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EXHIBIT 10.1
LOAN AGREEMENT
THE STATE OF TEXAS
COUNTY OF WALKER WITNESSETH:
THIS AGREEMENT made and entered into on this 10th day of November 2000,
by and between MITCHAM INDUSTRIES, INC., a Texas corporation, with principal
offices at 44,000 Highway 75S, Huntsville, Texas 77340, in Walker County, Texas
(herein referred to as "Borrower") and First Victoria National Bank, a national
banking corporation, with its offices and domicile in Victoria, Victoria County,
Texas, (herein referred to as "Lender") to induce Lender to extend credit to
Borrower in the amounts evidenced by the promissory notes described in Paragraph
II of this agreement (herein referred to as the "Loan").
In consideration of their mutual warranties, covenants and agreements
contained herein and Lender's extension of credit to Borrower in the amount
aforesaid, Borrower and Lender hereby warrant, covenant and agree as follows:
I. WARRANTIES OF BORROWER
A. That Borrower is a Texas corporation currently authorized to do
business in the State of Texas, and that all franchise taxes, employment taxes,
withholding taxes, income taxes, sales taxes, use taxes and all other taxes have
been paid current to the date of this agreement.
B. That the execution by Borrower of this agreement and the other
documents described herein has been duly authorized by its corporate board and
that all of the agreements, indentures, or conveyances described herein to be
made or undertaken by Borrower are within its corporate powers and not
prohibited by law or its governing documents.
C. That this Loan Agreement and all promissory notes and security
documents referenced herein are legal, valid and binding obligations of Borrower
which are enforceable against him in accordance with the respective terms
thereof.
D. That all audits and financial information submitted to Lender may be
relied upon by Lender as fairly representing the financial condition of the
companies or individuals to which the same relate, and that there has been no
adverse material change in the financial condition of Borrower.
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E. That there are no litigation, arbitration or governmental or
regulatory proceedings pending or threatened against Borrower which, if
adversely determined, could have a material adverse effect on Borrower's
financial condition or affect the legality, validity or enforceability of this
Loan Agreement or any promissory notes or security documents referenced herein
and that Borrower has no material contingent liabilities or material forward
commitments which are not disclosed in the financial information now held by
Lender.
F. That there are no other liens or encumbrances against the property
given as security for the payment of the hereinafter described loan, except as
stated herein.
G. That, except as has been disclosed to Lender in writing of even date
with this loan agreement and which writing shall be attached hereto, none of the
property given as security for the payment of the herein described Loan is now
or has at any time in the past been used for or contaminated by the generation,
transportation, treatment, disbursal, storage, discharge or disposal of any
pollutants, hazardous or toxic substances, or hazardous wastes as defined or
regulated by any of the following federal statutes: (a) The Comprehensive
Environmental Response, Compensation and Liability Act ("CERCLA"), as amended by
the Superfund Amendments and Re-Authorization Act of 1986 ("SARA"), (b) the
Resource Conservation and Recovery Act ("RCRA"), (c) the Toxic Substance Control
Act ("TSCA"), (d) any amendments to or regulations promulgated by any agency
under any of the above statutes, and (e) any other state or federal statute or
regulation for the control of hazardous or toxic substances.
H. That Borrower presently has no claims or defenses against Lender
arising out of this Loan Agreement or the promissory notes or security documents
referenced herein, the indebtedness or obligations of any party governed
thereby, or any action previously taken or not taken by Lender with respect
thereto and that Borrower is aware that Lender is relying upon this warranty in
connection with this extension of credit. Borrower hereby waives, releases and
forever discharges Lender from and against any and all such claims, defenses and
causes of action which might now exist against Lender or which arise out of this
Loan Agreement or the promissory notes or security documents referenced herein,
the indebtedness or obligations of any party governed thereby, or any action
previously taken or not taken by Lender with respect thereto.
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II. INDEBTEDNESS
A. Lender shall advance to Borrower, according to the terms thereof and
subject to the limitations expressed therein and in this agreement, the
principal sum of the following promissory note:
One certain promissory note of even date herewith executed by Borrower
and payable to the order of Lender in the original principal sum of
$8,500,000.00, bearing interest at the Wall Street Journal Prime Rate,
plus One percent (1%) per annum, as such rate is determined daily on
the principal balance outstanding, providing for multiple advances,
until the total amount of principal has been advanced, interest being
payable monthly as it accrues, and being due on or before the 9th day
of November, 2004.
