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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE EXCHANGE ACT OF 1934
Commission file number 0-27070
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VENTURE SEISMIC LTD.
(Exact name of small business issuer as specified in its charter)
<TABLE>
<S> <C>
ALBERTA, CANADA N/A
(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
</TABLE>
3110 -- 80TH AVENUE S.E.
CALGARY, ALBERTA T2C 1J3
(Address of principal executive offices)
(403) 777-9070
(Issuer's telephone number)
------------------------------------
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days. Yes [X]
No [ ]
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 3,109,819 Common Shares, no
par value, were outstanding as of May 13, 1997.
Transitional Small Business Disclosure Format (Check one)
Yes [ ] No [X]
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VENTURE SEISMIC LTD.
INDEX TO FORM 10-QSB
FOR THE QUARTER ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
March 31, 1997 and September 30, 1996................................................. 4
Consolidated Statements of Income
Three and six months ended March 31, 1997 and 1996.................................... 5
Consolidated Statements of Cash Flows
Six months ended March 31, 1997 and 1996.............................................. 6
Notes to Consolidated Financial Statements............................................... 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of
Operations........................................................................ 8
</TABLE>
PART II. OTHER INFORMATION
<TABLE>
<S> <C>
Item 4. Submission of Matters to a Vote of Security Holders............................... 11
Item 6. Exhibits and Reports on Form 8-K.................................................. 12
Signatures................................................................................. 13
</TABLE>
<PAGE> 3
PART 1. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS
VENTURE SEISMIC LTD.
CONSOLIDATED BALANCE SHEETS
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
MARCH 31, SEPTEMBER 30,
1997 1996
---------- -------------
<S> <C> <C>
ASSETS
Current
Cash.............................................................. $ 262,488 $ --
Accounts receivable............................................... 10,928,929 2,644,659
Work-in-progress.................................................. 941,472 381,273
Income taxes recoverable.......................................... -- 430,975
Other receivables................................................. 36,475 135,048
Prepaid expenses and deposits..................................... 190,826 156,678
----------- -----------
12,360,190 3,748,633
Advances to shareholders............................................ 14,684 14,684
Deferred income taxes............................................... -- 63,875
Capital assets...................................................... 11,143,310 9,614,265
Intangible assets................................................... 1,414,623 1,491,783
----------- -----------
$24,932,807 $14,933,240
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Bank indebtedness................................................. $ 840,486 $ 164,630
Accounts payable and accrued liabilities.......................... 8,497,604 2,764,723
Income taxes payable.............................................. 702,742 --
Current portion of long term debt (note 4)........................ 1,414,268 1,520,000
----------- -----------
11,455,100 4,449,353
----------- -----------
Long term debt (note 4)............................................. 4,004,929 2,356,060
----------- -----------
Deferred income taxes............................................... 125,045 --
----------- -----------
Shareholders' equity
Share capital (note 5)............................................ 7,495,552 7,539,902
Retained earnings................................................. 1,740,658 494,843
Cumulative translation adjustment................................. 111,523 93,082
----------- -----------
9,347,733 8,127,827
----------- -----------
$24,932,807 $14,933,240
=========== ===========
</TABLE>
4
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VENTURE SEISMIC LTD.
CONSOLIDATED STATEMENTS OF INCOME
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
------------------------ ------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Revenue..................................... $10,098,230 $5,872,360 $15,683,001 $7,464,286
Direct expenses............................. 6,903,473 4,246,177 11,150,221 5,516,233
----------- ---------- ----------- ----------
Gross margin................................ 3,194,757 1,626,183 4,532,780 1,948,053
----------- ---------- ----------- ----------
Expenses
General and administrative................ 488,336 344,728 886,290 631,667
Depreciation and amortization............. 625,926 305,293 1,163,109 577,615
----------- ---------- ----------- ----------
1,114,262 650,021 2,049,399 1,209,282
----------- ---------- ----------- ----------
Income from operations...................... 2,080,495 976,162 2,483,381 738,771
Other income (expense)
Interest and other income................. 843 39,819 6,550 81,265
Interest expense.......................... (134,767) (72,517) (273,338) (157,255)
----------- ---------- ----------- ----------
(133,924) (32,698) (266,788) (75,990)
----------- ---------- ----------- ----------
Income before income taxes.................. 1,946,571 943,464 2,216,593 662,781
Income taxes
Current................................... 703,616 365,200 703,616 143,980
Deferred.................................. 147,162 51,128 267,162 146,990
----------- ---------- ----------- ----------
850,778 416,328 970,778 290,970
----------- ---------- ----------- ----------
Net income.................................. $1,095,793 $ 527,136 $1,245,815 $ 371,811
=========== ========== =========== ==========
Earnings per common share
Basic..................................... $ 0.35 $ 0.18 $ 0.40 $ 0.14
Fully diluted............................. $ 0.22 $ 0.12 $ 0.25 $ 0.11
Weighted average number of common shares
outstanding
Basic..................................... 3,109,000 3,004,000 3,105,000 2,646,000
Fully diluted............................. 5,350,000 5,199,000 5,346,000 4,840,000
</TABLE>
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VENTURE SEISMIC LTD.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN U.S. DOLLARS)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
MARCH 31,
-------------------------
1997 1996
---------- ----------
<S> <C> <C>
Operating activities:
Net income $1,245,815 $ 371,811
Items not involving cash:
Depreciation and amortization.................................. 1,163,109 577,615
Deferred income taxes.......................................... 267,162 133,532
Cumulative translation adjustment................................. (54,151) 84,924
Net change in non-cash working capital............................ (1,913,446) (2,902,373)
----------- -----------
708,489 (1,734,491)
----------- -----------
Financing activities:
Proceeds on issuance of shares.................................... 50,000 6,499,195
Increase in bank indebtedness..................................... 675,856 66,919
Proceeds from long term debt...................................... 3,820,411 --
Principal payments on long term debt.............................. (2,277,274) (458,363)
Decrease in advances to shareholders.............................. -- 195
Net change in non-cash working capital............................ (100,000) --
----------- -----------
2,168,993 6,107,946
----------- -----------
Investment activities:
Purchase of capital assets........................................ (2,614,994) (2,883,832)
----------- -----------
(2,614,994) (2,883,832)
----------- -----------
Increase in cash for the period..................................... 262,488 1,489,623
Cash, beginning of period........................................... -- --
----------- -----------
Cash, end of period................................................. $ 262,488 $1,489,623
=========== ===========
</TABLE>
6
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VENTURE SEISMIC LTD.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
1. BASIS OF FINANCIAL STATEMENT PRESENTATION
The consolidated financial statements of Venture Seismic Ltd. (the
"Company") are unaudited and reflect all adjustments (consisting only of normal
recurring adjustments) which are, in the opinion of management, necessary for a
fair presentation of the financial position as of March 31, 1997, operating
results for the three months and six months ended March 31, 1997 and March 31,
1996 and statements of cash flows for the six months ended March 31, 1997 and
March 31, 1996. The consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto,
together with management's discussion and analysis of financial condition and
results of operations, contained in the Company's Annual Report on Form 10-KSB
for the fiscal year ended September 30, 1996. The foregoing interim results for
the three months and six months ended March 31, 1997 are not necessarily
indicative of the results for the entire fiscal year ending September 30, 1997.
The consolidated financial statements are prepared in accordance with
Canadian generally accepted accounting principles ("Canadian GAAP"). Certain of
these principles differ from those applicable in the United States ("U.S.
GAAP"). Differences, if material, are disclosed in note 3 -- United States
Accounting Principles.
2. CURRENCY PRESENTATION AND EXCHANGE RATES
All dollar amounts, unless otherwise stated, are expressed in United States
dollars. Since the completion of its initial public offering the Company has
selected U.S. dollars as its currency for financial reporting and display
purposes on the basis that the securities of the Company are currently only
listed for trading on the Nasdaq Stock Market and the primary users of the
financial statements are U.S. residents. Accordingly, the Company applies the
current rate method to translate its accounts measured in Canadian dollars to
U.S. dollars. Under this method, average exchange rates are used for items
included in the consolidated income statement and period end exchange rates for
the assets and liabilities. Any significant gains or losses are included as a
separate component of shareholders' equity.
For translation purposes the exchange rates of the Canadian dollar in
exchange for U.S. dollars, is calculated from the exchange rates reported by the
Federal Reserve Bank of New York as the noon buying rate in New York for cable
transfers in Canadian dollars as certified for custom purposes. The average
exchange rates for the three months ended March 31, 1997 and March 31, 1996 are
US $0.7358 = $1.00 Canadian and US $0.7304 = $1.00 Canadian, respectively. The
average exchange rates for the six months ended March 31, 1997 and March 31,
1996 are US $0.7382 = $1.00 Canadian and US $0.7339 = $1.00 Canadian,
respectively. The period end exchange rates at March 31, 1997 and September 30,
1996 are US $0.7228 = $1.00 Canadian and US $0.7342 = $1.00 Canadian
respectively.
3. UNITED STATES ACCOUNTING PRINCIPLES AND EARNINGS PER SHARE
For the periods ended March 31, 1997 and March 31, 1996 there were no
material differences in net income and net income per common share using
Canadian and U.S. GAAP.
7
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4. LONG TERM DEBT
<TABLE>
<CAPTION>
SEPTEMBER
MARCH 31, 30,
1997 1996
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<S> <C> <C>
Capital loan, bearing interest at the lender's cost of funds plus
3.0% and repayable in monthly installments of $102,000 ($140,000
Canadian), due February 15, 2001.................................. $4,756,058 --
Equipment lease purchase contract, bearing interest at 22%,
repayable in monthly installments of $73,704 comprised of
principal and interest, due April 30, 1997........................ 663,139 --
Capital loan........................................................ -- 2,409,094
Equipment purchase contract......................................... -- 795,528
Equipment lease purchase contract................................... -- 671,438
---------- ----------
5,419,197 3,876,060
Less current portion................................................ (1,414,268) (1,520,000)
---------- ----------
$4,004,929 $2,356,060
========== ==========
</TABLE>
A general security agreement on equipment and a fixed charge on certain
equipment have been pledged as collateral for the capital loan. A fixed charge
on certain seismic equipment has been pledged as collateral for the equipment
lease purchase contract. Aggregate principal repayments for long term debt are
as follows:
<TABLE>
<S> <C>
1997, remainder of fiscal year.............................................. $ 729,000
1998........................................................................ 1,370,400
1999........................................................................ 1,370,400
2000........................................................................ 1,370,400
2001........................................................................ 578,997
----------
$5,419,197
==========
</TABLE>
5. SHARE CAPITAL
During the six months ended March 31, 1997 an income tax benefit of $57,000
associated with fiscal 1996 share issue expenses has been recorded in the share
capital account. The remaining income tax benefit of $173,776 will be recognized
in the share capital account when realized.
6. SUBSEQUENT EVENTS
Subsequent to March 31, 1997 the Company exercised a purchase option, of
approximately $630,000, to acquire certain seismic equipment which the Company
had been leasing. The Company obtained approximately $650,000 of debt financing
from its existing capital asset lender to fund the exercise of this purchase
option. The financing is evidenced by a debenture bearing interest at a rate
equal to the lender's cost of funds plus 2.75%, is repayable in monthly
principal installments of $13,000 plus interest and matures in July 2001. A
general security agreement on equipment and a fixed charge on the purchased
equipment have been pledged as collateral for the capital loan.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Except for the description of historical facts contained herein, this Form
10-QSB contains certain forward-looking statements that involve risks and
uncertainties. Actual results could differ from those anticipated due to a
number of factors including the capital intensive nature of the Company's
business and its need for additional funds for operations and debt service
requirements, fluctuations in operating results, dependence upon principal
customers and on the activity of the oil and gas industry, risks associated with
international operations and regulatory, competitive and contractual risks.
8
<PAGE> 8
RESULTS OF OPERATIONS
Revenue for the three and six month periods ended March 31, 1997 ("1997
three and six months") increased by approximately 72% and 110% to $10,098,230
and $15,683,001, respectively, as compared to $5,872,360 and $7,464,286 for the
three and six month periods ended March 31, 1996 ("1996 three and six months"),
respectively. These increases were primarily attributable to increased activity
in the Canadian market combined with additional revenue from the United States
market generated by the Company's wholly owned subsidiary, Boone Geophysical,
Inc. ("Boone"). Boone was acquired in June 1996 and generated revenue of
$1,295,652 and $3,060,858 for the 1997 three and six months. Revenue for the
1997 three and six months from the Canadian market increased by approximately
49.9% and 69.1% to $8,802,578 and $12,622,143 respectively, as compared to
$5,872,360 and $7,464,286 for the 1996 three and six months, respectively. As a
percentage of revenue Canadian based operations contributed 87.2% and 80.5% for
the 1997 three and six months as compared to 100% for the 1996 three and six
months.
During the six months ended March 31, 1997 and March 31, 1996 two customers
each accounted for in excess of 10% of the Company's revenues and the same
customer accounted for 48% and 56% of the revenues respectively. Although the
projects performed by the Company were generally short term, the inability to
replace significant customers would cause the Company's revenues and operating
results to fluctuate significantly from period to period, and the loss of
certain customers would have a material adverse impact on the business. Because
of the limited number of data acquisition crews owned by the Company, and thus
the limited number of data acquisition crews that the Company is able to deploy
at any given time, the Company anticipates that a substantial portion of future
revenues will continue to be attributable to a few customers, who may change
from time to time.
Direct expenses for the 1997 three and six months increased by 62.6% and
102.1% to $6,903,473 and $11,150,221, respectively, as compared to $4,246,177
and $5,516,233 for the 1996 three and six months, respectively. Direct expenses
as a percentage of revenue for the 1997 three and six months decreased to 68.4%
and 71.1%, respectively, as compared to 72.3% and 73.9% for the 1996 three and
six months respectively. The decrease in direct costs as a percentage of revenue
in the 1997 three and six months is due to increased activity for the Company's
Canadian seismic crews which decreased the effect of fixed direct costs,
improvements in contracted rates due to increased demand in the market and the
completion of a greater number of 3D projects, which generate higher margins
than 2D projects, during the period.
General and administrative expenses for the 1997 three and six months
increased by 41.7% and 40.3% to $488,336 and $886,290, respectively, as compared
to $344,728 and $631,667 for the 1996 three and six months, respectively. These
increases were primarily attributable to increased activity levels in the
Canadian market and the inclusion of general and administrative expenses related
to the Boone operations in the U.S. market.
Depreciation and amortization expense for the 1997 three and six months
increased by 105% and 101% to $625,926 and $1,163,109, respectively, as compared
to $305,293 and $577,615 for the 1996 three and six months, respectively. The
increase in depreciation is primarily attributable to additional equipment
related to the acquisition of Boone in June 1996 and the acquisition of two
telemetry systems in November and December 1996. The 1997 three and six months
also includes a monthly amortization charge of $12,860 related to the
amortization of goodwill recognized on the acquisition of Boone.
Interest and other income for the 1997 three and six months decreased by
$38,976 and $74,715, to $843 and $6,550, respectively as compared to $39,819 and
$81,265 for the 1996 three and six months, respectively. The 1996 three and six
month period includes interest income generated on the proceeds from the
Company's initial public offering in November 1995.
Interest expense for the 1997 three and six months increased by 85.8% and
73.8% to $134,767 and $273,338, respectively, as compared to $72,517 and
$157,255 for the 1996 three and six months, respectively. These increases
primarily result from increased debt levels related to the acquisition of two
data acquisition systems, geophones for the Company's U.S. operation and a new
set of vibroseis units.
The Company's effective income tax rate was approximately 44% for all
reported periods. Minor variances from this rate are due to certain
non-deductible expenses.
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QUARTERLY FLUCTUATIONS
The Company's business is subject to substantial quarterly variations as a
result of activity variations in the Canadian seismic industry. Generally,
increased activity occurs in the Canadian seismic industry during the Canadian
winter season, from November to March. During this period the colder weather
freezes the ground and permits easier access to marshy terrain in the northern
areas of Western Canada and agricultural areas. During the spring, bans are
placed on road use, which temporarily limits access to many areas where the
Company conducts its operations. Further, due to the soft wet ground conditions
and marshy terrain in the northern areas of Western Canada, both of which are
extremely sensitive to traffic and heavy equipment, the extent to which the
Company can conduct its operations during the spring and summer is significantly
reduced. As a result the Company has historically experienced a fluctuation in
quarterly results with generally increased activity in the Company's first and
second fiscal quarters and a significant decrease in revenues and net income
during the third and fourth fiscal quarters. With the acquisition of Boone in
June 1996 the Company is expanding and diversifying its operations into the
United States, which is expected to reduce somewhat the seasonality
traditionally associated with Company's Canadian operations. Due to the factors
noted above, the Company's results of operations may be subject to fluctuations,
particularly on a quarterly basis and the Company's stock price may be affected
by such results.
As a result of the seasonality in the Company's Canadian operations,
revenues for the three months ending June 30, 1997 are expected to decrease
significantly as compared to the three months ended March 31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
At March 31, 1997 the Company had working capital of $905,090, which
includes the current portion of long term debt in the amount of $1,414,268.
In December 1996 the Company entered into a financing agreement whereby the
Company's existing capital loan and equipment financing was refinanced and
additional funding was provided for the acquisition of capital equipment (the
"New Capital Loan"). This refinancing resulted in a New Capital Loan of
approximately $5,105,100 ($7,000,000 Canadian) for which all of the Company's
equipment is pledged as collateral. The New Capital Loan is evidenced by a
debenture bearing interest at a rate equal to the lender's cost of funds plus
3.00% (the Company's effective interest rate at April 15, 1997 was 6.665%), is
payable in monthly principal installments of $102,000 plus interest, and matures
in February 2001.
In October 1996 the Company entered into a "lease to purchase" agreement
for a telemetry data acquisition system whereby the Company can exercise a
purchase option (the "Purchase Option") on April 30, 1997 with credit being
given for a portion of the lease payments made during the period November 1,
1996 to April 30, 1997. Subsequent to March 31, 1997 the Company exercised the
Purchase Option and entered into a financing agreement ("Capital Loan 2") with
its existing capital asset lender to provide approximately $650,000 for the
exercise of the Purchase Option. Capital Loan 2 is evidenced by a debenture
bearing interest at a rate equal to the lender's cost of funds plus 2.75% (the
Company's effective interest rate at April 15, 1997 was 6.415%) and is repayable
in monthly principal installments of $13,000 plus interest, and matures in July
2001.
Based on the lender's cost of funds at April 15, 1997 the Company's debt
service requirements in connection with the New Capital Loan and Capital Loan 2
(the "Capital Loans") are expected to aggregate approximately $1,685,000 for the
next twelve months.
In addition to its capital asset financing the Company continues to
maintain an operating line of credit which provides for an aggregate of up to
$1,200,000 in advances available to the Company subject to a limit of: i) the
excess in value of current assets over current liabilities (excluding the
current portion of long-term debt) and ii) 70% of the value of the accounts
receivable of the Company which are less than ninety days old. Borrowings under
the operating line are payable on demand, bear interest at the bank's prime rate
plus .75%. The Company's trade receivables have been pledged as collateral for
borrowings under the operating line. Advances under the Company's operating line
of credit were nil as of May 8, 1997.
The Company will require satisfactory operating cash flows to continue
operations, complete capital expenditures and meet its principal and interest
obligations with respect to the Capital Loans. The Company anticipates, based on
its current plans and assumptions, funds expected to be generated from
operations will be sufficient to satisfy the Company's existing cash
requirements over the next twelve month period. However, the
10
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Company's ability to meet its debt service and other obligations depends on its
future performance which is subject to general economic conditions, oil and gas
commodity prices and other business factors beyond the Company's control. If the
Company is unable to generate sufficient cash flow from operations or to comply
with the terms of the Capital Loans it may be required to refinance all or a
portion of its existing debt or to obtain additional financing, although there
can be no assurance that the Company will be able to obtain such refinancing or
additional financing.
