LOAN AND SECURITY AGREEMENT
DATED AS OF NOVEMBER 17, 1997
BETWEEN
SANWA BUSINESS CREDIT CORPORATION
AS LENDER
AND
NORTHERN GEOPHYSICAL OF AMERICA, INC.
AS BORROWER
TABLE OF CONTENTS
PAGE
1. DEFINITIONS AND ACCOUNTING TERMS.........................................................1
1.1 ................................................................"Account Debtor"1
1.2 ......................................................................"Accounts"1
1.3 ....................................................................."Affiliate"1
1.4 .........................................................."Ancillary Agreements"1
1.5 ...................................................."Average Daily Availability"2
1.6 ....................................................................."Borrowing"2
1.7 .................................................................."Business Day"2
1.8 ...................................................................."Capex Loan"2
1.9 ...................................................................."Capex Note"2
1.10 .........................................................."Capital Expenditures"2
1.11 ......................................................"Cash Flow Coverage Ratio"2
1.12 ................................................................."Change of Law"2
1.13 ......................................................................."Charges"2
1.14 .................................................................."Closing Date"2
1.15 ...................................................................."Collateral"2
1.16 ......................................................."Collateral Availability"2
1.17 ....................................................................."Companies"3
1.18 ....................................................................."Computers"3
1.19 ................................................................"Current Assets"3
1.20 ..........................................................."Current Liabilities"3
1.21 ......................................................."Daily Collateral Report"3
1.22 ......................................................................."Default"3
1.23 .................................................................."Default Rate"3
1.24 ......................................................................."Dollars"3
1.25 ..............................................................."Depository Bank"3
1.26 ................................................................"Direct Charges"3
1.27 ........................................................................"EBITDA"3
1.28 ............................................................."Eligible Accounts"3
TABLE OF CONTENTS
(CONTINUED)
PAGE
1.29 ................................................................"Environmental Laws"4
1.30 ........................................................................."Equipment"4
1.31 ............................................................................."ERISA"4
1.32 .................................................................."Event of Default"4
1.33 ........................................................................"Financials"4
1.34 .............................................................................."GAAP"4
1.35 ..............................................................."General Intangibles"4
1.36 ................................................................."Governmental Rule"4
1.37 ........................................................................."Guarantor"4
1.38 ..............................................................."Hazardous Materials"4
1.39 ......................................................................"Indebtedness"4
1.40 ......................................................................"Initial Term"5
1.41 ......................................................."Interest Determination Date"5
1.42 ..................................................................."Interest Period"5
1.43 ........................................................................."Inventory"5
1.44 ......................................................................."Liabilities"5
1.45 ............................................................................."LIBOR"5
1.46 ........................................................................"LIBOR Loan"6
1.47 ....................................................................."LIBOR Portion"6
1.48 .............................................................................."Lien"6
1.49 ..................................................................."Loan" or "Loans"6
1.50 ......................................................................"Loan Account"6
1.51 ............................................................"Net Profit After Taxes"6
1.52 ............................................................................."Notes"6
1.53 ...................................................."Notice of Borrowing/Conversion"6
1.54 ......................................................................."Overadvance"6
1.55 ......................................................................."Participant"6
1.56 ..................................................................."Permitted Liens"6
1.57 ............................................................................"Person"7
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TABLE OF CONTENTS
(CONTINUED)
PAGE
1.58 ............................................................................."Portion"7
1.59 ......................................................................"Prepayment Fee"7
1.60 .........................................................................."Prime Rate"7
1.61 ....................................................................."Prime Rate Loan"7
1.62 ........................................................................"Renewal Term"7
1.63 ...................................................................."Reportable Event"7
1.64 ......................................................................"Revolving Loan"7
1.65 ............................................................"Revolving Loan Borrowing"7
1.66 .................................................................."Security Documents"7
1.67 .................................................................."Special Collateral"7
1.68 ..............................................................................."Stock"7
1.69 ..........................................................................."Subsidiary"8
1.70 ..................................................................."Tangible Net Worth"8
1.71 ............................................................................"Term Loan"8
1.72 ............................................................................"Term Note"8
1.73 .................................................................................."3-D"8
1.74 ......................................................................."Total Facility"8
1.75 ................................................................................."Type"8
2. LOANS: GENERAL TERMS............................................................................8
2.1 ........................................................................Total Facility.8
2.2 ........................................Advances to Constitute One Loan; Loan Purpose.11
2.3 ........................................................................Interest Rate.12
2.4 ..............................................................Change of Circumstances.12
2.5 .........................................................Funding Loss Indemnification.13
2.6 ..........................................................................Prepayments.14
2.7 ....................................Term of Agreement; Prepayment; Liquidated Damages.14
2.8 ............................................................................Audit Fee.15
2.9 ..........................................................................Closing Fee.15
2.10 .....................................................................Unused Line Fee.15
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3. ELIGIBLE ACCOUNTS; ELIGIBLE INVENTORY.........................................................16
3.1 ...................................................................Eligible Accounts.16
4. PAYMENTS......................................................................................17
4.1 .............................................Loan Account; Method of Making Payments.17
4.2 .......................................................................Payment Terms.17
4.3 .................................................Collection of Accounts and Payments.18
4.4 .............................................Application of Payments and Collections.18
4.5 ..........................................................................Statements.19
5. COLLATERAL: GENERAL TERMS.....................................................................19
5.1 ...................................................................Security Interest.19
5.2 .....................................................Disclosure of Security Interest.19
5.3 ..................................................................Special Collateral.19
5.4 ..................................................................Further Assurances.19
5.5 ..........................................................................Inspection.20
5.6 .....................................Perfection and Priority; Location of Collateral.20
5.7 ..............................Lender's Payment of Claims Asserted Against Collateral.20
6. COLLATERAL: ACCOUNTS..........................................................................21
6.1 ............................................................Verification of Accounts.21
6.2 ....................................Assignments, Records and Daily Collateral Report.21
6.3 ..................................................Notice Regarding Disputed Accounts.21
6.4 .....................................................Sale or Encumbrance of Accounts.21
7. COLLATERAL: INVENTORY........................................................................21
8. COLLATERAL: EQUIPMENT.........................................................................21
8.1 ........................................................Maintenance of the Equipment.21
8.2 ..................................................Evidence of Ownership of Equipment.21
8.3 ...........................................................Proceeds of the Equipment.21
8.4 ...............................................................Location of Equipment.22
9. WARRANTIES AND REPRESENTATIONS................................................................22
9.1 ..............................................General Warranties and Representations.22
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TABLE OF CONTENTS
(CONTINUED)
PAGE
9.2 ..............................................Account Warranties and Representations.25
9.3 ............................................Inventory Warranties and Representations.26
9.4 ..........................Automatic Warranty and Representation and Reaffirmation of
Warranties and Representations.......................................................26
9.5 ..........................................Survival of Warranties and Representations.26
10. COVENANTS AND CONTINUING AGREEMENTS...........................................................27
10.1 ...............................................................Affirmative Covenants.27
10.2 ..................................................................Negative Covenants.29
10.3 ..................................................................Contesting Charges.31
10.4 ..................................................................Payment of Charges.31
10.5 ......................................................Insurance; Payment of Premiums.31
10.6 ...............................Survival of Obligations Upon Termination of Agreement.32
10.7 .............................................................Environmental Indemnity.32
10.8 ...................................................................Change of Control.32
10.9 ................................................................Revisions or Updates.32
11. CONDITIONS PRECEDENT TO CLOSING...............................................................33
12. DEFAULT; RIGHTS AND REMEDIES ON DEFAULT.......................................................35
12.1 .............................................................................Default.35
12.2 .....................................................Acceleration of the Liabilities.37
12.3 .........................................................Advances During Cure Period.37
12.4 ........................................................................Default Rate.37
12.5 ............................................................................Remedies.37
12.6 ..............................................................................Notice.38
13. MISCELLANEOUS.................................................................................38
13.1 .........................Appointment of Lender as Borrower's Lawful Attorney-In-Fact.38
13.2 ...........................Modification of Agreement; Assignment or Sale of Interest.39
13.3 .......................Attorneys' Fees and Expenses; Lender's Out-of-Pocket Expenses.39
13.4 ....................................................................Waiver by Lender.40
13.5 ........................................................................Severability.40
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13.6 ...........................................................Parties; Entire Agreement.40
13.7 ...................................................................Conflict of Terms.41
13.8 ..................................................................Waiver by Borrower.41
13.9 ................................................................Governing Law, Venue.41
13.10 ..............................................................................Notice.42
13.11 .................................................................Section Titles, Etc.42
13.12 ...................................................................Course of Dealing.42
13.13 ..............................................................................Setoff.43
13.14 ..............................................................Nonliability of Lender.43
13.15 .................................................................Time of the Essence.43
13.16 .....................................................................Indemnification.43
13.17 ....................................................Waiver of Right to Trial by Jury.44
LIST OF EXHIBITS
Exhibit A Financials
Exhibit B Form of Notice of Borrowing/Conversion
Exhibit C Locations
Exhibit D Tradenames
Exhibit E Litigation
Exhibit F Title to Assets, Liens
Exhibit G Affiliates and Subsidiaries
Exhibit H Covenant Compliance Certificate
Exhibit I Form of Daily Collateral Report
Exhibit J Existing Indebtedness for Borrowed Money
Schedule 1.29 Equipment
Schedule 10.1(a) Financial Covenants
Schedule 10.2 Deposit Accounts
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LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT ("Agreement") is made as of
the 17th day of November, 1997, by and between Sanwa Business Credit
Corporation, a Delaware corporation ("Lender"), and Northern Geophysical of
America, Inc., a Delaware corporation ("Borrower").
W I T N E S S E T H:
WHEREAS, Borrower desires to borrow funds and obtain other
financial accommodations from Lender, and Lender is willing to make certain
loans and provide other financial accommodations to Borrower upon the terms and
subject to the conditions set forth herein;
NOW THEREFORE, in consideration of the terms and conditions
contained herein, and of any loans or other financial accommodations heretofore,
now or hereafter made to, or for the benefit of, Borrower by Lender, the parties
hereto agree as follows:
1. DEFINITIONS AND ACCOUNTING TERMS
A. Specific Defined Terms. When used herein, the following terms shall
have the following respective meanings:
1.1 "ACCOUNT DEBTOR" shall mean any Person who is or who may become
obligated to Borrower under, with respect to, or on account of an Account.
1.2 "ACCOUNTS" shall mean and include all of Borrower's presently
existing and hereafter arising or acquired accounts, receivables and rights of
Borrower to payment for goods sold or leased or for services rendered,
including, without limitation, those which are not evidenced by instruments or
chattel paper, and whether or not they have been earned by performance; proceeds
of any letters of credit on which Borrower is named as beneficiary; contract
rights; chattel paper; instruments; documents; insurance proceeds; and all such
obligations whatsoever owing to Borrower, together with all instruments and all
documents of title representing any of the foregoing, all rights in any
merchandise or goods which any of the same may represent, and all right, title,
security and guaranties with respect to each of the foregoing, including,
without limitation, any right of stoppage in transit.
1.3 "AFFILIATE" shall mean any and all Subsidiaries and any and all
Persons which, in the reasonable judgment of Lender, directly or indirectly, own
or control, are controlled by or are under common control with Borrower, and any
and all Persons from whom, in the reasonable judgment of Lender, Borrower has
not or is not likely to exhibit independence of decision or action. For the
purpose of this definition, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise.
1.4 "ANCILLARY AGREEMENTS" shall mean all Security Documents and all
agreements, instruments and documents, including without limitation, notes,
guaranties,
1
mortgages, deeds of trust, chattel mortgages, pledges, negative pledges, powers
of attorney, consents, assignments, contracts, notices, security agreements,
intellectual property security agreements, leases, financing statements,
subordination agreements, trust account agreements and all other written matter
whether heretofore, now, or hereafter executed by or on behalf of Borrower or
any other Person or delivered to Lender or any Participant with respect to this
Agreement.
1.5 "AVERAGE DAILY AVAILABILITY" shall mean for any period the sum of
Collateral Availability for each Business Day during such period divided by the
number of Business Days in such period.
1.6 "BORROWING" shall mean a borrowing by Borrower consisting of a Loan
made by Lender on the same date and of the same Type pursuant to a single Notice
of Borrowing/Conversion.
1.7 "BUSINESS DAY" shall mean (a) any day on which commercial banks are
not authorized to close or not required to close in Los Angeles, California and
(b) if such Business Day is related to a Loan which bears or is to bear interest
based on LIBOR, any day in which dealings in Dollar deposits may be carried out
in the London interbank market.
1.8 "CAPEX LOAN" shall have the meaning given to that term in Section
2.1(c).
1.9 "CAPEX NOTE" shall have the meaning given to that term in Section
2.1(c).
1.10 "CAPITAL EXPENDITURES" shall mean all expenditures made and
liabilities incurred for the acquisition of any fixed asset or improvement,
replacement, substitution or addition thereto, which has a useful life of more
than one year and including, without limitation, those arising in connection
with capital leases.
1.11 "CASH FLOW COVERAGE RATIO" shall mean for any period, the quotient
of (x) EBITDA minus the sum of (A) all taxes paid during such period, (B) all
Capital Expenditures permitted hereunder and actually made, except any portion
thereof financed through Indebtedness permitted hereunder, and (C) all dividends
actually paid during such period, divided by (y) the sum of (A) all principal,
interest and other payments made or required to be made by the Companies on
Indebtedness during such period, including any fees and charges owed by the
Companies in connection with any such Indebtedness and (B) all capitalized lease
payments made or required to be made by the Companies during such period.
1.12 "CHANGE OF LAW" shall have the meaning specified in Section
2.4(b).
1.13 "CHARGES" shall mean all national, federal, state, county, city,
municipal, or other governmental taxes, levies, assessments, charges, liens,
claims or encumbrances (including, without limitation, those of the Pension
Benefit Guaranty Corporation) upon or relating to (i) the Collateral, (ii) the
Liabilities, (iii) Borrower's employees, payroll, income or gross receipts, (iv)
Borrower's ownership or use of any of its assets, or (v) any other aspect of
Borrower's business.
1.14 "CLOSING DATE" shall mean the date on which each of the conditions
precedent in Section 11 are satisfied and the initial Loans are made.
1.15 "COLLATERAL" shall mean all of the property and interests in
property described in Section 5.1 and all other property and interests in
property which shall, from time to time, secure all or any part of the
Liabilities.
1.16 "COLLATERAL AVAILABILITY" shall have the meaning ascribed to it in
Section 2.1(a).
2
1.17 "COMPANIES" shall mean, collectively, Borrower; 3-D; 3-D
Geophysical of Latin America, Inc., a Cayman Island company; J.R.S. Exploration
Company, Ltd., a Canada corporation; Geoevaluaciones, S.A. de C.V., a Mexico
company; and Procesos Interactivos Avanzados, S.A. de C.V., a Mexico company.
1.18 "COMPUTERS" shall mean all of Borrower's right, title and
interest, now owned and hereafter acquired, in computer equipment and hardware,
including, without limitation, all central processing units, terminals, disk
drives, tape drives, electronic memory units, printers, keyboards, screens,
peripherals (and other input/output devices), modems and other communication
controllers, and any and all accessions, parts and appurtenances thereto,
substitutions therefore and replacements thereof, all intellectual property used
by Borrower, at any time, in the operation of such computer equipment hardware,
including, without limitation, all software, all of Borrower's rights under any
licenses related to Borrower's software or hardware, and all leases pursuant to
which Borrower leases any computer equipment, hardware or software.
1.19 "CURRENT ASSETS" shall mean the aggregate net book value of the
current assets of Borrower as determined in accordance with GAAP, excluding any
Accounts owing to Borrower from any Affiliate.
1.20 "CURRENT LIABILITIES" shall mean the aggregate amount of all
liabilities of Borrower which would be classified as current liabilities under
GAAP.
1.21 "DAILY COLLATERAL REPORT" shall mean a borrowing base report in
the form of Exhibit I hereto delivered to Lender by Borrower, as required by
Section 6.2, consisting of sales, collections and an aged trial balance of all
of the Accounts existing as of the date of such Daily Collateral Report,
specifying for each Account Debtor obligated on the Accounts, such Account
Debtor's name, address and outstanding balance and the aging of such outstanding
balance; inventory valuations as set forth in the most recent Inventory Report,
and such other information as may, from time to time, be required by Lender.
1.22 "DEFAULT" shall mean the occurrence or existence of any one or
more of the events described in Section 12.1.
1.23 "DEFAULT RATE" shall have the meaning ascribed to it in Section
12.4.
1.24 "DOLLARS" shall mean U.S. dollars.
1.25 "DEPOSITORY BANK" shall mean the banking institution which is
referred to in Section 4.3.
1.26 "DIRECT CHARGES" shall mean accounts arising from work performed
by subcontractors or other third parties and billed by Borrower.
1.27 "EBITDA" shall mean, for any period, the net income for such
period of 3-D determined on a consolidated basis in accordance with GAAP
(excluding any extraordinary income items, including, without limitation, gain
on sale of assets, income relating to foreign exchange, swap or other derivative
transactions and changes in GAAP), plus the following items, to the extent
deducted from the revenues of 3-D in the calculation of net income or loss: (i)
depreciation, (ii) amortization of intangibles and any other non-cash items,
(iii) cash interest expense (excluding any interest paid-in-kind) and (iv) tax
expense.
1.28 "ELIGIBLE ACCOUNTS" shall mean those Accounts (including Accounts
of J.R.S. Exploration Company, Ltd., Geoevaluaciones, S.A. de C.V., and Procesos
Interactivos, S.A. de C.V., to the extent provided in Section 3.1 hereof)
included in a Daily Collateral Report which, as of the date of such Daily
Collateral Report and at all times thereafter, (i) satisfy the requirements for
eligibility as described in Section 3.1, (ii) do not violate the covenants,
representations and warranties and other provisions of this Agreement and (iii)
Lender, in its reasonable credit judgment, deems to be Eligible Accounts.
3
1.29 "ENVIRONMENTAL LAWS" shall mean the Resource Conservation and
Recovery Act of 1987, the Comprehensive Environmental Response, Compensation and
Liability Act, any so-called "Superfund" or "Superlien" law, the Toxic
Substances Control Act, or any other federal state or local statute, law,
ordinance, code, rule, regulation, order or decree regulating, relating to, or
imposing liability or standards of conduct concerning, any hazardous, toxic or
dangerous waste, substance or material, as now or at any time hereafter in
effect.
1.30 "EQUIPMENT" shall mean all of Borrower's now owned and hereafter
acquired equipment and fixtures, including without limitation, furniture,
machinery, tools, vehicles and trade fixtures, together with any and all
accessories, parts and appurtenances thereto, substitutions therefor and
replacements thereof, including without limitation the Equipment listed in
Schedule 1.30 hereto.
1.31 "ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.32 "EVENT OF DEFAULT" shall mean any event or condition which, with
the passage of time or the giving of notice or both, would constitute a Default.
1.33 "FINANCIALS" shall mean those consolidated and consolidating
financial statements of 3-D attached hereto as Exhibit "A" or delivered to
Lender pursuant to Section 10.1(e).
1.34 "GAAP" shall mean generally accepted accounting principles,
consistently applied.
1.35 "GENERAL INTANGIBLES" shall mean all choses in action, general
intangibles, causes of action and all other intangible personal property of
Borrower of every kind and nature (other than Accounts) now owned or hereafter
acquired by Borrower. Without in any way limiting the generality of the
foregoing, General Intangibles specifically include, without limitation, all
corporate or other business records, security deposits, prepaid deposits and
expenses, inventions, designs, patents, patent applications, trademarks,
trademark applications, trade names, trade secrets, goodwill, copyrights,
registrations, licenses, franchises, tax refunds and tax refund claims, all
rights and claims against carriers and shippers, all rights to indemnification,
and all letters of credit, guarantee claims, security interests or other
security held by or granted to Borrower to secure payment by an Account Debtor
of any Accounts.
