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Exhibit 10.9
LOAN AGREEMENT
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This LOAN AGREEMENT is entered into as of October 16, 1996, by
and among XXXXXXX ASSOCIATES, L.P., a Delaware limited partnership with offices
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Xxxxxxx"); WESTGATE
INTERNATIONAL, L.P., a Cayman Islands limited partnership with offices at c/o
Midland Bank Trust Corporation (Cayman) Limited, Xxxx Street, Grand Cayman,
Cayman Islands, BWI ("Westgate"); SOLID STATE GEOPHYSICAL INC., a corporation
organized under the laws of Alberta, Canada, with offices located at 0000 Xxxxx
Xxxx X.X., Xxxxxxx, Xxxxxxx X0X 163 ("Parent"); and SOLID STATE GEOPHYSICAL
CORP., a Colorado corporation with offices at 0000 Xxxxx Xxxxx Xxx, Xxxx X,
Xxxxxxxxx, Xxxxxxxx 00000 ("Borrower"). Xxxxxxx and Westgate are referred to
collectively hereinafter as the "Lenders."
W I T N E S S E T H:
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WHEREAS, Borrower and Parent desire to enter into certain
financing transactions with Lenders and Lenders desire to enter into such
transactions with Borrower and Parent as more specifically described herein; and
WHEREAS, contemporaneously with the execution of this Loan
Agreement, shares of common stock of Parent are being issued to Xxxxxxx in a
private placement in the aggregate amount equivalent to $3,000,000 pursuant to a
Subscription Agreement of even date among Parent and Lenders (the "Subscription
Agreement"); and
WHEREAS, the Parent is to make a rights offering to its
shareholders to produce proceeds equivalent to $4,000,000 (the "Rights
Offering");
NOW, THEREFORE, in consideration of the mutual promises and
covenants contained herein, Borrower, Parent and Lenders hereby agree as
follows:
SECTION I: DEFINITIONS
1.1 DEFINITIONS. The following words shall have the following
meanings when used in this Loan Agreement. Terms not otherwise defined in this
Loan Agreement shall have the meanings attributed to such terms in the New York
Uniform Commercial Code (as amended from time to time). All references to dollar
amounts shall mean amounts in lawful money of the United States of America.
"ATCHAFALAVA DATA BANK" means the seismic data relating to the
Louisiana Accounts.
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"CANADIAN DATA BANK" means the seismic data relating to the
Canadian Accounts.
"CANADIAN ACCOUNTS" shall mean all presently existing and
hereafter arising accounts, contract rights and all other
forms of obligations arising out of the sale of assets and/or
the rendition of services, in each case related to the
gathering of seismic data in Canada pursuant to the agreements
described on Schedule 1.1 and also at the Doig River and
Xxxxxx Creek locations.
"CHANGE OF CONTROL" shall mean (i) a substantial change in the
senior management of Parent; (ii) in excess of one-half of the
current members of the board of directors of Parent ceasing to
serve as directors over any twelve-month period; or (iii) any
person, or any persons acting together which, if U.S. law were
applicable, would constitute a group" for purposes of Section
13(d) of the U.S. Securities Exchange Act (excluding the
Parent and Borrower themselves), together with any affiliates
thereof, shall beneficially own (as defined in Rule 13d-3
under such Act) at least 50% of the total voting power of all
classes of capital stock of Parent or Borrower entitled to
vote generally in the election of directors.
"CLOSING DATE" shall mean the date of the Closing hereunder,
as provided in Section 6.4 below.
"DOLLARS" or "$" means U.S. dollars, unless otherwise
specified.
"EVENT OF DEFAULT" means and includes any of the Events of
Default set forth in Section 7.1.
"EXISTING DEBENTURE" means the subordinated convertible
debenture dated April 23, 1996 and issued in the name of
Lenders.
"EXISTING NOTES" means the two promissory notes from Borrower
to Westgate dated April 23, 1996 and September 16, 1996, and
payable on December 31, 1996 in the aggregate outstanding
principal amount of $4,000,000.
"HK BANK" shall mean Hongkong Bank of Canada.
"INDEBTEDNESS" means and includes without limitation all
Loans, and all other loans, advances, principal, interest,
premiums, fees, guaranties, obligations, debts, liabilities,
covenants and duties owing by Borrower and/or Parent to
Lenders (as well as all claims by Lenders against Borrower
and/or Parent relating to or arising from the transactions
contemplated by this Loan Agreement) of any kind, nature, or
description (i) whether now or hereafter existing, direct or
indirect, voluntary or involuntary, due or not due, absolute
or contingent, liquidated or unliquidated, (ii) whether
Borrower and/or Parent may be liable individually or jointly
with others, (iii) whether Borrower and/or Parent may be
obligated as a guarantor, surety, or otherwise, (iv) whether
recovery upon such Indebtedness may be or hereafter may become
barred by any statute of limitations, (v) whether such
Indebtedness may be or hereafter may become otherwise
unenforceable,
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and (vi) whether pursuant to or evidenced by this Loan
Agreement or the Related Documents, by any note or other
instrument, or by any other agreement between Lenders and
Borrower and/or Parent, irrespective of whether for the
payment of money.
"INSOLVENCY PROCEEDING" means any proceeding commenced by or
against any Person under any provision of the bankruptcy laws
of Canada, the United States or any province or state thereof,
as amended, or under any other bankruptcy or insolvency law,
including assignments for the benefit of creditors, formal or
informal moratoria, compositions, extensions generally with
its creditors, or proceedings seeking reorganization,
arrangement, or other similar relief.
"LOAN" or "LOANS" means and includes any and all loans and
financial accommodations from Lenders to Borrower and/or
Parent related to or arising out of the loan transactions
contemplated by this Loan Agreement, whether now or hereafter
existing, and however evidenced, including without limitation
the Senior Secured Debt Facility.
"LOAN AGREEMENT" means this Loan Agreement as this Loan
Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Loan
Agreement from time to time.
"LOUISIANA ACCOUNTS" means all presently existing and
hereafter arising accounts, contract rights, and all other
forms of obligations owing to Borrower pursuant to the Asset
Purchase Agreement dated February 23, 1996 between Ceco-Prakla
and Borrower, as the same may be amended or modified, arising
out of the sale of assets and/or the rendition of services by
Borrower or Parent (the "Geco- Prakla Agreement").
"MATURITY DATE" means October 30, 1999 or such other date as
may be mutually agreed upon in writing by all of the parties
hereto as the date for repayment in full of the Senior Secured
Debt Facility (subject to required prepayments under certain
circumstances).
