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Registration File No. 333-_______
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON AUGUST 21, 1996
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
MITCHAM INDUSTRIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS
(STATE OR OTHER JURISDICTION OF 76-0210849
INCORPORATION OR ORGANIZATION) (I.R.S. EMPLOYER IDENTIFICATION NO.)
POST OFFICE BOX 1175
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77342
(409) 291-2277
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
BILLY F. MITCHAM, JR.
POST OFFICE BOX 1175
44000 HIGHWAY 75 SOUTH
HUNTSVILLE, TEXAS 77342
(409) 291-2277
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE)
Copy to:
SABRINA A. MCTOPY
NORTON, JACOBS, KUHN & MCTOPY, L.L.P.
TEXACO HERITAGE PLAZA
1111 BAGBY, SUITE 2450
HOUSTON, TEXAS 77002-4004
(713) 659-1131
Approximate date of commencement of proposed sale to the public: As soon as
practicable after the Registration Statement becomes effective.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the
following box [ ]
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or
interest reinvestment plans, please check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
CALCULATION OF REGISTRATION FEE
<TABLE>
- --------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------
PROPOSED PROPOSED
TITLE OF EACH CLASS OF MAXIMUM MAXIMUM
SECURITIES TO BE AMOUNT TO BE OFFERING PRICE AGGREGATE OFFERING AMOUNT OF
REGISTERED REGISTERED PER SHARE PRICE REGISTRATION FEE
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.01 par
value ("Common Stock"). . . 516,730 $5.75(1) $2,971,197.50 $1,024.55
- --------------------------------------------------------------------------------------------
Common Stock Underlying
Warrants . . . . . . . . . . 242,953 $5.75(2) $1,396,979.7 $ 481.72
- --------------------------------------------------------------------------------------------
Total . . . . . . . . . . . $1,506.27
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- --------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
(1) Pursuant to Rule 457(c), the registration fee for these shares is
calculated based upon the last sale price of the Common Stock reported on
the Nasdaq National Market System on August 15, 1996, or $5.75 per share.
(2) In accordance with Rule 457(g), the registration fee for these shares
is calculated based upon a price of $5.75 per share, which is the highest
of (i) the price at which the warrants may be exercised; (ii) the offering
price of securities of the same class included in the registration
statement; and (iii) the price of securities of the same class, as
determined pursuant to Rule 457(c).
--------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE
OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE
REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT
THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE
WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.
<PAGE>
MITCHAM INDUSTRIES, INC.
CROSS REFERENCE SHEET
(PURSUANT TO ITEM 501(b) OF REGULATION S-K)
--------------------
<TABLE>
ITEM FORM SB-2 ITEM NUMBER AND CAPTION LOCATION IN PROSPECTUS
- ---- --------------------------------- ----------------------
<S> <C> <C>
1. Forepart of the Registration Statement and
Outside Front Cover Page of Prospectus........ Facing Pace; Outside Front Cover of Prospectus
2. Inside Front and Outside Back Cover Pages
of Prospectus ................................ Inside Front Cover Page; Outside Back Cover Page
3. Summary Information, Risk Factors and
Ratio of Earnings to Fixed Charges ........... The Company; Risk Factors
4. Use of Proceeds............................... Not Applicable
5. Determination of Offering Price............... Not Applicable
6. Dilution ..................................... Not Applicable
7. Selling Security Holders ..................... Selling Security Holders
8. Plan of Distribution.......................... Outside Front Cover Page; Plan of Distribution
9. Description of Securities to be Registered.... Not Applicable
10. Interests of Named Experts and Counsel........ Legal Matters
11. Material Changes.............................. Not Applicable
12. Incorporation of Certain Information by
Reference..................................... Documents Incorporated by Reference
13. Disclosure of Commission Position On
Indemnification for Securities Act
Liabilities .................................. Not Applicable
</TABLE>
<PAGE>
PROSPECTUS
759,683 SHARES
MITCHAM INDUSTRIES, INC.
COMMON STOCK
($0.01 PAR VALUE)
--------------------
This prospectus relates to 759,683 shares of common stock, par value
$0.01 per share (the "Common Stock"), of Mitcham, Industries, Inc., (the
"Company") which may be offered and sold from time to time by security
holders of the Company (the "Selling Security Holders"). Of the total number
of shares offered hereby, 516,730 are currently outstanding shares of the
Company's Common Stock owned by certain security holders of the Company and
242,953 are issuable upon the exercise of certain warrants to acquire Common
Stock. See "Selling Security Holders." The Company will not receive any of
the proceeds from the sale of the shares of Common Stock offered hereby.
However, if all of the 242,953 warrants representing shares of Common Stock
in this offering are exercised, the Company will receive aggregate proceeds
therefrom of approximately $962,000.
The Company's Common Stock traded on the Nasdaq SmallCap Market under the
symbol "MIND" from December 19, 1994 through April 25, 1996. The Company's
Common Stock is currently traded on the Nasdaq National Market System under
the symbol "MIND". On August 15, 1996 the last sales price of the Company's
Common Stock was $5.75 per share.
The Company Stock may be offered and sold from time to time by the
Selling Security Holders named herein through dealers or agents or directly
to one or more purchasers in fixed price offerings, in negotiated
transactions, at market prices prevailing at the time of sale or at prices
related to such market prices. The terms of the offering and sale of Common
Stock with respect to which this Prospectus is being delivered, including any
discounts, commissions or concessions allowed, or paid to dealers or agents,
the purchase price of the shares of Common Stock, the proceeds to the Selling
Security Holders, and any other material terms shall be as set forth in a
Prospectus Supplement. See "Plan of Distribution" for possible
indemnification arrangements for dealers and agents.
FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON STOCK, SEE "RISK FACTORS"
BEGINNING ON PAGE 3.
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE
--------------------
The date of this Prospectus is __________, 1996
<PAGE>
AVAILABLE INFORMATION
The Company has filed with the Securities and Exchange Commission (the
"Commission") in Washington, D.C. a Registration Statement on Form S-3 under
the Securities Act of 1933, as amended (the "Securities Act"), with respect
to the Common Stock offered by this Prospectus. Certain portions of the
Registration Statement have not been included in this Prospectus. For
further information, reference is made to the Registration Statement and the
exhibits thereto. The Company is subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files reports, proxy statements and other information
with the Commission. The Registration Statement (with exhibits), as well as
such reports, proxy statements and other information, can be inspected and
copied at the public reference facilities maintained by the Commission at its
principal offices at Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549. Copies of such material can be obtained at prescribed rates from
the Public Reference Section of the Commission at its principal office at
Judiciary Plaza, 450 Fifth Street, N.W., Room 1023, Washington, D.C. 20549.
DOCUMENTS INCORPORATED BY REFERENCE
The Company hereby incorporates by reference in this Prospectus (i) the
Company's Annual Report on Form 10-KSB for the fiscal year ended January 31,
1996; (ii) the Company's Quarterly Report on Form 10-QSB for the three months
ended April 30, 1996; and (iii) the description of the Company's Common Stock
contained in the Company's Form SB-2, dated December 19, 1994, including any
amendments, post-effective amendments or reports filed for the purpose
updating such description. All other reports filed by the Company pursuant
to Section 13(a) or 15(d) of the Exchange Act since January 31, 1996 are
hereby incorporated herein by reference.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14
and 15(d) of the Exchange Act after the date of this Prospectus and before
the termination of the offering covered hereby will be deemed to be
incorporated by reference in this Prospectus and to be a part hereof from the
date of filing of such documents. Any statement contained in a document
incorporated or deemed to be incorporated by reference in this Prospectus
shall be deemed to be modified or superseded for purposes of this Prospectus
to the extent that a statement contained in this Prospectus or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference modifies or replaces such statement.
