD ENDED PREDECESSOR ENDED YEAR ENDED AND
JULY 19, DECEMBER 31, AND DECEMBER 31, DECEMBER 31, OFFERING
1996 1996 SUCCESSOR 1996 1996 ADJUSTMENTS
------------ ------------ ----------- ------------ ------------ -----------
<S> <C> <C> <C> <C> <C> <C>
Operating revenue....... $10,020,259 $10,942,423 $ -- $20,962,682 $3,532,207 $ (220,644)(h)
Operating expenses...... 6,809,823 8,114,135 236,026 (i) 15,159,984 2,622,280 12,351 (a)
----------- ----------- --------- ----------- ---------- -----------
Gross profit............ 3,210,436 2,828,288 (236,026) 5,802,698 909,927 (232,995)
Selling, general and
administrative
expenses............... 792,866 1,049,851 -- 1,842,717 318,143 268,074 (b)
194,102 (c)
----------- ----------- --------- ----------- ---------- -----------
Operating income........ 2,417,570 1,778,437 (236,026) 3,959,981 591,784 (695,171)(d)
Interest expense........ 150,552 437,137 347,928 (j) 935,617 160,870 (1,096,487)(d)
740,331 (e)
Other income............ 2,209 19,220 -- 21,429 -- --
----------- ----------- --------- ----------- ---------- -----------
Pro forma income before
income tax expense..... 2,269,227 1,360,520 (583,954) 3,045,793 430,914 (339,015)
Pro forma income tax
expense................ (908,000)(f) (544,000)(f) (172,000)(f)
----------- ----------- ----------
Pro forma net income.... $ 1,361,227 $ 816,520 $ 258,914
=========== =========== ==========
Pro forma net income per
share.................. $ 0.06
===========
Pro forma weighted
average number of
common shares
outstanding............ 10,779,878
<CAPTION>
PRO FORMA AS
ADJUSTED
YEAR ENDED
DECEMBER 31,
1996
----------------
<S> <C>
Operating revenue....... $24,274,245
Operating expenses...... 17,794,615
----------------
Gross profit............ 6,479,630
Selling, general and
administrative
expenses............... 2,623,036
----------------
Operating income........ 3,856,594
Interest expense........ 740,331
Other income............ 21,429
----------------
Pro forma income before
income tax expense..... 3,137,692
Pro forma income tax
expense................ (1,255,000)(f)
----------------
Pro forma net income.... $ 1,882,692
================
Pro forma net income per
share.................. $ 0.12
================
Pro forma weighted
average number of
common shares
outstanding............ 15,359,895(g)
</TABLE>
F-27
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
OMNI PRO FORMA
GEOPHYSICAL, OFFERING PRO FORMA
ASSETS L.L.C. ADJUSTMENTS AS ADJUSTED
------ ------------ ----------- -----------
<S> <C> <C> <C>
CURRENT ASSETS:
Cash................................ $ 2,318,028 $44,930,000 (k) $16,533,802
(4,751,173)(l)
(17,963,053)(l)
(8,000,000)(l)
Accounts receivable................. 12,315,714 -- 12,315,714
Inventory........................... 2,316,748 -- 2,316,748
Other............................... 1,069,258 -- 1,069,258
----------- ----------- -----------
Total current assets................ 18,019,748 14,215,774 32,235,522
PROPERTY AND EQUIPMENT:
Land, buildings and improvements.... 457,821 -- 457,821
Drilling, field and support
equipment.......................... 18,607,158 -- 18,607,158
Shop equipment...................... 214,267 -- 214,267
Aircraft............................ 7,542,606 -- 7,542,606
Vehicles............................ 2,853,771 -- 2,853,771
Construction in progress............ 1,641,175 -- 1,641,175
Accumulated depreciation............ (2,161,271) -- (2,161,271)
----------- ----------- -----------
Total property and equipment........ 29,155,527 -- 29,155,527
OTHER ASSETS:
Goodwill, net of amortization....... 7,594,586 -- 7,594,586
Other............................... 1,095,890 -- 1,095,890
----------- ----------- -----------
Total other assets.................. 8,690,476 -- 8,690,476
----------- ----------- -----------
Total assets........................ $55,865,751 $14,215,774 $70,081,525
=========== =========== ===========
<CAPTION>
LIABILITIES AND EQUITY
----------------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term
debt............................... $ 4,751,173 $(4,751,173)(l) $ --
Accounts payable.................... 6,316,843 -- 6,316,843
Accrued expenses.................... 1,356,606 -- 1,356,606
----------- ----------- -----------
Total current liabilities........... 12,424,622 (4,751,173) 7,673,449
LONG-TERM LIABILITIES:
Long-term debt, less current
maturities......................... 28,209,053 689,470 (m) 10,935,470
(17,963,053)(l)
Revolving line of credit............ 8,000,000 (8,000,000)(l) --
EQUITY:
Preferred units -- -- --
Common units 1,135 (1,135)(n) --
Additional paid-in capital 6,541,471 (4,070,000)(k) 51,317,606
48,965,000 (k)
(118,865)(n)
Common stock -- 35,000 (k) 155,000
120,000 (n)
Retained earnings 689,470 (689,470)(m) --
----------- ----------- -----------
Total equity........................ 7,232,076 44,240,530 51,472,606
----------- ----------- -----------
Total liabilities and equity........ $55,865,751 $14,215,774 $70,081,525
=========== =========== ===========
</TABLE>
F-28
<PAGE>
NOTES TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following notes set for the assumptions used in preparing the unaudited
Pro Forma Condensed Consolidated Financial Statements. The pro forma
adjustments are based on estimates made by the Company's management using
information currently available. As a result, the pro forma adjustments
discussed below are subject to change.
The Pro Forma Condensed Consolidated Financial Statements do not consider
non-recurring charges pursuant to the Offering, including approximately
$443,000 in debt prepayment penalties and deferred loan closing costs of
approximately $473,000.
The adjustments to the accompanying unaudited pro forma condensed
consolidated statements of income are described below:
a) Reflects additional depreciation expense due to adjustments to the
recorded value of the assets acquired from American Aviation resulting from
the application of purchase accounting.
b) Reflects an increase in amortization expense as a result of goodwill
and intangible assets purchased in connection with the acquisition of
American Aviation, using an amortization period of 25 years.
c) Reflects an increase in compensation expense from employment
agreements entered into by the Company and its key executive officers.
d) Reflects a reduction in interest expense as a result of the retirement
of certain indebtedness of the Company with the proceeds of the Offering.
e) Reflects an increase in interest expense as a result of the incurrence
of indebtedness to finance the Preferred Unit Repurchase and the LLC
Distribution.
f) OMNI Geophysical is a limited liability company that does not pay
income taxes at the entity level. The Company is a corporation that will
pay income taxes at the corporate level. This adjustment reflects the
provision for income taxes at a combined federal and state tax rate of 40%.
g) Includes 1,080,017 shares of common stock issued in connection with
the acquisition of American Aviation, 3,500,000 shares of common stock
issued in the Offering and 71,393 shares of common stock equivalents
related to outstanding stock options.
h) Reflects the elimination of a gain recognized by American Aviation
upon the sale of a helicopter to OMNI Geophysical.
i) Reflects additional depreciation expense due to adjustments to the
recorded value of the assets acquired from OGC resulting from the
application of purchase accounting.
j) Reflects an increase in interest expense as a result of the incurrence
of indebtedness to finance the OGC Acquisition.
The adjustments to the accompanying unaudited pro forma condensed
consolidated balance sheet are described below:
k) Reflects the net proceeds to the Company in the Offering (assuming an
initial public offering price of $14.00 per share), net of the underwriting
discounts and commissions (estimated to be $3,430,000) and offering
expenses (estimated to be $640,000).
l) Reflects the application of the net proceeds of the public offering to
repay indebtedness of the Company.
m) Reflects the LLC Distribution and borrowings related thereto.
n) Reflects the Share Exchange pursuant to which all outstanding common
units of OMNI Geophysical will be exchanged for 12,000,000 shares of Common
Stock.
F-29
<PAGE>
Inside Back Cover and Pictures of various Company helicopters and airplanes,
including a Bell 206, Bell 407, Hughes 500 (with long-line equipment); Beech
King Air; Cessna 185 Amphibian. Text; Aviation--The Company's aviation division
operates an aircraft fleet comprised of Bell 407, Bell 20 and Hughes 500
helicopters, together with Beech King Air, Cessna 185 Amphibian and Cessna 172
airplanes. Company Logo and American Aviation Logo.
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NO DEALER, SALESPERSON OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS,
AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY THE COMPANY OR ANY UNDERWRITER. THIS PROSPEC-
TUS DOES NOT CONSTITUTE AN OFFER OF ANY SECURITIES OTHER THAN THOSE TO WHICH IT
RELATES OR AN OFFER TO SELL, OR A SOLICITATION OF AN OFFER TO BUY, TO ANY PER-
SON IN ANY JURISDICTION WHERE SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UN-
DER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Prospectus Summary........................................................ 3
Risk Factors.............................................................. 9
The Company............................................................... 15
Change in Tax Status and Related Distributions............................ 15
Use of Proceeds........................................................... 16
Dividend Policy........................................................... 17
Dilution.................................................................. 18
Capitalization............................................................ 19
Selected Financial and Operating Data..................................... 20
Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................... 22
Business.................................................................. 29
Management................................................................ 40
Principal Shareholders.................................................... 49
Certain Transactions...................................................... 50
Description of Capital Stock.............................................. 51
Shares Eligible for Future Sale........................................... 54
Underwriting.............................................................. 55
Legal Matters............................................................. 57
Experts................................................................... 57
Additional Information.................................................... 57
Index to Consolidated Financial Statements................................ F-1
</TABLE>
-----------------
UNTIL , 1997 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL
DEALERS EFFECTING TRANSACTIONS IN THE COMMON STOCK, WHETHER OR NOT PARTICIPAT-
ING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS. THIS DELIV-
ERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER A PRO-
SPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD ALLOTMENTS
OR SUBSCRIPTIONS.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
3,500,000 SHARES
LOGO
[Logo of OMNI Energy Services Corp. appears here]
COMMON STOCK
-----------------
PROSPECTUS
, 1997
-----------------
LEHMAN BROTHERS
PRUDENTIAL SECURITIES INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 3. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Estimated expenses payable in connection with the proposed sale of Common
Stock covered hereby are as follows:
<TABLE>
<S> <C>
SEC registration fee.................................................. $ 20,735
NASD filing fee....................................................... 7,343
Nasdaq listing fee.................................................... 50,000
Printing expenses..................................................... 100,000*
Legal fees and expenses............................................... 170,000*
Accounting fees and expenses.......................................... 230,000*
Transfer agent fees and expenses...................................... 5,000*
Miscellaneous expenses................................................ 56,922*
--------
Total expenses........................................................ $640,000
========
</TABLE>
- --------
* Estimated.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Louisiana Business Corporation Law (the "LBCL"), Section 83, (i) gives
Louisiana corporations broad powers to indemnify their present and former
directors and officers and those of affiliated corporations against expenses
incurred in the defense of any lawsuit to which they are made parties by
reason of being or having been such directors or officers; (ii) subject to
specific conditions and exclusions, gives a director or officer who
successfully defends such an action the right to be so indemnified; and (iii)
authorizes Louisiana corporations to buy directors' and officers' liability
insurance. Such indemnification is not exclusive of any other rights to which
those indemnified may be entitled under any by-law, agreement, authorization
of shareholders or otherwise.
The Company's By-laws make mandatory the indemnification of directors and
officers permitted by the LBCL. The standard to be applied in evaluating any
claim for indemnification (excluding claims for expenses incurred in
connection with the successful defense of any proceeding or matter therein for
which indemnification is mandatory without reference to any such standard) is
whether the claimant acted in good faith and in a manner he reasonably
believed to be in, or not opposed to, the best interests of the Company. With
respect to any criminal action or proceeding, the standard is that the
claimant had no reasonable cause to believe the conduct was unlawful. No
indemnification is permitted in respect of any claim, issue or matter as to
which a director or officer shall have been adjudged by a court of competent
jurisdiction to be liable for willful or intentional misconduct or to have
obtained an improper personal benefit, unless, and only to the extent that the
court shall determine upon application that, in view of all the circumstances
of the case, he is fairly and reasonably entitled to indemnity for such
expenses that the court shall deem proper.
The Company maintains liability policies to indemnify its officers and
directors against loss arising from claims by reason of their legal liability
for acts as officers and directors, subject to limitations and conditions to
be set forth in the policies.
The Underwriters have also agreed to indemnify the directors and certain of
the Company's officers against certain liabilities, including liabilities
under the Securities Act of 1933, as amended (the "Securities Act"), or to
contribute to payments that such directors and officers may be required to
make in respect thereof.
Each of the Company's directors and executive officers has entered into an
indemnity agreement with the Company, pursuant to which the Company has agreed
under certain circumstances to purchase and maintain directors' and officers'
liability insurance. The agreements also provide that the Company will
indemnify the
II-1
<PAGE>
directors and executive officers against any costs and expenses, judgments,
settlements and fines incurred in connection with any claim involving a
director or executive officer by reason of his position as director or officer
that are in excess of the coverage provided by any such insurance, provided
that the director or officer meets certain standards of conduct. A form of
indemnity agreement containing such standards of conduct is included as an
exhibit to this Registration Statement. Under the indemnity agreements, the
Company is not required to purchase and maintain directors' and officers'
liability insurance if it is not reasonably available or, in the reasonable
judgment of the Board of Directors, there is insufficient benefit to the
Company from the insurance.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
In connection with its initial capitalization, the Registrant issued 1,000
shares of its Common Stock to Advantage Capital Management Corporation for
$1,000. Pursuant to the Share Exchange, the Registrant will issue the
following number of shares to the holders of common units of OMNI Geophysical,
L.L.C. in exchange for their 113,476 common units in OMNI Geophysical, L.L.C.
(number of common units to be exchanged in parentheses):
<TABLE>
<CAPTION>
SHARES OF
COMMON
NAME OF HOLDER STOCK
- -------------- ---------
<S> <C>
American Aviation (10,213)............................................ 1,080,017
Roger E. Thomas (10,664).............................................. 1,127,708
Allen R. Woodard (13,164)............................................. 1,392,083
Shannon H. Daigle (1,461)............................................. 154,500
David A. Jeansonne (2,836)............................................ 299,905
Alan J. Thomas (500).................................................. 52,875
Ben E. Thomas (500)................................................... 52,875
Christina M. Thomas (500)............................................. 52,875
Advantage Capital Partners Limited Partnership (2,780)................ 293,983
Advantage Capital Partners II Limited Partnership (9,398)............. 993,831
Advantage Capital Partners III Limited Partnership (15,282)........... 1,616,060
Advantage Capital Partners IV Limited Partnership (28,612)............ 3,025,697
Advantage Capital Partners V Limited Partnership (17,566)............. 1,857,591
</TABLE>
Also in connection with the Share Exchange, the Registrant will issue
options to purchase its Common Stock to persons holding options to acquire
common units of OMNI Geophysical, L.L.C. David E. Crays will receive options
to acquire 54,567 shares Common Stock at $2.28 per share in exchange for
options to purchase 516 common units of OMNI Geophysical, L.L.C. at $242 per
unit that were issued to Mr. Crays in April 1997 when he was hired by OMNI
Geophysical, L.L.C. In June 1997, the Company also granted the following
options to purchase the following number of common units of OMNI Geophysical,
L.L.C., William F. Fincher, 250; J. David Booth, 250; and Rita Darbonne, 100.
These options all have an exercise price of $242 per common unit and, upon the
Share Exchange, will be converted into options to purchase, 26,438, 26,438 and
10,575 shares of Common Stock, respectively, at an exercise price of $2.28 per
share.
In connection with the acquisition of O.T.H. Exploration Services, Inc., the
Company agreed to grant 55,000 options to purchase Common Stock to one of the
sellers. These options will be issued under the Company Incentive Plan and
have an exercise price equal to the initial public offering price.
In addition to the foregoing, on September 30, 1997, the Registrant issued
options to Hibernia National Bank to purchase $50,000 worth of Common Stock
based on the initial public offering price (3,572 shares assuming an initial
public offering price of $14.00 per share). These options expire two years
following the date of the Offering, have an exercise price equal to the
initial public offering price and were issued in connection with the
establishment of the Distribution Loan.
All of these securities were or will be offered and sold without
registration under the Securities Act inasmuch as they are deemed not subject
to registration pursuant to the exception provided in Section 4(2) of the
Securities Act as securities sold in transactions not involving any public
offering.
II-2
<PAGE>
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
<TABLE>
<C> <S>
1.1 Form of Underwriting Agreement.
Form of Exchange Agreement between the members of OMNI Geophysical,
2.1 L.L.C. and the Company.
2.2 Asset Purchase Agreement between OMNI Geophysical, L.L.C. and OMNI
Geophysical Corporation dated as of July 19, 1996.*
2.3 Exchange Agreement by and among American Aviation Incorporated, American
Aviation, L.L.C. and OMNI Geophysical, L.L.C., dated as of July 1,
1997.*
2.4 Intangible Asset Purchase Agreement by and among American Aviation
Incorporated, American Aviation L.L.C. and OMNI Geophysical, L.L.C.
dated as of July 1, 1997.*
2.5 Asset Purchase Agreement by and between O.T.H. Exploration Services,
Inc. and OMNI Geophysical, L.L.C. dated as of August 31, 1997.*
2.6 Agreement of Merger by and among the Company, American Helicopter
Drilling, Inc. and the shareholders of American Helicopter Drilling Inc.
dated as of October 31, 1997.
2.7 Agreement of Merger by and among the Company, Fournier & Associates,
Inc. and the shareholders of Fournier & Associates, Inc. dated as of
October 31, 1997.
3.1 Amended and Restated Articles of Incorporation of the Company.
3.2 By-laws of the Company.
4.1 See Exhibits 3.1 and 3.2 for provisions of the Company's Articles of
Incorporation and By-laws defining the rights of holders of Common
Stock.
4.2 Specimen Common Stock certificate.
4.3 Amended and Restated Loan Agreement dated as of June 13, 1997 by and
between OMNI Geophysical, L.L.C. and Hibernia National Bank (the
"Hibernia Credit Facility").
4.4 First Amendment to the Hibernia Credit Facility dated as of August 6,
1997.
4.5 Second Amendment to the Hibernia Credit Facility dated as of September
30, 1997.
4.6 Promissory Note under the Hibernia Credit Facility dated September 30,
1997.
5.1 Opinion of Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
10.1 Form of Indemnity Agreement by and between the Company and each of its
directors and executive officers.*
10.2 The Company's Stock Incentive Plan.*
10.3 Form of Stock Option Agreements under the Company's Long-Term Incentive
Plan.*
10.4 Amended and Restated Employment and Non-Competition Agreement between
OMNI Geophysical, L.L.C. and David Jeansonne.
10.5 Amended and Restated Employment and Non-Competition Agreement between
OMNI Geophysical, L.L.C. and Roger E. Thomas.
10.6 Amended and Restated Employment and Non-Competition Agreement between
OMNI Geophysical, L.L.C. and Allen R. Woodard.
10.7 Employment and Non-Competition Agreement between OMNI Geophysical,
L.L.C. and Richard Patrick Morris.*
10.8 Amended and Restated Employment and Non-Competition Agreement between
OMNI Geophysical, L.L.C. and David E. Crays.
10.9 Confidentiality and Non-Competition Agreement between OMNI Geophysical,
L.L.C. and OMNI Geophysical Corporation, David Jeansonne, Max Brian
Hoyt, Ted W. Hoyt, and Wilbur Sam Hoyt.*
10.10 Confidentiality and Non-Competition Agreement between OMNI Geophysical,
L.L.C., American Aviation, L.L.C. and American Aviation Incorporated,
David Jeansonne and Richard Patrick Morris.*
10.11 Option Agreement between OMNI Geophysical, L.L.C. and David E. Crays.*
10.12 Option Agreement between the Company and Roger E. Thomas dated as of
September 25, 1997.
</TABLE>
II-3
<PAGE>
<TABLE>
<S> <C>
10.13 Option Agreement between the Company and Allen P. Woodard dated as of September 25, 1997.
11.1 Statement re computation of per share earnings
21.1 Subsidiaries of the Company.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Jones, Walker, Waechter, Poitevent, Carrere & Denegre L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page to the Registration Statement).*
24.2 Power of Attorney of William W. Rucks, IV.
27.1 Financial Data Schedule.
</TABLE>
- --------
* Previously filed.
ITEM 17. UNDERTAKINGS.
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1)
or (4) or 497(h) under the Securities Act shall be deemed to be part of
this Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities Act,
each post-effective amendment that contains a form of prospectus 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.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions described in Item 14 above, 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 Securities 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 Securities Act and will be governed by the final
adjudication of such issue.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 1 to its Registration Statement on Form S-1
to be signed on its behalf by the undersigned, thereunto duly authorized, in
the City of Carencro, State of Louisiana, on November 4, 1997.
OMNI ENERGY SERVICES CORP.
By: /s/ Roger E. Thomas
---------------------------------
Roger E. Thomas,
President
Pursuant to the requirements of the Securities Act of 1933, 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>
/s/ David A. Jeansonne* Chief Executive Officer and November 4, 1997
____________________________________ Chairman of the Board
David A. Jeansonne (Principal Executive
Officer)
/s/ Roger E. Thomas President and Director November 4, 1997
____________________________________
Roger E. Thomas
/s/ Allen R. Woodard* Vice President--Marketing; November 4, 1997
____________________________________ Business Development and
Allen R. Woodard Director
/s/ David E. Crays* Vice President Finance and November 4, 1997
____________________________________ Chief Financial Officer
David E. Crays (Principal Financial and
Accounting Officer) and
Director
/s/ Steven T. Stull* Director November 4, 1997
____________________________________
Steven T. Stull
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Crichton W. Brown* Director November 4, 1997
____________________________________
Crichton W. Brown
/s/ William W. Rucks, IV* Director November 3, 1997
____________________________________
William W. Rucks, IV
</TABLE>
/s/ Roger E. Thomas
*By: _____________________
Agent and Attorney-in-Fact
II-6
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBITS NUMBER PAGE
------- ----------------------- ------------
<C> <S> <C>
1.1 Form of Underwriting Agreement.
2.1 Form of Exchange Agreement between the members of OMNI
Geophysical, L.L.C. and the Company.
2.2 Asset Purchase Agreement between OMNI Geophysical,
L.L.C. and OMNI Geophysical Corporation dated as of
July 19, 1996.*
2.3 Exchange Agreement by and among American Aviation
Incorporated, American Aviation, L.L.C. and OMNI
Geophysical, L.L.C., dated as of July 1, 1997.*
2.4 Intangible Asset Purchase Agreement by and among
American Aviation Incorporated, American Aviation
L.L.C. and OMNI Geophysical, L.L.C. dated as of July 1,
1997.*
2.5 Asset Purchase Agreement by and between O.T.H.
Exploration Services, Inc. and OMNI Geophysical, L.L.C.
dated as of August 31, 1997.*
2.6 Agreement of Merger by and among the Company, American
Helicopter Drilling, Inc. and the shareholders of
American Helicopter Drilling Inc. dated as of October
31, 1997.
2.7 Agreement of Merger by and among the Company, Fournier
& Associates, Inc. and the shareholders of Fournier &
Associates, Inc. dated as of October 31, 1997.
3.1 Amended and Restated Articles of Incorporation of the
Company.
3.2 By-laws of the Company.
4.1 See Exhibits 3.1 and 3.2 for provisions of the
Company's Articles of Incorporation and By-laws
defining the rights of holders of Common Stock.
4.2 Specimen Common Stock certificate.
4.3 Amended and Restated Loan Agreement dated as of June
13, 1997 by and between OMNI Geophysical, L.L.C. and
Hibernia National Bank (the "Hibernia Credit
Facility").
4.4 First Amendment to the Hibernia Credit Facility dated
as of August 6, 1997.
4.5 Second Amendment to the Hibernia Credit Facility dated
as of September 30, 1997.
4.6 Promissory Note under the Hibernia Credit Facility
dated September 30, 1997.
5.1 Opinion of Jones, Walker, Waechter, Poitevent, Carrere
& Denegre, L.L.P.
10.1 Form of Indemnity Agreement by and between the Company
and each of its directors and executive officers.*
10.2 The Company's Stock Incentive Plan.*
10.3 Form of Stock Option Agreements under the Company's
Long-Term Incentive Plan.*
10.4 Amended and Restated Employment and Non-Competition
Agreement between OMNI Geophysical, L.L.C. and David
Jeansonne.
10.5 Amended and Restated Employment and Non-Competition
Agreement between OMNI Geophysical, L.L.C. and Roger E.
Thomas.
10.6 Amended and Restated Employment and Non-Competition
Agreement between OMNI Geophysical, L.L.C. and Allen R.
Woodard.
10.7 Employment and Non-Competition Agreement between OMNI
Geophysical, L.L.C. and Richard Patrick Morris.*
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBITS NUMBER PAGE
------- ----------------------- ------------
<C> <S> <C>
10.8 Amended and Restated Employment and Non-Competition
Agreement between OMNI Geophysical, L.L.C. and David E.
Crays.
10.9 Confidentiality and Non-Competition Agreement between
OMNI Geophysical, L.L.C. and OMNI Geophysical
Corporation, David Jeansonne, Max Brian Hoyt, Ted W.
Hoyt, and Wilbur Sam Hoyt.*
10.10 Confidentiality and Non-Competition Agreement between
OMNI Geophysical, L.L.C., American Aviation, L.L.C. and
American Aviation Incorporated, David Jeansonne and
Richard Patrick Morris.*
10.11 Option Agreement between OMNI Geophysical, L.L.C. and
David E. Crays.*
10.12 Option Agreement between the Company and Roger E.
Thomas dated as of September 25, 1997.
10.13 Option Agreement between the Company and Allen P.
Woodard dated as of September 25, 1997.
11.1 Statement re computation of per share earnings
21.1 Subsidiaries of the Company.
23.1 Consent of Arthur Andersen LLP.
23.2 Consent of Jones, Walker, Waechter, Poitevent, Carrere
& Denegre L.L.P. (included in Exhibit 5.1).
24.1 Power of Attorney (included in the Signature Page to
the Registration Statement).*
24.2 Power of Attorney of William W. Rucks, IV.
27.1 Financial Data Schedule.
</TABLE>
- --------
* Previously filed.
<PAGE>
EXHIBIT 1.1
3,500,000 SHARES
OMNI ENERGY SERVICES CORP.
COMMON STOCK
UNDERWRITING AGREEMENT
LEHMAN BROTHERS INC. November __, 1997
PRUDENTIAL SECURITIES INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
As Representatives of
the several Underwriters
named in Schedule 1
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
OMNI Energy Services Corp., a Louisiana corporation (the "Company"),
proposes to sell 3,500,000 shares (the "Firm Shares") of the Company's common
stock, par value $.01 per share (the "Common Stock"), to the several
Underwriters named in Schedule 1 hereto (the "Underwriters"). In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional 525,000 shares of Common Stock on the terms and for the purposes set
forth in Section 2 (the "Option Shares"). The Firm Shares and the Option
Shares, if purchased, are hereinafter collectively called the "Shares." This is
to confirm the agreement concerning the purchase of the Shares from the Company
by the Underwriters.
It is understood and agreed by all the parties that on or before the
First Delivery Date (as defined in Section 4 hereof), and in any event prior to
the sale of the Shares to the Underwriters, the holders of all of the
outstanding common units of OMNI Geophysical, L.L.C., a Louisiana limited
liability company ("OMNI Geophysical"), will exchange all of such units for
12,000,000 newly issued shares of Common Stock of the Company and the holders of
all outstanding options to purchase common units of OMNI Geophysical will
receive options to purchase a corresponding number of shares of Common Stock
(the "Share Exchange"). As a result of the Share Exchange, OMNI Geophysical
will become a wholly owned subsidiary of the Company. Prior to the date and
time (the "Exchange Time") of the Share Exchange, (i) all of the undistributed
earnings of OMNI Geophysical through the Exchange Time will be distributed to
the members of OMNI Geophysical (the "LLC Distribution") and (ii) OMNI
Geophysical will repurchase all of the outstanding preferred units of OMNI
Geophysical for $5.0 million (the "Preferred Unit Repurchase" and, collectively
with the LLC Distribution, the "LLC Transactions"). As used herein, the term
"OMNI Entities" shall
<PAGE>
mean the Company, OMNI Geophysical and each subsidiary (as
defined in Rule 405 of the Rules and Regulations (as defined in Section 1(a)
hereof)) of the Company and OMNI Geophysical (and including OMNI Geophysical as
a subsidiary of the Company after the Exchange Time).
1. Representations and Warranties of the Company and OMNI
Geophysical. The Company and OMNI Geophysical, jointly and severally, represent
and warrant to, and agree with, each Underwriter that:
(a) A registration statement on Form S-1 (File No. 333-36561) with
respect to the Shares (i) has been prepared by the Company in conformity with
the requirements of the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations (the "Rules and Regulations") of the
Securities and Exchange Commission (the "Commission") thereunder, (ii) has been
filed with the Commission under the Securities Act and (iii) either has become
effective under the Securities Act and is not proposed to be amended or is
proposed to be amended by amendment or post-effective amendment. If the Company
does not propose to amend such registration statement and if any post-effective
amendment to such registration statement has been filed with the Commission
prior to the execution and delivery of this Agreement, the most recent such
amendment has been declared effective by the Commission. Copies of such
registration statement as amended to date have been delivered by the Company to
you as the representatives (the "Representatives") of the Underwriters. As used
in this Agreement, "Effective Time" means the date and the time as of which such
registration statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each prospectus included
in such registration statement, or amendments thereof, before it became
effective under the Securities Act and any prospectus filed with the Commission
by the Company with the consent of the Representatives pursuant to Rule 424(a)
of the Rules and Regulations; "Registration Statement" means such registration
statement, as amended at the Effective Time, including, if the Effective Date is
on or before the date of this Agreement, all information contained in the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations ("Rule 424(b)") in accordance with Section 5(a) hereof and deemed to
be a part thereof as of the Effective Time pursuant to paragraph (b) of Rule
430A of the Rules and Regulations; and "Prospectus" means such final prospectus,
as first filed with the Commission pursuant to paragraph (1) or (4) of Rule
424(b) or, if the Effective Date is after the date of this Agreement, the final
prospectus in the form heretofore delivered by the Company to the
Representatives, with any changes made thereto by the Company with the consent
of the Representatives, as the case may be. If it is contemplated at the time
this Agreement is executed that a registration statement or a post-effective
amendment will be filed pursuant to Rule 462(b) or 462(d) under the Securities
Act before the offering of the Common Stock may commence, the term "Registration
Statement" as used in this Agreement includes such registration statement or
amendment.
(b) The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus. Each Preliminary Prospectus, at the time
of the filing thereof, conformed in all material respects to the requirements of
the Securities Act and the Rules and Regulations and did not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
-2-
<PAGE>
circumstances under which they were made, not misleading; provided, however,
that no representation or warranty is made as to information contained in or
omitted from any Preliminary Prospectus in reliance upon, and in conformity
with, written information furnished to the Company through the Representatives
by or on behalf of any Underwriter specifically for inclusion therein.
(c) If the Effective Date is on or before the date of this Agreement,
(i) the Registration Statement conforms in all material respects, and the
Prospectus and any further amendments or supplements to the Registration
Statement or the Prospectus will when they become effective or are filed with
the Commission or are first used to confirm sales of the Shares, as the case may
be, conform in all material respects to the requirements of the Securities Act
and the Rules and Regulations, (ii) the Registration Statement and any amendment
thereto does not, and will not, as of the applicable effective date, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading
and (iii) the Prospectus and any amendment or supplement thereto will not, as of
the applicable filing date or as of the first date of its use to confirm sales
of the Shares, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. If the Effective Date is after the date of this Agreement,
(i) the Registration Statement and the Prospectus and any further amendments or
supplements thereto will, when they become effective or are filed with the
Commission or are first used to confirm sales of the Shares, as the case may be,
conform in all material respects to the requirements of the Securities Act and
the Rules and Regulations, (ii) the Registration Statement and any amendment
thereto will not, as of the applicable Effective Date, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein not misleading and
(iii) the Prospectus and any amendment or supplement thereto will not, as of the
applicable filing date or as of the first date of their use to confirm sales of
the Shares, contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. In addition, each of the statements made in such documents
within the coverage of Rule 175(b) of the Rules and Regulations was made or will
be made by the Company with a reasonable basis and in good faith.
Notwithstanding the foregoing, no representation or warranty is made as to
information contained in or omitted from the Registration Statement or the
Prospectus or any amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for inclusion
therein. There is no contract or document required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which is not described or filed as required.
(d) The Company is a corporation duly organized and validly existing
in good standing under the laws of the State of Louisiana with full corporate
power and authority to own, lease and operate its properties and conduct its
business and is duly qualified or registered as a foreign corporation for the
transaction of business and is in good standing as a foreign corporation under
the laws of each jurisdiction in which the character of the business conducted
by it or the location of the properties owned, leased or operated by it make
such qualification or registration necessary, except where the failure to
qualify or register or to be in good standing would not,
-3-
<PAGE>
individually or in the aggregate, have a material adverse effect on the
condition (financial or other), results of operations, business or prospects of
the Company and the Subsidiaries taken as a whole.
(e) OMNI Geophysical is a limited liability company duly organized and
validly existing in good standing under the laws of the State of Louisiana with
full power and authority to own, lease and operate its properties and conduct
its business and is duly qualified or registered as a foreign limited liability
company for the transaction of business and is in good standing as a foreign
limited liability company under the laws of each jurisdiction in which the
character of the business conducted by it or the location of the properties
owned, leased or operated by it make such qualification or registration
necessary, except where the failure to qualify or register or to be in good
standing would not, individually or in the aggregate, have a material adverse
effect on the condition (financial or other), results of operations, business or
prospects of the Company and its Subsidiaries taken as a whole.
(f) Each Subsidiary (other than OMNI Geophysical), is duly organized
and validly existing in good standing under the laws of the jurisdiction of its
incorporation or organization, with full power and authority to own, lease and
operate its properties and conduct its business and is duly qualified or
registered for the transaction of business and is in good standing under the
laws of each jurisdiction in which the character of the business conducted by it
or the location of the properties owned, leased or operated by it make such
qualification or registration necessary, except where the failure to qualify or
register or to be in good standing would not, individually or in the aggregate,
have a material adverse effect on the condition (financial or other), results of
operations, business or prospects of the Company and the Subsidiaries taken as a
whole. None of the Subsidiaries, other than OMNI Geophysical after the Exchange
Time, is a "significant subsidiary" of the Company as such term is defined in
Rule 405 of the Rules and Regulations. All the outstanding shares of capital
stock or other equity interests of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and nonassessable and, upon the
consummation of the Share Exchange, all of such shares of capital stock or other
equity interests will be owned by the Company directly, or indirectly through
one of the other Subsidiaries, free and clear of any lien, adverse claim,
security interest or other encumbrance.
(g) Upon the consummation of the Share Exchange, the authorized and
outstanding capital stock of the Company will be as set forth in the Prospectus,
and all of the issued and outstanding shares of capital stock of the Company
will have been duly authorized and validly issued and will be fully paid and
nonassessable. The Shares have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued, fully paid and nonassessable. The Shares, when issued and
delivered against payment therefor as provided herein, will conform to the
description thereof contained under the caption "Description of Capital Stock"
in the Prospectus.
(h) Except as described in the Prospectus, there are no preemptive
rights or other rights to subscribe for or to purchase, nor any restriction upon
the voting or transfer of, any shares of Common Stock pursuant to the Company's
articles of incorporation, bylaws or other governing documents or any agreement
or other instrument to which any of the OMNI Entities is a party or by which any
of them may be bound, and, except as described in the Prospectus, there are no
-4-
<PAGE>
outstanding options, warrants or rights to purchase any shares of capital stock
of the Company, any securities convertible into or exercisable or exchangeable
for any shares of capital stock of the Company, any units or other equity
interests in OMNI Geophysical or any securities convertible into or exercisable
or exchangeable for any units or other equity interests of OMNI Geophysical.
(i) The Company and OMNI Geophysical have all requisite power and
authority to execute and deliver this Agreement, and the Company has all
requisite power and authority to issue, sell and deliver the Shares in
accordance with and upon the terms and conditions set forth in this Agreement
and in the Registration Statement and Prospectus. At each Delivery Date (as
defined in Section 4 hereof), all action required to be taken by the Company and
OMNI Geophysical for the authorization, issuance, sale and delivery of the
Shares and the consummation of the transactions contemplated by this Agreement,
including without limitation the Share Exchange and the LLC Transactions, shall
have been validly taken. This Agreement has been duly and validly authorized,
executed and delivered by the Company and OMNI Geophysical.
(j) Neither the offering, issuance and sale by the Company of the
Shares, the execution, delivery and performance of this Agreement by the Company
and OMNI Geophysical nor the consummation of the transactions contemplated
hereby (including the Share Exchange and the LLC Transactions) (i) conflicts or
will conflict with or constitutes or will constitute a breach or violation of,
or a default (or an event which, with notice or lapse of time or both, would
constitute such a default) under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which any of the OMNI Entities is
a party or by which any of them is bound or to which any of the property or
assets of any of them is subject, (ii) constitutes or will constitute a
violation of the articles of incorporation, articles of organization, operating
agreement, bylaws or other governing documents of any of the OMNI Entities,
(iii) violates or will violate any law, statute or regulation or any order, rule
decree, judgment or injunction of any court or governmental agency or body
directed to any of the OMNI Entities or any of their properties in a proceeding
to which any of them or their property is a party or (iv) will result in the
creation or imposition of any lien, charge, claim or encumbrance upon any
property or asset of any of the OMNI Entities.
(k) Except for the registration of the Shares under the Securities Act
and such consents, approvals, authorizations, registrations or qualifications as
may be required under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), the securities or "Blue Sky" laws of certain jurisdictions and
applicable state securities laws in connection with the purchase and
distribution of the Shares by the Underwriters, no consent, approval,
authorization or order of, or filing or registration with, any such court or
governmental agency or body is required for the execution, delivery and
performance of this Agreement by the Company and OMNI Geophysical and the
consummation of the transactions contemplated hereby, including without
limitation the Share Exchange and the LLC Transactions.
(l) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the Company or OMNI Geophysical and any
person granting such person the right to require the Company to file a
registration statement under the Securities Act with respect to any securities
of the Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement or in any
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securities being registered pursuant to any other registration statement filed
by the Company under the Securities Act.
(m) Except as described in the Prospectus, the Company has not sold or
issued any shares of Common Stock and OMNI Geophysical has not sold or issued
any units or other equity interests during the six-month period preceding the
date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulation D or S of, the Securities Act.
(n) None of the OMNI Entities has sustained, since the date of the
latest audited financial statements included in the Prospectus, any material
loss or interference with its business from fire, explosion, flood, accident or
other calamity, whether or not covered by insurance, or from any labor dispute,
or has become a party to or the subject of any material litigation, court or
governmental action, investigation, order or decree, in any case otherwise than
as set forth or contemplated in the Prospectus; and, since the respective dates
as of which information is given in the Prospectus, there has not been any
change in the capital stock or long-term debt, or any material change in short-
term debt, of the OMNI Entities or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
general affairs, operations, business, prospects, management, capitalization,
financial condition, results of operations or net worth of the Company and the
Subsidiaries, otherwise than as set forth or contemplated in the Prospectus.
(o) Arthur Andersen LLP, who have certified certain financial
statements included in the Registration Statement, any Preliminary Prospectus
and the Prospectus (or any amendment or supplement thereto), are independent
public accountants with respect to each of the OMNI Entities as required by the
Securities Act and the Rules and Regulations.
(p) The financial statements (including the related notes) included in
the Registration Statement, any Preliminary Prospectus and the Prospectus (or
any amendment or supplement thereto) present fairly in all material respects the
financial position, results of operations and cash flows of the entities
purported to be shown thereby at the dates and for the periods indicated, all in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods indicated. The selected historical financial data
included in the Prospectus under the caption "Selected Financial and Operating
Data" are fairly stated in relation to the historical financial statements from
which they have been derived. The pro forma financial statements set forth in
the Registration Statement, any Preliminary Prospectus and the Prospectus (the
"pro forma financial statements") have been prepared in accordance with the
applicable accounting requirements of Rule 11-02 of Regulation S-X; the pro
forma adjustments reflected in the pro forma financial statements have been
properly applied to the historical amounts in compilation of such statements;
and the assumptions used in the preparation of the pro forma financial
statements are, in the opinion of the Company and OMNI Geophysical, reasonable.
(q) Each of the OMNI Entities have good and marketable title in fee
simple to all real property and good and marketable title to all personal
property owned by them, free and clear of all liens, claims, encumbrances and
title defects except (i) as described in the Prospectus or (ii) such as do not
materially interfere with the use of such properties as they have been used in
the past
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<PAGE>
and are proposed to be used in the future as described in the Prospectus; and
all real property and buildings held under lease by any of the OMNI Entities are
held by them under valid, subsisting and enforceable leases, with such
exceptions as are not material and do not interfere with the use made and
proposed to be made of such property and buildings by the OMNI Entities.
(r) None of the OMNI Entities is (i) in breach or violation of its
charter, articles of organization, operating agreement, bylaws or other
governing documents or of any law, statute or regulation or order, decree,
judgment or injunction of any court or governmental agency or body having
jurisdiction over it or (ii) in default (and no event has occurred which, with
notice or lapse of time or both, would constitute such a default) breach or
violation in the due performance of any term, covenant or condition contained in
any indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which it is a party or by which it is bound or to which any of its
properties are subject. To the knowledge of the Company and OMNI Geophysical,
no third party to any indenture, mortgage, deed of trust, loan agreement or
other material agreement or instrument to which it is a party or by which it is
bound or to which any of its properties are subject is in default under any such
agreement.
(s) No action has been taken and no statute, rule or regulation or
order has been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Shares or suspends the effectiveness of the
Registration Statement, prevents or suspends the use of any Preliminary
Prospectus or suspends the sale of the Shares in any jurisdiction in which the
Shares are qualified pursuant to Section 5(h) hereof; no injunction, restraining
order or order of any nature by a federal or state court of competent
jurisdiction has been issued with respect to the Company which would prevent or
suspend the issuance or sale of the Shares, the effectiveness of the
Registration Statement or the use of any Preliminary Prospectus in any
jurisdiction in which the Shares are qualified pursuant to Section 5(h) hereof;
no action, suit or proceeding is pending against or, to the best knowledge of
the Company or OMNI Geophysical, threatened against or affecting any of the OMNI
Entities before any court or arbitrator or any governmental body, agency or
official, domestic or foreign, which, if adversely determined, would materially
interfere with or adversely affect the issuance of the Shares or in any manner
draw into question the validity or the subject matter of this Agreement and the
transactions contemplated hereby, including without limitation the Share
Exchange and the LLC Transactions, or the performance by the Company and OMNI
Geophysical of their respective obligations hereunder.
(t) Except as disclosed in the Prospectus, there is no action, suit or
proceeding before or by any court or governmental agency or body, domestic or
foreign, now pending or, to the knowledge of the Company or OMNI Geophysical,
threatened against any of the OMNI Entities or any of their respective
properties which, if determined adversely to such person, would individually or
in the aggregate have a material adverse effect on the condition (financial or
other), results of operations, business or prospects of the Company and the
Subsidiaries taken as a whole.
(u) Except as described in the Prospectus, each of the OMNI Entities
own or possess adequate rights to use all patents, patent applications,
trademarks, trademark registrations, trade names, service marks, service mark
registrations, copyrights, licenses inventions and trade secrets necessary for
the conduct of their respective businesses, and the Company and OMNI
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Geophysical have no reason to believe that the conduct of the respective
businesses of the OMNI Entities will conflict with, and have not received any
notice of any claim of conflict with, any such rights of others.
(v) Each of the OMNI Entities carry, or are covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of their
respective businesses and the value of their respective properties and as is
customarily obtained by businesses similarly situated. In the Company's and OMNI
Geophysical's reasonable judgment, such insurance insures against such losses
and risks as are adequate to protect the OMNI Entities and their businesses.
None of the OMNI Entities has received notice from any insurer or agent of such
insurer that substantial capital improvements or other expenditures will have to
be made in order to continue such insurance; and all such insurance is
outstanding and duly in force on the date hereof and will be outstanding and
duly in force on each Delivery Date.
(w) None of the OMNI Entities is, or at either Delivery Date will be,
(a) a "public utility company", a "holding company" or a "subsidiary company" of
a "holding company" or an "affiliate" thereof, within the meaning of the Public
Utility Holding Company Act of 1935, as amended, or (b) an "investment company"
or a company "controlled by" an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "Investment Company Act"), and
the rules and regulations thereunder.
(x) Each of the OMNI Entities has, or at each Delivery Date will have,
such permits, consents, licenses, franchises and authorizations of governmental
or regulatory authorities ("permits") as are necessary to conduct the business
currently (or, as described or contemplated in the Prospectus, to be) operated
by them, except for such permits which, if not obtained, would not have,
individually or in the aggregate, a material adverse effect on the condition
(financial or other), results of operations, business or prospects of the
Company and the Subsidiaries taken as a whole; and none of the OMNI Entities has
received any notice of proceedings relating to the revocation or modification of
any such certificate, authorization or permit.
(y) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, hazardous
wastes or hazardous substances by any of the OMNI Entities (or, to the knowledge
of the Company and OMNI Geophysical, any predecessors in interest to the OMNI
Entities) at, upon or from any of the property now or previously owned or leased
by any of the OMNI Entities in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation or remedial action which would not
have, or could not be reasonably likely to have, singularly or in the aggregate
with all such violations and remedial actions, a material adverse effect on the
condition (financial or other), results of operations, business or prospects of
the Company and the Subsidiaries taken as a whole; there has been no material
spill, discharge, leak, emission,
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<PAGE>
injection, escape, dumping or release of any kind onto such property or into the
environment surrounding such property of any toxic wastes, solid wastes,
hazardous wastes or hazardous substances due to or caused by the Company or the
Subsidiaries or with respect to which the Company or the Subsidiaries have
knowledge, except for any such spill, discharge, leak, emission, injection,
escape, dumping or release which would not have or would not be reasonably
likely to have, individually or in the aggregate, a material adverse effect on
the condition (financial or other), results of operations, business or prospects
of the Company and the Subsidiaries taken as a whole; and the terms "hazardous
wastes," "toxic wastes," "hazardous substances" and "solid wastes" shall have
the meanings specified in any applicable local, state, federal and foreign laws
or regulations with respect to environmental protection.
(z) Each of the OMNI Entities is in compliance in all material
respects with all presently applicable provisions of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA) for
which any of the OMNI Entities would have any liability; none of the OMNI
Entities have incurred or expects to incur liability under (i) Title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or (ii)
Section 412 or 4971 of the Internal Revenue Code of 1986, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which any of the OMNI Entities would have any liability that
is intended to be qualified under Section 401(a) of the Code is so qualified in
all material respects and nothing has occurred, whether by action or by failure
to act, which would cause the loss of such qualification.
(aa) Each of the OMNI Entities has filed all federal, state and local
foreign income and franchise tax returns required to be filed through the date
hereof and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to any of the OMNI Entities which has had (nor do any of
the Company and OMNI Geophysical have any knowledge of any tax deficiency which,
if determined adversely to any one of the OMNI Entities, might have) a material
adverse effect on the condition (financial or other), results of operations,
business or prospects of the Company and the Subsidiaries taken as a whole. All
of the members of OMNI Geophysical are citizens or residents of the United
States for United States federal income tax purposes. Neither OMNI Geophysical
nor the Company will incur any liability for federal, state, local or other
taxes as a result of the Share Exchange, except for any such liability which
would not, individually or in the aggregate, have a material adverse effect on
the condition (financial or other), results of operations, business or prospects
of the Company and the Subsidiaries taken as a whole.
(bb) None of the OMNI Entities (i) has taken, and none of such persons
shall take, directly or indirectly, any action designed to cause or result in,
or which has constituted or which might constitute, the stabilization or
manipulation of the price of the Common Stock to facilitate the sale or resale
of the Common Stock in violation of any law, rule or regulation or (ii) since
the initial filing of the Registration Statement, except as contemplated by this
Agreement, (A) has sold, bid for, purchased or paid anyone any compensation for
soliciting purchases of the Common Stock or (B) has paid or, except as
contemplated hereby, has agreed to pay to any person any compensation for
soliciting another to purchase any other securities of the Company.
(cc) The Shares have been approved for inclusion on the Nasdaq
National Market ("Nasdaq"), subject only to official notice of issuance.
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<PAGE>
(dd) From the date as of which information is given in the Prospectus
through the date hereof, and except as may otherwise be disclosed in the
Prospectus, none of the OMNI Entities has (i) issued any securities or granted
any options to purchase any securities, (ii) incurred any liability or
obligation, direct or contingent, other than liabilities and obligations which
were incurred in the ordinary course of business, (iii) entered into any
transaction not in the ordinary course of business or (iv) declared or paid any
dividend on its capital stock.
(ee) Each of the OMNI Entities (i) makes and keeps accurate books and
records and (ii) maintains internal accounting controls which provide reasonable
assurance that (A) transactions are executed in accordance with management's
authorization, (B) transactions are recorded as necessary to permit preparation
of its financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the recorded accountability for its assets is compared
with existing assets at reasonable intervals.
(ff) None of the OMNI Entities, nor any director, officer, agent,
employee or other person associated with or acting on behalf of any of the OMNI
Entities, has used any corporate funds for any unlawful contribution, gift,
entertainment or other unlawful expense relating to political activity; made any
direct or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation of any
provision of the Foreign Corrupt Practices Act of 1977; or made any bribe,
rebate, payoff, influence payment, kickback or other unlawful payment.
(gg) No relationship, direct or indirect, exists between or among any
of the OMNI Entities, on the one hand, and any of the directors, officers,
stockholders, customers or suppliers of any of the OMNI Entities, on the other
hand, which is required to be described in the Prospectus which is not so
described.
(hh) The issuance of shares of Common Stock in the Share Exchange is
exempt from the registration requirements of the Securities Act and the
securities laws of any state having jurisdiction with respect thereto, and none
of the OMNI Entities has taken or will take any action that would cause the loss
of such exemption.
2. Purchase of the Shares by the Underwriters. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Company agrees to sell 3,500,000 Firm Shares
to the several Underwriters, and each of the Underwriters, severally and not
jointly, agrees to purchase the number of Firm Shares set opposite that
Underwriter's name in Schedule 1 hereto. The respective purchase obligations of
the Underwriters with respect to the Firm Shares shall be rounded among the
Underwriters to avoid fractional shares, as the Representatives may determine.
In addition, the Company grants to the Underwriters an option to
purchase up to 525,000 Option Shares. Such option is granted solely for the
purpose of covering over-allotments in the sale of Firm Shares and is
exercisable as provided in Section 4 hereof. Option Shares shall be purchased
severally for the account of the Underwriters in proportion to the number of
Firm
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<PAGE>
Shares set opposite the names of such Underwriters in Schedule 1 hereto. The
respective purchase obligations of each Underwriter with respect to the Option
Shares shall be adjusted by the Representatives so that no Underwriter shall be
obligated to purchase Option Shares other than in 100 Share amounts. The price
of both the Firm Shares and any Option Shares shall be $ _____ per Share.
The Company shall not be obligated to deliver any of the Shares to be
delivered on the First Delivery Date or the Second Delivery Date (as defined in
Section 4 hereof), as the case may be, except upon payment for all the Shares to
be purchased on such Delivery Date as provided herein.
3. Offering of Shares by the Underwriters. Upon authorization by
the Representatives of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale upon the terms and conditions set
forth in the Prospectus.
4. Delivery of and Payment for the Shares. Delivery of and payment
for the Firm Shares shall be made at such place as shall be determined by
agreement between the Representatives and the Company at 10:00 A.M., New York
City time, on the fourth full Business Day (as defined in Section 15 hereof)
following the date of this Agreement or at such other date as shall be
determined by agreement between the Representatives and the Company. This date
and time are sometimes referred to as the "First Delivery Date." On the First
Delivery Date, the Company shall deliver or cause to be delivered certificates
representing the Firm Shares to the Representatives for the account of each
Underwriter against payment to or upon the order of the Company of the purchase
price by wire transfer of immediately available funds. Time shall be of the
essence, and delivery at the time and place specified pursuant to this Agreement
is a further condition of the obligation of each Underwriter hereunder. Upon
delivery, the Firm Shares shall be registered in such names and in such
denominations as the Representatives shall request in writing not less than two
full Business Days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Shares,
the Company shall make the certificates representing the Firm Shares available
for inspection by the Representatives in New York City, not later than 2:00
P.M., New York City time, on the Business Day prior to the First Delivery Date.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 2 may be exercised by written notice
being given to the Company by the Representatives. Such notice shall set forth
the aggregate number of Option Shares as to which the option is being exercised,
the names in which the Option Shares are to be registered, the denominations in
which the Option Shares are to be issued and the date and time, as determined by
the Representatives, when the Option Shares are to be delivered; provided,
however, that this date and time shall not be earlier than the First Delivery
Date nor earlier than the second Business Day after the date on which the option
shall have been exercised nor later than the fifth Business Day after the date
on which the option shall have been exercised. The date and time the Option
Shares are delivered are sometimes referred to as the "Second Delivery Date,"
and the First Delivery Date and the Second Delivery Date are sometimes each
referred to as a "Delivery Date."
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<PAGE>
Delivery of and payment for the Option Shares shall be made at the
place specified in the first sentence of the first paragraph of this Section 4
(or at such other place as shall be determined by agreement between the
Representatives and the Company) at 10:00 A.M., New York City time, on the
Second Delivery Date. On the Second Delivery Date, the Company shall deliver or
cause to be delivered the certificates representing the Option Shares to the
Representatives for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer of immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder. Upon delivery, the Option Shares
shall be registered in such names and in such denominations as the
Representatives shall request in the aforesaid written notice. For the purpose
of expediting the checking and packaging of the certificates for the Option
Shares, the Company shall make the certificates representing the Option Shares
available for inspection by the Representatives in New York City, not later than
2:00 P.M., New York City time, on the Business Day prior to the Second Delivery
Date.
5. Further Agreements of the Company. The Company covenants and
agrees with each Underwriter:
(a) To prepare the Prospectus in a form approved by the
Representatives and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than the Commission's close of business on the second
Business Day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) of the Rules
and Regulations; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus except as permitted herein; to
advise the Representatives, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has been
filed and to furnish the Representatives with copies thereof; to advise the
Representatives, promptly after it receives notice thereof, of the issuance by
the Commission of any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the Registration
Statement or the Prospectus or for additional information; and, in the event of
the issuance of any stop order or of any order preventing or suspending the use
of any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly its best efforts to obtain its withdrawal;
(b) To furnish promptly to each of the Representatives and to counsel
for the Underwriters an executed copy of the Registration Statement as
originally filed with the Commission, and each amendment thereto filed with the
Commission, including all consents and exhibits filed therewith;
(c) To deliver promptly to the Representatives such number of the
following documents as the Representatives shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission and each amendment thereto (in each case excluding exhibits other
than this Agreement) and (ii) each Preliminary Prospectus, the Prospectus
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and any amended or supplemented Prospectus; and, if the delivery of a prospectus
is required at any time after the Effective Time in connection with the offering
or sale of the Shares or any other securities relating thereto and if at such
time any events shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall be
necessary to amend or supplement the Prospectus in order to comply with the
Securities Act, to notify the Representatives and, upon their request, to file
such document and to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many copies as the Representatives may from time
to time reasonably request of an amended or supplemented Prospectus which will
correct such statement or omission or effect such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representatives, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 of the Rules and Regulations, to furnish a copy thereof to
the Representatives and counsel for the Underwriters and obtain the consent of
the Representatives to the filing;
(f) As soon as practicable after the Effective Date, to make generally
available to the Company's security holders and to deliver to the
Representatives an earnings statement of the Company and the Subsidiaries (which
need not be audited) complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the Company, Rule 158);
(g) For a period of five years following the Effective Date, to
furnish to the Representatives copies of all materials furnished by the Company
to its security holders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange or automated quotation system upon which the Shares may be listed
pursuant to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act, or any rule or regulation of the
Commission thereunder;
(h) Promptly from time to time to take such action as the
Representatives may reasonably request to qualify the Shares for offering and
sale under the securities laws of such jurisdictions as the Representatives may
request and to comply with such laws so as to permit the continuance of sales
and dealings therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares; provided that in no event shall the
Company be obligated in connection therewith to qualify as a foreign
corporation, or to execute a general consent to service of process;
(i) For a period of 180 days from the date of the Prospectus, not to,
directly or indirectly, (1) offer for sale, sell, pledge or otherwise dispose of
(or enter into any transaction or device which is designed to, or could be
expected to, result in the disposition by any person at any
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time in the future of) any shares of Common Stock or securities convertible into
or exchangeable for Common Stock, or sell or grant options, rights or warrants
with respect to any shares of Common Stock or securities convertible into or
exchangeable for Common Stock or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be settled by delivery of
Common Stock or other securities, in cash or otherwise, in each case without the
prior written consent of Lehman Brothers Inc.; provided, that the Company may,
as part of the consideration for the acquisition of American Helicopter
Drilling, Inc., issue to the sellers in such transaction up to [______ shares of
Common Stock] [that number of shares of Common Stock having a market value
(based on the trading price of the Common Stock on Nasdaq) not to exceed $_____
million];
(j) To cause each stockholder, officer and director of the Company to
furnish to the Representatives, prior to the First Delivery Date, a letter or
letters, substantially in the form attached hereto as Exhibit A, pursuant to
which each such person shall agree not to, directly or indirectly, (1) offer for
sale, sell, pledge or otherwise dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the disposition
by any person at any time in the future of) any shares of Common Stock or
securities convertible into or exchangeable for Common Stock or (2) enter into
any swap or other derivatives transaction that transfers to another, in whole or
in part, any of the economic benefits or risks of ownership of such shares of
Common Stock, whether any such transaction described in clause (1) or (2) above
is to be settled by delivery of Common Stock or other securities, in cash or
otherwise, in each case for a period of 180 days from the date of the
Prospectus, without the prior written consent of Lehman Brothers Inc.;
(k) To take such action as shall be necessary to comply with the rules
and regulations of the Nasdaq with respect to the Shares;
(l) To apply the net proceeds from the sale of the Shares as set forth
in the Prospectus;
(m) To take such steps as shall be necessary to ensure that neither
the Company nor any of the Subsidiaries shall become an "investment company"
within the meaning of such term under the Investment Company Act and the rules
and regulations of the Commission thereunder; and
(n) To timely complete all required filings and otherwise fully comply
in a timely manner with all provisions of the Exchange Act, including the rules
and regulations thereunder, in connection with the registration of the Shares
thereunder.
6. Expenses. The Company agrees to pay (a) the costs incident to
the authorization, issuance, sale and delivery of the Shares and any taxes
payable in that connection; (b) the costs incident to the preparation, printing,
filing, delivery and shipping of the Registration Statement and any amendments
and exhibits thereto; (c) the costs of distributing the Registration Statement
as originally filed and each amendment thereto and any post-effective amendments
thereof (including, in each case, exhibits), each Preliminary Prospectus, the
Prospectus and any amendment or supplement to the Prospectus, all as provided in
this Agreement; (d) the costs of producing and
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distributing this Agreement and any other related documents in connection with
the offering, purchase, sale and delivery of the Shares; (e) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of sale of the Shares; (f) any applicable
listing or other similar fees; (g) the fees and expenses of qualifying the
Shares under the securities laws of the several jurisdictions as provided in
Section 5(h) and of preparing, printing and distributing a Blue Sky Memorandum,
if the preparation of such Memorandum is requested by the Representatives
(including related fees and expenses of counsel to the Underwriters); (h) the
cost of printing certificates representing the Shares; (i) the costs and charges
of any transfer agent or registrar; and (j) all other costs and expenses
incident to the performance of the obligations of the Company; provided that,
except as provided in this Section 6 and in Section 11, the Underwriters shall
pay their own costs and expenses, including the costs and expenses of their
counsel, any transfer taxes on the Shares which they may sell and the expenses
of advertising any offering of the Shares made by the Underwriters.
7. Conditions of Underwriters' Obligations. The respective
obligations of the Underwriters hereunder are subject to the accuracy, when made
and on each Delivery Date, of the representations and warranties of the Company
and OMNI Geophysical contained herein, to the performance by the Company of its
obligations hereunder and to the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a) hereof, the Registration Statement and all post-
effective amendments to the Registration Statement shall have become effective,
all filings required by Rule 424 and Rule 430A of the Rules and Regulations
shall have been made and no such filings shall have been made without the
consent of the Representatives; no stop order suspending the effectiveness of
the Registration Statement or any amendment or supplement thereto or suspending
the qualification of the Shares for offering or sale in any jurisdiction shall
have been issued; no proceedings for the issuance of any such order shall have
been initiated or threatened; and any request of the Commission for additional
information (to be included in the Registration Statement or the Prospectus or
otherwise) shall have been disclosed to the Representatives and complied with to
their satisfaction.
(b) No Underwriter shall have been advised by the Company or shall
have discovered and disclosed to the Company that the Registration Statement or
the Prospectus or any amendment or supplement thereto contains an untrue
statement of fact which, in the opinion of the Representatives or in the opinion
of counsel to the Underwriters, is material or omits to state a fact which, in
the opinion of the Representatives or in the opinion of counsel to the
Underwriters, is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
(c) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Shares, the Registration
Statement and the Prospectus, and all other legal matters relating to this
Agreement and the transactions contemplated hereby shall be reasonably
satisfactory in all material respects to counsel for the Underwriters, and the
Company
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shall have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) Jones, Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P.
shall have furnished to the Representatives their written opinion, as counsel
for the Company and OMNI Geophysical, addressed to the Underwriters and dated
such Delivery Date, in form and substance satisfactory to the Representatives,
with respect to the matters set forth in Exhibit B hereto.
(e) The Representatives shall have received from Baker & Botts,
L.L.P., counsel for the Underwriters, such opinion or opinions, dated such
Delivery Date, with respect to the issuance and sale of the Shares, the
Registration Statement, the Prospectus and other related matters as the
Representatives may reasonably require, and the Company shall have furnished to
such counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(f) At the time of execution of this Agreement, the Representatives
shall have received from Arthur Andersen LLP a letter, in form and substance
satisfactory to the Representatives, addressed to the Underwriters and dated the
date hereof (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Prospectus, as of a
date not more than five days prior to the date hereof), the conclusions and
findings of such firm with respect to the financial information and other
matters ordinarily covered by accountants' "comfort letters" to Underwriters in
connection with registered public offerings.
(g) With respect to the letter of Arthur Andersen LLP referred to in
the preceding paragraph and delivered to the Representatives concurrently with
the execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Representatives a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated such Delivery Date (i)
confirming that they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X
of the Commission, (ii) stating, as of the date of the bring-down letter (or,
with respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Prospectus, as
of a date not more than five days prior to the date of the bring-down letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the initial letter and (iii) confirming
in all material respects the conclusions and findings set forth in the initial
letter.
(h) On each Delivery Date, there shall have been furnished to the
Representatives a certificate, dated such Delivery Date and addressed to the
Representatives, signed on behalf of the Company by its Chief Executive Officer
or President and its Chief Financial Officer, to the effect that (i) the
representations, warranties and agreements of the Company contained in this
Agreement are true and correct, as if made at and as of such Delivery Date, and
the Company has complied with
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all the agreements and satisfied all the conditions on its part to be complied
with or satisfied at or prior to such Delivery Date; (ii) no stop order
suspending the effectiveness of the Registration Statement has been issued, and
no proceeding for that purpose has been initiated or threatened; (iii) the
signers of said certificate have carefully examined the Registration Statement
and the Prospectus and any amendments or supplements thereto, and such documents
contain all statements and information required to be included therein, and do
not include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make the statements
therein not misleading; (iv) since the Effective Date there has occurred no
event required to be set forth in an amendment or supplement to the Registration
Statement or the Prospectus which has not been so set forth; and (v) no event
contemplated by subsection (i) of this Section 7 in respect of any of the OMNI
Entities shall have occurred.
(i) Since the Effective Date, none of the OMNI Entities shall have
sustained any material loss or interference with its business by fire, flood,
explosion, accident or other calamity, whether or not covered by insurance, or
shall have become a party to or the subject of any litigation, court or
governmental action, investigation, order or decree which is materially adverse
to the OMNI Entities; nor shall there have been a change in the capital stock,
short-term debt or long-term debt of any of the OMNI Entities (other than as a
result of the consummation of the Share Exchange and the LLC Transactions) or
any material adverse change, or any development involving a prospective material
adverse change, in or affecting the general affairs, operations, business,
prospects, management, capitalization, financial condition, results of
operations or net worth of the OMNI Entities, which loss, litigation, change or
development, in the judgement of the Representatives, shall render it
impractical or inadvisable to proceed with the payment for and delivery of the
Shares.
