<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 26, 1997.
REGISTRATION NO. 333-
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------
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
TITLE OF EACH CLASS OF AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED PRICE(1) REGISTRATION FEE
- ------------------------------------------------------------------------------
<S> <C> <C>
Common Stock, $0.01 par value
per share...................... $60,375,000 $18,296
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</TABLE>
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(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.
----------------
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 September 26, 1997
PROSPECTUS
3,500,000 SHARES
OMNI ENERGY SERVICES CORP.
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. Application has
been made for inclusion of the Common Stock on the Nasdaq National Market under
the symbol "OMNI."
-------------
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 Discounts and Proceeds to
to Public Commissions(1) Company(2)
- -------------------------------------------------------------------------------
<S> <C> <C> <C>
Per Share.............. $ $ $
- -------------------------------------------------------------------------------
Total(3)............... $ $ $
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</TABLE>
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(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, 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>
[EQUIPMENT PHOTOGRAPHS]
------------------
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."
2
<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.
The Company is the leading provider of seismic drilling services throughout the
Transition Zone. 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. As a result, 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
("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 this 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, which management believes is superior to that generally
available in the market. 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 non-binding letter of intent 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.
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.,
Incorporated, and currently has 16 survey crews devoted primarily to the
seismic survey market in the Transition Zone. 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. During the first
six months of 1997, 3-D seismic data was acquired from approximately 4,100
square miles of the Transition Zone in Louisiana.
4
<PAGE>
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 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 non-binding
letter of intent to acquire American Helicopter and has separately contracted
for delivery of two heavy-lift helicopters 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.
Many of the Company's customers who operate in the Transition Zone also have
extensive international operations, but 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
there were reliable and cost-effective third party service providers operating
internationally. 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.
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.
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 net proceeds of the Offering will be
used to repay approximately $33.4 million
of indebtedness. The remainder of the
proceeds, estimated to be approximately
$11.5 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) 1,090,018 shares issuable upon exercise of outstanding
options or options that will be granted in connection with the Offering and
(ii) 528,000 shares reserved for issuance under the Company's Stock
Incentive Plan. 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."
In addition, prior to the Share Exchange, (i) all of the undistributed
earnings of OMNI Geophysical through the date of the Share Exchange, estimated
to be approximately $ million, will be distributed to the current 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"). 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, the 201-
day period ended July 19, 1996 and the six months ended June 30, 1996 reflect
the results of OGC. Financial data for the 165-day period ended December 31,
1996 and the six months ended June 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>
PREDECESSOR SUCCESSOR PREDECESSOR SUCCESSOR
------------------------- ------------ ----------- ------------
201-DAY PRO FORMA PRO FORMA
YEAR ENDED PERIOD 165-DAY AS ADJUSTED(A) SIX MONTHS SIX MONTHS AS ADJUSTED(A)
DECEMBER 31, ENDED PERIOD ENDED YEAR ENDED ENDED ENDED SIX MONTHS
--------------- JULY 19, DECEMBER 31, DECEMBER 31, JUNE 30, JUNE 30, ENDED JUNE 30,
1994 1995 1996 1996 1996 1996 1997 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...... $7,268 $12,690 $10,017 $ 10,942 $ 24,271 $8,820 $ 17,035 $ 19,381
Operating expenses(b).. 5,025 8,704 6,814 8,114 17,798 5,978 12,305 14,412
------ ------- ------- ------------ ------------ ------ ------------ ------------
Gross profit........... 2,243 3,986 3,203 2,828 6,473 2,842 4,730 4,969
General and
administrative
expenses.............. 1,079 1,791 789 1,050 2,158 711 1,472 1,971
------ ------- ------- ------------ ------------ ------ ------------ ------------
Operating income....... 1,164 2,195 2,414 1,778 4,315 2,131 3,258 2,998
Interest expense(b).... 97 148 151 437 614 121 622 307
Other expense (income),
net................... (8) 7 (6) (20) (25) (5) 5 5
------ ------- ------- ------------ ------------ ------ ------------ ------------
Net income............. $1,075 $ 2,040 $ 2,269 $ 1,361 $ 3,726 $2,015 $ 2,631 $ 2,686
====== ======= ======= ============ ============ ====== ============ ============
UNAUDITED PRO FORMA
DATA:
Net income as reported
above................. $1,075 $ 2,040 $ 2,269 $ 1,361 $ 3,726 $2,015 $ 2,631 $ 2,686
Pro forma provision for
income taxes(c)....... 430 816 908 544 1,490 806 1,052 1,075
------ ------- ------- ------------ ------------ ------ ------------ ------------
Pro forma net income... $ 645 $ 1,224 $ 1,361 $ 817 $ 2,236 $1,209 $ 1,579 $ 1,611
====== ======= ======= ============ ============ ====== ============ ============
Pro forma net income
per common share...... $ 0.06(d) $ 0.15(e) $ 0.13(d) $ 0.10(e)
============ ============ ============ ============
Pro forma weighted
average common shares. 10,807,210(d) 15,387,227(e) 10,885,499(d) 15,465,516(e)
STATEMENT OF CASH FLOW
DATA:
Cash provided by (used
in)
operating activities.. $ 806 $ 1,781 $ 1,456 $ 606 $ 803 $ 1,076
Cash provided by (used
in) investing
activities............ (830) (1,106) (1,435) (12,479) (942) (5,719)
Cash provided by (used
in) financing
activities............ 135 (557) (247) 11,912 65 6,576
OTHER FINANCIAL DATA:
Depreciation and
amortization(b)....... $ 228 $ 372 $ 275 $ 697 $ 1,221 $ 229 $ 880 $ 918
EBITDA(f).............. 1,392 2,567 2,689 2,475 5,536 2,360 4,138 3,916
</TABLE>
<TABLE>
<CAPTION>
AS OF JUNE 30, 1997
(UNAUDITED)
----------------------
PRO FORMA
AS
HISTORICAL ADJUSTED(G)
---------- -----------
(IN THOUSANDS)
<S> <C> <C>
BALANCE SHEET DATA:
Working capital......................................... $5,297 $27,463
Property, plant and equipment, net...................... 18,644 25,427
Total assets............................................ 31,866 61,168
Long-term debt, less current maturities................. 15,908 8,904
Shareholders' equity.................................... 8,731 47,481
</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 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.
(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
$172,000 for the six months ended June 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 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) The unaudited pro forma as adjusted balance sheet data gives effect to (i)
the acquisition of substantially all of the assets of American Aviation,
(ii) the Share Exchange, (iii) the Preferred Unit Repurchase, (iv) the LLC
Distribution and (v) the Offering and the application of the 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 262 at January 1, 1996 to approximately 600 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
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<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. 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 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
termination without penalty at the option of the customer, which could
substantially reduce the amount of backlog currently reported. Termination of
a number of large projects in the Company's existing backlog could
10
<PAGE>
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 22 projects for two customers. See "Management's Discussion
and Analysis of Financial Condition and Results of Operations--General--
Backlog" and "Business--Backlog."
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.
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."
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<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 1,090,018 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 application has been made to list the Common Stock offered hereby on
the Nasdaq National Market, 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 $10.94 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
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<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 are
owned by persons who are not U.S. citizens. The Articles of Incorporation
provide that any transfer or purported transfer of shares of Common Stock that
would result in the ownership by persons who are not U.S. citizens of more
than 24% of the then outstanding shares of Common Stock would not become
effective against the Company, and the Company would have the power to deny
voting and dividend rights with respect to such shares. 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."
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<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 to provide long-
line helicopter services to the geophysical industry.
In July 1996, OMNI Geophysical was formed to facilitate the OGC Acquisition,
pursuant to which OMNI Geophysical acquired substantially all of the assets of
OGC, the successor to the business of OMNI Drilling. In July 1997, OMNI
Geophysical also acquired substantially all of the assets of American
Aviation.
The Company 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. Prior to
the Share Exchange, OMNI Geophysical will effect the Preferred Unit Repurchase
pursuant to which it will repurchase all of its outstanding preferred units
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.
Prior to the Share Exchange, all of the 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. At June 30, 1997, OMNI
Geophysical's undistributed earnings totaled approximately $3.7 million.
Management estimates that the Company will have additional undistributed
earnings of approximately $ million, for an aggregate of $ million,
at the time of the Share Exchange (assuming the Share Exchange is consummated
on , 1997). Purchasers of Common Stock in the Offering will not
receive any portion of the LLC Distribution.
The LLC Distribution will be funded with the proceeds of a $10.0 million
term loan from Hibernia National Bank bearing interest at the London Interbank
Offered Rate ("LIBOR") plus 1.0% which will be secured by the cash distributed
in the LLC Distribution. Following completion of the Offering, amounts
outstanding under this 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
upon completion of the Offering. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and Capital
Resources" and "Certain Transactions."
OGC historically made cash distributions to its shareholders in order to
provide such shareholders with a cash return and to fund federal and state
income tax liabilities payable by such shareholders that resulted from OGC's
status as an S corporation. 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 $572,858 since
January 1, 1997 in order to fund federal and state tax liabilities payable by
its members. See "Certain Transactions."
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<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 $33.4 million of the net proceeds to repay the following
indebtedness (including prepayment penalties and accrued interest thereon):
<TABLE>
<CAPTION>
ESTIMATED
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)................. $ 4,669,439 8.6%
First National Bank of Lafayette(b).................... 518,459 8.5%
The CIT Group/Equipment Financing, Inc.(c)............. 6,361,437 9.4%
Transamerica Insurance Finance Corporation(d).......... 463,329 7.9%
Hibernia National Bank (Vehicle Financing)(e).......... 864,809 9.0%
Hibernia National Bank (Revolving Line of Credit)(f)... 7,495,000 9.0%
Hibernia National Bank (Construction/Term Loan)(g)..... 2,600,000 --
Hibernia National Bank (American Aviation)(h).......... 6,630,208 9.0%
OMNI Geophysical Corporation(i)........................ 1,833,355 8.5%
American Aviation Incorporated(j)...................... 1,000,000 8.5%
Transamerica Insurance Finance Corporation(k).......... 340,195 8.0%
-----------
Total................................................ $32,776,231
===========
</TABLE>
- --------
(a) Bears interest at the London Interbank Offered Rate ("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 $93,000).
(b) Matures on January 3, 2000. Proceeds from this loan were used to
consolidate financing incurred to purchase 43 trucks, which serve as
collateral for the loan.
(c) Of the principal outstanding, $5,361,437 bears interest at LIBOR plus
3.75% (the "Variable Rate") and matures on July 19, 2001. Prior to August
19, 1998, the Company can 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 $268,072) of the amount of indebtedness prepaid,
depending on the date of prepayment. The proceeds of this portion of the
loan were used to finance 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 an aggregate of up to $4,000,000 or 90% of the
cost of the collateral securing amounts advanced under this amendment.
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
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 22 separate motor vehicle loans incurred to purchase 34
trucks, which 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 August 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 and its Carencro
facilities. 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 $2.6 million
prior to the completion of the Offering. Proceeds 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. The Company will incur a prepayment penalty
of 1.0% of the prepayment amount (approximately $67,000).
(i) Matures on June 30, 2001. This promissory note was issued to OGC as part
of the consideration for the OGC Acquisition. See "Certain Transactions."
(j) Payable on demand. This promissory note was issued in connection with the
acquisition of substantially all of the assets of American Aviation.
(k) 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 the remainder of the estimated net proceeds
(approximately $11.5 million) 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."
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<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 July 31,
1997 would have been $2.6 million, or $0.21 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
offering expenses estimated to be $4.1 million), the pro forma net tangible
book value of the Company at July 31, 1997 would have been approximately $47.5
million or $3.06 per share of Common Stock. This represents an immediate
increase in net tangible book value of $2.85 per share of Common Stock to
current holders of Common Stock and an immediate dilution of approximately
$10.94 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 July 31,
1997..................................................... $0.21
Increase attributable to new investors.................... 2.85
-----
Adjusted pro forma net tangible book value per share after
the Offering............................................... 3.06
------
Dilution per share to new investors......................... $10.94
======
</TABLE>
The following table summarizes, on a pro forma as adjusted basis, at July
31, 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% $ 2,551,000 5% $ 0.21
New investors.............. 3,500,000 23% 49,000,000 95% $14.00
---------- --- ----------- ----
Total.................... 15,500,000 100% $51,551,000 $100%
========== === =========== ====
</TABLE>
18
<PAGE>
CAPITALIZATION
The following table sets forth the capitalization of OMNI Geophysical as of
June 30, 1997, (i) on an actual basis, (ii) on a pro forma basis giving effect
to the Share Exchange, the LLC Distribution, the Preferred Unit Repurchase and
the acquisition of substantially all of the assets of American Aviation 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 JUNE 30, 1997
---------------------------
PRO FORMA
PRO AS
ACTUAL FORMA ADJUSTED(A)
------- ------- -----------
(IN THOUSANDS)
<S> <C> <C> <C>
Current maturities of long-term debt............... $ 2,985 $ 3,622 $ --
======= ======= =======
Long-term debt (less current maturities) and
revolving line of credit.......................... $15,908 $31,633 $ 8,904
------- ------- -------
Equity:
Preferred units, par value $1,000 per unit; 5,000
units issued and outstanding (actual), no units
issued and outstanding (pro forma and pro forma
as adjusted).................................... 5,000 -- --
Common units, par value $0.01 per unit; 103,263
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....................... 78 2,431 47,326
Retained earnings................................ 3,652 -- --
------- ------- -------
Total equity................................... 8,731 2,551 47,481
------- ------- -------
Total capitalization............................... $24,639 $34,184 $56,385
======= ======= =======
</TABLE>
- --------
(a) Adjusted to reflect the Offering and the application of the net proceeds
therefrom to reduce indebtedness by approximately $26.4 million as of June
30, 1997. However, as of September 30, 1997, the Company's total long-term
obligations, which are to be repaid with a portion of the net proceeds of
the Offering, are expected to be $32.7 million.
(b) Does not include (i) 1,090,018 shares issuable upon exercise of
outstanding options or options that will be granted in connection with the
Offering and (ii) 528,000 shares reserved for issuance under the Company's
Stock Incentive Plan. 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 six months ended
June 30, 1997 are derived from the unaudited financial statements of OMNI
Geophysical for such periods and the selected financial data for the six
months ended June 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 PREDECESSOR SUCCESSOR
------------------------------------------------- ------------ ----------- -----------
201-DAY
PERIOD 165-DAY SIX MONTHS SIX MONTHS
YEAR ENDED DECEMBER 31, ENDED PERIOD ENDED ENDED ENDED
--------------------------------------- JULY 19, DECEMBER 31, JUNE 30, JUNE 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 $10,017 $ 10,942 $8,820 $ 17,035
Operating expenses(a).. 2,052 2,544 5,025 8,704 6,814 8,114 5,978 12,305
------ ------ ------ ------- ------- ---------- ------ ----------
Gross profit........... 1,580 1,428 2,243 3,986 3,203 2,828 2,842 4,730
General and
administrative
expenses.............. 892 756 1,079 1,791 789 1,050 711 1,472
------ ------ ------ ------- ------- ---------- ------ ----------
Operating income....... 688 672 1,164 2,195 2,414 1,778 2,131 3,258
Interest expense....... 36 56 97 148 151 437 121 622
Other expense (income),
net................... -- -- (8) 7 (6) (20) (5) 5
------ ------ ------ ------- ------- ---------- ------ ----------
Net income............. $ 652 $ 616 $1,075 $ 2,040 $ 2,269 $ 1,361 $2,015 $ 2,631
====== ====== ====== ======= ======= ========== ====== ==========
UNAUDITED PRO FORMA
DATA:
Net income as reported
above................. $ 652 $ 616 $1,075 $ 2,040 $ 2,269 $ 1,361 $2,015 $ 2,631
Pro forma provision for
income taxes(b)....... 261 246 430 816 908 544 806 1,052
------ ------ ------ ------- ------- ---------- ------ ----------
Pro forma net income... $ 391 $ 370 $ 645 $ 1,224 $ 1,361 $ 817 $1,209 $ 1,579
====== ====== ====== ======= ======= ========== ====== ==========
Pro forma net income
per common share(c)... $ 0.06 $ 0.13
========== ==========
Pro forma weighted
average common
shares(c)............. 10,807,210 10,885,499
STATEMENT OF CASH FLOW
DATA:
Cash provided by (used
in) operating
activities............ $ 577 $ 463 $ 806 $ 1,781 $ 1,456 $ 606 $ 803 $ 1,076
Cash provided by (used
in) investing
activities............ (850) (236) (830) (1,106) (1,435) (12,479) (942) (5,719)
Cash provided by (used
in) financing
activities............ 343 (250) 135 (557) (247) 11,912 65 6,576
OTHER FINANCIAL DATA:
Depreciation and
amortization(a)....... $ 92 $ 151 $ 228 $ 372 $ 275 $ 697 $ 229 $ 880
EBITDA(d).............. 780 823 1,392 2,567 2,689 2,475 2,360 4,138
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF
------------------------------------------- JUNE 30,
1992 1993 1994 1995 1996(E) 1997
----------- ----------- ----- ----- ------- -----------
(IN THOUSANDS)
(UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA:
Working capital........ $ 473 $ 755 $ 496 $ 997 $1,600 $5,297
Property, plant and
equipment, net........ 797 882 1,492 2,174 13,780 18,644
Total assets........... 1,491 2,134 4,044 5,429 20,386 31,866
Long-term debt, less
current maturities.... 625 510 434 341 10,575 15,908
Shareholders' equity... 660 1,142 1,588 2,863 5,343 8,731
</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 and OMNI Geophysical 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 $172,000 for
the six months ended June 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. See "The Company."
(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 general 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 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.
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 work force 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 $61.2 million, compared to $29.6 million
at August 31, 1996. 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 and the
revenue generated from the backlog. Historically, the Company has not
experienced a large volume of project terminations, and those projects that
have been terminated have typically been replaced by unscheduled projects.
Nevertheless, 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 Acquisition. On September 10, 1997, the Company entered into a non-
binding letter of intent to acquire American Helicopter for $750,000 in cash
and $2.75 million in Common Stock. 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. The
acquisition of American Helicopter is anticipated to occur on or before
January 31, 1998. There can be no assurance that a binding contract relating
to this acquisition will be executed or that this acquisition 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. 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. The historical results of operations
discussed below analyze the results of operations of OGC for the periods prior
to July 19, 1996 and the results of operations of OMNI Geophysical for the
periods after July 19, 1996. Because the effect of the OGC Acquisition is to
reduce the comparability of results of operations before and after July 19,
1996 for the reasons discussed above, and because the historical comparisons
presented below include periods that are not comparable due to different
lengths and the effect of seasonality, management is also
23
<PAGE>
presenting a pro forma comparison of results of operations for the years ended
December 31, 1995 and December 31, 1996 as if the OGC Acquisition had occurred
on January 1, 1995. These pro forma results do not include the results of
operations of any of the Company's recent or pending acquisitions.
Pro Forma Year Ended December 31, 1996 Compared to Pro Forma Year Ended
December 31, 1995
<TABLE>
<CAPTION>
PRO FORMA
--------------------------
YEAR ENDED YEAR ENDED
DECEMBER 31, DECEMBER 31,
1995 1996
------------ ------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
Operating revenues............................. $12,689,772 $20,959,110
Operating expenses............................. 8,777,691 15,163,489
----------- -----------
Gross profit................................... 3,912,081 5,795,621
General and administrative expenses............ 1,134,038 1,839,212
----------- -----------
Operating income............................... 2,778,043 3,956,409
Interest expense............................... 925,355 935,617
Other income (expense)......................... (6,377) 25,001
----------- -----------
Net income..................................... $ 1,846,311 $ 3,045,793
=========== ===========
</TABLE>
Pro forma 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 55 support equipment units at December
31, 1996. The Company employed 262 employees for both field and administrative
operations at December 31, 1995 compared to 522 at December 31, 1996, a 99%
increase.
Pro forma operating expenses increased 73%, from $8.8 million in 1995 to
$15.2 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 49%, from $4.1 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.
Pro forma gross profit increased 49%, from $3.9 million in 1995 compared to
$5.8 million in 1996; however, gross profit margins fell from 31% in 1995 to
28% 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.
Pro forma general and administrative expenses increased 64%, from $1.1
million in 1995 to $1.8 million in 1996, primarily due to an increase in
office personnel and insurance costs. 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. Total general and
administrative expense as a percentage was 9% in both 1995 and 1996.
24
<PAGE>
Pro forma interest expense remained unchanged at $0.9 million in 1995 and
1996. A decrease in the interest rates charged on current and long-term debt
from 1995 to 1996 offset the higher debt levels experienced by the Company in
1996. At December 31, 1995, the interest rates on then existing debt ranged
from 8.25% to 11%. At December 31, 1996, the 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.
Six Months Ended June 30, 1997 Compared to Six Months Ended June 30, 1996
Operating revenues increased 93%, from $8.8 million in the first six months
of 1996 to $17.0 million in the first six months of 1997, primarily due to the
increase in industry demand for 3-D seismic data and to the Company's
increased capacity as measured by drilling units and support equipment. The
Company had approximately 41 drilling units and 32 support equipment units at
June 30, 1996 compared to 87 drilling units and 75 support equipment units at
June 30, 1997. The Company employed 300 employees for both field and
administrative operations at June 30, 1996 compared to 439 at June 30, 1997, a
46% increase. The Company's newly formed survey division generated
approximately $300,000 in revenue during the first six months of 1997.
Operating expenses increased 105%, from $6.0 million in the first six months
of 1996 to $12.3 million in the first six months of 1997. Repair and
maintenance costs increased 100%, from $0.9 million in the first six months of
1996 to $1.8 million in the first six 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 100%, from $2.5 million in
the first six months of 1996 to $5.0 million in the first six months of 1997,
primarily due to the significant increase in the Company's workforce.
Explosive costs increased 100%, from $0.7 million in the first six months of
1996 to $1.4 million in the first six months of 1997, due primarily to an
increase in the number of projects for which the Company provided explosives.
Depreciation expense increased 300%, from $0.2 million in the first six months
of 1996 to $0.8 million in the first six months of 1997, due to the increased
number of seismic drilling and support equipment units and the stepped-up
basis in such units that resulted from the OGC Acquisition. In addition, due
to the increased volume of the Company's operations, supplies expense
increased 80% from $0.5 million in the first six months of 1996 to $0.9
million in the first six months of 1997.
Gross profit increased 68%, from $2.8 million in the first six months of
1996 to $4.7 million in the first six months of 1997; however, gross profit
margins fell from 32% in the first six months of 1996 to 28% in the first six
months of 1997, primarily due to the start-up costs of $0.4 million related to
the survey division and an increase in depreciation expense due to the step-up
in value of equipment acquired from OGC.
General and administrative expenses increased 114%, from $0.7 million in the
first six months of 1996 to $1.5 million in the first six months of 1997,
primarily due to additions of office personnel to support the Company's
expanded operations; however, general and administrative expenses, as a
percentage of revenues, increased from 8% in the first six months of 1996 to
9% in the first six months of 1997. Payroll, insurance and payroll taxes
increased 80%, from $0.5 million in the first six months of 1996 to $0.9
million in the first six months of 1997.
Interest expense increased 500%, from $0.1 million in the first six months
of 1996 to $0.6 million in the first six 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.
165-day Period Ended December 31, 1996 Compared to 201-day Period Ended July
19, 1996
Operating revenues increased 9%, from $10.0 million in the 201-day period
ended July 19, 1996 (the "201-day period") to $10.9 million in the 165-day
period ended December 31, 1996 (the "165-day period"), primarily due to the
increase in demand for the Company's seismic drilling services. In order to
meet this continued increased demand, the Company fabricated or purchased an
additional 14 drilling units and 14 support equipment
25
<PAGE>
units during the 165-day period, which enabled the Company to record increased
revenue despite the differences in the length of the two periods. In addition,
as mentioned previously, drilling revenues are typically higher in the summer
and fall months due to favorable weather conditions for Transition Zone
drilling services.
Operating expenses increased 19%, from $6.8 million in the 201-day period to
$8.1 million in the 165-day period. Other operating expenses, with the
exception of depreciation expense, generally increased commensurate with the
increase in seismic drilling services provided by the Company. Depreciation
expense increased 133%, from $0.3 million in the 201-day period to $0.7
million in the 165-day period, due to the step-up of the basis of the
Company's assets that resulted from the OGC Acquisition.
Gross profit declined from $3.2 million for the 201-day period to $2.8
million for the 165-day period due primarily to the increase in depreciation
expense discussed above.
General and administrative expenses as a percent of revenue increased from
8% for the 201-day period to 9% for the 165-day period, due primarily to the
increase in office personnel needed to support the increased scope of the
Company's operations.
Interest expense increased from $0.2 million for the 201-day period to $0.4
million for the 165-day period 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.
201-day Period Ended July 19, 1996 Compared to Year Ended December 31, 1995
Operating revenues for the 201-day period were $10.0 million compared to
$12.7 million for the year ended December 31, 1995. The decline in revenue was
due entirely to the shorter time period of the 201-day period as compared to a
full year in 1995, as demand for the Company's seismic drilling services
continued to increase in the 201-day period.
Operating expenses also declined due to the shorter period. Gross profit
margin was 31% for 1995 compared to 32% for the 201-day period.
General and administrative expenses as a percentage of revenues were 14% for
1995 compared to 8% for the 201-day period. This decrease was primarily
attributable to a reduction in the bonuses paid to certain employees.
Interest expense was approximately the same for both periods, although on an
annualized basis interest expense increased due to the additional borrowings
incurred to expand the number of drilling units and support equipment units
during the later half of 1995 and the 201-day period.
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 six 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
26
<PAGE>
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, representing gross profit margins of 30% in 1994 and 31% in 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 only slightly offset by a $0.1 million decrease in consulting
fees.
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 1997, the Company had approximately $2.0 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 $5.3 million at
June 30, 1997 as 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 $1.1 million for the six months ended June 30, 1997 as compared
to $0.6 million for the 165-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
New Facility (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. and (iii) $126,000
incurred in connection with the formation of OMNI Geophysical (March 1, 2001
maturity date).
New Facility. On September , 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 will be secured by the cash distributed in the
LLC Distribution. 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"). Upon 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 $2.5
million to purchase or construct new assets between July 19, 1996 and December
31, 1996, and made approximately $5.4 million of capital expenditures during
the first six months of 1997, including $0.3 million for the acquisition of
Delta Surveys, Inc., $4.7 million for new equipment and $0.4 million for the
expansion of its Carencro facility. As of September 30, 1997, the Company had
made additional capital expenditures of $11.9 million, primarily for the
acquisition of substantially all the assets, American Aviation and OTH, and
expects to spend approximately $7.0 million during the remainder of 1997,
primarily for the fabrication of additional seismic drilling units and the
purchase of two additional helicopters. The Company currently expects to make
capital expenditures of approximately $12.0 million in 1998, including $6.5
million for the purchase of additional helicopters, $4.5 million for
additional seismic drilling equipment and $1.0 million for support vehicles.
In 1998, the Company
27
<PAGE>
also expects to spend approximately $750,000 in cash as part of the purchase
price for American Helicopter and to make additional capital expenditures
estimated to be $2.0 million to expand the operations of American Helicopter.
Management believes that the net proceeds from the Offering, cash generated
by operations and funds available under the New Facility and its 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 No. 128 ("SFAS No. 128"), "Earnings Per
Share," which adopts a revised methodology for computing earnings per share
for publicly owned companies. The Company will be required to adopt the new
methodology in the fourth quarter of 1997. Early adoption of SFAS No. 128 is
not permitted.
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. The Company is the
leading provider of seismic drilling services throughout the Transition Zone.
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. As a result, 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 must be determined by
the geophysical company. 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 a 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
29
<PAGE>
other end of the line and the process is repeated. In the case of 3-D data,
numerous source points, typically 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 18 years of
flight experience. 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.
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 non-binding letter of
intent 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. During the first six months of 1997, 3-D seismic data was acquired from
approximately 4,100 square miles of the Transition Zone in Louisiana.
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 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.
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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 non-
binding letter of intent to acquire American Helicopter and has separately
contracted for delivery of two heavy-lift helicopters 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. Many of the Company's customers who operate in the Transition Zone
also have extensive international operations, but 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 there were reliable and cost-effective third party service
providers operating internationally. 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. 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.
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 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.
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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..................................... 14
Water Buggies............................................... 13
Aluminum Marsh ATVs......................................... 12
Steel Marsh ATVs............................................ 8
Airboat Drilling Units...................................... 28
Swamp ATVs.................................................. 25
Pullboats................................................... 19
Pontoon Boats............................................... 11
Skid-Mounted Drilling Units................................. 32
</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 14
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 20 marsh ATVs, of which eight are made of
stainless steel and 12 are made of aluminum. The aluminum ATVs are lighter
than steel vehicles and are specifically designed for the 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
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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 19 pullboats. Swamp ATVs are also used in
connection with survey operations in swamp areas.
Pontoon Boats. The Company owns and operates 11 pontoon boats that are used
in 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
inland bays or lakes or in coastal waters, the Company leases a jack-up rig
and mounts one of the Company's skid-mounted drilling units on the jack-up rig
to perform the seismic drilling services. 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 32 of these units.
Miscellaneous. The Company owns and operates 65 single engine airboats and
23 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, if
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.
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
SEPTEMBE R 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>
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- --------
(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
has agreed to purchase two additional Bell 407 helicopters configured for
the heavy lifting required in heli-portable drilling at an aggregate cost
of approximately $3 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 (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.
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.
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.
35
<PAGE>
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.
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
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<PAGE>
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 $61.2 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.
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
37
<PAGE>
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.
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
38
<PAGE>
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 August 31, 1997, the Company had approximately 600 employees,
including approximately 560 operating personnel and approximately 40
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................ 36 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................. 39 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. Except as
described in "Executive Employment Agreements" below, all executive officers
of the Company serve at the pleasure of the Board of Directors of the Company.
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.
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<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.
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<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) Messrs. Thomas and 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 it 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.
The term of Mr. Morris' employment agreement is from July 1, 1997 to June
30, 2000, and it 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.
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<PAGE>
The term of Mr. Woodard's employment agreement is from July 19, 1996 to July
19, 1999, and it provides that he shall serve as a director and an officer 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.
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 as
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 and officers and directors who are employees of the Company
(the "Eligible Employees") 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 Employees. The Compensation Committee will
establish the exercise price of any stock options granted to Eligible
Employees 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 Employee 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 Employees
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,
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<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.
46
<PAGE>
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.
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........................ 317,000(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
47
<PAGE>
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.
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
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 units to Advantage Capital for
$4.0 million and the proceeds from a $7 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. 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 during the six months ended June
30, 1997.
Prior to the Share Exchange, all of the undistributed earnings of OMNI
Geophysical through the date of the Share Exchange will be distributed to the
current members of OMNI Geophysical. At June 30, 1997, OMNI Geophysical's
undistributed earnings totaled approximately $3.7 million. Management
estimates that it will have additional undistributed earnings of approximately
$ million, for an aggregate of $ million, at the time of the Share
Exchange. Prior to the Share Exchange, OMNI Geophysical will also repurchase
all of the outstanding preferred units of OMNI Geophysical for $5.0 million.
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 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 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.
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.
Since the OGC Acquisition, OMNI Geophysical has leased the land and building
in which its 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.
50
<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 application has been
made to have the Common Stock listed on the Nasdaq National Market, 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
51
<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 are
owned by persons who are not U.S. citizens. The Articles of Incorporation
provide that any transfer or purported transfer of shares of Common Stock that
would result in the ownership by persons who are not U.S. citizens of more
than 24% of the then outstanding shares of Common Stock will not become
effective against the Company, and the Company has the power to deny voting
and dividend rights with respect to such shares and, at its option, to redeem
such shares.
TRANSFER AGENT AND REGISTRAR
The Transfer Agent and Registrar for the Common Stock is .
53
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Offering, the Company will have 15,500,000 shares of
Common Stock outstanding. 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 (other than stock issued or options granted pursuant to the Company's
stock incentive plans) 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.
54
<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
UNDERWRITERS OF 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 any
shares of Common Stock or any
55
<PAGE>
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 acquisition of American Helicopter.
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.