"NEW NOTES" means the two promissory notes of even date from
Borrower to Lenders payable in the aggregate outstanding
principal amount of $9,000,000, in the forms of Exhibits A-1
and A-2 annexed.
"PERMITTED LIENS" shall have the meaning set forth in Section
4.1(e).
"PERSON" means and includes natural persons, corporations,
limited partnerships, general partnerships, joint stock
companies, joint ventures, associations, companies, trusts,
banks, trust companies, land trusts, business trusts, or other
organizations, irrespective of whether they are legal
entities, and governments and agencies and political
subdivisions thereof.
"RELATED DOCUMENTS" means and includes without limitation all
promissory notes, debentures, credit agreements, loan
agreements, guaranties, security agreements, lockbox
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agreements, assignments, collateral assignments and all other
instruments, agreements and documents, whether now or
hereafter existing, executed in connection with the
Indebtedness.
"RIGHTS OFFERING" shall have the meaning ascribed thereto in
the Subscription Agreement.
"SECURITY AGREEMENT" means and includes without limitation any
agreements, promises, covenants, arrangements, understandings
or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a
Security Interest.
"SECURITY INTEREST" means and includes without limitation any
type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel
mortgage, chattel trust, factor's lien, equipment trust,
conditional sale, trust receipt, lien or title retention
contract, lease or consignment intended as a security device,
or any other security or lien interest whatsoever, whether
created by law, contract, or otherwise.
"SENIOR SECURED DEBT FACILITY" shall mean the loan facility
described in Section 2.2.
"SOLVENT" means, with respect to any Person on a particular
date, that on such date (i) at fair valuations, all of the
assets of such Person are greater than the sum of the debts,
including contingent liabilities, of such Person, (ii) the
present fair salable value of the assets of such person is not
less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute
and matured, (iii) such Person does not intend to, and does
not believe that it will, incur additional debts beyond such
Person's ability to pay as such debts mature, and (iv) such
Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such
Person's assets would constitute unreasonably small capital
after giving due consideration to the prevailing practices in
the industry in which such Person is engaged. In computing the
amount of contingent liabilities at any time, it is intended
that such liabilities will be computed at the amount that, in
light of all the facts and circumstances existing at such
time, represents the amount that can reasonably be expected to
become an actual or matured liability.
SECTION 2:
SENIOR SECURED DEBT FACILITY: TERMS OF PAYMENT
2.1 Preamble. Borrower has requested that Lenders provide to
it loans and other financial accommodations and, subject to the terms and
conditions hereof and the Related Documents, Lenders have agreed to make such
loans to Borrower for such purposes as provided for herein. Borrower understands
and agrees that: (i) in granting, renewing, or extending any loan under this
Loan Agreement, Lenders are relying upon Borrower's and Parent's
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representations, warranties, and agreements, as set forth in this Loan
Agreement, and (ii) all such loans shall be and shall remain subject to
the terms and conditions of this Loan Agreement.
2.2 SENIOR SECURED DEBT FACILITY; ADVANCES AND REPAYMENTS.
(a) Senior Secured Debt Facility. On the date hereof,
Xxxxxxx agrees to lend to Borrower the sum of $5,400,000, and
Westgate agrees to lend to Borrower the sum of $3,600,000,
disbursed in accordance with the terms hereof and the terms of
the New Notes, which amounts (collectively, the "Senior
Secured Debt Amount") shall be repaid on the Maturity Date.
Simultaneously herewith, Lenders shall deliver the Senior
Secured Debt Amount by wire transfer to an account designated
by Borrower, and the Borrower shall deliver to Lenders the New
Notes duly executed and the documents required under Section
6. The Senior Secured Debt Amount shall be increased to
provide for the funding of Lenders' fees and costs incurred in
connection herewith which are unpaid as of the Closing Date.
The loan made pursuant to this subsection shall be referred to
in this Loan Agreement as the "Senior Secured Debt Facility."
(b) Mandatory Prepayments.
Until the New Notes are paid in full:
(i) Within five (5) days after Borrower's
(or Parent's) receipt of any proceeds with respect to
the Louisiana Accounts (excluding the $625,000 of
Louisiana Accounts owed to Borrower by Texaco with
respect to which Westgate previously released its
security interest) or Canadian Accounts, Borrower
and/or Parent shall pay over such proceeds to Lenders
as a prepayment under the New Notes.
(ii) On each anniversary hereof, Borrower
shall pay to Lenders (on a proportionate basis) the
aggregate sum of the excess, if any, of (A)
$1,000,000 over (B) the aggregate sum paid to Lenders
under the preceding clause (i) during the preceding
twelve-month period (excluding from such aggregate
sum referred to in this subclause (B) for purposes of
this clause (ii) only, all proceeds of Louisiana
Accounts and/or Canadian Accounts created prior to
the Closing Date but collected thereafter), which
payments shall be applied to the outstanding
principal balance of the New Notes.
(iii) Within five (5) days after the closing
of the Rights Offering, Borrower and/or Parent shall
pay to Lenders (on a proportionate basis) an amount
equal to all of the net proceeds thereof, which
payment shall be applied to the outstanding principal
balance of the New Notes.
(c) Use of Proceeds. Borrower shall use the proceeds
of the Senior Secured Debt Facility (i) first for the
immediate re-payment of the entire outstanding principal
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amount under the Existing Notes, together with accrued
interest and applicable fees, payable as of the Closing Date
and (ii) the balance for purposes of working capital for
Borrower and Parent, to pay down debt and to fund maintenance
capital expenditures and for the payment of all fees and
expenses as provided in Section 3.
2.3 INTEREST ON SENIOR SECURED DEBT FACILITY.
(a) Interest. The outstanding principal balance of the New
Notes shall initially bear interest at a rate equal to eighteen percent
(18%) per annum. After completion of the Rights Offering (and provided
that at least $4,000,000 in proceeds is raised by Parent in the Rights
Offering), the principal balance of the Indebtedness shall thereafter
bear interest at the rate of fifteen percent (15%) per annum. Interest
shall be calculated on the basis of a year consisting of 365 days and
paid for the actual number of days elapsed. Interest due under this
subsection 2.3(a) shall be payable quarterly, in arrears, on each July
1, October 1, January 1 and April 1.
(b) Overdue Interest; Default Rate. Overdue interest shall
itself bear interest at eighteen percent (18%) per annum, both before
and after the applicable Maturity Date.
