SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
X Annual report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1997
__ Transition report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
COMMISSION FILE NUMBER 0-23383
OMNI ENERGY SERVICES CORP.
(Exact name of registrant as specified in its charter)
LOUISIANA 72-1395273
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
4500 N.E. EVANGELINE THRUWAY 70520
CARENCRO, LOUISIANA (Zip Code)
(Address of principal executive offices)
Registrant's telephone number, including area code: (318) 896-6664
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, $0.01 par value per share
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. <checked-box>
The aggregate market value of the voting stock held by non-affiliates of
the Registrant at March 20, 1998 was approximately $41,718,000.
The number of shares of the Registrant's common stock, $0.01 par value
per share, outstanding at March 20, 1998 was 15,726,282.
DOCUMENTS INCORPORATED BY REFERENCE
Portions of the Registrant's Proxy Statement for its 1998 annual meeting
of shareholders have been incorporated by reference into Part III of this Form
10-K.
<PAGE>
OMNI ENERGY SERVICES CORP.
ANNUAL REPORT ON FORM 10-K FOR
THE FISCAL YEAR ENDED DECEMBER 31, 1997
TABLE OF CONTENTS
PAGE
PART I......................................................................1
Items 1 and 2. Business and Properties................................ 1
Item 3. Legal Proceedings......................................10
Item 4. Submission of Matters To a Vote Of Security Holders....10
Item 4A. Executive Officers of The Registrant...................11
PART II.....................................................................12
Item 5. Market for Registrant's Common Stock and Related
Stockholder Matters....................................12
Item 6. Selected Financial Data................................15
Item 7. Management's Discussion and Analysis of Financial
Conditionand Results of Operations.....................17
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk............................................22
Item 8. Financial Statements and Supplementary Data............23
Item 9. Changes in and Disagreements With Accountants
on Accounting and Financial Disclosure.................40
Part III....................................................................40
Item 10. Directors and Executive Officers of the Registrant.....40
Item 11. Executive Compensation.................................40
Item 12. Security Ownership of Certain Beneficial Owners and
Management.............................................40
Item 13. Certain Relationships and Related Transactions.........40
Item. 14. Exhibits, Financial Statement Schedules and Reports on
Form 8-K...............................................40
SIGNATURES.................................................................S-1
EXHIBIT INDEX..............................................................E-1
<PAGE>
PART I
ITEMS 1 AND 2. BUSINESS AND PROPERTIES
GENERAL
OMNI Energy Services Corp. (the "Company") is an oilfield service company
specializing in providing an integrated range of onshore seismic drilling,
helicopter support and survey services to geophysical companies operating in
logistically difficult and environmentally sensitive terrain in the United
States. The Company's primary market is the marsh, swamp, shallow water and
contiguous dry land areas along the U.S. Gulf Coast (the "Transition Zone"),
primarily in Louisiana and Texas, where it is the leading provider of seismic
drilling services.
The Company owns and operates an extensive fleet of specialized seismic
drilling and transportation equipment for use in the Transition Zone, much of
which is fabricated by the Company. The Company believes that it is the only
company that currently can both provide an integrated range of seismic
drilling, helicopter support and survey services in all of the varied terrains
of the Transition Zone and simultaneously support operations for multiple,
large-scale seismic projects. In 1997 the Company expanded its seismic
drilling operations into the Rocky Mountain region, where it engages in seismic
rock drilling in hard rock terrain.
The Company. The Company was originally founded in 1987 by the Company's
Chairman and Chief Executive Officer, David A. Jeansonne, as OMNI Drilling
Corporation, to provide drilling services to the geophysical industry. In July
1996, OMNI Geophysical, L.L.C. ("OMNI Geophysical") acquired substantially all
of the assets (the "OGC Acquisition") of OMNI Geophysical Corporation ("OGC"),
the successor to the business of OMNI Drilling Corporation. OMNI Energy
Services Corp. was formed as a Louisiana corporation on September 11, 1997. On
December 10, 1997, the Company completed a share exchange (the "Share
Exchange"), pursuant to which the holders of common units in OMNI Geophysical
exchanged all of the outstanding common units of OMNI Geophysical for
12,000,000 shares of the Company's common stock, $0.01 par value per share (the
"Common Stock"). Subsequently, the Company completed an initial public
offering of 3,450,000 shares of Common Stock.
Recent Acquisitions. Since the beginning of 1997, the Company has
completed several acquisitions designed to expand the scope and size of its
operations. These acquisitions substantially increased the Company's survey
operations and marked its entry into the helicopter seismic support and seismic
rock drilling markets. The following table sets forth information with respect
to these acquisitions:
<TABLE>
<CAPTION>
Effective Date Seismic Support
Name of Acquired Company of Acquisiton Services
- ------------------------- ---------------- -------------------
<S> <C> <C>
Delta Surveys, Inc. March 21, 1997 Survey
American Aviation Incorporated July 1, 1997 Helicopter Support
Leonard J. Chauvin, Jr., Inc. July 1, 1997 Survey
O.T.H. Exploration Services, Inc. September 1, 1997 Seismic Rock Drilling
American Helicopter Drilling, Inc. October 1, 1997 Seismic Rock Drilling
Fournier & Associates, Inc. October 1, 1997 Survey
</TABLE>
Pending Acquisitions. In March 1998, the Company entered into non-
binding letters of intent to acquire three support companies: (i) Hamilton
Drill Tech, Inc., a Canadian-based seismic drilling company ("Hamilton Drill");
(ii) Coastal Airboats, Inc., a Louisiana-based airboat operator and (iii)
Coastal Turbine, Inc., a Louisiana-based, turbine engine repair company. These
acquisitions, which are subject to definitive agreements with the respective
sellers, are expected to close during the second quarter of 1998 at an
approximate aggregate cost of $3.2 million in cash and stock.
INDUSTRY OVERVIEW
Seismic data generally consists of computer-generated three-dimensional
("3-D") images or two dimensional ("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. Onshore 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.
Historically, 2-D surveys were the primary technique used to acquire seismic
data. However, advances in computer technology in the last five to ten years
have made 3-D seismic data, which provides a more comprehensive geophysical
image, a practical and capable oil and gas exploration and development tool.
3-D seismic data has proven to be more accurate and effective than 2-D data at
identifying potential hydrocarbon-bearing geological formations. The use of 3-
D seismic data to identify locations to drill both exploration and development
wells has improved the economics of finding and producing oil and gas reserves,
which in turn has created increased demand for 3-D seismic surveys and seismic
support services.
Oil and gas companies generally contract with independent geophysical
companies to acquire seismic data. Once an area is chosen for seismic
analysis, permits and landowner consents are obtained, either by the
geophysical company or special permitting agents, and the geophysical company
determines the layout of the source and receiving points. For 2-D data, the
typical configuration of source and receiving points is a straight line with a
source point and small groups of specialized sensors ("geophones") or geophone
stations, placed evenly every few hundred feet along the line. For 3-D data,
the configuration is generally a grid of perpendicular lines spaced a few
hundred to a few thousand feet apart, with geophone stations spaced evenly
every few hundred feet along one set of parallel lines, and source points
spaced evenly every few hundred feet along the perpendicular lines. This
configuration is designed by the geophysical company to provide the best
imaging of the targeted geological structures while taking into account surface
obstructions such as water wells, oil and gas wells, pipelines and areas where
landowner consents cannot be obtained. The source points and geophone
locations are then marked by a survey team, and the source points are drilled
and loaded with dynamite.
After the source points have been drilled and loaded and the network of
geophones and field recording boxes deployed over a portion of the project
area, the dynamite is detonated at a source point. Seismic waves generated by
the blast move through the geological formations under the project area and are
reflected by various subsurface strata back to the surface where they are
detected by geophones. The signals from the geophones are collected and
digitized by recording boxes and transmitted to a central recording system.
In the case of 2-D data, the geophones and recording devices from one end of
the line are then shuttled, or "rolled forward," to the other end of the line
and the process is repeated. In the case of 3-D data, numerous source points,
typically 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. Helicopters are frequently used to shuttle geophones and
recording devices between receiving points ("long-line helicopter support") 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
Transition Zone vehicles are typically 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. 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.
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 explosives which are delivered
to the jobsite in an explosive magazine carried by hand, vehicle or helicopter.
Helicopter Support Services. Through its aviation division, created upon
the acquisition of substantially all of the assets of American Aviation
Incorporated ("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 the next
receiving points in the survey area in an efficient manner and with minimal
environmental impact. 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 operates 14 helicopters, 13 of which are owned and one of
which is leased by the Company. The Company's pilots have an average of over
10,000 flight hours each. The Company performs all routine maintenance and
repairs on its Transition Zone-based aircraft at its facilities at the
Lafayette, Louisiana Airport.
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 has announced its intention to sell its airplanes and
related assets in an effort to focus on its helicopter seismic support
operations. The sale of these assets is expected to occur in March or April of
1998.
Survey Services. 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, as opposed to most other survey companies which must rent this
equipment.
The Company currently has 25 survey crews devoted primarily to the
seismic survey market in the Transition Zone. Most of the Company's survey
personnel have 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.
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 purchases airboats directly from the manufacturer
and then modifies the airboats to install the drilling equipment. The Company
has also designed and built a limited number of highland drilling units by
installing its drilling equipment on tractors bought directly from the
manufacturer. The Company also fabricates rock drilling equipment and has the
capability to fabricate other key equipment, such as swamp ATVs. 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.
FACILITIES AND EQUIPMENT
Facilities. The Company recently completed the construction of two new
buildings which now house its corporate headquarters, fabrication facility and
primary maintenance facility. The buildings are located on approximately 34
acres of land owned by the Company in Carencro, Louisiana. The new buildings
provide approximately 20,000 square feet of office space and 32,000 square feet
of covered maintenance and fabrication space. The Company also leases two
additional buildings adjacent to its main headquarters that provide
approximately 2,500 square feet of office space and 19,000 square feet of
covered maintenance, fabrication and warehouse space. The Company has an
option to purchase these buildings for $500,000 which expires in 2001. The
Company plans to use these adjacent buildings for the storage and maintenance
of its helicopter assets, which are currently stored and maintained at leased
facilities at the Lafayette, Louisiana Airport.
The Company leases an operations base in Victoria, Texas which is
used to store parts and equipment for use in Texas and bases in Big Piney,
Wyoming, and Loveland, Colorado to support its rock drilling operations. The
Company also leases an office for its survey operations in Thibodaux,
Louisiana.
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. 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:
Number of
units as of
Types of Equipment December 31, 1997
-------------------------- -----------------
Highland Drilling Units 38(1)
Water Buggies 17
Aluminum Marsh ATVs 12
Steel Marsh ATVs 8
Airboat Drilling Units 28
Swamp ATVs 25
Pullboats 20
Pontoon Boats 12
Skid-Mounted Drilling Units 35
- ------------------------
(1) Fourteen of these drilling units are currently dedicated to seismic rock
drilling operations outside of the Transition Zone.
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
38 highland drilling units for seismic drilling in dry land areas, fourteen of
which are currently dedicated to the Company's seismic rock drilling operations
outside of the Transition Zone. 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.
The Company intends to increase the number of highland drilling units
that it operates by 50 in 1998. Twelve of these drills will be obtained
through the acquisition of Hamilton Drill, if completed. The remaining drills
will be either purchased or manufactured. The Company anticipates that the new
drilling units will be subject to long-term, minimum guarantee contracts with
the Company's major clients. Most of the new drills are expected to be placed
into service during the second and third quarters of 1998. The acquisition of
Hamilton Drill, if completed, will also provide the Company with an entrance
into the seismic drilling market in Canada.
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.
Airboat Drilling Units. The Company owns and operates 28 airboat
drilling units. An airboat drilling unit consists of a drilling unit
fabricated and installed by the Company on a large, three-engine airboat.
Because of their better mobility, airboat drilling units are used in shallow
waters and all marsh areas where sufficient water is present.
Swamp ATVs and Pullboats. Wooded lowland areas typically covered with
water are referred to as the "swamp areas" of the Transition Zone. The
Company's swamp ATVs are used to provide drilling services in these areas.
Swamp ATVs are smaller, narrower versions of the marsh ATVs. The smaller unit
is needed in swamp areas due to the dense vegetation typical in the terrain.
Because of its smaller size, the swamp ATV uses a skid-mounted drilling unit
installed in a pullboat, a non-motorized craft towed behind the swamp ATV. The
Company owns and operates 25 swamp ATVs and 20 pullboats. Swamp ATVs are also
used in connection with survey operations in swamp areas.
Pontoon Boats. The Company owns and operates 12 pontoon boats that are
used in shallow or protected inland bays and lakes and shallow coastal waters.
Each pontoon boat uses a skid-mounted drilling unit installed on board.
Jack-Up Rigs. When a seismic survey requires source points to be drilled
in deeper inland bays or lakes or in deeper coastal waters, the Company
utilizes jack-up rigs equipped with one of the Company's skid-mounted drilling
units. Seismic activity in water deeper than approximately 20 feet is
generally conducted by using offshore seismic techniques that 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 facilities in Carencro, Louisiana and owns 35 of
these units.
Miscellaneous. The Company owns and operates 83 single engine airboats
and 25 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.
The Company has signed a letter of intent to acquire Coastal Airboats, Inc.,
which provides airboat and general transportation water craft to geophysical
companies and currently operates 17 boats. This acquisition is expected to
close during the second quarter of 1998.
Heli-portable and Seismic Rock Drilling Equipment. The Company has 50
heli-portable and man-portable drilling units and 14 highland drilling units
dedicated to seismic rock drilling. The Company also has the ability to
manufacture its own heli-portable and man-portable seismic rock drilling units,
and often exports and provides servicing of heli-portable and man-portable
drilling units. Approximately 20 of the 50 highland drilling units that the
Company expects to add during 1998 will be dedicated to drilling operations in
the northwest United States and Canada.
Aviation Equipment. The following table sets forth the type and number
of helicopters that are operated by the Company's aviation division:
Number of Aircraft
Helicopters as of December 31, 1997
---------------------------- -----------------------
Bell Jet Ranger 206 B-III(1) 7
Hughes MD-500 4
Bell 407(2) 1
Bell B-47 G3 1
Hughes MD-530 1
- ---------------------
(1) One of the Bell Jet Ranger 206 B-IIIs is leased by the Company.
(2) The Bell 407 is currently configured for heli-portable operations.
The Company's aviation division also operates four fixed-wing planes,
including a float plane. The Company has recently announced its intention to
sell its airplanes and related assets in an effort to focus on its helicopter
seismic support operations. The sale of these assets is expected to occur in
March or April of 1998.
The Company has signed a letter of intent to purchase Coastal Turbine,
Inc. ("Turbine"), a Louisiana-based turbine engine repair company. Turbine has
been approved as a Part 145 repair station by the Federal Aviation
Administration ("FAA"). The Company expects to close this acquisition during
the second quarter of 1998.
MATERIALS AND EQUIPMENT
The principal materials and equipment 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
The Company 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 include first
aid and CPR training. The Company's Vice President of Health, Safety,
Environment & Training reports directly to the Company's Chairman and
supervises 18 HSE field advisors and four instructors who provide OSHA-
mandated training. 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, depending on the project's requirements, an assistant
supervisor and 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) or 133 (external load) 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,
although in many cases the oil and gas company participates in determining
which drilling, survey or aviation company will be used on its 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 Western Geophysical), 70% (Eagle
Geophysical, Grant Geophysical, Universal Seismic and Western Geophysical), and
40% (Eagle Geophysical and Western Geophysical) of revenue for fiscal 1995, 1996
and 1997, respectively. In addition, as of December 31, 1997, 69% of the
Company's backlog was attributable to four customers (Western Geophysical, Eagle
Geophysical, Grant Geophysical and Fairfield Industries).
Marketing. The Company's services traditionally have been marketed by
the Company's principal executive officers, in particular, Messrs. Jeansonne,
Thomas, Woodard and Morris. The Company believes that this marketing approach
helps the Company 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 in the
Rocky Mountain region from Loveland, Colorado.
Contracting - Seismic Drilling. The Company generally contracts for
seismic drilling services with its customers on a fixed-price basis, either on
a per hole or per foot basis. These contracts are often awarded on a
competitive bid basis. The Company prices its contracts based on detailed
project specifications provided by the customer, including the number, location
and depth of source holes and the project's completion schedule. As a result,
the Company is generally able to make a relatively accurate determination prior
to pricing a contract of the type and amount of equipment required to complete
the contract on schedule.
Because of fixed-priced contracting, the Company generally bears the risk
of delays that are beyond its control, such as those caused by adverse weather.
The Company often bills the customer standby charges if the Company's
operations are delayed due to delays in permitting or surveying or for other
reasons within the geophysical company's control.
Contracting - Helicopter Support Services. The Company's aircraft are
chartered on an hourly rate basis, with a guaranteed minimum number of hours
per day. The Company primarily provides aviation services in connection with
projects for which the Company also provides seismic drilling services, and
also charters its aircraft to customers for use with other seismic projects.
Contracting - Survey Services. The Company contracts for seismic survey
services with its customers on a day rate or per mile basis. Under the per
mile basis, revenue is recognized when the source or receiving point is marked
by one of the Company's survey crews. 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. Management believes that no other company
operating in the Transition Zone owns a fleet of Transition Zone seismic
drilling equipment as varied 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. The Company believes
there are numerous competitors offering rock and heli-portable drilling in the
Rocky Mountain region and internationally.
Helicopter Support Services. The Company has numerous competitors that
provide helicopter support services to geophysical companies operating in the
Transition Zone; however, none of these competitors currently provides long-
line helicopter services with a comparable number of aircraft. In addition,
the Company believes that it is the only company offering both seismic drilling
and long-line support services in the Transition Zone. The Company believes
that there are numerous companies offering helicopter services in rock drilling
and other mountain areas, as well as internationally. All of these companies
have greater experience in these areas and several operate more aircraft than
the Company in these areas.
Survey Services. The Company's competitors include a number of
established companies with a comparable number of crews to the Company and
numerous smaller companies.
SEASONALITY AND WEATHER RISKS
The Company's operations are subject to seasonal variations in weather
conditions and daylight hours. Since the Company's activities take place
outdoors, the average number of hours worked per day, and therefore the number
of holes drilled or surveyed per day, generally is less in winter months than
in summer months, due to an increase in rainy, foggy and cold conditions and a
decrease in daylight hours. Furthermore, demand for seismic data acquisition
activity by oil and gas companies in the first quarter is generally lower than
at other times of the year. As a result, the Company's revenue and gross
profit during the first quarter of each year are typically low as compared to
the other quarters. Operations may also be affected by the rainy weather,
lightning, hurricanes and other storms prevalent along the Gulf Coast
throughout the year and by seasonal climatic conditions in the Rocky Mountain
area. In addition, prolonged periods of dry weather result in slower drill
rates in marsh and swamp areas as water in the quantities needed to drill is
more difficult to obtain and equipment movement is impeded. Adverse weather
conditions and dry weather can also increase maintenance costs for the
Company's equipment and decrease the number of vehicles available for
operations.
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 or delay
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 or delays, and terminations
and delays from its backlog have typically been replaced by unscheduled
projects.
As of December 31, 1997, the Company's backlog was approximately $70.0
million compared to $40.8 million at December 31, 1996. The Company expects
all of its backlog at December 31, 1997 will be completed during 1998. The
backlog at December 31, 1996 included seismic drilling projects in the
Transition Zone only. Backlog at December 31, 1997 includes seismic drilling
projects in the Transition Zone in addition to survey projects and seismic rock
drilling projects. The Company's aviation division historically has not
measured backlog due to the nature of its 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 its future operations and earnings may be affected by new
legislation, new regulations or changes in existing regulations.
Aviation. As a commercial operator of small aircraft, the Company is
subject to regulations pursuant to the Federal Aviation Administration
Authorization Act of 1994, as amended (the "Federal Aviation Act"), and other
statutes. The FAA regulates the flight operations of the Company, and in this
respect, exercises jurisdiction over personnel, aircraft, ground facilities and
other aspects of the Company's operations.
The Company carries persons and property in its aircraft pursuant to
authority granted by the FAA. Under the Federal Aviation Act it is unlawful to
operate certain aircraft for hire within the United States unless such aircraft
are registered with the FAA and the operator of such aircraft has been issued
an operating certificate by the FAA. The Company has all FAA certificates
required to conduct its helicopter and aviation operations, and all of its
aircraft are registered with the FAA.
As a general rule, aircraft may be registered under the Federal Aviation
Act only if the aircraft is owned or controlled by one or more citizens of the
United States and operated pursuant to an operating certificate, which 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 and bylaws include provisions that are designed to ensure
compliance with this requirement.
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 Bureau of Alcohol, Tobacco and Firearms of the
U.S. Department of Justice. 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 these licenses 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 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 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.
EMPLOYEES
As of December 31, 1997, the Company had approximately 602 employees,
including approximately 536 operating personnel and approximately 66 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.
ITEM 3. 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 its financial condition, results of operations or cash flows.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Prior to completion of the Company's initial public offering of Common
Stock, the Company's sole stockholder executed two written consents in
accordance with Section 76 of the Louisiana Business Corporation Law. The
first consent, dated September 25, 1997, approved an amendment and restatement
of the Company's Articles of Incorporation and the adoption of the Company's
stock incentive plan, a copy of which has been incorporated by reference as an
exhibit to this report. The second consent, dated November 4, 1997, approved a
further amendment and restatement of the Company's Articles of Incorporation, a
copy of which has been incorporated by reference as an exhibit to this report.
ITEM 4A. EXECUTIVE OFFICERS OF THE REGISTRANT
The name, age and offices held by each of the executive officers of the
Company as of March 1, 1998 are as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
David A. Jeansonne............ 37 Chairman of the Board and Chief Executive Officer
Roger E. Thomas............... 55 President
Allen R. Woodward............. 36 Vice President-Marketing & Business Development and
Secretary
David E. Crays................ 37 Vice President-Finance, Chief Financial Officer and
Treasurer
R. Patrick Morris............. 31 Vice President and General Manager of the Aviation
Division
</TABLE>
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.
Mr. Jeansonne and the Company have entered into an employment agreement, the
term of which expires in June 2003.
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. Mr. Thomas and the
Company have entered into an employment agreement, the term of which expires in
July 1999.
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. Mr. Woodard and the Company have entered
into an employment agreement, the term of which expires in July 1999.
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. Mr. Crays and the Company have entered into
an employment agreement, the term of which expires in April 1999.
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
substantially all of the assets 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. Mr. Morris and the Company have entered into an employment
agreement, the term of which expires in June 2000.
<PAGE>
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED STOCKHOLDER
MATTERS
(a) The Company's Common Stock is listed for quotation on the Nasdaq
National Market under the symbol "OMNI". At March 20, 1998, the Company had 36
shareholders of record of Common Stock. The following table sets forth the
range of high and low bid prices of the Company's Common Stock as reported by
the Nasdaq National Market for the periods indicated since trading in the
Common Stock began on December 5, 1997.
HIGH LOW
1997 ----- ---
Fourth quarter (commencing December 5, 1997) $ 12 1/4 $ 9 1/8
1998
First quarter (through March 27, 1998) $ 12 5/8 $ 8 7/8
The Company has never paid cash dividends on its Common Stock. The
Company intends to retain future earnings, if any, to meet its working capital
requirements and to finance the future operations and growth of its business.
Therefore, the Company does not plan to declare or pay cash dividends to
holders of its Common Stock in the foreseeable future. In addition, certain of
the Company's credit arrangements contain provisions that limit the Company's
ability to pay cash dividends on its Common Stock.
Sales of Unregistered Securities. In connection with its formation and
initial capitalization on September 11, 1997, the Company issued 1,000 shares
of Common Stock to Advantage Capital Management Corporation for $1,000 in cash.
These shares were cancelled in connection with the Share Exchange. Pursuant to
the Share Exchange, the Company issued the following number of shares to the
holders of common units OMNI Geophysical in exchange for their 113,476 common
units in OMNI Geophysical (number of common units exchanged in parentheses):
Shares of
Common
Name of Holder Stock
- -------------- ----------
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
Also in connection with the Share Exchange, the Company issued options to
purchase its Common Stock to persons holding options to acquire common units of
OMNI Geophysical, which were cancelled upon completion of the Share Exchange.
David E. Crays received options to acquire 54,567 shares of Common Stock at
$2.28 per share in exchange for options to purchase 516 common units of OMNI
Geophysical at $242.25 per unit that were issued to Mr. Crays in April 1997
upon his hiring 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, William E. Fincher, 250; J. David Booth, 250; and Rita
Darbonne, 100. These options also had exercise prices of $242.25 per common
unit and, pursuant to the Share Exchange, were converted into options to
purchase, 26,438, 26,438 and 10,575 shares of Common Stock, respectively,
having an exercise price of $2.28 per share.
In connection with the acquisition of O.T.H. Exploration Services, Inc.,
completed on September 1, 1997, the Company granted options to purchase 55,000
shares of Common Stock to one of the sellers. These options were issued under
the Company's stock incentive plan and have an exercise price of $11.00 per
share. In addition, on September 30, 1997, the Company issued options to
Hibernia National Bank ("Hibernia") to purchase 4,545 shares of Common Stock at
an exercise price of $11.00 per share. These options expire in December 1999
and have an exercise price of $11.00 per share.
As part of the consideration paid in connection with the Company's
mergers with American Helicopter Drilling, Inc. ("American Helicopter") and
Fournier & Associates, Inc. ("Fournier"), both of which were completed on
December 17, 1997 (with effective dates of October 1, 1997), the Company issued
the following number of shares of Common Stock to the individuals listed below:
NAME NUMBER OF SHARES
- ----- ----------------
David Ward 102,273
Linda Ward 102,272
Keith J. Fournier 33,923
David and Linda Ward (Joint Ownership) 22,727
Sandra B. Miller 6,816
Roger D. Hebert 6,362
Don C. Ross 1,909
All of these securities were offered and sold without registration under
the Securities Act of 1933, as amended (the "Securities Act"), inasmuch as they
were deemed not subject to registration pursuant to the exception provided in
Section 4(2) of the Securities Act as securities sold in transactions not
involving any public offering.
(b) On December 10, 1997, the Company completed the initial public
offering of its Common Stock (the "Initial Public Offering"). The Initial
Public Offering was conducted pursuant to a Registration Statement on Form S-1
(Registration Statement No. 333-36561, the "Registration Statement") filed
pursuant to the Securities Act and declared effective on December 4, 1997.
The Registration Statement covered shares of Common Stock with a maximum
aggregate offering price of $68,425,000. The Company issued and sold 3,450,000
shares of Common Stock pursuant to the Registration Statement at an initial
price to public of $11.00 per share. The aggregate offering price of the
Common Stock offered by the Company was $37,950,000. Managing underwriters for
the Initial Public Offering were Lehman Brothers Inc., Prudential Securities
Incorporated and Raymond James & Associates, Inc. There will be no further
sales pursuant to this Registration Statement.
Set forth below are the expenses incurred by the Company prior to
December 31, 1997 with respect to the Initial Public Offering, including
underwriting discounts and commissions:
Underwriting Discounts and Commissions $ 2,656,500
Filing/listing fees 78,078
Printing Expenses 147,154
Legal and Accounting fees 482,008
Expenses of Roadshow 193,442
Miscellaneous expenses 117,395
-----------
Total $ 3,674,577
===========
None of the expenses were paid directly or indirectly to directors or
officers of the Company or their associates, to persons owning 10% or more of
the outstanding equity securities of the Company or to any other affiliates of
the Company.
Use of Proceeds. Net proceeds of the Initial Public Offering, after
deducting the foregoing, were $34,275,423. On December 17, 1997, the Company
completed its acquisition of American Helicopter and Fournier, using $1,261,000
of the net proceeds from the Initial Public Offering. Both of these
acquisitions had an effective date of October 1, 1997. The Company also used
approximately $23.8 million of the net proceeds of the Initial Public Offering
to repay outstanding indebtedness. The Company repaid all of the following
credit facilities:
NAME OF LENDER AMOUNT REPAID
- -------------- --------------
U.S. Bancorp Leasing and Financial(1) $ 4,736,995
First National Bank of Lafayette(2) 508,051
Transamerica Insurance Finance Corporation(3) 684,749
Hibernia National Bank(4) 14,992,146
OGC(5) 1,833,355
American Aviation(6) 1,000,000
------------
$ 23,755,296
============
- -------------------------
(1) Borrowings under this facility were used to finance various seismic
drilling and support equipment.