1.36 "GOVERNMENTAL RULE" shall mean any applicable law or governmental
rule, regulation or order (or any interpretation thereof, and including the
introduction of any new law or governmental rule, regulation or order).
1.37 "GUARANTOR" shall mean the Persons described in Section 10.1(k)
and any other Person who after the date hereof guaranties all or any part of the
Liabilities.
1.38 "HAZARDOUS MATERIALS" shall mean any hazardous substance or
pollutant or contaminant defined as such in (or for the purposes of) any
Environmental Law and shall include, but not be limited to, petroleum, any
radioactive material, and asbestos in any form or condition.
1.39 "INDEBTEDNESS" shall mean all of Borrower's liabilities,
obligations and indebtedness to any Person of any and every kind and nature,
whether primary, secondary, direct, indirect, absolute, contingent, fixed, or
otherwise, heretofore, now or hereafter owing, due or payable, however
evidenced, created, incurred, acquired or owing and however arising, whether
under written or oral agreement, by operation of law, or otherwise. Without in
any way limiting the generality of the foregoing, Indebtedness specifically
includes (i) the Liabilities, (ii) all obligations or liabilities of any Person
that are secured by
4
any lien, claim, encumbrance or security interest upon property owned by
Borrower, even though Borrower has not assumed or become liable for the payment
thereof, (iii) all obligations or liabilities created or arising under any lease
of real or personal property, or conditional sale or other title retention
agreement with respect to property used or acquired by Borrower, even though the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property, (iv) all unfunded pension fund obligations and
liabilities and (v) deferred taxes.
1.40 "INITIAL TERM" shall have the meaning ascribed to it in Section
2.7.
1.41 "INTEREST DETERMINATION DATE" shall have the meaning ascribed to
it in Section 1.45.
1.42 "INTEREST PERIOD" shall mean with respect to any LIBOR Loan or
LIBOR Portion, the time period selected by Borrower pursuant to Section 2.1(i)
which, in each case, commences on the first day of such Loan or Portion or the
effective date of any conversion and ends on the last day of such time period,
and thereafter, each subsequent time period selected by Borrower pursuant to
Section 2.1(i) which commences on the last day of the immediately preceding time
period and ends on the last day of that time period.
1.43 "INVENTORY" shall mean all goods, inventory, merchandise and other
personal property, including, without limitation, goods in transit, wherever
located and whether now owned or hereafter acquired by Borrower which is or may
at any time be held for sale or lease, furnished under any contract of service
or held as raw materials, work in process, supplies or materials used or
consumed in Borrower's business or are or might be used in connection with the
manufacturing, shipping, advertising or selling or finishing of such goods,
merchandise and other personal property and all documents of title or documents
representing the same, and all such property the sale or other disposition of
which has given rise to Accounts and which has been returned to or repossessed
or stopped in transit by Borrower.
1.44 "LIABILITIES" shall mean all of Borrower's liabilities,
obligations and indebtedness to Lender of any and every kind and nature, whether
primary, secondary, direct, absolute, contingent, fixed, or otherwise
(including, without limitation, the Revolving Loan, the Term Loan, any Capex
Loans or other accommodations, interest, charges, expenses, attorneys' fees and
other sums chargeable to Borrower by Lender, future advances made to or for the
benefit of Borrower and obligations of performance), whether arising under this
Agreement, under any other Ancillary Agreement or acquired by Lender from any
other source, whether heretofore, now or hereafter owing, arising, due, or
payable from Borrower to Lender, however evidenced, created, incurred, acquired
or owing and however arising, whether under written or oral agreement, operation
of law, or otherwise.
1.45 "LIBOR" shall mean the London Interbank Offered Rate. The LIBOR
Rate shall be determined as of each Interest Determination Date, which shall be
that date which corresponds to the initial transaction effective date and to
each subsequent interest reset for the Interest Period. LIBOR, with respect to
any Interest Determination Date, shall be determined as follows:
(i) As of the initial transaction effective date, the
offered rate for deposits in Dollars for the Interest Period which
appears on Telerate Page 3750 at approximately 11:00 A.M., London time,
on such Interest Determination Date. "Telerate Page 3750" shall mean
the display designated as Page 3750 on the Telerate Systems
Incorporated financial information reporting service (or such other
page as may replace page 3750 on the service for the purpose of
displaying London interbank offered rates as published by the British
Bankers' Association).
5
(ii) If no offered rate appears on the Telerate Page
3750, the principal London offices of each of four major banks in the
London interbank market will be selected by Lender to provide Lender
with its offered quotations for deposits in Dollars for the Interest
Period to prime banks in the London interbank market at approximately
11:00 A.M. London time on such Interest Determination Date and in a
principal amount equal to an amount of not less than $1 million that is
representative of a single transaction in such market at such time. If
at least two such quotations are provided, LIBOR will be the arithmetic
mean of such quotations. If fewer than two quotations are provided,
LIBOR in respect of such Interest Determination Date will be the
arithmetic mean of the offered rates quoted by three major money center
banks in the City of New York selected by Lender at approximately 11:00
A.M., New York City time, on such Interest Determination Date for loans
in Dollars to leading European banks, for such Interest Period and in a
principal amount of not less than $1 million that is representative of
a single transaction in such market at such time; provided, however,
that if fewer than three banks selected as aforesaid by Lender are
quoting rates as set forth above, LIBOR for such Interest Period will
be the same as LIBOR for the immediately preceding Interest Period (or,
if there was no such Interest Period, the rate of interest payable on
the LIBOR Loans for which LIBOR is being determined shall be the
initial interest rate). 1.46 "LIBOR LOAN" shall mean any Loan or
Portion which bears interest at a rate
per annum based upon LIBOR.
1.47 "LIBOR PORTION" shall mean (i) with respect to the Revolving
Loans, the Portion of the Revolving Loans which bears interest at a rate
determined by reference to LIBOR as provided in Section 2.1(e)(ii), (ii) with
respect to the Term Loan, the Portion of the Term Loan which bears interest at a
rate determined by reference to LIBOR as provided in Section 2.1(f)(ii), and
(iii) with respect to the Capex Loan, the Portion of the Capex Loan which bears
interest at a rate determined by reference to LIBOR as provided in Section
2.1(g)(ii).
1.48 "LIEN" means any mortgage, deed of trust, pledge, hypothecation,
security interest, encumbrance, lien or charge, whether arising by operation of
law or otherwise.
1.49 "LOAN" OR "LOANS" shall mean any or all of the advances to be made
by Lender pursuant to this Agreement.
1.50 "LOAN ACCOUNT" shall have the meaning ascribed to it in Section
4.1.
1.51 "NET PROFIT AFTER TAXES" shall mean net income for such period of
Borrower determined in accordance with generally accepted accounting principles
("GAAP"), consistently applied (excluding any extraordinary items, including
without limitation income or expenses related to foreign exchange, swaps or
other derivative transactions and changes in GAAP).
1.52 "NOTES" shall mean, collectively, the Term Note and the Capex
Notes.
1.53 "NOTICE OF BORROWING/CONVERSION" shall have the meaning given to
that term in Section 2.1(d).
1.54 "OVERADVANCE" shall have the meaning given to that term in Section
2.6(b).
1.55 "PARTICIPANT" shall mean any Person, now or at any time or times
hereafter, participating with Lender in the Loans or other financial
accommodations made by Lender to Borrower pursuant to this Agreement and the
Ancillary Agreements.
1.56 "PERMITTED LIENS" shall mean the following:
(i) Any Liens existing on the Closing Date and
disclosed in Exhibit "F" or arising under this Agreement or the other
Ancillary Documents;
6
(ii) Liens for taxes, fees, assessments or other
governmental charges or levies on real property, either not delinquent
or being contested in good faith by appropriate proceedings and for
which adequate reserves have been established;
(iii) Liens upon or in any Equipment acquired or held
by Borrower to secure the purchase price of such Equipment or
indebtedness incurred solely for the purpose of financing the
acquisition of such Equipment in the original principal amount not to
exceed One Million Five Hundred Thousand Dollars ($1,500,000) per
fiscal year of Borrower.
1.57 "PERSON" shall mean any individual, sole proprietorship,
partnership, limited liability partnership, joint venture, trust, unincorporated
organization, association, corporation, limited liability company, institution,
entity, party, or government (whether national, federal, state, county, city,
municipal or otherwise, including, without limitation, any instrumentality,
division, agency, body or department thereof).
1.58 "PORTION" shall mean an amount of any Revolving Loan, Term Loan or
Capex Loan which is less than the entire outstanding principal balance of such
Revolving Loan, Term Loan or Capex Loan.
1.59 "PREPAYMENT FEE" shall have the meaning ascribed to it in Section
2.7.
1.60 "PRIME RATE" shall mean the highest prime rate of interest quoted,
from time to time, by The Wall Street Journal as the "base rate on corporate
loans at large U.S. money center commercial banks"; provided, however, that if
The Wall Street Journal ceases quoting a prime rate of the type described, Prime
Rate shall mean the highest per annum rate of interest quoted as the "Bank Prime
Loan" rate for "This Week" in Statistical Release H.15 (519) published from time
to time by the Board of Governors of the Federal Reserve System; provided,
further, that in the event that both of the aforesaid indices cease to be
published or to quote rates of the aforesaid types, the "Prime Rate" shall be
determined from a comparable index chosen by Lender in good faith. The Prime
Rate shall change effective on the date of the publication of any change in the
applicable index by which such "Prime Rate" is determined.
1.61 "PRIME RATE LOAN" shall mean any Loan or any Portion of any Loan
which bears interest at a rate per annum based upon the Prime Rate.
1.62 "RENEWAL TERM" shall have the meaning ascribed to it in Section
2.7.
1.63 "REPORTABLE EVENT" shall have the meaning ascribed to it in
Section 9.1(n).
1.64 "REVOLVING LOAN" shall have the meaning ascribed to it in Section
2.1(a).
1.65 "REVOLVING LOAN BORROWING" shall mean a borrowing by Borrower
consisting of a Revolving Loan made by Lender on the same date and of the same
Type pursuant to a single Notice of Revolving Loan Borrowing. 1.66 "SECURITY
DOCUMENTS" shall mean this Agreement and all other agreements, security
agreements, instruments, documents, financing statements, warehouse receipts,
bills of lading, notices of assignment, schedules, assignments, deeds of trust,
Ancillary Agreements, mortgages and other written matter necessary or requested
by Lender to create, perfect and maintain perfected, Lender's security interest
in the Collateral. 1.67 "SPECIAL COLLATERAL" shall have the meaning ascribed to
it in Section 5.3. 1.68 "STOCK" shall mean all shares, options, interests,
membership interests, participations or other equivalents (however designated)
of or in a corporation or limited liability company, whether voting or
non-voting, including, without limitation, common stock, warrants, membership
interests, preferred stock, convertible debentures and all agreements,
instruments and documents convertible, in whole or in part, into any one or more
or all of the foregoing.
7
1.69 "SUBSIDIARY" shall mean, with respect to Borrower, each of the
Persons identified as a "Subsidiary" on Exhibit "G" hereto, and any Person of
which Borrower acquires, after the date hereof, 50% or more of the issued and
outstanding voting stock.
1.70 "TANGIBLE NET WORTH" shall mean, as of any particular date, the
difference between (a) 3-D's consolidated total assets as they would normally be
shown on the balance sheet of 3-D, but excluding therefrom the aggregate amount
of all 3-D's intangible assets, including but not limited to all values
attributable to goodwill, patents, copyrights, trademarks, licenses, prepaid
deposits and expenses, leasehold improvements net of depreciation, other General
Intangibles and Accounts due from Affiliates and other intangibles reasonably
determined by Lender and (b) 3-D's consolidated total liabilities and deferred
charges as they would usually be shown on such balance sheet, including as
liabilities (without duplication) all guarantees of the indebtedness of
Affiliates or any other Person.
1.71 "TERM LOAN" shall have the meaning ascribed to it in Section
2.1(b).
1.72 "TERM NOTE" shall have the meaning ascribed to it in Section
2.1(b).
1.73 "3-D" means 3-D Geophysical, Inc., a Delaware corporation.
1.74 "TOTAL FACILITY" shall have the meaning ascribed to it in Section
2.1.
1.75 "TYPE" shall mean, with respect to any Loan, Borrowing or Portion
at any time, the classification of such Loan, Borrowing or Portion by the type
of interest rate it then bears, whether an interest rate based on the Prime Rate
or LIBOR.
B. Accounting Terms. Any accounting terms used in this Agreement which
are not specifically defined shall have the meanings customarily given them in
accordance with GAAP.
C. Other Terms. All other terms contained in this Agreement which are
not otherwise defined in this Agreement shall, unless the context indicates
otherwise, have the meanings provided for by the Uniform Commercial Code of the
State of California to the extent the same are used or defined therein.
2. LOANS: GENERAL TERMS
2.1 TOTAL FACILITY. Lender agrees to make available for Borrower's use
from time to time during the term of this Agreement, upon Borrower's request
therefor, certain Loans and other financial accommodations in an aggregate
principal amount outstanding not to exceed Thirty Million Dollars ($30,000,000)
(the "Total Facility"). The Total Facility shall be subject to all of the terms
and conditions of this Agreement and shall consist of:
(A) Revolving Loan. A revolving line of credit consisting of
advances against Eligible Accounts (the "Revolving Loan") in an
aggregate principal amount not to exceed, at any time outstanding, the
lesser of (i) Ten Million Dollars ($10,000,000) and (ii) the
outstanding amount of Collateral Availability. As used in this
Agreement, "Collateral Availability" shall mean and, at any particular
time and from time to time, be equal to, up to eighty percent (80%) of
the net amount (after deduction of such reserves as Lender in its
reasonable credit judgment deems proper and necessary) of Eligible
Accounts. The Revolving Loan shall be repayable as provided in Section
4.2.
Lender shall have the right to establish reserves from time to
time against borrowing availability under the Revolving Loan in such
amounts, and with respect to such matters, as Lender shall deem
reasonably necessary or appropriate, including, without limitation, a
$2,000,000 reserve (which amount may be increased in Lender's
reasonable business judgment) with respect to the lawsuit described in
Section 11(y) below. Lender may, in the exercise of its reasonable
discretion, at any time and from
8
time to time, increase or decrease the advance percentage contained in
this Section to be applied to Eligible Accounts. In the event such
percentage is decreased, such decrease shall become effective upon not
less than ten (10) Business Days notice to Borrower, unless an Event of
Default has occurred and is continuing or a material, negative audit
finding has been made, in which case such decrease shall be effective
immediately, for the purpose of calculating the amount which Lender may
be willing to advance, or allow to remain outstanding, against Eligible
Accounts.
(B) Term Loan. A term loan in the aggregate principal amount
of Ten Million Dollars ($10,000,000) (the "Term Loan"), evidenced by a
term loan promissory note (the "Term Note"), and repayable as provided
therein. The Term Note shall be in a form and contain such terms as may
be acceptable to Lender. The Term Loan shall be repayable in fifty-nine
(59) equal consecutive monthly installments of principal plus accrued
interest commencing on the first (1st) Business Day of the month
following the Closing Date, based on an eighty-four (84) month
amortization, with all remaining principal and all accrued but unpaid
interest thereon payable at the end of the Initial Term; provided,
however, that if the Revolving Loan is terminated by Lender or Borrower
for any reason the Term Loan shall be immediately due and payable in
full.
(C) Capex Loan. A Capital Expenditure line of credit ("Capex
Loan") in an aggregate principal amount not to exceed the lesser of (i)
$10,000,000 and (ii) 85% of the purchase price for new equipment and/or
85% of the orderly liquidation value (as determined by Lender) of used
equipment, in each case exclusive of taxes, licenses, delivery and
installation expenses. Draws under the Capex Loan, once repaid, may not
be reborrowed. Advances under the Capex Loan will be made upon
Borrower's request for funds to finance the acquisition of new or used
equipment, on the terms and subject to the conditions contained in this
Agreement. Draws on the Capex Loan during each 12-month period
following the Closing Date shall be combined into a single promissory
note (each, a "Capex Note") at the end of such period, repayable based
upon a 60-month amortization, and payable in full at the end of the
Initial Term. Until so evidenced by a Capex Note, Capex Loans shall be
payable interest-only. If the Revolving Loan is terminated by Lender or
Borrower for any reason, the Capex Loan shall be immediately due and
payable in full.
(D) Notice of Borrowing. Borrower shall request each Loan by
delivering to Lender an irrevocable written notice in the form of
Exhibit "B", appropriately completed (a "Notice of
Borrowing/Conversion"), which specifies, among other things:
i Whether the loan is to be a Revolving Credit
Loan, a Term Loan or a Capex Loan (in each case accompanied by such
supporting documentation as may be required hereunder);
(ii) The principal amount of the requested Borrowing;
(iii) Whether the requested Loan will be a Prime Rate
Loan or a
LIBOR Loan (each LIBOR Borrowing shall be in a minimum amount of
$1,000,000 or an integral multiple of $1,000,000 in excess thereof);
(iv) If the requested Loan is to be a LIBOR Loan, the
Interest Period selected by Borrower for such Loan in accordance with
Section 2.1(i); and
(v) The date of the requested Loan, which shall be a
Business Day. Borrower shall give each Notice of Borrowing/Conversion
to Lender at least two (2) Business Days before the date of the
requested Loan in the case of a Loan which will be a
9
LIBOR Loan and before 10:00 a.m. Pacific time on the date of the requested Loan
in the case of a Loan which will be a Prime Rate Loan. Each Notice of
Borrowing/Conversion shall be delivered to Lender at the office or telecopy
number specified in Section 13.10; provided, however, that Borrower shall
promptly deliver to Lender the original of any Notice of Borrowing/Conversion
initially delivered by telecopy. Notwithstanding the above, no LIBOR Loans may
be requested at any time after the occurrence and during the continuance of a
Default.
(E) Revolving Loan Interest Rates. Borrower shall pay interest
on the outstanding principal balance of each Revolving Loan for so long
as such Revolving Loan is outstanding, at one of the following rates,
based on a year of 360 days and actual days elapsed:
(i) During such periods as any Portion of such
Revolving Loan is a Prime Rate Loan, at a rate per annum equal to the
Prime Rate plus one-half of one percent (0.5%), such rate to change
from time to time as the Prime Rate shall change; and
(ii) During such periods as any Portion of such
Revolving Loan is a LIBOR Loan, at a rate per annum equal at all times
during each Interest Period for such LIBOR Portion to LIBOR for such
Interest Period plus two and three-quarter percent (2.75%).
(F) Term Loan Interest Rates. Borrower shall pay interest on
the first day of each month on the unpaid principal amount of the Term
Loan from the date the Term Loan is made until paid in full at one of
the following rates, based on a year of 360 days and actual days
elapsed:
i During such period as any Portion of the Term
Loan is a Prime Rate Loan, at a rate per annum on such Portion equal to
the Prime Rate plus one percent (1.0%), such rate to change from time
to time as the Prime Rate shall change; and
(ii) During such period as any Portion of the Term
Loan is a LIBOR Loan, at a rate per annum equal at all times during
each Interest Period for such Portion to LIBOR for such Interest Period
plus three and one-half percent (3.5%).
(G) Capex Loan Interest Rates. Borrower shall pay interest on
the first day of each month on the aggregate unpaid principal amount of
the Capex Loan from the date the first Capex Loan is made until paid in
full at one of the following rates, based on a year of 360 days and
actual days elapsed:
i During such period as any Portion of the Capex
Loan is a Prime Rate Loan, at a rate per annum on such Portion equal to
the Prime Rate plus one percent (1.0%), such rate to change from time
to time as the Prime Rate shall change; and
(ii) During such period as any Portion of the Capex
Loan is a LIBOR Loan, at a rate per annum equal at all times during
each Interest Period for such LIBOR Portion to LIBOR for such Interest
Period plus three and one-half percent (3.5%). All Capex Loans
evidenced by Capex Notes shall bear interest and be payable in
accordance with the terms of such Capex Notes.