(j) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by federal or state authorities, (iii) the United States shall have
become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such) as to make it, in the judgment of a
majority in interest of the several Underwriters, impracticable or inadvisable
to proceed with the public offering or delivery of the Shares being delivered on
such Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(k) The Nasdaq shall have approved the Shares for listing, subject
only to official notice of issuance and evidence of satisfactory distribution.
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(l) The Representatives shall have been furnished by the Company such
additional documents and certificates as the Representatives or counsel for the
Underwriters may reasonably request.
(m) Prior to the closing hereunder on the First Delivery Date, the
Share Exchange and the LLC Transactions shall have been consummated in
accordance with the description thereof contained in the Prospectus.
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to the Representatives and to counsel for the Underwriters. The
Company shall furnish to the Representatives conformed copies of such opinions,
certificates, letters and other documents in such number as they shall
reasonably request. If any of the conditions specified in this Section 7 shall
not have been fulfilled, when and as required by this Agreement, this Agreement
and all obligations of the Underwriters hereunder may be canceled at, or at any
time prior to, each Delivery Date, by the Representatives. Any such
cancellation shall be without liability of the Underwriters to the Company or
any of its affiliates. Notice of such cancellation shall be given to the Company
in writing, or by telegraph or telephone and confirmed in writing.
8. Indemnification and Contribution.
(a) The Company and OMNI Geophysical, jointly and severally, shall
indemnify and hold harmless each Underwriter, its officers and employees and
each person, if any, who controls any Underwriter within the meaning of the
Securities Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited to, any
loss, claim, damage, liability or action relating to purchases and sales of
Shares), to which that Underwriter, officer, employee or controlling person may
become subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained (A) in
any Preliminary Prospectus, the Registration Statement or the Prospectus or in
any amendment or supplement thereto or (B) in any blue sky application or other
document prepared or executed by the Company (or based upon any written
information furnished by the Company) specifically for the purpose of qualifying
any or all of the Shares under the securities laws of any state or other
jurisdiction (any such application, document or information being hereinafter
called a "Blue Sky Application"), (ii) the omission or alleged omission to state
in any Preliminary Prospectus, the Registration Statement or the Prospectus, or
in any amendment or supplement thereto, or in any Blue Sky Application any
material fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Shares or the offering contemplated hereby, and which is included as
part of or referred to in any loss, claim, damage, liability or action arising
out of or based upon matters covered by clause (i) or (ii) above (provided that
neither the Company nor OMNI Geophysical shall be liable under this clause (iii)
to the extent that it is determined in a final judgment by a court of competent
jurisdiction that such loss, claim, damage, liability or action resulted
directly from any such acts or failures to act undertaken or omitted to be taken
by such Underwriter through its gross negligence or willful misconduct), and
shall reimburse
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each Underwriter and each such officer, employee or controlling person promptly
upon demand for any legal or other expenses reasonably incurred by that
Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that neither the Company nor OMNI Geophysical shall be liable in any such case
to the extent that any such loss, claim, damage, liability or action arises out
of, or is based upon, any untrue statement or alleged untrue statement or
omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus, or in any such amendment or
supplement, or in any Blue Sky Application, in reliance upon and in conformity
with written information concerning such Underwriter furnished to the Company
through the Representatives by or on behalf of any Underwriter specifically for
inclusion therein. The foregoing indemnity agreement is in addition to any
liability which the Company or OMNI Geophysical may otherwise have to any
Underwriter or to any officer, employee or controlling person of that
Underwriter.
(b) Each Underwriter, severally but not jointly, shall indemnify and
hold harmless the Company, and its officers, employees and directors (including
any person who, with his or her consent, is named in the Registration Statement
as about to become a director of the Company), and each other person, if any,
who controls the Company within the meaning of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in
respect thereof, to which the Company or any such director, officer or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or in any amendment or supplement thereto, or in any Blue Sky
Application or (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or in any amendment or
supplement thereto, or in any Blue Sky Application any material fact required to
be stated therein or necessary to make the statements therein not misleading,
but in each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Underwriter furnished to the
Company through the Representatives by or on behalf of that Underwriter
specifically for inclusion therein, and shall reimburse the Company and any such
director, officer or controlling person for any legal or other expenses
reasonably incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred. The foregoing indemnity agreement is in addition to any liability
which any Underwriter may otherwise have to the Company or any such director,
officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section
8 of notice of any claim or the commencement of any action, the indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall
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be brought against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to participate therein
and, to the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel reasonably
satisfactory to the indemnified party. After notice from the indemnifying party
to the indemnified party of its election to assume the defense of such claim or
action, the indemnifying party shall not be liable to the indemnified party
under this Section 8 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that any Underwriter or
any such controlling person shall have the right to employ separate counsel in
any such action and participate in the defense thereof, but the fees and
expenses of such counsel shall be at the expense of such Underwriters or such
controlling person unless (i) the employment of such counsel has been
specifically authorized in writing by the Company or OMNI Geophysical, (ii) the
Company or OMNI Geophysical shall have failed to assume the defense and employ
counsel or (iii) the named parties to any such action (including any impleaded
parties) include both such Underwriter or such controlling person and the
Company or OMNI Geophysical, and such Underwriter or such controlling person
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the Company or OMNI Geophysical (in which case the Company or OMNI
Geophysical shall not have the right to assume the defense of such action on
behalf of such Underwriter or such controlling person and the fees and expenses
of such separate counsel shall be paid by the Company or OMNI Geophysical).
Neither the Company nor OMNI Geophysical shall, in connection with any one such
action or proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be liable for the reasonable fees and expenses of more than
one separate firm of attorneys (in addition to any local counsel) at any time
for such indemnified party, which firm shall be designated by the Underwriters.
No indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld) settle or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party or if there
be a final judgment of the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any
loss or liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for
any reason be unavailable to or insufficient to hold harmless an indemnified
party under Section 8(a) or 8(b) in respect of any loss, claim, damage or
liability, or any action in respect thereof, referred to therein, then each
indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company and OMNI Geophysical, on the one hand, and the
Underwriters, on the other hand, from the offering of the Shares or (ii) if the
allocation provided by clause (i) above
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is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company and OMNI Geophysical, on the one hand, and the
Underwriters, on the other hand, with respect to the statements or omissions
which resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company and OMNI Geophysical, on the one hand, and the
Underwriters, on the other hand, with respect to such offering shall be deemed
to be in the same proportion as the total net proceeds from the offering of the
Shares purchased under this Agreement (before deducting expenses) received by
the Company, on the one hand, and the total underwriting discounts and
commissions received by the Underwriters with respect to the Shares purchased
under this Agreement, on the other hand, bear to the total gross proceeds from
the offering of the Shares under this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or OMNI Geophysical or the Underwriters,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
OMNI Geophysical and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8 were to be determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8
shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public was offered to the public
exceeds the amount of any damages which such Underwriter has otherwise paid or
becomes liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute as provided in
this Section 8(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Underwriters severally confirm and the Company and OMNI
Geophysical acknowledge that the statements with respect to the public offering
of the Shares by the Underwriters set forth on the cover page of, the legend
concerning over-allotments on the inside front cover page of and the concession
and reallowance figures appearing under the caption "Underwriting" in, the
Prospectus are correct and constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters specifically for inclusion in the Registration Statement and the
Prospectus.
9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining non-
defaulting Underwriters shall be obligated to
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purchase the Shares which the defaulting Underwriter agreed but failed to
purchase on such Delivery Date in the respective proportions which the number of
Firm Shares set opposite the name of each remaining non-defaulting Underwriter
in Schedule 1 hereto bears to the total number of Firm Shares set opposite the
names of all the remaining non-defaulting Underwriters in Schedule 1 hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Shares on such Delivery Date if the total
number of Shares which the defaulting Underwriter or defaulting Underwriters
agreed but failed to purchase on such date exceeds 9.09% of the total number of
Shares to be purchased on such Delivery Date, and any remaining non-defaulting
Underwriter shall not be obligated to purchase more than 110% of the number of
the Shares which it agreed to purchase on such Delivery Date pursuant to the
terms of Section 2. If the foregoing maximums are exceeded, the remaining non-
defaulting Underwriters, or those other Underwriters satisfactory to the
Representatives who so agree, shall have the right, but shall not be obligated,
to purchase, in such proportion as may be agreed upon among them, all the Shares
to be purchased on such Delivery Date. If the remaining Underwriters or other
Underwriters satisfactory to the Representatives do not elect to purchase the
Shares which the defaulting Underwriter or Underwriters agreed but failed to
purchase on such Delivery Date, this Agreement (or, with respect to the Second
Delivery Date, the obligation of the Underwriters to purchase, and of the
Company to sell, the Option Shares) shall terminate without liability on the
part of any non-defaulting Underwriter or the Company, except that the Company
will continue to be liable for the payment of expenses to the extent set forth
in Sections 6 and 11. As used in this Agreement, the term "Underwriter"
includes, for all purposes of this Agreement unless the context requires
otherwise, any party not listed in Schedule 1 hereto who, pursuant to this
Section 9, purchases Firm Shares which a defaulting Underwriter agreed but
failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages, including expenses paid by the
Company pursuant to Sections 6 and 11, caused by its default. If other
Underwriters are obligated or agree to purchase the Shares of a defaulting or
withdrawing Underwriter, either the Representatives or the Company may postpone
the Delivery Date for up to seven full Business Days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may be
terminated by the Representatives by notice given to and received by the Company
prior to delivery of and payment for the Firm Shares if, prior to that time, any
of the events described in Section 7(i) or 7(j) shall have occurred or if the
Underwriters shall decline to purchase the Shares for any reason permitted under
this Agreement.
11. Reimbursement of Underwriters' Expenses. If the Company shall
fail to tender the Shares for delivery to the Underwriters by reason of any
failure, refusal or inability on the part of the Company to perform any
agreement to be performed by it, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company or
OMNI Geophysical is not fulfilled, the Company and OMNI Geophysical will
reimburse the Underwriters for all reasonable out-of-pocket expenses (including
fees and disbursements of counsel) incurred by the Underwriters in connection
with this Agreement and the proposed purchase of the Shares, and
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upon demand the Company and OMNI Geophysical shall collectively pay the full
amount thereof to the Representatives. If this Agreement is terminated pursuant
to Section 9 by reason of the default of one or more Underwriters, neither the
Company nor OMNI Geophysical shall be obligated to reimburse any defaulting
Underwriter on account of those expenses.
12. Notices. Any notice, consent, request, instruction, approval and
other communication provided for herein shall be in writing, shall be delivered
or sent by mail, telex or facsimile transmission and shall be deemed validly
given, made or served (i) on the date on which it is delivered personally with
receipt acknowledged, (ii) five Business Days after it is sent by registered or
certified mail (receipt requested and postage prepaid), (iii) one Business Day
after it is sent by overnight courier (charges prepaid) or (iv) on the same
Business Day when sent before 5:00 P.M., recipient's time (and on the next
Business Day when sent after 5:00 P.M., recipient's time) by telex or
telecopier, transmission confirmed and charges prepaid. Such notices shall be
in writing, and
(a) if to the Company or OMNI Geophysical, such notice shall be
addressed to the Company at 4484 NE Evangeline Thruway, Carencro, Louisiana
70520, Attention: Mr. David A. Jeansonne (Fax: 318/896-6655); and
(b) if to the Underwriters, such notice shall be addressed to the
Representatives in care of Lehman Brothers Inc., 3 World Financial Center,
11th Floor, New York, New York 10285-1100, Attention: Syndicate Department
(Fax: 212/526-6588), with a copy, in the case of any notice pursuant to
Section 8(c), to the Director of Litigation, Office of the General Counsel,
Lehman Brothers Inc., 3 World Financial Center, 10th Floor, New York, New
York 10285;
provided, however, that any notice to a Underwriter pursuant to Section 8(c)
shall be delivered or sent by mail, telex or facsimile transmission to such
Underwriter at its address set forth in its acceptance telex to the
Representatives, which address will be supplied to any other party hereto by the
Representatives upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company and
OMNI Geophysical shall be entitled to act and rely upon any request, consent,
notice or agreement given or made on behalf of the Underwriters by Lehman
Brothers Inc. on behalf of the Representatives.
13. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the Company, OMNI
Geophysical and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of those persons, except that (a) the
representations, warranties, indemnities and agreements of the Company and OMNI
Geophysical contained in this Agreement shall also be deemed to be for the
benefit of the person or persons, if any, who control each Underwriter within
the meaning of Section 15 of the Securities Act and (b) the indemnity agreement
of the Underwriters contained in Section 8(b) of this Agreement shall be deemed
to be for the benefit of directors of the Company, officers of the Company who
have signed the Registration Statement and any person controlling the Company
within the meaning of Section 15 of the Securities Act. Nothing in this
Agreement is intended or shall be construed to give any person, other than the
persons referred to in this Section
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13, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
14. Survival. The respective indemnities, representations,
warranties and agreements of the Company and OMNI Geophysical and the
Underwriters contained in this Agreement or made by or on behalf on them,
respectively, pursuant to this Agreement, shall survive the delivery of and
payment for the Shares and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person controlling
any of them.
15. Definition of the Term "Business Day." For purposes of this
Agreement, "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF NEW YORK.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
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<PAGE>
If the foregoing correctly sets forth the agreement among the Company,
OMNI Geophysical and the Underwriters, please indicate your acceptance in the
space provided for that purpose below.
Very truly yours,
OMNI ENERGY SERVICES CORP.
By:
------------------------------
David A. Jeansonne
Chairman and Chief Executive Officer
OMNI GEOPHYSICAL, L.L.C.
By:
-------------------------------
Name:
Title:
Accepted:
LEHMAN BROTHERS INC.
PRUDENTIAL SECURITIES INCORPORATED
RAYMOND JAMES & ASSOCIATES, INC.
For themselves and as
Representatives of the
several Underwriters named
in Schedule 1 hereto
By: LEHMAN BROTHERS INC.
By:
-----------------------------
Authorized Representative
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<PAGE>
EXHIBIT A
LEHMAN BROTHERS INC. __________________, 1997
PRUDENTIAL SECURITIES INCORPORATED
RAYMOND JAMES & ASSOCIATES
c/o Lehman Brothers Inc.
Three World Financial Center
New York, New York 10285
Dear Sirs:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement") among OMNI Energy Services
Corp., a Louisiana corporation (the "Company"), OMNI Geophysical, L.L.C., a
Louisiana limited liability company, and Lehman Brothers Inc., Prudential
Securities Incorporated and Raymond James & Associates, Inc., as Underwriters,
relating to an underwritten public offering of common stock, par value $.01 per
share (the "Common Stock"), of the Company.
To induce you to enter into the Underwriting Agreement, the undersigned agrees
that he/she will not, directly or indirectly, (1) offer for sale, sell, pledge
or otherwise dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the disposition by any person at
any time in the future of) any shares of Common Stock or securities convertible
into or exchangeable for Common Stock or (2) enter into any swap or other
derivatives transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of shares of Common Stock, whether
any such transaction described in clause (1) or (2) above is to be settled by
delivery of Common Stock or other securities, in cash or otherwise, in each case
for a period of 180 days from the date of the Prospectus (as defined in the
Underwriting Agreement), without the prior written consent of Lehman Brothers
Inc.
If for any reason the Underwriting Agreement is terminated before the First
Delivery Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated.
Yours very truly,
___________________________
<PAGE>
EXHIBIT B
OPINION OF JONES, WALKER, WAECHTER, POITEVENT
CARRERE & DENEGRE, L.L.P.
1. The Company and the Subsidiaries have been duly organized and are
validly existing in good standing under the laws of their respective
jurisdictions of incorporation. The Company and the Subsidiaries have full
power and authority to own, lease and operate their respective properties and
conduct their respective businesses and are duly qualified and registered for
the transaction of business and are in good standing under the laws of each
jurisdiction in which the character of the respective businesses conducted by
them or the location of the properties owned, leased or operated by them make
such qualification or registration necessary, except where the failure to
qualify or register or to be in good standing would not, individually or in the
aggregate, have a material adverse effect on the condition (financial or other),
results of operations, business or prospects of the Company and the Subsidiaries
taken as a whole.
2. All the outstanding shares of capital stock or other equity
interests of each of the Subsidiaries have been duly authorized and validly
issued, are fully paid and nonassessable; and all of such shares of capital
stock or other equity interests are owned by the Company directly, or indirectly
through one of the other Subsidiaries, free and clear of any lien, adverse
claim, security interest or other encumbrance known to such counsel after due
inquiry.
3. The authorized and outstanding capital stock of the Company is as
set forth in the Prospectus. All of the issued and outstanding shares of
capital stock of the Company have been duly authorized, were validly issued and
are fully paid and nonassessable. The Company has all requisite power and
authority to issue, sell and deliver the Shares in accordance with and upon the
terms and conditions set forth in the Underwriting Agreement. The Shares have
been duly and validly authorized and, when issued and delivered against payment
therefor as provided in the Underwriting Agreement, will be duly and validly
issued, fully paid and nonassessable.
4. Except as described in the Prospectus, here are no preemptive
rights or other rights to subscribe for or to purchase, nor any restriction upon
the voting or transfer of, any shares of Common Stock pursuant to Louisiana law
or the Company's articles of incorporation, bylaws or other governing documents
or any agreement or other instrument known to such counsel to which the Company
or any of the Subsidiaries is a party or by which any of them may be bound.
Except as described in the Prospectus, to the knowledge of such counsel, there
are no outstanding options, warrants or rights to purchase any shares of capital
stock of the Company, any securities convertible into or exercisable or
exchangeable for any shares of capital stock of the Company, any units or other
equity interests in OMNI Geophysical or any securities convertible into or
exercisable or exchangeable for any units or other equity interests of OMNI
Geophysical.
5. The Company and OMNI Geophysical have all requisite power and
authority to execute and deliver the Underwriting Agreement and to incur and
perform their respective obligations provided therein, including the Share
Exchange and the LLC Transactions, and in the
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Registration Statement and the Prospectus. The Underwriting Agreement has been
duly and validly authorized, executed and delivered by the Company and OMNI
Geophysical.
6. Neither the offering, issuance and sale by the Company of the
Shares, the execution, delivery and performance of the Underwriting Agreement by
the Company and OMNI Geophysical nor the consummation of the transactions
contemplated thereby (including the Share Exchange and the LLC Transactions) (i)
conflicts or will conflict with or constitutes or will constitute a breach or
violation of, or a default (or an event which, with notice or lapse of time or
both, would constitute such a default) under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which any of the OMNI
Entities is a party or by which any of them is bound or to which any of the
property or assets of any of them is subject, (ii) constitutes or will
constitute a violation of the articles of incorporation, articles of
organization, operating agreement, bylaws or other governing documents of any of
the OMNI Entities, (iii) violates or will violate any law, statute or regulation
or any order, rule decree, judgment or injunction of any court or governmental
agency or body directed to any of the OMNI Entities or any of their properties
in a proceeding to which any of them or their property is a party or (iv) will
result in the creation or imposition of any lien, charge, claim or encumbrance
upon any property or asset of any of the OMNI Entities.
7. Except for the registration of the Shares under the Securities
Act and such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act, the securities or
"Blue Sky" laws of certain jurisdictions and applicable foreign securities laws
in connection with the purchase and distribution of the Shares by the
Underwriters, no consent, approval, authorization or order of, or filing or
registration with, any court or governmental agency or body is required for the
execution, delivery and performance of the Underwriting Agreement by the Company
and the consummation of the transactions contemplated thereby, including without
limitation the Share Exchange and the LLC Transactions.
8. To the best of such counsel's knowledge, except as described in
the Prospectus, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered pursuant to any
other registration statement filed by the Company under the Securities Act.
9. To such counsel's knowledge, there are no legal or governmental
actions, suits or proceedings pending or threatened to which the Company or any
of the Subsidiaries is a party or of which any of their respective property or
assets is subject which, if determined adversely to the Company or the
Subsidiaries, would materially interfere with or adversely affect the issuance
of the Shares or in any manner call into question the validity of the
Underwriting Agreement and the transactions contemplated thereby, including
without limitation the Share Exchange and the LLC Transactions, or the
performance by the Company and OMNI Geophysical of their respective obligations
thereunder, or would individually or in the aggregate have a material adverse
effect on
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the condition (financial or other), results of operations, business or prospects
of the Company and the Subsidiaries taken as a whole.
10. As of the date hereof, neither the Company nor any of the
Subsidiaries is (a) a "public utility company", a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" thereof, within
the meaning of the Public Utility Holding Company Act of 1935, as amended, or
(b) an "investment company" or a company "controlled by" an "investment company"
within the meaning of the Investment Company Act and the rules and regulations
thereunder.
11. To such counsel's knowledge, the Company and the Subsidiaries
possess all certificates, authorizations or permits issued by the appropriate
local, state, federal or foreign regulatory agencies or bodies necessary to
conduct the business currently (or, as described or contemplated in the
Prospectus, to be) operated by them, except for such certificates,
authorizations or permits which, if not obtained, would not have, individually
or in the aggregate, a material adverse effect on the condition (financial or
other), results of operations, business or prospects of the Company and the
Subsidiaries taken as a whole; and neither the Company nor the Subsidiaries
have received any notice of proceedings relating to the revocation or
modification of any such certificate, authorization or permit.
12. Neither OMNI Geophysical nor the Company will incur any liability
for federal, state, local or other taxes as a result of the Share Exchange,
except for any such liability which would not, individually or in the aggregate,
have a material adverse effect on the condition (financial or other), results of
operations, business or prospects of the Company and the Subsidiaries taken as a
whole.
13. The Shares have been approved for inclusion on the Nasdaq
National Market, subject only to official notice of issuance.
14. The Registration Statement was declared effective under the
Securities Act at _________ New York City time on ____________, 1997; the
Prospectus was filed with the Commission pursuant to subparagraph ____ of Rule
424(b) of the Rules and Regulations on ___________, 1997; and no stop order
suspending the effectiveness of the Registration Statement has been issued and,
to the knowledge of such counsel, no proceeding for that purpose is pending or
threatened by the Commission.
15. The Registration Statement and the Prospectus and any further
amendments or supplements thereto made by the Company prior to the date hereof
(other than the financial statements, as to which such counsel need express no
opinion) comply as to form in all material respects with the requirements of the
Securities Act and the Rules and Regulations.
16. The statements in the Registration Statement, insofar as such
statements purport to summarize the provisions of the documents or agreements
specifically referred to therein or matters of law or legal conclusions, are
true and correct in all material respects and constitute a fair summary thereof.
The Common Stock conforms in all material respects to the description thereof
contained under the caption "Description of Capital Stock" in the Prospectus.
To such
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counsel's knowledge, there are no contracts or other documents which are
required to be described in the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act or by the Rules and Regulations
which have not been described or filed as exhibits to the Registration
Statement.
17. The issuance of Common Units in the Share Exchange is exempt from
the registration requirements of the Securities Act and the securities laws of
any state having jurisdiction with respect thereto.
18. Upon delivery to the Underwriters of certificates evidencing the
Shares issued in the name of the Underwriters and payment by the Underwriters of
the purchase price for the Shares, the Underwriters will acquire the Shares free
of any adverse claim (as such term is defined in Section 8-302 of the New York
Uniform Commercial Code) assuming that the Underwriters are acting in good faith
and without notice of any adverse claim.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, the
independent public accountants of the Company and representatives of the
Underwriters, at which the contents of the Registration Statement and Prospectus
and related matters were discussed, and although such counsel is not passing
upon, and does not assume responsibility for the accuracy, completeness or
fairness of, any portion of the Registration Statement or the Prospectus, as
amended or supplemented (except to the extent specified in such counsel's
opinion), nothing has come to the attention of such counsel that causes such
counsel to believe that as of its effective date, the Registration Statement or
any further amendment thereto made by the Company prior to the date hereof
(other than the financial statements, including the notes thereto and the
auditor's report thereon, and the other financial and statistical information
contained therein, as to which such counsel need express no opinion) contained
an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading or that, as of its date and as of the date hereof, the Prospectus or
any further amendment or supplement thereto made by the Company prior to the
date hereof (other than the financial statements, including the notes thereto
and the auditor's report thereon, and the other financial and statistical
information contained therein, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state a material
fact necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
In rendering such opinion, such counsel may (i) rely in respect of
matters of fact upon certificates of officers and employees of the Company and
upon information obtained from public officials, (ii) assume that all documents
submitted to them as originals are authentic, that all copies submitted to them
conform to the originals thereof, and that the signatures on all documents
examined by such counsel are genuine and (iii) state that their opinion is
limited to federal laws and the laws of the State of Louisiana.
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SCHEDULE 1
LIST OF UNDERWRITERS
NUMBER OF
UNDERWRITERS COMMON SHARES
- -------------- -------------
Lehman Brothers Inc.
Prudential Securities Incorporated
Raymond James & Associates, Inc.
TOTAL 3,500,000
=========
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<PAGE>
EXHIBIT 2.1
UNIT EXCHANGE AGREEMENT
This Unit Exchange Agreement dated as of November ___, 1997, (the
"Agreement") is by and among David A. Jeansonne, Roger E. Thomas, Allen R.
Woodard (in his individual capacity and as natural tutor of Wesley William
Woodard and of Kaylee Theresa Woodard), Shannon H. Daigle, Ben E. Thomas,
Christina Thomas, Alan J. Thomas, Advantage Capital Partners II Limited
Partnership, Advantage Capital Partners III Limited Partnership, Advantage
Capital Partners IV Limited Partnership, Advantage Capital Partners V Limited
Partnership, Advantage Capital Partners Limited Partnership and American
Aviation Incorporated (each a "Common Unit Holder" and collectively, the "Common
Unit Holders"); David E. Crays, William F. Fincher, David Booth and Rita
Darbonne (each as "Option Holder" and collectively, the "Option Holders");
American Capital Management Corporation ("ACMC") and OMNI Energy Services Corp.
("Omni Energy").
WITNESSETH:
WHEREAS, the Common Unit Holders are the owners of all 113,476 issued and
outstanding common units (the "Common Units") of OMNI Geophysical, L.L.C., a
Louisiana limited liability company ("Omni") and the Option Holders are the
owners of the 1,116 outstanding options to purchase additional Common Units (the
"Common Unit Options"), the ownership of each as represented on Exhibit A
hereto;
WHEREAS, Omni Energy desires to issue 12,000,000 shares of its common stock
("Common Stock") and 118,018 options to purchase common stock at an exercise
price of $2.28 per share ("Common Stock Options"), in exchange for the 113,476
Common Units and for the corresponding 1,116 outstanding Common Unit Options.
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and in reliance upon the undertakings,
representations and warranties contained herein, the parties hereby agree as
follows:
ARTICLE 1
EXCHANGE OF UNITS AND OPTIONS; CANCELLATION OF SHARES
Section 1.1 Exchange of Units and Options. Subject to the terms and
conditions stated herein, the Common Unit Holders hereby exchange with full
title the 113,476 Common Units and the Option Holders hereby exchange with full
title the 1,116 Common Unit Options, for which Omni Energy hereby exchanges
12,000,000 shares of Common Stock and 118,018 Common Stock Options (the
"Exchange"), respectively.
Section 1.2 Cancellation of Shares. Upon the consummation of the
transactions set forth in Section 1.1 above, the 1,000 shares of Common Stock
previously issued by Omni Energy to ACMC shall be cancelled and no consideration
shall be given for such shares. ACMC hereby agrees and consents to the
cancellation of such shares.
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<PAGE>
ARTICLE 2
CONSENTS
Section 2.1 Amendment to Schedule A Operating Agreement. The Common Unit
Holders hereby agree to amend and do hereby amend Schedule A of the Amended
and Restated Operating Agreement (the "Operating Agreement") of Omni to reflect
the Exchange of Common Units by the Common Unit Holders. The revised Schedule A
is attached as Exhibit B to this Agreement.
Section 2.2 Consent to Exchange. The Common Unit Holders, representing
all of the members of Omni ("Members") consent to : (a) the Exchange pursuant to
this Agreement; (b) the transfer of each of the Common Unit Holder's interests
to Omni Energy as set forth in Exhibit A; (c) the admission of Omni Energy as a
substitute Member for each Common Unit Holder; and (d) the Amendment to Schedule
A of the Operating Agreement as set forth in Exhibit B. The Option Holders
consent to the exchange of their 1,116 Common Unit Options for 118,018 options
to purchase Omni Energy Common Stock.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF
COMMON UNIT HOLDERS AND OPTION HOLDERS
The Common Unit Holders and Option Holders represent and warrants to Omni
Energy as of the date hereof as follows:
Section 3.1 Ownership. The Common Unit Holders and Option Holders are
the sole record and beneficial owners of the Common Units and Common Unit
Options, respectively. The Common Unit Holders have good and marketable title
to the Common Units and the right to deliver the Common Units in accordance with
the terms of this Agreement. The Option Holders have good and marketable title
to the Common Unit Options and the right to deliver the Common Unit Options in
accordance with the terms of this Agreement. The transfers of Common Units and
Common Unit Options to Omni Energy in accordance with the terms of this
Agreement transfer good and marketable title to the Common Units and Common Unit
Options to Omni Energy free and clear of all liens, restrictions, rights,
options and claims of every kind.
Section 3.2 Authority; Enforceability. The Common Unit Holders and the
Option Holders have the full legal right, power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by the
Common Unit Holders and the Option Holders and constitutes a valid and legally
binding obligation of the Common Unit Holders and the Option Holders enforceable
against them in accordance with their respective terms, except as (a)
enforceability may be limited by applicable bankruptcy, insolvency, fraudulent
transfer, moratorium or similar laws from time to time in effect affecting
creditors' rights generally and (b) the availability of equitable remedies may
be limited by equitable principles of general applicability.
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<PAGE>
Section 3.3 No Conflict. Neither the execution and the delivery of this
Agreement by the Common Unit Holders and the Option Holders, nor the
consummation of the transactions contemplated hereby: (a) violate, conflict
with, or result in a breach of any provisions of; (b) constitute a default (or
an event which, with notice or lapse of time or both, would constitute a
default) under; (c) result in the termination of or accelerate the performance
required by; (d) result in the creation of any Lien upon the Common Units or
Common Unit Options under any of the terms, conditions or provisions of the
Articles of Organization or the Operating Agreement of Omni, or to any material
extent, under the terms and conditions of any note, bond, mortgage, indenture,
deed of trust, lease, license, loan agreement or other instrument or obligation
to or by which Omni, the Common Unit Holders or Option Holders or any of their
respective assets are bound; or (e) to any material extent, violate any
Applicable Law binding upon Omni, the Common Unit Holders or Option Holders or
any of their respective assets.
Section 3.4 No Other Representations or Warranties. Except as set forth
above in this Section 3, no other representations or warranties, express or
implied, are made in this Agreement by the Common Unit Holders or the Option
Holders to Omni Energy.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OMNI ENERGY
Omni Energy represents and warrants to the Common Unit Holders and the
Option Holders as of the date hereof as follows:
Section 4.1 Organization. Omni Energy is a corporation duly organized,
validly existing and in good standing under the laws of Louisiana and has all
requisite corporate power and authority to own its properties and carry on its
business as now being conducted.
Section 4.2 Capitalization. As of the date of this Agreement, the
authorized capital stock of Omni Energy consists of 45,000,000 Common Shares,
$0.01 par value per share; and 5,000,000 shares of preferred stock, $0.01 par
value per share, issuable in series.
Section 4.3 Authority; Enforceability. Omni Energy has the requisite
corporate power and authority to execute and deliver this Agreement and to carry
out its obligations hereunder. The execution, delivery and performance of this
Agreement and the consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of Omni Energy
and no other corporate proceedings on the part of Omni Energy are necessary to
authorize this Agreement or to consummate the transactions so contemplated.
This Agreement has been duly executed and delivered by Omni Energy and
constitutes a valid and binding obligation of Omni Energy, enforceable against
Omni Energy in accordance with its terms, except as (a) enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent transfer, moratorium or
similar laws from time to time in effect affecting creditors' rights generally
and (b) the availability of equitable remedies may be limited by equitable
principles of general applicability.
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<PAGE>
Section 4.4 No Conflict. Neither the execution and delivery of this
Agreement by Omni Energy, nor the consummation of the transactions contemplated
hereby, do or will: (a) violate, conflict with, or result in a breach of any
provisions of; (b) constitute a default (or an event which, with notice or lapse
of time or both, would constitute a default) under; (c) result in the
termination of or accelerate the performance required by; (d) result in the
creation of a Lien upon the Omni Energy shares of common stock or common stock
options under any of the terms, conditions or provisions of the Articles of
Incorporation or Bylaws of Omni Energy or any note, bond, mortgage, indenture,
deed of trust, lease, license, loan agreement or other instrument or obligation
to or by which Omni Energy or any of its assets are bound; or (e) violate any
Applicable Law binding upon Omni Energy and on any of its assets.
Section 4.5 Shares to be Exchanged. When issued in accordance with the
terms of this Agreement, the shares of Common Stock to be exchanged for the
Common Units will be duly authorized, validly issued and non-assessable shares
of the Common Stock. The Common Stock to be issued upon exercise of the Common
Stock Options, if and when exercised, will be duly authorized, validly issued
and non-assessable shares of Common Stock.
Section 4.6 No Other Representations or Warranties. Except as set forth
above in this Section 4, no other representations or warranties, express or
implied, are made in this Agreement by Omni Energy to the Common Unit Holders or
Option Holders.
ARTICLE 5
INDEMNIFICATION; REMEDIES
Section 5.1 Indemnification by Common Unit Holders. Except as otherwise
expressly provided in this Article 5, the Common Unit Holders, as their sole
obligation and the exclusive remedy of Omni Energy, shall jointly and severally
defend, indemnify and hold harmless Omni Energy, and shall reimburse Omni
Energy, for, from and against, each and every demand, claim, action, loss,
liability, judgment, damage, cost and expense (including, without limitation,
interest, penalties, costs of preparation and investigation, and the reasonable
fees, disbursements and expenses of attorneys, accountants and other
professional advisors) (collectively, "Losses") imposed on or incurred by Omni
Energy, directly or indirectly, relating to, resulting from or arising out of:
(a) any inaccuracy in any representation or warranty of the Common Unit Holders
in this Agreement, whether or not Omni Energy relied thereon or had knowledge
thereof, or (b) any breach or nonperformance of any covenant, agreement or other
obligation of the Common Unit Holders under this Agreement or any certificate,
document or other instrument delivered or to be delivered pursuant hereto.
Section 5.2 Indemnification by Options Holders. Except as otherwise
expressly provided in this Article 5, the Option Holders, as their sole
obligation and the exclusive remedy of Omni Energy, shall jointly and severally
defend, indemnify and hold harmless Omni Energy, and shall reimburse Omni
Energy, for, from and against, each and every demand, claim, action, loss,
liability, judgment, damage, cost and expense (including, without limitation,
interest, penalties, costs of
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<PAGE>
preparation and investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and other professional advisors)
(collectively, "Losses") imposed on or incurred by Omni Energy, directly or
indirectly, relating to, resulting from or arising out of: (a) any inaccuracy in
any representation or warranty of the Option Holders in this Agreement, whether
or not Omni Energy relied thereon or had knowledge thereof, or (b) any breach or
nonperformance of any covenant, agreement or other obligation of the Option
Holders under this Agreement or any certificate, document or other instrument
delivered or to be delivered pursuant hereto.
Section 5.3 Indemnification by Omni Energy. Except as otherwise expressly
provided in this Article 5, Omni Energy, as its sole obligation and the
exclusive remedy of the Common Unit Holders and Option Holders, shall defend,
indemnify and hold harmless the Common Unit Holders and Option Holders, and
shall reimburse them, for, from and against all Losses imposed on or incurred by
the Common Unit Holders and Option Holders, directly or indirectly, relating to,
resulting from or arising out of: (a) any inaccuracy in any representation or
warranty of Omni Energy in this Agreement, whether or not the Common Unit
Holders or Option Holders relied thereon or had knowledge thereof, or (b) any
breach or nonperformance of any covenant, agreement or other obligation of Omni
Energy under this Agreement or any certificate, document or other instrument
delivered or to be delivered pursuant hereto.
Section 5.4 Notice and Defense of Third Party Claims. If any third party
demand, claim, action or proceeding shall be brought or asserted under this
Article 5 against an indemnified party or any successor thereto (the
"Indemnified Person") in respect of which indemnity may be sought under this
Article 5 from an indemnifying person or any successor thereto (the
"Indemnifying Person"), the Indemnified Person shall give prompt written notice
thereof to the Indemnifying Person who shall have the right to assume its
defense, including the hiring of counsel reasonably satisfactory to the
Indemnified Person and the payment of all expenses; except that any delay or
failure to so notify the Indemnifying Person shall relieve the Indemnifying
Person of its obligations under this Article 5 only to the extent, if at all,
that it is prejudiced by reason of such delay or failure. The Indemnified Person
shall have the right to employ separate counsel in any of the foregoing actions,
claims or proceedings and to participate in the defense thereof, but the fees
and expenses of such counsel shall be at the expense of the Indemnified Person
unless both the Indemnified Person and the Indemnifying Person are named as
parties and the Indemnifying Person and the Indemnified Person shall in good
faith agree that representation by the same counsel is inappropriate. In the
event that the Indemnifying Person, within ten days after notice of any such
action or claim, does not assume the defense thereof, the Indemnified Person
shall have the right to undertake the defense, compromise or settlement of such
action, claim or proceeding for the account of the Indemnifying Person, subject
to the right of the Indemnifying Person to assume the defense of such action,
claim or proceeding with counsel reasonably satisfactory to the Indemnified
Person at any time prior to the settlement, compromise or final determination
thereof. Anything in this Article 5 to the contrary notwithstanding, the
Indemnifying Person shall not, without the Indemnified Person's prior consent,
settle or compromise any action or claim or consent to the entry of any judgment
with respect to any action, claim or proceeding for anything other than money
damages paid by the Indemnifying Person. The Indemnifying Person may, without
the Indemnified Person's prior consent, settle or compromise any such action,
claim or proceeding or consent to entry of any judgment with respect
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<PAGE>
to any such action or claim that requires solely the payment of money damages by
the Indemnifying Person and that includes as an unconditional term thereof the
release by the claimant or the plaintiff of the Indemnified Person from all
liability in respect of such action, claim or proceeding.
ARTICLE 6
DEFINED TERMS
Definitions. In addition to the other defined terms used herein, as used
in this Agreement, the following terms when capitalized have the meanings
indicated.
"Applicable Law" shall mean any statute, law, rule or regulation or any
judgment, order, writ, injunction or decree of any Governmental Entity to which
a specified person or its property is subject.
"Governmental Entity" shall mean any court or tribunal in any jurisdiction
or any public, governmental or regulatory body, agency, department, commission,
board, bureau or other authority or instrumentality.
"Liens" shall mean pledges, liens, defects, leases, licenses, equities,
options, rights to buy, conditional sales contracts, charges, claims,
encumbrances, security interests, easements, restrictions, chattel mortgages,
mortgages or deeds of trust, of any kind or nature whatsoever.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Survival of Representations, Warranties and Agreements. The
representations, warranties, covenants and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Exchange
and shall not be limited or affected by any investigation by or on behalf of any
party hereto.
Section 7.2 Notices. All notices hereunder must be in writing and shall
be deemed to have been given upon receipt of delivery by: (a) personal delivery
to the designated individual; (b) certified or registered mail, postage prepaid,
return receipt requested; (c) a nationally recognized overnight courier service
(against a receipt therefor); or (d) facsimile transmission with confirmation of
receipt. All such notices must be addressed to the address at which any party
hereto may have notified the other in writing.
Section 7.3 Headings; Gender. When a reference is made in this Agreement
to a section, exhibit or schedule, such reference shall be to a section, exhibit
or schedule of this Agreement unless otherwise indicated. The headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. All personal
pronouns used in this Agreement shall include the other genders, whether used in
the masculine, feminine or
-6-
<PAGE>
neuter gender, and the singular shall include the plural and vice versa,
whenever and as often as may be appropriate.
Section 7.4 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents, exhibits and instruments referred to herein)
(a) constitutes the entire agreement and supersedes all prior agreements, and
understandings and communications, both written and oral, among the parties with
respect to the subject matter hereof, and (b) is not intended to confer upon any
person other than the parties hereto any rights or remedies hereunder.
Section 7.5 Governing Law. This Agreement shall be governed and construed
in accordance with the laws of the State of Louisiana without regard to any
applicable principles of conflicts of law.
Section 7.6 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party.
Section 7.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by reason of any
rule of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any adverse manner to either party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being enforced,
the parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the transactions contemplated hereby are
fulfilled to the extent possible, and in any case such term or provision shall
be deemed amended to the extent necessary to make it no longer invalid, illegal
or unenforceable.
Section 7.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which taken
together shall constitute one and the same document.
Section 7.9 Amendment and Modification. This Agreement may not be amended
or modified except by an instrument in writing signed by each of the parties
hereto.
Section 7.10 Limitation of Liability. Notwithstanding any other
provision of this Agreement, in no event shall any party hereto be liable to any
other party hereto with respect to breach or violation of any provision in this
Agreement, whether based on contract, tort (including negligence), strict
liability or other theory of law or equity, for loss of anticipated profits or
consequential loss or damage of any nature arising at any time or from any cause
whatsoever.
-7-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
signed themselves or by their respective duly authorized officers as of the date
first written above.
"COMMON UNIT HOLDERS"
ADVANTAGE CAPITAL PARTNERS
LIMITED PARTNERSHIP
By: Advantage Capital Corporation,
General Partner
By:
----------------------------------
Name: Steven T. Stull
Title: President
ADVANTAGE CAPITAL PARTNERS II
LIMITED PARTNERSHIP
By: Advantage Capital Corporation,
General Partner
By:
----------------------------------
Name: Steven T. Stull
Title: President
ADVANTAGE CAPITAL PARTNERS III
LIMITED PARTNERSHIP
By: Advantage Capital Management
Corporation, General Partner
By:
----------------------------------
Name: Steven T. Stull
Title: President
ADVANTAGE CAPITAL PARTNERS IV
LIMITED PARTNERSHIP
By: Advantage Capital Financial
Company, L.L.C., General Partner
By:
-----------------------------------
Name: Steven T. Stull
Title: President
-8-
<PAGE>
ADVANTAGE CAPITAL PARTNERS V
LIMITED PARTNERSHIP
By: Advantage Capital Advisors, L.L.C.,
General Partner
By:
------------------------------------
Name: Steven T. Stull
Title: President
AMERICAN AVIATION, INCORPORATED
By:
------------------------------------
Name: David A. Jeansonne
Title: President and Chief Executive
Officer
----------------------------------------
David A. Jeansonne
----------------------------------------
Roger T. Thomas
Wesley William Woodard
By:
-------------------------------------
Allen R. Woodard,
Natural Tutor
Kaylee Theresa Woodard
By:
-------------------------------------
Allen R. Woodard,
Natural Tutor
----------------------------------------
Ben E. Thomas
----------------------------------------
Christina M. Thomas
-----------------------------------------
Alan J. Thomas
-----------------------------------------
Allen R. Woodard
-9-
<PAGE>
-----------------------------------------
Shannon Daigle
"OMNI OPTION HOLDERS"
-----------------------------------------
David E. Crays
-----------------------------------------
William F. Fincher
-----------------------------------------
David Booth
-----------------------------------------
Rita Darbonne
ADVANTAGE CAPITAL MANAGEMENT
CORPORATION
By:
-------------------------------------
Name: Steven T. Stull
Title: President
OMNI ENERGY SERVICES CORP.
By:
-------------------------------------
Name: Roger E. Thomas
Title: President
-10-
<PAGE>
EXHIBIT A
---------
OMNI GEOPHYSICAL, L.L.C. COMMON UNIT HOLDERS
<TABLE>
<CAPTION>
MEMBERS AND ADDRESS TOTAL NUMBER COMMON UNIT TOTAL NUMBER
OF SHARE PERCENTAGE OMNI ENERGY
OMNI COMMON COMMON SHARES
UNITS
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Allen R. Woodard 12,164 10.719% 1,286,333
4484 Interstate 49, North
Lafayette, Louisiana 70520
- ------------------------------------------------------------------------------------------------
Allen R. Woodard, Natural Tutor 500 0.441% 52,875
of Wesley William Woodard
1901 Sevanne Road
Houma, Louisiana 70360
- ------------------------------------------------------------------------------------------------
Allen R. Woodard, Natural Tutor 500 0.441% 52,875
of Kaylee Theresa Woodard
1901 Sevanne Road
Houma, Louisiana 70360
- ------------------------------------------------------------------------------------------------
Roger E. Thomas 10,664 9.398% 1,127,708
4484 Interstate 49, North
Lafayette, Louisiana 70520
- ------------------------------------------------------------------------------------------------
Ben E. Thomas 500 0.441% 52,875
1524 Applewood Road
Baton Rouge, Louisiana 70808
- ------------------------------------------------------------------------------------------------
Christina M. Thomas 500 0.441% 52,875
1524 Applewood Road
Baton Rouge, Louisiana 70808
- -----------------------------------------------------------------------------------------------
Alan J. Thomas 500 0.441% 52,8725
1524 Applewood Road
Baton Rouge, Louisiana 70808
- -----------------------------------------------------------------------------------------------
David A. Jeansonne 2,836 2.499% 299,905
P. O. Box 5409
Lafayette, Louisiana 70502
- -----------------------------------------------------------------------------------------------
American Aviation Incorporated 10,213 9.000% 1,080,017
P. O. Box 5409
Lafayette, Louisiana 70502
- -----------------------------------------------------------------------------------------------
</TABLE>
-11-
<PAGE>
<TABLE>
<CAPTION>
MEMBERS AND ADDRESS TOTAL NUMBER COMMON UNIT TOTAL NUMBER
OF SHARE PERCENTAGE OMNI ENERGY
OMNI COMMON COMMON SHARES
UNITS
- ------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Shannon H. Daigle 1,461 1.287% 154,500
358 W. Kenilworth Street
New Orleans, Louisiana 70124
- ------------------------------------------------------------------------------------------------
Advantage Capital Partners 2,780 2.450% 293,983
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
- ------------------------------------------------------------------------------------------------
Advantage Capital Partners II 9,398 8.282% 993,831
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
- -----------------------------------------------------------------------------------------------
Advantage Capital Partners III 15,282 13.467% 1,616,060
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
- -----------------------------------------------------------------------------------------------
Advantage Capital Partners IV 28,612 25.214% 3,025,697
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
- -----------------------------------------------------------------------------------------------
Advantage Capital Partners V 17,566 15.480% 1,857,591
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
- -----------------------------------------------------------------------------------------------
TOTAL 113,476 100.000% 12,000,000
===============================================================================================
</TABLE>
-12-
<PAGE>
OMNI GEOPHYSICAL, L.L.C. HOLDERS OF
OPTIONS TO PURCHASE COMMON UNITS
<TABLE>
<CAPTION>
OPTION HOLDER OMNI COMMON OMNI ENERGY
UNIT OPTIONS COMMON STOCK
OPTIONS
- ---------------------------------------------------
<S> <C> <C>
David E. Crays 516 54,567
- ---------------------------------------------------
William F. Fincher 250 26,438
- ---------------------------------------------------
David Booth 250 26,438
- ---------------------------------------------------
Rita Darbonne 100 10,575
- ---------------------------------------------------
</TABLE>
-13-
<PAGE>
EXHIBIT B
---------
SCHEDULE A
OMNI GEOPHYSICAL, L.L.C.
MEMBERS, CAPITAL CONTRIBUTIONS, UNITS AND SHARING PERCENTAGES
<TABLE>
<CAPTION>
MEMBER CAPITAL TOTAL NUMBER COMMON UNIT
CONTRIBUTION COMMON UNITS SHARE PERCENTAGE
- ------------------------------------------------------------------------------
<S> <C> <C> <C>
Omni Energy Services Corp. 12,000,000 Omni 113,476 100%
4484 NE Evangeline Thruway Energy
Carencro, Louisiana 70520 Corporation
Common Shares
- ------------------------------------------------------------------------------
</TABLE>
-14-
<PAGE>
EXHIBIT 2.6
AGREEMENT OF MERGER
BY AND AMONG
AMERICAN HELICOPTER DRILLING INC.,
DAVID WARD, LINDA WARD
AND
OMNI ENERGY SERVICES CORP.
DATED AS OF OCTOBER 31, 1997
<PAGE>
AGREEMENT OF MERGER
BY AND AMONG
AMERICAN HELICOPTER DRILLING INC.,
DAVID WARD, LINDA WARD
AND
OMNI ENERGY SERVICES CORP.
DATED AS OF OCTOBER 31, 1997
THIS AGREEMENT OF MERGER (the "Agreement") is made and entered into as of
the 31st day of October 1997 by and among OMNI ENERGY SERVICES CORP., a
Louisiana corporation ("Omni"), AMERICAN HELICOPTER DRILLING INC., a Montana
corporation ("American"), Linda Ward, in her capacity as a shareholder of
American, and David Ward, in his capacity as a shareholder and president of
American (Mr. and Ms. Ward are collectively referred to herein as the
"Shareholders").
RECITALS
WHEREAS, the Shareholders collectively own 100% of the issued and
outstanding common stock of American, no par value per share (the "American
Common Stock");
WHEREAS, American is primarily engaged in the seismic rock drilling
business in the Rocky Mountain region (the "Business");
WHEREAS, Omni is an oilfield service company providing an integrated range
of onshore seismic drilling, helicopter support and survey services to
geophysical companies operating in logistically difficult and environmentally
sensitive terrain in the United States, primarily along the U.S. Gulf Coast;
WHEREAS, Omni is currently undertaking the initial public offering (the
"Initial Public Offering") of shares of Omni common stock (the "Omni Common
Stock") pursuant to a Registration Statement on Form S-1 filed with the
Securities and Exchange Commission on September 26, 1997 (the "Registration
Statement"); and
WHEREAS, subject to the terms and conditions set forth herein, the parties
hereto have agreed to effect a tax-free merger of American with and into Omni
pursuant to section 368(a)(1)(A) of the Internal Revenue Code of 1986, as
amended.
NOW THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants, and agreements set forth herein, each of
the parties hereto agrees as follows:
1
<PAGE>
SECTION 1
MERGER OF AMERICAN INTO OMNI
1.1 The Merger. At the Effective Time (as hereinafter defined), in
accordance with the terms and subject to the conditions of this Agreement, the
Louisiana Business Corporation Law (the "LBCL") and the Montana Business
Corporation Act (the "Montana Act"), American will merge with and into Omni (the
"Merger"), the separate corporate existence of American shall cease and Omni
shall continue as the surviving corporation (sometimes referred to herein as the
"Surviving Corporation").
1.2 The Closing.
1.2.1 Unless this Agreement shall have been terminated pursuant
to the provisions hereof, and subject in each case to the satisfaction or waiver
of the conditions to closing specified in Section 6 hereof, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Jones Walker Waechter Poitevent Carrere & Denegre at FirstNBC
Center, New Orleans, Louisiana, commencing at 9:00 a.m. local time on the
earlier to occur of (i) December 31, 1997, (ii) ten days following satisfaction
or waiver of all conditions to the obligations of the parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective parties will take at the Closing itself) or (iii) such other date
as the Parties may mutually determine (such date being referred to herein as the
"Closing Date").
1.2.2 If all conditions set forth in Section 6 hereof are
satisfied or duly waived, at the Closing, (i) American will deliver to Omni the
certificates, instruments, and documents referred to in Section 2.1 below, (ii)
Omni will deliver to American the certificates, instruments, and documents
referred to in Section 2.2 below, (iii) Omni and American shall execute, deliver
and acknowledge the Certificate of Merger in the form attached hereto as Exhibit
1.2 and in such other form as may be required by the Montana Act or the LBCL
(the "Certificate of Merger"), and (iv) Omni will deliver to the Shareholders
the consideration to be paid in the Merger as provided in Sections 1.4 and 1.6
hereof.
1.3 The Effective Time; Effect of Merger.
1.3.1 The Merger shall be effective upon the filing of the
Certificate of Merger with the Secretary of State of Montana in accordance with
the Montana Act, or at such other time and date as is provided in the
Certificate of Merger pursuant to the mutual agreements of American and Omni
(hereinafter referred to as the "Effective Time"). Omni agrees that it shall
cause the Certificate of Merger to be filed in accordance with the Montana Act
and the LBCL as soon as practicable after the Closing. Upon the Effective Time
and by virtue of the Merger, the Surviving Corporation shall possess all the
rights, privileges and franchises possessed by American and shall be responsible
for all of the liabilities and obligations of American in the same manner as if
the Surviving Corporation had itself incurred such liabilities or obligations,
and the Merger shall have such other effects as may be specified in the
applicable provisions of the LBCL.
2
<PAGE>
1.3.2 Directors and Officers; Articles of Incorporation. After
the Effective Time and until their successors shall have been duly elected or
appointed, the directors and officers of Omni will be the directors and officers
of the Surviving Corporation. The Articles of Incorporation and By-laws of Omni,
as in effect immediately prior to the Effective Time, shall be the articles of
incorporation and by-laws of the Surviving Corporation after the Effective Time
until thereafter duly amended.
1.3.3 Financial Accounting Effect. For financial and tax
accounting and reporting purposes the Merger shall be effective as of October 1,
1997 and the respective financial, tax and accounting records and statements of
each party hereto shall be prepared as if such Merger were declared effective as
of October 1, 1997.
1.4 Conversion of American Shares. At and as of the Effective Date,
by reason of the Merger (a) all of the issued and outstanding shares of American
Common Stock, shall be converted into the right to receive that number of shares
of Omni Common Stock having an aggregate value of $2,500,000 based upon the
price at which such shares are sold to the public in the Initial Public Offering
and (b) all shares of American Common Stock, whether issued and outstanding or
held in treasury, shall be canceled. The shares of Omni Common Stock issued in
connection with the Merger shall be allocated between the Shareholders on a pro
rata basis based upon the number of shares of American Common Stock held by each
of them at the Effective Time as set forth in Schedule 1.4 hereof. Cash will be
issued in lieu of any fractional shares and will be similarly allocated between
the Shareholders.
1.5 Delivery and Exchange of Certificates. On the Closing Date, the
Shareholders shall deliver to Omni all certificates representing outstanding
shares of American Common Stock. Upon such delivery, Omni shall deliver to each
Shareholder a certificate representing the number of shares of Omni Common Stock
into which such shares will be converted at the Effective Time, as determined in
Section 1.4 hereof. Until so delivered, each certificate which represented
shares of American Common Stock before the Effective Time shall be deemed for
all purposes to represent the number of whole shares of Omni Common Stock into
which such shares shall have been converted in the Merger. Omni may, at its
option, refuse to pay any dividend or other distribution, if any, payable after
the Effective Time to the holders of shares of Omni Common Stock to the holders
of certificates evidencing undelivered shares of American Common Stock. Whether
or not a stock certificate representing shares of American Common Stock is
delivered as provided herein, from and after the Effective Time, such
certificate shall under no circumstances evidence, represent or otherwise
constitute any stock or interest in American or any person, firm or corporation
other than Omni.
1.6 Cash Consideration. In addition to the shares of Omni Common
Stock into which the outstanding shares of American Common Stock are convertible
as set forth in Section 1.4 hereof, at the Effective Time Omni will pay the
Shareholders by wire transfer according to their respective instructions an
aggregate of One Million Fifty Thousand and no/100 dollars ($1,050,000.00) cash,
which amount shall be allocated among the Shareholders on a pro rata based upon
the number of
3
<PAGE>
shares of American Common Stock held by each of them at the Effective Time as
set forth in Schedule 1.4 hereof.
SECTION 2
EVENTS OCCURRING ON THE CLOSING DATE
2.1 Deliveries by American and the Shareholders. On the Closing Date,
American will deliver to Omni the following:
2.1.1 A copy of the Articles of Incorporation of American,
certified by the Secretary of State of the State of Montana as of a date within
thirty (30) days of the Closing Date;
2.1.2 A certificate from the Secretary of State of the State of
Montana as of a date within thirty (30) days of the Closing Date as to the good
standing of American in such state;
2.1.3 A certificate of the Secretary of American, attaching
thereto a true and complete copy of its By-laws in effect on the Closing Date
and attesting to the incumbency of the person executing this Agreement on behalf
of American;
2.1.4 A certificate from the president of American and each of
the Shareholders stating that its and their respective representations and
warranties are true, complete and accurate in all material respects at and as of
the Closing Date;
2.1.5 The executed counterpart copies of all consents, approvals,
authorizations and permits, if any, from third parties as referred to in Section
3.1.25 hereof;
2.1.6 An Employment and Non-Competition Agreement between David
Ward and Omni, which agreement shall be in the form set forth in Exhibit 2.1
hereto (the "Employment Agreement");
2.1.7 Mr. Ward will execute and deliver the Lease Agreement (as
hereinafter defined);
2.1.8 An opinion of legal counsel to American and the
Shareholders as to the due incorporation, existence and good standing of
American, its qualification to do business in Montana and any Material
Jurisdictions (as defined in Section 3.1.8 hereof), its power and authority to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby, and such other matters as shall be reasonably requested by
Omni; and
2.1.9 All other previously undelivered items required to be
delivered by American at or prior to the Closing Date pursuant to the terms of
this Agreement.
4
<PAGE>
2.2 Deliveries by Omni. On the Closing Date, Omni will deliver the
following to the Shareholders:
2.2.1 The shares of Omni Common Stock as set forth in Section
1.4.
2.2.2 The cash consideration set forth in Section 1.6.
2.2.3 The Employment Agreement.
2.2.4 The Lease Agreement.
2.2.5 Any consents required by Section 6.3.1.
2.2.6 The legal opinion required by Section 6.3.5.
2.2.7 The officer's certificate required by Section 6.3.4.
2.2.8 The incumbency certificate required by
Section 6.3.2.
SECTION 3
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of American and the Shareholders.
Each Shareholder, with respect to matters relating to themselves and their
respective American Common Stock, represents and warrants to and agrees with
Omni as set forth as follows in Sections 3.1.1 through 3.1.6 and the
Shareholders, acting jointly and severally, represent and warrant to and agree
with Omni as follows with respect to the matters set forth in Sections 3.1.7
through 3.1.30.
3.1.1 Ownership. Each Shareholder is, and at the Effective Time
will be, the record and beneficial owner of the number of shares of American
Common Stock, which are represented by the certificates bearing the numbers,
shown opposite their respective names in Schedule 1.4 hereof. Each Shareholder
has, and at the Effective Time, will have good and marketable title to all such
shares and the absolute right to deliver such shares in accordance with the
terms hereof, free and clear of all liens, pledges and encumbrances of any kind.
Each Shareholder has the power, authority and capacity necessary to approve the
Merger, execute and deliver this Agreement and perform its obligations under
this Agreement.
3.1.2 Pending Actions. As of the date hereof there are, and at
the Effective Time there will be, no actions, suits or proceedings pending or
threatened involving the ownership by the Shareholders of their respective
shares of American Common Stock or their ability to approve the Merger pursuant
to this Agreement.
5
<PAGE>
3.1.3 No Other Agreements. Except for this Agreement, the
Employment Agreement, the Lease Agreement, and certain agreements regarding
employee benefits and other matters ancillary to the Employment Agreement, there
are no contracts, agreements, arrangements or understandings between any
Shareholder and Omni relating to American or the transactions contemplated by
this Agreement. No Shareholder is a party to any agreement with respect to the
voting, sale or transfer of any of the American Common Stock or the issuance of
any additional shares of American capital stock or the redemption of any such
stock.
3.1.4 Restrictions on Resale; Investment Intent.
(i) Each Shareholder is acquiring the Omni Common Stock to
be received in connection with the Merger for investment for their own account
and has no present intention of reselling or otherwise distributing or
participating in a distribution of such stock. Each Shareholder understands that
the shares of Omni Common Stock to be issued in the Merger will not be
registered under the Securities Act of 1933, as amended (the "Securities Act"),
that such shares will be "restricted securities" as that term is defined in Rule
144 ("Rule 144") promulgated by the Securities and Exchange Commission (the
"Commission") under the Securities Act, and that the Shareholder cannot transfer
any of such shares unless they are subsequently registered under the Securities
Act and under any applicable state securities law or are transferred in a
transfer that, in the opinion of counsel satisfactory to Omni, is exempt from
such registration. Each Shareholder further understands that Omni is not
obligated by this Agreement to register such shares under the Securities Act or
under any such state laws and that Omni will, as a condition to the transfer of
any such shares, require that the request for transfer be accompanied by an
opinion of counsel, in form and substance satisfactory to Omni, to the effect
that the proposed transfer does not result in a violation of the Securities Act
or any applicable state securities law, unless such transfer is covered by an
effective registration statement. Each Shareholder understands that such shares
of Omni Common Stock may not be sold publicly in reliance on the exemption from
registration under the Securities Act afforded by Rule 144 unless and until the
minimum holding period and other requirements of Rule 144 have been satisfied.
(ii) Each Shareholder has been represented by competent and
experienced legal counsel in connection with the negotiation and execution of
this Agreement, has been granted the opportunity to make a thorough
investigation of and to obtain information with respect to the affairs of Omni
and their acquisition of Omni Common Stock, and has availed himself or herself
of such opportunity either directly or through its legal counsel and other
authorized representatives.
(iii) Each Shareholder has been advised that the shares of Omni
Common Stock issued hereunder have not been and are not being registered under
the Securities Act and that Omni in issuing such shares is relying upon, among
other things, the representations and warranties of the Shareholders contained
in this Section in concluding that such issuance does not require compliance
with the registration provisions of the Securities Act.
6
<PAGE>
(iv) Each Shareholder understands and agrees that all
certificates evidencing the shares of Omni Common Stock issued hereunder will
bear restrictive legends in substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or any applicable state law, and may not be transferred
without registration under the Act and any such state law or an
opinion of counsel satisfactory to the corporation that
registration is not required.
3.1.5 Information. The Shareholders acknowledge that (i) they have
received and have reviewed to their satisfaction this Agreement, the
Registration Statement and such additional material information with respect to
the Merger and Omni, if any, as each of them has requested and (ii) such
information is sufficient for them to determine objectively whether to approve
the Merger and enter into this Agreement.
3.1.6 Capitalization and Ownership. The authorized capital stock
of American consists of 50,000 shares of common stock, no par value per share,
of which 100 shares are issued and outstanding. All of the issued and
outstanding shares of such common stock have been duly authorized and are
validly issued fully paid and non-assessable. There are no outstanding
warrants, options, rights, calls or other commitments of any nature relating to
any share of capital stock of American, and there are no outstanding securities
or debt obligations of American convertible into shares of capital stock of
American. Other than the shares of American Common Stock listed in Schedule
1.4, there are no shares of American capital stock outstanding.
3.1.7 Organization.
(i) American is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Montana, with the corporate power
and authority to own, lease, and operate its properties and to carry on its
business as now being conducted.
(ii) The copy of the Articles of Incorporation and all amendments
thereto of American, as certified by the Secretary of State of the State of
Montana, and the By-laws, as amended to date, of American, as certified by its
Secretary and delivered to Omni, are true, complete, and correct copies of the
respective Articles of Incorporation and By-laws, as amended and currently in
effect, of American.
3.1.8 Qualification. American is licensed or qualified to do
business as a foreign corporation and is in good standing in the jurisdictions
in which it conducts its business, except where the failure to so qualify would
not have a material adverse effect on the business or financial condition of the
Business taken as a whole (the "Material Jurisdictions").
7
<PAGE>
3.1.9 Authority. American has the corporate power and authority
to execute and deliver this Agreement and to consummate the transactions
contemplated hereby. The execution and delivery by American of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by the Board of Directors and shareholders of American; no other
corporate proceedings on the part of American or any other person or entity,
whether pursuant to the Articles of Incorporation or By-laws of American or by
law or otherwise, are necessary to authorize American to enter into this
Agreement, or to consummate the transactions contemplated hereby; and this
Agreement is the legal, valid, and binding obligation of American (and the
Shareholders, as the case may be). This Agreement has been duly executed and
delivered by American and the Shareholders and constitutes a valid and binding
obligation of American and the Shareholders, enforceable against each of them in
accordance with its terms, except that (i) such enforcement may be subject to
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally, (ii) the remedy of specific performance and injunctive relief are
subject to certain equitable defenses and to the discretion of the court before
which any proceedings therefor may be brought, and (iii) rights to
indemnification hereunder may be limited under applicable securities laws.
