<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1997
REGISTRATION NO. 333-28303
================================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
EAGLE GEOPHYSICAL, INC.
(Exact name of registrant as specified in its charter)
<TABLE>
<C> <C> <C>
DELAWARE 1382 76-0522659
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>
50 BRIAR HOLLOW LANE
6TH FLOOR WEST
HOUSTON, TEXAS 77027
(713) 627-1990
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)
JAY N. SILVERMAN, PRESIDENT
EAGLE GEOPHYSICAL, INC.
50 BRIAR HOLLOW LANE
6TH FLOOR WEST
HOUSTON, TEXAS 77027
(713) 627-1990
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies to:
<TABLE>
<C> <C>
N. L. STEVENS III
W. MARK YOUNG JOSEPH W. ARMBRUST
GARDERE WYNNE SEWELL & RIGGS, L.L.P. BROWN & WOOD LLP
333 CLAY AVENUE, SUITE 800 ONE WORLD TRADE CENTER
HOUSTON, TEXAS 77002 NEW YORK, NEW YORK 10048
(713) 308-5500 (212) 839-5300
</TABLE>
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
================================================================================
<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The Registrant estimates that expenses in connection with the Offering
described in this Registration Statement will be as follows. All of the amounts
except the SEC registration fee, NASD fee and the Nasdaq National Market listing
fee are estimates.
<TABLE>
<CAPTION>
ITEM AMOUNT
---- -------
<S> <C>
SEC registration fee........................................ $30,750
NASD fee.................................................... 10,500
Nasdaq National Market listing fee.......................... 39,005
Legal fees and expenses..................................... **
Accounting fees and expenses................................ **
Printing expenses........................................... **
Fees and expenses for qualification under state securities
laws (including legal fees)............................... **
Transfer agent's and registrar's fees and expenses.......... **
Miscellaneous............................................... **
-------
Total............................................. $ *
=======
</TABLE>
- ---------------
* None of this amount is to be borne by the Selling Stockholder.
** To be filed by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The Registrant is incorporated under the laws of Delaware. Section 145 of
the Delaware General Corporation Law provides that a Delaware corporation may
indemnify any person against expenses, fines and settlements actually and
reasonably incurred by any such person in connection with a threatened, pending
or completed action, suit or proceeding in which he is involved by reason of the
fact that he is or was a director, officer, employee or agent of such
corporation, provided that (i) he acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of the
corporation and (ii) with respect to any criminal action or proceeding, he had
no reasonable cause to believe his conduct was unlawful. If the action or suit
is by or in the name of the corporation, the corporation may indemnify any such
person against expenses actually and reasonably incurred by him in connection
with the defense or settlement of such action or suit if he acted in good faith
and in a manner he reasonably believed to be in or not opposed to the best
interest of the corporation, except that no indemnification may be made in
respect to any claim, issue or matter as to which such person shall have been
adjudged to be liable for negligence or misconduct in the performance of his
duty to the corporation, unless and only to the extent that the Delaware Court
of Chancery or the court in which the action or suit is brought determines upon
application that, despite the adjudication of liability but in light of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
As permitted by the Delaware General Corporation Law, the Registrants'
Certificate of Incorporation provides that the directors and officers of the
Registrant shall be indemnified by the Registrant against certain liabilities
that those persons may incur in their capacities as directors or officers. The
Certificate of Incorporation eliminates the liability of directors of the
Registrant, under certain circumstances, to the maximum extent permitted by the
Delaware General Corporation Law. See "Description of Capital Stock -- Special
Provisions of the Certificate of Incorporation and By-laws" included in the
Prospectus.
The Underwriting Agreement to be filed as Exhibit 1.1 hereto contains
reciprocal agreements of indemnity between the Registrant and the underwriters
as to certain liabilities, including liabilities under the Securities Act of
1933, as amended (the "Securities Act"), and in certain circumstances provides
for indemnification of the Registrant's directors and officers.
II-1
<PAGE> 3
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
During the previous three years, the Registrant has issued and sold the
following securities without registration under the Securities Act (none of
which sales were underwritten):
The Company was formed in December 1996, at which time it issued 1,000 of
its shares of Common Stock for a cash purchase price of $1.00 per share to the
Selling Stockholder. Such issuance of shares was exempt from registration under
the Securities Act pursuant to Section 4(2) thereof as a transaction by the
issuer not involving any public offering.
On May 22, 1997, the Company effected a stock split pursuant to which the
1,000 outstanding shares of Common Stock were subdivided into 3,400,000 shares
of Common Stock. All such shares were issued to the Selling Stockholder as sole
stockholder of the Company. Such issuance was exempt from registration under the
Securities Act pursuant to Section 3(a)(9) thereof as securities exchanged by
the issuer with its existing security holders exclusively where no commission or
other remuneration was given directly or indirectly for soliciting such
exchange.
Prior to consummation of the Offering, the Company intends to issue 25,000
shares of Common Stock to Jay N. Silverman, President of the Company, at a
purchase price equal to the initial public offering price. Such purchase price
will be paid by delivery to the Company of a promissory note by Mr. Silverman.
This issuance of shares will be exempt from registration under the Securities
Act pursuant to Section 4(2) thereof as a transaction by the issuer not
involving any public offering.
Pursuant to an agreement dated June 2, 1997, contemporaneously with the
consummation of the Offering, the Company will issue an aggregate of 600,000
shares of Common Stock to Oliveira Limited, Dormera Limited, Balmedie Limited,
and Larlane Limited in exchange for the 81.0% of the outstanding shares of
Energy Research International owned by such entities. Gerald Harrison, George
Purdie, Neil Campbell, and David Burns, all of whom will be directors, officers
or employees of the Company after the consummation of the Offering, own all of
the issued and outstanding shares of Oliveira Limited, Dormera Limited, Balmedie
Limited, and Larlane Limited, respectively. This issuance of shares will be
exempt from registration under the Securities Act pursuant to Section 4(2)
thereof as a transaction by the issuer not involving any public offering.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
(a) Exhibits
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
1.1** -- Form of Underwriting Agreement
2.1** -- Stock Purchase Agreement dated June 2, 1997, among Gerald
Harrison, George Purdie, Neil Campbell, David Burns,
Olivera Limited, Dormera Limited, Balmedie Limited,
Larlane Limited and Registrant
3.1** -- Certificate of Incorporation, as amended
3.2** -- Amended and Restated Bylaws
4.1* -- Specimen Certificate for Registrant's common stock, par
value $0.01
5.1* -- Form of opinion of Gardere Wynne Sewell & Riggs, L.L.P.
10.1.1 -- Loan and Security Agreement dated July 9, 1996, between
Seitel Geophysical, Inc., as Debtor, and Nationsbanc
Leasing Corporation of North Carolina, as Secured Party
10.1.2 -- Assumption and Consent dated December 31, 1996, among
Seitel Geophysical, Inc., Eagle Geophysical, Inc.,
Nationsbanc Leasing Corporation of North Carolina and
Seitel, Inc.
10.2 -- Loan and Security Agreement dated February 6, 1997,
between Eagle Geophysical, Inc., as Debtor, and
Nationsbanc Leasing Corporation of North Carolina, as
Secured Party
</TABLE>
II-2
<PAGE> 4
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.3 -- Conditional Sales Agreement dated February 19, 1997,
between Input/Output, Inc. and Horizon Exploration
Limited ("HEL")
10.4.1 -- Installment Note ($306,180) by HEL in favor of Teledyne
Brown Engineering Marine Products
10.4.2 -- Promissory Note ($330,000) by HEL in favor of Teledyne
Industries, Inc.
10.5.1 -- Loan and Security Agreement dated February 22, 1996,
between Seitel Geophysical, Inc. and MetLife Capital
Corporation
10.5.2 -- Assignment and Assumption Agreement dated December 31,
1996 between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.6.1 -- Master Equipment Lease Agreement dated May 20, 1994,
between Seitel Geophysical, Inc. and MetLife Capital,
Limited Partnership, as amended
10.6.2 -- Assignment and Assumption Agreement dated December 31,
1996 between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.7.1 -- Master Lease Agreement dated February 16, 1994 between
McCullagh Leasing (a unit of GE Capital Fleet Services)
and Seitel Geophysical, Inc., as amended
10.7.2 -- Partial Assignment dated April 8, 1997 among Seitel
Geophysical, Inc., Eagle Geophysical, Inc. and GE Capital
Fleet Services
10.8 -- Term Credit and Security Agreement dated July 15, 1993,
between Seitel Geophysical, Inc. and Compass Bank (f/k/a
Central Bank of the South), as amended
10.9.1 -- Bareboat Charter by Way of Subdemise dated July 15, 1994,
between Simon-Horizon Limited ("Simon") and HEL
10.9.2 -- Management Agreement dated December 19, 1990 between
Simon and Ervik Marine Services A/S ("Ervik")
10.9.3 -- Side Letter Agreement dated December 19, 1990, between
Simon and Ervik
10.9.4 -- Assignment Agreement Relating to a Ship Management
Agreement dated December 19, 1990 (as amended) dated July
15, 1990, between Simon and HEL
10.9.5 -- Deed of Assignment of Insurances dated July 15, 1994,
between HEL and Simon
10.9.6 -- Deed of Continuing Inter-Company Cross Guarantee and
Indemnity dated July 15, 1994, by Horizon Seismic Inc.,
Exploration Holdings Limited and HEL in favor of Simon,
Simon Petroleum Technology Limited and Simon Engineering
Plc
10.9.7 -- Sublease Contract Number 1 dated July 15, 1994, between
Simon and HEL
10.9.8 -- Sublease Contract Number 2 dated July 15, 1994, between
Simon and HEL
10.9.9 -- Agreement dated July 15, 1994, among Simon, Simon
Petroleum Technology Limited, Simon Engineering Plc and
HEL
10.9.10 -- Charterparty by way of Sub-Demise dated December 20,
1996, between Royal Bank of Scotland and Simon
10.9.11 -- Addendum to Charterparty dated March 31, 1992, between
Royal Bank of Scotland and Simon
10.9.12 -- Quadripartite Agreement dated August 18, 1994, among
Simon, Royal Bank of Scotland (Industrial Leasing)
Limited, HEL and Simon Engineering plc
10.9.13 -- Master Leasing Agreement dated July 15, 1994 between
Simon and HEL
10.10 -- Contribution and Assumption Agreement dated December 31,
1996, between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.11.1 -- Agreement to Extend the Charterparty of "Pacific Horizon"
dated July 11, 1994, by and between J. Marr Limited and
HEL
10.11.2 -- Deed of Novation m.v. "Pacific Horizon" dated July 11,
1994, by and among Simon, J. Marr Limited and HEL
10.11.3 -- Pacific Horizon Charter dated February 4, 1981, between
J. Marr and Son, Limited and HEL
10.12 -- Employment Agreement between Exploration Holdings Limited
("EHL") and Gerald Harrison, as amended
</TABLE>
II-3
<PAGE> 5
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.13 -- Employment Agreement between EHL and George Purdie, as
amended
10.14 -- Employment Agreement between EHL and Neil A.M. Campbell,
as amended
10.15 -- Form of Employment Agreement Amendment between EHL and
each of Messrs. Harrison, Purdie and Campbell
10.16* -- Form of Employment Agreement between Eagle Geophysical,
Inc. and Jay Silverman
10.17 -- Employment Agreement between Eagle Geophysical, Inc. and
Richard McNairy
10.18 -- Commercial Lease dated March 10, 1994, between Ron Chase
dba Chase Properties and Eagle Geophysical, Inc./Seitel
Geophysical, Inc.
10.19 -- Modification and Ratification of Lease dated April 24,
1996, between Ron Chase dba Chase Properties and Eagle
Geophysical, Inc./Seitel Geophysical, Inc.