(H) Conversion of Interest Rate on Loans. So long as no
Default has occurred and is continuing, Borrower may convert
outstanding Prime Rate Loans into LIBOR Loans and outstanding LIBOR
Loans into Prime Rate Loans; provided,
10
however, that any conversion of LIBOR Loans into a Prime Rate Loan
shall be made on, and only on, the last day of an Interest Period for
such LIBOR Loans. At Lender's option in its sole discretion, upon the
occurrence and at any time during the continuation of a Default, all
LIBOR Loans shall be converted to Prime Rate Loans, and Borrower shall
be liable for all costs and fees associated with such conversion as
provided in this Agreement. Borrower shall request such a conversion by
delivering to Lender an appropriately completed Notice of
Borrowing/Conversion, which specifies, among other things:
(i) The Prime Rate Portion or the LIBOR Portion which
is to be converted, specifying the amount thereof and whether such
Portion is a Revolving Loan Portion, a Term Loan Portion, or a Capex
Loan Portion;
(ii) The Type of Loans into which such Loans or
Portion are to be converted;
(iii) If Prime Rate Loans are to be converted into
LIBOR Loans, the Interest Period selected by Borrower for such Loans in
accordance with Section 2.1(i); and
(iv) The date of the requested conversion, which
shall be a Business Day.
Borrower shall give each Notice of Borrowing/Conversion to Lender at least two
(2) Business Days before the date of the requested conversion in the case of a
conversion into LIBOR Loans, and at least one (1) Business Day before the date
of the requested conversion in the case of a conversion into Prime Rate Loans.
Each Request for Borrowing/Conversion shall be delivered to Lender at the office
or to the telecopy number specified in Section 13.10; provided, however, that
Borrower shall promptly deliver to Lender the original of any Notice of
Borrowing/Conversion initially delivered by telecopy.
(i)LIBOR Interest Periods. The initial and each subsequent
Interest Period selected by Borrower for a LIBOR Loan shall be thirty
(30), sixty (60) or ninety (90) days; provided, however, that (A) any
Interest Period which would otherwise end on a day which is not a
Business Day shall be extended to the next succeeding Business Day,
unless such next Business Day falls in another calendar month, in which
case such Interest Period shall end on the immediately preceding
Business Day; (B) any interest Period for a LIBOR Loan which begins on
the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of
such Interest Period) shall end on the last Business Day of a calendar
month; (C) no such Interest Period shall end after the Initial Term or
any Renewal Term or after any scheduled principal payment date on any
Loan, if any LIBOR Portion would have to be broken in order for
Borrower to timely make such principal payment; and (D) no more than
six (6) Portions (Revolving Loan Portions, Term Loan Portions or Capex
Loan Portions in the aggregate) bearing interest based on LIBOR may be
outstanding at any time. If Borrower fails to notify Lender of the next
Interest Period for any LIBOR Portion in accordance with this Section
2.1(i), such Portion shall automatically convert to a Prime Rate
Portion on the last day of the current Interest Period therefor. 2.2
ADVANCES TO CONSTITUTE ONE LOAN; LOAN PURPOSE. All Loans and advances
by Lender to Borrower under this Agreement and the Ancillary Agreements shall
constitute one loan and all Liabilities of Borrower to Lender under this
Agreement and the Ancillary Agreements shall constitute one general obligation
secured by the Collateral. The proceeds of the initial Loans or financial
accommodations made by Lender shall be used to repay 3-
11
D's existing obligations to Xxxxx Fargo Bank and certain other creditors, and
the proceeds of all Loans or financial accommodations made by Lender shall be
used to finance Borrower's and certain of its Affiliates' working capital
requirements, all on the terms and subject to the conditions set forth in this
Agreement and in accordance with applicable law.
2.3 INTEREST RATE. All computations of interest and fees under this
Agreement shall be based on a year of 360 days and actual days elapsed. In no
contingency or event whatsoever shall the rate or amount of interest paid by
Borrower under this Agreement or any of the Ancillary Agreements exceed the
maximum rate or amount permissible under any law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. In the
event that such a court determines that Lender has received interest hereunder
or under any Ancillary Agreement in excess of the maximum amount permitted by
such law, (i) Lender shall apply such excess to any unpaid principal owed by
Borrower to Lender on the Revolving Loan first, and then to the Capex Loan and
Term Loan or, if the amount of such excess exceeds the unpaid balance of such
principal, Lender shall promptly refund such excess interest to Borrower and
(ii) the provisions hereof shall be deemed amended to provide for such
permissible rate. All sums paid, or agreed to be paid, by Borrower which are, or
hereafter may be construed to be, compensation for the use, forbearance or
detention of money shall, to the extent permitted by applicable law, be
amortized, prorated, spread and allocated throughout the full term of all such
indebtedness until the indebtedness is paid in full.
2.4 CHANGE OF CIRCUMSTANCES.
(A) Inability to Determine Rates. If, on or before the first
day of any Interest Period of any Loan or Portion, (i) LIBOR for such
Interest Period cannot be adequately and reasonably determined due to
the unavailability of funds in, or other circumstances affecting, the
London interbank market or (ii) the LIBOR rates of interest for such
Loans or Portions do not adequately and fairly reflect the cost to
Lender of making or maintaining such Loans or Portions, Lender shall
promptly give notice of such condition to Borrower. After the giving of
any such notice and until Lender shall otherwise notify Borrower that
the circumstances giving rise to such condition no longer exist,
Borrower's right to request the making of or conversion to, and
Lender's obligation to make or convert to LIBOR Loans or LIBOR Portions
of the Type affected by such condition shall be suspended. Any LIBOR
Loans or LIBOR Portions of the Type affected by such condition
outstanding at the commencement of any such suspension shall be
converted at the end of the then-current Interest Period for such Loans
or Portions into another Type of Loan or Portion not affected by such
suspension unless such suspension has then ended.
(B) Illegality. If, after the date of this Agreement, (i) the
adoption of any Governmental Rule, (ii) any change in any Governmental
Rule or the application of requirements thereof (whether such change
occurs in accordance with the terms of such Governmental Rule as
enacted, as a result of amendment or otherwise), (iii) any change in
the interpretation or administration of any Governmental Rule by any
Governmental Authority, or (iv) compliance by Lender with any request
or directive (whether or not having the force of law) of any
Governmental Authority (each such occurrence, a "Change of Law") shall
make it unlawful or impossible for Lender to make or maintain any LIBOR
Loan or LIBOR Portion, Lender shall immediately notify Borrower of such
Change of Law. Upon receipt of such notice, (i) Borrower's right to
request the making of or conversion to, and Lender's obligation to make
or convert to, any Loans or Portions of the Type affected by such
Change of Law shall
12
be terminated, and (ii) Borrower shall, at the request of Lender,
either (A) pursuant to Section 2.1(h), convert any such then
outstanding Loans or Portions into another Type of Loans or Portions
not affected by such Change of Law at the end of the current Interest
Period for such Loans or Portions, or (B) immediately repay or convert
any such Loans or Portions if Lender shall notify Borrower that Lender
may not lawfully continue to fund and maintain such Loans or Portions.
Any conversion or prepayment of Loans or Portions made pursuant to the
preceding sentence prior to the last day of an Interest Period for such
Loans or Portions shall be deemed a prepayment thereof for purposes of
this Agreement.
(C) Increased Costs. If any Change of Law announced after the
date of this Agreement:
(i)Shall subject Lender to any tax, duty or other
charge with respect to any LIBOR Loan or LIBOR Portion, or shall change
the basis of taxation of payments by Borrower to Lender on such a Loan
or Portion or in respect to such a Loan or Portion under this Agreement
(except for changes in the rate of taxation on the overall net income
of Lender); or
(ii) Shall impose, modify or hold applicable any
reserve, special deposit or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances or
loans by, or any other acquisition of funds by Lender for any LIBOR
Loan or LIBOR Portion; or
(iii) Shall impose on Lender any other condition
related to any LIBOR Loan or LIBOR Portion;
and the effect of any of the foregoing is to increase the direct cost to Lender
of making, renewing, or maintaining any such LIBOR Loan or LIBOR Portion or to
reduce any amount receivable by Lender hereunder; then Borrower shall from time
to time, upon demand by Lender, pay to Lender additional amounts sufficient to
reimburse Lender for such increased direct costs or to compensate Lender for
such reduced amounts showing the calculation thereof in reasonable detail. A
certificate as to the amount of such increased costs or reduced amounts,
submitted by Lender to Borrower shall, in the absence of manifest error, be
conclusive and binding on Borrower for all purposes; provided, however, that the
increased costs or reduced amounts shall not relate to any period more than 180
days prior to the date of such certificate.
(D) Capital Requirements. If, after the date of this
Agreement, Lender determines that (i) any Change of Law announced after
the date of this Agreement affects the amount of capital required or
expected to be maintained by Lender or any Person controlling Lender (a
"Capital Adequacy Requirement") and (ii) the amount of capital
maintained by Lender or such Person which is attributable to or based
upon the Loans or this Agreement must be increased as a result of such
Capital Adequacy Requirement (taking into account Lender's or such
Person's policies with respect to capital adequacy), Borrower shall pay
to Lender or such Person, upon demand, such amounts as Lender or such
Person shall determine are necessary to compensate Lender or such
Person for the increased costs to Lender or such Person of such
increased capital. A certificate of Lender setting forth in reasonable
detail the computation of any such increased costs, delivered by Lender
to Borrower shall, in the absence of manifest error, be conclusive and
binding on Borrower for all purposes; provided, however, that the
increased costs or reduced amounts shall not relate to any period more
than 180 days prior to the date of such certificate. 2.5 FUNDING LOSS
INDEMNIFICATION. If Borrower shall (a) repay or prepay any
13
LIBOR Loan or LIBOR Portion on any day other than the last day of an Interest
Period therefor (whether an optional prepayment, a mandatory prepayment, a
payment upon acceleration or otherwise) or (b) fail to borrow (including any
conversion to) any LIBOR Loan or LIBOR Portion for which a Notice of
Borrowing/Conversion has been delivered to Lender (whether as a result of the
failure to satisfy any applicable conditions or otherwise) Borrower shall, upon
demand by Lender, reimburse Lender and hold Lender harmless for all costs and
losses incurred by Lender as a result of such repayment, prepayment or failure.
Borrower understands that such costs and losses may include, without limitation,
losses incurred by Lender as a result of funding and other contracts entered
into by Lender to fund a LIBOR Loan or LIBOR Portion. If Lender shall demand
payment under this Section 2.5, Lender shall deliver to Borrower a certificate
setting forth the amount of costs and losses for which demand is made, showing
the calculation thereof in reasonable detail. Such a certificate so delivered to
Borrower shall, in the absence of manifest error, be conclusive and binding on
Borrower as to the amount of such loss for all purposes.
2.6 PREPAYMENTS.
(A) Voluntary Prepayments. Subject to Section 2.7 below and
except for the paydown of the Revolving Loans from the collection of
the Accounts, Borrower may prepay the Loans in whole or in part only if
(i) Borrower gives Lender written notice (which shall be given by
first-class mail or telecopy to the office or the telecopy number
specified in Section 13.10) of Borrower's intention to make such
prepayments, at least one (1) Business Day prior to tendering the
prepayments, (ii) the total amount of the prepayments is a whole
multiple of $1,000,000 (or the entire remaining balance of the Term
Loan or the Capex Loan), and (iii) Borrower pays any accrued interest
on the amount prepaid at the time of such prepayment. Each such
prepayment will be applied by Lender to reduce the applicable Loan and,
in the case of the Term Loan and the Capex Notes, to reduce the
repayment installments in the inverse order of maturity of payments.
(B) Mandatory Prepayments When Overadvances Exist. If at any
time the outstanding amount of the Revolving Loan exceeds Collateral
Availability or the aggregate outstanding Revolving Loan exceeds Ten
Million Dollars ($10,000,000) (an "Overadvance"), whether as a result
of advances by Lender, a decline in the value of Eligible Accounts, or
otherwise, Borrower shall on demand by Lender make a prepayment in the
amount of the Overadvance.
2.7 TERM OF AGREEMENT; PREPAYMENT; LIQUIDATED DAMAGES. This Agreement
shall be in effect until five (5) years from the date hereof (the "Initial
Term") and shall be automatically renewed thereafter for successive periods of
one year (each a "Renewal Term") unless terminated as provided below. Borrower
and Lender shall have the right to terminate this Agreement at the end of the
Initial Term or at the end of any Renewal Term by giving the other party at
least sixty (60) days' prior written notice of such termination. In the event
Borrower gives notice of termination and the Total Facility is not paid in full
at the end of the Initial Term or Renewal Term, as applicable, upon the request
of Borrower, but in Lender's sole discretion, Lender may continue to make
advances under the Revolving Loan and renew this Agreement for an additional
year, upon such terms and conditions as Lender may require. In the event Lender
does not agree to continue to make advances and renew the term for an additional
year, all Liabilities shall be immediately due and payable. This Agreement may
also be terminated by Lender upon the occurrence of a Default. Upon the
effective date of any termination, all of the Liabilities (including the Notes)
shall become immediately due and payable without presentment, notice or demand.
Notwithstanding any
14
termination, until all of the Liabilities shall have been fully and finally paid
and satisfied, Lender shall be entitled to retain its security interest in the
Collateral, Borrower shall continue to remit collections of Accounts and
proceeds of Collateral as provided in this Agreement, and Lender shall retain
all of its rights and remedies under this Agreement. During the Initial Term or
any Renewal Term, Borrower may, at its option, upon not less than ninety (90)
days' prior written notice to Lender specifying the date of prepayment,
terminate this Agreement and prepay all of the Liabilities hereunder. In such
event, Borrower shall pay to Lender for loss of the bargain and not as a
penalty, as liquidated damages and as compensation for the costs of Lender's
being prepared to make funds available to Borrower under this Agreement, an
amount (the "Prepayment Fee") equal to the following percentages of the maximum
Total Facility during the given year: 3.0% in the first year following the
Closing Date, 2.0% in the second year following the Closing Date, and 1.0%
during any year thereafter. In addition, Borrower shall pay to Lender, upon any
prepayment in whole or in part of the Term Loan and/or the Capex Loan, a fee
equal to the foregoing percentages of the principal amount so prepaid; provided
that, if such prepayment is made with the proceeds of equity or subordinated
debt issued by Borrower or 3-D and permitted pursuant to the terms of this
Agreement, Borrower shall pay a fee equal to 1.0% of the principal amount so
prepaid (the "Reduced Prepayment Amount"), regardless of the date of prepayment.
If, however, this Agreement is terminated prior to the end of the Initial Term,
Borrower shall be required at the time of termination to pay (in addition to the
Prepayment Fee described above) the difference between the Reduced Prepayment
Amount and the fee which would otherwise have been applicable to such prepaid
amount (had proceeds of equity or subordinated debt not been used for such
prepayment). Borrower shall also be responsible to pay, in every event, LIBOR
breakage penalties pursuant to Section 2.5, and if any fixed rate Loans are
outstanding Borrower agrees to pay an additional prepayment charge equal to the
actual loss, if any, that may be sustained by Lender through redeployment of the
funds loaned to Borrower at the then prevailing interest rates.
2.8 AUDIT FEE. Borrower shall pay to Lender its reasonable costs and
expenses incurred during the course of periodic field examinations and audits,
including a per diem charge for examiners in the field and office at Lender's
then prevailing rate (currently $500 per person per day).
2.9 CLOSING FEE. Borrower shall pay to Lender, in cash, upon the
execution of this Agreement, a Closing Fee in the amount of Three Hundred
Thousand Dollars ($300,000).
2.10 UNUSED LINE FEE. Borrower shall pay to Lender, each month, an
unused line fee equal to one-half of one percent (0.50%) per annum of the
difference between the maximum commitment for the Revolving Loan ($10,000,000 as
of the Closing Date) and the daily average outstanding borrowings under the
Revolving Loan for the prior month. The unused line fee shall be in addition to
any other fees or charges owing with respect to the Revolving Loan.
15
3. ELIGIBLE ACCOUNTS
3.1 ELIGIBLE ACCOUNTS. Upon Borrower's delivery to Lender of a Daily
Collateral Report, Lender shall determine which individual Accounts listed
thereon are Eligible Accounts. Unless otherwise agreed to by Lender in writing
and except as specifically set forth in the proviso at the end of this Section
3.1, Eligible Accounts shall be (i) Accounts of Borrower, (ii) to the extent
Lender has a first priority perfected security interest therein, Accounts of
J.R.S. Exploration Company, Ltd., and (iii) to the extent owing by PEMEX,
Accounts of Geoevaluaciones, S.A. de C.V., and Procesos Interactivos, S.A. de
C.V., and shall in each case and at all times be subject to the following
requirements for eligibility:
(A) If the Account arises from the sale of goods, such goods
shall have been shipped or delivered on open account and on an absolute
sale basis and not on consignment, on approval or on a sale-or-return
basis and shall not be subject to any other repurchase or return
agreement and no material part of such goods shall have been returned,
repossessed, rejected, lost or damaged;
(B) Except as specifically set forth in the proviso at the end
of this Section 3.1, if the Account arises from the performance of
services, such services shall have been performed in full;
(C) The Account shall not be evidenced by chattel paper or an
instrument of any kind;
(D) The Account Debtor obligated on such Account shall not be
suspended from doing business, insolvent or the subject of any
bankruptcy or insolvency proceeding of any kind, or the subject of an
assignment for the benefit of creditors, or have had a receiver or
trustee appointed for a significant portion of its assets, and Lender
shall be satisfied with the creditworthiness of such Account Debtor;
(E) The Account Debtor obligated on such Account shall not be
a supplier to or creditor of Borrower, except to the extent that the
aggregate of such Account Debtor's Accounts exceeds Borrower's
liabilities (including contingent liabilities) to such Account Debtor;
(F) Except as specifically set forth in the proviso at the end
of this Section 3.1, if the Account is owing from an Account Debtor
located outside the United States or Canada (unless the Account Debtor
is PEMEX), such Account Debtor shall have furnished Borrower with an
irrevocable letter of credit issued or confirmed by a financial
institution acceptable to Lender, which letter of credit shall be in
form and substance acceptable to Lender, pledged to Lender, and be
payable in Dollars in an amount not less than the face value of the
Account;
(G) The Account shall be a valid, legally enforceable
obligation of the Account Debtor, reduced by the amount of any offset,
counterclaim or defense denying liability thereunder asserted in
writing by such Account Debtor;
(H) The Account shall be subject to and covered by Lender's
perfected security interest and shall not be subject to any other lien,
claim, encumbrance or security interest;
(i)The Account shall be evidenced by an invoice or other
documentation in form acceptable to Lender;
(J) The Account shall not have remained unpaid for a period
exceeding ninety (90) days after the original invoice date of the
related invoice and not more than fifty percent (50%) of the balance of
all Accounts owing from the Account Debtor obligated under such Account
shall have remained unpaid for more than ninety (90) days after the
invoice date of the related invoices or otherwise be deemed
16
ineligible;
(K) If the Account Debtor is located in the State of New
Jersey or the State of Minnesota, Borrower shall have filed a Notice of
Business Activities Report with the appropriate agency in New Jersey or
Minnesota, as applicable, for the then current year;
(L) The Account shall not be owing from an employee, officer,
agent, director or stockholder of Borrower or any Affiliate or from the
United States of America or any department, agency or instrumentality
thereof;
(M) The aggregate amount of Accounts from an Account Debtor
owing to any of the Companies shall not, at any time, exceed fifteen
percent (15%) (twenty-five percent (25%) in the case of Occidental
Petroleum and other major energy companies approved by Lender from time
to time in its discretion, reasonably exercised, and thirty percent
(30%) in the case of PEMEX and British Petroleum) of the aggregate
amount of existing Eligible Accounts;
(N) The Account shall be one against which Lender is legally
permitted to make loans and advances;
(O) Each of the warranties and representations set forth in
Section 9.2 shall be reaffirmed with respect to such Account at the
time that the most recent Daily Collateral Report was delivered to
Lender;
(P) The Account shall not consist of unapplied cash, deferred
revenue, deposits from customers, Direct Charges or credits in excess
of ninety (90) days; and
(Q) The Account shall otherwise be acceptable to Lender in its
discretion, reasonably exercised;
provided, however, that Lender shall deem the following Accounts to be Eligible
Accounts, subject to the terms specified herein: (i) British Petroleum extended
terms balance owing to Borrower, eligible only through January 31, 1998, subject
to a limit of $1,200,000 on advances against such Accounts (ii) Accounts of
PEMEX owing to Geoevaluaciones, S.A. de C.V., subject to a limit of $3,000,000
on advances against such Accounts (provided that the aggregate of advances
against the British Petroleum balance described in clause (i) and the amount of
advances against PEMEX Eligible Accounts may not exceed $3,000,000 at any time),
and (iii) progress xxxxxxxx, subject to a limit of $1,000,000 on advances
against such Accounts. 4. PAYMENTS
4.1 LOAN ACCOUNT; METHOD OF MAKING PAYMENTS. Lender shall maintain a
loan account (the "Loan Account") on its books in which shall be recorded (i)
all loans and advances made by Lender to Borrower pursuant to this Agreement,
(ii) all payments made by Borrower on all such loans and advances and (iii) all
other appropriate debits and credits as provided in this Agreement, including,
without limitation, all fees, charges, expenses and interest. All entries in the
Loan Account shall be made in accordance with Lender's customary accounting
practices as in effect from time to time. Unless otherwise agreed to in writing,
all payments which Borrower is required to make to Lender under this Agreement
or under any of the Ancillary Agreements shall be made by appropriate debits to
the Loan Account. Lender may, in its discretion, elect to xxxx Borrower for the
amount of any such payment in which case such amount shall be immediately due
and payable with interest thereon at the rate then applicable to Prime Rate
Revolving Loan Portions.