3.1.10 No Conflict. Except as set forth in Schedule 3.1.10 hereof
(the items listed in such Schedule being referred to herein as "Permitted
Encumbrances"), neither the execution and the delivery of this Agreement by
American and the Shareholders, nor the consummation of the transactions
contemplated hereby do or will (i) violate, conflict with, or result in a breach
of any provisions of, (ii) constitute a default (or an event which, with notice
or lapse of time or both, would constitute a default) under, (iii) result in the
termination of or accelerate the performance required by, (iv) result in the
creation of any lien, security interest, charge, claim, mortgage or encumbrance
(collectively referred to hereafter as "Encumbrances") upon any of American's
properties or assets under any of the terms, conditions or provisions of
American's Articles of Incorporation or By-laws or any note, bond, mortgage,
indenture, deed of trust, lease, license, loan agreement or other instrument or
obligation to or by which American, the Shareholders or any of its or their
assets are bound, or (v) violate any order, writ, injunction, decree, statute,
rule or regulation of any governmental entity applicable to either American, the
Shareholders or any of their respective assets, except for any such conflict,
breach, termination, acceleration, default or Encumbrance which would not have a
material adverse effect on (A) the business, assets or financial condition of
American or (B) American's or the Shareholder's ability to consummate any of the
transactions contemplated hereby.
3.1.11 Financial Statements. American has heretofore delivered to
Omni its balance sheet as of March 31, 1997 (the "Balance Sheet"), and the
related statement of operations for the three months ended March 31, 1997,
together with its balance sheet as of December 31, 1996 and the related
statement of operations for the year then ended. The financial statements
referred to in the preceding sentence are hereinafter collectively referred to
as the "Financial Statements." Each of the Financial Statements was prepared
from the books and records of American in conformity with generally accepted
accounting principles consistently applied, and fairly present the financial
condition and results of operations of American for the period and as of the
dates stated therein.
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Except to the extent reflected in the Financial Statements, American has no
liabilities or obligations required to be reflected in the Financial Statements
(or the notes thereto) in accordance with generally accepted accounting
principles other than current liabilities incurred in the ordinary course of
business, consistent with past practice subsequent to March 31, 1997.
3.1.12 Absence of Certain Changes or Events. Except as set forth
in Schedule 3.1.l2 hereto, since March 31, 1997 (the "Balance Sheet Date"),
American has operated the Business in the ordinary course consistent with past
practice, and neither American nor the Business has:
(i) Suffered any material adverse change in its business or any event
or condition of any character, which individually or in the aggregate, has had
or might reasonably be expected to have a material adverse effect on the
business or financial condition of the Business taken as a whole;
(ii) Incurred any obligations or liabilities (absolute, accrued,
contingent, or otherwise) or entered into any transactions, commitments or
agreements other than in the ordinary course of business and consistent with
past practice;
(iii) Paid, discharged, or satisfied any claims, obligations, or
liabilities (absolute, accrued, contingent, or otherwise), except the payment,
discharge, or satisfaction in the ordinary course of business and consistent
with past practice of any claims, obligations, and liabilities (i) which are
reflected or reserved against in the Financial Statements or (ii) which were
incurred in the ordinary course of business and consistent with past practice
since the Balance Sheet Date;
(iv) Permitted or allowed any of its properties or assets, whether
tangible or intangible, to be subjected to any Encumbrances or other liabilities
and obligations;
(v) Written off as uncollectible, or canceled or waived, any accounts
receivable or any portion thereof, or any debts or claims, except in the
ordinary course of business and consistent with past practice;
(vi) Sold, conveyed, or otherwise disposed of any properties or
assets, except for fair consideration in the ordinary course of business and
consistent with past practice;
(vii) Disposed of or permitted to lapse any item of intangible
property, or any license, permit, or other form of authorization to use any
intangible property;
(viii) Except for normal increases that are not material and are
consistent with past practice, granted or agreed to grant any increase in the
compensation of any employee (including any such increase pursuant to any bonus,
pension, profit sharing or other plan or commitment), or become a party to or
instituted any new benefit programs for any employee;
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(ix) Made any change in any method of accounting or accounting
practice or in any Tax (as such term is defined in Section 8.2 of this
Agreement) procedures or elections;
(x) Terminated or suffered a termination of (excluding a termination
in accordance with its terms) or amended, any material contract, agreement,
license, or lease;
(xi) Declared, paid, or made, or set aside for payment or making, any
dividend or other distribution in respect of the capital stock of American or,
directly or indirectly, redeemed, purchased, or otherwise acquired any of the
capital stock of American;
(xii) Suffered any damage, destruction or casualty loss to the
physical properties of American (whether or not covered by insurance),
materially and adversely affecting the business, operations, prospects or
financial condition of American; or
(xiii) Agreed, whether in writing or otherwise, or made any
arrangement, whether or not legally binding, to take any action which, if taken
prior to the date hereof, would have served to make false any of the statements
contained in clauses (i) through (xiii) of this Section 3.1.12.
3.1.13 Certain Tax Matters.
(i) All income taxes, unemployment, social security, franchise, real
property, personal property and all other taxes levied, assessed or imposed upon
American in connection with American's operation of the Business by the United
States, or any state, or governmental subdivision of either, to the extent due
and payable, have been duly paid to date or are being contested through
appropriate administrative or judicial procedures, and no liability for
deficiencies with respect thereto exists. There are no tax audits pending nor
any outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state or local income tax return for any
period in connection with American's operation of the Business. No tax
deficiencies have been determined nor proposed tax assessments charged against
American (nor is there any basis therefor) in connection with American's
operation of the Business. American has filed all federal, state, local, sales,
franchise, withholding, real and personal property tax returns required to be
filed in connection with American's operation of the Business. No penalties or
other charges are, or will become, due with respect to the late filing of any
return by American in connection with American's operation of the Business.
True, correct and complete copies of the state and local real property and
personal property tax returns of American in connection with American's
operation of the Business for American's last three fiscal years have been
delivered to Purchaser.
(ii) American:
(x) Is not subject to any liens for Taxes on its assets;
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(y) Is not currently under any contractual obligation to pay the
Tax obligations of, or with respect to transactions relating to, any other
person or to indemnify any other person with respect to any Tax;
(z) Is not subject to any (A) claims, audits, actions, suits,
proceedings, or investigations with respect to any Tax or assessment for which
the Purchaser could be liable, which would be material to the Business, and (B)
requests for rulings in respect of any Tax or any proposed transaction pending
before any Taxing Authority (as defined in Section 8.2 of this Agreement).
(iii) Neither of the Shareholders is aware of any facts that could
give rise to any claim, audit, action, suit, proceeding, or investigation with
respect to any material Tax or assessment for which Omni could be liable and
which would be material.
(iv) No Tax or assessment will be assessed on or after the Effective
Time against or pertaining to American or any assets of the Business for any tax
period ending on or prior to the Effective Date, or for any period ending after
the Effective Date with respect to any portion of such tax period that includes
or is prior to the Effective Date, other than Taxes disclosed in the Financial
Statements.
3.1.14 Condition of Facilities. The facilities and other property
owned or leased by American, including equipment, furniture, vehicles and other
tangible personal property owned or held or used in the conduct of the Business
(collectively, the "Assets"), are in good operating condition and repair,
ordinary wear and tear excepted, and are in adequate working order for the
continued conduct of the Business as it is currently conducted. Other than as
disclosed herein, neither of the Shareholders has knowledge of any condition or
defect, in any of the Assets which would materially affect the fair market
value, use or operation of the Business.
3.1.15 Receivables; Payables.
(i) Schedule 3.1.15 sets forth a list of all accounts and notes
receivable accrued in connection with the operation of the Business as of the
Effective Date that have a balance of in excess of $5,000, their respective
balances and an accurate aging thereof. (Such notes and receivables are
referred to collectively as "Receivables"). The Receivables have been earned
and recorded in the ordinary course of business consistent with past practices,
and no Receivables are subject to any counterclaim or offset. None of the
Receivables has been sold, transferred, or otherwise disposed of by American and
all are fully collectible. Other than those Receivables set forth in Schedule
3.1.15, there are no accounts or notes receivable by American which either
individually or in the aggregate are material to the Business.
(ii) Schedule 3.1.15 contains an aging schedule of all accounts and
trade payables of the Business as of the Effective Date that have a balance of
in excess of $5,000, including the dollar amounts thereof (such accounts and
trade payables being referred to as
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"Accounts Payable"). All such payables of American have arisen in the ordinary
course of business, and no such payables are more than 45 days past due, except
for those account or trade payables with respect to which there is an amount
disputed in good faith and which are marked "Disputed" on Schedule 3.1.15. All
Accounts Payable are accurately reflected in the Financial Statements. Other
than those Accounts Payable set forth in Schedule 3.1.15, there are no accounts
or trade payables by American which either individually or in the aggregate are
material to the Business.
3.1.16 Title to Properties; Encumbrances. Except as set forth in
Schedule 3.1.16 hereto,
(i) American has good and marketable title to all of the Assets,
free and clear of all Encumbrances, except for Permitted Encumbrances.
(ii) Since the Balance Sheet Date,
(x) American has incurred no indebtedness or liabilities
with respect to any of the Assets except those listed as Permitted Encumbrances;
(y) American has not received any notice of default under
any of its liabilities, nor, is any such notice pending or do reasons exist for
the giving of such notice.
3.1.17 Leases.
(i) Schedule 3.1.17 contains a list of each lease pursuant to
which American leases real or personal property (collectively, the "Leases").
(ii) Each of the Leases is in full force and effect in
accordance with its terms, no Lease has been modified or amended in writing, and
American has not received any written notice of any breach or default with
respect to a Lease.
3.1.18 Patents, Trademarks, and Similar Rights.
(i) American has the sole and exclusive right to use all patents,
copyrights, trademarks, trade names, technology, know-how, processes, trade
secrets, inventions, proprietary data, formulae, research and development data,
computer software programs, and other intangible property, and any applications
for the same, owned by American or the Shareholders and used in the Business,
and all goodwill associated with such intangible property (collectively, the
"Intangible Property"), and the consummation of the transactions contemplated by
this Agreement will not alter or impair any such rights;
(ii) American has the right to use all Intangible Property which is
currently used by American in connection with the Business either as provided in
clause (i) above or as
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licensed or authorized by others, and the consummation of the transactions
contemplated by this Agreement will not alter or impair any such rights;
(iii) No claims have been asserted by any person or entity for the use
of any such Intangible Property or challenging or questioning the validity or
effectiveness of any such license or agreement, and the Shareholders have no
knowledge of any valid basis for any such claim;
(iv) The use of such Intangible Property by American does not infringe
on the rights of any person or entity and no proceedings have been instituted,
are pending, or threatened that challenge the rights of American in respect
thereof; and
(v) None of American's Intangible Property rights, to the best of the
Shareholders' knowledge, are being infringed by the products, activities,
operations, trade names, trademarks, service marks, trade dress rights or
copyrights of any other person or persons and none are subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof.
3.1.19 Insurance. American has heretofore made available for
inspection by Omni a true and complete copy of all policies of fire, liability,
workers' compensation, and other forms of insurance owned or held by American.
All such policies are in full force and effect, all premiums with respect
thereto covering all periods up to and including the Closing Date have been
paid, and no notice of cancellation or termination has been received with
respect to any such policy. Such policies are in such amounts and insure against
such losses and risks and provide such coverage as, in the opinion of American,
is adequate to protect the Business as it is currently conducted.
3.1.20 No Benefit Plans; Absence of PBGC Lien. Except for
American's 401(k) plan and its disability and hospitalization plan, which will
be continued or replaced by Omni for at least twelve (12) months after the
Effective Date of this Agreement, neither American nor any Affiliate (as defined
in Section 8.2 of this Agreement) maintains any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations promulgated thereunder, that covers
any employee or former employee of American. None of the Assets are subject to a
lien in favor of the Pension Benefit Guaranty Corporation.
3.1.21 Documents; Commitments.
(i) The Shareholders have delivered or made available to Omni the
following documents, each of which is true and complete:
(A) Copies of all documents listed in Schedule 3.1.21, which is
a listing of every material contract, agreement, or other commitment, written or
oral, to which American is a party or has succeeded to a party by assumption or
assignment or in which it has a beneficial interest. For the purposes of this
Agreement, any contract or agreement shall be deemed material if the Business
taken as a whole is substantially dependent upon it, if it involves a financial
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obligation of or benefit to the Business in excess of $100,000, if the contract
is not made in the ordinary course, or if it constitutes a management contract
or employment contract (excluding oral agreements that arise by operation of
law), but excluding quotations given to customers of American in connection with
estimates of the cost of future work; and
(B) Copies of all product bulletins, technical bulletins, or
other advertising or sales materials currently used in connection with the
Business.
(ii) American does not have (A) any outstanding sales contracts
or commitments that are reasonably expected to result in any loss to the
Business upon completion of performance thereof or (B) any outstanding bids or
sales or service proposals quoting prices that are not reasonably expected to
result in a profit consistent with past practice.
(iii) American is not restricted by agreement from carrying on
the Business anywhere in the world.
3.1.22 Labor Matters.
(i) Neither American nor any employee employed by American is a
party to or is covered by any labor agreement with any collective bargaining
representative representing employees of American.
(ii) American is operating in material compliance with all
applicable law respecting employment and employment practices, terms and
conditions of employment, and wages and hours, and is not engaged in any unfair
labor practices and no charges or proceedings before the National Labor
Relations Board, or similar agency, exist or are threatened.
(iii) There are no unfair labor practice complaints, labor
disputes, work stoppages, or union organization efforts, or threats of the
foregoing, directed against any of the operations of the Business.
(iv) No legal proceedings, charges, complaints, or similar
actions exist under any federal, state or local laws affecting the employment
relationship including, but not limited to: (A) antidiscrimination statutes such
as Title VII of the Civil Rights Act of 1964, as amended (or similar state or
local laws prohibiting discrimination because of race, sex, religion, national
origin, age and the like); (B) the Fair Labor Standards Act or other federal,
state or local laws regulating hours of work, wages, overtime and other working
conditions; (C) requirements imposed by federal, state or local governmental
contracts such as those imposed by Executive Order 11246; (D) state laws with
respect to tortious employment conduct, such as slander, false light, invasion
of privacy, negligent hiring or retention, intentional infliction of emotional
distress, assault and battery, or loss of consortium; or (E) the Occupational
Safety and Health Act, as amended, as well as any similar state laws, or other
regulations respecting safety in the workplace; no proceedings, charges, or
complaints are threatened under any such laws or regulations and no facts
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or circumstances exist which would give rise to any such proceedings, charges,
complaints, or claims, whether valid or not.
(v) With respect to each person employed by American on or after
December 31, 1995, and who actually commenced such employment on or after
November 6, 1986, (i) American hired such person in compliance with the
Immigration Reform and Control Act of 1986 and the rules and regulations
thereunder ("IRCA") and (ii) American has complied with all record keeping and
other regulatory requirements under IRCA.
(vi) American has not incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state laws.
American has not laid off more than ten percent (10%) of its employees at any
single site of employment in any ninety (90) day period during the twelve (12)
month period ending as of the Closing Date. It shall be the obligation of the
Shareholders to provide any notice required by said Act by reason of the
provisions, execution or operation of this Agreement.
(vii) To the best of the Shareholders' knowledge, American is in full
compliance with the provisions of the Americans with Disabilities Act (the
"ADA") as of the Closing Date.
3.1.23 Personnel.
(i) Schedule 3.1.23 sets forth (A) the name and current annual
salary (or rate, if an hourly or day rate employee) and other compensation
(including, without limitation, normal bonus, profit sharing and other
compensation) now payable by American to each employee, (B) any increase to
become effective after the date of this Agreement in the total compensation or
rate of total compensation payable by American to each such person, (C) all
presently outstanding loans and advances (other than routine travel advances to
be repaid or formally accounted for within sixty (60) days) made by American to,
or made to American by, any director, officer or employee, (D) all other
material transactions between American and any director, officer or employee of
American since March 31, 1997, and (E) all accrued but unpaid vacation pay and
any other compensation owing to any officer or employee which is not disclosed
on the Financial Statements. Full payment has been made of all compensation and
other employee benefit amounts which American was required to have paid to each
employee (including all accrued vacation pay) on or prior to the Closing Date
(excluding any amounts not yet due).
(ii) American's relationship with its respective employees is
good and the Shareholders have no knowledge of any facts which would indicate
that American's employees will not continue in its employ following the Closing.
3.1.24 No Breach.
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(i) Each Permit, contract, agreement, deed of trust, lease, policy,
license, plan, commitment, arrangement, and understanding (whether evidenced by
a written document or otherwise) referred to in this Agreement or in any
Schedule or Exhibit hereto or which is otherwise material to the Business, under
which American has any right, interest, or obligation (A) is in full force and
effect and (B) is not subject to any threatened amendment, cancellation, or
outstanding dispute.
(ii) American is not in breach of, and there does not exist any
default or event (including the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby) which, with the giving of
notice or the lapse of time or both, would become a breach or default, and there
is no basis for any valid claim of a default in any respect with regard to any
contracts or agreements which may be affected by the execution of this
Agreement.
3.1.25 Consents, Permits, Etc. Except as set forth in Schedule
3.1.25, no consent, approval, authorization, or permit from any person, entity
or governmental authority is necessary to the consummation of the transactions
contemplated by this Agreement. All such consents, permits, approvals and
authorizations listed in Schedule 3.1.25 have been either obtained or waived.
3.1.26 Litigation. There is no litigation, proceeding,
arbitration, administrative or other proceeding or audit, inquiry or
investigation pending, or controversy (an "Action") pending, or to the best
knowledge of the Shareholders, threatened by or against, or involving American
or any directors, officers, or employees thereof in their capacity as such or
that question or challenge the validity of this Agreement, or any action taken
or to be taken by the Shareholders pursuant to this Agreement or in connection
with the transactions contemplated hereby, and to the knowledge of the
Shareholders, there is no valid basis for any such Action. No such Action
would, if adversely decided, have a material adverse effect on the Business
taken as a whole or, after the Closing Date, on the ability of Omni to conduct
the Business.
3.1.27 Compliance With Applicable Law; Adverse Restrictions.
Except as set forth in Schedule 3.1.27 hereto, the operations of American are
being conducted in material compliance with (i) all applicable Permits,
licenses, orders, writs, injunctions, judgments, decrees, or awards of all
courts and governmental and regulatory authorities, and (ii) to the knowledge of
the Shareholders, all laws (statutory or otherwise), ordinances, rules,
regulations, by-laws, and codes of all governmental and regulatory authorities,
whether federal, state, or local (individually, a "Law" and collectively,
"Laws") that are applicable to the Assets or the Business (including, without
limitation, those related to public or occupational safety, pollution and
protection of the environment, and hazardous or other waste disposal). American
has not received any written notification of any asserted present failure to
comply with any Law, except for failures that in the aggregate are not and were
not material to the conduct of the Business as a whole and which American has
taken steps to correct or contest in good faith.
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3.1.28 Customers and Suppliers.
(i) Since March 31, 1997, there has not been any adverse change in the
business relationship of American with any customer, distributor, or supplier
that is material to the business or financial condition of the Business taken as
a whole. To the knowledge of the Shareholders, no customer or supplier of
American will cease to do business with the Business after the consummation of
the transactions contemplated hereby, which cessation would have a material
adverse effect on the business, operations or financial condition of the
Business. American has not experienced any difficulties in obtaining any
inventory, supplies, equipment or other items necessary to the operation of its
business, and, to the knowledge of the Shareholders, no such shortage of supply
of inventory, supplies, equipment or other items is threatened or pending.
American is not required to provide any bonding or other financial security
arrangements in any material amount in connection with any transactions with any
of its customers or suppliers.
(ii) Except as set forth in Schedule 3.1.28 hereto, no shareholder,
officer, director or employee of American, nor any spouse or child of any of
them, has any direct or indirect interest in any competitor, supplier or
customer of American or in any person from whom or to whom American leases any
real or personal property, or in any other person with whom American is doing
business.
3.1.29 Environmental Laws and Regulations. Except as set forth in
Schedule 3.1.29,
(i)(A) The ownership and operations of the "Subject Property," as
defined below, and any use, storage, treatment, disposal, or transportation of
"Hazardous Substances," as defined below, that has occurred in or on the Subject
Property while owned by the Shareholders but prior to the date of this Agreement
have been in compliance with "Environmental Requirements," as defined below; (B)
during the ownership, occupancy and operation of the Subject Property by
American, or, to the knowledge of the Shareholders, prior to American's
ownership, occupancy or operation, no release, leak, discharge, spill, disposal,
or emission of Hazardous Substances has occurred in, on, or under the Subject
Property in a quantity or manner that violates or requires further investigation
or remediation under Environmental Requirements; (C) to the best of the
Shareholders' knowledge, the Subject Property is free of Hazardous Substances as
of the date of this Agreement; (D) there is no pending or threatened litigation
or administrative investigation or proceeding concerning the Subject Property
involving Hazardous Substances or Environmental Requirements; and (E) to the
best of the Shareholders' knowledge, there is no ACM (as defined below), within
the Subject Property, whether friable or non-friable, and there are no above-
ground or underground storage tank systems ("Tank Systems") located at the
Subject Property.
(ii) Definitions. As used in this Agreement, the following terms
shall have the following meanings:
"Environmental Requirements" means all laws, statutes, rules, regulations,
ordinances, guidance documents, judgments, decrees, orders, agreements and other
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restrictions and requirements (whether now or hereafter in effect) of any
governmental authority, including, without limitation, federal, state, and local
authorities, relating to the regulation or protection of human health and
safety, natural resources, conservation, the environment, or the storage,
treatment, disposal, transportation, handling, or other management of industrial
or solid waste, hazardous waste, hazardous or toxic substances or chemicals, or
pollutants.
"Hazardous Substance" means (i) any "hazardous substance" as defined in
101(14) of the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, as amended from time to time (42 U.S.C. (S)(S) 9601 et
seq.)("CERCLA") or any regulations promulgated thereunder; (ii) petroleum and
petroleum by-products; (iii) asbestos or asbestos-containing material ("ACM");
or (iv) any additional substances or materials which have been or are currently
classified or considered to be pollutants, hazardous or toxic under
Environmental Requirements.
"Subject Property" means any and all immovable property owned by, leased by
or used by American in connection with the Business or otherwise at any time
during its corporate existence.
3.1.30 Effectiveness of Representations and Warranties. All of the
representations and warranties of American and the Shareholders in this
Agreement shall be true in all material respects on the Closing Date and shall
be deemed to have been made again by each of them on and as of the Closing Date.
3.2 Representations and Warranties of Omni. Omni represents and warrants
to each of the Shareholders as follows:
3.2.1 Completeness and Accuracy of Registration Statement. The
Registration Statement contains a complete and accurate description of Omni's
business and financial condition as of the date thereof.
3.2.2 Validity of Omni Common Stock. The shares of Omni Common
Stock to be issued to the Shareholders in the Merger shall be duly authorized,
fully paid and non-assessable.
3.2.3 Organization.
(i) Omni is a corporation duly organized, validly existing, and
in good standing under the laws of the State of Louisiana, with the corporate
power and authority to own, lease, and operate its properties and to carry on
its business as now being conducted.
(ii) The copy of the Articles of Incorporation and all
amendments thereto of Omni, as certified by the Secretary of State of the State
of Louisiana, and the By-laws, as amended to date, of Omni, as certified by its
Secretary and delivered to the Shareholders, are true,
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complete, and correct copies of the respective Articles of Incorporation and By-
laws, as amended and currently in effect, of Omni.
3.2.4 Qualification. Omni is licensed or qualified to do business as a
foreign corporation and is in good standing in the jurisdictions in which it
conducts its business, except where the failure to so qualify would not have a
material adverse effect on the business or financial condition of Omni taken as
a whole.
3.2.5 Authority. Omni has the corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by Omni of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors and shareholders of Omni; no other corporate
proceedings on the part of Omni or any other person or entity, whether pursuant
to the Articles of Incorporation or By-laws of Omni or by law or otherwise, are
necessary to authorize Omni to enter into this Agreement, or to consummate the
transactions contemplated hereby; and this Agreement is the legal, valid, and
binding obligation of Omni. This Agreement has been duly executed and delivered
by Omni and constitutes a valid and binding obligation of Omni, enforceable
against it in accordance with its terms, except that (i) such enforcement may be
subject to bankruptcy, insolvency, moratorium or similar laws affecting
creditors' rights generally, (ii) the remedy of specific performance and
injunctive relief are subject to certain equitable defenses and to the
discretion of the court before which any proceedings therefor may be brought,
and (iii) rights to indemnification hereunder may be limited under applicable
securities laws.
3.2.6 Effectiveness of Representations and Warranties. All of the
representations and warranties of Omni in this Agreement shall be true in all
material respects on the Closing Date and shall be deemed to have been made
again by it on and as of the Closing Date.
SECTION 4.
PRE-CLOSING COVENANTS
4.1 Access to Properties and Records. Until the Effective Time, American
and each of the Shareholders shall allow Omni and its authorized representatives
full access, during normal business hours and on reasonable notice, to all of
American's plants, properties, offices, vehicles, equipment, inventory and other
assets, documents, files, books and records, in order to allow Omni a full
opportunity to make such investigation and inspection as they desire of the
Business and assets. American and the Shareholders shall further use their best
efforts to cause the employees, counsel and regular independent certified public
accountants of American to be available upon reasonable notice to answer
questions of Omni's representatives concerning the business and affairs of
American, and shall further use their best efforts to cause them to make
available all relevant books and records in connection with such inspection and
examination, including without limitation work papers for all audits and reviews
of financial statements of American.
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4.2 Conduct of Business. From and after the date of this Agreement and
until the Closing Date, each of American and Omni shall conduct their respective
businesses in the ordinary course and consistently with past practice, except as
expressly required or otherwise permitted by this Agreement, and shall not take
or permit any action which would cause any of the representations made in
Section 3 not to be true and correct on the Closing Date.
4.3 Public Statements. Prior to the Effective Time, none of the parties
to this Agreement shall, and each party shall use its best efforts so that none
of its advisors, officers, directors or employees shall, except with the prior
written consent of the other parties, publicize, announce or describe to any
third person, except their respective advisors and employees, the execution or
terms of this Agreement, the parties hereto or the transactions contemplated
hereby, except as required by law or as required pursuant to this Agreement to
obtain the consent of such third person; provided, in any case, that Omni may
make such disclosures and announcements as may be necessary or advisable under
applicable securities laws.
4.4 No Solicitation. The Shareholders and American will not, prior to
the Effective Time or the termination of this Agreement pursuant to Section 7,
(nor will they permit any of their affiliates or any of American's officers,
directors or agents to) directly or indirectly solicit or participate or engage
in or initiate any negotiations or discussions, or enter into or authorize any
agreement or agreements in principle, or announce any intention to do any of the
foregoing, with respect to any offer or proposal to acquire all or any
significant part of American's business and properties or any of its capital
stock whether by merger, purchase of assets, purchase of stock or otherwise.
The Shareholders and American will notify Omni promptly upon receipt of any
inquiry, offer or other communication from any third party regarding any such
activities.
4.5 No Stock Splits or Dividends. American shall not declare or pay any
dividend on or permit any reclassification or recapitalization with respect to
shares of American capital stock, or the establishment of a record date for any
of the foregoing, to occur during the period between the date of this Agreement
and the Effective Time.
4.6 Notification as to Representations. Each of the parties hereto will
promptly disclose in writing to the other any information contained in its
representations and warranties or on the schedules related thereto that, because
of an event occurring after the date hereof, is incomplete or no longer correct.
Such disclosure will not be deemed to modify the representations and warranties
of such party or such schedule, as the case may be.
SECTION 5
ADDITIONAL AGREEMENTS
5.1 Legal Requirements to Merger. Subject to the conditions set forth in
Section 6 and to the other terms and provisions of this Agreement, each of the
parties to this Agreement agrees to take, or cause to be taken, all reasonable
actions necessary to comply promptly with all legal requirements applicable to
each of them with respect to the Merger and will promptly cooperate with
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and furnish information to each other in connection with any such requirements
imposed upon any of them in connection with the Merger. Each of American, the
Shareholders and Omni will take all reasonable actions necessary to obtain, and
will cooperate with each other in obtaining, any consent, authorization, order
or approval of, or any exemption by, any governmental entity or other public or
private party, required to be obtained or made by it in connection with the
Merger or the taking or any action contemplated by this Agreement.
5.2 Further Assurances. After the Effective Time, each of American, the
Shareholders and Omni will, at their own expense, take all appropriate action
and execute all documents, instruments or conveyances which may be reasonably
necessary to carry out the provisions of this Agreement.
5.3 Expenses, Transfer Taxes, Etc. Whether or not the transactions
contemplated by this Agreement shall be consummated, all fees and expenses
(including all fees of counsel, actuaries, accountants and other experts)
incurred by any party in connection with the negotiation and execution of this
Agreement shall be borne by such party.
5.4 Confidentiality. Until the Effective Time and subsequent to the
termination of this Agreement pursuant to Section 7, each of the parties will
keep confidential and will not disclose to any third party any information
obtained by it in connection with this Agreement except (a) that information may
be disclosed by the parties to their advisors in connection with the
negotiation of and the activities conducted pursuant to this Agreement, (b) to
the extent that such information is or becomes generally available to the public
through no act or omission of Omni in violation of this Agreement and (c) to the
extent permitted by Section 4.3 hereof.
5.5 Employment Agreements. At the Closing, each of Omni and Mr. Ward will
execute and deliver the Employment Agreement.
5.6 Corporate Name. After the Effective time, the Surviving Corporation
shall have the right to use the corporate name "American Helicopter Drilling
Inc." and any derivatives or combinations thereof and none of the Shareholders
shall use or attempt to use such name or any derivative or combination thereof
as the corporate name of a corporation, partnership or other entity, an assumed
name, a trade name or in any other manner.
5.7 Lease Agreement. Shareholders agree to lease to Omni and Omni agrees
to lease from Shareholders all of the lands and buildings on which American's
operations are conducted as of the date hereof or on which they are being
conducted as of the Closing Date. The terms of such lease shall be as set forth
in the Lease Agreement attached hereto as Exhibit 5.7 (the "Lease Agreement").
5.8 Retention of American Employees. Omni agrees that it intends to
retain each of the American employees listed in Schedule 3.1.23 subsequent to
the Closing; provided that nothing in this Section 5.8 shall in any way restrict
Omni's right to terminate any of such employees for cause.
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SECTION 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction or, where permissible, waiver by such party of the following
conditions at or prior to the Effective Time:
6.1.1 No statute, rule, regulation, executive order, decree,
preliminary or permanent injunction or restraining order shall have been
enacted, entered, promulgated or enforced by any court of competent jurisdiction
or other governmental entity which prohibits or restricts the consummation of
the Merger and no action, suit, claim or proceeding by a state or federal
governmental entity before any court or other governmental entity shall have
been commenced and be pending which seeks to prohibit or restrict the
consummation of the Merger, other than actions, suits, claims and proceedings
which, in the reasonable opinion of counsel to the parties hereto, are unlikely
to result in an adverse judgment; provided, however, that before any
determination is made to the effect that this condition has not been satisfied,
American and Omni shall each use all reasonable efforts and take such actions as
may be reasonably necessary, at its own expense, to have such order, stay,
judgment or decree lifted or dismissed and any such suit, action or proceeding
dismissed or terminated.
6.1.2 All filings with and notices to and all consents and waivers
from the third parties listed in Schedule 3.1.25 shall have been made or
obtained.
6.2 Conditions to Obligations of Omni. The obligations of Omni to effect
the Merger are subject to the satisfaction of the following conditions unless
waived by Omni:
6.2.1 The Registration Statement shall have been declared
effective and the Initial Public Offering shall have been closed;
6.2.2 The representations and warranties of the Shareholders set
forth in this Agreement shall be true and correct in all material respects as of
the date of this Agreement and as of the Closing Date as though made on and as
of the Closing Date, except as otherwise contemplated by this Agreement, and
American and the Shareholders shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date.
6.2.3 All consents and approvals of governmental entities or third
parties necessary for consummation of the Merger by the parties shall have been
obtained, other than those which, if not obtained, would not in Omni's judgment
have a material adverse effect on any party's ability to consummate any of the
transactions contemplated hereby or on the Business and properties of American.
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6.2.4 Omni shall have received the opinion of Joseph B. Dischinger,
P.C., counsel to American and to the Shareholders, dated the Effective Time,
which will be substantially to the effect that:
(i) American is a corporation duly organized, validly existing
and in good standing under the laws of the State of Montana;
(ii) American has the corporate power to enter into this
Agreement and to consummate the transactions contemplated hereby, and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all requisite
corporate action taken on the part of American.
(iii) This Agreement has been duly executed and delivered by
American and the Shareholders, and is a valid and binding obligation of each
enforceable against each in accordance with its terms, except (A) as
enforceability may be limited by any bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights; (B) such enforceability is subject to
general principles of equity; and (C) no opinion need be expressed regarding the
enforcement of the choice of law provision of Section 9.4;
(iv) The Merger has been approved by the Shareholders in
accordance with the Montana Act and, assuming proper corporate action on the
part of Omni and compliance with the LBCL, the Merger will be effective under
the Montana Act upon proper filing of the Certificate of Merger in the State of
Montana;
(v) To such counsel's knowledge, based upon review of American's
Articles of Incorporation, By-laws, corporate minute book and certificates
representing American Common Stock, American's stock records and certificates of
officers of American, as of the date hereof, the authorized capital stock of
American consists of 50,000 shares of American Common Stock, 100 of which are
validly issued and outstanding.
(vi) Neither the execution and the delivery of this Agreement by
American, nor the consummation of the transactions contemplated hereby, will (A)
violate any of the provisions of the Articles of Incorporation or By-laws of
American; or (B) to such counsel's knowledge, except as disclosed in an Exhibit
or Schedule to or set forth in this Agreement, conflict with or result in a
breach of, or give rise to a right of termination of, or accelerate the
performance required by, any terms of any court order, consent decree, note,
bond, mortgage, indenture, deed of trust, or any license or agreement, or any
other instrument or obligation binding on American or constitute a default
thereunder, or result in the creation of any Encumbrance upon any of the assets
of American.
As to any matter in such opinion which involves matters of fact or
matters relating to laws other than United States federal, or Montana law, such
counsel may rely, without independent investigation, upon the certificates of
officers and directors of American and of public
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<PAGE>
officials, reasonably acceptable to Omni. Such counsel need not render any
opinion with respect to any federal or state securities laws.
6.2.5 Omni shall have had a full opportunity to conduct
inspections of the operating assets and books and records of American.
6.2.6 American shall have provided Omni certified copies of its
Articles of Incorporation and By-laws and certificates of existence, good
standing and qualification to do business as a foreign corporation, certified by
the appropriate state authorities in American's state of incorporation and
applicable Material Jurisdictions.
6.2.7 Omni shall have received a certificate of a duly authorized
officer of American, dated the Closing Date, certifying as to the incumbency of
any person executing this Agreement or any certificate or other document
delivered in connection with this Agreement and certifying as to such other
matter as Omni shall reasonably request.
6.2.8 Omni will be reasonably satisfied, and shall have received a
certificate of each of the Shareholders and of the president of American that
the condition specified in Section 6.2.2 has been fulfilled.
6.2.9 Omni shall have received Schedule 3.1.29 and shall be
satisfied, in its sole discretion, that the information set forth therein will
not in any manner impair the operations or profitability of, or expose Omni to
liabilities which, in its discretion, are unacceptable.
6.3 CONDITIONS TO OBLIGATIONS OF AMERICAN AND SHAREHOLDERS. The
obligations of American and the Shareholders to effect the Merger are subject to
the satisfaction for the following conditions, unless waived by American and
each of the Shareholders:
6.3.1 All consents and approvals of governmental entities or third
parties necessary for consummation of the Merger by the parties, shall have been
obtained, other than those which, if not obtained, would not have a material
adverse effect on any party's ability to consummate any of the transactions
contemplated hereby. Omni shall have used its best efforts to obtain all
necessary permits, authorizations, consents and approvals required by such
governmental entities prior to the Closing Date.
6.3.2 American and the Shareholders shall have received a
certificate of a duly authorized officer of Omni, dated the Closing Date, and
certifying as to the incumbency of any person executing this Agreement or any
certificate or other document delivered in connection with this Agreement and
certifying such other matters as American or the Shareholders shall reasonably
request.
6.3.3 The Registration Statement shall have been declared
effective and the Initial Public Offering shall have been closed.
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6.3.4 The Shareholders shall have received a certificate of a duly
authorized officer of Omni, dated the Closing Date, and certifying that the
representations and warranties of Omni set forth in this Agreement shall be true
and correct in all material respects as of the date of this Agreement and as of
the Closing Date as though made on and as of the Closing Date, except as
otherwise contemplated by this Agreement, and that Omni has performed in all
material respects or had waived all obligations required to be performed by them
under this Agreement at or prior to the Closing Date.
6.3.5 The Shareholders shall have received the opinion of Jones,
Walker, Waechter, Poitevent, Carrere & Denegre, L.L.P., counsel to Omni, dated
the Effective Time, which will be substantially to the effect that:
(i) Omni is a corporation duly organized, validly existing and in good
standing under the laws of the State of Louisiana;
(ii) Omni has the corporate power to enter into this Agreement and to
consummate the transactions contemplated hereby, and the execution and delivery
of this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all requisite corporate action taken on the part of
Omni;
(iii) This Agreement has been duly executed and delivered by Omni, and
is a valid and binding obligation of each enforceable against each in accordance
with its terms, except (A) as enforceability may be limited by any bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights; (B) such
enforceability is subject to general principles of equity; and (C) no opinion
need be expressed regarding the enforcement of the choice of law provision of
Section 9.4;
(iv) The Merger has been approved by Omni in accordance with the LBCL
and, assuming proper corporate action on the part of American and the
Shareholders and compliance with the Montana Act, the Merger will be effective
under the LBCL upon proper filing of the Certificate of Merger in the State of
Louisiana;
(v) To such counsel's knowledge, based upon review of Omni's Articles
of Incorporation, By-laws, corporate minute book, Omni's stock records and
certificates of officers of Omni, as of the date hereof, the authorized capital
stock of Omni consists of 45,000,000 shares of Omni Common Stock, 15,500,000 of
which are validly issued and outstanding.
(vi) Neither the execution and the delivery of this Agreement by Omni,
nor the consummation of the transactions contemplated hereby, will (A) violate
any of the provisions of the Articles of Incorporation or By-laws of Omni, or
(B) to such counsel's knowledge, except as disclosed in an Exhibit or Schedule
to or set forth in this Agreement, conflict with or result in a breach of, or
give rise to a right of termination of, or accelerate the performance required
by, any terms of any court order, consent decree, note, bond, mortgage,
indenture, deed of trust, or any
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license or agreement, or any other instrument or obligation binding on Omni or
constitute a default thereunder, or result in the creation of any Encumbrance
upon any of the assets of Omni.
As to any matter in such opinion which involves matters of fact or
matters relating to laws other than United States federal, or Louisiana law,
such counsel may rely, without independent investigation, upon the certificates
of officers and directors of Omni and of public officials, reasonably acceptable
to the Shareholders. Such counsel need not render any opinion with respect to
any federal or state securities laws.
SECTION 7
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger may be
abandoned at any time prior to the Effective Time:
7.1.1 by mutual consent of American and Omni;
7.1.2 by American or Omni, if any permanent injunction or other
order of a court or other competent governmental entity preventing the
consummation of the Merger shall have become final and nonappealable; or
7.1.3 by American, Omni or any Shareholder if the Merger shall not
have been consummated on or before December 31, 1997; provided, that the right
to terminate this Agreement under this Section 7.1 shall not be available to any
party whose breach of its representations and warranties in this Agreement or
whose failure to perform any of its covenants and agreements under this
Agreement has resulted in the failure of the Merger to occur on or before such
date.
7.2 Effect of Termination. In the event of a termination of this Agreement
by either American or Omni as provided in Section 7.1, this Agreement shall
forthwith become void and there shall be no liability or obligation under any
provisions hereof on the part of American, Omni or their respective officers,
directors or stockholders, except (a) pursuant to the covenants and agreements
contained in Section 5.3 and Section 5.4 and this Section 7.2 and (b) to the
extent that such termination results from the willful material breach by a party
hereto of any of its representations, warranties, covenants or agreements set
forth in this Agreement, in which case the non-breaching party shall have a
right to recover its damages caused thereby.
7.3 Amendment. This Agreement may not be amended except by an instrument
in writing signed by each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may, in their respective sole discretion and to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered
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pursuant thereto; and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in a written
instrument signed by or on behalf of such party.
SECTION 8
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
8.1 Survival; Indemnification.
8.1.1 The covenants, representations and warranties and agreements
of the parties hereto contained herein or in any certificate or other writing
delivered pursuant hereto or in connection herewith shall survive the Closing
Date in accordance with their terms.
8.1.2 The Shareholders and their successors and assigns (each an
"Indemnitor"), jointly and severally, hereby agree to indemnify each Indemnitee
and Indemnitee Affiliate (as each is defined in Section 8.2 of this Agreement)
against and agree to hold it harmless from any and all damage, loss, liability,
and expense (including, without limitation, reasonable expenses of investigation
and attorney's fees and expenses in connection with any action, suit,
proceeding, claim, investigation, or other loss) (a "Loss") incurred or suffered
by such Indemnitee or Indemnitee Affiliate arising out of or relating to:
(i) Any breach of any covenant or agreement or any inaccuracy or
omission in any representation or warranty made by them pursuant to this
Agreement;
(ii) Any taxes attributable to any Pre-Closing Tax Period; and
(iii) U.S. or any state or local Environmental Laws and relating
to conditions, events, actions, violations, obligations, or circumstances that
exist in whole or part prior to the Closing Date.
8.1.3 Omni and their successors and assigns (each an
"Indemnitor"), jointly and severally, hereby agree to indemnify each Indemnitee
and Indemnitee Affiliate (as each is defined in Section 8.2 of this Agreement)
against and agree to hold it harmless from any and all damage, loss, liability,
and expense (including, without limitation, reasonable expenses of investigation
and attorney's fees and expenses in connection with any action, suit,
proceeding, claim, investigation, or other loss) (a "Loss") incurred or suffered
by such Indemnitee or Indemnitee Affiliate arising out of or relating to any
breach of any covenant or agreement or any inaccuracy or omission in any
representation or warranty made by them pursuant to this Agreement.
8.1.4 Nothwithstanding any other provisions of this Section 8,
neither the Shareholders, American or Omni shall be liable:
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<PAGE>
(a) for Losses arising under this Section 8.1 after such time as such
party shall have paid an aggregate of Three Million Five Hundred
Thousand and 00/100 Dollars ($3,500,000) in satisfaction of claims
made pursuant to the provisions hereof, or
(b) for indemnification relating to any
(i) breach of any covenant, except the covenant of
confidentiality after termination pursuant to Section 7 (as set
forth in Section 5.4 above) or covenants regarding the rights to
the American Helicopter Drilling name (as set forth in Section
5.6 above); or
(ii) inaccuracy or omission in any representation or
warranty made pursuant this Agreement;
unless notice providing specific details of the alleged breach or
misrepresentation is delivered to the other party within three years of the
Closing Date and a lawsuit is commenced within one year of such notice.
8.2 Definitions. For the purpose of this Agreement, the following terms
have the following meanings:
8.2.1 "Affiliate" means, with respect to any person, any person
directly or indirectly controlling, controlled by, or under common control with
such other person.
8.2.2 "Indemnitee" means, with respect to the obligations of the
Shareholders under this Section 8, Omni and its Affiliates and, with respect to
the obligations of Omni under this Section 8, American, its Affiliates or the
Shareholders.
8.2.3 "Indemnitee Affiliate" means the employees, successors, and
assigns of each Indemnitee and, with respect to each corporate Indemnitee, its
directors, officers, and shareholders.
8.2.4 "Pre-Closing Tax Period" means any tax period ending on or
before the close of business on March 31, 1997, or, in the case of any tax
period which includes, but does not end on, March 31, 1997, the portion of such
period up to and including March 31, 1997.
8.2.5 "Tax" or "Taxes" shall mean (i) any net income, alternative
or add-on minimum tax, gross income, gross receipts, sales, use, ad valorem,
franchise, capital, paid-up capital, profits, greenmail, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty, or other tax, governmental
fee, or other like assessment or charge of any kind whatsoever, together with
any interest or any penalty, addition to tax or additional amount imposed by any
governmental authority (a "Taxing Authority") responsible for the imposition of
any such tax (domestic or foreign), and (ii) liability for
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the payment of any amounts of the type described in (i) as a result of any
express obligations to indemnify any other person.
8.3 Control of Litigation.
(a) The Indemnitees and Indemnitee Affiliates agree to give prompt
notice to the Indemnitors of the assertion of any claim, or the commencement of
any suit, action, or proceeding in respect of which indemnity may be sought
under Section 8.1.2 or Section 8.1.3 of this Agreement and of any Loss which any
such Indemnitee deems to be within the ambit of Section 8.1.2 or Section 8.1.3
of this Agreement (specifying with reasonable particularity the basis therefor)
and will give the Indemnitors such information with respect thereto as the
Indemnitors may reasonably request. The Indemnitors may, at their own expense,
participate in and, upon notice to such Indemnitee, assume the defense of any
such suit, action, or proceeding; provided that the Indemnitors' counsel is
reasonably satisfactory to such Indemnitee, the Indemnitors shall thereafter
consult with such Indemnitee upon such Indemnitee's reasonable request for such
consultation from time to time with respect to such suit, action, or proceeding,
and the Indemnitors shall not, without such Indemnitee's consent, which consent
shall not be unreasonably withheld, settle or compromise any such suit, action,
or claim. If the Indemnitors assume such defense, such Indemnitees shall have
the right (but not the duty) to participate in the defense thereof and to employ
counsel, at their own expense, separate from the counsel employed by the
Indemnitors. For any period during which the Indemnitors have not assumed the
defense thereof, the Indemnitors shall be liable for the fees and expenses of
counsel employed by any Indemnitee; provided, however, that the Indemnitors
shall not be liable for the fees or expenses of more than one counsel employed
by any Indemnitee in any jurisdiction for all Indemnitees. If the Indemnitees
assume the defense thereof, the Indemnitees shall thereafter consult with the
Indemnitors upon the Indemnitors' reasonable request for such consultation from
time to time with respect to such suit, action, or proceeding and the
Indemnitees shall not, without the Indemnitors' consent, which consent shall not
be unreasonably withheld, settle or compromise any such suit, action or claim.
(b) No investigation by any Indemnitee or Indemnitee Affiliate prior
to the Closing Date shall relieve any Indemnitor of any liability hereunder.
8.4 Cooperation on Tax Matters. American and Omni shall cooperate fully,
as and to the extent reasonably requested by the other party, in connection with
any audit, litigation, or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party's request) the
provision of records and information which are reasonably relevant to any such
audit, litigation, or other proceeding and making employees available on a
mutually convenient basis to provide additional information and explanation of
any material provided hereunder. Omni and American agree (a) to retain all
books and records which are relevant to the determination of the Tax liabilities
pertinent to the Assets relating to any Pre-Closing Tax Period until the
expiration of the applicable statute of limitations and to abide by all record
retention agreements entered into with any Taxing Authority, and (b) to give the
other party reasonable written notice prior to destroying or
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discarding any such books and records and, if the other party so requests, Omni
or American, as the case may be, shall allow the other party to take possession
of such books and records.
SECTION 9
MISCELLANEOUS PROVISIONS
9.1 Amendment and Modification. This Agreement may be amended, modified,
or supplemented only by written agreement of the parties hereto.
9.2 Waiver of Compliance; Consents. Any failure of a party to comply with
any obligation, covenant, agreement, or condition herein may be waived by the
other party; provided, however, that any such waiver may be made only by a
written instrument signed by the party granting such waiver, 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 9.2, with appropriate notice in
accordance with Section 9.7 of this Agreement.
9.3 Assignment. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns. Any party may assign any of its rights
hereunder, but no such assignment shall relieve it of its obligations hereunder.
Nothing in this Agreement, expressed or implied, is intended or shall be
construed to confer upon any person other than the parties, any successors and
permitted assigns, any rights, remedy, or claim under or by reason of this
Agreement or any provisions herein contained.
9.4 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Louisiana (without regard to its
conflicts of law doctrines).
9.5 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
Agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
9.6 Notices. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if delivered by hand or
mailed by registered or certified mail (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):
If to American or the Shareholders:
David Ward
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2580 W. County Road 14
Loveland, Colorado 80537
If to Omni:
OMNI Energy Services Corp.
4484 Interstate 49, North
Lafayette, Louisiana 70520
Attention: Roger Thomas, President
9.7 Specific Performance. Each of the parties acknowledges that money
damages would not be a sufficient remedy for any breach of this Agreement and
that irreparable harm would result if this Agreement were not specifically
enforced. Therefore, the rights and obligations of the parties under this
Agreement shall be enforceable by a decree of specific performance issued by any
court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. A party's right to specific
performance shall be in addition to all other legal or equitable remedies
available to such party.
9.8 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.9 Entire Agreement. This Agreement, including the exhibits, schedules,
and other documents and instruments referred to herein, embodies the entire
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
9.10 Severability. If any one or more provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
9.11 Schedules and Exhibits. All Schedules and Exhibits attached hereto
are hereby incorporated in and made a part as if set forth in full herein.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
AMERICAN HELICOPTER DRILLING INC.
By: /s/ David Ward
-------------------------
David Ward, President
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OMNI ENERGY SERVICES CORP.
By: /s/ Roger E. Thomas
--------------------------
Roger E. Thomas, President
SHAREHOLDERS
/s/ David Ward
-----------------------------
David Ward
/s/ Linda Ward
-----------------------------
Linda Ward
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THIS EXHIBIT OMITS THE FOLLOWING SCHEDULES AND EXHIBITS. THE COMPANY WILL
SUPPLEMENTALLY FURNISH THE COMMISSION A COPY OF ANY SUCH SCHEDULES OR EXHIBITS
UPON REQUEST:
Schedule Title
- -------- -------------------------------------
1.4 Ownership of American Common Stock
3.1.10 Permitted Encumbrances
3.1.12 Changes Since March 31, 1997
3.1.15 Receivable and Payables
3.1.16 Encumbrances on Properties
3.1.17 Leases
3.1.21 Material Contracts
3.1.23 Personnel
3.1.25 Consents and Permits
3.1.27 Compliance with Applicable Law
3.1.29 Environmental
Exhibit Title
- -------- -------------------------------------
2.1 Employment and Non-Competition
Agreement Between the Company and
David Ward
5.7 Lease Agreement Between the Company
and David and Linda Ward
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EXHIBIT 2.7
AGREEMENT OF MERGER
BY AND AMONG
FOURNIER & ASSOCIATES, INC.,
KEITH J. FOURNIER, SANDRA B. MILLER,
ROGER D. HEBERT, DON C. ROSS
AND
OMNI ENERGY SERVICES CORP.
DATED AS OF OCTOBER 31, 1997
<PAGE>
AGREEMENT OF MERGER
BY AND AMONG
FOURNIER & ASSOCIATES, INC.,
KEITH J. FOURNIER, SANDRA B. MILLER,
ROGER D. HEBERT, DON C. ROSS
AND
OMNI ENERGY SERVICES CORP.
DATED AS OF OCTOBER 31, 1997
THIS AGREEMENT OF MERGER (the "Agreement") is made and entered into as of
the 31st day of October 1997 by and among OMNI ENERGY SERVICES CORP., a
Louisiana corporation ("Omni"), FOURNIER & ASSOCIATES, INC., a Louisiana
corporation ("Fournier"), Sandra B. Miller, Roger D. Hebert and Don C. Ross, in
their capacity as shareholders of Fournier and Keith J. Fournier, in his
capacity as a shareholder and president of Fournier (Messrs. Fournier, Hebert
and Ross and Ms. Miller being collectively referred to herein as
"Shareholders").
RECITALS
WHEREAS, the Shareholders collectively own 100% of the issued and
outstanding common stock of Fournier, $1.00 par value per share (the "Fournier
Common Stock");
WHEREAS, Fournier is currently engaged in the geophysical survey business,
primarily along the U.S. Gulf Coast (the "Business");
WHEREAS, Omni is currently undertaking the initial public offering (the
"Initial Public Offering") of shares of Omni common stock (the "Omni Common
Stock") pursuant to a Registration Statement on From S-1 filed with the
Securities and Exchange Commission on September 26, 1997 (the "Registration
Statement"); and
WHEREAS, subject to the terms and conditions set forth herein, the parties
hereto have agreed to effect a merger of Fournier with and into Omni.
NOW THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants, and agreements set forth herein, each of
the parties hereto agree as follows:
SECTION 1
MERGER OF FOURNIER INTO OMNI
1.1 The Merger. At the Effective Time (as hereinafter defined), in
accordance with the terms and subject to the conditions of this Agreement and
the Louisiana Business Corporation Law (the "LBCL"), Fournier will merge with
and into Omni (the "Merger"), the separate corporate
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existence of Fournier shall cease and Omni shall continue as the surviving
corporation (sometimes referred to herein as the "Surviving Corporation").
1.2 The Closing. (a) Unless this Agreement shall have been terminated
pursuant to the provisions hereof, and subject in each case to the satisfaction
or waiver of the conditions to closing specified in Section 6 hereof, the
closing of the transactions contemplated by this Agreement (the "Closing") shall
take place at the offices of Jones Walker Waechter Poitevent Carrere & Denegre
at FirstNBC Center, New Orleans, Louisiana, commencing at 9:00 a.m. local time
on the earlier to occur of (i) December 31, 1997, (ii) ten days following
satisfaction or waiver of all conditions to the obligations of the parties to
consummate the transactions contemplated hereby (other than conditions with
respect to actions the respective parties will take at the Closing itself) or
(iii) such other date as the Parties may mutually determine (such date being
referred to herein as the "Closing Date").
(b) If all conditions set forth in Section 6 hereof are satisfied or duly
waived, at the Closing, (i) Fournier will deliver to Omni the certificates,
instruments, and documents referred to in Section 2.1 below, (ii) Omni will
deliver to Fournier the certificates, instruments, and documents referred to in
Section 2.2 below, (iii) Omni and Fournier shall execute, deliver and
acknowledge the Certificate of Merger in the form attached hereto as Exhibit 1.2
(the "Certificate of Merger"), and (iv) Omni will deliver to the Shareholders
the consideration to be paid in the Merger as provided in Sections 1.4 and 1.6
hereof.
1.3 The Effective Time; Effect of Merger. (a) The Merger shall be
effective upon the filing of the Certificate of Merger with the Secretary of
State of Louisiana in accordance with the LBCL, or at such other time and date
as is provided in the Certificate of Merger pursuant to the mutual agreements of
Fournier and Omni (hereinafter referred to as the "Effective Time"). Upon the
Effective Time and by virtue of the Merger, the Surviving Corporation shall
possess all the rights, privileges and franchises possessed by Fournier and
shall be responsible for all of the liabilities and obligations of Fournier in
the same manner as if the Surviving Corporation had itself incurred such
liabilities or obligations, and the Merger shall have such other effects as may
be specified in the applicable provisions of the LBCL.
(b) Directors and Officers; Articles of Incorporation. After the
Effective Time and until their successors shall have been duly elected or
appointed, the directors and officers of Omni will be the directors and officers
of the Surviving Corporation. The Articles of Incorporation and By-laws of Omni,
as in effect immediately prior to the Effective Time, shall be the articles of
incorporation and by-laws of the Surviving Corporation after the Effective Time
until thereafter duly amended.
(c) Financial Accounting Effect. For financial and tax accounting and
reporting purposes the Merger shall be effective as of October 1, 1997 and the
respective financial, tax and accounting records and statements of each party
hereto shall be prepared as if such Merger were declared effective as of October
1, 1997.
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1.4 Conversion of Fournier Shares. Subject to Section 5.7 hereof, at and
as of the Effective Date, by reason of the Merger (a) all of the issued and
outstanding shares of Fournier Common Stock shall be converted into the right to
receive that number of shares of Omni Common Stock having an aggregate value of
$539,126.25 based upon the price at which such shares are sold to the public in
the Initial Public Offering and (b) all shares of Fournier Common Stock, whether
issued and outstanding or held in treasury, shall be canceled. The shares of
Omni Common Stock issued in connection with the Merger shall be allocated
between the Shareholders as set forth in Schedule 1.4 hereof. Cash will be
issued in lieu of any fractional shares and will be similarly allocated between
the Shareholders.
1.5 Delivery and Exchange of Certificates. On the Closing Date, the
Shareholders shall deliver to Omni all certificates representing outstanding
shares of Fournier Common Stock. Upon such delivery, Omni shall deliver to each
Shareholder a certificate representing the number of shares of Omni Common Stock
into which such shares will be converted at the Effective Time, as determined in
Section 1.4 hereof. Until so delivered, each certificate which represented
shares of Fournier Common Stock before the Effective Time shall be deemed for
all purposes to represent the number of whole shares of Omni Common Stock into
which such shares shall have been converted in the Merger. Omni may, at its
option, refuse to pay any dividend or other distribution payable after the
Effective Time with respect to Omni Common Stock to the holders of certificates
evidencing undelivered shares of Fournier Common Stock. Whether or not a stock
certificate representing shares of Fournier Common Stock is delivered as
provided herein, from and after the Effective Time, such certificate shall under
no circumstances evidence, represent or otherwise constitute any stock or
interest in Fournier or any person, firm or corporation other than Omni.
1.6 Cash Consideration. In addition to the shares of Omni Common Stock
into which the outstanding shares of Fournier Common Stock are convertible as
set forth in Section 1.4 hereof, at the Effective Time Omni will pay the
Shareholders an aggregate of Two Hundred Ten Thousand Eight Hundred Seventy-
Three and 75/100 dollars ($210,873.75) cash together with interest on such
amount at the rate of 8.75 per cent per annum commencing October 1, 1997 and
until such time as such amount and the interest thereon is paid in full, which
amount shall be allocated among the Shareholders as set forth in Schedule 1.4
hereof.
SECTION 2
EVENTS OCCURRING ON THE CLOSING DATE
2.1 Deliveries by Fournier and the Shareholders. On the Closing Date,
Fournier will deliver to Omni the following:
(a) A copy of the Articles of Incorporation of Fournier, certified by the
Secretary of State of the State of Louisiana as of a date within thirty (30)
days of the Closing Date;
(b) A certificate from the Secretary of State of the State of Louisiana
as of a date within thirty (30) days of the Closing Date as to the good standing
of Fournier in such state;
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(c) A certificate of the Secretary of Fournier, attaching thereto a true
and complete copy of its By-laws in effect on the Closing Date and attesting to
the incumbency of the person executing this Agreement on behalf of Fournier;
(d) A certificate from the president of Fournier and each of the
Shareholders stating that its and their respective representations and
warranties are true, complete and accurate in all material respects at and as of
the Closing Date;
(e) The executed counterpart copies of all consents, approvals,
authorizations and permits, if any, from third parties as referred to in Section
3.25 hereof;
(f) An Employment and Non-Competition Agreement between each of Keith J.
Fournier, Dan C. Ross and Roger D. Hebert and Omni, which agreement shall be in
the form set forth in Exhibit 2.1 hereto (the "Employment Agreement");
(g) An opinion of legal counsel to Fournier and the Shareholders as to
the due incorporation, existence and good standing of Fournier, its
qualification to do business in Louisiana and any Material Jurisdictions (as
defined in Section 3.8 hereof), its power and authority to execute and deliver
this Agreement and to consummate the transactions contemplated hereby, and such
other matters as shall be reasonably requested by Omni; and
(h) All other previously undelivered items required to be delivered by
Fournier at or prior to the Closing Date pursuant to the terms of this
Agreement.
2.2 Deliveries by Omni. On the Closing Date, Omni will deliver the
following to the Shareholders:
(a) The shares of Omni Common Stock as set forth in Section 1.4;
(b) The cash consideration and interest thereon set forth in Section 1.6;
and
(c) The Employment Agreement.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF
FOURNIER AND THE SHAREHOLDERS
Each Shareholder, with respect to matters relating to themselves and their
respective Fournier Common Stock, represents and warrants to and agrees with
Omni as set forth as follows in Sections 3.1 through 3.5 and the Shareholders,
acting jointly, severally and in solido (i.e., the Louisiana term for jointly
and severally) represent and warrant to and agree with Omni as follows with
respect to the matters set forth in Sections 3.6 through 3.31:
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3.1 Ownership. Each Shareholder is, and at the Effective Time will be,
the record and beneficial owner of the number of shares of Fournier Common
Stock, which are represented by the certificates bearing the numbers, shown
opposite their respective names in Schedule 1.4 hereof. Each Shareholder has,
and at the Effective Time, will have good and marketable title to all such
shares and the absolute right to deliver such shares in accordance with the
terms hereof, free and clear of all liens, pledges and encumbrances of any kind.
Each Shareholder has the power, authority and capacity necessary to approve the
Merger, execute and deliver this Agreement and perform its obligations under
this Agreement.
3.2 Pending Actions. As of the date hereof there are, and at the
Effective Time there will be, no actions, suits or proceedings pending or
threatened involving the ownership by the Shareholders of their respective
shares of Fournier Common Stock or their ability to approve the Merger pursuant
to this Agreement.
3.3 No Other Agreements. Except for this Agreement and the Employment
Agreement, there are no contracts, agreements, arrangements or understandings
between any Shareholder and Omni relating to Fournier or the transactions
contemplated by this Agreement. No Shareholder is a party to any agreement with
respect to the voting, sale or transfer of any of the Fournier Common Stock or
the issuance of any additional shares of Fournier capital stock or the
redemption of any such stock.
3.4 Restrictions on Resale; Investment Intent.
(a) Each Shareholder is acquiring the Omni Common Stock to be received in
connection with the Merger for investment for their own account and has no
present intention of reselling or otherwise distributing or participating in a
distribution of such stock. Each Shareholder understands that the shares of
Omni Common Stock to be issued in the Merger will not be registered under the
Securities Act of 1933, as amended (the "Securities Act"), that such shares will
be "restricted securities" as that term is defined in Rule 144 ("Rule 144")
promulgated by the Securities and Exchange Commission (the "Commission") under
the Securities Act, and that the Shareholder cannot transfer any of such shares
unless they are subsequently registered under the Securities Act and under any
applicable state securities law or are transferred in a transfer that, in the
opinion of counsel satisfactory to Omni, is exempt from such registration. Each
Shareholder further understands that Omni is not obligated by this Agreement to
register such shares under the Securities Act or under any such state laws and
that Omni will, as a condition to the transfer of any such shares, require that
the request for transfer be accompanied by an opinion of counsel, in form and
substance satisfactory to Omni, to the effect that the proposed transfer does
not result in a violation of the Securities Act or any applicable state
securities law, unless such transfer is covered by an effective registration
statement. Each Shareholder understands that such shares of Omni Common Stock
may not be sold publicly in reliance on the exemption from registration under
the Securities Act afforded by Rule 144 unless and until the minimum holding
period and other requirements of Rule 144 have been satisfied.
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(b) Each Shareholder has been represented by competent and experienced
legal counsel in connection with the negotiation and execution of this
Agreement, has been granted the opportunity to make a thorough investigation of
and to obtain information with respect to the affairs of Omni and their
acquisition of Omni Common Stock, and has availed himself or herself of such
opportunity either directly or through its legal counsel and other authorized
representatives.
(c) Each Shareholder has been advised that the shares of Omni Common
Stock issued hereunder have not been and are not being registered under the
Securities Act and that Omni in issuing such shares is relying upon, among other
things, the representations and warranties of the Shareholders contained in this
Section in concluding that such issuance does not require compliance with the
registration provisions of the Securities Act.
(d) Each Shareholder understands and agrees that all certificates
evidencing the shares of Omni Common Stock issued hereunder will bear
restrictive legends in substantially the following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act"), or any applicable state law, and may not be transferred
without registration under the Act and any such state law or an
opinion of counsel satisfactory to the corporation that
registration is not required.
3.5 Information. The Shareholders acknowledge that (a) they have received
and have reviewed to their satisfaction this Agreement, the Registration
Statement and such additional material information with respect to the Merger
and Omni, if any, as each of them has requested and (b) such information is
sufficient for them to determine objectively whether to approve the Merger and
enter into this Agreement.
3.6 Capitalization and Ownership. The authorized capital stock of
Fournier consists of 1,000 shares of common stock, $1.00 par value per share, of
which 100 shares are issued and outstanding. All of the issued and outstanding
shares of such common stock have been duly authorized and are validly issued
fully paid and non-assessable. There are no outstanding warrants, options,
rights, calls or other commitments of any nature relating to any share of
capital stock of Fournier, and there are no outstanding securities or debt
obligations of Fournier convertible into shares of capital stock of Fournier.
