-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, U5sEFT1HFh9Whp5PV4umgNCsHc475uYi/jvro5zpjydY0dxBFD4Dl4go500nJzmC w2NnaQG5E7gF97J5Ug5Npg== 0000950129-05-005786.txt : 20050614 0000950129-05-005786.hdr.sgml : 20050614 20050527130153 ACCESSION NUMBER: 0000950129-05-005786 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20050527 DATE AS OF CHANGE: 20050527 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: Sciotto Dennis CENTRAL INDEX KEY: 0001307699 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: BUSINESS PHONE: 7608098265 MAIL ADDRESS: STREET 1: 7315 EL FUERTE STREET CITY: CARLSBAD STATE: CA ZIP: 92009 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: OMNI ENERGY SERVICES CORP CENTRAL INDEX KEY: 0001046212 STANDARD INDUSTRIAL CLASSIFICATION: OIL AND GAS FIELD EXPLORATION SERVICES [1382] IRS NUMBER: 721395273 STATE OF INCORPORATION: LA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-53451 FILM NUMBER: 05862707 BUSINESS ADDRESS: STREET 1: 4500 NE INTERSTATE 49 CITY: CARENCRO STATE: LA ZIP: 70520 BUSINESS PHONE: 3188966664 MAIL ADDRESS: STREET 1: 4484 NE EVANGELINE THRUWAY CITY: CARENCRO STATE: LA ZIP: 70520 SC 13D 1 h25902sc13d.txt DENNIS SCIOTTO FOR OMNI ENERGY SERVICES CORP UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 SCHEDULE 13D UNDER THE SECURITIES EXCHANGE ACT OF 1934 OMNI ENERGY SERVICES CORP. -------------------------- (Name of Issuer) COMMON STOCK, $0.01 PAR VALUE PER SHARE --------------------------------------- (Title of Class of Securities) 68210 T1 09 ----------- (CUSIP Number) DENNIS SCIOTTO, 7315 EL FUERTE STREET, CARLSBAD, CA 92009, (760) 809-8265 ------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) MAY 17, 2005 ------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Sections 240.13d-1(e), 240.13d-1(f) or 204.13d-1(g), check the following box. [x] NOTE: Schedules filed in paper format shall include a signed original and five copies of the schedule, including all exhibits. See Section 240.13d-7(b) for other parties to whom copies are to be sent. *The remainder of the cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). CUSIP NO. 68210 T1 09 - -------------------------------------------------------------------------------- (1) Names of Reporting Persons I.R.S. Identification Nos. of above persons (entities only) DENNIS SCIOTTO - -------------------------------------------------------------------------------- (2) Check the Appropriate Box if a Member of a Group (See Instructions) (a) [ ] (b) [ ] - -------------------------------------------------------------------------------- (3) SEC Use Only - -------------------------------------------------------------------------------- (4) Source of Funds (See Instructions) PF - -------------------------------------------------------------------------------- (5) Check if Disclosure of Legal Proceedings is Required Pursuant to Items 2(d) or 2(e) - -------------------------------------------------------------------------------- (6) Citizenship or Place of Organization United States - -------------------------------------------------------------------------------- Number of 7. Sole Voting Power Shares 5,846,503 (1) Beneficially --------------------------------------------------------- Owned by 8. Shared Voting Power 32,682 Each --------------------------------------------------------- Reporting 9. Sole Dispositive Power Person With 5,846,503 (1) --------------------------------------------------------- 10. Shared Dispositive Power 32,682 - -------------------------------------------------------------------------------- (11) Aggregate Amount Beneficially Owned by Each Reporting Person 5,879,185 (1) - -------------------------------------------------------------------------------- (12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares (See Instructions) - -------------------------------------------------------------------------------- (13) Percent of Class Represented by Amount in Row (11) 35.6% - -------------------------------------------------------------------------------- (14) Type of Reporting Person (See Instructions) IN - -------------------------------------------------------------------------------- (1) Includes 997,800 shares of common stock, 2,660 shares of Series C 9% Convertible Preferred Stock (convertible into 1,364,103 shares of common stock) and warrants redeemable for 3,484,600 shares of common stock ITEM 1. SECURITY AND ISSUER. This statement on Schedule 13D (the "Schedule 13D") relates to the Common Stock, $0.01 par value ("Common Stock") of OMNI Energy Services Corp., a Louisiana corporation (the "Issuer"), into which the Issuer's Series C 9% Convertible Preferred Stock, no par value (the "Series C Stock"), is convertible and the warrants to purchase Common Stock (the "Warrants") are redeemable. Dennis Sciotto (the "Reporting Person") indirectly acquired 2,660 shares of Series C Stock and Warrants redeemable for 3,484,600 shares of Common Stock. The Issuer has its principal executive offices at 4500 N.E. Evangeline Thruway, Carencro, Louisiana 70520. ITEM 2. IDENTITY AND BACKGROUND. This Schedule 13D is being filed by the Reporting Person to report his indirect acquisition of Common Stock issuable upon the conversion of the Preferred Stock and the redemption of the Warrants. The principal residential address of the Reporting Person is 7315 El Fuerte Street, Carlsbad, CA 92009. The present principal occupation of the Reporting Person is real estate manager and developer. During the last five years, the Reporting Person has not (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors) or (ii) been a party to a civil proceeding or a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violation with respect to such laws. Mr. Sciotto is a United States citizen. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION. On May 17, 2005, the Reporting Person entered into the Securities Purchase Agreement (the "Purchase Agreement"), dated as of May 17, 2005, by and between the Issuer and the holders of Series C Stock pursuant to which the Reporting Person acquired 2,660 shares of Series Stock (convertible into 1,364,103 shares of the Issuer's Common Stock) and Warrants redeemable for 3,484,600 shares of the Issuer's Common Stock. The Reporting Person personally financed the $2.66 million in consideration he paid for the Series C Stock and the Warrants. ITEM 4. PURPOSE OF TRANSACTION. The Reporting Person acquired the Preferred Stock and Warrants for investment purposes. The Issuer amended its Articles of Incorporation on May 17, 2005 to create the Series C Stock. The amendment is attached hereto as an exhibit to this Schedule 13D and is incorporated herein by reference. The Articles of Amendment provide for the following: The Series C Stock holders shall receive payment before the holders of the Issuer's Common Stock upon the voluntary or involuntary liquidation, winding up or dissolution of the Issuer. The holders of the Series C Stock, voting as a separate class, are entitled to elect two directors to the Board of Directors of the Issuer, as long as 2,000 shares of Series C Stock are outstanding. One of the two directors will be the Reporting Person or his designee. The Issuer cannot, without the affirmative vote of the holders of the Series C Stock, (i) amend its Articles of Incorporation or any other document to change any rights, preferences or privileges of the Series C Stock, (ii) authorize another class or series of shares senior to or ranking pari passu with the Series C Stock with respect to dividends or distribution of assets on liquidation, dissolution or the winding up of the affairs of the Issuer, (iii) so long as at least 2,000 shares of Series C Stock remain outstanding, increase the number of persons on the Board of Directors above six, (iv) purchase, redeem or otherwise acquire any Common Stock or any other junior stock of the Issuer, either directly or through a subsidiary. The Issuer may purchase, redeem or otherwise acquire the 29 shares of Series B 8% Convertible Preferred Stock currently outstanding without receiving the prior approval of the holders of Series C Stock, or (v) so long as at least 2,000 shares of Series C Stock remain outstanding, sell, grant any option to purchase, or otherwise issue any Common Stock or any equity or equity equivalent securities (including any equity, debt or other instrument that is at any time over the life thereof is convertible into or exchangeable for Common Stock) entitling any person, other than the holders of the Series C Stock or any Excluded Securities (as hereinafter defined), to acquire shares of Common Stock at an effective price per share less than $1.95. For purposes hereof, "Excluded Securities" means (1) securities purchased under the Securities Purchase Agreement, dated as of May 17, 2005, by and between the Issuer and the holders of Series C Stock (the "Securities Purchase Agreement"); (2) securities issued upon conversion or exercise of the Series C Stock or the Warrants (as defined in the Securities Purchase Agreement); (3) shares of Common Stock issuable or issued to employees, consultants or directors from time to time upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors pursuant to one or more stock option plans or restricted stock plans in effect; (4) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (5) securities issued upon conversion of outstanding shares of Series B 8% Convertible Preferred Stock, provided that the terms of such preferred stock have not been amended since the date hereof; (6) securities issued upon conversion or exercise of Debentures or Warrants issued under the Securities Purchase Agreement, dated as of February 12, 2004, between the Company and the Investors named therein and the Securities Purchase Agreement, dated as of April 15, 2004, between the Company and the Investors named therein, each as amended, modified and supplemented; (7) 361,800 shares (200,000 shares to James C. Eckert and 161,800 shares to G. Darcy Klug) and 100,000 options (40,000 options to James C. Eckert and 60,000 options to G. Darcy Klug); and (8) 2,924,424 shares issuable upon exercise of the currently outstanding warrants and "investor options" listed on Schedule 1 to the Warrants (as defined in the Securities Purchase Agreement). Except as set forth in this Item 4, the Reporting Person does not have any specific plans or proposals that relate to or would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D. ITEM 5. INTEREST IN SECURITIES OF THE ISSUER. (a) As of the date hereof, the Reporting Person beneficially owns an aggregate of 5,879,185 shares of the Issuer's Common Stock as follows: 997,800 shares are owned directly; 32,682 shares are owned by his wife; 1,364,103 shares are issuable upon conversion of 2,660 shares of Series C Stock; and 3,484,600 shares are issuable upon redemption of the Warrants. This represents a 35.6% interest in the Issuer's Common Stock. (b) As of the date hereof, the Reporting Person has sole voting power for 5,846,503 shares, shared voting power for 32,682 shares with his wife, sole dispositive power for 5,846,503 shares and shared dispositive power for 32,682 shares with his wife. (c) Other than the transaction described in Item 4, the Reporting Persons have not effected any transactions during the past 60 days in the Common Stock, Series C Stock or Warrants. (d) To the best knowledge of the Reporting Person, no person has the right to receive, or the power to direct the receipt of dividends from, or the power to direct the receipt of proceeds of the sale of the Common Stock, Series C Stock or Warrants owned by the Reporting Person. (e) Not applicable. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER. SECURITIES PURCHASE AGREEMENT A Securities Purchase Agreement, dated as of May 17, 2005, by and between the Issuer and the holders of Series C Stock has been executed by the Reporting Person, a copy of which is attached hereto as an exhibit to this Schedule 13D and is incorporated herein by reference. REGISTRATION RIGHTS AGREEMENT A Registration Rights Agreement, dated as of May 17, 2005, by and between the Issuer and the holders of Series C has been executed by the Reporting Person and is attached hereto as an exhibit. The Registration Rights Agreement requires the Issuer to file a Registration Statement for the shares of the Issuer's Common Stock issued upon the conversion of the Series C Stock exercise of the Warrants or as dividends on the Series C Stock. ITEM 7. MATERIAL TO BE FILED AS EXHIBITS 1. Stock Purchase Agreement.(1) 2. Registration Rights Agreement.(1) 3. Articles of Amendment to the Articles of Incorporation of the Issuer.(1) (1) Filed herewith SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. DATED AS OF MAY 27, 2005 By: /s/ Dennis Sciotto --------------------------- Dennis Sciotto EX-99.1 2 h25902exv99w1.txt STOCK PURCHASE AGREEMENT OMNI ENERGY SERVICES CORP. SECURITIES PURCHASE AGREEMENT This Securities Purchase Agreement (this "Agreement") is dated as of May 17, 2005, among OMNI Energy Services Corp., a Louisiana corporation (the "Company"), and the purchasers identified on the signature pages hereto (each a "Purchaser" and collectively the "Purchasers"). RECITALS WHEREAS, the Company has authorized the sale and issuance to the Purchasers of an aggregate of 5,000 shares (the "Shares") of the Company's Series C 9% Convertible Preferred Stock, no par value (the "Series C Stock"); WHEREAS, the Company wishes to issue warrants to the Purchasers to purchase up to an aggregate of 6,550,000 shares of the Company's Common Stock in connection with Purchasers' purchase of the Securities; and WHEREAS, Purchasers desire to purchase and the Company desires to sell the Shares and the Warrants (as defined below) on the terms and conditions set forth herein. NOW, THEREFORE, in consideration of the foregoing recitals and the mutual promises, representations, warranties and covenants hereinafter set forth and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: AGREEMENT 1. Purchase and Sale. Pursuant to the terms and conditions set forth in this Agreement, the Company agrees to sell to the Purchasers, and the Purchasers hereby agree to purchase the Shares at a purchase price of $1,000.00 per share, for a total purchase price of $5,000,000 (the "Purchase Price") and three Warrants in the forms of Exhibit A, Exhibit B and Exhibit C attached hereto (collectively, the "Warrants") (the Shares and the Warrants are collectively referred to herein as the "Securities"). The Warrants will be distributed pro-rata among the Purchasers based on the percentage of the Series C Stock purchased by each Purchaser. 2. Fees and Expenses. On the Closing Date, the Company shall reimburse the Purchasers for their expenses (including legal fees and expenses) incurred in connection with the preparation and negotiation of this Agreement and the Related Agreements (as defined below), the Purchasers' due diligence review of the Company and all related matters. 3. Closing, Delivery and Payment. 3.1. Closing. Subject to the terms and conditions herein, the closing of the transactions contemplated hereby shall occur in two tranches. The first closing (the "First Closing") shall take place on the date hereof (the "First Closing Date"), at the offices of Solomon Ward Seidenwurm & Smith, LLP ("SWSS"), located at 401 B. Street, Suite 1200, San Diego, California. Subject to the satisfaction of the conditions set forth in Section 7 below, the second closing (the "Second Closing") shall take place on August 15, 2005, at SWSS's offices or such time or place as the Company and Purchasers may mutually agree (such date is hereinafter referred to as the "Second Closing Date"). 