56
<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 June
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, 1995 and 1994, and the six months ended June 30, 1997 and
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, 1995 and 1994, and the six months ended June
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, 1995 and 1994, and the six months ended June 30,
1997 and 1996 (unaudited).............................................. F-9
Notes to Financial Statements........................................... F-10
American Aviation Incorporated
Report of Independent Public Accountants................................ F-16
Balance Sheets as of December 31, 1996 and 1995 and June 30, 1997
(unaudited)............................................................ F-17
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-18
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-19
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-20
Notes to Financial Statements........................................... F-21
Pro Forma Statements (unaudited)
Headnote to Pro Forma Statements........................................ F-24
Pro Forma Condensed Consolidated Statement of Income for the six months
ended June 30, 1997.................................................... F-25
Pro Forma Condensed Consolidated Statement of Income for the year ended
December 31, 1996...................................................... F-26
Pro Forma Condensed Consolidated Balance Sheet as of June 30, 1997...... F-27
Notes to Pro Forma Condensed Consolidated Financial Statements.......... F-28
</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"). 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 972,000 shares of Common
Stock to employees and directors of the Company.
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 Board of Directors 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 JUNE 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
------------ ------------------------ -----------
JUNE 30,
DECEMBER 31, DECEMBER 31, JUNE 30, 1997
ASSETS 1995 1996 1997 PRO FORMA
------ ------------ ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash..................................................................... $ 299,901 $ 38,611 $ 1,971,517 $ 1,971,517
Accounts receivable...................................................... 2,457,423 4,565,399 8,374,561 8,374,561
Parts and supply inventory............................................... 246,853 706,140 1,607,619 1,607,619
Prepaid expenses and other............................................... 216,393 758,808 570,223 570,223
---------- ----------- ----------- -----------
Total current assets................................................... 3,220,570 6,068,958 12,523,920 12,523,920
---------- ----------- ----------- -----------
PROPERTY AND EQUIPMENT, (Note 2):
Land..................................................................... 32,400 -- 358,514 358,514
Building and improvements................................................ 322,679 32,325 84,461 84,461
Drilling, field and support equipment.................................... 1,864,906 11,929,801 16,234,766 16,234,766
Shop equipment........................................................... 36,648 120,964 175,253 175,253
Helicopters.............................................................. -- 526,000 526,000 526,000
Vehicles................................................................. 747,203 1,384,715 1,973,197 1,973,197
Construction in progress................................................. 138,040 461,264 808.722 808,722
---------- ----------- ----------- -----------
3,141,876 14,455,069 20,160,913 20,160,913
Less: accumulated depreciation........................................... 967,727 674,958 1,516,501 1,516,501
---------- ----------- ----------- -----------
2,174,149 13,780,111 18,644,412 18,644,412
---------- ----------- ----------- -----------
OTHER ASSETS............................................................... 33,892 536,967 697,554 697,554
---------- ----------- ----------- -----------
Total assets........................................................... $5,428,611 $20,386,036 $31,865,886 $31,865,886
========== =========== =========== ===========
</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 JUNE 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
------------ ------------------------ -----------
JUNE 30,
DECEMBER 31, DECEMBER 31, JUNE 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 2,985,239 2,985,239
Accounts payable......................................................... 331,687 1,378,699 3,179,294 3,179,294
Accrued expenses......................................................... 305,599 560,113 1,012,395 1,012,395
Due to related parties................................................... 69,710 29,471 49,656 49,656
---------- ----------- ----------- -----------
Total current liabilities............................................... 2,223,841 4,468,692 7,226,584 7,226,584
---------- ----------- ----------- -----------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities (Note 3)......................... 341,466 8,458,227 9,850,048 18,472,058
Revolving line of credit (Note 4)........................................ -- 2,116,394 6,058,044 6,058,044
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; 4,000 units, 10% participating and
1,000 units, 15% participating, issued and outstanding at June 30, 1997
(liquidation preference of $4.2 million at December 31, 1996 and $5.4
million at June 30, 1997)............................................... -- 4,000,000 5,000,000 --
Common units, $.01 par value; 101,263 and 103,263 units issued and
outstanding at December 31, 1996 and June 30, 1997, respectively........ -- 1,013 1,033 --
Additional paid-in capital............................................... -- -- 77,980 --
Retained earnings........................................................ 2,857,304 1,341,710 3,652,197 --
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; 10,919,983
issued and outstanding.................................................. -- -- -- 109,200
---------- ----------- ----------- -----------
Total equity............................................................ 2,863,304 5,342,723 8,731,210 109,200
---------- ----------- ----------- -----------
Total liabilities and equity............................................ $5,428,611 $20,386,036 $31,865,886 $31,865,886
- --------------------------------------------------
========== =========== =========== ===========
</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, AND THE SIX MONTHS ENDED JUNE 30, 1996 AND 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>
PREDECESSOR SUCCESSOR PREDECESSOR SUCCESSOR
-------------------------------------- ------------ ----------- -----------
201-DAY
PERIOD 165-DAY SIX MONTHS SIX MONTHS
YEAR ENDED YEAR ENDED ENDED PERIOD ENDED ENDED ENDED
DECEMBER 31, DECEMBER 31, JULY 19, DECEMBER 31, JUNE 30, JUNE 30,
1994 1995 1996 1996 1996 1997
------------ ------------ ----------- ------------ ----------- -----------
(UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C> <C> <C>
Operating Revenue....... $7,267,640 $12,689,772 $10,016,687 $10,942,423 $8,820,423 $17,034,580
Operating expenses...... 5,024,215 8,703,559 6,813,328 8,114,135 5,978,872 12,305,038
---------- ----------- ----------- ----------- ---------- -----------
Gross profit.......... 2,243,425 3,986,213 3,203,359 2,828,288 2,841,551 4,729,542
General and
administrative
expenses............... 1,079,323 1,791,365 789,361 1,049,851 710,985 1,471,703
---------- ----------- ----------- ----------- ---------- -----------
Operating income...... 1,164,102 2,194,848 2,413,998 1,778,437 2,130,566 3,257,839
Interest expense........ 96,624 148,355 150,552 437,137 121,369 622,352
Other income (expense).. 7,305 (6,377) 5,781 19,220 5,781 (4,358)
---------- ----------- ----------- ----------- ---------- -----------
(89,319) (154,732) (144,771) (417,917) (115,588) (626,710)
---------- ----------- ----------- ----------- ---------- -----------
Net income........... $1,074,783 $ 2,040,116 $ 2,269,227 $ 1,360,520 $2,014,978 $ 2,631,129
========== =========== =========== =========== ========== ===========
UNAUDITED PRO FORMA DATA
(Note 2)
Net income, reported
above.................. $1,074,783 $ 2,040,116 $ 2,269,227 $ 1,360,520 $2,014,978 $ 2,631,129
Pro forma provision for
income taxes related to
operations as a non-
taxable corporate
entity................. (430,000) (816,000) (908,000) (544,000) (806,000) (1,052,000)
---------- ----------- ----------- ----------- ---------- -----------
Pro forma net income.... $ 644,783 $ 1,224,116 $ 1,361,227 $ 816,520 $1,208,978 $ 1,579,129
========== =========== =========== =========== ========== ===========
Pro forma net income per
share.................. $ 0.06 $ 0.13
=========== ===========
Pro forma weighted
average common shares.. 10,807,210 10,885,499
</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 SIX MONTHS ENDED JUNE 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 1,
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 (Unaudited)..... 2,000 20 -- -- 77,980 -- 78,000
--sale of preferred
units (Unaudited)..... -- -- 1,000 1,000,000 -- -- 1,000,000
--net income for the
period ended
June 30, 1997
(Unaudited)....... -- -- -- -- -- 2,631,129 2,631,129
Deduct--distributions
to members
(Unaudited)........... -- -- -- -- -- (320,642) (320,642)
------- ------ ----- ---------- ------- ---------- ----------
BALANCE, June 30, 1997
(Unaudited)............ 103,263 $1,033 5,000 $5,000,000 $77,980 $3,652,197 $8,731,210
======= ====== ===== ========== ======= ========== ==========
</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, AND THE SIX MONTHS ENDED JUNE 30, 1997 AND 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 PREDECESSOR
-------------------------------------- ------------ ------------
201-DAY
PERIOD 165-DAY SIX MONTHS
YEAR ENDED YEAR ENDED ENDED PERIOD ENDED ENDED
DECEMBER 31, DECEMBER 31, JULY 19, DECEMBER 31, JUNE 30,
1994 1995 1996 1996 1996
------------ ------------ ----------- ------------ ------------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $1,074,783 $ 2,040,116 $ 2,269,227 $ 1,360,520 $ 22,014,978
Adjustments to reconcile net income to net
cash provided by operating activities--
Depreciation and amortization................. 227,754 371,874 274,971 697,200 228,661
(Gain) Loss on fixed asset disposition........ (6,615) 53,392 558 16,642 558
Provision for bad debts....................... -- -- -- 110,000 --
Other......................................... -- (24,490) -- --
Changes in operating assets and liabilities--
Decrease (increase) in assets--
Receivables-
Trade....................................... (955,121) (471,335) (1,896,159) (340,813) (1,994,799)
Other....................................... (4,607) (6,512) 22,387 -- 21,957
Due from affiliates.......................... (20,723) 21,723 -- -- --
Inventory.................................... (90,025) (75,897) (157,240) (302,047) (277,164)
Prepaid expenses............................. 56,479 (53,009) 93,239 (639,045) 50,947
Other........................................ -- (140) 19,259 (492,489) 18,063
Increase (decrease) in liabilities-
Accounts payable............................. 425,382 (249,560) 807,738 76,903 691,476
Accrued expenses............................. 53,420 168,575 64,424 118,991 83,555
Due to affiliates and stockholders/members... 44,800 6,734 (42,650) -- (35,087)
---------- ----------- ----------- ------------ ------------
Net cash provided by operating activities.. 805,527 1,781,471 1,455,754 605,862 803,145
---------- ----------- ----------- ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of assets from OMNI Geophysical
Corporation, net of cash received............ -- -- -- (9,965,728) --
Proceeds from disposal of fixed assets........ 10,411 58,138 3,700 25,280 3,700
Purchase of fixed assets...................... (838,970) (1,163,925) (1,438,433) (2,538,966) (945,358)
Other investments............................. (956) -- -- -- --
---------- ----------- ----------- ------------ ------------
Net cash used in investing activities...... (829,515) (1,105,787) (1,434,733) (12,479,414) (941,658)
---------- ----------- ----------- ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt...... 168,344 514,674 2,771,243 9,539,627 315,700
Principal payments on long-term debt.......... (211,645) (366,129) (1,134,642) (1,969,434) (332,768)
Net payments on line of credit................ 805,866 59,897 (1,002,551) 359,767 962,951
Capital contributions......................... -- -- -- 4,001,013 --
Distributions to stockholders/members......... (628,000) (765,250) (881,200) (18,810) (881,200)
---------- ----------- ----------- ------------ ------------
Net cash provided by (used in) financing
activities................................ 134,565 (556,808) (247,150) 11,912,163 64,683
NET INCREASE (DECREASE) IN CASH................ 110,577 118,876 (226,129) 38,611 (73,830)
CASH, at beginning of year..................... 70,448 181,025 299,901 -- 299,901
---------- ----------- ----------- ------------ ------------
CASH, at end of year........................... $ 181,025 $ 299,901 $ 73,772 $ 38,611 $ 226,071
========== =========== =========== ============ ============
CASH PAID FOR INTEREST......................... $ 89,753 $ 163,400 $ 133,278 $ 443,282 $ 117,484
- --------------------------------------------------
========== =========== =========== ============ ============
<CAPTION>
SUCCESSOR
------------
SIX MONTHS
ENDED
JUNE 30,
1997
------------
(UNAUDITED)
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.................................... $ 2,631,129
Adjustments to reconcile net income to net
cash provided by operating activities--
Depreciation and amortization................. 880,322
(Gain) Loss on fixed asset disposition........ 9,884
Provision for bad debts....................... --
Other......................................... --
Changes in operating assets and liabilities--
Decrease (increase) in assets--
Receivables-
Trade....................................... (3,809,162)
Other....................................... 1,091
Due from affiliates.......................... (9,235)
Inventory.................................... (901,479)
Prepaid expenses............................. 196,729
Other........................................ (196,062)
Increase (decrease) in liabilities-
Accounts payable............................. 1,800,595
Accrued expenses............................. 452,282
Due to affiliates and stockholders/members... 20,185
------------
Net cash provided by operating activities.. 1,076,279
------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of assets from OMNI Geophysical
Corporation, net of cash received............ --
Proceeds from disposal of fixed assets........ 48,975
Purchase of fixed assets...................... (5,768,007)
Other investments............................. --
------------
Net cash used in investing activities...... (5,719,032)
------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt...... 3,240,298
Principal payments on long-term debt.......... (1,363,647)
Net payments on line of credit................ 3,941,650
Capital contributions......................... 1,078,000
Distributions to stockholders/members......... (320,642)
------------
Net cash provided by (used in) financing
activities................................ 6,575,659
NET INCREASE (DECREASE) IN CASH................ 1,932,906
CASH, at beginning of year..................... 38,611
------------
CASH, at end of year........................... $ 1,971,517
============
CASH PAID FOR INTEREST......................... $ 539,211
- --------------------------------------------------
============
</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 JUNE 30, 1997 AND 1996 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 No. 128 ("SFAS No. 128"), "Earnings Per
Share," which adopts a revised methodology for computing earnings per share
for publicly owned companies. The Company will be required to adopt the new
methodology in the fourth quarter of 1997. Early adoption of SFAS No. 128 is
not permitted.
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.
Accounts Receivable
Trade and other receivables are stated at net realizable value and the
allowance for uncollectible accounts was approximately $125,000 as of June 30,
1997 and 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.
F-10
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO JUNE 30, 1997 AND 1996 IS UNAUDITED)
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 (103,263 as of June
30, 1997) for 10,919,983 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.
Unaudited Pro Forma June 30, 1997 Balance Sheet Data and Unaudited Pro Forma
Earnings Per Share
The pro forma financial information reflects (i) the Share Exchange, (ii)
the distribution by the Company to its members all of its retained earnings,
approximately $3.7 million as of June 30, 1997, and (iii) the redemption
F-11
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO JUNE 30, 1997 AND 1996 IS UNAUDITED)
of all the outstanding preferred units of the Company (Note 8). The
distributions are expected to be funded through long-term borrowings. The
unaudited pro forma balance sheet data as of June 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:
DECEMBER 31,
-------------------- JUNE 30,
1995 1996 1997
-------- ----------- -----------
(UNAUDITED)
Notes payable to a finance company, variable
interest rate (8.38% to 8.72% at June 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 $ 3,786,211
Note payable to a finance company, variable
interest rate (9.22% at June 30, 1997) with
monthly principal payments of $116,667;
maturing July 2001; secured by various
property and equipment...................... -- 6,416,667 5,716,667
Notes payable to finance companies, interest
payable at 8.99% with varying maturities to
September 1999, to finance insurance
premiums.................................... 124,301 543,662 298,801
Note payable to an individual, monthly
payments of $3,000 through April 1, 2001.... -- 150,000 132,000
Subordinated promissory note payable to
shareholder, interest payable at interest
rates ranging from 7.7% to 9.1%, quarterly
principal payments beginning in March 1997
of $75,000; unsecured; due June 2001........ -- 2,058,355 1,983,355
Notes payable to various banks, interest
rates at 9%, due on demand and, if no demand
is made, maturing from September 1997 to
June 2000, collateralized by vehicles and
equipment................................... 322,261 449,007 209,458
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................. -- -- 588,795
-------- ----------- -----------
Total........................................ 855,760 10,958,636 12,835,287
Less: Current maturities..................... 514,294 2,500,409 2,985,239
-------- ----------- -----------
Long-term debt less current maturities....... $341,466 $ 8,458,227 $ 9,850,048
======== =========== ===========
Annual maturities of long-term debt during each of the following years ended
December 31, are as follows:
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
===========
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 when
the Company's net income exceeds $4,000,000 in any year.
F-12
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO JUNE 30, 1997 AND 1996 IS UNAUDITED)
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,
--------------------- JUNE 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%, expiring in August 1998,
collateralized by accounts receivable,
certain equipment of the Company and
personal guarantees of the members of the
Company..................................... -- 2,116,394 6,058,044
---------- ---------- ----------
Total........................................ $1,002,551 $2,116,394 $6,058,044
========== ========== ==========
</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.
6. CUSTOMER CONCENTRATION:
Substantially all of the Company's revenues are derived from companies in
the geophysical industry. During the six months ended June 30, 1997, three
customers accounted for approximately 57% of the Company's total revenues.
Included in accounts receivable as of June 30, 1997, are amounts owed from one
of these customers totaling approximately $2,070,000, which was approximately
25% of total accounts receivable. The weighted average days outstanding of
this account was approximately 45 days at June 30, 1997.
During the 165-day period ended December 31, 1996, four customers accounted
for approximately 67% 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.
F-13
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO JUNE 30, 1997 AND 1996 IS UNAUDITED)
During the 201-day period ended July 19, 1996, four customers accounted for
approximately 70% of the predecessor's total revenues for that period. During
the years ended December 31, 1995 and 1994, four customers accounted for
approximately 88% 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 June 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 1,000, 15% cumulative participating preferred units in the six months
ended June 30, 1997, respectively. The Company may redeem the preferred units
at a redemption price equal to the sum of the cumulative unpaid dividends to
date plus the units' redemption price of $1,000 per unit. Cumulative unpaid
dividends totaled approximately $180,000 and $352,000 at December 31, 1996 and
June 30, 1997, respectively.
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) which approximated their fair value on the date of grant. The
options vest ratably over three years and expire if unexercised after ten
years.
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.
F-14
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
NOTES TO FINANCIAL STATEMENTS--(CONTINUED)
DECEMBER 31, 1996, 1995 AND 1994
(DATA WITH RESPECT TO JUNE 30, 1997 AND 1996 IS UNAUDITED)
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 American Aviation, the Company issued
to the sellers 10,213 common units of the Company (equivalent to 1,080,017
shares of Common Stock) valued at approximately $2.5 million, a $1.0 million
promissory note bearing interest at 8.5%, paid $500,000 cash and assumed
approximately $6.7 million in debt.
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.
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.
On September 10, 1997, the Company entered into a non-binding letter of
intent to acquire American Helicopter Drilling, Inc. ("American Helicopter")
for $750,000 in cash and $2.75 million in Common Stock. 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. The acquisition of American Helicopter is anticipated to occur on or
before January 31, 1998. There can be no assurance that this acquisition will
be consummated.
F-15
<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-16
<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
======== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
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-17
<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-18
<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-19
<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-20
<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-21
<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-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)
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% 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-23
<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 year ended
December 31, 1996 and the period ended June 30, 1997 and the unaudited pro
forma condensed consolidated balance sheet of OMNI Geophysical as of June 30,
1997. The balance sheet gives effect to (i) the acquisition of substantially
all the assets of American Aviation Incorporated ("American Aviation"), (ii)
the Share Exchange, (iii) the Preferred Unit Repurchase, (iv) the LLC
Distribution and (v) this Offering, as if all such events had occurred on June
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) 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 June 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 projection of future results.
F-24
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
----------------------------- PRO FORMA
OMNI AMERICAN PRO FORMA AS ADJUSTED
GEOPHYSICAL, AVIATION ACQUISITION SIX MONTHS
L.L.C. INCORPORATED AND ENDED
JUNE 30, JUNE 30, OFFERING JUNE 30,
1997 1997 ADJUSTMENTS 1997
------------ ------------ ----------- -----------
<S> <C> <C> <C> <C>
Operating revenue....... $17,034,580 $2,346,012 $ -- $19,380,592
Operating expenses...... 12,305,038 2,068,617 37,749 (a) 14,411,404
----------- ---------- --------- -----------
Gross profit............ 4,729,542 277,395 (37,749) 4,969,188
Selling, general and
administrative
expenses............... 1,471,703 499,789 -- 1,971,492
----------- ---------- --------- -----------
Operating income (loss). 3,257,839 (222,394) (37,749) 2,997,696
Interest expense........ 622,352 192,846 (815,198)(b) 307,027
307,027 (c)
Other expense........... 4,358 -- -- 4,358
----------- ---------- --------- -----------
Pro forma income (loss)
before income tax
expense................ 2,631,129 (415,240) 470,422 2,686,311
Pro forma income tax
expense................ (1,052,000)(d) 166,000 (d) 1,074,000(d)
----------- ---------- -----------
Pro forma net income.... $ 1,579,129 $ (249,240) $ 1,612,311
=========== ========== ===========
Pro forma net income per
share.................. $ 0.13 $ 0.10
=========== ===========
Pro forma weighted
average number of
common shares
outstanding............ 10,885,499 15,465,516(e)
</TABLE>
F-25
<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....... $10,016,687 $10,942,423 $ -- $20,959,110 $3,532,207 $ (220,644)(f)
Operating expenses...... 6,813,328 8,114,135 236,026 (g) 15,163,489 2,622,280 12,351 (a)
----------- ----------- --------- ----------- ---------- -----------
Gross profit............ 3,203,359 2,828,288 (236,026) 5,795,621 909,927 (232,995)
Selling, general and
administrative
expenses............... 789,361 1,049,851 -- 1,839,212 318,143 --
----------- ----------- --------- ----------- ---------- -----------
Operating income........ 2,413,998 1,778,437 (236,026) 3,956,409 591,784 (232,995)
Interest expense........ 150,552 437,137 347,928 (h) 935,617 160,870 (1,096,487)(b)
614,054 (c)
Other income............ 5,781 19,220 -- 25,001 -- --
----------- ----------- --------- ----------- ---------- -----------
Pro forma income before
income tax expense..... 2,269,227 1,360,520 (583,954) 3,045,793 430,914 249,438
Pro forma income tax
expense................ (908,000)(d) (544,000)(d) (172,000)(d)
----------- ----------- ----------
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............ 10,807,210
<CAPTION>
PRO FORMA AS
ADJUSTED
YEAR ENDED
DECEMBER 31,
1996
----------------
<S> <C>
Operating revenue....... $24,270,673
Operating expenses...... 17,798,120
----------------
Gross profit............ 6,472,553
Selling, general and
administrative
expenses............... 2,157,355
----------------
Operating income........ 4,315,198
Interest expense........ 614,054
Other income............ 25,001
----------------
Pro forma income before
income tax expense..... 3,726,145
Pro forma income tax
expense................ (1,490,000)(d)
----------------
Pro forma net income.... $ 2,236,145
================
Pro forma net income per
share.................. $ 0.15
================
Pro forma weighted
average number of
common shares
outstanding............ 15,387,227 (e)
</TABLE>
F-26
<PAGE>
OMNI GEOPHYSICAL, L.L.C.
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET
AS OF JUNE 30, 1997
(UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
--------------------------
OMNI AMERICAN PRO FORMA
GEOPHYSICAL, AVIATION PRO FORMA OFFERING PRO FORMA
ASSETS L.L.C. INCORPORATED ADJUSTMENTS PRO FORMA ADJUSTMENTS AS ADJUSTED
------ ------------ ------------ ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
CURRENT ASSETS:
Cash................... $ 1,971,517 $ -- $ (500,000)(i) $ 1,471,517 $44,930,000 (j) $20,050,380
(3,621,939)(k)
(16,671,154)(k)
(6,058,044)(k)
Accounts receivable.... 8,374,561 1,316,094 -- 9,690,655 -- 9,690,655
Inventory.............. 1,607,619 184,999 -- 1,792,618 -- 1,792,618
Other.................. 570,223 117,153 25,774 (i) 713,154 -- 713,154
----------- ---------- ----------- ----------- ----------- -----------
Total current assets... 12,523,920 1,618,246 (474,226) 13,667,944 18,578,863 32,246,807
PROPERTY AND EQUIPMENT:
Land, buildings and
improvements.......... 442,975 -- -- 442,975 -- 442,975
Drilling, field and
support equipment..... 16,234,766 -- -- 16,234,766 -- 16,234,766
Shop equipment......... 175,253 172,093 (12,554)(i) 334,792 -- 334,792
Aircraft............... 526,000 5,348,073 1,063,927 (i) 6,938,000 -- 6,938,000
Vehicles............... 1,973,197 255,725 (44,743)(i) 2,184,179 -- 2,184,179
Construction in
progress.............. 808,722 -- -- 808,722 -- 808,722
Accumulated
depreciation.......... (1,516,501) (243,585) 243,585 (i) (1,516,501) -- (1,516,501)
----------- ---------- ----------- ----------- ----------- -----------
Total property and
equipment............. 18,644,412 5,532,306 1,250,215 25,426,933 -- 25,426,933
OTHER ASSETS:
Goodwill, net of
amortization.......... 379,098 -- 2,797,049 (i) 3,176,147 -- 3,176,147
Other.................. 318,456 26,115 (26,111)(i) 318,456 -- 318,456
----------- ---------- ----------- ----------- ----------- -----------
Total other assets..... 697,554 26,115 2,770,938 3,494,603 -- 3,494,603
----------- ---------- ----------- ----------- ----------- -----------
Total assets........... $31,865,886 $7,176,667 $ 3,546,927 $42,589,480 $18,578,863 $61,168,343
=========== ========== =========== =========== =========== ===========
LIABILITIES AND EQUITY
----------------------
CURRENT LIABILITIES:
Current maturities of
long-term debt........ $ 2,985,239 $ 636,700 $ -- $ 3,621,939 $(3,621,939)(k) $ --
Accounts payable....... 3,179,294 385,771 (49,194)(i) 3,515,871 3,515,871
Accrued expenses....... 1,012,395 155,781 49,783 (i) 1,217,959 1,217,959
Due to affiliates and
shareholders.......... 49,656 -- -- 49,656 -- 49,656
----------- ---------- ----------- ----------- ----------- -----------
Total current
liabilities........... 7,226,584 1,178,252 589 8,405,425 (3,621,939) 4,783,486
LONG-TERM LIABILITIES:
Long-term debt, less
current maturities.... 9,850,048 2,703,106 1,000,000 (i) 25,575,351 (16,671,154)(k) 8,904,197
3,370,000 (i)
5,000,000 (l)
355,159 (m)
3,297,038 (n)
Revolving line of
credit................ 6,058,044 -- -- 6,058,044 (6,058,044)(k) --
Due to shareholder..... -- 3,370,000 (3,370,000)(i) -- -- --
EQUITY:
Preferred units 5,000,000 (5,000,000)(l) -- -- --
Common units 1,033 101 (i) -- -- --
(1,134)(o)
Additional paid-in
capital 77,980 2,471,546 (i) 2,430,660 (4,070,000)(j) 47,325,660
(118,866)(n) 48,965,000 (j)
Common stock 1,000 (1,000)(i) 120,000 35,000 (j) 155,000
120,000 (o)
Retained earnings 3,652,197 (75,691) (3,297,038)(n) -- -- --
(355,159)(m)
75,691 (i)
----------- ---------- ----------- ----------- ----------- -----------
Total equity........... 8,731,210 (74,691) (6,105,859) 2,550,660 44,930,000 47,480,660
----------- ---------- ----------- ----------- ----------- -----------
Total liabilities and
equity................ $31,865,886 $7,176,667 $(3,546,927) $42,589,480 $18,578,863 $61,168,343
=========== ========== =========== =========== =========== ===========
</TABLE>
F-27
<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 adjustments to the accompanying unaudited 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 a reduction in interest expense as a result of the retirement
of certain indebtedness of the Company with the proceeds of the Offering.
c) Reflects an increase in interest expense as a result of the incurrence
of indebtedness to finance the Preferred Unit Repurchase and the LLC
Distribution.
d) 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%.
e) 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 98,725 shares of common stock equivalents
related to outstanding stock options.
f) Reflects the elimination of a gain recognized by American Aviation
upon the sale of a helicopter to OMNI Geophysical.
g) Reflects additional depreciation expense due to adjustments to the
recorded value of the assets acquired from OGC resulting from the
application of purchase accounting.
h) Reflects an increase in interest expense as a result of the incurrence
of indebtedness to finance the OGC Acquisition.
The adjustments to the accompanying pro forma condensed consolidated balance
sheet are described below:
i) Reflects adjustments to the recorded value of the assets acquired from
American Aviation resulting from the application of purchase accounting and
the repayment of an American Aviation note due to a shareholder with new
indebtedness.
j) 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).
k) Reflects the application of the net proceeds of the public offering to
repay indebtedness of the Company.
l) Reflects the Preferred Unit Repurchase and borrowings related thereto.
m) Reflects the payment of accrued dividends to the holders of preferred
units of OMNI Geophysical in connection with the Preferred Unit Repurchase.
n) Reflects the LLC Distribution and borrowings related thereto.
o) 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-28
<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
OMNI ENERGY SERVICES CORP.
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.................................................. $ 18,296
NASD filing fee....................................................... *
Nasdaq listing fee.................................................... *
Printing expenses..................................................... *
Legal fees and expenses............................................... *
Accounting fees and expenses.......................................... *
Transfer agent fees and expenses...................................... *
Miscellaneous expenses................................................ *
--------
Total expenses........................................................ $640,000
========
</TABLE>
- --------
* To be filed by amendment.
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, 26,437, 26,437 and 10,575 shares of
Common Stock, respectively, at an exercise price of $2.28 per share.
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 Security Act as
securities sold in transactions not involving any public offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(A) EXHIBITS
1.1 Form of Underwriting Agreement.*
2.1 Form of Exchange Agreement between the members of OMNI Geophysical, L.L.C.
and the Company.*
II-2
<PAGE>
<TABLE>
<C> <S>
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.
3.1 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.*
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 Employment and Non-Competition Agreement between OMNI Geophysical,
L.L.C. and David Jeansonne.*
10.5 Employment and Non-Competition Agreement between OMNI Geophysical,
L.L.C. and Roger E. Thomas.*
10.6 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 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.
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 this Registration
Statement).
27.1 Financial Data Schedule.
</TABLE>
- --------
* To be filed by amendment.
II-3
<PAGE>
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 Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Carencro, State of
Louisiana, on September 26, 1997.
OMNI ENERGY SERVICES CORP.
By: /s/ David A. Jeansonne
---------------------------------
David A. Jeansonne
Chairman of the Board and Chief
Executive Officer
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints 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, in any and all capacities, to sign any and all amendments (including
post-effective amendments) to this Registration Statement, and to file the same
with all exhibits thereto, and 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.
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 September 26, 1997
____________________________________ Chairman of the Board
David A. Jeansonne (Principal Executive
Officer)
/s/ Roger E. Thomas President and Director September 26, 1997
____________________________________
Roger E. Thomas
/s/ Allen R. Woodard Vice President--Marketing; September 26, 1997
____________________________________ Business Development and
Allen R. Woodard Director
/s/ David E. Crays Vice President Finance and September 26, 1997
____________________________________ Chief Financial Officer
David E. Crays (Principal Financial and
Accounting Officer) and
Director
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ Steven T. Stull Director September 26, 1997
____________________________________
Steven T. Stull
/s/ Crichton W. Brown Director September 26, 1997
____________________________________
Crichton W. Brown
Director
____________________________________
William W. Rucks, IV
</TABLE>
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.
3.1 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*
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 Employment and Non-Competition Agreement between OMNI
Geophysical, L.L.C. and David Jeansonne*
10.5 Employment and Non-Competition Agreement between OMNI
Geophysical, L.L.C. and Roger E. Thomas*
10.6 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 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. and 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
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIALLY
NUMBER DESCRIPTION OF EXHIBITS NUMBER PAGE
------- ----------------------- ------------
<C> <S> <C>
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
this Registration Statement)
27.1 Financial Data Schedule
</TABLE>
- --------
*To be filed by amendment.