Other than the shares of Fournier Common Stock listed in Schedule 1.4, there are
no shares of Fournier capital stock outstanding.
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3.7 Organization.
(a) Fournier is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Louisiana, with the corporate power
and authority to own, lease, and operate its properties and to carry on its
business as now being conducted.
(b) The copy of the Articles of Incorporation and all amendments thereto
of Fournier, as certified by the Secretary of State of the State of Louisiana,
and the By-laws, as amended to date, of Fournier, as certified by its Secretary
and delivered to Omni, are true, complete, and correct copies of the respective
Articles of Incorporation and By-laws, as amended and currently in effect, of
Fournier.
3.8 Qualification. Fournier is licensed or qualified to do business as a
foreign corporation and is in good standing in the jurisdictions in which it
conducts its business, except where the failure to so qualify would not have a
material adverse effect on the business or financial condition of the Business
taken as a whole (the "Material Jurisdictions").
3.9 Authority. Fournier has the corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery by Fournier of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by the Board of Directors and shareholders of Fournier; no other corporate
proceedings on the part of Fournier or any other person or entity, whether
pursuant to the Articles of Incorporation or By-laws of Fournier or by law or
otherwise, are necessary to authorize Fournier to enter into this Agreement, or
to consummate the transactions contemplated hereby; and this Agreement is the
legal, valid, and binding obligation of Fournier (and the Shareholders, as the
case may be). This Agreement has been duly executed and delivered by Fournier
and the Shareholders and constitutes a valid and binding obligation of Fournier
and the Shareholders, enforceable against each of them in accordance with its
terms, except that (i) such enforcement may be subject to bankruptcy,
insolvency, moratorium or similar laws affecting creditors' rights generally,
(ii) the remedy of specific performance and injunctive relief are subject to
certain equitable defenses and to the discretion of the court before which any
proceedings therefor may be brought, and (iii) rights to indemnification
hereunder may be limited under applicable securities laws.
3.10 No Conflict. Except as set forth in Schedule 3.10 hereof (the items
listed in such Schedule being referred to herein as "Permitted Encumbrances"),
neither the execution and the delivery of this Agreement by Fournier and the
Shareholders, nor the consummation of the transactions contemplated hereby do or
will (a) violate, conflict with, or result in a breach of any provisions of, (b)
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, (c) result in the termination of or
accelerate the performance required by, (d) result in the creation of any lien,
security interest, charge, claim, mortgage or encumbrance (collectively referred
to hereafter as "Encumbrances") upon any of Fournier's properties or assets
under any of the terms, conditions or provisions of Fournier's Articles of
Incorporation or By-laws or any note, bond, mortgage, indenture, deed of trust,
lease, license, loan agreement or other
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instrument or obligation to or by which Fournier, the Shareholders or any of its
or their assets are bound, or (e) violate any order, writ, injunction, decree,
statute, rule or regulation of any governmental entity applicable to either
Fournier, the Shareholders or any of their respective assets, except for any
such conflict, breach, termination, acceleration, default or Encumbrance which
would not have a material adverse effect on (i) the business, assets or
financial condition of Fournier or (ii) Fournier's or the Shareholder's ability
to consummate any of the transactions contemplated hereby.
3.11 Financial Statements. Fournier has heretofore delivered to Omni
its balance sheet as of September 30 , 1997 (the "Balance Sheet"), and the
related statement of operations for the three months ended September 30 , 1997,
together with its balance sheet as of December 31, 1996 and the related
statement of operations for the year then ended. The financial statements
referred to in the preceding sentence are hereinafter collectively referred to
as the "Financial Statements." Each of the Financial Statements was prepared
from the books and records of Fournier in conformity with generally accepted
accounting principles consistently applied, and fairly present the financial
condition and results of operations of Fournier for the period and as of the
dates stated therein. Except to the extent reflected in the Financial
Statements, Fournier has no liabilities or obligations required to be reflected
in the Financial Statements (or the notes thereto) in accordance with generally
accepted accounting principles other than current liabilities incurred in the
ordinary course of business, consistent with past practice subsequent to
September 30 , 1997.
3.12 Absence of Certain Changes or Events. Since September 30, 1997
(the "Balance Sheet Date"), Fournier has operated the Business in the ordinary
course consistent with past practice, and neither Fournier nor the Business has:
(a) Suffered any material adverse change in its business or any event or
condition of any character, which individually or in the aggregate, has had or
might reasonably be expected to have a material adverse effect on the business
or financial condition of the Business taken as a whole;
(b) Incurred any obligations or liabilities (absolute, accrued,
contingent, or otherwise) or entered into any transactions, commitments or
agreements other than in the ordinary course of business and consistent with
past practice;
(c) Paid, discharged, or satisfied any claims, obligations, or
liabilities (absolute, accrued, contingent, or otherwise), except the payment,
discharge, or satisfaction in the ordinary course of business and consistent
with past practice of any claims, obligations, and liabilities (i) which are
reflected or reserved against in the Financial Statements or (ii) which were
incurred in the ordinary course of business and consistent with past practice
since the Balance Sheet Date;
(d) Permitted or allowed any of its properties or assets, whether
tangible or intangible, to be subjected to any Encumbrances or other liabilities
and obligations;
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(e) Written off as uncollectible, or canceled or waived, any accounts
receivable or any portion thereof, or any debts or claims, except in the
ordinary course of business and consistent with past practice;
(f) Sold, conveyed, or otherwise disposed of any properties or assets,
except for fair consideration in the ordinary course of business and consistent
with past practice;
(g) Disposed of or permitted to lapse any item of intangible property, or
any license, permit, or other form of authorization to use any intangible
property;
(h) Except for normal increases that are not material and are consistent
with past practice, granted or agreed to grant any increase in the compensation
of any employee (including any such increase pursuant to any bonus, pension,
profit sharing or other plan or commitment), or become a party to or instituted
any new benefit programs for any employee;
(i) Made any change in any method of accounting or accounting practice or
in any Tax (as such term is defined in Section 8.2 of this Agreement) procedures
or elections;
(j) Terminated or suffered a termination of (excluding a termination in
accordance with its terms) or amended, any material contract, agreement,
license, or lease;
(k) Declared, paid, or made, or set aside for payment or making, any
dividend (other than cash dividends) or other distribution in respect of the
capital stock of Fournier or, directly or indirectly, redeemed, purchased, or
otherwise acquired any of the capital stock of Fournier;
(l) Suffered any damage, destruction or casualty loss to the physical
properties of Fournier (whether or not covered by insurance), materially and
adversely affecting the business, operations, prospects or financial condition
of Fournier; or
(m) Agreed, whether in writing or otherwise, or made any arrangement,
whether or not legally binding, to take any action which, if taken prior to the
date hereof, would have served to make false any of the statements contained in
clauses (a) through (l) of this Section 3.12.
3.13 Certain Tax Matters.
(a) All income taxes, unemployment, social security, franchise, real
property, personal property and all other taxes levied, assessed or imposed upon
Fournier in connection with Fournier's operation of the Business by the United
States, or any state, or governmental subdivision of either, to the extent due
and payable, have been duly paid to date or are being contested through
appropriate administrative or judicial procedures, and no liability for
deficiencies with respect thereto exists. There are no tax audits pending nor
any outstanding agreements or waivers extending the statutory period of
limitations applicable to any federal, state or local income tax return for any
period in connection with Fournier's operation of the Business. No tax
deficiencies have been determined nor
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proposed tax assessments charged against Fournier (nor is there any basis
therefor) in connection with Fournier's operation of the Business. Fournier has
filed all federal, state, local, sales, franchise, withholding, real and
personal property tax returns required to be filed in connection with Fournier's
operation of the Business. No penalties or other charges are, or will become,
due with respect to the late filing of any return by Fournier in connection with
Fournier's operation of the Business. True, correct and complete copies of the
state and local real property and personal property tax returns of Fournier in
connection with Fournier's operation of the Business for Fournier's last three
fiscal years have been delivered to Purchaser.
(b) Fournier:
(i) Is not subject to any liens for Taxes on its assets;
(ii) Is not currently under any contractual obligation to pay the
Tax obligations of, or with respect to transactions relating to, any other
person or to indemnify any other person with respect to any Tax;
(iii) Is not subject to any (A) claims, audits, actions, suits,
proceedings, or investigations with respect to any Tax or assessment for which
the Purchaser could be liable, which would be material to the Business, and (B)
requests for rulings in respect of any Tax or any proposed transaction pending
before any Taxing Authority (as defined in Section 8.2 of this Agreement).
(c) Neither of the Shareholders is aware of any facts that could give
rise to any claim, audit, action, suit, proceeding, or investigation with
respect to any material Tax or assessment for which Omni could be liable and
which would be material.
(d) No Tax or assessment will be assessed on or after the Closing Date
against or pertaining to Fournier or any assets of the Business for any tax
period ending on or prior to the Effective Date, or for any period ending after
the Effective Date with respect to any portion of such tax period that includes
or is prior to the Effective Date, other than Taxes disclosed in the Financial
Statements.
3.14 Condition of Facilities. The facilities and other property owned
or leased by Fournier, including equipment, furniture, vehicles and other
tangible personal property owned or held or used in the conduct of the Business
(collectively, the "Assets"), are in good operating condition and repair,
ordinary wear and tear excepted, and are in adequate working order for the
continued conduct of the Business as it is currently conducted. Other than as
disclosed herein, neither of the Shareholders has knowledge of any condition or
defect, in any of the Assets which would materially affect the fair market
value, use or operation of the Business.
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3.15 Receivables; Payables.
(a) Schedule 3.15(a) sets forth a list of all accounts and notes
receivable accrued in connection with the operation of the Business as of the
Effective Date which have a balance of in excess of $5,000, their respective
balances and an accurate aging thereof. (Such notes and receivables are referred
to collectively as "Receivables"). The Receivables have been earned and recorded
in the ordinary course of business consistent with past practices, and no
Receivables are subject to any counterclaim or offset. None of the Receivables
have been sold, transferred, or otherwise disposed of by Fournier and are fully
collectible. Other than those Receivables set forth in Schedule 3.15(a), there
are no accounts or notes receivable by Fournier which either individually or in
the aggregate are material to the Business.
(b) Schedule 3.15(b) contains an aging schedule of all accounts and trade
payables of the Business as of the Effective Date which have a balance of in
excess of $5,000, including the dollar amounts thereof (such accounts and trade
payables being referred to as "Accounts Payable"). All such payables of
Fournier have arisen in the ordinary course of business, and no such payables
are more than 45 days past due, except for those account or trade payables with
respect to which there is an amount disputed in good faith and which are marked
"Disputed" on Schedule 3.15(b). All Accounts Payable are accurately reflected
in the Financial Statements. Other than those Accounts Payable set forth in
Schedule 3.15(b), there are no accounts or trade payables by Fournier which
either individually or in the aggregate are material to the Business.
3.16 Title to Properties; Encumbrances.
(a) Fournier has good and marketable title to all of the Assets, free and
clear of all Encumbrances, except for Permitted Encumbrances.
(b) Since the Balance Sheet Date,
(i) Fournier has incurred no indebtedness or liabilities with respect to
any of the Assets except those listed as Permitted Encumbrances;
(ii) Fournier has not received any notice of default under any of its
liabilities, nor, is any such notice pending or do reasons exist for the giving
of such notice.
3.17 Leases.
(a) Schedule 3.17 contains a list of each lease pursuant to which
Fournier leases real or personal property (collectively, the "Leases").
(b) Each of the Leases is in full force and effect in accordance with its
terms, no Lease has been modified or amended in writing, and Fournier has not
received any written notice of any breach or default with respect to a Lease.
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3.18 Patents, Trademarks, and Similar Rights.
(a) (i) Fournier has the sole and exclusive right to use all patents,
copyrights, trademarks, trade names, technology, know-how, processes, trade
secrets, inventions, proprietary data, formulae, research and development data,
computer software programs, and other intangible property, and any applications
for the same, owned by Fournier or the Shareholders and used in the Business,
and all goodwill associated with such intangible property (collectively, the
"Intangible Property"), and the consummation of the transactions contemplated by
this Agreement will not alter or impair any such rights;
(ii) Fournier has the right to use all Intangible Property which is
currently used by Fournier in connection with the Business either as provided in
clause (i) above or as licensed or authorized by others, and the consummation of
the transactions contemplated by this Agreement will not alter or impair any
such rights;
(iii) No claims have been asserted by any person or entity for the
use of any such Intangible Property or challenging or questioning the validity
or effectiveness of any such license or agreement, and the Shareholders have no
knowledge of any valid basis for any such claim;
(iv) The use of such Intangible Property by Fournier does not
infringe on the rights of any person or entity and no proceedings have been
instituted, are pending, or threatened that challenge the rights of Fournier in
respect thereof; and
(v) None of Fournier's Intangible Property rights, to the best of
the Shareholders' knowledge, are being infringed by the products, activities,
operations, trade names, trademarks, service marks, trade dress rights or
copyrights of any other person or persons and none are subject to any
outstanding order, judgment, decree, stipulation or agreement restricting the
use thereof.
3.19 Insurance. Fournier has heretofore made available for inspection
by Omni a true and complete copy of all policies of fire, liability, workers'
compensation, and other forms of insurance owned or held by Fournier. All such
policies are in full force and effect, all premiums with respect thereto
covering all periods up to and including the Closing Date have been paid, and no
notice of cancellation or termination has been received with respect to any such
policy.
3.20 No Benefit Plans; Absence of PBGC Lien. Except for Fournier's
401(k) plan and its disability and hospitalization plan, which will be continued
or replaced by Omni for at least twelve (12) months after the Effective Date of
this Agreement, neither Fournier nor any Affiliate (as defined in Section 8.2 of
this Agreement) maintains any "employee benefit plan" as defined in Section 3(3)
of the Employee Retirement Income Security Act of 1974, as amended, and the
rules and regulations promulgated thereunder, that covers any employee or former
employee of Fournier. None of the Assets are subject to a lien in favor of the
Pension Benefit Guaranty Corporation.
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3.21 Documents; Commitments.
(a) The Shareholders have delivered or made available to Omni the
following documents, each of which is true and complete:
(i) Copies of all documents listed in Schedule 3.21(a), which is a
listing of every material contract, agreement, or other commitment, written or
oral, to which Fournier is a party or has succeeded to a party by assumption or
assignment or in which it has a beneficial interest. For the purposes of this
Agreement, any contract or agreement shall be deemed material (A) if the
Business taken as a whole is substantially dependent upon it, (B) if it involves
a financial obligation of or benefit to the Business in excess of $100,000, (C)
if the contract is not made in the ordinary course, or (D) if it constitutes a
management contract or employment contract (excluding oral agreements that arise
by operation of law), but excluding quotations given to customers of Fournier in
connection with estimates of the cost of future work; and
(ii) Copies of all product bulletins, technical bulletins, or other
advertising or sales materials currently used in connection with the Business.
(b) Fournier does not have (i) any outstanding sales contracts or
commitments that are reasonably expected to result in any loss to the Business
upon completion of performance thereof or (ii) any outstanding bids or sales or
service proposals quoting prices that are not reasonably expected to result in a
profit consistent with past practice.
(c) Fournier is not restricted by agreement from carrying on the Business
anywhere in the world.
3.22 Labor Matters.
(a) Neither Fournier nor any employee employed by Fournier is a party to
or is covered by any labor agreement with any collective bargaining
representative representing employees of Fournier.
(b) Fournier is operating in material compliance with all applicable law
respecting employment and employment practices, terms and conditions of
employment, and wages and hours, and is not engaged in any unfair labor
practices and no charges or proceedings before the National Labor Relations
Board, or similar agency, exist or are threatened.
(c) There are no unfair labor practice complaints, labor disputes, work
stoppages, or union organization efforts, or threats of the foregoing, directed
against any of the operations of the Business.
(d) No legal proceedings, charges, complaints, or similar actions exist
under any federal, state or local laws affecting the employment relationship
including, but not limited to: (i)
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antidiscrimination statutes such as Title VII of the Civil Rights Act of 1964,
as amended (or similar state or local laws prohibiting discrimination because of
race, sex, religion, national origin, age and the like); (ii) the Fair Labor
Standards Act or other federal, state or local laws regulating hours of work,
wages, overtime and other working conditions; (iii) requirements imposed by
federal, state or local governmental contracts such as those imposed by
Executive Order 11246; (iv) state laws with respect to tortious employment
conduct, such as slander, false light, invasion of privacy, negligent hiring or
retention, intentional infliction of emotional distress, assault and battery, or
loss of consortium; or (v) the Occupational Safety and Health Act, as amended,
as well as any similar state laws, or other regulations respecting safety in the
workplace; no proceedings, charges, or complaints are threatened under any such
laws or regulations and no facts or circumstances exist which would give rise to
any such proceedings, charges, complaints, or claims, whether valid or not.
(e) With respect to each person employed by Fournier since its
incorporation and who actually commenced such employment on or after November 6,
1986, (i) Fournier hired such person in compliance with the Immigration Reform
and Control Act of 1986 and the rules and regulations thereunder ("IRCA") and
(ii) Fournier has complied with all record keeping and other regulatory
requirements under IRCA.
(f) Fournier has not incurred any liability or obligation under the
Worker Adjustment and Retraining Notification Act or similar state laws.
Fournier has not laid off more than ten percent (10%) of its employees at any
single site of employment in any ninety (90) day period during the twelve (12)
month period ending as of the Closing Date. It shall be the obligation of the
Shareholders to provide any notice required by said Act by reason of the
provisions, execution or operation of this Agreement.
(g) To the best of the Shareholders' knowledge, Fournier is in full
compliance with the provisions of the Americans with Disabilities Act (the
"ADA") as of the Closing Date.
3.23 Personnel.
(a) Schedule 3.23 sets forth (i) the name and current annual salary (or
rate, if an hourly or day rate employee) and other compensation (including,
without limitation, normal bonus, profit sharing and other compensation) now
payable by Fournier to each employee, (ii) any increase to become effective
after the date of this Agreement in the total compensation or rate of total
compensation payable by Fournier to each such person, (iii) all presently
outstanding loans and advances (other than routine travel advances to be repaid
or formally accounted for within sixty (60) days) made by Fournier to, or made
to Fournier by, any director, officer or employee, (iv) all other transactions
between Fournier and any director, officer or employee of Fournier since March
31, 1997, and (v) all accrued but unpaid vacation pay and any other compensation
owing to any officer or employee which is not disclosed on the Financial
Statements. Full payment has been made of all compensation and other employee
benefit amounts which Fournier was required to have paid to each employee
(including all accrued vacation pay) on or prior to the Closing Date (excluding
any amounts not yet due).
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(b) Fournier's relationship with its respective employees is good and the
Shareholders have no knowledge of any facts which would indicate that Fournier's
employees will not continue in its employ following the Closing.
3.24 No Breach.
(a) Each Permit, contract, agreement, deed of trust, lease, policy,
license, plan, commitment, arrangement, and understanding (whether evidenced by
a written document or otherwise) referred to in this Agreement or in any
Schedule or Exhibit hereto or which is otherwise material to the Business, under
which Fournier has any right, interest, or obligation (i) is in full force and
effect and (ii) is not subject to any threatened amendment, cancellation, or
outstanding dispute.
(b) Fournier is not in breach of, and there does not exist any default or
event (including the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby) which, with the giving of
notice or the lapse of time or both, would become a breach or default, and there
is no basis for any valid claim of a default in any respect with regard to any
contracts or agreements which may be affected by the execution of this
Agreement.
3.25 Consents, Permits, Etc. Except as set forth in Schedule 3.25, no
consent, approval, authorization, or permit from any person or entity is
necessary to the consummation of the transactions contemplated by this
Agreement. All such consents, permits, approvals and authorizations listed in
Schedule 3.25 have been either obtained or waived.
3.26 Litigation. There is no litigation, proceeding, arbitration,
administrative or other proceeding or audit, inquiry or investigation pending,
or controversy (an "Action") pending, or to the best knowledge of the
Shareholders, threatened by or against, or involving Fournier or any directors,
officers, or employees thereof in their capacity as such or that question or
challenge the validity of this Agreement, or any action taken or to be taken by
the Shareholders pursuant to this Agreement or in connection with the
transactions contemplated hereby, and to the knowledge of the Shareholders,
there is no valid basis for any such Action. No such Action would, if adversely
decided, have a material adverse effect on the Business taken as a whole or,
after the Closing Date, on the ability of Omni to conduct the Business.
3.27 Compliance With Applicable Law; Adverse Restrictions. The
operations of Fournier are being conducted in material compliance with (a) all
applicable Permits, licenses, orders, writs, injunctions, judgments, decrees, or
awards of all courts and governmental and regulatory authorities, and (b) to the
knowledge of the Shareholders, all laws (statutory or otherwise), ordinances,
rules, regulations, by-laws, and codes of all governmental and regulatory
authorities, whether federal, state, or local (individually, a "Law" and
collectively, "Laws") that are applicable to the Assets or the Business
(including, without limitation, those related to public or occupational safety,
pollution and protection of the environment, and hazardous or other waste
disposal). Fournier has not received any written notification of any asserted
present failure to comply with any Law, except for failures
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that in the aggregate are not and were not material to the conduct of the
Business as a whole and which Fournier has taken steps to correct or contest in
good faith.
3.28 Customers and Suppliers.
(a) Since September 30, 1997, there has not been any adverse change in
the business relationship of Fournier with any customer, distributor, or
supplier that is material to the business or financial condition of the Business
taken as a whole. To the knowledge of the Shareholders, no customer or supplier
of Fournier will cease to do business with the Business after the consummation
of the transactions contemplated hereby, which cessation would have a material
adverse effect on the business, operations or financial condition of the
Business. Fournier has not experienced any difficulties in obtaining any
inventory, supplies, equipment or other items necessary to the operation of its
business, and, to the knowledge of the Shareholders, no such shortage of supply
of inventory, supplies, equipment or other items is threatened or pending.
Fournier is not required to provide any bonding or other financial security
arrangements in any material amount in connection with any transactions with any
of its customers or suppliers.
(b) No shareholder, officer, director or employee of Fournier, nor any
spouse or child of any of them, has any direct or indirect interest in any
competitor, supplier or customer of Fournier or in any person from whom or to
whom Fournier leases any real or personal property, or in any other person with
whom Fournier is doing business.
3.29 Governmental Approvals and Consents. No approval, authorization,
consent, or other order or action by the Shareholders or Omni before any court,
administrative agency, or other governmental authority is required for the
execution and delivery by the Shareholders of this Agreement or the consummation
by the Shareholders of the transactions contemplated hereby.
3.30 Environmental Laws and Regulations.
(a)(i) The ownership and operations of the "Subject Property," as defined
below, and any use, storage, treatment, disposal, or transportation of
"Hazardous Substances," as defined below, that has occurred in or on the Subject
Property while owned by the Shareholders but prior to the date of this Agreement
have been in compliance with "Environmental Requirements," as defined below;
(ii) during the ownership, occupancy and operation of the Subject Property by
Fournier, or, to the knowledge of the Shareholders, prior to Fournier's
ownership, occupancy or operation, no release, leak, discharge, spill, disposal,
or emission of Hazardous Substances has occurred in, on, or under the Subject
Property in a quantity or manner that violates or requires further investigation
or remediation under Environmental Requirements; (iii) to the best of the
Shareholders' knowledge, the Subject Property is free of Hazardous Substances as
of the date of this Agreement; (iv) there is no pending or threatened litigation
or administrative investigation or proceeding concerning the Subject Property
involving Hazardous Substances or Environmental Requirements; and (v) to the
best of the Shareholders' knowledge, there is no ACM (as defined below), within
the Subject
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Property, whether friable or non-friable, and there are no above-ground or
underground storage tank systems ("Tank Systems") located at the Subject
Property.
(b) Definitions. As used in this Agreement, the following terms shall
have the following meanings:
"Environmental Requirements" means all laws, statutes, rules,
regulations, ordinances, guidance documents, judgments, decrees, orders,
agreements and other restrictions and requirements (whether now or
hereafter in effect) of any governmental authority, including, without
limitation, federal, state, and local authorities, relating to the
regulation or protection of human health and safety, natural resources,
conservation, the environment, or the storage, treatment, disposal,
transportation, handling, or other management of industrial or solid waste,
hazardous waste, hazardous or toxic substances or chemicals, or pollutants.
"Hazardous Substance" means (i) any "hazardous substance" as defined
in 101(14) of the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended from time to time (42 U.S.C. (S)(S) 9601
et seq.)("CERCLA") or any regulations promulgated thereunder; (ii)
petroleum and petroleum by-products; (iii) asbestos or asbestos-containing
material ("ACM"); or (iv) any additional substances or materials which have
been or are currently classified or considered to be pollutants, hazardous
or toxic under Environmental Requirements.
"Subject Property"means any and all immovable property owned by,
leased by or used by Fournier in connection with the Business or otherwise
at any time during its corporate existence.
3.31 Effectiveness of Representations and Warranties. All of the
representations and warranties of Fournier and the Shareholders in this
Agreement shall be true in all material respects on the Closing Date and shall
be deemed to have been made again by each of them on and as of the Closing Date.
SECTION 4.
PRE-CLOSING COVENANTS
4.1 Access to Properties and Records. Until the Effective Time, Fournier
and the each of the Shareholders shall allow Omni and its authorized
representatives full access, during normal business hours and on reasonable
notice, to all of Fournier's plants, properties, offices, vehicles, equipment,
inventory and other assets, documents, files, books and records, in order to
allow Omni a full opportunity to make such investigation and inspection as they
desire of the Business and assets. Fournier and the Shareholders shall further
use their best efforts to cause the employees, counsel and regular independent
certified public accountants of Fournier to be available upon reasonable notice
to answer questions of Omni's representatives concerning the business and
affairs of Fournier, and
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shall further use their best efforts to cause them to make available all
relevant books and records in connection with such inspection and examination,
including without limitation work papers for all audits and reviews of financial
statements of Fournier.
4.2 Conduct of Business. From and after the date of this Agreement and
until the Closing Date, each of Fournier and Omni shall conduct their respective
businesses in the ordinary course and consistently with past practice, except as
expressly required or otherwise permitted by this Agreement, and shall not take
or permit any action which would cause any of the representations made in
Section 3 not to be true and correct on the Closing Date.
4.5 Public Statements. Prior to the Effective Time, none of the parties
to this Agreement shall, and each party shall use its best efforts so that none
of its advisors, officers, directors or employees shall, except with the prior
written consent of the other parties, publicize, announce or describe to any
third person, except their respective advisors and employees, the execution or
terms of this Agreement, the parties hereto or the transactions contemplated
hereby, except as required by law or as required pursuant to this Agreement to
obtain the consent of such third person; provided, in any case, that Omni may
make such disclosures and announcements as may be necessary or advisable under
applicable securities laws.
4.6 No Solicitation. The Shareholders and Fournier will not, prior to the
Effective Time or the termination of this Agreement pursuant to Section 7, (nor
will they permit any of their affiliates or any of Fournier's officers,
directors or agents to) directly or indirectly solicit or participate or engage
in or initiate any negotiations or discussions, or enter into or authorize any
agreement or agreements in principle, or announce any intention to do any of the
foregoing, with respect to any offer or proposal to acquire all or any
significant part of Fournier's business and properties or any of its capital
stock whether by merger, purchase of assets, purchase of stock or otherwise. The
Shareholders and Fournier will notify Omni promptly upon receipt of any inquiry,
offer or other communication from any third party regarding any such activities.
4.7 No Stock Splits or Dividends. Fournier shall not declare or pay any
dividend on or permit any reclassification or recapitalization with respect to
shares of Fournier capital stock, or the establishment of a record date for any
of the foregoing, to occur during the period between the date of this Agreement
and the Effective Time.
4.8 Notification as to Representations. Fournier and the Shareholders
will promptly disclose in writing to the other any information contained in its
representations and warranties or on the schedules related thereto that, because
of an event occurring after the date hereof, is incomplete or no longer correct.
Such disclosure will not be deemed to modify the representations and warranties
of such party or such schedule, as the case may be.
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SECTION 5
ADDITIONAL AGREEMENTS
5.1 Legal Requirements to Merger. Subject to the conditions set
forth in Section 6 and to the other terms and provisions of this Agreement, each
of the parties to this Agreement agrees to take, or cause to be taken, all
reasonable actions necessary to comply promptly with all legal requirements
applicable to it each of them with respect to the Merger and will promptly
cooperate with and furnish information to each other in connection with any such
requirements imposed upon any of them in connection with the Merger. Each of
Fournier, the Shareholders and Omni will take all reasonable actions necessary
to obtain, and will cooperate with each other in obtaining, any consent,
authorization, order or approval of, or any exemption by, any governmental
entity or other public or private party, required to be obtained or made by it
in connection with the Merger or the taking or any action contemplated by this
Agreement.
5.2 Further Assurances. After the Effective Time, each of Fournier,
the Shareholders and Omni will, at their own expense, take all appropriate
action and execute all documents, instruments or conveyances which may be
reasonably necessary to carry out the provisions of this Agreement.
5.3 Expenses. Except as otherwise provided herein, each party will
pay all costs and expenses incurred by it in connection with this Agreement and
the transactions contemplated hereby.
5.4 Confidentiality. Until the Effective Time and subsequent to the
termination of this Agreement pursuant to Section 7, each of the parties will
keep confidential and will not disclose to any third party any information
obtained by it in connection with this Agreement except (a) that information may
be disclosed by the parties to their advisors in connection with the
negotiation of and the activities conducted pursuant to this Agreement, (b) to
the extent that such information is or becomes generally available to the public
through no act or omission of Omni in violation of this Agreement and (c) to the
extent permitted by Section 4.5 hereof. In the event this Agreement is
terminated, each of the parties hereto agree that they shall not use any
information obtained in connection with this Agreement for their benefit or to
the detriment of any other party hereto.
5.5 Employment Agreements. At the Closing, each of Omni and Mr.
Fournier will execute and deliver the Employment Agreement.
5.6 Corporate Name. After the Effective time, the Surviving
Corporation shall have the right to use the corporate name "Fournier &
Associates, Inc." and any derivatives or combinations thereof and none of the
Shareholders shall use or attempt to use such name or any derivative or
combination thereof as the corporate name of a corporation, partnership or other
entity, an assumed name, a trade name or in any other manner.
5.7 Alternative Purchase Consideration. The parties hereto agree
that, notwithstanding Section 1.4 and Schedule 1.4 hereof regarding the issuance
of Omni Common Stock to the Shareholders, in the event the Initial Public
Offering shall not have closed by December 31, 1997,
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the Merger shall be completed as an all cash transaction with Omni paying the
Shareholders an aggregate of $750,000.00, to be distributed among them as set
forth beside their respective names under the "Total" column of Schedule 1.4
hereof.
SECTION 6
CONDITIONS
6.1 Conditions to Each Party's Obligation to Effect the Merger. The
respective obligations of each party to effect the Merger shall be subject to
the satisfaction or, where permissible, waiver by such party of the following
conditions at or prior to the Effective Time:
(a) No statute, rule, regulation, executive order, decree, preliminary
or permanent injunction or restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or other
governmental entity which prohibits or restricts the consummation of the Merger
and no action, suit, claim or proceeding by a state or federal governmental
entity before any court or other governmental entity shall have been commenced
and be pending which seeks to prohibit or restrict the consummation of the
Merger, other than actions, suits, claims and proceedings which, in the
reasonable opinion of counsel to the parties hereto, are unlikely to result in
an adverse judgment; provided, however, that before any determination is made to
the effect that this condition has not been satisfied, Fournier and Omni shall
each use all reasonable efforts and take such actions as may be reasonably
necessary, at its own expense, to have such order, stay, judgment or decree
lifted or dismissed and any such suit, action or proceeding dismissed or
terminated.
(b) All filings with and notices to and all consents and waivers from
the third parties listed in Schedule 3.25 shall have been made or obtained.
6.2 Conditions to Obligations of Omni. The obligations of Omni to
effect the Merger are subject to the satisfaction of the following conditions
unless waived by Omni:
(a) The Registration Statement shall have been declared effective and
the Initial Public Offering shall have been closed.
(b) The representations and warranties of the Shareholders set forth
in this Agreement shall be true and correct in all material respects as of the
date of this Agreement and as of the Closing Date as though made on and as of
the Closing Date, except as otherwise contemplated by this Agreement, and
Fournier and the Shareholders shall have performed in all material respects all
obligations required to be performed by them under this Agreement at or prior to
the Closing Date.
(c) All consents and approvals of governmental entities or third
parties necessary for consummation of the Merger by the parties shall have been
obtained, other than those which, if not obtained, would not in Omni's judgment
have a material adverse effect on any party's ability to consummate any of the
transactions contemplated hereby or on the Business and properties of
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Fournier. Fournier shall have used its best efforts to obtain all necessary
permits, authorizations, consents and approvals required by such governmental
entities prior to the Closing Date.
(d) Omni shall have had a full opportunity to conduct inspections of
the operating assets and books and records of Fournier.
(e) Fournier shall have provided Omni certified copies of its Articles
of Incorporation and By-laws and certificates of existence, good standing and
qualification to do business as a foreign corporation, certified by the
appropriate state authorities in Fournier's state of incorporation.
(f) Omni shall have received a certificate of a duly authorized
officer of Fournier, dated the Closing Date, certifying as to the incumbency of
any person executing this Agreement or any certificate or other document
delivered in connection with this Agreement and certifying as to such other
matter as Omni shall reasonably request.
(g) Omni will be reasonably satisfied, and shall have received a
certificate of each of the Shareholders and of the president of Fournier that
the condition specified in Section 6.2(b) has been fulfilled.
(h) Omni will be reasonably satisfied that the Merger will be treated
as a pooling of interests for financial reporting purposes.
6.3 Conditions to Obligations of Fournier and Shareholders. The
obligations of Fournier and the Shareholders to effect the Merger are subject to
the satisfaction for the following conditions, unless waived by Fournier and
each of the Shareholders:
(a) All consents and approvals of governmental entities or third
parties necessary for consummation of the Merger by the parties, shall have been
obtained, other than those which, if not obtained, would not have a material
adverse effect on any party's ability to consummate any of the transactions
contemplated hereby. Omni shall have used its best efforts to obtain all
necessary permits, authorizations, consents and approvals required by such
governmental entities prior to the Closing Date.
(b) Fournier and the Shareholders shall have received a certificate of
a duly authorized officer of Omni, dated the Closing Date, and certifying as to
the incumbency of any person executing this Agreement or any certificate or
other document delivered in connection with this Agreement and certifying such
other matters as Fournier or the Shareholders shall reasonably request.
SECTION 7
TERMINATION AND AMENDMENT
7.1 Termination. This Agreement may be terminated and the Merger may
be abandoned at any time prior to the Effective Time:
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(a) by mutual consent of Fournier and Omni;
(b) by Fournier or Omni, if any permanent injunction or other order of
a court or other competent governmental entity preventing the consummation of
the Merger shall have become final and nonappealable; or
(c) by Fournier, Omni or any Shareholder if the Merger shall not have
been consummated on or before December 31, 1997; provided, that the right to
terminate this Agreement under this Section 7.1 shall not be available to any
party whose breach of its representations and warranties in this Agreement or
whose failure to perform any of its covenants and agreements under this
Agreement has resulted in the failure of the Merger to occur on or before such
date.
7.2 Effect of Termination. In the event of a termination of this
Agreement by either Fournier or Omni as provided in Section 7.1, this Agreement
shall forthwith become void and there shall be no liability or obligation under
any provisions hereof on the part of Fournier, Omni or their respective
officers, directors or stockholders, except (a) pursuant to the covenants and
agreements contained in Section 5.3 and Section 5.4 and this Section 7.2 and (b)
to the extent that such termination results from the willful material breach by
a party hereto of any of its representations, warranties, covenants or
agreements set forth in this Agreement, in which case the non-breaching party
shall have a right to recover its damages caused thereby.
7.3 Amendment. This Agreement may not be amended except by an
instrument in writing signed by each of the parties hereto.
7.4 Extension; Waiver. At any time prior to the Effective Time, the
parties hereto may, in their respective sole discretion and to the extent
legally allowed, (a) extend the time for the performance of any of the
obligations or other acts of the other parties hereto; (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant thereto; and (c) waive compliance with any of the
agreements or conditions contained herein. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in a
written instrument signed by or on behalf of such party.
SECTION 8
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
8.1 Survival; Indemnification.
(a) The representations and warranties of the parties hereto contained
herein or in any certificate or other writing delivered pursuant hereto or in
connection herewith shall survive the Closing Date and shall extend without
limit as to time. The covenants and agreements of the parties hereto contained
herein or in any certificate or other writing delivered pursuant hereto or in
connection herewith shall survive the Closing Date in accordance with their
terms.
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(b) The Shareholders and their successors and assigns (each an
"Indemnitor"), jointly and severally, hereby agree to indemnify each Indemnitee
and Indemnitee Affiliate (as each is defined in Section 8.2 of this Agreement)
against and agree to hold it harmless from any and all damage, loss, liability,
and expense (including, without limitation, reasonable expenses of investigation
and attorney's fees and expenses in connection with any action, suit,
proceeding, claim, investigation, or other loss) (a "Loss") incurred or suffered
by such Indemnitee or Indemnitee Affiliate arising out of or relating to:
(i) Any breach of any covenant or agreement or any inaccuracy or
omission in any representation or warranty made by the Shareholders pursuant to
this Agreement;
(ii) Any taxes attributable to any Pre-Closing
Tax Period; and
(iii) U.S. or any state or local Environmental Laws and relating to
conditions, events, actions, violations, obligations, or circumstances that
exist in whole or part prior to the Closing Date.
(c) Omni (an "Indemnitor") hereby agrees to indemnify each Indemnitee
and Indemnitee Affiliate against and hold each of them harmless from any and all
Loss incurred or suffered by any such Indemnitee or Indemnitee Affiliate arising
out of or relating to any breach of any covenant or agreement made by it under
this Agreement.
8.2 Definitions. For the purpose of this Agreement, the following terms
have the following meanings:
(a) "Affiliate" means, with respect to any person, any person directly
or indirectly controlling, controlled by, or under common control with such
other person.
(b) "Indemnitee" means, with respect to the Shareholders, Omni and its
Affiliates and, with respect to Omni, the Shareholders and each of their
respective Affiliates.
(c) "Indemnitee Affiliate" means the employees, successors, and assigns
of each Indemnitee and, with respect to each corporate Indemnitee, its
directors, officers, and shareholders.
(d) "Pre-Closing Tax Period" means any tax period ending on or before
the close of business on the Effective Date, or, in the case of any tax period
which includes, but does not end on, the Effective Date, the portion of such
period up to and including the Effective Date.
(e) "Tax" or "Taxes" shall mean (i) any net income, alternative or
add-on minimum tax, gross income, gross receipts, sales, use, ad valorem,
franchise, capital, paid-up capital, profits, greenmail, license, withholding,
payroll, employment, excise, severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty, or other tax, governmental
fee, or other like assessment or charge of any kind whatsoever, together with
any interest or any
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penalty, addition to tax or additional amount imposed by any governmental
authority (a "Taxing Authority") responsible for the imposition of any such tax
(domestic or foreign), and (ii) liability for the payment of any amounts of the
type described in (i) as a result of any express obligations to indemnify any
other person.
8.3 Control of Litigation.
(a) The Indemnitees and Indemnitee Affiliates agree to give prompt
notice to the Indemnitors of the assertion of any claim, or the commencement of
any suit, action, or proceeding in respect of which indemnity may be sought
under Section 8.1(b) or Section 8.1 (c) of this Agreement and of any Loss which
any such Indemnitee deems to be within the ambit of Section 8.1(b) or Section
8.1(c) of this Agreement (specifying with reasonable particularity the basis
therefor) and will give the Indemnitors such information with respect thereto as
the Indemnitors may reasonably request. The Indemnitors may, at their own
expense, participate in and, upon notice to such Indemnitee, assume the defense
of any such suit, action, or proceeding; provided that the Indemnitors' counsel
is reasonably satisfactory to such Indemnitee, the Indemnitors shall thereafter
consult with such Indemnitee upon such Indemnitee's reasonable request for such
consultation from time to time with respect to such suit, action, or proceeding,
and the Indemnitors shall not, without such Indemnitee's consent, which consent
shall not be unreasonably withheld, settle or compromise any such suit, action,
or claim. If the Indemnitors assume such defense, such Indemnitees shall have
the right (but not the duty) to participate in the defense thereof and to employ
counsel, at their own expense, separate from the counsel employed by the
Indemnitors. For any period during which the Indemnitors have not assumed the
defense thereof, the Indemnitors shall be liable for the fees and expenses of
counsel employed by any Indemnitee; provided, however, that the Indemnitors
shall not be liable for the fees or expenses of more than one counsel employed
by any Indemnitee in any jurisdiction for all Indemnitees. If the Indemnitees
assume the defense thereof, the Indemnitees shall thereafter consult with the
Indemnitors upon the Indemnitors' reasonable request for such consultation from
time to time with respect to such suit, action, or proceeding and the
Indemnitees shall not, without the Indemnitors' consent, which consent shall not
be unreasonably withheld, settle or compromise any such suit, action. or claim.
Whether or not the Indemnitors choose to defend or prosecute any claim, all of
the parties hereto shall cooperate in the defense or prosecution thereof.
(b) No investigation by any Indemnitee or Indemnitee Affiliate prior
to the Closing Date shall relieve any Indemnitor of any liability hereunder.
8.4 Cooperation on Tax Matters. Fournier and Omni shall cooperate
fully, as and to the extent reasonably requested by the other party, in
connection with any audit, litigation, or other proceeding with respect to
Taxes. Such cooperation shall include the retention and (upon the other party's
request) the provision of records and information which are reasonably relevant
to any such audit, litigation, or other proceeding and making employees
available on a mutually convenient basis to provide additional information and
explanation of any material provided hereunder. Omni and Fournier agree (a) to
retain all books and records which are relevant to the determination of the Tax
liabilities pertinent to the Assets relating to any Pre-Closing Tax Period until
the expiration of the
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applicable statute of limitations and to abide by all record retention
agreements entered into with any Taxing Authority, and (b) to give the other
party reasonable written notice prior to destroying or discarding any such books
and records and, if the other party so requests, Omni or Fournier, as the case
may be, shall allow the other party to take possession of such books and
records.
SECTION 9
MISCELLANEOUS PROVISIONS
9.1 Amendment and Modification. This Agreement may be amended,
modified, or supplemented only by written agreement of the parties hereto.
9.2 Waiver of Compliance; Consents. Any failure of a party to comply
with any obligation, covenant, agreement, or condition herein may be waived by
the other party; provided, however, that any such waiver may be made only by a
written instrument signed by the party granting such waiver, 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 9.2, with appropriate notice in
accordance with Section 9.7 of this Agreement.
9.3 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Any party may assign any of its
rights hereunder, but no such assignment shall relieve it of its obligations
hereunder. Nothing in this Agreement, expressed or implied, is intended or
shall be construed to confer upon any person other than the parties, any
successors and permitted assigns, any rights, remedy, or claim under or by
reason of this Agreement or any provisions herein contained.
9.4 Expenses, Transfer Taxes, Etc. Whether or not the transactions
contemplated by this Agreement shall be consummated, all fees and expenses
(including all fees of counsel, actuaries, accountants and other experts)
incurred by any party in connection with the negotiation and execution of this
Agreement shall be borne by such party.
9.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Louisiana (without regard to its
conflicts of law doctrines).
9.6 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument and shall become a binding
Agreement when one or more of the counterparts have been signed by each of the
parties and delivered to the other party.
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9.7 Notices. All notices and other communications hereunder shall be
in writing and shall be deemed to have been duly given if delivered by hand or
mailed by registered or certified mail (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):
If to Fournier or the Shareholders:
Fournier & Associates, Inc.
4010 West Congress Street
Suite 104
Lafayette, LA 70506
If to Omni:
OMNI Energy Services Corp.
4484 Interstate 49, North
Lafayette, Louisiana 70520
Attention: Roger Thomas, President
9.8 Specific Performance. Each of the parties acknowledge that money
damages would not be a sufficient remedy for any breach of this Agreement and
that irreparable harm would result if this Agreement were not specifically
enforced. Therefore, the rights and obligations of the parties under this
Agreement shall be enforceable by a decree of specific performance issued by any
court of competent jurisdiction, and appropriate injunctive relief may be
applied for and granted in connection therewith. A party's right to specific
performance shall be in addition to all other legal or equitable remedies
available to such party.
9.9 Headings. The article and section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
9.10 Entire Agreement. This Agreement, including the exhibits,
schedules, and other documents and instruments referred to herein, embodies the
entire agreement and understanding of the parties hereto in respect of the
subject matter contained herein. This Agreement supersedes all prior agreements
and understandings between the parties with respect to such subject matter.
9.11 Severability. If any one or more provisions contained in this
Agreement shall, for any reason, be held to be invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provision of this Agreement, but this Agreement shall
be construed as if such invalid, illegal, or unenforceable provision had never
been contained herein.
9.12 Schedules and Exhibits. All Schedules and Exhibits attached
hereto are hereby incorporated in and made a part as if set forth in full
herein.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
FOURNIER & ASSOCIATES, INC.
By: /s/ Keith J. Fournier
------------------------------
Keith J. Fournier, President
OMNI ENERGY SERVICES CORP.
By: /s/ Roger E. Thomas
------------------------------
Roger E. Thomas, President
SHAREHOLDERS
/s/ Keith J. Fournier
---------------------------------
Keith J. Fournier
/s/ Sandra B. Miller
---------------------------------
Sandra B. Miller
/s/ Roger D. Hebert
---------------------------------
Roger D. Hebert
/s/ Don C. Ross
---------------------------------
Don C. Ross
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THIS EXHIBIT OMITS THE FOLLOWING SCHEDULES AND EXHIBITS. THE COMPANY WILL
SUPPLEMENTALLY FURNISH THE COMMISSION A COPY OF ANY SUCH SCHEDULES OR EXHIBITS
UPON REQUEST:
Schedule 1.4 List of Shareholders
Exhibit 2.1 Employment Agreements Between the Company and each of Keith J.
Fournier, Dan C. Ross and Roger D. Hebert
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EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
OMNI ENERGY SERVICES CORP.
ARTICLE I
NAME
The name of the corporation is OMNI Energy Services Corp.
ARTICLE II
PURPOSE
The purpose of the Corporation is to engage in any lawful activity for
which corporations may be formed under the Business Corporation Law of
Louisiana.
ARTICLE III
CAPITAL
A. Authorized Stock. The Corporation shall have the authority to
issue an aggregate of 50,000,000 shares of capital stock, of which 45,000,000
shares shall be Common Stock, $0.01 par value per share, and 5,000,000 shares
shall be Preferred Stock, no par value per share.
B. Preferred Stock. Shares of Preferred Stock may be issued from
time to time in one or more series. Authority is hereby vested in the Board of
Directors of the Corporation to amend these Articles of Incorporation from time
to time to fix the preferences, limitations and relative rights as between the
Preferred Stock and the Common Stock, and to fix variations in the preferences,
limitations and relative rights as between different series of Preferred Stock.
ARTICLE IV
DIRECTORS
A. Number of Directors. The Board of Directors shall consist of such
number of persons as shall be designated from time to time in the by-laws of the
Corporation, or, if not so designated, as may be designated from time to time by
resolution of the Board of Directors, provided that no decrease in the number of
directors shall shorten the term of any incumbent director.
B. Term of Office. Each member of the Board of Directors, other than
those who may be elected by the holders of any class or series of stock having
preference over the Common Stock as to dividends or upon liquidation (whose
terms of office may be determined by the Board of Directors pursuant to Article
III(B)), shall be elected at each subsequent annual meeting of shareholders for
a term expiring at the next succeeding annual meeting of shareholders and shall
<PAGE>
serve until his successor is duly elected and qualified. If the Board of
Directors shall appoint any director to fill a vacancy on the Board, whether
resulting from an increase in the number of directors or otherwise, such
director shall serve a term to expire at the next succeeding annual meeting of
shareholders and shall serve until his successor is duly elected and qualified.
C. Vacancies. Except as provided in or pursuant to Article IV(F)
hereof, any vacancy on the Board (including any vacancy resulting from an
increase in the authorized number of directors or from a failure of the
shareholders to elect the full number of authorized directors) may,
notwithstanding any resulting absence of a quorum of directors, be filled by a
vote of at least two-thirds of the directors remaining in office, provided that
the shareholders shall have the right to fill the vacancy at any special meeting
called for such purpose prior to any such action by the Board. Vacancies on the
Board may be filled only as provided in this Article IV(C).
D. Removal. Except as provided in or pursuant to Article IV(F)
hereof, any one or more directors may be removed at any time, (1) with or
without cause, by the holders of not less than two-thirds of the Total Voting
Power (as defined in Article VII(C) hereof) that is present or represented at a
special meeting of shareholders called for such purpose, voting together as a
single class or (2) with or without cause, by the affirmative vote of a majority
of all of the directors then constituting the Board of Directors. At the same
meeting at which the directors or shareholders remove one or more directors, a
successor or successors may be elected for the unexpired term of the director or
directors removed. Except as set forth in this Article IV(D), or in any
provision of these Articles of Incorporation relating to removal of directors
elected by holders of Preferred Stock, directors shall not be subject to
removal.
E. Board Nominations. Except as provided in or pursuant to Article
IV(F) hereof, only persons who are nominated in accordance with the procedures
set forth in this Article IV(E) shall be eligible for election as directors.
Nominations of persons for election to the Board of Directors of the Corporation
may be made at a meeting of shareholders by or at the direction of the Board of
Directors or by any shareholder of record of the Corporation entitled to vote at
such meeting for the election of directors who complies with the notice
procedures set forth in this Article IV(E). Such nominations, other than those
made by or at the direction of the Board of Directors, shall be made pursuant to
timely notice in writing to the Secretary of the Corporation. To be timely, a
shareholder's notice shall be delivered to or mailed and received at the
principal office of the Corporation not less than 45 days nor more than 90 days
prior to the meeting; provided, however, that in the event that less than 55
days notice or prior public disclosure of the date of the meeting is given or
made to shareholders, notice by the shareholder to be timely must be so received
at the principal executive offices of the Corporation no later than the close of
business on the tenth day following the day on which such notice of the date of
the meeting was mailed or such public disclosure was made. Such shareholder's
notice shall set forth or include the following:
1. as to each person whom the shareholder proposes to nominate
for election or re-election as a director, (a) the name, age, business
address and residential address of such person, (b) the principal
occupation or employment of such person, (c) the class and number of
shares of capital stock of the Corporation of which such person is the
beneficial owner (as defined in Rule 13d-3 promulgated under the
Securities Exchange Act of 1934, as amended
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(the "Exchange "Act")), (d) such person's written consent to being named
in the proxy statement as a nominee and to serve as a director if
elected and (e) any other information relating to such person that would
be required to be disclosed in solicitations of proxies for the election
of directors, or would be otherwise required, in each case pursuant to
Regulation 14A promulgated under the Exchange Act; and
2. as to the shareholder of record giving the notice, (a) the
name and address of such shareholder and (b) the class and number of
shares of capital stock of the Corporation of which such shareholder is
the beneficial owner (as defined in Rule 13d-3 promulgated under the
Exchange Act). If requested in writing by the Secretary of the
Corporation at least 15 days in advance of the meeting, such shareholder
shall disclose to the Secretary, within ten days of such request,
whether such person is the sole beneficial owner of the shares held of
record by him, and, if not, the name and address of each other person
known by the shareholder of record to claim or have a beneficial
interest in such shares.
At the request of the Board of Directors, any person nominated by the Board of
Directors for election as a director shall furnish to the Secretary of the
Corporation that information required to be set forth in a shareholder's notice
of nomination which pertains to the nominee. If a shareholder seeks to nominate
one or more directors, the Secretary shall appoint two inspectors, who shall not
be affiliated with the Corporation, to determine whether the shareholder has
complied with this Article IV(E). If the inspectors shall determine that the
shareholder has not complied with this Article IV(E), the defective nomination
shall be disregarded and the inspectors shall direct the Chairman of the meeting
to declare at the meeting that such nomination was not made in accordance with
the procedures prescribed by the Articles of Incorporation.
F. Directors Elected by Preferred Shareholders. Notwithstanding
anything in these Articles of Incorporation to the contrary, whenever the
holders of any one or more classes or series of stock having a preference over
the Common Stock as to dividends or upon liquidation shall have the right,
voting separately as a class, to elect one or more directors of the Corporation,
the provisions of these Articles of Incorporation (as they may be duly amended
from time to time) fixing the rights and preferences of such preferred stock
shall govern with respect to the nomination, election, term, removal, vacancies
or other related matters with respect to such directors.
ARTICLE V
BY-LAWS
A. Adoption, Amendment and Repeal. The By-laws of the Corporation
and of any provision thereof may be adopted only by a majority vote of all
directors who constitute the Board of Directors. The By-laws and any provision
thereof may be amended or repealed only by (1) a majority vote of all directors
who constitute the Board of Directors, or (2) the affirmative vote of the
holders of at least two-thirds of that portion of the Total Voting Power, as
defined in Article VII(C) hereof, voting together as a single class, that is
present or represented at any regular or special meeting of shareholders, the
notice of which meeting of shareholders expressly states that the proposed
amendment or repeal is to be considered at the meeting.
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B. New Matters. Any purported amendment to the By-laws which would
add thereto a matter not expressly covered in the By-laws prior to such
purported amendment shall be deemed to constitute the adoption of a By-law
provision and not an amendment to the By-laws.
ARTICLE VI
APPLICATION OF CERTAIN LAWS
The Corporation hereby elects not to be governed by Sections 132, 133
and 134 of the Louisiana Business Corporation Law (La.R.S. 12:132, La.R.S.
12:133 and La.R.S. 12:134).
ARTICLE VII
SPECIAL SHAREHOLDER VOTING REQUIREMENTS
A. Amendments. Unless approved by vote of a majority of all
directors constituting the Board of Directors, Articles IV, V, VI, VII and X of
the Articles of Incorporation may be amended only by the affirmative vote of not
less than eighty percent of the Total Voting Power of the Corporation. Except
as set forth in Article VIII(E), shareholders may, by the affirmative vote of a
majority of the voting power present or represented at a meeting of
shareholders, adopt any amendment to the Articles of Incorporation that does not
affect any of such articles; provided, that shareholder approval shall not be
required for any amendment authorized by Article III(B).
B. Other Corporate Actions. If a vote of shareholders is required to
authorize an agreement of merger or consolidation of the Corporation, the sale
of all or substantially all of the assets of the Corporation or the voluntary
dissolution of the Corporation, then (1) unless such action has been approved by
vote of a majority of all directors constituting the Board of Directors, such
action may be authorized only by the affirmative vote of eighty percent of the
Total Voting Power of the Corporation and (2) if any such action has been
approved by vote of at least two-thirds of all directors who constitute the
Board of Directors, such action may be authorized by the affirmative vote of a
majority of the voting power present or represented at a meeting of
shareholders.
C. Total Voting Power. The term "Total Voting Power" means the total
number of votes that shareholders, and holders of any bonds, debentures or other
obligations granted voting rights by the Corporation pursuant to La.R.S.
12:75(H), are generally entitled to cast with respect to the election of
directors or, if such term is used with reference to any other particular matter
properly brought before the shareholders or such other holders for their
consideration and vote, means the total number of such votes that are entitled
to be cast with respect to such matter.
D. Foreign Ownership of Common Stock. (1) For purposes of this
paragraph D, the following terms shall have the meanings specified below:
"Act" means the Federal Aviation Administration Authorization Act
of 1994, as amended.
"Beneficial Ownership," "Beneficially Owned," or "Beneficially
Own" refers to beneficial ownership as defined in Rule
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13d-3 (without regard to the 60-day provision in paragraph (d)(1)(i)
thereof) promulgated by the Securities and Exchange Commission as such
rule may be amended from time to time.
"FAA" means the Federal Aviation Administration.
"Non-Citizen Owned Shares" means any issued and outstanding
Voting Securities that are owned of record, Beneficially Owned, or
otherwise controlled by any Person or Persons who are not United
States Citizens.
"Permitted Percentage" means one percent less than the percentage
of the voting interest in the Corporation that may be owned or
controlled by Persons who are not United States Citizens without loss,
under Section 40102(a)(15) of Title 49 of the United States Code or
any successor or other applicable law or regulation, of the United
States Citizen status of the Corporation or any Subsidiary.
"Person" means any individual, corporation, partnership, trust or
other entity of any nature whatsoever.
"Subsidiary" means any corporation of which a majority of any
class of equity security is owned, directly or indirectly, by the
Corporation.
"United States Citizen" means any Person who is a Citizen of the
United States as defined in Section 40102(a)(15) of Title 49 of the
United States Code, as in effect on the date in question, or any
successor statute or regulation.
"Voting Securities" means the Common Stock, any other voting
stock of the Corporation, and any bonds, debentures or other
obligations granted voting rights by the Corporation pursuant to La.
R.S. 12:75(H).
(2) The Corporation or its subsidiearies hold operating certificates issued
by the FAA pursuant to the regulations promulgated under the Act, and the Board
and shareholders deem the retention of the rights and priviledges under such
certificates to be of material importance to the Corporation. As long as the
Corporation or its subsidiearies hold, or the Board deems it desirable for the
Corporation or its subsidiaries to hold, such operating certificates or any
other certificate issued by the FAA pursuant to the Act and the regulations
promulgated thereunder or any successor statute or regulation, it shall be the
Corporation's policy that the number of Non-Citizen Owned Shares shall not
exceed the Permitted Percentage.
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(3) If at any time the voting interest of Non-Citizen Owned Shares exceeds
the Permitted Percentage, then (i) the voting power otherwise attributable to
each Non-Citizen Owned Share shall be immediately and automatically reduced on a
pro rata basis (based on the proportion of the voting power otherwise
attributable to such Non-Citizen Owned Share to the total voting power
attributable to all Non-Citizen Owned Shares) without any further action by the
Corporation so that the maximum number of votes that may be cast by the holders
of all Non-Citizen Owned Shares shall equal the Permitted Percentage and (ii)
the total voting power of any affected class or series of Voting Securities
shall also be immediately and automatically reduced without any further action
by the Corporation by the total number of votes by which the voting power of
Non-Citizen Owned Shares of such class or series was reduced pursuant to clause
(i) of this subparagraph (3).
(4) In determining the citizenship of any Person who Beneficially Owns
Voting Securities, the Corporation may rely on the Corporation's stock transfer
records and the citizenship provided by any Person shown as the record owner and
any Person who the Corporation has reasonable cause to believe Beneficially Owns
such Voting Securities. The Board may establish procedures to monitor the
Beneficially Ownership and control of Voting Securities, to make any reasonable
determination regarding the Beneficial Ownership and control of Voting
Securities, and to take any actions deemed necessary or desirable to ensure that
the voting interest of Non-Citizen Owned Shares does not exceed the Permitted
Percentage. The Board may, but unless expressly provided otherwise is not
required to, rely on any statutes, regulations, policies, procedures, rulings,
or determinations of the FAA, or any successor governmental authority, in
deciding the extent to which Voting Securities are Beneficially Owned or
controlled by United States Citizens.
(5) To the extent necessary for the Corporation to comply with any present
or future registration, licensing or other provisions of the Act, or regulations
promulgated thereunder, the Corporation shall have the power, but not the
obligation, to redeem Non-Citizen Owned Shares in excess of the Permitted
Percentage ("Excess Shares") out of funds legally available therefor, subject to
the following terms and conditions:
(a) The per share redemption price (the "Redemption Price") to be
paid for the Excess Shares to be redeemed shall be the average closing sales
prices during the 10 trading days immediately prior to the date the notice of
redemption is given as quoted in the NASDAQ National Market System; or if such
shares are not then so quoted, then the average closing sales prices of such
shares on any national secuities exchange on which such shares are then listed;
or if such shares are not then listed on any national securities exchange, then
the mean between the representative bid and ask prices as quoted by NASDAQ or
another generally recognized reporting system, on each of such 10 trading days.
(b) The Redemption Price may be paid in cash or by delivery of a
promissory note of the Corporation, at the election of the Corporation. Any
such promissory note shall have a maturity of not more than ten years from the
date of issuance and shall bear interest at the rate equal to the then current
coupon rate of a 10-year Treasury note as such rate is published in the Wall
Street Journal or comparable publication.
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(c) A notice of redemption shall be given by first class mail, postage
prepaid, mailed not less than 10 days prior to the redemption date to each
holder of record of the Excess Shares to be redeemed, at such holder's address
as the same appears on the stock register of the Corporation. Each such notice
shall state (i) the redemption date; (ii) the number of shares or face amount of
Voting Securites to be redeemed from such holder, (iii) the Redemption Price,
and the manner of payment therefor, (iv) the place where certificates for such
Excess Shares are to be surrendered for payment of the Redemption Price, and (v)
that dividends on the Excess Shares to be redeemed will cease to accrue on such
redemption date.
(d) From and after the redemption date, dividends on the Voting
Securities called for redemption shall cease to accrue and such Voting
Securities shall no longer be deemed to be outstanding and all rights of the
holders thereof as security holders of the Corporation (except the right to
receive from the Corporation the Redemption Price) shall cease. Upon surrender
of the certificates for any Voting Securities so redeemed in acccordance with
the requirements of the notice of redemption, such Voting Securities shall be
redeemed by the Corporation at the Redemption Price. If fewer than all the
Voting Securities represented by any such certificate are redeemed, a new
certificate shall be issued representing the Voting Securities not redeemed
without cost to the holder thereof.
(6) The Corporation may by notice in writing (which may be included in
a proxy or ballot distributed to the Corporation's shareholders) require any
Person that is a holder of record of Voting Securities or that the Corporation
has reasonable cause to believe Beneficially Owns or controls Voting Securities
to certify in such manner as the Corporation shall deem appropriate (including
execution of a proxy or ballot) that, to the knowledge of such Person:
(a) all Voting Securities owned of record, Beneficially Owned, or
controlled by such Person are owned and controlled only by United
States Citizens; or
(b) the number and class or series of Non-Citizen Owned Shares
owned of record, Beneficially Owned, or controlled by such Person are
as set forth in such certificate.
The Corporation may require any Person certifying as to the ownership or
control of Voting Securities in response to clause (a) of this subparagraph
(6) to provide such further information as the Corporation may reasonably
request in order to implement the provisions of this paragraph D. If any
Person fails to provide such certificate or other information, the
Corporation may presume that all such Voting Securities are Non-Citizen
Owned Shares.
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ARTICLE VIII
LIMITATION OF LIABILITY AND INDEMNIFICATION
A. Limitation of Liability. No director or officer of the
Corporation shall be liable to the Corporation or to its shareholders for
monetary damages for breach of his fiduciary duty as a director or officer,
provided that the foregoing provision shall not eliminate or limit the liability
of a director or officer for (1) any breach of his duty of loyalty to the
Corporation or its shareholders; (2) acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law; (3)
liability for unlawful distributions of the Corporation's assets to, or
redemptions or repurchases of the Corporation's shares from shareholders of the
Corporation, under and to the extent provided in La.R.S. 12:92(D); or (4) any
transaction from which he derived an improper personal benefit. If, after the
date hereof, the Louisiana Business Corporation Law is amended to authorize
further elimination or limitation of the personal liability of directors or
officers, then the liability of a director or an officer of the Corporation
shall be eliminated or limited to the fullest extent permitted by the Louisiana
Business Corporation Law, as so amended.
B. Indemnification. Subject to such limitations as may be determined
by the Board of Directors (provided that no change in such limitations may
adversely affect any claim to indemnification that arises prior to such change),
the Corporation shall indemnify each of its directors to the full extent from
time to time permitted by law, and may so indemnify each of its officers,
against any expenses or costs, including attorney's fees, actually or reasonably
incurred by him in connection with any threatened, pending or completed claim
action, suit or proceeding, whether criminal, civil, administrative or
investigative against such person or as to which he is involved solely as a
witness or person required to give evidence
C. Authorization of Further Actions. The Board of Directors may (1)
cause the Corporation to enter into contracts with its directors and officers
providing for the limitation of liability set forth in this Article to the
fullest extent permitted by law, (2) adopt By-laws or resolutions, or cause the
Corporation to enter into contracts, providing for indemnification of directors
and officers of the Corporation and other persons (including but not limited to
directors and officers of the Corporation's direct and indirect subsidiaries) to
the fullest extent permitted by law and (3) cause the Corporation to exercise
the powers set forth in La.R.S. 12:83F, notwithstanding that some or all of the
members of the Board of Directors acting with respect to the foregoing may be
parties to such contracts or beneficiaries of such By-laws or resolutions or the
exercise of such powers. No repeal or amendment of any such By-laws or
resolutions limiting the right to indemnification thereunder shall affect the
entitlement of any person to indemnification whose claim thereto results from
conduct occurring prior to the date of such repeal or amendment.