The Company will provide without charge to each person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the documents incorporated by reference in this
Prospectus, other than exhibits to such documents, unless such exhibits are
specifically incorporated by reference into the information that this
Prospectus incorporates. All such requests should be directed to Mitcham
Industries, Inc., Post Office Box 1175, 44000 Highway 75 South, Huntsville,
Texas 77342, Attention: Roberto Rios, telephone number (409) 291-2277.
2
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY, AND SHOULD BE READ
IN CONJUNCTION WITH, THE MORE DETAILED INFORMATION CONTAINED ELSEWHERE IN
THIS PROSPECTUS.
THE COMPANY
Mitcham Industries, Inc., a Texas corporation ("Company"), specializes in
the leasing and sale of seismic equipment to the oil and gas industry. The
Company provides short-term leasing of peripheral seismic equipment to meet a
customer's requirements, as well as offering maintenance and support during
the lease term. The Company leases its seismic equipment primarily to
land-based seismic data acquisition companies and major oil and gas
exploration companies conducting seismic data acquisition surveys in North
and South America. The Company also sells and services new and used seismic
data acquisition systems and peripheral equipment to companies engaged in oil
and gas exploration.
Seismic data acquisition equipment is used in the identification and
graphic definition of subsurface geologic structures and formations which
potentially contain oil and gas. Since the mid-1980s, the oil and gas
industry has evolved from utilizing seismic data using two-dimensional
("2-D") seismic surveys to utilizing three-dimensional ("3-D") surveys.
Three-dimensional seismic data, although more costly than 2-D data, is
believed to provide greatly enhanced information regarding subsurface
geology, resulting in improved drilling success rates and reduced exploration
costs. The production of this enhanced information requires the use of a
greater number of remote signal conditioners, or "channel boxes," which
collect and transmit seismic data, and of various other types of peripheral
seismic equipment to support the additional channel boxes. Management
believes that 3-D seismic surveys will continue to increase in importance and
become the dominant seismic data acquisition technique in the oil and gas
industry.
The Company's strategy is to respond to its customers' short-term demand
for additional 3-D channel boxes and supporting peripheral equipment by
expanding its 3-D seismic leasing operations. Historically, a majority of the
Company's operations were focused on the sale and service of 2-D seismic
equipment of various manufacturers. Given the expense of 3-D channel boxes
and other peripheral equipment, management believes that seismic survey firms
will increasingly engage in short-term leasing of such equipment as an
alternative to purchasing it. In response to this trend, in February 1994,
the Company entered into an agreement with Input/Output, Inc. ("I/O"), a
designer and manufacturer of technologically advanced, land-based 3-D seismic
data acquisition equipment and systems. Under this agreement, as amended (the
"I/O Agreement"), the Company is the exclusive recipient of requests I/O
receives from its customers and others to lease I/O 3-D channel boxes in
North and South America subject to certain conditions, including certain
minimum purchase requirements and may acquire I/O 3-D channel boxes at
favorable prices based on the volume of equipment purchased. Since entering
into the I/O Agreement and acquiring 3-D I/O seismic equipment, the Company
has changed its business focus from the leasing and sale of 2-D seismic
equipment to the lease of 3-D seismic equipment, with a primary emphasis on
channel boxes.
Effective June 1, 1996, the Company had purchased approximately $7.9
million of the required $10.0 million of I/O 3-D channel boxes under the I/O
Agreement, and was required to purchase an additional $2.1 million of channel
boxes on or before December 31, 1996. Effective June 1, 1996, the Company
entered into an amendment of its Exclusive Lease Referral Agreement with I/O.
Under the I/O Agreement as amended, (i) the term has been extended until May
31, 2000; (ii) the seismic data acquisition equipment that I/O will sell to
the Company and with respect to which I/O will recommend the Company as a
potential lessor has been expanded; and (iii) the former $10.0 million has
been replaced with an aggregate $13.25 minimum purchase requirement over the
remaining term of the Agreement.
The Company was formed in January 1987. Its principal offices are located
at Post Office Box 1175, 44000 Highway 75 South, Huntsville, Texas, and its
telephone number is (409) 291-2277.
3
<PAGE>
RISK FACTORS
IN ADDITION TO THE OTHER INFORMATION CONTAINED IN THIS PROSPECTUS,
POTENTIAL INVESTORS SHOULD CAREFULLY EVALUATE THE FOLLOWING RISK FACTORS,
WHICH COULD HAVE A MATERIAL ADVERSE EFFECT ON THE VALUE OF THE COMPANY'S
COMMON STOCK.
DEPENDENCE ON EXCLUSIVE LEASE REFERRAL AGREEMENT WITH INPUT/OUTPUT;
COMPETITION FROM INPUT/OUTPUT
While the Company will continue to sell and lease 2-D seismic equipment
of various manufacturers, its future earnings growth is dependent upon its
success in leasing 3-D seismic equipment of I/O and other manufacturers. Of
critical importance to that growth is the I/O Agreement, entered into in
February, 1994, pursuant to which the Company (i) is the exclusive recipient
of requests from I/O customers and others to lease I/O channel boxes in North
and South America; and (ii) may acquire channel boxes from I/O at favorable
prices based upon the volume of equipment purchased. As a manufacturer of
complete data acquisition systems that are compatible only with I/O channel
boxes, I/O typically receives significant inquiries to lease I/O 3-D channel
boxes from customers desiring to expand the capacities of their systems on a
short-term basis. In order to continue to receive the above benefits under
the I/O Agreement, except as otherwise provided therein, the Company must
meet certain minimum purchase requirements of I/O 3-D channel boxes.
In order to receive the benefits of the I/O Agreement, the Company was
required to purchase an aggregate of $10.0 million of I/O 3-D channel boxes
in stated installments over the term of the agreement, which was to terminate
on December 31, 1996 (the "Termination Date"). As of June 1, 1996, the
Company had purchased approximately $7.9 million of the required $10.0
million of I/O 3-D channel boxes under the I/O Agreement, and was required to
purchase an additional $2.1 million of channel boxes on or before the
Termination Date. Effective June 1, 1996, the Company entered into an
amendment of the I/O Agreement.
Under the I/O Agreement as amended, (i) the term has been extended until
May 31, 2000; (ii) the seismic data acquisition equipment that I/O will sell
to the Company and with respect to which I/O will recommend the Company as a
potential lessor has been expanded; and (iii) the former aggregate minimum
purchase requirement of $10.0 million no longer applies. The other
provisions of the I/O Agreement remain substantially the same.
In addition to I/O 3-D channel boxes that were the subject of the
agreement before the amendment, the I/O Agreement now covers (i) ocean bottom
cable systems, which collect seismic data in an ocean environment in depths
of up to 200 meters; (ii) central electronics units, which act as the control
center of and test all functions of complete data acquisition systems; and
(iii) remote acquisition modules, field communication devices between channel
boxes and central electronics units that allow more channel boxes to be
employed in a seismic survey.