2.4 TERM. This Loan Agreement shall be effective upon the
execution and delivery hereof by Borrower, Parent and Lenders, and shall
continue in full force and effect hereafter until all Indebtedness of Borrower
to Lenders has been repaid in full or this Loan Agreement is terminated by
Lenders as otherwise provided for herein. Notwithstanding the foregoing, Lenders
shall have the right to terminate their obligations hereunder immediately and
without notice upon the occurrence and continuance of an Event of Default. On
the date of termination, all Indebtedness shall become immediately due and
payable without notice or demand. No termination of this Loan Agreement,
however, shall relieve or discharge Borrower or Parent of their duties,
Indebtedness, or covenants hereunder, and Lenders' continuing security interest
in any collateral shall remain in effect until all Indebtedness has been
discharged.
2.5 PARTICIPATION RIGHT. Lenders shall have the following
rights with respect to any sale or issuance of any debt securities (including,
without limitation convertible debt securities) or any loan or similar financing
obtained by Parent or its subsidiaries in one transaction or a series of related
transactions in excess of $500,000 for a period of three (3) years from the date
hereof. Parent shall give the Lenders written notice of any such proposal to
issue debt securities or obtain financing and shall provide with such notice
copies of the applicable unsigned letter of intent or commitment letter, with
the economic terms of the transaction specified. Each Lender shall have three
(3) business days from receipt of such notice to deliver a written notice to
Parent that such Lender wishes to enter into such transaction, in whole or in
part, in lieu of the applicable third party(ies). Failure by such Lender to
respond within such period shall be deemed an irrevocable waiver of its rights
pursuant to this Section. If such Lender exercises such right, it must close the
transactions contemplated by the proposed issuance within thirty (30) business
days of the exercise of its right hereunder, provided that neither Parent nor
any of its subsidiaries delays such closing in any way. If such Lender fails to
close the transaction for any reason other than a breach by Parent or any of its
subsidiaries of its obligations hereunder, such Lender's right shall terminate
as to that transaction.
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SECTION 3: FEES AND EXPENSES
With respect to the Senior Secured Debt Facility, Borrower
shall assume and pay to Lenders upon demand all ordinary and necessary costs and
expenses incurred by Lenders in connection with the preparation and negotiation
of loan documents, the creation of the Senior Secured Debt Facility, due
diligence and the protection, administration and enforcement of Lenders' rights
granted under this Loan Agreement and the Related Documents, including without
limitation the following: (a) $2,000 for expenditures incurred in connection
with the further investigation of Borrower and Parent on behalf of the Lenders,
(b) all closing costs, fees and disbursements, and (c) all reasonable fees and
expenses of Lenders' legal counsel. Borrower and Parent shall further be
responsible for and reimburse Lenders or pay for all expenses pursuant to
Section 8.4 below. If not paid on demand or if mutually agreed upon, the amount
of such fees and expenses shall be added to the principal amount of the New
Notes. In the event the Borrower or Parent elects not to consummate the
transactions contemplated by this Loan Agreement and the Related Documents,
Borrower and/or Parent shall nevertheless reimburse Lenders for reasonable fees
and expenses of Lender's legal counsel, due diligence and other costs and
expenses incurred through the date on which Lenders are informed of such
election by Borrower and/or Parent.
SECTION 4: BORROWER'S AND PARENT'S
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES. Borrower and Parent,
jointly and severally, represent and warrant to Lenders (and their successors
and assigns), as of the date of this Loan Agreement, that:
(a) Organization. The Borrower is, and shall at all
times hereafter be, a corporation which is duly organized,
validly existing, and in good standing under the laws of
Colorado. The Parent is, and shall at all times hereafter be,
a corporation which is duly organized, validly existing, and
in good standing under the laws of Alberta. Each of Borrower
and Parent has the full power and authority to own its
properties and to transact the business in which it is
presently engaged or presently proposes to engage. Each of
Borrower, Parent and each of Parent's other direct and
indirect subsidiaries is duly qualified as a foreign
corporation and is in good standing in all jurisdictions and
territories in which the failure to so qualify would have a
material adverse effect on its business or financial
condition.
(b) Authorization. The execution, delivery, and
performance of this Loan Agreement and all Related Documents
and the transactions contemplated hereby and thereby by each
of Borrower and Parent have been duly authorized by all
necessary action by Borrower and Parent; do not require the
consent or approval of any other Person, regulatory or
judicial authority or governmental body which has not been
obtained (excluding HK Bank and Input/Output Inc.); and do not
conflict with, result in
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a breach or violation of, or constitute a default under (i)
any provision of its articles of incorporation or
organization, or bylaws, or (subject to the required consent
of HK Bank and Input/Output Inc.) any agreement or other
instrument binding upon Borrower and Parent or (ii) any law,
governmental regulation, court decree, or order applicable to
Borrower or Parent.
(c) Financial Information. The financial statements
of Parent included within Parent's Annual Report for 1995
(audited) and subsequent third quarter report (unaudited)
dated May 31, 1996 present fairly Parent's financial condition
as of the dates of such statements, and contain no material
misstatements or omissions, and there has been no material
adverse change in Parent's financial condition subsequent to
such third quarter financial statements except as disclosed on
Schedule 4.1(o). Such financial statements have been prepared
in accordance with generally accepted accounting principles
consistently applied. Neither Borrower nor Parent has any
material contingent obligations except as disclosed in such
financial statements. Borrower's most recent public securities
filings have been delivered to Lenders and are true, accurate
and complete.
(d) Legal Effect. This Loan Agreement constitutes,
and any instrument or agreement required hereunder to be given
by Borrower or Parent when delivered will constitute, legal,
valid and binding obligations of Borrower and Parent,
enforceable against them in accordance with their respective
terms, subject to applicable bankruptcy and insolvency laws.
(e) Properties. Except for (a) liens for unpaid taxes
that are not yet due and payable, (b) purchase money security
interests and liens of lessors under capitalized leases, so
long as each such security interest or lien only secures the
purchase price of the asset, (c) liens and security interests
set forth on the attached Schedule 4. 1(e), (clauses (a), (b)
and (c) collectively hereinafter referred to as "Permitted
Liens"), each of Borrower and Parent owns and has good title
to all of its properties free and clear of all Security
Interests, liens, claims and other encumbrances, and has not
executed any security documents or financing statements
relating to such properties. All of Borrower's and Parent's
properties are titled in their legal names. Neither Borrower
nor Parent has used, or filed a financing statement (or other
evidence of a lien, charge or Security Interest) under, any
other names in any jurisdiction or territory for at least the
last five (5) years, other than "Solid State Exploration Ltd."