As of May 13, 1997 the Company's backlog of commitments for services was
approximately $8.9 million, and the backlog for the United States segment of
operations was approximately $7.3 million (the "U.S. backlog"). A substantial
portion of the U.S. backlog is attributable to one three-dimensional project in
the St. Landry Parish of Louisiana. This project is valued at $3.9 million based
upon a square mile rate and project parameters specified in the contract.
Preliminary work commenced on the project in late April and the project is
expected to be completed in the Company's fourth fiscal quarter. It is
anticipated that substantially all of the orders and commitments included in the
backlog will be completed within the next six months. Such backlog consists of
written orders or commitments believed to be firm. Contracts for the Company's
services are occasionally varied or modified by mutual consent and in certain
instances are cancelable by the customer on short notice without penalty. As a
result of these factors the Company's backlog as of any particular date may not
be indicative of the Company's actual operating results for any succeeding
period and is subject to seasonal fluctuations as discussed.
Included in the March 31, 1997 accounts receivable balance of $10,928,929
and the accounts payable and accrued liabilities balance of $8,497,604 were
certain reimbursable amounts which are not included in the Company's revenue or
direct costs. In accordance with the terms of various project agreements,
certain costs are paid by the Company and passed on or flowed through to the
customer at cost. As a result these reimbursable costs are included in accounts
receivables and accounts payable even though they do not impact revenue or
direct expenses. The collection of accounts receivable and the payment of
accounts payable are expected to continue to occur in the normal 30 to 60 day
time period following billing. As of May 8, 1997 approximately 73% of the March
31, 1997 accounts receivable have been collected.
Accounts receivable, work-in-progress and accounts payable and accrued
liabilities at March 31, 1997 were $10,928,929, $941,472 and $8,497,604,
respectively, as compared to accounts receivable, work-in-progress and accounts
payable and accrued liabilities at September 30, 1996 of $2,644,659, $381,273
and $2,764,723, respectively. The increased value of these accounts at March 31,
1997 as compared to September 30, 1996 primarily reflects the significant
increase in activity, primarily in the Canadian market, that occurs during the
three months ended March 31, 1997 as compared to the three months ended
September 30, 1996.
The decrease in income taxes recoverable at March 31, 1997 resulted from
the recovery of previously paid income taxes, which were recoverable as a result
of the 1996 loss. Income taxes payable of $702,742 at March 31, 1997 reflects
the taxable nature of operating results for the six months ended March 31, 1997.
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
On April 30, 1997 the Company held a Special and Annual Shareholders
Meeting (the "1996 Annual Meeting"). At the 1996 Annual Meeting: (i) all five
director nominees were elected; (ii) the resolution fixing the number of
directors for the ensuing year at five was approved and ratified; (iii) the
amendment to the by-laws of the Company increasing the quorum from 10% to 50%
was approved and ratified; (iv) the amendment to the Company's 1995 Stock Option
Plan, as amended, increasing from 250,000 to 450,000 the number of Common Shares
reserved for issuance was approved and ratified; and (v) the appointment of
Ernst & Young, Chartered Accountants as the independent auditors of the Company
was approved and ratified.
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The following directors were elected for a one year term at the 1996 Annual
Meeting by the votes indicated:
<TABLE>
<CAPTION>
FOR WITHHELD
-------- --------
<S> <C> <C>
Brian W. Kozun.................................................... 2,360,152 4,200
P. Daniel McArthur................................................ 2,360,152 4,200
Michael Beninger.................................................. 2,360,152 4,200
J. Joseph Ciavarra................................................ 2,360,152 4,200
Stuart Norman..................................................... 2,360,152 4,200
</TABLE>
1. The resolution fixing the number of directors for the ensuing year at five
was approved and ratified by a vote of 2,357,152 for; 2,500 against and 4,700
abstaining.
2. The resolution confirming the amendment to the by-laws of the Company,
which increases the quorum for shareholders' meetings from 10% to 50%, was
approved and ratified by a vote of 1,349,870 for; 15,600 against and 6,400
abstaining.
3. The amendment to the Company's 1995 Stock Option Plan, as amended,
increasing the number of Common Shares authorized to be issued under such Plan
from 250,000 to 450,000, was approved and ratified by a vote of 1,295,576 for;
62,250 against and 7,400 abstaining.
4. The appointment of Ernst & Young, Chartered Accountants as independent
auditors of the Company for the ensuing fiscal year was approved and ratified by
a vote of 2,358,452 for; 2,200 against and 3,700 abstaining.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(A) EXHIBITS
<TABLE>
<S> <C>
3.2(a) By-laws of the Registrant, as amended
10.10(a) 1995 Stock Option Plan, as amended
10.24 Addendum No. 1 to Supplemental Agreement No. 3 between Boone Geophysical, Inc. and
H.S. Resources, Inc. dated March 20, 1997
10.25 Debenture issued by the Registrant dated April 29, 1997
27 Financial Data Schedule
</TABLE>
(B) REPORTS ON FORM 8-K
The Registrant did not file any reports on Form 8-K during the three months
ended March 31, 1997.
12
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
VENTURE SEISMIC LTD.
/s/ GREG WIEBE
--------------------------------
By: Gregory B. Wiebe
Vice President Finance and Chief
Financial Officer
Dated: May 13, 1997
13
<PAGE> 1
EXHIBIT 3.2(a)
INDEX OF BY-LAWS
<TABLE>
<CAPTION>
DIRECTORS SHAREHOLDERS
BY-LAW APPROVAL CONFIRMATION
NUMBER DESCRIPTION (DATE) (DATE)
- ------ ----------- --------- ------------
<S> <C> <C> <C>
1 General by-law relating Sept. 12, 1985 Sept. 12, 1985
to the transaction of
the business and affairs
of the Corporation
By-law Number 1 repealed July 4, 1994 July 4, 1994
in its entirety
2 General by-law relating July 4, 1994 July 4, 1994
to the transaction of
the business and affairs
of the Corporation
Amendment to Article 10.11 August 24, 1995 April 30, 1997
of By-law Number 2
</TABLE>
<PAGE> 2
BY-LAW NUMBER 2
A by-law relating generally to the transaction
of the business and affairs of the Corporation.
<TABLE>
<CAPTION>
CONTENTS
SECTION
<S> <C>
ONE INTERPRETATION
TWO ADMINISTRATION
THREE BORROWING AND SECURITIES
FOUR DIRECTORS
FIVE COMMITTEES
SIX OFFICERS
SEVEN PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
EIGHT SHARES
NINE DIVIDENDS AND RIGHTS
TEN MEETINGS OF SHAREHOLDERS
ELEVEN DIVISIONS AND DEPARTMENTS
TWELVE INFORMATION AVAILABLE TO SHAREHOLDERS
THIRTEEN NOTICES
FOURTEEN EFFECTIVE DATE (AND REPEAL)
</TABLE>
BE IT ENACTED as a by-law of VENTURE SEISMIC LTD. (hereinafter called the
"Corporation") as follows:
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SECTION ONE
INTERPRETATION
1.01 DEFINITIONS. In the by-laws and all resolutions of the Corporation,
unless the context otherwise requires:
(a) "Act" means the Business Corporations Act (Alberta), and any statute
that may be substituted therefor, as from time to time amended;
(b) "appoint" includes "elect" and vice versa;
(c) "articles" means the original or restated articles of incorporation,
articles of amendment, articles of amalgamation, articles of
continuance, articles of reorgani- zation, articles of arrangement,
articles of dissolution, articles of revival and includes an amendment
to any of them;
(d) "board" means the board of directors of the Corporation;
(e) "by-laws" means this by-law and all other by-laws of the Corporation
from time to time in force and effect;
(f) "Corporation" means a body corporate incorporated or continued under
the Act and not discontinued under the Act;
(g) "meeting of shareholders" means an annual meeting of shareholders and
a special meeting of shareholders;
(h) "non-business day" means Saturday, Sunday and any other day that is a
holiday as defined in the Interpretation Act (Alberta) or the
Interpretation Act (Canada);
(i) "ordinary resolution" means a resolution
(i) passed by a majority of the votes cast by the shareholders who
voted in respect of that resolution, or
(ii) signed by all the shareholders entitled to vote on that
resolution;
(j) "recorded address" means, in the case of a shareholder, his address as
recorded in the Securities Register of the Corporation; and, in the
case of joint shareholders, the address appearing in the Securities
Register of the Corporation in respect of such joint holding or the
first address so appearing if there are more than one; and, in the
case of a director, officer, auditor or member of a committee of the
board, his latest address as recorded in the records of the
Corporation;
(k) "resident Canadian" means an individual who is
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(i) a Canadian citizen ordinarily resident in Canada,
(ii) a Canadian citizen not ordinarily resident in Canada who is a
member of a prescribed class of persons, or
(iii)a permanent resident within the meaning of the Immigration Act,
1976 (Canada) and ordinarily resident in Canada, except a
permanent resident who has been ordinarily resident in Canada for
more than 1 year after the time at which he first became eligible
to apply for Canadian citizenship;
(l) "signing officer" means, in relation to any instrument, any person
authorized to sign the same on behalf of the Corporation by Clause
2.04 or by a resolution passed pursuant thereto;
(m) "special business" means all business transacted at a special meeting
of shareholders and all business transacted at an annual meeting of
shareholders, except consideration of the financial statements and
auditor's report, fixing the number of directors for the following
year, election of directors and reappointment of the incumbent
auditor;
(n) "special meeting of shareholders" means a meeting, other than an
annual meeting, of shareholders entitled to vote at an annual meeting
of shareholders, and includes a meeting of any class or classes of
shareholders acting separately from any other class or classes of
shareholders;
(o) "special resolution" means a resolution passed by a majority of not
less than 2/3 of the votes cast by the shareholders who voted in
respect of that resolution or signed by all the shareholders entitled
to vote on that resolution;
(p) "unanimous shareholder agreement" means
(i) a written agreement to which all the shareholders of a
corporation are or are deemed to be parties, whether or not any
other person is also a party, or
(ii) a written declaration by a person who is the beneficial owner of
all the issued shares of a corporation, that provides for any of
the matters enumerated in section 140(1) of the Act.
Save as aforesaid, words and expressions defined in the Act have the same
meanings when used herein; and words importing the singular number include the
plural and vice versa; words importing gender include the masculine, feminine
and neuter genders; and words importing persons include individuals, bodies
corporate, partnerships, trusts and unincorporated organizations.
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SECTION TWO
ADMINISTRATION
2.01 REGISTERED OFFICE, RECORDS OFFICE AND ADDRESS FOR SERVICE. Until
changed in accordance with the Act, the registered office of the Corporation,
the designated records office (if separate from the registered office) of the
Corporation and the post office box (if any) designated as the address for
service upon the Corporation by mail shall initially be at the address or
addresses in Alberta specified in the notice thereof filed with the articles and
thereafter as the board may from time to time determine.
2.02 CORPORATE SEAL. The corporate seal of the Corporation shall be in the
form as determined by the board from time to time.
2.03 FINANCIAL YEAR. The financial year of the Corporation shall be
determined by the board from time to time.
2.04 EXECUTION OF INSTRUMENTS. Any officer or any director may sign
certificates and similar instruments (other than share certificates) on the
Corporation's behalf with respect to any factual matters relating to the
Corporation's business and affairs, including certificates certifying copies of
the articles, by-laws, resolutions and minutes of meetings of the Corporation.
Subject to the foregoing:
(a) Deeds, transfers, assignments, contracts, obligations, and
other instruments shall be signed on behalf of the Corporation by one
or more persons who hold the office of director, chairman of the
board, president, managing director, vice-president, secretary,
treasurer, assistant secretary or assistant treasurer or any other
office created by by-law or by resolution of the board. When there
is only one director and that director is the only officer of the
Corporation, deeds, transfers, assignments, contracts, obligations
and other instruments may be signed by that person alone, as director
or officer, on behalf of the Corporation;
(b) Security certificates (including share certificates) shall be
signed by at least one director or officer of the Corporation or by
or on behalf of a registrar, transfer agent or branch transfer agent
of the Corporation or by a trustee who certifies it in accordance
with a trust indenture. Any signatures required on a security
certificate (including share certificates) may be printed or
otherwise mechanically reproduced on it.
In addition, the board may from time to time direct the person or
persons by whom any particular instrument or class of instruments may or shall
be signed. Any signing officer or director may affix the corporate seal to any
instrument requiring the same.
2.05 BANKING ARRANGEMENTS. The banking business of the Corporation
including, without limitation, the borrowing of money and the giving of security
therefor, shall be transacted with such banks, trust companies or other bodies
corporate or organizations as may from time to time be designated by or under
the authority of the board. Such banking business or any
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part thereof shall be transacted under such agreements, instructions and
delegations of powers as the board may from time to time prescribe or
authorize.
2.06 VOTING RIGHTS IN OTHER BODIES CORPORATE. The signing officers of the
Corporation may execute and deliver proxies and arrange for the issuance of
voting certificates or other evidence of the right to exercise the voting rights
attaching to any securities held by the Corporation. Such instruments,
certificates or other evidence shall be in favour of such person or persons as
may be determined by the officers executing such proxies or arranging for the
issuance of voting certificates or such other evidence of the right to exercise
such voting rights. In addition, the board, or failing the board, the signing
officers of the Corporation, may from time to time direct the manner in which
and the person or persons by whom any particular voting rights or class of
voting rights may or shall be exercised.
SECTION THREE
BORROWING AND SECURITIES
3.01 BORROWING POWER. Without limiting the borrowing powers of the
Corporation as set forth in the Act, but subject to the articles or any
unanimous shareholders agreement, the board may from time to time on behalf of
the Corporation, without authorization of the shareholders:
(a) borrow money upon the credit of the Corporation in such amounts
and on such terms as may be deemed expedient by obtaining loans or
advances or by way of overdraft or otherwise;
(b) issue, reissue, sell or pledge bonds, debentures, notes or
other evidences of indebtedness or guarantee of the Corporation,
whether secured or unsecured for such sums and at such prices as may
be deemed expedient;
(c) to the extent permitted by the Act, give a guarantee on behalf
of the Corporation to secure performance of any present or future
indebtedness, liability or obligation of any person;
(d) to charge, mortgage, hypothecate, pledge or otherwise create a
security interest in all or any present and future property, real and
personal, immoveable and moveable, of the Corporation, including its
undertakings and rights, to secure any bonds, debentures, notes or
other evidences of indebtedness or guarantee or any other
indebtedness, liability or obligation of the Corporation, present or
future; and
(e) delegate to a committee of the board, a director or an officer
of the Corporation all or any of the powers conferred aforesaid or by
the Act to such extent and in such manner as the directors may
determine.
Nothing in this section limits or restricts the borrowing of money by
the Corporation on bills of exchange or promissory notes made, drawn, accepted
or endorsed by or on behalf of the
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Corporation.
3.02 DELEGATION. The board may from time to time delegate to such one or
more of the directors and officers of the Corporation as may be designated by
the board all or any of the powers conferred on the board by Clause 3.01 or by
the Act to such extent and in such manner as the board shall determine at the
time of each such delegation.
SECTION FOUR
DIRECTORS
4.01 NUMBER OF DIRECTORS AND QUORUM. Until changed in accordance with the
Act, the board shall consist of not fewer than the minimum number and not more
than the maximum number of directors provided in the articles. Subject to
Clause 4.08, the quorum for the transaction of business at any meeting of the
board shall consist of a majority of the Board of Directors of the Corporation
or such greater or lesser number of directors as the board may from time to time
determine. If a quorum is present at the opening of any meeting of directors,
the directors present may proceed with the business of the meeting
notwithstanding that a quorum is not present throughout the meeting. If a
quorum is not present at the opening of any meeting of directors, the directors
present may adjourn the meeting to a fixed time and place but may not transact
any other business other than as provided in these By-laws or in the Act until a
quorum is present.
4.02 QUALIFICATION. The following persons are disqualified from being a
director of the Corporation:
(a) anyone who is less than 18 years of age;
(b) anyone who
(i) is a dependent adult as defined in The Dependent
Adults Act or is the subject of a certificate of incapacity
under that Act,
(ii) is a formal patient as defined in The Mental Health Act,
1972,
(iii) is the subject of an order under The Mentally Incapacitated
Persons Act appointing a committee of his person or estate or
both, or
(iv) has been found to be a person of unsound mind by a court
elsewhere than in Alberta;
(c) a person who is not an individual;
(d) a person who has the status of bankrupt.
A director need not be a shareholder. At least half of the directors
shall be resident
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Canadians.
4.03 CONSENT TO ACT. A person who is elected or appointed a director is
not a director unless:
(a) he was present at the meeting when he was elected or appointed
and did not refuse to act as a director, or
(b) if he was not present at the meeting when he was elected or
appointed, he consented to act as a director in writing before his
election or appointment or within 10 days after it, or he has acted
as a director pursuant to the election or appointment.
4.04 ELECTION AND TERM. Shareholders of the Corporation shall, by ordinary
resolution at the first meeting of shareholders and at each succeeding annual
meeting at which an election of directors is required, elect directors to hold
office for a term expiring not later than the close of the annual meeting of
shareholders following the election. At each annual meeting of shareholders,
all directors whose term of office has expired or then expires shall retire but,
if qualified, shall be eligible for re-election. A director not elected for an
expressly stated term ceases to hold office at the close of the first annual
meeting of shareholders following his election. Notwithstanding the foregoing,
if directors are not elected at a meeting of shareholders, the incumbent
directors continue in office until their successors are elected. The number of
directors to be elected at any such meeting shall be the number of directors
whose term of office has expired or then expires unless the directors or the
shareholders otherwise determine. It is not necessary that all directors
elected at a meeting of shareholders hold office for the same term. If the
articles so provide, the directors may, between annual meetings of shareholders,
appoint one or more additional directors of the Corporation to serve until the
next annual meeting of shareholders, but the number of additional directors
shall not at any time exceed one-third of the number of directors who held
office at the expiration of the last annual meeting of the Corporation.
4.05 REMOVAL OF DIRECTORS. Subject to the Act, the shareholders may, by
ordinary resolution passed at a special meeting, remove any director from office
and the vacancy created by such removal may be filled at the meeting of the
shareholders at which the director was removed or, if not so filled, may be
filled by the directors.
4.06 CEASING TO HOLD OFFICE. A director ceases to hold office when he
dies, when he is removed from office by the shareholders, when he ceases to be
qualified for election as a director, or when his written resignation is sent or
delivered to the Corporation, or if a time is specified in such resignation, at
the time so specified, whichever is later. Provided always that, subject to the
Act, the shareholders of the Corporation may by ordinary resolution at a special
meeting remove any director or directors from office.
4.07 VACANCIES. Subject to the Act, a quorum of the board may fill a
vacancy in the board. In the absence of a quorum of the board, the board shall
forthwith call a special meeting of the shareholders to fill the vacancy. If
the board fails to call such meeting or if there are no such directors then in
office, any shareholder may call the meeting.
4.08 ACTION BY THE BOARD. Subject to any unanimous shareholder agreement,
the
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board shall manage the business and affairs of the Corporation. Subject to
Clauses 4.09 and 4.10, the powers of the board may be exercised by a meeting at
which the quorum is present or by resolution in writing signed by all the
directors entitled to vote on that resolution at a meeting of the board. Where
there is a vacancy in the board, the remaining directors may exercise all the
powers of the board so long as a quorum remains in office. Where the
Corporation has only one director, that director may constitute a meeting.
4.09 CANADIAN REPRESENTATION. Subject to the Act, the board shall not
transact business at a meeting, other than filling a vacancy in the board,
unless at least one-half of the directors present are resident Canadians, except
where:
(a) a resident Canadian director who is unable to be present
approves in writing or by telephone or other communications
facilities the business transacted at the meeting; and
(b) the number of resident Canadian directors present at the
meeting, together with any resident Canadian director who gives his
approval under clause (a), totals at least half of the directors
present at the meeting.