D. Subsidiaries. The Board of Directors may cause the Corporation to
approve for its direct and indirect subsidiaries limitation of liability and
indemnification provisions comparable to the foregoing.
E. Amendment. In addition to any other votes required by law or
these Articles of Incorporation (and notwithstanding the fact that a lesser
percentage may be specified by law or these Articles of Incorporation), the
affirmative vote of the holders of at least 80% of the Total Voting
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Power shall be required to repeal this Article or to amend this Article so as to
reduce the limitation of liability set forth herein or the rights to
indemnification of any person or the powers of the Board of Directors provided
in this Article, and any amendment or repeal of this Article shall not adversely
affect any indemnification or limitation of liability of a director or officer
of the Corporation under this Article with respect to any action or inaction
occurring prior to the time of such amendment or repeal.
ARTICLE IX
REVERSION
Cash, property or share dividends, shares issuable to shareholders in
connection with a reclassification of stock, and the redemption price of
redeemed shares, that are not claimed by the shareholders entitled thereto
within one year after the dividend or redemption price became payable or the
shares became issuable, despite reasonable efforts by the Corporation to pay the
dividend or redemption price or deliver the certificates for the shares to such
shareholders within such time, shall at the expiration of such time, revert in
full ownership to the Corporation, and the Corporation's obligation to pay such
dividend or redemption price or issue such shares, as the case may be, shall
thereupon cease; provided, however, that the Board of Directors may, at any
time, for any reason satisfactory to it, but need not, authorize (1) payment of
the amount of any cash or property dividend or redemption price or (2) issuance
of any shares, ownership of which has reverted to the Corporation pursuant to
this Article, to the person or entity who or which would be entitled thereto had
such reversion not occurred.
ARTICLE X
SPECIAL MEETINGS OF SHAREHOLDERS
A. Special meetings of shareholders, for any purpose or purposes, may
be called in any manner set forth in the By-laws, provided that the power of
shareholders as such to call or cause to be called special meetings shall be
governed exclusively by paragraph B of this Article.
B. At any time, upon the written request of any shareholder or group
of shareholders holding in the aggregate at least a majority of the Total Voting
Power, the Secretary of the Corporation shall call a special meeting of
shareholders to be held at the registered office of the Corporation at such time
as the Secretary may fix not less than 15 nor more than 60 days after the
receipt of said request, and if the Secretary shall neglect or refuse to fix
such time or to give notice of the meeting, the shareholder or shareholders
making the request may do so. Such requests must state the specific purpose or
purposes of the proposed special meeting, and the business to be conducted
thereat shall be limited to such purpose or purposes.
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EXHIBIT 3.2
BY-LAWS
OF
OMNI ENERGY SERVICES CORP.
SECTION 1
OFFICES
1.1 PRINCIPAL OFFICE. The principal office of the Corporation shall be
located at 4484 NE Evangeline Thruway, Carencro, Louisiana 70520.
1.2 ADDITIONAL OFFICES. The Corporation may have such offices at such
other places as the Board of Directors may from time to time determine or the
business of the Corporation may require.
SECTION 2
SHAREHOLDER MEETINGS
2.1 PLACE OF MEETINGS. Unless otherwise required by law or these By-
laws, all meetings of the shareholders shall be held at the principal office of
the Corporation or at such other place, within or without the State of
Louisiana, as may be designated by the board of Directors.
2.2 ANNUAL MEETINGS; NOTICE THEREOF. An annual meeting of the
shareholders shall be held each year on the date and at the time as the Board of
Directors shall designate, for the purpose of electing directors and of the
transaction of such other business as may be properly brought before the
meeting. If no annual shareholders' meeting is held for a period of eighteen
months, any shareholder may call such meeting to be held at the registered
office of the Corporation as shown on the records of the Secretary of State of
the State of Louisiana.
2.3 SPECIAL MEETINGS. Special meetings of the shareholders, for any
purpose or purposes, may be called by or at the direction of the Board of
Directors. Shareholders may call a special meeting of shareholders in accordance
with the applicable provisions of the Articles of Incorporation.
2.4 NOTICE OF MEETINGS. Except as otherwise provided by law or the
Articles of Incorporation, the authorized person or persons calling a
shareholders' meeting shall cause written notice of the time, place and purpose
of the meeting to be given to all shareholders entitled to vote at such meeting,
at least 10 days and not more than 75 days prior to the day fixed for the
meeting. Notice of the annual meeting need not state the purpose or purposes
thereof, unless action is to be taken at the meeting as to which notice is
required by law, the Articles of Incorporation or the By-laws. Notice of a
special meeting shall state the purpose or purposes thereof, and the business
conducted at any special meeting shall be limited to the purpose or purposes
stated in the notice.
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2.5 LIST OF SHAREHOLDERS. At every meeting of shareholders, a list of
shareholders entitled to vote, arranged alphabetically and certified by the
Secretary or by the agent of the Corporation having charge of transfers of
shares, showing the number and class of shares held by each such shareholder on
the record date for the meeting and confirming the number of votes per share as
to which each such shareholder is entitled, shall be produced on the request of
any shareholder.
2.6 QUORUM. At all meetings of shareholders, the holders of a majority
of the total voting power shall constitute a quorum; provided, however, that
this subsection shall not have the effect of reducing the vote required to
approve any matter that may be established by law, the Articles of Incorporation
or these By-laws.
2.7 VOTING. When a quorum is present at any shareholders' meeting, the
vote of the holders of a majority of the votes actually cast shall decide each
question brought before such meeting, unless the resolution of the question
requires, by express provision of law, the Articles of Incorporation or these
By-laws, a different vote or one or more separate votes by the holders of a
class or series of capital stock, in which case such express provision shall
apply and control the decision of such question. Directors shall be elected by
plurality vote.
2.8 PROXIES. At any meeting of the shareholders, every shareholder
having the right to vote shall be entitled to vote in person or by proxy
appointed by an instrument in writing executed by such shareholder and bearing a
date not more than eleven months prior to the meeting, unless the instrument
provides for a longer period, but in no case will an outstanding proxy be valid
for longer than three years from the date of its execution. The person appointed
as proxy need not be a shareholder of the Corporation.
2.9 ADJOURNMENTS. Adjournments of any annual or special meeting of
shareholders may be taken without new notice being given unless a new record
date is fixed for the adjourned meeting, but any meeting at which directors are
to be elected shall be adjourned only from day to day until such directors shall
have been elected.
2.10 WITHDRAWAL. If a quorum is present or represented at a duly
organized shareholders' meeting, such meeting may continue to do business until
adjournment, notwithstanding the withdrawal of enough shareholders to leave less
than a quorum as fixed in Section 2.6 of these By-laws, or the refusal of any
shareholders to vote.
2.11 LACK OF QUORUM. If a meeting cannot be organized because a quorum
has not attended, the shareholders present may, by vote of the holders of a
majority of the votes actually cast, adjourn the meeting to such time and place
as they may determine, subject, however, to the provisions of Section 2.9
hereof. In the case of any meeting called for the election of directors, those
who attend the second of such adjourned meetings, although less than a quorum as
fixed in Section 2.6 hereof, shall nevertheless be deemed to constitute a quorum
for the purpose of electing directors.
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2.12 PRESIDING OFFICER. The Chairman of the Board or a person designated
by the Chairman of the Board, or in their absence a person designated by the
Board of Directors, shall preside at all shareholders' meetings.
2.13 DEFINITION OF SHAREHOLDER. As used in these By-laws, and unless the
context otherwise requires, the term shareholder shall mean a person who is (i)
the record holder of shares of the Corporation's common stock or any other
capital stock of the Corporation granted voting rights, or (ii) a registered
holder of any bonds, debentures or similar obligations granted voting rights by
the Corporation pursuant to La.R.S. 12:75(H).
SECTION 3
DIRECTORS
3.1 NUMBER. All of the corporate powers shall be vested in, and the
business and affairs of the Corporation shall be managed by, a Board of
Directors. Except as otherwise fixed by or pursuant to Article III(B) of the
Articles of Incorporation (as it may be duly amended from time to time) relating
to the rights of the holders of any class or series of stock having a preference
over the Common Stock as to dividends or upon liquidation to elect additional
directors by class vote, the Board of Directors shall consist of seven natural
persons; provided that, if after the last action of the Board of Directors with
respect to nomination of directors prior to the mailing to shareholders of proxy
materials for any meeting of shareholders at which directors are to be elected,
any person or persons named therein to be nominated at the direction of the
Board of Directors becomes unable or unwilling to serve, the foregoing number of
authorized directors shall be automatically reduced by a number equal to the
number of such persons unless the Board of Directors selects a replacement
nominee or nominees. No director need be a shareholder. The Secretary shall have
the power to certify at any time as to the number of directors authorized and as
to the class to which each director has been elected or assigned.
3.2 POWERS. Board may exercise all such powers of the Corporation and do
all such lawful acts and things which are not by law, the Articles of
Incorporation or these By-laws directed or required to be done by the
shareholders.
3.3 TERM OF OFFICE. Each member of the Board of Directors, other than
those directors who may be elected by the holders of any class or series of
stock having preference over the Common Stock as to dividends or upon
liquidation (whose term of office may be determined by the Board of Directors
pursuant to Section 3.3), shall be elected by the shareholders at the annual
meeting of shareholders to a term expiring at the next succeeding annual meeting
of shareholders and shall serve until his successor is duly elected and
qualified. If the Board of Directors shall appoint any person to fill a vacancy
on the Board, whether resulting from an increase in the number of directors or
otherwise, such person shall serve a term expiring at the next succeeding annual
meeting of shareholders and until his successor is duly elected and qualified.
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3.4 GENERAL ELECTION. At each annual meeting of shareholders, directors
shall be elected to succeed those directors whose terms then expire. No decrease
in the number of directors constituting the Board of Directors shall shorten the
term of any incumbent director.
3.5 VACANCIES. Except as otherwise provided in the Articles of
Incorporation or these By-laws, the office of a director shall become vacant if
he dies, resigns or is duly removed from office.
3.6 FILLING VACANCIES. Except as otherwise provided in the Articles of
Incorporation or Section 3.8 of these By-laws, any vacancy on the board
(including any vacancy resulting from an increase in the authorized number of
directors or from failure of the shareholders to elect the full number of
authorized directors) may, notwithstanding any resulting absence of a quorum of
directors, be filled by a majority vote of the Board of Directors remaining in
office, provided that the shareholders shall have the right, at any special
meeting called for such purpose prior to such action by the Board, to fill the
vacancy. A director elected pursuant to this section shall serve until the next
shareholders' meeting held for the election of directors of the class to which
he shall have been appointed and until his successor is elected and qualified.
3.7 NOTICE OF SHAREHOLDER NOMINEES. Except as otherwise provided in or
pursuant to Section 3.8 of these By-laws, only persons who are nominated in
accordance with the procedures set forth in Article IV(E) of the Articles of
Incorporation shall be eligible for election as directors.
3.8 DIRECTORS ELECTED BY PREFERRED SHAREHOLDERS. Notwithstanding
anything in these By-laws to the contrary, whenever the holders of any one or
more classes or series of stock having a preference over the Common Stock as to
dividends or upon liquidation shall have the right, voting separately as a
class, to elect one or more directors of the Corporation, the provisions of the
Articles of Incorporation (as they may be duly amended from time to time) fixing
the rights and preferences of such preferred stock shall govern with respect to
the nomination, election, term, removal, vacancies or other related matters with
respect to such directors.
3.9 COMPENSATION OF DIRECTORS. Directors shall receive such compensation
for their services, in their capacity as directors, as may be fixed by
resolution of the Board of Directors; provided, however, that nothing herein
contained shall be construed to preclude any director from serving the
Corporation in any other capacity and receiving compensation therefor.
3.10 NATIONALITY OF DIRECTORS. At no time shall more than one-third of the
directors be persons who are not "citizens of the United States," as such term
is defined in Title 49 USC (S)40102 ("Non-Citizens").
SECTION 4
MEETINGS OF THE BOARD
4.1 PLACE OF MEETINGS. The meetings of the Board of Directors may be
held at such place within or without the State of Louisiana as a majority of the
directors may from time to time appoint.
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4.2 INITIAL MEETINGS. Except as otherwise determined by the Board of
Directors, the first meeting of each newly elected Board shall be held
immediately following the shareholders' meeting at which the Board, or any class
thereof, is elected and at the same place as such meeting, and no
notice of such first meeting shall be necessary for the newly elected directors
in order legally to constitute the meeting.
4.3 REGULAR MEETINGS; NOTICE. Regular meetings of the Board may be held
at such times as the Board may from time to time determine. Notice of regular
meetings of the Board of Directors may be given, but no special form of notice
or time of notice shall be necessary.
4.4 SPECIAL MEETINGS; NOTICE. Special meetings of the Board may be
called by or at the direction of the Chairman of the Board or the President on
reasonable notice given to each director, either personally or by mail,
reputable courier service, telephone, telex, telecopy or any other comparable
form of facsimile communication. Special meetings shall be called by the
Secretary in like manner and on like notice on the written request of a majority
of the directors and if such officer refuses, or fails or is unable within 24
hours to call a meeting when requested, then the directors making the request
may call the meeting on two days' written notice given to each director. Except
as otherwise required by law, the Articles of Incorporation or these By-laws,
the notice of a special meeting of directors need not state its purpose or
purposes, but if the notice states a purpose or purposes and does not state a
further purpose to consider such other business as may properly come before the
meeting, the business to be conducted at the special meeting shall be limited to
the purpose or purposes stated in the notice.
4.5 WAIVER OF NOTICE. Directors present at any regular or special
meeting shall be deemed to have received, or to have waived, due notice thereof,
provided that a director who participates in a meeting by telephone (as
permitted by Section 4.9 hereof) shall not be deemed to have received or waived
due notice if, at the beginning of the meeting, he objects to the transaction of
any business because the meeting is not lawfully called.
4.6 QUORUM. A majority of the Board shall be necessary to constitute a
quorum for the transaction of business, and except as otherwise provided by law,
the Articles of Incorporation or these By-laws, the acts of a majority of the
directors present at a duly called meeting at which a quorum is present shall be
the acts of the Board. If a quorum is not present at any meeting of the Board of
Directors, the directors present may adjourn the meeting from time to time
without notice other than announcement at the meeting, until a quorum is
present.
4.7 WITHDRAWAL. If a quorum was present when the meeting convened, the
directors present may continue to do business, taking action by vote of a
majority of a quorum as fixed in Section 4.6 hereof, until adjournment,
notwithstanding the withdrawal of enough directors to leave less than a quorum
as fixed in Section 4.6 hereof or the refusal of any director present to vote.
4.8 ACTION BY CONSENT. Any action that may be taken at a meeting of the
Board, or any committee thereof, may be taken by a consent in writing signed by
all of the directors or by all members of the committee, as the case may be, and
filed with the records of proceedings of the Board or committee.
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4.9 MEETINGS BY TELEPHONE OR SIMILAR COMMUNICATION. Members of the Board
may participate at and be present at any meeting of the Board or any committee
thereof by means of conference telephone or similar communications equipment if
all persons participating in such meeting can hear and communicate with each
other.
SECTION 5
COMMITTEES OF THE BOARD
5.1 GENERAL. The Board may designate one or more committees, each
committee to consist of two or more of the directors of the Corporation (and one
or more directors may be named as alternate members to replace any absent or
disqualified regular members), which, to the extent provided by resolution of
the Board or these By-laws, shall have and may exercise the powers of the Board
in the management of the business and affairs of the Corporation, and may have
power to authorize the seal of the Corporation to be affixed to documents, but
no such committee shall have power or authority to amend the Articles of
Incorporation, adopt an agreement of merger, consolidation or share exchange,
recommend to the shareholders the sale, lease or exchange of all or
substantially all of the Corporation's assets, a dissolution of the Corporation
or a revocation of dissolution, remove directors, or amend these By-laws; and
unless the resolution expressly so provides, no such committee shall have the
power or authority to declare a dividend or authorize the issuance of stock.
Such committee or committees shall have such name or names as may be stated in
these By-laws, or as may be determined, from time to time, by the Board. Any
vacancy occurring in any such committee shall be filled by the Board, but the
President may designate another director to serve on the committee pending
action by the Board. Each such member of a committee shall hold office during
the term designated by the Board.
5.2 COMPENSATION COMMITTEE. The Board shall establish and maintain a
Compensation Committee consisting of two or more directors, each of whom (i)
shall be qualified to the extent appropriate as a "non-employee director" under
Rule 16b-3 of the Securities Exchange Commission and as an "outside director"
under Section 162(m) of the Internal Revenue Code and (ii) shall meet any
further qualifications designated by the Board. The Compensation Committee shall
review and analyze the compensation of the Corporation's executive officers;
review and provide general guidance as to compensation of the Corporation's
other managers; evaluate the performance of the Corporation's executive
officers; administer the Corporation's incentive compensation plan or plans,
including grants thereunder; and perform such other services as may be
designated by the Board.
5.3 AUDIT COMMITTEE. The Board shall establish an Audit Committee
consisting of at least two directors, a majority of whom are not officers or
employees of the Corporation or of any of its affiliates. The Audit Committee
shall (i) facilitate communication among the Corporation's directors,
management, independent accountants and internal auditing personnel regarding
matters relating to financial accounting, reporting and controls, (ii) assist
the Board of Directors in fulfilling its fiduciary responsibilities as to
accounting policies and reporting practices of the Corporation and all
subsidiaries and the sufficiency of auditing practices with respect thereto by,
among other things, reviewing the scope of audit coverage, including
consideration of the Corporation's accounting practices and procedures and
system of internal accounting controls and reporting to the Board with
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respect thereto, (iii) operate as the Board's principal agent in ensuring the
independence of theCorporation's independent accountants, the integrity of
management and the adequacy of disclosure to shareholders, and (iv) perform such
other services as may be designated by the Board.
SECTION 6
REMOVAL OF BOARD MEMBERS
Directors may be removed in accordance with the applicable provisions of
the Articles of Incorporation.
SECTION 7
NOTICES
7.1 FORM OF DELIVERY. Whenever under the provisions of law, the Articles
of Incorporation or these By-laws notice is required to be given to any
shareholder or director, it shall not be construed to mean personal notice
unless otherwise specifically provided in the Articles of Incorporation or these
By-laws, but such notice may be given by mail, addressed to such shareholder or
director at his address as it appears on the records of the Corporation, with
postage thereon prepaid, or in such other manner as may be specified in these
By-laws. Notices given by mail shall be deemed to have been given at the time
they are deposited in the United States mail, and all other notices shall be
deemed to have been given upon delivery or transmission to the appropriate
address.
7.2 WAIVER. Whenever any notice is required to be given by law, the
Articles of Incorporation or these By-laws, a waiver thereof in writing signed
by the person or persons entitled to such notice, whether before or after the
time stated therein, shall be deemed equivalent thereto. Notice shall be deemed
to have been given to, or waived by, any shareholder who attends a meeting of
shareholders in person, or is represented at such meeting by proxy, without
protesting at the commencement of the meeting the transaction of any business
because the meeting is not lawfully called or convened.
SECTION 8
OFFICERS
8.1 DESIGNATIONS. The officers of the Corporation shall be elected by
the directors and shall be the President, Secretary and Treasurer. The Board of
Directors may appoint one or more vice presidents, a chief executive officer, a
chief operating officer, a chief financial or accounting officer and such other
officers as it shall deem necessary. Officers shall hold their offices for such
terms and shall exercise such powers and perform such duties as shall be
determined from time to time by the Board. To the extent permitted by law, more
than one office may be held by a single person. At no time shall more than
one-third of the officers of the Corporation be Non-Citizens.
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8.2 TERM OF OFFICE. The officers of the Corporation shall hold office at
the pleasure of the Board of Directors. Except as otherwise provided in the
resolution of the Board of Directors electing any officer, each officer shall
hold office until the first meeting of the Board of Directors after the annual
eeting of shareholders next succeeding his or her election and until his or her
successor is elected and qualified or until his, or her earlier resignation or
removal. Any officer may resign at any time upon written notice to the Board,
Chairman of the Board, President or Secretary of the Corporation. Such
resignation shall take effect at the time specified therein and acceptance of
such resignation shall not be necessary to make it effective. The Board may
remove any officer with or without cause at any time. Any such removal shall be
without prejudice to the contractual rights of such officers, if any, with the
Corporation, but the election of an officer shall not in and of itself create
contractual rights. Any vacancy occurring in any office of the Corporation by
death, resignation, removal or otherwise may be filled for the unexpired
position of the term by the Board at any regular or special meeting.
8.3 THE CHAIRMAN OF THE BOARD. The Board may appoint a Chairman of the
Board who shall preside at meetings of the Board of Directors and the
shareholders and perform such other duties as may be designated by the Board of
Directors or these By-laws. The Chairman of the Board shall not, solely by
virtue of such position, be an officer of the Corporation but may be designated
an officer by the Board of Directors.
8.4 THE PRESIDENT. The President shall, unless otherwise provided by the
Board, have general and active responsibility for the management of the business
of the Corporation, shall be the chief executive and chief operating officer of
the Corporation, shall supervise the daily operations of the business of the
Corporation and shall ensure that all orders, policies and resolutions of the
Board are carried out. At no time shall the President be a Non-Citizen.
8.5 THE VICE PRESIDENTS. The Vice Presidents (if any) shall have such
designations and perform such duties as the President or the Board of Directors
shall prescribe.
8.6 THE SECRETARY. The Secretary shall attend all meetings of the Board
of Directors and all meetings of the shareholders and record all votes and the
minutes of all proceedings in a book to be kept for that purpose. He shall give,
or cause to be given, notice of all meetings of the shareholders and regular and
special meetings of the Board, and shall perform such other duties as may be
prescribed by the Board or President. He shall keep in safe custody the seal of
the Corporation, if any, and affix such seal to any instrument requiring it.
8.7 THE TREASURER. The Treasurer shall have the custody of the corporate
funds and shall keep or cause to be kept full and accurate accounts of receipts
and disbursements in books belonging to the Corporation and shall deposit all
monies and other valuable effects in the name and to the credit of the
Corporation in such depositories as may be designated by the Board of Directors.
He shall keep a proper accounting of all receipts and disbursements and shall
disburse the funds of the Corporation only for proper corporate purposes or as
may be ordered by the Board and shall render to the President and the Board at
the regular meetings of the Board, or whenever they may require it, an account
of all his transactions as Treasurer and of the financial condition and results
of operations of the Corporation.
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SECTION 9
STOCK
9.1 CERTIFICATES. Every holder of stock in the Corporation shall be
entitled to have a certificate signed by the President or a Vice President and
the Secretary or an Assistant Secretary evidencing the number and class (and
series, if any) of shares owned by him, containing such information as required
by law and bearing the seal of the Corporation. If any stock certificate is
manually signed by a transfer agent or registrar other than the Corporation
itself or an employee of the Corporation, the signature of any such officer may
be a facsimile. In case any officer, transfer agent or registrar who has signed
or whose facsimile signature has been placed upon a certificate shall have
ceased to be an officer, transfer agent or registrar of the Corporation before
such certificate is issued, it may be issued by the Corporation with the same
effect as if such person or entity were an officer, transfer agent or registrar
of the Corporation on the date of issue.
9.2 MISSING CERTIFICATES. The President or any Vice President may direct
a new certificate or certificates to be issued in place of any certificate or
certificates theretofore issued by the Corporation alleged to have been lost,
stolen or destroyed, upon the Corporation's receipt of an affidavit of that fact
from the person claiming the certificate of stock to be lost, stolen or
destroyed. As a condition precedent to the issuance of a new certificate or
certificates, the officers of the Corporation shall, unless otherwise determined
by the President, require the owner of such lost, stolen or destroyed
certificate or certificates, or his legal representative, to (i) give the
Corporation a bond or (ii) enter into a written indemnity agreement, in each
case in an amount appropriate to indemnify the Corporation against any claim
that may be made against the Corporation with respect to the certificate alleged
to have been lost, stolen or destroyed.
9.3 TRANSFERS. The shares of stock of the Corporation shall be
transferable only on the books of the Corporation by the holders thereof in
person or by their duly authorized attorneys or legal representatives upon
surrender and cancellation of certificates for a like number of shares. Except
as otherwise required by law, upon surrender to the Corporation or the transfer
agent of the Corporation of a certificate for shares duly endorsed or
accompanied by proper evidence of succession, assignment or authority to
transfer, it shall be the duty of the Corporation to issue a new certificate to
the person entitled thereto, cancel the old certificate and record the
transaction upon its books.
SECTION 10
DETERMINATION OF SHAREHOLDERS
For the purpose of determining shareholders entitled to notice of and to
vote at a meeting, or to receive a dividend, or to receive or exercise
subscription or other rights, or to participate in a reclassification of stock,
or in order to make a determination of shareholders for any other proper
purpose, the Board of Directors may fix in advance a record date for
determination of shareholders for such purpose, such date to be not more than 60
days and, if fixed for the purpose of determining
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shareholders entitled to notice of and to vote at a meeting, not less than 10
days, prior to the date on which the action requiring the determination of
shareholders is to be taken.
SECTION 11
INDEMNIFICATION
11.1 DEFINITIONS. As used in this section the following terms shall have
the meanings set forth below:
(a) "Board" - the Board of Directors of the Corporation.
(b) "Claim" - any threatened, pending or completed claim, action,
suit, or proceeding, whether civil, criminal, administrative or investigative
and whether made judicially or extra-judicially, or any separate issue or matter
therein, as the context requires.
(c) "Determining Body" - (i) those members of the Board who are not
named as parties to the Claim for which indemnification is being sought
("Impartial Directors"), if there are at least three Impartial Directors, (ii) a
committee of at least three Impartial Directors appointed by the Board
(regardless whether the members of the Board of Directors voting on such
appointment are Impartial Directors) or (iii) if there are fewer than three
Impartial Directors or if the Board of Directors or the committee appointed
pursuant to clause (ii) of this paragraph so directs (regardless whether the
members thereof are Impartial Directors), independent legal counsel, which may
be the regular outside counsel of the Corporation.
(d) "Disbursing Officer" - the President of the Corporation or, if
the President is a party to the Claim for which indemnification is being sought,
any officer not a party to such Claim who is designated by the President to be
the Disbursing Officer with respect to indemnification requests related to the
Claim, which designation shall be made promptly after receipt of the initial
request for indemnification with respect to such Claim.
(e) "Expenses" - any expenses or costs, including, without
limitation, attorney's fees, judgments, punitive or exemplary damages, fines and
amounts paid in settlement.
(f) "Indemnitee" - each person who is or was a director or officer of
the Corporation.
11.2 INDEMNITY.
(a) To the extent such Expenses exceed the amounts reimbursed or paid
pursuant to policies of liability insurance maintained by the Corporation, the
Corporation shall indemnify each Indemnitee against any Expenses actually and
reasonably incurred by him (as they are incurred) in connection with any Claim
either against him or as to which he is involved solely as a witness or person
required to give evidence, by reason of his position (i) as a director or
officer of the Corporation, (ii) as a director or officer of any subsidiary of
the Corporation, (iii) as a fiduciary with
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respect to any employee benefit plan of the Corporation, or (iv) as a director,
officer, partner, employee or agent of another corporation, partnership, joint
venture, trust or other for-profit or not-for-profit entity or enterprise, if
such position is or was held at the request of the Corporation, whether relating
to service in such position before or after the effective date of this Section,
if he (i) is successful in his defense of the claim on the merits or otherwise
or (ii) has been found by the Determining Body (acting in good faith) to have
met the Standard of Conduct (defined below); provided that (A) the amount
otherwise payable by the Corporation may be reduced by the Determining Body to
such amount as it deems proper if it determines that the Claim involved the
receipt of a personal benefit by Indemnitee, and (B) no indemnification shall be
made in respect of any Claim as to which Indemnitee shall have been adjudged by
a court of competent jurisdiction, after exhaustion of all appeals therefrom, to
be liable for willful or intentional misconduct in the performance of his duty
to the Corporation or to have obtained an improper personal benefit, unless, and
only to the extent that, a court shall determine upon application that, despite
the adjudication of liability but in view of all the circumstances of the case,
Indemnitee is fairly and reasonably entitled to indemnity for such Expenses as
the court deems proper.
(b) For purposes of this Section 11, the Standard of Conduct is met
when the conduct by an Indemnitee with respect to which a Claim is asserted was
conduct that was in good faith and that he reasonably believed to be in, or not
opposed to, the best interest of the Corporation, and, in the case of a criminal
action or proceeding, that he had no reasonable cause to believe was unlawful.
The termination of any Claim by judgment, order, settlement, conviction, or upon
a plea of nolo contendere or its equivalent, shall not, of itself, create a
presumption that Indemnitee did not meet the Standard of Conduct.
(c) Promptly upon becoming aware of the existence of any Claim as to
which he may be indemnified hereunder, Indemnitee shall notify the President of
the Corporation of the Claim and whether he intends to seek indemnification
hereunder. If such notice indicates that Indemnitee does so intend, the
President shall promptly advise the Board thereof and notify the Board that the
establishment of the Determining Body with respect to the Claim will be a matter
presented at the next regularly scheduled meeting of the Board, or if a meeting
of the Board of Directors is not regularly scheduled within 90 calendar days of
such request, the President shall cause a meeting of the Board of Directors to
be called within such period in accordance with these By-laws. After the
Determining Body has been established the President shall inform the Indemnitee
thereof and Indemnitee shall immediately provide the Determining Body with all
facts relevant to the Claim known to him. No later than the 45th day (the
"Determination Date") after its receipt of such information, together with such
additional information as the Determining Body may request of Indemnitee, the
Determining Body shall determine, and shall advise Indemnitee of its
determination, whether Indemnitee has met the Standard of Conduct.
(d) During such 45-day period, Indemnitee shall promptly inform the
Determining Body upon his becoming aware of any relevant facts not theretofore
provided by him to the Determining Body, unless the Determining Body has
obtained such facts by other means. The providing of such facts to the
Determining Body shall not begin a new 45-day period.
-11-
<PAGE>
(e) The Determining Body shall have no authority to revoke a
determination that Indemnitee met the Standard of Conduct unless Indemnitee (i)
submits fraudulent information to the Determining Body at any time during the 45
days prior to the Determination Date or (ii) fails to comply with the provisions
of subsections (c) or (d) hereof, including without limitation Indemnitee's
obligation to submit information or documents relevant to the Claim reasonably
requested by the Determining Body prior to the Determination Date.
(f) In the case of any Claim not involving a proposed, threatened or
pending criminal proceeding,
(i) if Indemnitee has, in the good faith judgment of the
Determining Body, met the Standard of Conduct, the Corporation may, in its sole
discretion after notice to Indemnitee, assume all responsibility for the defense
of the Claim, and, in any event, the Corporation and the Indemnitee each shall
keep the other informed as to the progress of the defense, including prompt
disclosure of any proposals for settlement; provided that if the Corporation is
a party to the Claim and Indemnitee reasonably determines that there is a
conflict between the positions of the Corporation and Indemnitee with respect to
the Claim, then Indemnitee shall be entitled to conduct his defense, with
counsel of his choice; and provided further that Indemnitee shall in any event
be entitled at his expense to employ counsel chosen by him to participate in the
defense of the Claim; and
(ii) the Corporation shall fairly consider any proposals by
Indemnitee for settlement of the Claim. If the Corporation (A) proposes a
settlement acceptable to the person asserting the Claim, or (B) believes a
settlement proposed by the person asserting the Claim should be accepted, it
shall inform Indemnitee of the terms thereof and shall fix a reasonable date by
which Indemnitee shall respond. If Indemnitee agrees to such terms, he shall
execute such documents as shall be necessary to effect the settlement. If he
does not agree he may proceed with the defense of the Claim in any manner he
chooses, but if he is not successful on the merits or otherwise, the
Corporation's obligation to indemnify him for any Expenses incurred following
his disagreement shall be limited to the lesser of (A) the total Expenses
incurred by him following his decision not to agree to such proposed settlement
or (B) the amount the Corporation would have paid pursuant to the terms of the
proposed settlement. If, however, the proposed settlement would impose upon
Indemnitee any requirement to act or refrain from acting that would materially
interfere with the conduct of his affairs, Indemnitee may refuse such settlement
and proceed with the defense of the Claim, if he so desires, at the
Corporation's expense without regard to the limitations imposed by the preceding
sentence. In no event, however, shall the Corporation be obligated to indemnify
Indemnitee for any amount paid in a settlement that the Corporation has not
approved.
(g) In the case of a Claim involving a proposed, threatened or
pending criminal proceeding, Indemnitee shall be entitled to conduct the defense
of the claim, and to make all decisions with respect thereto, with counsel of
his choice; provided, however, that the Corporation shall not be obligated to
indemnify Indemnitee for an amount paid in settlement that the Corporation has
not approved.
-12-
<PAGE>
(h) After notifying the Corporation of the existence of a Claim,
Indemnitee may from time to time request the Corporation to pay the Expenses
(other than judgments, fines, penalties or amounts paid in settlement) that he
incurs in pursuing a defense of the Claim prior to the time that the Determining
Body determines whether the Standard of Conduct has been met. If the Disbursing
Officer believes the amount requested to be reasonable, he shall pay to
Indemnitee the amount requested (regardless of Indemnitee's apparent ability to
repay such amount) upon receipt of an undertaking by or on behalf of Indemnitee
to repay such amount if it shall ultimately be determined that he is not
entitled to be indemnified by the Corporation under the circumstances. If the
disbursing Officer does not believe such amount to be reasonable, the
Corporation shall pay the amount deemed by him to be reasonable and Indemnitee
may apply directly to the Determining Body for the remainder of the amount
requested.
(i) After the Determining Body has determined that the Standard of
Conduct was met, for so long as and to the extent that the Corporation is
required to indemnify Indemnitee under this Agreement, the provisions of
paragraph (h) shall continue to apply with respect to Expenses incurred after
such time except that (i) no undertaking shall be required of Indemnitee and
(ii) the Disbursing Officer shall pay to Indemnitee such amount of any fines,
penalties or judgments against him which have become final as the Corporation is
obligated to indemnify him.
(j) Any determination by the Corporation with respect to settlements
of a Claim shall be made by the Determining Body.
(k) The Corporation and Indemnitee shall keep confidential, to the
extent permitted by law and their fiduciary obligations, all facts and
determinations provided or made pursuant to or arising out of the operation of
this Section, and the Corporation and Indemnitee shall instruct its or his
agents and employees to do likewise.
11.3 ENFORCEMENT.
(a) The rights provided by this Section shall be enforceable by
Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights under
this Section, Indemnitee shall be entitled to recover from the Corporation, and
shall be indemnified by the Corporation against, any and all Expenses actually
and reasonably incurred by him in connection with such proceeding but only if he
prevails therein. If it shall be determined that Indemnitee is entitled to
receive part but not all of the relief sought, then the Indemnitee shall be
entitled to be reimbursed for all Expenses incurred by him in connection with
such judicial adjudication if the amount to which he is determined to be
entitled exceeds 50% of the amount of his claim. Otherwise, the Expenses
incurred by Indemnitee in connection with such judicial shall be appropriately
prorated.
(c) In any judicial proceeding described in this subsection, the
Corporation shall bear the burden of proving that Indemnitee is not entitled to
any Expenses sought with respect to any Claim.
-13-
<PAGE>
11.4 SAVING CLAUSE. If any provision of this Section is determined by a
court having jurisdiction over the matter to require the Corporation to do or
refrain from doing any act that is in violation of applicable law, the court
shall be empowered to modify or reform such provision so that, as modified or
reformed, such provision provides the maximum indemnification permitted by law,
and such provision, as so modified or reformed, and the balance of this Section,
shall be applied in accordance with their terms. Without limiting the generality
of the foregoing, if any portion of this Section shall be invalidated on any
ground, the Corporation shall nevertheless indemnify an Indemnitee to the full
extent permitted by any applicable portion of this Section that shall not have
been invalidated and to the full extent permitted by law with respect to that
portion that has been invalidated.
11.5 NON-EXCLUSIVITY.
(a) The indemnification and advancement of Expenses provided by or
granted pursuant to this Section shall not be deemed exclusive of any other
rights to which Indemnitee is or may become entitled under any statute, article
of incorporation, by-law, authorization of shareholders or directors, agreement,
or otherwise.
(b) It is the intent of the Corporation by this Section to indemnify
and hold harmless Indemnitee to the fullest extent permitted by law, so that if
applicable law would permit the Corporation to provide broader indemnification
rights than are currently permitted, the Corporation shall indemnify and hold
harmless Indemnitee to the fullest extent permitted by applicable law
notwithstanding that the other terms of this Section would provide for lesser
indemnification.
11.6 SUCCESSORS AND ASSIGNS. This Section shall be binding upon the
Corporation, its successors and assigns, and shall inure to the benefit of the
Indemnitee's heirs, personal representatives, and assigns and to the benefit of
the Corporation, its successors and assigns.
11.7 INDEMNIFICATION OF OTHER PERSONS. The Corporation may indemnify any
person not covered by Sections 11.1 through 11.6 to the extent provided in a
resolution of the Board or a separate section of these By-laws.
SECTION 12
ADOPTION AND AMENDMENT OF BY-LAWS
By-laws of the Corporation may be adopted and amended as provided in the
Articles of Incorporation.
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<PAGE>
SECTION 13
MISCELLANEOUS
13.1 DIVIDENDS. Except as otherwise provided by law, the Articles of
Incorporation or these By-laws, dividends upon the stock of the Corporation may
be declared by the Board of Directors at any regular or special meeting.
Dividends may be paid in cash, property, or shares of stock, subject to the
limitations specified by law and in the Articles of Incorporation.
13.2 VOTING OF SHARES OWNED BY CORPORATION. Unless otherwise directed by
the Board, any shares of capital stock issued by a wholly-owned subsidiary of
the Corporation may be voted by the President of the Corporation, or by any
person authorized to do so by the President, at any shareholders' meeting of the
subsidiary (or in connection with any written consent in lieu thereof).
13.3 FISCAL YEAR. Until otherwise determined by the Board of Directors,
the Corporation shall have a fiscal year ending December 31.
13.4 SEAL. The Board of Directors may adopt a corporate seal, which shall
have inscribed thereon the name of the Corporation. The seal may be used by
causing it or a facsimile thereof to be impressed or affixed or reproduced or
otherwise. Failure to affix the seal shall not, however, affect the validity of
any instrument.
13.5 GENDER. All pronouns and variations thereof used in these By-laws
shall be deemed to refer to the masculine, feminine or neuter gender, singular
or plural, as the identity of the person, persons, entity or entities referred
to may require.
13.6 CONTROL SHARE ACQUISITIONS. The provisions of Sections 135 through
140.2 of the Louisiana Business Corporation Law (La.R.S. 12:135 through 140.2)
do not apply to control share acquisitions of shares of the Corporation.
-15-
<PAGE>
EXHIBIT 4.2
<TABLE>
<CAPTION>
<S> <C> <C>
OMNI
ENERGY SERVICES CORP.
THIS CERTIFICATE IS TRANSFERABLE COMMON STOCK
IN NEW YORK, NY OR CHICAGO, IL Incorporated under the Laws of the State of Louisiana CUSIP 68210T 10 9
See Reverse For Certain Definitions
This Certifies that
is the record holder of
FULLY PAID AND NON ASSESSABLE SHARES OF COMMON STOCK, $0.01 PAR VALUE PER SHARE, OF
OMNI Energy Services Corp.
transferable on the books of the Corporation in person, or by duly authorized attorney, upon surrender of this Certificate
properly endorsed. This Certificate is not valid until countersigned by the Transfer Agent and registered by the Registrar.
The Corporation will furnish to any shareholder upon request and without charge, a summary of the designations,
relative rights, preferences and limitations of the shares of each class and of each series of each preferred or special
class, so far as the same have been fixed, and the authority of the board to establish other series and to fix the relative
rights, preferences and limitations of the shares of any class or series by amendment of the articles.
WITNESS the facsimile seal of the Corporation and the facsimile signatures of its duly authorized officers.
Dated: [OMNI ENERGY CORPORATE SEAL APPEARS HERE]
VICE PRESIDENT AND SECRETARY CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
COUNTERSIGNED AND REGISTERED:
Harris Trust and Savings Bank
</TABLE>
<PAGE>
OMNI Energy Services Corp.
The following abbreviations when used in the inscription of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
<TABLE>
<CAPTION>
<S> <C>
TEN COM - as tenants in common UNIF GIFT MIN ACT - ...........Custodian.........
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
JT TEN - as joint tenants with right Act ..........................
of survivorship and not as (State)
tenants in common
</TABLE>
Additional abbreviations may also be used though not in the above list.
For value received, _________________________ hereby sell, assign and transfer
unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
(PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE OF ASSIGNEE)
________________________________________________________________________________
___________________________________________________________________of the Shares
of Common Stock represented by the within Certificate, and do hereby irrevocably
constitute and appoint
________________________________________________________________________Attorney
to transfer the said stock on the books of the within named Company with full
power of substitution in the premises.
Dated ________________________________
_______________________________________
NOTICE: The signature to this assignment must
correspond with the name as written
upon the face of the certificate in
every particular. Without alteration or
enlargement or any change whatever.
Signature(s) Guaranteed:______________________________________
The signature(s) should be guaranteed
by an eligible guarantor institution
(banks, stockbrokers, savings and loan
associations and credit unions with
membership in an approved signature
guarantee medallion program). Pursuant
to S.E.C. Rule 17Ad-15.
<PAGE>
EXHIBIT 4.3
=================================================================
AMENDED AND RESTATED LOAN AGREEMENT
DATED AS OF
JUNE 13, 1997
BY AND BETWEEN
OMNI GEOPHYSICAL, L.L.C.
AND
HIBERNIA NATIONAL BANK
=================================================================
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT dated as of June 13, 1997, by and
between OMNI GEOPHYSICAL, L.L.C., a Louisiana limited liability company
("Borrower"), and HIBERNIA NATIONAL BANK, a national banking association
("Bank").
W I T N E S S E T H:
WHEREAS, Bank has previously extended certain credit facilities to
Borrower, pursuant to that certain Loan Agreement dated as of July 19, 1996, by
and between Borrower and Bank, as heretofore amended by that certain First
Amendment to Loan Agreement dated as of December 4, 1996, by and between
Borrower and Bank, and by that certain Second Amendment to Loan Agreement dated
as of April 4, 1997 by and between Borrower and Bank (as so amended, the
"Original Agreement"); and,
WHEREAS, Borrower has applied to Bank for an amendment to the terms of its
existing credit facility, and for additional credit facilities; and,
WHEREAS, Bank has agreed to provide such amended and additional credit
facilities to Borrower pursuant to the terms of this Agreement, which shall
amend and restate the Original Agreement in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants hereunder set
forth, Borrower and Bank do hereby amend and restate the Original Agreement in
its entirety with this Agreement, and do hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. DEFINED TERMS. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"ACKNOWLEDGMENT OF CONTRACTOR" shall mean the Acknowledgment of Assignment
executed by the Contractor.
"ACKNOWLEDGMENT OF ARCHITECT" shall mean the Acknowledgment of Assignment
executed by the Architect.
"AGREEMENT" shall mean this Amended and Restated Loan Agreement, as the
same may from time to time be amended, modified or supplemented and in
effect.
"APPLICABLE MARGIN" shall mean the following additional rate per annum:
Type of Loan LIBOR Applicable Margin Base Rate Applicable Margin
---------------- ----------------------- ---------------------------
Revolving Loans 3.5% .5%
Construction Loan 3.75% .75%
<PAGE>
Term Loan 3.75% .75%
"ARCHITECT" shall mean The Corne-Lemaire Group, an architectural
corporation.
"ARCHITECT'S CONTRACT" shall mean that certain Standard Form of Agreement
between the Borrower and Architect, dated March 24, 1997.
"ASSIGNMENT OF ARCHITECT'S CONTRACT" shall mean that certain Assignment of
Architect's Contract by the Borrower in favor of the Bank.
"ASSIGNMENT OF CONSTRUCTION CONTRACT" shall mean that certain Assignment of
Construction Contracts, Plans and Specifications by the Borrower in favor
of the Bank.
"BANK" shall mean Hibernia National Bank, a national banking association.
"BANK'S INSPECTOR" shall mean William Neill or another inspector designated
by Bank (including an officer or employee of Bank) to inspect and monitor
the progress of construction of the Improvements on behalf of the Bank.
"BASE RATE" shall mean the rate of interest established from time to time
by the Board of Directors or management of Citibank, N.A., New York, New
York, as its "prime" or "base" lending rate, whether or not that rate is
published, and which is not necessarily the lowest rate charged by
Citibank, N.A., or by Bank, such rate to be adjusted automatically on and
as of the effective date of any change in such Base Rate.
"BASE RATE LOAN" shall mean the portion of any of the Loans bearing
interest calculated on the basis of the Base Rate.
"BASE RATE TRANCHE" shall mean, with respect to any Loan, all or any
portion of such Loan that constitutes a Base Rate Loan
"BORROWER" shall mean Omni Geophysical, L.L.C., a Louisiana limited
liability company.
"BORROWING BASE AMOUNT" shall mean at any time, based upon the most recent
timely submitted borrowing base certificate submitted by or on behalf of
Borrower (but not less than on a weekly basis), as the same may be adjusted
by Bank on a daily basis upon review of Borrower's sales journals and cash
receipts and as a result of field examinations of such Borrower's
Collateral (using reasonable lending discretion), the lesser of (i)
$8,000,000.00, or (ii) the amount of Qualified Receivables at such time.
"BUSINESS DAY" means a day other than a Saturday, Sunday or legal holiday
for commercial banks under the laws of the State of Louisiana or a day on
which national banks are authorized to be closed in New Orleans, Louisiana,
and, if such day relates to a Conversion to, or Continuation of, a LIBOR
Rate Loan, also a day on which dealings in Dollar deposits are carried out
in the interbank market selected by Bank for purposes of setting the LIBOR
Rate.
"COLLATERAL" shall mean any interest in any kind of property or assets
pledged, mortgaged or otherwise subject to an Encumbrance in favor of Bank
pursuant to the Collateral Documents.
"COLLATERAL DOCUMENTS" shall collectively refer to the Security Agreement,
the Mortgage, the Security Agreement (Fixtures), the Assignment of
Construction Contract, the Assignment of Architect's Contract, the
Acknowledgment of Contractor, the Acknowledgment of Architect and any and
all other documents in which an Encumbrance is created on any property of
the Borrower or of any third person to secure payment of the Indebtedness
of Borrower or any part thereof.
-2-
<PAGE>
"COMMITMENTS" shall mean, collectively, the Revolving Loan Commitment, the
Construction Loan Commitment and the Term Loan Commitment
"CONSTRUCTION CONTRACT" shall mean that certain Standard Form of Agreement
between the Borrower and Contractor, dated June 16, 1997, as amended and
modified from time to time, and providing for the construction of the
Improvements contemplated by the Plans.
"CONSTRUCTION LOAN" shall have the meaning assigned to that term in Section
3.1 hereof.
"CONSTRUCTION LOAN COMMITMENT" shall have the meaning assigned to that term
in Section 3.1 hereof.
"CONSTRUCTION NOTE" shall have the meaning assigned to that term in Section
3.1 hereof.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall mean the continuation
pursuant to Section 5.3 hereof of a LIBOR Rate-based interest rate accruing
on the Notes from one Interest Period to the next Interest Period.
"CONTRACT RATE" shall mean, at any time, the rate of interest then borne by
the Notes after giving effect to any fluctuations in the Base Rate or LIBOR
Rate, but without giving any effect to the application of any default rate
of interest imposed by Bank under the terms of the Notes. The Contract
Rate shall be as follows:
a) With respect to Base Rate Loans, the Applicable Margin plus the Base
Rate from time to time in effect.
b) With respect to LIBOR Rate Loans, the Applicable Margin plus the LIBOR
Rate applicable during such Interest Period to such LIBOR Rate Loan or
LIBOR Rate Tranche.
"CONTRACTOR" shall mean The Lemoine Company, Inc.
"CONVERT", "CONVERSION" and "CONVERTED" shall mean a conversion pursuant to
Section 5.3 hereof of the interest rate then accruing on any Note or any
Tranche thereof to a LIBOR Rate-based interest rate or to a Base Rate-based
interest rate.
"CREDITS" shall have the meaning assigned to that term in Section 2.1
hereof.
"CREDIT APPLICATION" shall have the meaning assigned to that term in
Section 2.3.1 hereof.
"CREDIT COMMISSION" shall have the meaning assigned to that term in Section
2.3.3 hereof.
"CREDIT OBLIGATION" shall have the meaning assigned to that term in Section
2.3.4 hereof.
"DEBT" shall mean any and all amounts and/or liabilities owing from time to
time by Borrower to any Person, including the Bank, direct or indirect,
liquidated or contingent, now existing or hereafter arising, including
without limitation (i) indebtedness for borrowed money; (ii) the amounts of
all standby and commercial letters of credit and bankers acceptances,
matured or unmatured, issued on behalf of Borrower; (iii) guaranties of the
obligations of any other Person, whether direct or indirect, whether by
agreement to purchase the indebtedness of any other Person or by agreement
for the furnishing of funds to any other Person through the purchase or
lease of goods, supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or discharging the
indebtedness of any other Person, or otherwise; (iv) the present value of
all obligations for the payment of rent or hire of property of any kind
(real or personal) under leases or lease agreements required to be
capitalized under GAAP, and (v) trade payables and operating leases
incurred in the ordinary course of business or otherwise.
-3-
<PAGE>
"DEBT-TO-WORTH RATIO" shall mean, at any date, the ratio obtained by
dividing (1) the total liabilities of Borrower less the subordinated Debt
of Borrower as of such date, by (2) the Tangible Net Worth of Borrower as
of such date.
"DEFAULT" shall mean an event which with the giving of notice or the lapse
of time (or both) would constitute an Event of Default hereunder.
"DEFICIENCY" shall have the meaning assigned to that term in Section 3.3(b)
hereof.
"DEVELOPMENT EXPENSE SCHEDULE" shall mean the detailed line item cost
breakdown of land costs, construction costs (hard costs) and all other
related indirect development costs (soft costs) submitted to and approved
by Bank.
"DOLLARS" and "$" shall mean lawful money of the United States of America.
"DOMINION ACCOUNT" shall have the meaning ascribed to such term in Section
10.15 hereof.
"ENCUMBRANCES" shall mean individually, collectively and interchangeably
any and all presently existing and/or future mortgages, liens, privileges,
servitudes, rights-of-way and other contractual and/or statutory security
interests and rights of every nature and kind that, now and/or in the
future may affect the property of Borrowers or Guarantors or any part or
parts thereof.
"ENVIRONMENTAL LAWS" shall mean the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section
9601, et seq. ("CERCLA"), the Superfund Amendments and Reauthorization Act
of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq., the Resource
Conservation and Recovery Act, 49 U.S.C. Section 6901, et seq., the
Louisiana Environmental Affairs Act, La. R.S. 30:2001 et seq., or other
applicable Governmental Requirements or regulations adopted pursuant to any
of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"EVENT OF DEFAULT" shall mean individually, collectively and
interchangeably any of the Events of Default set forth below in Section
12.1 hereof.
"FUNDING LOSSES" shall mean, with respect to (a) any Borrower's payment or
prepayment of principal of a LIBOR Rate Loan or LIBOR Rate Tranche on a day
other than the last day of the applicable Interest Period; (b) any
Borrower's failure to borrow a LIBOR Rate Loan or a LIBOR Rate Tranche on
the date specified by such Borrower; (c) any Borrower's failure to make any
prepayment of any LIBOR Rate Loans or LIBOR Rate Tranches on the date
specified by Borrower, or (d) any cessation of a LIBOR Rate to apply to the
Loans or any Tranche thereof pursuant to Section 6.5 hereof`, in each case
whether voluntary or involuntary, any loss, expense, penalty, premium or
liability incurred by Bank (including but not limited to any loss or
expense incurred by reason of the liquidation or reemployment of deposits
or other funds acquired by Bank to fund or maintain a Loan).
"GAAP" shall mean, at any time, accounting principles generally accepted in
the United States as then in effect.
"GENERAL INTANGIBLES" shall mean, all general intangibles as defined in
(S)9-106 of the UCC, of Borrower, whether now owned or hereafter acquired,
including without limitation (i) all contractual rights and obligations or
indebtedness owing to Borrower (other than Receivables) from whatever
source arising; (ii) all things and actions, rights represented by
judgments and claims arising out of tort and other claims related to the
Collateral, including the right to assert and otherwise be the proper party
of interest to commence and prosecute actions; (iii) all goodwill, patents,
patent licenses, trademarks, trademark
-4-
<PAGE>
licenses, trade names, service marks, trade secrets, rights and
intellectual property, copyrights, permits and licenses; (iv) all rights or
claims in respect of refunds for taxes paid; and (v) all deposit accounts
of Borrower, including the Dominion Account.
"GOVERNMENTAL REQUIREMENT" shall mean any applicable state, federal or
local law, statute, ordinance, code, rule, regulation, order or decree.
"GUARANTOR" shall mean any subsidiary of Borrower existing now or acquired
by Borrower in the future.
"IMPROVEMENTS" shall mean the 13,000 square foot administration building,
the approximately 40,000 square foot fabrication facility, and other
structures (including off-site and on-site constructions) which are to be
constructed on the Property with advances on the Construction Loan.
"INDEBTEDNESS" shall mean, at any time, the indebtedness of Borrower
evidenced by the Notes executed by Borrower pursuant to this Agreement, in
principal, interest, costs, expenses and reasonable attorneys' fees and all
other fees and charges, together with all Credit Obligations, Credit
Commissions, commitment fees and other indebtedness and costs and expenses
for which each Borrower is responsible under this Agreement or under any of
the Related Documents. In addition, the word "Indebtedness" also includes,
any and all other loans, extensions of credit, obligations, debts and
liabilities of Borrower, plus interest thereon, that may now and in the
future be owed to or incurred in favor of Bank, as well as all claims by
Bank against Borrower, whether existing now or later; whether they are
voluntary or involuntary, due or to become due, direct or indirect or by
way of assignment, determined or undetermined, absolute or contingent,
liquidated or unliquidated; whether Borrower may be liable individually or
jointly with others, of every nature and kind whatsoever, in principal,
interest, costs, expenses and reasonable attorneys' fees and all other fees
and charges; whether Borrower may be obligated as principal obligor,
guarantor, surety, accommodation party or otherwise.
"INTEREST PAYMENT DATE" shall have the meaning ascribed to such term in
Section 5.2 hereof.
"INTEREST PERIOD" shall mean with respect to a LIBOR Rate Loan or a LIBOR
Rate Tranche, each period commencing on (1) the date any such LIBOR Rate
Loan or LIBOR Rate Tranche of any new Loan is made, (2) the date the
interest rate on any Loan or Tranche thereof is Converted by a Borrower
from a Base Rate Loan to a LIBOR Rate Loan, or (3) the day following the
last day of the immediately preceding Interest Period for which a LIBOR
Rate-based rate for the LIBOR Rate Loan or LIBOR Rate Tranche is applicable
and is continued, and, in each case, ending on the numerically
corresponding day in the first, second, or third calendar month thereafter,
as a Borrower may select as provided in Article V hereof, except that each
Interest Period which commences on the last Business Day of a calendar
month (or on any day for which there is no numerically corresponding day in
the appropriate subsequent calendar month) shall end on the last Business
Day of the appropriate subsequent calendar month. Notwithstanding the
foregoing: (i) if any Interest Period would otherwise commence before and
end after the final maturity date of the Loan to which it relates, such
Interest Period shall end on the final maturity date of such Loan; (ii)
each Interest Period which would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day, unless such
next succeeding Business Day falls in the next succeeding calendar month,
then on the next preceding Business Day.
"LIBOR RATE" shall mean, with respect to the applicable Interest Period in
effect, an interest rate per annum equal to the quotient (converted to a
percentage) of (i) the rate per annum of interest equal to the annual rate
of interest (rounded upward to the nearest whole multiple of 1/100 of 1%,
if such average is not such a multiple) determined by Bank, at or before
11:00 a.m. New Orleans, Louisiana time on the first day of such Interest
Period, to be the annual rate of interest at which deposits of Dollars are
offered by prime banks in whatever London interbank market may be selected
by Bank in its sole discretion, acting in good faith, at the time of
determination and in accordance with the then existing practice in such
market for delivery on the first day of such Interest Period in immediately
available funds and having a maturity equal to such Interest Period in an
amount equal (or as nearly equal as may be) to the applicable LIBOR Rate
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Loan, divided by (ii) 1.00 minus the LIBOR Reserve Requirement (as defined
below), expressed as a decimal, for such Interest Period. "LIBOR Reserve
Requirement" shall mean for any day during a Interest Period, that
percentage which is specified by the Board of Governors of the Federal
Reserve System (or any successor) for determining the maximum reserve
requirement (including, but not limited to, any marginal reserve
requirement) for the Bank with respect to liabilities consisting of or
including "Eurocurrency liabilities" (as defined in Regulation D of the
Board of Governors of the Federal Reserve System) with a maturity equal to
such Interest Period. In determining the percentage, the Bank may use any
reasonable averaging and attribution methods. Each determination by Bank
of a LIBOR Rate or of the LIBOR Reserve Requirement used in determining
same shall be conclusive and binding, absent manifest error.
"LIBOR RATE LOAN" shall mean any of the Loans (or any portion thereof)
bearing interest calculated on the basis of the LIBOR Rate.
"LIBOR RATE TRANCHE" shall mean the amount of any Loan of Borrower that
constitutes a LIBOR Rate Loan for a specific Interest Period.
"LOANS" shall mean, collectively, the Revolving Loans, the Construction
Loan and the Term Loan.
"LOAN DOCUMENTS" shall mean this Agreement, the Notes, the Collateral
Documents and any other Related Documents.
"MATERIAL ADVERSE CHANGE" shall mean, with respect to Borrower, an event
which causes a material adverse effect on the business, assets, operations
or condition (financial or otherwise) of such Person, or which otherwise
changes in a materially adverse way any other facts, circumstances or
conditions which Bank has relied upon or utilized in making its Commitments
hereunder.
"MORTGAGE" shall mean that certain Multiple Indebtedness Mortgage by the
Borrower in favor of the Bank pursuant to which the Bank is granted a
mortgage lien on the Property as security for the Indebtedness.
"NOTES" shall mean, collectively, the Revolving Note, the Construction Note
and the Term Note, as each of them may be renewed or extended, together
with all other promissory note or notes given in renewal, substitution or
as a refinancing of any part of the indebtedness evidenced thereby.
"PERMITTED ENCUMBRANCES" shall have the meaning ascribed to such term in
Section 11.4 hereof.
"PERSON" shall mean an individual or a corporation, partnership, trust,
joint venture, incorporated or unincorporated association, joint stock
company, government, or an agency or political subdivision thereof, or
other entity of any kind.
"PLANS" shall mean the final architectural and engineering drawings and
specifications, including any revisions, amendments and addenda required to
complete the construction of the Improvements, including off-site and on-
site work.
"PROJECT" shall mean the Property and the Improvements.
"PROJECT COST" shall mean the cost of acquiring the Property and
constructing the Improvements, as modified, and as approved by Bank.
"PROPERTY" shall mean the immovable property (land and any existing
improvements) covered by the Collateral Documents and on which the
Improvements are or shall be located.
"QUALIFIED RECEIVABLES" shall mean eighty percent (80%) of the Receivables
of Borrower carried on its books of account, which, on the date as of which
the determination is made, (a) are subject to a first
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priority perfected Encumbrance in favor of Bank, (b) arose in the ordinary
course of Borrower's business, (c) arose from the sale of goods or
performance of services by Borrower, (d) are evidenced by an "invoice"
(i.e., an invoice, shipping order or similar writing), (e) are not subject
to setoff, counterclaim, defense, or a dispute of any kind or nature, (f)
are not more than 90 days old, (g) are payable by Persons other than any
Person who is an affiliate (as defined in accordance with GAAP) of Borrower
or an officer or director of Borrower or an officer or director of an
affiliate of Borrower (h) are not payable by the United States of America
or any agency or department thereof (unless such Receivable has been
assigned to Bank pursuant to a properly perfected assignment under the
Federal Assignment of Claims Act, 31 U.S.C. (S)3727), (i) do not by their
own terms prohibit the collateral assignment thereof or require the consent
of the obligor thereon to any collateral assignment thereof, (j) do not
arise out of a transaction with an account debtor outside the United States
of America (unless covered by a letter of credit acceptable to Bank), (k)
are not Receivables due by a Person from whom over 50% of its entire
accounts receivable balance with Borrower is unpaid for more than 90 days
past the invoice date(s) related thereto, (l) are not credit balances, (m)
are not Receivables which the Bank believes, in its sole credit judgment
reasonably applied, that collection of such Receivables is insecure or that
such Receivables may not be paid by reason of the account debtor's
financial inability to pay or that such Receivables are otherwise
unacceptable collateral, (n) are not proceeds of a Receivable, (o) are not
Receivables due by a Person by whom over 50% of the Receivables are owed
unless (x) such Receivables are due from a Company which is not rated
Investment Grade or better by a national rating agency or (y) the Bank, in
its sole discretion consents to their inclusion in Qualified Receivables,
and (p) commencing 90 days from the date hereof, are owed by a Person who
has either signed an acceptance of the work giving rise to the Receivable
or signed an acceptance of Borrower's proposal for work giving rise to the
Receivable. For purposes of this Agreement, a Receivable is 90 days old on
the 90th day after the date of the invoice evidencing such Receivable
(regardless of the due date of such invoice).
"RECEIVABLES" shall mean, with respect to such Person, all accounts (as
such term is defined in (S)9-106 of the UCC) of such Person, including all
indebtedness presently existing or hereafter owing to such Person in
connection with such Person's business, profession, occupation or
undertaking, including, but not limited to, the sale of goods or the
performance of services, together with all proceeds thereof; excluding,
however, any indebtedness due to or arising out of claims in tort and
indebtedness evidenced by a promissory note or a negotiable instrument.
"RELATED DOCUMENTS" shall mean and include individually, collectively,
interchangeably and without limitation all promissory notes, credit
agreements, loan agreements, guaranties, security agreements, mortgages,
collateral mortgages, deeds of trust, and all other instruments and
documents, whether now or hereafter existing, executed in connection with
the Indebtedness.
"REQUEST FOR ADVANCE" shall mean the Borrower's written request for an
advance.
"REVOLVING LOAN COMMITMENT" means the agreement by Bank to Borrower (other
than to Distribution) to make Revolving Loans and to issue Credits in
accordance with the provisions of Article II hereof.
"REVOLVING LOANS" shall mean loans made by Bank under the Revolving Notes
to Borrower in accordance with and subject to the terms of the Revolving
Loan Commitment.
"REVOLVING NOTE" shall mean that certain promissory note more fully
described in Section 2.2.1 hereof, together with any and all extensions,
renewals, modifications and substitutions therefor.
"SECURITY AGREEMENT" shall mean (i) that certain Commercial Security
Agreement dated July 19, 1996, by Borrower in favor of Bank, as amended by
First Amendment to Security Agreement, affecting all of the properties
described therein, (ii) all UCC-1 financing statements, and related
documents required by Bank in connection with the foregoing Commercial
Security Agreement, and (iii) all additional security agreements hereafter
granted by any Person as security for the Indebtedness, together with any
and all amendments or modifications to any of the foregoing.
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"SECURITY AGREEMENT (FIXTURES)" shall mean (i) that certain Security
Agreement (Fixtures) by Borrower dated as of June 13, 1997 in favor of Bank
and (ii) the related UCC-1 financing statement by Borrower.
"SOLVENT" shall mean, when used with respect to any Person on a particular
day, that on such date (i) the fair value of the property of such Person is
greater than the total amount of liabilities, including without limitation,
contingent liabilities, of such person, (ii) the present fair salable value
of the assets of such person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured, (iii) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent obligations and
other commitments as they mature in the ordinary course of business, (iv)
such Person does not intend to, and does not believe that it will, incur
debts and liabilities beyond such Person's ability to pay as such debts and
liabilities mature, and (v) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital
after giving due consideration to the prevailing practice in the industry
in which such person is engaged. In computing the amount of contingent
liabilities at any time, it is intended that such liabilities will be
computed at the amount which, in light of all of the facts and
circumstances existing at such time, represents the amount that can be
reasonably expected to become an actual or matured liability.
"SUBSIDIARIES" shall mean at any date with respect to any Person all the
corporations of which such Person at such date, directly or indirectly,
owns 50% or more of the outstanding capital stock (excluding directors'
qualifying shares), and "SUBSIDIARY" means any one of the Subsidiaries.
"TANGIBLE NET WORTH" shall mean, at any time, Borrower's total assets
excluding intangible assets (i.e., patents, copyrights, trademarks, trade
names, franchises, goodwill, organizational expenses, and similar
intangible expenses, but including leaseholds and leasehold improvements),
less the total liabilities of Borrower.