(2) Borrowings under this loan were used to consolidate debt incurred for the
purchase of 43 trucks.
(3) Borrowings used to fund Company insurance policies.
(4) Consists of repayments under several facilities. The Company repaid
approximately $6.4 million of indebtedness incurred to fund the
acquisition of American Aviation, approximately $700,000 in vehicle loans,
approximately $5.8 million to repay outstanding amounts under its
revolving credit facility, approximately $2.0 million borrowed to fund the
construction of the Company's new headquarters and approximately $45,000
of indebtedness of Leonard J. Chauvin, Jr., Inc. that existed at the time
of its acquisition by the Company. The proceeds of the loan from Hibernia
used to fund the acquisition of American Aviation were paid to American
Aviation, a company owned by David A. Jeansonne and Richard Patrick
Morris, two of the Company's executive officers.
(5) Note payable to OGC issued as part of the consideration for the OGC
Acquisition. OGC is controlled by Mr. Jeansonne.
(6) Note payable to American Aviation issued as part of the consideration for
the acquisition of American Aviation. American Aviation is owned by
Messrs. Jeansonne and Morris.
The Company used approximately $5.7 million of the remaining net proceeds
to fund capital expenditures made during December 1997 and January 1998.
Items acquired by the Company included various seismic drilling units and
support vehicles and five helicopters. The remainder of the net proceeds of
the Initial Public Offering (approximately $3.6) million were used for working
capital and general corporate purposes.
In the prospectus that formed a part of the Registration Statement the
Company disclosed its intention to use the net proceeds of the Initial Public
Offering to fund the cash portion of the American Helicopter and Fournier
acquisitions, to repay the indebtedness listed above and to repay a portion of
the amounts outstanding under its asset-based financing arrangements with CIT
Group/Equipment Financing, Inc. (the "CIT Loan"). The net proceeds of the
Initial Public Offering were used to fund the acquisitions of American
Helicopter and Fournier and the repayment of the indebtedness listed above but
were not applied to the CIT Loan. Because of capital expenditures resulting
from business opportunities arising after the completion of the Initial Public
Offering, the Company's management did not believe it was prudent to incur the
prepayment penalties associated with repayment of the CIT Loan in light of the
Company's continued need for cash to fund these capital expenditures and
related working capital needs. Thus, the remaining portion of the net proceeds
was used as set forth above.
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA
The selected financial data as of December 31, 1993 and for the year
ended December 31, 1993 is 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 as of and for the years ended
December 31, 1994 and 1995 and as of and for 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 1997, and for the 165-day period
ended December 31, 1996 and the year ended December 31, 1997 are derived from
the audited financial statements of the Company. 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 that period. 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 Annual Report.
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
-------------------------------------------------------- --------------------------------
201-day
period 165-day
ended period ended Year ended
July 19, December 31, December 31,
1993 1994 1995 1996 1996 1997
------------ ----------- ----------- ------------- ---------------- --------------
(In thousands, except share and per share data)
(Unaudited)
<S> <C> <C> <C> <C> <C> <C>
Income Statement Data:
Operating revenue............. $ 3,972 $ 7,268 $ 12,690 $ 10,017 $ 10,942 $ 49,591
Operating expense(1).......... 2,544 5,025 8,704 6,814 8,114 36,302
------------ ----------- ----------- ------------- ---------------- --------------
Gross profit.................. 1,428 2,243 3,986 3,203 2,828 13,289
General and
administrative
expenses..................... 756 1,079 1,791 789 1,050 5,122
------------ ----------- ----------- ------------- ---------------- --------------
Operating income.............. 672 1,164 2,195 2,414 1,778 8,167
Interest expense(1)........... 56 97 148 151 437 1,866
Other expense
(income), net................ --- (8) 7 6 (20) (37)
------------ ----------- ----------- ------------- ---------------- --------------
Income before income taxes
and extraordinary
item......................... 616 1,075 2,040 2,269 1,361 6,338
Income tax expense............ --- --- --- --- --- 403
------------ ----------- ----------- ------------- ---------------- --------------
Income before
extraordinary item........... 616 1,075 2,040 2,269 1,361 5,935
Extraordinary expense
from early
extinguishment of
debt net of tax............ --- --- --- --- --- 84
------------ ----------- ----------- ------------- ---------------- --------------
Net income.................... $ 616 $ 1,075 $ 2,040 $ 2,269 $ 1,361 $ 5,851
============ =========== =========== ============= ================ ==============
Unaudited Pro Forma Data:
Income before income taxes
and extraordinary
item, reported
above........................ $ 616 $ 1,075 $ 2,040 $ 2,269 $ 1,361 $ 6,338
Pro forma interest
expense(2) 345
Pro forma provision
for income
taxes(3)..................... 246 430 816 908 475 2,400
------------ ----------- ----------- ------------- ---------------- --------------
Pro forma net income.......... $ 370 $ 645 $ 1,224 $ 1,361 $ 886 $ 3,593
============ =========== =========== ============= ================ ==============
Pro forma net income
per common share............. $ 0.30
==============
Pro forma weighted
average common
shares...................... 11,810,016
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
-------------------------------------------------------------------------------------
1993 1994 1995 1996(4) 1997
--------------- -------------- ------------- ------------- -------------
(In thousands)
(Unaudited)
<S> <C> <C> <C> <C> <C>
Balance Sheet Data:
Total assets.............. $ 2,134 $ 4,044 $ 5,429 $ 20,386 $ 74,913
Long-term debt, less current
maturities................ 510 434 341 10,574 14,558
</TABLE>
<PAGE>
(1) The step-up to fair value of the assets acquired in the OGC Acquisition
resulted in increased depreciation reported by the Company, which is
included in operating expenses. In order to finance the OGC Acquisition,
the Company incurred additional indebtedness, which resulted in additional
interest expenses being reported.
(2) Reflects an increase in interest expense as a result of the incurrence of
indebtedness to finance the LLC Distribution (as defined herein) as if
such event had occurred on January 1, 1997.
(3) Each of OGC, OMNI Geophysical and American Aviation was an S corporation
or a limited liability company exempt from income tax at the entity level,
and thus the historical financial statements prior to December 4, 1997
show no provision for income taxes. Effective December 4, 1997, the
Company became subject to 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%.
(4) Includes the stepped-up fair value of the assets and liabilities purchased
in the OGC Acquisition.
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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.
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. If anticipated increases in seismic activity are realized,
management would also expect these expenses to continue to increase as a direct
correlation.
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 December
31, 1997, the Company's backlog was $70.0 million, compared to $40.8 million at
December 31, 1996. Projects currently included in the Company's backlog are
subject to rescheduling or termination without penalty at the option of the
customer, which could substantially reduce the amount of backlog currently
reported and the revenue generated from the backlog. Historically, the Company
has not experienced a large volume of project delays or terminations, and those
projects that have been delayed or terminated have typically been replaced by
unscheduled projects. Nevertheless, delay or termination of a number of large
projects in the Company's existing backlog could have a material adverse effect
on the Company's revenue, net income and cash flow.
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.
RESULTS OF OPERATIONS
The following discussion provides information related to the results of
operations of the Company and OMNI Geophysical. OMNI Geophysical acquired
substantially all of the assets and liabilities of OGC in the OGC Acquisition
on July 19, 1996. In order to provide comparable historical periods for 1996,
management has combined the results of operations of OGC for the 201-day period
ended July 19, 1996 with the results of operations of OMNI Geophysical for the
165-day period ended December 31, 1996 (see tables in the following section).
The OGC Acquisition was accounted for as a purchase with the assets acquired
and liabilities assumed recorded at their estimated fair value. As a result of
borrowings incurred to finance the OGC Acquisition and the write up of the
fixed assets purchased from OGC to their fair value at the time of the OGC
Acquisition, the Company has experienced higher interest, depreciation and
amortization expense since July 19, 1996.
Year Ended December 31, 1997 Compared to the Combined Year Ended December
31, 1996 (OGC 201-day Period Ended July 19, 1996 and OMNI Geophysical 165-day
Period Ended December 31, 1996) (In Thousands of Dollars):
<TABLE>
<CAPTION>
Combined
Year Ended Year Ended
December 31, 1996 December 31, 1997
----------------- -----------------
(unaudited)
<S> <C> <C>
Operating revenue ................................. $20,959 $49,591
Operating expense ................................. 14,928 36,302
----------------- -----------------
Gross profit....................................... 6,031 13,289
General and administrative expenses................ 1,839 5,122
----------------- -----------------
Operating income................................... 4,192 8,167
Interest expense................................... 588 1,866
Other income....................................... 26 37
----------------- -----------------
Income before income taxes and
extraordinary item.............................. 3,630 6,338
Income tax expense................................. - 403
----------------- -----------------
Income before extraordinary item................... 3,630 5,935
Extraordinary expense from early
extinguishment of debt, net of tax.............. - 84
----------------- -----------------
Net income......................................... $ 3,630 $ 5,851
================= =================
</TABLE>
Operating revenues increased 136%, from $21.0 million for the year ended
December 31, 1996 to $49.6 million for the year ended December 31, 1997.
Internal growth resulting from the increase in industry demand for 3-D seismic
data in the Transition Zone accounted for approximately $17.0 million, or 59%,
of this increase. In order to meet this demand, the Company added 49 seismic
drilling units for use in the Transition Zone during 1997, a 79% increase from
the number of such units owned by the Company at the end of 1996. The
remaining increase was due to the increase in the Company's operations that
resulted from the six acquisitions completed during 1997. These six
acquisitions broadened the Company's operations to include helicopter support
operations and survey services. In addition, the Company added the Rocky
Mountain region as a primary service area. The Company's aviation division
contributed approximately $4.4 million in revenues, while the Company's survey
and Rocky Mountain seismic drilling divisions generated revenues of $4.0
million and $3.1 million, respectively in 1997. The Company employed 308
employees for both field and administrative operations at December 31, 1996
compared to 602 at December 31, 1997, a 95% increase.
Operating expenses increased 144%, from $14.9 million in 1996 to $36.3
million in 1997, due to both internal growth of the Company's operations from
1996 to 1997 and the expanded scope of the Company's operations that resulted
from the acquisitions described above. Total payroll expense increased 135% in
1997, to $15.5 million from $6.6 million in 1996, due to the significant
increase in the size of the Company's workforce. Repairs and maintenance costs
were $4.7 million in 1997, a 135% increase over 1996 repairs and maintenance
costs of $2.0 million, primarily due to the increase in the number and
utilization of the Company's seismic drilling and transportation equipment.
Explosives costs increased 185% in 1997, to $3.7 million from $1.3 million in
1996, due to an increase in the number of projects for which the Company
provided explosives. Depreciation expense increased $1.3 million, or 130%,
from $1.0 million in 1996 to $2.3 million in 1997 due to the increased number
of seismic drilling and support equipment units owned by the Company, the
stepped-up basis in such units that resulted from the OGC Acquisition and the
addition of the aircraft acquired from American Aviation. Contract services
increased 180%, or $0.9 million, from $0.5 million in 1996 to $1.4 million in
1997, primarily due to the survey division's need for additional surveyors.
Increased operations resulting from increased demand for the Company's services
and the acquisitions led to an increase of $0.5 million, or 50%, in supplies
expense from $1.0 million in 1996 to $1.5 million in 1997. Rental and lease
expense also increased in 1997 to $1.6 million from $0.6 million in 1996. The
remaining increase in operating expenses was primarily related to the increase
in the size and scope of the Company's operations, including a $0.7 million, or
140%, increase in insurance expense and a $0.8 million, or 100%, increase in
fuel expense.
Gross profit increased $7.3 million, or 122%, from $6.0 million in 1996
to $13.3 million in 1997. Gross margins fell from 29% in 1996 to 27% in 1997.
This decline in the Company's margin was primarily due to the rapid expansion
of the Company's operations and the addition of new field crews.
General and administrative expenses increased 183%, or $3.3 million, from
$1.8 million in 1996 to $5.1 million in 1997, primarily due to increases in
office personnel to support the Company's expanded operations, payroll taxes
and insurance expense. These three items increased 145%, from $1.1 million in
1996 to $2.7 million in 1997. Additionally, other components of general and
administrative expenses, such as utilities, advertising, office, travel and
entertainment, rent and permits, increased 260%, from $0.5 million in 1996 to
$1.8 million in 1997. This increase was primarily due to the expansion of the
Company's facilities and operations. Professional services and bad debt
expense increased 100% from $0.2 million in 1996 to $0.4 million in 1997 due to
the increase in the Company's operations. Amortization of loan costs and
goodwill expense increased to $0.3 million in 1997 as a result of the
acquisitions completed in 1997. General and administrative expenses as a
percentage of revenue were 10% and 9% in 1997 and 1996, respectively.
Interest expense increased $1.3 million, or 217%, from $0.6 million in
1996 to $1.9 million in 1997, due to increased borrowings used to fund the six
acquisitions completed during 1997 and the acquisition of additional drilling
units, support equipment and helicopters.
Income tax expense was $0.4 million in 1997. On December 4, 1997, the
Company converted from a non-taxable entity to a taxable entity and thus became
subject to federal and state income taxation. Prior to this conversion, the
Company had been treated as a partnership for income tax purposes and,
accordingly, no provision for income taxes had been made. Income tax expense
for 1997 is not indicative of future income tax expense as the Company was
subject to income taxation for less than one month.
Combined Year Ended December 31, 1996 (OGC 201-day Period Ended July 19,
1996 and OMNI Geophysical 165-day Period Ended December 31, 1996) Compared to
Year Ended December 31, 1995 (In Thousands of Dollars):
<TABLE>
<CAPTION>
Combined
Year Ended Year Ended
December 31, 1995 December 31, 1996
----------------- -----------------
(unaudited)
<S> <C> <C>
Operating revenue ..................................... $12,690 $20,959
Operating expense ..................................... 8,704 14,928
----------------- -----------------
Gross profit........................................... 3,986 6,031
General and administrative expenses.................... 1,791 1,839
----------------- -----------------
Operating income....................................... 2,195 4,192
Interest expense....................................... 148 588
Other income (expense)................................. (7) 26
----------------- -----------------
Net income............................................. $ 2,040 $ 3,630
================= =================
</TABLE>
Operating revenues increased 65%, from $12.7 million in 1995 to $21.0
million in 1996, primarily due to an increase in industry demand for 3-D
seismic data in the Transition Zone and to the Company's increased capacity as
measured by drilling units, support equipment and employees. The Company had
approximately 40 drilling units and 32 support equipment units at December 31,
1995, compared to 57 drilling units and 72 support equipment units at December
31, 1996. The Company employed 172 employees for both field and administrative
operations at December 31, 1995, compared to 308 at December 31, 1996, a 79%
increase.
Operating expenses increased 71%, from $8.7 million in 1995 to $14.9
million in 1996, due to the increase in the volume of the Company's operations
from 1995 to 1996. Repair and maintenance costs increased 25%, from $1.6
million in 1995 to $2.0 million in 1996, primarily due to the increase in the
utilization and number of the Company's seismic drilling and transportation
equipment. Total operating labor costs increased 57%, from $4.2 million in
1995 to $6.6 million in 1996, due to the large increase in the number of
employees required to meet the increased demand for the Company's services.
Explosives costs increased 550%, from $0.2 million in 1995 to $1.3 million in
1996, primarily due to an increase in the number of projects for which the
Company provided explosives and a 6% increase in the price of explosives. Fuel
costs increased 60%, from $0.5 million in 1995 to $0.8 million in 1996, due to
the increased number and usage of the company's drilling and support units.
Contract drilling services costs increased 67%, from $0.3 million in 1995 to
$0.5 million in 1996, as the Company occasionally had to subcontract for
equipment and services, including drilling units and personnel, to meet the
increased demand. Equipment rentals increased 200%, from $0.2 million in 1995
to $0.6 million in 1996.
Gross profit increased 50%, from $4.0 million in 1995 to $6.0 million in
1996; however, gross profit margins fell from 31% in 1995 to 29% in 1996,
primarily due to the increase in the number of projects for which the Company
provided explosives, as the Company receives lower margins on explosives than
it does from its other operations.
General and administrative expenses remained constant at $1.8 million in
both 1995 and 1996. Included in general and administrative expenses for 1995
are $1.2 million of executive bonuses. The Company paid no corresponding
bonuses in 1996. Excluding executive bonuses, general and administrative
expenses as a percentage of operating revenues were 5% and 9% in 1995 and 1996,
respectively. The increase in general and administrative expenses as a
percentage of revenue was primarily due to an increase in office personnel,
insurance costs and bad debt expense. Insurance costs increased 100%, from
$0.2 million in 1995 to $0.4 million in 1996, due to expanded coverage and
increased limits of liability on existing policies. Office personnel costs
increased 300%, from $0.2 million in 1995 to $0.8 million in 1996, due to the
additional personnel needed to manage the increase in the Company's operations.
There was $0.1 million of bad debt expense in 1996 and none in 1995.
Interest expense increased 500%, from $0.1 million in 1995 to $0.6
million in 1996 due to the additional financing costs associated with the OGC
Acquisition and the increase in borrowings used to fund purchases and
construction of new drilling units and support equipment. The increased
interest expense in 1996 was partially offset by a decrease in the interest
rates charged on current and long-term debt. At December 31, 1995, the
interest rates on debt ranged from 8.25% to 11%. At December 31, 1996,
interest rates on the Company's revolving line of credit, the debt used for the
OGC Acquisition and the subordinated debt issued in connection with OGC
Acquisition were 9.25%, 9.37% and 8.5%, respectively.
LIQUIDITY AND CAPITAL RESOURCES
At December 31, 1997, the Company had approximately $8.7 million in cash
compared to approximately $39,000 at December 31, 1996. The Company had
working capital of approximately $11.5 million at December 31, 1997 compared to
approximately $1.6 million at December 31, 1996. The increase in working
capital was primarily due to increased cash and accounts receivable generated
from operations and the cash received from the Initial Public Offering. Cash
generated from operations was $4.9 million for the year ended December 31, 1997
compared to $0.6 million for the 165-day period ended December 31, 1996 and
$1.5 million for the 201-day period ended July 19, 1996.
On December 10, 1997, the Company completed the Initial Public Offering,
pursuant to which it issued 3,450,000 shares of Common Stock. The Company
received net proceeds, after deducting expenses of the Initial Public Offering,
including underwriting discounts and commissions, of approximately $34.3
million. The Company used approximately $1.3 million of the net proceeds to
fund the cash portions of the respective purchase prices for its acquisitions
of American Helicopter and Fournier, both of which were completed in December
1997. The Company used approximately $23.8 million of the remaining net
proceeds to repay outstanding indebtedness and approximately $5.7 million to
fund capital expenditures during December 1997 and January 1998. The remaining
net proceeds, approximately $3.6 million, were used for working capital and
general corporate purposes.
On September 30, 1997, the Company entered into a $10.0 million term loan
(the "Distribution Loan") with Hibernia to fund the repurchase of outstanding
preferred units of OMNI Geophysical and the initial portion of a distribution
to the members of OMNI Geophysical. Prior to December 31, 1997, the Company
borrowed an additional $1.0 million under the Distribution Loan to fund the
remaining portion of the distribution. This distribution (the "LLC
Distribution") represented all of the undistributed earnings of OMNI
Geophysical, on which the members had previously incurred income tax liability.
On January 20, 1998, the Company restructured its credit arrangements with
Hibernia. Under the restructured facility (the "New Facility"), the Company
refinanced the $11.0 million Distribution Loan, obtained a $10.0 million
revolving line of credit to finance working capital requirements, and obtained
a $9.0 million line of credit to finance capital expenditures and acquisitions.
The loans under the New Facility bear interest at LIBOR plus an applicable
margin (currently 1.5%) which is calculated quarterly and is based on the
Company's ratio of average funded debt to earnings before interest, taxes and
depreciation and amortization. The applicable margin can range from
1.25% to 2.25%. The New Facility has a final maturity of January 20, 2000, is
required to be guaranteed by all of the Company's subsidiaries, requires the
Company to maintain certain financial ratios, imposes certain limitations in
the Company's ability to pay cash dividends and is collateralized by a mortgage
on the Company's land and buildings and by substantially all of the Company's
assets not used as collateral for the CIT Loan. As of February 28, 1998, the
Company had approximately $10.9 million outstanding under the New Facility.
In addition to outstanding indebtedness under the New Facility, as of
February 28, 1998, the Company also had approximately $7.6 million in
outstanding indebtedness. The majority of this debt (approximately $6.5
million) is owed pursuant to the CIT Loan, which consists of several asset-
based financing loans. Of the principal outstanding under the CIT Loan,
approximately $4.9 million bears interest at LIBOR plus 3.75% (the "Variable
Rate") and matures on July 19, 2001. Prior to August 19, 1998, the Company may
elect to pay interest on this portion of the loan at a fixed rate equal to the
interest rate on U.S. Treasury securities of a comparable maturity to the loan
at the time of election plus 4.25% (the "Fixed Rate"). The proceeds of this
portion of the loan were used to finance a portion of the OGC Acquisition, and
the assets acquired serve as collateral for the loan. The remaining portion of
this loan was borrowed pursuant to an additional commitment from the lender of
up to $4,000,000 or 90% of the cost of the collateral securing amounts advanced
under this commitment. As of February 28, 1998, $1.8 million of this
commitment had been advanced. Amounts advanced under this commitment bear
interest at LIBOR plus 3.0% and are collateralized by various seismic drilling,
support equipment and aircraft.
Remaining indebtedness includes, as of February 28, 1998, (i) $120,000
owed to Delta Surveys, Inc. (8.5% interest rate; March 31, 2000 maturity date),
(ii) $111,000 incurred in connection with the formation of OMNI Geophysical
(March 1, 2001 maturity date), (iii) approximately $875,000 owed to finance
companies incurred to finance certain of the Company's insurance premiums and
(iv) approximately $12,000 in other miscellaneous indebtedness.
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 acquisitions. The Company made capital
expenditures of approximately $14.5 million to purchase or construct new assets
between July 19, 1996 and December 31, 1996, and made approximately $36.0
million of capital expenditures during the year ended December 31, 1997,
including $14.6 million in cash and stock for the acquisition of substantially
all of the assets of American Aviation, $0.9 million in cash for the
acquisition of Leonard J. Chauvin, Jr., Inc., $0.6 million in cash for the
acquisition of substantially all of the assets of OTH, $0.3 million in cash and
notes for the acquisition of Delta Surveys, Inc., $0.8 million in cash and
stock for the acquisition of Fournier, $3.5 million in cash and stock for the
acquisition of American Helicopter, $11.6 million for new equipment and support
vehicles and $3.7 for the expansion of its headquarters.
The Company currently expects to make capital expenditures of
approximately $15.1 million in 1998, including $6.0 million for additional
helicopters, $6.9 for additional seismic drilling equipment, $1.2 million for
support vehicles, $0.3 million for survey equipment and $0.7 million for
additional computers and leasehold improvements. As of February 28, 1998, the
Company is committed to $8.7 million of the estimated capital expenditures for
1998. The Company has also entered into non-binding letters of intent to
acquire three support companies. These acquisitions, which are subject to
definitive agreements with the respective sellers, are expected to close during
the second quarter of 1998 at an approximate aggregate cost of $3.2 million in
cash and stock.
Management believes that cash generated by operations and the Company's
New Facility will be sufficient to meet the company's anticipated capital
expenditures for 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, the Company may
require additional debt financing, possibly in excess of the limits of the New
Facility, or equity financing.
The Company has evaluated its computer systems for year 2000 compliance
and believes its current plans for system upgrades are adequate to address year
2000 issues internally at no significant cost.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In February 1997, the Financial Accounting Standards Board ("FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
Per Share," which simplifies the standards required under current accounting
rules for computing earnings per share and replaces the presentation of primary
earnings per share and fully diluted earnings per share with a presentation of
basic earnings per share ("basic EPS") and diluted earnings per share ("diluted
EPS"). Basic EPS excludes dilution and is determined by dividing income
available to common stockholders by the weighted average number of shares of
common stock outstanding during the period. Diluted EPS reflects the potential
dilution that could occur if securities and other contracts to issue shares of
common stock were exercised or converted into common stock. Diluted EPS is
computed similarly to fully diluted earnings per share under current accounting
rules. The adoption of SFAS 128 in the fourth quarter of 1997 did not have a
material effect on the Company's earnings per share as determined under prior
accounting rules.
In June 1997 the FASB issued SFAS No. 131 "Disclosures About Segments of
an Enterprise and Related Information," which requires that a public business
enterprise report financial and descriptive information about its reportable
operating segments. SFAS 131 is effective for any fiscal year beginning after
December 15, 1997. The Company will adopt the new standard in 1998.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
<PAGE>
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Index to Consolidated Financial Statements PAGE
Report of Independent Public Accountants................................... 24
Consolidated Balance Sheets as of December 31, 1996 and 1997............... 25
Consolidated Statements of Income for the Year Ended December 31, 1995,
the 201-day Period Ended July 19, 1996, the 165-day Period Ended
December 31, 1996, and the Year Ended December 31, 1997.............. 27
Consolidated Statements of Changes in Equity for the Year Ended
December 31, 1995, the 201-day Period Ended July 19, 1996, the
165-day Period Ended December 31, 1996, and for the Year Ended
December 31, 1997.................................................... 28
Consolidated Statements of Cash Flows for the Year Ended December 31,
1995, the 201-day Period Ended July 19, 1996, the 165-day Period
Ended December 31, 1996, and for the Year Ended December 31, 1997.... 29
Notes to Financial Statements.............................................. 31
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders and Board of Directors of OMNI Energy Services Corp.:
We have audited the accompanying consolidated balance sheets of OMNI Energy
Services Corp. and subsidiaries (a Louisiana corporation, the "Company"),
formerly OMNI Geophysical, L.L.C. and successor to OMNI Geophysical Corporation
("Predecessor") as of December 31, 1997 and 1996, and the related statements of
income, cash flows and changes in equity for the year ended December 31, 1997
and the 165-day period ended December 31, 1996. In addition, we have audited
the consolidated statements of income, cash flows and changes in equity for the
201-day period ended July 19, 1996 and the year ended December 31, 1995 of
Predecessor. 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 Energy Services Corp.
and subsidiaries as of December 31, 1997 and 1996 and the results of its
operations and cash flows for the year ended December 31, 1997 and the 165-day
period ended December 31, 1996 and (b) the financial position of OMNI
Geophysical Corporation and the results of its operations and cash flows for
the 201-day period ended July 19, 1996 and for the year ended December 31,
1995, all in conformity with generally accepted accounting principles.
ARTHUR ANDERSEN LLP
New Orleans, Louisiana,
February 11, 1998
<PAGE>
OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
<TABLE>
<CAPTION>
December 31, December 31,
ASSETS 1996 1997
------ ------------- -------------
(Thousands of Dollars)
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $ 39 $ 8,723
Accounts receivable, net 4,565 11,958
Parts and supplies inventory 706 2,988
Prepaid expenses and other 759 1,965
------------- -------------
Total current assets 6,069 25,634
------------- -------------
PROPERTY AND EQUIPMENT:
Land - 359
Building and improvements 32 3,949
Drilling, field and support equipment 11,930 22,703
Shop equipment 121 227
Aircraft 526 9,266
Vehicles 1,385 3,448
Construction in progress 461 800
------------- -------------
14,455 40,752
Less: accumulated depreciation 675 2,909
------------- -------------
Total property and equipment, net 13,780 37,843
------------- -------------
OTHER ASSETS:
Goodwill, net 218 10,680
Other 319 756
------------- -------------
Total other assets 537 11,436
------------- -------------
Total assets $ 20,386 $ 74,913
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
OMNI ENERGY SERVICES CORP.