4.2 PAYMENT TERMS. Unless otherwise expressly provided in writing, the
Liabilities will be repayable as follows: (i) interest shall be payable on the
first day of each month (for the immediately preceding month) out of the first
collections received with respect
17
to any proceeds of Collateral, (ii) fees, costs, expenses and similar charges
shall be payable as and when provided for in this Agreement or the Ancillary
Agreements, and (iii) the principal balance of the Liabilities shall be payable
from collections received with respect to any proceeds of Collateral as such
proceeds are received; provided, however, that if at any time the outstanding
principal balance of the Revolving Loan exceeds the Collateral Availability or
the outstanding principal balance of all of the Liabilities exceeds the Total
Facility, Borrower shall immediately pay to Lender such amount as is necessary
to eliminate such excess. Subject to the foregoing and to the provisions of
Section 2.7, the Term Loan will be payable as provided in the Term Note. All of
the Liabilities shall be payable at the address of Lender set forth in Section
13.10. Nothing contained in this Section shall authorize Borrower to sell, lease
or otherwise dispose of any Collateral other than as expressly set forth in
Sections 6.4 and 8.3.
4.3 COLLECTION OF ACCOUNTS AND PAYMENTS. Lender has established one or
more special accounts in Lender's name with Xxxxx Fargo Bank located at 0000
Xxxxxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxx 00000 (Attention: Xxxx Xxxxxxxxx, Energy
Department) and Bank One, Colorado, N.A., located at 0000 00xx Xxxxxx, Xxxxxx,
Xxxxxxxx 00000-0000 (Attention: Xxx Xxxxx) (collectively "Depository Bank") to
which Borrower will immediately deposit all remittances and proceeds of the
Collateral in the identical form in which such payment was made, whether by cash
or check. Borrower hereby agrees that all payments made to such special account
or otherwise received by Lender, whether on the Accounts or as proceeds of other
Collateral or otherwise, will be the sole and exclusive property of Lender and
will be applied on account of the Liabilities. After allowing one (1) calendar
day for collection after such funds are received by Lender, Lender will credit
(conditional upon final collection) all payments received through the special
account to the Loan Account. Borrower and any Affiliates, shareholders,
directors, officers, employees, agents of Borrower and all Persons acting for or
in concert with Borrower who receive any monies, checks, notes, drafts or any
other payments relating to or proceeds of Accounts or other Collateral which
come into their possession or under their control shall, acting as trustee for
Lender, hold such property as the sole and exclusive property of Lender and
immediately upon receipt thereof, shall remit the same or cause the same to be
remitted, in kind, to Lender. Borrower agrees to pay to Lender any and all fees,
costs and expenses (if any) which Lender incurs in connection with opening and
maintaining the special account and depositing for collection by Lender any
check or item of payment received or delivered to Depository Bank in connection
with the special account or any returned or collected checks received by
Depository Bank for deposit in the special account.
4.4 APPLICATION OF PAYMENTS AND COLLECTIONS. Borrower irrevocably
waives the right to direct the application of payments and collections received
by Lender from or on behalf of Borrower, and Borrower agrees that Lender shall
have the continuing exclusive right to apply and reapply any and all such
payments and collections against the Liabilities in such manner as Lender may
deem appropriate, notwithstanding any entry by Lender upon any of its books and
records. To the extent that Borrower makes a payment or payments to Lender or
Lender receives any payment or proceeds of the Collateral for Borrower's
benefit, which payment(s) or proceeds or any part thereof are subsequently
invalidated, declared to be fraudulent or preferential, set aside or required to
be repaid to a trustee, receiver or any other party under any bankruptcy act,
state or federal law, common law or equitable cause, then, to the extent such
payment or proceeds received are so set aside, invalidated, required to be
repaid or the like, the Liabilities or part thereof intended to be satisfied
shall be revived and shall continue in full force and effect, as if such
payments or proceeds had not been
18
received by Lender.
4.5 STATEMENTS. All advances and other financial accommodations
hereunder to Borrower, and all other debits and credits provided for in this
Agreement, shall be evidenced by entries made by Lender in its internal data
control systems showing the date, amount and reason for each such debit or
credit. Until such time as Lender shall have rendered to Borrower written
statements of account as provided herein, the balance in the Loan Account, as
set forth on Lender's most recent statement, shall be presumptive evidence of
the amounts due and owing to Lender by Borrower. Not more than ten (10) days
after the final day of each calendar month, Lender shall render to Borrower a
statement setting forth the balance of the Loan Account, including principal,
interest, expenses and fees. Each such statement shall be subject to subsequent
adjustment by Lender and Lender's right to reapply payments in accordance with
Section 4.4, but shall, absent manifest errors or omissions, be presumed correct
and binding upon Borrower and shall constitute an account stated unless, within
thirty (30) days after receipt of any statement from Lender, Borrower shall
deliver to Lender written objection thereto specifying the error or errors, if
any, contained in such statement.
5. COLLATERAL: GENERAL TERMS
5.1 SECURITY INTEREST. To secure the prompt payment to Lender of the
Liabilities, Borrower hereby grants to Lender a continuing security interest in
and to all of Borrower's now owned or existing and hereafter acquired or arising
tangible and intangible assets, including without limitation the following
property and interest in property of Borrower whether now owned or existing or
hereafter acquired or arising and wherever located: (i) all Accounts, Inventory,
Equipment, contract rights (including, without limitation, the right to receive
monies due under all contracts which may otherwise prohibit such assignment),
General Intangibles, tax refunds, chattel paper, instruments, letters of credit,
investment property, documents and documents of title; (ii) all of the
Borrower's deposit accounts (general or special) including those maintained with
Depository Bank or any other financial institution (iii) all monies, and any and
all other property of Borrower now or hereafter coming into the actual
possession, custody or control of Lender, or any Affiliate of Lender in any way
or for any purpose (whether for safekeeping, deposit, custody, pledge,
transmission, collection or otherwise); (iv) all of Borrower's Computers, books
and records; and (v) all insurance and other proceeds of or relating to any of
the foregoing; and (vi) all accessions and additions to, substitutions for, and
replacements, products and proceeds of any of the foregoing.
5.2 DISCLOSURE OF SECURITY INTEREST. Borrower shall make appropriate
entries upon its financial statements and books and records disclosing Lender's
security interest in the Collateral.
5.3 SPECIAL COLLATERAL. Immediately upon Borrower's receipt of any
Collateral which is evidenced or secured by an agreement, chattel paper, letter
of credit, instrument or document, including, without limitation, promissory
notes, documents of title and warehouse receipts (the "Special Collateral"),
Borrower shall deliver the original thereof to Lender or to such agent of Lender
as Lender shall designate, together with appropriate endorsements, the documents
required to draw thereunder (as may be relevant to letters of credit) or other
specific evidence (in form and substance acceptable to Lender) of assignment
thereof to Lender and shall take such actions as Lender may require to perfect
Lender's security interest in such Special Collateral and any collateral
securing such Special Collateral.
5.4 FURTHER ASSURANCES. At Lender's request, Borrower shall, from time
to time, (i) execute and deliver to Lender all Security Documents that Lender
may reasonably request, in form and substance acceptable to Lender, and pay the
costs of any recording or filing of
19
the same and (ii) take such other actions as Lender may request in order to
fully effect the purposes of this Agreement and to protect Lender's interest in
the Collateral. Upon the occurrence of any uncured Default, Borrower hereby
irrevocably makes, constitutes and appoints Lender (and all Persons designated
by Lender for that purpose) as Borrower's true and lawful attorney and
agent-in-fact to sign the name of Borrower on any of the Security Documents and
to deliver any of the Security Documents to such Persons as Lender, in its sole
discretion, may elect. This power of attorney is coupled with an interest.
Borrower agrees that a photocopy or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement. Upon Borrower's cure
of any Default, Lender shall have the right to complete any action commenced by
it as attorney or agent-in-fact while such Default was continuing.
5.5 INSPECTION. Lender (by any of its officers, employees or agents)
shall have the right, at any time or times without prior notice, to inspect the
Collateral, all records related thereto (and to make extracts from such records)
and the premises upon which any of the Collateral is located, to discuss
Borrower's affairs and finances with any Person and to verify the amount,
quality, value and condition of, or any other matter relating to, the
Collateral; provided that for so long as no Default is continuing, such
inspections shall occur only during Borrower's normal business hours. Borrower
shall pay all costs and expenses incurred by Lender in the course of periodic
audits and examinations of the Collateral (and any collateral for any Guaranty)
and Borrower's (and any of the Companies') operations plus a per diem charge at
Lender's then prevailing rate (currently $500 per person per day) for its
auditors and examiners in the field and office.
5.6 PERFECTION AND PRIORITY; LOCATION OF COLLATERAL. Borrower's chief
executive office, principal place of business and all other offices and
locations of the Collateral and books and records related thereto (including,
without limitation, the Computers, computer programs, printouts and other
computer materials and records concerning the Collateral but excluding temporary
field locations established by Borrower in the ordinary course of its business)
are set forth on Exhibit "C" attached hereto. Borrower shall not remove its
books and records or the Collateral from any such locations (except for
movements of Equipment in the ordinary course of Borrower's business within the
states listed on Exhibit "C" and in accordance with the terms of this Agreement)
and shall not open any new offices or relocate any of its books and records or
the Collateral except within the continental United States of America and with
at least thirty (30) days' prior written notice thereof to Lender.
5.7 LENDER'S PAYMENT OF CLAIMS ASSERTED AGAINST COLLATERAL. Lender may,
but shall not be obligated to, at any time or times hereafter, in its sole
discretion, and without waiving any Default or waiving or releasing any
obligation, liability or duty of Borrower under this Agreement or the Ancillary
Agreements, pay, acquire or accept an assignment of any security interest, lien,
claim or other encumbrance asserted by any Person against the Collateral, unless
Borrower is then contesting the related charge, lien, claim, security interest
or encumbrance as permitted by Section 10.3. All sums paid by Lender under this
Section, including all costs, fees (including reasonable attorneys' fees),
expenses and other charges relating thereto, shall be payable by Borrower to
Lender on demand and shall be additional Liabilities secured by the Collateral.
20
6. COLLATERAL: ACCOUNTS
6.1 VERIFICATION OF ACCOUNTS. Any of Lender's officers, employees or
agents shall have the right, at any time or times hereafter, in Borrower's or
Lender's name or tradestyle or in the name of a firm of independent certified
public accountants acceptable to Lender, to verify the validity, amount or any
other matters relating to any Accounts by mail, telephone, telegraph or
otherwise.
6.2 ASSIGNMENTS, RECORDS AND DAILY COLLATERAL REPORT. Borrower shall
keep accurate and complete records of its Accounts and, as frequently as Lender
shall require, but not less frequently than twice weekly, Borrower shall deliver
to Lender a Daily Collateral Report and formal written assignments of all
Accounts, together with (upon Lender's request) copies of the invoices related
thereto. Borrower shall also deliver to Lender, upon demand, copies (or, after
an uncured Default, originals if requested by Lender) of all documents,
including, without limitation, repayment histories, present status reports and
shipment reports, relating to the Accounts included in any Daily Collateral
Report and such other matters and information relating to the status of then
existing Accounts as Lender shall reasonably request.
6.3 NOTICE REGARDING DISPUTED ACCOUNTS. Borrower shall give Lender
prompt notice of any Accounts which, for an Account Debtor, aggregate in excess
of One Hundred Thousand Dollars ($100,000) in dispute between such Account
Debtor and Borrower. In addition, each Daily Collateral Report shall identify
all disputed Accounts and disclose, in reasonable detail, the reason for the
dispute, all claims related thereto and the amount in controversy.
6.4 SALE OR ENCUMBRANCE OF ACCOUNTS. Borrower shall not, without the
prior written consent of Lender, sell, transfer, grant a security interest in or
otherwise dispose of or encumber any of its Accounts to any Person other than
Lender.
7. COLLATERAL: INVENTORY
Borrower shall keep such records with respect to its Inventory, if any,
as Lender shall reasonably request and shall provide copies of the same to
Lender promptly upon request.
8. COLLATERAL: EQUIPMENT
8.1 MAINTENANCE OF THE EQUIPMENT. Borrower shall keep and maintain the
Equipment in good operating condition and repair and shall make all necessary
replacements thereof so that the value, utility and operating efficiency thereof
shall at all times be maintained and preserved and shall promptly inform Lender
of any material additions to or deletions from the Equipment. Borrower shall not
permit any such Equipment to become affixed to real estate in such manner that
such Equipment will become a fixture or an accession to other personal property.
8.2 EVIDENCE OF OWNERSHIP OF EQUIPMENT. Borrower shall, upon Lender's
request, deliver to Lender all evidence of ownership of the Equipment
(including, without limitation, bills of sale, certificates of title and
applications for title).
8.3 PROCEEDS OF THE EQUIPMENT. Borrower shall not sell, transfer,
lease, grant a security interest in or otherwise dispose of or encumber the
Equipment or any part thereof to any Person other than Lender; provided,
however, that (i) Borrower may complete the sale of up to $400,000 worth of real
estate and related assets in Ohio, currently in progress; and (ii) in any fiscal
year of Borrower, Borrower may sell or otherwise dispose of Equipment with an
aggregate net book value not to exceed Two Hundred Fifty Thousand Dollars
($250,000). In the event any Equipment or real estate is sold, transferred or
otherwise disposed of as permitted in this Section, Borrower shall promptly
notify Lender of such fact and deliver all of the cash proceeds of such sale,
transfer or disposition to Lender, which
21
proceeds shall be applied to the repayment of the Liabilities; provided,
however, that with Lender's prior consent, in its discretion reasonably
exercised, Borrower may use the proceeds of such sale, transfer or disposition
of Equipment to finance the purchase of replacement Equipment in which Lender
has a first priority, perfected security interest documented to the satisfaction
of Lender. Borrower shall deliver to Lender written evidence of the use of the
proceeds for such purchase. All replacement Equipment purchased by Borrower
shall be free and clear of all liens, claims, security interests and other
encumbrances, except for the security interest granted to Lender and Permitted
Liens.