"TERMINATION DATE" shall mean, with respect to Bank's Revolving Loan
Commitment the earlier to occur of (i) August 1, 1998, or (ii) the date of
termination of the Commitments pursuant to Article XII hereof.
"TERM LOAN" shall have the meaning assigned to that term in Section 4.1
hereof.
"TERM LOAN COMMITMENT" shall have the meaning assigned to that term in
Section 4.1 hereof.
"TERM NOTE" shall have the meaning assigned to that term in Section 4.2
hereof.
"TRANCHE" shall mean a portion of any of the Revolving Loans outstanding to
Borrower that bears interest at either a particular LIBOR Rate-based rate
or at the Base Rate.
"UCC" shall mean the Uniform Commercial Code, Commercial Laws-Secured
Transactions (La. R.S. 10-9-101 et seq.) in the State of Louisiana, as
amended from time to time, provided that if by reason of mandatory
provisions of law, the perfection or effect of perfection or non-perfection
of the Bank's Encumbrances against the Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than the State
of Louisiana "UCC" means the Uniform Commercial Code as in effect in such
other jurisdiction.
SECTION 1.2. ACCOUNTING TERMS. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP, and all financial
data submitted pursuant to this Agreement shall be prepared in accordance with
GAAP.
ARTICLE II
REVOLVING LOANS AND
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LETTERS OF CREDIT
SECTION 2.1. THE REVOLVING LOAN COMMITMENT. Subject to the terms and
conditions of this Agreement, Bank agrees to extend credit to Borrower during
the period from the date hereof until the Termination Date (a) by making
Revolving Loans to Borrower from time to time, and (b) by Bank issuing
irrevocable standby and commercial letters of credit (said irrevocable standby
and commercial letters of credit being referred to herein as the "Credits") for
the account of Borrower from time to time; provided, however, that at no time
shall the sum of (1) the aggregate principal amount of Revolving Loans to
Borrower at such time outstanding, plus (2) the aggregate unfunded amount of
Credits issued for the account of Borrower at such time outstanding, exceed the
Borrowing Base Amount then in effect. In the event, at any time, and from time
to time, the sum of all outstanding Revolving Loans and Credits issued and
outstanding to Borrower exceeds the Borrowing Base Amount then in effect,
Borrower shall prepay the Revolving Loans by such an amount to cause the sum of
the Revolving Loans and Credits outstanding to Borrower to equal the Borrowing
Base Amount (or, at the option of Bank, Borrower may post cash collateral to
secure such deficiency in the Borrowing Base Amount).
SECTION 2.2. REVOLVING LOANS.
SECTION 2.2.1. REVOLVING LOANS. Subject to the terms and conditions of
this Agreement, Bank agrees to make Revolving Loans to Borrower from time to
time during the period from the date hereof to and including the Termination
Date; provided, however, that (1) no such Revolving Loan shall exceed an amount
which, when added to (i) the aggregate principal amount of all Revolving Loans
to Borrower at such time outstanding, plus (ii) the aggregate undisbursed amount
of Credits issued for the account of Borrower at such time outstanding, exceeds
the Borrowing Base Amount then in effect. Within the limits set forth herein,
Borrower may borrow from Bank hereunder, repay any and all such Revolving Loans
as hereinafter provided and reborrow hereunder. Borrower's obligation to repay
the Revolving Loans made by Bank shall be evidenced by a master promissory note
of Borrower (said promissory note being herein referred to as the "Revolving
Note"), payable to the order of Bank in the principal sum of $8,000,000.00 or
such other or lesser amount as may be reflected from time to time on the on the
books and records of Bank as evidencing the aggregate unpaid principal balance
of loan advances made to Borrower, with a final maturity of August 1, 1998, and
bearing interest at the rate or rates from time to time in effect pursuant to
the terms of Article V hereof (it being understood and agreed that the Revolving
Note executed and delivered to Bank by Borrower has been given in renewal and
extension, but not in extinguishment of, the indebtedness of Borrower under the
promissory note of Borrower dated July 19, 1996, issued pursuant to the Original
Agreement, as modified by the Allonge to Promissory Note dated as of December 4,
1996 by Borrower and accepted by Bank). Interest on the Revolving Note shall be
payable in accordance with the terms of Section 5.2 hereof.
SECTION 2.2.2. MANNER AND NOTICE OF BORROWING UNDER THE REVOLVING LOAN
COMMITMENT. Requests for advances under the Revolving Loan Commitment may be
made by Borrower in person, in writing or through telephone calls to Bank and
such requests shall be fully authorized by Borrower if made by any one of the
persons designated by Borrower in writing to Bank. Bank shall have the right,
but not the obligation, to verify any telephone requests by calling the person
who made the request at the telephone number designated by Borrower in writing
to Bank. Requests for advances must be received by not later than 11:00 a.m.
(Central Time) on the date of the proposed advance. Not later than 2:00 p.m.
(Central Time) on the date of such request, assuming all conditions of this
Agreement for such advance has been satisfied, Bank will make such advance. The
amount thereof shall be credited by Bank to the checking account maintained in
the name of Borrower with Bank and the credit advice resulting therefrom shall
be mailed to Borrower. Bank's copy of such credit advice indicating such
deposit to the account of Borrower shall be deemed conclusive evidence of
Borrower's indebtedness to Bank in connection with such borrowing. The
aggregate outstanding amount of principal and interest due by Borrower at any
given time under the Revolving Loan Commitment shall be and constitute the
indebtedness of Borrower to Bank under the Revolving Note made by Borrower.
When each advance is made by Bank to Borrower hereunder, Borrower shall be
deemed to have renewed and reissued its Revolving Note for the amount of the
advance plus all amounts due by Borrower to Bank under the Revolving Loan
Commitment immediately prior to such advance.
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SECTION 2.2.3. BORROWINGS UNDER THE REVOLVING LOAN COMMITMENT. Within
the limits of the Revolving Loan Commitment to Borrower hereunder and subject to
the terms and conditions of this Agreement, Bank shall only be obligated to lend
Borrower an amount which will not cause its Borrowing Base Amount to be
exceeded. During the period of the Revolving Loan Commitment, Borrower may use
the Revolving Loan Commitment by borrowing, prepaying and reborrowing, all in
accordance with the terms and conditions of this Agreement.
SECTION 2.2.4. PAYMENT OF THE REVOLVING NOTE UNDER THE REVOLVING LOAN
COMMITMENT. Interest on the unpaid principal balance of the Revolving Note
shall be payable in accordance with the terms of Section 5.2 hereof. Principal
shall be payable on the Termination Date; provided, however, in the event at any
time the aggregate outstanding principal amounts of the Revolving Loans to
Borrower, when added to the aggregate unfunded amounts of Credits at such time
outstanding to Borrower, causes its Borrowing Base Amount to be exceeded, the
Borrower shall, within three (3) Business Days from the date of such excess,
prepay its Revolving Note in an amount necessary to cause the aggregate
principal amount of its unpaid Revolving Loans plus the aggregate unfunded
amount of its Credits to equal its Borrowing Base Amount (or, at the option of
Bank, Borrower may post cash collateral to secure such deficiency in its
Borrowing Base Amount). Borrower hereby authorizes Bank to debit its funding
account maintained with Bank (account no. 542024135) to pay interest due on its
Revolving Note on each payment date, and to credit all proceeds of its
Receivables received in the Dominion Account when collected (or earlier, if Bank
in its sole discretion allows such funds to be available to Borrower prior to
the date on which any checks or other instruments given in payment of
Receivables are actually collected) towards payment of the Revolving Loans
outstanding under its Revolving Note. Bank agrees to give notice to the
Borrower of any debits to its funding account used to pay interest within three
(3) Business Days following each such debit.
SECTION 2.2.5. FEES. In addition to the Credit fees and commissions
described in Section 2.3.3 hereof, the Borrower shall also pay Bank the
following fees:
(a) Borrower shall pay Bank a commitment fee in the amount of $35,000.00
for the Revolving Loan Commitment, payable upon execution of this Agreement by
Borrower; and
(b) Borrower shall pay Bank a fee equal to 0.38% per annum on the unused
portion of the Revolving Loan Commitment, payable quarterly in arrears,
commencing June 30, 1997, and quarterly thereafter, and on the Termination Date.
The unused portion of the Revolving Loan Commitment shall be determined on a
daily basis by subtracting from $8,000,000.00 the amount of all Revolving Loans
and Credit outstanding, and by averaging said daily amounts for the period for
which the fee is to be determined.
SECTION 2.2.6. PROCEEDS OF DOMINION ACCOUNT. Borrower has executed a
lockbox agreement with Bank, pursuant to which all checks, drafts and other
instruments evidencing payment of the Borrower's Receivables shall be delivered
to Bank and deposited into the Borrower's Dominion Account more fully described
in Section 10.15 hereof. Borrower hereby authorizes Bank to apply, on a daily
basis, the proceeds of all its accounts receivable actually collected (or, at
the sole discretion of Bank, amounts which have been received but not yet
collected) by the Bank from the Dominion Account to reduce the outstanding
principal balance of the Revolving Loans due. Such payments will adjust
availability immediately for purposes of loan availability and on the next day
for bookkeeping and interest purposes.
SECTION 2.2.7. USE OF PROCEEDS. Borrower shall use the proceeds of the
Revolving Loan Commitment solely to refinance and renew the amounts outstanding
under the working capital facility provided for in the Original Agreement, and
thereafter to finance general working capital requirements of Borrower.
SECTION 2.2.8. OVERLINES AND OVERADVANCES. Notwithstanding the
provisions of Section 2.2.1 hereof, in the event that at any time the aggregate
unpaid principal amount of the Revolving Loans ever exceeds $8,000,000 (the
maximum possible amount of the Borrowing Base Amount), Borrower agrees to pay
the excess amount (an "overline") immediately upon demand by Bank. In the event
the unpaid principal amount of the Revolving Loans ever exceeds the Borrowing
Base Amount then in effect, Borrower agrees to pay the excess amount (an
"overadvance") immediately upon demand by Lender. Overlines and overadvances
shall bear interest at the rate (or
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at the highest rate, if more than one rate is then in effect) borne by the
Revolving Note. Upon request of Bank, Borrower shall execute a promissory note,
payable to the order of Bank, to represent the amount of any overline or
overadvance; however, Borrower acknowledges and agrees that the records of Bank
and this Agreement shall constitute conclusive evidence of any overline or
overadvance and the obligation of Borrower to repay any overline or overadvance,
with interest. All overlines and overadvances for which Bank has not demanded
payment earlier, and all unpaid and accrued interest on overlines and
overadvances not due and payable earlier, shall be due and payable on the
Termination Date. Borrower acknowledges and agrees that Bank is not obligated to
Borrower to fund any advance which would create an overline or overadvance.
SECTION 2.3. THE CREDITS.
SECTION 2.3.1. THE CREDITS. Upon the written application of Borrower,
using the form of letter of credit application then normally required by Bank in
connection with the issuance of such Credits (the "Credit Application"),
executed by Borrower (or by any one of the persons designated by Borrower in
writing to Bank in accordance with the terms hereof), Bank agrees, subject to
the terms and conditions of this Agreement, that it will issue its Credit
substantially in accordance with the Credit Application. Credits may either be
commercial letters of credit, in which case they shall have an expiry date on a
Business Day not later than the earlier to occur of the Termination Date, or
standby letters of credit issued to secure workers' compensation obligations of
Borrower (or for other purposes deemed acceptable by Bank in its sole
discretion), in which case they shall have an expiry date not later than the
earlier to occur of the Termination Date or one year from the date of issuance.
In no event shall a Credit be issued by Bank for the account of Borrower (i) if
the sum of the face amount thereof when added to the aggregate unfunded amount
of Credits issued for the account of Borrower then outstanding exceeds
$1,000,000.00 or (ii) if the sum of the face amount thereof when added to the
aggregate unfunded amount of Credits issued for the account of Borrower then
outstanding plus the aggregate principal amount of the Revolving Loans to
Borrower at such time outstanding exceeds the Borrowing Base Amount then in
effect.
SECTION 2.3.2. ISSUANCE OF CREDITS. Each Credit shall be issued not
later than three (3) Business Days after receipt by Bank of the Credit
Application related thereto. No later than 12:00 noon (Central Time) on the
third Business Day following receipt of the Credit Application and upon
fulfillment of the applicable conditions set forth in this Agreement, Bank shall
issue its Credit. Bank may rely fully and completely upon the authority of the
signatory of the Credit Application and the contents thereof unless such
authority is terminated by written notice delivered to Bank, and any such
termination of authority shall be effective only prospectively.
SECTION 2.3.3. CREDIT COMMISSION. Borrower agrees to pay to Bank the
standard fees charged and established by Bank from time to time for the issuance
and processing of letters of credit (the "Credit Commission") with respect to
each Credit created by Bank hereunder. Payment of such Credit Commission with
respect to each Credit created by Bank shall be paid in advance on the date of
issuance of the Credit. With respect to standby Credits issued hereunder,
Borrower unconditionally agrees to pay to the Bank, in addition to Bank's
standard fees for the issuance and processing of such Credits, a commission,
payable in advance on or before the date of issuance of each Credit, calculated
at the rate of 1.50% per annum on the face amount of each Credit, based upon the
number of days of the term of each such Credit divided by 360, which commission
shall not be less than $300.00 per standby letter of credit.
SECTION 2.3.4. CREDIT OBLIGATIONS. Borrower agrees unconditionally to
pay Bank on demand in United States currency at Bank's principal office in New
Orleans, Louisiana, the amount required to pay (a) any and all drafts drawn and
any and all demands made or purported to be made under any Credit issued for its
account, (b) any and all costs, charges, fees and/or expenses incurred or paid
by Bank in connection with any Credit issued for its account, and (c) interest
on such amounts described above under (a) and (b) as hereinafter provided (the
"Credit Obligations"). In the event of any drafts drawn and any and all demands
made under any Credit are payable in foreign currency, Borrower agrees to make
the aforementioned payment to Bank in United States currency at Bank's selling
rate for cable transfers to the place of payment of such draft on the date of
such payment. Such obligation of Borrower shall be deemed a Credit Obligation
hereunder. Borrower further agrees to comply with any and all governmental
currency exchange regulations or requirements now or hereafter applicable to
such Credit or
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to any drafts related thereto. Borrower further authorizes Bank, at its option,
to compensate itself by applying any part or all of the balance of any deposit
account or certificate of deposit which Borrower may maintain with Bank, at any
time, whether or not the deposit is mature, and/or any and all monies or
property or interest of any kind now or hereafter in Bank's hands, or in transit
to or from Bank, and belonging to Borrower, to the payment, in whole or in part,
of the amount of any draft and all interest, costs and attorney's fees which
Borrower may owe Bank pursuant to this Agreement. In the event a Credit
Obligation is not paid when demanded by Bank, Borrower agrees to pay to Bank on
demand a sum equal to the amount of the Credit Obligation, plus interest thereon
from the date the Credit Obligation is demanded by Bank until paid at the Base
Rate then in effect. A payment shall not be deemed made until funds therefor
have been actually collected and made available to Bank. Upon the occurrence of
an Event of Default hereunder, Borrower agrees to pay to Bank on demand a sum
equal to the aggregate unfunded amounts of all Credits outstanding, together
with interest thereon at the Base Rate, or at any higher rate of interest which
Bank may impose as a default rate pursuant to the terms of Borrower's Revolving
Note issued pursuant to the terms hereof (such obligation of Borrower shall be
deemed a Credit Obligation as such term is used herein). Upon the occurrence of
such Event of Default, Bank may exercise its right of offset and compensation
set forth above in this Section 2.3.4. Any amount which Bank offsets or which
Borrower may pay to Bank in excess of drafts actually drawn on any outstanding
Credits, shall be held by Bank in pledge to secure the payment of future drafts
until the Commitment to Borrower has been terminated, all Indebtedness of
Borrower has been paid in full, and no further Credits issued for the account of
Borrower are outstanding.
SECTION 2.3.5. REVOLVING LOANS. In the event that Credit Obligations
owed Bank by Borrower are not paid when due for any reason including Credit
Obligations arising upon occurrence of an Event of Default hereunder,
notwithstanding the limitation contained in Section 2.2.1, such Credit
Obligations shall be immediately paid by Borrower pursuant to Revolving Loans in
the amount of such Credit Obligations. Such Credit Obligations shall be
immediately converted to Revolving Loans by Bank and evidenced by the Revolving
Note. If at any time any Event of Default occurs and any portion of any Credits
remains unfunded, the Borrower for whose account such Credits were issued shall
pay to Bank in cash for application to future drawings under the outstanding
Credits, an amount equal to the aggregate unfunded portion of the outstanding
Credits. If Borrower does not pay such amount on demand, notwithstanding the
limitation contained in Section 2.2.1, such amount shall be immediately paid by
Borrower by Revolving Loans to Borrower from Bank. Such amount shall be
immediately converted to a Revolving Loan by Bank and shall be evidenced by the
Revolving Note. The amount of such Revolving Loans shall be held by Bank in
pledge securing all of Borrower's obligations under this Agreement, with
Borrower hereby granting Bank a continuing security interest in such funds as
security for the Indebtedness of Borrower until the Commitments have all
terminated, all Indebtedness of Borrower has been paid in full, and no further
Credits issued for the account of Borrower are outstanding.
SECTION 2.3.6. HOLD HARMLESS. Bank shall have the right to deliver the
Credit through any correspondents or agents (the "Correspondents") that Bank in
its sole discretion may choose. Except in the case of Bank's gross negligence
or willful misconduct, Borrower shall hold Bank harmless from any actions that
arise out of the handling of such delivery by the Correspondents making the
delivery. Borrower further agrees that Bank and any Correspondent shall not in
any way be responsible for performance by any beneficiary of obligations to
Borrower nor for the form, validity, sufficiency, correctness, truthfulness or
genuineness of any documents delivered in connection with any Credit, even if
such documents should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; for failure of any Credit draft to bear any
reference or correct reference to the Credit; for errors, omissions, or delays
in transmission or delivery of any messages, whether by mail, cable,
teletransmission, or otherwise; or for any error, neglect or default of any
Correspondents. Borrower further agrees that, if any of the above events should
occur, such event will not affect, impair or prevent Borrower's liability or the
Bank's rights or powers hereunder. No liability shall attach to Bank or to the
Correspondents for any losses or damage, in consequence of present or future
laws, censorships, regulations, decrees, orders or restrictions, right or
wrongfully exercised by an de facto or de jure government or governmental
agency. Without limiting the foregoing, and in addition to any other provision
hereof, Bank is hereby expressly authorized and directed to honor any request
for payment which is made under and in compliance with the terms of the Credit
without regard to, and without any duty on Bank's part to inquire into, the
existence of any disputes or controversies between Borrower and the beneficiary
or any other person, firm, or corporation, or the respective rights, duties or
liabilities of any of them or whether any facts or occurrences represented in
any documents presented under the Credit are true and
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correct. Borrower fully understands and agrees that the sole obligation of Bank
to Borrower shall be limited to honoring requests for payment made under and in
compliance with the Credit and the obligation of Bank remains so limited even if
Bank may have assisted Borrower in the preparation of the wording of the Credit
or any documents required to be presented thereunder or if Bank may otherwise be
aware of the underlying transaction giving rise to the Credit. If Bank, in its
sole discretion and at the written request of Borrower, agrees to any change or
modification to the amount or terms of any Credit or any instrument or document
related thereto, Borrower agrees that this Agreement shall be binding upon it
with regard to any changes or modifications and with regard to any actions taken
by Bank or by any agents or Correspondents relative thereto.
ARTICLE III
CONSTRUCTION LOAN
SECTION 3.1 CONSTRUCTION LOAN COMMITMENT. Subject to the terms and
conditions contained in this Agreement, the Bank agrees to make a construction
loan (the "Construction Loan") available to the Borrower in the maximum
aggregate principal amount at any one time outstanding of the lesser of (1) 80%
of Project Cost, (2) 75% of the fair market value of the Property and completed
Improvements, based upon an MAI appraisal of the Plans, or (3) the sum of
$2,600,000.00 (the "Construction Loan Commitment"). Bank shall not be obligated
to make any advance under the Construction Loan Commitment with respect to the
first 20% of Project Costs incurred by Borrower. Borrower's obligation to repay
the Construction Loan made by Bank shall be evidenced by a master promissory
note of Borrower (said promissory note being herein referred to as the
"Construction Note"), payable to the order of Bank in the principal sum of
$2,600,000.00 or such other or lesser amount as may be reflected from time to
time on the books and records of Bank as evidencing the aggregate unpaid
principal balance of loan advances made to Borrower, with a final maturity of
April 13, 1998, and bearing interest at the rate or rates from time to time in
effect pursuant to the terms of Article V hereof. Interest on the Construction
Note shall be payable in accordance with the terms of Section 5.2 hereof
SECTION 3.2. CONSTRUCTION LOAN ADVANCES. The Bank agrees to make
advances to the Borrower from time to time on any Business Day in accordance
with the provisions of this Article III up to the Construction Loan Commitment.
The credit advice resulting from the deposit of the proceeds of any disbursement
in the Borrower's construction account with the Bank or the Bank's copy of any
cashier's check representing all or any part of the proceeds or a disbursement
shall be deemed prima facie evidence of the obligation of the Borrower to the
Bank on the Construction Loan.
SECTION 3.3. BORROWING PROCEDURE. (a) The proceeds of the Construction
Loan shall be advanced by the Bank to the Borrower's construction account for
further credit, as appropriate, to the account of the Contractor at Bank not
more than once per month as construction of the Improvements progresses;
provided, however, that (i) the Borrower shall submit a Request for Advance to
the Bank at least 10 Business Days prior to the proposed funding date specifying
the total amount of the proposed Advance and the proposed date on which said
Advance is to be made; (ii) each Request for Advance shall be in substantially
the form prescribed by the Bank, (iii) each advance shall be funded in strict
accordance with the Development Expense Schedule; and (iv) upon the occurrence
of a Deficiency (as defined below), the Borrower shall not be entitled to
request or receive any advances until such time as the Deficiency has been cured
to the satisfaction of the Bank. Notwithstanding the foregoing, Bank shall be
authorized to fund an advance to pay interest on the Construction Loan when due,
without the requirement of a Request for Advance.
(b) If at any time during the term of the Construction Loan, the costs
to complete the Improvements shall increase over the costs delineated on the
Development Expense Schedule such that the undisbursed portion of the
Construction Loan is insufficient to pay the remaining Project Costs and to
provide debt service on the Construction Loan and all other costs and expenses
necessary to make the Project operational (such difference between the
undisbursed portion of the Construction Loan and the costs of completion of the
Project being referred to as a "Deficiency"), then, in such event, upon demand
by the Bank to the Borrower, the Borrower shall deposit the amount
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of such Deficiency into a cash collateral account maintained by Bank and on
which the Bank shall have the sole right to draw. No additional advances on the
Loan shall be made until the full amount of such Deficiency shall be deposited
as aforesaid.
(c) Advances for construction costs shall be made only to the extent
that the work is actually completed in accordance with the Plans and in place
and approved by the Bank, including materials actually incorporated into the
Project or stored on-site, but excluding materials stored elsewhere.
SECTION 3.4. REQUESTS FOR ADVANCES. (a) Each Request for Advance shall
be submitted to the Bank in duplicate and shall be accompanied by the following:
(i) AIA Documents. Application and Certificate for Payment (AIA
Documents G-702 and G-703) signed by the Contractor and properly notarized.
(ii) Development Expense Schedule. An updated copy of the Development
Expense Schedule approved by the Bank showing all changes since the date of the
last advance, accompanied by supporting invoices for costs other than interest
and construction costs.
(iii) (Intentionally left blank).
(iv) Title. In the case of the initial Advance under the Construction
Loan, a mortgagee's title insurance policy (with a multiple indebtedness
mortgage endorsement) issued by or on behalf of First American Title Insurance
Company in the amount of the Construction Loan Commitment in form and substance
satisfactory to Bank. including but not limited to insuring that the lien of the
Mortgage is superior to all materialmen and other mechanics' liens affecting the
Property, and otherwise in form and substance satisfactory to Bank.
(v) Insurance. If required by the Bank, evidence satisfactory to the
Bank that the required insurance remains in full force and effect.
(vi) Lien Waivers. Waivers of liens and receipts for payment by the
Contractor, subcontractors and suppliers.
(vii) Other Documents. The documents listed in Section 8.2 or 8.3, as
the case may be, and such other instruments, documents, certificates,
endorsements, invoices and opinions as the Bank may reasonably require.
(b) In the case of each advance for costs (other than interest and
construction costs), the Borrower shall provide the Bank with copies of all
supporting invoices with respect to such costs.
(c) In the case of advances for construction costs, the Bank must
obtain the report of the Bank's Inspector, which report shall be in form and
substance satisfactory to the Bank and shall state (i) that the work completed
under the Construction Contract as of the date of the inspection has been
performed and constructed in accordance with the Plans, (ii) that the work is
progressing on schedule, and (iii) that the disbursements to date (including the
current Request for Advance) plus retainage correspond with the percentage of
work completed and/or in place as of the Request for Advance. If the Bank's
Inspector does not approve an item of work, the Bank, in the exercise of its
reasonable judgment, may hold back an amount which in the Bank's opinion shall
be sufficient to remedy the item of work until the noncomplying item of work is
remedied.
SECTION 3.5. MODIFIED ADVANCE PROCEDURE. The Bank reserves the right
to modify the foregoing procedures and to disburse construction advances as
follows:
Advances to the Contractor. At its option, the Bank may make any and
all construction advances when due under the Construction Contract directly to
the Contractor or to subcontractors and suppliers through the Contractor, in the
judgment of the Bank, to prevent a default under the Construction Contract For
these purposes,
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Borrower shall irrevocably make, nominate, constitute, and appoint the Bank, in
its place and stead acting through any of its directors or officers, as
Borrower's true and lawful agent and attorney-in-fact with full power of
substitution, to make such construction advances directly to the Contractor,
subcontractors and suppliers; the foregoing mandate or agency shall be an
irrevocable power of attorney, that is, a power coupled with an interest which
cannot be revoked, the Bank having direction and authorization to so make such
construction advances, and no further direction or authorization from the
Borrower shall be necessary to warrant such direct construction advances, and
all such construction advances shall satisfy pro tanto the obligations of the
Bank and shall constitute construction advances hereunder and shall be secured
by the Collateral Documents as fully as if made to Borrower, regardless of the
disposition thereof by the Contractor, subcontractors, or suppliers.
SECTION 3.6. PAYMENTS. The Borrower shall make each payment at the
time and place set forth in the Construction Note. The Borrower hereby
authorizes the Bank, if and to the extent payment is not made when due hereunder
or under the Construction Note, to charge from time to time against the
Borrower's accounts with the Bank any amount so due.
SECTION 3.7. USE OF PROCEEDS. The Borrower shall use the proceeds of
the Construction Loan solely to pay Project Costs.
SECTION 3.8. FEES. Borrower shall pay Bank a commitment fee in the
amount of $26,000.00 for the Construction Loan Commitment, payable by Borrower
to Bank upon Borrower's execution of this Agreement. Also, Borrower agrees to
reimburse Bank the sum of $350 plus expenses for each inspection of the Project
by Bank's Inspector during construction of the Project. In addition, Borrower
agrees to reimburse Bank for its costs (up to the amount of $1,600) associated
with Bank's review of the Plans and related construction documents.
ARTICLE IV
TERM LOAN
SECTION 4.1. THE TERM LOAN. Subject to the terms, conditions and
provisions of this Agreement, Bank agrees to make a term loan (the "Term Loan")
to Borrower in an amount not to exceed the lesser of (1) 80% of Project Cost,
(ii) 75% of the fair market value of the Property and completed Improvements,
based upon an MAI appraisal, (3) $2,600,000.00, or (4) the outstanding principal
balance of the Construction Loan ("Term Loan Commitment"); the proceeds of which
shall be used to repay the Construction Loan.
SECTION 4.2. THE TERM NOTE. Borrower's indebtedness to Bank pursuant to
the Term Loan shall be evidenced by a promissory note of Borrower (said
promissory note being herein referred to as the "Term Note"), payable to the
order of Bank in the principal sum of the amount of the Term Loan Commitment,
with a final maturity of five years after date, and bearing interest at the rate
or rates from time to time in effect pursuant to the terms of Article V hereof
the Term Note. The Term Note shall be due and payable in 60 monthly
installments, based on an eight year amortization.
SECTION 4.3. PREPAYMENTS OF THE TERM LOAN. Borrower shall have the right
to prepay the Term Loan in whole or in part at any time without payment of
premium or penalty, other than for Funding Losses incurred by Bank as a result
thereof.
SECTION 4.4. REQUEST FOR TERM LOAN ADVANCE. In the case of the Term Loan
Advance, the Request for Advance shall be submitted to the Bank in duplicate and
shall be accompanied by the following.
(a) Certificate of Occupancy. A certificate of occupancy issued by the
appropriate governmental authority consenting to the use and occupancy of the
Improvements.
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(b) Certificate of Substantial Completion. A Certificate of
Substantial Completion (AIA Form G-704) signed by the Borrower and the
Contractor.
(c) As-Built Survey. A survey of the Property and all Improvements,
including completed buildings, and pertinent grade and floor elevations,
together with an appropriate endorsement to the Bank's title policy.
(d) Lien and Privilege Certificate. A clear lien and privilege
certificate issued by the appropriate clerk of court or recorder of mortgages
dated after the expiration of the period for filing liens.
(e) Multi-Peril Hazard Insurance. Multi-peril hazard insurance policy
for all of the Improvements as required by the Mortgage.
(f) Inspection. A final report of the Bank's Inspector in form and
substance satisfactory to the Bank stating that the additional Improvements have
been completed under the Construction Contract in accordance with the Plans.
ARTICLE V
INTEREST PAYABLE ON THE LOANS
SECTION 5.1. INTEREST ON THE LOANS.
(a) Subject to the terms and conditions hereof, the Loans may from
time to time be split into (1) LIBOR Rate Tranches, (2) Base Rate Tranches, or
(3) any combination thereof subject to the limitation set forth in Section
5.3(c) of this Article, as determined pursuant to the terms of this Article V.
(b) The unpaid principal amounts of all Loans or Tranches thereof
shall bear interest at one or more of the following interest rates, at
Borrower's option: (i) the Base Rate from time to time in effect, adjusted
daily, plus the Applicable Margin, or (ii) the LIBOR Rate plus the Applicable
Margin then in effect for such Loans as determined by Bank at the time such
LIBOR Rate is determined for any of the Loans or Tranches thereof. Borrower
shall select the interest rate option applicable to each Loan or Tranche upon
the funding of each such Loan or Tranche thereof (and length of the desired
Interest Period if a LIBOR Rate Loan or Tranche is selected), and the selected
interest rate option shall continue as to said Loan or Tranche until changed in
accordance with the following provisions hereof. Borrower shall notify Bank of
their desire to change the interest rate on any of their respective Loans or
Tranches thereof not less than two (2) Business Days prior to the date on which
such change shall be effective. The Borrower may change a Loan or Tranche
thereof from a Base Rate Loan to a LIBOR Rate Loan at any time without payment
of premium or penalty, but the Borrower may change a Loan or Tranche thereof
from a LIBOR Rate Loan to a Base Rate Loan only as of the last day of an
Interest Period without payment of premium or penalty. In the absence of any
specific rate election by the Borrower, all and Tranches thereof shall bear
interest at the Base Rate plus the Applicable Margin for Base Rate Loans.
(c) Borrower shall notify Bank, such notice to be irrevocable, at
least two (2) Business Days prior to the last day of an Interest Period, of the
duration of the next succeeding Interest Period with respect to any LIBOR Rate
Loan or LIBOR Rate Tranche. If Borrower fails to provide such notice to Bank in
a timely manner, such Loan(s) or Tranche(s) shall bear interest at the Base Rate
plus the Applicable Margin for Base Rate Loans at the end of each current
Interest Period.
SECTION 5.2. PAYMENT OF INTEREST ON THE LOANS. Interest on all Base Rate
Loans and LIBOR Rate Loans shall be payable on the last Business Day of each
month and on the final maturity date of each such Loan (each such interest
payment date for any Loan, whether a Base Rate Loan or LIBOR Rate Loan, being
herein referred to as an "Interest Payment Date").
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SECTION 5.3. CONVERSIONS AND CONTINUATIONS; MAXIMUM AMOUNT OF TRANCHES.
(a) The Borrower may elect from time to time to convert a LIBOR Rate
Loan or Tranche to a Base Rate Loan, or a Base Rate Loan to a LIBOR Rate Loan,
by giving the Bank at least two (2) Business Days' prior irrevocable written
notice of such election, provided that any such conversion of a LIBOR Rate Loan
shall only be made on the last day of a Interest Period with respect thereto.
All or any part of an outstanding LIBOR Rate Loan and a Base Rate Loan may be
converted as provided herein, provided that (1) no Base Rate Loan may be
converted into a LIBOR Rate Loan when any Default or Event of Default has
occurred and is continuing, (2) no Loan may be converted into a LIBOR Rate Loan
after the date that is one month prior to the final maturity date of such Loan,
and (5) any such conversion may only be made if, after giving effect thereto,
the provisions of Section 5.3(c) hereof shall not have been contravened.
(b) Any LIBOR Rate Loan may be continued as such upon the expiration
of a Interest Period with respect thereto by the Borrower giving Bank at least
two (2) Business Days' prior irrevocable written notice of such continuance;
provided, that no LIBOR Rate Loan may be continued as such (1) when any Default
or Event of Default has occurred and is continuing and the Bank has determined
that such a continuation is not appropriate or (2) after the date that is one
month prior to the final maturity date of such Loan, and provided, further, that
if the Borrower shall fail to give such written notice or if such continuation
is not permitted, then the Borrower shall be deemed to have converted said LIBOR
Rate Loan to a Base Rate Loan upon the expiration of the then current Interest
Period. Any LIBOR Rate Loan which is continued by Borrower in accordance
herewith will be continued for the same LIBOR Interest Rate Period previously in
effect with respect thereto unless Borrower's notice to continue such LIBOR Rate
Loan provides otherwise or unless such LIBOR Interest Rate Period would extend
beyond the final maturity date of such Loan, in which case the next longest
available LIBOR Interest Rate Period terminating before such date shall apply.
(c) All borrowings, conversions and continuations of the Loans
hereunder and all selection of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, after giving effect
thereto no more than four (4) LIBOR Rate Tranches shall be outstanding as to
Borrower under its Revolving Loans and no more than one (1) LIBOR Rate Tranche
shall be outstanding as to Borrower under its Term Loan.
ARTICLE VI
CERTAIN GENERAL PROVISIONS
SECTION 6.1. PAYMENTS TO BANK. All payments of principal, interest,
commitment fees and any other amounts due hereunder or under any of the other
Related Documents shall be made to the Bank at the Bank's office at 313
Carondelet Street, New Orleans, Louisiana 70130, or at such other location that
the Bank may from time to time designate in writing to Borrower, in each case in
immediately available funds.
SECTION 6.2. NO OFFSET, ETC. All payments by Borrower hereunder and under
any of the other Related Documents shall be made without setoff or counterclaim
and free and clear of and without deduction for any taxes, levies, imposts,
duties, charges, fees, deductions, withholdings, compulsory loans, restrictions
or conditions of any nature now or hereafter imposed or levied by any
jurisdiction or any political subdivision thereof or taxing or other authority
therein unless Borrower is compelled by law to make such deduction or
withholding. If any such obligation is imposed upon Borrower with respect to
any amount payable by it hereunder or under any of the other Loan Documents,
Borrower will pay to the Bank, on the date on which such amount is due and
payable hereunder or under such other Related Document, such additional amount
in Dollars as shall be necessary to enable the Bank to receive the same net
amount which Bank would have received on such due date had no such obligation
been imposed upon Borrower. Borrower will deliver promptly to the Bank
certificates or other valid vouchers for all taxes or other charges deducted
from or paid with respect to payments made by Borrower hereunder or under such
other Loan Documents.
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SECTION 6.3. COMPUTATIONS. All computations of interest on the Loans and
of commitment or other fees shall be assessed utilizing a 360-day daily interest
factor over the number of days in an actual calendar year (365 days or 366 days
in a leap year). Bank shall determine each interest rate applicable to the
Loans in accordance with this Agreement, and Bank's determination of same shall
be conclusive in the absence of manifest error. Except as otherwise provided in
the definition of the term "Interest Period", whenever a payment hereunder or
under any of the other Related Documents becomes due on a day that is not a
Business Day, the due date for such payment shall be extended to the next
succeeding Business Day, and interest shall accrue during such extension. The
outstanding amount of the Loans as reflected on the Bank's books and records
from time to time shall be prima facie evidence of the amounts so outstanding.
SECTION 6.4. INABILITY TO DETERMINE LIBOR RATE. In the event, prior to
the commencement of any Interest Period, the Bank shall determine or be notified
that adequate and reasonable methods do not exist for ascertaining the LIBOR
Rate that would otherwise determine the rate of interest to be applicable to the
Loans during any Interest Period, the Bank shall forthwith give notice of such
determination (which shall be conclusive and binding on Borrower) to Borrower.
In such event the Loans (or any Tranches thereof) will automatically, on the
last day of the then current Interest Period applicable to such Loans or
Tranches, become a Base Rate Loan until the Bank determines that the
circumstances giving rise to such suspension no longer exist, whereupon the Bank
shall so notify Borrower.
SECTION 6.5. ILLEGALITY. Notwithstanding any other provisions herein, if
any present or future law, regulation, treaty or directive or the interpretation
or application thereof shall make it unlawful for the Bank to make available, or
maintain in effect, the LIBOR Rate, the Bank shall forthwith give notice of such
circumstances to Borrower and thereupon any Loans bearing interest at a LIBOR
Rate shall be converted automatically to Base Rate Loans on the last day of the
then current Interest Period applicable to such Loans or within such earlier
period as may be required by law. Borrower hereby agree promptly to pay the
Bank, upon demand by Bank, any additional amounts necessary to compensate the
Bank for any costs incurred by the Bank in making any conversion in accordance
with this paragraph, including any interest or fees payable by the Bank to
lenders of funds obtained by it in order to make available, or maintain in
effect, the LIBOR Rate for the Loans.
SECTION 6.6. ADDITIONAL COSTS, ETC. If any present or future applicable
law, which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to the Bank by any central bank or other fiscal, monetary or
other authority (whether or not having the force of law), shall:
(1) subject the Bank to any tax, levy, impost, duty, charge, fee, deduction
or withholding of any nature with respect to this Agreement, the other
Related Documents or the Indebtedness (other than taxes based upon or
measured by the revenue, income or profits of the Bank), or
(2) materially change the basis of taxation (except for changes in taxes on
revenue, income or profits) of payments to the Bank of the principal of or
the interest on the Indebtedness of any other amounts payable to the Bank
under this Agreement or the other Related Documents, or
(3) impose or increase or render applicable (other than to the extent
specifically provided for elsewhere in this Agreement) any special deposit,
reserve, assessment, liquidity, capital adequacy or other similar
requirements (whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or commitments of an
office of the Bank, or
(4) impose on the Bank any other conditions or requirements with respect to
this Loan Agreement, the other Related Documents, the Indebtedness, or any
class of loans of which the Indebtedness forms a part, and the result of
any of the foregoing is
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(i) to increase the cost to the Bank of making, funding, issuing,
renewing, extending or maintaining the Indebtedness or issuing
Credits, or
(ii) to reduce the amount of principal, interest or other amount
payable to the Bank hereunder on account of such the Indebtedness, or
(iii) to require the Bank to make any payment or to forego any
interest or other sum payable hereunder, the amount of which payment
or foregone interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received by the Bank from
Borrower hereunder, then, and in each such case, Borrower will, upon
demand made by the Bank at any time and from time to time and as often
as the occasion therefor may arise, pay to the Bank such additional
amounts as will be sufficient to compensate the Bank for such
additional cost, reduction, payment or foregoing interest or others
sum.
SECTION 6.7. CAPITAL ADEQUACY. If after the date hereof the Bank
determines that (a) the adoption of or change in any law, governmental rule,
regulations, policy guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (b) compliance by the Bank or any
corporation controlling the Bank with any law, governmental rule, regulation,
policy, guideline or directive (whether or not having the force of law) of any
such entity regarding capital adequacy, has the effect of reducing the return on
the Bank's Loans to a level below that which the Bank could have achieved but
for such adoption, change or compliance (taking into consideration the Bank's
then existing policies with respect to capital adequacy and assuming full
utilization of such entity's capital) by any amount deemed by the Bank to be
material, then the Bank may notify Borrower of such fact. Borrower agrees to
pay the Bank for the amount of such reduction in the return on capital as and
when such reduction is determined upon presentation by the Bank of a
certification in accordance with paragraph Section 6.8.
SECTION 6.8. CERTIFICATE; OPTIONAL RIGHT OF PREPAYMENT. Bank shall provide
Borrower with a certificate setting forth any additional amounts which it
declares to be payable pursuant to Sections 6.6 and 6.7 hereof, and a complete
explanation of such amounts which are due, and each such certificate shall be
conclusive, absent manifest error, that such amounts are due and owing.
Borrower shall have the right, at any time within 90 days of receipt of any such
certificate, to prepay all the Loans (subject to any and all prepayment
penalties and obligations to pay Funding Losses under the terms of this
Agreement) without being obligated to pay any such additional costs set forth in
such certificate, after which Bank shall promptly terminate, discharge and
release of record (at Borrowers' expense) all of its Encumbrances affecting the
Collateral and return all Collateral to Borrower.
SECTION 6.9. INDEMNITY. Borrower agrees to indemnify the Bank and to hold
the Bank harmless from and against any and all Funding Losses or any other loss,
cost or expense that the Bank may sustain or incur as a consequence of (a)
default by Borrower in payment of the principal amount of or any interest on any
Indebtedness as and when due and payable, including any such loss or expense
arising from interest or fees payable by the Bank to lenders of funds obtained
by it in order to maintain its LIBOR Rate in effect for the Loans, or (b) the
making of any payment of Indebtedness on a day that is not the last day of the
applicable Interest Period, including interest or fees payable by the Bank to
lenders of funds obtained by it in order to maintain its LIBOR Rate in effect
for the Loans.
ARTICLE VII
SECURITY FOR THE INDEBTEDNESS
SECTION 7.1. SECURITY. The Indebtedness shall be secured by the following:
(a) the Security Agreement, as amended, and related financing statement;
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(b) the Security Agreement (Fixtures) and related financing statement;
(c) the Mortgage;
(d) the Assignment of Construction Contract and related financing
statement;
(e) the Acknowledgment of Contractor;
(f) the Assignment of Architect's Contract and related financing
statement;
(g) the Acknowledgment of Architect; and
(h) Continuing Guaranty of Borrower's indebtedness to Bank by each
Guarantor.
The Borrower understands and acknowledges that items (a) through (f) constitute
a first priority mortgage lien or security interest, as the case may be, in
favor of Bank.
ARTICLE VIII
CONDITIONS PRECEDENT
SECTION 8.1. GENERAL CONDITIONS PRECEDENT TO ALL LOANS AND CREDITS. The
obligation of Bank to make any Loan or to issue any Credit hereunder shall be
subject to the satisfaction and the continued satisfaction of the following
conditions precedent:
(a) Borrower shall have executed and delivered to Bank this Agreement, the
Collateral Documents, the Notes and all other documents required by this
Agreement, all in form and substance and in such number of counterparts as may
be required by Bank;
(b) The representations and warranties of Borrower as set forth herein, or
in any Related Document furnished to Bank in connection herewith, shall be and
remain true and correct;
(c) Bank shall have received a favorable legal opinion of counsel to
Borrower, in form, scope and substance satisfactory to Bank;
(d) Bank shall have received certified resolutions of Borrower authorizing
the execution of all documents contemplated hereby;
(e) Bank shall have received all fees, charges and expenses which are due
and payable as specified in this Agreement or any Related Document;
(f) No Default or Event of Default shall exist or shall result from the
making of a Loan or the issuance of a Credit;
(g) Borrower shall have provided Bank with all financial statements,
reports and certificates required by this Agreement (including an initial
borrowing base certificate of Borrower in the form required by Section 10.1(e)
which is hereby required as a condition to the initial advance to Borrower
hereunder);
(h) Bank's counsel shall have reviewed the articles of organization and
Operating Agreement of Borrower, and shall be satisfied with the validity, due
authorization and enforceability thereof and of all Related Documents;
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(i) Bank shall have received evidence acceptable to Bank and its counsel
that its Encumbrances affecting the Collateral shall have a first priority
position, subject only to Permitted Encumbrances;
(j) Borrower shall have complied with the procedure set forth in this
Agreement for the making of the particular type of Loan then being applied for;
(k) There shall have occurred no Material Adverse Change;
(l) Bank's due diligence and review of all financial information provided
by Borrower, and Bank's field audit of Borrower's books and records, shall be
satisfactory to Bank; and
(m) Bank shall have received the following executed documents: Agreement
by The CIT Group/Equipment Financing, Inc. that the indebtedness of Borrower
under this Agreement is subject to the Subordination Agreement dated July 19,
1996 by Borrower, Omni Geophysical Corporation, and Bank, as amended; and Second
Amendment to Subordination Agreement by and among Borrower, Omni Geophysical
Corporation, and Bank.
SECTION 8.2. CONDITIONS PRECEDENT TO FUNDING THE INITIAL ADVANCES UNDER
THE CONSTRUCTION LOAN. In addition to the conditions of lending otherwise set
forth above, the obligation of Bank to make the initial advance under the
Construction Loan shall be subject to the satisfaction and the continued
satisfaction of the following conditions precedent:
(a) Appraisal. Delivery to Bank within ninety (90) days of June 13,
1997 of an appraisal of the Property and Improvements based on the Plans and
prepared by an MAI appraiser, addressed to Bank and approved by Bank in minimum
amount required by the Bank. The appraisal will be ordered by Bank at
Borrower's expense;
(b) Architect's Contract. Delivery to Bank of the Architect's
Contract signed by Borrower and Architect;
(c) Building Permit. Delivery to Bank of all building permits and such
other licenses and permits prerequisite to authorize construction of the
Improvements in accordance with the Plans;
(d) Construction Completion Schedules. Schedule of all construction
trades and delivery of materials from beginning of construction through
completion;
(e) Cost Take-Off. A certification by Bank's Inspector that the
Improvements can be completed for the costs set forth in the Development Expense
Schedule and the Schedule of Values;
(f) Inspection. A favorable inspection of the Property by Bank's
Inspector, at Borrower's expense;
(g) Development Expense Schedule. Delivery to Bank of the detailed
line item cost breakdown of land costs, construction costs (hard costs) and all
other related indirect development costs (soft costs);
(h) Disbursement Schedule. Delivery to Bank of the schedule of
Borrower's anticipated advances;
(i) Environmental Engineering Report (Phase 1). Delivery of a report
acceptable to Bank, conducted by an environmental engineer, to determine whether
hazardous substances are or could be present on the Property. The report shall
also indicate location and jurisdiction of the Property, historical ownership
and use of the Property, current use of the Property, any information available
in governmental records on previous investigations and litigation, any adjacent
properties which have been, are or could be potential hazards, locations of
equipment containing PCB's and a conclusion/recommendation statement. The
report will be ordered by Bank at Borrower's expense;
(j) (Intentionally left blank);
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(k) Insurance Policies. Delivery to Bank of the insurance policies or
certificates otherwise required by this Agreement or the Bank, including
builder's risk insurance;
(l) Construction Contract; Payment and Performance Bonds. Delivery to
Bank of the Construction Contract signed by Borrower and Contractor, which
Construction Contract shall have a guaranteed maximum price. Recordation of the
Construction Contract or a Notice of Contract in the mortgage records of
Lafayette Parish, together with statutory form of bond from surety company
approved by the Bank and naming Bank as a co-obligee, guaranteeing that the
Improvements will be completed according to the terms and conditions of the
Construction Contract and that subcontractors and suppliers will be paid;
(m) Plans. Delivery to Bank of the final architectural and engineering
drawings and specifications, including any revisions, amendments and addenda,
required to complete the construction of the Improvements;
(n) Schedule of Values (AIA Form G702-G703). Delivery to Bank of the
line item hard costs breakdown;
(o) Mortgage; No Work Affidavit. Execution by Borrower of the
Mortgage; recordation of the Mortgage and recordation of No Work Affidavit from
licensed architect, surveyor or civil engineer that no work has begun and no
materials have been delivered to the Property;
(p) Soil Test Report. Delivery to Bank of a report by firm acceptable
to Bank, reflecting conditions of the soil at the Property (or other
geotechnical matters), in form and substance satisfactory to the Bank;
(q) Survey. Delivery to Bank of three (3) copies of a survey performed
by a surveyor acceptable to Bank, in form and substance satisfactory to the
Bank;
(r) Utility Letters. Letter from all applicable utility companies that
all of the necessary utilities (water, sewer, gas, electricity and telephone)
for the operation of the Property are or will be available at completion;
(s) Zoning Certificate or Letter. Proof satisfactory to Bank that the
Property is zoned to permit construction of the Improvements in accordance with
the Plans and use of the Improvements for their intended purpose; and
(t) Other Documentation. Delivery to Bank of all documentation
relating to the Project requested by Bank.
SECTION 8.3. CONDITIONS PRECEDENT TO FUNDING ADDITIONAL ADVANCES UNDER THE
CONSTRUCTION LOAN. In addition to the conditions set forth in Section 8.2 above,
the obligation of Bank to make additional advances under the Construction Loan
shall be subject to the satisfaction and the continued satisfaction of the
following conditions precedent:
(a) Review. Review and approval by Bank and Bank's Inspector of the
Plans, the Construction Contract, and the Architect's Contract.
(b) Receipt of Acknowledgments. Receipt by Bank of the executed
Acknowledgment of Architect.
(c) Project Budget. Receipt by Bank of the budget for the Project.
(d) Disbursement Schedule. Receipt by Bank of a schedule detailing
disbursement projections for the Project.
(e) Subcontracts. Receipt by Bank of copies of all major subcontracts
and a listing of all subcontracts and a listing of all subcontractors and
suppliers of materials.
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(f) Lien Waivers. Receipt by Bank of conditional waiver of lien
rights by the Contractor for each advance.
(g) Final Budget. Receipt by Bank of the final construction and
development budget for the Project, containing adequate contingency reserve, all
subject to review and acceptance by Bank.
(h) Mortgagee's Title Policy. Receipt by Bank of a mortgagee's policy
of title insurance insuring the Mortgage as a first priority mortgage lien.
SECTION 8.4. CONDITIONS PRECEDENT TO THE TERM LOAN. In addition to the
conditions of lending otherwise set forth above in Section 8.1, the obligation
of Bank to make the Term Loan hereunder shall be subject to the satisfaction and
the continued satisfaction of the following conditions precedent:
(a) Certificates. A certificate of occupancy issued by the appropriate
governmental authority consenting to the use and occupancy of the Improvements,
and the issuance of all other certificates, inspections, and reports necessary
for occupancy and use of the Improvements;
(b) As-Built Survey. A survey of the Property and all Improvements,
including completed buildings, and pertinent grade and floor elevations;
(c) Lien and Privilege Certificate. A clear lien and privilege
certificate issued by the appropriate clerk of court or recorder of mortgages
dated after the expiration of the period for filing liens;
(d) Multi-Peril Hazard Insurance. Multi-peril hazard insurance policy
for all of the Improvements as required by the Mortgage.;
(e) Inspection. A final report of the Bank's Inspector in form and
substance satisfactory to the Bank stating that the Improvements have been
completed under the Construction Contract in accordance with the Plans, that
direct connection has been made to all utilities set forth in the Plans, and
that the Project is ready for occupancy; and
(f) The Project shall have been completed substantially in accordance
with the Plans, a notice of termination of the Construction Contract shall have
been filed in accordance with La. R.S. 9:4801 et seq., all statutory lien
periods shall have expired, no Encumbrances shall have been filed and not paid
or removed, and the Construction Contract shall have been cancelled from the
mortgage records of Lafayette Parish, Louisiana.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Bank as follows:
SECTION 9.1. CORPORATE AUTHORITY. Borrower is a limited liability
company duly created, validly existing and in good standing under the laws of
its state of organization, and is duly qualified and in good standing as a
foreign limited liability company in all other jurisdictions where the failure
to qualify would have an adverse effect upon its ability to perform its
obligations under this Agreement and all Related Documents. Borrower has the
power to enter into this Agreement, issue the Notes, mortgage and grant the
liens and security interests in the Collateral in the manner and for the purpose
contemplated by the Collateral Documents. Borrower has the corporate power to
perform its obligations hereunder and under the Related Documents. The making
and performance by Borrower of the Related Documents have all been duly
authorized by all necessary corporate action (including all necessary member
action), and do not and will not violate any provision of any law, rule,
regulation, order, writ, judgment, decree, determination or award presently in
effect having applicability to Borrower or the
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articles of organization of Borrower. The making and performance by Borrower of
the Related Documents to which it is a party do not and will not result in a
breach of or constitute a default under any indenture or loan or credit
agreement or any other agreement or instrument to which Borrower is a party or
by which it may be bound or affected, or result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security interest or
other charge or encumbrance of any nature (other than as contemplated by the
Related Documents) upon or with respect to any of the properties now owned or
hereafter acquired by Borrower, and Borrower is not in default under or in
violation of any such order, writ, judgment, decree, determination, award,
indenture, agreement or instrument. Each of the Related Documents to which
Borrower is a party constitutes a legal, valid and binding obligations of
Borrower, enforceable in accordance with its terms
SECTION 9.2. FINANCIAL STATEMENTS. The balance sheet of Borrower at the
date thereof, and the related statements of income and retained earnings for the
year then ended, copies of which have been delivered to Bank, are complete and
correct and fairly present the financial condition of such entities as of the
date or dates thereof. Each of said financial statements were prepared in
conformity with GAAP applied on a basis consistent with the preceding year. No
Material Adverse Change has occurred since said dates in the financial position
or in the results of operations of Borrower in their businesses taken as a
whole.
SECTION 9.3. TITLE TO COLLATERAL. Borrower has good and marketable title
to the Collateral, free and clear of all Encumbrances other than Permitted
Encumbrances. The Collateral Documents constitute legal, valid and perfected
first Encumbrances on the property interests covered thereby, subject only to
Permitted Encumbrances.
SECTION 9.4. LITIGATION. Other than as has been disclosed previously to
Bank in writing, there are no legal actions, suits or proceedings pending or
threatened against or affecting Borrower or any of their properties before any
court or administrative agency (federal, state or local), which, if determined
adversely to any of the Borrower would constitute a Material Adverse Change to
any of them, and there are no judgments or decrees affecting Borrower or its
property (including, without limitation, the Collateral) which are or may become
an Encumbrance against such property.
SECTION 9.5. APPROVALS. No authorization, consent, approval or formal
exemption of, nor any filing or registration with, any governmental body or
regulatory authority (federal, state or local), and no vote, consent or approval
of the members of Borrower is or will be required in connection with the
execution and delivery by Borrower of the Related Documents or the performance
by Borrower of its obligations hereunder and under the other Related Documents.
SECTION 9.6. LICENSES. Borrower possesses adequate franchises, licenses
and permits to own its properties and to carry on its business as presently
conducted.
SECTION 9.7. ADVERSE AGREEMENTS. Borrower is not a party to any
agreement or instrument, nor subject to any charter or other restriction,
materially and adversely affecting the business, properties, assets, or
operations of Borrower or its condition (financial or otherwise), and Borrower
is not in default in the performance, observance or fulfillment of any of the
obligations, covenants or conditions contained in any agreement or instrument to
which it is a party, which default would constitute a Material Adverse Change.
SECTION 9.8. DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
hereunder has occurred or is continuing or will occur as a result of the giving
effect hereto.
SECTION 9.9. EMPLOYEE BENEFIT PLANS. Each employee benefit plan as to
which Borrower may have any liability complies in all material respects with all
applicable requirements of law and regulations, and (i) no Reportable Event (as
defined in ERISA) has occurred with respect to any such plan, (ii) Borrower has
not withdrawn from any such plan or initiated steps to do so, and (iii) no steps
have been taken to terminate any such plan.
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SECTION 9.10. INVESTMENT COMPANY ACT. Borrower is not an "investment
company" or a company "controlled" by an "investment company," within the
meaning of the Investment Company Act of 1940, as amended.
SECTION 9.11. PUBLIC UTILITY HOLDING COMPANY ACT. Borrower is not a
"holding company," or a "subsidiary company" of a "holding company," within the
meaning of the Public Utility Holding Company Act of 1935, as amended.
SECTION 9.12. REGULATIONS G, T AND U. Borrower is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of Governors of the Federal
Reserve System), and none of the proceeds of the Revolving Loans will be used
for the purpose of purchasing or carrying such margin stock.
SECTION 9.13. LOCATION OF BORROWERS' OFFICES, RECORDS, EQUIPMENT AND
INVENTORY. The chief places of business of Borrower, and the offices where
Borrower keep its respective records concerning the Collateral, is 4484
Interstate 49 North, Lafayette, Louisiana 70520.
SECTION 9.14. INFORMATION. All information heretofore or
contemporaneously herewith furnished by Borrower to Bank for the purposes of or
in connection with this Agreement or any transaction contemplated hereby is, and
all information hereafter furnished by or on behalf of Borrower to Bank will be,
true and accurate in every material respect on the date as of which such
information is dated or certified; and none of such information is or will be
incomplete by omitting to state any material fact necessary to make such
information not misleading.
SECTION 9.15. ENVIRONMENTAL MATTERS. Except as may have been disclosed
in writing to Bank prior to the date hereof, no properties of Borrower has ever
been, nor will ever be so long as this Agreement remains in effect, used for the
generation, manufacture, storage, treatment, disposal, release or threatened
release of any hazardous waste or substance, as those terms are defined in the
Environmental Laws, except in compliance with such Environmental Laws. Except
as may have been disclosed in writing by Borrower to Bank, Borrower represents
and warrants that it is in material compliance with all Environmental Laws
affecting it and its properties.
No friable asbestos, or any substance containing asbestos deemed hazardous
by federal or state regulations on the date of this Agreement, has been
installed in the Property. The Property and the Borrower are not in violation of
or subject to any existing, pending, or threatened investigation or inquiry by
any governmental authority or to any remedial obligations under any applicable
laws pertaining to health or the environment (hereinafter sometimes collectively
called "Applicable Environmental Laws"), including without limitation the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended by the Superfund Amendments and Reauthorization Act of 1986 (as
amended, hereinafter called "CERCLA"), the Resource Conservation and Recovery
Act of 1976, as amended by the Used Oil Recycling Act of 1980, the Solid Waste
Disposal Act Amendments of 1980, and the Hazardous and Solid Waste Amendments of
1984 (as amended, hereinafter called "RCRA"), and this representation and
warranty would continue to be true and correct following disclosure to the
applicable governmental authorities of all relevant facts, conditions and
circumstances, if any, pertaining to the Property and known to the Borrower. The
Borrower has not obtained and is not required to obtain any permits, licenses or
similar authorizations to construct, occupy, operate or use any buildings,
improvements, fixtures and equipment forming a part of the Property by reason of
any Applicable Environmental Laws. No hazardous substances or solid wastes have
been disposed of or otherwise released on or to the Property. The use which the
Borrower makes and intends to make of the Property will not result in the
disposal or other release of any hazardous substance or solid waste on or to the
Property. The terms "hazardous substance" and "release" as used in this
Agreement shall have the meanings specified in CERCLA, and the terms "solid
waste" and "disposal" (or "disposed") shall have the meanings specified in RCRA,
provided, however, in the event that the laws of the State of Louisiana
establish a meaning for "hazardous substance," "release," "solid waste," or
"disposal" which is broader than that specified in either CERCLA or RCRA, such
broader meaning shall apply.
SECTION 9.16. SOLVENCY OF BORROWER. Borrower is, and after consummation
of the transactions contemplated by this Agreement (including the making of the
Loans and the issuance of the Credits), and after giving effect to all
obligations incurred by Borrower in connection herewith, will be, Solvent.
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SECTION 9.17. GOVERNMENTAL REQUIREMENTS. The Property is in compliance
with all current governmental requirements affecting the Property, including,
without limitation, all current coastal zone protection, zoning and land use
regulations, building codes and all restrictions and requirements imposed by
applicable governmental authorities with respect to the construction of any
improvements on the Property and the contemplated use of the Property.
SECTION 9.18. CONSTRUCTION. The Borrower hereby represents and warrants
to the Bank (i) that the Plans are in final form and are satisfactory to the
Borrower and the Contractor, and to the extent required by applicable law, to
all applicable governmental authorities; (ii) the Plans, together with the
anticipated use of the Property, do not violate any restrictive covenant
applicable to the Property, (iii) the Borrower has obtained all permits and
approvals necessary to construct the Improvements from all applicable
governmental authorities; (iv) the Borrower, as of June 16, 1997, had not begun
any work on the Improvements, delivered any materials to the Property or in any
way commenced the construction of the Improvements; and (v) the Development
Expense Schedule contains a true and accurate estimate of the cost of the
Improvements.
SECTION 9.19. EXISTING LEASE. Borrower represents and warrants that it
has a lease affecting Borrower's present business location located on I-49 North
in Lafayette Parish, Louisiana which extends through June of 1998.
SECTION 9.20. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Borrower
understands and agrees that Bank is relying upon the above representations and
warranties in making the Loans to Borrower. Borrower further agrees that the
foregoing representations and warranties shall be continuing in nature and shall
remain in full force and effect until such time as the Indebtedness shall be
paid in full, or until this Agreement shall be terminated, whichever is the last
to occur.
ARTICLE X
AFFIRMATIVE COVENANTS
In addition to the covenants contained in the Collateral Documents, which
covenants are hereby ratified and confirmed by Borrower, Borrower covenants and
agrees as follows:
SECTION 10.1. FINANCIAL STATEMENTS. Borrower will furnish or cause
to be furnished to Bank:
(a) within thirty (30) days following the end of each calendar month,
financial statements consisting of the balance sheet of Borrower as of
the end of such month, and a statement of income and statement of cash
flow of Borrower for such month and for the fiscal year through such
month, all certified by the chief financial officer of Borrower as
having been prepared in accordance with GAAP consistently applied,
(b) as soon as available and in any event within ninety (90) days
following the close of fiscal year of Borrower, audited, consolidated
and consolidating financial statements of Borrower consisting of a
balance sheet as at the end of such fiscal year and statements of
income, and statement of cash flow for such fiscal year, setting forth
in each case in comparative form the corresponding figures for the
preceding fiscal year, certified by independent public accountants of
recognized standing acceptable to Bank,
(c) within thirty (30) days after the end of each calendar quarter, a
certificate signed by the chief financial officer of Borrower,
certifying that he has reviewed this Agreement and to the best of his
knowledge no Default or Event of Default has occurred, or if such
Default or Event of Default has occurred, specifying the nature and
extent thereof, and that all financial covenants in this Agreement
have been met, and providing a computation of all financial covenants
contained herein,
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(d) within fifteen (15) days following the end of each calendar month, an
aging of Borrower's Receivables and accounts payable, together with a
certificate executed by the chief financial officer of Borrower,
identifying the amount of Qualified Receivables of Borrower as of the
end of such month, in such form and containing such representations
and warranties regarding the Receivables as Bank may reasonably
require,
(e) on the last day of each month, and not less than weekly during each
calendar month, and at any time upon the request by Bank, a borrowing
base certificate showing Borrower's total Receivables, minus
ineligibles, total Qualified Receivables, in form and substance
acceptable to Bank, accompanied by such supporting documents as may be
required by Bank, with Borrower's borrowing base certificate to be
certified by the chief financial officer of Borrower,
(f) such other necessary financial information concerning the Borrowers as
Bank may reasonably request from time to time.
SECTION 10.2. NOTICE OF DEFAULT; LITIGATION; ERISA MATTERS. Borrower will
give written notice to Bank as soon as reasonably possible and in no event more
than five (5) Business Days of (i) the occurrence of any Default or Event of
Default hereunder of which it has knowledge or should have knowledge, (ii) the
filing of any actions, suits or proceedings against Borrower in any court or
before any governmental authority or tribunal of which they have knowledge or
should have knowledge which could cause a Material Adverse Change with respect
to Borrower, (iii) the occurrence of a reportable event under, or the
institution of steps by Borrower to withdraw from, or the institution of any
steps to terminate, any employee benefit plan as to which Borrower may have
liability, or (iv) the occurrence of any other action, event or condition of any
nature of which they have knowledge which may cause, or lead to, or result in,
any Material Adverse Change to Borrower.