CONSOLIDATED BALANCE SHEETS
DECEMBER 31, 1996 AND 1997
<TABLE>
<CAPTION>
December 31, December 31,
LIABILITIES AND EQUITY 1996 1997
- ---------------------- -------------- -------------
(Thousands of Dollars)
<S> <C> <C>
CURRENT LIABILITIES:
Current maturities of long-term debt $ 2,500 $ 5,713
Accounts payable 1,379 5,998
Accrued expenses 561 2,409
Due to affiliates and shareholders 29 ---
-------------- -------------
Total current liabilities 4,469 14,120
-------------- -------------
LONG-TERM LIABILITIES:
Long-term debt, less current maturities 8,458 14,558
Line of credit 2,116 ---
Deferred taxes --- 1,650
-------------- -------------
Total long-term liabilities 10,574 16,208
-------------- -------------
EQUITY:
Preferred units; $1,000 par value; 4,000 units,
10% participating, issued and outstanding at
December 31, 1996 (liquidation preference of
$4.2 million at December 31, 1996) 4,000 ---
Common units, $.01 par value; 101,263 units
issued and outstanding at December 31, 1996 1 ---
Preferred Stock, $.01 par value, 5,000,000 shares
authorized; none issued and outstanding --- ---
Common Stock, $.01 par value, 45,000,000
shares authorized; 15,726,282 issued and
outstanding --- 157
Additional paid-in capital --- 44,038
Retained earnings 1,342 390
-------------- -------------
Total equity 5,343 44,585
-------------- -------------
Total liabilities and equity $ 20,386 $ 74,913
============== =============
</TABLE>
The accompanying notes are an integral part of these financial
statements.
<PAGE>
OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF INCOME FOR THE YEAR ENDED DECEMBER 31, 1995,
THE 201-DAY PERIOD ENDED JULY 19, 1996, THE 165-DAY PERIOD ENDED DECEMBER 31,
1996, AND THE YEAR ENDED DECEMBER 31, 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 Predecessor and Successor
presented below are not comparable in all material respects since those
financial statements report the financial position, results of operations and
cash flows of these two separate entities.
<TABLE>
<CAPTION>
PREDECESSOR SUCCESSOR
------------------------------------- ---------------------------------
201-Day 165-Day
Year Ended Period Ended Period Ended Year Ended
December 31, July 19, December 31, December 31,
1995 1996 1996 1997
--------------- ---------------- ---------------- -------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
Operating revenue $ 12,690 $ 10,017 $ 10,942 $ 49,591
Operating expense 8,704 6,814 8,114 36,302
--------------- ---------------- ---------------- -------------
Gross profit 3,986 3,203 2,828 13,289
General and administrative expense 1,791 789 1,050 5,122
--------------- ---------------- ---------------- -------------
Operating income 2,195 2,414 1,778 8,167
Interest expense 148 151 437 1,866
Other income (expense) (7) 6 20 37
--------------- ---------------- ---------------- -------------
(155) (145) (417) (1,829)
--------------- ---------------- ---------------- -------------
Income before taxes and extraordinary item 2,040 2,269 1,361 6,338
Income tax expense --- --- --- 403
--------------- ---------------- ---------------- -------------
Income before extraordinary item 2,040 2,269 1,361 5,935
Extraordinary expense from early
extinguishment of debt net of tax --- --- --- 84
--------------- ---------------- ---------------- -------------
Net income $ 2,040 $ 2,269 1,361 5,851
--------------- ---------------- ---------------- -------------
Preferred dividend requirements $ --- $ --- (180) (391)
--------------- ---------------- ---------------- -------------
Income applicable to common shares $ 2,040 $ 2,269 $ 1,181 $ 5,460
Basic earnings per common share: --------------- ---------------- ---------------- -------------
Before extraordinary item $ 1,020 $ 1,135 $ 0.11 $ 0.47
Extraordinary item net of tax --- --- --- (0.01)
--------------- ---------------- ---------------- -------------
Net income $ 1,020 $ 1,135 $ 0.11 $ 0.46
=============== ================ ================ =============
UNAUDITED PRO FORMA DATA
Income before taxes and extraordinary item, $ 2,040 $ 2,269 $ 1,361 6,338
reported above
Pro forma interest expense --- --- --- (345)
Pro forma provision for income taxes related to
operations
as a non-taxable corporate entity (816) (908) (544) (2,400)
--------------- ---------------- ---------------- -------------
Pro forma net income $ 1,224 $ 1,361 $ 817 $ 3,593
=============== ================ ================ =============
Pro forma net income per common share $ .30
=============
Pro forma weighted average common shares 11,810,016
=============
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY FOR THE YEAR ENDED DECEMBER 31,
1995, THE 201-DAY PERIOD ENDED JULY 19, 1996, THE 165-DAY PERIOD ENDED
DECEMBER 31, 1996, AND FOR THE YEAR ENDED DECEMBER 31, 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 Predecessor and Successor
presented below 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>
Additional
Common Stock Preferred Units Common Units Paid-In Retained
Shares Amount Units Amount Units Amount Capital Earnings Total
(Thousands of Dollars)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PREDECESSOR:
BALANCE December 31, 1995 2,000 $ 6 --- $ --- --- $ --- $ --- $ 2,857 $ 2,863
Add - net income for the
period ended July 19, 1996 --- --- --- --- --- --- --- $ 2,269 $ 2,269
Deduct- distributions to
shareholders --- --- --- --- --- --- --- (881) (881)
------- ------- ------ -------- ------ -------- ---------- ------- -------
BALANCE, July 19, 1996 2,000 6 --- --- --- --- --- 4,245 4,251
SUCCESSOR:
BALANCE, July 19, 1996 2,000 6 --- --- --- --- --- 4,245 4,251
Deduct adjustments to
reflect purchase of
predecessor (2,000) (6) --- --- --- --- --- (4,245) (4,251)
Add - initial capital --- --- 4,000 4,000 101,263 1 --- --- 4,001
contribution
- net income --- --- --- --- --- --- --- 1,360 1,360
Deduct - distribution to
members --- --- --- --- --- --- --- (18) (18)
------- -------- ------ -------- -------- -------- ---------- ------- -------
BALANCE, December 31, 1996 --- --- 4,000 4,000 101,263 1 --- 1,342 5,343
Add - sale of common --- --- --- --- 2,000 --- 78 --- 78
units
- sale of preferred --- --- 1,000 1,000 --- --- --- --- 1,000
units
- issuance of common --- --- --- --- 10,213 --- 6,415 --- 6,415
units
Deduct - contribution of
undistributed
retained earnings
from OMNI due to
change in tax status --- --- --- --- --- --- 302 (302) ---
- distributions to
common unitholders --- --- --- --- --- --- --- (5,930) (5,930)
- payment of preferred
dividends --- --- --- --- --- --- --- (571) (571)
- retirement of --- --- (5,000) (5,000) --- --- --- --- (5,000)
preferred units
Share exchange 12,000,000 120 --- --- (113,476) (1) (119) --- ---
Add - public offering of 3,450,000 34 --- --- --- --- 34,241 --- 34,275
shares
- issuance of common
shares for
acquisitions 276,282 3 --- --- --- --- 3,037 --- 3,040
- deferred
compensation --- --- --- --- --- --- 84 --- 84
expense
- net income for the --- --- --- --- --- --- --- 5,851 5,851
year ended
December 31, 1997
---------- --------- ------ -------- -------- -------- ---------- ------- -------
BALANCE, December 31, 1997 15,726,282 $ 157 --- $ --- --- $ --- $ 44,038 $ 390 $44,585
========== ========= ====== ======== ======== ======== ========== ======= =======
The accompanying notes are an integral part of these financial statements.
</TABLE>
OMNI ENERGY SERVICES CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE YEAR ENDED DECEMBER 31, 1995,
THE 201-DAY PERIOD ENDED JULY 19, 1996, THE 165-DAY PERIOD ENDED
DECEMBER 31, 1996, AND FOR THE YEAR ENDED DECEMBER 31, 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 Predecessor and
Successor presented below are not comparable in all material respects since
those financial statements report the financial position, results of
operations and cash flows of these two separate entities.
<TABLE>
<CAPTION>
Predecessor Successor
--------------------------- -----------------------------
201-Day 165-Day
Year Ended Period Ended Period Ended Year Ended
December 31, July 19, December 31, December 31,
1995 1996 1996 1997
-------------- ------------ ------------- ------------
(Thousands of Dollars)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 2,040 $ 2,269 $ 1,361 $ 5,851
Adjustments to reconcile net income to
net cash provided by operating
activities-
Depreciation 372 275 674 2,259
Amortization --- --- 23 252
Loss on fixed asset disposition 53 1 17 39
Deferred compensation --- --- --- 84
Provision for bad debts --- --- 110 151
Deferred taxes --- --- --- 179
Other (24) --- --- ---
Changes in operating assets and liabilities
Decrease (increase) in assets-
Receivables-
Trade (471) (1,896) (341) (4,340)
Other (7) 22 --- (622)
Due from affiliates 22 --- --- ---
Inventory (76) (157) (302) (1,710)
Prepaid expenses (53) 93 (639) (849)
Other --- 19 (492) (661)
Increase (decrease) in liabilities-
Accounts payable (250) 808 77 3,569
Accrued expenses 168 66 118 772
Due to affiliates and
stockholders/members 7 (44) --- (29)
----------- ----------- ----------- -----------
Net cash provided by operating
activities 1,781 1,456 606 4,945
----------- ----------- ----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of assets from Delta Surveys,
Inc., American Aviation, Inc., and
O.T.H. Exploration Services, Inc.,
net of cash received --- --- --- (1,280)
Purchase of assets from OMNI
Geophysical Corporation, --- --- (10,948) ---
net of cash received
Purchase of Leonard J. Chauvin, Jr.,
Inc., American Helicopter Drilling,
Inc. and Fournier & Associates, Inc.,
net of cash received --- --- --- (1,913)
Proceeds from disposal of fixed assets 58 4 25 579
Purchase of fixed assets (1,164) (1,438) (2,539) (16,398)
----------- ----------- ----------- -----------
Net cash used in investing
activities (1,164) (1,434) (13,462) (19,012)
----------- ----------- ----------- -----------
The accompanying notes are an integral part of these financial statements.
Predecessor Successor
201-Day 165-Day
Year Ended Period Ended Period Ended Year Ended
December 31, July 19, December 31, December 31,
1995 1996 1996 1997
(Thousands of Dollars)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from issuance of long-term debt 515 2,771 9,540 27,283
Principal payments on long-term debt (366) (1,135) (987) (26,268)
Net borrowings/(payments) on line of
credit 60 (1,003) 360 (2,116)
Capital contributions --- --- 4,001 1,078
Distributions to stockholders/members (765) (881) (19) (6,501)
Retirement of preferred units --- --- --- (5,000)
Net proceeds from public offering --- --- --- 34,275
-------- -------- -------- ----------
Net cash provided by (used in)
financing activities (556) (248) 12,895 22,751
-------- -------- -------- ----------
NET INCREASE (DECREASE) IN CASH 119 (226) 39 8,684
CASH, at beginning of period 181 300 --- 39
-------- -------- -------- ----------
CASH, at end of period $ 300 $ 74 $ 39 $ 8,723
======== ======== ======== ==========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
CASH PAID FOR INTEREST $ 163 $ 133 $ 443 $ 1,771
======== ======== ======== ==========
CASH PAID FOR TAXES $ --- $ --- $ --- $ ---
======== ======== ======== ==========
The accompanying notes are an integral part of these financial statements.
OMNI ENERGY SERVICES CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
Organization and Principles of Consolidation
OMNI Energy Services Corp. (a Louisiana corporation, the "Company") was formed
on September 11, 1997 and on December 10, 1997 issued 12,000,000 shares of its
common stock in exchange for all of the outstanding common units of OMNI
Geophysical, L.L.C. ("OMNI") (the "Share Exchange"). Options to purchase
118,018 shares of the Company's common stock were issued in exchange for
options to acquire common units of OMNI. In December, 1997, after completion
of the Share Exchange, the Company publicly offered for sale 3,450,000 shares
of common stock.
OMNI was formed in 1996 as a Louisiana limited liability company. OMNI
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 values. 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 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
Predecessor's results of operations for the year ended December 31, 1995 and
the 201-day period ended July 19, 1996.
All material intercompany accounts and transactions have been eliminated in
these financial statements. Certain prior year amounts have been reclassified
to conform with current year financial statement presentation.
Nature of Business
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 continental 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.
Use of Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and the disclosures
of contingent assets and liabilities at the date of the financial statements
and the reported amounts of revenue and expenses during the reporting period.
Actual results could differ from those estimates.
Recent Pronouncements
In February 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 128, "Earnings Per Share," which
simplifies the standards required under existing accounting rules for
computing earnings per share and replaces the presentation of primary earnings
per share and fully diluted earnings per share with basic earnings per share
("basic EPS") and diluted earnings per share ("diluted EPS"), respectively.
Basic EPS excludes dilution and is determined by dividing income available to
common stockholders by the weighted average number of shares of common stock
outstanding during the period. Diluted EPS reflects the potential dilution
that could occur if securities and other contracts to issue shares of common
stock were exercised or converted into common stock. The implementation of
SFAS No. 128 did not have a material effect on the Company's earnings per
share as determined under prior accounting rules.
In June 1997 the FASB issued SFAS No. 131 "Disclosures About Segments of an
Enterprise and Related Information," which requires that a public business
enterprise report financial and descriptive information about its reportable
operating segments. SFAS 131 is effective for fiscal year beginning after
December 15, 1997. The Company will adopt the new standard in 1998.
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 either on a day rate or per mile basis.
Under the per mile basis, revenue is recognized when the source or receiving
point is marked by one of the Company's survey crews. The Company's aircraft,
which are usually chartered for a guaranteed minimum number of hours per day,
generate revenue pursuant to a fixed hourly rate. Generally, the Company
invoices its customers twice a month.
Cash and Cash Equivalents
The Company considers investments with a maturity of 90 days or less to be
cash equivalents. Due to its short-term nature the fair value of cash and
cash equivalents approximates its book value.
Accounts Receivable
Trade and other receivables are stated at net realizable value. The allowance
for uncollectible accounts was approximately $125,000 and $390,000 as of
December 31, 1996 and 1997, respectively. The Company grants short-term
credit to its customers, primarily geophysical companies.
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:
Asset Classification Useful Life Salvage Value
Buildings and Improvements 25 years ---
Drilling, field and support equipment 10 years 10%
Shop equipment 10 years ---
Aircraft 10-15 years 25%
Vehicles 4-10 years ---
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.
Subsequent to December 31, 1997, the Company decided to sell its fixed wing
aircraft which had a net carrying value at December 31, 1997 of approximately
$2.4 million. The anticipated gain or loss from the sale of these assets is
not expected to be material.
Goodwill
Goodwill represents the excess of the purchase price of acquisitions over the
fair value of the net assets acquired. Such excess costs are being amortized
on a straight-line basis over a twenty-five year period. As of December 31,
1996 and 1997, accumulated goodwill amortization totaled approximately $4,000
and $183,000, respectively. The Company periodically assesses the
recoverability of the unamortized balance based on expected future
profitability and undiscounted future cash flows of the acquisitions and their
contribution to the overall operation of the Company.
Income Taxes
Prior to December 4, 1997, OMNI was treated as a partnership for income tax
purposes and income taxes were the responsibility of the individual members.
Accordingly, no provision for income taxes had been made in the accompanying
financial statements.
As discussed in Note 1, on December 4, 1997 the members of OMNI exchanged all
of their common units in OMNI for 12,000,000 shares of common stock of the
Company. The Share Exchange was accounted for as a reorganization whereby the
assets and liabilities transferred were accounted for at their historical cost
in a manner similar to that in a pooling-of-interest. As a result, the
Company has provided for income taxes in the fourth quarter of 1997.
Unaudited Pro Forma Data
Additional interest expense is recorded as a pro forma adjustment to reflect
the incurrence of indebtedness to finance the LLC Distribution as if such
event had occurred on January 1, 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
and extraordinary item.
2. EARNINGS PER SHARE
Pro forma basic earnings per common share was computed by dividing net income
by the weighted average number of shares of common stock outstanding during
the year. All income per share amounts for all periods have been presented,
and where necessary, restated to conform to the requirements of SFAS No. 128.
The following table sets forth the computation of basic and diluted income
from continuing operations per share (dollars and shares in thousands):
</TABLE>
<TABLE>
<CAPTION>
Predecessor Successor
----------------------------- ------------------------------
201-day 165-day
Year Ended Period Ended Period Ended Year Ended
December 31, July 19, December 31, December 31,
1995 1996 1996 1997
------------ ------------ ------------- -----------
<S> <C> <C> <C> <C>
Income before extraordinary item $ 2,040 $ 2,269 $ 1,361 $ 5,935
Less: Preferred dividend
requirements -- -- (180) (391)
---------- ---------- ----------- ----------
Income available to common
stockholders $ 2,040 $ 2,269 $ 1,181 $ 5,544
========== ========== =========== ==========
Shares:
Weighted average number of common
shares outstanding 2 2 10,708 11,732
Options -- -- -- 77
---------- ---------- ----------- ----------
Weighted average number of common
shares outstanding, plus assumed
conversion 2 2 10,708 11,810
========== ========== =========== ==========
Basic earnings per share $ 1,020 $ 1,135 $ 0.11 $ 0.47
========== ========== =========== ==========
Diluted earnings per share $ 1,020 $ 1,135 $ 0.11 $ 0.47
========== ========== =========== ==========
The weighted average number of shares of common stock for the Successor period
in the table above give effect to the Share Exchange discussed in Note 1.
</TABLE>
3. LONG-TERM DEBT:
Long-term debt consists of the following (dollars in thousands):
<TABLE>
<CAPTION>
December 31,
--------------------
1996 1997
----------- ----------
<S> <C> <C>
Notes payable to a finance company, variable interest rate $ 1,341 $ ---
with monthly principal and interest payments of $83;
maturing December 2001 to May 2002; secured by various
property and equipment
Notes payable to a finance company, variable interest rate 6,417 6,659
with $4,895 at LIBOR plus 3.75%. Remaining portion at
LIBOR plus 3.0% interest rates ranging from 8.6% to 9.4%
at December 31, 1997 with maturity dates ranging from
July 2001 to November 2002, secured by various property
and equipment
Notes payable to finance companies, interest payable at 544 516
7.91% with varying maturities to December 1999, to
finance insurance premiums
Note payable to an individual, monthly payments of $3 150 117
through April 1, 2001
Subordinated promissory note payable to shareholder, 2,057 ---
quarterly principal payments beginning in March 1997 of
$75; unsecured; due June 2001
Notes payable to various banks, interest rates at 9%, due on 449 ---
demand and, if no demand is made, maturing from September
1997 to June 2001, collateralized by vehicles and
equipment
Note payable to a company; annual payments of $40 through --- 120
March 2000
Note payable to a bank with interest payable at LIBOR plus --- 10,902
1.00% (6.77% at December 31, 1997) maturing January 2000
Construction loan to a bank with interest payable at the --- 1,937
lesser of Citibank prime plus 0.75% or LIBOR plus 3.75%
(8.5% at December 31, 1997) collateralized by buildings.
Loan was repaid in January, 1998.
Various notes payable --- 20
----------- ----------
Total 10,958 20,271
Less: Current maturities 2,500 5,713
----------- ----------
Long-term debt less current maturities $ 8,458 $ 14,558
=========== ==========
</TABLE>
Annual maturities of long-term debt during each of the following years ended
December 31, are as follows (in thousands):
1998 $ 5,713
1999 4,240
2000 8,910
2001 1,070
2002 338
--------
$20,271
========
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, 1997 and 1996.
There was no interest capitalized for the year ended December 31, 1995, or in
the 201-day period ended July 19, 1996. During the 165-day period ended
December 31, 1996 and the year ended December 31, 1997, interest in the amount
of approximately $44,000 and $217,000, respectively, was capitalized to
property, plant and equipment.
In connection with the Company's initial public offering, during 1997
approximately $23.8 million in debt was retired, resulting in an extraordinary
loss of $84,000, net of tax effects of approximately $42,000.
The Company restructured its credit facility with a bank in January, 1998.
Under the new facility the Company refinanced approximately $11.0 million of
its note payable, obtained a $9.0 million line of credit for acquisitions and
increased its revolving loan for working capital requirements from $8.0
million (discussed in note 4 below) to $10.0 million.
4. LINE OF CREDIT:
The Company had outstanding a revolving line of credit agreement with a bank.
Availability under the agreement is the lower of $8.0 million or 80% of
eligible accounts receivable. The line bore interest at prime plus 0.5%
(9.0% at December 31, 1997) and matured on November 1, 1998. The weighted-
average interest rate on the line was 9.3% and 9.2% for the 165-day period
ended December 31, 1996 and 1997, respectively. The line was collateralized by
accounts receivable and certain equipment of the Company. OMNI had $2.1
million outstanding on its line at December 31, 1996. There was no balance
outstanding at December 31, 1997.
5. RELATED PARTY TRANSACTIONS:
During the 165-day period ended December 31, 1996, OMNI 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 165-day period ended December 31, 1996, four
customers accounted for approximately 67% (24%, 21%, 11% and 11%,
respectively) of the Company's total revenues. Included in accounts
receivable as of December 31, 1996, are amounts owed from one of these
customers totaling approximately $1.1 million, which was approximately 23% of
total accounts receivable.
During the year ended December 31, 1997, two customers accounted for
approximately 40% (25% and 15%, respectively) of the Company's total revenues.
Included in accounts receivable as of December 31, 1997, are amounts owed from
these customers totaling approximately 28% (16% and 12%, respectively) of
total accounts receivable.
7. COMMITMENTS AND CONTINGENCIES:
In connection with the acquisition of the assets of Predecessor discussed in
Note 1, OMNI also entered into a five-year lease agreement with Predecessor 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.
Total rental expense was $255,000, $248,000, $425,000 and $1,921,000 for the
year ended December 31, 1995, the 201-day period ended July 19, 1996, the 165-
day period ended December 31, 1996 and the year ended December 31, 1997.
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 December 31, 1997.
8. PREFERRED UNITS:
In connection with OMNI's acquisition of Predecessor on July 19, 1996 (Note
1), OMNI issued 4,000 10%, cumulative participating preferred units in the
165-day period ended December 31, 1996 and on February 19, 1997, 1,000 15%,
cumulative participating preferred units. OMNI paid dividends of
approximately $180,000 on its 10% cumulative participating preferred units in
early 1997. On September 30, 1997, OMNI redeemed the outstanding preferred
units at a redemption price of $1,000 per unit and paid the holders of the
preferred units cumulative unpaid dividends totaling approximately $391,000.
9. STOCK OPTIONS:
In April and June 1997, OMNI issued options to purchase 516 and 600 common
units, respectively, (equivalent to 54,567 and 63,451 shares, respectively of
Common Stock calculated on the pro forma share basis described in Note 1).
The exercise price for these options is $2.28 per share (on the pro forma
share basis described in Note 1) and expire if unexercised after ten years.
The Company will recognize pro rata over the three-year vesting period
approximately $432,000 of compensation expense related to these options. The
deferred compensation to be recognized by the Company is based on the
estimated fair value of the Company's common units on the date of the
issuance. Compensation expense related to the options totaled $84,000 for the
year ended December 31, 1997.
In September 1997, the Company adopted and its sole shareholder approved the
Stock Incentive Plan (the "Incentive Plan") to provide long-term incentives to
its key employees, officers, directors who are employees of the Company, and
consultants and advisors to the Company and non-employee directors ("Eligible
Persons"). Under the incentive plan, the Company may grant incentive stock
options, non-qualified stock options, restricted stock, other stock-based
awards, or any combination thereof to Eligible Persons. Options generally
vest over a four-year period under the Plan and generally expire if unused
after ten years. The exercise price of any stock option granted may not be
less than the fair market value of the Common Stock on the date of grant. A
total of 1,500,000 shares of common stock were authorized under the Incentive
Plan in 1997. Of the 1,500,000 authorized, 439,455 remain available for
issuance under the plan at December 31, 1997.
The Company accounts 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," do not affect the
Company's reported results of operations. Pro forma disclosures as if the
Company had adopted the provisions of SFAS No. 123 are presented below.
Had compensation cost been determined based on the fair value at the grant
date consistent with the provisions of SFAS No. 123, the Company's net income
and earnings per common share would have approximated the pro forma amounts
below:
Year ended December 31, 1997
----------------------------
As Reported Pro Forma
------------ -----------
(Dollars in thousands
except per share amounts)
Net Income $ 5,851 $ 5,510
Basic earnings per share $ 0.47 $ 0.44
Diluted earnings per share $ 0.47 $ 0.43
A summary of the Company's stock options as of December 31, 1997 and changes
during the year ended is presented below:
Weighted Incentive Other
Average Plan Options
Exercise Price Options
-------------- --------- -------
Balance at January 1, 1997 $ -- $ -- $ --
Granted 10.10 1,060,545 118,018
---------- ---------- ---------
Balance at December 31, 1997 $ 10.10 $1,060,545 $ 118,018
========== ========== =========
As of December 31, 1997, there were no options exercisable.
The weighted average fair value at date of grant for options granted during
1997 was $4.26 per option. The fair value of options granted is estimated on
the date of grant using the Black-Scholes option-pricing model with the
following assumptions: (a) dividend yield of 0.00%; (b) expected volatility
of 40%; (c) risk-free interest rate of 6.07%; and (d) expected life from 3 to
6.5 years.
The following table summarizes information about stock options outstanding as
of December 31, 1997:
<TABLE>
<CAPTION>
Options Options
Outstanding Exercisable
----------------------------------------------- ----------------------------
<S> <C> <C> <C> <C> <C>
Exercise Prices Number Wgtd. Avg. Wgtd. Avg. Number Wgtd. Avg.
Outstanding Remaining Exercise Exercisable Exercise
Contr. Life Price Price
----------- ----------- ---------- ----------- ----------
$ 2.28 118,018 9.42 $ 2.28 -- $ 2.28
$ 11.00 1,026,000 9.57 $ 11.00 -- $ 11.00
---------- -----------
1,144,018 --
========== ===========
The Company has entered into employment agreements with its key executive
officers which include respective base salaries and terms of employment.
The Company also issued 34,545 options to non-employees in 1997. These
options, which were issued under the Plan, have an exercise price of $11 per
share and expire from two to ten years from the date of grant.
10. INCOME TAXES:
The components of deferred tax assets and liabilities as of December 31, 1997
are as follows (dollars in thousands):
Deferred Tax Assets:
Allowance for doubtful $ 137
accounts
Insurance reserves 75
-------
Total deferred tax 212
assets
Deferred Tax Liabilities:
Property and equipment 1,634
Goodwill 16
-------
Total deferred tax 1,650
liabilities -------
Net deferred tax liabilities $ 1,438
=======
The provision for income taxes for the three years ended December 31, 1997
consisted of the following (dollars in thousands):
1997
-----
Current expense $ 338
Deferred expense (8)
Adjustment to deferred taxes
due to change in tax status 73
Tax expense before ------
extraordinary item 403
Allocated to extraordinary
item (42)
------
Total $ 361
======
The reconciliation of Federal statutory and effective income tax rates for the
year ended December 31, 1997 is shown below:
1997
------
Statutory federal rate 34%
Income not subject to (27%)
corporate tax
Other, net (1%)
------
Total 6%
======
11. ACQUISITIONS:
On March 25, 1997, OMNI 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 over the
estimated fair value of the net assets resulted in goodwill of approximately
$172,000.
Effective July 1, 1997, OMNI acquired substantially all of the assets and
liabilities of American Aviation Incorporated ("American Aviation"), a company
that operated aircraft for various seismic drilling support services. In
consideration for the acquisition of substantially all the assets of American
Aviation, OMNI issued to American Aviation 10,213 common units of OMNI
(equivalent to 1,080,017 shares of Common Stock), valued at approximately $6.4
million, and a $1.0 million promissory note bearing interest at 8.5%, paid
$500,000 cash and assumed approximately $6.7 million in debt. The excess cost
over the estimated fair value of the net assets result in goodwill of
approximately $7.2 million.
Effective July 1, 1997, OMNI acquired Leonard J. Chauvin, Jr., Inc.