3,500 of the Shares will be sold and issued in the First Closing and the remaining 1,500 Shares will be sold and issued in the Second Closing. The Shares and Warrants sold and issued in each of the respective closings will be, and will be distributed among the Purchasers, as set forth on Exhibit D. 3.2. Closing Deliverables. (a) At the First Closing, and as a condition to the Purchaser's obligations hereunder, the Company will deliver the following to the Purchasers: (i) an executed copy of this Agreement; (ii) an executed copy of the Registration Rights Agreement attached hereto as Exhibit E (the "Registration Rights Agreement"); (iii) filed stamped copy of the Articles of Amendment, attached as Exhibit F (the "Amended Articles"), to the Company's Articles of Incorporation designating the Series C Convertible Preferred Stock filed with the Louisiana Secretary of State; (iv) evidence of the closing of the Company's loan with General Electric Capital Corporation; (v) stock certificates representing the Shares purchased at the First Closing; and (vi) the Warrants purchased at the First Closing. The Warrants, Registration Rights Agreement and Amended Articles are referred to herein as the "Related Agreements." (b) At the First Closing, each Purchaser will deliver the following to the Company: (i) an executed copy of this Agreement; (ii) an executed copy of the Registration Rights Agreement; and (iii) the Purchase Price for the Shares to be purchased by such Purchaser at the First Closing, via wire transfer to an account designated by the Company. (c) At the Second Closing, the Company will deliver the following to the Purchasers: (i) a certificate certifying that the Company's representations and warranties set forth in this Agreement continue to be true and correct in all material respects as of the Second Closing Date and that the Company has complied with all of its obligations under this Agreement and the Related Agreements; (ii) stock certificates representing the Shares issued at the Second Closing; and (iii) the Warrants purchased at the Second Closing (d) At the Second Closing, each Purchaser who is purchasing Shares in the Second Closing will deliver the following to the Company: (i) a certificate certifying that such Purchaser's representations and warranties set forth in this Agreement continue to be true and correct in all material respects as of the Second Closing Date and that such Purchaser has complied with all of such Purchaser's obligations under this Agreement and the Related Agreements; and (ii) the Purchase Price for the Shares to be purchased by such Purchaser at the Second Closing, via wire transfer. 4. Representations and Warranties of the Company. Except as set forth in the Company's filings under the Securities Exchange Act of 1934 (collectively, the "Exchange Act Filings"), copies of which have been made available to the Purchasers), the Company hereby represents and warrants to the Purchaser as follows: 4.1. Organization, Good, Standing and Qualification. Each of the Company and its active Subsidiaries (as defined below) is an entity duly incorporated or otherwise organized, validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization (as applicable), with the requisite power and authority to own and use its properties and assets and to carry on its business as currently conducted. Neither the Company nor any active Subsidiary is in violation of any of the provisions of its respective certificate or articles of incorporation, bylaws or other organizational or charter documents. Each of the Company and the active Subsidiaries is duly qualified to do business and is in good standing as a foreign corporation or other entity in each jurisdiction in which the nature of the business conducted or property owned by it makes such qualification necessary, except where the failure to be so qualified or in good standing, as the case may be, could not, individually or in the aggregate: (i) adversely affect the legality, validity or enforceability of this Agreement or the Related Agreements, (ii) have or result in or be reasonably likely to have or result in a material adverse effect on the results of operations, assets, business or condition (financial or otherwise) of the Company and the Subsidiaries, taken as a whole, or (iii) adversely impair the Company's ability to perform fully on a timely basis its obligations under this Agreement or the Related Agreements (any of (i), (ii) or (iii), a "Material Adverse Effect"). 4.2. Subsidiaries. Each direct and indirect Subsidiary of the Company, the direct owner of such Subsidiary and its percentage ownership thereof, is set forth on Exhibit 21.1 to the Company's 10-K for the year ended December 31, 2004. For the purpose of this Agreement, a "Subsidiary" of any person or entity means (i) a corporation or other entity whose shares of stock or other ownership interests having ordinary voting power (other than stock or other ownership interests having such power only by reason of the happening of a contingency) to elect a majority of the directors of such corporation, or other persons or entities performing similar functions for such person or entity, are owned, directly or indirectly, by such person or entity or (ii) a corporation or other entity in which such person or entity owns, directly or indirectly, more than 50% of the voting interests at such time. 4.3. Capitalization; Voting Rights. (a) The authorized capital stock of the Company, as of the date hereof consists of 45,000,000 shares of common stock par value $0.01, of which 13,879,565 are issued and outstanding and 5,000,000 shares of preferred stock no par value, of which 15,000 are designated as Series A 8% Convertible Preferred Stock, none of which are issued and outstanding, 10,000 shares are designated as Series B 8% Convertible Preferred Stock, 29 shares of which are issued and outstanding, and 10,000 shares are designated as Series C 9% Convertible Preferred Stock, none of which are issued and outstanding. The authorized capital stock of each active Subsidiary of the Company is set forth on Schedule 4.3. (b) Except as disclosed in the Company's Exchange Act Filings or on Schedule 4.3 there are no outstanding options, warrants, rights (including conversion or preemptive rights and rights of first refusal), proxy or stockholder agreements, or arrangements or agreements of any kind for the purchase or acquisition from the Company of any of its securities other than this Agreement and the Related Agreements. (c) All issued and outstanding shares of the Company's Common Stock: (A) have been duly authorized and validly issued and are fully paid and nonassessable; and (B) were issued by the Company in full compliance with all applicable state and federal laws concerning the issuance of securities. (d) The rights, preferences, privileges and restrictions of the shares of the Common Stock are as stated in the Company's Articles of Incorporation, as amended (the "Charter") and pursuant to applicable law. 4.4. Authorization and Binding Obligations. All corporate, partnership or limited liability company, as the case may be, action on the part of the Company (including the respective officers and directors) necessary for the authorization of this Agreement and the Related Agreements, the performance of all obligations of the Company hereunder and under the other Related Agreements at the Closing and, the authorization, sale, issuance and delivery of the Securities has been taken or will be taken prior to the Closing. This Agreement and the Related Agreements, when executed and delivered will be valid and binding obligations of each of the Company enforceable against the Company in accordance with their terms, except as limited by applicable bankruptcy, insolvency, reorganization, moratorium or other laws of general application affecting enforcement of creditors' rights and general principles of equity that restrict the availability of equitable or legal remedies. 4.5. Liabilities. Neither the Company nor any of its Subsidiaries has any material contingent liabilities, except current liabilities incurred in the ordinary course of business and liabilities disclosed in the Company's Exchange Act Filings or on Schedule 4.5. 4.6. Agreements; Action. Except as set forth on Schedule 4.6 or as disclosed in any Exchange Act Filings: (a) there are no agreements, understandings, instruments, contracts, proposed transactions, judgments, orders, writs or decrees to which the Company or any of its Subsidiaries is a party or by which it is bound which may involve: (A) obligations (contingent or otherwise) of, or payments to, the Company in excess of $250,000 (other than obligations of, or payments to, the Company arising from purchase or sale agreements entered into in the ordinary course of business); or (B) provisions restricting the development, manufacture or distribution of the Company's products or services. (b) Since December 31, 2004, neither the Company nor any of its Subsidiaries has: (A) declared or paid any dividends, or authorized or made any distribution upon or with respect to any class or series of its capital stock; (B) incurred any indebtedness for money borrowed or any other liabilities (other than ordinary course obligations) individually in excess of $250,000 or, in the case of indebtedness and/or liabilities individually less than $250,000, in excess of $250,000 in the aggregate; (C) made any loans or advances to any person not in excess, individually or in the aggregate, of $250,000, other than ordinary course advances for travel expenses; or (D) sold, exchanged or otherwise disposed of any of its assets or rights, other than the sale of its inventory in the ordinary course of business. (c) For the purposes of subsections (i) and (ii) above, all indebtedness, liabilities, agreements, understandings, instruments, contracts and proposed transactions involving the same person or entity (including persons or entities the Company has reason to believe are affiliated therewith) shall be aggregated for the purpose of meeting the individual minimum dollar amounts of such subsections. 4.7. Obligations to Related Parties. Except as set forth in the Company's Exchange Act Filings or on Schedule 4.7, there are no obligations of the Company or any of its Subsidiaries to officers, directors, stockholders or employees of the Company or any of its Subsidiaries other than: (a) for payment of salary for services rendered and for bonus payments; (b) reimbursement for reasonable expenses incurred on behalf of the Company and its Subsidiaries; and (c) for other standard employee benefits made generally available to all employees (including stock option agreements outstanding under any stock option plan approved by the Board of Directors of the Company). Except as described above or set forth on Schedule 4.7, none of the officers, directors or, to the best of the Company's knowledge, key employees or stockholders of the Company or any members of their immediate families, are indebted to the Company, individually or in the aggregate, in excess of $50,000 or have any direct or indirect ownership interest in any firm or corporation with which the Company is affiliated or with which the Company has a business relationship, or any firm or corporation which competes with the Company, other than passive investments in publicly traded companies (representing less than one percent (1%) of such company) which may compete with the Company. Except as described above, no officer, director or stockholder, or any member of their immediate families, is, directly or indirectly, interested in any material contract with the Company and no agreements, understandings or proposed transactions are contemplated between the Company and any such person. Except as set forth on Schedule 4.7, the Company is not a guarantor or indemnitor of any indebtedness of any other person, firm or corporation. 4.8. Changes. Since December 31, 2004, except as disclosed in any Exchange Act Filing, on Schedule 4.8 or any other Schedule to this Agreement or to any of the Related Agreements, there has not been: (a) any change in the business, assets, liabilities, condition (financial or otherwise), properties or operations of the Company or any of its Subsidiaries, which individually or in the aggregate has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; (b) any resignation or termination of any officer, key employee or group of employees of the Company or any of its Subsidiaries; (c) any material change, except in the ordinary course of business, in the contingent obligations of the Company or any of its Subsidiaries by way of guaranty, endorsement, indemnity, warranty or otherwise; (d) any damage, destruction or loss, whether or not covered by insurance, has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; (e) any waiver by the Company or any of its Subsidiaries of a valuable right or of a material debt owed to it; (f) any direct or indirect loans made by the Company or any of its Subsidiaries to any stockholder, employee, officer or director of the Company or any of its Subsidiaries, other than advances made in the ordinary course of business; (g) any material change in any compensation arrangement or agreement with any employee, officer, director or stockholder of the Company or any of its Subsidiaries; (h) any declaration or payment of any dividend or other distribution of the assets of the Company or any of its Subsidiaries; (i) any labor organization activity related to the Company or any of its Subsidiaries; (j) any debt, obligation or liability incurred, assumed or guaranteed by the Company or any of its Subsidiaries, except those for immaterial amounts and for current liabilities incurred in the ordinary course of business; (k) any sale, assignment, hypothecation or transfer of any patents, trademarks, copyrights, trade secrets or other intangible assets owned by the Company or any of its Subsidiaries; (l) any change in any material agreement to which the Company or any of its Subsidiaries is a party or by which either the Company or any of its Subsidiaries is bound which either individually or in the aggregate has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; (m) any other event or condition of any character that, either individually or in the aggregate, has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; or (n) any arrangement or commitment by the Company or any of its Subsidiaries to do any of the acts described in subsection (a) through (m) above. 4.9. Title to Properties and Assets; Liens, Etc. Except as set forth on Schedule 4.9, the Company and each of its Subsidiaries has good and marketable title to its properties and assets, and good title to its leasehold estates, in each case subject to no mortgage, pledge, lien, lease, encumbrance or charge, other than: (a) those resulting from taxes which have not yet become delinquent; (b) minor liens and encumbrances which do not materially detract from the value of the property subject thereto or materially impair the operations of the Company or any of its Subsidiaries; and (c) those that have otherwise arisen in the ordinary course of business. All facilities, machinery, equipment, fixtures, vehicles and other properties owned, leased or used by the Company and its Subsidiaries are in good operating condition and repair and are reasonably fit and usable for the purposes for which they are being used. Except as set forth on Schedule 4.9, the Company and its Subsidiaries are in compliance with all material terms of each lease to which it is a party or is otherwise bound except where such failure to be in compliance, either individually or in the aggregate has had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. 4.10. Intellectual Property. (a) Each of the Company and each of its Subsidiaries owns or possesses sufficient legal rights to all patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes necessary for its business as now conducted, as presently proposed to be conducted (the "Intellectual Property"), without any infringement of the rights of others. There are no outstanding options, licenses or agreements of any kind relating to the foregoing proprietary rights, nor is the Company or any of its Subsidiaries bound by or a party to any options, licenses or agreements of any kind with respect to the patents, trademarks, service marks, trade names, copyrights, trade secrets, licenses, information and other proprietary rights and processes of any other person or entity other than such licenses or agreements arising from the purchase of "off the shelf" or standard products. (b) Neither the Company nor any of its Subsidiaries has received any communications alleging that the Company or any of its Subsidiaries has violated any of the patents, trademarks, service marks, trade names, copyrights or trade secrets or other proprietary rights of any other person or entity, nor is the Company or any of its Subsidiaries aware of any basis therefor. (c) The Company does not and will not utilize any inventions, trade secrets or proprietary information of any of its employees made prior to their employment by the Company or any of its Subsidiaries, except for inventions, trade secrets or proprietary information that have been rightfully assigned to the Company or any of its Subsidiaries. 