(f) Litigation and Claims. No litigation or claim
(including those for unpaid taxes) against Borrower and Parent
is pending or threatened, and no other event has occurred
which may materially adversely affect Borrower's or Parent's
financial condition or properties, other than litigation,
claims, or other events, if any, that are described on
Schedule 4. 1(f) annexed hereto.
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(g) Taxes. All tax returns and reports of Borrower
and Parent that are or were required to be filed, have been
filed, and all taxes, assessments and other governmental
charges have been paid in full.
(h) Lien Priority. Except for Permitted Liens,
neither Borrower nor Parent has entered into or granted any
Security Agreements, or permitted the filing or attachment of
any Security Interests on or affecting the Atchafalaya or
Canadian Data Bank or the Louisiana Accounts or Canadian
Accounts that would be prior or that may in any way be
superior to Lenders' Security Interests and rights in and to
such Collateral. At Closing, HK Bank shall subordinate to
Lenders all of its rights with regard to the Atchafalaya and
Canadian Data Banks and the Louisiana Accounts and Canadian
Accounts.
(i) Insolvency. Upon the closing under the
Subscription Agreement of even date, each of Borrower and
Parent will be Solvent. No transfer of property is being made
by Borrower or Parent and no obligation is being incurred by
Borrower or Parent in connection with the transactions
contemplated by this Loan Agreement or Related Documents with
the intent to hinder, delay, or defraud either present or
future creditors of Borrower or Parent.
(j) Investment Company Act/PUHCA. Neither Borrower
nor Parent is an "investment company" or a company
"controlled" by an "investment company", within the meaning of
the Investment Company Act of 1940, as amended. Neither
Borrower nor Parent is a "holding company," or a "subsidiary
company" of a "holding company or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company,"
within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
(k) Regulations G, T and U. Neither Borrower nor
Parent is engaged principally, or as one of its important
activities, in the business of extending credit for the
purpose of purchasing or carrying margin stock (within the
meaning of Regulations G, T and U of the Board of Governors of
the Federal Reserve System).
(l) Environmental Compliance. Borrower and Parent are
in compliance in all material respects with all applicable
environmental laws and regulations.
(m) Location of aces and Records. The chief place of
business of Borrower and Parent, respectively, and the offices
where Borrower and Parent keep their records concerning their
business activities are located only at the principal offices
described in the first paragraph of this Loan Agreement.
(n) Information. All information heretofore or
contemporaneously herewith furnished by Borrower or Parent to
Lenders for the purposes of or in connection with this Loan
Agreement or any transaction contemplated hereby is, and all
information
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hereafter furnished by or on behalf of Borrower or Parent to
Lenders will be, true and accurate in every material respect
on the date as of which such information is dated or
certified. None of such information is or will be incomplete
by omitting to state any material fact necessary to make such
information not misleading. None of such information would
constitute a "material fact" or "material change" within the
meaning of applicable Alberta securities legislation with
respect to Parent that has not been generally disclosed.
(o) No Material Adverse Change. Since August 31,
1995, there has been no material adverse change in Borrower's,
Parent's or their affiliates' business, operations or
prospects, except as disclosed in Schedule 4. 1(o).
(p) No Event of Default. There will exist no Event of
Default upon the execution and delivery of this Loan
Agreement, and no facts or circumstances currently exist which
with notice or the passage of time or both would constitute an
Event of Default.
(q) Collected Accounts. Since July 2, 1996, Borrower
and Parent have made no sales giving rise to, and have
collected no monies with respect to, the Louisiana Accounts
and Canadian Accounts.
(r) No Canadian Activities. Borrower (i) does not
carry on business principally in Canada, or (ii) operate an
oil or gas well in Canada or extract petroleum or natural gas
from a natural accumulation thereof in Canada, or (iii)
extract minerals from a mineral resource in Canada.
4.2 SURVIVAL OF REPRESENTATIONS AND WARRANTIES;
APPLICATION. Borrower and Parent understand and agree that
Lenders are relying upon the above representations and
warranties in making Loans hereunder. Borrower and Parent
further agree that the foregoing representations and
warranties shall be continuing in nature and shall remain in
full force and effect until such time as the Loans and the New
Notes shall be paid in full, or until this Loan Agreement
shall be terminated in the manner provided above whichever is
the last to occur.
SECTION 5: BORROWER'S AND PARENT'S COVENANTS
5.1 AFFIRMATIVE COVENANTS. Each of Borrower and Parent
covenants and agrees with Lenders that, while this Loan Agreement is in effect,
each shall:
(a) Information on Adverse Changes. Upon Lenders'
request, promptly inform Lenders in writing of (i) all
material adverse changes in Borrower's or Parent's financial
condition, (ii) all litigation and claims and all threatened
litigation and claims and all matters affecting Borrower or
Parent which could materially adversely affect the
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financial condition of Borrower or Parent, and (iii) any
event, occurrence or other matter which has had a materially
adverse effect or which could have a materially adverse effect
on the Atchafalaya and Canadian Data Banks, the Louisiana
Accounts or the Canadian Accounts. Borrower and Parent shall
assist Lenders in any litigation involving Lenders with
respect to any of the Louisiana Accounts or Canadian Accounts.
(b) Financial Records. Maintain its books and records
in accordance with generally accepted accounting principles,
applied on a consistent basis, and permit Lenders to examine
and audit Borrower's and Parent's books and records at
Lenders' discretion.
(c) Financial Statements. If requested by Lenders,
furnish Lenders with, as soon as available, but in no event
later than thirty (30) days after the end of each month,
Borrower's and Parent's balance sheet, profit and loss
statement and accounts receivable aging report each for the
period ended, prepared and certified as correct to the best
knowledge and belief by Borrower's and Parent's chief
financial officer or other officer or person acceptable to
Lenders. All financial reports required to be provided under
this Loan Agreement shall be prepared in accordance with
generally accepted accounting principles, applied on a
consistent basis, and certified by Borrower and Parent as
being true and correct.
(d) Additional Information. Furnish such additional
information and statements, lists of assets and liabilities,
agings of receivables and payables, schedules, budgets,
forecasts, tax returns, and other reports with respect to
Borrower's and Parent's financial condition and business
operations as Lenders may reasonably request from time to
time.
(e) Insurance. Maintain, or cause to be maintained,
fire and other risk insurance, public liability insurance, and
such other insurance as Lenders may reasonably require in
accordance with industry standards with respect to Borrower's
and Parent's properties and operations, in form, amounts,
coverages and with insurance companies reasonably acceptable
to Lenders. Borrower and Parent, upon request of Lenders, will
deliver to Lenders from time to time the policies or
certificates of insurance in form satisfactory to Lenders,
including stipulations that coverages will not be cancelled or
diminished without at least ten (10) days prior written notice
to Lenders.