("Chauvin"), a surveying company, for $788,000 cash and up to an additional
$100,000 based on the future earnings of Chauvin through August 31, 1999. The
excess cost over the estimated fair value of the net assets acquired resulted
in goodwill of approximately $650,000.
Effective September 1, 1997, OMNI acquired substantially all the assets O.T.H.
Exploration Services, Inc., a seismic rock drilling company, headquartered in
the Rocky Mountain region. The aggregate purchase price was $600,000 cash,
which approximated the fair value of the net assets acquired.
Effective October 1, 1997, the Company acquired American Helicopter Drilling
Inc. ("American Helicopter") for $1,050,000 in cash and 227,272 shares of
common stock valued at approximately $2,500,000 at the initial offering price.
The excess cost over the estimated fair value of the net assets acquired
resulted in goodwill of approximately $1,971,000. American Helicopter was
engaged in seismic drilling services in the Rocky Mountain area and in the
fabrication, export and servicing of heli-portable and other seismic drilling
units.
Effective October 1, 1997, the Company acquired Fournier & Associates
("Fournier") for $211,000 in cash and 49,010 shares of common stock valued at
approximately $539,000 at the initial offering price. The excess cost over
the estimated fair value of the net assets acquired resulted in goodwill of
approximately $625,000. Fournier was a seismic survey company operating four
crews in the Transition Zone and adjacent areas.
The operating results of each of the acquired companies have been included in
consolidated statements of income from the effective dates of acquisition.
The following summarized unaudited income statement data reflects the
Company's results of operations as if the American Aviation and American
Helicopter transactions had taken place on July 20, 1996:
Unaudited Pro-forma Results
(Dollars in Thousands)
-----------------------------
165-day Period
Ended Year Ended
December 31, December 31,
1996 1997
------------- --------------
Gross revenue $ 15,613 $ 54,747
============== ===============
Income before
extraordinary item $ 1,055 $ 5,005
============== ===============
Net income $ 1,055 $ 4,921
============== ===============
Basic earnings per share $ 0.08 $ 0.39
============== ===============
The pro forma effect of the acquisitions other than of American Aviation and
American Helicopter were not material.
Item 9.Changes in and Disagreements With Accountants on Accounting and
Financial Disclosure
None.
PART III
Item 10. Directors and Executive Officers of the Registrant
Information concerning the Company's directors and officers called for
by this item will be included in the Company's definitive Proxy Statement
prepared in connection with the 1998 Annual Meeting of shareholders and is
incorporated herein by reference.
Item 11. Executive Compensation
Information concerning the compensation of the Company's executives
called for by this item will be included in the Company's definitive Proxy
Statement prepared in connection with the 1998 Annual Meeting of shareholders
and is incorporated herein by reference.
Item 12. Security Ownership of Certain Beneficial Owners and Management
Information concerning security ownership of certain beneficial owners
and management called for by this item will be included in the Company's
definitive Proxy Statement prepared in connection with the 1998 Annual Meeting
of shareholders and is incorporated herein by reference.
Item 13. Certain Relationships and Related Transactions
Information concerning certain relationships and related transactions
called for by this item will be included in the Company's definitive Proxy
Statement prepared in connection with the 1998 Annual Meeting of shareholders
and is incorporated herein by reference.
Item. 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K
(a)The following financial statements, schedules and exhibits are filed as
part of this Report:
(1) Financial Statements. Reference is made to Item 8 hereof.
(2) Financial Statement Schedules: None.
(3) Exhibits. See Index to Exhibits on page E-1. The Company will
furnish to any eligible shareholder, upon written request of such
shareholder, a copy of any exhibit listed upon the payment of a
reasonable fee equal to the Company's expenses in furnishing such
exhibit.
(b)Reports on form 8-K: None
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this Report to be signed
on its behalf by the undersigned, thereunto duly authorized.
OMNI ENERGY SERVICES CORP.
(Registrant)
By: /s/ David A. Jeansonne
David A. Jeansonne
Chairman of the Board and
Chief Executive Officer
Date: March 27, 1998
Pursuant to the requirements of the Securities Exchange Act of 1934,
this Report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ David A. Jeansonne Chairman of the Board and Chief March 27, 1998
David A. Jeansonne Executive Officer
(Principal Executive Officer
/s/ Roger E. Thomas President and Director March 27, 1998
Roger E. Thomas
/s/ Allen R. Woodard Vice President-Marketing; Business March 27, 1998
Allen R. Woodard Development and Director
/s/ David E. Crays Vice President-Finance and Chief March 27, 1998
David E. Crays Financial Officer and Director
(Principal Financial and Accounting
Officer)
/s/ Steven T. Stull Director March 27, 1998
Steven T. Stull
/s/ Crichton W. Brown Directo March 27, 1998
Crichton W. Brown
/s/ William W. Rucks, IV Director March 27, 1998
William W. Rucks, IV
OMNI ENERGY SERVICES CORP.
EXHIBIT INDEX
EXHIBIT SEQUENTIALLY
NUMBER NUMBERED PAGE
2.1 Exchange Agreement between the members of OMNI
Geophysical, L.L.C. and OMNI Energy Services Corp.
(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.*
3.1 Amended and Restated Articles of Incorporation of the
Company*
3.2 Bylaws of the Company, as amended*
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*
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
Stock Incentive Plan*+
10.4 Amended and Restated Employment and Non-Competition
Agreement between OMNI Geophysical, L.L.C. and David
Jeansonne*+
10.5 Amended and Restated Employment and Non-Competition
Agreement between OMNI Geophysical, L.L.C. and Roger
E. Thomas*+
10.6 Amended and Restated Employment and Non-Competition
Agreement between OMNI Geophysical, L.L.C. and Allen
R. Woodard*+
10.7 Employment and Non-Competition Agreement between OMNI
Geophysical, L.L.C. and Richard Patrick Morris*+
10.8 Amended and Restated Employment and Non-Competition
Agreement between OMNI Geophysical, L.L.C. and David
E. Crays*+
10.9 Confidentiality and Non-Competition Agreement between
OMNI Geophysical, L.L.C. and OMNI Geophysical
Corporation, David Jeansonne, Max Brian Hoyt, Ted W.
Hoyt, and Wilbur Sam Hoyt*+
10.10 Confidentiality and Non-Competition Agreement between OMNI
Geophysical, L.L.C. 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*+
10.12 Option Agreement between the Company and Roger E. Thomas
dated as of September 25, 1997.*+
10.13 Option Agreement between the Company and Allen P. Woodard
dated as of September 25, 1997.*+
10.14 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.*
10.15 Amended and Restated Loan Agreement, dated as of January 20,
1998, by and among the Company, American Aviation L.L.C.,
OMNI Marine & Supply, Inc. and Hibernia National Bank.
21.1 Subsidiaries of the Company
27.1 Financial Data Schedule
* Incorporated by reference to the Company's Registration Statement on
Form S-1 (Registration Statement No. 333-36561).
+ Management Contract or Compensation Plan or Arrangement.
</TABLE>
EXHIBIT 2.1
UNIT EXCHANGE AGREEMENT
This Unit Exchange Agreement dated as of December 10, 1997, (the
"Agreement") is by and among David A. Jeansonne, Roger E. Thomas, Allen R.
Woodard (in his individual capacity and as natural tutor of Wesley William
Woodard and of Kaylee Theresa Woodard), Shannon H. Daigle, Ben E. Thomas,
Christina Thomas, Alan J. Thomas, Advantage Capital Partners II Limited
Partnership, Advantage Capital Partners III Limited Partnership, Advantage
Capital Partners IV Limited Partnership, Advantage Capital Partners V
Limited Partnership, Advantage Capital Partners Limited Partnership and
American Aviation Incorporated (each a "Common Unit Holder" and
collectively, the "Common Unit Holders"); David E. Crays, William F.
Fincher, David Booth and Rita Darbonne (each as "Option Holder" and
collectively, the "Option Holders"); Advantage Capital Management
Corporation ("ACMC") and OMNI Energy Services Corp. ("Omni Energy").
WITNESSETH:
WHEREAS, the Common Unit Holders are the owners of all 113,476 issued
and outstanding common units (the "Common Units") of OMNI Geophysical,
L.L.C., a Louisiana limited liability company ("Omni"), and the Option
Holders are the owners of the 1,116 outstanding options to purchase
additional Common Units (the "Common Unit Options"), the ownership of each
as represented on Exhibit A hereto;
WHEREAS, Omni Energy desires to issued 12,000,000 shares of its common
stock ("Common Stock") and 118,018 options to purchase common stock at an
exercise price of $2.28 per share ("Common Stock Options"), in exchange for
the 113,476 Common Units and for the corresponding 1,116 outstanding Common
Unit Options.
NOW THEREFORE, in consideration of the mutual promises, covenants and
agreements set forth herein and in reliance upon the undertakings,
representations and warranties contained herein, the parties hereby agree
as follows:
ARTICLE 1
EXCHANGE OF UNITS AND OPTIONS; CANCELLATION OF SHARES
Section 1.1 Exchange of Units and Options. Subject to the terms and
conditions stated herein, the Common Unit Holders hereby exchange with full
title the 113,476 Common Units and the Option Holders hereby exchange with
full title the 1,116 Common Unit Options, for which Omni Energy hereby
exchanges 12,000,000 shares of Common Stock and 118,018 Common Stock
Options (the "Exchange"), respectively.
Section 1.2 Cancellation of Shares. Upon the consummation of the
transactions set forth in Section 1.1 above, the 1,000 shares of Common
Stock previously issued by Omni Energy to ACMC shall be cancelled and no
consideration shall be given for such shares. ACMC hereby agrees and
consents to the cancellation of such shares.
ARTICLE 2
CONSENTS
Section 2.1 Amendment to Schedule A Operating Agreement. The Common
Unit Holders agree to amend and do hereby amend Schedule A of the Amended
and Restated Operating Agreement (the "Operating Agreement") of Omni to
reflect the Exchange of Common Units by the Common Unit Holders. The
revised Schedule A is attached as Exhibit B to this Agreement.
Section 2.2 Consent to Exchange. The Common Unit Holders,
representing all of the members of Omni ("Members") consent to : (a) the
Exchange pursuant to this Agreement; (b) the transfer of each of the Common
Unit Holder's interests to Omni Energy as set forth in Exhibit A; (c) the
admission of Omni Energy as a substitute Member for each Common Unit
Holder; and (d) the Amendment to Schedule A of the Operating Agreement as
set forth in Exhibit B. The Option Holders consent to the exchange of
their 1,116 Common Unit Options for 118,018 options to purchase Omni Energy
Common Stock.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF COMMON UNIT HOLDERS
AND OPTION HOLDERS
Each Common Unit Holder and Option Holder represents and warrants to
Omni Energy as of the date hereof as follows:
Section 3.1 Ownership. Such Common Unit Holder or Option Holder is
the sole record and beneficial owner of the Common Units or Common Unit
Options set forth beside its name on Exhibit A. Such Common Unit Holder
has good and marketable title to such Common Units and the right to deliver
such Common Units in accordance with the terms of this Agreement. Such
Option Holder has good and marketable title to such Common Unit Options and
the right to deliver such Common Unit Options in accordance with the terms
of this Agreement. The transfer of Common Units or Common Unit Options by
such Common Unit Holder or Option Holder to Omni Energy in accordance with
the terms of this Agreement transfers good and marketable title to such
Common Units or Common Unit Options to Omni Energy free and clear of all
liens, restrictions, rights, options and claims of every kind.
Section 3.2 Authority; Enforceability. Such Common Unit Holder or
Option Holder has the full legal right, power and authority to execute,
deliver and perform this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly executed and delivered by
such Common Unit Holder or Option Holder and constitutes a valid and
legally binding obligation of such Common Unit Holder or Option Holder
enforceable against it in accordance with its terms, except as (a)
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent transfer, moratorium or similar laws from time to time in effect
affecting creditors' rights generally and (b) the availability of equitable
remedies may be limited by equitable principles of general applicability.
Section 3.3 No Conflict. Neither the execution and the delivery of
this Agreement by such Common Unit Holder or Option Holder, nor the
consummation of the transactions contemplated hereby: (a) violate, conflict
with, or result in a breach of any provisions of; (b) constitute a default
(or an event which, with notice or lapse of time or both, would constitute
a default) under; (c) result in the termination of or accelerate the
performance required by; (d) result in the creation of any Lien upon the
Common Units or Common Unit Options set forth beside its name on Exhibit A
under any of the terms, conditions or provisions of the Articles of
Organization or the Operating Agreement of Omni, or to any material extent,
under the terms and conditions of any note, bond, mortgage, indenture, deed
of trust, lease, license, loan agreement or other instrument or obligation
to or by which Omni, such Common Unit Holder or Option Holder or any of
their respective assets are bound; or (e) to any material extent, violate
any Applicable Law binding upon Omni, such Common Unit Holder or Option
Holder or any of their respective assets.
Section 3.4 No Other Representations or Warranties. Except as set
forth above in this Section 3, no other representations or warranties,
express or implied, are made in this Agreement by the Common Unit Holders
or the Option Holders to Omni Energy.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF OMNI ENERGY
Omni Energy represents and warrants to Omni and the Common Unit
Holders and the Option Holders as of the date hereof as follows:
Section 4.1 Organization. Omni Energy is a corporation duly
organized, validly existing and in good standing under the laws of
Louisiana and has all requisite corporate power and authority to own its
properties and carry on its business as now being conducted.
Section 4.2 Capitalization. As of the date of this Agreement, the
authorized capital stock of Omni Energy consists of 45,000,000 Common
Shares, $0.01 par value per share; and 5,000,000 shares of preferred stock,
$0.01 par value per share, issuable in series.
Section 4.3 Authority; Enforceability. Omni Energy has the requisite
corporate power and authority to execute and deliver this Agreement and to
carry out its obligations hereunder. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of Omni Energy and no other corporate proceedings on
the part of Omni Energy are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly
executed and delivered by Omni Energy and constitutes a valid and binding
obligation of Omni Energy, enforceable against Omni Energy in accordance
with its terms, except as (a) enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent transfer, moratorium or similar laws
from time to time in effect affecting creditors' rights generally and (b)
the availability of equitable remedies may be limited by equitable
principles of general applicability.
Section 4.4 No Conflict. Neither the execution and delivery of this
Agreement by Omni Energy, nor the consummation of the transactions
contemplated hereby, do or will: (a) violate, conflict with, or result in a
breach of any provisions of; (b) constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under;
(c) result in the termination of or accelerate the performance required by;
(d) result in the creation of a Lien upon the Omni Energy shares of Common
Stock or Common Stock Options under any of the terms, conditions or
provisions of the Articles of Incorporation or Bylaws of Omni Energy or any
note, bond, mortgage, indenture, deed of trust, lease, license, loan
agreement or other instrument or obligation to or by which Omni Energy or
any of its assets are bound; or (e) violate any Applicable Law binding upon
Omni Energy and on any of its assets.
Section 4.5 Shares to be Exchanged. When issued in accordance with
the terms of this Agreement, the shares of Common Stock to be exchanged for
the Common Units will be duly authorized, validly issued and non-assessable
shares of the Common Stock. The Common Stock to be issued upon exercise of
the Common Stock Options, if and when exercised, will be duly authorized,
validly issued and non-assessable shares of Common Stock.
Section 4.6 No Other Representations or Warranties. Except as set
forth above in this Section 4, no other representations or warranties,
express or implied, are made in this Agreement by Omni Energy to the Common
Unit Holders or Option Holders.
ARTICLE 5
INDEMNIFICATION; REMEDIES
Section 5.1 Indemnification by Common Unit Holders. Except as
otherwise expressly provided in this Article 5, each Common Unit Holder, as
its sole obligation and the exclusive remedy of Omni Energy, shall
severally (and not jointly) defend, indemnify and hold harmless Omni
Energy, and shall reimburse Omni Energy, for, from and against, each and
every demand, claim, action, loss, liability, judgment, damage, cost and
expense (including, without limitation, interest, penalties, costs of
preparation and investigation, and the reasonable fees, disbursements and
expenses of attorneys, accountants and other professional advisors)
(collectively, "Losses") imposed on or incurred by Omni Energy, directly or
indirectly, relating to, resulting from or arising out of: (a) any
inaccuracy in any representation or warranty of such Common Unit Holder in
this Agreement, whether or not Omni Energy relied thereon or had knowledge
thereof, or (b) any breach or nonperformance of any covenant, agreement or
other obligation of such Common Unit Holder under this Agreement or any
certificate, document or other instrument delivered or to be delivered
pursuant hereto.
Section 5.2 Indemnification by Options Holders. Except as otherwise
expressly provided in this Article 5, each Option Holder, as its sole
obligation and the exclusive remedy of Omni Energy, shall severally (and
not jointly) defend, indemnify and hold harmless Omni Energy, and shall
reimburse Omni Energy, for, from and against, each and every demand, claim,
action, loss, liability, judgment, damage, cost and expense (including,
without limitation, interest, penalties, costs of preparation and
investigation, and the reasonable fees, disbursements and expenses of
attorneys, accountants and other professional advisors) (collectively,
"Losses") imposed on or incurred by Omni Energy, directly or indirectly,
relating to, resulting from or arising out of: (a) any inaccuracy in any
representation or warranty of such Option Holder in this Agreement, whether
or not Omni Energy relied thereon or had knowledge thereof, or (b) any
breach or nonperformance of any covenant, agreement or other obligation of
such Option Holder under this Agreement or any certificate, document or
other instrument delivered or to be delivered pursuant hereto.
Section 5.3 Indemnification by Omni Energy. Except as otherwise
expressly provided in this Article 5, Omni Energy, as its sole obligation
and the exclusive remedy of the Common Unit Holders and Option Holders,
shall defend, indemnify and hold harmless the Common Unit Holders and
Option Holders, and shall reimburse them for, from and against all Losses
imposed on or incurred by the Common Unit Holders and Option Holders,
directly or indirectly, relating to, resulting from or arising out of: (a)
any inaccuracy in any representation or warranty of Omni Energy in this
Agreement, whether or not the Common Unit Holders or Option Holders relied
thereon or had knowledge thereof, or (b) any breach or nonperformance of
any covenant, agreement or other obligation of Omni Energy under this
Agreement or any certificate, document or other instrument delivered or to
be delivered pursuant hereto.
Section 5.4 Notice and Defense of Third Party Claims. If any third
party demand, claim, action or proceeding shall be brought or asserted
under this Article 5 against an indemnified party or any successor thereto
(the "Indemnified Person") in respect of which indemnity may be sought
under this Article 5 from an indemnifying person or any successor thereto
(the "Indemnifying Person"), the Indemnified Person shall give prompt
written notice thereof to the Indemnifying Person who shall have the right
to assume its defense, including the hiring of counsel reasonably
satisfactory to the Indemnified Person and the payment of all expenses;
except that any delay or failure to so notify the Indemnifying Person shall
relieve the Indemnifying Person of its obligations under this Article 5
only to the extent, if at all, that it is prejudiced by reason of such
delay or failure. The Indemnified Person shall have the right to employ
separate counsel in any of the foregoing actions, claims or proceedings and
to participate in the defense thereof, but the fees and expenses of such
counsel shall be at the expense of the Indemnified Person unless both the
Indemnified Person and the Indemnifying Person are named as parties and the
Indemnifying Person and the Indemnified Person shall in good faith agree
that representation by the same counsel is inappropriate. In the event
that the Indemnifying Person, within ten days after notice of any such
action or claim, does not assume the defense thereof, the Indemnified
Person shall have the right to undertake the defense, compromise or
settlement of such action, claim or proceeding for the account of the
Indemnifying Person, subject to the right of the Indemnifying Person to
assume the defense of such action, claim or proceeding with counsel
reasonably satisfactory to the Indemnified Person at any time prior to the
settlement, compromise or final determination thereof. Anything in this
Article 5 to the contrary notwithstanding, the Indemnifying Person shall
not, without the Indemnified Person's prior consent, settle or compromise
any action or claim or consent to the entry of any judgment with respect to
any action, claim or proceeding for anything other than money damages paid
by the Indemnifying Person. The Indemnifying Person may, without the
Indemnified Person's prior consent, settle or compromise any such action,
claim or proceeding or consent to entry of any judgment with respect to any
such action or claim that requires solely the payment of money damages by
the Indemnifying Person and that includes as an unconditional term thereof
the release by the claimant or the plaintiff of the Indemnified Person from
all liability in respect of such action, claim or proceeding.
ARTICLE 6
DEFINED TERMS
Definitions. In addition to the other defined terms used herein, as
used in this Agreement, the following terms when capitalized have the
meanings indicated.
"Applicable Law" shall mean any statute, law, rule or regulation or
any judgment, order, writ, injunction or decree of any Governmental Entity
to which a specified person or its property is subject.
"Governmental Entity" shall mean any court or tribunal in any
jurisdiction or any public, governmental or regulatory body, agency,
department, commission, board, bureau or other authority or
instrumentality.
"Liens" shall mean pledges, liens, defects, leases, licenses,
equities, options, rights to buy, conditional sales contracts, charges,
claims, encumbrances, security interests, easements, restrictions, chattel
mortgages, mortgages or deeds of trust, of any kind or nature whatsoever.
ARTICLE 7
MISCELLANEOUS
Section 7.1 Survival of Representations, Warranties and Agreements.
The representations, warranties, covenants and agreements in this Agreement
or in any instrument delivered pursuant to this Agreement shall survive the
Exchange and shall not be limited or affected by any investigation by or on
behalf of any party hereto.
Section 7.2 Notices. All notices hereunder must be in writing and
shall be deemed to have been given upon receipt of delivery by: (a)
personal delivery to the designated individual; (b) certified or registered
mail, postage prepaid, return receipt requested; (c) a nationally
recognized overnight courier service (against a receipt therefor); or (d)
facsimile transmission with confirmation of receipt. All such notices must
be addressed to the address at which any party hereto may have notified the
other in writing.
Section 7.3 Headings; Gender. When a reference is made in this
Agreement to a section, exhibit or schedule, such reference shall be to a
section, exhibit or schedule of this Agreement unless otherwise indicated.
The headings contained in this Agreement are for reference purposes only
and shall not affect in any way the meaning or interpretation of this
Agreement. All personal pronouns used in this Agreement shall include the
other genders, whether used in the masculine, feminine or neuter gender,
and the singular shall include the plural and vice versa, whenever and as
often as may be appropriate.
Section 7.4 Entire Agreement; No Third Party Beneficiaries. This
Agreement (including the documents, exhibits and instruments referred to
herein) (a) constitutes the entire agreement and supersedes all prior
agreements, and understandings and communications, both written and oral,
among the parties with respect to the subject matter hereof, and (b) is not
intended to confer upon any person other than the parties hereto any rights
or remedies hereunder.
Section 7.5 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Louisiana without
regard to any applicable principles of conflicts of law.
Section 7.6 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party.
Section 7.7 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by reason of
any rule of law or public policy, all other conditions and provisions of
this Agreement shall nevertheless remain in full force and effect so long
as the economic or legal substance of the transactions contemplated hereby
is not affected in any adverse manner to either party. Upon such
determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good
faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in an acceptable manner to the end that the
transactions contemplated hereby are fulfilled to the extent possible, and
in any case such term or provision shall be deemed amended to the extent
necessary to make it no longer invalid, illegal or unenforceable.
Section 7.8 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which
taken together shall constitute one and the same document.
Section 7.9 Amendment and Modification. This Agreement may not be
amended or modified except by an instrument in writing signed by each of
the parties hereto.
Section 7.10 Limitation of Liability. Notwithstanding any other
provision of this Agreement, in no event shall any party hereto be liable
to any other party hereto with respect to breach or violation of any
provision in this Agreement, whether based on contract, tort (including
negligence), strict liability or other theory of law or equity, for loss of
anticipated profits or consequential loss or damage of any nature arising
at any time or from any cause whatsoever.
Section 7.11 Construction as Separate Contracts. Each Common Unit
Holder and each Option Holder is contracting separately with the other
parties hereto as to the Common Units or Common Unit Options shown as owned
by it on Exhibit A hereto. Notwithstanding anything to the contrary in
this Agreement, the covenants, obligations, representations and warranties
in this Agreement are made severally, and not jointly, by each such Common
Unit Holder or Option Holder and relate only to its Common Units or Common
Unit Options.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed themselves or by their respective duly authorized officers as of
the date first written above.
COMMON UNIT HOLDERS
ADVANTAGE CAPITAL PARTNERS
LIMITED PARTNERSHIP
By: Advantage Capital Corporation,
a Louisiana corporation,
General Partner
By: /s/ Steven T. Stull
--------------------
Name: Steven T. Stull
Title: President
ADVANTAGE CAPITAL PARTNERS II
LIMITED PARTNERSHIP
By: Advantage Capital Corporation,
General Partner
By: /s/ Steven T. Stull
--------------------
Name: Steven T. Stull
Title: President
ADVANTAGE CAPITAL PARTNERS III
LIMITED PARTNERSHIP
By: Advantage Capital Management
Corporation, General Partner
By: /s/ Steven T. Stull
--------------------
Name: Steven T. Stull
Title: President
ADVANTAGE CAPITAL PARTNERS IV
LIMITED PARTNERSHIP
By: Advantage Capital Financial
Company, L.L.C., General Partner
By: /s/ Steven T. Stull
--------------------
Name: Steven T. Stull
Title: President
ADVANTAGE CAPITAL PARTNERS V
LIMITED PARTNERSHIP
By: Advantage Capital Advisors, L.L.C.,
General Partner
By: /s/ Steven T. Stull
--------------------
Name: Steven T. Stull
Title: President
AMERICAN AVIATION, INCORPORATED
By: /s/ David A. Jeansonne
-----------------------
Name: David A. Jeansonne
Title: President and Chief Executive Officer
/s/ David A. Jeansonne
-----------------------
David A. Jeansonne
/s/ Roger E. Thomas
--------------------
Roger T. Thomas
Wesley William Woodard
By: /s/ Allen R. Woodard
---------------------
Allen R. Woodard,
Natural Tutor
Kaylee Theresa Woodard
By: /s/ Allen R. Woodard
---------------------
Allen R. Woodard,
Natural Tutor
/s/ Ben E. Thomas
------------------
Ben E. Thomas
/s/ Christina M. Thomas
------------------------
Christina M. Thomas
/s/ Alan J. Thomas
-------------------
Alan J. Thomas
/s/ Allen R. Woodard
---------------------
Allen R. Woodard
/s/ Shannon Daigle
-------------------
Shannon Daigle
OMNI OPTION HOLDERS
/s/ David E. Crays
-------------------
David E. Crays
/s/ William F. Fincher
-----------------------
William F. Fincher
/s/ David Booth
----------------
David Booth
/s/ Rita Darbonne
------------------
Rita Darbonne
ADVANTAGE CAPITAL MANAGEMENT
CORPORATION
By: /s/ Steven T. Stull
--------------------
Name: Steven T. Stull
Title: President
OMNI ENERGY SERVICES CORP.