B. Borrower agrees to execute and deliver to Lender such promissory
note in the form prescribed by Lender and on terms described herein, evidencing
the indebtedness created by such advances.
C. Borrower hereby acknowledges and agrees that Lender has and shall
have the right, at any time, without the consent of or notice to Borrower, to
grant participations in all or part of the obligations of Borrower evidenced by
this note, together with any liens or collateral securing the payment hereof. In
the event Lender elects to participate any Overline Portion (as hereinafter
defined) of the obligations evidenced by this note and if Lender is unable to
procure a participant or a participant fails or refuses to advance to Borrower
any Overline Portion through no fault of Lender, it is agreed that Lender shall
have no liability to Borrower to fund such Overline Portion, nor shall Lender
have any obligation to procure funds from other sources or fund any amounts that
would cause Lender to be in violation of any state or federal law with respect
to Borrower being liable to Lender in an amount in excess of that permitted by
such applicable law. The term "Overline Portion" shall mean the amount of loan
proceeds in excess of the amount that Lender is permitted by applicable law or
Lender's loan policy limitations to loan to Borrower.
D. Notwithstanding any other provision in this agreement or the
provisions of any promissory note or other loan document to the contrary, Lender
shall not charge or collect and Lender does not intend to contract for interest
in excess of that permitted by law for loans of this kind, and to prevent such
occurrence, Lender will, at maturity, or an earlier final payment of any
promissory note described above, determine the total amount of interest that can
be lawfully
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charged or collected by applying the highest lawful rate of interest to the full
periodic balances of principal for the period each is outstanding and unpaid and
compare such amount with the total interest that has accrued under the terms of
such note, and, if necessary to prevent usury, reduce the total amount of
interest payable by Borrower to the lesser amount. If the amount of interest
that has been collected exceeds the lawful amount, Lender shall either make
direct refund of such excess to Borrower or credit it against other sums owed by
Borrower to Lender, whichever Lender deems appropriate. If at any time the rate
of interest provided for in any note shall exceed the highest lawful rate, the
annual rate at which interest shall accrue on such note shall be limited to such
highest lawful rate. The highest lawful rate shall thereafter be the rate at
which interest is accrued on such note until the total amount of interest
accrued equals the amount of interest that would have accrued if the interest
rate provided in such note had at all times been in effect, after which the
interest rate provided in such note, if it does not exceed the highest lawful
rate, shall apply. As used herein, the term "highest lawful rate" means the
highest rate of interest permitted to be charged or collected under the
applicable state or federal law for this type of loan applied to the full
periodic balances of principal advances for the period each is outstanding and
unpaid.
III. SECURITY
A. As security for the loan, Borrower and Guarantors shall execute and
deliver to, procure for, deposit with, and pay to Lender the following:
1. Commercial Security Agreement and financing statements in form
and content acceptable to Lender, executed by Borrower and
granting a purchase money security interest in all equipment
purchased from Sercel, Ltd., GeoSpace Corp. and Mark Products
and containing an assignment of all leases and revenues
generated from such equipment. Such security agreement shall
also cover all accounts receivable arising from Borrower's
business operations, together with all instruments, chattel
paper, general intangibles, proceeds and cash proceeds arising
therefrom, securing payment of the note described in Paragraph
II A. hereof evidencing a first lien and prior security
interest in such collateral, whether now owned or hereinafter
acquired by Borrower.
2. Such other documents and instruments as Lender may require for
the perfection of liens and their registration under the laws
of the State of Texas or of the United States.
3. Hazard insurance policy or policies in form and content and
issued by a company or companies with loss payable
endorsements acceptable to Lender, insuring all collateral
given as security against loss or damage and against vandalism
and malicious mischief and insuring said collateral
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against the usual and customary risks and hazards as Lender
may request, all of such policy or policies to be for a total
amount acceptable to Lender.
B. Borrower shall execute and deliver to Lender such other documents
and instruments as Lender may require to evidence the status or authority of
Borrower and to evidence, govern or secure the payment of the Loan or any
portion thereof.
IV. COVENANTS OF BORROWER AND GUARANTORS
A. For so long as any portion of the Loan remains unpaid, Borrower
covenants and agrees as follows:
POSITIVE COVENANTS
1. That Borrower agrees to pay to Lender, upon demand, all
expenses of every nature incurred by Lender in connection with
the consummation of the transaction contemplated by this
agreement, or the enforcement or preservation of Lender's
rights hereunder, including attorney's fees and expenses of
Lender's counsel, hazard insurance premiums, filing and
recording fees, court costs, and other fees and reasonable
expenses incurred by Lender.