(f) Insurance Reports. Furnish to Lenders, upon their
request, reports on each existing insurance policy showing
such information as Lenders may reasonably request, including
without limitation, the following: (i) the name of the
insurer; (ii) the risks insured; (iii) the amount of the
policy; (iv) the properties insured; (v) the then current
property values on the basis of which insurance has been
obtained, and the manner of determining those values; and (vi)
the expiration date of the policy.
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(g) Other Agreements. Comply with all material terms
and conditions of all other agreements, whether now or
hereafter existing, between Borrower (and/or Parent or other
affiliate) and any other party and notify Lenders immediately
in writing of any material default in connection with any
other such agreements.
(h) Loan Proceeds. Use all Loan proceeds solely as
provided for herein.
(i) Taxes, Charges and Liens.
(i) Pay and discharge when due all of their
indebtedness and obligations, including without
limitation all assessments, taxes, governmental
charges, levies and liens, of every kind and nature,
imposed upon Borrower or Parent, or their properties,
income, or profits, prior to the date on which
penalties would attach, and all lawful claims that,
if unpaid, might become a lien or charge upon any of
Borrower's or Parent's properties, income, or
profits. Provided, however, Borrower and Parent will
not be required to pay and discharge any such
assessment, tax, charge, xxxx, xxxx or claim so long
as (A) the legality of the same shall be promptly
contested in good faith by appropriate proceedings,
and (B) Borrower or Parent shall have established on
its books adequate reserves with respect to such
contested assessment, tax, charge, levy, lien, or
claim in accordance with generally accepted
accounting practices. Borrower and Parent, upon
demand of Lenders, will furnish to Lenders evidence
of payment of the assessments, taxes, charges,
levies, liens and claims and will authorize the
appropriate governmental official to deliver to
Lenders at any time a written statement of any
assessments, taxes, charges, levies, liens and claims
against Borrower's or Parent's properties, income, or
profits.
(ii) Take all reasonable steps necessary to
remove all claims of liens (excluding Permitted
Liens) against the Atchafalaya and Canadian Data
Banks, Louisiana Accounts and Canadian Accounts or
any part thereof or any rights or interests therein.
(iii) Promptly file all tax returns and
reports which are overdue as of the date hereof, if
any, in all applicable jurisdictions and promptly
provide Lenders with a copy thereof together with
evidence of such filing and payment of all taxes
shown to be due on such tax returns.
(j) Performance. Perform and comply with all terms,
conditions, and provisions set forth in this Loan Agreement,
the Related Documents and all other instruments and agreements
between Borrower and/or Parent and Lenders in a timely manner,
and promptly notify Lenders if Borrower or Parent learns of
the occurrence of any event which constitutes an Event of
Default under this Loan Agreement.
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(k) Operations. Substantially maintain its present
executive and management personnel; conduct its business
affairs in a reasonable and prudent manner and in compliance
with all applicable foreign, federal, provincial, state and
municipal laws, ordinances, rules and regulations respecting
its properties, charters, businesses and operations; and
maintain any registration, if required, and all licenses,
permits, approvals and other regulatory matters, if any, on a
current basis and in good standing.
(l) Inspection. Permit employees or agents of Lenders
at their discretion to inspect the Atchafalaya Bay, Louisiana
project and all of the sites listed on Schedule 1.1.
(m) Additional Assurances. Make, execute and deliver
to Lenders such promissory notes, Security Agreements,
financing statements, instruments, documents and other
agreements as Lenders or their attorneys may reasonably
request to evidence and secure (as contemplated herein or in
any of the Related Documents) the Loans and to perfect all
Security Interests entered into by Borrower or Parent in favor
of Lender.
(n) Notice of Default. Immediately (and in no event
later than two (2) days thereafter) notify Lenders in writing
of any default for nonpayment or any other default or event of
default or notice thereof under any agreements or instruments
representing material indebtedness of Borrower or Parent or
any security interest therein, including without limitation
this Agreement or any Related Document.
(o) Lenders' Designee to Parent's Board of Directors.
Use its best efforts to cause the two persons nominated by the
Lenders to continue to be elected as directors of Parent in
accordance with Section 6.3 hereof.
5.2 NEGATIVE COVENANTS. Each of Borrower and Parent, jointly
and severally, covenants and agrees with Lenders that while this Loan Agreement
is in effect (unless the entire Indebtedness is simultaneously repaid in full),
neither shall without the prior written consent of lenders which may be withheld
for any reason in their sole discretion, or as otherwise provided for herein:
(a) Continuity of operations. (i) Engage in any
business activities substantially different than those in
which it is presently engaged, (ii) cease operations,
liquidate, merge or consolidate with any other entity, (iii)
pay any dividends on Parent's stock or purchase or retire any
of Parent's or Borrower's outstanding shares or alter or amend
Borrower's or Parent's capital structure (except pursuant to
the Rights Offering), or (iv) sell or otherwise dispose of any
material equity interest in Borrower.
(b) Dispositions. Sell, transfer or dispose of (i)
all or substantially all of Borrower's or Parent's assets or
(ii) any of Borrower's or Parent's material assets, except for
fair value as determined in an arm's length transaction.
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(c) Account Collections. Take any action or make any
statements which would in any way impede or delay the payment
or collection of the Louisiana Accounts or Canadian Accounts.
(d) Indebtedness to HK Bank. Accept any new secured
advances from HK Bank in excess of Cdn$2 million until the
Indebtedness is paid in full.
(e) Liens and Judgments. Except for Permitted Liens,
permit or suffer any claim, lien, charge, mortgage, deed of
trust or other encumbrances to attach to any of Borrower's or
Parent's assets or allow any judgment to be levied or any
other action to be instituted against Borrower or Parent,
unless there is a good faith dispute by Borrower or Parent as
to the validity of the lien or other encumbrance and Borrower
or Parent gives Lenders written notice thereof and deposits
with Lenders monies or a surety bond which Lenders determine
is an adequate reserve or bond therefor.
SECTION 6: CONDITIONS PRECEDENT; CLOSING
6.1 DELIVERY OF DOCUMENTS. In addition to any other conditions
precedent set forth herein or in any Related Document, Lenders' obligations to
make any Loan is subject to, in addition to delivery of this executed Loan
Agreement, the New Notes and payment of all loan fees and costs and expenses of
Lenders (including reasonable attorneys' fees), delivery of the following
documents:
(a) Assignments of Accounts. The duly executed
Assignment of Louisiana Accounts and Assignment of Canadian
Accounts, dated of even date herewith, in the forms annexed
hereto as Exhibits B-1 and B-2.