Specifically, in place of the former aggregate $10.0 million of required
purchases, Company has agreed to purchase an aggregate of $3.0 million of I/O
3-D channel boxes after June 1, 1996 and before November 30, 1996 (the
"Renewal Purchase"), with a minimum of $1.5 million to be purchased by August
31, 1996. From January 1, 1997 through May 31, 1997, the Company must
purchase at least an aggregate of $1.25 million of I/O seismic equipment in
order to receive favorable pricing with respect to such equipment. In each
of the years from June 1, 1997 through May 31, 1998, June 1 through May 31,
1999 and June 1, 1999 through May 31, 2000, the Company must purchase at
least an aggregate of $3.0 million of I/O Equipment (or an aggregate
additional $10.25 million after the $3.0 million Renewal Purchase is made) in
order to receive favorable pricing on such equipment.
The Company anticipates that the cash flow generated from the I/O 3-D
channel boxes which it currently owns, the available portions of its $1.0
million line of credit with a bank and its $4.2 million term loan with a
bank, and all or a portion of the approximately $4.2 million aggregate
proceeds it has received from the exercise of the Warrants, bridge warrants,
and representative's warrants issued to the representative of the
underwriters in the Company's IPO, will be used to fund $1.5 million of the
Renewal Purchase by August 15, 1996 and the remaining $1.5 million of the
Renewal Purchase by November 30, 1996. The Company anticipates that the
foregoing sources will fund in part the remaining aggregate $10.25 million of
subsequent minimum purchases required over the term of the I/O Agreement in
order to receive favorable pricing on such equipment. However, the Company
anticipates
4
<PAGE>
that it may require additional equipment loans in order to fully fund those
minimum purchase requirements. There can be no assurance that the Company
will be able to obtain such equipment financing loans on terms acceptable to
the Company, if at all. Failure to meet the minimum purchase requirement in
one or more years would mean the loss of favorable pricing provided for by
the I/O Agreement, which would have a material adverse effect on the
Company's future operations and profits.
Under the I/O Agreement, subject to certain exceptions described below,
the Company is the exclusive recipient of requests from I/O customers and
others to lease I/O 3-D channel boxes in North and South America. I/O may not
recommend or suggest any competitor of the Company as a potential lessor of
I/O 3-D channel boxes in North and South America. However, if the Company (i)
is unable to lease the 3-D channel boxes due to a shortage in its lease
fleet; (ii) cannot agree on the terms of a proposed lease with a prospective
lessee within 72 hours of the lessee's introduction to the Company; or (iii)
otherwise chooses not to lease to a prospective lessee, then I/O may lease
channel boxes to the prospective lessee. Leases of channel boxes with
purchase options are specifically excluded from the I/O Agreement. Therefore,
I/O may continue to enter into leases with purchase options in North and
South America during the term of the I/O Agreement. Channel boxes which I/O
owned and which were subject to lease at the date of the I/O Agreement are
also specifically excluded from the I/O Agreement. However, as of the date of
this Prospectus, substantially all of those channel boxes have been acquired
by the Company and others. After the remaining 3-D channel boxes owned by I/O
and subject to lease at the date of the I/O Agreement are acquired, I/O
cannot compete with the Company in North and South America except as
described above.
DEPENDENCE UPON INPUT/OUTPUT
In connection with the Company's decision to concentrate its business
focus primarily upon 3-D seismic leasing, the Company has determined to rely
upon I/O to manufacture and sell to the Company the I/O 3-D seismic equipment
which the Company will be leasing to its customers and, to a lesser extent,
to refer leasing customers to the Company. As a result, I/O has the ability
to adversely affect the 3-D seismic leasing portion of the Company's
business. While the Company does not anticipate any difficulty in obtaining
channel boxes or lease referrals from I/O based upon its past experience and
current relationship with I/O, any such occurrence could have a material
adverse effect upon the Company's business, financial condition and results
of operations. In addition, by entering into the I/O Agreement, and engaging
in cooperative advertising with I/O with respect to I/O 3-D channel boxes,
the Company has undertaken to establish an identity connected with I/O. As
such, any adverse economic condition of I/O or negative operating results for
I/O or even negative publicity about I/O or its products, could in turn
adversely affect the Company's business, financial condition and results of
operations. Conversely, the Company has no ability to affect I/O's
operations or results of operations. While the Company in such case could
purchase 3-D seismic equipment from another manufacturer, there can be no
assurance the Company could either obtain favorable prices based upon the
volume of equipment purchased or obtain customer lease referrals from such
manufacturer.
DEPENDENCE UPON ADDITIONAL LEASE CONTRACTS; UNCERTAIN FUTURE RESULTS
The Company's operating risks occur primarily in its equipment leasing
business. The Company's leases typically have a term of three to nine months
and provide gross revenues equal to 20% to 80% of the acquisition cost of the
new equipment, thereby recovering only a portion of the Company's capital
investment. The Company's ability to generate lease revenues, and thus its
profitability, is dependent upon obtaining additional lease contracts after
the termination of an initial lease. However, lessees are under no obligation
to, and frequently do not, continue to lease seismic equipment after the
expiration of a lease. Although the Company has been successful in obtaining
additional lease contracts with other lessees after the termination of
three-to-nine month equipment leases, there can be no assurance that it will
continue to do so. The Company's failure to obtain additional or extended
leases beyond the initial term would have a material adverse effect on its
operations and financial condition.
5
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POTENTIAL LIABILITY EXPOSURE; POSSIBILITY OF INADEQUATE COVERAGE
The Company maintains general liability insurance coverage for potential
claims, the nature and amount of which it believes is customary in the
industry. There is no assurance that adequate insurance will be available to
the Company in the future on terms as favorable as those contained in its
existing arrangements. The Company's lease equipment is covered by a minimum
of $1,000,000 general liability and actual loss coverage when under lease.
This insurance is paid for by the Company's lessees and the Company receives
certification that it has been named as additional insured and loss payee on
lessees' policies prior to delivery of equipment. Thus, the Company's lessees
bear the risk of loss or damage to leased equipment during the lease term.
POSSIBLE ADVERSE EFFECT OF INSTABILITY OF OIL AND GAS INDUSTRY AND DEMAND FOR
SERVICES
Demand for the Company's services depends upon the level of spending by
oil and gas companies for exploration, production, and development
activities, as well as on the number of land seismic crews operating in the
world, and especially in North America. Fluctuations in the price of oil and
gas in response to relatively minor changes in the supply and demand for oil
and natural gas continue to have a major effect on these activities and thus,
on the demand for the Company's services. Published industry sources indicate
that the number of seismic crews working worldwide has declined from
approximately 1,500 in 1988 to 1,214 as of July 1, 1996. Likewise, those
sources indicate that the number of seismic crews working in North America
has declined from 300 in 1988 to 140 as of July 1, 1996. The Company believes
that the number of active crews will continue to decline through the year
2000, but it anticipates that the total amount of 3-D seismic equipment in
use by those crews will continue to increase in an effort to increase
drilling success rates and decrease exploration costs. There can be no
assurance of an increased demand for additional 3-D seismic equipment or as
to the level of future demand for the Company's services.
TRANSACTIONS WITH AFFILIATES
The Company has had several transactions with affiliates, including a
consulting agreement. In particular, until September 1995 the Company was
leasing its facilities from an affiliate at approximately twice the cost per
square foot being paid by an unrelated third party for adjacent facilities.