8.4 LOCATION OF EQUIPMENT. Borrower and the other Companies shall at
all times maintain in the United States, in jurisdictions in which Lender has
perfected its security interest in Borrower's and the Companies' assets,
Equipment with an orderly liquidation value (determined to Lender's
satisfaction) of not less than $20,000,000. Borrower shall deliver a certificate
to Lender monthly confirming and detailing Borrower's compliance with such
covenant. 9. WARRANTIES AND REPRESENTATIONS
9.1 GENERAL WARRANTIES AND REPRESENTATIONS. Borrower warrants and
represents that:
(A) Existence and Qualification. Borrower is a corporation
duly organized and validly existing and in good standing under the laws
of the state of its incorporation and is qualified or licensed as a
foreign corporation to do business in all other countries, states and
provinces in which the laws thereof require Borrower to be so qualified
or licensed;
(B) Other Names. Borrower has not used, during the five (5)
year period preceding the date of this Agreement, and does not intend
to use, any other corporate or fictitious name, except as disclosed in
Exhibit "D" attached hereto;
(C) Authority and Power. Borrower has the right and power and
is duly authorized and empowered to enter into, execute, deliver and
perform this Agreement and the Ancillary Agreements to which it is a
party;
(D) Compliance with Law and Other Agreements. The execution,
delivery and performance by Borrower of this Agreement and the
Ancillary Agreements shall not, by their execution or performance, the
lapse of time, the giving of notice or otherwise, constitute a
violation of any applicable and material law, rule, regulation,
judgment, order or decree or a breach of any provision contained in
Borrower's charter documents or by-laws or contained in any agreement,
instrument, indenture or other document to which Borrower is now a
party or by which it is bound;
(E) Use of Proceeds. Borrower's use of the proceeds of any
advances made by Lender is and will continue to be a legal and proper
corporate use (duly authorized by its board of directors, in accordance
with applicable and material law, rule or regulation) and such use is
and will continue to be consistent with all applicable laws, rules and
regulations;
(F) Governmental Approvals. Borrower has, and is current and
in good standing with respect to, all governmental approvals, permits,
certificates, inspections, consents and franchises necessary to conduct
and to continue to conduct its present and intended business as
heretofore conducted by it and to own or lease and operate its
properties as now owned or leased and operated by it; and to the best
knowledge of Borrower, none of said governmental approvals, permits,
certificates, consents or franchises contains any term, provision,
condition or limitation more burdensome than such as are generally
applicable to Persons engaged in the same or similar business as
22
Borrower;
(G) Solvency. Borrower now has capital sufficient to carry on
its business and transactions and all businesses and transactions in
which it is about to engage and is now solvent and able to pay its
debts as they mature and Borrower now owns property the fair salable
value of which is greater than the amount required to pay Borrower's
debts;
(H) No Litigation, Indebtedness or Guaranties. Except as
disclosed on Exhibit "E" attached hereto, Borrower has no litigation
pending, or to the best of its knowledge, threatened, and no
Indebtedness (except for trade payables arising in the ordinary course
of its business since the dates reflected in the Financials) and has
not guaranteed the obligations of any other Person;
(i)No Other Adverse Agreements or Arrangements. Borrower is
not a party to any contract or agreement or subject to any charge,
restriction, judgment, decree or order materially and adversely
affecting its business, property, assets, operations or condition,
financial or otherwise, and is not a party to any labor dispute,
lockout, strike or walkout relating to any labor contracts and no such
contract is scheduled to expire during the Initial Term;
(J) Good Title. Borrower has good, indefeasible and
merchantable title to, and ownership of, the Collateral, free and clear
of all liens, claims, security interests and other encumbrances, except
those of Lender and those described on Exhibit "F" attached hereto;
(K) No Violation of Laws. To the best knowledge of Borrower,
Borrower is not in violation of any applicable statute, rule,
regulation or ordinance of any governmental entity, including, without
limitation, the United States of America, any state, city, town,
municipality, county or any other jurisdiction, or of any agency
thereof, in any respect materially and adversely affecting the
Collateral or Borrower's business, property, assets, operations or
condition, financial or otherwise;
(L) No Lien or Borrowing Defaults. Borrower is not in default
under any indenture, loan agreement, mortgage, lease, deed of trust or
other similar agreement relating to the borrowing of monies or
encumbering of assets to which it is a party or by which it is bound;
(M) Financials. The Financials fairly present the assets,
liabilities and financial condition and results of operations of 3-D
and such other Persons described therein as of the dates thereof; there
are no omissions or other facts or circumstances which are or may be
material and there has been no material and adverse change in the
assets, liabilities or financial or other condition of 3-D or any of
such other Persons since the date of the Financials; there exist no
equity or long term investments in or outstanding advances to any
Person not reflected in the Financials; there are no actions or
proceedings which are pending or, to the best of Borrower's knowledge,
threatened, against Borrower or any other Person which might result in
any material adverse change in Borrower's financial condition or
materially and adversely affect Borrower's operations, its assets or
the Collateral;
(N) ERISA. Borrower has received no notice to the effect that
it is not in full compliance with any of the requirements of ERISA, and
the regulations promulgated thereunder and, to the best of its
knowledge, there exists no event described in Section 4043 of ERISA,
excluding subsections 4043(b)(2) and 4043 (b)(3) thereof ("Reportable
Event"), with respect to Borrower, and neither Borrower nor any Person
who is a member of Borrower's controlled group for Federal income
23
tax purposes has directly or indirectly, caused or permitted any of the
following to occur: (i) restated or amended any pension,
profit-sharing, savings, stock bonus, or other deferred compensation
plans established and maintained by it which are subject to ERISA since
ERISA became effective with respect to such plans in a manner designed
to or which would disqualify those plans and their related trusts under
the applicable requirements of the Internal Revenue Code of 1986, as
amended (the "IRC"); (ii) permitted any of its officers to materially
and adversely affect the qualified tax-exempt status of any of its
pension, profit-sharing, savings, stock bonus or other deferred
compensation plans and trusts under the IRC; (iii) engaged in or
permitted any officer to engage in any "prohibited transaction" as
defined in Section 406 of ERISA or Section 4975 of the IRC; (iv)
incurred any "accumulated funding deficiency" as defined in Section 302
of ERISA or Section 412(a) of the IRC, whether or not waived in
connection with any pension, profit-sharing, savings, stock bonus or
other deferred compensation plans; (v) taken or failed to take any
action which caused or may cause a termination of any pension plan in a
manner which could result in the imposition of a lien on any Borrower's
property pursuant to Section 4068 of ERISA; (vi) failed to notify
Lender that notice has been received of a "termination" (as defined in
ERISA) of any "multi-employer plan" (as defined in ERISA) to which
Borrower has an obligation to contribute; (vii) incurred a "complete
withdrawal" (as defined in ERISA) from any "multi-employer plan" to
which Borrower has an obligation to contribute; (viii) incurred a
"partial withdrawal" (as defined in ERISA) from any "multi-employer
plan" to which Borrower has an obligation to contribute; or (ix) failed
to notify Lender that notice has been received from the Administrator
of any "multi-employer plan" to which Borrower has an obligation to
contribute that any such plan will be placed in "reorganization" as
defined in ERISA;
(O) Taxes. Borrower has filed all federal, state and local tax
returns and other reports, or has been included in consolidated returns
or reports filed by an Affiliate, which Borrower is required by law,
rule or regulation to file and all Charges that are due and payable
have been paid;
(P) No Securities. Borrower's execution and delivery of this
Agreement or any of the Ancillary Agreements does not directly or, to
the best knowledge of Borrower, indirectly violate or result in a
violation of any applicable laws, rules or regulations, including
without limitation, the Securities Exchange Act of 1934, as amended,
and Regulations U, G, T and X of the Board of Governors of the Federal
Reserve System (12 CFR 221, 207, 220 and 224, respectively), and
Borrower does not own or intend to purchase or carry any "margin
security," as defined in such Regulations.
(Q) Affiliates. All Persons who are Borrower's Affiliates at
this time are identified as such on Exhibit "G" hereto;
(R) Subsidiaries. Exhibit "G" correctly sets forth the names,
forms of legal entity and jurisdictions of formation of all
Subsidiaries of Borrower and all Subsidiaries of such Subsidiaries.
Except as described in Exhibit "G", Borrower does not own any capital
stock, partnership interest, joint venture interest or other equity
interest in any Person. Unless otherwise indicated in Exhibit "G", all
of the outstanding shares of capital stock or partnership or joint
venture interests of each Subsidiary of Borrower are owned of record
and beneficially by Borrower, and all securities and interests so owned
are duly authorized, validly issued, fully paid, non-
24
assessable and issued in compliance with all applicable state and
federal securities and other laws, and are free and clear of all liens.
Each Subsidiary of Borrower is a legal entity duly formed, validly
existing and in good standing under the laws of its jurisdiction of
formation, is duly qualified or registered to transact business and is
in good standing in each jurisdiction in which the conduct of its
business or the ownership or leasing of its properties makes such
qualification or registration necessary and has all requisite legal
power and authority to conduct its business and to own and lease its
properties. Each Subsidiary of Borrower is in compliance with all laws
and other legal requirements applicable to its business, has obtained
all authorizations, consents, approvals, orders, licenses and permits
from, and has accomplished all filings, registrations and
qualifications with, or obtained exemptions from any of the foregoing
from, any governmental agency that are necessary for the transaction of
its business.
(S) Environmental Matters. (i) The operations of Borrower, any
other obligor and each of Borrower's Subsidiaries comply in all
material respects with all applicable Environmental Laws; (ii) none of
the operations of Borrower, any other obligor or any Subsidiary of
Borrower are subject to any judicial or administrative proceeding
alleging the violation of any Environmental Laws; (iii) none of the
operations of Borrower, any other obligor or any Subsidiary of Borrower
is the subject of any federal or state investigation evaluating whether
any remedial action is needed to respond to a release of any Hazardous
Material into the environment; (iv) none of Borrower, any other obligor
or any Subsidiary of Borrower has filed any notice under any federal or
state law indicating past or present treatment, storage or disposal of
a Hazardous Material or reporting a spill or release of a Hazardous
Material into the environment; and (v) none of Borrower, any other
obligor or any Subsidiary of Borrower has any known material contingent
liability in connection with any release of any Hazardous Material into
the environment. The materiality standard used in this Section shall be
exceeded if the facts giving rise to a breach or breaches of the
representations or warranties contained herein might result in
liability in excess of Two Hundred Fifty Thousand Dollars ($250,000) in
the aggregate.
(T) No Broker's Fee. No brokerage, finder's or similar fee or
commission is due to any party by reason of Borrower's entering into
this Agreement or by reason of any of the transactions contemplated
hereby, and Borrower shall indemnify and hold Lender harmless from any
such fees and commissions. 9.2 ACCOUNT WARRANTIES AND REPRESENTATIONS.
Borrower warrants and represents
that Lender may rely, in determining which Accounts listed on any Daily
Collateral Report are Eligible Accounts, without independent investigation, on
all statements, warranties and representations made by Borrower on or with
respect to any such Daily Collateral Report and, unless otherwise indicated in
writing by Borrower, that
(A) Such Accounts are genuine, are in all respects what they
purport to be, are not reduced to a judgment and, if evidenced by any
instrument, item of chattel paper, agreement, contract or document, are
evidenced by only one executed original instrument, item of chattel
paper, agreement, contract, or document, which original has been
endorsed and delivered to Lender;
(B) Such Accounts represent undisputed, bona fide transactions
completed in accordance with the terms and provisions contained in any
documents related thereto;
(C) The amounts shown on the Daily Collateral Report, and all
invoices
25
and statements delivered to Lender with respect to any Account, are
actually and absolutely owing to Borrower and are not contingent for
any reason;
(D) Except as may be disclosed on such Daily Collateral
Report, there are no setoffs, counterclaims or disputes existing or
asserted with respect to any Accounts included on an Daily Collateral
Report, and Borrower has not made any agreement with any Account Debtor
for any deduction from such Account, except for discounts or allowances
allowed by Borrower in the ordinary course of its business for prompt
payment, which discounts and allowances have been disclosed to Lender
and are reflected in the calculation of the invoice related to such
Account;
(E) There are no facts, events or occurrences which in any way
impair the validity or enforcement of any of the Accounts or tend to
reduce the amount payable thereunder from the amount of the invoice
shown on any Daily Collateral Report and on all contracts, invoices and
statements delivered to Lender with respect thereto;
(F) To the best of Borrower's knowledge, all Account Debtors
are solvent and had the capacity to contract at the time any contract
or other document giving rise to or evidencing the Accounts was
executed;
(G) The goods (if any), the sale of which gave rise to the
Accounts, (i) were produced in full compliance with the Fair Labor
Standards Act, 29 U.S.C. xx.xx. 207 et seq., as amended from time to
time, and (ii) are not subject to any lien, claim, security interest or
other encumbrance, except those of Lender, and those removed or
terminated prior to the date hereof;
(H) Borrower has no knowledge of any fact or circumstance
which would impair the validity or collectability of any of the
Accounts;
(i) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any
Account Debtor which might result in any material adverse change in
such Account Debtor's financial condition or business; and
(J) The Accounts have not been pledged or sold to any other
Person or otherwise encumbered and Borrower is the owner of the
Accounts free of all claims, liens and encumbrances except those of
Lender.
9.3 INVENTORY WARRANTIES AND REPRESENTATIONS. Borrower warrants and
represents that it does not produce, purchase or sell a material amount of
Inventory in the ordinary course of its business.
9.4 AUTOMATIC WARRANTY AND REPRESENTATION AND REAFFIRMATION OF
WARRANTIES AND REPRESENTATIONS. Each request for an advance made by Borrower
pursuant to this Agreement or the Ancillary Agreements shall constitute (i) an
automatic warranty and representation by Borrower to Lender that there does not
then exist a Default or an Event of Default and (ii) a reaffirmation as of the
date of said request of all of the warranties and representations of Borrower
contained in this Agreement and in the Ancillary Agreements.
9.5 SURVIVAL OF WARRANTIES AND REPRESENTATIONS. Borrower covenants,
warrants and represents to Lender that all representations and warranties of
Borrower contained in this Agreement and the Ancillary Agreements shall be true
at the time of Borrower's execution of this Agreement and the Ancillary
Agreements, and shall survive the execution, delivery and acceptance hereof and
thereof by the parties thereto and the closing of the transactions described
herein and therein or related hereto or thereto.
26
10. COVENANTS AND CONTINUING AGREEMENTS
10.1 AFFIRMATIVE COVENANTS. Borrower covenants that it shall:
(A) Financial Tests. Comply as of the end of each of
Borrower's fiscal quarters with each of the financial covenants set
forth on Schedule 10.1(a) hereto.
(B) Bank Fees. Pay to Lender, on demand, any and all fees,
costs or expenses which Lender or any Participant pays to a bank or
other similar institution arising out of or in connection with (i) the
forwarding to Borrower or any other Person on behalf of Borrower, by
Lender or any Participant, of proceeds of loans or other credit
accommodations made by such party to Borrower pursuant to this
Agreement and (ii) the depositing for collection, by Lender or any
Participant, of any check or item of payment received or delivered to
such party on account of the Liabilities;
(C) Notice of Loss of Collateral. Notify Lender promptly of
any event or occurrence causing a material loss or decline in value of
the Collateral and the estimated (or actual, if available) amount of
such loss or decline;
(D) Notice Re Account Debtors. Promptly upon Borrower's
learning thereof, notify Lender of (i) any material delay in Borrower's
performance of any of its obligations to any Account Debtor and of any
assertion of any claims, offsets, defenses or counterclaims by any
Account Debtor and of any allowances or credits granted (including all
credits issued for returned or repossessed Inventory) or other monies
advanced by Borrower to any Account Debtor and (ii) all material
adverse information relating to the financial or other condition of any
Account Debtor;
(E) Financials. Keep books of account and prepare consolidated
and consolidating financial statements, including in such financial
statements all foreign Companies ("Financials"), and furnish to Lender
the following (all to be kept and prepared in accordance with GAAP,
unless Borrower's independent certified public accountants concur in
any changes therein and such changes are disclosed in writing to Lender
and are consistent with then generally accepted accounting principles):
(i)as soon as available, but not later than ninety
(90) days after the close of each fiscal year of 3-D, consolidated and
consolidating Financials of 3-D, including in such financial statements
all foreign Companies (including a balance sheet, a profit and loss
statement and a statement of cash flows, each with supporting
footnotes) as at the end of such fiscal year and for the fiscal year
then ended all in reasonable detail as requested by Lender and audited
by a firm of independent certified public accountants of recognized
national standing selected by Borrower and containing the unqualified
opinion of such independent certified public accountants with respect
to the Financials;
(ii) as soon as available, but not later than thirty
(30) days after the end of each month and each fiscal quarter of 3-D,
unaudited consolidated and consolidating Financials of 3-D, including
in such financial statements all foreign Companies (including for each
month a statement of profit and loss for the month then ended and a
balance sheet as at the end of such month and, for each fiscal
quarter-end, a statement of profit and loss and of surplus for the
fiscal quarter then ended, a statement of cash flow, a balance sheet as
at the end of such quarter, and a covenant compliance certificate in
the form of Exhibit "H" hereto) as at the end of the portion of 3-D's
fiscal year then elapsed, all in reasonable detail as requested by
Lender and certified by 3-D's principal financial officer as prepared
in accordance with generally accepted accounting principles and fairly
presenting the financial
27
position and results of operations of 3-D and its consolidated
Subsidiaries for such period;
(iii) for Borrower, J.R.S. Exploration Company, Ltd.,
Geoevaluaciones, S.A. de C.V., and Procesos Interactivos Avanzados,
S.A. de C.V., individually and in the aggregate, (A) as soon as
possible, but not later than fifteen (15) days after the end of each
month, an Accounts aging, and (B) as soon as possible, but not later
than thirty (30) days after the end of each month, an aging of all
accounts payable, all in reasonable detail as requested by Lender and
certified by Borrower's principal financial officer as accurate and
complete and prepared in accordance with generally accepted accounting
principles;
(iv) daily, a Daily Collateral Report;
(v) as soon as available, but not later than sixty
(60) days before the beginning of each fiscal year of 3-D, a
consolidated and consolidating income statement, balance sheet and cash
flow projection for 3-D for such fiscal year, including in such
documentation all foreign Companies, detailed by quarter, together with
appropriate supporting documents reasonably acceptable to Lender;
(vi) promptly after the sending or filing thereof, as
the case may be, copies of any proxy statements, financial statements
or reports which 3-D has made available to its shareholders and copies
of any regular, periodic and special reports or registration statements
which 3-D files with the Securities and Exchange Commission or any
governmental authority which may be substituted therefor, or any
national securities exchange;
(Vii) such other data and information (financial and
otherwise) as Lender, from time to time, may reasonably request,
bearing upon or related to the Collateral, Borrower's financial
condition or results of its operations, or the financial condition of
any Person who is a Guarantor;
(F) Notice Re Ineligibility of Accounts. Notify Lender
promptly, but in no event later than two (2) days after Borrower's
learning thereof, that any Eligible Account has ceased to be an
Eligible Account and the reason(s) for such ineligibility;
(G) Notice Re Litigation. Notify Lender, promptly upon
Borrower's learning of (i) any litigation affecting Borrower if the
claim is in excess of $250,000, whether or not the claim is considered
by Borrower to be covered by insurance; and (ii) the institution of any
suit or administrative proceeding which may materially and adversely
affect the operations, financial condition or business of Borrower or
which may affect Lender's security interest in the Collateral;
(H) Copies of Agreements. Provide Lender with copies of all
leases with a duration in excess of six months or similar agreements
between Borrower and any Person, whether Borrower is lessor or lessee
thereunder, and, upon request provide Lender with copies of any other
leases, licenses, permits or similar agreement relative to Borrower's
business;
(i)Notice of Default. Notify Lender, promptly upon learning
thereof, of any Default or Event of Default;
(J) Environmental Matters. Give written notice to Lender
immediately upon receipt of any notice that (i) the operations of
Borrower, any other obligor or any Subsidiary of Borrower are not in
full compliance with requirements of applicable Environmental Laws;
(ii) Borrower, any other obligor or any Subsidiary of Borrower is
subject to any federal or state investigation evaluating whether any
remedial action is needed to respond to the release of any Hazardous
Material into the environment;
28
or (iii) any properties or assets of Borrower, any other obligor or any
Subsidiary of Borrower are subject to an Environmental Lien. As used
herein, "Environmental Lien" means a lien in favor of any governmental
entity for (A) any liability under any Environmental Laws, or (B)
damages arising from or costs incurred by such governmental entity in
response to a release of a Hazardous Material into the environment.
Without limiting the generality of any of Borrower's other covenants
and agreements, the operations of Borrower, any other obligor and each
of Borrower's Subsidiaries shall at all times comply in all material
respects with all applicable Environmental Laws and post-testing
procedures and requirements. The materiality standard used in this
Section shall be exceeded if the facts giving rise to a breach or
breaches of the covenant contained herein might result in liability in
excess of Two Hundred Fifty Thousand Dollars ($250,000) the aggregate;
and
(K) Guaranty. Provide Lender with and maintain in effect
continuing guaranties in form and substance satisfactory to Lender
("Guaranties") and executed by each of the following Affiliates of
Borrower: 3-D; 3-D Geophysical of Latin America, Inc., a Cayman Island
company; J.R.S. Exploration Company, Ltd., a Canada corporation;
Geoevaluaciones, S.A. de C.V., a Mexico company; and Procesos
Interactivos Avanzados, S.A. de C.V., a Mexico company. The Guaranty of
3-D shall be secured by a perfected first priority security interest in
the stock of certain of the Companies and the Guaranty of J.R.S.
Exploration Company, Ltd. shall be secured by a perfected first
priority security interest in all of the assets of such Guarantor in
each case pursuant to security agreements, pledge agreements and such
other documentation as Lender shall require, all in form and substance
satisfactory to Lender in its sole discretion. Each such Guarantor
shall make representations and warranties similar to those of Borrower
in this Agreement, and shall agree to be bound by covenants and
agreements similar to those applicable to Borrower in this Agreement.