10.20 -- Lease dated May 28, 1996, between Partnership of
Perkins-Guidry-Beazley-Ostteen and Seitel Geophysical,
Inc.
10.21* -- Form of Sublease between Seitel, Inc. and its
subsidiaries and Eagle Geophysical, Inc.
10.22* -- Form of Master Separation Agreement between Seitel, Inc.
and Eagle Geophysical, Inc.
10.23 -- Form of Registration Rights Agreement between EHI
Holdings, Inc. and Eagle Geophysical, Inc.
10.24* -- Form of Tax Indemnity Agreement between Seitel, Inc. and
Eagle Geophysical, Inc.
10.25 -- Form of Administrative Services Agreement between Seitel,
Inc. and Eagle Geophysical, Inc.
10.26 -- Amended and Restated Promissory Note ($2,000,000) dated
July 3, 1996 by Energy Research International ("ERI") in
favor of Seitel, Inc.
10.27 -- Promissory Note ($2,679,040) dated November 15, 1996 by
ERI in favor of Seitel, Inc.
10.28* -- Form of Bonus Agreement between Eagle Geophysical, Inc.
and Paul A. Frame
10.29 -- Form of Outside Directors Deferred Compensation Plan
10.30 -- Form of Independent Directors Stock Option Plan
10.31 -- Form of Stock Option Plan
10.32.1 -- Form of Promissory Note payable by Jay Silverman to Eagle
Geophysical, Inc.
10.32.2 -- Form of Subscription Agreement between Eagle Geophysical,
Inc. and Jay N. Silverman
10.32.3 -- Form of Security Agreement -- Pledge between Eagle
Geophysical, Inc. and Jay N. Silverman
10.33.1 -- The Bank of N.T. Butterfield Term Loan Facility dated
February 27, 1995
10.33.2 -- The Bank of N.T. Butterfield & Son Limited Facility
Letter dated August 23, 1994
10.33.3 -- The Bank of N.T. Butterfield & Son Limited Amendment
Letter No. 1 dated February 3, 1995
10.33.4 -- The Bank of N.T. Butterfield & Son Limited Amendment
Letter No. 2 dated February 19, 1996
10.33.5 -- The Bank of N.T. Butterfield & Son Limited Letter dated
May 10, 1996
10.33.6 -- The Bank of N.T. Butterfield & Son Limited Letter dated
May 19, 1997
10.34.1* -- Abshire Tide Blanket Time Charter dated February 9, 1996,
between Tidewater Marine, Inc. and Horizon Seismic Inc.
10.34.2 -- Letter Agreement dated February 12, 1996 relating to
Abshire Tide Blanket Time Charter
10.34.3 -- Tidewater Marine letter to Horizon Seismic, Inc. dated
September 19, 1996 regarding the letter agreement dated
February 12, 1996 governing the Time Charter of the MV
Abshire Tide
</TABLE>
II-4
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.34.4 -- Tidewater Marine letter to Horizon Seismic, Inc. dated
March 25, 1996 regarding the letter agreement dated
February 12, 1996 governing the Time Charter of the MV
Abshire Tide
10.35.1 -- Supplemental Security Agreement No. One dated February
22, 1996 between Seitel Geophysical, Inc. and MetLife
Capital Corporation
10.35.2 -- Term Promissory Note ($433,000) dated March 14, 1996, by
Seitel Geophysical, Inc. in favor of MetLife Capital
Corporation
10.36 -- Service Agreement for MV Discoverer dated April 12, 1994,
between Horizon Seismic, Inc. and Shanghai Bureau of
Marine Geological Survey, as amended
10.37 -- Underlease dated April 21, 1997, between Payless
Properties Limited and HEL
10.38 -- Lease Agreement between Pincay Oaks, Inc. and HEL
10.39 -- Lease dated February 1, 1997, between Tuscan Property
Developments Limited and HEL
10.40 -- Set-off and Charge dated August 30, 1994, between HEL and
The Bank of N.T. Butterfield & Son Limited
10.41 -- Deed relating to 6 Pembroke Road Sevenoaks Kent dated
August 25, 1993, between Marley Waterproofing Limited and
HEL
10.42 -- Debenture dated August 12, 1994, between HEL and The Bank
of N.T. Butterfield & Son Limited
10.43 -- Chattel Mortgage between HEL and The Bank of N.T.
Butterfield & Son Limited
10.44 -- Form of Employment Agreement between Eagle Geophysical
and David Burns.
10.45 -- Operating Lease of Marine Seismic Equipment dated as of
July 1, 1996, between Seismic Geophysical, Inc. and HEL
10.46 -- Assignment between HEL and The Bank of NT Butterfield &
Sons Limited
10.47 -- Letter of Hypothecation and Pledge dated August 30, 1994,
between Seismic Exploration Ltd. and The Bank of N.T.
Butterfield & Son Limited
10.48 -- Lease Agreement dated January 7, 1997, between DigiCOURSE
INC. and HEL
10.49 -- Lease Agreement dated March 27, 1997, between DigiCOURSE
INC. and HEL
10.50* -- Initial Definitive Trust Deed -- Horizon Pension Plan
10.51 -- Operating Lease dated February 3, 1997, between Eagle
Geophysical, Inc. and HEL
10.52 -- Contribution Agreement dated as of May 30, 1997, between
Seitel, Inc. and Eagle Geophysical, Inc.
10.53 -- Assignment of Life Insurance dated December 9, 1993
insuring G.M. Harrison.
10.54 -- Lease dated December 12, 1995, between Newington Bricks
Limited and HEL
10.55 -- Lease dated August 25, 1993, between Marley Waterproofing
Limited and HEL
10.56* -- Form of Master Agreement for Geophysical Services by and
between Eagle Geophysical Onshore, Inc. and Seitel Data,
Ltd.
10.57* -- Form of Master Agreement for Geophysical Services by and
between Eagle Geophysical Onshore, Inc. and DDD Energy,
Ltd.
23.1** -- Consent of Arthur Andersen LLP, Independent Public
Accountants
23.2** -- Consent of KPMG, Independent Public Accountants
23.3 -- Consent of Gardere Wynne Sewell & Riggs, L.L.P.
(contained in exhibit 5.1 opinion)
27** -- Financial data schedule
</TABLE>
- ---------------
* To be filed by amendment
** Previously filed
II-5
<PAGE> 7
(b) Financial Statement Schedules
The following financial statement schedules are included in Part II of the
Registration Statement:
None
All other schedules are omitted because they are inapplicable or the
requested information is shown in the financial statements or noted therein.
ITEM 17. UNDERTAKINGS.
(a) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
(b) The undersigned Registrant hereby undertakes to provide to the
representatives of the underwriters at the closing specified in the Underwriting
Agreement certificates in such denominations and registered in such names as
required by the representatives of the underwriters to permit prompt delivery to
each purchaser.
(c) The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in a
form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(d) If the Underwriters do not exercise their option to purchase additional
shares of Common Stock to cover over-allotments, if any, or if such option is
partially exercised, the Registrant hereby undertakes to file a post-effective
amendment to the Registration Statement deregistering all such shares as to
which such option shall not have been exercised.
II-6
<PAGE> 8
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Amendment No. 2 to Registration Statement to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of
Houston, State of Texas, on the 25th day of June, 1997
EAGLE GEOPHYSICAL, INC.
By: /s/ JAY N. SILVERMAN
-------------------------------------
Jay N. Silverman
President and Chief Executive Officer
POWER OF ATTORNEY
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
* Chairman of the Board of June 25, 1997
- ----------------------------------------------------- Directors
William L. Lurie
/s/ JAY N. SILVERMAN President, Chief Executive June 25, 1997
- ----------------------------------------------------- Officer and Director (Principal
Jay N. Silverman Executive Officer)
* Executive Vice President and June 25, 1997
- ----------------------------------------------------- Director
Gerald M. Harrison
* Senior Vice June 25, 1997
- ----------------------------------------------------- President -- Offshore Operations
George Purdie and Director
/s/ RICHARD W. MCNAIRY Vice President -- Chief June 25, 1997
- ----------------------------------------------------- Financial Officer and Secretary
Richard W. McNairy (Principal Financial and
Accounting Officer)
/s/ PAUL A. FRAME Director June 25, 1997
- -----------------------------------------------------
Paul A. Frame
*By: /s/ JAY N. SILVERMAN
- -----------------------------------------------------
Jay N. Silverman
Attorney-in-Fact
</TABLE>
II-7
<PAGE> 9
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<S> <C>
1.1** -- Form of Underwriting Agreement
2.1** -- Stock Purchase Agreement dated June 2, 1997, among Gerald
Harrison, George Purdie, Neil Campbell, David Burns,
Olivera Limited, Dormera Limited, Balmedie Limited,
Larlane Limited and Registrant
3.1** -- Certificate of Incorporation, as amended
3.2** -- Amended and Restated Bylaws
4.1* -- Specimen Certificate for Registrant's common stock, par
value $0.01
5.1* -- Form of opinion of Gardere Wynne Sewell & Riggs, L.L.P.
10.1.1 -- Loan and Security Agreement dated July 9, 1996, between
Seitel Geophysical, Inc., as Debtor, and Nationsbanc
Leasing Corporation of North Carolina, as Secured Party
10.1.2 -- Assumption and Consent dated December 31, 1996, among
Seitel Geophysical, Inc., Eagle Geophysical, Inc.,
Nationsbanc Leasing Corporation of North Carolina and
Seitel, Inc.
10.2 -- Loan and Security Agreement dated February 6, 1997,
between Eagle Geophysical, Inc., as Debtor, and
Nationsbanc Leasing Corporation of North Carolina, as
Secured Party
10.3 -- Conditional Sales Agreement dated February 19, 1997,
between Input/Output, Inc. and Horizon Exploration
Limited ("HEL")
10.4.1 -- Installment Note ($306,180) by HEL in favor of Teledyne
Brown Engineering Marine Products
10.4.2 -- Promissory Note ($330,000) by HEL in favor of Teledyne
Industries, Inc.
10.5.1 -- Loan and Security Agreement dated February 22, 1996,
between Seitel Geophysical, Inc. and MetLife Capital
Corporation
10.5.2 -- Assignment and Assumption Agreement dated December 31,
1996 between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.6.1 -- Master Equipment Lease Agreement dated May 20, 1994,
between Seitel Geophysical, Inc. and MetLife Capital,
Limited Partnership, as amended
10.6.2 -- Assignment and Assumption Agreement dated December 31,
1996 between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.7.1 -- Master Lease Agreement dated February 16, 1994 between
McCullagh Leasing (a unit of GE Capital Fleet Services)
and Seitel Geophysical, Inc., as amended
10.7.2 -- Partial Assignment dated April 8, 1997 among Seitel
Geophysical, Inc., Eagle Geophysical, Inc. and GE Capital
Fleet Services
10.8 -- Term Credit and Security Agreement dated July 15, 1993,
between Seitel Geophysical, Inc. and Compass Bank (f/k/a
Central Bank of the South), as amended
10.9.1 -- Bareboat Charter by Way of Subdemise dated July 15, 1994,
between Simon-Horizon Limited ("Simon") and HEL
10.9.2 -- Management Agreement dated December 19, 1990 between
Simon and Ervik Marine Services A/S ("Ervik")
10.9.3 -- Side Letter Agreement dated December 19, 1990, between
Simon and Ervik
10.9.4 -- Assignment Agreement Relating to a Ship Management
Agreement dated December 19, 1990 (as amended) dated July
15, 1990, between Simon and HEL
10.9.5 -- Deed of Assignment of Insurances dated July 15, 1994,
between HEL and Simon
</TABLE>
<PAGE> 10
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.9.6 -- Deed of Continuing Inter-Company Cross Guarantee and
Indemnity dated July 15, 1994, by Horizon Seismic Inc.,
Exploration Holdings Limited and HEL in favor of Simon,
Simon Petroleum Technology Limited and Simon Engineering
Plc
10.9.7 -- Sublease Contract Number 1 dated July 15, 1994, between
Simon and HEL
10.9.8 -- Sublease Contract Number 2 dated July 15, 1994, between
Simon and HEL
10.9.9 -- Agreement dated July 15, 1994, among Simon, Simon
Petroleum Technology Limited, Simon Engineering Plc and
HEL
10.9.10 -- Charterparty by way of Sub-Demise dated December 20,
1996, between Royal Bank of Scotland and Simon
10.9.11 -- Addendum to Charterparty dated March 31, 1992, between
Royal Bank of Scotland and Simon
10.9.12 -- Quadripartite Agreement dated August 18, 1994, among
Simon, Royal Bank of Scotland (Industrial Leasing)
Limited, HEL and Simon Engineering plc
10.9.13 -- Master Leasing Agreement dated July 15, 1994 between
Simon and HEL
10.10 -- Contribution and Assumption Agreement dated December 31,
1996, between Seitel Geophysical, Inc. and Eagle
Geophysical, Inc.