Other than with respect to such lease, management of the Company believes
that the terms of such transactions are reasonable and fair. However, in no
case has an independent determination as to the fairness been made and the
affiliates have no fiduciary obligation to the Company. Therefore, such
transactions may be subject to self-dealing by affiliates.
TECHNOLOGICAL OBSOLESCENCE
The Company has a substantial capital investment in 3-D seismic
equipment. In addition, under the I/O Agreement, the Company is required to
make a substantial additional investment in I/O 3-D seismic equipment. The
Company believes that the technology represented by the 3-D equipment in
service and to be acquired from I/O will not become obsolete prior to the
Company's recovery of its initial investment. However, there can be no
assurance that manufacturers of seismic equipment will not develop
alternative systems that would have competitive advantages over systems now
in use, thus having potentially adverse affects on the Company's ability to
profitably lease its existing 3-D seismic equipment. In the past, the Company
has been successful in avoiding material losses caused by technological
obsolescence by selling its older technology 2-D seismic equipment in the
international market and, to a lesser extent, to smaller seismic survey firms
in the domestic market. However, there can be no assurance that the Company
will be able to sell technologically obsolete equipment in the future.
CUSTOMER CONCENTRATION
The Company typically sells and leases significant amounts of seismic
equipment to a relatively small number of customers, the composition of which
changes from year to year as leases are negotiated and concluded and
equipment needs vary. Therefore, at any one time, a large portion of the
Company's revenues may be derived from a limited number of customers. In the
years ended January 31, 1995 and January 31, 1996, one customer accounted for
approximately 16% and 18%, respectively, of the Company's total revenues. The
termination of any large
6
<PAGE>
seismic lease could have a material adverse effect on the Company's
operations if the Company does not replace such business on a timely basis.
COMPETITION
Competition in the leasing of seismic equipment is fragmented, and the
Company is aware of numerous companies that engage in such equipment leasing.
Many of these competitors, however, do not lease seismic equipment of several
manufacturers, nor do they offer maintenance and support during the lease
term. Competition exists to a lesser extent from seismic data acquisition
firms seeking to generate revenue from equipment that is temporarily idle.
Under the I/O Agreement, I/O and its subsidiary, Global Charter Corporation
(``Global'') retain the right to continue to (i) lease channel boxes in
certain situations where the Company and a prospective lessee cannot or do
not enter into a lease, as more fully described in the I/O Agreement; (ii)
lease channel boxes with a purchase option in North and South America and
(iii) lease the channel boxes owned by either of them and subject to lease on
the date of the I/O Agreement. However, as of the date of this Prospectus,
substantially all of the latter channel boxes have been acquired by the
Company and others. After the remaining 3-D channel boxes owned by I/O and
subject to lease at the date of the I/O Agreement are acquired, I/O cannot
compete with the Company in North and South America except as described
above. The Company does not believe that I/O's lease of channel boxes with a
purchase option would directly compete with the Company's seismic equipment
leasing business, as the Company does not engage in lease/purchase
arrangements. The Company has several competitors engaged in seismic
equipment sales, including land-based seismic data acquisition companies and
major oil and gas exploration companies that use seismic equipment, many of
which have substantially greater financial resources than the Company. There
are also numerous smaller competitors who, in the aggregate, generate
significant revenue from the sale of seismic survey equipment.
DEPENDENCE ON KEY PERSONNEL
The Company's success is dependent on, among other things, the services
of Billy F. Mitcham, Jr., the Chairman of the Board, President and Chief
Executive Officer of the Company. In May 1994, the Company entered into an
employment agreement with Mr. Mitcham for a term of three years, subject to
earlier termination upon certain stated events. Under the employment
agreement, the Company agreed to pay Mr. Mitcham an annual salary of
$100,000, subject to increase by the Company's Board of Directors. The
employment agreement prohibits Mr. Mitcham from providing services to, and
from contacting or soliciting in an effort to provide services to, any
competitor of the Company for two years after the termination of his
employment. The Company has obtained a $1.0 million key employee life
insurance policy payable to the Company in the event of Mr. Mitcham's death.
The loss of the services of Mr. Mitcham could have a material adverse effect
on the Company.
CONTROL BY PRINCIPAL SHAREHOLDER
As of the date of this Prospectus, Billy F. Mitcham, Jr. owned and had
voting control of approximately 15.4% and 29.6%, respectively, of the
outstanding shares of Common Stock. It should be assumed that, although Mr.
Mitcham does not own a majority interest, he will exercise effective voting
control over most corporate actions that require shareholder approval, and
may therefore exercise a controlling influence over the Company.
NO DIVIDEND HISTORY
The Company has never paid cash dividends on its Common Stock. The
Company does not presently anticipate paying any cash dividends on the Common
Stock in the foreseeable future.
POSSIBLE ISSUANCE OF PREFERRED STOCK
The Company's Articles of Incorporation authorize the issuance of
1,000,000 shares of ``blank check'' preferred stock, par value $1.00 per
share (``Preferred Stock'') with such designations, rights and preferences as
may be determined from time to time by the Board of Directors. No shares of
Preferred Stock will be outstanding as of the consummation of this Offering.
However, because the Board of Directors is empowered to issue Preferred Stock
with such preferences and rights as it determines, it may afford the holders
of any series of Preferred Stock
7
<PAGE>
preferences, rights or voting powers superior to those of the holders of
Common Stock. Although the Company has no present intention to issue any
shares of its Preferred Stock, there can be no assurance that the Company
will not do so in the future.
LIMITATION ON DIRECTOR LIABILITY
The Company's Articles of Incorporation, as amended, provide, as
permitted by governing Texas law, that a director of the Company shall not be
personally liable to the Company or its shareholders for monetary damages for
breach of fiduciary duty as a director, with certain exceptions. These
provisions may discourage shareholders from bringing suit against a director
for breach of fiduciary duty and may reduce the likelihood of derivative
litigation brought by shareholders on behalf of the Company against a
director.
8
<PAGE>
SELLING SECURITY HOLDERS
The following table sets forth the name of each Selling Security Holder
and the number of shares of Common Stock being offered by each Selling
Security Holder. The shares of Common Stock being offered hereby are being
registered to permit public secondary trading, and the Selling Security
Holders may offer all or a portion of the shares for resale from time to
time. See "Plan of Distribution."
