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FIRST AMENDMENT
TO LETTER LOAN AGREEMENT
This First Amendment to Letter Loan Agreement dated as of January
16, 1997 ("First Amendment") is entered into by and between MITCHAM
INDUSTRIES, INC., a Texas corporation (the "Borrower"), BANK ONE, TEXAS, N.A.,
a national banking association and BANC ONE LEASING CORPORATION (collectively,
the "Lender").
W I T N E S S E T H:
Borrower and Lender entered into a Letter Loan Agreement dated
January 31, 1996 (as such may be amended, modified, supplemented or restated,
the "Loan Agreement").
Borrower has requested that the Lender modify certain
financial covenants of the credit facility evidenced by the Loan Agreement, and
Lender has agreed to such request, subject to the terms and conditions of the
Loan Agreement as amended by this First Amendment.
NOW, THEREFORE, in consideration of the premises herein
contained, and each intending to be legally bound hereby, the parties agree as
follows:
1. Amendments to Loan Agreement.
A. Section 1.(a) of the Loan Agreement is hereby amended by
replacing the first two (2) full paragraphs of such section
with the following:
"1.(a) Revolving Line of Credit. Subject to the
terms and conditions set forth herein, Bank agrees to lend to
Borrower, on a revolving basis from time to time during the
period commencing on the date hereof and continuing through
and including 11:00 a.m. on January 1, 1998 (the "Termination
Date"), such amounts as Borrower may request hereunder (the
"Revolving Line of Credit"); provided, however, the total
principal amount outstanding at any time shall not exceed the
lesser of an amount (the "Borrowing Base") equal to (i) 80% of
the then Eligible Accounts plus 50% of Eligible Inventory,
such Eligible Inventory not to exceed $200,000, or (ii)
$1,000,000 (the "Committed Sum"). If at any time the
aggregate principal amount outstanding under the Revolving
Line of Credit Loan shall exceed an amount equal to the
Borrowing Base, Borrower agrees to immediately repay to Bank
such excess amount, plus all accrued but unpaid interest
thereon. Subject to the terms and conditions hereof, Borrower
may borrow, repay and reborrow hereunder. All sums advanced
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hereunder, together with all accrued but unpaid interest
thereon, shall be due and payable in full on the Termination
Date. The sums advanced under the Revolving Line of Credit
shall be used for working capital and general corporate
purposes. Borrower shall give Bank not less than two (2)
business days' prior written notice of each requested advance
hereunder, specifying (i) the aggregate amount of such
requested advance, and (ii) the requested date of such
advance, with such advances to be requested in a form
satisfactory to Bank.
"As used in this Loan Agreement, the term "Eligible
Accounts" means, at any time, an amount equal to the aggregate
net invoice or ledger amount owing on all trade accounts
receivable of Borrower for goods sold or leased or services
rendered in the ordinary course of business, in which the Bank
has a perfected, first priority lien, and after deducting
(without duplication): (i) each such account that is unpaid
ninety (90) days or more after the original invoice date
thereof, (ii) the amount of all discounts, allowances,
rebates, credits and adjustments to such accounts (iii) the
amount of all contra accounts, setoffs, defenses or
counterclaims asserted by or available to the account debtors,
(iv) all accounts with respect to which goods are placed on
consignment or subject to a guaranteed sale or other terms by
reason of which payment by the account debtor may be
conditional, (v) the amount billed for or representing
retainage, if any, until all prerequisites to the immediate
payment of retainage have been satisfied, (vi) all accounts
owing by account debtors for which there has been instituted a
proceeding in bankruptcy or reorganization under the United
States Bankruptcy Code or other law, whether state or federal,
now or hereafter existing for relief of debtors, (vii) all
accounts in which the account debtor is the United States or
any department, agency or instrumentality of the United
States, except to the extent an acknowledgment of assignment
to Bank of such account in compliance with the Federal
Assignment of Claims Act and other applicable laws has been
received by Bank, (viii) all accounts subject to any provision
prohibiting assignment or requiring notice of or consent to
such assignment, (ix) that portion of all account balances
owing by any single account debtor which exceeds twenty-five
percent (25%) of the aggregate of all accounts otherwise
deemed eligible hereunder which are owing to Borrower by all
account debtors, (x) any accounts for any unbilled work in
process, progress payments, unapplied client retainer payments
and net of client advances, (xi) all accounts existing outside
of the United States of America (unless such accounts are
insured by The Export Import Bank, or a bank acceptable
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to Lender has issued a letter of credit guaranteeing the
payment of such account), and (xii) any other accounts deemed
unacceptable by Bank in its sole and absolute discretion;
provided, however, if more than twenty percent (20%) of the
then balance owing by any single account debtor does not
qualify as an Eligible Account under the foregoing provisions,
then the aggregate amount of all accounts owing by such
account debtor shall be excluded from Eligible Accounts.