<PAGE>
EXHIBIT 2.2
TABLE OF CONTENTS
Section 1 PURCHASE AND SALE OF ASSETS BY PURCHASER AND
SELLER...................................................1
1.1 Sale of the Assets..................................1
1.2 Conveyance Instruments..............................3
1.3 Purchase Price......................................3
1.4 Assumed Liabilities.................................3
1.5 Excluded Liabilities................................4
1.6 Allocation of Purchase Price........................4
1.7 Purchase of Helicopter from American Aviation.......4
Section 2 EVENTS OCCURRING ON THE CLOSING DATE.....................4
2.1 Deliveries by the Seller............................4
2.2 Deliveries by the Purchaser.........................5
2.3 Other Deliveries....................................6
Section 3 REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND JEANSONNE............................................6
3.1 Capitalization and Ownership........................6
3.2 Organization........................................6
3.3 Qualification.......................................7
3.4 Authority...........................................7
3.5 No Violations.......................................7
3.6 Financial Statements................................8
3.7 Absence of Certain Changes or Events................8
3.8 Certain Tax Matters.................................9
3.9 Condition of Facilities............................10
3.10 Receivables; Payables..............................11
3.11 Title to Properties; Encumbrances..................11
3.12 Leases.............................................11
3.13 Patents, Trademarks, and Similar Rights............12
3.14 Insurance..........................................12
3.15 No Benefit Plans; Absence of PBGC Lien.............12
3.16 Documents; Commitments.............................13
3.17 Labor Matters......................................13
3.18 Personnel..........................................14
3.19 No Breach..........................................15
3.20 Consents, Permits, Etc.............................15
3.21 Litigation.........................................15
3.22 Compliance With Applicable Law; Adverse
Restrictions.......................................16
3.23 Assets Necessary to Business.......................16
3.24 Customers and Suppliers............................16
3.25 Governmental Approvals and Consents................16
3.26 Environmental Laws and Regulations.................17
<PAGE>
Section 4 COVENANTS OF THE PARTIES................................18
4.1 Consents, Permits, Etc..............................18
4.2 Confidentiality and Competition.....................18
4.3 Contribution of Cash by the Advantage Entities......18
Section 5 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION............18
5.1 Survival; Indemnification...........................18
5.2 Definitions.........................................20
5.3 Control of Litigation...............................20
5.4 Cooperation on Tax Matters..........................21
Section 6 MISCELLANEOUS PROVISIONS................................21
6.1 Amendment and Modification.........................21
6.2 Waiver of Compliance; Consents.....................21
6.3 Assignment.........................................22
6.4 Expenses, Transfer Taxes, Etc......................22
6.5 Further Assurances.................................22
6.6 Governing Law......................................22
6.7 Counterparts.......................................22
6.8 Publicity..........................................22
6.9 Notices............................................23
6.10 Specific Performance...............................23
6.11 Headings...........................................24
6.12 Entire Agreement...................................24
6.13 Severability.......................................24
6.14 Schedules and Exhibits.............................24
<PAGE>
ASSET PURCHASE AGREEMENT
by and between
OMNI GEOPHYSICAL CORPORATION
and
OMNI GEOPHYSICAL, L.L.C.
Dated July 19, 1996
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and
entered into on the 19th day of July, 1996 (the "Closing Date") by and
between OMNI GEOPHYSICAL CORPORATION (the "Seller") and OMNI
GEOPHYSICAL, L.L.C. (the "Purchaser"). David Jeansonne, the President
of the Seller ("Jeansonne"), joins in the execution of this Agreement
for the purposes of making the representations and warranties set
forth in Section 3 and agreeing to be bound by the terms of Section 5.
RECITALS
1. The Seller, a Louisiana corporation, is engaged primarily in
a seismic drilling and support services business based in Louisiana
with operations on the Gulf Coast (the "Business").
2. Seller desires to sell to Purchaser, and Purchaser desires
to purchase from Seller, all of the assets of Seller except for those
items of immovable property described on Schedule 1.1.
3. The sale of assets by the Seller and assumption of
liabilities by the Purchaser are all subject to the terms and
conditions of this Agreement.
In consideration of the foregoing and the mutual representations,
warranties, covenants, and agreements herein contained, the Seller and
the Purchaser agree as follows:
SECTION 1
PURCHASE AND SALE OF ASSETS
BY PURCHASER AND SELLER
1.1 Sale of the Assets.
(a) Subject to the terms and conditions of this Agreement, on
the Closing Date, the Seller hereby assigns, transfers, and delivers
to the Purchaser, free and clear of all title defects, objections,
liens, pledges, claims, rights of first refusal, options, charges,
security interests, mortgages, or other encumbrances of any nature
whatsoever (collectively, "Encumbrances") other than "Permitted
Encumbrances" (as defined in Section 1.1(b) of this Agreement), all of
the assets, properties, and business of every kind and description,
wherever located, real, personal, or mixed; tangible or intangible;
owned or held; or used in the conduct of the Business by the Seller
(collectively, the "Assets"), including, without limitation, all
right, title, and interest of the Seller in, to, and under:
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(i) All machinery, equipment, furniture, vehicles, and
other tangible property (including, without limitation, maintenance
and operating supplies and spare parts) used in connection with the
Business, including those listed and described in Schedule 1.1(a)(i)
of this Agreement (collectively, the "Equipment");
(ii) 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, used in the Business, and all goodwill associated with
such intangible property (collectively, the "Intangible Property");
(iii) All of the Seller's rights, claims, credits, causes
of action, or right of setoff against third parties relating to the
Assets or the Business (collectively, "Claims");
(iv) All contracts, agreements, leases, licenses, and
other instruments, arrangements, and commitments relating to the
Business or the Assets (collectively, "Rights");
(v) All certificates of occupancy and other transferable
licenses, permits, registrations, authorizations, use agreements,
orders or approvals of governmental or quasi-governmental agencies and
authorities (whether federal, state, local, municipal, or foreign) or
private parties relating to the fabrication, use, operation,
development, or enjoyment of the Assets (collectively, "Permits");
(vii) All accounts and notes receivable arising out of the
operation of the Business prior to the close of business on the
Closing Date (collectively, "Receivables");
(viii) All transferable bonds or deposits made by the Seller
or its predecessors in title (or its agents) with any governmental
agency or authority or with any utility company or third party
relating to the fabrication, use, operation, development, sale or
enjoyment of the Assets;
(ix) All prepaid rentals and other prepaid expenses
arising from payments made by the Seller in the ordinary and usual
course of the operation of the Business related to the Assets prior to
the close of business on the Closing Date; and
(x) Originals or copies of all books, records, files and
papers, whether in hard copy or computer format, used in the Business,
including without limitation, engineering information, manuals and
data, sales and advertising materials, sales and purchase
correspondence, lists of present and former suppliers, personnel and
employment records, and information that is necessary for the
preparation of any Tax (as defined in Section 5.2 of this Agreement)
returns to be filed by the Purchaser after the Closing Date or the
determination of the Tax basis of the Assets (collectively, "Files and
Records").
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But specifically excluding the immovable property described in
Schedule 1.1 (the "Immovable Property"), which Immovable Property
shall be retained by the Seller.
(b) For purposes of this Agreement, "Permitted Encumbrances"
shall mean (i) liens for current "Taxes" (as defined in Section 5.2 of
this Agreement) not yet due and payable; and (ii) any such other
encumbrances agreed to in writing prior to the Closing Date by the
Seller and described on Schedule 1.1(b).
1.2 Conveyance Instruments. In order to effect the purchase and
sale of the Assets as contemplated by this Section 1, the Seller has,
or will hereafter, execute and deliver, or cause to be executed and
delivered, all such documents or instruments of assignment, transfer,
or conveyance, in each case dated as of the Closing Date
(collectively, the "Conveyance Instruments"), as the parties and their
respective counsel shall reasonably deem necessary or appropriate to
vest in or confer title to the Assets to the Purchaser.
1.3 Purchase Price. The total consideration for the purchase of
the Assets (the "Purchase Price") is as follows:
(a) Nine Million Thirty Thousand and no/100 dollars
($9,030,000.00) cash, to be paid at the Closing; plus
(b) 42.9% of the net income of Seller from June 1, 1996 through
the Closing Date to be paid in cash on August 31, 1996; plus
(c) A promissory note bearing interest at the rate of 8% per
annum, in the form attached hereto as Exhibit 1.3(c) (the "Promissory
Note") in a principal amount of Two Million Fifty-Eight Thousand Three
Hundred Fifty-Five dollars ($2,058,355.00),
said Promissory Note to be amended on August 31, 1996 to increase the
principal thereof by an amount equal to 57.1% of the net income of
Seller from June 1, 1996 through the Closing Date less Four Hundred
Thousand dollars ($400,000.00); plus
(d) A promissory note bearing interest at the rate of 18% per
annum, in the form attached hereto as Exhibit 1.3(d) (the "Additional
Promissory Note") in a principal amount of One Million dollars
($1,000,000.00); plus
(e) The assumption of the Assumed Liabilities as specified in
Section 1.4 hereof.
1.4 Assumed Liabilities. Subject to the terms and conditions of
this Agreement, in reliance on the representations, warranties,
covenants, and agreements of the parties contained herein, the
Purchaser hereby assumes and agrees to pay, discharge, or fulfill the
following liabilities and obligations relating to the Business: (a)
all of the liabilities and obligations arising from and after the
Closing Date in respect of the Rights referred to in Section
1.1(a)(iv); (b) the liabilities listed in
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Schedule 1.4 (collectively, the "Assumed Liabilities"), which Assumed
Liabilities are agreed to total no more than $4,000,000; and (c) the
liabilities incurred in the ordinary course of business from May 31,
1996 through the Closing.
1.5 Excluded Liabilities. Notwithstanding any provision of this
Agreement or any Conveyance Instrument to the contrary, the Purchaser
is assuming only the Assumed Liabilities and is not assuming any other
liability or obligation of the Seller (or any predecessor owner of all
or part of its business and assets) of whatever nature whether
currently in existence or arising hereafter, including, but not
limited to, any and all liabilities and obligations bearing on or for
the benefit of the Immovable Property, and all such other liabilities
and obligations shall be retained by and remain liabilities of the
Seller (all of such liabilities and obligations not being assumed
hereinafter referred to as the "Excluded Liabilities").
1.6 Allocation of Purchase Price. The Seller and Purchaser
hereby agree that the Purchase Price described in Section 1.3 hereof
shall be finally allocated among the Assets on August 31, 1996 in
accordance with an allocation set forth in a document to be annexed
hereto as Schedule 1.6; provided that Seller and Purchaser hereby
agree that the amounts shown on Schedule 1.1(a)(i) for the Assets
listed thereon are the fair market values of the Assets.
1.7 Purchase of Helicopter from American Aviation. In connection
with the Closing of the purchase and sale of the Assets contemplated
hereunder, Seller and Purchaser have agreed that the Purchaser will
purchase a Bell 206B-III Helicopter, Identification Number N49661,
from American Aviation, Inc., an Affiliate of Seller, together with
all costs of its operations (except fuel), maintenance and incidental
parts and repairs for one year, for a total consideration of Five
Hundred Thousand dollars ($500,000.00). The sale shall take place on a
date mutually agreed upon by Purchaser and American Aviation, Inc.,
but no later than July 31, 1996, and shall be documented by an
agreement substantially in the form attached hereto as Exhibit 1.7.
SECTION 2
EVENTS OCCURRING ON THE CLOSING DATE
2.1 Deliveries by the Seller. Simultaneously with the execution
hereof, the Seller has delivered to the Purchaser the following:
(a) The Conveyance Instruments to effect the sale of the Assets
to the Purchaser and the assumption of the Assumed Liabilities by the
Purchaser, such Conveyance Instruments to be those reasonably deemed
necessary by, and in form and substance satisfactory to, counsel to
the parties;
(b) A copy of the resolutions of its Board of Directors and of
its shareholders, each certified by its Secretary, authorizing or
ratifying its execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
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(c) A copy of its Articles of Incorporation, certified as of a
date within thirty (30) days of the Closing Date by the Secretary of
State of the State of Louisiana;
(d) A certificate from the Secretary of State of the State of
Louisiana as to its good standing in such state;
(e) A certificate of its Secretary, attaching thereto a true and
complete copy of its Bylaws in effect on the Closing Date;
(f) A certificate from its President stating that Seller's
representations and warranties are true, complete and accurate in all
material respects at and as of the Closing Date;
(g) The executed counterpart copies of all consents, approvals,
authorizations and Permits, if any, from third parties referred to in
Section 4.1(a) hereof;
(h) A lease of the Immovable Property in favor of the Purchaser
at a rental of $5,000.00 per month, which lease shall contain an
option in favor of the Purchaser to purchase the Immovable Property
for the sum of $500,000.00 during the term of the lease, which lease
shall be in the form specified in Exhibit 2.1(h) hereto.
(i) An Employment and Non-Competition Agreement between
Jeansonne and the Purchaser, which agreement shall be in the form
specified in Exhibit 2.1(i) hereto.
(j) A Confidentiality and Non-Competition Agreement between the
Seller, its shareholders and the Purchaser, which shall be in the form
specified in Exhibit 2.1(j) hereto.
(k) An opinion of legal counsel to the Seller as to the due
incorporation, existence and good standing of the Seller, its
qualification to do business in Louisiana and any Material
Jurisdictions (as defined in Section 3.3 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 the Purchaser.
(l) All other previously undelivered items required to be
delivered by the Seller at or prior to the Closing Date pursuant to
the terms of this Agreement;
2.2 Deliveries by the Purchaser. Simultaneously with the
execution hereof, the Purchaser has delivered to the Seller the
following:
(a) The cash portion of the Purchase Price by wire transfer of
immediately available funds to the account of Omni Geophysical
Corporation c/o First National Bank of Commerce, New Orleans, LA, ABA
#065000029, Credit: FNB Lafayette, Further Credit: Omni Geophysical
Corp., Account # 000448206;
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<PAGE>
(b) The Promissory Note and the Additional Promissory Note;
(c) The Conveyance Instruments to effect the assumption of the
Assumed Liabilities of the Purchaser, such Conveyance Instruments to
be those reasonably deemed necessary by, and to be in form and
substance reasonably satisfactory to, counsel to the parties;
(d) A lease of the Immovable Property in favor of the Purchaser
at a rental of $5,000.00 per month, which lease shall contain an
option in favor of the Purchaser to purchase the Immovable Property
for the sum of $500,000.00 during the term of the lease, which lease
shall be in the form specified in Exhibit 2.1(h) hereto.
(e) An Employment and Non-Competition Agreement between
Jeansonne and the Purchaser, which agreement shall be in the form
specified in Exhibit 2.1(i) hereto;
2.3 Other Deliveries. Simultaneously with the execution hereof,
and as a condition of this Agreement, the Purchaser has delivered to
American Aviation, Inc., an Affiliate of the Seller, and American
Aviation, Inc. has delivered to the Purchaser, an agreement to
purchase a Bell 206B-III Helicopter, Identification Number N49661,
which agreement is substantially in the form attached hereto as
Exhibit 1.7.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND JEANSONNE
In consideration of the receipt of the Purchase Price and the
other covenants undertaken by Purchaser under this Agreement, the
Seller and Jeansonne hereby jointly and severally represent and
warrant to the Purchaser that:
3.1 Capitalization and Ownership. The authorized capital stock
of the Seller consists of 25,000,000 shares of common stock, no par
value per share, of which 2,000 shares are issued and outstanding. All
of the issued and outstanding shares of such common stock have been
duly authorized and are duly and validly issued and outstanding, fully
paid and non-assessable, and are owned by the parties listed on
Schedule 3.1 of this Agreement, free and clear of all liens,
encumbrances, pledges, adverse claims or defects in title. There are
no outstanding warrants, options, rights, calls or other commitments
of any nature relating to any share of capital stock of the Seller,
and there are no outstanding securities or debt obligations of the
Seller convertible into shares of capital stock of the Seller.
3.2 Organization.
(a) The Seller 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. Set forth in Schedule 3.2(a) is a list of all of the
companies and joint ventures in which the Seller has an interest.
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<PAGE>
(b) The copy of the Articles of Incorporation and all amendments
thereto of the Seller, as certified by the Secretary of State of the
State of Louisiana, and the Bylaws, as amended to date, of the Seller,
as certified by its Secretary and delivered to the Purchaser, are
true, complete, and correct copies of the respective Articles of
Incorporation and Bylaws, as amended and currently in effect, of the
Seller.
3.3 Qualification. The Seller 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"). There are no such Material Jurisdictions.
3.4 Authority. The Seller has the corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by the
Seller of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of
Directors and shareholders of the Seller; no other corporate
proceedings on the part of the Seller or any other person or entity,
whether pursuant to the Articles of Incorporation or Bylaws of the
Seller or by law or otherwise, are necessary to authorize the Seller
to enter into this Agreement, or to consummate the transactions
contemplated hereby; and this Agreement is the legal, valid, and
binding obligation of the Seller (and Jeansonne, as the case may be).
This Agreement has been duly executed and delivered by the Seller and
Jeansonne and constitutes a valid and binding obligation of the Seller
and Jeansonne, enforceable against both the Seller and Jeansonne 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.
3.5 No Violations. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated
hereby:
(a) Requires any filing or registration with, or consent,
authorization, approval, or Permit of, any governmental or regulatory
authority on the part of the Seller;
(b) Violates or will violate (i) any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory
authority or (ii) to the knowledge of the Seller, violates or will
violate any "Law," as defined in Section 3.24 of this Agreement, of
any governmental or regulatory authority to which the Seller or any of
its properties or assets are subject;
(c) Violates or will violate, or conflicts with or will conflict
with, any provision of, or constitutes a default under, the Articles
of Incorporation or Bylaws of the Seller; or
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(d) (i) violates or breaches or constitutes a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or give rise to a right to terminate, any mortgage,
contract, agreement, deed of trust, license, lease, or other
instrument, arrangement, commitment, obligation, understanding, or
restriction of any kind to which the Seller is a party or by which its
properties may be bound, or (ii) will cause, or give any person
grounds to cause, to be accelerated (with notice or lapse of time or
both) the maturity of, or will increase, any liability or obligation
of the Seller.
3.6 Financial Statements. The Seller has heretofore delivered to
the Purchaser its balance sheet as of March 31, 1996 (the "Balance
Sheet"), and the related statement of operations for the three months
ended March 31, 1996, together with its balance sheet as of December
31, 1995 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 the Seller in conformity with generally accepted
accounting principles consistently applied and fairly present the
financial condition and results of operations of the Business for the
periods and as of the dates stated therein. Except to the extent
reflected in the Financial Statements, the Seller 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, 1996.
3.7 Absence of Certain Changes or Events. Since March 31, 1996
(the "Balance Sheet Date"), the Seller has operated the Business in
the ordinary course consistent with past practice, and neither the
Seller 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, except (i) in the ordinary course
of business and (ii) Permitted Encumbrances;
8
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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 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 the Seller or, directly or indirectly,
redeemed, purchased, or otherwise acquired any of the capital stock of
the Seller; or
(l) Suffered any damage, destruction or casualty loss to the
physical properties of the Seller (whether or not covered by
insurance), materially and adversely affecting the business,
operations, prospects or financial condition of the Seller; 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
3.7.
3.8 Certain Tax Matters.
(a) All income taxes, unemployment, social security, franchise,
real property, personal property and all other taxes levied, assessed
or imposed upon Seller in connection with Seller'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 Seller's operation of the Business. No tax
deficiencies have been determined nor
9
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proposed tax assessments charged against Seller (nor is there any
basis therefor) in connection with Seller's operation of the Business.
Seller has filed all federal, state, local, sales, franchise,
withholding, real and personal property tax returns required to be
filed in connection with Seller'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 Seller in connection with Seller's
operation of the Business. True, correct and complete copies of the
state and local real property and personal property tax returns of
Seller in connection with Seller's operation of the Business for
Seller's last 3 fiscal years, have been delivered to Purchaser.
(b) the Seller:
(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 5.2 of this Agreement).
(c) None of the directors or officers of the Seller is aware of
any state of facts that could give rise to any claim, audit, action,
suit, proceeding, or investigation with respect to any Tax or
assessment for which the Purchaser 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 any assets of the Business for
any tax period ending on or prior to the Closing Date, or for any
period ending after the Closing Date with respect to any portion of
such tax period that includes or is prior to the Closing Date other
than a Tax disclosed on Schedule 3.8(d). "Tax" or "Taxes" shall mean
all taxes, charges, fees, levies or other assessments including,
without limitation, income, excise, property, withholding, sales and
franchise taxes and any other charge in the nature of a tax, imposed
by the United States, or any state, county, local or foreign
government or subdivision or agency thereof, and including any
interest, penalties or additions attributable thereto.
3.9 Condition of Facilities. The facilities included in the
Assets, including equipment, furniture, vehicles and other tangible
personal property, 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 and
Seller has no knowledge of any condition or defect, not disclosed
herein, in any of the Assets which would materially affect the fair
market value, use or operation of the Business, such as to have a
material adverse effect on the Business or its operations.
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3.10 Receivables; Payables.
(a) Schedule 3.10(a) contains a list of all Receivables (as
defined in Section 1.1(a)(vii) of this Agreement) as of June 30, 1996,
including the dollar amounts thereof together with an accurate aging
thereof. 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 the Seller.
All Receivables are fully collectible.
(b) Schedule 3.10(b) contains an aging schedule of all accounts
and trade payables of the Business as of the date shown thereon,
including the dollar amounts thereof. In addition to the payables
listed on Schedule 3.10(b), there are other payables that were
incurred in the ordinary course of business subsequent to the date
shown on Schedule 3.10(b) and which are not reflected thereon. All
such payables of the Seller 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 3.10(b).
3.11 Title to Properties; Encumbrances.
(a) The Seller has good and marketable title to all of the
Assets, free and clear of all Encumbrances, except for Permitted
Encumbrances. As a result of the delivery to the Purchaser of the
Conveyance Instruments, all of the Assets are owned by the Purchaser
free and clear of all Encumbrances, except Permitted Encumbrances and
encumbrances created by the Purchaser (whether or not arising from the
transactions contemplated hereby).
(b) (i) The Seller has incurred no indebtedness or liabilities
which may bear against the Assets of the Business except those listed
as Permitted Encumbrances or Assumed Liabilities.
(ii) The Seller has not received any notice of default under
any of the Assumed Liabilities, nor, to the knowledge of Seller, is
any such notice pending or do reasons exist for the giving of such
notice.
3.12 Leases.
(a) Schedule 3.12 contains a list of each lease pursuant to
which the Seller 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
the Seller has not received any written notice of any breach or
default with respect to a Lease the consequences of which would result
in such Lease being terminated by the lessor or which, individually or
in the aggregate, would have a material adverse effect on the business
or financial condition of the Business taken as a whole.
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3.13 Patents, Trademarks, and Similar Rights.
(a) (i) The Seller has the sole and exclusive right to use
the Intangible Property referred to in Section 1.1(a)(ii), and the
consummation of the transactions contemplated by this Agreement will
not alter or impair any such rights and will result in the Purchaser
having the sole and exclusive right to use all such Intangible
Property used in the Business;
(ii) The Seller has the right to use all Intangible
Property which is currently used by the Seller 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 and will result in the Purchaser having the right to use all
such Intangible Property to the same extent it is currently used in
the Business;
(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 Seller has no knowledge of any valid basis for any
such claim; and
(iv) To the knowledge of the Seller, the use of such
Intangible Property by the Seller does not infringe on the rights of
any person or entity and no proceedings have been instituted, are
pending, or, to the best of Sellers' knowledge, threatened that
challenge the rights of the Seller in respect thereof.
(v) None of Seller's Intangible Property rights, to the
best of Seller's 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.
3.14 Insurance. The Seller has heretofore made available for
inspection by the Purchaser a true and complete copy of all policies
of fire, liability, workers' compensation, and other forms of
insurance owned or held by the Seller. 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 the Seller, is adequate to protect the Business as it is
currently conducted.
3.15 No Benefit Plans; Absence of PBGC Lien. Neither the Seller
nor any Affiliate (as defined in Section 5.2 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 the Seller. None of the Assets are
subject to a lien in favor of the Pension Benefit Guaranty
Corporation.
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3.16 Documents; Commitments.
(a) The Seller has delivered or made available to the Purchaser
the following documents, each of which is true and complete:
(i) Copies of all documents in Schedule 3.16(a), which is
a listing of every material contract, agreement, or other commitment,
written or oral, to which the Seller is a party or has succeeded to a
party by assumption or assignment or in which it has a beneficial
interest and excluding documents listed in any other Exhibit hereto
(any contract or agreement shall, for the purposes of this Agreement,
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 the Seller 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) The Seller 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) The Seller is not restricted by agreement from carrying on
the Business anywhere in the world.
3.17 Labor Matters.
(a) Neither the Seller nor any employee employed by the Seller
is a party to or is covered by any labor agreement with any collective
bargaining representative representing employees of the Seller.
(b) The Seller 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 to the
best knowledge of the Seller, 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.
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(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)
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; and to the
best knowledge of the Seller, 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 the Seller on or
after December 31, 1995, and who actually commenced such employment on
or after November 6, 1986, (i) the Seller hired such person in
compliance with the Immigration Reform and Control Act of 1986 and the
rules and regulations thereunder ("IRCA") and (ii) the Seller has
complied with all recordkeeping and other regulatory requirements
under IRCA.
(f) The Seller has not incurred any liability or obligation
under the Worker Adjustment and Retraining Notification Act or similar
state laws. The Seller 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 Seller to provide any notice
required by said Act by reason of the provisions, execution or
operation of this Agreement.
(g) To the best of Seller's knowledge, the Seller is in or will
take all steps necessary for full compliance with the provisions of
the Americans with Disabilities Act (the "ADA"). The Seller
acknowledges and agrees that it has the obligation to ensure that the
facilities located on the Immovable Property are in full compliance
with the ADA and that it will make all modifications to existing
facilities required for such compliance.
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3.18 Personnel.
(a) Schedule 3.18 sets forth (i) the name and current annual
salary (or rate, if an hourly employee) and other compensation
(including, without limitation, normal bonus, profit sharing and other
compensation) now payable by the Seller 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 the Seller
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 the Seller to, or made
to the Seller by, any director, officer or employee, (iv) all other
transactions between the Seller and any director, officer or employee
of the Seller since December 31, 1995 , 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 the Seller 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).
(b) The Seller's relationship with its respective employees is
good and the Seller has no knowledge of any facts which would indicate
that the Seller's employees will not continue in its employ on a basis
acceptable to Purchaser following the Closing.
3.19 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, under which the
Seller 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) The Seller 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,
and the Seller has used its best efforts to secure the consents (where
such consents are necessary) of the other parties to any agreements
affected hereby, to the consummation of the transactions contemplated
by this Agreement.
3.20 Consents, Permits, Etc. No consent, approval, governmental
filing, authorization, or Permit from any person or entity is
necessary to the consummation of the transactions contemplated by this
Agreement.
3.21 Litigation. Except as set forth in Schedule 3.21, there is
no litigation, proceeding, arbitration, administrative or other
proceeding or audit, inquiry or investigation pending, or
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controversy (an "Action") pending or threatened by or against, or
involving the Seller 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 Seller
pursuant to this Agreement or in connection with the transactions
contemplated hereby, and to the knowledge of the Seller, there is no
valid basis for any such Action. No Action set forth in Schedule 3.21
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 the Purchaser to conduct the Business.
3.22 Compliance With Applicable Law; Adverse Restrictions. The
operations of the Seller are being conducted in material compliance
with (a) all applicable Permits, orders, writs, injunctions,
judgments, decrees, or awards of all courts and governmental and
regulatory authorities, and (b) to the knowledge of the Seller, all
laws (statutory or otherwise), ordinances, rules, regulations, bylaws,
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). The Seller 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 the Seller has taken
steps to correct or contest in good faith.
3.23 Assets Necessary to Business. As a result of the
transactions effected hereby, the Purchaser (with respect to Assets
owned prior to the Closing Date by the Seller) (a) will have title to,
or a valid leasehold interest in, all tangible and intangible assets
and properties relating to the Business; (b) will possess valid
consents, authorizations, approvals, and Permits relating to the
Business; and (c) will be party to all agreements, in each case
necessary to permit the Purchaser to continue to carry on the Business
substantially as currently conducted.
3.24 Customers and Suppliers.
(a) Since January 1, 1996, there has not been any adverse change
in the business relationship of the Seller 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
Seller, no customer of supplier of the Seller 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. Seller 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 Seller, no
such shortage of supply of inventory, supplies, equipment or other
items is threatened or pending. The Seller 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) Neither the Seller, nor, to the best of Seller's knowledge,
any shareholder, officer, director or employee of the Seller, nor any
spouse or child of any of them, as any direct or indirect
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interest in any competitor, supplier or customer of the Seller or in
any person from whom or to whom the Seller leases any real or personal
property, or in any other person with whom the Seller is doing
business.
3.25 Governmental Approvals and Consents. No approval,
authorization, consent, or other order or action by the Seller or the
Purchaser before any court, administrative agency, or other
governmental authority is required for the execution and delivery by
the Seller of this Agreement or the consummation by the Seller of the
transactions contemplated hereby.
3.26 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 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 the Seller, or, to the knowledge of the
Seller, prior to its 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) 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) 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.
(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. Section 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
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or are currently classified or considered to be pollutants,
hazardous or toxic under Environmental Requirements.
"Subject Property" means the Immovable Property.
SECTION 4
COVENANTS OF THE PARTIES
4.1 Consents, Permits, Etc.
(a) The Seller (i) has maintained in full force and effect and
renewed, when required, all Permits, and (ii) has obtained all
consents, approvals, governmental filings, authorizations, and Permits
necessary to (A) the consummation of the transactions contemplated by
this Agreement, and (B) the continued conduct of the Business by the
Purchaser after the Closing Date as it is currently conducted by the
Seller, and delivers herewith to the Purchaser copies of each such
consent, approval, governmental filing, authorization, and Permit.
(b) In the event and to the extent that any of the contracts,
leases, agreements, Permits, plans, commitments, purchase orders, or
other binding arrangements relating to the Assets (in this Section
4.1(b) called "Agreements") cannot be assumed by or assigned to the
Purchaser without the consent of another party, and such consent has
not been obtained as of the Closing Date, the Seller and the Purchaser
each agrees to cooperate with the other in any reasonable arrangement
designed to enable the Seller to perform its obligations under, and to
provide for the Purchaser the benefits of, any such agreements,
including enforcement at any cost, and for the account of the
Purchaser, of any and all rights of the Seller against the other party
thereto arising out of the breach or cancellation thereof by such
other party or otherwise. The Seller will promptly pay to the
Purchaser when received all monies received by the Seller under any
such Agreements.
4.2 Confidentiality and Competition. Contemporaneously herewith,
the Seller, on behalf of itself and its Affiliates, and each of the
shareholders of Seller listed on Schedule 3.1 of this Agreement, have
executed and delivered the Confidentiality and Non-Competition
Agreement in the form attached hereto as Exhibit 2.1(j) of this
Agreement.
4.3 Contribution of Cash by the Advantage Entities. Subject to
the terms and conditions of this Agreement, and further conditioned
upon but effective simultaneously with the Sale of the Assets pursuant
to this Agreement, the Advantage Entities (as that term is defined in
the Operating Agreement of the Purchaser dated as of the date hereof)
has made a capital contribution to the Purchaser in the amount of
$2,920,000.00.
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SECTION 5
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.1 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.
(b) The Seller and Jeansonne 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 5.2 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
Seller or Jeansonne pursuant to this Agreement;
(ii) The failure of the Seller to perform any obligation
or liability of the Business not assumed by the Purchaser pursuant to
this Agreement or which is related to the Excluded Assets;
(iii) Claims by third parties in connection with the sale
by the Seller of the Business or the Assets to the Purchaser; and
(iv) Any and all losses, claims, demands, penalties,
fines, settlements, or damages arising under 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) The Purchaser and its successors and assigns (each an
"Indemnitor"), jointly and severally, hereby agree to indemnify each
Indemnitee and Indemnitee Affiliate (as each is defined in Section 5.2
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) The failure of the Purchaser to perform any obligation
or liability of the Business assumed by the Purchaser pursuant to this
Agreement or which is related to the purchased Assets;
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(ii) The failure of the Purchaser to secure the release of
any Affiliate of the Seller from the personal guaranty of any
indebtedness of the Seller related to the purchased Assets; and
(iii) Any and all losses, claims, demands, penalties,
fines, settlements, or damages arising under U.S. or any state or
local Environmental Laws and relating to conditions, events, actions,
violations, obligations, or circumstances that occurred subsequent to
the Closing Date.
5.2 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 the Purchaser and its Affiliates or the
Seller and its Affiliates, as appropriate.
(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 Closing Date, or, in the case of
any Tax period which includes, but does not end on, the Closing Date,
the portion of such period up to and including the Closing Date.