<TABLE>
<CAPTION>
SHARES SHARES PERCENTAGE
BENEFICIALLY BENEFICIALLY BENEFICIALLY
OWNED OWNED OWNED
BEFORE SHARES AFTER AFTER
NAME OFFERING OFFERED OFFERING OFFERING+
- ---- -------- ------- -------- ---------
<S> <C> <C> <C> <C>
Billy F. Mitcham, Jr. . . . . . . . . 1,355,062(1) 300,000 1,055,062 23%
Billy F. Mitcham III, Trust. . . . . . 45,981(2) 8,721 37,260 *
Benjamin R. Mitcham Trust. . . . . . . 45,981(2) 8,721 37,260 *
Roberto Rios . . . . . . . . . . . . . 12,772(3) 12,772 -- --
William J. Sheppard. . . . . . . . . . 12,772(3) 12,772 -- --
Alamo Atlas Group, Inc. . . . . . . . 148,597(4) 148,597 -- --
Thomas M. Hunt . . . . . . . . . . . . 929 929 -- --
Dan D. Sudduth . . . . . . . . . . . . 17,030(5) 17,030 -- --
Milton Barbarosh . . . . . . . . . . . 3,230(5) 3,230 -- --
Carl L. Norton . . . . . . . . . . . . 40,530(5) 40,530 -- --
Heptagon Investments Limited . . . . . 3,750 3,750 -- --
OVH, Inc. . . . . . . . . . . . . . . 12,000 12,000 -- --
Marathon Holding Corporation . . . . . 1,751 1,751 -- --
Margolis Holding Corporation . . . . . 1,750 1,750 -- --
Jeffrey E. Margolis. . . . . . . . . . 1,749 1,749 -- --
Sabrina A. McTopy. . . . . . . . . . . 6,381 6,381 -- --
Robert T. Kirk . . . . . . . . . . . . 55,500(6) 55,500 -- --
Glen Desort. . . . . . . . . . . . . . 39,000(6) 39,000 -- --
Michael Morrisett. . . . . . . . . . . 6,000(6) 6,000 -- --
Jack Gilbert . . . . . . . . . . . . . 6,000(6) 6,000 -- --
Ken Kamen. . . . . . . . . . . . . . . 6,000(6) 6,000 -- --
Brian Herman . . . . . . . . . . . . . 6,000(6) 6,000 -- --
Wendy Tand Gusrae. . . . . . . . . . . 25,500(6) 25,500 -- --
The Equity Group, Inc. . . . . . . . . 35,000(7) 35,000 -- --
TOTAL 1,889,265 759,683 1,055,062 23%
</TABLE>
________________________
9
<PAGE>
+ Assumes no shares are effected by the Selling Security Holder during the
offering period other than pursuant to this Registration Statement.
* Less than 1%
(1) Includes an aggregate of 445,740 shares of Common Stock owned by Billy
F. Mitcham, Sr. (242,540 shares), Paul C. Mitcham (118,680 shares) and
two trusts established for the benefit of Mr. Mitcham, Jr.'s sons
(37,260 shares for each trust), and as to which shares Mr. Mitcham, Jr.
has the right to vote under a Voting Agreement. Also includes shares
underlying currently exercisable options to purchase an aggregate of
200,692 shares of Common Stock, as follows: Billy F. Mitcham, Jr.
(116,000 shares), Billy F. Mitcham, Sr. (45,750 shares), Paul C. Mitcham
(21,500 shares), and the two trusts (8,721 shares each).
(2) Represents 37,260 shares that are included in the number of shares
beneficially owned by Billy F. Mitcham, Jr. and 8,721 shares that may
be acquired upon the exercise of a warrant at an exercise price of $3.87
per share.
(3) Includes 2,422 shares that may be acquired upon the exercise of a warrant
at an exercise price of $3.87 per share.
(4) Includes 31,977 shares that may be acquired upon the exercise of a warrant
at an exercise price of $3.87 per share.
(5) Includes or represents 3,230 shares that may be acquired upon the exercise
of a warrant at an exercise price of $3.87 per share.
(6) Represents shares that may be acquired upon the exercise of an aggregate
of 29,500 Representative's Warrants and 85,000 Underlying
Representative's Warrants issued in the Company's initial public
offering in January 1995. Each Representative's Warrant entitles the
holder to purchase a unit at an exercise price of $7.97 per unit,
consisting of two shares of Common Stock and an Underlying
Representative's Warrant to purchase an additional share of Common Stock
at an exercise price of $4.20 per share.
(7) Represents shares that may be acquired upon the exercise of warrants at an
exercise price of $3.50 per share.
PLAN OF DISTRIBUTION
The Selling Security Holders may offer the shares of Common Stock subject
to this Prospectus from time to time in one or more offerings through dealers
or agents or directly to one or more purchasers in fixed price offerings, in
negotiated transactions, at market prices prevailing at the time of sale or
at prices related to such market prices. Resales by the purchasers of such
shares may be made in the same manner.
The distribution of the shares of Common Stock by the Selling Security
Holders, or by transferees of the Selling Security Holders, may be effected
from time to time in one or more transactions (which may involve block
transactions) in the over-the-counter market, in negotiated transactions or
in a combination of such methods of sale, at fixed prices, at market prices
prevailing at the time of sale, at prices related to such prevailing market
prices, or at negotiated prices. The Selling Security Holders may effect
such transactions by selling shares of Common Stock directly to purchasers or
to or through broker-dealers acting as principals or agents. Such
broker-dealers may receive compensation in the form of discounts,
concessions, or commissions from the Selling Security Holders or the
purchasers of the shares of Common Stock for whom such broker-dealers may act
as agent, or to whom they may sell as principal or both (which compensation,
as to a particular broker-dealer, may be less than or in excess of customary
commissions).
Upon the Company's being notified by a Selling Security Holder that any
material arrangement has been entered into with a broker-dealer for the sale
of shares through a block trade, special offering, exchange distributions or
secondary distribution, a supplemental Prospectus will be filed, pursuant to
Rule 424(b) under the Act, setting forth (i) the name of each Selling
Securityholder and of the participating broker-dealer(s), (ii) the number of
shares involved, (iii) the price at which such shares were sold (iv) the
commissions paid or discounts or concessions
10
<PAGE>
allowed to such broker-dealer(s), where applicable, (v) that such
broker-dealer(s) did not conduct any investigation to verify the information
set out in this Prospectus and (vi) other facts material to the transactions.
The Selling Security Holders and any broker-dealers or agents who
participate in a sale of shares of Common Stock covered by this Prospectus
may be deemed to be underwriters (within the meaning of such term under the
Securities Act) of the Common Stock offered thereby. Any commissions received
by them, as well as any proceeds from any sales as principal by them, may be
deemed to be underwriting discounts and commissions under the Securities Act.
Unless otherwise set forth in the applicable Prospectus Supplement, such
dealers or agents may, under agreements with the Selling Security Holders, be
entitled to indemnification by the Company or the Selling Security Holders
against certain civil liabilities under the Securities Act.
There are no contractual arrangements between or among any of the Selling
Security Holders with respect to sales of Common Stock and not Underwriter
will be acting for the Selling Security Holders. The Company will not
receive any of the proceeds from the sale of the shares of Common Stock
offered hereby. However, if all of warrants representing shares of Common
Stock in this offering are exercised, the Company will receive aggregate
proceeds therefrom of approximately $962,000.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be passed on for the
Company by Norton, Jacobs, Kuhn & McTopy, L.L.P. Members of that firm own an
aggregate of 43,681 shares of Common Stock and a warrant to acquire an
additional 2,500 shares of Common Stock at $3.87 per share. Members of that
firm are offering an aggregate of 46,911 shares pursuant to this prospectus.
See "Selling Security Holders."
EXPERTS
The audited financial statements incorporated by reference in this
Prospectus have been incorporated herein in reliance on the report of Hein +
Associates, LLP, independent certified public accountants, given on the
authority of such firm as experts in accounting and auditing.
11
<PAGE>
==========================================
NO DEALER, SALESMAN OR OTHER PERSON HAS
BEEN AUTHORIZED TO GIVE ANY INFORMATION
OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN, OR INCORPORATED BY
REFERENCE IN, THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A
SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY IN ANY
JURISDICTION TO ANY PERSON TO WHOM IT IS
UNLAWFUL TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE DELIVERY OF
THIS PROSPECTUS NOR ANY SALE MADE
HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE
DATE HEREOF, OR THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE SUCH DATE.