10.2 NEGATIVE COVENANTS. Borrower covenants that it shall not, without
the prior
written consent of Lender, which consent shall be in the discretion of Lender,
reasonably exercised:
(A) Merger. Merge or consolidate with or acquire any Person;
(B) Investments. Other than in the ordinary course of its
business, make any investment in the securities of any Person;
(C) Dividends. Declare or pay dividends upon any of Borrower's
Stock or make any distribution of Borrower's property or assets or make
any loans, advances or extensions of credit to any Person, including,
without limitation, any Affiliate, officer or employee of Borrower;
provided that Borrower may issue stock dividends upon its Stock so long
as the same is in accordance with all applicable laws and provided no
Default has occurred;
(D) Loans and Advances. Make any loans or other advances of
money (other than salary) to officers, directors or stockholders of any
of the Companies, or permit the annual salary and all other direct and
indirect remuneration (excluding stock options) to their officers to
exceed Seven Hundred Thousand Dollars ($700,000) individually or Three
Million Five Hundred Thousand Dollars ($3,500,000) in the aggregate; or
make loans or other advances of money to Affiliates, except for (i)
transfers to J.R.S. Exploration Company, Ltd., Geoevaluaciones, S.A. de
C.V., 3- D Geophysical of Latin America, Inc., and Procesos
Interactivos, S.A. de C.V., not to exceed at any time for any such
Company the outstanding amount of advances
29
made by Lender to Borrower based on the Eligible Accounts of such
Company, (ii) loans by Borrower to the Companies described in clause
(i) hereof in excess of the amounts permitted under clause (i),
provided that no Default or Event of Default then exists or would
result from the making of such loan, and (iii) in addition to the
foregoing entities described in clause (i), advances to other
Affiliates, in an amount for each such Affiliate not to exceed $25,000
at any time outstanding or $50,000 in the aggregate at any time
outstanding for all such Affiliates;
(E) Redemptions. Redeem, retire, purchase or otherwise
acquire, directly or indirectly, any of Borrower's Stock;
(F) Change in Business. Make any material change in Borrower's
capital structure or in any of its business objectives, purposes and
operations which might in any way adversely affect the repayment of the
Liabilities;
(G) Affiliate Transactions. Except as provided in Section
10.2(d), above, enter into, or be a party to, any transaction with any
Affiliate, director, officer or stockholder of Borrower, except in the
ordinary course of and pursuant to the reasonable requirements of
Borrower's business and upon fair and reasonable terms which are fully
disclosed to Lender and are no less favorable to Borrower than would
obtain in a comparable arm's length transaction with a Person not an
Affiliate, director, officer or stockholder of Borrower;
(H) Agreements Re Collateral. Enter into any transaction which
materially and adversely affects the Collateral or Borrower's ability
to repay the Liabilities or permit or agree to any extension,
compromise or settlement or make any change or modification of any kind
or nature with respect to any Account, including any of the terms
relating thereto;
(i) Guaranty. Guarantee or otherwise, in any way, become
liable with respect to the obligations or liabilities of any Person,
except (i) its Affiliates' obligations to Lender and (ii) by
endorsement of instruments or items of payment for deposit to the
general account of Borrower or for delivery to Lender on account of the
Liabilities;
(J) Deposits to Affiliates. Except as provided in Section
10.2(d), above, make deposits to or withdrawals from any of its deposit
accounts for the benefit of any Affiliate;
(K) Encumbrances. Except as otherwise expressly permitted
herein or in the Ancillary Agreements, encumber, pledge, mortgage,
grant a security interest in, assign, sell, lease or otherwise dispose
of or transfer, whether by sale, merger, consolidation, liquidation,
dissolution, or otherwise, any of Borrower's assets;
(L) Indebtedness for Borrowed Money. Incur any Indebtedness
for borrowed money in excess of One Million Five Hundred Thousand
Dollars ($1,500,000) during any fiscal year of Borrower, other than the
Liabilities, except for Indebtedness disclosed on Exhibit "J" hereto
and except for Indebtedness which is unsecured and is with Persons who
execute and deliver to Lender (in form and substance acceptable to
Lender) subordination agreements subordinating their claims against
Borrower to the payment of the Liabilities;
(M) Capital Expenditures. Make Capital Expenditures, in any
fiscal year which, in the aggregate, exceed the greater of (i) Sixteen
Million Dollars ($16,000,000) or (ii) an amount equal to 12% of
Borrower's gross revenues, not to exceed Twenty Five Million Dollars
($25,000,000), or;
(N) Affiliate Accounts. Except as provided in Section
10.2(d)(i), permit
30
any Accounts owing to Borrower from any Affiliate to be payable on
terms which would not allow Borrower to demand payment upon the
occurrence of a default;
(O) Deposit Accounts. Open, transfer, close or change any of
Borrower's deposit accounts. A description of all Borrower's deposit
accounts is provided in Schedule 10.2 hereto; or
(P) 3-D Stock. Nothing herein shall be deemed to prohibit or
otherwise affect or require consent by Lender to any issuance by 3-D of
any stock of 3-D or options with respect thereto for any purpose
whatsoever, except to consummate a merger or acquisition. 10.3
CONTESTING CHARGES. Notwithstanding anything to the contrary herein,
Borrower may dispute any Charges without prior payment thereof, even if such
non-payment may cause a lien to attach to Borrower's assets, provided that
Borrower shall give Lender prompt notice of such dispute and shall be diligently
contesting the same in good faith and by an appropriate proceeding and there is
no danger of a loss or forfeiture of any of the Collateral or of Lender's
priority position with respect to such Collateral and provided further that, if
the same are potentially or actually in excess of Two Hundred Fifty Thousand
Dollars ($250,000) in the aggregate at any time hereafter, Borrower shall give
Lender such additional collateral and assurances as Lender, in its sole
discretion, deems necessary under the circumstances, immediately upon demand by
Lender.
10.4 PAYMENT OF CHARGES. Subject to the provisions of Section 10.3,
Borrower shall pay promptly when due all of the Charges. In the event Borrower,
at any time or times hereafter, shall fail to pay the Charges or to promptly
obtain the satisfaction of such Charges, Borrower shall promptly so notify
Lender thereof and Lender may, without waiving or releasing any obligation or
liability of Borrower hereunder or any Default, in its discretion reasonably
exercised, at any time or times thereafter, make such payment or any part
thereof, (but shall not be obligated so to do) or obtain such satisfaction and
take any other action with respect thereto which Lender deems advisable. All
sums so paid by Lender and any expenses, including reasonable attorneys' fees,
court costs, expenses and other charges relating thereto, shall be payable by
Borrower to Lender upon demand and shall be additional Liabilities.
10.5 INSURANCE; PAYMENT OF PREMIUMS. At its sole cost and expense,
Borrower shall (i) keep and maintain the Collateral insured for the greater of
original cost or replacement value of the Collateral against loss or damage by
fire, theft, explosion, sprinklers and all other hazards and risks in amounts
customary for companies of similar size engaged in the same or similar
businesses; (ii) if applicable, maintain product liability insurance in an
amount customary for the business conducted by Borrower and acceptable to
Lender; and (iii) general public liability insurance in an amount satisfactory
to Lender but in no event less than Ten Million Dollars ($10,000,000) per
occurrence, for bodily injury and property damage. All policies of insurance on
the Collateral or otherwise required hereunder shall be in form and amount
satisfactory to Lender and with insurers reasonably recognized as adequate by
Lender. Borrower shall deliver to Lender a copy of each policy of insurance and,
if requested, evidence of payment of all premiums therefor and shall deliver
renewals of all such policies to Lender at least thirty (30) days prior to their
expiration dates. Such policies of insurance shall contain an endorsement, in
form and substance acceptable to Lender, showing all losses payable to Lender.
Such endorsement shall provide that the insurance companies will give Lender at
least thirty (30) days' prior notice before any such policy shall be altered or
canceled and that no act or default of Borrower or any other person shall affect
the right of Lender to recover under such policy in case of loss or damage.
31
Borrower hereby directs all insurers under such policies to pay all proceeds
payable thereunder directly to Lender. After the occurrence and during the
continuance of a Default, Borrower irrevocably makes, constitutes and appoints
Lender (and all officers, employees or agents designated by Lender) as
Borrower's true and lawful attorney and agent-in-fact for the purpose of making,
settling and adjusting claims under such policies (provided that Lender shall
consult with Borrower prior to finally making, settling or adjusting claims
under such policies), endorsing the name of Borrower in writing or by stamp on
any check, draft, instrument or other item of payment for the proceeds of such
policies and for making all determinations and decisions with respect to such
policies. If Borrower shall fail to obtain or maintain any of the policies
required by this Section 10.5 or to pay any premium relating thereto, then
Lender, without waiving or releasing any obligation or default by Borrower
hereunder, may (but shall be under no obligation to do so) obtain and maintain
such policies of insurance and pay such premiums and take any other action with
respect thereto which Lender deems advisable. All sums so disbursed by Lender,
including reasonable attorneys' fees, court costs, expenses and other charges
relating thereto, shall be payable by Borrower to Lender upon demand and shall
be additional Liabilities.
10.6 SURVIVAL OF OBLIGATIONS UPON TERMINATION OF AGREEMENT. Except as
otherwise expressly provided for in this Agreement and in the Ancillary
Agreements, no termination or cancellation (regardless of cause or procedure) of
this Agreement or the Ancillary Agreements shall in any way affect or impair the
powers, obligations, duties, rights, and liabilities of Borrower or Lender in
any way or respect relating to any transaction or event occurring prior to such
termination or cancellation, the Collateral, or any of the undertakings,
agreements, covenants, warranties and representations of Borrower or Lender
contained in this Agreement or the Ancillary Agreements. All such undertakings,
agreements, covenants, warranties and representations shall survive such
termination or cancellation.
10.7 ENVIRONMENTAL INDEMNITY. Borrower hereby indemnifies Lender, its
successors and assignees, and agrees to hold Lender harmless from and against
any and all losses, liabilities, damages, injuries, costs, expenses and claims
of any and every kind whatsoever (including, without limitation, court costs and
attorneys' fees) which at any time or from time to time may be paid, incurred or
suffered by, or asserted against, Lender for, with respect to, or as a direct or
indirect result of the violation by Borrower, any other obligor or any of
Borrower's Affiliates, of any laws, including but not limited to, the
Environmental Laws or any laws or regulations relating to Hazardous Materials,
treatment, storage, disposal, generation and transportation, air, water and
noise pollution, soil or ground or water contamination, the handling, storage or
release into the environment of Hazardous Materials; or with respect to, or as a
direct or indirect result of the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission or release from, properties utilized by
Borrower, any other obligor or any of Borrower's Subsidiaries in the conduct of
their respective business into or upon any land, the atmosphere, or any
watercourse, body of water or wetland, of any Hazardous Materials (including,
without limitation, any losses, liabilities, damages, injuries, costs, expenses
or claims asserted or arising under the Environmental Laws); and the provisions
of and undertakings and indemnification set out in this Section shall survive
the satisfaction and payment of the Liabilities and the termination of this
Agreement.
10.8 CHANGE OF CONTROL. It is covenanted and agreed by Borrower that
3-D shall at all times own 100% of the shares of Borrower's capital stock.
10.9 REVISIONS OR UPDATES. Should any of the information or disclosures
provided
32
on any of the Schedules or Exhibits originally attached hereto become outdated
or incorrect in any material respect, Borrower promptly shall provide to Lender
such revisions or updates as may be necessary or appropriate to update or
correct such Schedule(s) or Exhibit(s); provided that no such revisions or
updates shall be deemed to have amended, modified or superseded such Schedule or
Exhibit as originally attached hereto, or to have cured any breach of warranty
or representation resulting from the inaccuracy or incompleteness of any such
Schedule or Exhibit unless and until Lender, in its sole and absolute
discretion, shall have accepted in writing such revisions or updates.
11. CONDITIONS PRECEDENT TO CLOSING
Lender will not be obligated to make any advances hereunder
unless the following conditions precedent have been satisfied as determined by
Lender:
(A) Lender shall have received landlord waivers, mortgagee
waivers and warehouse agreements acceptable to Lender in its sole
discretion from the owners of such owned and leased locations of
Borrower with a duration in excess of six months as Lender shall
determine. The landlord waivers shall include, without limitation, a
right of Lender to remain on the premises for up to three months;
(B) Borrower's representations and warranties contained in
this Agreement and the Ancillary Agreements shall be correct and
complete; Borrower shall have performed and complied with all
covenants, agreements, and conditions contained herein and in the
Ancillary Agreements which are required to have been performed or
complied with; and there shall exist no Default or Event of Default;
(C) No material adverse change in the condition, operations or
prospects, financial or otherwise, of any of the Companies shall have
occurred during the period commencing with June 30, 1997 and ending on
the Closing Date ("Interim Period");
(D) This Agreement, the Guaranties, all security documents
relating to the foregoing Guaranties, all other collateral documents
and agreements, promissory notes and other documents, instruments and
agreements required by Lender shall be executed by the parties thereto
and delivered to Lender in form and substance acceptable to Lender and
its counsel;
(E) Borrower shall have entered into one or more dominion
account agreements with Lender and the financial institutions
maintaining such accounts, all in form and substance acceptable to
Lender;
(F) Lender shall have received such opinions of counsel for
the Companies as Lender may require;
(G) Lender shall have received such opinions, if any, as it
may require from counsel in Canada and Mexico opining as to the
perfection of Lender's liens and security interests in the assets of
the Companies located in such jurisdictions;
(H) Lender shall have received one or more pledges of all
stock of the Companies (other than the stock of 3-D), and shall have
received the original stock certificates of such Companies with duly
executed assignments in blank;
(i) Lender shall have received insurance certificates,
lender's loss payable endorsements and copies of all insurance policies
confirming insurance by the Companies in amounts, coverage, form and by
insurers satisfactory to Lender in its discretion;
(J) Lender shall have received confirmation that it has a
first priority perfected security interest in the Collateral (and all
collateral pledged as security for any Guaranty), subject only to such
liens and encumbrances, if any, as Lender shall have approved in its
discretion in writing. Such confirmation shall include, without
33
limitation, (i) written confirmation from all relevant jurisdictions of
the filing and priority of financing statements (or similar foreign
filings) covering the Collateral, and (ii) written confirmation from
the United States Patent and Trademark Office and any other applicable
federal, state and international offices of the registration and
priority of Lender's lien on all of Borrower's intellectual property
assets;
(K) Lender shall have received a certificate of corporate
status with respect to each Company, dated within 21 calendar days
prior to the Closing Date, from the Secretary of State (or similar
foreign office, as applicable) of such Company's jurisdiction of
incorporation, which indicates that such Company is in good standing in
such jurisdiction;
(L) Lender shall have received certificates of corporate
status indicating that each Company is in good standing as a foreign
corporation, dated within 21 calendar days prior to the Closing Date,
from the Secretary of State (or similar foreign office, as applicable)
of each jurisdiction in which the character of such Company's assets or
the nature of its activities makes such qualification necessary;
(M) None of the Companies shall have entered into any material
commitment or material transaction during the Interim Period,
including, without limitation, transactions for borrowings and capital
expenditures, which are not in the ordinary course of such Company's
business;
(N) None of the Companies shall have made any material change
in its accounting methods or principles during the Interim Period;
(O) No materially advantageous agreement previously in effect
between any Company and any other Person shall have been terminated,
modified or declared to be in default during the Interim Period;
(P) All consents necessary to permit the secured financing
transaction contemplated by this Agreement and the Ancillary Agreements
to be consummated pursuant to the terms and conditions hereof and
thereof shall have been obtained;
(Q) Lender shall have received a description of all employee
pension benefit plans (if any) of the Companies, and shall have
confirmed that such plans are funded at a level satisfactory to Lender;
(R) During the Interim Period, there shall not have been
instituted or threatened in any court or administrative forum, any
material litigation or proceeding to which any of the Companies is a
party;
(S) Lender shall have received evidence satisfactory to it
that no broker's fee, finder's fee or similar fee shall be payable by
any of the Companies or by any other Person in connection with this
Agreement;
(T) Lender shall have received copies of all labor contracts
(if any) to which any of the Companies is a party, and all labor
contracts (if any) necessary to the continuation of the business
operations of the Companies shall be in effect on the Closing Date;
(U) On the Closing Date, the present fair salable value of the
assets of Borrower shall be greater than the total liabilities of
Borrower, including, without limitation, contingent liabilities, and
Lender shall be satisfied that the present fair salable value of the
assets of Borrower will continue thereafter to be greater than the
total liabilities of Borrower, including, without limitation,
contingent liabilities;
(v) On the Closing Date and after giving effect to the
financial accommodations contemplated hereunder, all of the assets
supporting the Liabilities shall be sufficient in value, as determined
by Lender, to provide Borrower with
34
(a) minimum excess borrowing availability under the Revolving Loan of
$3,000,000, and (b) adequate working capital to enable Borrower to
profitably operate its business;
(W) Subordination agreements, no-offset agreements and
intercreditor agreements in form and substance satisfactory to Lender,
shall have been executed and delivered by the Companies and such other
parties as Lender deems necessary;
(X) During the Interim Period, Lender or its representatives
shall have been given access at all reasonable times to inspect and
evaluate the Collateral (and any collateral pledged by any Guarantor)
and the Companies' books and records; and the Companies shall have
provided Lender with all financial and other information which Lender
may have reasonably requested;
(Y) Lender shall have received satisfactory information
regarding the lawsuit by Capilano International Inc. against
Geoevaluaciones, S.A. de C.V. ("Geo-Mexico"), and Lender shall be
satisfied in its sole discretion (i) with the likely outcome to such
lawsuit, (ii) that an adverse outcome with respect thereto will not
have a material adverse affect on 3-D or Geo-Mexico, and (iii) that 3-D
and Geo-Mexico have adequate cash reserves and contingency plans in the
event of an adverse outcome to such lawsuit;
(Z) Lender shall have received (i) the consolidated and
consolidating third fiscal quarter financial statements of 3-D, and
(ii) the most recently prepared projections of the Companies, all of
which must be acceptable to Lender in its discretion reasonably
exercised;
(AA) Lender shall be satisfied with the Companies' procedures
for verifying job completion;
(BB) Lender shall have received a certificate from the
secretary or assistant secretary of each Company certifying (i) the
adoption of resolutions by the board of directors of such Company
authorizing the transactions contemplated hereby, (ii) the articles or
certificate of incorporation of such Company, and (iii) the by-laws of
such Company; and
(CC) Lender shall have received the Closing Fee and all other
fees and expenses payable on or prior to the Closing Date.
12. DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
12.1 DEFAULT. The occurrence of any one or more of the following events
shall constitute a Default:
(A) Borrower fails to pay any part of the Liabilities when due
or declared due or is in default, beyond any applicable grace period,
in the payment of any other Indebtedness in excess of $125,000 in the
aggregate;
(B) Borrower or any Guarantor fails or neglects to perform,
keep or observe any other term, provision, condition or covenant
contained in this Agreement or in the Ancillary Agreements, which is
required to be performed, kept or observed by Borrower or any Guarantor
and any such failure or neglect shall continue for more than five (5)
days from the date of such failure or neglect, provided that the
foregoing cure period shall not apply to a default with respect to
Section 10.2 hereof;
(C) A default shall occur and continue beyond any applicable
grace period under any agreement, document or instrument, other than
this Agreement or any of the Ancillary Agreements, now or hereafter
existing, to which Borrower is a party if as a result thereof Borrower
is in default of obligations in excess of $125,000 in the aggregate;
(D) Any statement, warranty, representation, report, financial
statement, or
35
certificate made or delivered by Borrower or by any Guarantor, or any
of their officers, employees or agents, to Lender is not true and
correct in any material respect;
(E) There shall occur any material uninsured damage to or
loss, theft, or destruction of any of the Collateral;
(F) Collateral or any of Borrower's or any Guarantor's other
assets with an aggregate value in excess of $125,000 are attached,
seized, levied upon or subjected to a writ or distress warrant, or come
within the possession of any receiver, trustee, custodian or assignee
for the benefit of creditors and the same is not dismissed or otherwise
avoided within thirty (30) days thereafter; or application is made by
any Person other than Borrower or any Guarantor for the appointment of
a receiver, trustee, or custodian for any of the Collateral or any of
Borrower's or any Guarantor's other assets and the same is not
dismissed within thirty (30) days after the application therefor;
(G) An application is made by Borrower or any Guarantor for
the appointment of a receiver, trustee or custodian for any of the
Collateral or any of Borrower's or any Guarantor's other assets; a
petition under any section or chapter of the Bankruptcy Code or similar
law or regulation is filed by Borrower or any Guarantor; a petition
under any section or chapter of the Bankruptcy Code or similar law or
regulation is filed against Borrower or any Guarantor and is not
dismissed within thirty (30) days after filing; Borrower or any
Guarantor makes an assignment for the benefit of its creditors or any
case or proceeding is filed by or against Borrower or any Guarantor for
its dissolution, liquidation, or termination; Borrower or any Guarantor
ceases to conduct its business as now conducted or is enjoined,
restrained or in any way prevented by court order from conducting all
or any material part of its business affairs;
(H) Except as permitted in Section 10.3, a notice of lien,
levy or assessment is filed of record with respect to all or any
substantial portion of Borrower's or any Guarantor's assets by the
United States, or any department, agency or instrumentality thereof, or
by any state, county, municipal or other governmental agency including,
without limitation, the Pension Benefit Guaranty Corporation, or any
taxes or debts owing to any of the foregoing becomes a lien or
encumbrance upon the Collateral or any of Borrower's or any Guarantor's
other assets and such lien or encumbrance is not released within thirty
(30) days after its creation;
(i)One or more judgments is rendered against Borrower or any
Guarantor in an aggregate amount in excess of Two Hundred Fifty
Thousand Dollars ($250,000) or, in the lawsuit described in Section
11(y), in excess of Two Million Dollars ($2,000,000), and Borrower or
any Guarantor, as applicable, fails to immediately satisfy such
judgment or fails to bond and stay enforcement of such judgment and
commence appropriate proceedings to appeal such judgment within the
applicable appeal period or, after such appeal is filed, Borrower or
any Guarantor, as applicable, fails to diligently prosecute such appeal
or such appeal is denied;
(J) Borrower or any Guarantor becomes insolvent or fails
generally to pay its debts as they become due;
(K) Borrower fails within fifteen (15) days after the
occurrence of any of the following events, to furnish Lender with
appropriate notice thereof: (i) the happening of a Reportable Event
with respect to any profit sharing or pension plan governed by ERISA
(such notice shall contain the statement of the chief financial
36
officer of Borrower setting forth details as to such Reportable Event
and the action which Borrower proposes to take with respect thereto and
a copy of the notice of such Reportable Event to the Pension Benefit
Guaranty Corporation), (ii) the termination of any such plan, (iii) the
appointment of a trustee by an appropriate United States District Court
to administer any such plan, or (iv) the institution of any proceedings
by the Pension Benefit Guaranty Corporation to terminate any such plan
or to appoint a trustee to administer any such plan;
(L) Borrower fails to: (i) furnish to Lender a copy of each
report which is filed by Borrower with respect to any profit sharing or
pension plan governed by ERISA promptly after the filing thereof with
the Secretary of Labor or the Pension Benefit Guaranty Corporation or
(ii) notify Lender promptly upon receipt by Borrower of any notice of
the institution of any proceeding or other actions which may result in
the termination of any such plans;
(M) Any Guarantor revokes or terminates any Guaranty relating
to any of the Liabilities or any document or agreement securing the
same, or defaults under the terms of any such Guaranty or other
agreement beyond any applicable grace period;
(N) Any party (other than Lender) to an intercreditor and/or
subordination agreement executed in connection herewith shall be in
default thereunder;
(O) A default occurs under any agreement, instrument or
document relating to any of the Liabilities heretofore, now or at any
time or times hereafter executed by, or delivered to Lender by Borrower
or by any Guarantor. 12.2 ACCELERATION OF THE LIABILITIES. Upon and
after the occurrence of a Default,
all of the Liabilities may, at the option of Lender and without demand, notice,
or legal process of any kind, be declared, and immediately shall become, due and
payable.
12.3 ADVANCES DURING CURE PERIOD. Upon the occurrence of a Default
which is subject to any cure period, Lender may, in its sole discretion, cease
making further advances during the time such Default remains uncured.
12.4 DEFAULT RATE. Upon the occurrence of a Default, the Loans shall
bear interest at a Default Rate equal at all times to three percent (3%) above
the Prime Rate-based interest rates provided for such Loans, such Default rate
to begin upon the occurrence of the Default and to be adjusted upon any change
in the Prime Rate as provided herein.
12.5 REMEDIES. Upon and after the occurrence of a Default, Lender shall
have all of the following rights and remedies:
(a) All of the default rights and remedies of a secured party
under the California Commercial Code or any other applicable law, all
of which rights and remedies shall be cumulative, and not exclusive, to
the extent permitted by law and in addition to any other rights and
remedies contained in this Agreement and in any of the Ancillary
Agreements;
(b) The right to (i) peacefully enter upon the premises of
Borrower or any other place or places where the Collateral is located,
without any obligation to pay rent to Borrower or any other Person,
through self-help and without judicial process or first obtaining a
final judgment or giving Borrower notice and opportunity for a hearing
on the validity of Lender's claim, and remove the Collateral from such
premises and places to the premises of Lender or any agent of Lender,
for such time as Lender may require to collect or liquidate the
Collateral, and/or (ii) require Borrower to assemble and deliver the
Collateral to Lender at a place to be designated by Lender;
(c) The right to (i) open Borrower's mail and collect any and
all amounts
37
due from Account Debtors or direct that Borrower's mail be diverted to
a post office box or other location as determined by Lender, (ii)
notify Account Debtors that the Accounts have been assigned to Lender
and that Lender has a security interest therein and (iii) direct such
Account Debtors to make all payments due from them upon the Accounts,
including the Special Collateral, directly to Lender or to a lock box
designated by Lender. Lender shall promptly furnish Borrower with a
copy of any such notice sent and Borrower hereby agrees that any such
notice, in Lender's sole discretion, may be sent on Lender's
stationery, in which event, Borrower shall, upon demand, co-sign such
notice with Lender;
(d) The right to sell, lease or to otherwise dispose of all or
any Collateral in its then condition, or after any further
manufacturing or processing thereof, at public or private sale or
sales, in lots or in bulk, for cash or on credit, all as Lender, in its
sole discretion, may deem advisable. At any such sale or sales of the
Collateral, the Collateral need not be in view of those present and
attending the sale, nor at the same location at which the sale is being
conducted. Lender shall have the right to conduct such sales on
Borrower's premises or elsewhere and shall have the right to use
Borrower's premises without charge for such sales for such time or
times as Lender may see fit. Lender is hereby granted a license or
other right to use, without charge, Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade names,
trademarks and advertising matter, or any property of a similar nature,
as it pertains to the Collateral, in advertising for sale and selling
any Collateral and Borrower's rights under all licenses and all
franchise agreements shall inure to Lender's benefit but Lender shall
have no obligations thereunder. Lender may purchase all or any part of
the Collateral at public or, if permitted by law, private sale and, in
lieu of actual payment of such purchase price, may setoff the amount of
such price against the Liabilities. The proceeds realized from the sale
of any Collateral shall be applied first to the costs, expenses and
attorneys' fees and expenses incurred by Lender for collection and for
acquisition, completion, protection, removal, storage, sale and
delivery of the Collateral; second to interest due upon any of the
Liabilities; and third to the principal of the Liabilities. Lender
shall account to Borrower for any surplus. If any deficiency shall
arise, Borrower shall remain liable to Lender therefor. 12.6 NOTICE.
Borrower agrees that any notice required to be given by Lender of a
sale, lease, or other disposition of any of the Collateral or any other intended
action by Lender, which is personally delivered to Borrower or which is
deposited in the United States mail, postage prepaid and duly addressed to
Borrower at the address set forth in Section 13.10, at least five (5) days prior
to any such public sale, lease or other disposition or other action being taken,
or the time after which any private sale of the Collateral is to be held, shall
constitute commercially reasonable and fair notice thereof to Borrower.
13.0 MISCELLANEOUS
13.1 APPOINTMENT OF LENDER AS BORROWER'S LAWFUL ATTORNEY-IN-FACT.
Borrower, irrevocably designates, makes, constitutes and appoints Lender (and
all persons designated by Lender) as Borrower's true and lawful attorney and
agent-in-fact (this power of attorney is coupled with an interest) and Lender,
or Lender's agent, may, without notice to Borrower:
(a) At any time hereafter, for the purpose of protecting,
preserving or collecting the Collateral, endorse by writing or stamp
Borrower's name on any checks, notes, drafts or any other payment
relating to the Collateral which comes into
38
the possession of Lender or under Lender's control and deposit the same
to the account of Lender for application to the Liabilities;
(b) At any time after the occurrence of an uncured Event of
Default, in Borrower's or Lender's name: (i) demand payment of the
Collateral; (ii) enforce payment of the Collateral, by legal
proceedings or otherwise; (iii) exercise all of Borrower's rights and
remedies with respect to the collection of the Collateral; (iv) settle,
adjust, compromise, extend or renew the Accounts and the Special
Collateral; (v) settle, adjust or compromise any legal proceedings
brought to collect the Collateral; (vi) if permitted by applicable law,
sell or assign the Collateral upon such terms, for such amounts and at
such time or times as Lender deems advisable; (vii) satisfy and release
the Accounts and Special Collateral; (viii) take control, in any
manner, of any item of payment or proceeds referred to in Section 4.3;
(ix) prepare, file and sign Borrower's name on any proof of claim in
Bankruptcy or similar document against any Account Debtor; (x) prepare,
file and sign Borrower's name on any notice of lien, assignment or
satisfaction of lien or similar document in connection with the
Collateral; (xi) do all acts and things necessary, in Lender's sole
discretion, to fulfill Borrower's obligations under this Agreement;
(xii) endorse by writing or stamp the name of Borrower upon any chattel
paper, document, instrument, invoice, freight xxxx, xxxx of lading or
similar document or agreement relating to the Collateral; and (xiii)
use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Collateral
to which Borrower has access; provided that, upon Borrower's cure of
any Default or Event of Default, Lender shall have the right to
complete any action commenced by it as attorney or agent-in-fact while
such Default or Event of Default was continuing; and
(c) At any time after the occurrence of an Event of Default
notify the post office authorities to change the address for delivery
of Borrower's mail to an address designated by Lender and receive, open
and dispose of all mail addressed to Borrower.
13.2 MODIFICATION OF AGREEMENT; ASSIGNMENT OR SALE OF INTEREST. This
Agreement and the Ancillary Agreements may not be modified, altered or amended,
except by an agreement in writing signed by Borrower and Lender. Borrower may
not sell, assign or transfer this Agreement or the Ancillary Agreements or any
portion hereof or thereof, including, without limitation, Borrower's right,
title, interest, remedies, powers, or duties hereunder or thereunder. Borrower
hereby consents to Lender's participation, sale, assignment, transfer or other
disposition, at any time or times hereafter, of this Agreement or the Ancillary
Agreements or of any portion hereof or thereof, including, without limitation,
Lender's right, title, interest, remedies, powers, or duties hereunder or
thereunder.
13.3 ATTORNEYS' FEES AND EXPENSES; LENDER'S OUT-OF-POCKET EXPENSES. If,
at any time or times, whether prior or subsequent to the date hereof and
regardless of the existence of a Default or an Event of Default, Lender incurs
legal or other costs and expenses or employs counsel, accountants, advisors,
consultants and/or other professionals for advice or other representation or
services in connection with:
(a) The preparation, negotiation, execution and administration
of this Agreement, all Ancillary Agreements, any amendment of or
modification of this Agreement or the Ancillary Agreements or any sale
or attempted sale of any interest herein to a co-lender or a
Participant; or consultation with counsel in connection with any of the
foregoing or any of the items listed in clauses (b) through (e) of this
39
Section 13.3;
(b) Any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Lender, Borrower or any other Person) in
any way relating to the Collateral, this Agreement, the Ancillary
Agreements or Borrower's affairs;
(c) Any attempt to enforce any rights of Lender or any
Participant against Borrower or any other Person which may be obligated
to Lender or such Participant by virtue of this Agreement or the
Ancillary Agreements, including, without limitation, the Account
Debtors;
(d) Any attempt to inspect, verify, protect, collect, sell,
liquidate or otherwise dispose of any of the Collateral; or
(e) Any inspection, verification, protection, collection,
sale, liquidation or other disposition of any of the Collateral,
including without limitation, Lender's periodic or special audits of
Borrower's books and records;
then, in any such event, the reasonable attorneys' and paralegals' fees and
expenses arising from such services and all reasonably incurred expenses, costs,
charges and other fees of or paid by Lender in any way or respect arising in
connection with or relating to any of the events or actions described in this
Section shall be payable by Borrower to Lender upon demand and shall be
additional Liabilities. Without limiting the generality of the foregoing, such
expenses, costs, charges and fees may include bank charges and fees,
accountants' fees, costs and expenses, court costs, fees and expenses,
photocopying and duplicating expenses, court reporter fees, costs and expenses,
long distance telephone charges, air express charges, telegram charges,
secretarial over-time charges, and expenses for travel, lodging and food paid or
incurred in connection with the performance of all such services.
13.4 WAIVER BY LENDER. Lender's failure, at any time or times
hereafter, to require strict performance by Borrower of any provision of this
Agreement or the Ancillary Agreements shall not constitute a waiver, or affect
or diminish any right of Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver by Lender of a
Default under this Agreement or the Ancillary Agreements shall not suspend,
waive or affect any other Default under this Agreement or the Ancillary
Agreements, whether the same is prior or subsequent thereto and whether of the
same or of a different type. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or the
Ancillary Agreements and no Default under this Agreement or the Ancillary
Agreements shall be deemed to have been suspended or waived by Lender, unless
such suspension or waiver is by an instrument in writing signed by an officer of
Lender and directed to Borrower specifying such suspension or waiver.
13.5 SEVERABILITY. Wherever possible, each provision of this Agreement
and the Ancillary Agreements shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Agreement
or the Ancillary Agreements shall be prohibited by or invalid under applicable
law, such provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or the Ancillary Agreements.
13.6 PARTIES; ENTIRE AGREEMENT. This Agreement and the Ancillary
Agreements shall be binding upon and inure to the benefit of the respective
successors and assigns of Borrower and Lender. Borrower's successors and assigns
shall include, without limitation, a trustee, receiver or debtor-in-possession
of or for Borrower. Nothing contained in this Section shall be deemed to modify
Section 13.2. This Agreement is the complete statement of the agreement by and
between Borrower and Lender and supersedes all prior negotiations,
40
understandings and representations between them with respect to the subject
matter of this Agreement.
13.7 CONFLICT OF TERMS. The provisions of the Ancillary Agreements are
incorporated in this Agreement by this reference. Except as otherwise provided
in this Agreement and except as otherwise provided in the Ancillary Agreements
by specific reference to the applicable provision of this Agreement, if any
provision contained in this Agreement is in conflict with, or inconsistent with,
any provision in any Ancillary Agreement, the provision contained in this
Agreement shall govern and control.
13.8 WAIVER BY BORROWER. Except as otherwise provided for in this
Agreement, Borrower waives (a) presentment, demand and protest, notice of
protest, notice of presentment, default, non-payment, maturity, release,
compromise, settlement, extension or renewal of any or all commercial paper,
accounts, contract rights, documents, instruments, chattel paper and guaranties
at any time held by Lender on which Borrower may in any way be liable and hereby
ratifies and confirms whatever Lender may do in this regard; (b) except as
otherwise provided by applicable law, all rights to notice and a hearing prior
to Lender's taking possession or control of, or to Lender's replevy, attachment
or levy upon, the Collateral or any bond or security which might be required by
any court prior to allowing Lender to exercise any of Lender's remedies; and (c)
except as otherwise provided by applicable law, the benefit of all valuation,
appraisement, extension and exemption laws. Borrower acknowledges that it has
been advised by its own counsel with respect to this Agreement and the
transactions evidenced by this Agreement. Borrower further agrees that (y)
Lender shall have no obligation to take, and Borrower shall have the sole
responsibility for taking, any and all steps to preserve rights against any and
all Account Debtors and against any and all prior parties to any note, chattel
paper, draft, trade acceptance, or other instrument for the payment of money
covered by the security interest whether or not in Lender's possession and (z)
Lender shall not be responsible to Borrower for loss or damage resulting from
Lender's failure to enforce any Accounts or to collect any moneys due or to
become due thereunder or other proceeds constituting Collateral hereunder unless
such loss or damage results from Lender's gross negligence or willful
misconduct.
13.9 GOVERNING LAW, VENUE. This Agreement has been delivered for
acceptance by Lender in Los Angeles County, California and shall be governed by
and construed in accordance with the internal laws (as opposed to the conflicts
of law provisions) of the State of California as the same may from time to time
be in effect, including without limitation the Uniform Commercial Code as
adopted in California. Borrower hereby (a) irrevocably submits to the
jurisdiction of any state or federal court located in Los Angeles County,
California over any action or proceeding to enforce or defend any matter arising
from or related to this Agreement; (b) waives personal service of any and all
process upon Borrower, and consents that all such service of process be made by
messenger, certified mail or registered mail directed to Borrower at the address
set forth in Section 13.10 and service so made shall be deemed to be completed
upon the earlier of actual receipt or three (3) days after the same shall have
been posted to Borrower's address; (c) irrevocably waives, to the fullest extent
Borrower may effectively do so, the defense of an inconvenient forum to the
maintenance of any such action or proceeding; (d) agrees that a final judgment
in any such action or proceeding shall be conclusive and may be enforced in any
other jurisdictions by suit on the judgment or in any other manner provided by
law; and (e) agrees not to institute any legal action or proceeding against
Lender or any of Lender's directors, officers, employees, agents or property,
concerning any matter arising out of or relating to this Agreement in any court
other than one located in Los Angeles County, California. Nothing
41
in this Section shall affect or impair Lender's right to serve legal process in
any manner permitted by law or Lender's right to bring any action or proceeding
against Borrower or Borrower's property in the courts of any other jurisdiction.
13.10 NOTICE. Except as otherwise provided herein or in the Ancillary
Agreements:
(a) All notices, requests, demands, directions and other
communications provided for hereunder or under any other Ancillary
Agreement must be in writing and must be mailed, telecopied or
delivered to the appropriate party at the address set forth below or,
as to any party hereto or to any Ancillary Agreement, at any other
address as may be designated by it in a written notice sent to all
other parties in accordance with this Section; and
(b) Any notice, request, demand, direction or other
communication given by telecopier will be confirmed within 48 hours by
letter mailed or delivered to the appropriate party at its respective
address. Except as otherwise expressly provided herein or in any
Ancillary Agreement, if any notice, request, demand, direction or other
communication required or permitted by any Loan Document is given by
mail it will be effective on the earlier of receipt or the third
calendar day after deposit in the United States mail with first class
or airmail postage prepaid; if given by telecopier, when sent; or if
given by personal delivery, when delivered.
If to Lender, at:
Sanwa Business Credit Corporation
000 Xxxxx Xxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Attn: Region Manager
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
If to Borrower, at:
Northern Geophysical of America, Inc.
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxx, Vice President & C.F.O.
Telephone: (000) 000-0000
Telecopier: (000) 000-0000
Tax Identification Number: 000000000
13.11 SECTION TITLES, ETC.. The Section titles and table of contents,
if any, contained in this Agreement are and shall be without substantive meaning
or content of any kind whatsoever and are not a part of the agreement between
the parties hereto. All references herein to Sections, paragraphs, clauses and
other subdivisions refer to the corresponding Sections, paragraphs, clauses and
other subdivisions of this Agreement; and the words "herein", "hereof",
"hereby", "hereto", "hereunder", and words of similar import refer to this
Agreement as a whole and not to any particular Section, paragraph, clause or
subdivision hereof. All Exhibits which are referred to herein or attached hereto
are hereby incorporated by reference.
13.12 COURSE OF DEALING. No course of dealing between Lender and
Borrower or
42
any third party and no delay or omission by Lender in exercising any right or
remedy hereunder or under any Ancillary Agreement or with respect to any
Liabilities shall operate as a waiver thereof or of any other right or remedy,
and no single or partial exercise thereof shall preclude any other or further
exercise thereof or the exercise of any other right or remedy. All rights and
remedies of Lender are cumulative.