(e) "Tax" means (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 the payment of any amounts of the type described in (i) as a
result of any express obligations to indemnify any other Person.
5.3 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 5.1(b) or Section 5.1(c) of
this Agreement and of any Loss which any such Indemnitee deems to be
within the ambit of Section 5.1(b) or Section 5.1(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
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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.
5.4 Cooperation on Tax Matters. The Seller and the Purchaser
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. The Purchaser and the
Seller 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
discarding any such books and records and, if the other party so
requests, the Purchaser or the Seller, as the case may be, shall allow
the other party to take possession of such books and records.
SECTION 6
MISCELLANEOUS PROVISIONS
6.1 Amendment and Modification. This Agreement may be amended,
modified, or supplemented only by written agreement of the parties
hereto.
6.2 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,
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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 6.2, with appropriate notice in accordance with Section 6.9 of
this Agreement.
6.3 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.
6.4 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.
6.5 Further Assurances. From time to time, at the request of the
Seller or the Purchaser and without further consideration, each party,
at its own expense, will execute and deliver such other documents, and
take such other action, as the Seller or the Purchaser may reasonably
request in order to consummate more effectively the transactions
contemplated hereby and to vest in the Purchaser good and marketable
title to the Assets. The Seller hereby constitutes and appoints,
effective as of the Closing Date, the Purchaser and its successors and
permitted assigns as the true and lawful attorney of the Seller with
full power of substitution in the name of the Purchaser or in the name
of the Seller, but for the benefit of the Purchaser, to collect for
the account of the Purchaser any items of Assets and to institute and
prosecute all proceedings that the Purchaser may in its reasonable
discretion deem proper in order to assert or enforce any right, title,
or interest in, to, or under the Assets, and to defend or compromise
any and all action, suits, or proceedings in respect of the Assets.
The Purchaser shall be entitled to retain for its own account any
amounts collected pursuant to the foregoing powers, including any
amounts payable as interest in respect thereof.
6.6 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).
6.7 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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6.8 Publicity. Neither of the parties will make any disclosure
of the transactions contemplated by this Agreement, or any discussions
in connection therewith, without the prior written consent of each of
the other parties. The preceding sentence shall not apply to any
disclosure required to be made by Law or the regulations of any stock
exchange(s) as reasonably determined by counsel to the party
determining that such disclosure is required, except that such party,
whenever practicable, shall be required to consult with the other
party concerning the timing and content of such disclosure before
making it.
6.9 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 the Seller:
Omni Geophysical Corporation
4484 Interstate 49, North
Lafayette, Louisiana 70520
Attention: David Jeansonne, President
with a copy to:
Ted W. Hoyt, Esq.
315 South College Road
Suite 165
Lafayette, Louisiana 70503
If to the Purchaser:
Omni Geophysical, L.L.C.
4484 Interstate 49, North
Lafayette, Louisiana 70520
Attention: Roger Thomas, Manager
with a copy to the Advantage Entities:
Advantage Capital Companies
909 Poydras, Suite 2230
New Orleans, Louisiana 70112
Attention: Steven T. Stull
with a copy to:
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Gerald J. Daigle, Jr., Esq.
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
6.10 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.
6.11 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.
6.12 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.
6.13 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.
6.14 Schedules and Exhibits. All Schedules and Exhibits attached
hereto are hereby incorporated in and made a part as if set forth in
full herein.
[Remainder of this page intentionally left blank]
24
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
OMNI GEOPHYSICAL CORPORATION
By: /s/ David Jeansonne
-------------------------------------
David Jeansonne, President
OMNI GEOPHYSICAL, L.L.C.
By: /s/ David Jeansonne
-------------------------------------
David Jeansonne, Manager
By: /s/ Roger E. Thomas
-------------------------------------
Roger E. Thomas, Manager
/s/ David Jeansonne
-----------------------------------------
David Jeansonne, individual (joining in
the execution of this Agreement for the
purposes set forth in the first paragraph
hereof)
25
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The schedules and exhibits to this agreement have been intentionally omitted in
accordance with the rules and regulations of the Commission. The Company will
provide such exhibits and schedules upon request of the Commission.
<PAGE>
EXHIBIT 2.3
TABLE OF CONTENTS
Section 1 TRANSFER OF ASSETS TO AA FROM AMERICAN....................2
1.1 Transfer of the Assets...............................2
1.2 Conveyance Instruments...............................3
1.3 Exchange.............................................3
1.4 Assumed Liabilities..................................3
1.5 Excluded Liabilities.................................4
1.6 Condition Precedent to Exchange......................4
Section 2 EVENTS OCCURRING ON THE CLOSING DATE......................4
2.1 Deliveries by American...............................4
2.2 Deliveries by AA.....................................5
2.3 Other Deliveries.....................................5
Section 3 REPRESENTATIONS AND WARRANTIES OF AMERICAN
AND JEANSONNE.............................................6
3.1 Capitalization and Ownership.........................6
3.2 Organization.........................................6
3.3 Qualification........................................6
3.4 Authority............................................6
3.5 No Violations........................................7
3.6 Financial Statements.................................7
3.7 Absence of Certain Changes or Events.................8
3.8 Certain Tax Matters..................................9
3.9 Condition of Facilities.............................10
3.11 Title to Properties; Encumbrances...................11
3.12 Leases..............................................11
3.13 Patents, Trademarks, and Similar Rights.............11
3.14 Insurance...........................................12
3.15 No Benefit Plans; Absence of PBGC Lien..............12
3.16 Documents; Commitments..............................12
3.17 Labor Matters.......................................13
3.18 Personnel...........................................14
3.19 No Breach...........................................15
3.20 Consents, Permits, Etc..............................15
3.21 Litigation..........................................15
3.22 Compliance With Applicable Law; Adverse
Restrictions........................................15
3.23 Assets Necessary to Business........................16
3.24 Customers and Suppliers.............................16
3.25 Governmental Approvals and Consents.................16
3.26 Environmental Laws and Regulations..................16
<PAGE>
Section 4 COVENANTS OF THE PARTIES.................................17
4.1 Consents, Permits, Etc...............................17
4.2 Condition Precedent to Exchange......................18
4.3 Confidentiality and Competition......................18
Section 5 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.............19
5.1 Survival; Indemnification............................19
5.2 Definitions..........................................20
5.3 Control of Litigation................................20
5.4 Cooperation on Tax Matters...........................21
Section 6 MISCELLANEOUS PROVISIONS.................................21
6.1 Amendment and Modification...........................21
6.2 Waiver of Compliance; Consents.......................22
6.3 Assignment...........................................22
6.4 Expenses, Transfer Taxes, Etc........................22
6.5 Further Assurances...................................22
6.6 Governing Law........................................22
6.7 Counterparts.........................................22
6.8 Publicity............................................23
6.9 Notices..............................................23
6.10 Specific Performance................................24
6.11 Headings............................................24
6.12 Entire Agreement....................................24
6.13 Severability........................................24
6.14 Schedules and Exhibits..............................24
<PAGE>
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
THIS EXCHANGE AGREEMENT (the "Agreement") is made and entered
into on the 5th day of August, 1997 (the "Closing Date") but effective
as of July 1, 1997 (the "Effective Date") by and among AMERICAN
AVIATION INCORPORATED ("American"), AMERICAN AVIATION L.L.C. ("AA")
and OMNI GEOPHYSICAL, L.L.C. ("Omni"). David Jeansonne, the President
of American ("Jeansonne"), joins in the execution of this Agreement
for the purposes of making the representations and warranties set
forth in Section 3 and agreeing to be bound by the terms of Section 5.
RECITALS
1. American, a Louisiana corporation, has been engaged
primarily in an aviation business based in Louisiana with operations
on the Gulf Coast (the "Business").
2. AA is a Missouri single-member limited liability company,
qualified to do business in Louisiana, which is wholly owned by Omni.
AA is a domestic entity with a single owner and has made an election
on Form 8832 to be disregarded as a separate entity for federal income
tax purposes.
3. American desires to effect the transfer to AA, and AA
desires to effect the acquisition from American of, all of the assets
of American (except for those specifically identified items of
intangible property referred to as Excluded Assets in Section 1.1(a)
of this Agreement), in exchange for 10,213 Common Units of Omni. It is
the specific intention of this Agreement that the contribution of
assets to AA by American in exchange for Common Units (as that term is
defined in Omni's Operating Agreement, as amended and restated) of
Omni qualify as a tax-free contribution of property to Omni under
section 721 of the Internal Revenue Code of 1986, as amended.
4. The exchange of the assets by American in exchange for the
Common Units of Omni and the assumption of liabilities by AA are
effective as of the Effective Date of this Agreement and are all
subject to the terms and conditions of this Agreement.
In consideration of the foregoing and the mutual representations,
warranties, covenants, and agreements herein contained, American and
AA agree as follows:
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Section 1
TRANSFER OF ASSETS TO AA FROM AMERICAN
1.1 Transfer of the Assets.
(a) Subject to the terms and conditions of this Agreement, on
the Closing Date, but effective as of the Effective Date, American
hereby assigns, transfers, and delivers to AA, free and clear of all
title defects, objections, liens, pledges, claims, rights of first
refusal, options, charges, security interests, mortgages, or other
encumbrances of any nature whatsoever (collectively, "Encumbrances")
other than "Permitted Encumbrances" (as defined in Section 1.1(b) of
this Agreement), all of the assets, properties, and business of every
kind and description, wherever located, real, personal, or mixed;
tangible or intangible; owned or held; or used in the conduct of the
Business by American (such assets, other than the Excluded Assets as
that term is defined in this Section 1.1(a), being hereinafter
collectively referred to as the "Assets"), including, without
limitation, all right, title, and interest of American in, to, and
under:
(i) All machinery, equipment, furniture, vehicles, and
other tangible property (including, without limitation, maintenance
and operating supplies and spare parts) used in connection with the
Business, including those listed and described in Schedule 1.1(a)(i)
of this Agreement (collectively, the "Equipment");
(ii) All of American's rights, claims, credits, causes of
action, or right of setoff against third parties relating to the
Assets or the Business (collectively, "Claims");
(iii) Federal Aviation Administration ("FAA") Air Carrier
Certificate number A05A037H, effective date May 7, 1997, issued at SW-
BTR-FSDO, and/or any substitute or reissued certificate related
thereto, and all rights and authority to operate as an air carrier and
to conduct common carriage operations thereunder (the "Certificate");
(iv) All accounts and notes receivable arising out of the
operation of the Business prior to the close of business on the
Effective Date (collectively, "Receivables");
(v) All transferable bonds or deposits made by American
or its predecessors in title (or its agents) with any governmental
agency or authority or with any utility company or third party
relating to the fabrication, use, operation, development, sale or
enjoyment of the Assets;
(vi) All prepaid rentals and other prepaid expenses
arising from payments made by American in the ordinary and usual
course of the operation of the Business related to the Assets prior to
the close of business on the Effective Date; and
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(vii) Originals or copies of all books, records, files and
papers, whether in hard copy or computer format, used in the Business,
including without limitation, customer lists, engineering information,
manuals and data, sales and advertising materials, sales and purchase
correspondence, lists of present and former suppliers, personnel and
employment records, and information that is necessary for the
preparation of any "Tax" (as defined in Section 5.2 of this Agreement)
returns to be filed by AA after the Closing Date or the determination
of the Tax basis of the Assets (collectively, "Files and Records").
But specifically excluding the intangible property described in
Schedule 1.1 (the "Excluded Assets"), which Excluded Assets are being
sold by American to AA contemporaneously herewith in that certain
Intangible Asset Purchase Agreement by and among American, AA and Omni
(the "Intangible Asset Purchase Agreement").
(b) For purposes of this Agreement, "Permitted Encumbrances"
shall mean (i) liens for current "Taxes" (as defined in Section 5.2 of
this Agreement) not yet due and payable; and (ii) any such other
encumbrances agreed to in writing prior to the Closing Date by
American and described on Schedule 1.1(b).
1.2 Conveyance Instruments. In order to effect the assignment,
transfer and delivery of the Assets as contemplated by this Section 1,
American has, or will hereafter, execute and deliver, or cause to be
executed and delivered, all such documents or instruments of
assignment, transfer, or conveyance, in each case dated as of the date
executed but effective as of the Effective Date (collectively, the
"Conveyance Instruments"), as the parties and their respective counsel
shall reasonably deem necessary or appropriate to vest in or confer
title to the Assets to AA.
1.3 Exchange. In exchange for the assignment, transfer, or
conveyance of the Assets by American, AA and Omni hereby agree as
follows:
(a) Omni hereby agrees to issue and deliver to American,
effective as of the Effective Date, 10,213 of its Common Units,
representing an interest of approximately 9.000% of the total issued
and outstanding Common Units of Omni Geophysical, L.L.C.;
(b) AA agrees to assume the Assumed Liabilities as specified in
Section 1.4 hereof. Omni agrees to guarantee performance by AA of its
obligations under the Assumed Liabilities.
1.4 Assumed Liabilities. Subject to the terms and conditions of
this Agreement, in reliance on the representations, warranties,
covenants, and agreements of the parties contained herein, AA hereby
assumes and agrees to pay, discharge, or fulfill the following
liabilities and obligations relating to the Business: (a) the
liabilities listed in Schedule 1.4 (collectively, the "Assumed
Liabilities"), including the liabilities to Jeansonne and to First
National Bank--Lafayette which will be paid at or contemporaneously
with the closing of this transaction; and (b) the liabilities incurred
in the ordinary course of business from the Effective Date through the
Closing Date.
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1.5 Excluded Liabilities. Notwithstanding any provision of this
Agreement or any Conveyance Instrument to the contrary, AA is assuming
only the Assumed Liabilities and is not assuming any other liability
or obligation of American (or any predecessor owner of all or part of
its business and assets) of whatever nature whether currently in
existence or arising hereafter; and all such other liabilities and
obligations shall be retained by and remain liabilities of American
(all of such liabilities and obligations not being assumed hereinafter
referred to as the "Excluded Liabilities").
1.6 Condition Precedent to Exchange. This Agreement and the
consummation of the transactions contemplated hereunder, including
without limitation the transfer and reregistration of all of the
aircraft included on Schedule 1.1(a)(i) and the transfer and/or
reissuance pursuant to such transfer of the Certificate, are subject
to the approval of the FAA and the U.S. Department of Transportation.
If approval of the FAA for all or any portion of the transactions
contemplated hereunder is not received by August 31, 1997, which date
may be extended by mutual agreement of the parties hereto, then this
Agreement shall be null and void and of no further effect.
SECTION 2
EVENTS OCCURRING ON THE CLOSING DATE
2.1 Deliveries by American. Simultaneously with the
execution hereof, American has delivered to AA the following:
(a) The Conveyance Instruments to effect the assignment,
transfer and conveyance of the Assets to AA, such Conveyance
Instruments to be those reasonably deemed necessary by, and in form
and substance satisfactory to, counsel to AA;
(b) A copy of the resolutions of its Board of Directors and of
its shareholders, each certified by its Secretary, authorizing or
ratifying its execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby;
(c) A copy of its Articles of Incorporation, certified as of a
date within sixty (60) days of the Closing Date by the Secretary of
State of the State of Louisiana;
(d) A certificate from the Secretary of State of the State of
Louisiana as to its good standing in such state, dated as of a date
within sixty (60) days of the Closing Date;
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(e) A certificate of its Secretary, attaching thereto a true and
complete copy of its Bylaws in effect on the Closing Date;
(f) A certificate from its President stating that American's
representations and warranties are true, complete and accurate in all
material respects at and as of the Closing Date;
(g) The executed counterpart copies of all consents, approvals,
authorizations and permits, if any, from third parties referred to in
Section 4.1(a) and Section 4.1(b) hereof;
(h) An Employment and Non-Competition Agreement between
Jeansonne and Omni, which agreement shall be in the form specified in
Exhibit 2.1(h) hereto.
(i) An Employment and Non-Competition Agreement between Richard
Patrick Morris and Omni, which agreement shall be in the form
specified in Exhibit 2.1(i) hereto.
(j) An opinion of legal counsel to American as to the due
incorporation, existence and good standing of American, its
qualification to do business in Louisiana and any Material
Jurisdictions (as defined in Section 3.3 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 AA.
(k) 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;
2.2 Deliveries by AA. Simultaneously with the execution hereof,
AA has delivered to American the following:
(a) An amendment to the Operating Agreement of Omni (together
with an amendment to Schedule "A" thereof), effective as of the
Effective Date, evidencing the issuance of 10,213 Common Units of Omni
to American;
(b) The documents required to effect the assumption of the
Assumed Liabilities by AA, such documents to be those reasonably
deemed necessary by, and to be in form and substance reasonably
satisfactory to, counsel to American;
(c) An Employment and Non-Competition Agreement between
Jeansonne and Omni, which agreement shall be in the form specified in
Exhibit 2.1(h) hereto.
(d) An Employment and Non-Competition Agreement between Richard
Patrick Morris and Omni, which agreement shall be in the form
specified in Exhibit 2.1(i) hereto.
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2.3 Other Deliveries. Simultaneously with the execution hereof,
and as a condition of this Agreement, American has delivered to AA and
Omni that certain Intangible Asset Purchase Agreement, dated as of
even date herewith, by and among American, AA and Omni.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF AMERICAN AND JEANSONNE
In consideration of the exchange of the Common Units of Omni and
the assumption of the Assumed Liabilities and the other covenants
undertaken by AA under this Agreement, American and Jeansonne hereby
jointly and severally represent and warrant to AA that:
3.1 Capitalization and Ownership. The authorized capital stock
of the Seller consists of 1,000 shares of common stock, no par value
per share, of which 1,000 shares are issued and outstanding. All of
the issued and outstanding shares of such common stock have been duly
authorized and are duly and validly issued and outstanding, fully paid
and non-assessable; and 900 shares are owned by David A. Jeansonne and
100 shares are owned by R. Patrick Morris, free and clear of all
liens, encumbrances, pledges, adverse claims or defects in title.
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.
3.2 Organization.
(a) American 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 American, as certified by the Secretary of State of the
State of Louisiana, and the Bylaws, as amended to date, of American,
as certified by its Secretary and delivered to AA, are true, complete,
and correct copies of the respective Articles of Incorporation and
Bylaws, as amended and currently in effect, of American.
3.3 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").
3.4 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
6
<PAGE>
corporate proceedings on the part of American or any other person or
entity, whether pursuant to the Articles of Incorporation or Bylaws 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 Jeansonne, as the case may be).
This Agreement has been duly executed and delivered by American and
Jeansonne and constitutes a valid and binding obligation of American
and Jeansonne, enforceable against both American and Jeansonne 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.
3.5 No Violations. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated
hereby:
(a) Requires any filing or registration with, or consent,
authorization, approval, or permit of, any governmental or regulatory
authority on the part of American;
(b) Violates or will violate (i) any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory
authority or (ii) to the knowledge of American, violates or will
violate any "Law," as defined in Section 3.22 of this Agreement, of
any governmental or regulatory authority to which American or any of
its properties or assets are subject;
(c) Violates or will violate, or conflicts with or will conflict
with, any provision of, or constitutes a default under, the Articles
of Incorporation or Bylaws of American; or
(d) (i) violates or breaches or constitutes a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or give rise to a right to terminate, any mortgage,
contract, agreement, deed of trust, license, lease, or other
instrument, arrangement, commitment, obligation, understanding, or
restriction of any kind to which American is a party or by which its
properties may be bound, or (ii) will cause, or give any person
grounds to cause, to be accelerated (with notice or lapse of time or
both) the maturity of, or will increase, any liability or obligation
of American.
3.6 Financial Statements. American has heretofore delivered to
AA 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 the Business for the periods
and as of the dates stated therein. Except to the extent reflected in
the Financial Statements, American has no liabilities or obligations
7
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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.
3.7 Absence of Certain Changes or Events. 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:
(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, except (i) in the ordinary course
of business and (ii) Permitted Encumbrances;
(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 procedures or elections;
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(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 American or, directly or indirectly,
redeemed, purchased, or otherwise acquired any of the capital stock of
American; or
(l) 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
(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
3.7.
3.8 Certain Tax Matters.
(a) 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 3 fiscal
years, have been delivered to AA.
(b) American:
(i) Is not subject to any liens for Taxes (as such term
is defined in Section 5.2 of this Agreement) 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;
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(iii) Is not subject to any (A) claims, audits, actions,
suits, proceedings, or investigations with respect to any Tax or
assessment for which AA 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 such
term is defined in Section 5.2 of this Agreement).
(c) None of the directors or officers of American is aware of
any state of facts that could give rise to any claim, audit, action,
suit, proceeding, or investigation with respect to any Tax or
assessment for which AA could be liable and which would be material.
(d) No Tax or assessment will be assessed on or after the
Effective Date against or pertaining to any assets of the Business for
any tax period ending on or prior to the Effective Date, or for any
tax period ending after the Effective Date with respect to any portion
of such tax period that includes or is prior to the Effective Date.
"Tax" or "Taxes" shall mean all taxes, charges, fees, levies or other
assessments including, without limitation, income, excise, property,
withholding, sales and franchise taxes and any other charge in the
nature of a tax, imposed by the United States, or any state, county,
local or foreign government or subdivision or agency thereof, and
including any interest, penalties or additions attributable thereto.
3.9 Condition of Facilities. The facilities included in the
Assets, including equipment, furniture, vehicles and other tangible
personal property, 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 and
American has no knowledge of any condition or defect, not disclosed
herein, in any of the Assets which would materially affect the fair
market value, use or operation of the Business, such as to have a
material adverse effect on the Business or its operations.
3.10 Receivables; Payables.
(a) Schedule 3.10(a) contains a list of all Receivables (as
defined in Section 1.1(a)(iv) of this Agreement) as of June 30, 1997,
including the dollar amounts thereof together with an accurate aging
thereof. 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 American. All
Receivables are fully collectible, except the Grant Receivable.
(b) Schedule 3.10(b) contains an aging schedule of all accounts
and trade payables of the Business as of the date shown thereon,
including the dollar amounts thereof. In addition to the payables
listed on Schedule 3.10(b), there are other payables that were
incurred in the ordinary course of business subsequent to the date
shown on Schedule 3.10(b) and which are not reflected thereon. 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 3.10(b).
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3.11 Title to Properties; Encumbrances.
(a) American has good and marketable title to all of the Assets,
free and clear of all Encumbrances, except for Permitted Encumbrances.
As a result of the delivery to AA of the Conveyance Instruments, all
of the Assets are owned by AA free and clear of all Encumbrances,
except Permitted Encumbrances and encumbrances created by AA (whether
or not arising from the transactions contemplated hereby).
(b) (i) American has incurred no indebtedness or liabilities
which may bear against the Assets of the Business except those listed
as Permitted Encumbrances or Assumed Liabilities.
(ii) American has not received any notice of default under
any of the Assumed Liabilities, nor, to the knowledge of American, is
any such notice pending or do reasons exist for the giving of such
notice.
3.12 Leases.
(a) American has delivered or made available to AA a copy of
each lease pursuant to which American leases real or personal property
(collectively, the "Leases"), each of which is true and complete. Each
of the Leases is transferable, and all of American's rights under any
such Leases are hereby transferred to AA, free and clear of all
Encumbrances.
(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
American has not received any written notice of any breach or default
with respect to a Lease.
3.13 Patents, Trademarks, and Similar Rights.
(a) (i) American has the sole and exclusive right to use the
patents, copyrights, trademarks, trade names, technology, know-how,
processes, trade secrets, inventions, proprietary data, formulae,
research and development data, computer software programs, flight
schedules, hanger leases, air rights, landing rights and other
intangible property, and any applications for the same, 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 and the Intangible Asset
Purchase Agreement will not alter or impair any such rights and will
result in AA having the sole and exclusive right to use all such
Intangible Property used in the Business;
(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 licensed or authorized by
others, and the consummation of the transactions contemplated by this
Agreement will not alter or impair any such rights and will result in
AA having the right to use all such Intangible Property to the same
extent it is currently used in the Business;
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(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 American has no knowledge of any valid basis for any
such claim; and
(iv) To the knowledge of American, 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, to the best of American's knowledge, have been threatened that
challenge the rights of American in respect thereof.
(v) None of American's Intangible Property rights, to the
best of American's 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.
3.14 Insurance. American has heretofore made available for
inspection by AA 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.
3.15 No Benefit Plans; Absence of PBGC Lien. Neither American nor
any Affiliate (as defined in Section 5.2 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 is subject to a lien in favor
of the Pension Benefit Guaranty Corporation.
3.16 Documents; Commitments.
(a) American has delivered or made available to AA the
following documents, each of which is true and complete:
(i) Copies of all material contracts, agreements, or
other commitments, 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 (any contract or agreement shall, for the
purposes of this Agreement, 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 American in connection
with estimates of the cost of future work); and
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(ii) Copies of all product bulletins, technical bulletins,
or other advertising or sales materials currently used in connection
with the Business.
(b) American 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) American is not restricted by agreement from carrying on the
Business anywhere in the world.
3.17 Labor Matters.
(a) 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.
(b) American is operating in material compliance with all
applicable laws 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 to the
best knowledge of American, 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)
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; and to the
best knowledge of American, 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.
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(e) With respect to each person employed by American on or after
December 31, 1996, 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 recordkeeping and other regulatory requirements under IRCA.
(f) 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 American to provide any notice
required by said Act by reason of the provisions, execution or
operation of this Agreement.
(g) To the best of American's knowledge, American is in or will
take all steps necessary for full compliance with the provisions of
Americans with Disabilities Act (the "ADA"). American acknowledges and
agrees that it has the obligation to ensure that the facilities
located on the Immovable Property are in full compliance with the ADA
and that it will make all modifications to existing facilities
required for such compliance.
3.18 Personnel.
(a) American has provided AA with (i) the name and current
annual salary (or rate, if an hourly employee) and other compensation
(including, without limitation, normal bonus, profit sharing and other
compensation) now payable by American 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 American
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 American to, or made to
American by, any director, officer or employee, (iv) all other
transactions between American and any director, officer or employee of
American since December 31, 1996 , 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 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).
(b) American's relationship with its respective employees is
good and American has no knowledge of any facts which would indicate
that American's employees will not continue in its employ on a basis
acceptable to AA following the Closing.
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3.19 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, under which
American 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) 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,
and American has used its best efforts to secure the consents (where
such consents are necessary) of the other parties to any agreements
affected hereby, to the consummation of the transactions contemplated
by this Agreement.
3.20 Consents, Permits, Etc. No consent, approval, governmental
filing, authorization, or permit from any person or entity is
necessary to the consummation of the transactions contemplated by this
Agreement.
3.21 Litigation. There is no litigation, proceeding, arbitration,
administrative or other proceeding or audit, inquiry or investigation
pending, or controversy (an "Action") pending or 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 American pursuant to this Agreement or in connection with the
transactions contemplated hereby, and to the knowledge of American,
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 AA to
conduct the Business.
3.22 Compliance With Applicable Law; Adverse Restrictions. The
operations of American are being conducted in material compliance with
(a) all applicable permits, orders, writs, injunctions, judgments,
decrees, or awards of all courts and governmental and regulatory
authorities, and (b) to the knowledge of American, all laws (statutory
or otherwise), ordinances, rules, regulations, bylaws, 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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3.23 Assets Necessary to Business. As a result of the
transactions effected hereby and those transactions effected pursuant
to the Intangible Asset Purchase Agreement, AA (a) will have title to,
or a valid leasehold interest in, all tangible and intangible assets
and properties relating to the Business; (b) will possess valid
consents, authorizations, approvals, and permits relating to the
Business; and (c) will be party to all agreements, in each case
necessary to permit AA to continue to carry on the Business
substantially as currently conducted, specifically including without
limitation any required consents, authorizations, approvals or permits
of the FAA relating to the Business.
3.24 Customers and Suppliers.
(a) Since January 1, 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
American, 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 American, 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.
(b) Neither American, nor, to the best of American's knowledge,
any 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.
3.25 Governmental Approvals and Consents. No approval,
authorization, consent, or other order or action by American or AA
before any court, administrative agency, or other governmental
authority is required for the execution and delivery by American of
this Agreement or the consummation by American of the transactions
contemplated hereby.
3.26 Environmental Laws and Regulations.
(a)(i) The ownership and/or 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 prior to the
date of this Agreement have been in compliance with "Environmental
Requirements," as defined below; (ii) during the ownership, occupancy
and/or operation of the Subject Property by American, or, to the
knowledge of American, prior to its 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
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or manner that violates or requires further investigation or
remediation under Environmental Requirements; (iii) 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) 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 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. SS SS 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.
SECTION 4
COVENANTS OF THE PARTIES
4.1 Consents, Permits, Etc.
(a) American (i) has maintained in full force and effect and
renewed, when required, all permits, and (ii) has obtained all
consents, approvals, governmental filings, authorizations, and permits
necessary to (A) the consummation of the transactions contemplated by
this Agreement, and (B) the continued conduct of the Business by AA
after the Closing Date as it is currently conducted by American, and
delivers herewith to AA copies of each such consent, approval,
governmental filing, authorization, and permit.
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(b) In the event and to the extent that any of the contracts,
leases, agreements, permits, plans, commitments, purchase orders, or
other binding arrangements relating to the Assets (in this Section
4.1(b) called "Commitments") cannot be sold to AA (pursuant to the
Intangible Asset Purchase Agreement) or assumed by or assigned to AA
(pursuant to this Agreement) without the consent of another party, and
such consent has not been obtained as of the Closing Date, American
and AA each agrees to cooperate with the other in any reasonable
arrangement designed to enable American to perform its obligations
under, and to provide for AA the benefits of, any such Commitments,
including enforcement at any cost, and for the account of AA, of any
and all rights of American against the other party thereto arising out
of the breach or cancellation thereof by such other party or
otherwise. American will promptly pay to AA when received all monies
received by American under any such Agreements.
(c) In the event and to the extent that any of the contracts,
leases, agreements, permits, plans, commitments, purchase orders, or
other binding arrangements relating to the Assets (in this Section
4.1(c) called "Licenses") cannot be sold to AA (pursuant to the
Intangible Asset Purchase Agreement) assumed by or assigned to AA
(pursuant to this Agreement) without the consent of a court,
administrative agency, or other governmental authority, specifically
including without limitation the FAA, and such consent has not been
obtained as of the Closing Date, American and AA each agrees to
cooperate with the other in any reasonable arrangement designed to
enable American to continue to operate and perform under, and to
provide for AA the benefits of, any such Licenses and the operations
thereunder as of the Effective Date, at no cost to AA and for the
account of AA, until such time as the consent to the transfer of such
Licenses to AA and AA's right to operate thereunder can be obtained.
American will promptly pay to AA when received all monies received by
American from its operations under any such Licenses.
4.2 Condition Precedent to Exchange. As provided in Section 1.6
hereof, and subject to the provisions of Section 4.1 hereof, this
Agreement and the consummation of the transactions contemplated
hereunder, including without limitation the transfer and
reregistration of all of the aircraft included on Schedule 1.1(a)(i)
and the transfer and/or reissuance pursuant to such transfer of the
Certificate, are subject to the approval to the approval of the FAA
and the U.S. Department of Transportation. If approval of the FAA for
all or any portion of the transactions contemplated hereunder is not
received by August 31, 1997, which date may be extended by mutual
agreement of the parties hereto, then this Agreement shall be null and
void and of no further effect.
4.3 Confidentiality and Competition. Contemporaneously herewith,
American, on behalf of itself and its Affiliates, and each of the
shareholders of American have executed and delivered the
Confidentiality and Non-Competition Agreement in the form attached
hereto as Exhibit 4.3 of this Agreement.
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SECTION 5
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.1 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.