4.10 PARTICIPATION BY TELEPHONE. A director may participate in a meeting
of the board or of a committee of the board by means of such telephone or other
communications facilities as permits all persons participating in the meeting to
hear each other, and a director participating in such a meeting by such means is
deemed to be present at the meeting.
4.11 PLACE OF MEETINGS. Subject to the Articles, meetings of the board may
be held at any place in or outside Canada.
4.12 CALLING OF MEETINGS. Meetings of the board shall be held from time to
time at such time and at such place as the board, the chairman of the board, the
managing director, the president or any two directors may determine. Provided
always that should more than one of the above named call a meeting at or for
substantially the same time there shall be held only one meeting and such
meeting shall occur at the time and place determined by, in order of priority,
the board, the chairman or the president.
4.13 NOTICE OF MEETING. Notice of the time and place of each meeting of
the board shall be given in the manner provided in Clause 13.01 to each director
not less than forty-eight hours before the time when the meeting is to be held.
A notice of a meeting of directors need not specify the purpose of or the
business to be transacted at the meeting, except where the Act requires such
purpose or business to be specified, including any proposal to:
(a) submit to the shareholders any question or matter requiring
approval of the shareholders;
(b) fill a vacancy among the directors or in the office of auditor;
(c) issue securities;
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(d) declare dividends;
(e) purchase, redeem, or otherwise acquire shares of the
Corporation;
(f) pay a commission for the sale of shares;
(g) approve a management proxy circular;
(h) approve any annual financial statements; or
(i) adopt, amend or repeal by-laws.
A director may, in any manner, waive notice of or otherwise consent to
a meeting of the board; and attendance of a director at a meeting of directors
is a waiver of notice of the meeting, except when a director attends a meeting
for the express purpose of objecting to the transaction of business on the
grounds that the meeting is not lawfully called.
4.14 FIRST MEETING OF NEW BOARD. Provided a quorum of directors is
present, each newly elected board may, without notice, hold its first meeting
immediately following the meeting of shareholders at which such board is
elected.
4.15 ADJOURNED MEETING. Notice of an adjourned meeting of the board is not
required if the time and place of the adjourned meeting is announced at the
original meeting.
4.16 REGULAR MEETINGS. The board may appoint a day or days in any month or
months for regular meetings of the board at a place and hour to be named. A
copy of any resolution of the board fixing the place and time of such regular
meetings shall be sent to each director forthwith after being passed, but no
other notice shall be required for any such regular meeting except where the Act
requires the purpose thereof or the business to be transacted thereat to be
specified.
4.17 CHAIRMAN AND SECRETARY. The chairman of the board, or, in his
absence, the president, or in his absence, a vice-president shall be chairman of
any meeting of the board. If none of the said officers are present, the
directors present shall choose one of their number to be chairman. The
secretary of the Corporation shall act as secretary at any meeting of the board,
and if the secretary of the Corporation be absent, the chairman of the meeting
shall appoint a person, who need not be a director, to act as secretary of the
meeting.
4.18 CASTING VOTES. At all meetings of the board every question shall be
decided by a majority of the votes cast on the question. In case of an equality
of votes the chairman of the meeting shall not be entitled to a second or
casting vote.
4.19 CONFLICT OF INTEREST. A director or officer shall not be disqualified
by his office, or be required to vacate his office, by reason only that he is a
party to, or is a director or officer or has a material interest in any person
who is party to, a material contract or proposed material contract with the
Corporation or subsidiary thereof. Such a director or officer shall, however,
disclose the nature and extent of his interest in the contract at the time and
in the manner
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provided by the Act. Any such contract or proposed contract shall be referred
to the board or shareholders for approval even if such contract is one that in
the ordinary course of the Corporation's business would not require approval by
the board or shareholders. Subject to the provisions of the Act, a director
shall not by reason only of his office be accountable to the Corporation or to
its shareholders for any profit or gain realized from such a contract or
transaction, and such contract or transaction shall not be void or voidable by
reason only of the director's interest therein, provided that the required
declaration and disclosure of interest is properly made, the contract or
transaction is approved by the directors or shareholders, and it is fair and
reasonable to the Corporation at the time it was approved and, if required by
the Act, the director refrains from voting as a director on the contract or
transaction at the directors' meeting at which the contract is authorized or
approved by the directors, except attendance for the purpose of being counted
in the quorum.
4.20 REMUNERATION AND EXPENSES. The directors shall be paid such
remuneration for their services as the board may from time to time determine.
The directors shall also be entitled to be reimbursed for travelling and other
expenses properly incurred by them in attending meetings of the board or any
committee thereof. Nothing herein contained shall preclude any director from
serving the Corporation in any other capacity and receiving remuneration
therefor.
SECTION FIVE
COMMITTEES
5.10 COMMITTEE OF DIRECTORS. The board may appoint a committee of
directors, however designated, or a managing director, who must be a resident
Canadian, and delegate to such committee or managing director any of the powers
of the board except those which, under the Act, a committee of directors or
managing director has no authority to exercise. At least half of the members of
such committee shall be resident Canadians. A committee may be comprised of one
director.
5.02 TRANSACTION OF BUSINESS. Subject to the provisions of these by-laws
relating to participation by telephone, the powers of a committee of directors
may be exercised by a meeting at which a quorum is present or by resolution in
writing signed by all the members of such committee who would have been entitled
to vote on that resolution at a meeting of the committee. Meetings of such
committee may be held at any place in or outside Canada and may be called by any
one member of the committee giving notice in accordance with the by-laws
governing the calling of directors' meetings.
5.03 PROCEDURE. Unless otherwise determined herein or by the board, each
committee shall have the power to fix its quorum at not less than a majority of
its members, to elect its chairman and to regulate its procedure.
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SECTION SIX
OFFICERS
6.01 APPOINTMENT OF OFFICERS. Subject to any unanimous shareholder
agreement, the board may from time to time appoint a chairman of the board, a
managing director (who shall be a resident Canadian), a president, one or more
vice-presidents, a secretary, a treasurer and such other officers as the board
may determine, including one or more assistants to any of the officers so
appointed. The board may specify the duties of and, in accordance with this
by-law and subject to the provisions of the Act, delegate to such officers
powers to manage the business and affairs of the Corporation. Except for a
managing director and a chairman of the board, an officer may but need not be a
director and one person may hold more than one office. The president or such
other officer as the board may designate, shall be the chief executive officer
of the Corporation.
6.02 CHAIRMAN OF THE BOARD. The board may from time to time appoint a
chairman of the board who shall be a director. If appointed, the board may
assign to him any of the powers and duties that are by any provisions of this
by-law assigned to the managing director or to the president; and he shall,
subject to the provisions of the Act, have such other powers and duties as the
board may specify. He shall preside at all meetings of the shareholders at
which he is present. During the absence or disability of the chairman of the
board, his duties shall be performed and his powers exercised by the managing
director, if any, or by the president if there is no managing director.
6.03 MANAGING DIRECTOR. The board may from time to time appoint a managing
director who shall be a resident Canadian and a director. If appointed, he
shall have, subject to the authority of the board, general supervision of the
business and affairs of the Corporation; and he shall, subject to the provisions
of the Act, have such other powers and duties as the board may specify. During
the absence or disability of the president, or if no president has been
appointed, the managing director shall also have the powers and duties of that
office.
6.04 PRESIDENT. If appointed, the president shall, subject to the
discretion of the board, be the chief executive officer, and, subject to the
authority of the board, shall have general supervision of the business of the
Corporation; and he shall have such other powers and duties as the board may
specify. During the absence or disability of the managing director, or if no
managing director has been appointed, the president shall also have the powers
and duties of that office.
6.05 VICE-PRESIDENT. A vice-president, if appointed, shall have such
powers and duties as the board or the chief executive officer may specify.
6.06 SECRETARY. The secretary, if appointed, shall attend and be the
secretary of all meetings of the board, shareholders and committees of the board
and shall enter or cause to be entered in records kept for that purpose minutes
of all proceedings thereat; he shall give or cause to be given, as and when
instructed, all notices to shareholders, directors, officers, auditors and
members of committees of the board; he shall be the custodian of the stamp or
mechanical device generally used for affixing the corporate seal of the
Corporation and of all books, papers, records, documents and instruments
belonging to the Corporation, except when some other officer or agent has been
appointed for that purpose; and he shall have such other powers and duties as
the board or
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the chief executive officer may specify.
6.07 TREASURER. The treasurer, if appointed, shall keep proper accounting
records in compliance with the Act and shall be responsible for the deposit of
money, the safekeeping of securities and the disbursement of the funds of the
Corporation; he shall render to the board, whenever required, an account of all
his transactions as treasurer and of the financial position of the Corporation;
and he shall have such other powers and duties as the board or the chief
executive officer may specify.
6.08 POWERS AND DUTIES OF OTHER OFFICERS. The powers and duties of all
other officers shall be such as the terms of their engagement call for or as the
board or the chief executive officer may specify. Any of the powers and duties
of an officer to whom an assistant has been appointed may be exercised and
performed by such assistant, unless the board or the chief executive officer
otherwise directs.
6.09 VARIATION OF POWERS AND DUTIES. The board may from time to time and
subject to the provisions of the Act, vary, add to or limit the powers and
duties of any officer.
6.10 TERM OF OFFICE. The board, in its discretion, may remove any officer
of the Corporation, without prejudice to such officer's rights under any
employment contract. Otherwise each officer appointed by the board shall hold
office until his successor is appointed.
6.11 TERMS OF EMPLOYMENT AND REMUNERATION. The terms of employment and the
remuneration of officers appointed by the board shall be settled by it from time
to time. The fact that any officer is a director or shareholder of the
Corporation shall not disqualify him from receiving such remuneration as an
officer as may be determined.
6.12 CONFLICT OF INTEREST. An officer shall disclose his interest in any
material contract or proposed material contract with the Corporation in
accordance with Clause 4.19.
6.13 AGENTS AND ATTORNEYS. The board shall have power from time to time to
appoint agents or attorneys for the Corporation in or outside Canada with such
powers of management or otherwise (including the power to sub-delegate) as may
be thought fit.
6.14 FIDELITY BONDS. The board may require such officers, employees and
agents of the Corporation as the board deems advisable to furnish bonds for the
faithful discharge of their powers and duties, in such forms and with such
surety as the board may from time to time determine.
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SECTION SEVEN
PROTECTION OF DIRECTORS, OFFICERS AND OTHERS
7.01 LIMITATION OF LIABILITY. Every director and officer of the Corporation in
exercising his powers and discharging his duties shall act honestly and in good
faith with a view to the best interests of the Corporation and exercise the
care, diligence and skill that a reasonably prudent person would exercise in
comparable circumstances. Subject to the foregoing, no director or officer
shall be liable for the acts, receipts, neglects or defaults of any other
director or officer or employee, or for joining in any receipt or other act for
conformity, or for any loss, damage or expense happening to the Corporation
through the insufficiency or deficiency of title to any property acquired for or
on behalf of the Corporation, or for the insufficiency or deficiency of any
security in or upon which any of the moneys of the Corporation shall be
invested, or for any loss or damage arising from the bankruptcy, insolvency or
tortious acts of any person with whom any of the moneys, securities or effects
of the Corporation shall be deposited, or for any loss occasioned by any error
of judgment or oversight on his part, or for any other loss, damage or
misfortune whatsoever which shall happen in the execution of the duties of his
office or in relation thereto, unless the same are occasioned by his own wilful
neglect or default; provided that nothing herein shall relieve any director or
officer from the duty to act in accordance with the Act and the regulations
thereunder or from liability for any breach thereof.
No act or proceeding of any director or officer or the board shall be
deemed invalid or ineffective by reason of the subsequent ascertainment of any
irregularity in regard to such act or proceeding or the qualification of such
director or officer or board.
Directors may rely upon the accuracy of any statement or report prepared by
the Corporation's auditors, internal accountants or other responsible officials
and shall not be responsible or held liable for any loss or damage resulting
from the paying of any dividends or otherwise acting upon such statement or
report.
7.02 INDEMNITY. Subject to the limitations contained in the Act, the
Corporation shall indemnify a director or officer, a former director or officer,
or a person who acts or acted at the Corporation's request as a director or
officer of a body corporate of which the Corporation is or was a shareholder or
creditor (or a person who undertakes or has undertaken any liability on behalf
of the Corporation or any such body corporate) and his heirs and legal
representatives, against all costs, charges and expenses, including an amount
paid to settle an action or satisfy a judgment, reasonably incurred by him in
respect of any civil, criminal or administrative action or proceeding to which
he is made a party by reason of being or having been a director or officer of
the Corporation or such body corporate, if:
(a) he acted honestly and in good faith with a view to the best interests
of the Corporation; and
(b) in the case of a criminal or administrative action or proceeding that
is enforced by a monetary penalty, he had reasonable grounds for
believing that his conduct was lawful.
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7.03 INSURANCE. Subject to the limitations contained in the Act, the
Corporation may purchase and maintain such insurance for the benefit of its
directors and officers as such against any liability incurred by him, as the
board may from time to time determine.
SECTION EIGHT
SHARES
8.01 ALLOTMENT AND ISSUE. The board may, from time to time, allot, or grant
options to purchase the whole or any part of the authorized and unissued shares
of the Corporation at such times and to such persons and for such consideration
as the board shall determine, provided that no share shall be issued until it is
fully paid as prescribed by the Act. Subject to the articles, no holder of any
class of share of the capital of the Corporation shall be entitled as of right
to subscribe for, purchase or receive any part of any new or additional issue of
shares of any class, whether now or hereafter authorized or any bonds,
debentures or other securities convertible into shares of any class.
8.02 COMMISSIONS. The board may from time to time authorize the Corporation to
pay a commission to any person in consideration of his purchasing or agreeing to
purchase shares of the Corporation, whether from the Corporation or from any
other person, or procuring or agreeing to procure purchasers for any such
shares.
8.03 SECURITIES REGISTER. The Corporation shall maintain a securities register
in which it records the securities issued by it in registered form, showing with
respect to each class or series of securities:
(a) the names, alphabetically arranged, and the latest known address of
each person who is or has been a security holder,
(b) the number of securities held by each security holder, and
(c) the date and particulars of the issue and transfer of each security.
The Corporation shall keep the information entered in the securities
register for the period of time prescribed in the regulations to the Act.
8.04 TRANSFER AGENTS AND REGISTRARS. The board may from time to time appoint
one or more trust companies registered under The Trust Companies Act (Alberta)
as its agent or agents to maintain the central securities register or registers,
and an agent or agents to maintain branch securities registers. Such a person
may be designated as transfer agent or registrar according to his functions and
one person may be appointed both registrar and transfer agent. The board may at
any time terminate such appointment.
8.05 REGISTRATION OF TRANSFER. Subject to the Act, no transfer of shares shall
be registered in a securities register except upon presentation of the
certificate representing such shares with a transfer endorsed thereon or
delivered therewith duly executed by the registered
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holder or by his attorney or successor duly appointed, together with such
reasonable assurance or evidence of signature, identification and authority to
transfer as the board may from time to time prescribe, upon payment of all
applicable taxes and any fees prescribed by the board; upon compliance with such
restrictions on transfer as are authorized by the articles and upon satisfaction
of any lien referred to in Clause 8.06.
8.06 LIEN FOR INDEBTEDNESS. If the articles provide that the Corporation shall
have a lien on shares registered in the name of a shareholder indebted to the
Corporation, such lien may be enforced, subject to any other provision of the
articles and to any unanimous shareholder agreement, by the sale of the shares
thereby affected, or by the cancellation by the Corporation of the shares
thereby affected and the appropriate corresponding reduction of the stated
capital account for said shares, or by any other action, suit, remedy or
proceeding authorized or permitted by law or by equity and, pending such
enforcement, may refuse to register a transfer of the whole or any part of such
shares.
8.07 NON-RECOGNITION OF TRUSTS. Subject to the provisions of the Act, the
Corporation shall treat as absolute owner of any share the person in whose name
the share is registered in the securities register as if that person had full
legal capacity and authority to exercise all rights of ownership irrespective of
any indication to the contrary through knowledge or notice or description in the
Corporation's records or on the share certificate.
8.08 SHARE CERTIFICATES. Every holder of one or more shares of the Corporation
shall be entitled, at his option, to a share certificate, or to a
non-transferable written acknowledgement of his right to obtain a share
certificate, stating the name of the person to whom the certificate or
acknowledgment was issued, and the number and class or series of shares held by
him as shown on the securities register. Share certificates and acknowledgments
of a shareholder's right to a share certificate, shall, subject to the Act, be
in such form as the board shall from time to time approve. Any share
certificate shall be signed in accordance with Clause 2.04 and need not be under
the corporate seal; provided that, unless the board otherwise determines,
certificates representing shares in respect of which a transfer agent and/or
registrar has been appointed shall not be valid unless countersigned by or on
behalf of such transfer agent and/or registrar. The signature of one of the
signing officers or, in the case of share certificates which are not valid
unless countersigned by or on behalf of a transfer agent and/or registrar, the
signatures of both signing officers may be printed or mechanically reproduced in
facsimile upon share certificates and every such facsimile signature shall for
all purposes be deemed to be the signature of the officer whose signature it
reproduces and shall be binding upon the Corporation. A share certificate
executed as aforesaid shall be valid notwithstanding that one or both of the
officers whose facsimile signature appears thereon no longer holds office at the
date of issue of the certificate.
8.09 REPLACEMENT OF SHARE CERTIFICATES. The board or any officer or agent
designated by the board may in its or his discretion direct the issue of a new
share certificate in lieu of and upon cancellation of a share certificate that
has been mutilated or in substitution for a share certificate claimed to have
been lost, destroyed or wrongfully taken on payment of such fee, not exceeding
the maximum amount prescribed in the regulations to the Act for a share
certificate issued in respect of a transfer, and on such terms as to indemnity,
reimbursement of expenses and evidence of loss and of title as the board may
from time to time prescribe, whether generally or in any particular case.
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8.10 JOINT SHAREHOLDERS. If two or more persons are registered as joint holders
of any share, the Corporation shall not be bound to issue more than one
certificate in respect thereof, and delivery of such certificate to one of such
persons shall be sufficient delivery to all of them. Any one of such persons
may give effectual receipts for the certificates issued in respect thereof or
for any dividend, bonus, return of capital or other money payable or warrant
issuable in respect of such shares.
8.11 DECEASED SHAREHOLDERS. In the event of the death of a holder, or one of
the joint holders, of any share, the Corporation shall not be required to make
any entry in the register of shareholders in respect thereof except on
production of all such documents as may be required by law and upon compliance
with the reasonable requirements of the Corporation and its transfer agents.
SECTION NINE
DIVIDENDS AND RIGHTS
9.01 DIVIDENDS. Subject to the provisions of the Act, the board may, from time
to time, declare dividends payable to the shareholders according to their
respective rights and interest in the Corporation. Dividends may be paid in
money or property or by issuing fully paid shares of the Corporation.
9.02 DIVIDEND CHEQUES. A dividend payable in cash shall be paid by cheque drawn
on the Corporation's bankers or one of them to the order of each registered
holder of shares of the class or series in respect of which it has been declared
and mailed by prepaid ordinary mail to such registered holder at his recorded
address, unless such holder otherwise directs. In the case of joint holders the
cheque shall, unless such joint holders otherwise direct, be made payable to the
order of all such joint holders and mailed to them at their recorded address.
The mailing of such cheque as aforesaid, unless the same is not paid on due
presentation, shall satisfy and discharge the liability for the dividend to the
extent of the sum represented thereby plus the amount of any tax which the
Corporation is required to and does withhold.
9.03 NON-RECEIPT OF CHEQUES. In the event of non-receipt of any dividend cheque
by the person to whom it is sent as aforesaid, the Corporation shall issue to
such person a replacement cheque for a like amount on such terms as to
indemnity, reimbursement of expenses and evidence of non-receipt and of title as
the board may from time to time prescribe, whether generally or in any
particular case.