10.11.1 -- Agreement to Extend the Charterparty of "Pacific Horizon"
dated July 11, 1994, by and between J. Marr Limited and
HEL
10.11.2 -- Deed of Novation m.v. "Pacific Horizon" dated July 11,
1994, by and among Simon, J. Marr Limited and HEL
10.11.3 -- Pacific Horizon Charter dated February 4, 1981, between
J. Marr and Son, Limited and HEL
10.12 -- Employment Agreement between Exploration Holdings Limited
("EHL") and Gerald Harrison, as amended
10.13 -- Employment Agreement between EHL and George Purdie, as
amended
10.14 -- Employment Agreement between EHL and Neil A.M. Campbell,
as amended
10.15 -- Form of Employment Agreement Amendment between EHL and
each of Messrs. Harrison, Purdie and Campbell
10.16* -- Form of Employment Agreement between Eagle Geophysical,
Inc. and Jay Silverman
10.17 -- Employment Agreement between Eagle Geophysical, Inc. and
Richard McNairy
10.18 -- Commercial Lease dated March 10, 1994, between Ron Chase
dba Chase Properties and Eagle Geophysical, Inc./Seitel
Geophysical, Inc.
10.19 -- Modification and Ratification of Lease dated April 24,
1996, between Ron Chase dba Chase Properties and Eagle
Geophysical, Inc./Seitel Geophysical, Inc.
10.20 -- Lease dated May 28, 1996, between Partnership of
Perkins-Guidry-Beazley-Ostteen and Seitel Geophysical,
Inc.
10.21* -- Form of Sublease between Seitel, Inc. and its
subsidiaries and Eagle Geophysical, Inc.
10.22* -- Form of Master Separation Agreement between Seitel, Inc.
and Eagle Geophysical, Inc.
10.23 -- Form of Registration Rights Agreement between EHI
Holdings, Inc. and Eagle Geophysical, Inc.
10.24* -- Form of Tax Indemnity Agreement between Seitel, Inc. and
Eagle Geophysical, Inc.
10.25 -- Form of Administrative Services Agreement between Seitel,
Inc. and Eagle Geophysical, Inc.
10.26 -- Amended and Restated Promissory Note ($2,000,000) dated
July 3, 1996 by Energy Research International ("ERI") in
favor of Seitel, Inc.
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ------------------------ ------------------------------------------------------------------------------------------
<C> <S>
10.27 -- Promissory Note ($2,679,040) dated November 15, 1996 by ERI in favor of Seitel, Inc.
10.28* -- Form of Bonus Agreement between Eagle Geophysical, Inc. and Paul A. Frame
10.29 -- Form of Outside Directors Deferred Compensation Plan
10.30 -- Form of Independent Directors Stock Option Plan
10.31 -- Form of Stock Option Plan
10.32.1 -- Form of Promissory Note payable by Jay Silverman to Eagle Geophysical, Inc.
10.32.2 -- Form of Subscription Agreement between Eagle Geophysical, Inc. and Jay N. Silverman
10.32.3 -- Form of Security Agreement -- Pledge between Eagle Geophysical, Inc. and Jay N.
Silverman
10.33.1 -- The Bank of N.T. Butterfield Term Loan Facility dated February 27, 1995
10.33.2 -- The Bank of N.T. Butterfield & Son Limited Facility Letter dated August 23, 1994
10.33.3 -- The Bank of N.T. Butterfield & Son Limited Amendment Letter No. 1 dated February 3,
1995
10.33.4 -- The Bank of N.T. Butterfield & Son Limited Amendment Letter No. 2 dated February 19,
1996
10.33.5 -- The Bank of N.T. Butterfield & Son Limited Letter dated May 10, 1996
10.33.6 -- The Bank of N.T. Butterfield & Son Limited Letter dated May 19, 1997
10.34.1* -- Abshire Tide Blanket Time Charter dated February 9, 1996, between Tidewater Marine,
Inc. and Horizon Seismic Inc.
10.34.2 -- Letter Agreement dated February 12, 1996 relating to Abshire Tide Blanket Time Charter
10.34.3 -- Tidewater Marine letter to Horizon Seismic, Inc. dated September 19, 1996 regarding the
letter agreement dated February 12, 1996 governing the Time Charter of the MV Abshire
Tide
10.34.4 -- Tidewater Marine letter to Horizon Seismic, Inc. dated March 25, 1996 regarding the
letter agreement dated February 12, 1996 governing the Time Charter of the MV Abshire
Tide
10.35.1 -- Supplemental Security Agreement No. One dated February 22, 1996 between Seitel
Geophysical, Inc. and MetLife Capital Corporation
10.35.2 -- Term Promissory Note ($433,000) dated March 14, 1996, by Seitel Geophysical, Inc. in
favor of MetLife Capital Corporation
10.36 -- Service Agreement for MV Discoverer dated April 12, 1994, between Horizon Seismic, Inc.
and Shanghai Bureau of Marine Geological Survey, as amended
10.37 -- Underlease dated April 21, 1997, between Payless Properties Limited and HEL
10.38 -- Lease Agreement between Pincay Oaks, Inc. and HEL
10.39 -- Lease dated February 1, 1997, between Tuscan Property Developments Limited and HEL
10.40 -- Set-off and Charge dated August 30, 1994, between HEL and The Bank of N.T. Butterfield
& Son Limited
10.41 -- Deed relating to 6 Pembroke Road Sevenoaks Kent dated August 25, 1993, between Marley
Waterproofing Limited and HEL
10.42 -- Debenture dated August 12, 1994, between HEL and The Bank of N.T. Butterfield & Son
Limited
10.43 -- Chattel Mortgage between HEL and The Bank of N.T. Butterfield & Son Limited
10.44 -- Form of Employment Agreement between Eagle Geophysical and David Burns.
10.45 -- Operating Lease of Marine Seismic Equipment dated as of July 1, 1996, between Seismic
Geophysical, Inc. and HEL
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
----------- -----------
<C> <S>
10.46 -- Assignment between HEL and The Bank of NT Butterfield & Sons Limited
10.47 -- Letter of Hypothecation and Pledge dated August 30, 1994, between Seismic Exploration
Ltd. and The Bank of N.T. Butterfield & Son Limited
10.48 -- Lease Agreement dated January 7, 1997, between DigiCOURSE INC. and HEL
10.49 -- Lease Agreement dated March 27, 1997, between DigiCOURSE INC. and HEL
10.50* -- Initial Definitive Trust Deed -- Horizon Pension Plan
10.51 -- Operating Lease dated February 3, 1997, between Eagle Geophysical, Inc. and HEL
10.52 -- Contribution Agreement dated as of May 30, 1997, between Seitel, Inc. and Eagle
Geophysical, Inc.
10.53 -- Assignment of Life Insurance dated December 9, 1993 insuring G.M. Harrison.
10.54 -- Lease dated December 12, 1995, between Newington Bricks Limited and HEL
10.55 -- Lease dated August 25, 1993, between Marley Waterproofing Limited and HEL
10.56* -- Form of Master Agreement for Geophysical Services by and between Eagle Geophysical
Onshore, Inc. and Seitel Data, Ltd.
10.57* -- Form of Master Agreement for Geophysical Services by and between Eagle Geophysical
Onshore, Inc. and DDD Energy, Inc.
23.1** -- Consent of Arthur Andersen LLP, Independent Public Accountants
23.2** -- Consent of KPMG, Independent Public Accountants
23.3* -- Consent of Gardere Wynne Sewell & Riggs, L.L.P. (contained in exhibit 5.1 opinion)
27** -- Financial data schedule
</TABLE>
- ---------------
* To be filed by amendment
** Previously filed
<PAGE> 1
10.1.1
LOAN AND SECURITY AGREEMENT
between
SEITEL GEOPHYSICAL, INC.,
as Debtor,
and
NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA,
as Secured Party,
dated as of July 9, 1996
THIS LOAN AND SECURITY AGREEMENT dated as of July 9, 1996 (as amended,
modified, supplemented, restated and/or replaced from time to time, the
"Agreement"), between SEITEL GEOPHYSICAL, INC., a Delaware corporation
("Debtor"), and NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a North
Carolina corporation ("Secured Party").
PRELIMINARY STATEMENTS:
(1) Debtor has requested that Secured Party make loans in the
aggregate principal amount of $7,264,211.13 to Debtor pursuant to the terms of
the Agreement as evidenced by promissory notes in such amount to finance
Debtor's acquisition of the Equipment (hereinafter defined).
(2) Secured Party has agreed to make the Loans to Debtor on the
condition, among other things, that Debtor shall have executed and delivered
the Notes (hereinafter defined) payable to Secured Party, this Agreement, any
required amendment or supplement hereto Granting (hereinafter defined) Secured
Party a first priority security interest in the Collateral (hereinafter
defined), related UCC-1 financing statements and other filings reasonably
deemed necessary or prudent by Secured Party to perfect such security interest.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor and Secured Party hereby agree as follows:
ARTICLE I
DEFINED TERMS; CREDIT FACILITIES; CONDITIONS PRECEDENT
SECTION 1.1 Definitions. When used in this Agreement, the
following capitalized terms shall have the following meanings (such meanings to
be equally applicable to both the singular and plural forms of the terms
defined):
<PAGE> 2
"Affiliate" means a Person (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, Debtor; (ii) which beneficially owns or holds 10% or more of any
class of the voting stock of Debtor, or (iii) of which 10% or more of the
voting stock is beneficially owned or held by Debtor or a Subsidiary.
"Assigned Agreements" has the meaning set forth in Section 2.1 (b)
hereof.
"Beneficiary" has the meaning set forth in Section 6.1 hereof.
"Bills of Sale" means each warranty bill of sale in favor of the
Debtor duly executed by the Seller of the Equipment.
"Break-Funding Costs" means, in the case of any voluntary prepayment
of all or any portion of the unamortized balance of the Loans, an amount
reasonably determined by Secured Party as shall compensate Secured Party as a
result of the inability of Secured Party in its reasonable discretion to
redeploy the amount so prepaid at an interest rate equal to or greater than the
interest rate on the applicable Loan and for a term equal to the remaining
average life of the applicable Loan.
"Business Day" means any day other than a day on which banking
institutions in the states of North Carolina or Georgia are authorized or
required by law to close.
"Closing Date" means July 12, 1996.
"Collateral" shall have the meaning set forth in Section 2.1 hereof.
"Default" shall mean an event or occurrence which upon the giving of
notice and/or the lapse of time shall constitute an Event of Default.
"Equipment" means each item of marine-based or land-based seismic
recordation equipment as more specifically described in Exhibit A attached
hereto and made a part hereof.