Borrower shall give Bank not less than two (2) business days'
prior notice of each requested advance hereunder, specifying
(1) the aggregate amount of such requested advance, and (2)
the requested date of such advance, with such advances to be
requested in a form satisfactory to Bank."
2. B. Section 5 of the Loan Agreement is hereby amended by replacing
the last sentence contained in said Section 5 with the
following:
"Borrower agrees to pay a fee to Bank of 0.25% of the
unused portion of the indebtedness on a quarter annual basis
beginning on April 1, 1997."
3. Reaffirmation of Representations and Warranties. To induce the Lender
to enter into this First Amendment, the Borrower hereby reaffirms, as of the
date hereof, its representations and warranties contained in Section 4 of the
Loan Agreement and in all other documents executed pursuant thereto, and
additionally represents and warrants as follows:
A. The execution and delivery of this First Amendment
and the performance by the Borrower of its obligations under this
First Amendment are within the Borrower's power, and does not and will
not contravene or conflict with any provision of law or of any
agreement binding upon the Borrower.
B. The Loan Agreement as amended by this First Amendment
represents the legal, valid and binding obligations of the Borrower,
enforceable against the Borrower in accordance with their respective
terms subject as to enforcement only to bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally.
C. No Event of Default has occurred and is continuing
as of the date hereof.
4. Defined Terms. Except as amended hereby, terms used herein that are
defined in the Loan Agreement shall have the same meanings herein.
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5. Reaffirmation of Loan Agreement. This First Amendment shall be deemed
to be an amendment to the Loan Agreement, and the Loan Agreement, as amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Loan Agreement herein and in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the Loan
Agreement as amended hereby.
6. Entire Agreement. The Loan Agreement, as hereby amended, embodies the
entire agreement between the Borrower and the Lender and supersedes all prior
proposals, agreements and understandings relating to the subject matter hereof.
The Borrower certifies that it is relying on no representation, warranty,
covenant or agreement except for those set forth in the Loan Agreement as
hereby amended and the other documents previously executed or executed of even
date herewith.
7. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. This First Amendment has been entered
into in Harris County, Texas, and it shall be performable for all purposes in
Harris County, Texas. Courts within the State of Texas shall have jurisdiction
over any and all disputes between the Borrower and the Lender, whether in law
or equity, including, but not limited to, any and all disputes arising out of
or relating to this First Amendment or any other Loan Document; and venue in
any such dispute whether in federal or state court shall be laid in Harris
County, Texas.
8. Severability. Whenever possible each provision of this First
Amendment shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this First Amendment 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 First Amendment.
9. Execution in Counterparts. This First Amendment may be executed in
any number of counterparts and by the different parties on separate
counterparts, and each such counterpart shall be deemed to be an original, but
all such counterparts shall together constitute but one and the same agreement.
10. Section Captions. Section captions used in this First Amendment are
for convenience of reference only, and shall not affect the construction of
this First Amendment.
11. Successors and Assigns. This First Amendment shall be binding upon
the Borrower and the Lender and their respective successors and assigns, and
shall inure to the benefit of the Borrower and the Lender, and the respective
successors and assigns of the Lender.
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12. Non-Application of Chapter 15 of Texas Credit Codes. The provisions
of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil Statutes, Article
5069-15) are specifically declared by the parties hereto not to be applicable
to the Loan Agreement as hereby amended or any of the other Loan Documents or
to the transactions contemplated hereby.
13. NOTICE. THIS FIRST AMENDMENT TOGETHER WITH THE LOAN AGREEMENT AND THE
OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE
PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this First
Amendment to be duly executed as of the day and year first above written.
BORROWER:
MITCHAM INDUSTRIES, INC.,
a Texas corporation
By: /s/ BILLY F. MITCHAM
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Billy F. Mitcham, President
Lender:
BANK ONE, TEXAS, N.A.
By: /s/ WALTER F. RODEE, III
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Name: Walter F. Rodee, III
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Title: Vice President
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BANC ONE LEASING CORPORATION
By:
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Name:
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Title:
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