(b) American and Jeansonne 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 5.2 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
American or Jeansonne pursuant to this Agreement;
(ii) The failure of American to perform any obligation or
liability of the Business not assumed by AA pursuant to this Agreement
or which is related to the Excluded Assets;
(iii) Claims by third parties in connection with the sale
by American of the Business or the Assets to AA;
(iv) Any and all losses, claims, demands, penalties, fines
or settlements relating to any income taxes for which the shareholders
of American are liable as a result of any allocation of their prorata
shares of income from American attributable to any tax period ending
on or prior to the Effective Date, or any tax period ending after the
Effective Date with respect to any portion of such tax period that
includes or is prior to the Effective Date; and
(v) Any and all losses, claims, demands, penalties,
fines, settlements, or damages arising under 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) AA and its successors and assigns (each an "Indemnitor"),
jointly and severally, hereby agree to indemnify each Indemnitee and
Indemnitee Affiliate (as each is defined in Section 5.2 of this
Agreement) against and agree to hold it harmless from any and all Loss
incurred or suffered by such Indemnitee or Indemnitee Affiliate
arising out of or relating to:
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(i) The failure of AA to perform any obligation or
liability of the Business assumed by AA pursuant to this Agreement or
which is related to the acquired Assets;
(ii) The failure of AA to secure the release of any
Affiliate of American from the personal guaranty of any indebtedness
of American related to the acquired Assets; and
(iii) Any and all losses, claims, demands, penalties,
fines, settlements, or damages arising under U.S. or any state or
local Environmental Laws and relating to conditions, events, actions,
violations, obligations, or circumstances that occurred subsequent to
the Closing Date.
5.2 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 AA and its Affiliates or American and its
Affiliates, as appropriate.
(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
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.
5.3 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 5.1(b) or Section 5.1 (c) of
this Agreement and of any Loss which any such Indemnitee deems to be
within the ambit of Section 5.1(b) or Section 5.1(c) of this Agreement
(specifying with reasonable particularity the basis
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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.
5.4 Cooperation on Tax Matters. American and AA 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. AA 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 discarding any
such books and records and, if the other party so requests, AA or
American, as the case may be, shall allow the other party to take
possession of such books and records.
SECTION 6
MISCELLANEOUS PROVISIONS
6.1 Amendment and Modification. This Agreement may be amended,
modified, or supplemented only by written agreement of the parties
hereto.
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6.2 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 6.2, with
appropriate notice in accordance with Section 6.9 of this Agreement.
6.3 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.
6.4 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.
6.5 Further Assurances. From time to time, at the request of
American or AA and without further consideration, each party, at its
own expense, will execute and deliver such other documents, and take
such other action, as American or AA may reasonably request in order
to consummate more effectively the transactions contemplated hereby
and to vest in AA good and marketable title to the Assets. American
hereby constitutes and appoints, effective as of the Effective Date,
AA and its successors and permitted assigns as the true and lawful
attorney of American with full power of substitution in the name of AA
or in the name of American, but for the benefit of AA, to collect for
the account of AA any items of Assets and to institute and prosecute
all proceedings that AA may in its reasonable discretion deem proper
in order to assert or enforce any right, title, or interest in, to, or
under the Assets, and to defend or compromise any and all action,
suits, or proceedings in respect of the Assets. AA shall be entitled
to retain for its own account any amounts collected pursuant to the
foregoing powers, including any amounts payable as interest in respect
thereof.
6.6 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).
6.7 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
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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.
6.8 Publicity. Neither of the parties will make any disclosure
of the transactions contemplated by this Agreement, or any discussions
in connection therewith, without the prior written consent of each of
the other parties. The preceding sentence shall not apply to any
disclosure required to be made by Law or the regulations of any stock
exchange(s) as reasonably determined by counsel to the party
determining that such disclosure is required, except that such party,
whenever practicable, shall be required to consult with the other
party concerning the timing and content of such disclosure before
making it.
6.9 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:
American Aviation Incorporated
301 Shepard Drive
Lafayette, Louisiana 70508
Attention: David Jeansonne, President
with a copy to:
Ted W. Hoyt, Esq.
P.O. Box 3263
Lafayette, Louisiana 70502
If to AA:
American Aviation L.L.C.
4484 Interstate 49, North
Lafayette, Louisiana 70520
Attention: Roger Thomas
If to Omni:
Omni Geophysical, L.L.C.
4484 Interstate 49, North
Lafayette, Louisiana 70520
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Attention: Roger Thomas, Manager
with a copy to:
Advantage Capital Companies
909 Poydras, Suite 2230
New Orleans, Louisiana 70112
Attention: Steven T. Stull
6.10 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.
6.11 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.
6.12 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.
6.13 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.
6.14 Schedules and Exhibits. All Schedules and Exhibits attached
hereto are hereby incorporated in and made a part as if set forth in
full herein.
[Remainder of this page left blank intentionally]
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the day and year first above written.
AMERICAN AVIATION INCORPORATED
By: /s/ David Jeansonne
-------------------------------------
David Jeansonne, President
AMERICAN AVIATION L.L.C.
By: OMNI GEOPHYSICAL, L.L.C.
By: /s/ Roger E. Thomas
-------------------------------------
Roger E. Thomas, Manager
OMNI GEOPHYSICAL, L.L.C.
By: /s/ David Jeansonne
-------------------------------------
David Jeansonne, Manager
By: /s/ Roger E. Thomas
-------------------------------------
Roger E. Thomas, Manager
/s/ David Jeansonne
-----------------------------------------
David Jeansonne, individually (joining in
the execution of this Agreement for the
purposes set forth in the first paragraph
hereof)
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The schedules and exhibits to this agreement have been intentionally omitted in
accordance with the rules and regulations of the Commission. The Company will
provide such exhibits and schedules upon request of the Commission.
<PAGE>
EXHIBIT 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
THIS INTANGIBLE ASSET PURCHASE AGREEMENT (the "Agreement") is
made and entered into on the 6th day of August, 1997 (the "Closing
Date") but effective as of July 1, 1997 (the "Effective Date") by and
among AMERICAN AVIATION INCORPORATION (the "Seller"), AMERICAN
AVIATION L.L.C. (the "Purchaser") and OMNI GEOPHYSICAL, L.L.C.
("Omni"). David Jeansonne, the President of the Seller ("Jeansonne"),
joins in the execution of this Agreement for the purposes of making
the representations and warranties set forth in Section 3 and agreeing
to be bound by the terms of Section 4.2.
RECITALS
1. The Seller, a Louisiana corporation, has been engaged
primarily in an aviation business based in Louisiana with operations
on the Gulf Coast (the "Business"). The Purchaser is a Missouri
single-member limited liability company, qualified to do business in
Louisiana, which is wholly owned by Omni, a Louisiana limited
liability company.
2. Seller desires to sell to Purchaser, and Purchaser desires
to purchase from Seller, the intangible assets of Seller listed and
more fully described on Schedule 1.1 of this Agreement.
3. The sale of the intangible assets by the Seller and the
purchase by the Purchaser are subject to the terms and conditions of
this Agreement.
In consideration of the foregoing and the mutual representations,
warranties, covenants, and agreements herein contained, the Seller,
the Purchaser and Omni agree as follows:
SECTION 1
PURCHASE AND SALE OF INTANGIBLE ASSETS
BY PURCHASER AND SELLER
1.1 Sale of the Intangible Assets. Subject to the terms and
conditions of this Agreement, on the Closing Date but effective as of
the Effective Date, the Seller hereby assigns, transfers, and delivers
to the Purchaser, free and clear of all title defects, objections,
liens, pledges, claims, rights of first refusal, options, charges,
security interests, mortgages, or other encumbrances of any nature
whatsoever (collectively, "Encumbrances"), the intangible assets
described on Schedule 1.1 (collectively, the "Assets").
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1.2 Conveyance Instruments. In order to effect the purchase and
sale of the Assets as contemplated by this Section 1, the Seller has,
or will hereafter, execute and deliver, or cause to be executed and
delivered, all such documents or instruments of assignment, transfer,
or conveyance, in each case dated as of the Effective Date
(collectively, the "Conveyance Instruments"), as the parties and their
respective counsel shall reasonably deem necessary or appropriate to
vest in or confer title to the Assets to the Purchaser.
1.3 Purchase Price. The total consideration for the purchase of
the Assets (the "Purchase Price") is as follows:
(a) Five Hundred Thousand and no/100 dollars ($500,000.00) cash,
to be paid at the Closing; plus
(b) A promissory note bearing interest at the rate of 8% per
annum, in the form attached hereto as Exhibit 1.3(b) (the "Promissory
Note") in a principal amount of One Million dollars ($1,000,000.00).
Omni will guarantee payment of the Promissory Note.
1.4 Allocation of Purchase Price. The Seller and Purchaser
hereby agree that the Purchase Price described in Section 1.3 hereof
shall be allocated among the Assets in accordance with an allocation
set forth in a document to be annexed hereto as Schedule 1.4.
SECTION 2
EVENTS OCCURRING ON THE CLOSING DATE
2.1 Deliveries by the Seller. Simultaneously with the execution
hereof, the Seller has delivered to the Purchaser the following:
(a) The Conveyance Instruments to effect the sale of the Assets
to the Purchaser, such Conveyance Instruments to be those reasonably
deemed necessary by, and in form and substance satisfactory to,
counsel to the Purchaser;
(b) An opinion of legal counsel to the Seller as to the due
incorporation, existence and good standing of the Seller, its
qualification to do business in Louisiana and any Material
Jurisdictions (as defined in Section 3.3 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 the Purchaser.
2.2 Deliveries by the Purchaser. Simultaneously with the
execution hereof, the Purchaser has delivered to the Seller the
following:
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(a) The cash portion of the Purchase Price by wire transfer of
immediately available funds to the account of American Aviation, Inc.,
c/o First National Bank of Commerce, New Orleans, LA, ABA #065000029,
Credit: FNB Lafayette, Further Credit: American Aviation Incorporated,
Account # __________;
(b) The Promissory Note;
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND JEANSONNE
In consideration of the receipt of the Purchase Price and the
other covenants undertaken by Purchaser under this Agreement, the
Seller and Jeansonne hereby jointly and severally represent and
warrant to the Purchaser that:
3.1 Capitalization and Ownership. The authorized capital stock
of the Seller consists of 1,000 shares of common stock, no par value
per share, of which 1,000 shares are issued and outstanding. All of
the issued and outstanding shares of such common stock have been duly
authorized and are duly and validly issued and outstanding, fully paid
and non-assessable; and 900 shares are owned by David A. Jeansonne and
100 shares are owned by R. Patrick Morris, free and clear of all
liens, encumbrances, pledges, adverse claims or defects in title.
There are no outstanding warrants, options, rights, calls or other
commitments of any nature relating to any share of capital stock of
the Seller, and there are no outstanding securities or debt
obligations of the Seller convertible into shares of capital stock of
the Seller.
3.2 Organization.
(a) The Seller 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 the Seller, as certified by the Secretary of State of the
State of Louisiana, and the Bylaws, as amended to date, of the Seller,
as certified by its Secretary and delivered to the Purchaser, are
true, complete, and correct copies of the respective Articles of
Incorporation and Bylaws, as amended and currently in effect, of the
Seller.
3.3 Qualification. The Seller 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"). There are no such Material Jurisdictions.
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<PAGE>
3.4 Authority. The Seller has the corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by the
Seller of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of
Directors and shareholders of the Seller; no other corporate
proceedings on the part of the Seller or any other person or entity,
whether pursuant to the Articles of Incorporation or Bylaws of the
Seller or by law or otherwise, are necessary to authorize the Seller
to enter into this Agreement, or to consummate the transactions
contemplated hereby; and this Agreement is the legal, valid, and
binding obligation of the Seller (and Jeansonne, as the case may be).
This Agreement has been duly executed and delivered by the Seller and
Jeansonne and constitutes a valid and binding obligation of the Seller
and Jeansonne, enforceable against both the Seller and Jeansonne 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.
3.5 No Violations. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated
hereby:
(a) Requires any filing or registration with, or consent,
authorization, approval, or Permit (as defined in Schedule 1.1 of this
Agreement) of, any governmental or regulatory authority on the part of
the Seller;
(b) Violates or will violate (i) any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory
authority or (ii) to the knowledge of the Seller, violates or will
violate any laws (statutory or otherwise), ordinances, rules,
regulations, bylaws, and codes of any governmental and regulatory
authorities, whether federal, state, or local, to which the Seller or
any of its properties or assets are subject;
(c) Violates or will violate, or conflicts with or will conflict
with, any provision of, or constitutes a default under, the Articles
of Incorporation or Bylaws of the Seller; or
(d) (i) violates or breaches or constitutes a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or give rise to a right to terminate, any mortgage,
contract, agreement, deed of trust, license, lease, or other
instrument, arrangement, commitment, obligation, understanding, or
restriction of any kind to which the Seller is a party or by which its
properties may be bound, or (ii) will cause, or give any person
grounds to cause, to be accelerated (with notice or lapse of time or
both) the maturity of, or will increase, any liability or obligation
of the Seller.
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3.6 Title to Properties; Encumbrances.
(a) The Seller has good and marketable title to all of the
Assets, free and clear of all Encumbrances. As a result of the
delivery to the Purchaser of the Conveyance Instruments, all of the
Assets are owned by the Purchaser free and clear of all Encumbrances,
except encumbrances created by the Purchaser (whether or not arising
from the transactions contemplated hereby).
(b) The Seller has incurred no indebtedness or liabilities which
may bear against the Assets.
3.7 Leases.
(a) The Seller has delivered or made available to the Purchaser
a copy of each lease pursuant to which the Seller leases real or
personal property (collectively, the "Leases"), each of which is true
and complete. Each of the Leases is transferable, and all of the
Seller's rights under any such Leases are hereby transferred to the
Purchaser, free and clear of all Encumbrances.
(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
the Seller has not received any written notice of any breach or
default with respect to a Lease.
3.8 Patents, Trademarks, and Similar Rights.
(a) (i) American has the sole and exclusive right to use the
Intangible Property (as defined in Schedule 1.1 of this Agreement),
and the consummation of the transactions contemplated by this
Agreement and the Intangible Asset Purchase Agreement will not alter
or impair any such rights and will result in the Purchaser having the
sole and exclusive right to use all such Intangible Property used in
the Business;
(ii) American has the right to use all Intangible Property
which is currently used by the Seller 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 and will result in
the Purchaser having the right to use all such Intangible Property to
the same extent it is currently used in the Business;
(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 Seller has no knowledge of any valid basis for any
such claim;
(iv) To the knowledge of the Seller, the use of such
Intangible Property by the Seller does not infringe on the rights of
any person or entity and no proceedings have been instituted, are
pending, or, to the best of the Seller's knowledge, have been
threatened that challenge the rights of the Seller in respect thereof;
and
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(v) None of the Seller's Intangible Property rights, to
the best of the Seller's 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.
3.9 Personnel. The Seller's relationship with its respective
employees is good and the Seller has no knowledge of any facts which
would indicate that the Seller's employees will not continue in its
employ on a basis acceptable to the Purchaser following the Closing.
The Seller's workforce is well trained and experienced in the
Business.
3.10 Customers and Suppliers. Since January 1, 1997, there has
not been any adverse change in the business relationship of the Seller
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 Seller, no customer or supplier of the Seller
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. The Seller 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 Seller, no such shortage of supply of inventory,
supplies, equipment or other items is threatened or pending.
3.11 No Breach. The Seller 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, and the Seller has used its best efforts to secure the
consents (where such consents are necessary) of the other parties to
any agreements affected hereby, to the consummation of the
transactions contemplated by this Agreement.
3.12 Consents, Permits, Etc. No consent, approval, governmental
filing, authorization, or Permit from any person or entity, including
any court, administrative agency, or other governmental authority, is
necessary to the consummation of the transactions contemplated by this
Agreement, except for the approval of the Federal Aviation
Administration ("FAA") of the transfer of the Certificate as defined
in Schedule 1.1 of this Agreement.
3.13 Assets Necessary to Business. As a result of the
transactions effected hereby and the transactions effected pursuant to
the Exchange Agreement, dated as of even date herewith, between the
Purchaser, the Seller and Omni, the Purchaser (a) will have title to,
or a valid leasehold interest in, all assets and properties relating
to the Business; (b) will possess valid consents, authorizations,
approvals, and Permits relating to the Business; and (c) will be party
to all agreements, in each case necessary to permit the Purchaser to
continue to carry on the Business substantially as currently
conducted, specifically including without limitation any required
consents, authorizations, approvals or Permits of the FAA relating to
the Business.
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SECTION 4
COVENANTS; REPRESENTATIONS; INDEMNIFICATION
4.1 Consents, Permits, Etc.
(a) The Seller (i) has maintained in full force and effect and
renewed, when required, all Permits, and (ii) has obtained all
consents, approvals, governmental filings, authorizations, and Permits
necessary to (A) the consummation of the transactions contemplated by
this Agreement, and (B) the continued conduct of the Business by the
Purchaser after the Closing Date as it is currently conducted by the
Seller, and delivers herewith to the Purchaser copies of each such
consent, approval, governmental filing, authorization, and Permit,
including any required required consents, authorizations, approvals or
Permits of the FAA relating to the Business.
(b) In the event and to the extent that any of the contracts,
leases, agreements, Permits, plans, commitments, purchase orders, or
other binding arrangements relating to the Assets (in this Section
4.1(b) called "Commitments") cannot be assumed by or assigned to the
Purchaser (pursuant to the Exchange Agreement) or sold to the
Purchaser (pursuant to this Agreement) without the consent of another
party, and such consent has not been obtained as of the Closing Date,
the Seller and the Purchaser each agrees to cooperate with the other
in any reasonable arrangement designed to enable the Seller to perform
its obligations under, and to provide for the Purchaser the benefits
of, any such Commitments as of the Effective Date, including
enforcement at any cost, and for the account of the Purchaser, of any
and all rights of the Seller against the other party thereto arising
out of the breach or cancellation thereof by such other party or
otherwise. The Seller will promptly pay to the Purchaser when received
all monies received by the Seller under any such Commitments.
(c) In the event and to the extent that any of the contracts,
leases, agreements, Permits, plans, commitments, purchase orders, or
other binding arrangements relating to the Assets (in this Section
4.1(c) called "Licenses") cannot be assumed by or assigned to the
Purchaser (pursuant to the Exchange Agreement) or sold to the
Purchaser (pursuant to this Agreement) without the consent of a court,
administrative agency, or other governmental authority, specifically
including without limitation the FAA, and such consent has not been
obtained as of the Closing Date, the Seller and the Purchaser each
agrees to cooperate with the other in any reasonable arrangement
designed to enable the Seller to continue to operate and perform
under, and to provide for the Purchaser the benefits of, any such
Licenses and the operations thereunder as of the Effective Date, at no
cost to the Purchaser and for the account of the Purchaser, until such
time as the consent to the transfer of such Licenses to the Purchaser
and the Purchaser's right to operate thereunder can be obtained. The
Seller will promptly pay to the Purchaser when received all monies
received by the Seller from its operations under any such Licenses.
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4.2 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.
(b) The Seller and Jeansonne and their successors and assigns
(each an "Indemnitor"), jointly and severally, hereby agree to
indemnify each the Purchaser and Omni 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 the Purchaser or Omni 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
Seller or Jeansonne pursuant to this Agreement;
(ii) Claims by third parties in connection with the sale
by the Seller of the Assets to the Purchaser; and
SECTION 5
MISCELLANEOUS PROVISIONS
5.1 Amendment and Modification. This Agreement may be amended,
modified, or supplemented only by written agreement of the parties
hereto.
5.2 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 6.2, with
appropriate notice in accordance with Section 5.9 of this Agreement.
5.3 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,
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any rights, remedy, or claim under or by reason of this Agreement or
any provisions herein contained.
5.4 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.
5.5 Further Assurances. From time to time, at the request of the
Seller or the Purchaser and without further consideration, each party,
at its own expense, will execute and deliver such other documents, and
take such other action, as the Seller or the Purchaser may reasonably
request in order to consummate more effectively the transactions
contemplated hereby and to vest in the Purchaser good and marketable
title to the Assets. The Seller hereby constitutes and appoints,
effective as of the Effective Date, the Purchaser and its successors
and permitted assigns as the true and lawful attorney of the Seller
with full power of substitution in the name of the Purchaser or in the
name of the Seller, but for the benefit of the Purchaser, to collect
for the account of the Purchaser any items of Assets and to institute
and prosecute all proceedings that the Purchaser may in its reasonable
discretion deem proper in order to assert or enforce any right, title,
or interest in, to, or under the Assets, and to defend or compromise
any and all action, suits, or proceedings in respect of the Assets.
The Purchaser shall be entitled to retain for its own account any
amounts collected pursuant to the foregoing powers, including any
amounts payable as interest in respect thereof.
5.6 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).
5.7 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.
5.8 Publicity. Neither of the parties will make any disclosure
of the transactions contemplated by this Agreement, or any discussions
in connection therewith, without the prior written consent of each of
the other parties. The preceding sentence shall not apply to any
disclosure required to be made by Law or the regulations of any stock
exchange(s) as reasonably determined by counsel to the party
determining that such disclosure is required, except that such party,
whenever practicable, shall be required to consult with the other
party concerning the timing and content of such disclosure before
making it.
5.9 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):
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If to the Seller:
American Aviation Incorporated
301 Shepard Drive
Lafayette, Louisiana 70508
Attention: David Jeansonne, President
with a copy to:
Ted W. Hoyt, Esq.
P.O. Box 3263
Lafayette, Louisiana 70502
If to the Purchaser:
American Aviation L.L.C.
4484 Interstate 49, North
Lafayette, Louisiana 70520
Attention: Roger Thomas
If to Omni:
Omni Geophysical, L.L.C.
4484 Interstate 49, North
Lafayette, Louisiana 70520
Attention: Roger Thomas, Manager
with a copy to:
Advantage Capital Companies
909 Poydras, Suite 2230
New Orleans, Louisiana 70112
Attention: Steven T. Stull
5.10 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
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connection therewith. A party's right to specific performance shall be
in addition to all other legal or equitable remedies available to such
party.
5.11 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.
5.12 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.
5.13 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.
5.14 Schedules and Exhibits. All Schedules and Exhibits attached
hereto are hereby incorporated in and made a part as if set forth in
full herein.
[Remainder of this page left blank intentionally]
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
AMERICAN AVIATION, INC.
By: /s/ David Jeansonne
------------------------------------
David Jeansonne, President
AMERICAN AVIATION L.L.C.
By: OMNI GEOPHYSICAL, L.L.C.
Its Sole Member
By: /s/ David Jeansonne
------------------------------------
David Jeansonne, Manager
By: /s/ Roger E. Thomas
------------------------------------
Roger E. Thomas, Manager
OMNI GEOPHYSICAL, L.L.C.
By: /s/ David Jeansonne
------------------------------------
David Jeansonne, Manager
By: /s/ Roger E. Thomas
------------------------------------
Roger E. Thomas, Manager
/s/ David Jeansonne
-----------------------------------------
David Jeansonne, individually (joining in
the execution of this Agreement for the
purposes set forth in the first paragraph
hereof)
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EXHIBIT 2.5
TABLE OF CONTENTS
Section 1 PURCHASE AND SALE OF ASSETS BY
PURCHASER AND SELLER.....................................1
1.1 Sale of the Assets..................................1
1.2 Conveyance Instruments..............................3
1.3 Purchase Price......................................3
1.4 No Assumption of Liabilities........................3
Section 2 EVENTS OCCURRING ON THE CLOSING DATE.....................3
2.1 Deliveries by the Seller............................3
2.2 Deliveries by the Purchaser.........................4
Section 3 REPRESENTATIONS AND WARRANTIES OF THE SELLER
AND KRATER...............................................4
3.1 Capitalization and Ownership........................4
3.2 Organization........................................5
3.3 Qualification.......................................5
3.4 Authority...........................................5
3.5 No Violations.......................................5
3.6 Financial Statements................................6
3.7 Absence of Certain Changes or Events................6
3.8 Certain Tax Matters.................................7
3.9 Condition of Facilities.............................9
3.11 Title to Properties; Encumbrances...................9
3.12 Leases..............................................9
3.13 Patents, Trademarks, and Similar Rights.............9
3.14 Insurance..........................................10
3.15 No Benefit Plans; Absence of PBGC Lien.............10
3.16 Documents; Commitments.............................10
3.17 Labor Matters......................................11
3.18 Personnel..........................................12
3.19 No Breach..........................................12
3.20 Consents, Permits, Etc.............................13
3.21 Litigation.........................................13
3.22 Compliance With Applicable Law; Adverse
Restrictions.......................................13
3.23 Assets Necessary to Business.......................13
3.24 Customers and Suppliers............................14
3.25 Governmental Approvals and Consents................14
3.26 Environmental Laws and Regulations.................14
Section 4 COVENANTS OF THE PARTIES................................15
4.1 Consents, Permits, Etc.............................15
4.2 Confidentiality and Competition....................16
<PAGE>
Section 5 SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION............16
5.1 Survival; Indemnification..........................16
5.2 Definitions........................................17
5.3 Control of Litigation..............................17
5.4 Cooperation on Tax Matters.........................18
Section 6 MISCELLANEOUS PROVISIONS................................19
6.1 Amendment and Modification.........................19
6.2 Waiver of Compliance; Consents.....................19
6.3 Assignment.........................................19
6.4 Expenses, Transfer Taxes, Etc......................19
6.5 Further Assurances.................................19
6.6 Governing Law......................................20
6.7 Counterparts.......................................20
6.8 Publicity..........................................20
6.9 Notices............................................20
6.10 Specific Performance...............................21
6.11 Headings...........................................21
6.12 Entire Agreement...................................21
6.13 Severability.......................................21
6.14 Schedules and Exhibits.............................22
<PAGE>
ASSET PURCHASE AGREEMENT
by and between
O.T.H. EXPLORATION SERVICES, INC.
and
OMNI GEOPHYSICAL, L.L.C.
Dated as of August 31, 1997
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made and
entered into on the 5th day of September, 1997 (the "Closing Date"),
but effective as of August 31, 1997 (the "Effective Date") by and
between O.T.H. EXPLORATION SERVICES, INC. (the "Seller") and OMNI
GEOPHYSICAL, L.L.C. (the "Purchaser"). James F. Krater ("Krater"), the
President of the Seller, joins in the execution of this Agreement for
the purposes of making the representations and warranties set forth in
Section 3 and agreeing to be bound by the terms of Section 5.
RECITALS
1. The Seller, a Texas corporation, is engaged primarily
in a heliportable drilling business (the "Business").
2. Seller desires to sell to Purchaser, and Purchaser desires
to purchase from Seller, the assets of Seller, as referenced herein.
3. The sale of assets by the Seller and assumption of
liabilities by the Purchaser are subject to the terms and conditions
of this Agreement.
In consideration of the foregoing and the mutual representations,
warranties, covenants, and agreements herein contained, the Seller and
the Purchaser agree as follows:
SECTION 1
PURCHASE AND SALE OF ASSETS
BY PURCHASER AND SELLER
1.1 Sale of the Assets.
(a) Subject to the terms and conditions of this Agreement, on
the Closing Date, but effective as of the Effective Date, the Seller
hereby assigns, transfers, and delivers to the Purchaser, free and
clear of all known title defects, objections, liens, pledges, claims,
rights of first refusal, options, charges, security interests,
mortgages, or other encumbrances of any nature whatsoever
(collectively, "Encumbrances"), all of the following described assets,
properties, and business, wherever located, real, personal, or mixed;
tangible or intangible; owned or held; and used in the conduct of the
Business by the Seller (collectively, the "Assets"), including,
without limitation, all right, title, and interest of the Seller in,
to, and under:
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(i) The machinery, equipment, furniture, vehicles, and
other tangible property (including, without limitation, maintenance
and operating supplies and spare parts) used in connection with the
Business, as listed and described in Schedule 1.1(a)(i) of this
Agreement (collectively, the "Equipment");
(ii) All transferable patents, copyrights, technology,
know-how, processes, trade secrets, inventions, proprietary data,
formulae, research and development data, internally developed computer
software programs, and other intangible property (other than Seller's
name and any mark or name by which Seller is known), and any
applications for the same, used in the Business, and all goodwill
associated with such intangible property (collectively, the
"Intangible Property");
(iii) All assignable contracts, agreements, leases,
licenses, and other instruments, arrangements, and commitments
relating to the Business or the Assets (collectively, "Rights");
(iv) All certificates of occupancy and other transferable
licenses, permits, registrations, authorizations, use agreements,
orders or approvals of governmental or quasi-governmental agencies and
authorities (whether federal, state, local, municipal, or foreign) or
private parties relating to the fabrication, use, operation,
development, or enjoyment of the Assets (collectively, "Permits");
(v) All prepaid rentals and other prepaid expenses
arising from payments made by the Seller in the ordinary and usual
course of the operation of the Business related to the Assets prior to
the close of business on the Closing Date; and
(vi) Originals or copies of all books, records, files and
papers, whether in hard copy or computer format, used in the Business,
including without limitation, engineering information, manuals and
data, sales and advertising materials, sales and purchase
correspondence, lists of present and former suppliers, personnel and
employment records, and information that is necessary for the
preparation of any Tax (as defined in Section 5.2 of this Agreement)
returns to be filed by the Purchaser after the Closing Date or the
determination of the Tax basis of the Assets (collectively, "Files and
Records"), with the costs of one copy of such Files and Records to be
paid for by Purchaser to assure that both Seller and Purchaser each
have one complete copy;
(vii) The Sale of the Assets includes only the foregoing
described assets, properties, and business. By way of example, the
Sale does not include the following:
(A) Any machinery, equipment, etc., as described in Section
1.1 (a) (i) that is not listed on Schedule 1.1 (a)(i).
(B) All accounts and notes receivable arising out of the
operation of the Business prior to the close of
business on the Closing Date (collectively,
"Receivables");
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(C) All transferable bonds or deposits made by the Seller
or its predecessors in title (or its agents) with any
governmental agency or authority or with any utility
company or third party relating to the fabrication,
use, operation, development, sale or enjoyment of the
Assets;
(D) Any cash in the possession of the Seller as of the
Effective Date.
1.2 Conveyance Instruments. In order to effect the purchase and
sale of the Assets as contemplated by this Section 1, the Seller has,
or will hereafter, execute and deliver, or cause to be executed and
delivered, all such documents or instruments of assignment, transfer,
or conveyance, in each case dated as of the Closing Date, but
effective as of the Effective Date (collectively, the "Conveyance
Instruments"), as the parties and their respective counsel shall
reasonably deem necessary or appropriate to vest in or confer title to
the Assets in the Purchaser.
1.3 Purchase Price. The total consideration for the purchase of
the Assets (the "Purchase Price") is Six Hundred Thousand and no/100
dollars ($600,000.00) cash, to be paid on the Closing Date.
1.4 No Assumption of Liabilities. Notwithstanding any provision
of this Agreement or any Conveyance Instrument to the contrary, the
Purchaser is not assuming any liability or obligation of the Seller
(or any predecessor owner of all or part of its business and assets)
of whatever nature, whether currently in existence or arising
hereafter, and all such other liabilities and obligations shall be
retained by and remain liabilities of the Seller.
SECTION 2
EVENTS OCCURRING ON THE CLOSING DATE
2.1 Deliveries by the Seller. Simultaneously with the execution
hereof, the Seller has delivered to the Purchaser the following:
(a) The Conveyance Instruments to effect the sale of the Assets
to the Purchaser, such Conveyance Instruments to be those reasonably
deemed necessary by, and in form and substance satisfactory to,
counsel to the Purchaser;
(b) A copy of the resolutions of its shareholders and directors,
each certified by its Secretary, authorizing or ratifying its
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby;
(c) A copy of its Articles of Incorporation, certified as of a
date within thirty (30) days of the Closing Date by the Secretary of
State of the State of Texas;
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(d) A certificate from the Secretary of State of the State of
Texas as to its existence in such state;
(e) A certificate of its Secretary, attaching thereto a true and
complete copy of its Bylaws in effect on the Closing Date;
(f) A certificate from Krater stating that Seller's
representations and warranties are, to the best of his knowledge,
true, complete and accurate in all material respects at and as of the
Closing Date;
(g) The executed counterpart copies of all consents, approvals,
authorizations and Permits, if any, from third parties referred to in
Section 4.1 (a) hereof;
(h) All other previously undelivered items required to be
delivered by the Seller at or prior to the Closing Date pursuant to
the terms of this Agreement.
2.2 Deliveries by the Purchaser. Simultaneously with the
execution hereof, the Purchaser has delivered to the Seller the
Purchase Price by wire transfer of immediately available funds to the
account of O.T.H. Exploration Services, Inc. c/o Sterling Bank, ABA
#113005549, Account #093002196; Attn: Gina Grossman.