"Equipment Cost" means, with respect to any item of Equipment, an
amount equal to the sum of (a) the total cost paid by Debtor for such item of
Equipment plus (b) all excise, sales and use taxes and registration fees paid
by Debtor on or with respect to the acquisition of such item of Equipment, both
as evidenced by invoices, appraisals and/or bills of sale in form and substance
reasonably satisfactory to Secured Party.
"ERISA" has the meaning set forth in Section 3.1(t) hereof.
"Event of Default" has the meaning set forth in Section 5.1 hereof.
"Event of Loss" with respect to an item of Equipment means any of the
following events: (i) loss of any item of Equipment or of the use thereof due
to theft or disappearance prior to the
2
<PAGE> 3
expiration or termination of this Agreement, or the non-existence of any item
of Equipment at the expiration or termination of this Agreement, (ii)
destruction, damage beyond repair, or rendition of any item of Equipment
permanently unfit for normal use for any reason whatsoever, (iii) any damage to
any item of Equipment which results in an insurance settlement with respect to
such item of Equipment on the basis of a total loss, or (iv) the condemnation,
confiscation, seizure, or requisition of use or title to any item of Equipment
by any governmental authority under the power of eminent domain or otherwise.
"Event of Loss Payment Date" has the meaning set forth in Section 4.3
hereof.
"Grant" means to grant, bargain, sell, warrant, remise, release,
convey, assign, transfer, mortgage, pledge, deposit, set over, confirm or
create a security interest under the North Carolina UCC. A grant with respect
to any instrument, document or agreement shall include all rights, powers and
options (but none of the obligations) of the granting party thereunder,
including without limitation the right to generally do anything which the
granting party then is or thereafter may be entitled to do thereunder or with
respect thereto.
"Guarantor" means Seitel, Inc., a Delaware corporation.
"Guaranty" means the Guaranty Agreement dated as of the date hereof,
as such may be amended, modified, supplemented, restated and/or replaced from
time to time, executed by Guarantor for the benefit of Secured Party.
"Installment Payment Date" means the last day of each monthly period
with respect to Term Loan A and Term Loan B.
"Lien" means any lien, claim, charge, security interest, mortgage
and/or other encumbrance.
"Loans" means each of Term Loan A and Term Loan B.
"North Carolina UCC" or "UCC" means the North Carolina Uniform
Commercial Code, N.C. Gen. Stat. Chapter 25, Articles 1-11, as now in effect
and as hereafter amended from time to time.
"Notes" means each of Secured Term Note A and Secured Term Note B.
"Notice of Borrowing" means a notice of borrowing delivered pursuant
to Section 1.3(b)(i) substantially in the form of Schedule 1.3(b)(i) hereto.
"PBGC" has the meaning set forth in Section 3.1(t) hereof.
"Permitted Contest" means any contest by Debtor with respect to any
Lien, tax or imposition referred to in Section 6.2 hereof, so long as Debtor
shall contest, in good faith and
3
<PAGE> 4
at its expense, the existence, the amount or the validity thereof, the amount
of the damages caused thereby, or the extent of its liability therefor, by
appropriate Proceedings which do not result in (i) the collection of, or other
realization upon, the tax, assessment, levy, fee, rent or Lien so contested,
(ii) the sale, forfeiture or loss of any item of Equipment or any material part
thereof, or (iii) any interference with the use of any item of Equipment or any
material part thereof.
"Permitted Encumbrances", with respect to the Collateral, means (i)
this Agreement and any assignment permitted hereby, (ii) any Lien affecting the
Collateral for work or service performed or materials furnished securing
amounts which are not yet due and payable or which are not otherwise delinquent
and (iii) any Lien which is the subject of a Permitted Contest and (iv) any
other Lien incurred in the ordinary course of business which such Lien does not
exceed $50,000.
"Permitted Lease" shall mean a lease of all the Equipment or any
portion thereof entered into between Debtor and a Permitted Lessee; provided,
that the following conditions shall be met with respect to each such lease:
(i) Secured Party shall have given its prior written consent to such lease;
(ii) upon the effective date of such lease, there shall exist no Default or
Event of Default and no Liens on any of the Collateral other than the Permitted
Encumbrances; (iii) each such lease shall specify explicitly as a condition to
the effectiveness of such lease that (A) Debtor shall remain fully obligated
and in compliance with the terms and conditions of this Agreement and (B) upon
Secured Party's delivery to the lessee of notice specifying that an Event of
Default has occurred and is continuing and that the Secured Party has commenced
the exercise of remedies with respect to the Equipment, such lease will
automatically terminate and be of no further force or effect and the lessee
will cause each item of Equipment then subject to such lease to be delivered to
Secured Party at a place to be designated by Secured Party. For purposes of
this definition, the subleases entered between Debtor, as lessor, and Seller,
as lessee, with respect to the Equipment shall be considered a "Permitted
Lease."
"Permitted Lessee" shall mean any Person which (i) is domiciled in the
United States, (ii) in Debtor's reasonable opinion, is financially responsible
and (iii) at the time Debtor enters into such lease, is not the subject of any
filing by or against such Person of a petition under any federal bankruptcy law
or any federal law replacing or superseding such law or any state bankruptcy
law in which such Person is named as debtor. For purposes of this definition,
Seller shall be considered a "Permitted Lessee."
"Person" means an individual or a corporation, partnership, trust,
association, joint venture, joint stock company, firm or other enterprise or
government (or a political subdivision or any agency, department or
instrumentality thereof) or other entity of any kind.
"Plan" means any "employee benefit pension plan" or other "plan"
(including a "multi-employer plan" as defined in Section 3(37) of ERISA)
established or maintained, as to which contributions have been made, by Debtor
or any Affiliate for either of their respective employees
4
<PAGE> 5
and which is covered by Title IV of ERISA or to which Section 412 of the
Internal Revenue Code of 1986, as amended applies.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Replacement Equipment" means an item (i) of comparable make, model
and manufacture as the item of Equipment with respect to which an Event of Loss
has occurred, (ii) selected by Debtor and consented to by Secured Party, such
consent not to be unreasonably withheld or delayed, (iii) owned by Debtor free
and clear of all Liens and other encumbrances other than Permitted Encumbrances
and (iv) having a value, utility and useful life at least equal to, and being
in as good operating condition as, the item of Equipment with respect to which
the Event of Loss occurred, assuming such item of Equipment was in the
condition and repair required by the terms hereof immediately prior to the
occurrence of the Event of Loss.
"Secured Obligations" has the meaning set forth in Section 2.2 hereof.
"Secured Party" means NationsBanc Leasing Corporation of North
Carolina, a North Carolina corporation, and its successors and assigns.
"Security Instrument" means each of this Agreement, and any other
instrument, document, financing statement or agreement with respect to which
any right or interest in or with respect to the Collateral has been Granted to
Secured Party or has been recorded with the appropriate filing office.
"Secured Term Note A" means the promissory note of the Debtor in favor
of the Secured Party dated the Closing Date evidencing Term Loan A as provided
pursuant to Section 1.3 (a) (iii), as amended, modified, supplemented,
extended, renewed or replaced from time to time.
"Secured Term Note B", means the promissory note of the Debtor in
favor of the Secured Party dated the Closing Date evidencing Term Loan B as
provided pursuant to Section 1. 3 (b) (iii), as amended, modified,
supplemented, extended, renewed or replaced from time to time.
"Seller" means Horizon Exploration Ltd., a company organized and
existing under the laws of England.
"Subsidiary" means any corporation, limited liability company,
partnership, joint venture, trust or estate of which (i) more than 50% of the
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation; or (ii) the interest in the capital
or profits of such corporation, limited liability company, partnership or joint
venture; or (iii) the beneficial interest of such trust or estate is owned
directly or indirectly by Guarantor and/or one of its Subsidiaries.
"Taxes or Other Impositions" has the meaning set forth in Section 6.2
hereof.
5
<PAGE> 6
"Term Loan A" means the term loan made pursuant to the provisions of
Section 1.3(a).
"Term Loan A Commitment" has the meaning set forth in Section 1.3(a)
hereof.
"Term Loan B" means the term loan made pursuant to the provisions of
Section 1.3(b).
"Term Loan B Commitment" has the meaning set forth in Section 1.3(b)
hereof.
"Term Loan B Draw Termination Date" has the meaning set forth in
Section 1.3 (b) hereof.
"Termination Value" means, with respect to any or all item(s) of
Equipment, an amount equal to the Equipment Cost of such item(s) of Equipment
multiplied by the Termination Value Percentage as of such Installment Payment
Date.
"Termination Value Percentage" means the termination value percentage
as of each Installment Payment Date as s forth in Exhibit B hereto.
SECTION 1.2 Other Terms. Unless otherwise defined in this
Agreement, all terms defined in the North Carolina UCC and used in this
Agreement have the meanings set forth in the North Carolina UCC.
SECTION 1.3 Term Loans.
(a) Term Loan A. Subject to and upon the terms and
conditions and relying upon the representations and warranties herein
set forth, the Secured Party agrees to make a term loan ("Term Loan
A") to the Debtor on the Closing Date in the principal amount of FIVE
MILLION NINE HUNDRED TWO THOUSAND THREE HUNDRED AND SEVENTY-TWO
DOLLARS ($5,902,372) (the "Term Loan A Commitment") for the purposes
hereinafter set forth. Amounts repaid on Term Loan A may not be
reborrowed. The Secured Party will make Term Loan A available to the
Debtor by deposit in U.S. dollars of immediately available funds to
the Debtor's account at the offices of Compass Bank in Houston, Texas.
(i) Payment of Principal and Interest. Principal
and interest on Term Loan A shall be payable in sixty (60)
consecutive monthly installments on the last day of each
monthly period, beginning with the first of such dates to
occur after the Closing Date. Each installment shall be in
payments of principal and interest equal to 2.027639% of the
Term Loan A Commitment. Payments received on Term Loan A
shall be applied first to accrued interest and then to
principal in inverse order of maturity. In the event the
actual rate of interest exceeds the assumed rate, additional
payments of interest will be made in the amount of the excess
thereof, payable on demand.
6
<PAGE> 7
(ii) Interest. Term Loan A shall bear interest at a
per annum rate equal to eight percent (8%); provided, however,
that upon the occurrence and during the continuation of an
Event of Default hereunder, the principal of and, to the
extent permitted by law, interest on Term Loan A hereunder
shall bear interest, payable on demand, at a rate equal to
2.0% per annum in excess of the rate otherwise applicable
hereunder.
(iii) Secured Term Note A. Term Loan A shall be
evidenced by a duly executed promissory note of the Debtor to
the Secured Party dated the Closing Date in an original
principal amount equal to the Term Loan A Commitment and
substantially in the form of Schedule 1.3(a) hereto.
(b) Term Loan B. Subject to and upon the terms and
conditions and relying upon the representations and warranties herein
set forth, the Secured Party agrees to make two (2) advances ("Term
Loan B") to the Debtor from time to time from the Closing Date until
August 31, 1996 (as such date may be extended from time to time in the
sole discretion of the Secured Party, (the "Term Loan B Draw
Termination Date")) in an aggregate principal amount of up to ONE
MILLION THREE HUNDRED SIXTY-ONE THOUSAND EIGHT HUNDRED AND THIRTY-NINE
AND 13/100 DOLLARS ($1,361,839.13) (the" Term Loan B Commitment") for
the purposes hereinafter set forth. Amounts repaid on Term Loan B may
not be reborrowed.
(i) Term Loan B Advances. So long as the
conditions to advances have been satisfied, the Secured Party
will make Term Loan B advances to the Debtor from time to time
from the Closing Date to the Term Loan B Draw Termination Date
upon submission of a Notice of Borrowing substantially in the
form of Schedule 1.3(b)(i) to the Secured Party on the
Business Day prior to the date of the requested advance. Each
such notice shall specify (A) the date of the requested
advance (which shall be a Business Day), (B) shall not exceed,
taking into account all prior Term Loan B advances, the Term
Loan B Commitment and (C) shall be accompanied by any
supporting invoices and requisitions relating to the requested
advance. The Secured Party shall make such Term Loan B
advances available by deposit to the Debtor's account at the
office of Compass Bank in Houston, Texas.