2. That Borrower shall furnish or cause to be furnished at its
expense to Lender financial statements or reports in form and
content acceptable to Lender, within 45 days of the end of
each quarter, which shall set forth an operating statement and
balance sheet for Borrower herein; an ageing of notes,
contract rights, accounts receivable and accounts payable of
Borrower for the preceding quarter. Lender shall be allowed to
make reasonable inspections of all assets securing said loan
and shall further have the right to inspect the books of
Borrower or other records relating to the affairs of Borrower.
The reasonable costs of any such inspection are to be borne by
Borrower.
3. That Borrower shall furnish at its expense to Lender annually,
within 90 days after the end of Borrower's income tax
reporting year, an audited report prepared by the Certified
Public Accounting firm for Borrower, including a balance
sheet, income statement, sources and uses of funds statement,
and a reconciliation of net worth. Additionally, Borrower
shall furnish their tax returns at its expense to Lender
annually, within 150 days after the end of Borrower's income
tax reporting year.
4. That while Borrower is indebted to Lender hereunder Borrower
will:
a. Perform all of its obligations to appropriate
regulatory agencies;
b. Punctually pay all indebtedness from time to time
owing hereunder when due;
c. Perform all of its obligations under the Security
Instruments described herein;
d. Promptly pay and discharge any and all indebtedness
or obligations when due and owing, including all
taxes of
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every kind and character, all assessments, and other
claims which might give rise to a lien on the
property given as security for this loan or impair
Borrower's obligation to conduct its business, except
as it may in good faith contest or as to which a bona
fide dispute may arise, provided provision is made to
the satisfaction of Lender for eventual payment
thereof in the event that it is found that such
indebtedness or obligation or tax or claim is an
obligation of Borrower, and when such dispute or
contest is settled or determined, it will promptly
pay the amount then due.
e. Maintain and keep in force insurance of the types and
in the amounts customarily carried by companies in
similar lines of business, including adequate amounts
of fire, windstorm, explosion, public liability,
property damage, and workman's compensation
insurance; all insurance is to be carried in company
or companies satisfactory to Lender, and Borrower
will deliver to Lender from time to time, at the
request of Lender, a schedule setting forth all
insurance in effect;
f. Maintain a standard and modern accounting system in
accordance with generally accepted principles of
accounting, permit Lender to inspect its books of
account and records at all reasonable times, furnish
to Lender such information respecting the business
affairs and financial condition of Borrower as Lender
may reasonably request.
g. Preserve all rights, privileges, franchises,
licenses, and permits connected with its business and
to the extent of its ability will conduct its
business in an orderly, efficient manner without
voluntary interruptions, and comply with all
applicable laws and regulations of government
agencies;
h. Maintain, preserve and keep all properties and
equipment in good repair, working order and
condition, and from time to time make all necessary
and proper repairs, renewals, replacements, and
improvements thereto so that at all times the
efficiency and value thereof shall be fully preserved
and maintained, and maintain leases, licenses and
permits, but nothing herein contained shall prevent
Borrower from in good faith contesting or seeking
legal construction of any dispute, terms or
conditions of a contract, lease or other obligation;
Lender may, at reasonable times, visit and inspect
any of the properties of Borrower;
i. To give notice in writing to Lender within 30 days of
any proceedings by any public or private body,
agency, or authority, pending or threatened, which
may have a substantial adverse effect on Borrower,
and of any litigation involving the possibility of
judgments or liabilities in excess of an aggregate of
$1,000,000.00 not covered by insurance.
j. To provide copies of all correspondence between
Borrower and the Securities and Exchange Commission,
whether such correspondence is prepared by Borrower
or the
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Securities and Exchange Commission, within thirty
(30) days of delivery or receipt of such
correspondence by Borrower.
k. To provide monthly status reports of pending
litigation between Borrower and Stanley Moskowitz,
et al, in Cause No. 98-CV-1244, which cause of action
was filed April 23, 1998, in the U. S. District
Court, Southern District of Texas.
l. Borrower shall maintain operating accounts at one of
the following Citizens Bank of Texas locations:
Huntsville, Texas; New Waverly, Texas or The
Woodlands, Texas.