By: /s/ Steven T. Stull
--------------------
Name: Roger E. Thomas
Title: President
EXHIBIT A
<TABLE>
<CAPTION>
MEMBERS AND ADDRESS TOTAL NUMBER OF COMMON COMMON UNIT TOTAL NUMBER
SHARES SHARE PERCENTAGE COMMON SHARES
<S> <C> <C> <C>
Allen R. Woodard 12,164 10.719% 1,286,333
4484 Interstate 49, North
Lafayette, Louisiana 70520
Allen R. Woodard, Natural Tutor 500 0.441% 52,875
of Wesley William Woodard
1901 Sevanne Road
Houma, Louisiana 70360
Allen R. Woodard, Natural Tutor 500 0.441% 52,875
of Kaylee Theresa Woodard
1901 Sevanne Road
Houma, Louisiana 70360
Roger E. Thomas 10,664 9.398% 1,127,708
4484 Interstate 49, North
Lafayette, Louisiana 70520
Ben E. Thomas 500 0.441% 52,875
1524 Applewood Road
Baton Rouge, Louisiana 70808
Christina M. Thomas 500 0.441% 52,875
1524 Applewood Road
Baton Rouge, Louisiana 70808
Alan J. Thomas 500 0.441% 52,875
1524 Applewood Road
Baton Rouge, Louisiana 70808
David A. Jeansonne 2,836 2.499% 299,905
P. O. Box 5409
Lafayette, Louisiana 70502
American Aviation Incorporated 10,213 9.000% 1,080,017
P. O. Box 5409
Lafayette, Louisiana 70502
Shannon H. Daigle 1,461 1.287% 154,500
358 W. Kenilworth Street
New Orleans, Louisiana 70124
Advantage Capital Partners 2,780 2.450% 293,983
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
Advantage Capital Partners II 9,398 8.282% 993,831
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
Advantage Capital Partners III 15,282 13.467% 1,616,060
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
Advantage Capital Partners IV 28,612 25.214% 3,025,697
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
Advantage Capital Partners V 17,566 15.480% 1,857,591
Limited Partnership
909 Poydras Street, Suite 2230
New Orleans, Louisiana 70112
TOTAL 113,476 100.000% 12,000,000{*}
</TABLE>
<TABLE>
<CAPTION>
OMNI OMNI ENERGY
OPTION HOLDER COMMON UNIT OPTIONS COMMON STOCK OPTIONS
<S> <C> <C>
David E. Crays 516 54,567
William F. Fincher 250 26,438
David Booth 250 26,438
Rita Darbonne 100 10,575
</TABLE>
EXHIBIT B
SCHEDULE A
OMNI GEOPHYSICAL, L.L.C.
MEMBERS, CAPITAL CONTRIBUTIONS, UNITS AND SHARING PERCENTAGES
<TABLE>
<CAPTION>
MEMBER CAPITAL TOTAL NUMBER COMMON UNIT
CONTRIBUTION COMMON UNITS SHARE PERCENTAGE
<S> <C> <C> <C>
Omni Energy Services Corp. $79,012.63 113,476 100%
4484 NE Evangeline Thruway
Carencro, Louisiana 70520
</TABLE>
EXHIBIT 10.15
=================================================================
AMENDED AND RESTATED LOAN AGREEMENT
dated as of
January 20, 1998
By and Among
OMNI ENERGY SERVICES CORP.,
AMERICAN AVIATION L.L.C.,
OMNI MARINE & SUPPLY, INC.,
and
HIBERNIA NATIONAL BANK
=================================================================
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement")
dated as of January 20, 1998, by and among OMNI ENERGY SERVICES
CORP., a Louisiana corporation (the "Borrower"), AMERICAN
AVIATION L.L.C., a Missouri limited liability company
("Aviation") OMNI MARINE & SUPPLY, INC., a Louisiana corporation
("Omni Marine"; Aviation and Omni Marine are herein collectively
called the "Guarantor"), and HIBERNIA NATIONAL BANK, a national
banking association (the "Bank").
R E C I T A L S:
1. The Bank has previously extended certain credit
facilities to Omni Geophysical, L.L.C., a Louisiana limited
liability company ("Omni Geophysical") pursuant to that certain
Loan Agreement dated as of July 19, 1996, by and between Omni
Geophysical and the Bank, as heretofore amended by that certain
First Amendment to Loan Agreement dated as of December 4, 1996,
and by that certain Second Amendment to Loan Agreement dated as
of April 4, 1997 (as so amended, the "Original Agreement").
2. The Original Agreement was amended and restated
pursuant to that certain Amended and Restated Loan Agreement
dated as of June 13, 1997, by and between Omni Geophysical and
the Bank, as amended by First Amendment thereto dated as of
August 6, 1997, by Second Amendment thereto dated as of September
30, 1997, and by Third Amendment thereto dated as of November 21,
1997 (the Amended and Restated Loan Agreement, as amended, is
herein called the "First Restated Agreement").
3. The First Restated Agreement provides for certain
credit and loan facilities to both Omni Geophysical and Aviation.
4. Effective January 5, 1998, Omni Geophysical was merged
into the Borrower, and pursuant to the merger, the Borrower
assumed all of Omni Geophysical's indebtedness to the Bank.
5. Each Guarantor is a wholly-owned subsidiary of the
Borrower.
6. The Borrower has applied to the Bank for new loans and
credit facilities, the proceeds of which will be used by the
Borrower, in part, to refinance the existing indebtedness of Omni
Geophysical and Aviation to the Bank.
7. The Bank has agreed to provide such credit and loan
facilities to the Borrower pursuant to the terms of this
Agreement. The Agreement shall amend and restate the Original
Agreement, as amended and restated by the First Restated
Agreement, in its entirety.
NOW, THEREFORE, in consideration of the mutual covenants
hereunder set forth, the Borrower, the Guarantor, and the Bank do
hereby amend and restate the Original Agreement, as amended and
restated by the First Restated Agreement, in its entirety, and do
hereby covenant and agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1. Defined Terms. As used in this Agreement, and
unless the context requires a different meaning, the following
terms have the meanings indicated:
"Acquisition Loan Commitment" shall mean the agreement by
the Bank to the Borrower to make loans to finance capital
expenditures and/or acquisitions in accordance with the
provisions of Article III hereof.
"Acquisition Loans" shall mean the loans made by the Bank
under the Acquisition Note to the Borrower in accordance
with and subject to the terms of the Acquisition Loan
Commitment.
"Acquisition Note" shall mean that certain promissory note
more fully described in Section 3.2.1 hereof, together with
any and all extensions, renewals, modifications, and
substitutions therefor.
"Agreement" shall mean this Amended and Restated Loan
Agreement, as the same may from time to time be amended,
modified or supplemented and in effect.
"Aircraft Security Agreement" shall mean that certain
Aircraft Security Agreement by Aviation, Omni Geophysical,
and the Bank, dated as of August 6, 1997, as amended by
First Amendment thereto dated as of December 29, 1997, and
as the same may be amended from time to time and in effect,
affecting certain aircraft, engines, propellers, and related
inventory, equipment and spare parts of Aviation.
"Average Funded Debt" shall mean the Borrower's consolidated
daily average amount outstanding under all credit facilities
at Bank plus any amounts outstanding elsewhere (including
any Additional Debt permitted under Section 12.5(d) of this
Agreement).
"Aviation" shall mean American Aviation L.L.C., a Missouri
limited liability company, together with its successors and
assigns.
"Applicable Margin" shall mean 1.50% until March 31, 1998.
Thereafter, the Applicable Margin shall be determined by
Omni Geophysical's Average Funded Debt to EBITDA ratio (on a
rolling four quarters basis), as follows:
Average Funded Debt Applicable
to EBITDA
Margin
x > 3.00x 2.25%
3.00 > x > 2.50 2.00%
2.50 > x > 2.25 1.75%
2.25 > x > 2.00 1.50%
2.00 > x > 1.50 1.35%
x < 1.50 1.25%
"Bank" shall mean Hibernia National the Bank, a national
banking association.
"Base Rate" shall mean the rate of interest established from
time to time by the Board of Directors or management of
Citibank, N.A., New York, New York, as its "prime" or "base"
lending rate, whether or not that rate is published, and
which is not necessarily the lowest rate charged by
Citibank, N.A., or by the Bank, such rate to be adjusted
automatically on and as of the effective date of any change
in such Base Rate.
"Borrower" shall mean, individually, interchangeably, and
collectively, , Omni Energy Services Corp., a Louisiana
corporation, together with its successors and assigns.
"Borrowing Base Amount" shall mean: (a) for the Revolving
Loan Commitment, at any time, based upon the most recent
timely submitted borrowing base certificate submitted by or
on behalf of the Borrower (but not less than on a weekly
basis), as the same may be adjusted by the Bank on a daily
basis upon review of the Borrower's sales journals and cash
receipts and as a result of field examinations of the
Collateral (using reasonable lending discretion), the lesser
of (i) $10,000,000.00, or (ii) the amount of Qualified
Receivables at such time; or (b) for the Acquisition Loan
Commitment, the lesser of (i) $9,000,000.00 or (ii) advances
for acquisitions by the Borrower are limited to an earnings
multiple of less than or equal to 5x projected EBITDA (based
upon the Borrower's current dayrates or contracts) and
advances for capital expenditures are limited to a loan to
value ratio of 75% for geophysical equipment and 80% for
aviation equipment. Further, for the Acquisition Loan
Commitment, advances to finance the purchase of geophysical
equipment are subject to a sublimit (in the aggregate) of
$4,000,000.00.
"Business Day" means a day other than a Saturday, Sunday or
legal holiday for commercial banks under the laws of the
State of Louisiana or a day on which national banks are
authorized to be closed in New Orleans, Louisiana, and, if
such day relates to a Conversion to, or Continuation of, a
LIBOR Rate Loan, also a day on which dealings in Dollar
deposits are carried out in the interbank market selected by
the Bank for purposes of setting the LIBOR Rate.
"Collateral" shall mean any interest in any kind of property
or assets pledged, mortgaged or otherwise subject to an
Encumbrance in favor of the Bank pursuant to the Collateral
Documents.
"Collateral Documents" shall collectively refer to the
Mortgage, the Security Agreements, the Guaranty, and any and
all other documents in which an Encumbrance is created on
any property of the Borrower, the Guarantor, or of any third
person to secure payment of the Indebtedness of either
Borrower or any part thereof.
"Commitments" shall mean, collectively, the Revolving Loan
Commitment, the Acquisition Loan Commitment, and the Term
Loan Commitment
"Credits" shall have the meaning assigned to that term in
Section 2.1 hereof.
"Credit Application" shall have the meaning assigned to that
term in Section 2.3.1 hereof.
"Credit Commission" shall have the meaning assigned to that
term in Section 2.3.3 hereof.
"Credit Obligation" shall have the meaning assigned to that
term in Section 2.3.4 hereof.
"Debt" shall mean any and all amounts and/or liabilities
owing from time to time by either Borrower to any Person,
including the Bank, direct or indirect, liquidated or
contingent, now existing or hereafter arising, including
without limitation (i) indebtedness for borrowed money; (ii)
the amounts of all standby and commercial letters of credit
and bankers acceptances, matured or unmatured, issued on
behalf of either Borrower; (iii) guaranties of the
obligations of any other Person, whether direct or indirect,
whether by agreement to purchase the indebtedness of any
other Person or by agreement for the furnishing of funds to
any other Person through the purchase or lease of goods,
supplies or services (or by way of stock purchase, capital
contribution, advance or loan) for the purpose of paying or
discharging the indebtedness of any other Person, or
otherwise; (iv) the present value of all obligations for the
payment of rent or hire of property of any kind (real or
personal) under leases or lease agreements required to be
capitalized under GAAP, and (v) trade payables and operating
leases incurred in the ordinary course of business or
otherwise.
"Default" shall mean an event which with the giving of
notice or the lapse of time (or both) would constitute an
Event of Default hereunder.
"Dollars" and "$" shall mean lawful money of the United
States of America.
"Dominion Account" shall have the meaning ascribed to such
term in Section 11.14 hereof.
"EBITDA" shall mean earnings before interest, taxes,
depreciation, and amortization, less dividends or
distributions.
"Encumbrances" shall mean individually, collectively and
interchangeably any and all presently existing and/or future
mortgages, liens, privileges, servitudes, rights-of-way and
other contractual and/or statutory security interests and
rights of every nature and kind that, now and/or in the
future may affect the property of either Borrower or the
Guarantor or any part or parts thereof.
"Environmental Laws" shall mean the Comprehensive
Environmental Response, Compensation, and Liability Act of
1980, as amended, 42 U.S.C. Section 9601, et seq.
("CERCLA"), the Superfund Amendments and Reauthorization Act
of 1986, Pub. L. No. 99-499 ("SARA"), the Hazardous
Materials Transportation Act, 49 U.S.C. Section 1801, et
seq., the Resource Conservation and Recovery Act, 49 U.S.C.
Section 6901, et seq., the Louisiana Environmental Affairs
Act, La. R.S. 30:2001 et seq., or other applicable
Governmental Requirements or regulations adopted pursuant to
any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended from time to time.
"Event of Default" shall mean individually, collectively and
interchangeably any of the Events of Default set forth below
in Section 13.1 hereof.
"Funded Debt" shall mean, on a consolidated basis, all
outstanding debt of Borrower from Bank and any other
outstanding debt of Borrower owed to other creditors.
"Funding Losses" shall mean, with respect to (a) Borrower's
payment or prepayment of principal of a LIBOR Rate Loan or
LIBOR Rate Tranche on a day other than the last day of the
applicable Interest Period, (b) Borrower's failure to borrow
a LIBOR Rate Loan or a LIBOR Rate Tranche on the date
specified by Borrower; (c) Borrower's failure to make any
prepayment of any LIBOR Rate Loans or LIBOR Rate Tranches on
the date specified by the Borrower, or (d) any cessation of
a LIBOR Rate to apply to the Loans or any Tranche thereof
pursuant to Section 7.5 hereof`, in each case whether
voluntary or involuntary, any loss, expense, penalty,
premium or liability incurred by the Bank (including but not
limited to any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds
acquired by the Bank to fund or maintain a Loan).
"GAAP" shall mean, at any time, accounting principles
generally accepted in the United States as then in effect.
"General Intangibles" shall mean, all general intangibles as
defined in 9-106 of the UCC, of the Borrower and the
Guarantor, whether now owned or hereafter acquired,
including without limitation (i) all contractual rights and
obligations or indebtedness owing to the Borrower (other
than Receivables) from whatever source arising; (ii) all
things and actions, rights represented by judgments and
claims arising out of tort and other claims related to the
Collateral, including the right to assert and otherwise be
the proper party of interest to commence and prosecute
actions; (iii) all goodwill, patents, patent licenses,
trademarks, trademark licenses, trade names, service marks,
trade secrets, rights and intellectual property, copyrights,
permits and licenses; (iv) all rights or claims in respect
of refunds for taxes paid; and (v) all deposit accounts of
the Borrower and the Guarantor, including the Dominion
Account.
"Governmental Requirement" shall mean any applicable state,
federal or local law, statute, ordinance, code, rule,
regulation, order or decree.
"Guarantor" shall mean individually, interchangeably, and
collectively Omni Marine & Supply, Inc., a Louisiana
corporation, and its successors and assigns, and American
Aviation L.L.C., a Missouri limited liability company, and
its successors and assigns, and any wholly-owned subsidiary
of Borrower that the Borrower may hereafter acquire.
"Guaranty" shall mean, collectively, that certain Commercial
Guaranty dated January 20, 1998 by Aviation in favor of the
Bank and that certain Commercial Guaranty dated January 20,
1998 by Omni Marine in favor of the Bank.
"Indebtedness" shall mean, at any time, the indebtedness of
the Borrower evidenced by the Notes executed by the Borrower
pursuant to this Agreement, in principal, interest, costs,
expenses and reasonable attorneys' fees and all other fees
and charges, together with all Credit Obligations, Credit
Commissions, commitment fees and other indebtedness and
costs and expenses for which the Borrower is responsible
under this Agreement or under any of the Related Documents.
In addition, the word "Indebtedness" also includes, any and
all other loans, extensions of credit, obligations, debts
and liabilities of the Borrower, plus interest thereon, that
may now and in the future be owed to or incurred in favor of
the Bank, as well as all claims by the Bank against the
Borrower, whether existing now or later; whether they are
voluntary or involuntary, due or to become due, direct or
indirect or by way of assignment, determined or
undetermined, absolute or contingent, liquidated or
unliquidated; whether the Borrower may be liable
individually or jointly with others, of every nature and
kind whatsoever, in principal, interest, costs, expenses and
reasonable attorneys' fees and all other fees and charges;
whether the Borrower may be obligated as principal obligor,
guarantor, surety, accommodation party or otherwise.
"Interest Payment Date" shall have the meaning ascribed to
such term in Section 6.2 hereof.
"Interest Period" shall mean with respect to a LIBOR Rate
Loan or a LIBOR Rate Tranche, each period commencing on (1)
the date any such LIBOR Rate Loan or LIBOR Rate Tranche of
any new Loan is made, or (2) the day following the last day
of the immediately preceding Interest Period for which a
LIBOR Rate-based rate for the LIBOR Rate Loan or LIBOR Rate
Tranche is applicable and is continued, and, in each case,
ending on the numerically corresponding day in the first,
second, or third calendar month thereafter, as a Borrower
may select as provided in Article VI hereof, except that
each Interest Period which commences on the last Business
Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent
calendar month) shall end on the last Business Day of the
appropriate subsequent calendar month. Notwithstanding the
foregoing: (i) if any Interest Period would otherwise
commence before and end after the final maturity date of the
Loan to which it relates, such Interest Period shall end on
the final maturity date of such Loan; (ii) each Interest
Period which would otherwise end on a day which is not a
Business Day shall end on the next succeeding Business Day,
unless such next succeeding Business Day falls in the next
succeeding calendar month, then on the next preceding
Business Day.
"LIBOR Rate" shall mean, with respect to the applicable
Interest Period in effect, an interest rate per annum equal
to the quotient (converted to a percentage) of (i) the rate
per annum of interest equal to the annual rate of interest
(rounded upward to the nearest whole multiple of 1/100 of
1%, if such average is not such a multiple) determined by
the Bank, at or before 11:00 a.m. New Orleans, Louisiana
time on the first day of such Interest Period, to be the
annual rate of interest at which deposits of Dollars are
offered by prime banks in whatever London interbank market
may be selected by the Bank in its sole discretion, acting
in good faith, at the time of determination and in
accordance with then existing practice in such market for
delivery on the first day of such Interest Period in
immediately available funds and having a maturity equal to
such Interest Period in an amount equal (or as nearly equal
as may be) to the applicable LIBOR Rate Loan, divided by
(ii) 1.00 minus the LIBOR Reserve Requirement (as defined
below), expressed as a decimal, for such Interest Period.
"LIBOR Reserve Requirement" shall mean for any day during an
Interest Period, that percentage which is specified by the
Board of Governors of the Federal Reserve System (or any
successor) for determining the maximum reserve requirement
(including, but not limited to, any marginal reserve
requirement) for the Bank with respect to liabilities
consisting of or including "Eurocurrency liabilities" (as
defined in Regulation D of the Board of Governors of the
Federal Reserve System) with a maturity equal to such
Interest Period. In determining the percentage, the Bank
may use any reasonable averaging and attribution methods.
Each determination by the Bank of a LIBOR Rate or of the
LIBOR Reserve Requirement used in determining same shall be
conclusive and binding, absent manifest error.
"LIBOR Rate Loan" shall mean any of the Loans (or any
portion thereof) bearing interest calculated on the basis of
the LIBOR Rate.
"LIBOR Rate Tranche" shall mean the amount of any Loan of
the Borrower that constitutes a LIBOR Rate Loan for a
specific Interest Period.
"Loans" shall mean, collectively, the Revolving Loans, the
Acquisition Loans, and the Term Loan.
"Loan Documents" shall mean this Agreement, the Notes, the
Collateral Documents and any other Related Documents.
"Material Adverse Change" shall mean, with respect to the
Borrower or either Guarantor, an event which causes a
material adverse effect on the business, assets, operations
or condition (financial or otherwise) of such Person, or
which otherwise changes in a materially adverse way any
other facts, circumstances or conditions which the Bank has
relied upon or utilized in making its Commitments hereunder.
"Mortgage" shall mean that certain Multiple Indebtedness
Mortgage by Omni Geophysical in favor of the Bank dated June
13, 1997, as amended from time to time and in effect,
pursuant to which the Bank is granted a mortgage lien on
certain real property in Lafayette Parish, Louisiana; which
Mortgage is recorded in the mortgage records of Lafayette
Parish under File No. 97-020694.
"Notes" shall mean, collectively, the Revolving Note, the
Acquisition Note and the Term Note, as each of them may be
renewed or extended, together with all other promissory note
or notes given in renewal, substitution or as a refinancing
of any part of the indebtedness evidenced thereby.
"Omni Geophysical" shall mean Omni Geophysical, L.L.C., a
Louisiana limited liability company, together with its
successors and assigns.
"Omni Marine" shall mean Omni Marine & Supply, Inc., a
Louisiana corporation, together with its successors and
assigns.
"Permitted Encumbrances" shall have the meaning ascribed to
such term in Section 12.4 hereof.
"Person" shall mean an individual or a corporation,
partnership, trust, joint venture, incorporated or
unincorporated association, joint stock company, government,
or an agency or political subdivision thereof, or other
entity of any kind.
"Qualified Receivables" shall mean eighty percent (80%) of
the Receivables of the Borrower and/or the Guarantor,
carried on their respective books of account, which, on the
date as of which the determination is made, (a) are subject
to a first priority perfected Encumbrance in favor of the
Bank, (b) arose in the ordinary course of business of the
Borrower and/or the Guarantor, (c) arose from the sale of
goods or performance of services by the Borrower and/or the
Guarantor, (d) are evidenced by an "invoice" (i.e., an
invoice, shipping order or similar writing), (e) are not
subject to setoff, counterclaim, defense, or a dispute of
any kind or nature, (f) are not more than 90 days old, (g)
are payable by Persons other than any Person who is an
affiliate (as defined in accordance with GAAP) of the
Borrower and/or the Guarantor or an officer or director of
the Borrower and/or the Guarantor or an officer or director
of an affiliate of the Borrower and/or the Guarantor, (h)
are not payable by the United States of America or any
agency or department thereof (unless such Receivable has
been assigned to the Bank pursuant to a properly perfected
assignment under the Federal Assignment of Claims Act, 31
U.S.C. 3727), (i) do not by their own terms prohibit the
collateral assignment thereof or require the consent of the
obligor thereon to any collateral assignment thereof, (j) do
not arise out of a transaction with an account debtor
outside the United States of America (unless covered by a
letter of credit acceptable to the Bank), (k) are not
Receivables due by a Person from whom over 50% of its entire
accounts receivable balance with the Borrower or the
Guarantor is unpaid for more than 90 days past the invoice
date(s) related thereto, (l) are not credit balances, (m)
are not Receivables which the Bank believes, in its sole
credit judgment reasonably applied, that collection of such
Receivables is insecure or that such Receivables may not be
paid by reason of the account debtor's financial inability
to pay or that such Receivables are otherwise unacceptable
collateral, (n) are not that portion of the Receivables due
by a single Person which are in excess of 25% (but in no
event in excess of 50%) of all of the Receivables due to the
Borrower and/or the Guarantor where such Person is not rated
or is rated (by a national rating agency acceptable to the
Bank) less than BBB-; provided, the term "Qualified
Receivables" shall include all Receivables of any single
Person which would otherwise qualify as such which do not
exceed 50% of all of the Receivables of the Borrower where
such Person is rated (by a national rating agency acceptable
to the Bank) BBB- or better, and (o) commencing 90 days from
the date hereof, are owed by a Person who has either signed
an acceptance of the work giving rise to the Receivable or
signed an acceptance of the proposal for work giving rise to
the Receivable. For purposes of this Agreement, a
Receivable is 90 days old on the 90th day after the date of
the invoice evidencing such Receivable (regardless of the
due date of such invoice).
"Receivables" shall mean, with respect to such Person, all
accounts (as such term is defined in 9-106 of the UCC) of
such Person, including all indebtedness presently existing
or hereafter owing to such Person in connection with such
Person's business, profession, occupation or undertaking,
including, but not limited to, the sale of goods or the
performance of services, together with all proceeds thereof;
excluding, however, any indebtedness due to or arising out
of claims in tort and indebtedness evidenced by a promissory
note or a negotiable instrument.
"Related Documents" shall mean and include individually,
collectively, interchangeably and without limitation all
promissory notes, credit agreements, loan agreements,
guaranties, security agreements, mortgages, collateral
mortgages, deeds of trust, and all other instruments and
documents, whether now or hereafter existing, executed in
connection with the Indebtedness.
"Request for Advance" shall mean the Borrower's request for
an Acquisition Loan or a Revolving Loan, as the case may be.
"Revolving Loan Commitment" means the agreement by the Bank
to the Borrower to make Revolving Loans and to issue Credits
in accordance with the provisions of Article II hereof.
"Revolving Loans" shall mean loans made by the Bank under
the Revolving Note to the Borrower in accordance with and
subject to the terms of the Revolving Loan Commitment.
"Revolving Note" shall mean that certain promissory note
more fully described in Section 2.2.1 hereof, together with
any and all extensions, renewals, modifications, and
substitutions therefor.
"Security Agreements" shall mean (i) that certain Commercial
Security Agreement dated July 19, 1996, by Omni Geophysical
in favor of the Bank, as amended by First Amendment thereto
dated as of June 13, 1997, by Second Amendment thereto dated
as of August 6, 1997, by Third Amendment thereto dated as of
September 30, 1997, by Fourth Amendment thereto dated as of
November 21, 1997, and by Fifth Amendment thereto dated as
of January 20, 1998, affecting all of the properties
described therein, (ii) that certain Security Agreement
(Fixtures) by Omni Geophysical dated as of June 13, 1997 in
favor of the Bank, as amended by First Amendment thereto
dated as of January 20, 1998, (iii) the Aircraft Security
Agreement, as amended by First Amendment thereto dated as of
December 29, 1997, and by Second Amendment thereto dated as
of January 20, 1998, (iv) Commercial Security Agreement
dated August 6, 1997 by Aviation in favor of the Bank, as
amended by First Amendment thereto dated as of January 20,
1998, (v)Commercial Security Agreement by the Borrower in
favor of the Bank dated as of January 20, 1998, (vi)
Commercial Security Agreement by Omni Marine dated as of
January 20, 1998 in favor of the Bank, (vii) all UCC-1
financing statements, and related documents required by the
Bank in connection with any of the foregoing, (viii) all
amendments or modifications to any of the foregoing, and
(ix) all additional security agreements hereafter granted by
any Person as security for the Indebtedness, together with
any and all amendments or modifications to any of the
foregoing.
"Solvent" shall mean, when used with respect to any Person
on a particular day, that on such date (i) the fair value of
the property of such Person is greater than the total amount
of liabilities, including without limitation, contingent
liabilities, of such person, (ii) the present fair salable
value of the assets of such person is not less than the
amount that will be required to pay the probable liability
of such Person on its debts as they become absolute and
matured, (iii) such Person is able to realize upon its
assets and pay its debts and other liabilities, contingent
obligations and other commitments as they mature in the
ordinary course of business, (iv) such Person does not
intend to, and does not believe that it will, incur debts
and liabilities beyond such Person's ability to pay as such
debts and liabilities mature, and (v) such Person is not
engaged in business or a transaction, and is not about to
engage in business or a transaction, for which such Person's
property would constitute unreasonably small capital after
giving due consideration to the prevailing practice in the
industry in which such person is engaged. In computing the
amount of contingent liabilities at any time, it is intended
that such liabilities will be computed at the amount which,
in light of all of the facts and circumstances existing at
such time, represents the amount that can be reasonably
expected to become an actual or matured liability.
"Subsidiaries" shall mean at any date with respect to any
Person all the corporations of which such Person at such
date, directly or indirectly, owns 50% or more of the
outstanding capital stock (excluding directors' qualifying
shares), and "Subsidiary" means any one of the Subsidiaries.
"Tangible Net Worth" shall mean, at any time, the Borrower's
consolidated total assets excluding intangible assets (i.e.,
patents, copyrights, trademarks, trade names, franchises,
goodwill, organizational expenses, and similar intangible
expenses, but including leaseholds and leasehold
improvements), less the consolidated total liabilities of
the Borrower.
"Termination Date" shall mean, with respect to the Bank's
Commitments the earlier to occur of (i) January 20, 2000, or
(ii) the date of termination of the Commitments pursuant to
Article XIII hereof.
"Term Loan" shall have the meaning assigned to that term in
Section 4.1 hereof.
"Term Loan Commitment" shall have the meaning assigned to
that term in Section 4.1 hereof.
"Term Note" shall have the meaning assigned to that term in
Section 4.2 hereof.
"Tranche" shall mean a portion of any of the Loans
outstanding to the Borrower that bears interest at a
particular LIBOR Rate.
"UCC" shall mean the Uniform Commercial Code, Commercial
Laws-Secured Transactions (La. R.S. 10-9-101 et seq.) in the
State of Louisiana, as amended from time to time, provided
that if by reason of mandatory provisions of law, the
perfection or effect of perfection or non-perfection of the
Bank's Encumbrances against the Collateral is governed by
the Uniform Commercial Code as in effect in a jurisdiction
other than the State of Louisiana "UCC" means the Uniform
Commercial Code as in effect in such other jurisdiction.