(ii) Payment of Principal and Interest. Term Loan
B shall be subject to a draw period during which accrued
interest shall be payable monthly in arrears on the last day
of each monthly period beginning with the first of such dates
to occur after the Closing Date. Interest during such draw
period shall accrue at the daily equivalent rate of eight and
six hundredths percent (8.06%) per annum for the actual number
of days elapsed with respect to Term Loan B advances made on
the Closing Date and throughout the draw period. Beginning on
the last day of the first monthly period after the Term Loan B
Draw Termination Date, Debtor shall make payments of principal
and interest on Term Loan B in thirty-six (36)
7
<PAGE> 8
consecutive monthly installments on the last day of each
monthly period. Each installment shall be in payments of
principal and interest equal to 3.136405% of the Term Loan B
Commitment. Payments received on Term Loan B shall be applied
first to accrued interest and then to principal in inverse
order of maturity. In the event the actual rate of interest
exceeds the assumed rate, additional payments of interest will
be made in the amount of the excess thereof, payable on
demand.
(iii) Interest. Term Loan B shall bear interest at
a per annum rate equal to eight and six hundredths percent
(8.06%); provided, however, that upon the occurrence and
during the continuation of an Event of Default hereunder, the
principal of and, to the extent permitted by law, interest on
Term Loan B hereunder shall bear interest, payable on demand,
at a rate equal to 2.0% per annum in excess of the rate
otherwise applicable hereunder.
(iv) Secured Term Note B. Term Loan B shall be
evidenced by a duly executed promissory note of the Debtor to
the Secured Party dated the Closing Date in an original
principal amount equal to the Term Loan B Commitment and
substantially in the form of Schedule 1.3(b) hereto.
(c) Early Termination. (i) On any Installment Payment
Date on or after the second anniversary of the Closing Date,
Debtor may, upon sixty (60) days' prior written notice to
Secured Party, terminate the Loans and this Agreement. Debtor
shall pay to Secured Party on the applicable Installment
Payment Date the sum of: (A) the Termination Value as of such
Installment Payment Date, plus (B) any Break- Funding Costs,
plus (C) any accrued but unpaid interest with respect to
either Loan to the extent the Installment Payment Date for
Term Loan A and Term Loan B are not the same date each month,
plus (D) all other obligations owing under the Agreement on
the termination date. Upon receipt of the amounts set forth
in (A)-(D) above, Secured Party shall release its Lien on the
Collateral.
(ii) On any Installment Payment Date on or after
the second anniversary of the Closing Date, Debtor may, upon
sixty (60) days' prior written notice to Secured Party, prepay
a portion of the Loans in accordance with the terms hereof.
Debtor shall have the option to make up to three (3)
prepayments in the aggregate on the Loans, each prepayment in
an amount not less than $200,000. Debtor shall pay to Secured
Party on the applicable Installment Payment Date the sum of:
(A) the prepayment amount, plus (B) any Break-Funding Costs,
plus (C) any accrued but unpaid interest with respect to the
prepayment. Amounts so prepaid under this subsection (c)(ii)
shall be applied to outstanding obligations owing under this
Agreement in the reasonable discretion of the Secured Party.
SECTION 1.4 Conditions Precedent. The obligation of Secured
Party to make any Loan advance shall be subject to the following conditions, as
appropriate:
8
<PAGE> 9
(a) Conditions to All Advances on Closing Date. Each
Loan advance on the Closing Date shall be subject to the delivery to
Secured Party of the following originally executed documents (unless
otherwise noted) each in form and substance satisfactory to Secured
Party and the satisfaction of the other conditions set forth herein:
(i) the Agreement;
(ii) the Notes;
(iii) the Guaranty;
(iv) evidence of payment (or evidence of
exemption) of any and all sales, transfer, use, documentation
or similar taxes due in connection with the acquisition of the
Equipment by Debtor;
(v) a secretarial certificate from Debtor: (A)
certifying Debtor's articles of incorporation, by-laws and
resolutions, with such resolutions authorizing the overall
transaction and Debtor's execution, delivery and performance
of this Agreement and (B) containing an incumbency
certification of Debtor with the name(s), title(s) and
specimen signature(s) of the person or persons authorized on
behalf of Debtor to execute this Agreement.
(vi) an officer's certificate from Debtor: (A)
stating that no material adverse change has occurred in the
condition of Debtor (financial or otherwise) since the date of
the last financial statement of Guarantor which has been
delivered to Secured Party which would impair the ability of
Debtor to pay and perform its obligations under this Agreement
and (B) stating that no Default or Event of Default shall have
occurred and be continuing as of such date;
(vii) a secretarial certificate from Guarantor:
(A) certifying Guarantor's articles of incorporation, by-laws
and resolutions, with such resolutions authorizing the overall
transaction and Guarantor's execution, delivery and
performance of the Guaranty and (B) containing an incumbency
certification of Guarantor with the name(s), title(s) and
specimen signature(s) of the person or persons authorized on
behalf of Guarantor to execute the Guaranty;
(viii) an officer's certificate from Guarantor: (A)
stating that no material adverse change has occurred in the
condition of Guarantor (financial or otherwise) since the date
of the last financial statement of Guarantor which has been
delivered to Secured Party which would impair the ability of
Guarantor to pay and perform its obligations under the
Guaranty and (B) stating that no Default or Event of Default
shall have occurred and be continuing as of such date;
(ix) a written opinion of counsel for Debtor and
Guarantor;
9
<PAGE> 10
(x) copies of the Bills of Sale;
(xi) certificates of insurance evidencing the
coverages required hereunder;
(xii) Uniform Commercial Code filings as deemed
appropriate by Secured Party's counsel duly executed by Debtor
and necessary third parties;
(xiii) good standing certificates from the Secretary
of State of Debtor's state of incorporation and the state of
Debtor's chief executive office; and
(xiv) good standing certificates from the Secretary
of State of Guarantor's state of incorporation and Guarantor's
chief executive office.
(xv) UCC, tax and judgment lien searches as deemed
necessary or advisable by Secured Party;
(xvi) the absence on the date hereof of any Liens
on the Collateral, other than any Permitted Encumbrance in
favor of Secured Party; and
(xvii) Secured Party shall have received such other
documents, certificates, financing statements and other
items, in form and substance satisfactory to Secured Party, as
Secured Party may request.
(b) Term Loan B Advances. The obligation of the Secured
Party to make Term Loan B advances after the Closing Date is subject
to satisfaction of the following conditions:
(i) delivery to the Secured Party of a Notice of
Borrowing;
(ii) no material adverse change in the condition
of the Debtor (financial or otherwise) shall have occurred
since the Closing Date;
(iii) the absence on the date of such advance of
any Default or Event of Default; and
(iv) no Lien or other interest shall have been
permitted to attach to the Collateral superior or subordinate
to the interest of the Secured Party under this Agreement,
except for Permitted Encumbrances.
10
<PAGE> 11
ARTICLE II
SECURITY INTEREST
SECTION 2.1 Grant of Security Interest. Debtor hereby Grants to
Secured Party a first priority security interest in the following
(collectively, the items described in subsections (a)-(d) may be referred to
herein as the "Collateral"):
(a) All right, title and interest of the Debtor in and
to the Equipment as the same is now and will hereafter be constituted,
whether now owned by the Debtor or hereafter acquired, together with
all accessories, equipment, parts and appurtenances appertaining or
attached to the Equipment whether now owned or hereafter acquired, and
all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Equipment together
with all the rents, issues, income, profits and avails thereof.
(b) All right, title, interest, claims and demands of
Debtor in, to and under the following (collectively the "Assigned
Agreements"):
(i) the Bills of Sale;
(ii) the Permitted Leases; and
(iii) any and all other contracts and agreements
(excluding this Agreement and any supplement or modification
thereto and the Notes) relating to the Equipment or any rights
or interests therein to which Debtor is now or may hereafter
be a party, together with all rights, powers, privileges,
licenses, easements, options and other benefits of Debtor
under each thereof, including without limitation the right to
make all waivers and agreements, to give and receive all
notices and other instruments or communications, to take such
action upon the occurrence of a default thereunder, including
the commencement, conduct and consummation of legal,
administrative or other Proceedings, as shall be permitted
thereby or by law, and to do any and all other things which
Debtor is or may be entitled to do thereunder.
(c) The proceeds from a sale or transfer of any right,
title or interest of Debtor in the Equipment or any portion thereof.
(d) All proceeds of any and all of the foregoing
Collateral, whether now owned or hereafter acquired by Debtor and
wherever located, including without limitation:
(i) cash, accounts receivable, instruments,
contract rights, chattel paper, documents of title and any
other obligation due to Debtor with respect to or in
connection with the foregoing Collateral; and
11
<PAGE> 12
(ii) to the extent not otherwise included, all
payments under any casualty insurance (whether or not Secured
Party is the loss payee thereof), condemnation award,
indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing
Collateral.
The Collateral shall mean and include all personal property
and the proceeds of such personal property described in any and all
amendments to this Agreement hereafter executed by Debtor and Secured
Party in connection with the Loan.
SECTION 2.2 Security for Secured Obligations. This Agreement
secures the payment of all indebtedness and other obligations of Debtor to
Secured Party with respect to: the Loans, whether now or hereafter existing,
including without limitation Debtor's obligations to Secured Party under the
Notes or any other instrument and all amendments thereto and renewals and
extensions thereof, whether for principal, interest, fees, expenses or
otherwise; all of Debtor's obligations of payment and performance now or
hereafter existing under this Agreement, including, without limitation, all
amendments hereto and renewals and extensions hereof (all such obligations of
Debtor described in this Section 2.2 being, collectively, the "Secured
Obligations").
SECTION 2.3 Security Interest Absolute. All rights of Secured
Party and security interests hereunder and all Secured Obligations shall be
absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of the Notes,
this Agreement or any other Security Instrument or any other agreement
or instrument relating thereto;
(ii) any change in the time, manner, or place or payment
of, or in any other term of, all or any of the Secured Obligations or
any other amendment or waiver of or any consent to any departure from
the Notes, this Agreement or any other Security Instrument; or
(iii) any exchange, release or non-perfection of any other
collateral, or any release, amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured
Obligations.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1 Debtor's Representations and Warranties. Debtor
hereby represents and warrants to Secured Party that:
(a) Debtor is a corporation duly organized and
validly existing under the laws of the State of its incorporation and
has all requisite corporate power, authority and legal right to own
its properties, including without limitation the Collateral, to
12
<PAGE> 13
conduct its business as is now being conducted and to execute, deliver
and perform its obligations under the Notes, this Agreement, each
other Security Instrument to which it is a party and each other
document or agreement related to the Collateral to which it is a
party. Debtor is fully qualified to do business and is in good
standing in each jurisdiction in which the failure to be in good
standing would have a material adverse effect on the business or
operations of Debtor.
(b) The execution, delivery and performance by Debtor of
the Notes, this Agreement and each other Security Instrument to which
it is a party are within Debtor's corporate powers, have been duly
authorized by all requisite corporate action, do not contravene
Debtor's charter or by-laws or any law, governmental rule or
regulation, or any order, writ, injunction, decree, determination or
award currently in effect applicable to, or any contractual
restriction binding on or affecting, Debtor or any of its properties,
including without limitation the Collateral, and do not result in or
require the creation of any Lien, security interest, right of
acceleration, charge or encumbrance (other than pursuant to this
Agreement) upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and
no notice to or filing (other than the filings referred to in
subparagraph (f) below) with, any governmental authority or regulatory
body, shareholders or any other Person is required for the due
execution, delivery and performance by Debtor of this Agreement or any
other Security Instrument to which it is a party.