SECTION 3
REPRESENTATIONS AND WARRANTIES OF THE SELLER AND KRATER
In consideration of the receipt of the Purchase Price and the
other covenants undertaken by Purchaser under this Agreement, the
Seller and Krater hereby jointly and severally represent and warrant
to the Purchaser, to the best of their knowledge, that:
3.1 Capitalization and Ownership. The authorized capital stock
of the Seller consists of 1,000,000 shares of common stock, with a par
value of $1.00 per share, of which 118,000 shares are issued and
outstanding. All of the issued and outstanding shares of such common
stock have been duly authorized and are duly and validly issued and
outstanding, fully paid and non-assessable, and are owned by the
parties listed on Schedule 3.1 of this Agreement, free and clear of
all liens, encumbrances, pledges, adverse claims or defects in title,
other than the Agreement Among Shareholders, dated May 15, 1994, a
copy of which is attached hereto as Exhibit 3.1. There are no
outstanding warrants, options, rights, calls or other commitments of
any nature relating to any share of capital stock of the Seller, and
there are no outstanding securities or debt obligations of the Seller
convertible into shares of capital stock of the Seller.
3.2 Organization.
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(a) The Seller is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Texas,
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 the Seller, as certified by the Secretary of State of the
State of Texas, and the Bylaws, as amended to date, of the Seller, as
certified by its Secretary and delivered to the Purchaser, are true,
complete, and correct copies of the respective Articles of
Incorporation and Bylaws, as amended and currently in effect, of the
Seller.
3.3 Qualification. The Seller 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").
3.4 Authority. The Seller has the corporate power and authority
to execute and deliver this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery by the
Seller of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Board of
Directors and shareholders of the Seller; no other corporate
proceedings on the part of the Seller or any other person or entity,
whether pursuant to the Articles of Incorporation or Bylaws of the
Seller or by law or otherwise, are necessary to authorize the Seller
to enter into this Agreement, or to consummate the transactions
contemplated hereby. This Agreement has been duly executed and
delivered by the Seller and Krater and constitutes the valid and
binding obligation of the Seller and Krater, 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 laws.
3.5 No Violations. Neither the execution or delivery of this
Agreement nor the consummation of the transactions contemplated
hereby:
(a) Requires any filing or registration with, or consent,
authorization, approval, or Permit of, any governmental or regulatory
authority on the part of the Seller;
(b) Violates or will violate (i) any order, writ, injunction,
judgment, decree, or award of any court or governmental or regulatory
authority or (ii) to the knowledge of the Seller, violates or will
violate any "Law," as defined in Section 3.22 of this Agreement, of
any governmental or regulatory authority to which the Seller or any of
its properties or assets are subject;
(c) Violates or will violate, or conflicts with or will conflict
with, any provision of, or constitutes a default under, the Articles
of Incorporation or Bylaws of the Seller; or
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(d) (i) violates or breaches or constitutes a default (or an
event that, with notice or lapse of time or both, would constitute a
default) under, or give rise to a right to terminate, any mortgage,
contract, agreement, deed of trust, license, lease, or other
instrument, arrangement, commitment, obligation, understanding, or
restriction of any kind to which the Seller is a party or by which its
properties may be bound, or (ii) will cause, or give any person
grounds to cause, to be accelerated (with notice or lapse of time or
both) the maturity of, or will increase, any liability or obligation
of the Seller.
3.6 Financial Statements. The Seller has heretofore delivered to
the Purchaser its balance sheet as of August 4, 1997 (the "Balance
Sheet"), and the related statement of operations for the period from
January 1, 1997 through August 4, 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 the Seller, in conformity with generally
accepted accounting principles consistently applied, and fairly
present the financial condition and results of operations of the
Business for the periods and as of the dates stated therein. Except to
the extent reflected in the Financial Statements, the Seller 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 August 4, 1997.
3.7 Absence of Certain Changes or Events. Since August 4, 1997
(the "Balance Sheet Date"), the Seller has operated the Business in
the ordinary course consistent with past practice, and neither the
Seller 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 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 the Seller or, directly or indirectly,
redeemed, purchased, or otherwise acquired any of the capital stock of
the Seller; or
(l) Suffered any damage, destruction or casualty loss to the
physical properties of the Seller (whether or not covered by
insurance), materially and adversely affecting the business,
operations, prospects or financial condition of the Seller; 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
3.7.
3.8 Certain Tax Matters.
(a) All income taxes, unemployment, social security, franchise,
real property, personal property and all other taxes levied, assessed
or imposed upon Seller in connection with Seller'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 Seller's operation of the Business. No tax
deficiencies have been determined nor
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proposed tax assessments charged against Seller (nor is there any
basis therefor) in connection with Seller's operation of the Business.
Seller has filed all federal, state, local, sales, franchise,
withholding, real and personal property tax returns known by Seller to
be required to be filed in connection with Seller's operation of the
Business. To the best of Seller's knowledge, no penalties or other
charges are, or will become, due with respect to the late filing of
any return by Seller in connection with Seller's operation of the
Business. True, correct and complete copies of the state and local
real property and personal property tax returns of Seller in
connection with Seller's operation of the Business for Seller's last 3
fiscal years, have been delivered to Purchaser.
(b) To the best of Seller and Krater's knowledge, the
Seller:
(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 5.2 of this Agreement).
(c) Seller is not aware of any state of facts that could
reasonably be expected to give rise to any claim, audit, action, suit,
proceeding, or investigation with respect to any Tax or assessment for
which the Purchaser could be liable.
(d) To the best of Seller or Krater's knowledge, no Tax or
assessment will be assessed on or after the Closing Date against or
pertaining to 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. "Tax" or "Taxes" shall
mean all taxes, charges, fees, levies or other assessments including,
without limitation, income, excise, property, withholding, sales and
franchise taxes and any other charge in the nature of a tax, imposed
by the United States, or any state, county, local or foreign
government or subdivision or agency thereof, and including any
interest, penalties or additions attributable thereto.
(e) Purchaser is liable for all property taxes relating to the
Assets for the entire calendar years 1997. There will be nor proration
between Purchaser and Seller for said 1997 taxes.
(f) To the extent that any or all of the transactions covered by
this Agreement (including the Sale of Assets) are subject to transfer,
sales, or use taxes, such taxes will be paid by Purchaser, along with
any interest, penalties, or other charges for any delay in payment.
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3.9 Condition of Facilities. The facilities included in the
Assets, including equipment, furniture, vehicles and other tangible
personal property, 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 and
Seller has no knowledge of any condition or defect, not disclosed
herein, in any of the Assets which would materially affect the fair
market value, use or operation of the Business, such as to have a
material adverse effect on the Business or its operations.
3.10 Title to Properties; Encumbrances.
(a) To the best of its knowledge, seller has good and marketable
title to all of the Assets, free and clear of all Encumbrances.
(b) The Seller has incurred no indebtedness or liabilities which
may bear against the Assets of the Business.
3.11 Leases. The Seller does not lease any real or personal
property, other than one lot and shop in Wyoming and one storage yard
in Magnolia, Texas.
3.12 Patents, Trademarks, and Similar Rights.
(a) (i) To the extent that any such properties exist, the
Seller has the sole and exclusive right to use the Intangible Property
referred to in Section 1.1(a)(ii), and the consummation of the
transactions contemplated by this Agreement should not alter or impair
any such rights and should result in the Purchaser having the sole and
exclusive right to use all such Intangible Property used in the
Business (Purchaser, however, does not gain any rights in Seller's
name or any mark or name which Seller is or may be known);
(ii) The Seller has the right to use all Intangible
Property which is currently used by the Seller in connection with the
Business either as provided in clause (i) above or as licensed or
authorized by others, and, upon information and belief, the
consummation of the transactions contemplated by this Agreement will
not alter or impair any such rights and will result in the Purchaser
having the right to use all such Intangible Property to the same
extent it is currently used in the Business;
(iii) To the best of Seller's knowledge, 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 Seller has no
knowledge of any valid basis for any such claim; and
(iv) To the best of Seller's knowledge, the use of such
Intangible Property by the Seller does not infringe on the rights of
any person or entity and no proceedings have been instituted, are
pending, or, to the best of Sellers' knowledge, threatened that
challenge the rights of the Seller in respect thereof.
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(v) None of Seller's Intangible Property rights, to the
best of Seller's 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.
3.13 Insurance. The Seller has heretofore made available for
inspection by the Purchaser a true and complete copy of all policies
of fire, liability, workers' compensation, and other forms of
insurance owned or held by the Seller. 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 the Seller, is adequate to protect the Business as it is
currently conducted.
3.14 No Benefit Plans; Absence of PBGC Lien. Neither the Seller
nor any Affiliate (as defined in Section 5.2 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 the Seller. None of the Assets are
subject to a lien in favor of the Pension Benefit Guaranty
Corporation.
3.15 Documents; Commitments.
(a) The Seller has delivered or made available to the Purchaser
the following documents, each of which is true and complete:
(i) To the extent that they exist, copies of all
documents in Schedule 3.16(a), which is a listing of every material
contract, agreement, or other commitment, written or oral, to which
the Seller is a party or has succeeded to a party by assumption or
assignment or in which it has a beneficial interest and excluding
documents listed in any other Exhibit hereto. Any contract or
agreement shall, for the purposes of this Agreement, 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
the Seller 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) The Seller 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.
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(c) The Seller is not restricted by any agreement to which it is
a signatory party from carrying on the Business anywhere in the world.
3.16 Labor Matters. Seller has no employees other than its
shareholders. Any crew members or other workers or "hands" are
obtained through Exploration Employment Service, which is located in
Livingston, Texas.
3.17 Personnel. Schedule 3.18 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 the Seller 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 the Seller 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
the Seller to, or made to the Seller by, any director, officer or
employee, (iv) all other transactions between the Seller and any
director, officer or employee of the Seller since December 31, 1996 ,
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 the Seller 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).
3.18 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, under which the
Seller 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) The Seller 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,
and the Seller has used its best efforts to secure the consents (where
such consents are necessary) of the other parties to any agreements
affected hereby, to the consummation of the transactions contemplated
by this Agreement.
3.19 Litigation. There is no litigation, proceeding, arbitration,
administrative or other proceeding or audit, inquiry or investigation
pending, or controversy (an "Action") pending or threatened by or
against, or involving the Seller 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
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taken or to be taken by the Seller pursuant to this Agreement or in
connection with the transactions contemplated hereby, and to the
knowledge of the Seller, 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 the Purchaser to conduct the Business.
3.20 Compliance With Applicable Law; Adverse Restrictions. The
operations of the Seller are being conducted in material compliance
with (a) all applicable Permits, orders, writs, injunctions,
judgments, decrees, or awards of all courts and governmental and
regulatory authorities, and (b) to the knowledge of the Seller, all
laws (statutory or otherwise), ordinances, rules, regulations, bylaws,
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). The Seller 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 the Seller has taken
steps to correct or contest in good faith.
3.21 Assets Necessary to Business. As a result of the
transactions effected hereby, the Seller (with respect to Assets owned
prior to the Closing Date by the Seller) will use its best efforts (a)
to have title to, or a valid leasehold interest in, all tangible and
intangible assets and properties relating to the Business; (b) to
possess valid consents, authorizations, approvals, and Permits
relating to the Business; and (c) to be party to all agreements
necessary to permit the Purchaser to continue the Business
substantially as currently conducted.
3.22 Customers and Suppliers.
(a) Since January 1, 1997, there has not been any adverse change
in the business relationship of the Seller 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
Seller, no customer of supplier of the Seller 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. Seller 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 Seller, no
such shortage of supply of inventory, supplies, equipment or other
items is threatened or pending. The Seller 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) Neither the Seller, nor, to the best of Seller's knowledge,
any shareholder, officer, director or employee of the Seller, nor any
spouse or child of any of them, has any direct or indirect interest in
any competitor, supplier or customer of the Seller or in any person
from whom or to whom the Seller leases any real or personal property,
or in any other person with whom the Seller is doing business.
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3.23 Governmental Approvals and Consents. No approval,
authorization, consent, or other order or action by the Seller or the
Purchaser before any court, administrative agency, or other
governmental authority is required for the execution and delivery by
the Seller of this Agreement or the consummation by the Seller of the
transactions contemplated hereby.
3.24 Environmental Laws and Regulations.
(a)(i) To the best of Seller and Krater's knowledge, 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 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 the Seller, or, to the knowledge of the Seller, prior to its
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) 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) 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, other than a small,
skid-mounted tank which carries used motor oil and other skid-mounted
fuel tanks, all of which are a part of Seller's Wyoming operation and
all of which are customary in Seller's line of business. With respect
to any potential adverse environmental problems (as outlined in this
paragraph) which were caused by someone other than Seller, Seller and
Krater can only represent that they have no knowledge of the existence
of any facts, which, to the best of their knowledge, might give rise
to such problems.
(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. SS SS 9601 et seq.)("CERCLA") or any regulations
promulgated thereunder; (ii) petroleum and petroleum by-products;
(iii) asbestos or asbestos-
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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 location at which the Seller
conducts business or stores equipment or other assets.
SECTION 4
COVENANTS OF THE PARTIES
4.1 Consents, Permits, Etc.
(a) The Seller (i) has maintained in full force and effect and
renewed, when required, all Permits, and (ii) has obtained all
consents, approvals, governmental filings, authorizations, and Permits
necessary to (A) the consummation of the transactions contemplated by
this Agreement, and (B) the continued conduct of the Business by the
Purchaser after the Closing Date, but effective as of the Effective
Date, as it is currently conducted by the Seller, and delivers
herewith to the Purchaser copies of each such consent, approval,
governmental filing, authorization, and Permit.
(b) In the event and to the extent that any of the contracts,
leases, agreements, Permits, plans, commitments, purchase orders, or
other binding arrangements relating to the Assets (in this Section
4.1(b) called "Agreements") cannot be assumed by or assigned to the
Purchaser without the consent of another party, and such consent has
not been obtained as of the Closing Date, the Seller and the Purchaser
agree to cooperate with the other in any reasonable arrangement
designed to enable the Seller to perform its obligations under, and to
provide for the Purchaser the benefits of, any such agreements,
effective as of the Effective Date.
SECTION 5
SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION
5.1 Survival; Indemnification. 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
for a period of two years, and no statute of limitations (including
the prescription law of Louisiana) shall serve to extend this period
of 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.
5.2 Cooperation on Tax Matters. The Seller and the Purchaser
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
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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. The
Purchaser and the Seller 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 discarding any such books and records and, if
the other party so requests, the Purchaser or the Seller, as the case
may be, shall allow the other party to take possession of such books
and records.
SECTION 6
MISCELLANEOUS PROVISIONS
6.1 Amendment and Modification. This Agreement may be amended,
modified, or supplemented only by written agreement of the parties
hereto.
6.2 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 6.2, with
appropriate notice in accordance with Section 6.9 of this Agreement.
6.3 Assignment. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto.
No assignment shall be binding unless a written consent is obtained
from the other party.
6.4 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. For example, if a party requests that certain information
be obtained by a third party (e.g., an appraisal of equipment or
property), all expenses incurred in gathering such information shall
be borne by the party requesting the information.
6.5 Further Assurances. From time to time, at the request of the
Seller or the Purchaser, each party, at its own expense, will execute
and deliver such other documents, and take such other action, as the
Seller or the Purchaser may reasonably request in order to consummate
more effectively the transactions contemplated hereby and to vest in
the Purchaser good and marketable title to the Assets. If compliance
with any such reasonable request requires the other party to incur
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out-of-pocket expenses, such reasonable expenses shall be reimbursed
by the party making such request. The Seller hereby constitutes and
appoints, effective as of the Closing Date, the Purchaser and its
successors and permitted assigns, but for the benefit of the
Purchaser, to collect for the account of the Purchaser any items of
Assets (as defined in Section 1, above) and to institute and prosecute
all proceedings that the Purchaser may in its reasonable discretion
deem proper in order to assert or enforce any right, title, or
interest in, to, or under the Assets, and to defend or compromise any
and all action, suits, or proceedings in respect of the Assets. The
Purchaser shall be entitled to retain for its own account any amounts
collected pursuant to the foregoing powers, including any amounts
payable as interest in respect thereof. Purchaser agrees to hold
Seller harmless for the result of any such proceeding and to indemnify
Seller for all costs of litigation (including attorneys' fees) and all
damage which Seller may incur arising our of such litigation.
6.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Texas (without
regard to its conflicts of law doctrines).
6.7 Counterparts. This Agreement may be executed in three 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.
6.8 Publicity. Neither the Seller nor Krater will make any
disclosure of the Purchase Price contemplated by this Agreement, or
any discussions in connection therewith, without the prior written
consent of the Purchaser. The preceding sentence shall not apply to
any disclosure required to be made by Law or the regulations of any
stock exchange(s) as reasonably determined by counsel to the party
determining that such disclosure is required, except that such party,
whenever practicable, shall be required to consult with the other
party concerning the timing and content of such disclosure before
making it.
6.9 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 the Seller:
O.T.H. Exploration Services, Inc.
c/o William G. Lowerre
Schweinle, Parish, Lowerre & Strawn, P.C.
3800 First City Tower
1001 Fannin Street
Houston, Texas 77002-6706
If to the Purchaser:
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Omni Geophysical, L.L.C.
4484 Interstate 49, North
Lafayette, Louisiana 70520
Attention: Roger Thomas, Manager
with a copy to:
Gerald J. Daigle, Jr., Esq.
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
6.10 Specific Performance. Each of the parties acknowledge that
money damages may not be a sufficient remedy for any breach of this
Agreement and that irreparable harm may result if this Agreement were
not specifically enforced.
6.11 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.
6.12 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.
6.13 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.
[Remainder of this page left blank intentionally]
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6.14 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.
O.T.H. EXPLORATION SERVICES, INC.
By: /s/ James F. Krater
--------------------------------------
James F. Krater, President
OMNI GEOPHYSICAL, L.L.C.
By: /s/ David A. Jeansonne
-------------------------------------
David A. Jeansonne, Manager
By: /s/ Roger E. Thomas
--------------------------------------
Roger E. Thomas, Manager
/s/ James F. Krater
-----------------------------------------
James F. Krater, individually
(joining in the execution of this
Agreement for the purposes set forth
in the first paragraph hereof)
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The schedules and exhibits to this agreement have been intentionally omitted in
accordance with the rules and regulations of the Commission. The Company will
provide such exhibits and schedules upon request of the Commission.
<PAGE>
EXHIBIT 3.1
AMENDED AND RESTATED
ARTICLES OF INCORPORATION
OF
OMNI ENERGY SERVICES CORP.
The undersigned, acting pursuant to the Business Corporation Law of
Louisiana, adopts the following articles of incorporation.
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
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<PAGE>
shareholders for a term expiring at the next succeding annual meeting of
shareholders and shall 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 succeding
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
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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 (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.
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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.
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
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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 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.
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"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 holds operating certificates issued by the FAA
pursuant to the regulations promulgated under the Act, and the Board and
shareholders deem the retention of the Corporation's rights under such
certificate to be of material importance to the Corporation. As long as the
Corporation holds, or the Board deems it desirable for the Corporation to
hold, its current 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.
(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) 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
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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
(5) to provide such further information as the Corporation may reasonably
request in order to implement the provisions of this paragraph B. 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.
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 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
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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 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.
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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.
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.
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
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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.
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.
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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 respect
thereto, (iii) operate as the Board's principal agent in ensuring the
independence of the
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Corporation'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.
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
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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.
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.
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(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.
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(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.
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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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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.
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EXHIBIT 10.1
INDEMNITY AGREEMENT
This Agreement is made as of ________________, 1997, by and
between Omni Energy Services Corp., a Louisiana corporation (the
"Corporation"), and _______________ ("Indemnitee").
In consideration of Indemnitee's continued service after the date hereof,
the Corporation and Indemnitee do hereby agree as follows:
1. AGREEMENT TO SERVE. Indemnitee agrees to serve as a
[director/officer] of the Corporation for so long as he is elected or appointed
or until such earlier time as he tenders his resignation in writing.
2. DEFINITIONS. As used in this Agreement:
(a) The term "Expenses" shall mean any expenses or costs (including,
without limitation, attorney's fees, judgments, punitive or exemplary damages,
fines and amounts paid in settlement). If any of the foregoing amounts paid on
behalf of Indemnitee are not deductible by Indemnitee for federal or state
income tax purposes, the Corporation will reimburse Indemnitee for tax liability
with respect thereto by paying to Indemnitee an amount which, after taking into
account taxes on such amount, equals Indemnitee's incremental tax liability.
(b) The term "Claim" shall mean 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) The term "Determining Body" shall mean (i) those members of the
Board of Directors 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, or (ii) a committee of at least three directors
appointed by the Board of Directors (regardless whether the members of the Board
of Directors voting on such appointment are Impartial Directors) and composed of
Impartial Directors or (iii) if there are fewer than three Impartial Directors
or if the Board of Directors or a committee appointed thereby so directs
(regardless whether the members thereof are Impartial Directors), independent
legal counsel, which may be the regular outside counsel of the Corporation.
3. LIMITATION OF LIABILITY.
To the fullest extent permitted by Article VIII of the Articles of
Incorporation of the Corporation in effect on the date hereof and, if and to the
extent such Article VIII is amended to permit further limitations, in effect at
any time prior to the determination of liability that would exist but for the
provisions of this Agreement, Indemnitee shall not be liable for breach of his
fiduciary duty as a director or officer.
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4. MAINTENANCE OF INSURANCE AND SELF-INSURANCE.
(a) The Corporation represents that it presently main-tains in force
and effect the following directors and officers liability insurance ("D&O
Insurance") policies (the "Insurance Policies"):
Insurer Policy No. Coverage
Subject only to the provisions of Section 4(b) hereof, the Corpo-ration hereby
agrees that, so long as Indemnitee shall continue to serve as a [director or
officer] (or shall continue at the request of the Corporation to serve in any
capacity referred to in Section 5(a) hereof) and thereafter so long as
Indemnitee shall be subject to any possible Claim, the Corporation shall use its
best efforts to purchase and maintain in effect for the benefit of Indemnitee
one or more valid and enforceable policy or policies of D&O Insurance providing,
in all respects, coverage at least comparable to that currently provided
pursuant to the Insurance Policies, provided that the Corporation shall have no
obligation to provide primary coverage in excess of $_____ million or excess
coverage in excess of $_____ million.
(b) The Corporation shall not be required to purchase and maintain
the Insurance Policies in effect if D&O Insurance is not reasonably available or
if, in the reasonable business judg-ment of the then directors of the
Corporation, either (i) the premium cost for such insurance is excessive in
light of the amount of coverage or (ii) the coverage provided by such insurance
is so limited by exclusions, retentions, deductibles or otherwise that there is
insufficient benefit from such insurance.
(c) If the Corporation does not purchase and maintain in effect the
Insurance Policies pursuant to the provisions of Section 4(b) hereof, the
Corporation agrees to hold harmless and indemnify Indemnitee to the full extent
of the coverage that would otherwise have been provided for the benefit of
Indemnitee pursuant to the Insurance Policies.
5. ADDITIONAL INDEMNITY.
(a) To the extent any Expenses incurred by Indemnitee are in excess
of the amounts reimbursed or indemnified pursuant to the provisions of Section 4
hereof, the Corporation shall indemnify and hold harmless Indemnitee against any
such Expenses actually and reasonably incurred, as they are incurred, in
connection with any Claim against Indemnitee (whether as a subject of or party
to, or a proposed or threatened subject of or party to, the Claim) or in which
Indemnitee 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
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(ii) as a director or officer of any subsidiary of the
Corporation or as a fiduciary with respect to any employee benefit plan of the
Corporation or
(iii) as a director, officer, 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 Agreement, if (i) the Indemnitee is successful in his
defense of the Claim on the merits or otherwise or (ii) the Indemnitee has been
found by the Determining Body (acting in good faith) to have met the Standard of
Conduct; provided that (a) the amount of Expenses for which the Corporation
shall indemnify Indemnitee may be reduced by the Determining Body to such amount
as it deems proper if it determines in good faith 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 shall deem proper; and provided further that, if the Claim involves
Indemnitee by reason of his position with an entity or enterprise described in
clause (ii) or (iii) of this Section 5(a) and if Indemnitee may be entitled to
indemnification with respect to such Claim from such entity or enterprise,
Indemnitee shall be entitled to indemnification hereunder only (x) if he has
applied to such entity or enterprise for indemnification with respect to the
Claim and (y) to the extent that indemnification to which he would be entitled
hereunder but for this proviso exceeds the indemnification paid by such other
entity or enterprise.
(b) For purposes of this Agreement, the Standard of Conduct is met
when conduct by an Indemnitee with respect to which a Claim is asserted was
conduct that he reasonably believed to be in, or not opposed to, the best
interest of the Corporation, and, in the case of a Claim which is a criminal
action or proceeding, conduct that the Indemnitee 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,
Indemnitee shall notify the Chief Executive Officer of the existence of the
Claim, who shall promptly advise the members of the Board of Directors and that
establishing the Determining Body will be a matter presented at the next
regularly scheduled meeting of the Board of Directors. After the Determining
Body has been established the Chief Executive Officer shall inform Indemnitee
thereof and Indemnitee shall immediately notify the Determining Body of all
facts relevant to the Claim known to such Indemnitee. Within 60 days of the
receipt of such notice and information, together with such additional
information as the Determining Body may request of Indemnitee, the Determining
Body shall report to Indemnitee of its determination whether Indemnitee has met
the Standard of Conduct. The Determining Body may extend the period of time
for determining whether the Standard of
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Conduct has been met, but in no event shall such period of time be extended
beyond an additional sixty days.
(d) If, after determining that the Standard of Conduct has been met,
the Determining Body obtains facts of which it was not aware at the time it made
such determination, the Determining Body on its own motion, after notifying
Indemnitee and providing him an opportunity to be heard, may, on the basis of
such facts, revoke such determination, provided that, in the absence of actual
fraud by Indemnitee, no such revocation may be made later than thirty days after
final disposition of the Claim.
(e) 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.
(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, assume all responsibility for the defense of the Claim, and, in any
event, the Corporation and Indemnitee each shall keep the other informed as to
the progress of the defense of the Claim, 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 proposes a settlement
of the Claim and such settlement is acceptable to the person asserting the Claim
or the Corporation believes a settlement proposed by the person asserting the
Claim should be accepted, it shall inform Indemnitee of the terms of such
proposed settlement 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 make final the settlement. If Indemnitee does not agree
with such terms, Indemnitee may proceed with the defense of the Claim in any
manner he chooses, provided that if Indemnitee is not successful on the merits
or otherwise, the Corporation's obligation to indemnify such Indemnitee as to
any Expenses incurred following his disagreement shall be limited to the lesser
of (A) the total Expenses incurred by Indemnitee following his decision not to
agree to such proposed settlement or (B) the amount that 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
Indemnitee's affairs, Indemnitee shall be permitted to refuse such settlement
and proceed with the defense of the Claim, if he so desires, at
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the Corporation's expense in accordance with the terms and conditions of this
Agreement without regard to the limitations imposed by the immediately preceding
sentence. In any event, the Corporation shall not be obligated to indemnify
Indemnitee for an 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 that the Corporation shall not be obligated to indemnify
Indemnitee for an amount paid in settlement that the Corporation has not
approved.
(h) After notification to the Corporation of the ex-istence of a
Claim, Indemnitee may from time to time request of the Chief Executive Officer
or, if the Chief Executive Officer is a party to the Claim as to which
indemnification is being sought, any officer who is not a party to the Claim and
who is designated by the Chief Executive Officer (the "Disbursing Officer"),
which designation shall be made promptly after receipt of the initial request,
that the Corporation advance to Indemnitee the Expenses (other than fines,
penalties, judgments 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. The Disbursing Officer shall pay
to Indemnitee the amount requested (regardless of Indemnitee's apparent ability
to repay the funds) 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, provided
that if the Disbursing Officer does not believe such amount to be reasonable, he
shall advance 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 a determination that the Standard of Conduct has been 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 the amount of any fines, penalties or judgments against
him which have become final for which the Corporation is obligated to indemnify
him or any amount of indemnification ordered to be paid to him by a court.
(j) Any determination by the Corporation with respect to settlement
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 pursuant to or arising out of the operation of this
Agreement and the Corporation and Indemnitee shall instruct its or his agents
and employees to do likewise.
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6. ENFORCEMENT.
(a) The rights provided by this Agreement shall be en-
forceable by Indemnitee in any court of competent jurisdiction.
(b) If Indemnitee seeks a judicial adjudication of his rights under,
or to recover damages for breach of, this Agreement, 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 Indemnitee shall be entitled to be reimbursed for all
Expenses incurred by him in connection with such proceeding if the
indemnification 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 adjudication shall be appropriately prorated.
(c) In any judicial proceeding described in this Sec-tion 6, the
Corporation shall bear the burden of proving that Indemnitee is not entitled to
Expenses sought with respect to any Claim.
7. SAVING CLAUSE. If any provision of this Agreement is determined by a
court having jurisdiction over the matter to re-quire 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
Agreement, shall be applied in accordance with their terms. Without limiting the
generality of the foregoing, if any portion of this Agreement shall be
invalidated on any ground, the Corporation shall nevertheless indemnify
Indemnitee to the full extent permitted by any applicable portion of this
Agreement that shall not have been invalidated and to the full extent permitted
by law with respect to that portion that has been invalidated.
8. NON-EXCLUSIVITY.
(a) The indemnification and payment of Expenses provided by or
granted pursuant to this Agreement 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 Agree-ment to
indemnify and hold harmless Indemnitee to the fullest ex-tent 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 Agreement would
provide for lesser indemnification.
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9. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall constitute the original.
10. APPLICABLE LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Louisiana.
11. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
Indemnitee and upon the Corporation, its successors and assigns, and shall inure
to the benefit of Indemnitee's heirs, personal representatives, and assigns and
to the benefit of the Corporation, its successors and assigns.
12. AMENDMENT. No amendment, modification, termination or cancellation of
this Agreement shall be effective unless made in writing signed by the
Corporation and Indemnitee. Notwithstanding any amendment or modification to or
termination or cancellation of this Agreement or any portion hereof, Indemnitee
shall be entitled to indemnification in accordance with the provisions hereof
with respect to any acts or omissions of Indemnitee which occur prior to such
amendment, modification, termination or cancellation.
13. GENDER. All pronouns and variations thereof used in this Agreement
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 refer to
may require.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and signed as of the date and year first above written.
OMNI ENERGY SERVICES CORP.
By:
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Name:
Office:
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Name:
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EXHIBIT 10.2
OMNI ENERGY SERVICES CORP.
STOCK INCENTIVE PLAN
1. PURPOSE. The purpose of the Stock Incentive Plan (the
"Plan") of Omni Energy Services Corp. ("Omni") is to increase
shareholder value and to advance the interests of Omni and its
subsidiaries (collectively, the "Company") by furnishing a variety of
economic incentives (the "Incentives") designed to attract, retain and
motivate key employees, officers and directors and to strengthen the
mutuality of interests between such employees, officers and directors
and Omni's shareholders. Incentives consist of opportunities to
purchase or receive shares of common stock, $.01 par value per share,
of Omni (the "Common Stock"), on terms determined under the Plan. As
used in the Plan, the term "subsidiary" means any corporation of which
Omni owns (directly or indirectly) within the meaning of Section
425(f) of the Internal Revenue Code of 1986, as amended (the "Code"),
50% or more of the total combined voting power of all classes of
stock.
2. ADMINISTRATION.
2.1. COMPOSITION. The Plan shall be administered by the
Compensation Committee of the Board of Directors of Omni or by a
subcommittee thereof (the "Committee"). The Committee shall
consist of not fewer than two members of the Board of Directors,
each of whom shall (a) qualify as a "non-employee director" under
Rule 16b-3 under the Securities Exchange Act of 1934 (the "1934
Act") or any successor rule, and (b) qualify as an "outside
director" under Section 162(m) of the Code.
2.2. AUTHORITY. The Committee shall have plenary authority
to award Incentives under the Plan, to interpret the Plan, to
establish any rules or regulations relating to the Plan that it
determines to be appropriate, to enter into agreements with
participants as to the terms of the Incentives (the "Incentive
Agreements") and to make any other determination that it believes
necessary or advisable for the proper administration of the Plan.