5. That Borrower will indemnify Lender against and hold Lender
harmless from any and all claims, liabilities, obligations,
penalties, loss, damage or causes of action of any kind
(including attorney's fees and costs of remediation
necessarily incurred by Lender in connection therewith),
whether arising under statute or regulation, common law, tort
or contract, and whether claimed, asserted, or assessed, in
any way by or necessarily paid by Lender to any private party
or any governmental entity or agency or any number or
combination thereof, and resulting or arising in any way from
the generation, transportation, treatment, disbursal, storage,
discharge or disposal of any pollutants, hazardous or toxic
substances, or hazardous wastes by Borrower, its agents,
employees, or contractors, at any location, or from the past,
present or future use of any property given as security for
this Loan for such purposes by any party, or from the presence
of any pollutants, hazardous or toxic substances, or hazardous
wastes on any such property, or from the falsity of any
warranty made herein with regard to the presence or uses of
such pollutants, hazardous or toxic substances, or hazardous
wastes, or from the use by Borrower of any underground storage
tanks or the presence of such tanks on any property given as
security for this Loan, or in any way from the actual,
threatened or alleged discharge, disbursal, release, storage,
treatment, generation, disposal or escape of pollutants, or
other toxic or hazardous substances, at any location, whether
occurring before or after the date of this agreement.
NEGATIVE COVENANTS
6. Borrower will not, except with the prior written consent of
Lender:
a. Permit any lien (other than for taxes not delinquent
and for taxes and other items being contested in good
faith) to exist on property given as security for
this loan or on the income or profits thereof,
excepting liens existing as of the date hereof
and as otherwise provided herein.
b. Except in the normal course of business; amend,
modify, terminate or otherwise alter the terms of any
account, contract or lease, nor accept or surrender
of any personal property subject thereto;
c. Assign any leases or the proceeds thereof to anyone
except Lender;
7. That Borrower may not assign or otherwise transfer this
Agreement or any rights hereunder, and that this Agreement
shall be binding upon Borrower
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and the representatives, heirs, executors, legal
representatives and successors of Borrower.
8. That Borrower shall not incur any indebtedness or obligations
(other than accounts payable which arise in the usual and
normal course of Borrower's operations) or guarantee the debt
or obligations of others in excess of $20,000,000.00, without
the prior written approval of Lender.
9. That, except after written notice to Lender and where such use
and the activities relating thereto are in strict compliance
with all applicable laws and regulations, Borrower shall not
hereafter permit any property which is (a) given as security
for this Loan, (b) used by Borrower for any business or other
activities financed by Lender or (c) the source of repayment
of this Loan, to be used in any way for the generation,
transportation, treatment, disbursal, storage, discharge or
disposal of any pollutants, hazardous or toxic substances, or
hazardous wastes as defined or regulated by any of the
following federal statutes: (a) The Comprehensive
Environmental Response, Compensation and Liability Act
("CERCLA"), as amended by the Superfund Amendments and
Re-Authorization Act of 1986 ("SARA"), (b) the Resource
Conservation and Recovery Act ("RCRA"), (c) the Toxic
Substance Control Act ("TSCA"), (d) any amendments to or
regulations promulgated by any agency under any of the above
statutes, and (e) any other state or federal statute or
regulation for the control of hazardous or toxic substances.
V. COVENANTS OF LENDER
A. Subject to the terms of this agreement and of the notes and security
instruments described herein, Lender covenants and agrees as follows:
1. That Lender shall be bound to make the advances herein on the
following conditions up to the amount specified as the
original principal sum of each note, subject to the following:
a. Compliance with all terms and conditions of Loan
Commitment and Loan Agreement, with respect to said
loan.
b. Payment of all fees and expenses contemplated by such
loan commitment, including remittance of a Twenty-six
Thousand Dollars ($26,000.00) commitment fee to
Lender.
c. Execution of all documents required by Lender.
d. Furnishing of financial statements evidencing sound
and satisfactory financial condition of each
Borrower.
2. Lender shall from time to time advance to Borrower portions of
the principal amount of the note described in Paragraph II.A.1
hereof upon delivery of an appraisal in form and content
satisfactory to Lender, establishing valuation of the
geophysical seismic equipment to be purchased with proceeds of
this loan in the amount of $22,000,000.00 or more, along with
purchase orders and other documentation from Sercel, Ltd.,
GeoSpace Corp, and Mark Products which evidences Borrower's
purchase and provides a specific description of such
collateral. The aggregate unpaid balance of all such advances
at any one time outstanding
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shall not exceed $8,500,000.00. The provisions of said
security agreement are hereby incorporated herewith by this
reference.