9.04 RECORD DATE FOR DIVIDENDS AND RIGHTS. The board may fix in advance a date,
preceding by not more than 50 days the date for the payment of any dividend or
the date for the issue of any warrant or other evidence of right to subscribe
for securities of the Corporation, as a record date for the determination of the
persons entitled to receive payment of such dividend or to receive the right to
subscribe for such securities, provided that if the Corporation is a
distributing corporation, notice of any such record date is given, not less than
7 days before such record date, in the manner provided in the Act. Where no
record date is fixed in
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advance as aforesaid, the record date for the determination of the persons
entitled to receive payment of any dividend or to receive the right to subscribe
for securities of the Corporation shall be at the close of business on the day
on which the resolution relating to such dividend or right to subscribe is
passed by the board.
9.05 UNCLAIMED DIVIDENDS. Any dividend unclaimed after a period of six years
from the date on which the same has been declared to be payable shall be
forfeited and shall revert to the Corporation.
SECTION TEN
MEETINGS OF SHAREHOLDERS
10.01 ANNUAL MEETINGS. The annual meeting of shareholders shall be held at such
time in each year and, subject to the Act and to Clause 10.04, at such place as
the board, the chairman of the board, the managing director or the president may
from time to time determine, for the purpose of considering the financial
statements and reports required by the Act to be placed before the annual
meeting, electing directors, appointing auditors and for the transaction of such
other business as may properly be brought before the meeting.
10.02 SPECIAL MEETINGS. The board, the chairman of the board, the managing
director or the president shall have power to call a special meeting of
shareholders at any time.
10.03 SPECIAL BUSINESS. All business transacted at a special meeting of
shareholders and all business transacted at an annual meeting of shareholders,
except consideration of the financial statements and auditor's report, fixing
the number of directors for the following year, election of directors and
reappointment of the incumbent auditors, is deemed to be special business.
10.04 PLACE OF MEETINGS. Meetings of shareholders shall be held at the
registered office of the Corporation or elsewhere in the municipality in which
the registered office is situate or, if the board shall so determine, at some
other place in Alberta or, if all the shareholders entitled to vote at the
meeting so agree, at some place outside Alberta.
10.05 NOTICE OF MEETINGS. Notice of the time and place of each meeting of
shareholders shall be given in the manner provided in Clause 13.01 not less than
21 days nor more than 50 days before the date of the meeting to each director,
to the auditor and to each shareholder who at the close of business on the
record date for notice is entered in the securities register as the holder of
one or more shares carrying the right to vote at the meeting. Notice of a
meeting of shareholders called for any purpose other than consideration of the
financial statements and auditor's report, election of directors and
re-appointment of the incumbent auditor shall state the nature of such business
in sufficient detail to permit the shareholder to form a reasoned judgment
thereon and shall state the text of any special resolution to be submitted to
the meeting. A shareholder may in any manner waive notice of or otherwise
consent to a meeting of shareholders.
10.06 RECORD DATE FOR NOTICE. The board may fix in advance a date, preceding
the date of any meeting of shareholders by not more than 50 days and not less
than 21 days, as a
<PAGE> 19
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record date for the determination of the shareholders entitled to notice of the
meeting, provided that if the Corporation is a distributing corporation, notice
of any such record date shall be given not less than 7 days before such record
date in the manner provided in the Act. If no such record date is so fixed, the
record date for the determination of the shareholders entitled to receive notice
of the meeting shall be at the close of business on the date immediately
preceding the day on which the notice is sent or, if no notice is sent, shall be
the day on which the meeting is held.
10.07 LIST OF SHAREHOLDERS ENTITLED TO NOTICE. If the Corporation has more than
15 shareholders entitled to vote at a meeting of shareholders, the Corporation
shall prepare a list of shareholders entitled to receive notice of the meeting,
arranged in alphabetical order and showing the number of shares held by each
shareholder. If a record date for the meeting is fixed pursuant to Clause
10.06, the shareholders listed shall be those registered at the close of
business on such record date. If no record date is fixed, the shareholders
listed shall be those registered at the close of business on the day immediately
preceding the day on which notice of the meeting is given, or where no such
notice is given, on the day on which the meeting is held. The list shall be
available for examination by any shareholder during usual business hours at the
records office of the Corporation or at the place where the central securities
register is maintained and at the meeting for which the list was prepared.
10.08 MEETINGS WITHOUT NOTICE. A meeting of shareholders may be held without
notice at any time and place permitted by the Act:
(a) if all the shareholders entitled to vote thereat are present in person
or represented by proxy or if those not present or represented by
proxy, waive notice of or otherwise consent to such meeting being
held, and
(b) if the auditors and the directors are present or waive notice of or
otherwise consent to such meeting being held;
so long as such shareholders, auditors or directors present are not attending
for the express purpose of objecting to the transaction of any business on the
grounds that the meeting is not lawfully called. At such a meeting any business
may be transacted which the Corporation at a meeting of shareholders may
transact. If the meeting is held at a place outside Alberta, shareholders not
present or represented by proxy, but who have waived notice of or otherwise
consented to such meeting, shall also be deemed to have consented to the meeting
being held at such place.
10.09 CHAIRMAN AND SECRETARY. The chairman of any meeting of shareholders shall
be the chairman, or in his absence, the president, or in his absence, a
vice-president who is a shareholder. If no such officer is present within
fifteen minutes from the time fixed for holding the meeting, the persons present
and entitled to vote shall choose one of their number to be chairman. If the
secretary of the Corporation is absent, the chairman shall appoint some person,
who need not be a shareholder, to act as secretary of the meeting.
10.10 PERSONS ENTITLED TO BE PRESENT. The only persons entitled to be present
at a meeting of shareholders shall be those entitled to vote thereat, the
directors and auditors of the Corporation and others who, although not entitled
to vote, are entitled or required under any provision of the Act or the articles
or by-laws to be present at the meeting. Any other person may
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be admitted only on the invitation of the chairman of the meeting or with the
consent of the meeting.
10.11 QUORUM. A quorum for the transaction of business at any meeting of
shareholders shall be at least two persons present in person, each being a
shareholder entitled to vote thereat or a duly appointed proxy or representative
for an absent shareholder so entitled and representing in the aggregate not less
than ten percent (10%) of the outstanding shares of the Corporation carrying
voting rights at the meeting. If a quorum is present at the opening of any
meeting of shareholders, the shareholders present or represented may proceed
with the business of the meeting notwithstanding that a quorum is not present
throughout the meeting. If a quorum is not present at the opening of any
meeting of shareholders, the shareholders present or represented may adjourn the
meeting to a fixed time and place but may not transact any other business other
than as provided in these By-laws or in the Act until a quorum is present.
10.12 RIGHT TO VOTE. Every person named in the list referred to in Clause 10.07
shall be entitled to vote the shares shown thereon opposite his name at the
meeting to which such list relates, except to the extent that:
(a) where the Corporation has fixed a record date in respect of such
meeting, such person has transferred any of his shares after such
record date or, where the Corporation has not fixed a record date in
respect of such meeting, such person has transferred any of his shares
after the date on which such list is prepared, and
(b) the transferee, having produced properly endorsed certificates
evidencing such shares or having otherwise established that he owns
such shares, has demanded not later than 10 days before the meeting
that his name be included in such list.
In any such excepted case, the transferee shall be entitled to vote the
transferred shares at such meeting. If the Corporation is not required to
prepare a list under Clause 10.07, subject to the provisions of the Act and this
by-law as to proxies and representatives, at any meeting of shareholders, every
person shall be entitled to vote at the meeting who at the time is entered in
the securities register as the holder of one or more shares carrying the right
to vote at such meeting.
10.13 PROXIES AND REPRESENTATIVES. Every shareholder entitled to vote at a
meeting of shareholders may appoint a proxyholder, or one or more alternate
proxyholders, who need not be shareholders, to attend and act at the meeting in
the manner and to the extent authorized and with the authority conferred by the
proxy. A proxy shall be in writing executed by the shareholder or his attorney
and shall conform with the requirements of the Act. Alternatively, every such
shareholder which is a body corporate or association may authorize, by
resolution of its directors or governing body, an individual, who need not be a
shareholder, to represent it at a meeting of shareholders and such individual
may exercise on the shareholder's behalf all the powers it could exercise if it
were an individual shareholder. The authority of such an individual shall be
established by depositing with the Corporation a certified copy of such
resolution, or in such other manner as may be satisfactory to the secretary of
the Corporation or the chairman of the meeting.
10.14 TIME FOR DEPOSIT OF PROXIES. The board may specify in a notice calling a
meeting of shareholders a time, preceding the time of such meeting or an
adjournment thereof by
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not more than 48 hours, exclusive of non-business days, before which proxies to
be used at such meeting must be deposited. A proxy shall be acted upon only
if, prior to the time so specified, it shall have been deposited with the
Corporation or an agent thereof specified in such notice or, if no such time is
specified in such notice, it has been received by the secretary of the
Corporation or by the chairman of the meeting or any adjournment thereof prior
to the time of voting.
10.15 JOINT SHAREHOLDERS. If two or more persons hold shares jointly, any
one of them present in person or represented at a meeting of shareholders may,
in the absence of the other or others vote the shares; but if two or more of
those persons are present in person or represented and vote, they shall vote as
one on the shares jointly held by them.
10.16 VOTES TO GOVERN. At any meeting of shareholders every question shall,
unless otherwise required by the articles or by-laws or by law, be determined by
the majority of the votes cast on the question. In case of an equality of votes
either upon a show of hands or upon a poll, the chairman of the meeting shall
not be entitled to a second or casting vote.
10.17 SHOW OF HANDS. Subject to the provisions of the Act, any question at
a meeting of shareholders shall be decided by a show of hands, unless a ballot
thereon is required or demanded as hereinafter provided. Upon a show of hands
every person who is present and entitled to vote shall have one vote. Whenever
a vote by a show of hands shall have been taken upon a question, unless a ballot
thereon is so required or demanded, a declaration by the chairman of the meeting
that the vote upon the question has been carried or carried by a particular
majority or not carried and an entry to that effect in the minutes of the
meeting shall be prima facie evidence of the fact without proof of the number or
proportion of the votes recorded in favour of or against any resolution or other
proceeding in respect of the said question, and the result of the vote so taken
shall be the decision of the shareholders upon the said question.
10.18 BALLOTS. On any question proposed for consideration at a meeting of
shareholders, any shareholder or proxyholder entitled to vote at the meeting may
require or demand a ballot, either before or on the declaration of the result of
any vote by show of hands. A ballot so required or demanded shall be taken in
such manner as the chairman shall direct. A requirement or demand for a ballot
may be withdrawn at any time prior to the taking of the ballot. If a ballot is
taken, each person present shall be entitled, in respect of the shares which he
is entitled to vote at the meeting upon the question, to that number of votes
provided by the Act or the articles, and the result of the ballot so taken shall
be the decision of the shareholders upon the said question.
10.19 ADMISSION OR REJECTION OF A VOTE. In case of any dispute as to the
admission or rejection of a vote, the chairman shall determine the same and such
determination made in good faith shall be final and conclusive.
10.20 ADJOURNMENT. If a meeting of the shareholders is adjourned by one or
more adjournments for an aggregate of less than thirty days, it shall not be
necessary to give notice of the adjourned meeting, other than by announcement at
the time of an adjournment. If a meeting of shareholders is adjourned by one or
more adjournments for an aggregate of thirty days or more, notice of the
adjourned meeting shall be given as for an original meeting.
10.21 MEETINGS BY TELEPHONE. A shareholder or any other person entitled to
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attend a meeting of shareholders may participate in the meeting by means of
telephone or other communication facilities that permit all persons
participating in the meeting to hear each other, and a person participating in
such a meeting by those means is deemed to be present at the meeting.
10.22 RESOLUTION IN WRITING. A resolution in writing signed by all the
shareholders entitled to vote on that resolution at a meeting of shareholders is
as valid as if it had been passed at a meeting of the shareholders.
10.23 ONLY ONE SHAREHOLDER. Where the Corporation has only one shareholder
or only one holder of any class or series of shares, the shareholder present in
person or by proxy constitutes a meeting.
SECTION ELEVEN
DIVISIONS AND DEPARTMENTS
11.01 CREATION AND CONSOLIDATION OF DIVISIONS. The board may cause the
business and operations of the Corporation or any part thereof to be divided or
to be segregated into one or more divisions upon such basis, including without
limitation, character or type of operation, geographical territory, product
manufactured or service rendered, as the board may consider appropriate in each
case. The board may also cause the business and operations of any such division
to be further divided into sub-units and the business and operations of any such
divisions or sub-units shall be consolidated upon such basis as the board may
consider appropriate in each case.
11.02 NAME OF DIVISION. Subject to law, any division or its sub-units may
be designated by such name as the board may from time to time determine and may
transact business, enter into contracts, sign cheques and other documents of any
kind and do all acts and things under such name. Any such contract, cheque or
document shall be binding upon the Corporation as if it had been entered into
or signed in the name of the Corporation.
11.03 OFFICERS OF DIVISIONS. From time to time the board or, if authorized
by the board, the chief executive officer, may appoint one or more officers for
any division, prescribe their powers and duties and settle their terms of
employment and remuneration. The board or, if authorized by the board, the
chief executive officer, may remove at its or his pleasure any officer so
appointed without prejudice to such officer's rights under any employment
contract. Officers of divisions or their subunits shall not, as such, be
officers of the Corporation.
SECTION TWELVE
INFORMATION AVAILABLE TO SHAREHOLDERS
12.01 Except as provided by the Act, no shareholder shall be entitled to
discovery of any information respecting any details or conduct of the
Corporation's business which in the opinion of the directors would be
inexpedient in the interests of the Corporation to communicate to the public.
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12.02 The directors may, from time to time, subject to the rights conferred
by the Act, determine whether and to what extent and at what time and place and
under what circumstances or regulations the documents, books and registers and
accounting records of the Corporation or any of them shall be open to inspection
of shareholders and no shareholder shall have any right to inspect any document
or book or register or accounting records of the Corporation except as conferred
by statute or authorized by the board of directors or by a resolution of the
shareholders.
SECTION THIRTEEN
NOTICES
13.01 METHOD OF GIVING NOTICES. Any notice (which term includes any
communication or document) to be given (which term includes sent, delivered or
served) pursuant to the Act, the regulations thereunder, the articles, the
by-laws or otherwise to a shareholder, director, officer, auditor or member of a
committee of the board shall be sufficiently given if delivered personally to
the person to whom it is to be given or if delivered to his recorded address or
if mailed to him at his recorded address by prepaid ordinary or air mail or if
sent to him at his recorded address by any means of prepaid transmitted or
recorded communication. A notice so delivered shall be deemed to have been
given when it is delivered personally or to the recorded address as aforesaid; a
notice so mailed shall be deemed to have been given when deposited in a post
office or public letter box; and a notice so sent by any means of transmitted or
recorded communication shall be deemed to have been given when dispatched or
delivered to the appropriate communication company or agency or its
representative for dispatch. The secretary may change or cause to be changed
the recorded address of any shareholder, director, officer, auditor or member of
a committee of the board in accordance with any information believed by him to
be reliable.
13.02 NOTICE TO JOINT SHAREHOLDERS. If two or more persons are registered
as joint holders of any share, any notice shall be addressed to all of such
joint holders but notice to one of such persons shall be sufficient notice to
all of them.
13.03 COMPUTATION OF TIME. In computing the date when notice must be given
under any provision requiring a specified number of days' notice of any meeting
or other event, the date of giving the notice shall be excluded and the date of
the meeting or other event shall be included.
13.04 UNDELIVERED NOTICES. If notices given to a shareholder pursuant to
Clause 13.01 are returned on three consecutive occasions because he cannot be
found, the Corporation shall not be required to give any further notices to such
shareholder until he informs the Corporation in writing of his new address.
13.05 OMISSIONS AND ERRORS. The accidental omission to give any notice to
any shareholder, director, officer, auditor or member of a committee of the
board or the non-receipt of any notice by any such person or any error in any
notice not affecting the substance thereof shall not invalidate any action taken
at any meeting held pursuant to such notice or otherwise founded thereon.
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13.06 PERSONS ENTITLED BY DEATH OR OPERATION OF LAW. Every person who, by
operation of law, transfer, death of a shareholder or any other means
whatsoever, shall become entitled to any share, shall be bound by every notice
in respect of such share which shall have been duly given to the shareholder
from whom he derives his title to such share prior to his name and address being
entered on the securities register (whether such notice was given before or
after the happening of the event upon which be became so entitled) and prior to
his furnishing to the Corporation the proof of authority or evidence of his
entitlement prescribed by the Act.
13.07 WAIVER OF NOTICE. Any shareholder (or his duly appointed
proxyholder), director, officer, auditor or member of a committee of the board
may at any time waive any notice, or waive or abridge the time for any notice,
required to be given to him under any provision of the Act, the regulations
thereunder, the articles, the by-laws or otherwise and such waiver or
abridgement shall cure any default in the giving or in the time of such notice,
as the case may be. Any such waiver or abridgement shall be in writing except a
waiver of notice of a meeting of shareholders or of the board which may be given
in any manner.
SECTION FOURTEEN
EFFECTIVE DATE (AND REPEAL)
14.01 EFFECTIVE DATE. This by-law shall come into force when made by the
board in accordance with the Act.
14.02 REPEAL. All previous by-laws of the Corporation are repealed as of
the coming into force of this by-law. Such repeal shall not affect the previous
operation of any by-law so repealed or affect the validity of any act done or
right, privilege, obligation or liability acquired or incurred under, or the
validity of any contract or agreement made pursuant to, or the validity of any
articles (as defined in the Act) or predecessor charter documents of the
Corporation obtained pursuant to, any such by-law prior to its repeal. All
officers and persons acting under any by-law so repealed shall continue to act
as if appointed under the provisions of this by-law and all resolutions of the
shareholders or the board or a committee of the board with continuing effect
passed under any repealed bylaw shall continue to be good and valid except to
the extent inconsistent with this by-law and until amended or repealed.
MADE AND ADOPTED by the board of directors the 4th day of July, 1994.
(signed) Brian W. Kozun
--------------------------------------
President
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(signed) Brian W. Kozun
--------------------------------------
Secretary
CONFIRMED by the shareholders in accordance with the Act the 4th day
of July, 1994.
(signed) Brian W. Kozun
--------------------------------------
Secretary
<PAGE> 26
AMENDMENT TO BY-LAW NUMBER 2
OF
VENTURE SEISMIC LTD.
(the "Corporation")
Article 10.11 of By-law Number 2 was amended to read as follows:
10.11 QUORUM. A quorum for the transaction of business at any meeting
of shareholders shall be at least two persons present in person, each
being a shareholder entitled to vote thereat or a duly appointed proxy
or representative for an absent shareholder so entitled and representing
in the aggregate not less than fifty percent (50%) of the outstanding
shares of the Corporation carrying voting rights at the meeting. If a
quorum is present at the opening of any meeting of shareholders, the
shareholders present or represented may proceed with the business of the
meeting notwithstanding that a quorum is not present throughout the
meeting. If a quorum is not present at the opening of any meeting of
shareholders, the shareholders present or represented may adjourn the
meeting to a fixed time and place but may not transact any other
business other than as provided in these By-laws or in the Act until a
quorum is present.
MADE AND ADOPTED by the board of directors the 24th day of August, 1995.
(signed) Brian W. Kozun
--------------------------------------
President
(signed) Brian W. Kozun
--------------------------------------
Secretary
CONFIRMED by the shareholders the 30th day of April, 1997.
(signed) Brian W. Kozun
--------------------------------------
Secretary
<PAGE> 1
EXHIBIT 10.10(a)
VENTURE SEISMIC LTD.