(d) The Notes, this Agreement and each other Security
Instrument to which Debtor is a party are the legal, valid and binding
obligations of Debtor, enforceable against Debtor in accordance with
their respective terms, subject, in the case of enforceability, to
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of affecting creditors' rights generally and to the
application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(e) The proceeds of the Loans will he used only to
finance the purchase by Debtor of the Equipment; Debtor owns good and
marketable title to the Equipment; the Collateral is free and clear of
all Liens (except for Permitted Encumbrances in favor of Secured
Party); and the Equipment is in good condition and ready for
operation. The Equipment is and will retain its character as personal
property, and neither Debtor, Guarantor, or any Affiliate or
Subsidiary of either Debtor or Guarantor shall affix or attach any
item of Equipment in any manner so as to alter the character of the
Equipment as personal property subject to the UCC.
(f) The filing of Uniform Commercial Code financing
statements in the office of the Secretary of State of the State of
Texas will create a valid perfected first priority security interest
in the Collateral, securing the payment of the Secured Obligations,
and all filings and other actions necessary or desirable to perfect
and protect such security
13
<PAGE> 14
interests will have been taken. No Person other than Secured Party
holds any security interest affecting the Collateral. No effective
Security Instrument or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office,
except such as may have been filed in favor of Secured Party relating
to this Agreement.
(g) Debtor's chief executive office is located in Harris
County, Houston, Texas. The Debtor has not used any trade names or
other names, except for "Eagle Geophysical."
(h) Contemporaneously with the execution and delivery of
this Agreement, Debtor is delivering to Secured Party evidence of
insurance satisfying the requirements of Section 4.1 hereof.
(i) Debtor is not currently insolvent, as defined in 11
U.S.C. 101(32) nor will it be rendered insolvent by virtue of entering
into the Notes, this Agreement or any other Security Instrument to
which it is a party or carrying out any of the transactions
contemplated hereby or thereby.
(j) Each financial statement of Guarantor which has been
furnished to Secured Party fairly presents the financial condition of
Guarantor as of the date of such financial statement. There has been
no material adverse change in Guarantor's financial condition since
the date of the most current financial statement delivered to Secured
Party.
(k) There is no pending, or to the Debtor's knowledge,
threatened, action or Proceeding affecting Debtor, Guarantor or any of
their properties before any court, governmental agency or arbitrator
which may materially and adversely affect the condition (financial or
otherwise) or operations of Debtor, Guarantor or any of their
properties or which purports to affect the validity or enforceability
of the Notes, this Agreement or any other Security Instrument to which
Debtor is a party.
(l) No Default or Event of Default has occurred and is
continuing.
(m) All sales, transfer, use, documentation or similar
taxes, fees or other charges due and payable prior to or as of the
date hereof have been paid to the extent such are in connection with
the sale to and purchase by Debtor of the Equipment.
(n) Debtor is not a party to, nor bound by, any contract,
agreement or instrument that would conflict with this Agreement, the
Notes or any other contracts, agreements or instruments executed in
connection with the transactions contemplated by this Agreement.
(o) Debtor has agreed, and hereby acknowledges, to accept
service of process at its address set forth in Section 8.1 hereof in
person or by registered or certified mail
14
<PAGE> 15
return receipt requested, postage prepaid, in connection with any
Proceeding initiated by Secured Party in any of the courts referenced
in Section 8.11 hereof.
(p) The Debtor has no Subsidiaries, except for African
Geophysical, Inc., a corporation organized and existing under the laws
of the Cayman Islands.
(q) Debtor has not incurred any accumulated unfunded
deficiency within the meaning of the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA") nor has
Debtor incurred any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") established under such Act (or any successor
thereto under such Act) in connection with any Plan. Debtor and its
Affiliates are in compliance in all material respects with those
provisions of ERISA and the regulations and public interpretations
thereunder which are applicable to Debtor and its Affiliates, except
for such noncompliance as would not have a material adverse effect on
the financial condition of Debtor and its Affiliates, taken as a
whole.
(r) Debtor has filed all income tax returns required to
be filed prior to the date hereof with the various governmental
entities having taxing authority with respect to Debtor.
(s) Debtor (i) is not an "investment company" as such
term is defined in, or otherwise subject to regulations under, the
Investment Company Act of 1940 and (ii) is not a "holding company" as
that term is defined in, and is not otherwise subject to regulations
under, the Public Utility Holding Company Act of 1935.
(t) Debtor has not sold, extended any offer to sell nor
accepted any offer to purchase regarding any of Debtor's interest in
the Collateral or with respect to the transactions described in the
Security Instruments or the Notes.
(u) Debtor has delivered true and accurate copies of the
Bills of Sale executed by Seller with respect to the transfer of the
Equipment to Debtor.
SECTION 3.2 Affirmative Covenants. Until all the Secured
Obligations shall have been fully paid and satisfied, Debtor covenants and
agrees that it shall, unless Secured Party shall have otherwise consented in
writing:
(a) promptly pay the principal of, interest on, and any
other amounts due under the Notes as and when the same become due,
whether at maturity, by acceleration or otherwise;
(b) (i) duly, punctually and faithfully perform its
obligations under the Notes, this Agreement and each other Security
Instrument to which it is a party; (ii) maintain the Liens and
security interests created by this Agreement and each other Security
Instrument to which it is a party as valid and perfected Liens on and
security interests in all of the
15
<PAGE> 16
Collateral, prior in right to any other Lien, security interest, claim
or other encumbrance; (iii) warrant and defend its interest in and to
the Collateral against the claims and demands of all Persons; and (iv)
defend, at Debtor's cost, any action, claim or Proceeding affecting
the Collateral;
(c) use the proceeds of the Loans only to finance the
purchase by Debtor of the Equipment and maintain good and marketable
title to the Equipment, free and clear of any Liens, security
interests, charges or encumbrances except for the security interest
created by this Agreement and Permitted Encumbrances;
(d) notify Secured Party at least thirty (30) days prior
to the changing of the chief executive office of the Debtor from the
location specified in Section 3.1(g);
(e) at no expense to Secured Party, cause each item of
Equipment to be serviced, maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and
tear excepted, and in accordance with any manufacturer's suggested or
approved maintenance program and warranty requirements, and shall, in
the case of any loss or damage to any item of Equipment, promptly
furnish to Secured Party a statement respecting any such loss or
damage and (unless an Event of Loss shall have occurred with respect
to an item of Equipment) as quickly as practicable after the
occurrence thereof make or cause to be made all repairs, replacements
and other improvements in connection therewith which are necessary or
desirable to keep each item of Equipment in proper working order;
(f) permit Secured Party to inspect the Equipment during
normal business hours upon reasonable prior notice to Debtor;
(g) from time to time execute and deliver all such
supplements and amendments hereto and to any other Security
Instrument, and all such financing statements, continuation
statements, instruments of further assurance and other instruments,
and take such other action, as the Secured Party requests and
reasonably deems necessary or advisable to: (i) further Grant,
maintain or preserve the Lien and security interest contemplated by
this Agreement or carry out more effectively the purposes hereof; (ii)
perfect or protect the validity of any Security Instrument or of any
Grant made or to be made by this Agreement; or (iii) enforce any
Security Instrument or preserve and defend title to the Collateral and
the rights of the Secured Party therein against the claims of all
Persons and parties;
(h) comply with all of its representations, warranties
and covenants set forth in this Agreement, in the Notes and each
Security Instrument to which it is a party; and punctually perform and
observe all of its obligations and agreements contained in this
Agreement, in the Notes and each Security Instrument to which it is a
party;
16
<PAGE> 17
(i) promptly notify the Secured Party of any default by
any Person under any Security Instrument;
(j) remain a duly organized and validly existing
corporation under the laws of the state of its incorporation and
remain duly qualified to do business and in good standing in each
jurisdiction in which the failure to be in good standing would have a
material adverse effect on the business or operations of Debtor;
(k) comply in all material respects with all applicable
laws, rules, regulations and orders; and preserve and maintain all
federal, state and local licenses, privileges, franchises,
certificates and other permits necessary for the operation of its
business and the operation of each item of Equipment;
(l) pay or cause to be paid promptly when due (i)
(subject to the right of Debtor, in accordance with the provisions of
this Agreement to obtain extensions of the date on which such taxes
are due) all property and other taxes (including without limitation
income, sales, use, franchise and gross receipts taxes) and
governmental charges or levies which are at any time or from time to
time levied upon or assessed against it or any item of Equipment or
are otherwise associated with the ownership, use or operation of any
item of Equipment (except such taxes levied on the net income of
Secured Party) and (ii) all claims (including without limitation
claims for labor, materials and supplies) against any item of
Equipment; provided, that Debtor may contest any such tax or claim by
appropriate Proceedings so long as such Proceedings shall suspend the
collection thereof, no part of the Collateral would be subject to
sale, forfeiture or diminution during the pendency of such
Proceedings, Debtor shall have furnished such security as may be
required in the Proceedings or reasonably requested by Secured Party,
Debtor conducts such contests in good faith and with due diligence,
and promptly after the final determination of each such contest,
Debtor pays all amounts which shall be determined to be payable in
respect thereof;
(m) within 120 days after the end of each fiscal year
furnish to the Secured Party unaudited year end financial reports of
the Debtor including without limitation (i) a balance sheet and (ii)
statements of income and retained earnings, all prepared in accordance
with generally accepted accounting principles consistently applied and
certified by the president, chief financial officer or any vice
president of Debtor who prepared such financial statements as being
true and accurate and fairly representing the financial condition of
Debtor;
(n) promptly report to Secured Party the commencement of
any Proceeding against Debtor if such litigation reasonably would be
expected to, in the event of an unfavorable outcome, cause an Event of
Default, have a material adverse effect on Debtor's financial
condition or operations, affect the validity or enforceability of the
Notes, this Agreement or any of the Security Instruments or affect
priority or enforceability of Secured Party's security interest in any
of the Collateral;
17
<PAGE> 18
(o) promptly notify Secured Party in writing if a Default
or an Event of Default has occurred;
(p) upon the replacement of an item of Equipment with
Replacement Equipment, Debtor, at its own expense, will promptly (i)
cause a supplement hereto, in form and substance satisfactory to
Secured Party, subjecting such Replacement Equipment to this
Agreement, to be duly executed by Debtor, (ii) furnish Secured Party
with such evidence of Debtor's title to such Replacement Equipment, of
the condition of such Replacement Equipment, and of compliance with
the insurance provisions hereof with respect to such Replacement
Equipment and (iii) take such other action as Secured Party may
request in order that such Replacement Equipment be duly and properly
titled in Debtor and subject to this Agreement to the same extent as
the item of Equipment replaced thereby;
(q) (i) at all times, make prompt payment of all
contributions required under its Plans and required to meet the
minimum funding standard set forth in ERISA with respect to its Plans;
(ii) notify Secured Party immediately of any fact, including, but not
limited to, any Reportable Event (as defined in ERISA) arising in
connection with any of its Plans, which might constitute grounds for
termination thereof by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer
such Plan, together with a statement, if requested by the Secured
Party, as to the reason therefor and the action, if any, proposed to
be taken with respect therefor; and (iii) furnish to Secured Party
upon its request, such additional information concerning any of its
Plans as may be reasonably requested;
(r) Debtor shall pay, and save Secured Party harmless
against, any and all losses, judgments, decrees and costs (including,
without limitation, all reasonable attorneys' fees and expenses) in
connection with any Permitted Contest and shall promptly after the
final settlement, compromise or determination (including any appeals)
of such contest, fully pay and discharge the amounts which shall be
levied, assessed, charged or imposed or be determined to be payable
therein or in connection therewith, together with all penalties,
fines, interest, costs and expenses thereof or in connection
therewith, and perform all acts, the performance of which shall be
ordered or decreed as a result thereof.