Section 1.2. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP, and all financial data submitted pursuant to this Agreement
shall be prepared in accordance with GAAP.
ARTICLE II
REVOLVING LOANS AND
LETTERS OF CREDIT
Section 2.1. The Revolving Loan Commitment. Subject to the
terms and conditions of this Agreement, the Bank agrees to extend
credit to the Borrower during the period from the date hereof
until the Termination Date (a) by making Revolving Loans to the
Borrower from time to time, and (b) by the Bank issuing
irrevocable standby and commercial letters of credit (said
irrevocable standby and commercial letters of credit being
referred to herein as the "Credits") for the account of the
Borrower from time to time; provided, however, that at no time
shall the sum of (1) the aggregate principal amount of Revolving
Loans to the Borrower at such time outstanding, plus (2) the
aggregate unfunded amount of Credits issued for the account of
the Borrower at such time outstanding, exceed the Borrowing Base
Amount then in effect. In the event, at any time, and from time
to time, the sum of all outstanding Revolving Loans and Credits
issued and outstanding to the Borrower exceeds the Borrowing Base
Amount then in effect, the Borrower shall prepay the Revolving
Loans by such an amount to cause the sum of the Revolving Loans
and Credits outstanding to the Borrower to equal the Borrowing
Base Amount (or, at the option of the Bank, the Borrower may post
cash collateral to secure such deficiency in the Borrowing Base
Amount).
Section 2.2. Revolving Loans.
Section 2.2.1. Revolving Loans. Subject to the terms and
conditions of this Agreement, the Bank agrees to make Revolving
Loans to the Borrower from time to time during the period from
the date hereof to and including the Termination Date; provided,
however, that (1) no such Revolving Loan shall exceed an amount
which, when added to (i) the aggregate principal amount of all
Revolving Loans to the Borrower at such time outstanding, plus
(ii) the aggregate undisbursed amount of Credits issued for the
account of the Borrower at such time outstanding, exceeds the
Borrowing Base Amount then in effect. Within the limits set
forth herein, the Borrower may borrow from the Bank hereunder,
repay any and all such Revolving Loans as hereinafter provided
and reborrow hereunder. The Borrower's obligation to repay the
Revolving Loans made by the Bank shall be evidenced by a master
promissory note of the Borrower (said promissory note being
herein referred to as the "Revolving Note"), payable to the order
of the Bank in the principal sum of $10,000,000.00 or such other
or lesser amount as may be reflected from time to time on the on
the books and records of the Bank as evidencing the aggregate
unpaid principal balance of all Revolving Loans made to the
Borrower, with a final maturity of January 20, 2000, and bearing
interest at the rate or rates from time to time in effect
pursuant to the terms of Article VI hereof. Interest on the
Revolving Note shall be payable in accordance with the terms of
Section 6.2 hereof.
Section 2.2.2. Manner and Notice of Borrowing Under the
Revolving Loan Commitment. Requests For Advances under the
Revolving Loan Commitment may be made by the Borrower in person,
in writing (including facsimile transmission) or through
telephone calls to the Bank and such requests shall be fully
authorized by the Borrower if made by any one of the persons
designated by the Borrower in writing to the Bank. The Bank
shall have the right, but not the obligation, to verify any
telephone requests by calling the person who made the request at
the telephone number designated by the Borrower in writing to the
Bank. Requests For Advances must be received by not later than
11:00 a.m. (Central Time) on the date of the proposed advance.
Not later than the close of business on the date of such request,
assuming all conditions of this Agreement for such advance has
been satisfied, the Bank will make such advance. The amount
thereof shall be credited by the Bank to the checking account
maintained in the name of the Borrower with the Bank and the
credit advice resulting therefrom shall be mailed to the
Borrower. The Bank's copy of such credit advice indicating such
deposit to the account of the Borrower shall be deemed conclusive
evidence of the Borrower's indebtedness to the Bank in connection
with such borrowing. The aggregate outstanding amount of
principal and interest due by the Borrower at any given time
under the Revolving Loan Commitment shall be and constitute the
indebtedness of the Borrower to the Bank under the Revolving Note
made by the Borrower. When each advance is made by the Bank to
the Borrower hereunder, the Borrower shall be deemed to have
renewed and reissued its Revolving Note for the amount of the
advance plus all amounts due by the Borrower to the Bank under
the Revolving Loan Commitment immediately prior to such advance.
Section 2.2.3. Borrowings Under the Revolving Loan
Commitment. Within the limits of the Revolving Loan Commitment
to the Borrower hereunder and subject to the terms and conditions
of this Agreement, the Bank shall only be obligated to lend the
Borrower an amount which will not cause its Borrowing Base Amount
to be exceeded. During the period of the Revolving Loan
Commitment, the Borrower may use the Revolving Loan Commitment by
borrowing, prepaying and reborrowing, all in accordance with the
terms and conditions of this Agreement.
Section 2.2.4. Payment of the Revolving Note Under the
Revolving Loan Commitment. Interest on the unpaid principal
balance of the Revolving Note shall be payable in accordance with
the terms of Section 6.2 hereof. Principal shall be payable on
the Termination Date; provided, however, in the event at any time
the aggregate outstanding principal amounts of the Revolving
Loans to the Borrower, when added to the aggregate unfunded
amounts of Credits at such time outstanding to the Borrower,
causes its Borrowing Base Amount to be exceeded, the Borrower
shall immediately upon demand by the Bank prepay its Revolving
Note in an amount necessary to cause the aggregate principal
amount of its unpaid Revolving Loans plus the aggregate unfunded
amount of its Credits to equal its Borrowing Base Amount (or, at
the option of the Bank, the Borrower may post cash collateral to
secure such deficiency in its Borrowing Base Amount). The
Borrower hereby authorizes the Bank to debit the Dominion Account
to pay interest due on the Revolving Note on each Interest
Payment Date, and to credit all proceeds of the Receivables
received in the Dominion Account when collected (or earlier, if
the Bank in its sole discretion allows such funds to be available
to the Borrower prior to the date on which any checks or other
instruments given in payment of Receivables are actually
collected) towards payment of the Revolving Loans outstanding
under the Revolving Note. Further, in the event there is no
outstanding debt under the Revolving Note, the Borrower
authorizes the Bank to sweep daily the proceeds from the Dominion
Account into the Borrower's operating account with Bank. The
Bank agrees to give notice to the Borrower of any debits to the
said funding account used to pay interest within three (3)
Business Days following each such debit.
Section 2.2.5. Reserved
Section 2.2.6. Proceeds of Dominion Account. The Borrower
has executed a lockbox agreement with the Bank, pursuant to which
all checks, drafts and other instruments evidencing payment of
the Borrower's Receivables shall be delivered to the Bank and
deposited into the Borrower's Dominion Account more fully
described in Section 11.14 hereof. The Borrower hereby
authorizes the Bank to apply, on a daily basis, the proceeds of
all its accounts receivable actually collected (or, at the sole
discretion of the Bank, amounts which have been received but not
yet collected) by the Bank from the Dominion Account to reduce
the outstanding principal balance of the Revolving Loans due.
Such payments will adjust availability immediately for purposes
of loan availability and on the next day for bookkeeping and
interest purposes.
Section 2.2.7. Use of Proceeds. The Borrower shall use the
proceeds of the Revolving Loan Commitment solely to refinance
existing indebtedness incurred by Omni Geophysical and thereafter
to finance working capital requirements and general corporate
purposes of the Borrower.
Section 2.2.8. Overlines and Overadvances. Notwithstanding
the provisions of Section 2.2.1 hereof, in the event that at any
time the aggregate unpaid principal amount of the Revolving Loans
ever exceeds $10,000,000 (the maximum possible amount of the
Borrowing Base Amount), the Borrower agrees to pay the excess
amount (an "overline") immediately upon demand by the Bank. In
the event the unpaid principal amount of the Revolving Loans ever
exceeds the Borrowing Base Amount then in effect, the Borrower
agrees to pay the excess amount (an "overadvance") immediately
upon demand by the Bank. Overlines and overadvances shall bear
interest at the rate (or at the highest rate, if more than one
rate is then in effect) borne by the Revolving Note. Upon
request of the Bank, the Borrower shall execute a promissory
note, payable to the order of the Bank, to represent the amount
of any overline or overadvance; however, the Borrower
acknowledges and agrees that the records of the Bank and this
Agreement shall constitute conclusive evidence of any overline or
overadvance and the obligation of the Borrower to repay any
overline or overadvance, with interest. All overlines and
overadvances for which the Bank has not demanded payment earlier,
and all unpaid and accrued interest on overlines and overadvances
not due and payable earlier, shall be due and payable on the
Termination Date. The Borrower acknowledges and agrees that the
Bank is not obligated to the Borrower to fund any advance which
would create an overline or overadvance.
Section 2.3. The Credits.
Section 2.3.1. The Credits. Upon the written application
of the Borrower, using the form of letter of credit application
then normally required by the Bank in connection with the
issuance of such Credits (the "Credit Application"), executed by
the Borrower (or by any one of the persons designated by the
Borrower in writing to the Bank in accordance with the terms
hereof), the Bank agrees, subject to the terms and conditions of
this Agreement, that it will issue its Credit substantially in
accordance with the Credit Application. Credits may either be
commercial letters of credit, in which case they shall have an
expiry date on a Business Day not later than the earlier to occur
of the Termination Date, or standby letters of credit issued to
secure workers' compensation obligations of the Borrower (or for
other purposes deemed acceptable by the Bank in its sole
discretion), in which case they shall have an expiry date not
later than the earlier to occur of the Termination Date or one
year from the date of issuance. In no event shall a Credit be
issued by the Bank for the account of the Borrower (i) if the sum
of the face amount thereof when added to the aggregate unfunded
amount of Credits issued for the account of the Borrower then
outstanding exceeds $1,000,000.00 or (ii) if the sum of the face
amount thereof when added to the aggregate unfunded amount of
Credits issued for the account of the Borrower then outstanding
plus the aggregate principal amount of the Revolving Loans to the
Borrower at such time outstanding exceeds the Borrowing Base
Amount then in effect.
Section 2.3.2. Issuance of Credits. Each Credit shall be
issued not later than three (3) Business Days after receipt by
the Bank of the Credit Application related thereto. No later
than 12:00 noon (Central Time) on the third Business Day
following receipt of the Credit Application and upon fulfillment
of the applicable conditions set forth in this Agreement, the
Bank shall issue its Credit. The Bank may rely fully and
completely upon the authority of the signatory of the Credit
Application and the contents thereof unless such authority is
terminated by written notice delivered to the Bank, and any such
termination of authority shall be effective only prospectively.
Section 2.3.3. Credit Commission. The Borrower agrees to
pay to the Bank the standard fees charged and established by the
Bank from time to time for the issuance and processing of letters
of credit (the "Credit Commission") with respect to each Credit
created by the Bank hereunder. Payment of such Credit Commission
with respect to each Credit created by the Bank shall be paid in
advance on the date of issuance of the Credit. With respect to
standby Credits issued hereunder, the Borrower unconditionally
agrees to pay to the Bank, in addition to the Bank's standard
fees for the issuance and processing of such Credits, a
commission, payable in advance on or before the date of issuance
of each Credit, calculated at the rate of 1.50% per annum on the
face amount of each Credit, based upon the number of days of the
term of each such Credit divided by 360, which commission shall
not be less than $300.00 per standby letter of credit.
Section 2.3.4. Credit Obligations. The Borrower agrees
unconditionally to pay the Bank on demand in United States
currency at the Bank's principal office in New Orleans,
Louisiana, the amount required to pay (a) any and all drafts
drawn and any and all demands made or purported to be made under
any Credit issued for its account, (b) any and all costs,
charges, fees and/or expenses incurred or paid by the Bank in
connection with any Credit issued for its account, and (c)
interest on such amounts described above under (a) and (b) as
hereinafter provided (the "Credit Obligations"). In the event of
any drafts drawn and any and all demands made under any Credit
are payable in foreign currency, the Borrower agrees to make the
aforementioned payment to the Bank in United States currency at
the Bank's selling rate for cable transfers to the place of
payment of such draft on the date of such payment. Such
obligation of the Borrower shall be deemed a Credit Obligation
hereunder. The Borrower further agrees to comply with any and
all governmental currency exchange regulations or requirements
now or hereafter applicable to such Credit or to any drafts
related thereto. The Borrower further authorizes the Bank, at
its option, to compensate itself by applying any part or all of
the balance of any deposit account or certificate of deposit
which the Borrower may maintain with the Bank, at any time,
whether or not the deposit is mature, and/or any and all monies
or property or interest of any kind now or hereafter in the
Bank's hands, or in transit to or from the Bank, and belonging to
the Borrower, to the payment, in whole or in part, of the amount
of any draft and all interest, costs and attorney's fees which
the Borrower may owe the Bank pursuant to this Agreement. In the
event a Credit Obligation is not paid when demanded by the Bank,
the Borrower agrees to pay to the Bank on demand a sum equal to
the amount of the Credit Obligation, plus interest thereon from
the date the Credit Obligation is demanded by the Bank until paid
at the interest rate then in effect under the Revolving Note. A
payment shall not be deemed made until funds therefor have been
actually collected and made available to the Bank. Upon the
occurrence of an Event of Default hereunder, the Borrower agrees
to pay to the Bank on demand a sum equal to the aggregate
unfunded amounts of all Credits outstanding, together with
interest thereon at the Base Rate, or at any higher rate of
interest which the Bank may impose as a default rate pursuant to
the terms of the Borrower's Revolving Note issued pursuant to the
terms hereof (such obligation of the Borrower shall be deemed a
Credit Obligation as such term is used herein). Upon the
occurrence of such Event of Default, the Bank may exercise its
right of offset and compensation set forth above in this Section
2.3.4. Any amount which the Bank offsets or which the Borrower
may pay to the Bank in excess of drafts actually drawn on any
outstanding Credits, shall be held by the Bank in pledge to
secure the payment of future drafts until the Commitments to the
Borrower have been terminated, all Indebtedness of the Borrower
has been paid in full, and no further Credits issued for the
account of the Borrower are outstanding.
Section 2.3.5. Revolving Loans. In the event that Credit
Obligations owed the Bank by the Borrower are not paid when due
for any reason including Credit Obligations arising upon
occurrence of an Event of Default hereunder, notwithstanding the
limitation contained in Section 2.2.1, such Credit Obligations
shall be immediately paid by the Borrower pursuant to Revolving
Loans in the amount of such Credit Obligations. Such Credit
Obligations shall be immediately converted to Revolving Loans by
the Bank and evidenced by the Revolving Note. If at any time any
Event of Default occurs and any portion of any Credits remains
unfunded, the Borrower for whose account such Credits were issued
shall pay to the Bank in cash for application to future drawings
under the outstanding Credits, an amount equal to the aggregate
unfunded portion of the outstanding Credits. If the Borrower
does not pay such amount on demand, notwithstanding the
limitation contained in Section 2.2.1, such amount shall be
immediately paid by the Borrower by Revolving Loans to the
Borrower from the Bank. Such amount shall be immediately
converted to a Revolving Loan by the Bank and shall be evidenced
by the Revolving Note. The amount of such Revolving Loans shall
be held by the Bank in pledge securing all of the Borrower's
obligations under this Agreement, with the Borrower hereby
granting the Bank a continuing security interest in such funds as
security for the Indebtedness of the Borrower until the
Commitments have all terminated, all Indebtedness of the Borrower
has been paid in full, and no further Credits issued for the
account of the Borrower are outstanding.
Section 2.3.6. Hold Harmless. The Bank shall have the
right to deliver the Credit through any correspondents or agents
(the "Correspondents") that the Bank in its sole discretion may
choose. Except in the case of the Bank's gross negligence or
willful misconduct, the Borrower shall hold the Bank harmless
from any actions that arise out of the handling of such delivery
by the Correspondents making the delivery. The Borrower further
agrees that the Bank and any Correspondent shall not in any way
be responsible for performance by any beneficiary of obligations
to the Borrower nor for the form, validity, sufficiency,
correctness, truthfulness or genuineness of any documents
delivered in connection with any Credit, even if such documents
should in fact prove to be in any or all respects invalid,
insufficient, fraudulent or forged; for failure of any Credit
draft to bear any reference or correct reference to the Credit;
for errors, omissions, or delays in transmission or delivery of
any messages, whether by mail, cable, teletransmission, or
otherwise; or for any error, neglect or default of any
Correspondents. The Borrower further agrees that, if any of the
above events should occur, such event will not affect, impair or
prevent the Borrower's liability or the Bank's rights or powers
hereunder. No liability shall attach to the Bank or to the
Correspondents for any losses or damage, in consequence of
present or future laws, censorships, regulations, decrees, orders
or restrictions, right or wrongfully exercised by an de facto or
de jure government or governmental agency. Without limiting the
foregoing, and in addition to any other provision hereof, the
Bank is hereby expressly authorized and directed to honor any
request for payment which is made under and in compliance with
the terms of the Credit without regard to, and without any duty
on the Bank's part to inquire into, the existence of any disputes
or controversies between the Borrower and the beneficiary or any
other person, firm, or corporation, or the respective rights,
duties or liabilities of any of them or whether any facts or
occurrences represented in any documents presented under the
Credit are true and correct. The Borrower fully understands and
agrees that the sole obligation of the Bank to the Borrower shall
be limited to honoring requests for payment made under and in
compliance with the Credit and the obligation of the Bank remains
so limited even if the Bank may have assisted the Borrower in the
preparation of the wording of the Credit or any documents
required to be presented thereunder or if the Bank may otherwise
be aware of the underlying transaction giving rise to the Credit.
If the Bank, in its sole discretion and at the written request of
the Borrower, agrees to any change or modification to the amount
or terms of any Credit or any instrument or document related
thereto, the Borrower agrees that this Agreement shall be binding
upon it with regard to any changes or modifications and with
regard to any actions taken by the Bank or by any agents or
Correspondents relative thereto.
ARTICLE III
ACQUISITION LOANS
Section 3.1. The Acquisition Loan Commitment. Subject to
the terms and conditions of this Agreement, the Bank agrees to
extend credit to the Borrower during the period from the date
hereof until January 20, 1999 by making Acquisition Loans to the
Borrower from time to time for the account of the Borrower;
provided, however, (i) advances under the Acquisition Loan
Commitment are subject to a sublimit for geophysical equipment
purchases and loan availability limits, all as set forth in the
definition of Borrowing Base Amount applicable to the Acquisition
Loan Commitment, and (ii) that at no time shall the sum of the
aggregate principal amount of Acquisition Loans to the Borrower
at such time outstanding exceed the Borrowing Base Amount then in
effect. In the event, at any time, and from time to time, the
sum of all outstanding Acquisition Loans issued and outstanding
to the Borrower exceeds the Borrowing Base Amount then in effect,
the Borrower shall prepay the Acquisition Loans by such an amount
to cause the sum of the Acquisition Loans outstanding to the
Borrower to equal the Borrowing Base Amount (or, at the option of
the Bank, the Borrower may post cash collateral to secure such
deficiency in the Borrowing Base Amount). The Acquisition Loan
Commitment is a non-revolving loan commitment.
Section 3.2. Acquisition Loans.
Section 3.2.1. Acquisition Note. Subject to the terms and
conditions of this Agreement, the Bank agrees to make Acquisition
loans to the Borrower from time to time during the period of the
date hereof to January 20, 1999, provided however, that (1) no
such Acquisition Loan shall exceed an amount which, when added to
(i) the aggregate principal amount of all Acquisition Loans to
the Borrower at such time outstanding exceeds the Borrowing Base
Amount then in effect. The Borrower's obligation to repay the
Acquisition Loans made by the Bank shall be evidenced by a master
promissory note of the Borrower (said promissory note being
herein referred to as the "Acquisition Note"), payable to the
order of the Bank in the principal sum of $9,000,000.00 or such
other or lesser amount as may be reflected from time to time on
the books and records of the Bank as evidencing the aggregate
unpaid principal balance of Acquisition Loans made to the
Borrower, with a final maturity of January 20, 2000, and bearing
interest at the rate or rates from time to time in effect
pursuant to the terms of Article VI hereof. Interest on the
Acquisition Note shall be payable in accordance with the terms of
Section 6.2 hereof.
Section 3.2.2. Manner and Notice of Borrowing Under the
Acquisition Loan Commitment. Requests For Advances under the
Acquisition Loan Commitment may be made by the Borrower in
person, in writing (including facsimile transmission) or through
telephone calls to the Bank and such requests shall be fully
authorized by the Borrower if made by any one of the persons
designated by the Borrower in writing to the Bank. The Bank
shall have the right, but not the obligation, to verify any
telephone requests by calling the person who made the request at
the telephone number designated by the Borrower in writing to the
Bank. Requests For Advances must be received by not later than
11:00 a.m. (Central Time) on the date of the proposed advance.
Not later than the close of business on the date of such request,
assuming all conditions of this Agreement for such advance has
been satisfied, the Bank will make such advance. The amount
thereof shall be credited by the Bank to the checking account
maintained in the name of the Borrower with the Bank and the
credit advice resulting therefrom shall be mailed to the
Borrower. The Bank's copy of such credit advice indicating such
deposit to the account of the Borrower shall be deemed conclusive
evidence of the Borrower's indebtedness to the Bank in connection
with such borrowing. The aggregate outstanding amount of
principal and interest due by the Borrower at any given time
under the Acquisition Loan Commitment shall be and constitute the
indebtedness of the Borrower to the Bank under the Acquisition
Note made by the Borrower. When each Acquisition Loan is made by
the Bank to the Borrower hereunder, the Borrower shall be deemed
to have renewed and reissued its Acquisition Note for the amount
of the advance plus all amounts due by the Borrower to the Bank
under the Acquisition Loan Commitment immediately prior to such
advance.
Section 3.2.3. Borrowings Under the Acquisition Loan
Commitment. Within the limits of the Acquisition Loan Commitment
and subject to the terms and conditions of this Agreement, the
Bank shall only be obligated to lend the Borrower an amount which
will not cause the Borrowing Base Amount to be exceeded.
Section 3.2.4. Payment of the Acquisition Note Under the
Acquisition Loan Commitment. Interest on the unpaid principal
balance of the Acquisition Note shall be payable quarterly for
the first twelve (12) months. Thereafter, principal and interest
shall be paid quarterly based on a five (5) year straight line
amortization, with a final maturity of January 20, 2000. In the
event at any time the aggregate outstanding principal amounts of
the Acquisition Loans to the Borrower causes the Borrowing Base
Amount to be exceeded, the Borrower shall immediately upon demand
by the Bank prepay its Acquisition Note in an amount necessary to
cause the aggregate principal amount of its unpaid Acquisition
Loans to equal the Borrowing Base Amount (or, at the option of
the Bank, the Borrower may post cash collateral to secure such
deficiency in its Borrower Base Amount). The Borrower hereby
authorizes the Bank to debit the Dominion Account to pay interest
due on the Acquisition Note on each Interest Payment Date during
the first twelve (12) months. The Bank agrees to give notice to
the Borrower of any debits to the said funding account used to
pay interest within three (3) Business Days following each such
debit.
Section 3.2.5. Use of Proceeds. The Borrower shall use the
proceeds of the Acquisition Loan Commitment solely to finance
capital expenditures and acquisitions.
Section 3.2.6. Overlines and Overadvances. Notwithstanding
the provisions of Section 3.2.1 hereof, in the event that at any
time the aggregate unpaid principal amount of the Acquisition
Loans ever exceeds $9,000,000 (the maximum possible amount of the
Borrowing Base Amount), the Borrower agrees to pay the excess
amount (an "overline") immediately upon demand by the Bank. In
the event the unpaid principal amount of the Acquisition Loans
ever exceeds the Borrowing Base Amount then in effect, the
Borrower agrees to pay the excess amount (an "overadvance")
immediately upon demand by the Bank. Overlines and overadvances
shall bear interest at the rate (or at the highest rate, if more
than one rate is then in effect) borne by the Acquisition Note.
Upon request of the Bank, the Borrower shall execute a promissory
note, payable to the order of the Bank, to represent the amount
of any overline or overadvance; however, the Borrower
acknowledges and agrees that the records of the Bank and this
Agreement shall constitute conclusive evidence of any overline or
overadvance and the obligation of the Borrower to repay any
overline or overadvance, with interest. All overlines and
overadvances for which the Bank has not demanded payment earlier,
and all unpaid and accrued interest on overlines and overadvances
not due and payable earlier, shall be due and payable on the
Termination Date. The Borrower acknowledges and agrees that the
Bank is not obligated to the Borrower to fund any advance which
would create an overline or overadvance.
ARTICLE IV
TERM LOAN
Section 4.1. The Term Loan. Subject to the terms,
conditions and provisions of this Agreement, the Bank agrees to
make a term loan (the "Term Loan") to the Borrower in an amount
not to exceed $10,951,810.41 ("Term Loan Commitment").
Section 4.2. The Term Note. The Borrower's indebtedness to
the Bank pursuant to the Term Loan shall be evidenced by a
promissory note of the Borrower (said promissory note being
herein referred to as the "Term Note"), payable to the order of
the Bank in the principal sum of the amount of the Term Loan
Commitment, with a final maturity of January 20, 2000, and
bearing interest at the rate or rates from time to time in effect
pursuant to the terms of Article VI hereof the Term Note. The
Term Note shall be due and payable in quarterly installments,
based on a five (5) year straight line amortization, but with a
final maturity of January 20, 2000.
Section 4.3. Prepayments of the Term Loan. A two percent
(2%) prepayment fee shall be payable by the Borrower to the Bank
in the event the Borrower prepays the Term Loan (or any portion
thereof) within twelve (12) months from the date of this
Agreement with loan proceeds from another lender. Otherwise, the
Borrower shall have the right to prepay the Term Loan in whole or
in part at any time without payment of premium or penalty, other
than for Funding Losses incurred by the Bank as a result thereof.
Section 4.4. Proceeds. The proceeds of the Term Loan shall
be used by the Borrower to refinance the "Bridge Loan" made to
Omni Geophysical and Aviation by the Bank under the First
Restated Agreement.
ARTICLE V
FEES
Section 5.1. Commitment Fee. In addition to the Credit
fees and commissions described in Section 2.3.3 above, the
Borrower shall pay to the Bank a commitment fee of $10,792.00,
payable upon execution of this Agreement by the Borrower. The
Borrower hereby authorizes the Bank to debit its account
maintained with the Bank for collection of the fee. In addition,
the parties have entered into a letter agreement addressing
additional commitment fee matters.
Section 5.2. Unused Fee. The Borrower shall pay the Bank a
fee equal to 0.38% per annum on the unused portion of the
Revolving Loan Commitment and the Acquisition Loan Commitment,
payable quarterly in arrears, commencing April 20, 1998, and
quarterly thereafter, and on the Termination Date. The unused
portion of the Revolving Loan Commitment and the Acquisition Loan
Commitment shall be determined on a daily basis by subtracting
from $19,000,000.00 the amount of all Acquisition Loans,
Revolving Loans, and Credits outstanding, and by averaging said
daily amounts for the period for which the fee is to be
determined.
Section 5.3. Stock Option. The provisions of paragraph
3(c)(ii) of the Second Amendment to the First Restated Agreement
shall remain in effect.
ARTICLE VI
INTEREST PAYABLE ON THE LOANS
Section 6.1. Interest on the Loans. The unpaid principal
amounts of all Loans or Tranches shall bear interest at the LIBOR
Rate plus the Applicable Margin then in effect for such Loans as
determined by the Bank at the time such LIBOR Rate is determined
for any of the Loans or Tranches thereof.
Section 6.2. Payment of Interest on the Loans. Interest
on all Loans shall be payable on the last Business Day of each
quarter and on the final maturity date of each such Loan (each
such interest payment date for any Loan being herein referred to
as an "Interest Payment Date").
ARTICLE VII
CERTAIN GENERAL PROVISIONS
Section 7.1. Payments to the Bank. All payments of
principal, interest, commitment fees and any other amounts due
hereunder or under any of the other Related Documents shall be
made to the Bank at the Bank's office at 313 Carondelet Street,
New Orleans, Louisiana 70130, or at such other location that the
Bank may from time to time designate in writing to the Borrower,
in each case in immediately available funds.