1995 STOCK OPTION PLAN, AS AMENDED
1. PURPOSE.
The purpose of this plan (the "Plan") is to secure for VENTURE SEISMIC LTD.
(the "Company") and its shareholders the benefits arising from capital stock
ownership by employees, officers and directors of, and consultants or advisors
to, the Company and its subsidiary corporations who are expected to contribute
to the Company's future growth and success. Those provisions of the Plan which
make express reference to Section 422 shall apply only to Incentive Stock
Options (as that term is defined in the Plan).
2. TYPE OF OPTIONS AND ADMINISTRATION.
(a) Types of Options. Options granted pursuant to the Plan shall be
authorized by action of the Board of Directors of the Company (or a
committee designated by the Board of Directors, the "Committee") and
may be either incentive stock options ("Incentive Stock Options")
meeting the requirements of Section 422 of the United States Internal
Revenue Code of 1986, as amended or replaced from time to time (the
"Code") or non-statutory options which are not intended to meet the
requirements of Section 422 of the Code.
(b) Administration. The Plan will be administered by the Board of
Directors or the Committee, whose construction and interpretation of
the terms and provisions of the Plan shall be final and conclusive.
The delegation of powers to the Committee shall be consistent with
applicable laws or regulations (including, without limitation,
applicable state law and Rule 16b-3 promulgated under the United
States Securities Exchange Act of 1934 (the "Exchange Act"), or any
successor rule ("Rule 16b-3")). The Board of Directors or the
Committee may in its sole discretion grant options to purchase the
Company's Common Shares, no par value ("Common Shares"), and issue
shares upon exercise of such options as provided in the Plan. The
Board of Directors or the Committee shall have authority, subject to
the express provisions of the Plan, to construe the respective option
agreements and the Plan, to prescribe, amend and rescind rules and
regulations relating to the Plan, to determine the terms and
provisions of the respective option agreements, which need not be
identical, and to make all other determinations in the judgment of the
Board of Directors or the Committee necessary or desirable for the
administration of the Plan. The Board of Directors or the Committee
may correct any defect or supply any omission or reconcile any
inconsistency in the Plan or in any option agreement in the manner and
to the extent it shall deem expedient to carry the Plan into effect
and it shall be the sole and final judge of such expediency. No
director or person acting pursuant to authority delegated by the Board
of Directors or the Committee shall be liable for any action or
determination under the Plan made in good faith. Subject to adjustment
as provided in Section 15 below, the aggregate number of shares of
Common Stock that may be subject to Options granted to any person in a
calendar year shall not exceed 135,000 shares or 30% of the maximum
number of shares which may be issued and sold under the Plan, as set
forth in Section 4 hereof, as such section may be amended from time to
time.
(c) Applicability of Rule 16b-3. Those provisions of the Plan which make
express reference to Rule 16b-3 shall apply to the Company only at
such time as the Company's Common Stock is registered under the
Exchange Act, subject to the last sentence of Section 3(b), and then
only to such persons as are required to file reports under Section
16(a) of the Exchange Act (a "Reporting Person").
3. ELIGIBILITY.
(a) General. Options may be granted to persons who are, at the time of
grant, employees, officers or directors of, or consultants or advisors
to, the Company or any subsidiaries of the Company as defined in
Sections 424(e) and 424(f) of the Code ("Participants") provided, that
Incentive Stock
<PAGE> 2
Options may only be granted to individuals who are employees of the
Company (within the meaning of Section 3401(c) of the Code). A person
who has been granted an option may, if he or she is otherwise
eligible, be granted additional options if the Board of Directors or
the Committee shall so determine.
(b) Grant of Options to Reporting Persons. The selection of a director or
an officer who is a Reporting Person (as the terms "director" and
"officer" are defined for purposes of Rule 16b-3) as a recipient of an
option, the timing of the option grant, the exercise price of the
option and the number of shares subject to the option shall be
determined either (i) by the Board of Directors, (ii) by a committee
consisting of two or more directors having full authority to act in
the matter, or (iii) pursuant to provisions for automatic grants set
forth in Section 3(c) below.
(c) Directors' Options. Directors of the Company who are not employees of
the Company ("Eligible Directors") will receive an option ("Director
Option") to purchase 5,000 Common Shares on the date that such person
is first elected or appointed a director ("Initial Director Option").
Commencing on the day immediately following the date of the annual
meeting of stockholders for the Company's fiscal year ending September
30, 1996, each Eligible Director will receive an automatic grant
("Automatic Grant") of a Director Option to purchase 1,000 Common
Shares, other than Eligible Directors who received an Initial Director
Option since the most recent Automatic Grant, on the day immediately
following the date of each annual meeting of stockholders, as long as
such director is a member of the Board of Directors. The exercise
price for each share subject to a Director Option shall be equal to
the fair market value of the Common Shares on the date of grant.
Director Options shall become exercisable in four equal annual
installments commencing one year from the date the option is granted
and will expire the earlier of 10 years after the date of grant or 90
days after the termination of the director's service on the Board.
4. STOCK SUBJECT TO PLAN.
The stock subject to options granted under the Plan shall be authorized but
unissued or reacquired Common Shares. Subject to adjustment as provided in
Section 15 below, the maximum number Common Shares of the Company which may be
issued and sold under the Plan is 450,000 shares. If an option granted under the
Plan shall expire, terminate or is cancelled for any reason without having been
exercised in full, the unpurchased shares subject to such option shall again be
available for subsequent option grants under the Plan.
5. FORMS OF OPTION AGREEMENTS.
As a condition to the grant of an option under the Plan, each recipient of
an option shall execute an option agreement in such form not inconsistent with
the Plan as may be approved by the Board of Directors. Such option agreements
may differ among recipients.
6. PURCHASE PRICE.
(a) General. The purchase price per share of stock deliverable upon the
exercise of an option shall be determined by the Board of Directors or
the Committee at the time of grant of such option; provided, however,
that in the case of an Incentive Stock Option, the exercise price
shall not be less than 100% of the Fair Market Value (as hereinafter
defined) of such stock, at the time of grant of such option, or less
than 110% of such Fair Market Value in the case of options described
in Section 11(b). "Fair Market Value" of a share of Common Stock of
the Company as of a specified date for the purposes of the Plan shall
mean the closing price of a Common Share on the principal securities
exchange (including the Nasdaq National Market) on which such shares
are traded on the day immediately preceding the date as of which Fair
Market Value is being determined, or on the next preceding date on
which such shares are traded if no shares were traded on such
immediately preceding day, or if the shares are not traded on a
securities exchange, Fair Market Value shall be deemed to be the
average of the high bid and low asked prices of the shares in the
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over-the-counter market on the day immediately preceding the date as
of which Fair Market Value is being determined or on the next
preceding date on which such high bid and low asked prices were
recorded. If the shares are not publicly traded, Fair Market Value of
a Common Share (including, in the case of any repurchase of shares,
any distributions with respect thereto which would be repurchased with
the shares) shall be determined in good faith by the Board of
Directors or the Committee. In no case shall Fair Market Value be
determined with regard to restrictions other than restrictions which,
by their terms, will never lapse.
(b) Payment of Purchase Price. Options granted under the Plan may provide
for the payment of the exercise price by delivery of cash or a check
to the order of the Company in an amount equal to the exercise price
of such options, or by any other means which the Board of Directors or
the Committee determines are consistent with the purpose of the Plan
and with applicable laws and regulations (including, without
limitation, the provisions of Rule 16b-3 and Regulation T promulgated
by the Federal Reserve Board if applicable).
7. OPTION PERIOD.
Subject to earlier termination as provided in the Plan, each option and all
rights thereunder shall expire on such date as determined by the Board of
Directors or the Committee and set forth in the applicable option agreement,
provided, that such date shall not be later than (10) ten years after the date
on which the option is granted.
8. EXERCISE OF OPTIONS.
Each option granted under the Plan shall be exercisable either in full or
in installments at such time or times and during such period as shall be set
forth in the option agreement evidencing such option, subject to the provisions
of the Plan. Subject to the requirements in the immediately preceding sentence,
if an option is not at the time of grant immediately exercisable, the Board of
Directors may (i) in the agreement evidencing such option, provide for the
acceleration of the exercise date or dates of the subject option upon the
occurrence of specified events, and/or (ii) at any time prior to the complete
termination of an option, accelerate the exercise date or dates of such option.
9. NONTRANSFERABILITY OF OPTIONS.
No option granted under this Plan shall be assignable or otherwise
transferable by the optionee except by will or by the laws of descent and
distribution or pursuant to a qualified domestic relations order as defined in
the Code or Title I of the Employee Retirement Income Security Act, or the rules
thereunder, if applicable. An option may be exercised during the lifetime of the
optionee only by the optionee. In the event an optionee dies during his
employment by the Company or any of its subsidiaries, or during the three-month
period following the date of termination of such employment, his option shall
thereafter be exercisable, during the period specified in the option agreement,
by his executors or administrators to the full extent to which such option was
exercisable by the optionee at the time of his death during the periods set
forth in Section 10 or 11(d).
10. EFFECT OF TERMINATION OF EMPLOYMENT OR OTHER RELATIONSHIP.
Except as provided in Section 11(d) with respect to Incentive Stock Options
and except as otherwise determined by the Committee at the date of grant of an
Option, and subject to the provisions of the Plan, an optionee may exercise an
option at any time within three months following the termination of the
optionee's employment or other relationship with the Company or within one (1)
year if such termination was due to the death or disability of the optionee but,
except in the case of the optionee's death, in no event later than the
expiration date of the Option. If the termination of the optionee's employment
is for cause or is otherwise attributable to a breach by the optionee of an
employment or confidentiality or non-disclosure agreement, the option shall
expire immediately upon such termination. The Board of Directors shall have the
power to determine what constitutes a termination for cause or a breach of an
employment or confidentiality or non-
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disclosure agreement, whether an optionee has been terminated for cause or has
breached such an agreement, and the date upon which such termination for cause
or breach occurs. Any such determinations shall be final and conclusive and
binding upon the optionee.
11. INCENTIVE STOCK OPTIONS.
Options granted under the Plan which are intended to be Incentive Stock
Options shall be subject to the following additional terms and conditions:
(a) Express Designation. All Incentive Stock Options granted under the
Plan shall, at the time of grant, be specifically designated as such
in the option agreement covering such Incentive Stock Options.
(b) 10% Shareholder. If any employee to whom an Incentive Stock Option is
to be granted under the Plan is, at the time of the grant of such
option, the owner of stock possessing more than 10% of the total
combined voting power of all classes of stock of the Company (after
taking into account the attribution of stock ownership rules of
Section 424(d) of the Code), then the following special provisions
shall be applicable to the Incentive Stock Option granted to such
individual:
(i) The purchase price per Common Share subject to such Incentive
Stock Option shall not be less than 110% of the Fair Market
Value of one Common Share at the time of grant; and
(ii) the option exercise period shall not exceed five years from the
date of grant.
(c) Dollar Limitation. For so long as the Code shall so provide, options
granted to any employee under the Plan (and any other incentive stock
option plans of the Company) which are intended to constitute
Incentive Stock Options shall not constitute Incentive Stock Options
to the extent that such options, in the aggregate, become exercisable
for the first time in any one calendar year for Common Shares with an
aggregate Fair Market Value, as of the respective date or dates of
grant, of more than $100,000.
(d) Termination of Employment, Death or Disability. No Incentive Stock
Option may be exercised unless, at the time of such exercise, the
optionee is, and has been continuously since the date of grant of his
or her option, employed by the Company, except that:
(i) an Incentive Stock Option may be exercised within the period of
three months after the date the optionee ceases to be an
employee of the Company (or within such lesser period as may be
specified in the applicable option agreement), provided, that
the agreement with respect to such option may designate a
longer exercise period and that the exercise after such
three-month period shall be treated as the exercise of a
non-statutory option under the Plan;
(ii) if the optionee dies while in the employ of the Company, or
within three months after the optionee ceases to be such an
employee, the Incentive Stock Option may be exercised by the
person to whom it is transferred by will or the laws of descent
and distribution within the period of one year after the date
of death (or within such lesser period as may be specified in
the applicable option agreement); and
(iii) if the optionee becomes disabled (within the meaning of Section
22(e)(3) of the Code or any successor provisions thereto) while
in the employ of the Company, the Incentive Stock Option may be
exercised within the period of one year after the date the
optionee ceases to be such an employee because of such
disability (or within such lesser period as may be specified in
the applicable option agreement).
For all purposes of the Plan and any option granted hereunder, "employment"
shall be defined in accordance with the provisions of Section 1.421-7(h) of the
Income Tax Regulations (or any successor regulations). Notwithstanding the
foregoing provisions, no Incentive Stock Option may be exercised after its
expiration date.
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<PAGE> 5
12. ADDITIONAL PROVISIONS.
(a) Additional Option Provisions. The Board of Directors or the Committee
may, in its sole discretion, include additional provisions in option
agreements covering options granted under the Plan, including without
limitation restrictions on transfer, repurchase rights, rights of
first refusal, commitments to pay cash bonuses, to make, arrange for
or guaranty loans or to transfer other property to optionees upon
exercise of options, or such other provisions as shall be determined
by the Board of Directors or the Committee; provided, that such
additional provisions shall not be inconsistent with any other term or
condition of the Plan and such additional provisions shall not cause
any Incentive Stock Option granted under the Plan to fail to qualify
as an Incentive Stock Option within the meaning of Section 422 of the
Code.
(b) Acceleration, Extension, Etc. The Board of Directors or the Committee
may, in its sole discretion, (i) accelerate the date or dates on which
all or any particular option or options granted under the Plan may be
exercised or (ii) extend the dates during which all, or any
particular, option or options granted under the Plan may be exercised;
provided, however, that no such extension shall be permitted if it
would cause the Plan to fail to comply with Section 422 of the Code or
with Rule 16b-3 (if applicable).
13. GENERAL RESTRICTIONS.
(a) Investment Representations. The Company may require any person to
whom an Option is granted, as a condition of exercising such option or
award, to give written assurances in substance and form satisfactory
to the Company to the effect that such person is acquiring the Common
Shares subject to the option, for his or her own account for
investment and not with any present intention of selling or otherwise
distributing the same, and to such other effects as the Company deems
necessary or appropriate in order to comply with federal and
applicable state securities laws, or with covenants or representations
made by the Company in connection with any public offering of its
Common Shares, including any "lock-up" or other restriction on
transferability.
(b) Compliance With Securities Law. Each Option shall be subject to the
requirement that if, at any time, counsel to the Company shall
determine that the listing, registration or qualification of the
shares subject to such option or award upon any securities exchange or
automated quotation system or under any state or federal law, or the
consent or approval of any governmental or regulatory body, or that
the disclosure of non-public information or the satisfaction of any
other condition is necessary as a condition of, or in connection with
the issuance or purchase of shares thereunder, such option or award
may not be exercised, in whole or in part, unless such listing,
registration, qualification, consent or approval, or satisfaction of
such condition shall have been effected or obtained on conditions
acceptable to the Board of Directors. Nothing herein shall be deemed
to require the Company to apply for or to obtain such listing,
registration or qualification, or to satisfy such condition.
14. RIGHTS AS A SHAREHOLDER.
The holder of an option shall have no rights as a shareholder with respect
to any shares covered by the option (including, without limitation, any rights
to receive dividends or non-cash distributions with respect to such shares)
until the date of issue of a stock certificate to him or her for such shares. No
adjustment shall be made for dividends or other rights for which the record date
is prior to the date such stock certificate is issued.
15. ADJUSTMENT PROVISIONS FOR RECAPITALIZATIONS, REORGANIZATIONS AND RELATED
TRANSACTIONS.
(a) Recapitalizations and Related Transactions. If, through or as a
result of any recapitalization, reclassification, stock dividend,
stock split, reverse stock split or other similar transaction, (i) the
outstanding Common Shares are increased, decreased or exchanged for a
different number or kind of shares or other securities of the Company,
or (ii) additional shares or new or different shares or other non-cash
assets are distributed with respect to such Common Shares or other
securities, an
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appropriate and proportionate adjustment shall be made in (x) the
maximum number and kind of shares reserved for issuance under or
otherwise referred to in the Plan, (y) the number and kind of shares
or other securities subject to any then outstanding options under the
Plan, and (z) the price for each share subject to any then outstanding
options under the Plan, without changing the aggregate purchase price
as to which such options remain exercisable. Notwithstanding the
foregoing, no adjustment shall be made pursuant to this Section 15 if
such adjustment (i) would cause the Plan to fail to comply with
Section 422 of the Code or with Rule 16b-3 or (ii) would be considered
as the adoption of a new plan requiring stockholder approval.
(b) Reorganization, Merger and Related Transactions. All outstanding
Options under the Plan shall become fully exercisable for a period of
sixty (60) days following the occurrence of any Trigger Event, whether
or not such Options are then exercisable under the provisions of the
applicable agreements relating thereto. For purposes of the Plan, a
"Trigger Event" is any one of the following events :
(i) the date on which Common Shares are first purchased pursuant
to a tender offer or exchange offer (other than such an offer
by the Company, any Subsidiary, any employee benefit plan of
the Company or of any Subsidiary or any entity holding shares
or other securities of the Company for or pursuant to the terms
of such plan), whether or not such offer is approved or opposed
by the Company and regardless of the number of shares purchased
pursuant to such offer;
(ii) the date the Company acquires knowledge that any person or
group deemed a person under Section 13(d)-3 of the Exchange Act
(other than the Company, any Subsidiary, any employee benefit
plan of the Company or of any Subsidiary or any entity holding
Common Shares or other securities of the Company for or
pursuant to the terms of any such plan or any individual or
entity or group or affiliate thereof which acquired its
beneficial ownership interest prior to the date the Plan was
adopted by the Board), in a transaction or series of
transactions, has become the beneficial owner, directly or
indirectly (with beneficial ownership determined as provided in
Rule 13d-3, or any successor rule, under the Exchange Act), of
securities of the Company entitling the person or group to 30%
or more of all votes (without consideration of the rights of
any class or stock to elect directors by a separate class vote)
to which all shareholders of the Company would be entitled in
the election of the Board of Directors were an election held on
such date;
(iii) the date, during any period of two consecutive years, when
individuals who at the beginning of such period constitute the
Board of Directors of the Company cease for any reason to
constitute at least a majority thereof, unless the election, or
the nomination for election by the shareholders of the Company,
of each new director was approved by a vote of at least
two-thirds of the directors then still in office who were
directors at the beginning of such period; and
(iv) the date of approval by the shareholders of the Company of an
agreement (a "reorganization agreement") providing for:
(A) The merger of consolidation of the Company with another
corporation where the shareholders of the Company,
immediately prior to the merger or consolidation, do not
beneficially own, immediately after the merger or
consolidation, shares of the corporation issuing cash or
securities in the merger or consolidation entitling such
shareholders to 65% or more of all votes (without
consideration of the rights of any class of stock to elect
directors by a separate class vote) to which all
shareholders of such corporation would be entitled in the
election of directors or where the members of the Board of
Directors of the Company, immediately prior to the merger
or consolidation, do not, immediately after the merger or
consolidation, constitute a majority of the Board of
Directors of the corporation issuing cash or securities in
the merger or consolidation; or
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(B) The sale or other disposition of all or substantially all the
assets of the Company.
(c) Board Authority to Make Adjustments. Any adjustments under this
Section 15 will be made by the Board of Directors, whose determination
as to what adjustments, if any, will be made and the extent thereof
will be final, binding and conclusive. No fractional shares will be
issued under the Plan on account of any such adjustments.