(b) Additional Security. The duly executed Security
Agreement in the form of Exhibit C.
(c) Debt Restructuring. Written confirmation from HK
Bank and Input/Output Inc. with respect to the restructuring
of outstanding debt on terms satisfactory to Lenders.
(d) Resolutions, Articles, By-Laws and Amendments to
Charters. Certified Board of Directors resolutions authorizing
the transactions contemplated hereby and under the Related
Documents, certified articles of incorporation and by-laws,
certificate of incumbency and a good standing certificate for
Borrower and Parent.
(e) Approvals and Consents. Approval of all necessary
governmental or regulatory agencies and exchanges (domestic or
foreign) which may have jurisdiction over (i) Borrower or
Parent or (ii) Lenders or their ability to enforce their
rights under
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this Loan Agreement or any of the Related Documents, and all
necessary consents of third parties.
(f) Opinions of Borrower's and Parent's Counsel. A
favorable opinion of Alberta, Colorado and New York counsel
for Borrower and Parent in form and substance acceptable to
Lenders regarding such matters as organization, authority and
execution, validity, perfection and enforcement of obligations
and security interests, regulatory approvals, and absence of
conflicts.
(g) Document Certification. Certification by Borrower
and Parent to Lenders that each agreement, document and
instrument delivered to Lenders in connection with its due
diligence with respect hereto, from whatever source, is a true
and correct copy of the original and has not been materially
amended or modified since the date of such delivery to Lender,
except to the extent such amendment or modification has been
furnished to Lenders.
(h) Warrants. Issuance by Parent to Lenders of
warrants ("Warrants") to purchase 125,000 common shares of
Parent at Cdn$1 .65 per share (such Warrants to replace
105,000 warrants previously issued to Lenders, which
previously issued warrants shall be delivered for cancellation
on the Closing Date).
(i) Subsection Closing. The consummation of the
transactions contemplated by the Subscription Agreement of
even date among Lenders and Parent.
(j) No Material Adverse Change. Absence of any
material adverse change affecting Borrower, Parent, their
subsidiaries, their businesses or the market price of the
Parent's stock.
(k) Guaranty. Execution and delivery to Lenders by
Parent of the Guaranty in the form annexed as Exhibit D.
(l) Canadian Security Agreements. Execution and
delivery to Lenders of the General Security Agreement annexed
as Exhibit E by Parent.
6.2 CONSENT OF HK BANK. In addition to the satisfaction of the
conditions precedent set forth in Section 6.1 above, and any condition precedent
set forth in any Related Document, Lenders' obligations to make any Loan is
subject to the written consent of HK Bank to this Loan Agreement and the
transactions contemplated hereby, including HK Bank's subordination of any lien
with respect to the Atchafalaya and Canadian Data Banks, Louisiana Accounts and
Canadian Accounts.
6.3 LENDERS' DESIGNEE TO PARENT'S BOARD OF DIRECTORS. In
addition to the satisfaction of the conditions precedent set forth in Sections
6. 1 and 6.2 above, and any condition precedent set forth in any Related
Document, Lenders' obligations to make any Loan
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is subject to Parent's acceptance of Lenders' nomination of one (1) individual,
reasonably acceptable to Parent, to the Board of Directors of Parent (which
person shall occupy a new sixth directorship). Parent shall use its best efforts
to procure that the person thereby nominated pursuant to this Section 6.3 shall
be elected as a Director as soon as reasonably practicable after being nominated
and to procure that such person and the person previously nominated by Lenders
shall not be removed from the Board except for cause or until the later of (i)
the repayment in full of the Loans or (ii) the date upon which the Lenders
collectively own less than 20% of the outstanding common stock of Parent. Until
the next annual meeting (scheduled for February 1997), the Parent shall have six
directors. One of the directors, to be designated by Lenders, shall not stand
for re-election and the Parent shall thereafter have no more than five (5)
directors (provided that such number may be increased to six (6) after the
Indebtedness is repaid in full). Lenders shall be entitled to select a
replacement for either of their two nominees who dies or becomes incapacitated
while the conditions referred to in this Section 6.3 remain in effect.
6.4 CLOSING. The Closing hereunder (the "Closing") shall be
held at the offices of Lender's counsel promptly upon satisfaction of the
foregoing conditions precedent (unless all parties agree to a different date
and/or place), provided that Lenders may in their discretion elect to terminate
this Agreement if (i) Borrower and Parent have not satisfied such conditions
prior to October 15, 1996 or (ii) Borrower and/or Parent otherwise delay the
Closing after such conditions are satisfied.
SECTION 7: EVENTS OF DEFAULT AND REMEDIES
7.1 EVENTS OF DEFAULT. Each of the following shall constitute
an Event of Default under this Loan Agreement:
(a) Default on Indebtedness. Failure of Borrower or
Parent to make any payment when due on the Loans or failure of
Borrower or Parent to pay the entire outstanding balance due
hereunder on the Maturity Date.
(b) Other Defaults. Failure of Borrower or Parent to
comply with or to perform when due any term, obligation,
covenant or condition contained in this Loan Agreement or in
any of the Related Documents, or failure of Borrower or Parent
to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between
Lenders and Borrower and/or Parent. If any failure, other than
a failure to pay money, is curable and if Borrower or Parent,
as applicable, has not been given a notice of a similar
breach, it may be cured (and no Event of Default will have
occurred) if Borrower or Parent, after receiving written
notice from Lenders demanding cure of such failure, cures the
failure within ten (10) days.
(c) Default in Favor of Third Parties. Any material
default by Borrower, Parent or any affiliate or subsidiary of
Borrower or Parent (which extends beyond any
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applicable cure period) under any loan, extension of credit,
security agreement, purchase or sales agreement, or any other
agreement in favor of any creditor or person that may
materially affect any of Borrower's or Parent's property or
their ability to repay the Loans or perform Borrower's or
Parent's respective obligations under this Loan Agreement or
any of the Related Documents, including, without limitation,
any uncured default under any agreement giving rise to the
Louisiana Accounts or Canadian Accounts.
(d) False Statements. Any warranty, representation,
or statement made or furnished to Lenders by or on behalf of
Borrower or Parent under this Loan Agreement or the Related
Documents is false or misleading in any material respect,
either now or at the time made or furnished.