13.13 SETOFF. Without limiting any other right of Lender, whenever
Lender has the right to declare any Liabilities to be immediately due and
payable (whether or not it has so declared), Lender at its sole election may
setoff against the Liabilities any and all monies then or thereafter owed to
Borrower by Lender in any capacity, whether or not the Liabilities or the
obligation to pay such monies owed by Lender is then due, and Lender shall be
deemed to have exercised such right of setoff immediately at the time of such
election even though any charge therefor is made or entered on Lender's records
subsequent thereto.
13.14 NONLIABILITY OF LENDER. Borrower acknowledges and agrees that:
(a) Any inspections of any Collateral made by or through
Lender are for purposes of administration of advances made hereunder
only and Borrower is not entitled to rely upon the same;
(b) By accepting or approving anything required to be
observed, performed, fulfilled or given to Lender pursuant to this
Agreement or the Ancillary Agreements, Lender shall not be deemed to
have warranted or represented the sufficiency, legality, effectiveness
or legal effect of the same, or of any term, provision or condition
thereof, and such acceptance or approval thereof shall not constitute a
warranty or representation to anyone with respect thereto by Lender;
(c) The relationship between Borrower and Lender is, and shall
at all times remain, solely that of a borrower and lender; Lender shall
not under any circumstance be construed to be a partner or joint
venturer of Borrower; Lender shall not under any circumstance be deemed
to be in a fiduciary relationship with Borrower; Lender does not
undertake or assume any responsibility or duty to Borrower to select,
review, inspect, supervise, pass judgment upon or inform Borrower of
any matter in connection with its property or the operations of
Borrower; Borrower shall rely entirely upon its own judgment with
respect to such matters; and any review, inspection, supervision,
exercise of judgment or supply of information undertaken or assumed by
Lender in connection with such matters is solely for the protection of
Lender and neither Borrower nor any other Person is entitled to rely
thereon; and
(d) Lender shall not be responsible or liable to any Person
for any loss, damage, liability or claim of any kind relating to injury
or death to such Persons or damage to property not caused by Lender and
caused by the actions, inaction or negligence of Borrower and Borrower
hereby indemnifies and holds Lender harmless from any such loss,
damage, liability or claim.
13.15 TIME OF THE ESSENCE. Time is of the essence hereunder and under
the Ancillary Agreements.
13.16 INDEMNIFICATION.
43
If after receipt of any payment of all or any part of the Indebtedness,
Lender is for any reason compelled to surrender such payment to any Person,
because such payment is determined to be void or voidable as a preference,
impermissible setoff, or a diversion of trust funds, or for any other reason,
this Agreement shall continue in full force and Borrower shall be liable to, and
shall indemnify and hold Lender harmless for, the amount of such payment
surrendered. The provisions of this Section shall be and remain effective
notwithstanding any contrary action which may have been taken by Lender in
reasonable reliance upon such payment, and any such contrary action so taken
shall be without prejudice to Lender's rights under this Agreement and shall be
deemed to have been conditioned upon such payment having become final and
irrevocable. The provisions of this Section shall survive the termination of
this Agreement.
Borrower agrees to indemnify, save and hold harmless Lender and its
directors, officers, agents, attorneys and employees (collectively the
"Indemnitees") from and against: (i) Any and all claims, demands, actions or
causes of action that are asserted against any Indemnitee by any Person if the
claim, demand, action or cause of action directly or indirectly relates to a
claim, demand, action or cause of action that such Person asserts or may assert
against Borrower, or any Affiliate or any officer, director or shareholder of
Borrower and such claim, demand, action or cause of action arises out of or
relates to this Agreement or the Ancillary Agreements, the use of proceeds of
any advance, or the relationship of Borrower and Lender under this Agreement;
(ii) Any and all claims, demands, actions or causes of action if the claim,
demand, action or cause of action arises out of or relates to Borrower's
compliance or noncompliance with the requirements of any environmental law;
(iii) Any administrative or investigative proceeding by any governmental agency
arising out of or related to a claim, demand, action or cause of action
described in clauses (i) or (ii) above; and (iv) Any and all liabilities,
losses, costs or expenses (including reasonable attorneys' fees and
disbursements and other professional services) that any Indemnitee suffers or
incurs as a result of the assertion of any foregoing claim, demand, action or
cause of action; provided that no Indemnitee shall be entitled to
indemnification for any loss caused by its own gross negligence or willful
misconduct. Each Indemnitee is authorized to employ counsel of its own choosing
in enforcing its rights hereunder and in defending against any claim, demand,
action or cause of action covered by this Section; provided that each Indemnitee
shall endeavor, in connection with any matter covered by this Section which also
involves other Indemnitees, to use reasonable efforts to avoid unnecessary
duplication of effort by counsel for all Indemnitees. Whenever practicable, upon
obtaining actual knowledge of any event that would entitle Lender to be
indemnified under this Section, Lender shall endeavor to provide notice to
Borrower of such fact and Lender shall cooperate with Borrower to endeavor to
minimize the liabilities for which Lender is entitled to be indemnified. Any
obligation or liability of Borrower to any Indemnitee under this Section shall
survive the expiration or termination of this Agreement and the repayment of all
Liabilities and the payment and performance of all other obligations under this
Agreement owed to Lender.
13.17 WAIVER OF RIGHT TO TRIAL BY JURY. THE PARTIES TO THIS AGREEMENT
ACKNOWLEDGE THAT JURY TRIALS OFTEN ENTAIL ADDITIONAL EXPENSES AND DELAYS NOT
OCCASIONED BY NONJURY TRIALS. THE PARTIES TO THIS AGREEMENT AGREE AND STIPULATE
THAT A FAIR TRIAL MAY BE HAD BEFORE A STATE OR FEDERAL JUDGE IN A COURT BY MEANS
OF A BENCH
44
TRIAL WITHOUT A JURY. IN VIEW OF THE FOREGOING, AND AS A SPECIFICALLY NEGOTIATED
PROVISION OF THIS AGREEMENT, EACH PARTY TO THIS AGREEMENT HEREBY EXPRESSLY
WAIVES ANY RIGHT TO TRIAL BY JURY OF ANY CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING UNDER THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION HEREWITH, OR IN ANY WAY CONNECTED
WITH OR RELATED OR INCIDENTAL TO THE DEALINGS OF THE PARTIES HERETO WITH RESPECT
TO THIS AGREEMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR AGREEMENT EXECUTED OR
DELIVERED IN CONNECTION HEREWITH, OR THE TRANSACTIONS RELATED HERETO OR THERETO,
WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN CONTRACT OR
TORT OR OTHERWISE; AND EACH PARTY HEREBY AGREES AND CONSENTS THAT ANY SUCH
CLAIM, DEMAND, ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT
A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
PARTIES HERETO TO THE WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
IN WITNESS WHEREOF, this Agreement has been duly executed as
of the day and year specified at the beginning hereof.
BORROWER:
---------
NORTHERN GEOPHYSICAL OF
AMERICA,
INC.
By /s/ Xxxxxx X. Xxxxx
---------------------------------
Title Vice President
LENDER:
SANWA BUSINESS CREDIT
CORPORATION
By /s/ Xxxxxxx X. Xxxxxx
---------------------------------
Title First Vice President
45
EXHIBIT A
FINANCIALS
(SEE ATTACHED)
A-1
EXHIBIT B
FORM OF NOTICE OF BORROWING/CONVERSION
(SEE ATTACHED)
B-1
EXHIBIT C
LOCATIONS
0000 Xxxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
1) 0000 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
2) 00000 Xxxx Xxxxxxx
Xxxxxxx, Xxxxx 00000
3) 0000 X. Xxxx Xxxxx
Xxxxx Xxxxxxxx, XX 00000
4) 0000 Xxxxxxx Xxxxxx
Xxxx, Xxxxx 00000
5) 0000 Xxxxx Xxxxx 00, Xxx 00
Xx. Xxxxxx, XX 00000
6) 000 Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxx Xxxx, XX 00000
7) Ninos Heros No. 51
Esquina Guadalupel Xxxxxxx
Col. Tepenan, Del. Xxxxxxxxxx
Xxxxxx, X.X. 00000
8) 0000 00xx Xxxxxx XX
Xxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
The states in which Borrower usually works include:
1) California
2) Nevada
3) Utah
4) Colorado
5) Wyoming
6) Montana
7) North Dakota
C-1
8) Kansas
9) Oklahoma
10) Texas
11) Mississippi
12) Alaska
The states in which Borrower has worked sporadically in the past and potentially
in the future include:
1) Oregon
2) Illinois
3) Louisiana
4) New Mexico
C-2
EXHIBIT D
TRADENAMES
1) 3-D Geophysical, Inc.
2) 3-D Geophysical of Latin America, Inc.
3) 3-D Geophysical of Canada, Inc.
4) Geo Acquisition Sub, Inc.
5) Geoevaluaciones, S.A. de C.V.
6) Procesos Interactivos Avanzados, S.A. de C.V.
7) International Production Services, Inc.
8) JanVo Equities, Ltd.
9) Cal-Core Properties, Ltd.
10) Xxxxxxx Consulting Service, Ltd.
11) Siegfried & Siegfried, Ltd.
12) JRS Exploration Company, Ltd.
13) Paragon Geophysical, Inc.
14) Xxxx Geophysical Corporation
15) Northern Geophysical of America, A Joint Venture
16) Northern Geophysical of America (Alaska), Inc.
D-1
EXHIBIT E
LITIGATION
1. Xxx Xxxx and Xxxxxxx Brothers v. Xxxxxx Xxxxxx Xxxxx and Xxxx
Geophysical Corporation, filed in the 23rd Judicial District Court of
Xxxxxxx County, Texas
2. Xxxxxx Technologies, Inc. (formerly Capilano International, Inc.) v.
Geoevaluaciones, S.A. de C.V., filed in Federal District Court in
Mexico
3. Xxxxx X. Xxxxxxx v. Northern Geophysical of America, Inc., filed in
United States District Court, Southwestern Division, North Dakota
4. Xxxxxxx Xxxxxxx, f/n/a Xxxxxxx Xxxxxxxxxxx v. Northern Geophysical of
America, Inc., filed in United States District Court, Southwestern
Division, North Dakota
5. Xxxxxxx Xxxxxxxx Xxxxxxx v. Geoevaluaciones, S.A. de C.V., filed in
Junta Federal 00 xx Xxxxxxxxxxxx x Xxxxxxxxx xx Xxxxxxxxxxxxx, Xxxxxxxx
0. Xxxxxxx Xxxxxx Xxxxx v. PEMEX, Perforadata and Geoevaluaciones, S.A. de
C.V., filed in Junta Especial 0-Xxx xx xx Xxxxxxx xx Xxxxxxxxxxx y
Arbitraje (Labor Federal Court 7-Bis)
7. Geoevaluaciones, S.A. de C.V. v. S.H.C.P. (Mexican Tax Authority),
filed in Income Tax Office in Nuevo Laredo, Tamaulipas, Mexico, Docket
No. 738/97
8. Geoevaluaciones, S.A. de C.V. v. S.H.C.P. (Mexican Tax Authority),
filed in Income Tax Office in Nuevo Laredo, Tamaulipas, Mexico, Docket
No. 739/97
9. Geoevaluaciones, S.A. de C.V. v. S.H.C.P. (Mexican Tax Authority),
filed in Income Tax Office in Nuevo Laredo, Tamaulipas, Mexico, Docket
No. 32420
10. Xxxxx Xxxx and Xxxxx & Xxxxxxx Xxxxxxxxx x. Xxxx Geophysical, a
threatened action in Texas resulting from an alleged trespass in
January, 1996
11. Xxxx Xxxxxxx, Xx. x. Xxxx Geophysical, a threatened action in Texas
resulting from an alleged trespass in January, 1996
E-1
EXHIBIT F
TITLE TO ASSETS, LIENS
F-1
EXHIBIT G
AFFILIATES AND SUBSIDIARIES
AFFILIATES
1) 3-D Geophysical, Inc., a Delaware corporation
2) 3-D Geophysical of Latin America, Inc., a Cayman Islands company
3) 3-D Geophysical of Canada, Inc., an Alberta Canada company
4) Geo Acquisition Sub, Inc., a Delaware corporation
5) Geoevaluaciones, S.A. de C.V., a Mexican company
6) Procesos Interactivos Avanzados, S.A. de C.V., a Mexican company
7) International Production Services, Inc., a Texas company
8) JanVo Equities, Ltd., an Alberta, Canada company
9) Cal-Core Properties, Ltd., an Alberta, Canada company
10) Xxxxxxx Consulting Service, Ltd., an Alberta, Canada company
11) Siegfried & Siegfried, Ltd., an Alberta, Canada company
12) JRS Exploration Company, Ltd., an Alberta, Canada company
13) Paragon Geophysical, Inc., an Ohio company
14) Xxxx Geophysical Corporation, a Texas company
15) Northern Geophysical of America, A Joint Venture, a Colorado partnership
16) Northern Geophysical of America (Alaska), Inc., an Alaska corporation
SUBSIDIARIES
None
G-1
EXHIBIT H
FORM OF COVENANT COMPLIANCE CERTIFICATE
(SEE ATTACHED)
H-1
EXHIBIT I
FORM OF DAILY COLLATERAL REPORT
(SEE ATTACHED)
I-1
EXHIBIT J
EXISTING INDEBTEDNESS FOR BORROWED MONEY
J-1
SCHEDULE 1.30
EQUIPMENT
68
SCHEDULE 10.1(A)
FINANCIAL COVENANTS
NOTE: All of the following covenants and definitions are on a
consolidated basis for 3-D Geophysical, Inc. and its consolidated subsidiaries
=============================================================================================================================
COVENANT REQUIRED COMMENTS
=============================================================================================================================
Indebtedness to Tangible Net 1997 - 1.3 Tested quarterly.
Worth Ratio 1998 - 1.3 For purposes of this
1999 - 1.3 covenant,
2000 - 1.3 "Indebtedness" shall
2001 - 1.3 be exclusive of
2002 - 1.3 operating leases,
contingent
liabilities
arising
out
of
lawsuits
not
yet
ripened
into
judgments,
performance
and
importation
bonds
and
deferred
taxes.
-----------------------------------------------------------------------------------------------------------------------------
Tangible Net Worth Closing Date $38,000,000 Tested quarterly
("TNW")
At 12/31/97 $38,000,000
Thereafter Previous year-end TNW plus the following amount
1998
1st quarter $450,000
2nd quarter $450,000
3rd quarter $750,000
4th quarter $950,000
1999
1st quarter $300,000
2nd quarter $300,000
3rd quarter $700,000
4th quarter $800,000
=============================================================================================================================
68
=============================================================================================================================
2000
1st quarter $450,000
2nd quarter $450,000
3rd quarter $750,000
4th quarter $950,000
2001
1st quarter $500,000
2nd quarter $500,000
3rd quarter $1,000,000
4th quarter $1,200,000
2002
1st quarter $650,000
2nd quarter $650,000
3rd quarter $1,200,000
4th quarter $1,450,000
-----------------------------------------------------------------------------------------------------------------------------
Cash Flow Coverage Ratio 1997 - 1.05 1997 will be a 4th
1998 - 1.05 quarter test only.
1999 - 1.05
2000 - 1.10 1998 will be tested
2001 - 1.15 each quarter based
2002 - 1.20 on the following
trailing levels:
1st quarter - trailing
6 months
2nd quarter - trailing
9 months
3rd quarter - trailing
12 months
4th quarter - trailing
12 months
1999 and thereafter
will be tested each
quarter on a trailing
12 month basis
68
-----------------------------------------------------------------------------------------------------------------------------
Net Income (determined in 1997 1997 will be a 4th
accordance with generally 4th quarter $200,000 for the quarter test only.
accepted accounting quarter
principles, consistently 1998 will be tested
applied) 1998 each quarter based
----
1st quarter $ 900,000 on the following
2nd quarter $ 900,000 trailing levels:
3rd quarter $1,500,000
4th quarter $1,900,000 1st quarter - trailing
6 months
1999
1st quarter $1,900,000 2nd quarter - trailing
2nd quarter $1,800,000 9 months
3rd quarter $1,700,000
4th quarter $1,600,000 3rd quarter - trailing
12 months
2000
1st quarter $1,700,000 4th quarter - trailing
2nd quarter $1,700,000 12 months
3rd quarter $1,800,000
4th quarter $1,900,000 1999 and thereafter
will be tested each
2001 quarter on a trailing
1st quarter $2,000,000 12 month basis
2nd quarter $2,100,000
3rd quarter $2,300,000
4th quarter $2,400,000
2002
1st quarter $2,500,000
2nd quarter $2,600,000
3rd quarter $2,800,000
4th quarter $2,900,000
=============================================================================================================================
68
SCHEDULE 10.2
DEPOSIT ACCOUNTS
Bank or Institution Acct. Account No. Address
Name
1) Xxxxx Fargo Bank 3-D 4159499706 Energy Department
3-D 4159677962 1000 Xxxxxxxxx
XXX 0000000000 0xx Xxxxx
XXX 4159677939 Xxxxxxx, Xxxxx 00000
NGA 4159677913
3-D 4159677947
1) Bank One, Colorado, N.A. NGA 1283238127 X.X. Xxx 0000
XXX 0000000000 Xxxxxx, XX 00000-0000
3-D 1283238135 0000 00xx Xxxxxx
3-D 616285722 Xxxxxx, XX 00000-0000
NGA 616285714 Attention: Xxx Xxxxx
3-D 616285730
1) Bank One, N.A. Paragon 789068228 Department 1045
Paragon 789065628 Xxxxxxxx, XX 00000-0000
Paragon 789068201
1) Norwest Bank 3-D 2693022920 0000 Xxxx Xxxxxxxx Xxxx
3-D 2698019346 Xxxxxxxxx, XX 00000
1) Chase Manhattan Bank 3-D 031173041 0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
1) Laredo National Bank GEO 80106218 Houston, Texas
1) Barclays Bank PLC 2774282 P.O. Box 68
Georgetown, Grand Cayman,
BWI
1) Banco Xxxxx 1484280 000 Xxxxxx Xxxx
0000000 Xxxx, Xxxx
1) Banco Santa Xxxx de la Sierra 1000104200302241 Santa Xxxx, Bolivia
1) Royal Bank of Canada 0000000 Calgary, Alberta, Canada
00
0) Xxxxxxx Xxxxxxxx Xxxxxxxx 000000000000 Xxxxxxx, Xxxxxxx, Xxxxxx
730000005170
730000005102
730000007824
730000008624
730000009424
730000010824
730000011624
730000012424
730000013224
730000016724
730000163324
730000164124
730000018324
730000019124
730000020524
1) Banca Serfin, S.A. 40003113425 Renosa, Tamualipas, Mexico
1) Banca Serfin, S.A. 0530120808781 Posa Rica, Veracruz, Mexico
1) Banca Serfin, S.A. 10604018686 Xxxxxxx xx Xxxxxxx,
Veracruz, Mexico
1) Banca Serfin, S.A. 03707382927 General Bravo, N.L., Mexico
1) Banca Serfin, S.A. 09006053748 Mexico City, Mexico
09009412285
1) Banco Inverlar, S.A. 9275185 Mexico City, Mexico
1) Banamex, S.A. 3630757 Xxxxxx Xxxx, Xxxxxx
0000000
1) Banamex, S.A. 2036102 Posa Rica, Veracruz, Mexico
1) Banamex, S.A. 3020414 Reynosa, Tamulipas, Mexico
1) Bancomer, S.A. 181788 Laredo, Tamulipas, Mexico
1) Inversiones Serfin 09009412285 Mexico City, Mexico
1) Inversiones Xxxxxxx 00000000 Xxxxxx Xxxx, Xxxxxx
1) Banco Continental/Tarapoto 00110310080100014926 Tarapota, Peru
Abbreviations Summary:
"3-D" = 3-D Geophysical, Inc.
"NGA" = Northern Geophysical of America, Inc.
"Paragon" = Paragon Geophysical, Inc.
"GEO" = Geoevaluaciones, S.A. de C.V.
68