VI. DEFAULT AND REMEDIES
A. The occurrence of any one of the following events of default shall,
at the option of Lender and without notice or demand, except as described
hereunder, make all or such parts of the sums owing from Borrower to Lender
hereunder, as Lender in its discretion shall determine, immediately due and
payable:
1. Failure of Borrower to pay within 10 days after demand any sum
past due hereunder;
2. Failure of Borrower to pay within 5 days after demand any debt
hereunder, the maturity of which has been accelerated;
3. The breach of any warranties of Borrower herein contained in
any material respect;
4. Insolvency;
5. The making by Borrower of an assignment for the benefit of
creditors;
6. The levy of any attachment, execution, or other like process
against any of Borrower's property;
7. The voluntary suspension of business by Borrower;
8. The entry of any decree or order of a court having
jurisdiction in the premises appointing a receiver of all or
any substantial part of Borrower's property;
9. The breach by Borrower of any of the provisions of this
Agreement, or of any of the promissory notes or security
instruments described herein, if the same is not remedied
within 10 days after written notice from Lender.
B. That no waiver of any default on the part of Borrower shall be
considered waiver of any other or subsequent default and no forbearance, delay,
or omission in exercising or enforcing the rights and powers of Lender shall be
construed as a waiver of such rights and powers, and likewise no exercise or
partial exercise of any rights or powers hereunder by Lender shall be held to
preclude further exercise of such rights and powers, and every such right and
power may be exercised from time to time.
C. The rights, powers and remedies given to Lender hereunder shall be
in addition to all rights, powers and remedies given to Lender by law against
Borrower and any other person.
D. No action shall be commenced by Borrower for any claim against
Lender under
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the terms of this Loan Agreement or arising from the subject loan relationship
unless a notice in writing specifically setting forth the claim of Borrower
shall have been given to Lender within six (6) months after the occurrence of
the event which Borrower alleges gave rise to such claim. Failure to give such
notice shall constitute a waiver of any such claim.
VII. GENERAL PROVISIONS
A. Any notice or demand required or permitted to be given hereunder by
Lender may be given in writing by depositing such notice in the United States
Mail, postage prepaid, addressed to Borrower at 44,000 Highway 75S, Huntsville,
Texas 77340, Attn: Billy F. Mitcham, Jr., or such other place as Borrower shall
have designated in writing. Notice shall be deemed to have been given 48 hours
after being so deposited in the United States Mail.
B. This agreement shall be construed under and in accordance with the
laws of the State of Texas, and all obligations of the parties created hereunder
are performable in Victoria County, Texas. In any suit arising under this
agreement or relating in any way to the obligations of the parties hereunder,
venue shall be fixed in Victoria County, Texas. Notwithstanding the provisions
of this paragraph, Chapter Fifteen of the Texas Credit Code, Art. 5069-15.01 et
seq., shall not apply to the loan governed by this agreement or any part
thereof.
C. In any case, if any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision had never been contained
herein.
D. This Agreement constitutes the sole and only agreement of the
parties hereto and supersedes any prior understandings or written or oral
agreements between the parties respecting the within subject matter.
E. This agreement shall apply to and govern the herein described
extensions of credit and all renewals, extensions and rearrangements of such
indebtedness of Borrower and Guarantors to Lender.
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EXECUTED on the date first hereinabove mentioned in New Waverly, Walker
County, Texas.
MITCHAM INDUSTRIES, INC.
ATTEST:
By /s/ BILLY F. MITCHAM, JR.
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/s/ KIM WILLIAMS Billy F. Mitcham, Jr.
- -------------------------- Its CEO
- --------------------------
BORROWER
FIRST VICTORIA NATIONAL BANK
ATTEST:
By /s/ JOHN D. HOWARD
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/s/ KIM WILLIAMS John D. Howard
- -------------------------- Its Vice President
- --------------------------
LENDER
THE STATE OF TEXAS
COUNTY OF WALKER
This instrument was acknowledged before me on November 10, 2000, by
Billy F. Mitcham, Jr., as President of Mitcham Industries, Inc., on behalf of
said corporation.
[STATE OF TEXAS NOTARY SEAL] /s/ KIM WILLIAMS
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Notary Public, State of Texas
THE STATE OF TEXAS
COUNTY OF WALKER
This instrument was acknowledged before me on November 10, 2000, by
John D. Howard, as Vice President of First Victoria National Bank, on behalf of
said corporation.
[STATE OF TEXAS NOTARY SEAL] /s/ KIM WILLIAMS
-----------------------------------
Notary Public, State of Texas