(e) Defective Collateralization. This Loan Agreement
or any of the Related Documents ceases to be in full force and
effect (including failure of any Security Agreement to create
a valid and perfected Security Interest) at any time and for
any reason, or any person shall seek to materially limit,
modify or revoke such agreement.
(f) Insolvency. The dissolution or termination of
Borrower's or Parent's existence as a going business,
Insolvency of Borrower or Parent, appointment of a receiver
for any part of Borrower's or Parent's property, or any
assignment for the benefit of creditors, any type of creditor
workout, or the commencement of any Insolvency Proceeding by
or against Borrower or Parent.
(g) Creditor Proceedings. Commencement of
foreclosure, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower
or Parent against the collateral securing any or all of the
Indebtedness, including, without limitation, a garnishment,
attachment, levy or the like.
(h) Sale of Collateral. The sale or transfer, without
the Lenders' prior written consent which may be withheld for
any reason m Lenders' sole discretion, of all or any material
part of the collateral securing the Indebtedness (except in
the ordinary course of business).
(i) Material Adverse Change. Lenders shall have
determined in good faith (which determination shall be
conclusive) that (i) a material adverse change has occurred in
the business, operations or financial condition of Borrower
and/or Parent, (ii) the prospect of payment or performance of
any obligation or agreement of Borrower and/or Parent
hereunder or under the New Notes is materially impaired, or
(iii) a material adverse change has occurred in the condition
or value of the collateral securing the Indebtedness
(including, without limitation, the Louisiana Accounts or
Canadian Accounts).
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(j) Change of Control. Borrower or Parent undergoes a
"Change of Control" without the prior written consent of
Lenders (which may be withheld in their discretion). A "Change
of Control" shall not be a curable default.
(k) Delisting. Parent's common stock ceases to be
listed on the Toronto Stock Exchange.
(l) Directors. Either of Lenders' designees on the
Parent's board of directors is removed or the number of
Parent's directors exceeds six (6) before the next annual
meeting or five (5) thereafter.
(m) Rights Offering. Parent's failure to raise at
least $4,000,000 in proceeds from the Rights Offering on or
prior to January 15, 1997 and to prepay at least $4,000,000 to
Lenders within five (5) days after the Closing thereof.
7.2 EFFECT OF AN EVENT OF DEFAULT. If any Event of Default
shall occur, all commitments and obligations of Lenders under this Loan
Agreement or the Related Documents or any other agreement between Lenders on the
one hand, and Borrower and/or Parent, on the other hand, immediately will
terminate and, at Lender's option, all Loans immediately will become due and
payable, all without notice of any kind to Borrower or Parent, except that in
the case of an Event of Default of the type described in subsection 7.1(f)
above, such acceleration shall be automatic and not optional. Upon the
occurrence of any Event of Default and at any time thereafter, Lenders may, at
their option, but without any obligation to do so, and in addition to any other
right Lenders may have, do any one or more of the following without notice to
Borrower or Parent: (a) institute appropriate proceedings to enforce the
performance of this Loan Agreement; (b) withhold further disbursement of any
Loan hereunder; (c) expend funds necessary to remedy the Event of Default; (d)
take possession of the Atchafalaya or Canadian Data Banks, the Louisiana
Accounts or the Canadian Accounts or any proceeds and records thereof; (e)
accelerate maturity of the New Notes and/or Indebtedness and demand payment of
all sums due thereunder; (f) bring an action on the New Notes and/or
Indebtedness; (g) foreclose on any other collateral securing the Indebtedness in
any manner available under law; and (h) exercise any other right or remedy which
it has under the New Notes or Related Documents, or which is otherwise available
at law or in equity or by statute.
SECTION 8: MISCELLANEOUS PROVISIONS
8.1 ENTIRE AGREEMENT; AMENDMENTS. This Loan Agreement,
together with the Related Documents, constitutes the entire understanding and
agreement of the parties as to the matters set forth in this Loan Agreement. No
alteration of or amendment to this Loan agreement shall be effective unless
given in writing and signed by the party or parties sought to be charged or
bound by the alteration or amendment.
8.2 CHOICE OF LAW AND VENUE; JURY TRIAL WAIVER. THE VALIDITY
OF THIS LOAN AGREEMENT, ITS CONSTRUCTION, INTERPRETATION, AND
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ENFORCEMENT, AND THE RIGHTS OF THE PARTIES HERETO SHALL BE DETERMINED UNDER,
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
NEW YORK, U.S.A. THE PARTIES IRREVOCABLY AND UNCONDITIONALLY AGREE (1) THAT ALL
ACTIONS OR PROCEEDINGS ARISING IN CONNECTION WITH THIS AGREEMENT MAY BE TRIED
AND LITIGATED IN THE STATE AND FEDERAL COURTS LOCATED IN NEW YORK CITY AND THAT
THE PARTIES SHALL BE SUBJECT TO THE JURISDICTION OF SUCH COURTS AND (2) THAT
SERVICE OF PROCESS BY CERTIFIED MAIL, RETURN RECEIPT REQUESTED, SHALL CONSTITUTE
PERSONAL SERVICE. EACH OF BORROWER, PARENT AND LENDERS WAIVE, TO THE EXTENT
PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY HAVE TO ASSERT THE DOCTRINE
OF FORUM NON CONVENIENS OR TO OBJECT TO VENUE TO THE EXTENT ANY PROCEEDING IS
BROUGHT IN ACCORDANCE WITH THIS SECTION 8.2. BORROWER, PARENT AND LENDERS HEREBY
WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS LOAN AGREEMENT, THE RELATED DOCUMENTS OR ANY
OF THE TRANSACTIONS CONTEMPLATED HEREIN OR THEREIN, INCLUDING WITHOUT LIMITATION
CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL OTHER COMMON LAW OR
STATUTORY CLAIMS. BORROWER, PARENT AND LENDERS REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER AND EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF LITIGATION, A COPY OF
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.
8.3 CAPTION HEADINGS. Caption headings in this Loan Agreement
are for convenience purposes only and are not to be used to interpret or define
the provisions of this Loan Agreement.
8.4 COSTS AND EXPENSES. Borrower and Parent agree to pay upon
demand all of Lenders' out-of-pocket expenses, including reasonable attorney's
fees incurred in connection with the enforcement of this Loan Agreement or the
Related Documents. Lenders may pay someone else to help collect the Loans and to
enforce this Loan Agreement, and Borrower and Parent will pay that amount. This
includes, subject to any limits under applicable law, Lenders' attorneys'
reasonable fees and legal expenses, whether or not there is a lawsuit, including
reasonable attorneys' fees for bankruptcy proceedings (including efforts to
modify or vacate any automatic stay or injunction), appeals, and any anticipated
post-judgment collection services. Borrower and Parent also will pay any court
costs, in addition to all other sums provided by law.