Its decisions in matters relating to the Plan shall be final and
conclusive on the Company and participants. The Committee may
delegate its authority hereunder to the extent provided in
Section 3 hereof. The Committee shall not have authority to award
Incentives under the Plan to directors who are not also employees
of the Company ("Outside Directors"). Outside Directors may
receive awards under the Plan only as specifically provided in
Section 9 hereof.
3. ELIGIBLE PARTICIPANTS. Key employees and officers of the
Company (including officers who also serve as directors of the
Company) and consultants and advisors to the Company shall become
eligible to receive Incentives under the Plan when designated by the
Committee. Employees may be designated individually or by groups or
categories, as the Committee deems appropriate. With respect to
participants not subject to Section 16 of the 1934 Act or Section
162(m) of the Code, the Committee may delegate to appropriate
personnel of the Company its authority to designate participants, to
determine the size and type of Incentives to be received by those
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participants and to determine or modify performance objectives for
those participants. Outside Directors may participate in the Plan only
as specifically provided in Section 9 hereof.
4. TYPES OF INCENTIVES. Incentives may be granted under the
Plan to eligible participants in any of the following forms, either
individually or in combination, (a) incentive stock options and non-
qualified stock options; (b) restricted stock; and (c) other stock-
based awards ("Other Stock-Based Awards").
5. SHARES SUBJECT TO THE PLAN.
5.1. NUMBER OF SHARES. Subject to adjustment as provided in
Section 10.5, a total of 1,500,000 shares of Common Stock are
authorized to be issued under the Plan. Incentives with respect
to no more than 400,000 shares of Common Stock may be granted
through the Plan to a single participant in one calendar year. In
the event that an Incentive granted hereunder expires or is
terminated or cancelled prior to exercise or payment, any shares
of Common Stock that were issuable thereunder may again be issued
under the Plan. In the event that shares of Common Stock are
issued as Incentives under the Plan and thereafter are forfeited
or reacquired by the Company pursuant to rights reserved upon
issuance thereof, such forfeited and reacquired shares may again
be issued under the Plan. If an Other Stock-Based Award is to be
paid in cash by its terms, the Committee need not make a
deduction from the shares of Common Stock issuable under the Plan
with respect thereto. If and to the extent that an Other Stock-
Based Award may be paid in cash or shares of Common Stock, the
total number of shares available for issuance hereunder shall be
debited by the number of shares payable under such Incentive,
provided that upon any payment of all or part of such Incentive
in cash, the total number of shares available for issuance
hereunder shall be credited with the appropriate number of shares
represented by the cash payment, as determined in the sole
discretion of the Committee. Additional rules for determining the
number of shares granted under the Plan may be made by the
Committee, as it deems necessary or appropriate.
5.2. TYPE OF COMMON STOCK. Common Stock issued under the
Plan may be authorized and unissued shares or issued shares held
as treasury shares.
6. STOCK OPTIONS. A stock option is a right to purchase shares
of Common Stock from Omni. Stock options granted under this Plan may
be incentive stock options or non-qualified stock options. Any option
that is designated as a non-qualified stock option shall not be
treated as an incentive stock option. Each stock option granted by the
Committee under this Plan shall be subject to the following terms and
conditions:
6.1. PRICE. The exercise price per share shall be determined
by the Committee, subject to adjustment under Section 10.5;
provided that in no event shall the exercise price be less than
the Fair Market Value of a share of Common Stock on the date of
grant, except that in connection with an acquisition,
consolidation, merger or other extraordinary transaction, options
may be granted at less than the then Fair Market Value in order
to
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replace options previously granted by one or more parties to such
transaction (or their affiliates) so long as the aggregate spread
on such replacement options for any recipient of such options is
equal to or less than the aggregate spread on the options being
replaced.
6.2. NUMBER. The number of shares of Common Stock subject
to the option shall be determined by the Committee, subject to
Section 5.1 and subject to adjustment as provided in Section
10.5.
6.3. DURATION AND TIME FOR EXERCISE. The term of each stock
option shall be determined by the Committee. Each stock option
shall become exercisable at such time or times during its term as
shall be determined by the Committee. Notwithstanding the
foregoing, the Committee may accelerate the exercisability of any
stock option at any time, in addition to the automatic
acceleration of stock options under Section 10.11.
6.4. MANNER OF EXERCISE. A stock option may be exercised,
in whole or in part, by giving written notice to the Company,
specifying the number of shares of Common Stock to be purchased.
The exercise notice shall be accompanied by the full purchase
price for such shares. The option price shall be payable in
United States dollars and may be paid by (a) cash; (b)
uncertified or certified check; (c) unless otherwise determined
by the Committee, by delivery of shares of Common Stock held by
the optionee for at least six months, which shares shall be
valued for this purpose at the Fair Market Value on the business
day immediately preceding the date such option is exercised; (d)
unless otherwise determined by the Committee, by delivering a
properly executed exercise notice together with irrevocable
instructions to a broker approved by Omni (with a copy to Omni)
to promptly deliver to Omni the amount of sale or loan proceeds
to pay the exercise price; or (e) in such other manner as may be
authorized from time to time by the Committee.
6.5. INCENTIVE STOCK OPTIONS. Notwithstanding anything in
the Plan to the contrary, the following additional provisions
shall apply to the grant of stock options that are intended to
qualify as Incentive Stock Options (as such term is defined in
Section 422 of the Code):
A. Any Incentive Stock Option agreement authorized
under the Plan shall contain such other provisions as the
Committee shall deem advisable, but shall in all events be
consistent with and contain or be deemed to contain all
provisions required in order to qualify the options as
Incentive Stock Options.
B. All Incentive Stock Options must be granted within
ten years from the date on which this Plan is adopted by the
Board of Directors.
C. Unless sooner exercised, all Incentive Stock
Options shall expire no later than ten years after the date
of grant.
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D. No Incentive Stock Options shall be granted to any
participant who, at the time such option is granted, would
own (within the meaning of Section 422 of the Code) stock
possessing more than 10% of the total combined voting power
of all classes of stock of the employer corporation or of
its parent or subsidiary corporation.
E. The aggregate Fair Market Value (determined with
respect to each Incentive Stock Option as of the time such
Incentive Stock Option is granted) of the Common Stock with
respect to which Incentive Stock Options are exercisable for
the first time by a participant during any calendar year
(under the Plan or any other plan of Omni or any of its
subsidiaries) shall not exceed $100,000. To the extent that
such limitation is exceeded, such options shall not be
treated, for federal income tax purposes, as Incentive Stock
Options.
7. RESTRICTED STOCK.
7.1. GRANT OF RESTRICTED STOCK. The Committee may award
shares of restricted stock to such officers and key employees as
the Committee determines pursuant to the terms of Section 3. An
award of restricted stock shall be subject to such restrictions
on transfer and forfeitability provisions and such other terms
and conditions as the Committee may determine, subject to the
provisions of the Plan. An award of restricted stock may also be
subject to the attainment of specified performance goals or
targets. To the extent restricted stock is intended to qualify as
performance-based compensation under Section 162(m) of the Code,
it must be granted subject to the attainment of performance goals
as described in Section 7.2 below and meet the additional
requirements imposed by Section 162(m).
7.2 PERFORMANCE-BASED RESTRICTED STOCK. To the extent that
restricted stock granted under the Plan 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 Omni, a division of Omni
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 Committee, relative to
internal goals or relative to levels attained in prior years. The
Committee may not waive any of the pre-established performance
goal objectives, except that such objectives shall be waived as
provided in Section 10.11 hereof, or as may be provided by the
Committee in the event of death, disability or retirement.
7.3. THE RESTRICTED PERIOD. At the time an award of
restricted stock is made, the Committee shall establish a period
of time during which the transfer of the shares of restricted
stock shall be restricted (the "Restricted Period"). The
Restricted Period shall be a minimum of three years, except that
if the vesting of the shares of restricted stock is based upon
the attainment of performance goals, a minimum Restricted Period
of one year is
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permitted. Each award of restricted stock may have a different
Restricted Period. The expiration of the Restricted Period shall
also occur as provided under Section 10.3 and under the
conditions described in Section 10.11 hereof.
7.4. ESCROW. The participant receiving restricted stock
shall enter into an Incentive Agreement with the Company setting
forth the conditions of the grant. Certificates representing
shares of restricted stock shall be registered in the name of the
participant and deposited with the Company, together with a stock
power endorsed in blank by the participant. Each such certificate
shall bear a legend in substantially the following form:
The transferability of this certificate and the shares of
Common Stock represented by it are subject to the terms and
conditions (including conditions of forfeiture) contained in
the Omni Energy Services Corp. Stock Incentive Plan (the
"Plan"), and an agreement entered into between the
registered owner and Omni Energy Services Corp. thereunder.
Copies of the Plan and the agreement are on file at the
principal office of Omni Energy Services Corp.
7.5. DIVIDENDS ON RESTRICTED STOCK. Any and all cash and
stock dividends paid with respect to the shares of restricted
stock shall be subject to any restrictions on transfer,
forfeitability provisions or reinvestment requirements as the
Committee may, in its discretion, prescribe in the Incentive
Agreement.
7.6. FORFEITURE. In the event of the forfeiture of any
shares of restricted stock under the terms provided in the
Incentive Agreement (including any additional shares of
restricted stock that may result from the reinvestment of cash
and stock dividends, if so provided in the Incentive Agreement),
such forfeited shares shall be surrendered and the certificates
cancelled. The participants shall have the same rights and
privileges, and be subject to the same forfeiture provisions,
with respect to any additional shares received pursuant to
Section 10.5 due to a recapitalization, merger or other change in
capitalization.
7.7. EXPIRATION OF RESTRICTED PERIOD. Upon the expiration
or termination of the Restricted Period and the satisfaction of
any other conditions prescribed by the Committee, the
restrictions applicable to the restricted stock shall lapse and a
stock certificate for the number of shares of restricted stock
with respect to which the restrictions have lapsed shall be
delivered, free of all such restrictions and legends, except any
that may be imposed by law, to the participant or the
participant's estate, as the case may be.
7.8. RIGHTS AS A SHAREHOLDER. Subject to the terms and
conditions of the Plan and subject to any restrictions on the
receipt of dividends that may be imposed in the Incentive
Agreement, each participant receiving restricted stock shall have
all the rights of a shareholder with respect to shares of stock
during the Restricted Period, including without limitation, the
right to vote any shares of Common Stock.
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8. OTHER STOCK-BASED AWARDS.
8.1 TERMS OF OTHER STOCK-BASED AWARDS. The Committee is
hereby authorized to grant to eligible employees an "Other Stock-
Based Award", which shall consist of an award, the value of which
is based in whole or in part on the value of shares of Common
Stock, that is not an instrument or Award specified in Sections 6
or 7 of the Plan. 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 (including, without
limitation, securities convertible or exchangeable into or
exercisable for shares of Common Stock), as deemed by the
Committee, consistent with the purposes of the Plan. The
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 granted under this Plan, 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.
8.2 DIVIDEND EQUIVALENTS. In the sole and complete
discretion of the Committee, an Other Stock-Based Award under
this Section 8 may provide the holder thereof with dividends or
dividend equivalents, payable in cash or shares of Common Stock
on a current or deferred basis.
8.3 PERFORMANCE GOALS. Other Stock-Based Awards intended
to qualify as "performance-based compensation" under Section
162(m) of the Code shall be paid based upon the achievement of
pre-established performance goals. The performance goals pursuant
to which Other Stock-Based Awards granted under the Plan 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 Committee,
relative to internal goals or relative to levels attained in
prior years. The Committee may not waive any of the pre-
established performance goal objectives if such Other Stock-Based
Award is intended to constitute "performance-based compensation"
under Section 162(m), except that such objectives shall be waived
as provided in Section 10.11 hereof, or as may be provided by the
Committee in the event of death, disability or retirement.
8.4. NOT A SHAREHOLDER. 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,
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<PAGE>
until the issuance of shares of Common Stock with respect to an
award, at which time such stock shall be considered issued and
outstanding.
9. STOCK OPTIONS FOR OUTSIDE DIRECTORS.
9.1 GRANT OF OPTIONS. Upon consummation of the Company's
initial public offering (the "IPO") of its Common Stock, each
Outside Director shall be granted non-qualified options to
purchase 10,000 shares of Common Stock. At any time thereafter
that an Outside Director first becomes a member of the Board of
Directors of Omni, such Outside Director shall also be granted
non-qualified options to purchase 10,000 shares of Common Stock.
In addition, beginning with the 1998 annual meeting of
shareholders and for as long as the Plan remains in effect and
shares of Common Stock remain available for issuance hereunder,
each Outside Director shall be automatically granted a non-
qualified stock option to purchase 5,000 shares of Common Stock
on the day following the annual meeting of stockholders of Omni.
9.2 EXERCISABILITY OF STOCK OPTIONS. The stock options
granted to Outside Directors under this Section 9 shall become
exercisable one year after grant and shall expire ten years
following the date of grant.
9.3 EXERCISE PRICE. The exercise price of the options
granted upon consummation of the IPO shall be equal to the IPO
price. The exercise price of the options granted to Outside
Directors thereafter shall be equal to the Fair Market Value, as
defined in the Plan, of a share of Common Stock on the date of
grant. The exercise price may be paid as provided in Section 6.4
hereof.
9.4 EXERCISE AFTER TERMINATION OF BOARD SERVICE. In the
event an Outside Director ceases to serve on the Board, the stock
options granted hereunder must be exercised, to the extent
otherwise exercisable at the time of termination of Board
service, within three months from termination of Board service;
provided, however, that in the event of termination of Board
service as a result of death, disability or retirement on or
after reaching age 65, the stock options must be exercised, to
the extent exercisable at the time of termination of Board
service, within 18 months from the date of termination of Board
service; and further provided, that no stock options may be
exercised later than ten years after the date of grant.
10. GENERAL.
10.1. DURATION. Subject to Section 10.10, the Plan shall
remain in effect until all Incentives granted under the Plan have
either been satisfied by the issuance of shares of Common Stock
or the payment of cash or been terminated under the terms of the
Plan and all restrictions imposed on shares of Common Stock in
connection with their issuance under the Plan have lapsed.
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<PAGE>
10.2. TRANSFERABILITY. No Incentives granted hereunder may
be transferred, pledged, assigned or otherwise encumbered by a
participant except: (a) by will; (b) by the laws of descent and
distribution; (c) pursuant to a domestic relations order, as
defined in the Code, if permitted by the Committee and so
provided in the Incentive Agreement or an amendment thereto; or
(d) as to options only, if permitted by the Committee and so
provided in the Incentive Agreement or an amendment thereto, (i)
to Immediate Family Members, (ii) to a partnership in which
Immediate Family Members, or entities in which Immediate Family
Members are the sole owners, members or beneficiaries, as
appropriate, are the sole partners, (iii) to a limited liability
company in which Immediate Family Members, or entities in which
Immediate Family Members are the sole owners, members or
beneficiaries, as appropriate, are the sole members, or (iv) to a
trust for the sole benefit of Immediate Family Members.
"Immediate Family Members" shall be defined as the spouse and
natural or adopted children or grandchildren of the participant
and their spouses. To the extent that an Incentive Stock Option
is permitted to be transferred during the lifetime of the
participant, it shall be treated thereafter as a nonqualified
stock option. Any attempted assignment, transfer, pledge,
hypothecation or other disposition of Incentives, or levy of
attachment or similar process upon Incentives not specifically
permitted herein, shall be null and void and without effect.
10.3. EFFECT OF TERMINATION OF EMPLOYMENT OR DEATH. Except
as provided in Section 9.4 with respect to Outside Directors, in
the event that a participant ceases to be an employee of the
Company for any reason, including death, disability, early
retirement or normal retirement, any Incentives may be exercised,
shall vest or shall expire at such times as may be determined by
the Committee in the Incentive Agreement. The Committee has
complete authority to modify the treatment of an Incentive in the
event of termination of employment of a participant by means of
an amendment to the Incentive Agreement. Consent of the
participant to the modification is required only if the
modification materially impairs the rights previously provided to
the participant in the Incentive Agreement.
10.4. ADDITIONAL CONDITION. Anything in this Plan to the
contrary notwithstanding: (a) the Company may, if it shall
determine it necessary or desirable for any reason, at the time
of award of any Incentive or the issuance of any shares of Common
Stock pursuant to any Incentive, require the recipient of the
Incentive, as a condition to the re-ceipt thereof or to the
receipt of shares of Common Stock issued pursuant thereto, to
deliver to the Company a written representation of present
intention to acquire the Incentive or the shares of Common Stock
issued pursuant thereto for his own account for investment and
not for distribution; and (b) if at any time the Company further
determines, in its sole discretion, that the listing,
registration or qualifi-cation (or any updating of any such
document) of any Incen-tive or the shares of Common Stock
issuable pursuant thereto is necessary on any securities exchange
or under any federal or state securities or blue sky law, or that
the consent or approval of any governmental regulatory body is
necessary or desirable as a condition of, or in connection with
the award of any Incentive, the issuance of shares of Common
Stock pursuant thereto, or the removal of any restrictions
imposed on such shares, such Incentive shall not be awarded or
such shares of Common Stock shall not be issued or such
restrictions shall not be removed, as the case may be, in whole
or in part, unless such listing, registration,
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<PAGE>
qualification, consent or approval shall have been effected or
obtained free of any conditions not acceptable to the Company.
10.5. ADJUSTMENT. In the event of any merger, consolidation
or reorganization of the Company with any other corporation or
corporations, there shall be substituted for each of the shares
of Common Stock then subject to the Plan, including shares
subject to restrictions, options or achievement of performance
objectives, the number and kind of shares of stock or other
securities to which the holders of the shares of Common Stock
will be entitled pursuant to the transaction. In the event of any
recapitalization, stock dividend, stock split, combination of
shares or other change in the Common Stock, the number of shares
of Common Stock then subject to the Plan, including shares
subject to outstanding Incentives, shall be adjusted in
proportion to the change in outstanding shares of Common Stock.
In the event of any such adjustments, the purchase price of any
option, the performance objectives of any Incentive, and the
shares of Common Stock issuable pursuant to any Incentive shall
be adjusted as and to the extent appropriate, in the reasonable
discretion of the Committee, to provide participants with the
same relative rights before and after such adjustment. No
substitution or adjustment shall require the Company to issue a
fractional share under this Plan and the substitution or
adjustment shall be limited by deleting any fractional share.
10.6. INCENTIVE AGREEMENTS. The terms of each Incentive
granted to an employee, officer, consultant or advisor shall be
stated in an agreement approved by the Committee.
10.7. WITHHOLDING.
A. The Company shall have the right to withhold from
any payments made under the Plan or to collect as a
condition of payment, any taxes required by law to be
withheld. At any time that a participant is required to pay
to the Company an amount required to be withheld under
applicable income tax laws in connection with the issuance
of Common Stock, the lapse of restrictions on Common Stock
or the exercise of an option, the participant may, subject
to disapproval by the Committee, satisfy this obligation in
whole or in part by electing (the "Election") to have the
Company withhold shares of Common Stock having a value equal
to the amount required to be withheld. The value of the
shares to be withheld shall be based on the Fair Market
Value of the Common Stock on the date that the amount of tax
to be withheld shall be determined ("Tax Date").
B. Each Election must be made prior to the Tax Date.
The Committee may disapprove of any Election, may suspend or
terminate the right to make Elections, or may provide with
respect to any Incentive that the right to make Elections
shall not apply to such Incentive. If a participant makes an
election under Section 83(b) of the Internal Revenue Code
with respect to shares of restricted stock, an Election is
not permitted to be made.
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<PAGE>
10.8. NO CONTINUED EMPLOYMENT. No participant under the Plan
shall have any right, because of his or her participation, to
continue in the employ of the Company for any period of time or
to any right to continue his or her present or any other rate of
compensation.
10.9. DEFERRAL PERMITTED. Payment of cash or distribution
of any shares of Common Stock to which a participant is entitled
under any Incentive shall be made as provided in the Incentive
Agreement. Payment may be deferred at the option of the
participant if provided in the Incentive Agreement.
10.10. AMENDMENTS TO OR TERMINATION OF THE PLAN.
A. The Board may amend, suspend or terminate the
Plan or any portion thereof at any time, provided that no
amendment shall be made without stockholder approval if such
approval is necessary to comply with any tax or regulatory
requirement, including any approval necessary to qualify
Incentives as "performance- based" compensation under
Section 162(m) or any successor provision, if such
qualification is deemed necessary or advisable by the
Committee.
B. Any provision of this Plan or any Incentive
Agreement to the contrary notwithstanding, the Committee may
cause any Incentive granted hereunder to be cancelled in
consideration of a cash payment or alternative Incentive
made to the holder of such cancelled Incentive equal in
value to such cancelled Incentive. The determinations of
value under this subparagraph shall be made by the Committee
in its sole discretion.
10.11. CHANGE OF CONTROL.
A. "Change of Control" shall mean:
1. the acquisition by any individual, entity or
group (within the meaning of Section 13(d)(3) or
14(d)(2) of the 1934 Act of beneficial ownership
(within the meaning of Rule 13d-3 promulgated under the
1934 Act) of more than 50% of the outstanding shares of
the Common Stock; provided, however, that for purposes
of this subsection 1., the following shall not
constitute a Change of Control:
(a) any acquisition of Common Stock directly
or indirectly from Omni, or Advantage Capital
Companies,
(b) any acquisition of Common Stock by Omni,
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<PAGE>
(c) any acquisition of Common Stock by any
employee benefit plan (or related trust) sponsored
or maintained by Omni or any corporation
controlled by Omni, or
(d) any acquisition of Common Stock by any
corporation pursuant to a transaction that
complies with clauses (a), (b) and (c) of
subsection (A)(3) of this Section 10.11; or
2. individuals who, as of the date of adoption
of the Plan by the Board of Directors of Omni (the
"Adoption Date"), constitute the Board (the "Incumbent
Board") cease for any reason to constitute at least a
majority of the Board; provided, however, that any
individual becoming a director subsequent to the
Adoption Date whose election, or nomination for
election by the Company's shareholders, was approved by
a vote of at least a majority of the directors then
comprising the Incumbent Board shall be considered a
member of the Incumbent Board, unless such individual's
initial assumption of office occurs as a result of an
actual or threatened election contest with respect to
the election or removal of directors or other actual or
threatened solicitation of proxies or consents by or on
behalf of a person other than the Incumbent Board; or
3. approval by the stockholders of Omni of a
reorganization, merger or consolidation, or sale or
other disposition of all of substantially all of the
assets of the Company (a "Business Combination"), in
each case, unless, following such Business Combination,
(a) all or substantially all of the
individuals and entities who were the beneficial
owners of Omni's outstanding common stock and
Omni's voting securities entitled to vote
generally in the election of directors immediately
prior to such Business Combination 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 corporation
resulting from such Business Combination (which,
for purposes of this paragraph (a) and paragraphs
(b) and (c), shall include a corporation which as
a result of such transaction controls the Company
or all or substantially all of the Company's
assets either directly or through one or more
subsidiaries), and
(b) except to the extent that such ownership
existed prior to the Business Combination, no
person (excluding any corporation resulting
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<PAGE>
from such Business Combination or any employee
benefit plan or related trust of the Company or
such corporation resulting from such Business
Combination) beneficially owns, directly or
indirectly, 30% or more of the then outstanding
shares of common stock of the corporation
resulting from such Business Combination or 30% or
more of the combined voting power of the then
outstanding voting securities of such corporation,
and
(c) at least a majority of the members of
the board of directors of the corporation
resulting from such Business Combination were
members of the Incumbent Board at the time of the
execution of the initial agreement, or of the
action of the Board, providing for such Business
Combination; or
4. approval by the shareholders of the Company
of a complete liquidation or dissolution of the
Company.
B. Upon a Change of Control, all outstanding options
shall automatically become fully exercisable, all
restrictions or limitations on any Incentives shall lapse
and all performance criteria and other conditions relating
to the payment of Incentives shall be deemed to be achieved
or waived by the Company, without the necessity of any
action by any person.
C. No later than 30 days after the approval by the
Board of a Change of Control of the types described in
Subsections A.3 and A.4 of this Section 10.11, and no later
than 30 days after a Change of Control of the type described
in Subsections A.1 and A.2 of this Section 10.11 of the
Plan, the Committee (as the Committee was composed
immediately prior to such Change of Control and
notwithstanding any removal or attempted removal of some or
all of the members thereof as directors or Committee
members), acting in its sole discretion without the consent
or approval of any participant, may act to effect one or
more of the alternatives listed below and such act by the
Committee may not be revoked or rescinded by persons not
members of the Committee immediately prior to the Change of
Control:
1. require that all outstanding options be
exercised on or before a specified date (before or
after such Change of Control) fixed by the Committee,
after which specified date all unexercised options
shall terminate,
2. make such equitable adjustments to Incentives
then outstanding as the Committee deems appropriate to
reflect such Change of Control (provided, however, that
the Committee may determine in its sole discretion that
no adjustment is necessary), or
3. provide that thereafter upon any exercise of
an option the participant shall be entitled to purchase
under such option, in lieu of the number of shares of
Common Stock then covered by such option, the number
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<PAGE>
and class of shares of stock or other securities or
property (including, without limitation, cash) to which
the participant would have been entitled pursuant to
the terms of the agreement providing for the merger,
consolidation, asset sale, dissolution or other Change
of Control of the type described in Sections 10.11.A.3
and A.4 of the Plan, if, immediately prior to such
Change of Control, the participant had been the holder
of record of the number of shares of Common Stock then
covered by such options.
10.12. DEFINITION OF FAIR MARKET VALUE. Whenever "Fair
Market Value" of Common Stock shall be determined for purposes of
this Plan, it shall be determined as follows: (i) if the Common
Stock is listed on an established stock exchange or any automated
quotation system that provides sale quotations, the closing sale
price for a share of the Common Stock on such exchange or
quotation system on the applicable date; (ii) if the Common Stock
is not listed on any exchange or quotation system, but bid and
asked prices are quoted and published, the mean between the
quoted bid and asked prices on the applicable date, and if bid
and asked prices are not available on such day, on the next
preceding day on which such prices were available; and (iii) if
the Common Stock is not regularly quoted, the fair market value
of a share of Common Stock on the applicable date as established
by the Committee in good faith.
10.13 LOANS. In order to assist a participant in acquiring
shares of Common Stock pursuant to an Incentive granted under the
Plan, the Committee may authorize, subject to the provisions of
Regulation G of the Board of Governors of the Federal Reserve
System, at either the time of the grant of the Incentive, at the
time of the acquisition of Common Stock pursuant to the
Incentive, or at the time of the lapse of restrictions on shares
of restricted stock granted under the Plan, the extension of a
loan to the participant by the Company. The terms of any loans,
including the interest rate, collateral and terms of repayment,
will be subject to the discretion of the Committee. The maximum
credit available hereunder shall be equal to the aggregate
purchase price of the shares of Common Stock to be acquired
pursuant to the Incentive plus the maximum tax liability that may
be incurred in connection with the Incentive.
10.14 TAX BENEFIT RIGHTS. The Committee may grant a tax
benefit right ("TBR") to a participant in the Plan on such terms
as the Committee in its discretion shall determine. A TBR may be
granted only with respect to an Incentive granted under the Plan
and may be granted concurrently with or after the grant of the
Incentive. A TBR shall entitle a participant to receive from the
Company an amount in cash not to exceed the product of the
ordinary income, if any, which the participant may realize as the
result of the exercise of an option or the grant or vesting of
restricted stock or an Other Stock-Based Award (including any
income realized as a result of the related TBR) multiplied by the
then applicable highest stated federal and state tax rate for
individuals. The Committee shall determine all terms and
provisions of the TBR granted hereunder.
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<PAGE>
EXHIBIT 10.3
FORM OF
STOCK OPTION AGREEMENT
FOR THE GRANT OF
NON-QUALIFIED STOCK OPTIONS UNDER THE
OMNI ENERGY SERVICES CORP.
STOCK INCENTIVE PLAN
THIS AGREEMENT is entered into and effective as of __________, 1997, by and
between Omni Energy Services Corp., a Louisiana corporation (the "Company"), and
______________ (the "Optionee").
WHEREAS Optionee is a key employee of the Company and the Company considers
it desirable and in its best interest that Optionee be given an inducement to
acquire a proprietary interest in the Company and an incentive to advance the
interests of the Company by possessing an option to purchase shares of the
common stock of the Company, $.01 par value per share (the "Common Stock") in
accordance with the Omni Energy Services Corp. Stock Incentive Plan (the
"Plan").
NOW, THEREFORE, in consideration of the premises, it is agreed by and
between the parties as follows:
I.
Grant of Option
The Company hereby grants to Optionee effective as of the date hereof (the
"Date of Grant") the right, privilege and option to purchase ________ shares of
Common Stock (the "Option") at an exercise price equal to the initial public
offering price of the Common Stock (the "Exercise Price"). The grant of the
Option is subject to the issuance and sale of Common Stock registered with the
Securities and Exchange Commission on Form S-1 (Reg. No. 333-_______) in
connection with the Company's initial public offering of the Common Stock. The
Option shall be exercisable at the time specified in Section II below. The
Option is a non-qualified stock option and shall not be treated as an incentive
stock option under Section 422 of the Internal Revenue Code of 1986, as amended
(the "Code").
II.
Time of Exercise
2.1 Subject to the provisions of the Plan and the other provisions of this
Section II, the Optionee shall be entitled to exercise the Option as follows:
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<PAGE>
25% of the total number of shares covered by
the Option beginning one year following
the Date of Grant;
50% of the total number of shares covered by
the Option beginning two years following
the Date of Grant, less any shares
previously issued;
75% of the total number of shares covered by
the Option beginning three years
following the Date of Grant, less any
shares previously issued; and
100% of the total number of shares covered by
the Option beginning four years
following the Date of Grant, less any
shares previously issued.
2.2 During Optionee's lifetime, the Option may be exercised only by him or
his guardian if he has been declared incompetent. In the event of death, the
Option may be exercised as provided herein by the Optionee's estate or by the
person to whom such right devolves as a result of the Optionee's death.
2.3 If an Optionee ceases to be an employee because of death or disability
within the meaning of Section 22(e)(3) of the Code ("Disability"), the Option
must be exercised, to the extent otherwise exercisable at the time of
termination of employment, within one year from the date on which the Optionee
ceases to be an employee, but in no event later than ten years following the
Date of Grant.
2.4 If an Optionee ceases to be an employee because of retirement, the
Option must be exercised, to the extent otherwise exercisable at the time of
termination of employment, within 18 months from the date on which Optionee
ceases to be an employee, but in no event later than ten years following the
Date of Grant.
2.5 If Optionee's employment is terminated, other than as a result of
death, disability or retirement, the Option must be exercised, to the extent
otherwise exercisable at the time of termination of employment, within three
months from the date on which Optionee ceases to be an employee, but in no event
later than ten years following the date of grant.
2.6 The Option shall expire and may not be exercised later than ten years
following the Date of Grant.
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<PAGE>
III.
Method of Exercise of Option
3.1 Optionee may exercise all or a portion of the Option by delivering to
the Company a signed written notice of his intention to exercise the Option,
specifying therein the number of shares to be purchased. Upon receiving such
notice, and after the Company has received full payment of the Exercise Price,
the appropriate officer of the Company shall cause the transfer of title of the
shares purchased to Optionee on the Company's stock records and cause to be
issued to Optionee a stock certificate for the number of shares being acquired.
Optionee shall not have any rights as a shareholder until the stock certificate
is issued to him.
3.2 The Option may be exercised by the payment of the Exercise Price in
cash, in shares of Common Stock held for six months or in a combination of cash
and shares of Common Stock held for six months. The Optionee may also pay the
Exercise Price by delivering a properly executed exercise notice together with
irrevocable instructions to a broker approved by the Compensation Committee
(with a copy to the Company) to promptly deliver to the Company the amount of
sale or loan proceeds to pay the Exercise Price.
IV.
No Contract of Employment Intended
Nothing in this Agreement shall confer upon Optionee any right to continue
in the employment of the Company or any of its subsidiaries, or to interfere in
any way with the right of the Company or any of its subsidiaries to terminate
Optionee's employment relationship with the Company or any of its subsidiaries
at any time.
V.