4.11. Compliance with other Instruments. Neither the Company nor any of its Subsidiaries is in violation or default of (i) any material term of its Charter or Bylaws, or (ii) of any provision of any indebtedness, mortgage, indenture, contract, agreement or instrument to which it is party or by which it is bound or of any judgment, decree, order or writ, which violation or default, in the case of this clause (ii), has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. The execution, delivery and performance of and compliance with this Agreement and the Related Agreements to which it is a party, and the issuance and sale of the Securities by the Company pursuant hereto, will not, with or without the passage of time or giving of notice, result in any such material violation, or be in conflict with or constitute a default under any such term or provision, or result in the creation of any mortgage, pledge, lien, encumbrance or charge upon any of the properties or assets of the Company or any of its Subsidiaries or the suspension, revocation, impairment, forfeiture or nonrenewal of any permit, license, authorization or approval applicable to the Company, its business or operations or any of its assets or properties. 4.12. Filings, Consents and Approvals. Neither the Company nor any Subsidiary is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person in connection with the execution, delivery and performance by the Company of this Agreement or the Related Agreements, other than (i) a current report on Form 8-K announcing the transactions contemplated under this Agreement, (ii) the filing of a registration statement with the SEC as required under the Registration Rights Agreement, (iii) the notice and/or application(s) to Nasdaq National Market ("Nasdaq") for the issuance and sale of the Securities and the listing of the shares of Common Stock issuable upon conversion of the Shares or exercise of the Warrants for trading thereon in the time and manner required thereby, and (iv) the filing of Form D with the SEC and applicable Blue Sky filings (collectively, the "Required Approvals"). 4.13. Litigation. Except as set forth in the Company's Exchange Act Filings or on Schedule 4.13 hereto, there is no action, suit, proceeding or investigation pending or, to the Company's knowledge, currently threatened against the Company or any of its Subsidiaries that prevents the Company or any of its Subsidiaries from entering into this Agreement or the other Related Agreements, or from consummating the transactions contemplated hereby or thereby, or which has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect or any change in the current equity ownership of the Company or any of its Subsidiaries, nor is the Company aware that there is any basis to assert any of the foregoing. Neither the Company nor any of its Subsidiaries is a party or subject to the provisions of any order, writ, injunction, judgment or decree of any court or government agency or instrumentality. There is no action, suit, proceeding or investigation by the Company or any of its Subsidiaries currently pending or which the Company or any of its Subsidiaries intends to initiate. 4.14. Tax Returns and Payments. Except as set forth on Schedule 4.14, the Company and each of its Subsidiaries has timely filed all tax returns (federal, state and local) required to be filed by it. All taxes shown to be due and payable on such returns, any assessments imposed, and all other taxes due and payable by the Company or any of its Subsidiaries on or before the Closing, have been paid or will be paid prior to the time they become delinquent. Except as set forth on Schedule 4.14, neither the Company nor any of its Subsidiaries has been advised: (a) that any of its returns, federal, state or other, have been or are being audited as of the date hereof; or (b) of any deficiency in assessment or proposed judgment to its federal, state or other taxes. The Company has no knowledge of any liability for any tax to be imposed upon its properties or assets as of the date of this Agreement that is not adequately provided for. 4.15. Employees. Except as set forth on Schedule 4.15, neither the Company nor any of its Subsidiaries has any collective bargaining agreements with any of its employees. There is no labor union organizing activity pending or, to the Company's knowledge, threatened with respect to the Company or any of its Subsidiaries. Except as disclosed in the Exchange Act Filings or on Schedule 4.15, neither the Company nor any of its Subsidiaries is a party to or bound by any currently effective employment contract, deferred compensation arrangement, bonus plan, incentive plan, profit sharing plan, retirement agreement or other employee compensation plan or agreement. To the Company's knowledge, no employee of the Company or any of its Subsidiaries, nor any consultant with whom the Company or any of its Subsidiaries has contracted, is in violation of any term of any employment contract, proprietary information agreement or any other agreement relating to the right of any such individual to be employed by, or to contract with, the Company or any of its Subsidiaries because of the nature of the business to be conducted by the Company or any of its Subsidiaries; and to the Company's knowledge the continued employment by the Company or any of its Subsidiaries of its present employees, and the performance of the Company's and its Subsidiaries' contracts with its independent contractors, will not result in any such violation. Neither the Company nor any of its Subsidiaries is aware that any of its employees is obligated under any contract (including licenses, covenants or commitments of any nature) or other agreement, or subject to any judgment, decree or order of any court or administrative agency, that would interfere with their duties to the Company or any of its Subsidiaries. Neither the Company nor any of its Subsidiaries has received any notice alleging that any such violation has occurred. Except for employees who have a current effective employment agreement with the Company or any of its Subsidiaries, no employee of the Company or any of its Subsidiaries has been granted the right to continued employment by the Company or any of its Subsidiaries or to any material compensation following termination of employment with the Company or any of its Subsidiaries. Except as set forth on Schedule 4.15, the Company is not aware that any officer, key employee or group of employees intends to terminate his, her or their employment with the Company or any of its Subsidiaries, nor does the Company or any of its Subsidiaries have a present intention to terminate the employment of any officer, key employee or group of employees. 4.16. Compliance with Laws; Permits. Neither the Company nor any of its Subsidiaries is in violation of any applicable statute, rule, regulation, order or restriction of any domestic or foreign government or any instrumentality or agency thereof in respect of the conduct of its business or the ownership of its properties which has had, or could reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect. No governmental orders, permissions, consents, approvals or authorizations are required to be obtained and no registrations or declarations are required to be filed in connection with the execution and delivery of this Agreement or any other Related Agreement and the issuance of any of the Securities, except such as has been duly and validly obtained or filed, or with respect to any filings that must be made after the Closing, as will be filed in a timely manner. Each of the Company and its Subsidiaries has all material franchises, permits, licenses and any similar authority necessary for the conduct of its business as now being conducted by it, the lack of which could, either individually or in the aggregate, reasonably be expected to have a Material Adverse Effect. 4.17. Environmental and Safety Laws. Neither the Company nor any of its Subsidiaries is in violation of any applicable statute, law or regulation relating to the environment or occupational health and safety and no material expenditures are or will be required in order to comply with any such existing statute, law or regulation except for such violations that individually, or in the aggregate, have had, or could reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect. No Hazardous Materials (as defined below) are used or have been used, stored, or disposed of by the Company or any of its Subsidiaries or, to the Company's knowledge, by any other person or entity on any property owned, leased or used by the Company or any of its Subsidiaries. For the purposes of the preceding sentence, "Hazardous Materials" shall mean: (a) materials which are listed or otherwise defined as "hazardous" or "toxic" under any applicable local, state, federal and/or foreign laws and regulations that govern the existence and/or remedy of contamination on property, the protection of the environment from contamination, the control of hazardous wastes, or other activities involving hazardous substances, including building materials; or (b) any petroleum products or nuclear materials. 4.18. Insurance. Each of the Company and each of its Subsidiaries has general commercial, fire and casualty insurance policies with coverages which the Company believes are customary for companies similarly situated to the Company and its Subsidiaries in the same or similar business. 4.19. SEC Reports. Except as set in the Exchange Act Filings, the Company has timely filed all proxy statements, reports and other documents required to be filed by it under the Securities Exchange Act 1934, as amended (the "Exchange Act"). The Company has made available to the Purchaser copies of: (i) its Annual Reports on Form 10-K for its fiscal year ended December 31, 2004; (ii) its quarterly reports on Form 10-Q for the fiscal quarters ended March 31, 2004, June 30, 2004 and September 30, 2004 and (iii) its reports on Form 8-K which have been filed from December 31, 2004 to date (collectively, the "SEC Reports"). Except as set forth on Schedule 4.19 or in the Exchange Act Filings, each SEC Report was, at the time of its filing, in substantial compliance with the requirements of its respective form and none of the SEC Reports, nor the financial statements (and the notes thereto) included in the SEC Reports, as of their respective filing dates, contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. 4.20. Listing. The Company's Common Stock is listed for trading on Nasdaq and satisfies all requirements for the continuation of such listing. The Company has not received any notice that its Common Stock will be delisted from Nasdaq or that its Common Stock does not meet all requirements for such continued listing. 5. Representations, Warranties and Covenants of the Purchaser. Each Purchaser hereby represents, warrants and covenants to the Company as follows: 5.1. Authorization; Enforceability. Each Purchaser has the power and authority to purchase the Securities and to execute and deliver this Agreement and the Related Agreements to which such Purchaser is a party and to perform the provisions hereof and thereof. This Agreement constitutes, and upon execution and delivery thereof, each other Related Agreement to which such Purchaser is a party will constitute, such Purchaser's valid and legally binding obligation, enforceable in accordance with its terms, subject to (i) applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other similar laws of general application relating to or affecting the enforcement of creditors' rights generally and (ii) general principles of equity. 5.2. No Conflict with Other Instruments. The (i) execution, delivery and performance of this Agreement by each Purchaser and the other Related Agreements to which such Purchaser is a party, and (ii) consummation of the transactions contemplated hereby and thereby by such Purchaser has not and will not result in default (and to the knowledge of such Purchaser, no event has occurred which, with notice or lapse of time or both, would constitute a default) under any provision of any instrument or contract to which such Purchaser is a party or by which such Purchaser or any of its property is bound, or in violation of any provision of any governmental requirement applicable to such Purchaser. 5.3. Consent. Filings, Consents and Approvals. No Purchaser is required to obtain any consent, waiver, authorization or order of, give any notice to, or make any filing or registration with, any court or other federal, state, local or other governmental authority or other person in connection with the execution, delivery and performance by the Purchaser of this Agreement or the Related Agreements, other than the Required Approvals or any other filing or notice required under federal or state securities laws to report the transactions contemplated in this Agreement and the Related Agreements. 5.4. Investment for Own Account. Such Purchaser will hold the Securities for their own account for investment purposes only, and not with a view to, or for resale in connection with, any distribution that would require registration under the Securities Act or the securities laws of any state. Such Purchaser does not presently have any reason to anticipate any change in circumstances or other particular occasion or event which would require selling the Securities or any part thereof or interest therein. Such Purchaser understands that there will be no established market for the Securities and that such Purchaser may be restricted from selling the Securities except in a sale exempt under federal and state securities laws. 5.5. No Registration. Such Purchaser understands that (a) the Securities (1) have not been registered under the Securities Act or any state securities laws, (2) will be issued in reliance upon an exemption from the registration and prospectus delivery requirements of the Securities Act which relate to private offerings, (3) may be required to be held by such Purchaser indefinitely, and (b) such Purchaser must therefore bear the economic risk of such investment indefinitely unless a subsequent disposition thereof is registered under the Securities Act and applicable state securities laws or is exempt therefrom. Such Purchased further understands that such exemptions depend upon, among other things, the accuracy of such Purchaser's representations set forth in this Section 5. 5.6. Access to Information. Such Purchaser has had an opportunity to ask questions of, and receive satisfactory answers from, the Company and its representatives or agents concerning the terms of this investment and the undersigned's potential acquisition of the Securities, and all such questions have been answered to such Purchaser's full satisfaction. Such Purchaser has been furnished by the Company all information (or provided access to all information) regarding the business and financial condition of the Company, the attributes of the Securities and the merits and risks of an investment in the Securities which such Purchaser has requested or otherwise needs to evaluate the investment in the Securities, and such Purchaser does not desire any further information or data concerning the Company. Specifically, such Purchaser acknowledges receipt from the Company of, without limitation, the following information (collectively, the "Investment Information"): (a) the Company's Exchange Act Filings; and (b) the Company's Charter and Bylaws. Such Purchaser has received, read and understands the Investment Information. Such Purchaser has examined all written materials furnished by the Company, or caused the same to be examined by such Purchaser's representatives, to the extent such Purchaser deemed necessary or appropriate. The undersigned acknowledges that the Company has made available to the undersigned the opportunity to obtain additional information to verify the accuracy of any material shown to the undersigned by the Company and to evaluate the merits and risks of this investment. 5.7. Accredited Investor. Such Purchaser is an "accredited investor" as defined in Rule 501 of Regulation D promulgated under the Securities Act, and such Purchaser, or those persons retained by such Purchaser, have knowledge, skill and experience in financial, business and investment matters relating to an investment of this type and are capable of evaluating the merits and risks of such investment and protecting such Purchaser in connection with an investment in the Securities. At such Purchaser's own expense, the undersigned has, to the extent deemed necessary by such Purchaser, retained and relied upon appropriate professional advice regarding the investment, tax and legal merits and consequences of an investment in the Securities. Such Purchaser has not received any legal, business, tax or other advice from the Company, its counsel or other representatives. 