8.5 NOTICES. All notices required to be given under this Loan
Agreement shall be given in writing and shall be effective when actually
delivered or three (3) days after being deposited in the United States or
Canadian mail, first class, postage prepaid, addressed to the party to whom the
notice is to be given or, if via facsimile, when sent xxx xxxxxxxxx xxxxxxxxxxxx
00
00
to the party to whom the notice is to be given and confirmation of such
transmission has been received, at the address and/or facsimile number shown
below:
If to Borrower: Solid State Geophysical Corp.
0000 Xxxxx Xxxxx Xxx, Xxxx X
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile No: (000) 000-0000
If to Parent: Solid State Geophysical Inc.
0000 Xxxxx Xxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
Attn: Mr. Xxxxxxxx Xxxxxx, President
Facsimile No: (000) 000-0000
in each case with
a copy to: Xxxxxx X. Xxxxxx, Esq.
Xxxxxx & Xxxxxx
#0, 000-0xx Xxxxxx
Xxxxxxx, Xxxxxxx X0X 0X0
Facsimile No: (000) 000-0000
If to Xxxxxxx: Xxxxxxx Associates, L.P.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxx Xxxxxxx
If to Westgate: c/o Midland Bank Trust
Corporation (Cayman) Limited
Xxxx Street
Grand Cayman, Cayman Islands, BWI
Facsimile No: (000) 000-0000
in each case with
a copy to: Kleinberg, Kaplan, Xxxxx & Xxxxx, P.C.
000 Xxxxx Xxxxxx, 00xx
Xxxxx Xxx Xxxx, Xxx Xxxx 00000
Facsimile No: (000) 000-0000
Attn: Xxxxxx X. Xxxxx, Esq.
Any party may change its address for notices under this Loan Agreement by giving
formal written notice to the other parties, specifying that the purpose of the
notice is to change the party's address. For notice purposes, Borrower and
Parent agree to keep Lenders informed at all times of their current addresses.
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8.6 SEVERABILITY. If a court of competent jurisdiction funds
any provision of this Loan Agreement to be invalid or unenforceable as to any
person or circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any such
offending provision shall be deemed to be modified to be within the limits of
enforceability or validity; however, if the offending provision cannot be so
modified, it shall be stricken and all other provisions of this Loan Agreement
in all other respects shall remain valid and enforceable and such offending
provision shall not be affected in any other jurisdiction.
8.7 SUCCESSORS AND ASSIGNS. All covenants and agreements
contained by or on behalf of Borrower or Parent shall bind its successors and
assigns and shall inure to the benefit of Lenders, their successors and assigns.
Borrower and Parent shall not, however, have the right to assign their rights
under this Loan Agreement or the Related Documents or any interest herein or
therein, without the prior written consent of Lenders which may be withheld for
any reason in Lenders' sole discretion. This Loan Agreement shall be freely
assignable by Lenders, in whole or in part.
8.8 SURVIVAL. All warranties, representations, and covenants
made by Borrower and/or Parent in this Loan Agreement or in any certificate or
other instrument delivered by Borrower or Parent to Lenders under this Loan
Agreement shall be considered to have been relied upon by Lenders and will
survive the making of the Loan and delivery to Lenders of the Related Documents
as provided in Section 4.2 above, regardless of any investigation made by
Lenders or on Lenders' behalf.
8.9 TIME IS OF THE ESSENCE. Time is of the essence in the
performance of this Loan Agreement.
8.10 INDEMNITY. In addition to the payment of expenses
pursuant to Section 3, except to the extent caused directly by Lenders' gross
negligence or wilful misconduct, Borrower and Parent agree to indemnify, pay and
hold Lenders and the officers, partners, directors, employees, agents and
affiliates of Lenders (collectively, the "indemnitees") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, claims, costs, expenses and disbursements of any kind
or nature whatsoever (including, without limitation, the reasonable fees and
disbursements of counsel) that may be imposed on, incurred by, or asserted
against any indemnitee, in any manner relating to or arising out of the Loans,
this Loan Agreement, any Related Document or any other agreements executed and
delivered by Borrower or Parent in connection herewith or the use or intended
use of the proceeds of any Loan or in connection with or arising out of any
investigation, proceeding or litigation, whether or not such indemnitee is a
party hereto or thereto. This indemnification shall survive the satisfaction and
payment of the Indebtedness and termination of this Loan Agreement.
8.11 WAIVER. Lenders shall not be deemed to have waived any
rights under this Loan Agreement unless such waiver is given in writing and
signed by Lenders. No delay or omission on the part of Lenders in exercising any
right shall operate as a waiver of such right or any other right. A waiver by
Lenders of a provision of this Loan Agreement shall not prejudice or
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constitute a waiver of Lenders' right otherwise to demand strict compliance with
that provision or any other provision of this Loan Agreement. No prior waiver by
Lenders, nor any course of dealing between Lenders and Borrower or Parent shall
constitute a waiver of any of Lenders' rights or of any obligations of Borrower
or Parent as to any future transactions. Whenever the consent of Lenders is
required under this Loan Agreement, the granting of such consent by Lenders in
any instance shall not constitute continuing consent in subsequent instances
where such consent is required and in all cases such consent may be granted or
withheld in the sole discretion of Lenders.
8.12 CONSTRUCTION. Borrower and Parent agree that any
ambiguities in this Loan Agreement or any Related Document shall not be
construed against Lenders merely because such documents were drafted primarily
by Lenders' counsel, Borrower and Parent having been fully represented by
counsel.
IN WITNESS WHEREOF, the parties hereto have caused this Loan
Agreement to be executed as of the date first written above.
SOLID STATE GEOPHYSICAL CORP.,
A COLORADO CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: President
SOLID STATE GEOPHYSICAL INC.,
AN ALBERTA CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: President
XXXXXXX ASSOCIATES, L.P., A
DELAWARE LIMITED PARTNERSHIP
By: /s/ Xxxx X. Xxxxxx
-------------------------------------
Name: Xxxx X. Xxxxxx
Title: General Partner
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WESTGATE INTERNATIONAL, L.P.,
A CAYMAN ISLANDS LIMITED PARTNERSHIP
By: MARTLEY INTERNATIONAL, INC.,
as Attorney-in-Fact
By: /s/ Xxxx X. Xxxxxx
------------------------------
Xxxx X. Xxxxxx, President
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