Binding Effect
This Agreement shall inure to the benefit of and be binding upon the
parties hereto and their respective heirs, executors, administrators and
successors.
VI.
Non-Transferability
The Option granted hereby may not be transferred, assigned, pledged or
hypothecated in any manner, by operation of law or otherwise, other than by
will, by the laws of descent and distribution or pursuant to a domestic
relations order, as defined in the Code, and shall not be subject to execution,
attachment or similar process.
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<PAGE>
VII.
Inconsistent Provisions
The Option granted hereby is subject to the provisions of the Plan as in
effect on the date hereof and as it may be amended. In the event any provision
of this Agreement conflicts with such a provision of the Plan, the Plan
provision shall control.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
executed on the day and year first above written.
OMNI ENERGY SERVICES CORP.
By:
-------------------------------
Member
Compensation Committee
-------------------------------
Optionee
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<PAGE>
IPO
DIRECTOR
GRANTS
___________ ___, 1997
OMNI ENERGY SERVICES CORP.
STOCK INCENTIVE PLAN
OUTSIDE DIRECTORS
STOCK OPTION AGREEMENT
___________________________
___________________________
___________________________
___________________________
Re: Options to purchase 10,000 shares of common stock of Omni Energy
Services Corp. at $____ per share granted on the ____ day of
____________, 1997
Dear __________:
You are hereby granted options (the "Options") for the purchase of 10,000
shares of the Common Stock of Omni Energy Services Corp., $.01 par value per
share (the "Common Stock") under the Omni Energy Services Corp. Stock Incentive
Plan (the "Plan") subject to all of the terms and conditions set forth in the
Plan, a copy of which will be provided to you.
The exercise price is $_____ per share, the initial public offering price,
payable in full at the time of exercise, either in the form of cash, check,
Common Stock of the Company held for six months and valued at Fair Market Value
on the date of exercise, or through a broker-assisted exercise, as described in
the Plan. Under the terms of the Plan, your Options are immediately exercisable.
Your Options will expire if not exercised on or before ______________, or
earlier in the event of termination of service on the Board, as provided in the
Plan. At the time or times when you wish to exercise an Option, in whole or in
part, please refer to the memorandum to participants and the provisions of the
Plan dealing with the methods and procedures of exercise of Options.
The Options granted hereby are non-qualified stock options and shall not be
treated as Incentive Stock Options under Section 422 of the Internal Revenue
Code of 1986, as amended.
All terms used in this agreement and not otherwise defined herein shall
have the meanings set forth in the Plan. All Options granted hereby are subject
to the provisions of the Plan as adopted, or to the provisions of the Plan as it
may be amended. In the event any provision of this agreement conflicts with the
provisions of the Plan, the Plan shall control.
<PAGE>
Page 2
Please indicate your acceptance of these Options and your agreement to
comply with the provisions of the Plan by signing and returning the enclosed
copy of this agreement to the Company.
Sincerely,
OMNI ENERGY SERVICES CORP.
------------------------------
By:
Title:
ACCEPTED this _______ day of _____________, 1997.
------------------------------
Optionee
<PAGE>
ANNUAL
DIRECTOR
GRANTS
THIS DOCUMENT CONSTITUTES PART OF A PROSPECTUS COVERING SECURITIES
THAT HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
__________ ___, 199__
OMNI ENERGY SERVICES CORP.
STOCK INCENTIVE PLAN
OUTSIDE DIRECTORS
STOCK OPTION AGREEMENT
___________________________
___________________________
___________________________
___________________________
Re: Options to purchase _____shares of common stock of Omni Energy
Services Corp at $_____ per share granted on the _____ day of
____________, 199__
Dear __________:
You are hereby granted options (the "Options") for the purchase of 5,000
shares of the Common Stock of Omni Energy Services Corp., $.01 par value per
share (the "Common Stock") under the Omni Energy Services Corp. Stock Incentive
Plan (the "Plan") subject to all of the terms and conditions set forth in the
Plan, a copy of which has been provided to you.
The exercise price is $_____ per share (100% of the Fair Market Value of a
share of Common Stock on the date of grant) payable in full at the time of
exercise, either in the form of cash, check, Common Stock of the Company held
for six months and valued at Fair Market Value on the date of exercise, or
through a broker-assisted exercise, as described in the Plan. Under the terms of
the Plan, your Options are exercisable immediately. Your Options will expire if
not exercised on or before ______________, or earlier in the event of
termination of service on the Board, as provided in the Plan. At the time or
times when you wish to exercise an Option, in whole or in part, please refer to
the memorandum to participants and the provisions of the Plan dealing with the
methods and procedures of exercise of Options.
The Options granted hereby are non-qualified stock options and shall not be
treated as Incentive Stock Options under Section 422 of the Internal Revenue
Code of 1986, as amended.
All terms used in this agreement and not otherwise defined herein shall
have the meanings set forth in the Plan. All Options granted hereby are subject
to the provisions of the Plan as adopted, or to the provisions of the Plan as it
may be amended. In the event any provision of this agreement conflicts with the
provisions of the Plan, the Plan shall control.
<PAGE>
Page 2
Please indicate your acceptance of these Options and your agreement to
comply with the provisions of the Plan by signing and returning the enclosed
copy of this agreement to the Company.
Sincerely,
OMNI ENERGY SERVICES CORP.
----------------------------
By:
Title:
ACCEPTED this _______ day of _____________, 199__.
----------------------------
Optionee
<PAGE>
EXHIBIT 10.6
OMNI GEOPHYSICAL, L.L.C.
AND
ALLEN R. WOODARD
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT is made and entered
into as of the 19th day of July, 1996 (the "Agreement") 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 is desirous of obtaining the services of the
Employee upon the terms and conditions contained herein; and
WHEREAS, the Employee is desirous of providing services for the
Company 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 hereby hires the Employee and the
Employee hereby agrees 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.
3. COMPENSATION. For the period beginning on the mutual
execution of this Agreement 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 the Chief Operating Officer
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.
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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.
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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.
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(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.
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.
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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.
[Remainder of this page intentionally blank]
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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 Jeansonne
--------------------------------
David Jeansonne, Manager
By:/s/ Roger E. Thomas
--------------------------------
Roger E. Thomas, Manager
EMPLOYEE
/s/Allen R. Woodard
-----------------------------------
Allen R. Woodard
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EXHIBIT 10.7
OMNI GEOPHYSICAL, L.L.C.
AND
RICHARD PATRICK MORRIS
EMPLOYMENT AND NON-COMPETITION AGREEMENT
THIS EMPLOYMENT AND NON-COMPETITION AGREEMENT is made and entered
into on the 6th day of August, 1997, but effective as of July 1, 1997
(the "Agreement") by and between OMNI GEOPHYSICAL, L.L.C., a Louisiana
limited liability company (hereinafter referred to as "Company") and
RICHARD PATRICK MORRIS, a resident of the State of Louisiana
(hereinafter referred to as "Employee").
WHEREAS, the Company is desirous of obtaining the services of the
Employee upon the terms and conditions contained herein; and
WHEREAS, the Employee is desirous of providing services for the
Company 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 hereby hires the Employee and the
Employee hereby agrees 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 mutual execution of this Agreement and
expiring on June 30, 2000, except that the provisions of Section 6 and
Section 7 of this Agreement shall be effective for the period
beginning on the mutual execution of this Agreement and expiring two
(2) years after the termination of Employee's employment under this
Agreement.
3. COMPENSATION. For the period beginning on the mutual
execution of this Agreement and expiring on June 30, 2000, the Company
shall pay Employee One Hundred Thousand Dollars ($100,000) per annum
as a base salary.
4. DUTIES. For the period beginning on the mutual execution of
this Agreement and expiring June 30, 2000, Employee shall serve as a
Vice President and General Manager of the Company's aviation division.
Notwithstanding anything in this Agreement to the contrary, Employee
shall perform such other duties, tasks and work as may be assigned to
him by the Company's officers and Board of Directors.
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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, and may also be terminated at any
time by the Company, without prior notice, without cause; provided,
however, that in the event this Agreement is terminated by the Company
without cause, then the Company shall continue to pay the Employee the
compensation as set forth in Section 2 hereof through June 30, 2000.
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 failure by Employee to
substantially perform his duties hereunder in the manner and at the
level as customarily performed by the general manager of aviation
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.
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 mutual execution of this Agreement and expiring two (2) years
after the termination of Employee's employment under this Agreement,
(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,
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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 aviation
company which provides seismic drilling or support services or
provides aircraft, pilots or other related equipment and services that
are used in support of seismic drilling or surveying activities. 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.
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.
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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: Richard Patrick Morris
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
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,
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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.
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 Jeansonne
---------------------------------
David Jeansonne, Manager
By:/s/Roger E. Thomas
---------------------------------
Roger E. Thomas, Manager
EMPLOYEE
/s/Richard Patrick Morris
------------------------------------
Richard Patrick Morris
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EXHIBIT 10.9
OMNI GEOPHYSICAL, L.L.C.
AND
OMNI GEOPHYSICAL CORPORATION, DAVID JEANSONNE,
MAX BRIAN HOYT, TED W. HOYT, AND WILBER SAM HOYT
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS CONFIDENTIALITY AND NON-COMPETITION AGREEMENT is made and
entered into as of the 19th day of July, 1996 (the "Agreement") by and
between OMNI GEOPHYSICAL, L.L.C., a Louisiana limited liability
company (hereinafter referred to as "Company"), OMNI GEOPHYSICAL
CORPORATION, a Louisiana corporation, and DAVID JEANSONNE, MAX BRIAN
HOYT, TED W. HOYT, and WILBER SAM HOYT, each a resident of the State
of Louisiana (hereinafter collectively referred to as the
"Shareholders").
WHEREAS, pursuant to that certain Asset Purchase Agreement (the
"Purchase Agreement") of even date herewith, by and among the Company,
Omni Corporation and the Shareholders, the Company acquired all of the
Assets (as that term is defined in the Purchase Agreement) of the
Business (as that term is defined in the Purchase Agreement) of Omni
Corporation;
WHEREAS, the agreements of Omni Corporation and the Shareholders
hereunder are an important aspect of the Purchase Agreement and the
Company would not consummate the Purchase Agreement absent the
execution and delivery of this Agreement, including the covenants set
forth in Sections 1 and 2 of this Agreement; and
WHEREAS, the Company considers the goodwill of the Business
acquired by the Company pursuant to the Purchase Agreement to be an
essential component of the business and operations of Omni
Corporation, and the Company and Omni Corporation desire the Company
to continue to have and to enjoy the full benefit of said goodwill;
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. CONFIDENTIALITY AND NON-DISCLOSURE OF INFORMATION. Omni
Corporation and each of the Shareholders hereby recognize, acknowledge
and agree that confidential information of any kind, nature or
description concerning any matters affecting or relating to the
Business (as that term is defined in the Purchase Agreement),
including but not limited to the names of customers, 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. Omni Corporation
and each of its Shareholders agrees that he
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(or it, in the case of Omni Corporation) will not, without the prior
written consent of the Company, directly or indirectly, in any
individual or representative capacity whatsoever (a) utilize for the
benefit of any person, business, enterprise or entity other than
Company or (b) 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. In the event of
any actual or threatened breach by Omni Corporation or any of the
Shareholders of the provisions of this Section 1, Omni Corporation and
each of the Shareholders agree that the Company shall not have an
adequate remedy at law, and the Company shall be entitled to an
injunction restraining Omni Corporation and/or any or all of the
Shareholders from breaching the provisions of this Agreement. Nothing
herein stated shall be construed as prohibiting the Company from
pursuing any other remedies available to the Company for such breach
or threatened breach including the recovery of damages from Omni
Corporation or any of the Shareholders.
2. COVENANT OF NON-COMPETITION. For a period of seven (7) years
beginning with the effective date of this Agreement, (a) Omni
Corporation and each of the Shareholders 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 for any other purpose whatsoever which is
detrimental to the Company or its business; and (b) Omni Corporation
and each of the Shareholders will not, directly or indirectly, within
any parish or municipality in Louisiana or in any other state or
foreign jurisdiction in which the 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 any of the Shareholders or
a partnership including any of the Shareholders) 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 Omni Corporation or any of the Shareholders of
the provisions of this Agreement, Omni Corporation and each of the
Shareholders agree that the Company shall not have an adequate remedy
at law, and the Company shall be entitled to an injunction restraining
Omni Corporation and/or any or all of the Shareholders 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 2 and/or the solicitation of any business on his or
its behalf or on behalf of others from any customer. Nothing herein
stated shall be construed as prohibiting the Company from pursuing any
other remedies available to the Company for such breach or threatened
breach including the recovery of damages from Omni Corporation or any
of the Shareholders.
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3. PERMITTED BUSINESS. The parties acknowledge that one of the
Shareholders, David Jeansonne, owns and operates American Aviation,
Inc., a Louisiana corporation ("American Aviation"), which utilizes
its fleet of helicopters to provide seismic drilling and support
services. Notwithstanding the provisions of Section 2 of this
Agreement, the Company acknowledges and agrees that David Jeansonne
may continue to own and operate American Aviation as set forth in this
Section 2 without violating the non-competition restrictions and
covenants contained in this Agreement.
4. REMEDIES AND EQUITABLE PROVISIONS. The following provisions
shall apply in respect of the covenants and agreements of Omni
Corporation and the Shareholders contained in this Agreement:
(a) Omni Corporation and each of the Shareholders acknowledge
and agree that the covenants and restrictions contained in this
Agreement are reasonable and necessary for the proper protection of
the legitimate interests of the Company.
(b) Omni Corporation and each of the Shareholders further
acknowledge and agree that any breach or threatened breach of any
agreement contained in Sections 1 and 2 above will cause such damage
to the Company as to be irreparable and which would be difficult to
ascertain and for which the Company does not have an adequate remedy
at law, and accordingly, Omni Corporation and each of the Shareholders
agree that the Company, in addition to any other remedy which may be
available to it, shall be entitled to enforce the covenants of Omni
Corporation and the Shareholders by injunction or other equitable
means. 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
Omni Corporation or any of the Shareholders.
(c) The parties agree that if Company should institute
litigation against Omni Corporation or any of the Shareholders 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.
5. REFORMATION/SAVINGS CLAUSE. The parties agree that if either
the length of time or the geographical area of the covenants of Omni
Corporation and the Shareholders 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.
6. WAIVER OF BREACH. The waiver or nonenforcement by the
Company of a breach of any provision of this Agreement by Omni
Corporation or any of the Shareholders shall not operate or be
construed as a waiver of any subsequent breach by Omni Corporation or
the Shareholders.
3
<PAGE>
7. SEVERABILITY. Every provision of this Agreement is entitled
to be severable. The parties agree that if any term or provision of
the Agreement 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.
8. 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.
9. 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.
10. 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.
11. APPLICABLE LAW. The Company, Omni Corporation and each of
the Shareholders acknowledge and agree that under applicable conflicts
of laws rules, 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 Missouri shall govern the construction,
interpretation, validity and enforcement of each and every term of
this Agreement. The parties to this Agreement have chosen the law of
the State of Missouri after careful consideration and reflection upon
the desirability of the stability and certainty of result which will
occur if the internal laws of the State of Missouri are chosen in the
manner described to govern the construction, interpretation,
enforcement, termination and validity of the rights and duties of the
parties under this Agreement.
12. 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.
13. 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, Omni Corporation has caused
this Agreement to be executed by its duly authorized officer, and each
of the Shareholders has hereunto set his hand as of the day and year
first above written.
OMNI GEOPHYSICAL, L.L.C.,
a Louisiana limited liability company
By:/s/ David Jeansonne
--------------------------------------
David Jeansonne, Manager
By:/s/ Roger E. Thomas
--------------------------------------
Roger E. Thomas, Manager
OMNI GEOPHYSICAL CORPORATION,
a Louisiana corporation
By:/s/ David Jeansonne
--------------------------------------
David Jeansonne, President
/s/ David Jeansonne
-----------------------------------------
David Jeansonne
/s/ Max Brian Hoyt
-----------------------------------------
Max Brian Hoyt
/s/ Ted W. Hoyt
-----------------------------------------
Ted W. Hoyt
/s/ Wilber Sam Hoyt
-----------------------------------------
Wilber Sam Hoyt
5
<PAGE>
EXHIBIT 10.10
OMNI GEOPHYSICAL, L.L.C. AND AMERICAN AVIATION L.L.C.
AND
AMERICAN AVIATION INCORPORATED, DAVID JEANSONNE,
AND RICHARD PATRICK MORRIS
CONFIDENTIALITY AND NON-COMPETITION AGREEMENT
THIS CONFIDENTIALITY AND NON-COMPETITION AGREEMENT (hereinafter
referred to as the "Agreement") is made and entered into on the 6th
day of August, 1997, but effective as of July 1, 1997, by and between
OMNI GEOPHYSICAL, L.L.C., a Louisiana limited liability company
("Omni"), AMERICAN AVIATION L.L.C., a single-member limited liability
company owned 100% by the Company ("AA") (Omni and AA being
hereinafter collectively referred to as the "Company"), AMERICAN
AVIATION INCORPORATED, a Louisiana corporation ("American"), and DAVID
JEANSONNE ("Jeansonne") and RICHARD PATRICK MORRIS ("Morris"), each a
resident of the State of Louisiana (Jeansonne and Morris being
hereinafter collectively referred to as the "Shareholders").
WHEREAS, pursuant to the Intangible Asset Purchase Agreement (the
"Purchase Agreement") and the Exchange Agreement (the "Exchange
Agreement") both of even date herewith, by and among the Company and
AA, the Company acquired all of the Assets of the Business (as those
terms are defined in the Purchase Agreement and the Exchange
Agreement) of American;
WHEREAS, the agreements of American and the Shareholders
hereunder are an important aspect of the Purchase Agreement and the
Exchange Agreement, and the Company would not consummate the Purchase
Agreement and the Exchange Agreement absent the execution and delivery
of this Agreement, including the covenants set forth in Sections 1 and
2 of this Agreement; and
WHEREAS, the Company considers the goodwill of the Business
acquired by the Company pursuant to the Purchase Agreement to be an
essential component of the business and operations of American, and
the Company and American desire the Company to continue to have and to
enjoy the full benefit of said goodwill;
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. CONFIDENTIALITY AND NON-DISCLOSURE OF INFORMATION. American
and each of the Shareholders hereby recognize, acknowledge and agree
that confidential information of any kind, nature or description
concerning any matters affecting or relating to the Business (as that
term is
1
<PAGE>
defined in the Purchase Agreement and the Exchange Agreement),
including but not limited to the names of customers, 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. American and each
of its Shareholders agrees that he (or it, in the case of American)
will not, without the prior written consent of the Company, directly
or indirectly, in any individual or representative capacity whatsoever
(a) utilize for the benefit of any person, business, enterprise or
entity other than Company or (b) 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. In
the event of any actual or threatened breach by American or any of the
Shareholders of the provisions of this Section 1, American and each of
the Shareholders agree that the Company shall not have an adequate
remedy at law, and the Company shall be entitled to an injunction
restraining American and/or any or all of the Shareholders from
breaching the provisions of this Agreement. Nothing herein stated
shall be construed as prohibiting the Company from pursuing any other
remedies available to the Company for such breach or threatened breach
including the recovery of damages from American or any of the
Shareholders.
2. COVENANT OF NON-COMPETITION. For a period of six (6) years
beginning with the effective date of this Agreement, (a) American and
each of the Shareholders 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 for any
other purpose whatsoever which is detrimental to the Company or its
business; and (b) American and Jeansonne will not, directly or
indirectly, within any parish or municipality in Louisiana or in any
other state or foreign jurisdiction in which the 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 Jeansonne or
a partnership including Jeansonne) 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 aviation
company, or (iii) owns, operates or controls any business which
competes with the Company. For a period of three (3) years beginning
with the effective date of this Agreement, Morris will not, directly
or indirectly, within any parish or municipality in Louisiana or in
any other state or foreign jurisdiction in which the 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
Morris or a partnership including Morris) 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 aviation
company, or (iii) owns, operates or controls any business which
competes with the
2
<PAGE>
Company. In the event of any actual or threatened breach by American
or any of the Shareholders of the provisions of this Agreement,
American and each of the Shareholders agree that the Company shall not
have an adequate remedy at law, and the Company shall be entitled to
an injunction restraining American and/or any or all of the
Shareholders 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 2 and/or the
solicitation of any business on his or its behalf or on behalf of
others from any customer. Nothing herein stated shall be construed as
prohibiting the Company from pursuing any other remedies available to
the Company for such breach or threatened breach including the
recovery of damages from American or any of the Shareholders.
3. REMEDIES AND EQUITABLE PROVISIONS. The following provisions
shall apply in respect of the covenants and agreements of American and
the Shareholders contained in this Agreement:
(a) American and each of the Shareholders acknowledge and agree
that the covenants and restrictions contained in this Agreement are
reasonable and necessary for the proper protection of the legitimate
interests of the Company.
(b) American and each of the Shareholders further acknowledge
and agree that any breach or threatened breach of any agreement
contained in Sections 1 and 2 above will cause such damage to the
Company as to be irreparable and which would be difficult to ascertain
and for which the Company does not have an adequate remedy at law, and
accordingly, American and each of the Shareholders agree that the
Company, in addition to any other remedy which may be available to it,
shall be entitled to enforce the covenants of American and the
Shareholders by injunction or other equitable means. 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 American or any of the
Shareholders.
(c) The parties agree that if Company should institute
litigation against American or any of the Shareholders 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.
4. REFORMATION/SAVINGS CLAUSE. The parties agree that if either
the length of time or the geographical area of the covenants of
American and the Shareholders 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.
3
<PAGE>
5. WAIVER OF BREACH. The waiver or nonenforcement by the
Company of a breach of any provision of this Agreement by American or
any of the Shareholders shall not operate or be construed as a waiver
of any subsequent breach by American or the Shareholders.
6. SEVERABILITY. Every provision of this Agreement is entitled
to be severable. The parties agree that if any term or provision of
the Agreement 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.
7. 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.
8. 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.
9. 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.
10. APPLICABLE LAW. The Company, American and each of the
Shareholders acknowledge and agree that under applicable conflicts of
laws rules, 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
Missouri shall govern the construction, interpretation, validity and
enforcement of each and every term of this Agreement. The parties to
this Agreement have chosen the law of the State of Missouri after
careful consideration and reflection upon the desirability of the
stability and certainty of result which will occur if the internal
laws of the State of Missouri are chosen in the manner described to
govern the construction, interpretation, enforcement, termination and
validity of the rights and duties of the parties under this Agreement.
11. 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.
12. 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, Omni has caused this Agreement to be executed
by its duly authorized manager, AA has caused this Agreement to be
executed by its sole member, American has caused this Agreement to be
executed by its duly authorized officer, and each of the Shareholders
has hereunto set his hand on the day and year first above written but
effective as of July 1, 1997.
OMNI GEOPHYSICAL, L.L.C.,
a Louisiana limited liability company
By:/s/ Roger E. Thomas
--------------------------------------
Roger E. Thomas, Manager
AMERICAN AVIATION L.L.C.,
a Missouri limited liability company
By: OMNI GEOPHYSICAL, L.L.C.,
a Louisiana limited liability company
By:/s/ Roger E. Thomas
--------------------------------------
Roger E. Thomas, Manager
AMERICAN AVIATION INCORPORATED
a Louisiana corporation
By:/s/ David Jeansonne
--------------------------------------
David Jeansonne, President
/s/ David Jeansonne
-----------------------------------------
David Jeansonne
/s/ Richard Patrick Morris
-----------------------------------------
Richard Patrick Morris
5
<PAGE>
EXHIBIT 10.11
OMNI GEOPHYSICAL, L.L.C.
AND
DAVID CRAYS
OPTION AGREEMENT
THIS OPTION AGREEMENT (the "Option Agreement"or the "Agreement")
is made and entered into on the 24th day of April, 1997 by and between
OMNI GEOPHYSICAL, L.L.C., a Louisiana limited liability company
("Omni"), and DAVID CRAYS ("Crays").
W I T N E S S E T H:
WHEREAS, Omni desires to employ Crays as a Vice President and its
Chief Financial Officer; and
WHEREAS, in order to attract and retain Crays as its Chief
Financial Officer, Omni is willing to grant Crays options to acquire
516 of its Common Units 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, Crays
and Omni hereby promise, covenant and agree as follows:
1. GRANT OF OPTION. Omni hereby irrevocably grants to Crays the
right and option (the "Option") to purchase 516 of its Common Units
(the "Common Units") on the terms and conditions herein set forth. As
of the date of this Agreement, there are 103,263 Common Units
outstanding.
2. OPTION PRICE. The purchase price for each Common Unit
subject to the Option shall be Two Hundred Forty-Two and 25/100
Dollars ($242.25) per Common Unit.
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 Units under the Option shall
vest and become effective as described in Section 5 of this Option
Agreement. Crays shall not have any rights of a member of Omni with
respect to the Common Units subject to this Option until the option is
exercised and the sale of the Common Units subject to the Option is
closed as provided herein. The Option and all of Crays' rights herein
are nontransferable. The Option and the right to acquire Common Units
pursuant to the Option shall be completely forfeited if Crays attempts
or actually transfers, or otherwise disposes of the Option in
contravention of Section 8 of this Option Agreement.
1
<PAGE>
4. METHOD OF EXERCISING OPTION. Subject to the terms and
conditions of this Agreement, the Option may be exercised by written
notice to Omni, at P.O. Box 3761, Lafayette, Louisiana 70502. Such
written notice shall state the election of Crays to exercise the
Option, shall set forth the number of Common Units he wishes to
purchase pursuant to the Option and shall be considered to be given by
Crays for purposes of this Option Agreement when such notice is
deposited in the United States mail, certified mail, return receipt
requested, with postage prepaid, to the address described above. Such
written notice shall fix a closing date which is not more than thirty
(30) days from the date such notice shall be given by Crays for the
payment of the full purchase price of any Common Units being acquired
pursuant to the exercise of the Option at a closing of the transaction
at Omni's principal offices at that time. Payment of such purchase
price shall be made by cashier's check or certified check payable to
the order of Omni or in immediately available funds. At the closing of
the transaction, Omni agrees to execute and, if deemed necessary by
Omni's counsel, to cause each of its members to execute, an amendment
to its Operating Agreement in order to effect the transfer of the
acquired Common Units to Crays.
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 the third (3rd) anniversary of the date
of this Agreement (the "Vesting Period") as described in this Section
5. Notwithstanding any other provision of this Agreement, unless Crays
should remain in the continuous employ of Omni during the Vesting
Period, then the Option shall be forfeited, and Crays' right to
acquire Common Units under the Option shall be null and void except to
the extent that such rights under the Option have vested as provided
in this Section 5.
(a) If Crays ceases to be employed within the first year of
the Vesting Period, none of his rights under the Option shall be
vested, and he shall have no right to acquire Common Units of Omni;
(b) If Crays ceases to be employed within the second year
of the Vesting Period (the period after the first anniversary but
prior to the second anniversary of this Option Agreement), one-third
of his rights under the Option shall be vested, and he shall have the
right to acquire 172 Common Units of Omni;
(c) If Crays ceases to be employed within the third year of
the Vesting Period (the period after the second anniversary but prior
to the third anniversary of this Option Agreement), two-thirds of his
rights under the Option shall be vested, and he shall have the right
to acquire an additional 172 Common Units of Omni, for a total of 344
Common Units of Omni;
(d) If Crays 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 172 Common Units
of Omni, for a total of 516 Common Units of Omni.
2
<PAGE>
(e) If Crays' employment is terminated during the Vesting
Period (i) by Omni without Cause or (ii) by Crays for Good Reason, as
the terms "Cause" and "Good Reason", as applicable, are defined in the
Employment Agreement dated of even date herewith between Omni and
Crays (the "Employment Agreement"), 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.
(f) If there is a change in control of Omni, as "Change in
Control of the Company" is defined in the Employment Agreement, 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.
6. RIGHTS RELATED TO OPTION. The Option constitutes the right
to acquire Common Units of Omni, as such Common Units are more fully
described in Omni's Operating Agreement, or any security, instrument,
property, or amount of consideration into which Common Units 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 Crays shall not be
entitled to vote with the members of Omni on matters on which the
members are entitled to vote as a result of the grant of the Option
until such time as the Option is exercised and Crays acquires Common
Units.
7. DUE AUTHORIZATION. The sale of Common Units of Omni pursuant
to the exercise of this Option Agreement has been duly authorized by
all necessary action of Omni. All members of Omni have consented to
the issuance of any Common Units pursuant to the exercise of the
Option, which consent shall be considered to be a consent for all
purposes of Section 7 of the Omni Operating Agreement.
8. RESTRICTION ON TRANSFERABILITY OF OPTION. The Option is not
assignable. Crays 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
Units under the Option.
9. RESTRICTION ON TRANSFERABILITY OF COMMON UNITS. Both during
and after the Vesting Period, the Common Units acquired as a result of
exercise of the Option shall be subject to all transfer, admission and
other restrictions and conditions contained in Omni's Operating
Agreement. Any certificate representing Common Units shall bear a
legend setting forth the restrictions on transfer contained in Omni's
Operating Agreement. Crays shall not transfer, convey, sell, assign,
dispose of, pledge or otherwise convey any Common Units acquired as a
result of exercise of the Option except as provided in Omni's
Operating Agreement. Any transferee of the Common Units shall agree to
be bound by the terms and conditions of Omni's Operating Agreement.
Any attempted disposition of the Common Units in contravention of this
section shall be null and void.
3
<PAGE>
10. RESTRICTION ON TRANSFERABILITY RELATED TO SECURITIES LAW.
Omni shall have the right to restrict any transfer of the Option or
the Common Units acquired as a result of exercise of the Option during
any such period as may be necessary or advisable to comply with the
Securities Exchange Act of 1934, as amended. Neither the Option nor
the Common Units acquired as a result of exercise of the Option have
been nor will be registered under the Securities Act of 1933, and
Crays shall not transfer, convey, sell, assign, dispose of, pledge or
otherwise convey the Option or any Common Units acquired as a result
of exercise of the Option unless (i) such Option or Common Units have
been registered under the Act or (ii) an exemption from the
registration provisions of the Act is applicable to Crays' proposed
sale, assignment, pledge, disposition or transfer of such Option or
Common Units.
11. 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.
12. HEADINGS. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation hereof.
13. APPLICABLE LAW. This Agreement shall be construed,
interpreted and enforced under and in accordance with the internal
laws of the State of Louisiana.
14. 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.
15. 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.
16. MULTIPLE COUNTERPARTS. This Agreement may be executed in
multiple counterparts and all counterparts shall be considered to be
an original and enforceable as such.
17. ENTIRE AGREEMENT. This Agreement embodies the entire
agreement between the parties and supersedes all prior agreements,
warranties, representations 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.
[Remainder of Page left blank intentionally]
4
<PAGE>
IN WITNESS WHEREOF, Omni and Crays have executed this Option
Agreement as of the day and year first above written.
OMNI GEOPHYSICAL, L.L.C.
By:/s/ Roger E. Thomas
--------------------------------------
Roger E. Thomas, President
/s/ David Crays
-----------------------------------------
David Crays
5
<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
September 25, 1997
<PAGE>
The schedules and exhibits to this agreement have been intentionally omitted in
accordance with the rules and regulations of the Commission. The Company will
provide such exhibits and schedules upon request of the Commission.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM JUNE 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> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,972
<SECURITIES> 0
<RECEIVABLES> 8,500
<ALLOWANCES> (125)
<INVENTORY> 1,608
<CURRENT-ASSETS> 12,524
<PP&E> 20,161
<DEPRECIATION> 1,517
<TOTAL-ASSETS> 31,866
<CURRENT-LIABILITIES> 7,227
<BONDS> 0
0
5,000
<COMMON> 1
<OTHER-SE> 3,730
<TOTAL-LIABILITY-AND-EQUITY> 31,866
<SALES> 17,035
<TOTAL-REVENUES> 17,035
<CGS> 12,305
<TOTAL-COSTS> 13,777
<OTHER-EXPENSES> 4
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 622
<INCOME-PRETAX> 2,631
<INCOME-TAX> 1,052
<INCOME-CONTINUING> 1,579
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,579
<EPS-PRIMARY> 0.13
<EPS-DILUTED> 0.13
</TABLE>