SECTION 10.3. MAINTENANCE OF EXISTENCE, PROPERTIES AND LIENS. Borrower
will (i) continue to engage in the business presently being operated by it; (ii)
maintain its existence and good standing in each jurisdiction in which it is
required to be qualified; (iii) keep and maintain all franchises, licenses and
properties necessary in the conduct of its business in good order and condition;
(iv) duly observe and conform to all material requirements of any governmental
authorities relative to the conduct of its business or the operation of its
properties or assets; and (v) maintain in favor of Bank a first perfected lien
and security interest in the Collateral, subject only to other Permitted
Encumbrances.
SECTION 10.4. COLLATERAL SCHEDULES AND LOCATIONS. As often as Bank shall
reasonably require, Borrower shall deliver to Bank schedules of such Collateral,
including such information as Bank may require, including without limitation
names and addresses of account debtors and agings of Receivables and General
Intangibles.
SECTION 10.5. TAXES. Borrower shall pay or cause to be paid when due, all
taxes, local and special assessments, and governmental and other charges of
every type and description, that may from time to time be imposed, assessed and
levied against it or its properties. Borrower further agrees to furnish Bank
with evidence that such taxes, assessments, and governmental and other charges
due by Borrower has been paid in full and in a timely manner. Borrower may
withhold any such payment or elect to contest any lien if Borrower is in good
faith conducting an appropriate proceeding to contest the obligation to pay and
so long as Bank's interest in the Collateral is not jeopardized.
SECTION 10.6. REQUIRED INSURANCE. Borrower shall maintain insurance with
insurance companies in such amounts and against such risks as is usually carried
by owners of similar businesses and properties in the same general areas in
which each of them operates, and as shall be reasonably satisfactory to Bank.
With respect to the Project, Borrower agrees to provide Bank with the following
types of insurance coverages, in addition to any additional coverages required
by the Mortgage, in each case with Bank named as loss payee and/or additional
insured, as appropriate:
(i) During the course of any construction, renovation or repair
of the Improvements, builder's all risk insurance coverage against
"all risks of
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physical loss", including loss by fire, theft, vandalism, malicious
mischief, explosion, windstorm, collapse, sprinkler leakage and
extended coverage for one hundred percent (100%) of replacement cost.
(ii) Multi-peril hazard policies of insurance against loss or
damage by fire, theft, vandalism, malicious mischief, explosion,
windstorm, collapse and extended coverage for one hundred percent
(100%) of replacement cost.
(iii) To the extent required by Bank, policies of insurance
against loss by flood in an amount equal to one hundred percent (100%)
of replacement cost or the maximum amount of flood insurance
available, whichever is the lesser.
(iv) Policies of comprehensive general liability insurance,
insuring on an occurrence basis against claims for bodily injury,
including personal injury or death, occurring upon or in the
Improvements, or the elevators located on the Improvements, or on or
in the streets adjoining the Improvements, to afford protection to the
limit of not less than $5,000,000.00 in the event of bodily injury,
personal injury, or death of any number of persons or of damage to
property arising out of one occurrence.
(v) Business interruption insurance for a period of six (6)
months in such amounts as are satisfactory to Bank.
(vi) Worker's Compensation Insurance for all contractors,
subcontractors and the Borrower to the fullest extent required by law.
(vii) Such other insurance on or with respect to the Property
against other insurable hazards or casualties which at the time are
commonly insured against in the case of premises similarly situated,
due regard being given to the height and type of Improvements, their
construction, location, use and occupancy; and any replacements or
substitutions of such insurance, or additions to such insurance, and
in such amounts as may from time to time be required by Bank.
Borrower agrees to provide Bank with originals or certified copies of such
policies of insurance. Borrower further agrees to promptly furnish Bank with
copies of all renewal notices and, if requested by Bank, with copies of receipts
for paid premium. Borrower shall provide Bank with originals or certified
copies of all renewal or replacement policies of insurance no later than fifteen
(15) days before any such existing policy or policies should expire. If
Borrower's insurance policies required hereunder and renewals thereof are held
by another person, Borrower agrees to supply original or certified copies of the
same to Bank within the time periods required above.
SECTION 10.7. PERFORMANCE OF LOAN DOCUMENTS. Borrower shall duly and
punctually pay and perform each of its obligations under the Notes, under this
Agreement (as the same may at any time be amended or modified and in effect) and
under each of the Related Documents to which it is a party, in accordance with
the terms hereof and thereof.
SECTION 10.8. COMPLIANCE WITH ENVIRONMENTAL LAWS. Borrower shall comply
with and shall cause all of its employees, agents, invitees or sublessees to
comply with all Environmental Laws with respect to the disposal of industrial
refuse or waste, and/or the discharge, procession, treatment, removal,
transportation, storage and handling of hazardous or toxic wastes and
substances, and pay immediately when due the cost of removal of any such waste
or substances from, and keep their properties free of any lien imposed pursuant
to any such laws, rules, regulations or orders.
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Borrower shall give notice to Bank as soon as reasonably possible and in no
event more than five (5) days after it receives any compliance orders,
environmental citations, or other notices from any governmental entity relating
to any environmental condition relating to its properties or elsewhere for which
it may have legal responsibility with a full description thereof; Borrower
agrees to take any and all reasonable steps, and to perform any and all
reasonable actions necessary or appropriate to promptly comply with any such
citations, compliance orders or Environmental Laws requiring Borrower to remove,
treat or dispose of such hazardous materials, wastes or conditions at the sole
expense of Borrower, to provide Bank with satisfactory evidence of such
compliance; provided, however, that nothing contained herein shall preclude
Borrower from contesting any such compliance orders or citations if such contest
is made in good faith, appropriate reserves are established for the payment for
the cost of compliance therewith, and Bank's security interest in any such
property affected thereby (or the priority thereof) is not jeopardized.
Regardless of whether any Event of Default hereunder shall have occurred
and be continuing, Borrower (i) releases and waives any present or future claims
against Bank for indemnity or contribution in the event Borrower becomes liable
for remediation costs under and Environmental Laws, and (ii) agrees to defend,
indemnify and hold harmless Bank from any and all liabilities (including strict
liability), actions, demands, penalties, losses, costs or expenses (including,
without limitation, reasonable attorneys fees and remedial costs), suits,
administrative orders, agency demand letters, costs of any settlement or
judgment and claims of any and every kind whatsoever which may now or in the
future (whether before or after the termination of this Agreement) be paid,
incurred, or suffered by, or asserted against Bank by any person or entity or
governmental agency for, with respect to, or as a direct or indirect result of,
the presence on or under, or the escape, seepage, leakage, spillage, discharge,
emission, or release from or onto the property of Borrower of any hazardous
materials, wastes or conditions regulated by any Environmental Laws,
contamination resulting therefrom, or arising out of, or resulting from, the
environmental condition of such property or the applicability of any
Environmental Laws relating to hazardous materials (including, without
limitation, CERCLA or any so called federal, state or local "super fund" or
"super lien" laws, statute, ordinance, code, rule, regulation, order or decree)
regardless of whether or not caused by or within the control of Bank (the costs
and/or liabilities described in (i) and (ii) above being hereinafter referred to
as the "Liabilities"). The covenants and indemnities contained in this Section
10.8 shall survive termination of this Agreement.
SECTION 10.9. FURTHER ASSURANCES. Borrower will, at any time and from
time to time, execute and deliver such further instruments and take such further
action as may reasonably be requested by Bank, in order to cure any defects in
the execution and delivery of, or to comply with or accomplish the covenants and
agreements contained in this Agreement or the Collateral Documents.
SECTION 10.10. FINANCIAL COVENANTS. Borrower shall comply with the
following covenants and ratios:
(a) Borrower shall at all times maintain a Debt-to-Worth Ratio of not more
than 2.75 through December 31, 1997 and a Debt-to-Worth Ratio of 2.5
thereafter.
(b) Borrower shall at all times maintain working capital of greater than
$1,000,000.00. For the purposes hereof, "working capital" shall mean
current assets less current liabilities.
(c) Borrower shall maintain a ratio at the end of each calendar quarter of
(i) the excess of net income for the preceding four calendar quarters
(before interest expense, income taxes, depreciation and amortization)
after dividends for the preceding four calendar quarters to (ii) to
the sum of current maturities of long term debt plus total interest
expense for the preceding four calendar quarters, of not less than 1.5
to 1. For the calendar quarters ending prior to September 30, 1998,
net income for the complete calendar quarters after the date of this
Agreement (before interest expense, income taxes, depreciation and
amortization) shall be annualized to determine such net income.
SECTION 10.11. OPERATIONS. Borrower shall conduct its business affairs in
a reasonable and prudent manner and in compliance with all applicable federal,
state and municipal laws, ordinances, rules and regulations respecting its
properties, charters, businesses and operations, including compliance with all
minimum funding
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standards and other requirements of ERISA of 1974, and other laws applicable to
any employee benefit plans which they may have.
SECTION 10.12. CHANGE OF LOCATION. Borrower shall, within ten (10)
Business Days prior to any such addition or change, notify Bank in writing of
any proposed additions to or changes in the location of their business.
SECTION 10.13. EMPLOYEE BENEFIT PLANS. So long as this Agreement remains
in effect, Borrower will maintain each employee benefit plan as to which they
may have any liability, in compliance with all applicable requirements of law
and regulations
SECTION 10.14. DEPOSIT ACCOUNTS. Borrower will maintain all corporate
deposit, disbursement, construction, reserve and operating accounts (including
separate tenant deposit accounts) with the Bank.
SECTION 10.15. DOMINION ACCOUNT. Borrower has established a lockbox with
Bank into which all proceeds of Receivables of Borrower shall be remitted.
Borrower will promptly direct its customers to remit payments of all of their
accounts receivable to such lockbox. Remittances received under the lockbox
arrangement will be deposited by the Bank to the demand deposit account
maintained by Borrower with the Bank (the "Dominion", account number 812378635).
Bank shall have dominion over all funds in the Dominion Account. Borrower shall
deposit all payments of accounts receivable which are not remitted by customers
directly to the Dominion Account into the Dominion Account on the date such
remittance is received. Amounts deposited into the Dominion Account will be
used for daily loan payments towards the Revolving Note as described in Section
2.2.6. Borrower will have no access to any funds in the Dominion Account for so
long as this Agreement remains in effect, the Revolving Note has not been paid
in full, or any Credits or other Indebtedness of Borrower remains outstanding.
SECTION 10.16. FIELD AUDITS; OTHER INFORMATION. Borrower shall allow
during normal business hours to perform field audits from time to time.
Borrower shall pay all costs and expenses associated with such field audits.
Borrower will provide Bank with such other information as Bank may reasonably
request from time to time.
SECTION 10.17. CONSTRUCTION COVENANTS. In addition to the covenants of the
Borrower otherwise set forth in this Agreement, the Borrower hereby agrees that,
so long as any part of the Construction Loan is outstanding, unless compliance
shall have been waived in writing by the Bank, the Borrower shall at all times
comply with the following covenants.
(a) COMMENCEMENT AND COMPLETION OF IMPROVEMENTS. Prior to the
recordation of the Mortgage, no work of any kind (including the destruction or
removal of any existing improvements, site work, draining, or fencing of the
Property) shall have commenced or shall have been performed on the Property
(except for clearing, leveling, grading, test piling, cutting or removal of
trees and debris, placing of fill dirt, leveling of the land surf ace), no
equipment or material shall have been delivered to or upon the Property for any
purpose whatsoever, and no contract (or memorandum or affidavit thereof) for the
supplying of labor, materials, or services for the construction of the
Improvements shall have been recorded in the mechanic's lien or other
appropriate records in the parish where the Property is located. The Borrower
will (i) commence construction on or after June 16, 1997; (ii) cause the
construction of the Improvements to be prosecuted with diligence and continuity
in accordance with the Plans; (iii) promptly correct or cause to be corrected
any defect in the Improvements, any material departure in the construction of
the Improvements from the Plans, governmental requirements, or any encroachment
by any part of the Improvements or any other structure located on the Property
on any building line, easement, property line, or restricted area; (iv)
guarantee to the Bank that the Improvements will be completed in good and
workmanlike manner in accordance with the Plans; (v) promptly notify Bank of any
lien filed by the Contractor, any subcontractor, supplier or laborer or of
Borrower's knowledge that the Contractor or any subcontractor, has failed to pay
amounts due following the funding of any Advance for the payment of same; and
(vi) complete the construction of the Improvements in accordance with the Plans
on or before April 13, 1998. Notwithstanding anything to the contrary in this
Agreement, the Improvements shall not be deemed to have been completed until (y)
they shall contain all equipment, furnishings and fixtures required for the use
and operation of the additional Improvements and/or which may be required by
governmental authorities and/or
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by any law, regulation or rule of any governmental authority; and (z) permanent
certificates of occupancy and all other necessary certificates, licenses,
consents and other approvals of governmental authorities have been issued or
made with respect to the Improvements.
(b) SURVEY. In addition to any survey required by this Agreement, the
Borrower will furnish the Bank with three copies of each of the following
surveys.
(i) FOUNDATION SURVEY. Within ten days after completion of the
foundation of the additional Improvements, the Borrower shall furnish the Bank
with a survey showing all existing on-site Improvements, plus the location and
dimensions of perimeter foundations and high point relative elevation of
adjacent streets to ensure compliance with final working drawings and set-back
lines of each building and first floor elevations, together with an appropriate
endorsement to the Bank's title policy.
(ii) AS-BUILT SURVEY. Upon completion of the Improvements, the
Borrower shall furnish the Bank with a survey delineating all completed
Improvements on the Property and pertinent grade and floor elevations, together
with an appropriate endorsement to the Bank's title policy.
(c) CHANGE ORDERS. The Borrower will not (i) cause or permit any
changes in the Plans affecting the Improvements except pursuant to a change
order approved in writing by the Bank, the Bank's Inspector, the Contractor and
the Architect, or (ii) make any change in the Construction Contract or any
subcontract without the prior written approval of Bank.
(d) SUBCONTRACTOR VERIFICATIONS. Within ten days after request by the
Bank, the Borrower shall furnish a certificate, in form prescribed by the Bank,
signed by all subcontractors and material suppliers as to the existence, amount
and retainage of any subcontracts and materials supplies agreements.
(e) FEES AND EXPENSES OF BANK'S INSPECTOR. The Borrower shall pay the
fees and expenses of the Bank's Inspector. Also, Borrower agrees to reimburse
Bank the sum of $350 plus expenses for each annual inspection of the Property by
Bank or its designated inspector.
ARTICLE XI
NEGATIVE COVENANTS
In addition to the negative covenants contained in the Collateral
Documents, which covenants are hereby ratified and confirmed by Borrower,
covenants and agrees as follows:
SECTION 11.1. LIMITATIONS ON FUNDAMENTAL CHANGES. Borrower shall not
change the nature of its business, grant credit terms to its customers on terms
different than those presently granted to customers, or form any subsidiary
without the prior written consent of the Bank, nor shall Borrower enter into any
transaction of merger or consolidation, or liquidate or dissolve itself (or
suffer any liquidation or dissolution).
SECTION 11.2. DISPOSITION OF ASSETS. Borrower shall not convey, sell,
lease, assign, transfer or otherwise dispose of, any of its property, business
or assets whether now owned or hereafter acquired except property disposed of in
the ordinary course of business, provided that, if such property is to be
replaced, the net cash proceeds of each such transaction are applied to obtain a
replacement item or items within 30 days of the disposition thereof.
SECTION 11.3. RESTRICTED PAYMENTS. Borrower shall not declare or pay (or
set aside reserves for payment of) any dividends or distributions, make any
member, shareholder or affiliate loans in excess of amounts required to
reimburse members for the income taxes which they will incur on their share of
the income of Borrower, pay
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excessive member compensation or enter into any similar transactions with the
members of Borrower without the prior written consent of the Bank.
SECTION 11.4. ENCUMBRANCES. Borrower shall not create, incur, assume or
permit to exist any Encumbrances on any of its property now owned or hereafter
acquired, except for the following (hereinafter referred to as the "Permitted
Encumbrances"):
(a) Encumbrances for taxes, assessments, or other governmental charges not
yet due or which are being contested in good faith by appropriate
action promptly initiated and diligently conducted, if such reserves
as shall be required by GAAP shall have been made therefor;
(b) Encumbrances of landlords, vendors, carriers, warehousemen,
mechanics, laborers and materialmen arising by law in the ordinary
course of business for sums either not yet due or being contested in
good faith by appropriate action promptly initiated and diligently
conducted, if such reserve as shall be required by generally accepted
accounting principles shall have been made therefor (provided,
however, that no such Encumbrance of this nature shall constitute a
Permitted Encumbrance to the extent it affects the Project until it
has been bonded to the satisfaction of Bank);
(c) Inchoate liens arising under ERISA to secure the contingent
liabilities, if any, permitted by this Agreement; or
(d) The Collateral Documents and any other liens in favor of the Bank to
secure the Indebtedness of the Borrower to the Bank.
SECTION 11.5. DEBTS, GUARANTIES AND OTHER OBLIGATIONS. Borrower will not
incur, create, assume or in any manner become or be liable in respect of any
Debt direct or contingent, except for:
(a) The Indebtedness to the Bank under this Agreement;
(b) Trade payables or operating and facility leases from time to time
incurred in the ordinary course of business;
(c) Taxes, assessments or other government charges which are not yet due
or are being contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserve as shall be
required by generally accepted accounting principles shall have been
made therefor; or
(d) Additional Debt up to $10,000,000.00 the proceeds of which were used
to acquire capital assets.
SECTION 11.6. INVESTMENTS, LOANS AND ADVANCES. The Borrower will not make
or permit to remain outstanding any loans or advances to or investments in any
Person, except for:
(a) Investments in direct obligations of the United States of America or
any agency thereof;
(b) Investments in either certificates of deposit of maturities less than
one year, issued by the Bank, or if the Bank is not substantially
competitive (in terms of certificate of deposit interest rate for
comparable amounts) with other banks (having a credit rating
acceptable to the Bank) certificates of deposit of maturities less
than one year, issued by one or more of such other banks;
(c) Investments in commercial paper of maturities less than one year with
the best rating by Standard & Poors, Moody's Investors Service, Inc.,
or any other rating agency satisfactory to the Bank;
(d) Routine advances to employees made in the ordinary course of business;
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(e) Investments in the stock of domestic corporations (who conduct their
business in the United States) up to the sum of $5,000,000.00 in the
aggregate; and
(f) Investment in the stock of American Aviation, Inc. or in a new
subsidiary formed to acquire the assets of American Aviation, Inc.
SECTION 11.7. CHANGES IN MANAGEMENT AND CONTROL. The identity of members,
the officers or the managers of Borrower will not change without the prior
written consent of Bank. David Jeansonne will remain in a senior management
position until at least July 31, 2002.
SECTION 11.8. OTHER AGREEMENTS. Borrower will not enter into any
agreement containing any provision which would be violated or breached by the
performance of its obligations hereunder or under any instrument or document
delivered or to be delivered by it hereunder or in connection herewith.
SECTION 11.9. TRANSACTIONS WITH AFFILIATES. Borrower will not enter into
any agreement with any affiliate of Borrower except to the extent that such
agreements are commercially reasonable which provide for terms which would
normally be obtainable in an arm's length transaction with an unrelated third
party.
SECTION 11.10. FOREIGN PROJECTS. Borrower will not enter into any foreign
projects, without first obtaining Bank's prior written consent.
ARTICLE XII
EVENTS OF DEFAULT
SECTION 12.1. EVENTS OF DEFAULT. The occurrence of any one or more of
the following shall constitute an Event of Default:
DEFAULT UNDER THE INDEBTEDNESS. Should Borrower default in the payment of
principal or interest under the Indebtedness of Borrower.
DEFAULT UNDER THIS AGREEMENT. Should Borrower violate or fail to comply
fully with any of the terms and conditions of, or default under, this Agreement,
and such default not be cured within ten days of the occurrence thereof
(provided, however, that no cure period shall be available for a default in the
obligation to maintain insurance coverages required hereby).
DEFAULT UNDER OTHER AGREEMENTS. Should any event of default occur or
exist under any of the Related Documents or should Borrower violate, or fail to
comply fully with, any terms and conditions of any of the Collateral Documents
or Related Documents, and such default not be cured within ten days of the
occurrence thereof (provided, however, that no cure period shall be available
for a default in the obligation to maintain insurance coverages required
thereby).
OTHER DEFAULTS IN FAVOR OF BANK. Should Borrower default under any other
loan, extension of credit, security agreement, or other obligation in favor of
Bank and fail to cure same in accordance with any applicable cure periods.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower default under any
loan, extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person and fail to cure
same in accordance with any applicable cure periods.
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INSOLVENCY. The following occurrences, in addition to the failure or
suspension of Borrower, shall constitute an Event of Default hereunder:
(a) Filing by Borrower of a voluntary petition or any answer seeking
reorganization, arrangement, readjustment of its debts or for any
other relief under any applicable bankruptcy act or law, or under any
other insolvency act or law, now or hereafter existing, or any action
by Borrower consenting to, approving of, or acquiescing in, any such
petition or proceeding; the application by Borrower for, or the
appointment by consent or acquiescence of, a receiver or trustee of
any of the Borrower for all or a substantial part of the property of
any such person; the making by Borrower, of an assignment for the
benefit of creditors; the inability of Borrower or the admission by
Borrower in writing, of its inability to pay its debts as they mature
(the term "acquiescence" means the failure to file a petition or
motion in opposition to such petition or proceeding or to vacate or
discharge any order, judgment or decree providing for such appointment
within sixty (60) days after the appointment of a receiver or
trustee); or
(b) Filing of an involuntary petition against Borrower in bankruptcy or
seeking reorganization, arrangement, readjustment of its debts or for
any other relief under any applicable bankruptcy act or law, or under
any other insolvency act or law, now or hereafter existing and such
petition remains undismissed or unanswered for a period of sixty (60)
days from such filing; or the insolvency appointment of a receiver or
trustee of Borrower for all or a substantial part of the property of
Borrower and such appointment remains unvacated or unopposed for a
period of sixty (60) days from such appointment, execution or similar
process against any substantial part of the property of Borrower and
such warrant remains unbonded or undismissed for a period of sixty
(60) days from notice to Borrower of its issuance.
DISSOLUTION PROCEEDINGS. Should proceedings for the dissolution or
appointment of a liquidator of Borrower be commenced.
FALSE STATEMENTS. Should any representation or warranty of Borrower made
in connection with the Indebtedness prove to be incorrect or misleading in any
material respect when made or reaffirmed.
MATERIAL ADVERSE CHANGE. Should a Material Adverse Change with respect to
Borrower occur at any time and not be cured within ten days of the occurrence
thereof.
Upon the occurrence of an Event of Default, all Commitments of Bank under
this Agreement will terminate immediately (including any obligation to make any
further Revolving Loans, to issue any further Credits to or for the account of
any of Borrower, to make any further Construction Loans or to fund the Term
Loan), and, at Bank's option, the Notes and all Indebtedness of Borrower will
become immediately due and payable, all without notice of any kind to Borrower,
except that in the case of type described in the "Insolvency" subsection above,
such acceleration shall be automatic and not optional.
Upon the occurrence of an Event of Default, Bank may proceed to realize
upon the Collateral under the terms of the Collateral Documents and exercise
any other rights which it has by law or contract (which rights shall be
cumulative in nature).
SECTION 12.2. WAIVERS BY BORROWER. Except as otherwise provided for in
this Agreement and by applicable law, Borrower waives (i) presentment, demand
and protest and notice of presentment, dishonor, notice of intent to accelerate,
notice of acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Bank on which Borrower may in any way be liable and hereby
ratify and confirm whatever Bank may do in this regard, (ii) all rights to
notice and a hearing prior to Bank's taking possession or control of, or to
Bank's replevy, attachment or levy upon, the Collateral or any bond or security
which might be required by any court prior to allowing Bank to exercise any of
its remedies, and (iii) the benefit of all valuation, appraisal and exemption
laws. Borrower acknowledges that it has been advised by counsel of their choice
with
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respect to this Agreement, the other Collateral Documents, and the transactions
evidenced by this Agreement and other Collateral Documents.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. NO WAIVER; MODIFICATION IN WRITING. No failure or
delay on the part of Bank in exercising any right, power or remedy hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. No amendment,
modification or waiver of any provision of this Agreement or of the Notes, nor
consent to any departure by Borrower therefrom, shall in any event be effective
unless the same shall be in writing signed by or on behalf of Bank and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. No notice to or demand on Borrower in any
case shall entitle Borrower to any other or further notice or demand in similar
or other circumstances.
SECTION 13.2. PAYMENT ON NON-BUSINESS DAY. Whenever any payment to
be made hereunder or on account of the Note shall be scheduled to become due on
a day which is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in computing interest and fees payable hereunder or on account of the
Notes.
SECTION 13.3. ADDRESSES FOR NOTICES. All notices and communications
provided for hereunder shall be in writing and, shall be mailed, by certified
mail, return receipt requested, or delivered as set forth below unless any
person named below shall notify the others in writing of another address, in
which case notices and communications shall be mailed, by certified mail, return
receipt requested, or delivered to such other address.
If to Bank:
Hibernia National Bank
P. O. Box 61540
New Orleans, LA 70161
Attention: Energy and Maritime Department
If to Borrower:
Omni Geophysical, L.L.C.
4484 Interstate 49 North
Lafayette, LA 70520
Attn: Roger E. Thomas, Manager
SECTION 13.4. FEES AND EXPENSES. Borrower agrees to pay all fees, costs
and expenses of Bank in connection with the preparation, execution and delivery
of this Agreement, and all Related Documents to be executed in connection
herewith and subsequent modifications or amendments to any of the foregoing,
including without limitation, the reasonable fees and disbursements of counsel
to Bank, and to pay all costs and expenses of Bank in connection with the
enforcement of this Agreement, the Notes or the other Related Documents,
including reasonable legal fees and disbursements arising in connection
therewith. Borrower also agrees to pay, and to save Bank harmless from any
delay in paying stamp and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of this
Agreement, the Notes, the other Related Documents, or any modification thereof.
SECTION 13.5. SECURITY INTEREST AND RIGHT OF SET-OFF. Bank shall have a
continuing security interest in, as well as the right to set-off the obligations
of Borrower hereunder against, all funds which Borrower may maintain
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on deposit with Bank (with the exception of funds deposited in Borrower's
accounts in trust for third parties or funds deposited in pension accounts,
IRA's, Keogh accounts and All Saver Certificates), and Bank shall have a lien
upon and a security interest in all property of Borrower in Bank's possession or
control which shall secure the Indebtedness of Borrower.
SECTION 13.6. WAIVER OF MARSHALING. Borrower shall not at any time
hereafter assert any right under any law pertaining to marshaling (whether of
assets or liens) and Borrower expressly agrees that Bank may execute or
foreclose upon the Collateral in such order and manner as Bank, in its sole
discretion, deems appropriate.
SECTION 13.7. GOVERNING LAW. This Agreement and the Notes shall be
deemed to be contracts made under the laws of the State of Louisiana and for all
purposes shall be construed in accordance with the laws of said State.
SECTION 13.8. CONSENT TO LOAN PARTICIPATION. Borrower agrees and
consents to Bank's sale or transfer, whether now or later, of one or more
participation interests in the Indebtedness of the Borrower arising pursuant to
this Agreement to one or more purchasers, whether related or unrelated to Bank.
Bank may provide, without any limitation whatsoever, to any one or more
purchasers, or potential purchasers, any information or knowledge Bank may have
about Borrower or about any other matter relating to such Indebtedness, and
Borrower hereby waives any rights to privacy it may have with respect to such
matters. Borrower additionally waives any and all notices of sale of
participation interests, as well as all notices of any repurchase of such
participation interests. Borrower also agrees that the purchasers of any such
participation interest will be considered as the absolute owners of such
interests in such Indebtedness.
SECTION 13.9. WAIVER OF JURY TRIAL; SUBMISSION TO JURISDICTION. (a)
BORROWER AND BANK HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
WHICH BORROWER AND BANK MAY BE PARTIES, ARISING OUT OF OR IN ANY WAY PERTAINING
TO (i) THE NOTES, (ii) THIS AGREEMENT, (iii) THE COLLATERAL DOCUMENTS OR (iv)
THE COLLATERAL. IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A
WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH ACTIONS OR
PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS
AGREEMENT. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE
BORROWER AND THE BANK, AND THE BORROWER AND THE BANK HEREBY REPRESENT THAT NO
REPRESENTATIONS OF FACT OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE
THIS WAIVER OF TRIAL BY JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE
BORROWER AND THE BANK EACH FURTHER REPRESENT THAT IT HAS BEEN REPRESENTED IN THE
SIGNING OF THIS AGREEMENT AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL
COUNSEL, SELECTED OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.
(b) THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE
STATE COURTS OF LOUISIANA AND THE FEDERAL COURTS IN LOUISIANA AND AGREE THAT
ANY ACTION OR PROCEEDING ARISING OUT OF OR BROUGHT TO ENFORCE THE PROVISIONS OF
THE NOTES, THIS AGREEMENT AND/OR THE COLLATERAL DOCUMENTS MAY BE BROUGHT IN ANY
COURT HAVING SUBJECT MATTER JURISDICTION.
SECTION 13.10. SEVERABILITY. If a court of competent jurisdiction finds
any provision of this Agreement to be invalid or unenforceable as to any person
or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Agreement in all
other respects shall remain valid and enforceable.
SECTION 13.11. HEADINGS. Article and Section headings used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement.
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SECTION 13.12. PURPOSES OF INSPECTIONS. The sole purpose and function of
the provisions of this Agreement authorizing the Bank, the Bank's Inspector, or
any agent, officer, employee or representative of the Bank to enter upon the
Property to make inspections of the Improvements, materials, Plans, shop
drawings, workmanship and construction of the Improvements or to enter into
possession of the Property upon any Default and perform any work necessary or
desirable to complete the Improvements and to take all other action in
connection therewith, is to obtain information and to afford the Bank the
opportunity to
(a) verify whether any advances the Bank is obligated to make under
this Agreement are due, and the correct amount of such advances;
(b) determine whether there has been or may be any Default of the
Indebtedness of Borrower under this Agreement; and
(c) take any necessary or appropriate action to protect and preserve
the Bank's security for the Loan and all advances made hereunder.
None of the aforesaid actions by the Bank, the Bank's Inspector, or any agent,
officer, employee or representative of the Bank, shall be or may be construed in
such a manner as to impose any duty or obligation whatsoever on the Bank, the
Bank's Inspector, or any agent, officer, employee or representative of the Bank,
to protect or represent any owner, borrower, contractor, surety, or any other
person whatsoever and shall not be considered or construed as having made any
warranty whatsoever, whether express or implied, as to the adequacy, quality of
fitness or purpose of any physical conditions, materials, workmanship, Plans,
specifications, drawings or other requirements pertaining to the construction of
the Improvements, or whether any such physical conditions, materials or
workmanship comply with any Plans, specifications, drawings, ordinances,
statutes, or other governmental requirements pertaining to the Property. Bank
shall have no liability, obligation or responsibility whatsoever with respect to
the construction of the Improvements except to advance the Construction Loan
pursuant to this Agreement Bank shall not be obligated to inspect the Property
or the construction of the Property, nor be liable for the performance or
Default of Borrower, Contractor, any architect, subcontractor or materialmen, or
any other party, or for any failure to construct, complete, protect, or insure
the Improvements, or for the payment of costs of labor, materials, or services
supplied for the Improvements, or for the performance of any obligation of
Borrower whatsoever. Nothing, including without limitation, any advance or
acceptance of any document or instrument, shall be construed as a representation
or warranty, express or implied, to any party by Bank.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
OMNI GEOPHYSICAL, L.L.C.
By: /s/ Roger E. Thomas
------------------------------
Roger E. Thomas, Manager
HIBERNIA NATIONAL BANK
By: /s/ Tammy M. Angelety
------------------------------
Title: Assistant Vice President
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EXHIBIT 4.4
FIRST AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED LOAN is dated as of August
6, 1997 (this "Amendment"), between OMNI GEOPHYSICAL, L.L.C., a Louisiana
limited liability company ("Borrower") and HIBERNIA NATIONAL BANK, a national
banking association ("Bank").
W I T N E S S E T H:
WHEREAS, Borrower and Bank have heretofore entered into an Amended and
Restated Loan Agreement dated as of June 13, 1997 (the "Loan Agreement"),
pursuant to which Bank established in favor of Borrower certain credit
facilities consisting of a revolving line of credit and a construction loan
convertible to a term loan; and
WHEREAS, Borrower and Bank desire to amend the Loan Agreement in certain
respects as more fully set forth herein.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants hereinafter set forth and intending to be legally bound hereby, agrees
as follows:
1. DEFINED TERMS. Capitalized terms used herein which are defined in
the Loan Agreement are used herein with such defined meanings.
2. AMENDMENTS TO LOAN AGREEMENT.
(a) The definition of the term "Qualified Receivables" contained in
Section 1.1 of the Loan Agreement is hereby amended and restated in its entirety
to read as follows:
"QUALIFIED RECEIVABLES" shall mean eighty percent (80%) of the Receivables
of Borrower and of its wholly owned Subsidiaries carried on their
respective books of account, which, on the date as of which the
determination is made, (a) are subject to a first priority perfected
Encumbrance in favor of Bank, (b) arose in the ordinary course of business
of Borrower and/or its wholly owned Subsidiaries, (c) arose from the sale
of goods or performance of services by Borrower and/or its wholly owned
Subsidiaries, (d) are evidenced by an "invoice" (i.e., an invoice, shipping
order or similar writing), (e) are not subject to setoff, counterclaim,
defense, or a dispute of any kind or nature, (f) are not more than 90 days
old, (g) are payable by Persons other than any Person who is an affiliate
(as defined in accordance with GAAP) of Borrower or of any of its wholly
owned Subsidiaries or an officer or director of Borrower or an officer or
director of an affiliate of Borrower (h) are not payable by the United
States of America or any agency or department thereof (unless such
Receivable has been assigned to Bank pursuant to a properly perfected
assignment under the Federal Assignment of Claims Act, 31 U.S.C.
<PAGE>
(S)3727), (i) do not by their own terms prohibit the collateral assignment
thereof or require the consent of the obligor thereon to any collateral
assignment thereof, (j) do not arise out of a transaction with an account
debtor outside the United States of America (unless covered by a letter of
credit acceptable to Bank), (k) are not Receivables due by a Person from
whom over 50% of its entire accounts receivable balance with Borrower is
unpaid for more than 90 days past the invoice date(s) related thereto, (l)
are not credit balances, (m) are not Receivables which the Bank believes,
in its sole credit judgment reasonably applied, that collection of such
Receivables is insecure or that such Receivables may not be paid by reason
of the account debtor's financial inability to pay or that such Receivables
are otherwise unacceptable collateral, (n) are not proceeds of a
Receivable, (o) are not not that portion of the Receivables due by a single
Person which which are in excess of 25% (but in no event in excess of 50%)
of all of the Receivables due to Borrower and its wholly owned Subsidiaries
where such Person is not rated or is rated (by a national rating agency
acceptable to Bank) less than BBB-; provided, the term "Qualified
Receivables" shall include all Receivables of any single Person which would
otherwise qualify as such which do not exceed 50% of of all of the
Receivables of Borrower and its wholly owned Subsidiares where such Person
is rated (by a national rating agency acceptable to Bank) BBB- or bettter;,
and (p) commencing 90 days from the date hereof, are owed by a Person who
has either signed an acceptance of the work giving rise to the Receivable
or signed an acceptance of Borrower's proposal for work giving rise to the
Receivable. For purposes of this Agreement, a Receivable is 90 days old on
the 90th day after the date of the invoice evidencing such Receivable
(regardless of the due date of such invoice).
(b) The subparagraph entitled "Other Defaults in Favor of Bank" in
Section 12.1 of the Loan Agreement is hereby amended and restated in its
entirety to read as follows:
OTHER DEFAULTS IN FAVOR OF BANK. Should Borrower default under any other
loan, extension of credit, security agreement, or other obligation in favor
of Bank (including specifically but without limitation, under any
obligation to the Bank pursuant to the terms of that certain Loan Agreement
dated as of August 6, 1997, by and among Borrower, American Aviation
L.L.C., and Bank, as the same may be amended from time to time), and fail
to cure same in accordance with any applicable cure periods.
3. REPRESENTATION: NO DEFAULT. On and as of the effective date
hereof, and after giving effect to this Amendment, Borrower (a) confirms,
reaffirms and restates the representations and warranties set forth in the Loan
Agreement and the Collateral Documents; provided, that each reference to the
Loan Agreement therein shall be deemed included the Loan Agreement as amended by
this Amendment; and (b) represents that no Default or Event of Default has
occurred and is continuing.
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<PAGE>
4. COLLATERAL DOCUMENTS. All of the liens, privileges, priorities and
equities existing and to exist under and in accordance with the terms of the
Collateral Documents are hereby renewed, extended and carried forward as
security for all of the Loans and all other debts, obligations and liabilities
of Borrower to Bank.
5. PAYMENT OF EXPENSES. Borrower agrees to pay or reimburse Bank for
all legal fees and expenses of counsel to Bank in connection with the
transactions contemplated by this Amendment.
6. GOVERNING LAW: COUNTERPARTS. The Amendment shall be governed by
and construed in accordance with the laws of the State of Louisiana. This
Amendment may be executed in any number of counterparts, all of which
counterparts, when taken together, shall constitute one and the same instrument.
7. CONTINUED EFFECT. Except as expressly modified herein, the Loan
Agreement shall continue in full force and effect. The Loan Agreement as
amended herein is hereby ratified and confirmed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date hereinabove provided by the authorized
officers each hereunto duly authorized.
OMNI GEOPHYSICAL, L.L.C.
By: /s/ Roger Thomas
--------------------------------------
Roger Thomas, Manager
HIBERNIA NATIONAL BANK
By: /s/ Tammy M. Angelety
--------------------------------------
Tammy M. Angelety, Assistant Vice President
3
<PAGE>
EXHIBIT 4.5
SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS SECOND AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT is dated and
effective as of September 30, 1997 (the "Second Amendment"), between OMNI
GEOPHYSICAL, L.L.C., a Louisiana limited liability company ("Omni"), and
AMERICAN AVIATION L.L.C., a Missouri limited liability company ("Aviation"), and
HIBERNIA NATIONAL BANK, a national banking association ("Bank").
W I T N E S S E T H:
WHEREAS, Omni and Bank have heretofore entered into an Amended and
Restated Loan Agreement dated as of June 13, 1997, as amended by First Amendment
thereto dated as of August 6, 1997 (the "Loan Agreement"), pursuant to which
Bank established in favor of Omni certain credit facilities consisting of a
revolving line of credit and a construction loan convertible to a term loan;
WHEREAS, Omni and Aviation have requested that Bank make a temporary term
loan to Omni and Aviation, as in solido co-borrowers, in a principal amount up
to $10,000,000.00;
WHEREAS, subject to the terms and conditions of this Second Amendment,
Bank is willing to make the temporary term loan; and
WHEREAS, Omni, Aviation, and Bank desire to amend the Loan Agreement in
certain respects as more fully set forth herein to evidence the terms and
conditions applicable to the temporary term loan in a principal amount up to
$10,000,000.00.
NOW, THEREFORE, THE PARTIES HERETO, IN CONSIDERATION OF THE MUTUAL
COVENANTS HEREINAFTER SET FORTH AND INTENDING TO BE LEGALLY BOUND HEREBY, AGREE
AS FOLLOWS:
1. DEFINED TERMS. Capitalized terms used herein which are defined in
the Loan Agreement are used herein with such defined meanings.
2. DEFINED TERMS REVISION.
(a) "Bridge Loan" shall have the meaning assigned to that term in
paragraph 3(a) of this Second Amendment.
(b) "Bridge Note" shall have the meaning assigned to that term in
paragraph 3(b) of this Second Amendment.
(c) The definition of the term "Loans" in Section 1.1 of the Loan
Agreement is hereby amended and restated in its entirety to read as follows:
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"Loans" shall mean, collectively, the Revolving Loan, the Construction
Loan, and the Bridge Loan.
(d) The definition of the term "Notes" in Section 1.1 of the Loan
Agreement is hereby amended and restated in its entirety to read as follows:
"Notes" shall mean, collectively, the Revolving Note, the Construction
Note, the Term Note, and the Bridge Note, as each of them may be
renewed or extended, together with all other promissory note or notes
given in renewal, substitution or as a refinancing of any part of the
indebtedness evidenced thereby.
3. THE BRIDGE LOAN COMMITMENT.
(a) BRIDGE LOAN. Subject to the terms and conditions of this Second
Amendment, Bank agrees to make a temporary term loan to Omni and Aviation, as in
solido co-borrowers, in a principal amount up to $10,000,000.00 (the "Bridge
Loan"). The proceeds of the Bridge Loan shall be used by Omni solely for
distributions to preferred shareholders/members of Omni and distributions of
earned income to members of Omni.
(b) BRIDGE NOTE. The indebtedness of Omni and Aviation to Bank under
the Bridge Loan shall be evidenced by a promissory note made by Omni and
Aviation (the "Bridge Note"), dated of even date herewith, payable to the order
of the Bank in the principal sum of $10,000,000.00, and bearing interest at the
LIBOR Rate plus 1.00%. The indebtedness of Omni and Aviation under the Bridge
Note shall be payable as follows: interest shall be payable monthly and at the
maturity of the Bridge Note, as therein provided; and principal and accrued
unpaid interest shall be due and payable on December 29, 1997. Upon the
occurrence of an Event of Default or in the event the indebtedness evidenced by
the Bridge Note is not paid in full on or before December 29, 1997, then Bank
has the right prospectively to adjust and fix the interest rate under the Bridge
Note until it is paid in full as follows: the LIBOR Rate plus 5.00% per annum.
(c) FEE. The nonrefundable commitment fee payable by the Omni and
Aviation to the Bank for the Bridge Loan shall be (i) $50,000.00 payable by Omni
and Aviation on or before its execution of this Second Amendment and (ii) in the
event Omni completes an initial public offering of its stock, Bank shall have an
option to acquire common stock of Omni having an aggregate value of $50,000.00
at the purchase price per share at which Omni's common stock is sold to the
public by the underwriter at the initial public offering.
4. REPRESENTATION: NO DEFAULT. On and as of the effective date
hereof, and after giving effect to this Second Amendment, Omni confirms,
reaffirms and restates the representations and warranties set forth in the Loan
Agreement and the Collateral Documents; provided, that each reference to the
Loan Agreement herein shall be deemed to include the Loan Agreement as amended
by this Second Amendment. Omni and Aviation also represent and warrant that no
Default or Event of Default has occurred and is continuing under the Loan
Agreement.
5. COLLATERAL DOCUMENTS: CONFIRMATION; REVISION.
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<PAGE>
(a) CONFIRMATION. All of the liens, privileges, priorities and
equities existing and to exist under and in accordance with the terms of the
Collateral Documents are hereby renewed, extended and carried forward as
security for all of the Loans and all other debts, obligations and liabilities
of Omni and Aviation to Bank.
(b) REVISION. Omni and Aviation hereby acknowledge that the
Collateral Documents described in Section 7.1 of the Loan Agreement shall
continue to secure the Loans. In addition, the Bridge Loan also shall be
secured by the following:
(i) A first priority security interest in the account of Omni at
Bank in which the proceeds from the Bridge Loan will be
deposited, and a first priority security interest granted by
each member of Omni and any other Person receiving a
distribution from Omni with proceeds from the Bridge Loan,
in favor of the Bank, affecting all cash and securities
accounts maintained by each member and such other Person at
Bank in which a distribution from Omni with proceeds from
the Bridge Loan has been deposited; and
(ii) Limited Continuing Guaranty by each member of the Omni and
any other Person receiving a distribution from Omni with
proceeds from the Bridge Loan, in favor of the Bank, whereby
each member and such other Person shall guaranty in solido
with Omni and Aviation the repayment of the Bridge Loan up
to the amount of the cash distribution received by said
member or Person with proceeds from the Bridge Loan.
6. CONDITIONS PRECEDENT TO BRIDGE LOAN. The obligation of the Bank to
make and fund the Bridge Loan shall be subject to the satisfaction of the
following conditions precedent:
(a) Omni and Aviation shall have executed and delivered to the Bank
this Second Amendment and the Bridge Note, and Omni shall have
executed and delivered to the Bank the Acknowledgment of Multiple
Indebtedness Mortgage and Third Amendment to Security Agreement;
all in form and substance satisfactory to the Bank;
(b) Bank shall have received certified resolutions signed by all
members of the Omni authorizing the transactions contemplated by
this Second Amendment, in form and substance satisfactory to the
Bank;
(c) The members of Omni shall have executed and delivered to the Bank
the Limited Continuing Guaranty agreements as described in
Paragraphs 5(b)(ii) above, all in form and substance satisfactory
to the Bank;
(d) The members of the Omni and any other Person receiving a
distribution from Omni with proceeds from the Bridge Loan, shall
have executed the security agreements and UCC financing
statements that are necessary to create a first
3
<PAGE>
priority security interest in the cash accounts mentioned in
Paragraph 5(b)(i) above, all in form and substance satisfactory
to the Bank;
(e) Bank shall have received a favorable legal opinion of counsel to
Omni and Aviation, in form, scope, and substance satisfactory to
the Bank, and a satisfactory review by in house counsel for Bank
of all preference and consideration issues;
(f) Bank shall have received the following executed documents:
Agreement by The CIT Group/Equipment Financing, Inc. that the
indebtedness of Omni and Aviation under this Second Amendment is
subject to the Subordination Agreement dated July 19, 1996 by
Omni, Omni Geophysical Corporation, and Bank, as amended; and
Fourth Amendment to Subordination Agreement by and among Omni,
Omni Geophysical Corporation, and Bank;
(g) There shall have occurred no Material Adverse Change;
(h) No Default or Event of Default shall exist or shall result from
the making of the Bridge Loan;
(i) Bank shall have received the $50,000.00 fee referenced in
Paragraph 3(c) above and Bank shall have received any necessary
documentation to evidence its option to acquire stock as
described in clause (ii) of Paragraph 3(c) above;
(j) Bank shall have received and completed a satisfactory review of
the financial statements for each member of Omni;
(k) Bank shall have received certified resolutions from American
Aviation Incorporated, Advantage Capital Corporation, Advantage
Capital Management Corporation, Advantage Financial Company,
L.L.C., and Advantage Capital Advisors, L.L.C., all in form and
substance satisfactory to the Bank and its counsel;
(l) Bank shall have received an executed commitment letter by Omni
and Aviation in favor of the Bank relating to the post initial
public offering credit facilities of $25,000,000.00.
7. AFFIRMATIVE AND NEGATIVE COVENANTS REVISION. To the extent Sections
10.1, 10.10, 11.6, and 11.7 of the Loan Agreement conflict with the provisions
contained in Sections 8.1, 8.10, 9.6, and 9.7 of that certain Loan Agreement
dated as of August 6, 1997 by and among Omni, Aviation and Bank (the
"Omni/American Loan Agreement"), then Sections 8.1, 8.10, 9.6, and 9.7 of the
Omni/American Loan Agreement shall control.
4
<PAGE>
8. PAYMENT OF EXPENSES. Omni and Aviation agree to pay or reimburse
Bank for all legal fees and expenses of counsel to Bank in connection with the
transactions contemplated by this Second Amendment.
9. WAIVER OF DEFENSES. In consideration of the Bank's execution of
this Second Amendment, Omni and Aviation do hereby irrevocably waive any and all
claims and/or defenses to payment on any indebtedness owed by either of them to
the Bank that may exist as of the date of execution of this Second Amendment.
10. AMENDMENTS. THE LOAN AGREEMENT AND THIS SECOND AMENDMENT ARE CREDIT
OR LOAN AGREEMENTS AS DESCRIBED IN LA. R.S. 6:(S)1121, ET SEQ. THERE ARE NO
ORAL AGREEMENTS BETWEEN THE BANK, OMNI AND AVIATION. THE LOAN AGREEMENT, AS
AMENDED BY THIS SECOND AMENDMENT, SETS FORTH THE ENTIRE AGREEMENT OF THE PARTIES
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDES ALL PRIOR WRITTEN AND
ORAL UNDERSTANDINGS BETWEEN OMNI, AVIATION AND THE BANK, WITH RESPECT TO THE
MATTERS HEREIN SET FORTH. THE LOAN AGREEMENT, AS AMENDED BY THIS SECOND
AMENDMENT, MAY NOT BE MODIFIED OR AMENDED EXCEPT BY A WRITING SIGNED AND
DELIVERED BY OMNI, AVIATION, AND THE BANK.
11. GOVERNING LAW: COUNTERPARTS. This Second Amendment shall be
governed by and construed in accordance with the laws of the State of Louisiana.
This Second Amendment may be executed in any number of counterparts, all of
which counterparts, when taken together, shall constitute one and the same
instrument.
12. CONTINUED EFFECT. Except as expressly modified herein, the Loan
Agreement shall continue in full force and effect. The Loan Agreement as
amended herein is hereby ratified and confirmed by the parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Second Amendment
to be executed and delivered as of the date hereinabove provided by the
authorized officers each hereunto duly authorized.
OMNI GEOPHYSICAL, L.L.C.
By: /s/ David Crays
---------------------------------------------
David Crays, CFO
AMERICAN AVIATION L.L.C.
By: /s/ David Crays
---------------------------------------------
David Crays, CFO
HIBERNIA NATIONAL BANK
By: /s/ Tammy M. Angelety
---------------------------------------------
Tammy M. Angelety, Assistant Vice President
5
<PAGE>
EXHIBIT 4.6
PROMISSORY NOTE
BORROWER: Omni Geophysical, L.L.C.
TIN No.: 43-6553844
4484 Interstate 49, North
Lafayette, LA 70520
and
American Aviation L.L.C.
TIN No.: 43-6553844
301 Shepard Drive
Lafayette, LA 70508
LENDER: Hibernia National Bank
TIN No.: 72-0210690
313 Carondelet Street
P.O. Box 61540
New Orleans, LA 70161
Principal Amount: $10,000,000.00 Date of Note: September 30, 1997
PROMISE TO PAY. Omni Geophysical, L.L.C., a Louisiana limited liability
company, and American Aviation L.L.C., a Missouri limited liability company
(collectively, the "Borrower"), solidarily promise to pay to the order of
Hibernia National Bank ("Lender"), in lawful money of the United States of
America, the sum of Ten Million and 00/100 Dollars (U.S. $10,000,000.00),
together with interest at the LIBOR Rate as determined in accordance with
Article III of the Loan Agreement (as hereinafter defined), plus 1.00%, being
assessed on the unpaid principal balance of this Note as outstanding from time
to time, commencing on the date hereof, and continuing until this Note is paid
in full or until the Lender exercises its right to prospectively rely on the
default interest rate provided hereinbelow.
LOAN AGREEMENT. This Note evidences the Bridge Loan to be made in accordance
with the terms of that certain Amended and Restated Loan Agreement by and
between Omni Geophysical, L.L.C. and Lender dated as of June 13, 1997, as
amended by First Amendment thereto dated as of August 6, 1997 by Omni
Geophysical, L.L.C. and Lender, as amended by Second Amendment thereto dated as
of September 30, 1997 by Borrower and Lender, and as the same may from time to
time be amended, supplemented or modified (the "Loan Agreement"), and is subject
to the terms of the Loan Agreement. Capitalized terms used herein and not
otherwise defined herein shall have the meaning ascribed to them in the Loan
Agreement.
PAYMENT. Borrower will pay this Note in accordance with the following payment
schedule:
<PAGE>
Interest shall be payable in monthly installments on October 31, 1997,
November 30, 1997, and December 29, 1997. Principal shall be due and
payable on December 29, 1997.
Borrower will pay Lender at Lender's address shown above or at such other place
as Lender may designate in writing. Unless otherwise agreed or required by
applicable law, payments will be applied first to unpaid collection costs and
late charges, then to unpaid interest, and any remaining amount to principal.
PREPAYMENT. Borrower may prepay this Note at any time without premium or
penalty. If Borrower prepays this Note in full, or if Lender accelerates
payment, Borrower understands that, unless otherwise required by law, any
prepaid fees or charges will not be subject to rebate and will be earned by
Lender at the time this Note is signed. Unless otherwise agreed to in writing,
early payments under this Note will not relieve Borrower of its obligation to
continue to make regularly scheduled payments under the above payment schedule.
Such prepayments will instead reduce the principal balance due, and Borrower may
be required to make fewer payments under this Note.
EVENTS OF DEFAULT. The occurrence of any Event of Default, as such term is
defined in the Loan Agreement, shall constitute an event of default under this
Note.
LENDER'S RIGHTS UPON AN EVENT OF DEFAULT. Should any one or more Events of
Default occur or exist under this Note as provided above, Lender shall have the
right, at its sole option, to declare formally this Note to be in default and to
accelerate the maturity and insist upon immediate payment in full of the unpaid
principal balance then outstanding under this Note, plus accrued interest,
together with reasonable attorneys' fees, costs, expenses and other fees and
charges as provided herein. Lender shall have the further right, again at its
sole option, to accelerate the maturity and to insist upon immediate payment in
full of each and every other loan, extension of credit, debt, liability and/or
obligation of every nature and kind that Borrower may then owe to Lender,
whether direct or indirect or by way of assignment, and whether absolute or
contingent, liquidated or unliquidated, voluntary or involuntary, determined or
undetermined, secured or unsecured, whether Borrower is obligated alone or with
others on a "solidary" or "joint and several" basis, as a principal obligor or
otherwise, all without further notice, demand or putting in default, unless
Lender shall otherwise elect. Lender and Borrower hereby waives the right to
any jury trial in any action, proceeding, or counterclaim brought by either
Lender or Borrower against the other.
INTEREST AFTER DEFAULT. If Lender declares this Note to be in default, Lender
has the right prospectively to adjust and fix the interest rate under this Note
to the LIBOR Rate plus 5.00% commencing upon the occurrence of an Event of
Default and lasting until this Note is paid in full.
ATTORNEYS' FEES. If Lender refers this Note to an attorney for collection, or
files suit against Borrower to collect this Note, or if either Borrower files
for bankruptcy or other relief from creditors, Borrower agrees to pay Lender's
reasonable attorneys' fees.
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<PAGE>
DEPOSIT ACCOUNTS. As collateral security for repayment of this Note and all
renewals and extensions, as well as to secure any and all other loans, notes,
indebtedness and obligations that Borrower may now and in the future owe to
Lender or incur in Lender's favor, whether direct or indirect, absolute or
contingent, due or to become due, of any nature and kind whatsoever (with the
exception of any indebtedness under a consumer credit card account), Borrower is
granting Lender a continuing security interest in any and all funds that
Borrower may now and in the future have on deposit with Lender or in
certificates of deposit or other deposit accounts as to which Borrower is an
account holder (with the exception of IRA, pension, and other tax-deferred
deposits). Borrower further agrees that Lender may at any time following the
occurrence of an Event of Default apply any funds that Borrower may have on
deposit with Lender or in certificates of deposit or other deposit accounts as
to which Borrower is account holders against the unpaid balance of this Note and
any and all other present and future indebtedness and obligations that Borrower
may then owe to Lender, in principal, interest, fees, costs, expenses, and
attorneys' fees.
GOVERNING LAW. Borrower agrees that this Note and the loan evidenced hereby
shall be governed under the laws of the State of Louisiana. Specifically, this
business or commercial Note is subject to La. R.S. 9:3509, et seq.
COLLATERAL. This Note is secured by the Collateral Documents described in the
Loan Agreement and by the security interests described in Paragraph 5(b)(i) of
the Second Amendment to the Loan Agreement dated as of September 30, 1997.
Collateral securing other loans with Lender may also secure this Note as a
result of cross-collateralization. The payment of this Note is guaranteed by
each member of the Borrower as provided in the Loan Agreement.
WAIVERS. Borrower hereby waives presentment for payment, protest, notice of
protest and notice of nonpayment. Borrower additionally agrees that Lender's
acceptance of payment other than in accordance with the terms of this Note, or
Lender's subsequent agreement to extend or modify such repayment terms, or
Lender's failure or delay in exercising any rights or remedies granted to
Lender, shall likewise not have the effect of releasing Borrower or any other
party or parties from their respective obligations to Lender, or of releasing
any collateral that directly or indirectly secures repayment hereof. In
addition, any failure or delay in exercising any of the rights and remedies
granted to Lender shall not have the effect of waiving any of Lender's rights
and remedies. Any partial exercise of any rights and/or remedies granted to
Lender shall furthermore not be construed as a waiver of any other rights and
remedies; it being Borrower's intent and agreement that Lender's rights and
remedies shall be cumulative in nature. Borrower further agrees that, should
any Event of Default occur or exist under this Note, any waiver or forbearance
on the part of Lender to pursue the rights and remedies available to Lender,
shall be binding upon Lender only to the extent that Lender specifically agrees
to any such waiver or forbearance in writing. A waiver or forbearance on the
part of Lender as to one Event of Default shall not be construed as a waiver or
forbearance as to any other Event of Default. Borrower further agrees that any
late charges provided for under the Loan Agreement will not be charges for
deferral of time for payment and will not and are not intended to compensate
Lender for a grace or cure period, and no such deferral, grace or cure period
has or will be granted to Borrower in return for the imposition of any late
charge. Borrower recognize that Borrower's
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<PAGE>
failure to make timely payment of amounts due under this Note will result in
damages to Lender, including but not limited to Lender's loss of the use of
amounts due, and Borrower agrees that any late charges imposed by Lender under
the terms of the Loan Agreement will represent reasonable compensation to Lender
for such damages. Failure to pay in full any installment or payment timely when
due under this Note, whether or not a late charge is assessed, will remain and
shall constitute an Event of Default hereunder.
SUCCESSORS AND ASSIGNS LIABLE. Borrower's obligations and agreements under this
Note shall be binding upon each Borrower's respective successors, heirs,
legatees, devisees, administrators, executors and assigns. The rights and
remedies granted to Lender under this Note shall inure to the benefit of
Lender's successors and assigns, as well as to any subsequent holder or holders
of this Note.
SOLIDARY LIABILITY. The obligations of each Borrower under this Note are
solidary obligations.
CAPTION HEADINGS. Caption headings of the sections of this Note are for
convenience purposes only and are not to be used to interpret or to define their
provisions. In this Note, whenever the context so requires, the singular
includes the plural and the plural also includes the singular.
SEVERABILITY. If any provision of this Note is held to be invalid, illegal or
unenforceable by any court, that provision shall be deleted from this Note and
the balance of this Note shall be interpreted as if the deleted provision never
existed.
PRIOR TO SIGNING THIS PROMISSORY NOTE, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE. BORROWER HEREBY WAIVE THE RIGHT TO ANY JURY TRIAL IN
ANY ACTION, PROCEEDING, OR COUNTERCLAIM BROUGHT BY EITHER LENDER OR BORROWER.
BORROWER AGREE TO THE TERMS OF THIS NOTE AND ACKNOWLEDGES RECEIPT OF A COMPLETED
COPY OF THIS NOTE.
BORROWERS:
OMNI GEOPHYSICAL, L.L.C.
By: /s/ David Crays
--------------------------------------
David Crays, CFO
AMERICAN AVIATION L.L.C.
By: /s/ David Crays
---------------------------------------
David Crays, CFO
4
<PAGE>
EXHIBIT 5.1
[Letterhead of Jones, Walker
Waechter, Poitevent
Carrere & Denegre, L.L.P.
appears here]
November 5, 1997
OMNI Energy Services Corp.
4484 NE Evangeline Thruway
Carencro, Louisiana 70520
RE: OMNI Energy Services Corp.
Registration Statement on Form S-1
Gentlemen:
We have acted as your counsel in connection with the preparation of a
registration statement on Form S-1 (Registration Statement No. 333-36561), as
amended by Amendment No. 1 thereto (as amended, the "Registration Statement"),
filed by OMNI Energy Services Corp. (the "Company") with the Securities and
Exchange Commission, relating to the registration of the sale of shares of
common stock, $.01 par value per share, of the Company (the "Common Stock").
In so acting, we have examined originals, or photostatic or certified
copies, of such records of the Company, certificates of officers of the Company
and of public officials, and such other documents as we have deemed relevant. In
such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals, the conformity to
original documents of all documents submitted to us as certified or photostatic
copies and the authenticity of the originals of such documents.
Based upon the foregoing, we are of the opinion that the 4,025,000 shares
of Common Stock that are the subject of the Registration Statement and offered
for sale pursuant to the Prospectus included therein (the "Prospectus"), when
issued and sold upon the terms described in the Registration Statement and the
Prospectus, will be legally issued and outstanding, fully paid and non-
assessable.
We consent to the filing of this opinion as an exhibit to the
Registration Statement and to the reference to us in the prospectus included
therein under the caption "Legal Matters" and as an exhibit (including by
incorporation by reference) to any registration statement filed under Rule 462
under the Securities Act of 1933, as amended (the "Act"). In giving this
consent, we do not admit that we are within the category of persons whose
consent is required under Section 7 of the Act or the general rules and
regulations of the Commission promulgated thereunder.
Very truly yours,
/s/ Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P.
JONES, WALKER, WAECHTER, POITEVENT,
CARRERE & DENEGRE, L.L.P.
1
<PAGE>
EXHIBIT 10.4
OMNI GEOPHYSICAL, L.L.C.
AND
DAVID A. JEANSONNE
AMENDED AND RESTATED
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT (the
"Agreement") is made and entered into on the 31st day of October, 1997, but
effective as of October 1, 1997 (the "Effective Date") by and between OMNI
GEOPHYSICAL, L.L.C., a Louisiana limited liability company (hereinafter referred
to as "Company"), and DAVID A. JEANSONNE, a resident of the State of Louisiana
(hereinafter referred to as "Employee").
WHEREAS, the Company and Employee entered into an Employment and Non-
Competition Agreement (the "Original Agreement") effective as of July 1, 1997
(the "Original Date"); and
WHEREAS, the Company and Employee desire to amend and restate the Original
Agreement effective as of the Effective Date upon the terms and conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company has hired the Employee and the Employee agreed
to be employed upon the terms and conditions hereinafter set forth.
2. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall be for the period beginning on the
Original Date and expiring on June 30, 2003, except that the provisions of
Section 6 and Section 7 of this Agreement shall survive the termination of this
Agreement and shall remain effective for the period expiring two (2) after the
termination of the employment of the Employee.
3. COMPENSATION. For the period beginning on the Effective Date, the
Company shall pay Employee One Hundred Fifty Thousand Dollars ($150,000) per
annum as a base salary for as long as Employee serves as Chairman of the Board
of Directors and Chief Executive Officer of the Company.
4. DUTIES. From and after the Effective Date, Employee shall serve as
Chairman of the Board of Directors and Chief Executive Officer of the Company.
5. TERMINATION. This Agreement may be terminated at any time by the
Company, without prior notice, for cause or for breach of any obligation of
Employee to Company.
1
<PAGE>
6. CONFIDENTIALITY AND NON-DISCLOSURE OF INFORMATION. Employee
recognizes, acknowledges and agrees that the names of the Company's customers
and its pricing structure, processes, operations, marketing programs, sales
techniques, designs, specifications and other trade secrets (collectively
referred to herein as "Proprietary Information") are valuable, special and
unique assets of the Company. Employee will not, during or after the term of
Employee's employment hereunder, directly or indirectly, utilize for the benefit
of any person, business, enterprise or entity other than Company or disclose any
portion or part of the Company's Proprietary Information to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever.
Furthermore, it is agreed that all data, lists, papers, memoranda, documents,
and all products of Employee's skill, resulting from Employee's employment
hereunder, shall be and remain the sole and exclusive property of the Company,
and Employee shall execute any and all agreements and instruments that may be
necessary to evidence the Company's ownership of such property. In the event of
a breach or threatened breach by the Employee of the provisions of this Section
6, the Company shall be entitled to an injunction restraining the Employee from
breaching the terms of this Agreement. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedy available to the Company
for such breach or threatened breach, including the recovery of damages from the
Employee.
7. COVENANT OF NON-COMPETITION. For the period beginning on the Original
Date of this Agreement and, and expiring two (2) years after the termination of
Employee's employment under this Agreement (whether such termination occurs
because of a breach of this Agreement by the Company or by Employee or because
of a termination of this Agreement by Company), (a) the Employee will not,
directly or indirectly, within any parish or municipality in Louisiana or in any
other state or foreign jurisdiction in which customers of the Company are
located or reside, solicit, induce or otherwise contact customers of the Company
for the purpose of soliciting business from the Company's customers, or any
other purpose whatsoever which is detrimental to the Company or its business;
and (b) the Employee will not, directly or indirectly, within any parish or
municipality in Louisiana or in any other state or foreign jurisdiction in which
Company engages in or has engaged in business, own, manage, operate, control, be
employed by, consult with, participate in, or be connected in any manner with
the ownership, management, operation or control of any business, enterprise, or
entity (including a sole proprietorship of Employee) which: (i) owns, operates
or controls any geophysical services business, which business includes but is
not limited to the provision of seismic drilling and support services, the
transportation of equipment used in connection with seismic drilling and support
services, and the design and manufacture of such equipment, (ii) owns, operates
or controls any aviation company, or (iii) owns, operates or controls any
business which competes with the Company. In the event of any actual or
threatened breach by the Employee of the provisions of this Agreement, Employee
agrees that Company shall not have an adequate remedy at law and the Company
shall be entitled to an injunction restraining the Employee from owning,
managing, operating, controlling, being employed by, participating in, or being
in any way so connected with any activity which is prohibited in this Section 7
and/or the solicitation of any business on his behalf or on behalf of others
from any customer. Nothing herein stated shall be construed as prohibiting
Company from pursuing any other remedies available to the Company for such
breach or threatened breach including the recovery of damages from the Employee.