Section 7.2. No Offset, etc. All payments by the Borrower
hereunder and under any of the other Related Documents shall be
made without setoff or counterclaim and free and clear of and
without deduction for any taxes, levies, imposts, duties,
charges, fees, deductions, withholdings, compulsory loans,
restrictions or conditions of any nature now or hereafter imposed
or levied by any jurisdiction or any political subdivision
thereof or taxing or other authority therein unless the Borrower
is compelled by law to make such deduction or withholding. If
any such obligation is imposed upon the Borrower with respect to
any amount payable by it hereunder or under any of the other Loan
Documents, the Borrower will pay to the Bank, on the date on
which such amount is due and payable hereunder or under such
other Related Document, such additional amount in Dollars as
shall be necessary to enable the Bank to receive the same net
amount which the Bank would have received on such due date had no
such obligation been imposed upon the Borrower. The Borrower
will deliver promptly to the Bank certificates or other valid
vouchers for all taxes or other charges deducted from or paid
with respect to payments made by the Borrower hereunder or under
such other Loan Documents.
Section 7.3. Computations. All computations of interest on
the Loans and of commitment or other fees shall be assessed
utilizing a 360-day daily interest factor over the number of days
in an actual calendar year (365 days or 366 days in a leap year).
The Bank shall determine each interest rate applicable to the
Loans in accordance with this Agreement, and the Bank's
determination of same shall be conclusive in the absence of
manifest error. Except as otherwise provided in the definition
of the term "Interest Period", whenever a payment hereunder or
under any of the other Related Documents becomes due on a day
that is not a Business Day, the due date for such payment shall
be extended to the next succeeding Business Day, and interest
shall accrue during such extension. The outstanding amount of
the Loans as reflected on the Bank's books and records from time
to time shall be prima facie evidence of the amounts so
outstanding.
Section 7.4. Inability to Determine LIBOR Rate. In the
event, prior to the commencement of any Interest Period, the Bank
shall determine or be notified that adequate and reasonable
methods do not exist for ascertaining the LIBOR Rate that would
otherwise determine the rate of interest to be applicable to the
Loans during any Interest Period, the Bank shall forthwith give
notice of such determination (which shall be conclusive and
binding on the Borrower) to the Borrower. In such event the
Loans (or any Tranches thereof) will automatically, on the last
day of then current Interest Period applicable to such Loans or
Tranches, become a Base Rate Loan until the Bank determines that
the circumstances giving rise to such suspension no longer exist,
whereupon the Bank shall so notify the Borrower.
Section 7.5. Illegality. Notwithstanding any other
provisions herein, if any present or future law, regulation,
treaty or directive or the interpretation or application thereof
shall make it unlawful for the Bank to make available, or
maintain in effect, the LIBOR Rate, the Bank shall forthwith give
notice of such circumstances to the Borrower and thereupon any
Loans bearing interest at a LIBOR Rate shall be converted
automatically to Base Rate Loans on the last day of then current
Interest Period applicable to such Loans or within such earlier
period as may be required by law. The Borrower hereby agree
promptly to pay the Bank, upon demand by the Bank, any additional
amounts necessary to compensate the Bank for any costs incurred
by the Bank in making any conversion in accordance with this
paragraph, including any interest or fees payable by the Bank to
lenders of funds obtained by it in order to make available, or
maintain in effect, the LIBOR Rate for the Loans.
Section 7.6. Additional Costs, etc. If any present or
future applicable law, which expression, as used herein, includes
statutes, rules and regulations thereunder and interpretations
thereof by any competent court or by any governmental or other
regulatory body or official charged with the administration or
the interpretation thereof and requests, directives, instructions
and notices at any time or from time to time hereafter made upon
or otherwise issued to the Bank by any central bank or other
fiscal, monetary or other authority (whether or not having the
force of law), shall:
(1) subject the Bank to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with
respect to this Agreement, the other Related Documents or
the Indebtedness (other than taxes based upon or measured by
the revenue, income or profits of the Bank), or
(2) materially change the basis of taxation (except for
changes in taxes on revenue, income or profits) of payments
to the Bank of the principal of or the interest on the
Indebtedness of any other amounts payable to the Bank under
this Agreement or the other Related Documents, or
(3) impose or increase or render applicable (other than to
the extent specifically provided for elsewhere in this
Agreement) any special deposit, reserve, assessment,
liquidity, capital adequacy or other similar requirements
(whether or not having the force of law) against assets held
by, or deposits in or for the account of, or loans by, or
commitments of an office of the Bank, or
(4) impose on the Bank any other conditions or requirements
with respect to this Loan Agreement, the other Related
Documents, the Indebtedness, or any class of loans of which
the Indebtedness forms a part, and the result of any of the
foregoing is
(i) to increase the cost to the Bank of making,
funding, issuing, renewing, extending or maintaining
the Indebtedness or issuing Credits, or
(ii) to reduce the amount of principal, interest
or other amount payable to the Bank hereunder on
account of such the Indebtedness, or
(iii) to require the Bank to make any payment
or to forego any interest or other sum payable
hereunder, the amount of which payment or foregone
interest or other sum is calculated by reference to the
gross amount of any sum receivable or deemed received
by the Bank from Borrower hereunder, then, and in each
such case, the Borrower will, upon demand made by the
Bank at any time and from time to time and as often as
the occasion therefor may arise, pay to the Bank such
additional amounts as will be sufficient to compensate
the Bank for such additional cost, reduction, payment
or foregoing interest or others sum.
Section 7.7. Capital Adequacy. If after the date hereof
the Bank determines that (a) the adoption of or change in any
law, governmental rule, regulations, policy guideline or
directive (whether or not having the force of law) regarding
capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or
governmental authority with appropriate jurisdiction, or (b)
compliance by the Bank or any corporation controlling the Bank
with any law, governmental rule, regulation, policy, guideline or
directive (whether or not having the force of law) of any such
entity regarding capital adequacy, has the effect of reducing the
return on the Bank's Loans to a level below that which the Bank
could have achieved but for such adoption, change or compliance
(taking into consideration the Bank's then existing policies with
respect to capital adequacy and assuming full utilization of such
entity's capital) by any amount deemed by the Bank to be
material, then the Bank may notify the Borrower of such fact.
The Borrower agrees to pay the Bank for the amount of such
reduction in the return on capital as and when such reduction is
determined upon presentation by the Bank of a certification in
accordance with Section 7.8.
Section 7.8. Certificate; Optional Right of Prepayment.
The Bank shall provide the Borrower with a certificate setting
forth any additional amounts which it declares to be payable
pursuant to Sections 7.6 and 7.7 hereof, and a complete
explanation of such amounts which are due, and each such
certificate shall be conclusive, absent manifest error, that such
amounts are due and owing. The Borrower shall have the right, at
any time within 90 days of receipt of any such certificate, to
prepay all the Loans (subject to any and all prepayment penalties
and obligations to pay Funding Losses under the terms of this
Agreement) without being obligated to pay any such additional
costs set forth in such certificate, after which the Bank shall
promptly terminate, discharge and release of record (at the
Borrowers' expense) all of its Encumbrances affecting the
Collateral and return all Collateral to the Borrower.
Section 7.9. Indemnity. The Borrower agrees to indemnify
the Bank and to hold the Bank harmless from and against any and
all Funding Losses or any other loss, cost or expense that the
Bank may sustain or incur as a consequence of (a) default by the
Borrower in payment of the principal amount of or any interest on
any Indebtedness as and when due and payable, including any such
loss or expense arising from interest or fees payable by the Bank
to lenders of funds obtained by it in order to maintain its LIBOR
Rate in effect for the Loans, or (b) the making of any payment of
Indebtedness on a day that is not the last day of the applicable
Interest Period, including interest or fees payable by the Bank
to lenders of funds obtained by it in order to maintain its LIBOR
Rate in effect for the Loans.
ARTICLE VIII
SECURITY FOR THE INDEBTEDNESS
Section 8.1. Security. The Indebtedness shall be secured
by the following:
(a) the Security Agreements;
(b) the Mortgage;
(c) Commercial Guaranty of the Borrower's indebtedness to
the Bank by Aviation; and
(d) Commercial Guaranty of the Borrower's indebtedness to
the Bank by Omni Marine.
The Borrower understands and acknowledges that items (a) and (b)
above constitute a first priority mortgage lien or security
interest, as the case may be, in favor of the Bank.
ARTICLE IX
CONDITIONS PRECEDENT
Section 9.1. General Conditions Precedent to All Loans and
Credits. The obligation of the Bank to make any Loan or to issue
any Credit hereunder shall be subject to the satisfaction and the
continued satisfaction of the following conditions precedent:
(a) The Borrower shall have executed and delivered to the
Bank this Agreement, the Collateral Documents, the Notes and all
other documents required by this Agreement, and the Guarantor
shall have executed and delivered to the Bank this Agreement, the
Guaranty, and all other documents required by this Agreement, all
in form and substance and in such number of counterparts as may
be required by the Bank;
(b) The representations and warranties of the Borrower and
the Guarantor as set forth herein, or in any Related Document
furnished to the Bank in connection herewith, shall be and remain
true and correct;
(c) The Bank shall have received a favorable legal opinion
of counsel to the Borrower and the Guarantor, in form, scope and
substance satisfactory to the Bank;
(d) The Bank shall have received certified resolutions of
the Borrower and the Guarantor authorizing the execution of all
documents contemplated hereby;
(e) The Bank shall have received all fees, charges and
expenses which are due and payable as specified in this Agreement
or any Related Document;
(f) No Default or Event of Default shall exist or shall
result from the making of a Loan or the issuance of a Credit;
(g) The Borrower and the Guarantor shall have provided the
Bank with all financial statements, reports and certificates
required by this Agreement (including an initial borrowing base
certificate of the Borrower in the form required by Section
11.1(g) which is hereby required as a condition to the initial
advance of any kind to the Borrower hereunder);
(h) The Bank shall have received the articles of
incorporation and bylaws, as amended, of the Borrower and the
articles of organization, operating agreement, articles of
incorporation, and bylaws, as amended, of the Guarantor, and the
Bank's counsel shall have reviewed the foregoing documents and is
satisfied with the validity, due authorization and enforceability
thereof and of all Related Documents;
(i) The Bank shall have received evidence acceptable to the
Bank and its counsel that its Encumbrances affecting the
Collateral shall have a first priority position, subject only to
Permitted Encumbrances;
(j) The Borrower shall have complied with the procedure set
forth in this Agreement for the making of the particular type of
Loan then being applied for;
(k) There shall have occurred no Material Adverse Change;
(l) The Bank's due diligence and review of all financial
information provided by the Borrower and the Guarantor, and the
Bank's field audit of the Borrower's books and records, shall be
satisfactory to the Bank;
(m) The Bank's receipt of satisfactory evidence of the
prepayment of senior and subordinated indebtedness of the
Borrower and the Guarantor. In the event all such debt is not
prepaid, the outstanding amount thereof will reduce (dollar for
dollar) the $10,500,000.00 limit specified in Section 12.5(d)
below, and the Bank's receipt, if applicable, of a subordination
agreement affecting such debt. The Bank reserves the right to
allow the Borrower a period of sixty (60) days (from the date of
this Agreement) to obtain any necessary subordination agreement;
(n) The Bank's receipt of a current listing of all senior
and subordinated debt of the Borrower (on a consolidated basis);
(o) The Bank's receipt of a current balance sheet of the
Borrower; and
(p) The Bank's receipt of satisfactory evidence that the
Borrower received not less than $35,000,000.00 in proceeds from
its recent initial public offering.
ARTICLE X
REPRESENTATIONS AND WARRANTIES
The Borrower and the Guarantor represent and warrant to the
Bank as follows:
Section 10.1. Corporate Authority. Each Borrower is a
corporation duly created, validly existing and in good standing
under the laws of its state of Louisiana, and is duly qualified
and in good standing as a foreign corporation in all other
jurisdictions where the failure to qualify would have an adverse
effect upon its ability to perform its obligations under this
Agreement and all Related Documents. The Borrower has the power
to enter into this Agreement, issue the Notes, mortgage and grant
the liens and security interests in the Collateral in the manner
and for the purpose contemplated by the Collateral Documents.
The Borrower has the corporate power to perform its obligations
hereunder and under the Related Documents. The making and
performance by the Borrower of the Related Documents have all
been duly authorized by all necessary company action (including
all necessary member action), and do not and will not violate any
provision of any law, rule, regulation, order, writ, judgment,
decree, determination or award presently in effect having
applicability to the Borrower or the articles of incorporation
and/or bylaws of the Borrower. The making and performance by the
Borrower of the Related Documents to which it is a party do not
and will not result in a breach of or constitute a default under
any indenture or loan or credit agreement or any other agreement
or instrument to which the Borrower is a party or by which it may
be bound or affected, or result in, or require, the creation or
imposition of any mortgage, deed of trust, pledge, lien, security
interest or other charge or encumbrance of any nature (other than
as contemplated by the Related Documents) upon or with respect to
any of the properties now owned or hereafter acquired by the
Borrower, and the Borrower is not in default under or in
violation of any such order, writ, judgment, decree,
determination, award, indenture, agreement or instrument. Each
of the Related Documents to which the Borrower is a party
constitutes a legal, valid and binding obligations of the
Borrower, enforceable in accordance with its terms. Omni Marine
is a corporation duly created, validly existing, and in good
standing under the laws of the State of Louisiana. Omni Marine's
execution of this Agreement, the Guaranty, and the Collateral
Documents to which it is a party, has been authorized by all
necessary corporate action, and each such document constitutes a
legal, valid, and binding obligation of Omni Marine, enforceable
in accordance with its terms. Aviation is a limited liability
company duly created, validly existing, and in good standing
under the laws of the State of Missouri. Aviation is registered
to do business in the State of Louisiana. Aviation's execution
of this Agreement, the Guaranty, and the Collateral Documents to
which it is a party, has been authorized by all necessary action,
and each such document constitutes a legal, valid, and binding
obligation of Aviation, enforceable in accordance with its terms.
Section 10.2. Financial Statements. The balance sheet of
the Borrower at the date thereof, and the related statements of
income and retained earnings for the year then ended, copies of
which have been delivered to the Bank, are complete and correct
and fairly present the financial condition of such entities as of
the date or dates thereof. Each of said financial statements
were prepared in conformity with GAAP applied on a basis
consistent with the preceding year. No Material Adverse Change
has occurred since said dates in the financial position or in the
results of operations of the Borrower in their businesses taken
as a whole.
Section 10.3. Title to Collateral. The Borrower or the
Guarantor, as applicable, has good and marketable title to the
Collateral, free and clear of all Encumbrances other than
Permitted Encumbrances. The Collateral Documents constitute
legal, valid and perfected first Encumbrances on the property
interests covered thereby, subject only to Permitted
Encumbrances.
Section 10.4. Litigation. Other than as has been disclosed
previously to the Bank in writing, there are no legal actions,
suits or proceedings pending or threatened against or affecting
the Borrower, the Guarantor, or any of their properties before
any court or administrative agency (federal, state or local),
which, if determined adversely to any of the Borrower or the
Guarantor would constitute a Material Adverse Change to any of
them, and there are no judgments or decrees affecting the
Borrower or its property (including, without limitation, the
Collateral) which are or may become an Encumbrance against such
property.
Section 10.5. Approvals. No authorization, consent,
approval or formal exemption of, nor any filing or registration
with, any governmental body or regulatory authority (federal,
state or local), and no vote, consent or approval of the members
of the Borrower is or will be required in connection with the
execution and delivery by the Borrower of the Related Documents
or the performance by the Borrower of its obligations hereunder
and under the other Related Documents.
Section 10.6. Required Insurance. The Borrower and the
Guarantor shall maintain insurance with insurance companies in
such amounts and against such risks as is usually carried by
owners of similar businesses and properties in the same general
areas in which each of them operates, and as shall be reasonably
satisfactory to the Bank, in each case with the Bank named as the
loss payee and/or additional insured, as appropriate. Aviation
shall also carry such insurance coverages as may be required by
the Aircraft Security Agreement.
The Borrower and the Guarantor agree to provide the Bank
with originals or certified copies of such policies of insurance.
The Borrower and the Guarantor further agree to promptly furnish
the Bank with copies of all renewal notices and, if requested by
the Bank, with copies of receipts for paid premium. The Borrower
and the Guarantor shall provide the Bank with originals or
certified copies of all renewal or replacement policies of
insurance no later than fifteen (15) days before any such
existing policy or policies should expire. If the Borrowers'
and/or the Guarantor's insurance policies required hereunder and
renewals thereof are held by another person, the Borrower and the
Guarantor agree to supply original or certified copies of the
same to the Bank within the time periods required above.
Section 10.7. Licenses. The Borrower and the Guarantor
possess adequate franchises, licenses and permits to own its
properties and to carry on their business as presently conducted.
Section 10.8. Adverse Agreements. The Borrower and the
Guarantor are not parties to any agreement or instrument, nor
subject to any charter or other restriction, materially and
adversely affecting the business, properties, assets, or
operations of the Borrower or the Guarantor or its/their
condition (financial or otherwise), and the Borrower and the
Guarantor are not in default in the performance, observance or
fulfillment of any of the obligations, covenants or conditions
contained in any agreement or instrument to which they are a
party, which default would constitute a Material Adverse Change.
Section 10.9. Default or Event of Default. No Default or
Event of Default hereunder has occurred or is continuing or will
occur as a result of the giving effect hereto.
Section 10.10. Employee Benefit Plans. Each employee
benefit plan as to which the Borrower may have any liability
complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event
(as defined in ERISA) has occurred with respect to any such plan,
(ii) the Borrower has not withdrawn from any such plan or
initiated steps to do so, and (iii) no steps have been taken to
terminate any such plan.
Section 10.11. Investment Company Act. The Borrower is not
an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment
Company Act of 1940, as amended.
Section 10.12. Public Utility Holding Company Act. The
Borrower is not a "holding company," or a "subsidiary company" of
a "holding company," within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
Section 10.13. Regulations G, T and U. The Borrower is not
engaged principally, or as one of its important activities, in
the business of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulations G, T and
U of the Board of Governors of the Federal Reserve System), and
none of the proceeds of the Loans will be used for the purpose of
purchasing or carrying such margin stock.
Section 10.14. Location of Offices, Records, Equipment and
Inventory. The chief place of business of the Omni Marine, and
the office where the Omni Marine keeps its records concerning the
Collateral, is 315 South College, Suite 165, Lafayette, Louisiana
70503. The chief place of business of Aviation, and the office
where Aviation keeps its records concerning the Collateral, is
301 Shepard Drive, Lafayette, Louisiana 70508. The chief place
of business of the Borrower, and the office where the Borrower
keeps all of its records concerning the Collateral, is 4484 N.E.
Evangeline Thruway, Carencro, Louisiana 70520.
Section 10.15. Information. All information heretofore or
contemporaneously herewith furnished by the Borrower and the
Guarantor to the Bank for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of the Borrower
and the Guarantor to the Bank will be, true and accurate in every
material respect on the date as of which such information is
dated or certified; and none of such information is or will be
incomplete by omitting to state any material fact necessary to
make such information not misleading.
Section 10.16. Environmental Matters. Except as may have
been disclosed in writing to the Bank prior to the date hereof,
no properties of the Borrower has ever been, nor will ever be so
long as this Agreement remains in effect, used for the
generation, manufacture, storage, treatment, disposal, release or
threatened release of any hazardous waste or substance, as those
terms are defined in the Environmental Laws, except in compliance
with such Environmental Laws. Except as may have been disclosed
in writing by the Borrower to the Bank, the Borrower represents
and warrants that it is in material compliance with all
Environmental Laws affecting it and its properties.
No friable asbestos, or any substance containing asbestos
deemed hazardous by federal or state regulations on the date of
this Agreement, has been installed in or on any of the property
comprising the Collateral. The said property and the Borrower
are not in violation of or subject to any existing, pending, or
threatened investigation or inquiry by any governmental authority
or to any remedial obligations under any applicable laws
pertaining to health or the environment (hereinafter sometimes
collectively called "Applicable Environmental Laws"), including
without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended by the
Superfund Amendments and Reauthorization Act of 1986 (as amended,
hereinafter called "CERCLA"), the Resource Conservation and
Recovery Act of 1976, as amended by the Used Oil Recycling Act of
1980, the Solid Waste Disposal Act Amendments of 1980, and the
Hazardous and Solid Waste Amendments of 1984 (as amended,
hereinafter called "RCRA"), and this representation and warranty
would continue to be true and correct following disclosure to the
applicable governmental authorities of all relevant facts,
conditions and circumstances, if any, pertaining to the said
property and known to the Borrower. The Borrower has not
obtained and is not required to obtain any permits, licenses or
similar authorizations to construct, occupy, operate or use any
buildings, improvements, fixtures and equipment forming a part of
the said property by reason of any Applicable Environmental Laws.
No hazardous substances or solid wastes have been disposed of or
otherwise released on or to the said property. The use which the
Borrower makes and intends to make of the said property will not
result in the disposal or other release of any hazardous
substance or solid waste on or to the said property. The terms
"hazardous substance" and "release" as used in this Agreement
shall have the meanings specified in CERCLA, and the terms "solid
waste" and "disposal" (or "disposed") shall have the meanings
specified in RCRA, provided, however, in the event that the laws
of the State of Louisiana establish a meaning for "hazardous
substance," "release," "solid waste," or "disposal" which is
broader than that specified in either CERCLA or RCRA, such
broader meaning shall apply.
Section 10.17. Solvency of the Borrower and the Guarantor.
The Borrower and the Guarantor are, and after consummation of the
transactions contemplated by this Agreement (including the making
of the Loans and the issuance of the Credits), and after giving
effect to all obligations incurred by the Borrower and the
Guarantor in connection herewith, will be, Solvent.
Section 10.18. Governmental Requirements. The Collateral is
in compliance with all current governmental requirements
affecting the said property.
Section 10.19. Existing Lease. The Borrower, as the
successor-by-merger to Omni Geophysical, represents and warrants
that it has a lease affecting its present business location
located on I-49 North in Lafayette Parish, Louisiana which
extends through June of 1998.
Section 10.20. Survival of Representations and Warranties.
The Borrower and the Guarantor understand and agree that the Bank
is relying upon the above representations and warranties in
making the Loans to the Borrower. The Borrower and the Guarantor
further agree that the foregoing representations and warranties
shall be continuing in nature and shall remain in full force and
effect until such time as the Indebtedness shall be paid in full,
or until this Agreement shall be terminated, whichever is the
last to occur.
ARTICLE XI
AFFIRMATIVE COVENANTS
In addition to the covenants contained in the Collateral
Documents, which covenants are hereby ratified and confirmed by
the Borrower and the Guarantor, as the case may be, the Borrower
and the Guarantor covenant and agree as follows:
Section 11.1. Financial Statements. The Guarantor and the
Borrower will furnish or cause to be furnished to the Bank:
(a) as soon as available and in any event within one
hundred twenty (120) days following the close of fiscal
year of the Borrower, audited, consolidated and
consolidating financial statements of the Borrower
consisting of a balance sheet as at the end of such
fiscal year and statements of income, and statement of
cash flow for such fiscal year, setting forth in each
case in comparative form the corresponding figures for
the preceding fiscal year, certified by independent
certified public accountants of recognized standing
acceptable to the Bank,
(b) as soon as available and in any event within one
hundred twenty (120) days following the close of fiscal
year of Omni Marine, Aviation, and any other Subsidiary
of the Borrower, audited financial statements of Omni
Marine, Aviation, and any other Subsidiary of the
Borrower consisting of a balance sheet as at the end of
such fiscal year and statements of income, and
statement of cash flow for such fiscal year, setting
forth in each case in comparative form the
corresponding figures for the preceding fiscal year,
certified by independent certified public accountants
of recognized standing acceptable to the Bank,
(c) within forty-five (45) days following the end of each
calendar quarter, financial statements consisting of
the consolidated balance sheet of the Borrower as of
the end of such quarter, and a statement of income and
statement of cash flow of the Guarantor for such
quarter and for the fiscal year through such quarter,
all certified as materially true and correct by the
chief financial officer of the Borrower as having been
prepared in accordance with GAAP consistently applied,
(d) within forty-five (45) days following the end of each
calendar quarter, financial statements consisting of
the balance sheet of Omni Marine, Aviation, and any
other Subsidiary of the Borrower as of the end of such
quarter, and a statement of income and statement of
cash flow for such quarter and for the fiscal year
through such quarter, all certified as materially true
and correct by the chief financial officer of Omni
Marine, Aviation, and any other Subsidiary of the
Borrower as having been prepared in accordance with
GAAP consistently applied,
(e) within sixty (60) days after the end of each calendar
quarter, a certificate signed by the chief financial
officer of the Borrower, certifying that he has
reviewed this Agreement and to the best of his
knowledge no Default or Event of Default has occurred,
or if such Default or Event of Default has occurred,
specifying the nature and extent thereof, and that all
financial covenants in this Agreement have been met,
and providing a computation of all financial covenants
contained herein, and details of any waivers,
amendments, or modifications of any covenant contained
in this Agreement,
(f) within fifteen (15) days following the end of each
calendar month, an aging of each the Borrower's and the
Guarantor's Receivables and accounts payable, together
with a certificate executed by the chief financial
officer(s) of the Borrower and the Guarantor,
identifying the amount of Qualified Receivables of the
Borrower as of the end of such month, in such form and
containing such representations and warranties
regarding the Receivables as the Bank may reasonably
require,
(g) within fifteen (15) days following the end of each
calendar month, and not less than weekly during each
calendar month, and at any time upon the request by the
Bank, a borrowing base certificate showing the
Borrower's total Receivables, minus ineligibles, total
Qualified Receivables, in form and substance acceptable
to the Bank, accompanied by such supporting documents
as may be required by the Bank, with the Borrower's
borrowing base certificate to be certified by the chief
financial officer(s) of the Borrower, and
(h) such other necessary financial information concerning
the Borrower and the Guarantor as the Bank may
reasonably request from time to time.
Section 11.2. Notice of Default; Litigation; ERISA Matters.
The Borrower will give written notice to the Bank as soon as
reasonably possible and in no event more than five (5) Business
Days of (i) the occurrence of any Default or Event of Default
hereunder of which it has knowledge or should have knowledge,
(ii) the filing of any actions, suits or proceedings against the
Borrower in any court or before any governmental authority or
tribunal of which they have knowledge or should have knowledge
which could cause a Material Adverse Change with respect to the
Borrower and/or the Guarantor, (iii) the occurrence of a
reportable event under, or the institution of steps by the
Borrower to withdraw from, or the institution of any steps to
terminate, any employee benefit plan as to which the Borrower may
have liability, or (iv) the occurrence of any other action, event
or condition of any nature of which they have knowledge which may
cause, or lead to, or result in, any Material Adverse Change to
the Borrower and/or the Guarantor.
Section 11.3. Maintenance of Existence, Properties and
Liens. Each of the Borrower and the Guarantor will (i) continue
to engage in the business presently being operated by it; (ii)
maintain its existence and good standing in each jurisdiction in
which it is required to be qualified; (iii) keep and maintain all
franchises, licenses and properties necessary in the conduct of
its business in good order and condition; (iv) duly observe and
conform to all material requirements of any governmental
authorities relative to the conduct of its business or the
operation of its properties or assets; and (v) maintain in favor
of the Bank a first perfected lien and security interest in the
Collateral, subject only to other Permitted Encumbrances.
Section 11.4. Collateral Schedules and Locations. As often
as the Bank shall reasonably require, the Borrower and the
Guarantor shall deliver to the Bank schedules of such Collateral,
including such information as the Bank may require, including
without limitation names and addresses of account debtors and
agings of Receivables and General Intangibles.