SECTION 3.3 Negative Covenants. Until the Secured Obligations
shall have been fully paid and satisfied, Debtor shall not, without the prior
written consent of Secured Party:
(a) (i) sell, lease, assign, transfer, convey, Grant an
interest in, exchange or otherwise dispose of any of the Collateral or
any part thereof or (ii) cause or permit any subleasing of any of the
Equipment (except that Debtor may lease any or all items of Equipment to
a Permitted Lessee pursuant to a Permitted Lease);
(b) create or suffer to exist any Lien affecting the
Collateral or any part thereof, other than in favor of Secured Party or
other Permitted Encumbrances;
18
<PAGE> 19
(c) use the Equipment for any unlawful purpose;
(d) dissolve, wind up or liquidate or seek or permit the
dissolution or liquidation of Debtor in whole or in part;
(e) [intentionally omitted];
(f) as against Secured Party, claim any credit on, or make
any deduction from, the principal or interest payable on the Notes,
whether by reason of the payment of any taxes levied or assessed upon
any of the Collateral, or otherwise;
(g) take or permit any action which would result in an
Event of Default;
(h) [intentionally omitted];
(i) [intentionally omitted];
(j) enter into any new line of business or operation not
currently in existence with respect to the Debtor or materially alter
its existing operations;
(k) consolidate with or merge into any other corporation
or sell, assign, convey, transfer or lease substantially all of its
assets as an entirety to any Person unless:
(i) Debtor is the surviving entity of any such
consolidation or merger; or
(ii) (A) the corporation formed by such
consolidation or into which Debtor is merged, or the Person
which acquires by conveyance, transfer or lease of
substantially all of the assets of Debtor as an entirety,
shall be a solvent corporation organized and existing under
the laws of the United States or any state thereof or the
District of Columbia and shall execute and deliver to Secured
Party an agreement containing an effective assumption by such
successor, transferee or lessee corporation of the due and
punctual performance and observance of each covenant and
condition of this Agreement;
(B) immediately prior to and after
giving effect to such transaction, no Default or Event
of Default shall have occurred and be continuing;
(C) Debtor shall have delivered to
Secured Party a certificate signed by an officer of
Debtor and an opinion of Debtor's counsel satisfactory
in form and substance to Secured Party stating that
such consolidation, merger, conveyance, transfer or
lease and the assumption agreement mentioned in clause
3.3(k)(ii)(A) above comply with the
19
<PAGE> 20
requirements of this Section 3.3(k) and that all
conditions precedent herein provided for relating to
such transaction have been complied with.
Upon any consolidation or merger in which Debtor is not the surviving
corporation, or any conveyance, transfer or lease of substantially all the
assets of Debtor as an entirety in accordance with this Section 3.3(k), the
successor corporation formed by such consolidation or into which Debtor is
merged or to which such conveyance, transfer or lease is made (x) shall succeed
to, and be substituted for (but without release of Debtor from any of its
obligations hereunder) and (y) may exercise every right and power of, Debtor
under this Agreement with the same effect as if such successor corporation had
been named as a Debtor herein.
(1) attach or affix any item of Equipment in any manner so
as to alter the character of the Equipment as personal property subject
to the UCC.
ARTICLE IV
INSURANCE, TRANSFER, CONDEMNATION AND EVENT OF LOSS
SECTION 4.1 Insurance.
(a) Property and Liability Insurance. So long as this
Agreement is in effect, Debtor shall maintain and keep in force, or
cause to be maintained and kept in force, without cost or expense to
Secured Party, with respect to all items of Equipment prior to the
expiration or earlier termination of this Agreement (i) all-risk
property damage insurance in an amount not less than the aggregate
Termination Value for all items of Equipment of such type as shall be
satisfactory to Secured Party and (ii) comprehensive general public
liability insurance, including blanket contractual and personal injury
insurance, covering any risks which Secured Party or Debtor might incur
by reason of the use or operation of the Equipment in or over any area,
in an amount not less than $6,000,000 per occurrence. Such insurance
policy or policies referenced to in clause (i) of the preceding sentence
will name Secured Party as a loss payee to the extent of its interest;
provided, that upon verification by Secured Party that all amounts owing
to Secured Party under the Agreement, the Notes or any other Security
Instrument have been paid in full, then Secured Party shall remit all
remaining property damage insurance proceeds, respecting any item of
Equipment, to the extent such proceeds are controlled by Secured Party,
to Debtor. Such insurance policy or policies referenced to in clause
(ii) of the preceding sentence will name Secured Party as an additional
insured. Each of the policies required by this Section 4.1 will provide
that (A) the same may not be invalidated against Secured Party by reason
of (1) any violation of a condition or breach of warranty of the
policies or the application therefor by any Person excepting Secured
Party, (2) the use of any item of Equipment for purposes not permitted
by such policies any Person excepting Secured Party, (3) any foreclosure
proceeding or notice of sale regarding any item of Equipment or (4) the
title or beneficial ownership of any item of Equipment being held by a
party other than Debtor; (B) the policies may be canceled or materially
amended by
20
<PAGE> 21
the insurer only after thirty (30) days' prior written notice to Secured
Party; (C) the interests of Secured Party in such insurance policies are
assignable and (D) such insurance policies shall be primary insurance.
Each of the policies required by this Section 4.1 shall otherwise be
reasonably satisfactory to Secured Party. The policies of insurance
required under this Section shall be valid and enforceable policies
issued by insurers of recognized responsibility acceptable to Secured
Party. On or before the date hereof, and thereafter at intervals of not
more than twelve months, Debtor will furnish or cause to be furnished to
Secured Party a certificate or other evidence satisfactory to Secured
Party signed by an independent insurance broker certifying to Secured
Party's satisfaction that Debtor has insurance in place with respect to
all items of Equipment which complies with the insurance requirements of
this Agreement. If Debtor shall fail to cause the insurance required
under this Section 4.1 to be carried and maintained, Secured Party may,
but shall have no obligation to, provide such insurance and Debtor shall
reimburse Secured Party upon demand for the cost thereof as a
supplemental payment hereunder in addition to other amounts owing with
respect to the Notes or this Agreement.
SECTION 4.2 Transfer of Collateral. Except as otherwise expressly
provided by the provisions of this Loan and Security Agreement, Debtor will not
(prior to the satisfaction of all Obligations) lease, Grant or otherwise
transfer the Collateral or any part thereof or any interest therein to any
party other than Secured Party without Secured Party's prior written consent
and any and all such transfers shall be made under and subject to Secured
Party's security interest in such Collateral hereunder. Prior to or
simultaneously with any such transfer, the transferee shall accept, agree to
and execute an agreement assuming Debtor's Obligations to Secured Party, in
form and substance satisfactory to Secured Party.
SECTION 4.3 Condemnation. Immediately upon obtaining knowledge
thereof, Debtor shall notify Secured Party of any condemnation or other eminent
domain Proceedings with respect to any item of Equipment. Secured Party may
participate in any such Proceedings, and Debtor shall provide Secured Party
with all instruments required by it to permit such participation upon obtaining
actual knowledge thereof. Debtor shall pay all reasonable fees and expenses
incurred by Secured Party in connection with Secured Party's participation in
any such Proceedings. All proceeds arising from any such eminent domain
Proceedings shall be paid to and applied by the Secured Party as specified in
Section 5.3 hereof.
SECTION 4.4 Certain Events of Loss. Upon the occurrence of an
Event of Loss with respect to any item of Equipment, Debtor shall pay Secured
Party within thirty (30) days after receipt of insurance proceeds after the
occurrence of such Event of Loss (but in no event shall such period extend 120
days beyond the date of the occurrence of such Event of Loss) or, if such day
is not a Business Day, on the next occurring Business Day (the "Event of Loss
Payment Date") an amount equal to the sum of (a) the Termination Value
(computed as of the Installment Payment Date immediately preceding the Event of
Loss Payment Date) for the items of Equipment then subject to the Event of
Loss, plus (b) all accrued but unpaid interest, plus (c) any Break-Funding
Costs with respect to the items of Equipment then subject to the Event of Loss,
plus (d) all other obligations owing hereunder on the Event of Loss Payment
Date. Upon
21
<PAGE> 22
payment of the amounts set forth in (a)-(d) above, Secured Party shall release
its Lien on the items of Equipment then subject to the Event of Loss.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.1 Events of Default. Any of the following occurrences
or acts shall constitute an event of default under this Agreement
(individually, an "Event of Default"):
(a) Debtor shall fail to pay any principal of, or interest
on, the Notes or any other indebtedness of Debtor to Secured Party, now
or hereafter existing, within five (5) Business Days from the date the
same shall be due and payable, whether at maturity, by acceleration or
otherwise; or
(b) Except as specified in Section 5.1(a), Debtor shall
default in the payment of any costs or expenses incurred by Secured
Party in connection herewith or any other amounts hereunder or under the
Notes within ten (10) Business Days from the date on which Secured Party
notifies Debtor of such default; or
(c) Debtor shall fail to observe the terms and covenants
of Sections 3.2(b)(ii), 3.2(c), 3.2(l), 3.3(a)-(1) or 4.1; or
(d) Except as otherwise specified in Sections 5.1(a)-(c),
Debtor shall fail to perform or observe any other term, covenant or
agreement contained in the Notes, this Agreement or any other Security
Instrument and such failure shall remain unremedied for a period of
thirty (30) days from either the date Debtor first knows of such failure
or the date on which Secured Party notifies Debtor of such failure; or
(e) Any representation or warranty made by Debtor in the
Notes, this Agreement, any other Security Instrument or in any
certificate or other document delivered pursuant hereto or thereto shall
prove to have been incorrect or misleading in any material respect when
made; or
(f) Debtor shall admit in writing its inability to pay its
debts, or shall make a general assignment for the benefit of creditors;
or any Proceeding shall be instituted by or against Debtor seeking to
adjudicate it bankrupt or insolvent, or seeking reorganization,
liquidation, arrangement, adjustment or composition of it or its debt
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking appointment of a receiver, custodian,
trustee, or other similar official for it or for any substantial part of
its property, and, in the case of any such Proceeding instituted against
Debtor, it shall remain undismissed for a period of sixty (60) days; or
Debtor shall take any action to authorize any of the actions set forth
in this subsection (f); or
22
<PAGE> 23
(g) This Agreement shall, for any reason, except to the
extent permitted by the terms hereof, cease to create a valid first
priority Lien on and perfected first priority security interest in any
of the Collateral purported to be covered hereby; or
(h) Any provision of the Notes, this Agreement or the
other Security Instruments shall cease to be valid and binding on
Debtor, as a signatory thereto, or Debtor shall so state in writing; or
Secured Party shall be deprived of any of the benefits of the Note, this
Agreement or any other Security Instrument for any reason whatsoever; or
(i) For any reason whatsoever, Debtor is not entitled to
or does not possess the property rights or other rights regarding the
Collateral which have been assigned or transferred to Secured Party; or
(j) Debtor shall dissolve or any action shall be taken by
Debtor to wind up or liquidate Debtor's business, affairs or property or
assets or Debtor shall announce its intention to do so without Secured
Party's prior written consent; or
(k) Any sale, transfer, conveyance, abandonment,
condemnation, partition or change in ownership of any item or items of
Equipment in excess of $50,000, or any portion thereof shall occur,
whether in one transaction or a series of transactions without Secured
Party's prior written consent; or
(l) An attachment or other Lien shall be filed or levied
against a substantial part of the property of Debtor (or any Affiliate
of Debtor) and such judgment shall continue unstayed and in effect, or
such attachment or Lien shall continue undischarged or unbonded, for a
period of sixty (60) days; or
(m) Guarantor shall fail to make a payment under the
Guaranty within five (5) Business Days from the date such payment is
due; or
(n) Except as specified in Section 5.1(m), Guarantor shall
fail to perform or observe any other term, covenant or agreement
contained in the Guaranty and such failure shall remain unremedied for a
period of thirty (30) days from either the date Guarantor first knows of
such failure or the date on which Secured Party notifies Guarantor of
such failure; or
(o) Any representation or warranty made by Guarantor in
the Guaranty or in any certificate or other document delivered pursuant
thereto shall prove to have been incorrect or misleading in any material
respect when made; or
(p) Guarantor shall admit in writing its inability to pay
its debts, or shall make a general assignment for the benefit of
creditors; or any Proceeding shall be instituted by or against Guarantor
seeking to adjudicate it bankrupt or insolvent, or seeking
reorganization, liquidation, arrangement, adjustment or composition of
its finances or debt
23
<PAGE> 24
under any law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking appointment of a receiver, custodian,
trustee, or other similar official for its finances or for any
substantial part of its property, and, in the case of any such
Proceeding instituted against Guarantor, it shall remain undismissed for
a period of sixty (60) days; or Guarantor shall take any action to
authorize any of the actions set forth in this subsection (p); or
(q) Guarantor (or any Affiliate of Guarantor) shall be in
default (i) under any lease, loan agreement or other agreement,
instrument or document respecting any such obligation of Guarantor (or
any Affiliate of Guarantor) in excess of $10,000,000, now or hereafter
entered into between Guarantor (or any Affiliate of Guarantor) and
Secured Party, or between Guarantor (or any Affiliate of Guarantor) and
any parent, subsidiary or affiliate of Secured Party, and such default
shall have been declared by the party entitled to declare the same, (ii)
under any promissory note, now or hereafter executed by Guarantor (or
any Affiliate of Guarantor) and delivered to any party referred to in
clause (i) above evidencing a loan made by any such party to Guarantor
(or any Affiliate of Guarantor) or (iii) in the payment of any single
amount due by Guarantor (or any Affiliate of Guarantor) to any Person
(other than Secured Party, or any parent, subsidiary or affiliate of
Secured Party) in excess of $10,000,000 (excluding any such obligation
which is being contested in good faith by Guarantor (or any Affiliate of
Guarantor) by appropriate proceedings, and the liability for which has
not been reduced to judgment) relating to the payment of borrowed money
or the payment of rent or hire under any lease agreement and such
default shall have continued for more than thirty (30) days after the
date Guarantor (or any Affiliate of Guarantor) obtained knowledge or
received notice thereof; or an attachment or other Lien shall be filed
or levied against a substantial part of the property of Guarantor or
Debtor and such judgment shall continue unstayed and in effect, or such
attachment or Lien shall continue undischarged or unbonded, for a period
of sixty (60) days; or
(r) Any provision of the Guaranty shall cease to be valid
and binding on Guarantor, as a signatory thereto, or Guarantor shall so
state in writing; or Secured Party shall be deprived of any of the
benefits of the Guaranty for any reason whatsoever; or
(s) Any action shall be taken by Guarantor to wind up or
liquidate Guarantor's business, affairs or property or assets or
Guarantor shall announce his intention to do so without Secured Party's
prior written consent.