_________________
TABLE OF CONTENTS
Available Information. . . . . . . . . 2
Documents Incorporated by Reference. . 2
Prospectus Summary . . . . . . . . . . 3
Risk Factors . . . . . . . . . . . . . 4
Selling Security Holders . . . . . . . 9
Plan of Distribution . . . . . . . . . 10
Legal Matters. . . . . . . . . . . . . 11
Experts. . . . . . . . . . . . . . . . 11
==========================================
==========================================
MITCHAM INDUSTRIES, INC.
759,683 SHARES
OF
COMMON STOCK
_______________________
P R O S P E C T U S
_______________________
_________, 1996
==========================================
<PAGE>
P A R T II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
Expenses payable in connection with the issuance and distribution of the
securities to be registered (other than underwriting discounts and
commissions), are estimated as follows:
Securities and Exchange Commission filing fee. . . . . . . . $1,506
Printing expenses. . . . . . . . . . . . . . . . . . . . . . 2,000*
Legal fees and expenses. . . . . . . . . . . . . . . . . . . 6,000*
Accounting fees and expenses . . . . . . . . . . . . . . . . 3,000*
Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 494*
-------
TOTAL . . . . . . . . . . . . . . . . . . . . . . . . . $13,000
-------
-------
__________________________
* Estimated
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Article Nine of the Company's Amended and Restated Articles of
Incorporation (the "Articles") eliminates or limits the personal liability of
directors for damages for an act or omission in the director's capacity as a
director, except for (i) a breach of a director's duty of loyalty to the
Company or its shareholders; (ii) an act or omission not in good faith that
constitutes a breach of duty of the director to the Company or that involves
intentional misconduct or a knowing violation of the law; (iii) a transaction
from which a director received an improper benefit, whether or not the
benefit resulted from an action taken within the scope of the directors'
office; or (iv) an act or omission for which the liability of a director is
expressly provided for by an applicable statute.
Article Eleven of the Articles makes mandatory the indemnification of
directors permitted under Section B of Article 2.02-1 of the Texas Business
Corporation Act ("TBCA") and permits the Company to advance the reasonable
expenses of a director upon compliance with the requirements of Sections K
and L thereof.
Article 2.02-1 of the TBCA provides as follows:
A. In this article:
(1) "Corporation" includes any domestic or foreign predecessor
entity of the corporation in a merger, consolidation, or other
transaction in which the liabilities of the predecessor are transferred
to the corporation by operation of law and in any other transaction in
which the corporation assumes the liabilities of the predecessor but
does not specifically exclude liabilities that are the subject matter of
this article.
(2) "Director" means any person who is or was a director of the
corporation and any person who, while a director of the corporation, is
or was serving at the request of the corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership,
joint venture, sole proprietorship, trust, employee benefit plan, or
other enterprise.
(3) "Expenses" include court costs and attorneys' fees.
(4) "Official capacity" means
(a) when used with respect to a director, the office of
director in the corporation, and
(b) when used with respect to a person other than a
director, the elective or appointive office in the
corporation held by the officer or the employment
or agency relationship undertaken by the employee or
agent in behalf of the corporation, but
<PAGE>
(c) in both Paragraphs (a) and (b) does not include service
for any other foreign or domestic corporation or any
partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise.
(5) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative,
arbitrative, or investigative, any appeal in such an action, suit, or
proceeding, and any inquiry or investigation that could lead to such an
action, suit, or proceeding.
B. A corporation may indemnify a person who was, is or is threatened to
be a made a named defendant or respondent in a proceeding because the person
is or was a director only if it is determined in accordance with Section F of
this article that the person:
(1) conducted himself in good faith;
(2) reasonably believed:
(a) in the case of conduct in his official capacity as a
director of the corporation, that his conduct was in the
corporation's best interests; and
(b) in all other cases, that his conduct was at least not
opposed to the corporation's best interests; and
(3) in the case of any criminal proceeding, had no reasonable
cause to believe his conduct was unlawful.
C. Except to the extent permitted by Section E of this article, a
director may not be indemnified under Section B of this article in respect of
a proceeding:
(1) in which the person is found liable on the basis that personal
benefit was improperly received by him, whether or not the
benefit resulted from an action taken in the person's official
capacity; or
(2) in which the person is found liable to the corporation.
D. The termination of a proceeding by judgment, order, settlement, or
conviction, or on a plea of nolo contendere or its equivalent is not of
itself determinative that the person did not meet the requirements set forth
in Section B of this article. A person shall be deemed to have been found
liable in respect of any claim, issue or matter only after the person shall
have been so adjudged by a court of competent jurisdiction after exhaustion
of all appeals therefrom.
E. A person may be indemnified under Section B of this article against
judgments, penalties (including excise and similar taxes), fines,
settlements, and reasonable expenses actually incurred by the person in
connection with the proceeding; but if the person is found liable to the
corporation or is found liable on the basis that personal benefit was
improperly received by the person, the indemnification (1) is limited to
reasonable expenses actually incurred by the person in connection with the
proceeding and (2) shall not be made in respect of any proceeding in which
the person shall have been found liable for willful or intentional misconduct
in the performance of his duty to the corporation.
F. A determination of indemnification under Section B of this article
must be made:
(1) by a majority vote of a quorum consisting of directors who
at the time of the vote are not named defendants or respondents in the
proceeding;
(2) if such a quorum cannot be obtained, by a majority vote of a
committee or the board of directors, designated to act in the matter by
a majority vote of all directors, consisting solely of two or more
directors who at the time of the vote are not named defendants or
respondents in the proceeding;
II-2
<PAGE>
(3) by special legal counsel selected by the board of directors
of a committee of the board by vote as set forth in Subsection (1) or (2)
of this section, or if such a quorum cannot be obtained and such a
committee cannot be established, by a majority vote of all directors; or
(4) by the shareholders in a vote that excludes the shares held by
directors who are named defendants or respondents in the proceeding.
G. Authorization of indemnification and determination as to
reasonableness of expenses must be made in the same manner as the
determination that indemnification is permissible, except that if the
determination that indemnification is permissible is made by special legal
counsel, authorization of indemnification and determination as to
reasonableness of expenses must be made in the manner specified by Subsection
(3) of Section F of this article for the selection of special legal counsel.
A provision obtained in the articles of incorporation, the bylaws, a
resolution of shareholders or directors, or an agreement that makes mandatory
the indemnification permitted under Section B of this article shall be deemed
to constitute authorization of indemnification in the manner required by this
section even though such provision may not have been adopted or authorized in
the same manner as the determination that indemnification is permissible.
H. A corporation shall indemnify a director against reasonable expenses
incurred by him in connection with a proceeding in which he is a named
defendant or respondent because he is or was a director if he has been wholly
successful, on the merits or otherwise, in the defense of the proceeding.
I. If, in a suit for the indemnification required by Section H of this
article, a court of competent jurisdiction determines that the director is
entitled to indemnification under that section, that court shall order
indemnification and shall award to the director the expenses incurred in
securing the indemnification.