5.8. Risk of Investment. Such Purchaser acknowledges that (i) it has been called to such Purchaser's attention that such Purchaser's investment in the Securities involves a high degree of risk, (ii) any investment in the Company is not insured by any governmental or other entity, and (iii) such Purchaser understands that the Securities will be an illiquid investment. Further, such Purchaser acknowledges that there are certain tax risks associated with the proposed investment and no assurances are being made that existing tax laws and regulations will not be modified in the future, thus altering tax consequences associated with this potential investment. The Company has never made any representation, guarantee or warranty (A) as to the approximate or exact length of time that such Purchaser will be required to remain an owner of the Securities (or any other securities of the Company); (B) the percentage of profit, amount of or type of consideration and/or profit or loss, if any, that will result from an investment in the Securities; or (C) that any future expectations relating to the Company's performance indicate in any way what the Company's financial condition or results of operations will be in the future. Such Purchaser understands the speculative nature of an investment in the Securities and the financial risks associated with the Securities. 5.9. Restrictions on Transfer. The Offering is being made in reliance upon exemptions from registration under the Securities Act and applicable state securities laws for an offer and sale of securities not involving a public offering. The Securities may not be sold, transferred or otherwise disposed of without satisfaction of certain conditions, including registration under, or the availability of an exemption from registration under, the Securities Act and applicable state securities laws. Such Purchaser agrees that the Company may permit the transfer of the Securities out of such Purchaser's name only when any request for transfer is accompanied by an opinion of counsel acceptable in form and substance to Company counsel to the effect that the proposed transfer results in no violation of the Securities Act or any applicable state securities laws. A legend to this effect will be placed upon each certificate representing the Securities. 5.10. Representations and Warranties. No person or entity, other than the Company, has been authorized to give any information or to make any representations on behalf of the Company in connection with the offering of the Securities and, if given or made, such information or representations have not been relied upon by the undersigned as having been made or authorized by the Company. The only representations, warranties and information made by the Company in connection with the Offering are those contained in this Agreement and the Investment Information. 5.11. General Solicitation. The solicitation of an offer to buy the Securities was communicated to such Purchaser in such a manner that at no time was such Purchaser presented with or solicited by or through any leaflet, public promotional meeting, television, radio, internet or other published advertisement or any other form of general or public advertising or solicitation. 5.12. Purchaser's Experience. By reason of such Purchaser's business and financial experience, such Purchaser has the capacity to protect such Purchaser's own interests in investments of this nature. Such Purchaser has evaluated such Purchaser's financial resources and investment position, and the risks associated with the proposed investment and concluded that such Purchaser has the ability to bear the economic risks associated with this proposed investment. 5.13. Non-public Information. After the date hereof, such Purchaser agrees to hold in strict confidence any non-public information of the Company (the "Information") acquired by such Purchaser, and not to use such Information for any competitive purpose. Such Purchaser may transmit Information to its partners, directors, officers, employees, agents or representatives, including attorneys, accountants and consultants (collectively, "Representatives"), but only to such Representatives who are informed of the confidential nature of the Information and are directed to treat such Information as confidential. Notwithstanding anything to the contrary herein, such Purchaser may disclose any Information to the extent such Information or portion thereof (i) is or becomes generally available to the public other than as a result of a disclosure by the undersigned or its Representatives in breach of the terms hereof, (ii) is or becomes available to such Purchaser on a non-confidential basis from a source, other than the Company or its representatives, without violation of a duty of confidentiality to the Company, or (iii) was known to such Purchaser on a non-confidential basis prior to the disclosure to such Purchaser by the Company or any of its representatives. 6. Covenants of the Company and each Purchaser. 6.1. Listing. The Company shall as promptly as practicable after Closing secure the listing of the shares of Common Stock issuable upon conversion of the Shares and upon the exercise of the Warrants on the Nasdaq (subject to official notice of issuance) and shall maintain such listing so long as any other shares of Common Stock shall be so listed. The Company will use commercially reasonable best efforts to maintain the listing of its Common Stock on Nasdaq, and will comply with the Company's reporting, filing and other obligations under the bylaws or rules of the National Association of Securities Dealers ("NASD") and such exchanges, as applicable. 6.2. Market Regulations. The Company shall notify the SEC, NASD and applicable state authorities, in accordance with their requirements, of the transactions contemplated by this Agreement, and shall take all other necessary action and proceedings as may be required and permitted by applicable law, rule and regulation, for the legal and valid issuance of the Securities to the Purchasers and promptly provide copies thereof to the Purchasers. 6.3. Reporting Requirements; Reports for Dennis Sciotto. The Company will timely file with the SEC all reports required to be filed pursuant to the Exchange Act and refrain from terminating its status as an issuer required by the Exchange Act to file reports thereunder even if the Exchange Act or the rules or regulations thereunder would permit such termination. The Company will prepare and timely file with the Commission, at the Company's expense, any filings pursuant to Section 13 or 16 of the Exchange Act that are required for Dennis Sciotto and The Dennis R. Sciotto Family Trust Dated September 19, 1999 in connection with this transaction and for any conversions of the Shares or exercise of the Warrants in the future; provided, however, that Dennis Sciotto agrees to deliver any necessary information required to complete such filings to the Company no later than the next business day after the transaction requiring such filing occurs. 6.4. Shareholder Approval. At the next annual meeting of the Company's shareholders, which shall be held no later than July 31, 2005, the Company shall include a proposal for the Company's shareholders to vote to approve this Agreement, the Related Agreements and the transactions contemplated hereby and thereby. The Company's Board of the Directors (the "Board") will recommend that the shareholders vote in favor of such proposal. 6.5. Board Seats. Within 5 days of the First Closing Date, the Board will appoint two individuals designated by a majority of the Series C Stock to the Board to fill the existing vacancies on the Board in accordance with Section D(i) of the Amended Articles. 6.6. Restrictions on Conversion and Exercise. Until this Agreement and the Related Agreements are approved by the holders a majority of the outstanding shares of capital stock of the Company entitled to vote, excluding holders of the Series C Convertible Preferred Stock ("Shareholder Approval"), no holder of Shares or Warrants shall be entitled to convert such holder's Shares or exercise such holder's Warrants, if after such conversion or exercise such holder will, with the shares of Common Stock issued on conversion or exercise and any other shares of the Company's Common Stock held by such holder, hold more than 19.99% of the outstanding Common Stock or voting power of the Company on the date of such conversion or exercise. 7. Conditions to the Second Closing. The Company and Purchasers obligations to effect the Second Closing are subject to the satisfaction, at or prior to the Second Closing, of the following conditions (any of which may be waived in whole or in part): 7.1. Conditions to Obligations of Purchasers. A majority in interest of the Purchasers shall have the option, in their sole and absolute discretion, to elect whether or not to effect the Second Closing. If the Purchasers determine not to effect the Second Closing, they shall deliver written notice to the Company at least ten (10) business days prior to the Second Closing Date. 7.2. Conditions to Obligations of the Company. (a) All of the representations and warranties made by the Purchasers in this Agreement must be true and correct in all material respects as if made on the Second Closing Date (except that representations and warranties given as of a specific date shall be true and correct only as of such date) and the Company shall have received a certificate from each Purchaser to such effect. (b) The Purchasers shall have in all material respects performed or complied with all covenants and obligations that it is required to perform or to comply with pursuant to this Agreement and the Company shall have received a certificate from the each Purchaser to such effect. (c) There shall not be any proceeding or threatened proceeding against the Purchasers or any person affiliated with the Purchasers: (a) involving any challenge to, or seeking damages or other relief in connection with, any of the transactions contemplated by this Agreement, or (b) that may have the effect of preventing, delaying, making illegal, or otherwise interfering with any of the transactions contemplated by this Agreement. 8. Indemnification. 8.1. Company Indemnification. The Company agrees to indemnify, hold harmless, reimburse and defend the Purchasers, each Purchaser's officers, directors, agents, affiliates, control persons, and principal shareholders, against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Purchasers which results, arises out of or is based upon: (i) any misrepresentation by the Company or any of its Subsidiaries or breach of any warranty by the Company or any of its Subsidiaries in this Agreement, any other Related Agreement or in any exhibits or schedules attached hereto or thereto; or (ii) any breach or default in performance by Company or any of its Subsidiaries of any covenant or undertaking to be performed by Company or any of its Subsidiaries hereunder, under any other Related Agreement or any other agreement entered into by the Company and/or any of its Subsidiaries and Purchasers relating hereto or thereto. 8.2. Purchasers' Indemnification. Each Purchaser agrees to indemnify, hold harmless, reimburse and defend the Company and each of the Company's officers, directors, agents, affiliates, control persons and principal shareholders, at all times against any claim, cost, expense, liability, obligation, loss or damage (including reasonable legal fees) of any nature, incurred by or imposed upon the Company which results, arises out of or is based upon: (i) any misrepresentation by the Purchasers or breach of any warranty by the Purchasers in this Agreement, any other Related Agreement or in any exhibits or schedules attached hereto or thereto; or (ii) any breach or default in performance by the Purchasers of any covenant or undertaking to be performed by the Purchasers hereunder, under any other Related Agreement or any other agreement entered into by the Company and/or any of its Subsidiaries and Purchasers relating hereto or thereto. 9. Miscellaneous. 9.1. Entire Agreement. This Agreement, the Related Agreements, the exhibits and schedules hereto and thereto and the other documents delivered pursuant hereto constitute the full and entire understanding and agreement between the parties with regard to the subjects hereof and no party shall be liable or bound to any other in any manner by any representations, warranties, covenants and agreements except as specifically set forth herein and therein. 9.2. Choice of Law. This Agreement shall be governed under the laws of the State of Delaware, without regard to conflicts of law. 9.3. Attorney's Fees. In the event any litigation, arbitration, mediation, or other proceeding ("Proceeding") is initiated by any party(ies) against any other party(ies) to enforce, interpret or otherwise obtain judicial or quasi-judicial relief in connection with this Agreement, the prevailing party(ies) in such Proceeding shall be entitled to recover from the unsuccessful party(ies) all costs, expenses, actual attorney's and expert witness fees, relating to or arising out of (1) such Proceeding (whether or not such Proceeding proceeds to judgment), and (2) any post-judgment or post-award proceeding including, without limitation, one to enforce any judgment or award resulting from any such Proceeding. Any such judgment or award shall contain a specific provision for the recovery of all such subsequently incurred costs, expenses, actual attorney and expert witness fees. 9.4. Counterparts. This Agreement may be signed in one (1) or more counterparts, each of which shall constitute an original but all of which together shall be one (1) and the same document. Signatures received by facsimile shall be deemed to be original signatures. 9.5. Partial Invalidity. Each provision of this Agreement will be valid and enforceable to the fullest extent permitted by law. If any provision of this Agreement or the application of the provision to any person or circumstance will, to any extent, be invalid or unenforceable, the remainder of this Agreement, or the application of the provision to persons or circumstances other than those as to which it is held invalid or unenforceable, will not be affected by such invalidity or unenforceability, unless the provision or its application is essential to this Agreement. 9.6. Titles and Subtitles. The titles and subtitles used in this Agreement are used for convenience only and are not to be considered in construing or interpreting this Agreement. 9.7. Drafting Ambiguities. Each party to this Agreement and their legal counsel have reviewed and revised this Agreement. The rule of construction that any ambiguities are to be resolved against the drafting party shall not be employed in the interpretation of this Agreement or any amendments or exhibits to this Agreement. 9.8. Notices. Any notice from one party to another shall be delivered either personally, via facsimile or by United States mail, postage fully prepaid, addressed as follows: Purchasers: To the respective addresses set forth below the Purchaser's signature at the foot of this Agreement. With a copy (not constituting notice): Solomon Ward Seidenwurm & Smith, LLP Attn: Harry J. Proctor, Esq. 401 B Street, Suite 1200 San Diego, CA 92101 Company: OMNI Energy Services Corp. Attention: James C. Eckert 4500 NE Evangeline Thruway Carenco, LA 70520 With a copy to (not constituting notice): Joe Perillo, Esq. Locke Liddell & Sapp LLP 3400 JPMorgan Chase Tower 600 Travis Houston, TX 77002-3095 Any notice being delivered within the continental United States shall be deemed delivered upon (a) personal service, or (b) transmission via facsimile (with the original thereof to be immediately sent via mail, postage prepaid), or (c) forty eight (48) hours after the time of deposit in the mail, as the case may be. In the event any Party changes its address, such change of address shall be communicated to the other Party in the manner set forth in this Section. 9.9. Definition of Knowledge. For the purposes of this Agreement, the Company shall only be deemed to have "knowledge" of a particular fact or other matter, if an executive officer of the Company is actually aware of such fact or matter, or a reasonably prudent individual operating in the capacity of an executive officer of the Company could be expected to discover or otherwise become aware of such fact or matter in the ordinary course of fulfilling the responsibilities of an executive officer. 