16. MERGER, CONSOLIDATION, ASSET SALE, LIQUIDATION, ETC.
(a) General. In the event of a consolidation or merger sale of all or
substantially all of the assets of the Company in which outstanding
Common Shares are exchanged for securities, cash or other property of
any other corporation or business entity or in the event of a
liquidation of the Company, the Board of Directors of the Company, or
the board of directors of any corporation assuming the obligations of
the Company, may, in its discretion, take any one or more of the
following actions, as to outstanding options: (i) in the event of a
merger under the terms of which holders of the Common Shares of the
Company will receive upon consummation thereof a cash payment for each
share surrendered in the merger (the "Merger Price"), make or provide
for a cash payment to the optionees equal to the difference between
(A) the Merger Price times the number of Common Shares subject to such
outstanding options (to the extent then exercisable at prices not in
excess of the Merger Price) and (B) the aggregate exercise price of
all such outstanding options in exchange for the termination of such
options, and (ii) in the event the provisions of Section 15 are not
applicable, provide that all or any outstanding options shall become
exercisable in full immediately prior to such event and upon written
notice to the optionees, provide that all unexercised options will
terminate immediately prior to the consummation of such transaction
unless exercised by the optionee within a specified period following
the date of such notice.
(b) Substitute Options. The Company may grant options under the Plan in
substitution for options held by employees of another corporation who
become employees of the Company, or a subsidiary of the Company, as
the result of a merger or consolidation of the employing corporation
with the Company or a subsidiary of the Company, or as a result of the
acquisition by the Company, or one of its subsidiaries, of property or
stock of the employing corporation. The Company may direct that
substitute options be granted on such terms and conditions as the
Board of Directors considers appropriate in the circumstances.
17. NO SPECIAL EMPLOYMENT RIGHTS.
Nothing contained in the Plan or in any option shall confer upon any
optionee any right with respect to the continuation of his or her employment by
the Company or interfere in any way with the right of the Company at any time to
terminate such employment or to increase or decrease the compensation of the
optionee.
18. OTHER EMPLOYEE BENEFITS.
Except as to plans which by their terms include such amounts as
compensation, the amount of any compensation deemed to be received by an
employee as a result of the exercise of an option or the sale of shares received
upon such exercise will not constitute compensation with respect to which any
other employee benefits of such employee are determined, including, without
limitation, benefits under any bonus, pension, profit-sharing, life insurance or
salary continuation plan, except as otherwise specifically determined by the
Board of Directors.
19. AMENDMENT OF THE PLAN.
(a) The Board of Directors may at any time, and from time to time, modify
or amend the Plan in any respect; provided, however, that if at any
time the approval of the shareholders of the Company is required under
Section 422 of the Code or any successor provision with respect to
Incentive Stock Options, or under Rule 16b-3 or by the Alberta
Business Corporation Act, the Board of Directors
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may not effect such modification or amendment without such
approval; and provided, further, that the provisions of
Section 3(c) hereof shall not be amended more than once every
six months, other than to comport with changes in the Code,
the Employer Retirement Income Security Act of 1974, as
amended, or the rules thereunder.
(b) The modification or amendment of the Plan shall not, without the
consent of an optionee, affect his or her rights under an option
previously granted to him or her. With the consent of the
optionee affected, the Board of Directors may amend outstanding
option agreements in a manner not inconsistent with the Plan.
The Board of Directors shall have the right to amend or modify
(i) the terms and provisions of the Plan and of any outstanding
Incentive Stock Options granted under the Plan to the extent
necessary to qualify any or all such options for such favorable
federal income tax treatment (including deferral of taxation
upon exercise) as may be afforded incentive stock options
under Section 422 of the Code and (ii) the terms and provisions
of the Plan and of any outstanding option to the extent
necessary to ensure the qualification of the Plan under Rule
16b-3.
20. WITHHOLDING.
(a) The Company shall have the right to deduct from payments of
any kind otherwise due to the optionee any federal, provincial
or state or local taxes of any kind required by law to be
withheld with respect to any shares issued upon exercise of
options under the Plan. Subject to the prior approval of the
Company, which may be withheld by the Company in its sole
discretion, the optionee may elect to satisfy such obligations,
in whole or in part, (i) by causing the Company to withhold
Common Shares otherwise issuable pursuant to the exercise of
an option or (ii) by delivering to the Company Common Shares
already owned by the optionee. The shares so delivered or
withheld shall have a Fair Market Value equal to such
withholding obligation as of the date that the amount of tax
to be withheld is to be determined. An optionee who has made
an election pursuant to this Section 20(a) may only satisfy
his or her withholding obligation with Common Shares which are
not subject to any repurchase, forfeiture, unfulfilled vesting
or other similar requirements.
(b) The acceptance of Common Shares upon exercise of an Incentive
Stock Option shall constitute an agreement by the optionee (i)
to notify the Company if any or all of such shares are
disposed of by the optionee within two years from the date the
option was granted or within one year from the date the shares
were issued to the optionee pursuant to the exercise of the
option, and (ii) if required by law, to remit to the Company,
at the time of and in the case of any such disposition, an
amount sufficient to satisfy the Company's federal, state and
local withholding tax obligations with respect to such
disposition, whether or not, as to both (i) and (ii), the
optionee is in the employ of the Company at the time of such
disposition.
(c) Notwithstanding the foregoing, in the case of a Reporting
Person whose options have been granted in accordance with the
provisions of Section 3(b) herein, no election to use shares
for the payment of withholding taxes shall be effective unless
made in compliance with any applicable requirements of Rule
16b-3.
21. CANCELLATION AND NEW GRANT OF OPTIONS, ETC.
The Board of Directors shall have the authority to effect, at any time and
from time to time, with the consent of the affected optionees, (i) the
cancellation of any or all outstanding options under the Plan and the grant in
substitution therefor of new options under the Plan covering the same or
different numbers of Common Shares and having an option exercise price per share
which may be lower or higher than the exercise price per share of the cancelled
options or (ii) the amendment of the terms of any and all outstanding options
under the Plan to provide an option exercise price per share which is higher or
lower than the then-current exercise price per share of such outstanding
options.
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22. EFFECTIVE DATE AND DURATION OF THE PLAN.
(a) Effective Date. The Plan shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted under the
Plan shall become exercisable unless and until the Plan shall have
been approved by the Company's shareholders. If such shareholder
approval is not obtained within twelve months after the date of the
Board's adoption of the Plan, no options previously granted under the
Plan shall be deemed to be Incentive Stock Options and no Incentive
Stock Options shall be granted thereafter. Amendments to the Plan not
requiring shareholder approval shall become effective when adopted by
the Board of Directors; amendments requiring shareholder approval (as
provided in Section 19) shall become effective when adopted by the
Board of Directors, but no Incentive Stock Option granted after the
date of such amendment shall become exercisable (to the extent that
such amendment to the Plan was required to enable the Company to grant
such Incentive Stock Option to a particular optionee) unless and until
such amendment shall have been approved by the Company's shareholders.
If such shareholder approval is not obtained within twelve months of
the Board's adoption of such amendment, any Incentive Stock Options
granted on or after the date of such amendment shall terminate to the
extent that such amendment to the Plan was required to enable the
Company to grant such option to a particular optionee. Subject to this
limitation, options may be granted under the Plan at any time after
the effective date and before the date fixed for termination of the
Plan.
(b) Termination. Unless sooner terminated in accordance with Section 16,
the Plan shall terminate upon the earlier of (i) the close of business
on the day next preceding the tenth anniversary of the date of its
adoption by the Board of Directors, or (ii) the date on which all
shares available for issuance under the Plan shall have been issued
pursuant to the exercise or cancellation of options granted under the
Plan. If the date of termination is determined under (i) above, then
options outstanding on such date shall continue to have force and
effect in accordance with the provisions of the instruments evidencing
such options.
23. PROVISION FOR FOREIGN PARTICIPANTS.
The Board of Directors may, without amending the Plan, modify awards or
options granted to participants who are foreign nationals or employed outside
the United States to recognize differences in laws, rules, regulations or
customs of such foreign jurisdictions with respect to tax, securities, currency,
employee benefit or other matters.
24. GOVERNING LAW.
The provisions of this Plan shall be governed and construed in accordance
with the laws of the province of Alberta, Canada without regard to the
principles of conflicts of laws.
Adopted by the Board of Directors on September 14, 1995, as amended by the
Board of Directors on March 3, 1997.
9
<PAGE> 1
EXHIBIT 10.24
SUPPLEMENTAL AGREEMENT NO. 3
This Supplemental Agreement No. 3, dated on the 20th day of March, 1997
to be attached and made a part of the BASIC AGREEMENT, dated November 1, 1996,
between H.S. RESOURCES, INC., hereafter referred to as "Client", and BOONE
GEOPHYSICAL, INC., hereinafter referred to as "Client", and BOONE GEOPHYSICAL,
INC., hereinafter referred to as "Contractor". This Supplemental Agreement
covers approximately 54 square miles of seismic acquisition, in the Port Barre
3D Prospect, St. Landry Parish, Louisiana. This work is to be done on a
"turnkey" or mileage basis.
TERMS
Contractor shall furnish its Seismic Party No. 1 and equipment, as
herein specified, for the conduct of a seismic survey in St. Landry Parish,
Louisiana, designated by Client. Such services will begin on or about the 20th
day of March, 1997, or as soon as possible thereafter, from Contractor's Seismic
Party's home base at Huntsville, Walker County, Texas, or a nearer point.
Contractor shall furnish its Seismic Party comprised of the following:
PERSONNEL
Contractor will provide a complete seismic crew comprised of Party
Manager, Permit Agents, Surveyors, Shooter, Observers, Technicians, and
Supervisors to provide quality seismic data acquisition in a timely and
workmanlike manner.
EQUIPMENT
SURVEYING: Equipment will be "state-of-the-art" and functioning at
manufacturer's technical specifications. Surveying will be done on an X, Y, Z
coordinate system. Proper field procedures and quality control will be
maintained at all times. Autocad printed map plotter 36".
RECORDING EQUIPMENT: One (1) OPSEIS EAGLE TELEMETRY digital recording
system equipped with CDP switch, static filters, oscilloscope, camera, necessary
FM radios, necessary test equipment, shooting system, geophones, and cables.
DRILLING EQUIPMENT: Will consist of Ardco Land Drill Rigs, Mini-drill
rigs, and water buggies. Powder and cap box both in compliance with all federal
laws.
MISCELLANEOUS: All necessary spare parts, tools, and equipment for the
maintenance and repair of the instrumentation, cables and geophones.
<PAGE> 2
PARAMETERS
37 Receiver lines (approximately 13, 145 total receivers)
6 lines live each shot (maximum total 1440 stations) roll in and roll out
Geophone interval: 110', 6 geophones per trace
Receiver line spacing: 1100'
Source line spacing: 1650'
Shot spacing: 110'
Hole depth: 100'
Charge size: 5.5 lbs. Pentolite explosives, single capped
Total shot points for prospect: 8365
Approximate surveying mileage: 484.3 linear miles
We will record 6 second data at a sample rate of 2 ms.
For additional information on lay out and quality standards, see
attached Addendum #1, lay out sheet, bid specifications, and original bid
letter.
PROCESSING
Processing will be provided by Client.
ACQUISITION COST
Agreed price for total acquisition, per square mile: Seventy Three Thousand
Fifty Dollars ($73,050.00) per square mile, based on highland acquisition.
Magnetic markers; if requested at cost (approximate cost $1.50 per marker).
Additional services can be provided at Client's request:
(a) Extra Drilling and Loading at $1.00 per foot for highland, plus
explosives billed at cost; and $2.00 per foot for mini holes, plus
explosives billed at cost. If gravel drilling is encountered there will
be a drilling surcharge of $1.00 per foot for shot holes drilled in
gravel if an excessive amount of bits and mud are required,
(b) Experimental Recording at $1,200.00 per hour;
(c) Extra Surveying at $1,000.00 per mile;
(d) Extra Prints: at cost;
(e) Extra Detonators requested, in excess of one (1) per hole at cost;
(f) Additional permitting will be done by BOONE GEOPHYSICAL, INC., and all
permits will be paid by the Client direct of paid upon demand when
invoiced by Contractor,
(g) Water truck if needed $250.00 per day, if water must be purchased it
will be billed at cost,
(h) GPS Surveying, if requested, at cost,
(I) Dozing if required billed at cost, approximately $65.00 per hour,
(j) Extra shot point recordings above what is called for in bid
specifications will be $200.00 per recording,
(k) Terra tires, if needed due to permit restriction, will be billed at
cost. (approximately $75.00 per set, per day),
(l) Extra detonators requested, in excess of one (1) per deep hole, at cost.
<PAGE> 3
CLIENT REIMBURSABLE CHARGES, IF APPLICABLE:
1. Drilling services, drilling bits, mud and mud additives, and other drilling
related accessories for 100' deep shot hole depths and 5.5# Pentolite
Explosives........................................*INCLUDED IN ACQUISITION RATE.
*If gravel drilling is encountered, there will be a drilling surcharge of
$1.00 per foot for shot holes drilled in gravel if an excessive amount of
bits and mud are required.
2. Explosives, caps, and other explosive related accessories............INCLUDED
IN ACQUISITION RATE.
3. Permits, including fees paid to landowners, leaseholders, and federal, state
and local authorities, plus related correspondence and communication
expenses................................................................AT COST.
4. Cost of a Permit Agent and vehicle provided by Contractor and used in
securing permits to survey lines or portions thereof................IF
NEEDED.........................RATE OF $300.00 PER DAY PER AGENT, plus expenses.
5. In the event the program is canceled prior to completion of shooting, Client
shall reimburse Contractor for permitting services at a rate of $300.00 per day,
per agent, plus 10% Administration cost.
6. Permitting, requiring abstracting, involved title searches, legal opinion and
title guarantees, in excess of industry standards, if requested by
Client..................................................................AT COST.
7. Bonds of Archaeological/Environmental Studies as required by governmental
agencies or permittees (unless already in place by
contractor)............................................TO BE PROVIDED BY CLIENT.
8. Damages or claims for damages where such damages have resulted from prudently
conducted operations and are not attributable to negligence on the part of the
Contractor or its employees (Client will be contacted for approval of each
claim)..................................................................AT COST.
9. Program maps, topos, extra ammonia prints, and photocopies of maps or basic
field data..............................................................AT COST.
10. All freight charges, postage, and insurance expenses for shipping and
mailing of basic field data and digital tape reels to Client or to a Client
designated facility.....................................................AT COST.
11. Experimental work, such as noise analysis, uphole surveys, or comparison
shooting to determine optimum recording parameters, where such work is requested
and approved by Client, per recording hour.............................$1,250.00
12. Digital seismic tapes, other recording expendables, and survey
supplies...........................................INCLUDED IN ACQUISITION RATE.
13. Vehicular license and registration requirements for the State of Texas will
be provided by Contractor. Licenses and registration fees for operations in
other states at Client request will be invoiced to Client...................N/A.
<PAGE> 1
EXHIBIT 10.25
DEBENTURE - FLOATING RATE
Issued to: RoyNat Inc.
4500 Canterra Tower
400 - 3rd Avenue S.W.
Calgary, Alberta T2P 4H2
Facsimile No. 269-7701
Venture Seismic Ltd.
3110 - 80th Avenue S.E.
Calgary, Alberta
T2C 1J3
DEBENTURE
$900,000.00 April 29, l997
1. Venture Seismic Ltd. (the "Company") for value received hereby
promises to pay to RoyNat Inc. ("RoyNat"), at its address specified above, the
principal amount of Nine Hundred Thousand Dollars ($900,000.00) in the manner
hereinafter provided, together with all other moneys which may from time to
time be owing hereunder or pursuant hereto.
2. Principal Payments. Subject to the provisions of this Debenture,
the principal amount of this Debenture shall become due and payable by 50
monthly instalments, each in the amount of $18,000.00, payable on the 15th day
of each month from and including May 15, l997 to and including June 15, 2001 and
the balance of the said principal amount, together with interest thereon and all
other moneys owing hereunder, shall become due and payable on the 15th day of
June, 2001.
3. Interest. Interest shall be payable on the 15th day of each month
on the balance from time to time outstanding of the principal amount of this
Debenture, any overdue interest and any other moneys due and payable hereunder,
both before and after maturity, default or judgment, at the rate of interest per
annum (the "Loan Rate") which is 2.75% greater than RoyNat's Floating Base Rate
for the Applicable Period calculated and compounded monthly, computed from the
respective dates of advance of the moneys by RoyNat to the Company until payment
in full of all moneys owing hereunder. RoyNat shall notify the Company at least
five days prior to each interest payment date of RoyNat's Floating Base Rate for
the Applicable Period but the non-receipt of any such notice by the Company or
the failure of RoyNat to give such notice shall in no way limit or negate the
obligation of the Company to pay interest on such payment date. The first
interest payment date shall be May 15, l997.
4. Redemption. The Company may redeem this Debenture prior to
maturity either in whole at any time or, when not in default hereunder, in part
from time to time on not less than 30 days' written notice at a price equal to
the principal amount being redeemed plus an additional amount equal to three
months' interest on such principal amount at the Loan Rate in effect on the
date fixed by the Company for redemption and together in each case with accrued
and unpaid interest on such principal amount to the date fixed for redemption
and, in the case of redemption in whole, all other moneys owing hereunder. The
Company shall have no other right of prepayment.
<PAGE> 2
Notwithstanding the foregoing paragraph, the Company may, when
not in default hereunder, on not less than 10 days' written notice, redeem up to
15% of the principal amount outstanding on the date fixed by the Company for
redemption at a price equal to the principal amount being redeemed, together
with accrued and unpaid interest on such principal amount to the date fixed for
redemption. This right may be exercised once during each 12 month period
following the date of the initial advance of funds hereunder, and shall be
non-cumulative.
4A. Conversion to Fixed Interest Rate. The Company may at any time
request that RoyNat provide a quotation as to the availability of fixed interest
rates on the principal of this Debenture. Within 60 days after receipt of such
request, RoyNat shall provide a written offer to the Company, offering specified
rates of interest for a selection of fixed interest periods as RoyNat may then
be able to provide and specifying a date from which the conversion would be
effective (the "Conversion Date"). Such rates of interest shall be 2.75% above
RoyNat's Term Base Rate for the relevant periods. The offer shall stipulate any
extensions of the term of this Debenture that RoyNat may require. If the Company
accepts such offer by selecting the applicable interest rate and fixed interest
period, the rate so specified and accepted shall be the "Loan Rate" for all
purposes of this Debenture from and after the Conversion Date for the fixed
interest period selected. If such period expires before the end of the agreed
extended term, the rate of interest on this Debenture shall revert to the
variable rate, provided in Section 3 hereof for the balance of the agreed
extended term, but the Company may thereafter avail itself again of the
provisions of this Section 4A. The Company shall forthwith execute and deliver
such documentation, if any, as RoyNat shall request to give effect to any
interest rate conversion or extension of the term of this Debenture. The Company
shall have no right to redeem this Debenture after conversion to a constant
interest rate except as may be specified in the offer from RoyNat accepted by
the Company, notwithstanding the provisions of Section 4 hereof.
For the purposes of this Section:
(a) "RoyNat's Term Base Rate", means, at any time, the annual rate of
interest which RoyNat establishes at its principal office in Toronto as the
reference rate of interest which RoyNat will charge for closed fixed rate
term loans in Canadian dollars made to its customers in Canada for varying
durations and which it refers to as "RoyNat's Term Base Rate" for that
duration of loan; and
(b) "Government of Canada Bond Yield" on any date means the yield to
maturity, assuming semi-annual compounding, which a non-callable Government
of Canada bond would carry if issued, in Canadian dollars in Canada at 100%
of its principal amount on such date with a term to maturity equal to the
fixed interest rate period being offered by RoyNat, as quoted to RoyNat by a
money market dealer or Canadian Charter Bank.
5. Partial Payments. In case less than the total principal amount
of this Debenture is redeemed at any time, the principal amount so redeemed
shall be credited against the principal payable hereunder in inverse order of
maturity.