2
<PAGE>
8. REFORMATION/SAVINGS CLAUSE. The parties agree that if either the
length of time or the geographical area of Employee's covenants contained
herein are deemed too restrictive by any court of competent jurisdiction in any
proceeding involving the validity of said covenants, then the court may reduce
the offending restriction to the maximum restriction it deems reasonable under
the circumstances so as to give the maximum permissible effect to the intentions
of the parties as set forth herein, and the court may enforce such provisions as
so reformed.
9. REMEDIES AND EQUITABLE PROVISIONS. The following provisions shall
apply in respect of Employee's covenants and agreements contained in this
Agreement:
(a) Employee acknowledges and agrees that Employee's covenants contained in
this Agreement are reasonable and necessary for the proper protection of Company
and that the Employee's agreements herein not to compete with the Company shall
not hinder Employee in obtaining gainful employment at the termination of this
Agreement in the event Employee shall desire such employment.
(b) Employee acknowledges and agrees that Company does not have an adequate
remedy at law for the breach or threatened breach of Employee's covenants
contained in this Agreement, and Employee therefore agrees that Company, in
addition to any other remedy which may be available to it, shall be entitled to
enforce Employee's covenants by injunction or other equitable means.
(c) The parties agree that if Company should institute litigation against
Employee to enforce any provisions of this Agreement, then the prevailing party
in such litigation shall be entitled to receive, in addition to any other relief
awarded such party, reasonable attorneys' fees in respect of the prosecution or
defense of such litigation.
10. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail
If to Employee: David A. Jeansonne
P.O. Box 5409
Lafayette, LA 70502
If to Company: Omni Geophysical, L.L.C.
P.O. Box 3761
Lafayette, Louisiana 70502
11. WAIVER OF BREACH. The waiver or nonenforcement by the Company of a
breach of any provision of this Agreement by the Employee shall not operate or
be construed as a waiver of any subsequent breach by the Employee.
12. ASSIGNMENT. Employee acknowledges that the services to be rendered by
him are unique and personal. Accordingly, Employee may not assign any of his
rights or delegate any of his duties or obligations under this Agreement. The
rights and obligations of Company under this
3
<PAGE>
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Company.
13. SEVERABILITY. Every provision of this Agreement is entitled to be
severable. The parties agree that if any term or provision hereof is held to be
illegal, invalid, against public policy or unenforceable for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder to the Agreement, and the remaining provisions of this Agreement shall
not be affected thereby.
14. AMENDMENTS. No alterations, modifications, amendments or changes
herein shall be effective or binding upon the parties unless the same shall have
been agreed in writing by all the parties.
15. SECTION HEADINGS. Section and other headings in this Agreement are
for reference purposes only, and are in no way intended to describe, interpret,
define or limit the scope or extent of any provision hereof.
16. COUNTERPART EXECUTION. This Agreement may be executed by any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All counterparts shall be construed together and shall constitute one
agreement.
17. APPLICABLE LAW. Company and Employee acknowledge and agree that the
law of several states could, conceivably, apply to the terms of this Agreement.
In order to provide certainty with respect to the construction, interpretation
and enforcement of this Agreement, it is the intention of the parties that the
internal laws of the State of Louisiana shall govern only the construction,
interpretation, validity and enforcement of each term of the Agreement which
relates to obligations which are intended to be performed or restrictions upon
the activities or conduct of the parties within the State of Louisiana. The
construction, interpretation, validity and enforcement of each term of the
Agreement which relates to obligations to be performed or restrictions upon the
activities or conduct of the parties outside of the State of Louisiana shall be
governed by the law of the State of Texas. The parties to this Agreement have
agreed to this bifurcated choice of law after careful consideration and
reflection.
18. RIGHTS CUMULATIVE. The rights of Company hereunder shall be
cumulative and the enforcement by Company of any right shall not affect in any
way the ability of Company to enforce any other right hereunder or any right or
remedy of Company at law or in equity.
19. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and may not be changed orally but only by agreement in writing
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought. This Agreement supersedes and replaces that certain
Employment Agreement dated July 19, 1996, by and between Omni Geophysical,
L.L.C., and David A. Jeansonne.
4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized managers, and the Employee has hereunto set his hand as of
the day and year first above written.
COMPANY
OMNI GEOPHYSICAL, L.L.C.,
a Louisiana limited liability company
By: /s/ David A. Jeansonne
---------------------------
David A. Jeansonne, Manager
By: /s/ Roger E. Thomas
------------------------
Roger E. Thomas, Manager
EMPLOYEE
/s/ David A. Jeansonne
--------------------------
David A. Jeansonne
5
<PAGE>
EXHIBIT 10.5
OMNI GEOPHYSICAL, L.L.C.
AND
ROGER E. THOMAS
AMENDED AND RESTATED
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT (the
"Agreement") is made and entered into on the 31st day of October, 1997, but
effective as of October 1, 1997 (the "Effective Date") by and between OMNI
GEOPHYSICAL, L.L.C., a Louisiana limited liability company (hereinafter referred
to as "Company"), and ROGER E. THOMAS, a resident of the State of Louisiana
(hereinafter referred to as "Employee").
WHEREAS, the Company and Employee entered into an Employment and Non-
Competition Agreement (the "Original Agreement") effective as of July 19, 1996
(the "Original Date"); and
WHEREAS, the Company and Employee desire to amend and restate the Original
Agreement effective as of the Effective Date upon the terms and conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company has hired the Employee and the Employee agreed
to be employed upon the terms and conditions hereinafter set forth.
2. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall be for a period of thirty-six (36)
months beginning on the Original Date.
3. COMPENSATION. For the period beginning on the Effective Date and
expiring on the termination of this Agreement, Company shall pay Employee One
Hundred Fifty Thousand Dollars ($150,000) per annum.
4. DUTIES. Employee shall serve as a Manager and the President of the
Company and as a member of the Company's Board of Directors. Notwithstanding
anything in this Agreement to the contrary, Employee shall perform such other
duties, tasks and other work as may be assigned to him by the Company's officers
and Board of Directors.
5. TERMINATION. This Agreement may be terminated at any time by the
Company, without prior notice, for cause or for breach of any obligation of
Employee to Company. This Agreement may be terminated at any time by Employee
with or without cause. Upon termination of this Agreement, Employee shall be
entitled to receive from the Company a cash payment or payments from time to
time after such termination upon exercise of any options (the "Options") to
acquire common stock of the Company to which Employee is at the time of such
termination entitled to exercise, pursuant to that certain Option Agreement
dated September 25, 1997 by and between the Company and Employee (the "Option
Agreement"), whether such Options become exerciseable as a result of such
termination, change of control of the Company, passage of time or otherwise.
Such payment or payments shall be made to Employee by the Company no later than
15 business days following any exercise of such Options by Employee and shall be
equal to the product of (i) the number of Options exercised, multiplied by (ii)
the excess of the fair market value of the shares received upon exercise of such
Options on the date of exercise over the Option Price (as defined in the Option
Agreement), multiplied by (iii) 20%.
1
<PAGE>
6. CONFIDENTIALITY AND NON-DISCLOSURE OF INFORMATION. Employee
recognizes, acknowledges and agrees that the names of the Company's customers
and its pricing structure, processes, operations, marketing programs, sales
techniques, designs, specifications and other trade secrets (collectively
referred to herein as "Proprietary Information") are valuable, special and
unique assets of the Company. Employee will not, during or after the term of
Employee's employment, directly or indirectly, utilize for the benefit of any
person, business, enterprise or entity other than Company, or disclose any
portion or part of the Company's Proprietary Information to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever.
Furthermore, it is agreed that all data, lists, papers, memoranda, documents,
and all products of Employee's skill, resulting from Employee's employment
herein, shall be and remain the sole and exclusive property of the Company, and
Employee shall execute any and all agreements and instruments that may be
necessary to evidence the Company's ownership of such property. In the event of
a breach or threatened breach by the Employee of the provisions of this Section
6, the Company shall be entitled to an injunction restraining the Employee from
breaching the terms of this Agreement. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedy available to the Company
for such breach or threatened breach, including the recovery of damages from the
Employee.
7. COVENANT OF NON-COMPETITION. For a period during Employee's employment
and ending five (5) years after termination of Employee's employment under this
Agreement (whether such termination occurs because of a breach of this Agreement
by the Company or by Employee or because of a termination of this Agreement by
Company or Employee): (a) the Employee will not, directly or indirectly, within
any parish or municipality in Louisiana or in any other state or foreign
jurisdiction in which customers of the Company are located or reside, solicit,
induce or otherwise contact customers of the Company for the purpose of
soliciting business from the Company's customers, or any other purpose
whatsoever which is detrimental to the Company or its business; (b) the Employee
will not, directly or indirectly, within any parish or municipality in Louisiana
or in any other state or foreign jurisdiction in which Company engages in or has
engaged in business, own, manage, operate, control, be employed by, consult
with, participate in, or be connected in any manner with the ownership,
management, operation or control of any business, enterprise, or entity
(including a sole proprietorship of Employee) which: (i) owns, operates or
controls any geophysical services business, which business includes but is not
limited to the provision of seismic drilling and support services, the
transportation of equipment used in connection with seismic drilling and support
services, and the design and manufacture of such equipment, or (ii) owns,
operates or controls any business which competes with the Company. In the event
of any actual or threatened breach by the Employee of the provisions of this
Agreement, Employee agrees that Company shall not have an adequate remedy at law
and the Company shall be entitled to an injunction restraining the Employee from
owning, managing, operating, controlling, being employed by, participating in,
or being in any way so connected with any activity which is prohibited in this
Section 7 and/or the solicitation of any business on his behalf or on behalf of
others from any customer. Nothing herein stated shall be construed as
prohibiting Company from pursuing any other remedies available to the Company
for such breach or threatened breach including the recovery of damages from the
Employee.
2
<PAGE>
8. REFORMATION/SAVINGS CLAUSE. The parties agree that if either the
length of time or the geographical area of Employee's covenants contained
herein are deemed too restrictive by any court of competent jurisdiction in any
proceeding involving the validity of said covenants, then the court may reduce
the offending restriction to the maximum restriction it deems reasonable under
the circumstances so as to give the maximum permissible effect to the intentions
of the parties as set forth herein, and the court may enforce such provisions as
so reformed.
9. REMEDIES AND EQUITABLE PROVISIONS. The following provisions shall apply
in respect of Employee's covenants and agreements contained in this Agreement:
(a) Employee acknowledges and agrees that Employee's covenants contained in
this Agreement are reasonable and necessary for the proper protection of Company
and that the Employee's agreements herein not to compete with the Company shall
not hinder Employee in obtaining gainful employment at the termination of this
Agreement in the event Employee shall desire such employment.
(b) Employee acknowledges and agrees that Company does not have an adequate
remedy at law for the breach or threatened breach of Employee's covenants
contained in this Agreement and Employee therefore agrees that Company, in
addition to any other remedy which may be available to it, shall be entitled to
enforce Employee's covenants by injunction or other equitable means.
(c) The parties agree that if Company should institute litigation against
Employee to enforce any provisions of this Agreement, then the prevailing party
in such litigation shall be entitled to receive, in addition to any other relief
awarded such party, reasonable attorneys' fees in respect of the prosecution or
defense of such litigation.
10. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail
If to Employee: Roger E. Thomas
1524 Applewood Road
Baton Rouge, Louisiana 70808
If to Company: Omni Geophysical, L.L.C.
P.O. Box 3761
Lafayette, Louisiana 70502
11. WAIVER OF BREACH. The waiver or nonenforcement by the Company of a
breach of any provision of this Agreement by the Employee shall not operate or
be construed as a waiver of any subsequent breach by the Employee.
12. ASSIGNMENT. Employee acknowledges that the services to be rendered by
him are unique and personal. Accordingly, Employee may not assign any of his
rights or delegate any of his duties or obligations under this Agreement. The
rights and obligations of Company under this
3
<PAGE>
Agreement shall inure to the benefit of and shall be binding upon the successors
and assigns of Company.
13. SEVERABILITY. Every provision of this Agreement is entitled to be
severable. The parties agree that if any term or provision hereof is held to be
illegal, invalid, against public policy or unenforceable for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder to the Agreement, and the remaining provisions of this Agreement shall
not be affected thereby.
14. AMENDMENTS. No alterations, modifications, amendments or changes
herein shall be effective or binding upon the parties unless the same shall have
been agreed in writing by all the parties.
15. SECTION HEADINGS. Section and other headings in this Agreement are
for reference purposes only, and are in no way intended to describe, interpret,
define or limit the scope or extent of any provision hereof.
16. COUNTERPART EXECUTION. This Agreement may be executed by any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All counterparts shall be construed together and shall constitute one
agreement.
17. APPLICABLE LAW. Company and Employee acknowledge and agree that the
law of several states could, conceivably, apply to the terms of this Agreement.
In order to provide certainty with respect to the construction, interpretation
and enforcement of this Agreement, it is the intention of the parties that the
internal laws of the State of Louisiana shall govern only the construction,
interpretation, validity and enforcement of each term of the Agreement which
relates to obligations which are intended to be performed or restrictions upon
the activities or conduct of the parties within the State of Louisiana. The
construction, interpretation, validity and enforcement of each term of the
Agreement which relates to obligations to be performed or restrictions upon the
activities or conduct of the parties outside of the State of Louisiana shall be
governed by the law of the State of Texas. The parties to this Agreement have
agreed to this bifurcated choice of law after careful consideration and
reflection.
18. RIGHTS CUMULATIVE. The rights of Company hereunder shall be
cumulative and the enforcement by Company of any right shall not affect in any
way the ability of Company to enforce any other right hereunder or any right or
remedy of Company at law or in equity.
19. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and may not be changed orally but only by agreement in writing
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought.
4
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized managers, and the Employee has hereunto set his hand as of
the day and year first above written.
COMPANY
OMNI GEOPHYSICAL, L.L.C.,
a Louisiana limited liability company
By: /s/ David A. Jeansonne
---------------------------
David A. Jeansonne, Manager
By: /s/ Roger E. Thomas
------------------------
Roger E. Thomas, Manager
EMPLOYEE
/s/ Roger E. Thomas
---------------------------
Roger E. Thomas
5
<PAGE>
EXHIBIT 10.6
OMNI GEOPHYSICAL, L.L.C.
------------------------
AND
---
ALLEN R. WOODARD
----------------
AMENDED AND RESTATED
--------------------
EMPLOYMENT AND NON-COMPETITION AGREEMENT
----------------------------------------
THIS AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT (the
"Agreement") is made and entered into on the 31st day of October, 1997, but
effective as of October 1, 1997 (the "Effective Date") by and between OMNI
GEOPHYSICAL, L.L.C., a Louisiana limited liability company (hereinafter referred
to as "Company"), and ALLEN R. WOODARD, a resident of the State of Louisiana
(hereinafter referred to as "Employee").
WHEREAS, the Company and Employee entered into an Employment and Non-
Competition Agreement (the "Original Agreement") as of July 19, 1997 (the
"Original Date"); and
WHEREAS, the Company and Employee desire to amend and restate the Original
Agreement effective as of the Effective Date upon the terms and conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company has hired the Employee and the Employee agreed
to be employed upon the terms and conditions hereinafter set forth.
2. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall be for a period of thirty-six (36)
months from the Original Date.
3. COMPENSATION. For the period beginning on the Effective Date and
expiring on the termination of this Agreement, Company shall pay Employee One
Hundred Thousand Dollars ($100,000) per annum.
4. DUTIES. Employee shall serve as Vice-President - Marketing and
Business Development and Secretary of the Company and as a member of the
Company's Board of Directors. Notwithstanding anything in this Agreement to the
contrary, Employee shall perform such other duties, tasks and other work as may
be assigned to him by the Company's officers and Board of Directors.
5. TERMINATION. This Agreement may be terminated at any time by the
Company, without prior notice, for cause or for breach of any obligation of
Employee to Company. This Agreement may be terminated at any time by Employee
with or without cause. Upon termination of this Agreement, Employee shall be
entitled to receive from the Company a cash payment or payments from time to
time after such termination upon exercise of any options (the "Options") to
acquire common stock of the Company to which Employee is at the time of such
termination entitled to exercise, pursuant to that certain Option Agreement
dated September 25, 1997 by and between the Company and Employee (the "Option
Agreement"), whether such Options become exerciseable as a result of such
termination, change of control of the Company, passage of time or otherwise.
Such payment or payments shall be made to Employee by the Company no later than
15 business days following any exercise of such Options by Employee and shall be
equal to the product of (i) the number of Options exercised, multiplied by (ii)
the excess of the fair market value of the shares received upon exercise of such
Options on the date of exercise over the Option Price (as defined in the Option
Agreement), multiplied by (iii) 20%.
1
<PAGE>
6. CONFIDENTIALITY AND NON-DISCLOSURE OF INFORMATION. Employee
recognizes, acknowledges and agrees that the names of the Company's customers
and its pricing structure, processes, operations, marketing programs, sales
techniques, designs, specifications and other trade secrets (collectively
referred to herein as "Proprietary Information") are valuable, special and
unique assets of the Company. Employee will not, during or after the term of
Employee's employment, directly or indirectly, utilize for the benefit of any
person, business, enterprise or entity other than Company, or disclose any
portion or part of the Company's Proprietary Information to any person, firm,
corporation, association or other entity for any reason or purpose whatsoever.
Furthermore, it is agreed that all data, lists, papers, memoranda, documents,
and all products of Employee's skill, resulting from Employee's employment
herein, shall be and remain the sole and exclusive property of the Company, and
Employee shall execute any and all agreements and instruments that may be
necessary to evidence the Company's ownership of such property. In the event of
a breach or threatened breach by the Employee of the provisions of this Section
6, the Company shall be entitled to an injunction restraining the Employee from
breaching the terms of this Agreement. Nothing herein shall be construed as
prohibiting the Company from pursuing any other remedy available to the Company
for such breach or threatened breach, including the recovery of damages from the
Employee.
7. COVENANT OF NON-COMPETITION. For a period during Employee's employment
and ending five (5) years after termination of Employee's employment under this
Agreement (whether such termination occurs because of a breach of this Agreement
by the Company or by Employee or because of a termination of this Agreement by
Company or Employee): (a) the Employee will not, directly or indirectly, within
any parish or municipality in Louisiana or in any other state or foreign
jurisdiction in which customers of the Company are located or reside, solicit,
induce or otherwise contact customers of the Company for the purpose of
soliciting business from the Company's customers, or any other purpose
whatsoever which is detrimental to the Company or its business; (b) the Employee
will not, directly or indirectly, within any parish or municipality in Louisiana
or in any other state or foreign jurisdiction in which Company engages in or has
engaged in business, own, manage, operate, control, be employed by, consult
with, participate in, or be connected in any manner with the ownership,
management, operation or control of any business, enterprise, or entity
(including a sole proprietorship of Employee) which: (i) owns, operates or
controls any geophysical services business, which business includes but is not
limited to the provision of seismic drilling and support services, the
transportation of equipment used in connection with seismic drilling and support
services, and the design and manufacture of such equipment, or (ii) owns,
operates or controls any business which competes with the Company. In the event
of any actual or threatened breach by the Employee of the provisions of this
Agreement, Employee agrees that Company shall not have an adequate remedy at law
and the Company shall be entitled to an injunction restraining the Employee from
owning, managing, operating, controlling, being employed by, participating in,
or being in any way so connected with any activity which is prohibited in this
Section 7 and/or the solicitation of any business on his behalf or on behalf of
others from any customer. Nothing herein stated shall be construed as
prohibiting Company from pursuing any other remedies available to the Company
for such breach or threatened breach including the recovery of damages from the
Employee.
2
<PAGE>
8. PERMITTED BUSINESS. The parties acknowledge that Employee has a fifty
percent (50%) ownership interest in the stock of Birthright Investment Group,
Inc. d/b/a Marsh Equipment Company, a Louisiana corporation ("Marsh Equipment"),
which designs, manufactures and sells equipment that can be used to provide
seismic drilling and support services. Notwithstanding the provisions of
Section 7 of this Agreement, the Company acknowledges and agrees that Employee
may continue to own the interest in Marsh Equipment set forth in this Section 8
without violating the non-competition restrictions and covenants contained in
this Agreement.
9. COMPANY'S OPTION TO PURCHASE MARSH EQUIPMENT. At any time during the
term of this Agreement, the Company shall have the option to purchase all (but
not less than all) of Employee's right, title and interest in and to the stock
of Marsh Equipment for a purchase price of Twenty Thousand Dollars ($20,000)
(the "Company's Option"). The Company's Option shall be exercisable by delivery
of a written notice to the Employee. The closing date for the exercise of the
Company's Option shall be as mutually agreed upon by the Company and the
Employee, but shall not be later than thirty (30) days after delivery of the
written notice referred to in this Section 9.
10. EMPLOYEE'S PUT OF MARSH EQUIPMENT. At any time during the term of
this Agreement, the Employee shall have the right to sell, and to require the
Company to purchase all (but not less than all) of Employee's right, title and
interest in and to the stock of Marsh Equipment for a purchase price of Twenty
Thousand Dollars ($20,000) (the "Employee's Put"). The Employee's Put shall be
exercisable by delivery of a written notice to the Company. The closing date
for the exercise of the Employee's Put shall be as mutually agreed upon by the
Company and the Employee, but shall not be later than thirty (30) days after
delivery of the written notice referred to in this Section 10.
11. REFORMATION/SAVINGS CLAUSE. The parties agree that if either the
length of time or the geographical area of Employee's covenants contained
herein are deemed too restrictive by any court of competent jurisdiction in any
proceeding involving the validity of said covenants, then the court may reduce
the offending restriction to the maximum restriction it deems reasonable under
the circumstances so as to give the maximum permissible effect to the intentions
of the parties as set forth herein, and the court may enforce such provisions as
so reformed.
12. REMEDIES AND EQUITABLE PROVISIONS. The following provisions shall
apply in respect of Employee's covenants and agreements contained in this
Agreement:
(a) Employee acknowledges and agrees that Employee's covenants contained in
this Agreement are reasonable and necessary for the proper protection of Company
and that the Employee's agreements herein not to compete with the Company shall
not hinder Employee in obtaining gainful employment at the termination of this
Agreement in the event Employee shall desire such employment.
(b) Employee acknowledges and agrees that Company does not have an adequate
remedy at law for the breach or threatened breach of Employee's covenants
contained in this Agreement and Employee therefore agrees that Company, in
addition to any other remedy which may be available to it, shall be entitled to
enforce Employee's covenants by injunction or other equitable means.
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(c) The parties agree that if Company should institute litigation against
Employee to enforce any provisions of this Agreement, then the prevailing party
in such litigation shall be entitled to receive, in addition to any other relief
awarded such party, reasonable attorneys' fees in respect of the prosecution or
defense of such litigation.
13. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail
If to Employee: Allen R. Woodard
1902 Sevanne Road
Houma, Louisiana 70360
If to Company: Omni Geophysical, L.L.C.
P.O. Box 3761
Lafayette, Louisiana 70502
14. WAIVER OF BREACH. The waiver or nonenforcement by the Company of a
breach of any provision of this Agreement by the Employee shall not operate or
be construed as a waiver of any subsequent breach by the Employee.
15. ASSIGNMENT. Employee acknowledges that the services to be rendered by
him are unique and personal. Accordingly, Employee may not assign any of his
rights or delegate any of his duties or obligations under this Agreement. The
rights and obligations of Company under this Agreement shall inure to the
benefit of and shall be binding upon the successors and assigns of Company.
16. SEVERABILITY. Every provision of this Agreement is entitled to be
severable. The parties agree that if any term or provision hereof is held to be
illegal, invalid, against public policy or unenforceable for any reason
whatsoever, such illegality or invalidity shall not affect the validity of the
remainder to the Agreement, and the remaining provisions of this Agreement shall
not be affected thereby.
17. AMENDMENTS. No alterations, modifications, amendments or changes
herein shall be effective or binding upon the parties unless the same shall have
been agreed in writing by all the parties.
18. SECTION HEADINGS. Section and other headings in this Agreement are
for reference purposes only, and are in no way intended to describe, interpret,
define or limit the scope or extent of any provision hereof.
19. COUNTERPART EXECUTION. This Agreement may be executed by any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All counterparts shall be construed together and shall constitute one
agreement.
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20. APPLICABLE LAW. Company and Employee acknowledge and agree that the
law of several states could, conceivably, apply to the terms of this Agreement.
In order to provide certainty with respect to the construction, interpretation
and enforcement of this Agreement, it is the intention of the parties that the
internal laws of the State of Louisiana shall govern only the construction,
interpretation, validity and enforcement of each term of the Agreement which
relates to obligations which are intended to be performed or restrictions upon
the activities or conduct of the parties within the State of Louisiana. The
construction, interpretation, validity and enforcement of each term of the
Agreement which relates to obligations to be performed or restrictions upon the
activities or conduct of the parties outside of the State of Louisiana shall be
governed by the law of the State of Texas. The parties to this Agreement have
agreed to this bifurcated choice of law after careful consideration and
reflection.
21. RIGHTS CUMULATIVE. The rights of Company hereunder shall be
cumulative and the enforcement by Company of any right shall not affect in any
way the ability of Company to enforce any other right hereunder or any right or
remedy of Company at law or in equity.
22. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and may not be changed orally but only by agreement in writing
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized managers, and the Employee has hereunto set his hand as of
the day and year first above written.
COMPANY
OMNI GEOPHYSICAL, L.L.C.,
a Louisiana limited liability company
By: /s/ David A. Jeansonne
-----------------------------
David A. Jeansonne, Manager
By: /s/ Roger E. Thomas
-----------------------------
Roger E. Thomas, Manager
EMPLOYEE
/s/ Allen R. Woodard
-----------------------------
Allen R. Woodard
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EXHIBIT 10.8
OMNI GEOPHYSICAL, L.L.C.
------------------------
AND
---
DAVID E. CRAYS
--------------
AMENDED AND RESTATED
--------------------
EMPLOYMENT AND NON-COMPETITION AGREEMENT
----------------------------------------
THIS AMENDED AND RESTATED EMPLOYMENT AND NON-COMPETITION AGREEMENT (the
"Agreement") is made and entered into on the 31st day of October, 1997, but
effective as of October 1, 1997 (the "Effective Date") by and between OMNI
GEOPHYSICAL, L.L.C., a Louisiana limited liability company (hereinafter referred
to as "Company"), and DAVID E. CRAYS, a resident of the State of Louisiana
(hereinafter referred to as "Employee").
WHEREAS, the Company and Employee entered into an Employment and Non-
Competition Agreement (the "Original Agreement") effective as of April 24, 1997
(the "Original Date"); and
WHEREAS, the Company and Employee desire to amend and restate the Original
Agreement effective as of October 1, 1997 upon the terms and conditions
contained herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
agreements herein contained, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. EMPLOYMENT. The Company has hired the Employee and the Employee agreed
to be employed upon the terms and conditions hereinafter set forth.
2. TERM. Unless Employee's employment is terminated at an earlier date
pursuant to Section 8 hereof, this Agreement shall continue in full force and
effect through the second anniversary of the Original Date and from year to year
thereafter subject to the right of Employee or the Company to terminate this
Agreement as of the second anniversary date or any subsequent anniversary date
by written notice given to the other party at least 60 days prior to such
anniversary date. Termination of this Agreement by either party in accordance
with the preceding sentence shall not require a statement of the reason
therefor.
3. COMPENSATION. For the period beginning on the Effective Date and
expiring on the termination of this Agreement, Company shall pay Employee
Eighty-Five Thousand Dollars ($85,000) per annum. All salary payable hereunder
may be increased from time to time by the Board or President, and, if so
increased, shall not thereafter be decreased during the term of this Agreement.
4. OTHER BENEFITS. Employee shall be entitled to participate in all
employee benefit plans or arrangements the Company makes available now or in the
future to its employees (collectively, the "Benefit Plans"). The Company shall
not directly or indirectly make any changes in any Benefit Plan that would
adversely affect Employee's rights or benefits thereunder, unless such
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changes do not result in a proportionately greater reduction in the rights of or
benefits to Employee compared with any other executive officer of the Company.
Any payments or benefits payable to Employee hereunder in respect of any
calendar year during which Employee is employed by the Company for less than the
entire year shall, unless otherwise provided in the applicable Benefit Plan be
prorated in accordance with the number of days in such calendar year during
which he is so employed.
Employee shall be entitled each year, at a time convenient to the Company,
to a vacation during which his salary will be paid in full. Employee shall be
entitled to a vacation of two weeks per year on the same policies as applicable
to employees of the Company generally.
5. REIMBURSEMENT FOR EXPENSES. Employee will be entitled to reimbursement
for ordinary and necessary business expenses incurred from time to time on
behalf of the Company in the performance of his duties hereunder, provided no
such expense will be reimbursed unless Employee will have properly accounted for
expenses to the extent necessary to substantiate the Company's federal income
tax deductions for such expenses under the Internal Revenue Code and the
regulations thereunder or equivalent subsequent legislation.
6. PLACE OF PERFORMANCE. In connection with Employee's employment by the
Company, Employee shall be based at the principal executive offices of the
Company in Lafayette, Louisiana, except for required travel relating to the
Company's business.
7. DUTIES. Employee shall serve as a Vice President and Chief Financial
Officer of the Company. Notwithstanding anything in this Agreement to the
contrary, Employee shall perform such duties and tasks as are customarily
performed by the chief financial officer of similar companies and such other
work as may be assigned to him by the Company's President and Board of
Directors.
8. TERMINATION. This Agreement may be terminated as follows:
(a) Death. Employee's employment shall terminate upon his death.
(b) Disability. If a physician chosen by the Company and reasonably
acceptable to Employee or his legal representatives certifies in writing that
Employee is incapable of discharging the essential functions of his job as the
Chief Financial Officer for a period of 120 consecutive days because of physical
or mental impairment, then the Employee shall be deemed disabled and the Company
shall have the continuing right and option during the period such disability
continues to terminate Employee's employment. Any such termination shall become
effective 30 days after notice of termination is given, unless within such 30-
day period such physician certifies in writing that Employee is no longer
impaired and is capable of discharging the essential functions of his job.
(c) With or Without Cause. The Company may terminate Employee's
employment with or without Cause. For purposes of this Agreement, the Company
shall have "Cause" for termination of Employee's employment hereunder upon the
occurrence of any of the following: (i) the continued
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failure by Employee to substantially perform his duties hereunder in the manner
and at the level as customarily performed by the chief financial officer of
similar companies after demand for substantial performance is delivered by the
Company that identifies the manner in which the Company believes Employee has
not substantially performed his duties, (ii) the Employee's conviction of a
felony, (iii) any acts of dishonesty or deceit by the Employee involving the
Company's business or his performance of his duties hereunder, or (iv) a
material breach of any fiduciary duty of loyalty owed to the Company by the
Employee. Any act, or failure to act, by Employee that is based upon authority
given pursuant to instructions from the President, pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
not constitute "Cause" for termination of Employee's employment with the
Company.
(d) Termination by Employee. Employee may terminate his employment at
any time and for any reason, including (i) for Good Reason (as defined below) or
(ii) in the event of a Change in Control of the Company (as defined below).
For purposes of this Agreement, "Good Reason" shall mean:
(i) the adoption by the Board of any resolution during the term of
this Agreement failing to re-elect Employee as a Vice President and Chief
Financial Officer except in connection with a termination by the Company of
Employee's employment in accordance with the terms and conditions of Sections
8(a), (b) or (c);
(ii) a diminution in Employee's duties, responsibilities or position
in the management of the Company and its subsidiaries, including, without
limitation, (A) the assignment to Employee of duties or responsibilities that
are inconsistent with Employee's position as a Vice President and Chief
Financial Officer of the Company or (B) the demotion of Employee;
(iii) the failure by the Company to pay to Employee any
installment of his salary or to pay any other amounts owed under this Agreement,
which failure continues for a period of 10 days after the Employee gives the
Company notice thereof;
(iv) the failure by the Company to commence, continue or maintain in
effect any Benefit Plan that is required to be provided by the Company pursuant
to this Agreement, unless comparable benefits or compensation are provided in
lieu thereof;
(v) any directive requiring Employee to be based anywhere other than
Lafayette, Louisiana, except for required travel in the ordinary course of the
Company's business; or
(vi) the failure by the Company to obtain the assumption of its
obligations under this Agreement by any successor or assign as contemplated by
Section 15.
For purposes of this Agreement, a "Change in Control of the Company" shall
mean an event (other than an initial equity public offering by the Company or
its successor) with respect to the
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Company that would be required to be reported in response to Item 6(e) of
Schedule 14A of Regulation 14A promulgated under the Securities Exchange Act of
1934 (the "Exchange Act") as in effect on the date hereof; provided that,
without limitation, a Change in Control of the Company shall be deemed to have
occurred if during any period of two consecutive years during the term of this
Agreement, individuals who at the beginning of such period constitute the
managers or Board of Directors cease for any reason to constitute at least fifty
percent (50%) thereof, unless the election of each manager or director who was
not a manager or director at the beginning of such period has been approved in
advance by managers or directors representing at least two-thirds of the
managers or directors then in office who were managers or directors at the
beginning of such period.
(e) Death. Until such time as the Company shall adopt a benefit plan
providing for the payment of death benefits to the Employee in accordance with
Section 4, upon termination of this Agreement as a result of Employee's death,
Employee's estate shall be paid an amount equal to the remaining salary due
under this Agreement, payable in a lump sum within 90 days following the date of
Employee's death.
(f) Disability. Until such time as the Company shall adopt a benefit plan
providing for the payment of disability benefits to the Employee in accordance
with Section 4, during any period that Employee is deemed to be disabled under
Section 8(b) ("disability period"), Employee shall continue to receive his full
salary at the rate then in effect for such period until his employment is
terminated pursuant to Section 8(b). Upon termination of Employee's employment
under Section 8(b), the Company shall pay to Employee in a lump sum in cash
within 30 days of the date of termination all accrued obligations hereunder, and
an amount equal to the remaining salary due under this Agreement and shall
timely furnish to Employee all benefits under any Benefit Plans.
(g) Cause; Other than Good Reason. If Employee's employment shall be
terminated for Cause by the Company, or voluntarily terminated by Employee other
than for Good Reason, this Agreement shall terminate without further obligation
to the Company other than for accrued obligations hereunder, which shall be paid
in a lump sum in cash within 30 days of the date of termination.
(h) Other than Death, Disability or Cause; Good Reason; Change in Control.
If during the term of this Agreement (i) the Company shall terminate Employee's
employment other than for death, disability or Cause or (ii) Employee shall
terminate his employment for Good Reason or following a Change in Control of the
Company, then, in addition to all amounts or compensation to which he is
entitled pursuant to the Company's termination policies and plans then in
effect, Employee shall receive as severance pay an amount equal to the remaining
salary due under this Agreement, payable in a lump sum within 30 days of the
date of termination;
9. CONFIDENTIALITY AND NON-DISCLOSURE OF INFORMATION. Employee
recognizes, acknowledges and agrees that the names of the Company's customers
and its pricing structure, processes, operations, marketing programs, sales
techniques, designs, specifications and other trade secrets (collectively
referred to herein as "Proprietary Information") are valuable, special and
unique assets of the Company. Employee will not, during or after the term of
Employee's employment, directly or indirectly, utilize for the benefit of any
person, business, enterprise or entity other than
4
<PAGE>
Company, or disclose any portion or part of the Company's Proprietary
Information to any person, firm, corporation, association or other entity for
any reason or purpose whatsoever. Furthermore, it is agreed that all data,
lists, papers, memoranda, documents, and all products of Employee's skill,
resulting from Employee's employment herein, shall be and remain the sole and
exclusive property of the Company, and Employee shall execute any and all
agreements and instruments that may be necessary to evidence the Company's
ownership of such property. In the event of a breach or threatened breach by
the Employee of the provisions of this Section 9, the Company shall be entitled
to an injunction restraining the Employee from breaching the terms of this
Agreement. Nothing herein shall be construed as prohibiting the Company from
pursuing any other remedy available to the Company for such breach or threatened
breach, including the recovery of damages from the Employee.
10. COVENANT OF NON-COMPETITION. For a period during Employee's
employment and ending two (2) years after termination of Employee's employment
under this Agreement (whether such termination occurs because of a breach of
this Agreement by the Company or by Employee or because of a termination of this
Agreement by Company or Employee): (a) the Employee will not, directly or
indirectly, within any parish or municipality in Louisiana or in any other state
or foreign jurisdiction in which customers of the Company are located or reside,
solicit, induce or otherwise contact customers of the Company for the purpose of
soliciting business from the Company's customers, or any other purpose
whatsoever which is detrimental to the Company or its business; (b) the Employee
will not, directly or indirectly, within any parish or municipality in Louisiana
or in any other state or foreign jurisdiction in which Company engages in or has
engaged in business, own, manage, operate, control, be employed by, consult
with, participate in, or be connected in any manner with the ownership,
management, operation or control of any business, enterprise, or entity
(including a sole proprietorship of Employee) which: (i) owns, operates or
controls any geophysical services business, which business includes but is not
limited to the provision of seismic drilling and support services, the
transportation of equipment used in connection with seismic drilling and support
services, the design and manufacture of such equipment and the provision of
seismic surveying services, or (ii) owns, operates or controls any business
which competes with the Company. In the event of any actual or threatened
breach by the Employee of the provisions of this Agreement, Employee agrees that
Company shall not have an adequate remedy at law and the Company shall be
entitled to an injunction restraining the Employee from owning, managing,
operating, controlling, being employed by, participating in, or being in any way
so connected with any activity which is prohibited in this Section 10 and/or the
solicitation of any business on his behalf or on behalf of others from any
customer. Nothing herein stated shall be construed as prohibiting Company from
pursuing any other remedies available to the Company for such breach or
threatened breach including the recovery of damages from the Employee.
11. REFORMATION/SAVINGS CLAUSE. The parties agree that if either the
length of time or the geographical area of Employee's covenants contained
herein are deemed too restrictive by any court of competent jurisdiction in any
proceeding involving the validity of said covenants, then the court may reduce
the offending restriction to the maximum restriction it deems reasonable under
the circumstances so as to give the maximum permissible effect to the intentions
of the parties as set forth herein, and the court may enforce such provisions as
so reformed.
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12. REMEDIES AND EQUITABLE PROVISIONS. The following provisions shall
apply in respect of Employee's covenants and agreements contained in this
Agreement:
(a) Employee acknowledges and agrees that Employee's covenants contained in
this Agreement are reasonable and necessary for the proper protection of Company
and that the Employee's agreements herein not to compete with the Company shall
not hinder Employee in obtaining gainful employment at the termination of this
Agreement in the event Employee shall desire such employment.
(b) Employee acknowledges and agrees that Company does not have an adequate
remedy at law for the breach or threatened breach of Employee's covenants
contained in this Agreement and Employee therefore agrees that Company, in
addition to any other remedy which may be available to it, shall be entitled to
enforce Employee's covenants by injunction or other equitable means.
13. NOTICES. Any notice required or permitted to be given under this
Agreement shall be sufficient if in writing, and if sent by certified mail
If to Employee: David E. Crays
2314 Kaliste Saloom
Apartment 1806
Lafayette, Louisiana 70508
If to Company: Omni Geophysical, L.L.C.
P.O. Box 3761
Lafayette, Louisiana 70502
14. WAIVER OF BREACH. The waiver or nonenforcement by the Company of a
breach of any provision of this Agreement by the Employee shall not operate or
be construed as a waiver of any subsequent breach by the Employee.
15. ASSIGNMENT. Employee acknowledges that the services to be rendered by
him are unique and personal. Accordingly, Employee may not assign any of his
rights or delegate any of his duties or obligations under this Agreement. This
Agreement shall be binding upon and shall inure to the benefit of the Company
and any of its successors or assigns. In addition, the Company shall require
any successor or assign (whether direct or indirect, by purchase of all or
substantially all of the Company's assets or capital stock, merger,
consolidation or otherwise) to (i) assume unconditionally and expressly this
Agreement and (ii) agree to perform all of the obligations under this Agreement
in the same manner and to the same extent as would have been required of the
Company had no assignment or succession occurred. In the event of any such
assignment or succession, the term "Company" as used in this Agreement shall
refer also to such successor or assign.
16. SEVERABILITY. Every provision of this Agreement is entitled to be
severable. The parties agree that if any term or provision hereof is held to be
illegal, invalid, against public policy or unenforceable for any reason
whatsoever, such illegality or invalidity shall not affect the validity
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of the remainder to the Agreement, and the remaining provisions of this
Agreement shall not be affected thereby.
17. AMENDMENTS. No alterations, modifications, amendments or changes
herein shall be effective or binding upon the parties unless the same shall have
been agreed in writing by all the parties.
18. SECTION HEADINGS. Section and other headings in this Agreement are
for reference purposes only, and are in no way intended to describe, interpret,
define or limit the scope or extent of any provision hereof.
19. COUNTERPART EXECUTION. This Agreement may be executed by any number of
counterparts with the same effect as if all parties hereto had signed the same
document. All counterparts shall be construed together and shall constitute one
agreement.
20. APPLICABLE LAW. Company and Employee acknowledge and agree that the
law of several states could, conceivably, apply to the terms of this Agreement.
In order to provide certainty with respect to the construction, interpretation
and enforcement of this Agreement, it is the intention of the parties that the
internal laws of the State of Louisiana shall govern only the construction,
interpretation, validity and enforcement of each term of the Agreement which
relates to obligations which are intended to be performed or restrictions upon
the activities or conduct of the parties within the State of Louisiana. The
construction, interpretation, validity and enforcement of each term of the
Agreement which relates to obligations to be performed or restrictions upon the
activities or conduct of the parties outside of the State of Louisiana shall be
governed by the law of the State of Texas. The parties to this Agreement have
agreed to this bifurcated choice of law after careful consideration and
reflection.
21. RIGHTS CUMULATIVE. The rights of Company hereunder shall be
cumulative and the enforcement by Company of any right shall not affect in any
way the ability of Company to enforce any other right hereunder or any right or
remedy of Company at law or in equity.
22. ENTIRE AGREEMENT. This instrument contains the entire agreement of
the parties and may not be changed orally but only by agreement in writing
signed by the party against whom enforcement of any waiver, change, modification
or discharge is sought.
23. PROVISION RE: NON-LIQUIDITY OF COMMON UNITS SUBJECT TO OPTION. For
purposes of Section 23 of this Agreement, "Liquidity Event" means the first to
occur of (a) a merger, consolidation or sale of Omni or sale of all or
substantially all of its assets in exchange for cash and/or stock of a publicly
traded corporation; or (b) the first offering by Omni of its securities
representing its equity ownership to the public pursuant to an effective
registration statement under the Securities Act of 1933, as then in effect, or
any comparable statement under any similar federal statute then in force; or (c)
the sale of Omni or sale of all or substantially all of its assets to a
privately held company for cash. In the event no Liquidity Event has occurred
by the termination of the Vesting Period (as that term is defined in the Option
Agreement between Crays and Omni), then commencing with the end of the Vesting
Period and until such time as a Liquidity Event occurs,
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Omni will pay Crays as additional compensation hereunder one-half percent (0.5%)
of all distributions made during such period to Common Unitholders (as that term
is defined in Omni's Operating Agreement, as amended) pursuant to Sections
6.1(a)(ii) and 6.1(a)(v) of Omni's Operating Agreement, as amended.
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized managers, and the Employee has hereunto set his hand as of
the day and year first above written.
COMPANY
OMNI GEOPHYSICAL, L.L.C.,
a Louisiana limited liability company
By: /s/ Roger E. Thomas
---------------------------------
Roger E. Thomas, Manager
EMPLOYEE
/s/ David E. Crays
---------------------------------
David E. Crays
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EXHIBIT 10.12
OMNI ENERGY SERVICES CORP.
AND
ROGER E. THOMAS
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement" or the "Agreement") is made
and entered into effective as of the 25th day of September, 1997 by and between
OMNI ENERGY SERVICES CORP., a Louisiana corporation ("Omni"), and ROGER E.
THOMAS ("Thomas" or "Employee"). This Option Agreement is subject to the terms
of the Company's Stock Incentive Plan (the "Plan").
W I T N E S S E T H:
WHEREAS, Omni has employed Thomas as its President; and
WHEREAS, in order to retain Thomas as its President, Omni is willing to
grant Thomas options to acquire 300,000 shares of its common stock upon the
terms and conditions described herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and legal sufficiency
of which is hereby acknowledged, Thomas and Omni hereby promise, covenant and
agree as follows:
1. Grant of Option. Omni hereby irrevocably grants to Thomas the right
and option (the "Option") to purchase 300,000 shares of its common stock (the
"Common Shares") on the terms and conditions herein set forth. As of the date
of this Agreement, there are 1,000 Common Shares outstanding.
2. Option Price. The purchase price for each Common Share subject to the
Option shall be the purchase price per share at which Omni Common Shares are
sold to the public at the initial public offering, which is equal to or greater
than the fair market value of the Common Stock on the date hereof.
3. Term of Option; Transferability. The term of the Option shall be from
the date of this Agreement through and including April 30, 2007. The right to
purchase Common Shares under the Option shall vest and become effective as
described in Section 5 of this Option Agreement. Thomas shall not have any
rights of a shareholder of Omni with respect to the Common Shares subject to
this Option until the Option is exercised and the sale of the Common Shares
subject to the Option is closed as provided herein. The Option and all of
Thomas' rights herein are nontransferable, except as provided in Section 9
hereof. The Option and the right to acquire Common Shares pursuant to the
Option shall be completely forfeited if Thomas attempts or actually transfers,
or otherwise disposes of the Option in contravention of Section 9 of this Option
Agreement.
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4. Method of Exercising Option. The Option may also be exercised as
provided in Section 6.4 of the Plan.
5. Vesting. The Options shall vest and become fully earned and
nonforfeitable during the period commencing with the date of this Option
Agreement and ending on July 18, 1999 (the "Vesting Period") as described below:
(a) If Thomas ceases to be employed prior to July 18, 1998, except as
provided in Section 5(d), none of his rights under the Option shall be vested,
and he shall have no right to acquire Common Shares of Omni;
(b) If Thomas remains in the continuous employ of the Company from the
date of this Option Agreement through July 18, 1998, one-half of his rights
under the Option shall be vested, and he shall have the right to acquire 150,000
Common Shares of Omni;
(c) If Thomas remains in the continuous employ of the Company from the
date of this Option Agreement through the end of the Vesting Period, all of his
rights under the Option shall be vested, and he shall have the right to acquire
an additional 150,000 Common Shares of Omni, for a total of 300,000 Common
Shares of Omni;
(d) If Thomas' employment is terminated during the Vesting Period (i)
by Omni without Cause or (ii) by Thomas for Good Reason, as the terms "Cause"
and "Good Reason," as applicable, are defined in Section 6 herein, the Option
shall become immediately exercisable in full for a period of one year after
termination of employment, after which time period the Option shall terminate.
(e) If there is a change in control of Omni, as "Change in Control of
the Company" is defined in Section 10.11 of the Plan, the Option shall become
exercisable as provided in the Plan.
6. Definitions
(a) Cause. For purposes of this Agreement, the Company shall have
"Cause" for Termination of Thomas' employment hereunder upon the occurrence of
any of the following: (i) the continued failure by Employee to substantially
perform his duties hereunder in the manner and at the level as customarily
performed by the president of similar companies after demand for substantial
performance is delivered by the Company that identifies the manner in which the
Company believes Thomas has not substantially performed his duties, (ii) Thomas'
conviction of a felony, (iii) any acts of dishonesty or deceit by Thomas
involving the Company's business or his performance of his duties hereunder, or
(iv) a material breach of any fiduciary duty of loyalty owed to the Company by
Thomas. Any act, or failure to act, by Thomas that is based upon authority
given pursuant to instructions from the President, pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel for the Company shall
not constitute "Cause" for termination of Thomas' employment with the Company.
(b) Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
-2-
<PAGE>
(i) the adoption by the Board of any resolution during the term
of this Agreement failing to re-elect Thomas as the
President except in connection with a termination by the
Company of Thomas' employment on account of his death,
disability or for Cause;
(ii) a diminution in Thomas' duties, responsibilities or position
in the management of the Company and its subsidiaries,
including, without limitation, (A) the assignment to Thomas
of duties or responsibilities that are inconsistent with
Thomas' position as the President of the Company or (B) the
demotion of Thomas;
(iii) the failure by the Company to pay to Thomas any installment
of his salary, which failure continues for a period of 10
days after Thomas gives the Company notice thereof; or
(iv) any directive requiring Thomas to be based anywhere other
than within a thirty-five mile radius of Lafayette,
Louisiana, except for required travel in the ordinary course
of the Company's business.
7. Rights Related to Option. The Option constitutes the right to acquire
Common Shares of Omni, as such Common Shares are more fully described in Omni's
Articles of Incorporation, or any security, instrument, property, or amount of
consideration into which Common Shares of Omni may be exchanged by reason of any
merger, consolidation, recapitalization, reorganization or other transaction.
The Option does not currently constitute equity in Omni, and Thomas shall not be
entitled to vote with the shareholders of Omni on matters on which the
shareholders are entitled to vote as a result of the grant of the Option until
such time as the Option is exercised and Thomas acquires Common Shares.
8. Restriction on Transferability of Option. The Option is not
assignable. Thomas shall not transfer, convey, sell, assign, dispose of, pledge
or otherwise convey the Option or any rights thereunder other than transfers by
will or the laws of descent and distribution. Any such attempted disposition
shall cause an immediate cancellation of the Option and forfeiture of any and
all rights to acquire Common Shares under the Option.
9. Restriction on Transferability Related to Securities Law. Omni shall
have the right to restrict any transfer of the Common Shares acquired as a
result of exercise of the Option during any such period as may be necessary or
advisable to comply with the Securities Act of 1933, as
-3-
<PAGE>
amended. The Common Shares acquired as a result of exercise of the Option have
not been registered under the Securities Act of 1933, and Thomas shall not
transfer, convey, sell, assign, dispose of, pledge or otherwise convey any
Common Shares acquired as a result of exercise of the Option unless (i) such
Common Shares have been registered under the Act or (ii) an exemption from the
registration provisions of the Act is applicable to Thomas' proposed sale,
assignment, pledge, disposition or transfer of such Common Shares.
10. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
11. Headings. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation
hereof.
12. Applicable Law. This Agreement shall be construed, interpreted and
enforced under and in accordance with the internal laws of the State of
Louisiana.
13. Additional Acts. The parties hereto agree, one to the other, that
they will each, at any time and from time to time upon the request of the other
party, do, perform, execute, acknowledge and deliver all such acts, deeds,
assignments, transfers, conveyances, powers of attorney, certificates and
assurances as may be reasonably required to consummate the transactions
contemplated hereby.
14. No Waivers or Modification. No waivers or modifications of any
provisions of this Agreement shall be valid or binding unless in writing and
executed by all of the parties hereto.
15. Multiple Counterparts. This Agreement may be executed in multiple
counterparts and all counterparts shall be considered to be an original and
enforceable as such.
16. Entire Agreement. This Agreement embodies the entire agreement
between the parties and supersedes all prior agreements, warranties,
representation and understandings, if any, relating to the option and may be
amended or supplemented only by an instrument in writing executed by the party
against whom the enforcement is sought.
IN WITNESS WHEREOF, Omni and Thomas have executed this Option Agreement as
of the day and year first above written.
OMNI Energy Services Corp.
By: /s/ David A. Jeansonne
---------------------------------
David A. Jeansonne,
Chief Executive Officer
/s/ Roger E. Thomas
-----------------------------------
Roger E. Thomas
-4-
<PAGE>
EXHIBIT 10.13
OMNI ENERGY SERVICES CORP.
AND
ALLEN R. WOODARD
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement" or the "Agreement") is made
and entered into effective as of the 25th day of September, 1997 by and between
OMNI ENERGY SERVICES CORP., a Louisiana corporation ("Omni"), and ALLEN R.
WOODARD ("Woodard" or "Employee"). This Option Agreement is subject to the
terms of the Company's Stock Incentive Plan (the "Plan").
W I T N E S S E T H:
WHEREAS, Omni has employed Woodard as its Vice President--Marketing and
Business Development and Secretary; and
WHEREAS, in order to retain Woodard as its Vice President--Marketing and
Business Development and Secretary, Omni is willing to grant Woodard options to
acquire 300,000 shares of its common stock upon the terms and conditions
described herein.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein
and for other good and valuable consideration, the receipt and legal sufficiency
of which is hereby acknowledged, Woodard and Omni hereby promise, covenant and
agree as follows:
1. Grant of Option. Omni hereby irrevocably grants to Woodard the right
and option (the "Option") to purchase 300,000 shares of its common stock (the
"Common Shares") on the terms and conditions herein set forth. As of the date
of this Agreement, there are 1,000 Common Shares outstanding.
2. Option Price. The purchase price for each Common Share subject to the
Option shall be the purchase price per share at which Omni Common Shares are
sold to the public at the initial public offering, which is equal to or greater
than the fair market value of the Common Stock on the date hereof.
3. Term of Option; Transferability. The term of the Option shall be from
the date of this Agreement through and including April 30, 2007. The right to
purchase Common Shares under the Option shall vest and become effective as
described in Section 5 of this Option Agreement. Woodard shall not have any
rights of a shareholder of Omni with respect to the Common Shares subject to
this Option until the Option is exercised and the sale of the Common Shares
subject to the Option is closed as provided herein. The Option and all of
Woodard's rights herein are nontransferable, except as provided in Section 9
hereof. The Option and the right to acquire Common Shares pursuant to the
Option shall be completely forfeited if Woodard attempts or actually
-1-
<PAGE>
transfers, or otherwise disposes of the Option in contravention of Section 9 of
this Option Agreement.
4. Method of Exercising Option. The Option may also be exercised as
provided in Section 6.4 of the Plan.
5. Vesting. The Options shall vest and become fully earned and
nonforfeitable during the period commencing with the date of this Option
Agreement and ending on July 18, 1999 (the "Vesting Period") as described below:
(a) If Woodard ceases to be employed prior to July 18, 1998, except as
provided in Section 5(d), none of his rights under the Option shall be vested,
and he shall have no right to acquire Common Shares of Omni;
(b) If Woodard remains in the continuous employ of the Company from
the date of this Option Agreement through July 18, 1998, one-half of his rights
under the Option shall be vested, and he shall have the right to acquire 150,000
Common Shares of Omni;
(c) If Woodard remains in the continuous employ of the Company from
the date of this Option Agreement through the end of the Vesting Period, all of
his rights under the Option shall be vested, and he shall have the right to
acquire an additional 150,000 Common Shares of Omni, for a total of 300,000
Common Shares of Omni;
(d) If Woodard's employment is terminated during the Vesting Period
(i) by Omni without Cause or (ii) by Woodard for Good Reason, as the terms
"Cause" and "Good Reason," as applicable, are defined in Section 6 herein, the
Option shall become immediately exercisable in full for a period of one year
after termination of employment, after which time period the Option shall
terminate.
(e) If there is a change in control of Omni, as "Change in Control of
the Company" is defined in Section 10.11 of the Plan, the Option shall become
exercisable as provided in the Plan.
6. Definitions
(a) Cause. For purposes of this Agreement, the Company shall have
"Cause" for Termination of Woodard's employment hereunder upon the occurrence of
any of the following: (i) the continued failure by Employee to substantially
perform his duties hereunder in the manner and at the level as customarily
performed by the vice president--marketing and business development and
secretary of similar companies after demand for substantial performance is
delivered by the Company that identifies the manner in which the Company
believes Woodard has not substantially performed his duties, (ii) Woodard's
conviction of a felony, (iii) any acts of dishonesty or deceit by Woodard
involving the Company's business or his performance of his duties hereunder, or
(iv) a material breach of any fiduciary duty of loyalty owed to the Company by
Woodard. Any act, or failure to act, by Woodard that is based upon authority
given pursuant to instructions from the President, pursuant to a resolution duly
adopted by the Board or based upon the advice of counsel
-2-
<PAGE>
for the Company shall not constitute "Cause" for termination of Woodard's
employment with the Company.
(b) Good Reason. For purposes of this Agreement, "Good Reason" shall
mean:
(i) the adoption by the Board of any resolution during the term of
this Agreement failing to re-elect Woodard as the Vice President--Marketing and
Business Development except in connection with a termination by the Company of
Woodard's employment on account of his death, disability or for Cause;
(ii) a diminution in Woodard's duties, responsibilities or position
in the management of the Company and its subsidiaries, including, without
limitation, (A) the assignment to Woodard of duties or responsibilities that are
inconsistent with Woodard's position as the Vice President--Marketing and
Business Development of the Company or (B) the demotion of Woodard;
(iii) the failure by the Company to pay to Woodard any installment
of his salary, which failure continues for a period of 10 days after Woodard
gives the Company notice thereof; or
(iv) any directive requiring Woodard to be based anywhere other than
within a thirty-five mile radius of Lafayette, Louisiana, except for required
travel in the ordinary course of the Company's business.
7. Rights Related to Option. The Option constitutes the right to acquire
Common Shares of Omni, as such Common Shares are more fully described in Omni's
Articles of Incorporation, or any security, instrument, property, or amount of
consideration into which Common Shares of Omni may be exchanged by reason of any
merger, consolidation, recapitalization, reorganization or other transaction.
The Option does not currently constitute equity in Omni, and Woodard shall not
be entitled to vote with the shareholders of Omni on matters on which the
shareholders are entitled to vote as a result of the grant of the Option until
such time as the Option is exercised and Woodard acquires Common Shares.
-3-
<PAGE>
8. Restriction on Transferability of Option. The Option is not
assignable. Woodard shall not transfer, convey, sell, assign, dispose of,
pledge or otherwise convey the Option or any rights thereunder other than
transfers by will or the laws of descent and distribution. Any such attempted
disposition shall cause an immediate cancellation of the Option and forfeiture
of any and all rights to acquire Common Shares under the Option.
9. Restriction on Transferability Related to Securities Law. Omni shall
have the right to restrict any transfer of the Common Shares acquired as a
result of exercise of the Option during any such period as may be necessary or
advisable to comply with the Securities Act of 1933, as amended. The Common
Shares acquired as a result of exercise of the Option have not been registered
under the Securities Act of 1933, and Woodard shall not transfer, convey, sell,
assign, dispose of, pledge or otherwise convey any Common Shares acquired as a
result of exercise of the Option unless (i) such Common Shares have been
registered under the Act or (ii) an exemption from the registration provisions
of the Act is applicable to Woodard's proposed sale, assignment, pledge,
disposition or transfer of such Common Shares.
10. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective heirs, legal representatives,
successors and assigns.
11. Headings. The headings contained in this Agreement are for reference
purposes only and shall not in any way affect the meaning or interpretation
hereof.
12. Applicable Law. This Agreement shall be construed, interpreted and
enforced under and in accordance with the internal laws of the State of
Louisiana.
13. Additional Acts. The parties hereto agree, one to the other, that
they will each, at any time and from time to time upon the request of the other
party, do, perform, execute, acknowledge and deliver all such acts, deeds,
assignments, transfers, conveyances, powers of attorney, certificates and
assurances as may be reasonably required to consummate the transactions
contemplated hereby.
14. No Waivers or Modification. No waivers or modifications of any
provisions of this Agreement shall be valid or binding unless in writing and
executed by all of the parties hereto.
15. Multiple Counterparts. This Agreement may be executed in multiple
counterparts and all counterparts shall be considered to be an original and
enforceable as such.
16. Entire Agreement. This Agreement embodies the entire agreement
between the parties and supersedes all prior agreements, warranties,
representation and understandings, if any, relating to the option and may be
amended or supplemented only by an instrument in writing executed by the party
against whom the enforcement is sought.
-4-
<PAGE>
IN WITNESS WHEREOF, Omni and Woodard have executed this Option Agreement as
of the day and year first above written.
OMNI Energy Services Corp.
By: /s/ David A. Jeansonne
---------------------------------
David A. Jeansonne,
Chief Executive Officer
/s/ Allen R. Woodard
------------------------------------
Allen R. Woodard
-5-
<PAGE>
EXHIBIT 11.1
OMNI GEOPHYSICAL LLC
STATEMENT OF COMPUTATION OF PER SHARE EARNINGS
<TABLE>
<CAPTION>
165-DAY NINE MONTHS
PERIOD ENDED ENDED
DECEMBER 31, SEPTEMBER
1996 30, 1997
------------ -----------
<S> <C> <C>
Primary earnings per share:
Pro forma net income(a).............................. $ 816,520 $ 2,801,403
Preferred dividend requirements...................... (180,328) (390,822)
----------- -----------
Income applicable to common shares................... $ 636,192 $ 2,410,581
=========== ===========
Weighted average number of units outstanding......... 101,263 102,428
Shares per unit...................................... 105.75 105.75
----------- -----------
Weighted average number of shares.................... 10,708,485 10,831,665
Shares from assumed exercise of options.............. 71,393 71,393
----------- -----------
10,779,878 10,903,058
=========== ===========
Earnings per share................................... $ 0.06 $ 0.22
=========== ===========
</TABLE>
- --------
(a) OMNI Geophysical is a limited liability company exempt from income tax at
the entity level, and thus the historical financial statements show no
provision for income taxes. The Company, however, is a corporation that
will pay income taxes at the corporate level. This pro forma adjustment
reflects a provision for income taxes on the net income of OMNI
Geophysical at a combined federal and state tax rate of 40%. See "Change
in Tax Status and Related Distribution."
<PAGE>
EXHIBIT 21
SUBSIDIARY LIST
FOR
OMNI ENERGY SERVICES CORP.
Upon completion of the Share Exchange (as defined in the Prospectus which
forms a part of this Registration Statement), the following will become
subsidiaries of OMNI Energy Services Corp.
State of Incorporation
Subsidiary or Organization
- ---------- ----------------------
OMNI Geophysical, LLC Louisiana
American Aviation, LLC Missouri
OMNI Marine & Supply, Inc. Louisiana
Leonard J. Chauvin, Jr., Inc. Louisiana
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our
reports (and to all references to our Firm) included in or made a part of this
registration statement.
/s/ Arthur Andersen LLP
-------------------------------------
Arthur Andersen LLP
New Orleans, Louisiana
November 5, 1997
<PAGE>
EXHIBIT 24.2
POWER OF ATTORNEY
BE IT KNOWN, that the undersigned, in his capacity as a member of the Board
of Directors of OMNI Energy Services Corp. (the "Company"), does hereby make,
constitute and appoint each of David A. Jeansonne, Roger E. Thomas and David E.
Crays, or any one of them, his true and lawful attorney-in-fact and agent, with
full power of substitution, for him and in his name, place and stead, to sign
any and all amendments (including post-effective amendments) to the Company's
Registration Statement on Form S-1 (Registration Statement No. 333-36561), and
to file the same with all exhibits thereto, and other documents in connection
therewith, with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each and
every act and thing requisite and ratifying and confirming all that said
attorney-in-fact and agent or his substitute or substitutes may lawfully do or
cause to be done by virtue hereof.
/s/ William W. Rucks, IV
-----------------------------------
William W. Rucks, IV
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM SEPTEMBER
30, 1997 FILED ON FORM S-1 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,318
<SECURITIES> 0
<RECEIVABLES> 12,691
<ALLOWANCES> (375)
<INVENTORY> 2,316
<CURRENT-ASSETS> 18,020
<PP&E> 31,317
<DEPRECIATION> (2,161)
<TOTAL-ASSETS> 55,866
<CURRENT-LIABILITIES> 12,425
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 7,231
<TOTAL-LIABILITY-AND-EQUITY> 55,866
<SALES> 33,989
<TOTAL-REVENUES> 33,989
<CGS> 24,806
<TOTAL-COSTS> 28,107
<OTHER-EXPENSES> (12)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,226
<INCOME-PRETAX> 4,668
<INCOME-TAX> 1,867
<INCOME-CONTINUING> 2,801
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,801
<EPS-PRIMARY> .22
<EPS-DILUTED> .22
</TABLE>