J. If, upon application of a director, a court of competent jurisdiction
determines, after giving any notice the court considers necessary, that the
director is fairly and reasonably entitled to indemnification in view of all
the relevant circumstances, whether or not he has met the requirements set
forth in Section B of this article or has been adjudged liable in the
circumstances described by Section C of this article, the court may order the
indemnification that the court determines is proper and equitable; but if the
person is found liable to the corporation or is found liable on the basis
that personal benefit was improperly received by the person, the
indemnification shall be limited to reasonable expenses actually incurred by
the person in connection with the proceeding.
K. Reasonable expenses incurred by a director who was, is, or is
threatened to be made a named defendant or respondent in a proceeding may be
paid or reimbursed by the corporation, in advance of the final disposition of
the proceeding and without any of the determinations specified in Sections F
and G of this article, after the corporation receives a written affirmation
by the director of his good faith belief that he has met the standard of
conduct necessary for indemnification under this article and a written
undertaking by or on behalf of the director to repay the amount paid or
reimbursed if it is ultimately determined that he has not met that standard
or if it is ultimately determined that indemnification of the director
against expenses incurred by him in connection with that proceeding is
prohibited by Section E of this article. A provision contained in the
articles of incorporation, the bylaws, a resolution of shareholders or
directors, or an agreement that makes mandatory the payment or reimbursement
permitted under this section shall be deemed to constitute authorization of
that payment or reimbursement.
L. The written undertaking required by Section K of this article must be
an unlimited general obligation of the director but need not be secured. It
may be accepted without reference to financial ability to make repayment.
M. A provision for a corporation to indemnify or to advance expenses to
a director who was, is or is threatened to be made a named defendant or
respondent in a proceeding, whether contained in the articles of
incorporation, the bylaws, a resolution of shareholders or directors, an
agreement, or otherwise, except in accordance with Section R of this article,
is valid only to the extent it is consistent with this article as limited by
the articles of incorporation, if such a limitation exists.
II-3
<PAGE>
N. Notwithstanding any other provision of this article, a corporation
may pay or reimburse expenses incurred by a director in connection with his
appearance as a witness or other participation in a proceeding at a time when
he is not a named defendant or respondent in the proceeding.
O. An officer of the corporation shall be indemnified as, and to the
same extent, provided by Sections H, I, and J of this article for a director
and is entitled to seek indemnification under those sections to the same
extent as a director. A corporation may indemnify and advance expenses to an
officer, employee, or agent of the corporation to the same extent that it may
indemnify and advance expenses to directors under this article.
P. A corporation may indemnify and advance expenses to persons who are
or were not officers, employees, or agents of the corporation but who are or
were serving at the request of the corporation as a director, officer,
partner, venturer, proprietor, trustee, employee, agent, or similar
functionary of another foreign or domestic corporation, partnership, joint
venture, sole proprietorship, trust, employee benefit plan, or other
enterprise to the same extent that it may indemnify and advance expenses to
directors under this article.
Q. A corporation may indemnify and advance expenses to an officer,
employee, agent, or person identified in Section P of this article and who is
not a director such further extent, consistent with law, as may be provided
by its articles of incorporation, bylaws, general or specific action of its
board of directors, or contract or as permitted or required by common law.
R. A corporation may purchase and maintain insurance or another
arrangement on behalf of any person who is or was a director, officer,
employee, or agent of the corporation or who is or was serving at the request
of the corporation as a director, officer, partner, venturer, proprietor,
trustee, employee, agent, or similar functionary of another foreign or
domestic corporation, partnership, joint venture, sole proprietorship, trust,
employee benefit plan, or other enterprise, against any liability asserted
against him and incurred by him in such a capacity or arising out of his
status as such a person, whether or not the corporation would have the power
to indemnify him against that liability under this article. If the insurance
or other arrangement is with a person or entity that is not regularly engaged
in the business of providing insurance coverage, the insurance or arrangement
may provide for payment of a liability with respect to which the corporation
would not have the power to indemnify the person only if including coverage
for the additional liability has been approved by the shareholders of the
corporation. Without limiting the power of the corporation to procure or
maintain any kind of insurance or other arrangement, a corporation may, for
the benefit of persons indemnified by the corporation, (1) create a trust
fund; (2) establish any form of self-insurance; (3) secure its indemnity
obligation by grant of a security interest or other lien on the assets of the
corporation; or (4) establish a letter of credit, guaranty, or surety
arrangement. The insurance or other arrangement may be procured, maintained,
or established within the corporation or with any insurer or other person
deemed appropriate by the board of directors regardless of whether all or
part of the stock or other securities of the insurer or other person are
owned in whole or part by the corporation. In the absence of fraud, the
judgment of the board of directors as to the terms and conditions of the
insurance or other arrangement and the identity of the insurer or other
person participating in an arrangement shall be conclusive and the insurance
or arrangement shall not be voidable and shall not subject the directors
approving the insurance or arrangement to liability, on any ground,
regardless of whether directors participating in the approval are
beneficiaries of the insurance or arrangement.
S. Any indemnification of or advance of expenses to a director in
accordance with this article shall be reported in writing to the shareholders
with or before the notice or waiver of notice of the next shareholders'
meeting or with or before the next submission to shareholders of a consent to
action without a meeting pursuant to Section A, Article 9.10, of this Act
and, in any case, within the 12-month period immediately following the date
of the indemnification or advance.
T. For purposes of this article, the corporation is deemed to have
requested a director to serve an employee benefit plan whenever the
performance by him of his duties to the corporation also imposes duties on or
otherwise involves services by him to the plan or participants or
beneficiaries of the plan. Excise taxes assessed on a director with respect
to an employee benefit plan pursuant to applicable law are deemed fines.
Action taken or omitted by him with respect to an employee benefit plan in
the performance of his duties for a purpose reasonably believed by
II-4
<PAGE>
him to be in the interest of the participants and beneficiaries of the plan
is deemed to be for a purpose which is not opposed to the best interests of
the corporation.
U. The articles of incorporation of a corporation may restrict the
circumstances under which the corporation is required or permitted to
indemnify a person under Section H, I, J, O, P, or Q of this article.
ITEM 16. EXHIBITS.
SEQUENTIALLY
EXHIBIT NO. NUMBERED PAGES
- ----------- --------------
5 - Opinion of Norton, Jacobs, Kuhn & McTopy, L.L.P., as
to the legality of the Common Stock
24.1 - Consent of Hein + Associates LLP
24.2 - Consent of Norton, Jacobs, Kuhn & McTopy, L.L.P.
(included in Exhibit 5.1).
25 - Power of Attorney (included as part of the signature
page of the Registration Statement)
ITEM 17. UNDERTAKINGS.
(a) The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to the registration statement to
include any prospectus required by section 10(a)(3) of the Securities
Act of 1933 (the "Securities Act") to include any material information
with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof; and
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Exchange
Act that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event a claim for indemnification against such liabilities (other than the
payment by the registrant of expenses incurred or paid by a director,
officer, or controlling person of the registrant in the successful defense of
any action, suit or proceeding) is asserted by such director, officer, or
controlling person of the registrant in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
II-5
<PAGE>
SIGNATURES
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933,
AS AMENDED, THE REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO
BELIEVE THAT IT MEETS ALL OF THE REQUIREMENTS OF FILING ON FORM S-3 AND HAS
DULY AUTHORIZED THIS REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF OF THE
UNDERSIGNED, THERETO DULY AUTHORIZED IN THE CITY OF HUNTSVILLE, STATE OF
TEXAS, ON AUGUST 15, 1996.