Section 11.5. Taxes. Each of the Borrower and the
Guarantor shall pay or cause to be paid when due, all taxes,
local and special assessments, and governmental and other charges
of every type and description, that may from time to time be
imposed, assessed and levied against it or its properties. The
Borrower and the Guarantor further agree to furnish the Bank with
evidence that such taxes, assessments, and governmental and other
charges due by the Borrower and the Guarantor have been paid in
full and in a timely manner. The Borrower and/or the Guarantor
may withhold any such payment or elect to contest any lien if the
Borrower and/or the Guarantor are in good faith conducting an
appropriate proceeding to contest the obligation to pay and so
long as the Bank's interest in the Collateral is not jeopardized.
Section 11.6. Performance of Loan Documents. The Borrower
and the Guarantor shall duly and punctually pay and perform each
of its obligations under the Notes, under this Agreement (as the
same may at any time be amended or modified and in effect) and
under each of the Related Documents to which it is a party, in
accordance with the terms hereof and thereof.
Section 11.7. Compliance with Environmental Laws. The
Borrower shall comply with and shall cause all of its employees,
agents, invitees or sublessees to comply with all Environmental
Laws with respect to the disposal of industrial refuse or waste,
and/or the discharge, procession, treatment, removal,
transportation, storage and handling of hazardous or toxic wastes
and substances, and pay immediately when due the cost of removal
of any such waste or substances from, and keep their properties
free of any lien imposed pursuant to any such laws, rules,
regulations or orders.
The Borrower shall give notice to the Bank as soon as
reasonably possible and in no event more than five (5) days after
it receives any compliance orders, environmental citations, or
other notices from any governmental entity relating to any
environmental condition relating to its properties or elsewhere
for which it may have legal responsibility with a full
description thereof; the Borrower agrees to take any and all
reasonable steps, and to perform any and all reasonable actions
necessary or appropriate to promptly comply with any such
citations, compliance orders or Environmental Laws requiring the
Borrower to remove, treat or dispose of such hazardous materials,
wastes or conditions at the sole expense of the Borrower, to
provide the Bank with satisfactory evidence of such compliance;
provided, however, that nothing contained herein shall preclude
the Borrower from contesting any such compliance orders or
citations if such contest is made in good faith, appropriate
reserves are established for the payment for the cost of
compliance therewith, and the Bank's security interest in any
such property affected thereby (or the priority thereof) is not
jeopardized.
Regardless of whether any Event of Default hereunder shall
have occurred and be continuing, the Borrower (i) releases and
waives any present or future claims against the Bank for
indemnity or contribution in the event the Borrower becomes
liable for remediation costs under and Environmental Laws, and
(ii) agrees to defend, indemnify and hold harmless the Bank from
any and all liabilities (including strict liability), actions,
demands, penalties, losses, costs or expenses (including, without
limitation, reasonable attorneys fees and remedial costs), suits,
administrative orders, agency demand letters, costs of any
settlement or judgment and claims of any and every kind
whatsoever which may now or in the future (whether before or
after the termination of this Agreement) be paid, incurred, or
suffered by, or asserted against the Bank by any person or entity
or governmental agency for, with respect to, or as a direct or
indirect result of, the presence on or under, or the escape,
seepage, leakage, spillage, discharge, emission, or release from
or onto the property of the Borrower of any hazardous materials,
wastes or conditions regulated by any Environmental Laws,
contamination resulting therefrom, or arising out of, or
resulting from, the environmental condition of such property or
the applicability of any Environmental Laws relating to hazardous
materials (including, without limitation, CERCLA or any so called
federal, state or local "super fund" or "super lien" laws,
statute, ordinance, code, rule, regulation, order or decree)
regardless of whether or not caused by or within the control of
the Bank (the costs and/or liabilities described in (i) and (ii)
above being hereinafter referred to as the "Liabilities"). The
covenants and indemnities contained in this Section 11.7 shall
survive termination of this Agreement.
Section 11.8. Further Assurances. The Borrower and the
Guarantor will, at any time and from time to time, execute and
deliver such further instruments and take such further action as
may reasonably be requested by the Bank, in order to cure any
defects in the execution and delivery of, or to comply with or
accomplish the covenants and agreements contained in this
Agreement or the Collateral Documents.
Section 11.9. Financial Covenants. The Borrower shall
comply with the following covenants and ratios:
(a) The Borrower shall maintain on a consolidated, calendar
quarterly basis, a debt service coverage ratio of at
least 1.25 to 1.0. The term "debt service coverage"
means the sum of net income before interest, taxes,
depreciation, and amortization, less dividends, to
current maturities of long term debt plus total
interest expense. EBITDA shall be calculated on a
rolling four quarters basis.
(b) The Borrower shall not allow (on a consolidated basis)
a ratio of Funded Debt divided by Tangible Net Worth to
exceed 1.00 to 1.00 at any time.
(c) The Borrower shall at all times maintain working
capital (on a consolidated basis) of greater than
$1,000,000.00. For the purposes hereof, "working
capital" shall mean total consolidated current assets
(including availability under the Revolving Loan
Commitment) less total consolidated current
liabilities.
(d) The Borrower shall maintain at all times, on a
consolidated basis, a Funded Debt to EBITDA ratio of
not more than 3.5 to 1.0. EBITDA shall be calculated
on a trailing four quarters basis.
Section 11.10. Operations. The Borrower and the Guarantor
shall conduct their business affairs in a reasonable and prudent
manner and in compliance with all applicable federal, state and
municipal laws, ordinances, rules and regulations respecting
their properties, charters, businesses and operations, including
compliance with all minimum funding standards and other
requirements of ERISA of 1974, and other laws applicable to any
employee benefit plans which they may have.
Section 11.11. Change of Location. The Borrower and the
Guarantor shall, within ten (10) Business Days prior to any such
addition or change, notify the Bank in writing of any proposed
additions to or changes in the location of their respective
businesses.
Section 11.12. Employee Benefit Plans. So long as this
Agreement remains in effect, the Borrower and the Guarantor will
maintain each employee benefit plan as to which they may have any
liability, in compliance with all applicable requirements of law
and regulations
Section 11.13. Deposit Accounts. The Borrower, the
Guarantor, and any Subsidiary of the Borrower, will maintain all
substantial deposit and operating accounts (including separate
tenant deposit accounts) with the Bank.
Section 11.14. Dominion Account. The Borrower has
established a lockbox with the Bank into which all proceeds of
Receivables of the Borrower shall be remitted. The Borrower will
promptly direct its customers to remit payments of all of their
accounts receivable to such lockbox. Remittances received under
the lockbox arrangement will be deposited by the Bank to the
demand deposit account maintained by the Borrower with the Bank
(the "Dominion Account", account number 812378643). The Bank
shall have dominion over all funds in the Dominion Account. The
Borrower shall deposit all payments of accounts receivable which
are not remitted by customers directly to the Dominion Account
into the Dominion Account on the date such remittance is
received. Amounts deposited into the Dominion Account will be
used for daily loan payments towards the Revolving Note as
described in Section 2.2.6. The Borrower will have no access to
any funds in the Dominion Account for so long as this Agreement
remains in effect, the Revolving Note has not been paid in full,
or any Credits or other Indebtedness of the Borrower remains
outstanding.
Section 11.15. Field Audits; Other Information. Each of
the Borrower and the Guarantor shall allow the Bank's employees
and agents access to their books and records and properties
during normal business hours to perform field audits from time to
time. The Borrower shall pay all costs and expenses associated
with such field audits. The Borrower and the Guarantor will
provide the Bank with such other information as the Bank may
reasonably request from time to time.
Section 11.16. Ownership of Aviation and Omni Marine. The
Borrower and the Guarantor covenant and agree that the Borrower
shall continue to own 100% of the membership interests of
Aviation and 100% of the issued and outstanding stock of Omni
Marine.
Section 11.17. Sale of Collateral. In the event the
Borrower or any Guarantor sells any equipment or any other
tangible asset that is part of the Collateral, the Borrower and
the Guarantor agree to pay down the Term Loan immediately after
such sale by the following amount: (i) if the item is sold for
market value, the pay down must be equal to said market value;
(ii) if the item is sold for greater than market value, the pay
down must be at least equal to market value; or (iii) if the item
is sold for less than market value, the pay down must be at least
equal to market value.
Section 11.18. Survey. The Borrower agrees to provide the
Bank within thirty (30) days from January 20, 1998, with a final
as built survey of the property encumbered by the Mortgage, in
form and substance satisfactory to the Bank that will enable the
Bank to obtain an endorsement to the Bank's loan policy.
ARTICLE XII
NEGATIVE COVENANTS
In addition to the negative covenants contained in the
Collateral Documents, which covenants are hereby ratified and
confirmed by the Borrower and the Guarantor, as the case may be,
the Borrower and the Guarantor covenant and agree as follows:
Section 12.1. Limitations on Fundamental Changes. The
Borrower and the Guarantor shall not change the nature of their
business, grant credit terms to its customers on terms different
than those presently granted to customers, or form any subsidiary
without the prior written consent of the Bank, nor shall the
Borrower or the Guarantor enter into any transaction of merger or
consolidation, or liquidate or dissolve itself (or suffer any
liquidation or dissolution).
Section 12.2. Disposition of Assets. The Borrower and the
Guarantor shall not convey, sell, lease, assign, transfer or
otherwise dispose of, any of its property, business or assets
(whether now owned or hereafter acquired) that has a value of
$2,000,000 or more without the prior written consent of the Bank.
Proceeds of any permitted asset disposition must be based on an
arm's length transaction at market rates, and must be used to
reduce the Term Loan.
Section 12.3. Restricted Payments. The Borrower shall not
declare or pay (or set aside reserves for payment of) any
dividends or distributions, make any shareholder or affiliate
loans, or pay excessive compensation or enter into any similar
transactions with the shareholders, officers, or affiliates of
the Borrower without the prior written consent of the Bank. The
term "excessive compensation" as used in this Section 12.3, means
compensation in excess of three times total current salary for
the Borrower's senior management, which total current salary is
approximately $675,000.00. Further, any increase in compensation
to shareholders, officers or affiliates of Borrower is prohibited
unless, after giving effect to such increase, the Borrower is in
compliance with all covenants contained in this Agreement,
including financial covenants.
Section 12.4. Encumbrances. The Borrower and the Guarantor
shall not create, incur, assume or permit to exist any
Encumbrances on any of their property now owned or hereafter
acquired, except for the following (hereinafter referred to as
the "Permitted Encumbrances"):
(a) Encumbrances for taxes, assessments, or other
governmental charges not yet due or which are being
contested in good faith by appropriate action promptly
initiated and diligently conducted, if such reserves as
shall be required by GAAP shall have been made
therefor;
(b) Encumbrances of landlords, vendors, carriers,
warehousemen, mechanics, laborers and materialmen
arising by law in the ordinary course of business for
sums either not yet due or being contested in good
faith by appropriate action promptly initiated and
diligently conducted, if such reserve as shall be
required by GAAP shall have been made therefor;
(c) Inchoate liens arising under ERISA to secure the
contingent liabilities, if any, permitted by this
Agreement;
(d) The Collateral Documents and any other liens in favor
of the Bank to secure the Indebtedness of the Borrower
to the Bank; or
(e) Liens in favor of The CIT Group/Equipment Financing,
Inc. existing as of the day of this Agreement.
Section 12.5. Debts, Guaranties and Other Obligations. The
Borrower and the Guarantor will not incur, create, assume or in
any manner become or be liable in respect of any Debt direct or
contingent, except for:
(a) The Indebtedness to the Bank under this Agreement;
(b) Trade payables or operating and facility leases from
time to time incurred in the ordinary course of
business;
(c) Taxes, assessments or other government charges which
are not yet due or are being contested in good faith by
appropriate action promptly initiated and diligently
conducted, if such reserve as shall be required by
generally accepted accounting principles shall have
been made therefor; or
(d) Additional Debt up to $10,500,000.00. The term
"Additional Debt" shall mean the consolidated debt of
the Borrower and the Guarantor, including senior and
subordinated debt, but excluding the Indebtedness.
Section 12.6. Investments, Loans and Advances. The
Borrower and the Guarantor will not make or permit to remain
outstanding any loans or advances to or investments in any
Person, except for:
(a) Investments in direct obligations of the United States
of America or any agency thereof;
(b) Investments in either certificates of deposit of
maturities less than one year, issued by the Bank, or
if the Bank is not substantially competitive (in terms
of certificate of deposit interest rate for comparable
amounts) with other banks (having a credit rating
acceptable to the Bank) certificates of deposit of
maturities less than one year, issued by one or more of
such other banks;
(c) Investments in commercial paper of maturities less than
one year with the best rating by Standard & Poors,
Moody's Investors Service, Inc., or any other rating
agency satisfactory to the Bank;
(d) Routine advances to employees made in the ordinary
course of business;
(e) Investments in the stock of domestic corporations (who
conduct their business in the United States) up to the
sum of $5,000,000.00 in the aggregate; and
(f) Investment in the stock of American Aviation, Inc. or
in a new subsidiary formed to acquire the assets of
American Aviation, Inc.
Section 12.7. Changes in Management and Control. The
senior management of the Borrower will not change without the
prior written consent of the Bank, and David Jeansonne will
remain as the Chairman of the Board of the Borrower until at
least June 30, 2003.
Section 12.8. Other Agreements. The Borrower and the
Guarantor will not enter into any agreement containing any
provision which would be violated or breached by the performance
of its obligations hereunder or under any instrument or document
delivered or to be delivered by any of them hereunder or in
connection herewith.
Section 12.9. Transactions with Affiliates. The Borrower
and the Guarantor will not enter into any agreement with any
affiliate except to the extent that such agreements are
commercially reasonable which provide for terms which would
normally be obtainable in an arm's length transaction with an
unrelated third party.
Section 12.10. Minimum Amount in Dominion Account. The
Borrower will maintain a minimum balance of $10,000.00 in the
Dominion Account.
ARTICLE XIII
EVENTS OF DEFAULT
Section 13.1. Events of Default. The occurrence of any one
or more of the following shall constitute an Event of Default:
Default under the Indebtedness. Should the Borrower default
in the payment of principal or interest under the Indebtedness of
the Borrower.
Default under this Agreement. Should the Borrower or the
Guarantor violate or fail to comply fully with any of the terms
and conditions of, or default under, this Agreement, and such
default not be cured within ten days of the occurrence thereof
(provided, however, that no cure period shall be available for a
default in the obligation to maintain insurance coverages
required hereby).
Default Under Other Agreements. Should any event of default
occur or exist under any of the Related Documents or should the
Borrower or the Guarantor violate, or fail to comply fully with,
any terms and conditions of any of the Collateral Documents or
Related Documents, and such default not be cured within ten days
of the occurrence thereof (provided, however, that no cure period
shall be available for a default in the obligation to maintain
insurance coverages required thereby).
Other Defaults in Favor of the Bank. Should the Borrower
default under any other loan, extension of credit, security
agreement, or other obligation in favor of the Bank and fail to
cure same in accordance with any applicable cure periods.
Default in Favor of Third Parties. Should the Borrower or
the Guarantor default under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other
agreement, in favor of any other creditor or person and fail to
cure same in accordance with any applicable cure periods.
Insolvency. The following occurrences, in addition to the
failure or suspension of either the Borrower or the Guarantor,
shall constitute an Event of Default hereunder:
(a) Filing by the Borrower or either Guarantor of a
voluntary petition or any answer seeking
reorganization, arrangement, readjustment of its debts
or for any other relief under any applicable bankruptcy
act or law, or under any other insolvency act or law,
now or hereafter existing, or any action by the
Borrower or either Guarantor consenting to, approving
of, or acquiescing in, any such petition or proceeding;
the application by the Borrower or either Guarantor
for, or the appointment by consent or acquiescence of,
a receiver or trustee of the Borrower or either
Guarantor for all or a substantial part of the property
of any such Person; the making by the Borrower or
either Guarantor, of an assignment for the benefit of
creditors; the inability of the Borrower or either
Guarantor or the admission by the Borrower or either
Guarantor in writing, of its inability to pay its debts
as they mature (the term "acquiescence" means the
failure to file a petition or motion in opposition to
such petition or proceeding or to vacate or discharge
any order, judgment or decree providing for such
appointment within sixty (60) days after the
appointment of a receiver or trustee); or
(b) Filing of an involuntary petition against the Borrower
or either Guarantor in bankruptcy or seeking
reorganization, arrangement, readjustment of its debts
or for any other relief under any applicable bankruptcy
act or law, or under any other insolvency act or law,
now or hereafter existing and such petition remains
undismissed or unanswered for a period of sixty (60)
days from such filing; or the insolvency appointment of
a receiver or trustee of the Borrower or either
Guarantor for all or a substantial part of the property
of such Person and such appointment remains unvacated
or unopposed for a period of sixty (60) days from such
appointment, execution or similar process against any
substantial part of the property of the Borrower or
either Guarantor and such warrant remains unbonded or
undismissed for a period of sixty (60) days from notice
to the Borrower or either Guarantor of its issuance.
Dissolution Proceedings. Should proceedings for the
dissolution or appointment of a liquidator of the Borrower or
either Guarantor be commenced.
False Statements. Should any representation or warranty of
either the Borrower or the Guarantor made in connection with the
Indebtedness prove to be incorrect or misleading in any material
respect when made or reaffirmed.
Material Adverse Change. Should a Material Adverse Change
with respect to either the Borrower or the Guarantor occur at any
time and not be cured within ten days of the occurrence thereof.
Upon the occurrence of an Event of Default, all Commitments
of the Bank under this Agreement will terminate immediately
(including any obligation to make any further Revolving Loans
and/or Acquisition Loans, to issue any further Credits to or for
the account of any Borrower or to fund the Term Loan), and, at
the Bank's option, the Notes and all Indebtedness of the Borrower
will become immediately due and payable, all without notice of
any kind to the Borrower or the Guarantor, except that in the
case of type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional.
Upon the occurrence of an Event of Default, the Bank may
proceed to realize upon the Collateral under the terms of the
Collateral Documents and exercise any other rights which it has
by law or contract (which rights shall be cumulative in nature).
Section 13.2. Waivers. Except as otherwise provided for in
this Agreement and by applicable law, the Borrower and the
Guarantor waive (i) presentment, demand and protest and notice of
presentment, dishonor, notice of intent to accelerate, notice of
acceleration, protest, default, nonpayment, maturity, release,
compromise, settlement, extension or renewal of any or all
commercial paper, accounts, contract rights, documents,
instruments, chattel paper and guaranties at any time held by the
Bank on which the Borrower or the Guarantor may in any way be
liable and hereby ratify and confirm whatever the Bank may do in
this regard, (ii) all rights to notice and a hearing prior to the
Bank's taking possession or control of, or to the Bank's replevy,
attachment or levy upon, the Collateral or any bond or security
which might be required by any court prior to allowing the Bank
to exercise any of its remedies, and (iii) the benefit of all
valuation, appraisal and exemption laws. The Borrower and the
Guarantor acknowledge that they have been advised by counsel of
their choice with respect to this Agreement, the other Collateral
Documents, and the transactions evidenced by this Agreement and
other Collateral Documents.
ARTICLE XIV
MISCELLANEOUS
Section 14.1. No Waiver; Modification in Writing. No
failure or delay on the part of the Bank in exercising any right,
power or remedy hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right, power or
remedy preclude any other or further exercise thereof or the
exercise of any other right, power or remedy hereunder. No
amendment, modification or waiver of any provision of this
Agreement or of the Notes, nor consent to any departure by the
Borrower or the Guarantor therefrom, shall in any event be
effective unless the same shall be in writing signed by or on
behalf of the Bank and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given. No notice to or demand on the Borrower
or the Guarantor in any case shall entitle the Borrower or the
Guarantor to any other or further notice or demand in similar or
other circumstances.
Section 14.2. Payment on Non-Business Day. Whenever any
payment to be made hereunder or on account of any of the Notes
shall be scheduled to become due on a day which is not a Business
Day, such payment may be made on the next succeeding Business
Day, and such extension of time shall in such case be included in
computing interest and fees payable hereunder or on account of
the Notes.
Section 14.3. Addresses for Notices. All notices and
communications provided for hereunder shall be in writing and,
shall be mailed, by certified mail, return receipt requested, or
delivered as set forth below unless any person named below shall
notify the others in writing of another address, in which case
notices and communications shall be mailed, by certified mail,
return receipt requested, or delivered to such other address.
If to the Bank:
Hibernia National the Bank
P. O. Box 61540
New Orleans, LA 70161
Attn: Energy and Maritime Department
If to the Borrower:
Omni Energy Services Corp.
4484 N.E. Evangeline Thruway
Carencro, LA 70520
Attn: David Jeansonne
If to Omni Marine:
Omni Marine & Supply, Inc.
315 South College, Suite 165
Lafayette, LA 70503
Attn: David Jeansonne
If to Aviation:
American Aviation L.L.C.
301 Shepard Drive
Lafayette, LA 70508
Attn: David Jeansonne
Section 14.4. Fees and Expenses. The Borrower agrees to
pay all fees, costs and expenses of the Bank in connection with
the preparation, execution and delivery of this Agreement, and
all Related Documents to be executed in connection herewith and
subsequent modifications or amendments to any of the foregoing,
including without limitation, the reasonable fees and
disbursements of counsel to the Bank, and to pay all costs and
expenses of the Bank in connection with the enforcement of this
Agreement, the Notes or the other Related Documents, including
reasonable legal fees and disbursements arising in connection
therewith. The Borrower also agrees to pay, and to save the Bank
harmless from any delay in paying stamp and other similar taxes,
if any, which may be payable or determined to be payable in
connection with the execution and delivery of this Agreement, the
Notes, the other Related Documents, or any modification thereof.
Section 14.5. Security Interest and Right of Set-off. The
Bank shall have a continuing security interest in, as well as the
right to set-off the obligations of the Borrower hereunder
against, all funds which the Borrower may maintain on deposit
with the Bank (with the exception of funds deposited in the
Borrower's accounts in trust for third parties or funds deposited
in pension accounts, IRA's, Keogh accounts and All Saver
Certificates), and the Bank shall have a lien upon and a security
interest in all property of the Borrower in the Bank's possession
or control which shall secure the Indebtedness of the Borrower.
Section 14.6. Waiver of Marshaling. The Borrower and the
Guarantor shall not at any time hereafter assert any right under
any law pertaining to marshaling (whether of assets or liens) and
the Borrower and the Guarantor expressly agree that the Bank may
execute or foreclose upon the Collateral in such order and manner
as the Bank, in its sole discretion, deems appropriate.
Section 14.7. Governing Law. This Agreement and the Notes
shall be deemed to be contracts made under the laws of the State
of Louisiana and for all purposes shall be construed in
accordance with the laws of said State.
Section 14.8. Consent to Loan Participation. The Borrower
and the Guarantor agree and consent to the Bank's sale or
transfer, whether now or later, of one or more participation
interests in the Indebtedness of the Borrower arising pursuant to
this Agreement to one or more purchasers, whether related or
unrelated to the Bank. The Bank may provide, without any
limitation whatsoever, to any one or more purchasers, or
potential purchasers, any information or knowledge the Bank may
have about the Borrower and the Guarantor or about any other
matter relating to such Indebtedness, and the Borrower and the
Guarantor hereby waive any rights to privacy they may have with
respect to such matters. The Borrower and the Guarantor also
agree that the purchasers of any such participation interest will
be considered as the absolute owners of such interests in such
Indebtedness.
Section 14.9. WAIVER OF JURY TRIAL; SUBMISSION TO
JURISDICTION. (a) THE BORROWER, THE GUARANTOR, AND THE BANK
HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO WHICH
THE BORROWER, THE GUARANTOR, AND THE BANK MAY BE PARTIES, ARISING
OUT OF OR IN ANY WAY PERTAINING TO (i) THE NOTES, (ii) THIS
AGREEMENT, (iii) THE COLLATERAL DOCUMENTS OR (iv) THE COLLATERAL.
IT IS AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A WAIVER
OF TRIAL BY JURY OF ALL CLAIMS AGAINST ALL PARTIES TO SUCH
ACTIONS OR PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE
NOT PARTIES TO THIS AGREEMENT. THIS WAIVER IS KNOWINGLY,
WILLINGLY AND VOLUNTARILY MADE BY THE BORROWER, THE GUARANTOR,
AND THE BANK, AND THE BORROWER, THE GUARANTOR, AND THE BANK
HEREBY REPRESENT THAT NO REPRESENTATIONS OF FACT OR OPINION HAVE
BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL BY
JURY OR TO IN ANY WAY MODIFY OR NULLIFY ITS EFFECT. THE
BORROWER, THE GUARANTOR, AND THE BANK EACH FURTHER REPRESENT THAT
IT HAS BEEN REPRESENTED IN THE SIGNING OF THIS AGREEMENT AND IN
THE MAKING OF THIS WAIVER BY INDEPENDENT LEGAL COUNSEL, SELECTED
OF ITS OWN FREE WILL, AND THAT IT HAS HAD THE OPPORTUNITY TO
DISCUSS THIS WAIVER WITH COUNSEL.
(b) THE BORROWER AND THE GUARANTOR HEREBY IRREVOCABLY
CONSENT TO THE JURISDICTION OF THE STATE COURTS OF LOUISIANA AND
THE FEDERAL COURTS IN LOUISIANA AND AGREE THAT ANY ACTION OR
PROCEEDING ARISING OUT OF OR BROUGHT TO ENFORCE THE PROVISIONS OF
THE NOTES, THIS AGREEMENT AND/OR THE COLLATERAL DOCUMENTS MAY BE
BROUGHT IN ANY COURT HAVING SUBJECT MATTER JURISDICTION.
Section 14.10. Severability. If a court of competent
jurisdiction finds any provision of this Agreement to be invalid
or unenforceable as to any person or circumstance, such finding
shall not render that provision invalid or unenforceable as to
any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within
the limits of enforceability or validity; however, if the
offending provision cannot be so modified, it shall be stricken
and all other provisions of this Agreement in all other respects
shall remain valid and enforceable.
Section 14.11. Headings. Article and Section headings used
in this Agreement are for convenience only and shall not affect
the construction of this Agreement.
[The remainder of this page is intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto
duly authorized, as of the date first above written.
OMNI ENERGY SERVICES CORP.
By: /s/ David E. Crays
Name: David E. Crays
Title: Vice President and Chief Financial
Officer
AMERICAN AVIATION L.L.C.
By:
OMNI ENERGY SERVICES CORP.,
as Sole Member
By: /s/ David E. Crays
Name: David E. Crays
Title: Vice President and Chief Financial
Officer
OMNI MARINE & SUPPLY, INC.
By: /s/ David E. Crays
Name: David E. Crays
Title: Vice President and Chief Financial
Officer
HIBERNIA NATIONAL BANK
By: /s/ Tammy M. Angelety
--------------------------------
Name: Tammy M. Angelety
Title: Assistant Vice President
EXHIBIT 21.1
SUBSIDIARIES OF OMNI ENERGY SERVICES CORP.
Subsidiary State of
Incorporation
or Organization
OMNI Energy Services - Alaska, Inc. Alaska
OMNI Marine Supply, Inc. Louisiana
American Aviation, L.L.C. Missouri
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S FINANCIAL STATEMENTS AS OF AND FOR THE YEAR ENDED DECEMBER 31,
1997 FILED WITH THIS ANNUAL REPORT ON FORM 10-K AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> DEC-31-1997
<CASH> 8,723
<SECURITIES> 0
<RECEIVABLES> 12,348
<ALLOWANCES> (390)
<INVENTORY> 2,988
<CURRENT-ASSETS> 25,634
<PP&E> 40,752
<DEPRECIATION> (2,909)
<TOTAL-ASSETS> 74,913
<CURRENT-LIABILITIES> 14,120
<BONDS> 0
0
0
<COMMON> 157
<OTHER-SE> 44,428
<TOTAL-LIABILITY-AND-EQUITY> 74,913
<SALES> 49,591
<TOTAL-REVENUES> 49,591
<CGS> 36,302
<TOTAL-COSTS> 41,424
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,866
<INCOME-PRETAX> 6,338
<INCOME-TAX> 403
<INCOME-CONTINUING> 5,935
<DISCONTINUED> 0
<EXTRAORDINARY> 84
<CHANGES> 0
<NET-INCOME> 5,851
<EPS-PRIMARY> .47
<EPS-DILUTED> .47
</TABLE>