9.10. Interpretation/Representation. Wherever the context of this Agreement requires, all words used in the singular shall be construed to have been used in the plural, and vice versa, and the use of any gender specific pronoun shall include any other appropriate gender. The term "person" shall refer to any individual, corporation or legal entity having standing to bring an action in its own name under applicable state law. The conjunctive "or" shall mean "and/or" unless otherwise required by the context in which the conjunctive "or" is used. The Purchasers acknowledge that the firm of Solomon Ward Seidenwurm & Smith, LLP represents only the Dennis R. Sciotto Family Trust and that each of them has had an opportunity to consult with and be advised by its own counsel and professional advisors. 9.11. Survival. The representations, warranties, covenants and agreements made herein shall survive any investigation made by the Purchaser and the closing of the transactions contemplated hereby to the extent provided therein. All statements as to factual matters contained in any certificate or other instrument delivered by or on behalf of the Company pursuant hereto in connection with the transactions contemplated hereby shall be deemed to be representations and warranties by the Company hereunder solely as of the date of such certificate or instrument. 9.12. Successors. Except as otherwise expressly provided herein, the provisions hereof shall inure to the benefit of, and be binding upon, the successors, heirs, executors and administrators of the parties hereto and shall inure to the benefit of and be enforceable by each person who shall be a holder of the Securities from time to time, other than the holders of Common Stock which has been sold by the Purchasers pursuant to Rule 144 or an effective registration statement. 9.13. Amendment and Waiver. (a) This Agreement may be amended or modified only upon the written consent of the Company and a majority in interest of the Purchasers. (b) The obligations of the Company and the rights of the Purchasers under this Agreement may be waived only with the written consent of a majority in interest of the Purchasers. (c) The obligations of the Purchasers and the rights of the Company under this Agreement may be waived only with the written consent of the Company. 9.14. Delays or Omissions. It is agreed that no delay or omission to exercise any right, power or remedy accruing to any party, upon any breach, default or noncompliance by another party under this Agreement or the Related Agreements, shall impair any such right, power or remedy, nor shall it be construed to be a waiver of any such breach, default or noncompliance, or any acquiescence therein, or of or in any similar breach, default or noncompliance thereafter occurring. All remedies, either under this Agreement or the Related Agreements, by law or otherwise afforded to any party, shall be cumulative and not alternative. [Remainder of Page Intentionally Left Blank.] IN WITNESS WHEREOF, the parties hereto have executed this Securities Purchase Agreement as of the date set forth in the first paragraph hereof. COMPANY: OMNI Energy Services Corp., a Louisiana corporation /s/ James C. Eckert - -------------------------- James C. Eckert, President PURCHASERS: The Dennis R. Sciotto Family Trust Dated Edward E. Colson, III Trust dated December 19, 1994 January 2, 1995 By: /s/ Dennis R. Sciotto By: /s/ Edward E. Colson --------------------- --------------------- Name: Dennis R. Sciotto Name: Edward E. Colson Its: ____________________ Its: ____________________ By: /s/ Jimit Mehta By: /s/ James C. Eckert --------------------- ------------------- Jimit Mehta James C. Eckert By: /s/ G. Darcy Klug ------------------- G. Darcy Klug EX-99.2 3 h25902exv99w2.txt REGISTRATION RIGHTS AGREEMENT REGISTRATION RIGHTS AGREEMENT This Registration Rights Agreement (this "Agreement") is made and entered into as of May 17, 2005, by and between OMNI Energy Services Corp., a Louisiana corporation (the "Company"), and the purchasers of the Company's Series C 9% Convertible Preferred Stock that are signatories hereto (each a "Purchaser" and collectively, the "Purchasers"). This Agreement is made pursuant to the Securities Purchase Agreement, dated as of the date hereof, by and between the Purchasers and the Company (the "Purchase Agreement"), and pursuant to the Warrants referred to therein. Capitalized terms used but not defined herein shall have the meaning set forth in the Purchase Agreement. The Company and the Purchasers hereby agree as follows: 1. Definitions. As used in this Agreement, the following terms shall have the following meanings: "Commission" means the Securities and Exchange Commission. "Common Stock" means shares of the Company's common stock, par value $0.01 per share. "Effectiveness Date" means the 90th day following the Filing Date. "Effectiveness Period" shall have the meaning set forth in Section 2(a). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and any successor statute. "Filing Date" means, with respect to the Registration Statement required to be filed hereunder, a date no later than sixty (60) days following the date hereof and, with respect to shares of Common Stock issuable to the Holder as a result of adjustments to the conversion price of the Series C Stock or the exercise price of the Warrants, pursuant to their respective terms, sixty (60) days after the occurrence of such event or the date of such adjustment. "Holder" or "Holders" means the Purchasers or any of its affiliates or transferees to the extent any of them hold Registrable Securities. "Indemnified Party" shall have the meaning set forth in Section 6(c). "Indemnifying Party" shall have the meaning set forth in Section 6(c). "Person" means any individual, corporation, partnership, limited liability company or other legal entity. "Proceeding" means an action, claim, suit, investigation or proceeding (including, without limitation, an investigation or partial proceeding, such as a deposition), whether commenced or threatened. 1 "Prospectus" means the prospectus included in the Registration Statement (including, without limitation, a prospectus that includes any information previously omitted from a prospectus filed as part of an effective registration statement in reliance upon Rule 430A promulgated under the Securities Act), as amended or supplemented by any prospectus supplement, with respect to the terms of the offering of any portion of the Registrable Securities covered by the Registration Statement, and all other amendments and supplements to the Prospectus, including post-effective amendments, and all material incorporated by reference or deemed to be incorporated by reference in such Prospectus. "Registrable Securities" means the shares of Common Stock issued upon the conversion of the Series C Stock, exercise of the Warrants or as dividends on the Series C Stock. "Registration Statement" means each registration statement required to be filed hereunder, including the Prospectus. "Rule 144" means Rule 144 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Rule 415" means Rule 415 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Rule 424" means Rule 424 promulgated by the Commission pursuant to the Securities Act, as such Rule may be amended from time to time, or any similar rule or regulation hereafter adopted by the Commission having substantially the same effect as such Rule. "Securities Act" means the Securities Act of 1933, as amended, and any successor statute. "Series C Stock" means the Series C 9% Convertible Preferred Stock. "Trading Market" means any of the NASD OTC Bulletin Board, NASDAQ SmallCap Market, the Nasdaq National Market, the American Stock Exchange or the New York Stock Exchange. "Warrants" means the Common Stock purchase warrants issued pursuant to the Purchase Agreement. 2. Registration. (a) On or prior to the Filing Date the Company shall prepare and file with the Commission a Registration Statement covering the Registrable Securities for an offering to be made on a continuous basis pursuant to Rule 415. The Registration Statement shall be on Form S-3 (except if the Company is not then eligible to register for resale the Registrable Securities on Form S-3, in which case such registration shall be on another appropriate form in accordance herewith). The Company shall cause the Registration Statement to become effective and remain effective as provided herein. The Company shall use its reasonable commercial efforts to cause the Registration Statement to be declared effective under the Securities Act as promptly as possible after the filing thereof, but in any event no later than the Effectiveness Date. The Company shall use its reasonable 2 commercial efforts to keep the Registration Statement continuously effective under the Securities Act until the date which is the earlier date of when (i) all Registrable Securities have been sold or (ii) all Registrable Securities may be sold immediately without registration under the Securities Act and without volume restrictions pursuant to Rule 144(k), as determined by the counsel to the Company pursuant to a written opinion letter to such effect, addressed and acceptable to the Company's transfer agent and the affected Holders (the "Effectiveness Period"). (b) If: (i) the Registration Statement is not filed on or prior to the Filing Date; (ii) the Registration Statement is not declared effective by the Commission by the Effectiveness Date; (iii) after the Registration Statement is filed with and declared effective by the Commission, the Registration Statement ceases to be effective (by suspension or otherwise) as to all Registrable Securities to which it is required to relate at any time prior to the expiration of the Effectiveness Period (without being succeeded immediately by an additional registration statement filed and declared effective) for a period of time which shall exceed 30 days in the aggregate per year or more than 20 consecutive calendar days (defined as a period of 365 days commencing on the date the Registration Statement is declared effective); or (iv) the Common Stock is not listed or quoted, or is suspended from trading on any Trading Market for a period of three (3) consecutive Trading Days (provided the Company shall not have been able to cure such trading suspension within 30 days of the notice thereof or list the Common Stock on another Trading Market); (any such failure or breach being referred to as an "Event," and for purposes of clause (i) or (ii) the date on which such Event occurs, or for purposes of clause (iii) the date which such 30 day or 20 consecutive day period (as the case may be) is exceeded, or for purposes of clause (iv) the date on which such three (3) Trading Day period is exceeded, being referred to as "Event Date"), then during the period beginning on the Event Date and ending on (but not including) the date that the applicable Event is cured, the Company shall pay to each Holder an amount in cash, as liquidated damages and not as a penalty, equal to 2.0% for each thirty (30) day period (prorated for partial periods on a daily basis) of the Purchase Price of the Registrable Securities then held by such Holder and the amount by which the Warrants are in the money. While such Event continues, such liquidated damages shall be paid not less often than each thirty (30) days. Any unpaid liquidated damages as of the date when an Event has been cured by the Company shall be paid within five (5) days following the date on which such Event has been cured by the Company. (c) Within three (3) business days following the date on which the Registration Statement is declared effective by the Commission, and assuming no stop-order has been issued with respect to the Registration Statement, the Company shall furnish to each Holder (x) a letter, dated such date, of outside counsel representing the Company addressed to such Holder, confirming such effectiveness and, to the knowledge of such counsel, the absence of any stop order, and (y) in the case of an underwriting (or if the Commission deems such Holder as an underwriter for disclosure purposes), (A) a copy of an opinion, dated such date, of such outside counsel, in such form and substance as is required to be given to the underwriters, and (B) a letter addressed to such Holder, dated such date, from the Company's independent certified public accountants, in such form and substance as is required to be given by the Company's independent certified public accountants to such underwriters. 3. Registration Procedures. If and whenever the Company is required by the provisions hereof to effect the registration of any Registrable Securities under the Securities Act, the Company will, as expeditiously as possible: 3 (a) prepare and file with the Commission such amendments and supplements to the Registration Statement and the Prospectus used in connection therewith as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by the Registration Statement and to keep such Registration Statement effective until the expiration of the Effectiveness Period; (b) upon the effectiveness of the Registration Statement, furnish to the Purchaser such number of copies of the Registration Statement and the Prospectus included therein (including each preliminary Prospectus) as the Purchaser reasonably may request to facilitate the public sale or disposition of the Registrable Securities covered by the Registration Statement; (c) use its commercially reasonable efforts to register or qualify the Purchaser's Registrable Securities covered by the Registration Statement under the securities or "blue sky" laws of such jurisdictions within the United States as the Purchaser may reasonably request, provided, however, that the Company shall not for any such purpose be required to qualify generally to transact business as a foreign corporation in any jurisdiction where it is not so qualified or to consent to general service of process in any such jurisdiction; (d) list the Registrable Securities covered by the Registration Statement with any securities exchange on which the Common Stock of the Company is then listed; (e) immediately notify the Purchaser at any time when a Prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event of which the Company has knowledge as a result of which the Prospectus contained in such Registration Statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and (f) make available for inspection by the Purchasers and any attorney, accountant or other agent retained by the Purchasers, upon reasonable prior notice, all publicly available, non-confidential financial and other records, pertinent corporate documents and properties of the Company, and cause the Company's officers, directors and employees to supply all publicly available, non-confidential information reasonably requested by the attorney, accountant or agent of the Purchasers. 4. Obligations of each Holder. In connection with the registration of Registrable Securities pursuant to a Registration Statement, each Holder shall: (a) timely furnish to the Company in writing such information regarding itself and the intended method of disposition of such Registrable Securities as the Company shall reasonably request in order to effect the registration thereof; (b) upon receipt of any notice from the Company of the happening of any Discontinuation Event described in Section 7(d), immediately discontinue any sale or other disposition of such Registrable Securities pursuant to such Registration Statement until the filing of an amendment or supplement is delivered to the Holder as described in Section 7(d), and use commercially reasonable efforts to maintain the confidentiality of such notice and its contents; 4 (c) in the event of an underwritten offering of such Registrable Securities in which such Holder participates, enter into a customary and reasonable underwriting agreement and execute such other documents as the Company and the managing underwriter for such offering may reasonably request; (d) notify the Company when it has sold all of the Registrable Securities held by it; and (e) notify the Company in the event that any information supplied by such Holder for inclusion in such Registration Statement or related prospectus is untrue or omits to state a material fact required to be stated therein or necessary to make such information not misleading in light of the circumstances then existing; immediately discontinue any sale or other disposition of such Registrable Securities pursuant to such Registration Statement until the filing of an amendment or supplement to such prospectus as may be necessary so that such prospectus does not contain an untrue statement of material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein not misleading in light of the circumstances then existing; and use commercially reasonable efforts to assist the Company as may be appropriate to make such amendment or supplement effective for such purpose. 