6. Security. As security for the payment of the principal, interest
and all other moneys from time to time payable under this Debenture, and the
performance by the Company of all its obligations hereunder, but subject to
Permitted Encumbrances and to the exception as to leaseholds
<PAGE> 3
hereinafter contained, the Company hereby grants a security interest in and
grants, assigns, mortgages and charges, as and by way of a first, fixed and
specific mortgage and charge to and in favour of RoyNat all furniture,
machinery, equipment, vehicles, accessories and other tangible personal property
(other than Inventory) now owned or hereafter acquired by the Company, together
with any proceeds of sale or disposition thereof, and including without
limitation the property described in Schedule "B" hereto.
And for the same consideration and purposes and subject to the
same exceptions, the Company hereby charges as and by way of a first floating
charge to and in favour of RoyNat the undertaking of the Company and all its
property and assets for the time being, both present and future, and of
whatsoever nature and wherever situate (other than property and assets from time
to time effectively subjected to the fixed and specific mortgages and charges
created hereby or by any instrument supplemental hereto).
Provided that such floating charge shall not prevent the Company
from time to time until the security hereby constituted shall have become
enforceable from selling, leasing or otherwise disposing of the property, rights
and assets included in such floating charge or from making expenditures with a
view to the expansion of its business or from giving security constituting
Permitted Encumbrances, all in the ordinary course of its business and subject
to the provisions of this Debenture. In particular, the Company may give
security to its bankers on its Inventory or by way of assignment of its accounts
receivable (except to the extent such accounts receivable represent proceeds of
the sale or disposition of property specifically mortgaged or charged hereunder
or under any instrument supplemental hereto) and such security if validly
perfected shall rank prior to the lien hereof on such assets without further
action by RoyNat. Notwithstanding any other provision of this Debenture except
as provided in the foregoing sentence, the security interests constituted hereby
and by any supplemental security granted to RoyNat shall not be subordinate to,
nor is there any intention to subordinate such security interests to, any
Permitted Encumbrances or security interests held by others.
All security interests created by this Debenture attach
immediately upon execution of the Debenture. The attachment of the floating
charge has not been postponed and the floating charge shall attach to any
particular property intended to be subject to it as soon as the Company has
rights in such property.
All property and assets of the Company whether specifically
charged or subjected to the floating charge are hereinafter referred to as the
"Mortgaged Premises".
7. Exception as to Leaseholds. It is hereby declared that the last
day of any term of years reserved by any lease or sublease, verbal or written,
or any agreement therefor, now held or hereafter acquired by the Company is
excepted out of the Mortgaged Premises, but the Company shall stand possessed of
any such reversion upon trust to assign and dispose thereof as RoyNat may
direct.
8. Payments and Notice. Any payments not received by RoyNat by two
o'clock p.m. on a Business Day shall be deemed to have been received on the next
Business Day. Any notice required or desired to be given hereunder or under any
instrument supplemental hereto shall be in writing and may be given by personal
delivery, by facsimile or other means of electronic communication or by sending
the same by registered mail, postage prepaid, to RoyNat or to the Company at
their respective addresses set out above and, in the case of electronic
communication, to
<PAGE> 4
the facsimile numbers set out above. Any notice so delivered shall be
conclusively deemed given when personally delivered and any notice sent by
facsimile or other means of electronic transmission shall be deemed to have been
delivered on the Business Day following the sending of the notice, and any
notice so mailed shall be conclusively deemed given on the third Business Day
following the day of mailing, provided that in the event of a known disruption
of postal service, notice shall not be given by mail. Any address for notice or
payments herein referred to may be changed by notice in writing given pursuant
hereto.
9. Covenants. (a) This Debenture is issued subject to and with the
benefit of all the covenants, terms and conditions in Schedule "A" hereto which
Schedule forms a part hereof.
(b) In addition to such covenants, terms and conditions, the Company
covenants with RoyNat that so long as this Debenture remains outstanding the
Company shall:
(i) execute and deliver all such documents as may be necessary
to maintain in force the pre-authorized payment system
specified in the Offer of Finance; and
(ii) not permit Consolidated Working Capital to fall below a ratio
of 1:1 excluding the current portion of term debt.
10. Offer of Finance. This Debenture is being issued by the Company
to RoyNat pursuant to the terms of a certain letter agreement between the
Company and RoyNat dated April 14, 1997 (such letter agreement including any
amendments thereto being herein called the "Offer of Finance"). All terms and
conditions of the Offer of Finance shall remain in full force and effect, except
to the extent inconsistent with the provisions of this Debenture.
11. Maximum Recovery. If any amounts, whether on account of interest,
fees, bonus or additional consideration, becomes payable to or is received by
RoyNat pursuant to this Debenture, the Offer of Finance, any other security
document or other agreement which would exceed the maximum amount recoverable
under applicable law on moneys advanced by RoyNat:
(a) any amounts so payable shall be reduced and are hereby limited to
the maximum amount recoverable under applicable law;
(b) any amounts so received by RoyNat shall, at RoyNat's option, either
be returned to the Company or, notwithstanding Section 4 hereof, be
deemed to have been received by RoyNat as a partial redemption of
this Debenture and shall be credited against principal payable
hereunder in inverse order of maturity; and
(c) if paragraph (a) requires the reduction in an amount or amounts
payable to RoyNat, RoyNat in its sole discretion shall determine
which amount or amounts shall be reduced to ensure compliance with
this Section 11.
12. Extensions and Amendments. Any agreement for the extension of the
time of payment of the moneys hereby secured or any part thereof made at, before
or after maturity, and prior to the execution of a discharge or release of this
Debenture, or any agreement for altering the term, rate
<PAGE> 5
of interest (whether increased or decreased), the amount of the principal
payments hereunder or any other covenant or condition hereof, need not be
registered in any office of public record but shall be effectual and binding
upon the Company and upon every subsequent mortgagee, chargee, encumbrancer or
other person claiming an interest in the Mortgaged Premises or any part thereof
when executed by the Company and delivered to RoyNat.
13. Receipt and Waiver. The Company hereby acknowledges receipt of a
true copy of this Debenture and, to the extent permitted by law, waives all
rights to receive from RoyNat a copy of any financing statement or financing
change statement filed, or any verification statement received, at any time in
respect of this Debenture or any supplemental or collateral security granted to
RoyNat.
14. Binding Effect, Governing Law and Headings. These presents are
binding upon the parties hereto and their respective successors and assigns.
This Debenture shall be governed by and construed in accordance with the laws of
the Province of Alberta and the laws of Canada applicable therein. The division
of this Debenture into sections and the insertion of headings are for
convenience of reference only and shall not affect the construction or
interpretation of this Debenture.
15. Invalidity, etc. Each of the provisions contained in this
Debenture is distinct and severable and a declaration of invalidity, illegality
or unenforceability of any such provision or part thereof by a court of
competent jurisdiction shall not affect the validity or enforceability of any
other provision of Debenture.
16. Waiver of Certain Legislation. The Company hereby declares and
covenants that:
(a) THE LAND CONTRACTS (ACTIONS) ACT (Saskatchewan) shall have no
application to any action as defined in THE LAND CONTRACTS
(ACTIONS) ACT with respect to this Debenture, any of the Mortgaged
Premises or any supplemental or collateral security granted to
RoyNat; and
(b) THE LIMITATION OF CIVIL RIGHTS ACT (Saskatchewan) shall have no
application to: (i) this Debenture; (ii) any indenture, instrument
or agreement entered into by the Company, at any time hereafter,
supplemental, collateral or ancillary hereto or in implementation
of this Debenture or the Offer of Finance and involving the
payment by the Company of money or the liability of the Company to
pay money; (iii) any mortgage, charge or other security for the
payment of the money made, given or created by this Debenture;
(iv) any instrument or agreement entered into by the Company at
any time hereafter, renewing or extending or collateral to this
Debenture or any other security given to RoyNat by the Company; or
(v) the rights, powers or remedies of RoyNat or a Receiver or any
other person under this Debenture or under any other security
granted by the Company to RoyNat or instrument or agreement
collateral, supplemental or ancillary hereto or referred to in
this Debenture; and
17. (a) Right of Consolidation. The right of consolidation shall apply
to this Debenture notwithstanding Section 27 of the PROPERTY LAW
ACT of British Columbia or any similar statutory provision in force
from time to time.
<PAGE> 6
(b) For the purposes of Section 198.1 of the LAND TITLE ACT (British
Columbia), the floating charge hereby created over the Borrower's
real and immovable property, both freehold and leasehold, shall
become a fixed charge thereon upon the earlier of:
(i) the occurrence of an event described in clause 9(e), (f) or
(g) of Schedule "A" hereto; or
(ii) RoyNat taking any action pursuant to clause 10 of Schedule
"A" hereto to enforce and realize on the security hereby
constituted.
IN WITNESS WHEREOF the Company has executed this Debenture.
VENTURE SEISMIC LTD.
By: /s/ BRIAN KOZUN
---------------------------
Name: BRIAN KOZUN
Title: President & CEO
c/s
<PAGE> 7
SCHEDULE "A"
1. THE COMPANY HEREBY DECLARES, COVENANTS AND AGREES THAT IT:
(a) As to Title - is the sole legal and beneficial owner of the Mortgaged
Premises and owns the same free of all encumbrances other than
Permitted Encumbrances;
(b) Future Acquisitions - shall at its expense on the request of RoyNat,
execute and deliver to RoyNat such further assurances and documents as
RoyNat may require to perfect RoyNat's security on all or any part of
the Mortgaged Premises, or to specifically charge any or all of the
property then subject to the floating charge created hereby;
(c) Pay Costs - shall pay all costs and expenses (including legal fees on a
solicitor and own client basis) of RoyNat incidental to or which in any
way relates to this Debenture or its enforcement including:
(i) the preparation, execution and filing of this Debenture and any
instruments postponing, discharging, amending, extending or
supplemental to this Debenture or any security required by the
Offer of Finance ("RoyNat's Security");
(ii) perfecting and keeping perfected RoyNat's Security;
(iii) maintaining the intended priority of RoyNat's Security on all
or any part of the Mortgaged Premises;
(iv) taking, recovering or possessing the Mortgaged Premises;
(v) taking any actions or other proceedings to enforce the remedies
provided herein or otherwise in relation to this Debenture or
the Mortgaged Premises, or by reason of a default hereunder or
the non-payment of the moneys hereby secured;
(vi) taking proceedings, giving notices and giving responses required
under any applicable law concerning or relating to RoyNat's
Security, including compliance with the provisions of applicable
bankruptcy, insolvency, personal property security and mortgage
enforcement legislation;
(vii) any inspections required to be made to the Mortgaged Premises,
or the review of any plans, specifications or other
documentation which may require the approval or consent of
RoyNat;
(viii) obtaining the advice of counsel and other advisors in relation
to the foregoing; all such costs and expenses and other monies
payable hereunder, together with interest at the Loan Rate,
shall be payable on demand and shall upon being incurred by
RoyNat be secured hereby and constitute a charge on the
Mortgaged Premises and any proceeds of realization;
<PAGE> 8
(d) To Pay Rents and Taxes - shall pay all rents, taxes and assessments
lawfully imposed upon the Mortgaged Premises or any part thereof and
upon the income and profits of the Company when the same become due and
payable, shall show to RoyNat on request receipts for such payment, and
shall not suffer any builders', construction, statutory or other liens
or rights of retention, other than Permitted Encumbrances, to remain
outstanding upon any of the Mortgaged Premises;
(e) To Maintain Corporate Existence and Security - shall maintain its
corporate existence, shall keep the Mortgaged Premises in good
condition and repair, shall maintain the security hereby created as a
valid and effective security at all times so long as any moneys are
outstanding hereunder, shall carry on and conduct its business in a
proper and efficient manner and in accordance with all applicable law,
shall not materially alter the kind of business carried on by it, shall
advise RoyNat promptly in writing of any proposed change in its name,
shall observe and perform all of its obligations under leases, licences
and other agreements to which it is a party so as to preserve and
protect the Mortgaged Premises and the income therefrom, and shall keep
proper books of accounts with correct entries of all transactions in
relation to its business;
(f) Not to Sell - shall not, except as otherwise permitted hereunder,
remove, destroy, lease, sell or otherwise dispose of any of the
Mortgaged Premises; provided that the Company may sell or otherwise
dispose of furniture, machinery, equipment, vehicles and accessories
which have become worn out or damaged or otherwise unsuitable for their
purposes on condition that it shall substitute therefor, subject to the
lien hereof and free from prior liens or charges, property of equal
value so that the security hereby constituted shall not thereby be in
any way reduced or impaired;
(g) To Hold Proceeds of Unauthorized Sale in Trust - in the event the
Mortgaged Premises or any part thereof are sold or disposed of prior to
the full discharge of this Debenture by RoyNat, in any manner not
authorized by this Debenture, shall hold all proceeds of such sale or
disposition received by the Company as trustee for RoyNat until the
Company has been fully released from this Debenture by RoyNat;
(h) To Insure - shall keep insured the Mortgaged Premises with reputable
insurers approved by RoyNat in such amounts against loss or damage by
fire and other causes or perils as RoyNat may reasonably require and
shall pay all premiums necessary for such purposes as the same shall
become due. All policies of insurance issued in respect of the
Mortgaged Premises and all proceeds thereof are hereby assigned to
RoyNat as security for the Company's obligations hereunder. Each
policy of insurance shall show RoyNat as loss payee, as its interest
may appear, shall contain such mortgage clauses as RoyNat may require,
shall be in terms satisfactory to RoyNat and, at the request of RoyNat,
shall be delivered to and held by RoyNat;
(i) To Furnish Proofs - shall forthwith on the happening of any loss or
damage furnish at its expense all necessary proofs and do all necessary
acts to enable RoyNat to obtain payment of the insurance moneys;
<PAGE> 9
(j) Inspection by RoyNat - shall allow any employees or authorized agents
of RoyNat at any reasonable time to enter the premises of the Company
to inspect the Mortgaged Premises, including without limitation the
right to undertake soil, ground water, environmental or other tests,
measurements or surveys in, on or below the Mortgaged Premises, and to
inspect the books and records of the Company and make extracts
therefrom, and shall permit RoyNat prompt access to such other persons
as RoyNat may deem necessary or desirable for the purposes of
inspecting or verifying any matters relating to any part of the
Mortgaged Premises or the books and records of the Company, provided
that any information so obtained shall be kept confidential, save as
required by RoyNat in exercising its rights hereunder. The Company
shall pay all costs and expenses of agents retained by RoyNat for
purposes of inspection under this clause (j);
(k) Deliver Financial Statements - shall deliver to RoyNat within 120 days
of the close of each financial year of the Company one copy of the
audited annual financial statements for that year, including the
balance sheet and statements of income, retained earnings and changes
in financial position accompanied by the report of the Company's
auditors, and such other statements or reports as may be required by
RoyNat in the Offer of Finance, and within 45 days after the first half
of each of the Company's financial years, one copy of the interim
financial statements signed by an authorized officer of the Company,
all of which financial statements shall be prepared in accordance with
generally accepted accounting principles; and shall at the same time
deliver to RoyNat copies of all management reports prepared by the
auditors of the Company together with any other statements stipulated
in the Offer of Finance;
(l) Not to Create Certain Charges - without the prior written consent of
RoyNat, which consent shall not be unreasonably withheld, shall not
create or suffer to exist any charge or encumbrance over all or any
portion of the Mortgaged Premises ranking or purporting to rank prior
to or pari passu with the charges hereof, other than Permitted
Encumbrances, and shall not permit any subsidiary to mortgage, charge
or otherwise encumber any of its property or assets or issue any bonds,
debentures, shares or other securities, except to the Company;
(m) Not to Remove - prior to the removal of any of the Mortgaged Premises
from the Provinces of Alberta, British Columbia, Saskatchewan or
Manitoba, the Northwest Territories or the States of Texas, Louisiana,
Arkansas, Alabama, Mississippi, Montana or North Dakota or to leasehold
property, the Company shall effect such further registrations and
obtain such other consents and give such other security, at the sole
cost and expense of the Company, as may be required or desirable to
protect or preserve the security hereby created, and the Company shall
forthwith notify RoyNat of the intended removal and the action proposed
to be taken;
(n) No Actions - has received no notice of and has no knowledge of any
pending, potential or threatened litigation or claim for judicial or
administrative action which would adversely affect the Mortgaged
Premises or their use or market value;
(o) Compliance with Environmental Laws -
<PAGE> 10
(i) shall conduct and maintain its business, operations and the
Mortgaged Premises so as to comply in all respects with all
applicable Environmental Laws, including obtaining all necessary
licenses, permits, consents and approvals required to own or
operate the Mortgaged Premises and the business carried out on,
at or from the Mortgaged Premises;
(ii) except as specifically permitted by RoyNat in writing, the
Company shall not permit or suffer to exist, Contaminants or
dangerous or potentially dangerous conditions in, on or below
the Mortgaged Premises including, without limitation, any
polychlorinated biphenyls, radio-active substances, underground
storage tanks, asbestos or urea formaldehyde foam insulation;
(iii) has no knowledge of the existence of Contaminants or dangerous
or potentially dangerous conditions at, on or under the
Mortgaged Premises or any properties in the vicinity of the
Mortgaged Premises which could affect the Mortgaged Premises or
the market value thereof;
(iv) has not given or received, nor does it have an obligation to
give, any notice, claim, communication or information regarding
any past, present, planned or threatened treatment, storage,
disposal, presence, release or spill of any Contaminant at, on,
under or from the Mortgaged Premises or any property in the
vicinity of the Mortgaged Premises, including any notice
pursuant to any Environmental Laws or any environmental report
or audit. The Company shall notify RoyNat promptly and in
reasonable detail upon receipt of any such claim, notice,
communication or information or if the Company becomes aware of
any violation or potential violation of the Company of any
Environmental Laws and shall describe therein the action which
the Company intends to take with respect to such matter;
(v) upon the request of RoyNat shall establish and maintain a system
to assure and monitor continued compliance with, and to prevent
the contravention of, Environmental Laws, which system shall
include periodic reviews of such compliance system;
(vi) shall at the Company's expense, if reasonably requested by
RoyNat in writing, retain an environmental consultant acceptable
to RoyNat, acting reasonably, to undertake environmental tests
and to prepare a report or audit with respect to the Mortgaged
Premises and deliver same to RoyNat for its review; and
(vii) shall indemnify and save harmless RoyNat, its officers,
directors, employees, agents and shareholders from and against
all losses, damages or costs suffered by RoyNat arising from or
relating to any breach by the Company of the foregoing
covenants in this clause 1(o) and any breach by the Company or
any other person now or hereafter having an interest in the
Mortgaged Premises which is asserted or claimed against
RoyNat. This indemnity shall survive the
<PAGE> 11
payment in full of all amounts secured hereunder and the
discharge of this Debenture. RoyNat shall hold the benefit of
this indemnity in trust for those indemnified persons who are
not parties to this Debenture.
2. Waiver of Covenants. RoyNat may waive any breach by the Company
of any of the provisions contained in this Debenture or any default by the
Company in the observance or performance of any covenant or condition required
to be observed or performed by the Company hereunder, provided that no such
waiver or any other act, failure to act or omission by RoyNat shall extend to or
be taken in any manner to affect any subsequent breach or default or the rights
of RoyNat resulting therefrom.
3. Performance of Covenants by RoyNat. If the Company shall fail to
perform any covenant on its part herein contained, RoyNat may in its absolute
discretion perform any such covenant capable of being performed by it. If any
such covenant requires the payment of money or if the Mortgaged Premises or any
part thereof shall become subject to any charge ranking in priority to the lien
hereof, RoyNat may make such payment and/or pay or discharge such charge, but
shall be under no obligation to do so. All sums so paid by RoyNat, together with
interest at the Loan Rate, shall be payable on demand and shall constitute a
charge upon the Mortgaged Premises. No such performance or payment shall relieve
the Company from any default hereunder or any consequences of such default.