MITCHAM INDUSTRIES, INC.
By: /s/ BILLY F. MITCHAM, JR.
--------------------------------------------
BILLY F. MITCHAM, JR., CHAIRMAN OF THE
BOARD, PRESIDENT AND CHIEF EXECUTIVE OFFICER
(PRINCIPAL EXECUTIVE OFFICER)
By: /s/ ROBERTO RIOS
--------------------------------------------
ROBERTO RIOS, VICE PRESIDENT-FINANCE
(PRINCIPAL FINANCIAL AND ACCOUNTING OFFICER)
EACH OF THE UNDERSIGNED OFFICER AND DIRECTORS OF THE COMPANY HEREBY
CONSTITUTES AND APPOINTS BILLY F. MITCHAM, JR. AND ROBERTO RIOS, OR EITHER OF
THEM, HIS TRUE AND LAWFUL ATTORNEYS-IN-FACT AND AGENTS, WITH FULL POWER OF
SUBSTITUTES, FOR HIM AND ON HIS BEHALF AND IN HIS NAME, PLACE AND STEAD, IN
ANY WAY AND ALL CAPACITIES, TO EXECUTE AND FILE ANY OR ALL AMENDMENTS TO THIS
REGISTRATION STATEMENT (INCLUDING, WITHOUT LIMITATION, POST-EFFECTIVE
AMENDMENTS AND ANY AMENDMENT OR AMENDMENTS INCREASING THE AMOUNT OF
SECURITIES FOR WHICH REGISTRATION IS BEING SOUGHT), WITH ALL EXHIBITS AND ANY
AND ALL DOCUMENTS REQUIRED TO BE FILED WITH RESPECT THERETO, WITH THE
SECURITIES AND EXCHANGE COMMISSION OR ANY REGULATORY AUTHORITY, GRANTING UNTO
SUCH ATTORNEYS-IN-FACT AND AGENTS FULL POWER AND AUTHORITY TO DO AND PERFORM
EACH AND EVERY ACT AND THING REQUISITE AND NECESSARY TO BE DONE IN AND ABOVE
THE PREMISES IN ORDER TO EFFECTUATE THE SAME, AS FULLY CONFIRMING ALL THAT
SUCH ATTORNEYS-IN-FACT AND AGENTS OR HIS SUBSTITUTE OR SUBSTITUTES, MAY
LAWFULLY DO OR CAUSE TO BE DONE.
IN ACCORDANCE WITH THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS
AMENDED, THIS REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS
IN THE CAPACITIES INDICATED ON AUGUST 15, 1996.
SIGNATURE TITLE/CAPACITY
--------- --------------
/s/ BILLY F. MITCHAM, JR. Chairman of the Board, President
- -------------------------------- and Chief Executive Officer
BILLY F. MITCHAM, JR.
/s/ PAUL C. MITCHAM Vice President -- Operations and
- -------------------------------- Director
PAUL C. MITCHAM
/s/ ROBERTO RIOS Vice President -- Finance, Secretary,
- -------------------------------- Treasurer and Director
ROBERTO RIOS
/s/ WILLIAM J. SHEPPARD Vice President of International
- -------------------------------- Operations and Director
WILLIAM J. SHEPPARD
/s/ RANDAL DEAN LEWIS Director
- --------------------------------
RANDAL DEAN LEWIS
II-6
<PAGE>
INDEX TO EXHIBITS
EXHIBIT SEQUENTIALLY
NO. IDENTIFICATION OF EXHIBITS NUMBERED PAGES
- --- -------------------------- --------------
5 -- Opinion of Norton, Jacobs, Kuhn & McTopy, L.L.P.,
as to the legality of the Common Stock
24.1 -- Consent of Hein + Associates LLP
24.2 -- Consent of Norton, Jacobs, Kuhn & McTopy, L.L.P.
(included in Exhibit 5)
25 -- Power of Attorney (included as part of the signature
page of the Registration Statement)
II-7
<PAGE>
NORTON, JACOBS, KUHN & MCTOPY, L.L.P.
ATTORNEYS AT LAW
TEXACO HERITAGE PLAZA
1111 BAGBY
SUITE 2450
HOUSTON, TEXAS 77002
TELEPHONE (713) 659-1131
FAX (713) 659-7341
August 20, 1996
Mitcham Industries, Inc.
44000 Highway 75 South
Huntsville, Texas 77342
Gentlemen:
We have acted as legal counsel for Mitcham Industries, Inc. (the
"Company"), a corporation organized under the laws of the State of Texas,
with respect to the Registration Statement on Form S-3 (the "Registration
Statement"), filed by the Company in connection with the registration under
the Securities Act of 1933, as amended (the "Act") of the following:
(i) 516,730 shares of Common Stock, $.01 par value per share (the
"Common Stock");
(ii) 242,953 warrants to acquire shares of Common Stock (the "Warrants").
The Common Stock and Warrants described above are collectively referred to
herein as the "Registered Securities."
In connection with this opinion, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of the following
documents and instruments:
1. Articles of Incorporation of the Company, as amended to date;
2. Bylaws of the Company, as amended to date;
3. The Registration Statement, including the Prospectus included
therein, to be filed with the Securities and Exchange
Commission (the "SEC") on August 20, 1996; and
4. Such other instruments and documents as we have deemed necessary
for the purpose of rendering the following opinion.
<PAGE>
Mitcham Industries, Inc.
August 20, 1996
Page 2
In such examination, we have assumed the genuineness of all signatures
and the conformity to original documents of all documents submitted to us as
certified or photostatic copies thereof. As to various questions of fact
material to our opinion, we have, when the relevant facts were not
independently established and to the extent we have deemed such reliance
proper, relied upon certificates of public officials and certificates and/or
factual representations of officers of the Company.
Based upon and subject to the foregoing, it is our opinion that the
Registered Securities have been duly and validly authorized for issuance and,
when issued as described in the Registration Statement, including, in the
case of the Common Stock, for consideration at least equal to $.01 per share,
will be validly issued, fully paid and non-assessable.
We hereby consent to the filing of this opinion with the Securities and
Exchange Commission as Exhibit 5 to the Registration Statement and further
consent to the statements made in the Registration Statement regarding our
firm and the use of our name under the heading "Legal Matters" in the
Prospectus constituting a part of such Registration Statement.
We are licensed to practice in the State of Texas only and do not express
any opinion as to matters governed by the laws of any jurisdiction other than
the laws of the State of Texas (without reference to choice-of-law or
conflict-of-law provisions, principles or decisions under Texas law, or under
any other state, Federal or foreign law); and we have assumed compliance with
all other laws, including, without limitation, Federal, foreign and other
states' laws.
Very truly yours,
NORTON, JACOBS, KUHN & McTOPY, L.L.P.
<PAGE>
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We hereby consent to the incorporation by reference in this Registration
Statement on Form S-3 of our report dated February 23, 1996, included in the
Form 10-KSB of Mitcham Industries, Inc. for the year ended January 31, 1996,
and to the reference to our Firm included under the caption "Experts" in this
registration statement.
HEIN + ASSOCIATES LLP
Certified Public Accountants
Houston, Texas
August 20, 1996