5. Registration Expenses. All expenses relating to the Company's compliance with Sections 2 and 3 hereof, including, without limitation, all registration and filing fees, printing expenses, fees and disbursements of counsel and independent public accountants for the Company, fees and expenses (including reasonable counsel fees) incurred in connection with complying with state securities or "blue sky" laws, fees of the NASD, transfer taxes, fees of transfer agents and registrars, fees of, and disbursements incurred by, one counsel for the Holders (to the extent such counsel is required due to Company's failure to meet any of its obligations hereunder), are called "Registration Expenses." All selling commissions applicable to the sale of Registrable Securities, including any fees and disbursements of any special counsel to the Holders beyond those included in Registration Expenses, are called "Selling Expenses." The Company shall only be responsible for all Registration Expenses and shall not be responsible for the Selling Expenses. 6. Indemnification. (a) In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, the Company will indemnify and hold harmless the Purchasers, and their officers, directors and each other person, if any, who controls the Purchasers within the meaning of the Securities Act, against any losses, claims, damages or liabilities, joint or several, to which the Purchasers, or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact contained in any Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and, subject to the provisions of Section 6(c) below, will reimburse the Purchasers, and each such person for any reasonable legal (of no more than one separate counsel) or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; provided, however, that 5 the Company will not be liable in any such case if and to the extent that any such loss, claim, damage or liability arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished by or on behalf of any Purchaser or any such person specifically for use in any such document, or (ii) a failure of such person to deliver or cause to be delivered the final Prospectus contained in the Registration Statement and made available by the Company, if such delivery is required by applicable law. (b) In the event of a registration of any Registrable Securities under the Securities Act pursuant to this Agreement, each Purchaser will indemnify and hold harmless the Company, and its officers, directors and each other person, if any, who controls the Company within the meaning of the Securities Act, against all losses, claims, damages or liabilities, joint or several, to which the Company or such persons may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof) arise out of or are based upon any untrue statement or alleged untrue statement of any material fact which was furnished by such Purchaser to the Company expressly for use in (and such information is contained in) the Registration Statement under which such Registrable Securities were registered under the Securities Act pursuant to this Agreement, any preliminary Prospectus or final Prospectus contained therein, or any amendment or supplement thereof, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and, subject to the provisions of Section 6(c) below, will reimburse the Company and each such person for any reasonable legal (of no more than one separate counsel) or other expenses incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action, provided, however, that such Purchaser will be liable in any such case if and only to the extent that any such loss, claim, damage or liability arises out of or is based upon (i) an untrue statement or alleged untrue statement or omission or alleged omission so made in conformity with information furnished to the Company by or on behalf of such Purchaser specifically for use in any such document, or (ii) a failure of such person to deliver or cause to be delivered the final Prospectus contained in the Registration Statement and made available by the Company, if such delivery is required by applicable law. Notwithstanding the provisions of this paragraph, no Purchaser shall be required to indemnify any person or entity in excess of the amount of the aggregate net proceeds received by such Purchaser in respect of Registrable Securities in connection with any such registration under the Securities Act. (c) Promptly after receipt by a party entitled to claim indemnification hereunder (an "Indemnified Party") of notice of the commencement of any action, such Indemnified Party shall, if a claim for indemnification in respect thereof is to be made against a party hereto obligated to indemnify such Indemnified Party (an "Indemnifying Party"), notify the Indemnifying Party in writing thereof, but the omission so to notify the Indemnifying Party shall not relieve it from any liability which it may have to such Indemnified Party other than under this Section 6(c) and shall only relieve it from any liability which it may have to such Indemnified Party under this Section 6(c) if and to the extent the Indemnifying Party is prejudiced by such omission. In case any such action shall be brought against any Indemnified Party and it shall notify the Indemnifying Party of the commencement thereof, the Indemnifying Party shall be entitled to participate in and, to the extent it shall wish, to assume and undertake the defense thereof with counsel satisfactory to such Indemnified Party, and, after notice from the Indemnifying Party to such Indemnified Party of its election so to assume and undertake the defense thereof, the Indemnifying Party shall not be liable to such Indemnified Party under this Section 6(c) for any legal expenses subsequently incurred by such Indemnified Party in connection with the defense thereof; if the Indemnified Party retains its 6 own counsel, then the Indemnified Party shall pay all fees, costs and expenses of such counsel, provided, however, that, if the defendants in any such action include both the indemnified party and the Indemnifying Party and the Indemnified Party shall have reasonably concluded that there may be reasonable defenses available to it which are different from or additional to those available to the Indemnifying Party or if the interests of the Indemnified Party reasonably may be deemed to conflict with the interests of the Indemnifying Party, the Indemnified Party shall have the right to select one separate counsel and to assume such legal defenses and otherwise to participate in the defense of such action, with the reasonable expenses and fees of such separate counsel and other expenses related to such participation to be reimbursed by the Indemnifying Party as incurred. (d) In order to provide for just and equitable contribution in the event of joint liability under the Securities Act in any case in which either (i) a Purchaser, or any officer, director or controlling person of a Purchaser, makes a claim for indemnification pursuant to this Section 6 but it is judicially determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the expiration of time to appeal or the denial of the last right of appeal) that such indemnification may not be enforced in such case notwithstanding the fact that this Section 6 provides for indemnification in such case, or (ii) contribution under the Securities Act may be required on the part of such Purchaser or such officer, director or controlling person of such Purchaser in circumstances for which indemnification is provided under this Section 6; then, and in each such case, the Company and such Purchaser will contribute to the aggregate losses, claims, damages or liabilities to which they may be subject (after contribution from others) in such proportion so that such Purchaser is responsible only for the portion represented by the percentage that the public offering price of its securities offered by the Registration Statement bears to the public offering price of all securities offered by such Registration Statement, provided, however, that, in any such case, (A) such Purchaser will not be required to contribute any amount in excess of the public offering price of all such securities offered by it pursuant to such Registration Statement; and (B) no person or entity guilty of fraudulent misrepresentation (within the meaning of Section 10(f) of the Act) will be entitled to contribution from any person or entity who was not guilty of such fraudulent misrepresentation. 7. Miscellaneous. (a) Remedies. In the event of a breach by the Company or by a Holder, of any of their respective obligations under this Agreement, each Holder or the Company, as the case may be, in addition to being entitled to exercise all rights granted by law and under this Agreement, including recovery of damages, will be entitled to specific performance of its rights under this Agreement. (b) No Piggyback on Registrations. Except as and to the extent specified in Schedule 7(b) hereto, neither the Company nor any of its security holders (other than the Holders in such capacity pursuant hereto) may include securities of the Company in any Registration Statement other than the Registrable Securities, and the Company shall not after the date hereof enter into any agreement providing any such right for inclusion of shares in the Registration Statement to any of its security holders. Except as and to the extent specified in Schedule 7(b) hereto, the Company has not previously entered into any agreement granting any registration rights with respect to any of its securities to any Person that have not been fully satisfied. 7 (c) Compliance. Each Holder covenants and agrees that it will comply with the prospectus delivery requirements of the Securities Act as applicable to it in connection with sales of Registrable Securities pursuant to the Registration Statement. (d) Discontinued Disposition. Each Holder agrees by its acquisition of such Registrable Securities that, upon receipt of a notice from the Company of the occurrence of a Discontinuation Event (as defined below), such Holder will forthwith discontinue disposition of such Registrable Securities under the applicable Registration Statement until such Holder's receipt of the copies of the supplemented Prospectus and/or amended Registration Statement or until it is advised in writing (the "Advice") by the Company that the use of the applicable Prospectus may be resumed, and, in either case, has received copies of any additional or supplemental filings that are incorporated or deemed to be incorporated by reference in such Prospectus or Registration Statement. The Company may provide appropriate stop orders to enforce the provisions of this paragraph. For purposes of this Section 7(d), a "Discontinuation Event" shall mean (i) when the Commission notifies the Company whether there will be a "review" of such Registration Statement and whenever the Commission comments in writing on such Registration Statement (the Company shall provide true and complete copies thereof and all written responses thereto to each of the Holders); (ii) any request by the Commission or any other Federal or state governmental authority for amendments or supplements to such Registration Statement or Prospectus or for additional information; (iii) the issuance by the Commission of any stop order suspending the effectiveness of such Registration Statement covering any or all of the Registrable Securities or the initiation of any Proceedings for that purpose; (iv) the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction, or the initiation or threatening of any Proceeding for such purpose; and/or (v) the occurrence of any event or passage of time that makes the financial statements included in such Registration Statement ineligible for inclusion therein or any statement made in such Registration Statement or Prospectus or any document incorporated or deemed to be incorporated therein by reference untrue in any material respect or that requires any revisions to such Registration Statement, Prospectus or other documents so that, in the case of such Registration Statement or Prospectus, as the case may be, it will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading. (e) Piggy-Back Registrations. If at any time during the Effectiveness Period there is not an effective Registration Statement covering all of the Registrable Securities and the Company shall determine to prepare and file with the Commission a registration statement relating to an offering for its own account or the account of others under the Securities Act of any of its equity securities, other than on Form S-4 or Form S-8 (each as promulgated under the Securities Act) or their then equivalents relating to equity securities to be issued solely in connection with any acquisition of any entity or business or equity securities issuable in connection with stock option or other employee benefit plans, then the Company shall send to each Holder written notice of such determination and, if within fifteen (15) days after receipt of such notice, any such Holder shall so request in writing, the Company shall use its best efforts to include in such registration statement all or any part of such Registrable Securities such holder requests to be registered to the extent the Company may do so without violating registration rights of others which exist as of the date of this Agreement, subject to customary underwriter cutbacks applicable to all holders of registration rights and subject to obtaining any required the consent of any selling stockholder(s) to such inclusion 8 under such registration statement. The Company shall have a right to postpone, delay or withdraw any registration pursuant to this Section 7(e) without obligation to the Holder. (f) Amendments and Waivers. The provisions of this Agreement, including the provisions of this sentence, may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given, unless the same shall be in writing and signed by the Company and the Holders of at least two-thirds (2/3) of the then outstanding Registrable Securities (without regard to any limitation on conversion or exercise of the Registrable Securities). Notwithstanding the foregoing, a waiver or consent to depart from the provisions hereof with respect to a matter that relates exclusively to the rights of certain Holders and that does not directly or indirectly affect the rights of other Holders may be given by Holders of at least a majority of the Registrable Securities to which such waiver or consent relates; provided, however, that the provisions of this sentence may not be amended, modified, or supplemented except in accordance with the provisions of the immediately preceding sentence. (g) Notices. Any notice or request hereunder may be given to the Company or the Purchasers at the respective addresses set forth in the Purchase Agreement or as may hereafter be specified in a notice designated as a change of address under this Section 7(g). Any notice or request hereunder shall be given by registered or certified mail, return receipt requested, hand delivery, overnight mail, Federal Express or other national overnight next day carrier (collectively, "Courier") or telecopy (confirmed by mail). Notices and requests shall be, in the case of those by hand delivery, deemed to have been given when delivered to any party to whom it is addressed, in the case of those by mail or overnight mail, deemed to have been given three (3) business days after the date when deposited in the mail or with the overnight mail carrier, in the case of a Courier, the next business day following timely delivery of the package with the Courier, and, in the case of a telecopy, when confirmed. (h) Successors and Assigns. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of each of the parties and shall inure to the benefit of each Holder. The Company may not assign its rights or obligations hereunder without the prior written consent of each Holder. Each Holder may assign their respective rights hereunder in connection with the transfer of the Shares or Warrants as long as: (i) the Company is, within a reasonable period of time following such transfer, furnished with written notice of the name and address of such transferee, (ii) the transferee agrees in writing with the Company to be bound by all of the provisions hereof, and (iii) such transfer is made in accordance with the applicable requirements of the Purchase Agreement and with the prior consent of the Company, which consent shall not be unreasonably withheld; provided, however, that the registration rights granted in this Agreement shall not be transferred to any person or entity that receives any Shares, Warrants or Registrable Securities in a public transaction pursuant to an effective registration statement under the Securities Act or pursuant to Rule 144. (i) Execution and Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original and, all of which taken together shall constitute one and the same Agreement. In the event that any signature is delivered by facsimile transmission, such signature shall create a valid binding obligation of the party executing (or on whose behalf such signature is executed) the same with the same force and effect as if such facsimile signature were the original thereof. 9 (j) Governing Law. All questions concerning the construction, validity, enforcement and interpretation of this Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without regard to the principles of conflicts of law thereof. Each party hereto hereby irrevocably waives personal service of process and consents to process being served in any such Proceeding by mailing a copy thereof via registered or certified mail or overnight delivery (with evidence of delivery) to such party at the address in effect for notices to it under this Agreement and agrees that such service shall constitute good and sufficient service of process and notice thereof. Nothing contained herein shall be deemed to limit in any way any right to serve process in any manner permitted by law. Each party hereto hereby irrevocably waives, to the fullest extent permitted by applicable law, any and all right to trial by jury in any legal proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. If either party shall commence a Proceeding to enforce any provisions of a Transaction Document, then the prevailing party in such Proceeding shall be reimbursed by the other party for its reasonable attorneys fees and other costs and expenses incurred with the investigation, preparation and prosecution of such Proceeding. (k) Cumulative Remedies. The remedies provided herein are cumulative and not exclusive of any remedies provided by law. (l) Severability. If any term, provision, covenant or restriction of this Agreement is held by a court of competent jurisdiction to be invalid, illegal, void or unenforceable, the remainder of the terms, provisions, covenants and restrictions set forth herein shall remain in full force and effect and shall in no way be affected, impaired or invalidated, and the parties hereto shall use their reasonable efforts to find and employ an alternative means to achieve the same or substantially the same result as that contemplated by such term, provision, covenant or restriction. It is hereby stipulated and declared to be the intention of the parties that they would have executed the remaining terms, provisions, covenants and restrictions without including any of such that may be hereafter declared invalid, illegal, void or unenforceable. (m) Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof. [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 10 IN WITNESS WHEREOF, the parties have executed this Registration Rights Agreement as of the date first written above. COMPANY: OMNI Energy Services Corp. By: /s/ G. Darcy Klug ----------------------------- Name: G. Darcy Klug Title: Executive Vice President HOLDERS: The Dennis R. Sciotto Family Trust Dated Edward E. Colson, III Trust dated December 19, 1994 January 2, 1995 By: /s/ Dennis R. Sciotto By: /s/ Edward E. Colson --------------------- --------------------- Name: Dennis R. Sciotto Name: Edward E. Colson Its: ____________________ Its: ____________________ By: /s/ Jimit Mehta By: /s/ James C. Eckert --------------------- --------------------- Jimit Mehta James C. Eckert By: /s/ G. Darcy Klug ------------------ G. Darcy Klug 11 EX-99.3 4 h25902exv99w3.txt ARTICLES OF AMENDMENT TO ARTICLES OF INCORPORATION ARTICLES OF AMENDMENT TO THE ARTICLES OF INCORPORATION OF OMNI ENERGY SERVICES CORP. Pursuant to Section 33 of the Louisiana Business Corporation Law and Article IIIB of the Articles of Incorporation, OMNI Energy Services Corp., a Louisiana corporation (the "Company"), acting through its undersigned President and Secretary, does hereby certify that the Board of Directors of the Company, pursuant to a duly called meeting of the Board of Directors on May 17, 2005 at which a quorum was present, duly adopted resolutions approving an amendment to the Company's Articles of Incorporation to add the following as Section B(III) to Article III of the Company's Articles of Incorporation: B(III). Series C 9% Convertible Preferred Stock. The Company's Series C 9% Convertible Preferred Stock, no par value per share (the "Series C Convertible Preferred Stock"), shall consist of 10,000 shares of Preferred Stock having the preferences, limitations and relative rights set forth below. Such number of shares may be increased or decreased at any time by resolution of the Board of Directors; provided, however, that no decrease shall reduce the number of shares of Series C Convertible Preferred Stock to a number less than the number of shares then outstanding plus the number of shares reserved for issuance upon the exercise of outstanding options, rights, warrants, or other securities of the Company that are convertible or exchangeable into shares of Series C Convertible Preferred Stock. Section (A). Liquidation. Upon the voluntary or involuntary liquidation, winding up or dissolution of the Company, out of the assets available for distribution to shareholders, the Series C Convertible Preferred Stock shall be entitled to receive, in preference to any payment to the holders of the Company's Common Stock and any other stock of the Company ranking junior to the Series C Convertible Preferred Stock as to dividends or the distribution of assets upon liquidation, dissolution or the winding up of the affairs of the Company (the Common Stock and any such other junior stock is referred to herein as "Junior Stock"), $1,000.00 per share plus an amount equal to all dividends (whether or not declared or due) accrued and unpaid on each such share up to the date fixed for distribution (the "Preferred Liquidation Value"). After the Preferred Liquidation Value due to the holders of the Series C Convertible Preferred Stock has been paid, the remaining assets of the Company shall be paid to the holders of Junior Stock in accordance with their respective priority, if any. In the event the net assets of the Company are insufficient to pay the holders of the Series C Convertible Preferred Stock the full amount of Preferred Liquidation Value then due, then the net assets of the Company shall be divided among and paid to the holders of the shares of Series C Convertible Preferred Stock ratably in proportion to the Preferred Liquidation Value to which each is entitled, and the holders of Junior Stock shall receive nothing. Notwithstanding anything to the contrary contained herein, the Series C Convertible Preferred Stock shall rank junior to the 29 shares of Series B 8% Convertible Preferred Stock currently outstanding as to dividends or the distribution of assets upon liquidation, dissolution or winding up of the affairs of the Company, and the 29 shares of Series B 8% Convertible Preferred Stock currently outstanding shall not be considered Junior Stock for purposes of this Section (B)(III). 1 Section (B). Dividends. (i) Subject to the prior approval of the Company's senior lender, the Series C Convertible Preferred Stock is entitled to receive, out of legally available funds, cumulative dividends from the issuance date thereof at the per share rate of NINETY DOLLARS ($90.00) per year. Dividends on the Series C Convertible Preferred Stock shall be payable in equal quarterly installments due on the first business day of each January, April, July and October while outstanding (each, a "Dividend Payment Date") commencing on July 1, 2005, to each holder of record at the start of business on such Dividend Payment Date. Dividends shall begin to accrue on outstanding shares of Series C Convertible Preferred Stock and to accumulate from the issuance date of such shares whether or not declared or due, but dividends for any period less than a full quarterly period between Dividend Payment Dates shall be computed on the basis of a 365-day year for the actual number of days elapsed. During the first two years after the issuance date of the Series C Convertible Preferred Stock and at the Company's option, any dividend may be paid, in whole or in part, in fully paid and nonassessable shares of Series C Convertible Preferred Stock having an aggregate Preferred Liquidation Value equal to the amount of the cash dividend that otherwise would have been required to be paid pursuant to this Section (B)(i); provided, however, the number of shares of Series C Convertible Preferred Stock that may be issued as a dividend upon the Company's election under this sentence will be subject to the conversion limitations set forth in Section (B)(III)(C)(iii) below. (ii) So long as any shares of Series C Convertible Preferred Stock shall be outstanding, the Company shall not, unless full cumulative dividends for all past dividend periods shall have been paid or declared and set apart for payment upon all outstanding shares of the Series C Convertible Preferred Stock, (1) declare, pay or set apart any amount for dividends on, or make any other distribution in cash or other property in respect of any shares of Junior Stock other than a dividend payable solely in Junior Stock, (2) purchase, redeem or otherwise acquire for value any shares of Junior Stock, directly or indirectly, other than as a result of reclassification of Junior Stock or the exchange or conversion of one type of Junior Stock for or into another type of Junior Stock, or other than through the use of proceeds of a substantially contemporaneous sale of other Junior Stock, or (3) make any payment on account of, or set aside money for, a sinking or other like fund for the purchase, redemption or other acquisition for value of any share of Junior Stock. Notwithstanding anything to the contrary contained herein, the Company may take any of the actions set forth in (1), (2) and (3) above with respect to the 29 shares of Series B 8% Convertible Preferred Stock currently outstanding. (iii) If the funds available for the payment of dividends are insufficient to pay in full the dividends payable on all outstanding shares of Series C Convertible Preferred Stock, the total available funds to be paid in partial dividends on the Series C Convertible Preferred Stock shall be divided ratably among the outstanding shares of Series C Convertible Preferred Stock. Accrued dividends shall not bear interest. Section (C). Conversion. The holders of the Series C Convertible Preferred Stock shall have conversion rights as follows: (i) Definitions. For purposes of this Section (C), the following definitions shall apply: 2 (1) "Conversion Price" shall mean, with respect to the Series C Convertible Preferred Stock, the price, determined pursuant to this Section (C), at which shares of Common Stock shall be deliverable upon conversion of shares of such Series C Convertible Preferred Stock into Common Stock. (2) "Issuance Date" shall mean, with respect to the Series C Convertible Preferred Stock, the first date on which the Company issues any shares of such Series C Convertible Preferred Stock. (3) "Securities Purchase Agreement" shall mean the Securities Purchase Agreement, dated as of May 17, 2005, by and between the Company and the holders of Series C Convertible Preferred Stock, and the transactions contemplated thereby. (4) "Shareholder Approval" shall mean the Securities Purchase Agreement and the Related Agreements (as defined in the Securities Purchase Agreement) are approved by the holders of a majority of the outstanding shares of capital stock of the Company entitled to vote, excluding the holders of Series C Convertible Preferred Stock. (ii) Right to Convert. Subject to the limitations set forth in subsection (iii) below, each share of Series C Convertible Preferred Stock shall be convertible, at the option of the holder thereof, at any time after its date of issuance until the close of business on the date on which such share is redeemed by the Company pursuant to Section (E), into such number of fully paid and non-assessable shares of Common Stock as determined by dividing the Preferred Liquidation Value (calculated including accumulated and unpaid dividends thereon up to the date of conversion) by the Conversion Price in effect at the time of conversion. For purposes of determining the number of shares of Common Stock into which the Series C Convertible Preferred Stock is convertible, the initial Conversion Price shall be $1.95. (iii) Restrictions on Conversion. Notwithstanding anything to the contrary contained herein, until Shareholder Approval is obtained, no holder of the Series C Convertible Preferred Stock shall be entitled to convert shares of Series C Convertible Preferred Stock, if after such conversion such holder will, with the shares issued on conversion and any other shares of the Company's capital stock held by such holder, hold more than 19.99% of the outstanding Common Stock or voting power of the Company on the date of such conversion. (iv) Mechanics of Conversion. Each holder of Series C Convertible Preferred Stock who desires to convert its shares of Series C Convertible Preferred Stock into shares of Common Stock pursuant to this Section (C) shall surrender the certificate or certificates evidencing such shares, duly endorsed, at the office of the Company or any transfer agent for the Series C Convertible Preferred Stock together with written notice stating the number of shares of Series C Convertible Preferred Stock being converted. Such conversion shall be deemed to have been made at the close of business on the date of such surrender of the certificates evidencing the shares of Series C Convertible Preferred Stock to be converted, and the person entitled to receive 3 the shares of Common Stock issuable upon such conversion shall be treated for all purposes as the record holder of such shares of Common Stock on such date. (v) Adjustments to Conversion Price. The Conversion Price for the Series C Convertible Preferred Stock shall be subject to adjustment from time to time as follows; provided, however, until Shareholder Approval is obtained, in no event shall the Conversion Price be below $1.95 other than for events described in (1) and (2) of this clause (v): (1) If after the date hereof the number of outstanding shares of Common Stock is increased by a stock dividend payable in shares of Common Stock or by a split-up of shares of Common Stock or other similar event, then, on the effective date thereof, the number of shares of Common Stock issuable upon conversion of shares of Series C Convertible Preferred Stock shall be increased in proportion to such increase in outstanding shares, and the then applicable Conversion Price shall be correspondingly decreased. (2) If after the date hereof the number of outstanding shares of Common Stock is decreased by a consolidation, combination or reclassification of shares of Common Stock or other similar event, then, upon the effective date of such consolidation, combination or reclassification, the number of shares of Common Stock issuable upon conversion of shares of Series C Convertible Preferred Stock shall be decreased in proportion to such decrease in outstanding shares, and the then applicable Conversion Price shall be correspondingly increased. (3) If after the date hereof any capital reorganization of the Common Stock of the Company, or consolidation or merger of the Company with another entity (other than a merger with a wholly-owned subsidiary of the Company or a merger in which the Company is the surviving entity), or the sale of all or substantially all of its assets to another entity or other similar event shall be effected, then as a condition of such reorganization, consolidation, merger, or sale, lawful and fair provision shall be made whereby the holders of shares of Series C Convertible Preferred Stock shall thereafter