4. Appointment of Monitor. If in the opinion of RoyNat, acting
reasonably, a material adverse change has occurred in the financial condition of
the Company, or if RoyNat in good faith believes that the ability of the Company
to pay any of its obligations to RoyNat or to perform any other covenant
contained herein has become impaired or if an event of default has occurred,
RoyNat may by written notice to the Company, appoint a monitor (the "Monitor")
to investigate any or a particular aspect of the business and affairs of the
Company for the purpose of reporting to RoyNat. The Company shall give the
Monitor its full co-operation, including full access to facilities, assets and
records of the Company and to its creditors, customers, contractors, officers,
directors, employees, auditors and agents. The Monitor shall not exercise any
decision making or other management responsibilities in connection with the
affairs of the Company. The Monitor shall have no responsibility for the affairs
of the Company nor shall it participate in the management of the Company's
affairs. The Monitor shall act solely on behalf of RoyNat and shall have no
contractual relationship with the Company as a consultant or otherwise. The
appointment of a Monitor shall not be regarded as an act of enforcement of this
Debenture. All reasonable fees and expenses of the Monitor shall be paid by the
Company upon submission to it of a written invoice therefor.
5. Application of Insurance Proceeds. Any insurance moneys received
by RoyNat pursuant to clause 1(i) above may at the option of RoyNat be applied
to rebuilding or repairing the Mortgaged Premises, or be paid to the Company, or
any such moneys or any insurance moneys received by RoyNat upon the death of any
person whose life is insured under any policy of insurance assigned to RoyNat as
security for the obligations of the Company hereunder may be applied in the sole
discretion of RoyNat, in whole or in part, to the repayment of the principal
amount hereby secured or any part thereof whether then due or not, with any
partial payments to be credited against principal instalments payable hereunder
in inverse order of their maturity dates.
<PAGE> 12
6. No Merger or Novation. The taking of any judgment or the exercise
of any power of seizure or sale shall not operate to extinguish the liability of
the Company to perform its obligations hereunder or to pay the moneys hereby
secured, shall not operate as a merger of any covenant herein contained or
affect the right of RoyNat to interest at the Loan Rate in effect from time to
time hereunder, and the acceptance of any payment or other security shall not
constitute or create any novation. The execution and delivery of this Debenture
or of any instruments or documents supplemental hereto shall not operate as a
merger of any representation, warranty, term, condition or other provision
contained in any other obligation or indebtedness of the Company to RoyNat or
under the Offer of Finance.
7. Security in Addition. The security hereby constituted is in
addition to any other security now or hereafter held by RoyNat. The taking of
any action or proceedings or refraining from so doing, or any other dealings
with any other security for the moneys secured hereby, shall not release or
affect the charges created hereby.
8. Partial Discharges. RoyNat may in its sole discretion grant
partial discharges in respect of any of the Mortgaged Premises on such terms and
conditions as it shall deem fit and no such partial discharges shall affect the
remainder of the security constituted hereby nor shall it alter the obligations
of the Company hereunder.
9. Events of Default. The whole of the principal balance remaining
unpaid together with interest and all other moneys secured by this Debenture
shall, at the option of RoyNat, become immediately due and payable and the
security hereby created shall become enforceable in each of the following events
(each event being herein called an "event of default"):
(a) if the Company defaults in payment of the principal of or interest on this
Debenture or on any other indebtedness of the Company to RoyNat when the
same becomes due;
(b) if the Company defaults in the performance or observance of any of the
covenants contained in clause 9(b) of the Debenture or in clauses 1(f),
1(j), 1(l) or 1(m) of this Schedule or section 4 of this Schedule;
(c) if the Company defaults in the performance or observance of any other
covenant or condition herein contained and such default shall continue for
15 days after written notice thereof to the Company by RoyNat;
(d) if there is any material misrepresentation or misstatement contained in
any certificate or document delivered by an officer or director of the
Company in connection with this Debenture;
(e) if the Company institutes any proceeding or takes any corporate action or
executes any agreement or notice of intention to authorize its
participation in or commencement of any proceeding (i) seeking to
adjudicate it a bankrupt or insolvent, or (ii) seeking liquidation,
dissolution, winding up, reorganization, arrangement, protection, relief
or composition of it or any of its property or debt or making a proposal
with respect to it under any law relating to bankruptcy, insolvency,
reorganization or compromise of debts or other similar laws
<PAGE> 13
(including, without limitation, any application under the COMPANIES'
CREDITORS ARRANGEMENT ACT or any reorganization, arrangement or compromise
of debt under the laws of its jurisdiction of incorporation);
(f) if any proceeding is commenced against or affecting the Company:
(i) seeking to adjudicate it a bankrupt or insolvent;
(ii) seeking liquidation, dissolution, winding up, reorganization,
arrangement, protection, relief or composition of it or any of its
property or debt or making a proposal with respect to it under any
law relating to bankruptcy, insolvency, reorganization or
compromise of debts or other similar laws (including, without
limitation, any reorganization, arrangement or compromise of debt
under the laws of its jurisdiction of incorporation); or
(iii) seeking appointment of a receiver, trustee, agent, custodian or
other similar official for it or for any part of its properties
and assets, including the Mortgaged Premises or any part thereof;
(g) if an encumbrancer or secured creditor shall appoint a receiver or agent
over any part of the Mortgaged Premises, or take possession of any part of
the Mortgaged Premises or if any execution, distress or other process of
any court becomes enforceable against any of the property of the Company,
or a distress or like process is levied upon any of such property unless
such distress or process is being diligently and with merit defended;
(h) if the Company takes any corporate proceedings for its dissolution,
liquidation or amalgamation with another company or if the corporate
existence of the Company shall be terminated by expiration, forfeiture or
otherwise;
(i) if a default occurs under any agreement supplemental hereto or under any
other security previously, now or hereafter granted to RoyNat by the
Company or any guarantor of the obligations of the Company or should any
party to any agreement supplemental or collateral hereto fail to carry out
or observe any covenant or condition on its part to be observed or
performed and such default continues for 15 days after written notice
thereof to the Company by RoyNat;
(j) if Voting Control of the Company shall change without the prior written
consent of RoyNat.
10. Enforcement. Upon the happening of any event of default, RoyNat
shall have the following rights, powers and remedies in addition to any other
rights, powers and remedies which otherwise may be available to it in law:
(a) to enter upon and take possession of all or any part of the Mortgaged
Premises;
(b) to preserve and maintain the Mortgaged Premises and make such
replacements thereof and additions thereto as it shall deem advisable;
<PAGE> 14
(c) to exercise all powers necessary to the performance of all functions
provided for herein including without limitation the powers to
purchase on credit, to borrow money in the Company's name or in its
own name and to advance its own money to the Company at such rates
of interest as it may deem reasonable;
(d) to sell, for cash or credit or part cash and part credit, lease or
dispose of all or any part of the Mortgaged Premises whether by
public auction or by private sale or lease in such manner as RoyNat
may determine, provided that it shall not be incumbent on RoyNat to
sell, lease or dispose of the said property but that it shall be
lawful for RoyNat peaceably to use and possess the same without
hindrance or interruption by the Company, or any other person or
persons whomsoever, and to receive income from such property and to
convey, transfer and assign to a purchaser or purchasers the title
to any undertaking, property and assets so sold and provided further
that in the case of a sale on credit RoyNat shall only be liable to
account to the Company, any subsequent encumbrancers and others for
moneys actually received by RoyNat; and
(e) to appoint by instrument any person or persons to be a Receiver of
all or any portion of the undertaking, property and assets hereby
charged, to fix the Receiver's remuneration and to remove any
Receiver so appointed and appoint another or others in his stead.
11. Powers of Receiver.
(1) Any Receiver shall have all of the powers of RoyNat set out in Section 10
of this Schedule and, in addition, shall have the following powers:
(a) to carry on the business of the Company and to enter into any
compromise or arrangement on behalf of the Company; and
(b) with the prior written consent of RoyNat to borrow money in his name
or in the Company's name, for the purpose of carrying on the
business of the Company and for the preservation and realization of
the undertaking, property and assets of the Company including,
without limitation, the right to pay persons having prior charges or
encumbrances on properties on which the Company may hold charges or
encumbrances, with any amount so borrowed and any interest thereon
to be a charge upon the Mortgaged Premises in priority to this
Debenture;
(2) Any Receiver appointed pursuant to the provisions hereof shall be deemed
to be an agent of the Company for the purposes of:
(a) carrying on and managing the business and affairs of the Company, and
(b) establishing liability for all of the acts or omissions of the
Receiver while acting in any capacity hereunder and RoyNat shall not
be liable for such acts or omissions,
<PAGE> 15
provided that, without restricting the generality of the foregoing, the Company
irrevocably authorizes RoyNat to give instructions to the Receiver relating to
the performance of its duties as set out herein.
12. Application of Moneys. All moneys actually received by RoyNat
or by the Receiver pursuant to Sections 10 and 11 of this Schedule shall be
applied:
(a) first, in payment of claims, if any, of secured creditors of the Company,
including any claim of the Receiver pursuant to clause 11(1), ranking in
priority to the charges created by this Debenture;
(b) second, in payment of all costs, charges and expenses of and incidental to
the appointment of the Receiver (including legal fees on a solicitor and
its own client basis) and the exercise by the Receiver or RoyNat of all or
any of the powers granted to them under this Debenture, including the
reasonable remuneration of the Receiver or any agent or employee of the
Receiver or any agent of RoyNat and all outgoings properly paid by the
Receiver or RoyNat in exercising their powers as aforesaid;
(c) third, in or towards the payment to RoyNat of all moneys due to it by the
Company in such order as RoyNat in its sole discretion may determine; and
(d) fourth, subject to applicable law, any surplus shall be paid to the
Company.
13. Restriction on Company and its Officers and Directors. Upon the
Company receiving notice from RoyNat of the taking of possession of the
Mortgaged Premises or the appointment of a Receiver, all the powers, functions,
rights and privileges of each of the directors and officers of the Company with
respect to the properties, business and undertaking of the Company shall cease
unless specifically continued by the written consent of RoyNat.
14. Discharge and Satisfaction. Upon payment by the Company to RoyNat
of all moneys hereby secured, these presents shall cease and become null and
void and the Mortgaged Premises shall revest in the Company without any
acknowledgement or formality, but RoyNat shall upon the request and at the
expense of the Company, execute and deliver to the Company a full release and
discharge.
15. No Obligation to Advance. Neither the issue and delivery of this
Debenture nor the advance of any funds hereunder shall obligate RoyNat to
advance any further funds hereunder.
16. Limited Power of Attorney. The Company hereby appoints RoyNat as
the Company's attorney, with full power of substitution, in the name and on
behalf of the Company, to execute, deliver and do all such acts, deeds, leases,
documents, transfers, demands, conveyances, assignments, contracts, assurances,
consents, financing statements and things as the Company has agreed to execute,
deliver and do hereunder, under the Offer of Finance or otherwise, or as may be
required by RoyNat or any Receiver to give effect to this Debenture or in the
exercise of any rights, powers or remedies hereby conferred on RoyNat or any
Receiver, and generally to use the name of the Company in the exercise of all or
any of the rights, powers or remedies hereby conferred on RoyNat or any
Receiver. This appointment, being coupled with an interest, shall not be revoked
by the insolvency, bankruptcy, dissolution, liquidation or other termination of
the existence of the Company or for any other reason.
<PAGE> 16
17. Interpretation. As used herein the following expressions shall have
the following meanings:
(a) "Applicable Period", with respect to any Interest Period, means the period
commencing on the 8th day of the month in which such Interest Period
commences and ending on the 7th day of the following month, except that if
the rate of interest hereunder is being determined:
(i) for the purpose of redemption by the Company, the Applicable
Period shall end on the 7th day preceding the redemption date; or
(ii) for any other purpose, other than the payment of interest on the
day following an Interest Period, the Applicable Period shall end
on the day preceding the day on which the rate is being determined
and the following Applicable Period shall commence on such day.
(b) "Business Day" means any day except Saturday, Sunday or a statutory
holiday.
(c) "Contaminant" means any solid, liquid, gas, odour, heat, sound, smoke,
waste, vibration, radiation or combination of any of them resulting
directly or indirectly from human activities that may cause: (i)
impairment of the quality of the natural environment for any use that can
be made of it, (ii) injury or damage to property or to plant or animal
life, (iii) harm or material discomfort to any person, (iv) an adverse
affect on the health of any person, (v) impairment of the safety of any
person, (vi) rendering any property or plant or animal life unfit for use
by man, (vii) loss of enjoyment of normal use of property, or (viii)
interference with the normal conduct of business, and includes any
pollutant or contaminant as defined in any applicable Environmental Laws
and any biological, chemical or physical agent which is regulated,
prohibited, restricted or controlled.
(d) "Environmental Laws" means the common law and all applicable federal,
provincial, local, municipal, governmental or quasi-governmental laws,
rules, regulations, licences, orders, permits, decisions or requirements
concerning Contaminants, occupational or public health and safety or the
environment and any other order, injunction, judgment, declaration, notice
or demand issued thereunder;
(e) "Interest Period" means each monthly period commencing on the 15th day of
a month and ending on the 14th day of the following month.
(f) "Inventory" means property of the Company held for sale including products
purchased for resale, finished goods, work in process and raw materials
but not including any property not intended to be directly incorporated in
finished goods or products to be sold.
(g) "Loan Rate" means the rate of interest specified in Section 3 of the
Debenture.
<PAGE> 17
(h) "Receiver" shall include one or more of a receiver, receiver-manager or
receiver and manager of all or a portion of the undertaking, property and
assets of the Company appointed by RoyNat pursuant to this Debenture.
(i) "RoyNat" means RoyNat Inc., its successors and assigns and, where
applicable, includes those for whom it acts as nominee or agent.
(j) "RoyNat's Floating Base Rate for the Applicable Period" means, with
respect to any Applicable Period, the arithmetic average (rounded to three
decimal places) of the annual rate of interest which is the rate
determined as being the arithmetic average of the "BA 1 month" rate
applicable to Canadian Dollar bankers' acceptances displayed and
identified as such on the "Reuters' Screen CDOR Page" (as defined in the
International Swap Dealer Association, Inc. definitions, as modified and
amended from time to time) as at approximately 10:00 a.m. (Toronto,
Ontario time) on each Business Day during such Applicable Period, plus
.50%; provided, however, if such rate does not appear on the Reuters'
Screen CDOR Page as contemplated on any Business Day during such
Applicable Period, then the rate on such Business Day shall be the prime
lending rate of The Bank of Nova Scotia as at approximately 10:00 a.m.
(Toronto, Ontario time) on such Business Day.
(k) "Voting Control" means the ownership of a sufficient number of outstanding
shares of a corporation to elect a majority of its directors; and "Voting
Control of the Company" means the Voting Control of the Company stated in
the Offer of Finance or such different Voting Control as shall have been
effected with the prior written consent of RoyNat.
(l) "Working Capital" of a company means the excess of its current assets over
its current liabilities calculated in accordance with generally accepted
accounting principles with any dissent as to the calculation thereof being
conclusively resolved by RoyNat; and "Consolidated Working Capital" means
the Working Capital of the Company and all its subsidiaries calculated on
a consolidated basis.
(m) "Permitted Encumbrances" means any of the following:
(i) liens for taxes, assessments, governmental charges or levies not
at the time due;
(ii) easements, rights of way or other similar rights in land existing
at the date of this Debenture which in the aggregate do not
materially impair the usefulness in the business of the Company of
the property subject thereto;
(iii) rights reserved to or vested in any municipality or governmental
or other public authority by the terms of any lease, licence,
franchise, grant or permit, or by any statutory provision, to
terminate the same or to require annual or other periodic payments
as a condition to the continuance thereof;
(iv) any lien or encumbrance the validity of which is being contested
by the Company in good faith and in respect of which either there
shall have been deposited with
<PAGE> 18
RoyNat cash in an amount sufficient to satisfy the same or RoyNat
shall be otherwise satisfied that its interests are not prejudiced
thereby;
(v) any reservations, limitations, provisos and conditions expressed
in any original grant from the Crown;
(vi) title defects or irregularities which, in the opinion of counsel
to RoyNat, are of a minor nature and in the aggregate shall not
materially impair the usefulness in the business of the Company of
the property subject thereto; and
(vii) validly perfected security given by the Company to its bankers on
its Inventory or under assignments of its accounts receivable,
except to the extent that such accounts receivable represent
proceeds of the sale or disposition of property specifically
charged, mortgaged or assigned under this Debenture or any
security supplemental hereto;
(viii) builder's carrier's, warehouseman's mechanic's or other similar
liens incidental to construction or operations which have not at
such time been filed pursuant to law and relate to obligations not
due or delinquent or related to obligations being contested at the
time in good faith by the Borrower, provided that the Borrower has
posted security therefor with the Lender or with the lienholder in
an amount sufficient to discharge same;
(ix) purchase money Security Interests, upon or in any property
acquired or held by the Borrower in the ordinary course of
business, to secure the purchase price of such property or to
secure indebtedness incurred solely for the purpose of financing
the acquisition of such property and Security Interests existing
on such property at the time of its acquisition (other than any
such Security interest created in contemplation of such
acquisition); provided, however, that the aggregate principal
amount of the indebtedness secured by the Security Interests
referred to in this paragraph (ix) shall not exceed $500,000 in
the aggregate in any fiscal year.
(x) Security Interests incurred or, trusts or deposits arising in
connection with workers' compensation, unemployment insurance
pension, employment or other social benefit laws or regulations or
any judgment under such laws or regulations; provided however, (i)
the Borrower' obligations thereunder are not at the time due or
delinquent, or (ii) the validity of which is being contested by
the Borrower in good faith and by appropriate proceedings,
provided that no execution in respect of such Security Interest,
trust or deposit has been initiated or, if initiated, such
execution has been stayed, and (iii) all such failures in the
aggregate have no material adverse effect on the financial
condition of the Borrower;
(xi) Security Interests securing the performance of bids, tenders,
leases, contracts (other than for the repayment of borrowed
money), statutory obligations, surety and appeal bonds and
performance bonds and other obligations of like nature, incurred
as an incident to and in the ordinary course of business, and
judgment liens,
<PAGE> 19
provided, however, that all such Security Interests (i) in the
aggregate have no material adverse effect on the financial
condition of the Borrower and (ii) do not secure directly or
indirectly judgments in excess of $50,000; and
(x) Security interests previously granted to RoyNat Inc.
<PAGE> 20
SCHEDULE "B"
to the Debenture of Venture Seismic Ltd.
dated the 29th day of April, 1997
1 -- Central Recording Station (CRS) with 2 (3480 Cartridge Drives)
70 -- Acquisition Remote Units (SAR) without antenna bags
4 -- RF Blasters
3 -- Battery Chargers
250 -- 3 @ 31-1/4 meter Opseis cables
2 -- Sets of manuals
1 -- Power Unit Capacity Tester
6 -- Deployment Aid Model 710
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE BALANCE
SHEET AND STATEMENT OF OPERATIONS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<CURRENCY> U.S.D.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 262,488
<SECURITIES> 0
<RECEIVABLES> 10,928,929
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 12,360,190
<PP&E> 15,349,445
<DEPRECIATION> 4,206,135
<TOTAL-ASSETS> 24,932,807
<CURRENT-LIABILITIES> 11,455,100
<BONDS> 4,004,929
<COMMON> 7,495,552
0
0
<OTHER-SE> 1,852,181
<TOTAL-LIABILITY-AND-EQUITY> 24,932,807
<SALES> 0
<TOTAL-REVENUES> 10,098,230
<CGS> 0
<TOTAL-COSTS> 6,903,473
<OTHER-EXPENSES> 1,114,262
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 134,767
<INCOME-PRETAX> 1,946,571
<INCOME-TAX> 850,778
<INCOME-CONTINUING> 1,095,793
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,095,793
<EPS-PRIMARY> .35
<EPS-DILUTED> .22
</TABLE>