have the right to convert shares of Series C Convertible Preferred Stock and receive, upon the basis and upon the terms and conditions specified in this Section B(III) of Article III and in lieu of the shares of Common Stock of the Company immediately theretofore receivable upon the conversion of shares of Series C Convertible Preferred Stock, such shares of stock, securities, assets or other consideration as may be issued or payable with respect to or in exchange for the number of outstanding shares of such Common Stock immediately theretofore receivable upon the conversion of share of Series C Convertible Preferred Stock, had such reorganization, consolidation, merger, or sale not taken place and in such event appropriate provision shall be made with respect to the rights and interests of the holder to the end that the provisions hereof shall thereafter be applicable, as nearly as may be in relation to any share of stock, securities or assets thereafter deliverable upon the conversion of shares of Series C Convertible Preferred Stock. The Company shall not effect any consolidation, merger, or sale unless prior to the consummation thereof the successor entity (if other than the Company) resulting from such consolidation or merger, or the corporation purchasing such assets, shall assume by written instrument executed and delivered to all holders of shares of Series C Convertible 4 Preferred Stock the obligation to deliver to the holders thereof such shares of stock, securities, assets or other consideration as, in accordance with the foregoing provisions, such holders may be entitled to acquire upon conversion of shares of Series C Convertible Preferred Stock. (vi) Certificate as to Adjustments. Upon the occurrence of each adjustment or readjustment of the Conversion Price pursuant to this Section (C), the Company shall promptly compute such adjustment or readjustment in accordance with the terms hereof and furnish to each holder of Series C Convertible Preferred Stock a certificate, signed by the Company's President or Chief Financial Officer, setting forth such adjustment or readjustment and showing in detail the facts upon which such adjustment or readjustment is based. The Company shall, upon the written request of any holder of Series C Convertible Preferred Stock, furnish or cause to be furnished to such holder a like certificate setting forth (1) such adjustments and readjustments, (2) the Conversion Price at the time in effect, and (3) the number of shares of Common Stock and the amount, if any, of other property which at the time would be received upon the conversion of Series C Convertible Preferred Stock. (vii) Fractional Shares. No fractional shares of Common Stock shall be issued upon conversion of the Series C Convertible Preferred Stock, and the number of shares of Common Stock to be issued shall be rounded up to the nearest whole share. All shares of Common Stock (including fractions thereof) issuable upon conversion of more than one share of Series C Convertible Preferred Stock by a holder thereof shall be aggregated for purposes of determining whether the conversion would result in the issuance of any fractional share. (viii) No Impairment. The Company will not, by amendment of its Articles of Incorporation or through any reorganization, transfer of assets, consolidation, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek to avoid the observance or performance of any of the terms to be observed or performed hereunder by the Company but will at all times in good faith assist in the carrying out of all the provisions of this Section (C) and take all such action as may be necessary or appropriate in order to protect the conversion rights of the holders of the Series C Convertible Preferred Stock against impairment. (ix) Reservation of Common Stock Issuable upon Conversion. The Company shall at all times reserve and keep available out of its authorized but unissued shares of Common Stock solely for issuance upon the conversion of shares of Series C Convertible Preferred Stock as herein provided, such number of shares of Common Stock as, from time to time, shall be issuable upon the conversion of all the shares of the Series C Convertible Preferred Stock at the time outstanding, including shares issuable as dividends on the Series C Convertible Preferred Stock. Section (D). Voting Rights. (i) Election of Directors. So long as at least 2,000 shares of Series C Convertible Preferred Stock remain outstanding, the holders of a majority of the Series C Convertible Preferred Stock, voting as a separate class to the exclusion of all other classes of the Company's capital stock, with each share of Series C Convertible Preferred Stock entitled to one vote, shall be entitled to elect two directors to the Board of Directors to serve on the Board until 5 their successors are duly elected by the holders of the Series C Convertible Preferred Stock or they are removed from office (with or without cause) by the holders of the Series C Convertible Preferred Stock; provided, however, that one of the directors appointed by the holders of the Series C Convertible Preferred Stock shall be Dennis Sciotto or his designee. Such right can be exercised at a special meeting of the holders of Series C Convertible Preferred Stock, at any annual or other special meeting of stockholders and, to the extent and in the manner permitted by applicable law, pursuant to a written consent in lieu of a stockholders meeting. If the holders of the Series C Convertible Preferred Stock for any reason fail to elect anyone to fill any such directorship, such position shall remain vacant until such time as the holders of the Series C Convertible Preferred Stock elect a director to fill such position and shall not be filled by resolution or vote of the Board or the Company's other stockholders. (ii) Other Voting Rights. Except as set forth in this Section (D) or as otherwise required by Louisiana law, holders of shares of Series C Convertible Preferred Stock shall not be entitled to vote as a separate class, but shall vote together with the holders of shares of all other classes of capital stock of the Company having general voting powers as one class, on all matters submitted to a vote of the Company's shareholders. Each holder of outstanding shares of Series C Convertible Preferred Stock shall be entitled to the number of votes equal to the number of whole shares of Common Stock into which such shares of Series C Convertible Preferred Stock are convertible (as adjusted from time to time pursuant to Section C), at the record date for the determination of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is first executed; provided, however, until Shareholder Approval is obtained, the holders of Series C Convertible Preferred Stock shall not have voting rights that exceed 19.99% of the Common Stock of the Company outstanding at the record date for the determination of the shareholders entitled to vote on such matters or, if no such record date is established, at the date such vote is taken or any written consent of shareholders is first executed. In all cases where the holders of shares of Series C Convertible Preferred Stock have the right to vote separately as a class as required by Louisiana law, such holders shall be entitled to one vote for each such share held by them respectively. (iii) Without the affirmative vote of the holders of not less than a majority of the shares of Series C Convertible Preferred Stock, voting together as a single class, the Company shall not: (1) amend its Articles of Incorporation or any other document to alter or change any rights, preferences or privileges of the Series C Convertible Preferred Stock. (2) authorize another class or series of shares senior to or ranking pari passu with the Series C Convertible Preferred Stock with respect to dividends or distribution of assets on liquidation, dissolution or the winding up of the affairs of the Company; (3) so long as at least 2,000 shares of Series C Convertible Preferred Stock remain outstanding, increase the number of persons on the Board of Directors above six (6); 6 (4) purchase, redeem or otherwise acquire any Junior Stock, either directly or through a subsidiary. The Company may purchase, redeem or otherwise acquire the 29 shares of Series B 8% Convertible Preferred Stock currently outstanding without receiving the prior approval of the holders of Series C Convertible Preferred Stock; or (5) so long as at least 2,000 shares of Series C Convertible Preferred Stock remain outstanding, sell, grant any option to purchase, or otherwise issue any Common Stock or any equity or equity equivalent securities (including any equity, debt or other instrument that is at any time over the life thereof is convertible into or exchangeable for Common Stock) entitling any person, other than the holders of the Series C Convertible Preferred Stock or any Excluded Securities (as hereinafter defined), to acquire shares of Common Stock at an effective price per share less than $1.95. For purposes hereof, "Excluded Securities" means (1) securities purchased under the Securities Purchase Agreement; (2) securities issued upon conversion or exercise of the Series C Convertible Preferred Stock or the Warrants (as defined in the Securities Purchase Agreement); (3) shares of Common Stock issuable or issued to employees, consultants or directors from time to time upon the exercise of options, in such case granted or to be granted in the discretion of the Board of Directors pursuant to one or more stock option plans or restricted stock plans in effect; (4) shares of Common Stock issued in connection with any stock split, stock dividend or recapitalization of the Company; (5) securities issued upon conversion of outstanding shares of Series B 8% Convertible Preferred Stock, provided that the terms of such preferred stock have not been amended since the date hereof; (6) securities issued upon conversion or exercise of Debentures or Warrants issued under the Securities Purchase Agreement, dated as of February 12, 2004, between the Company and the Investors named therein and the Securities Purchase Agreement, dated as of April 15, 2004, between the Company and the Investors named therein, each as amended, modified and supplemented; (7) 361,800 shares (200,000 shares to James C. Eckert and 161,800 shares to G. Darcy Klug) and 100,000 options (40,000 options to James C. Eckert and 60,000 options to G. Darcy Klug); and (8) 2,924,424 shares issuable upon exercise of the currently outstanding warrants and "investor options" listed on Schedule 1 to the Warrants (as defined in the Securities Purchase Agreement). Section (E). Redemption. (i) Beginning on May 17, 2009 and at any time thereafter, the Company shall have the right, at any time and at its sole option and election, to redeem the shares of Series C Convertible Preferred Stock, in whole or in part, on such date as may be specified in a notice of redemption given in accordance with Section (E)(ii) (any such date a "Redemption Date") at a price per share (the "Redemption Price") equal to 100% of the Preferred Liquidation Value (which includes accrued dividends thereon, whether or not declared or due, to the applicable Redemption Date) in immediately available funds. (ii) Notice of any redemption of shares of Series C Convertible Preferred Stock shall be mailed at least thirty (30), but not more than sixty (60), days prior to the applicable Redemption Date to each holder of the shares of Series C Convertible Preferred Stock 7 to be redeemed, at such holder's address as it appears on the transfer books of the Company. In order to facilitate the redemption of shares of Series C Convertible Preferred Stock, the Board of Directors may fix a record date for the determination of shares of Series C Convertible Preferred Stock to be redeemed, or may cause the transfer books of the Company for the Series C Convertible Preferred Stock to be closed, not more than sixty (60) days or less than ten (10) days prior to the applicable Redemption Date. (iii) Notice of redemption having been given as provided in Section (E)(ii), notwithstanding that any certificates for such shares shall not have been surrendered for cancellation, from and after the Redemption Date designated in the notice of redemption (1) the shares represented thereby shall no longer be deemed outstanding, (2) the rights to receive dividends thereon shall cease to accrue and (3) all rights of the holders of shares of Series C Convertible Preferred Stock to be redeemed shall cease and terminate, excepting only the right to receive the Redemption Price therefore and the right to convert such shares into shares of Common Stock (or other series of Preferred Stock) until the close of business on the applicable Redemption Date, in accordance with Section (C) hereof. Section (F). Put Option by James C. Eckert and G. Darcy Klug. If James C. Eckert's or G. Darcy Klug's employment is terminated by the Company (each a "Terminated Employee") without Cause (as defined in their respective Employment Agreements) after the date hereof, such Terminated Employee may exercise, upon written notice to the Company within sixty (60) days after such termination, his option to put all or any part of his shares of Series C Convertible Preferred Stock to the Company, and the Company, if legally able to do so, must purchase such shares of Series C Convertible Preferred Stock put to the Company for a price per share (the "Put Price") equal to 100% of the Preferred Liquidation Value (which includes accrued dividends thereon, whether or not declared or due, to the applicable put date) on the Terminated Employee's termination date. If the Company is not legally able to purchase such shares, the Company shall purchase all shares of Series C Convertible Preferred Stock it can legally purchase and the obligation of the Company to purchase the balance of the shares put to the Company shall continue until such time as the Company can legally purchase such balance with the purchase price for such balance to be the Put Price on the date of actual purchase (rather than the Terminated Employee's termination date). The closing of any purchase and sale of shares of Series C Convertible Preferred Stock pursuant to this Section (F) shall occur within thirty (30) days following the date that the Company receives notice from a Terminated Employee under this Section (F), unless a later time is required because the Company is not legally able to purchase such shares. At the closing, the Terminated Employee shall deliver and transfer the shares of Series C Convertible Preferred Stock of such Terminated Employee put to the Company subject to customary representations and warranties as to ownership, title, authority to sell and the like from the Terminated Employee regarding such shares. The Company shall pay the Put Price for the shares of Series C Convertible Preferred Stock purchased under this Section (F) in cash by check or wire transfer of funds. Section (G) Reacquired Shares. Any shares of Series C Convertible Preferred Stock converted, exchanged, redeemed, purchased or otherwise acquired by the Company in any manner whatsoever shall be retired and canceled promptly after the acquisition thereof. No such shares shall be reissued. 8 Section (H). Preemptive Rights. Except as provided herein, the Series C Convertible Preferred Stock is not entitled to any preemptive rights in respect of any securities of the Company. Section (I). Amendment and Waiver. The Company may not amend this Section (B)(III) of its Articles of Incorporation or waive compliance with any of the provisions hereof without, in either instance, the affirmative vote (at a meeting) or the written consent (with or without a meeting) of the holders of a majority of the shares of Series C Convertible Preferred Stock; provided that no such action will change the dividend rate, the Preferred Liquidation Value, the Conversion Price or the amount payable on redemption of the Series C Convertible Preferred Stock without the prior written consent of each holder of Series C Convertible Preferred Stock. Section (J). Severability of Provisions. Whenever possible, each provision hereof shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. 9 These Articles of Amendment are executed as of the 17th day of May, 2005. OMNI ENERGY SERVICES CORP. By: /s/ James C. Eckert -------------------------------------- James C. Eckert, President By: /s/ Staci L. Marcelissen -------------------------------------- Staci L. Marcelissen, Secretary 10 -----END PRIVACY-ENHANCED MESSAGE-----