SECTION 5.2 Remedies. If any Event of Default shall have occurred
and be continuing:
(a) the Secured Party may do one or more of the following:
(i) declare the Notes and all interest thereon
and all other Secured Obligations to be forthwith due and
payable, whereupon the Notes, all such interest and all
Secured Obligations shall become and be forthwith due and
24
<PAGE> 25
payable, without presentation, demand, protest or further
notice of any kind, all of which are hereby expressly waived
by Debtor;
(ii) exercise, in respect of the Collateral, in
addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a
secured party on default under the UCC and/or other applicable
law and also (A) require Debtor to, and Debtor hereby agrees
that it will at its expense and upon the request of Secured
Party forthwith, assemble all or part of the Collateral as
directed by Secured Party and make it available to Secured
Party at a place to be designated by Secured Party and (B)
without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or
private sale, at any of Secured Party's offices or elsewhere,
for cash, on credit or for future delivery, and upon such
other terms as Secured Party may deem commercially reasonable.
Debtor agrees that, to the extent notice of sale shall be
required by law, at least fifteen (15) days' notice to Debtor
of the time and place of any public sale or the time after
which any private sale is to be made shall constitute
reasonable notification. Secured Party shall not be obligated
to make any sale of Collateral regardless of notice of sale
having been given. Secured Party may adjourn any public or
private sale from time to time by announcement at the time and
place fixed therefor, and such sale may, without further
notice, be made at the time and place to which it was so
adjourned;
(iii) to the extent permitted by applicable law,
bring suit at law, in equity or through other appropriate
Proceedings, whether for the specific performance of any
covenant or agreement contained in this Agreement or any of
the other Security Instruments, for an injunction against a
violation of any of the terms hereof or thereof, in aid of the
exercise of any power Granted hereby or thereby, or by law, to
recover judgment for any and all amounts due on the Notes,
this Agreement, any of the other Security Instruments or
otherwise, including, without limitation, any deficiency
remaining after foreclosure hereunder;
(iv) exclude Debtor from the Collateral and take
immediate possession of interest therein, and, at the expense
of Debtor, maintain, repair, alter, use, add to, improve,
insure, lease, operate and manage the Collateral in such
manner as Secured Party shall see fit; and
(v) take any other appropriate action to protect
and enforce the rights and remedies of Secured Party
hereunder, or under or in respect of any other Security
Instrument, or otherwise.
(b) Notwithstanding any provision to the contrary
contained in this Agreement, the Notes or any other Security Instrument,
the unpaid principal amount of the Notes and all accrued interest and
other sums payable under the Notes or under this Agreement shall be
forthwith payable upon a sale of any portion of the Collateral pursuant
to subsection
25
<PAGE> 26
(a)(ii) of this Section 5.2. All earnings, revenues, proceeds, rents,
issues, profits and income derived pursuant to subsection (a)(iv) of
this Section 5.2 (after deducting costs and expenses of operation and
other proper charges), all proceeds of any such sale and all other money
and property received or recovered by the Secured Party pursuant to this
Section 5.2 shall be held and applied as set forth in Section 5.3
hereof.
(c) The power to effect any sale under this Section 5.2
shall not be exhausted by any one or more sales as to any portion of the
Collateral remaining unsold, but shall continue unimpaired until all of
the Collateral shall have been sold or all of the Secured obligations
shall have been paid in full.
(d) Secured Party may bid for and acquire any portion of
the Collateral in connection with a sale thereof under this Section 5.2,
and may pay all or part of the purchase price by crediting against
amounts owing on the Secured Obligations, all or part of the net
proceeds of such sale after deducting the costs, charges and expenses
incurred by Secured Party in connection with such sale. The Notes need
not be produced in order to complete any such sale or effect such
credit. Secured Party may hold, lease, operate, manage or otherwise
deal with any property so acquired in any manner permitted by law.
(e) Secured Party shall execute and deliver an appropriate
instrument of conveyance transferring its interest in any portion of the
Collateral in connection with a sale thereof under this Section 5.2. In
addition, Debtor hereby irrevocably appoints Secured Party as its agent
and attorney-in-fact to transfer and convey its interest in any portion
of the Collateral in connection with such a sale thereof and to take all
action necessary to effect such sale. No purchaser or transferee at
such a sale shall be bound to ascertain Secured Party's authority,
inquire into the satisfaction of any condition precedent or see to the
application of any monies.
(f) Secured Party's right to seek and recover judgment on
the Secured Obligations shall not be affected by the seeking, obtaining
or application of any other relief under or with respect to this
Agreement. Neither the Lien of this Agreement nor any rights or
remedies of Secured Party shall be impaired by the recovery of any
judgment by Secured Party against Debtor or by the levy of an execution
under such judgment upon any portion of the Collateral.
(g) All rights and remedies from time to time conferred
upon or reserved to the Secured Party are cumulative, and none is
intended to be exclusive of another and shall be in addition to every
other right or remedy permitted by law. No delay or omission in
insisting upon the strict observance or performance of any provision of
this Agreement, or in exercising any right or remedy, shall be construed
as a waiver or relinquishment of such provision, nor shall it impair
such right or remedy. Every right and remedy may be exercised from time
to time and as often as deemed expedient in any combination and order
desired by Secured Party; provided, however, that Secured Party shall
exercise none
26
<PAGE> 27
of the remedies referenced in this Section 5.2 with respect to the
Collateral unless and until an Event of Default shall have occurred and
be continuing.
(h) Anything contained in this Agreement to the contrary
notwithstanding, until an Event of Default shall occur and be
continuing: (i) all rights, powers, privileges and other benefits of or
accruing to Debtor under the Assigned Agreements shall be exercisable
only by Debtor, without the consent or approval of the Secured Party,
(ii) Debtor shall retain full right to make all waivers and agreements,
to give and receive all notices and other instruments or communications,
and to take all action upon the occurrence of a default under any
Assigned Agreement, including the commencement, conduct and consummation
of legal, administrative or other proceedings, as shall be permitted
thereby or by law, and to do any and all other things which Debtor is or
may be entitled to do under any Assigned Agreement.
SECTION 5.3 Proceeds of Collateral. All cash proceeds received by
Secured Party in respect of any sale of, collection from, or other realization
upon all or any part of the Collateral shall be held by Secured Party as
collateral for, and then promptly thereafter applied by Secured Party against,
all or any part of the amounts due under the Notes and the other Secured
Obligations in such order as Secured Party shall elect. Any surplus of such
cash or cash proceeds held by Secured Party and remaining after payment in full
of all the Secured Obligations shall be paid over to Debtor or to whomsoever
may be lawfully entitled to receive such surplus.
SECTION 5.4 Waiver of Rights; Receiver.
(a) Debtor consents to the appointment of one or more
receivers of all or part of the Collateral, upon the request of Secured
Party, if an Event of Default shall have occurred and be continuing.
(b) To the extent permitted by law, Debtor hereby waives
its right to seek, and hereby agrees that it will not seek or derive any
benefit or advantage from, any of the following whether now existing or
hereafter in effect:
(i) any stay, extension, moratorium or similar
law with respect to the Collateral or the Secured Obligations;
(ii) any law allowing for the redemption of any
portion of the Collateral after a sale thereof under Section
5.2 hereof; and
(iii) any right to have any portion of the
Collateral after an Event of Default shall have occurred.
Debtor covenants not to hinder, delay or impede the exercise of any
right or remedy of Secured Party under or in respect of this Agreement
and agrees to suffer and permit the exercise of each such remedy.
27
<PAGE> 28
ARTICLE VI
INDEMNITY AND EXPENSES
SECTION 6.1 General Indemnity. Debtor hereby assumes liability
for, and does hereby agree, whether or not any of the transactions contemplated
hereby, by the Security Instruments or the Notes are consummated, to indemnify,
protect, save, defend and hold harmless Secured Party and each of its officers,
directors, stockholders, successors, assigns, agents and servants (for purposes
of this Article VI, each of the foregoing may be referred to individually as a
"Beneficiary") from and against any and all obligations, fees, liabilities,
losses, damages, penalties, claims, demands, actions, suits, judgments, costs
and expenses, including, without limitation, reasonable legal fees and
expenses, of every kind and nature whatsoever imposed on, incurred by, or
asserted against any Beneficiary, in any way relating to or arising out of (a)
the manufacture, construction, ordering, purchase, acceptance or rejection,
financing, ownership, titling or retitling, registration or re-registration,
acceptance, leasing, subleasing, possession, use, operation, maintenance,
storage, removal, sale, delivery or other disposition of any item of Equipment,
including, without limitation, any of such as may arise from (i) loss or damage
to any property or death or injury to any person, (ii) patent or latent defects
in any item of Equipment (whether or not discoverable by Debtor or any
Beneficiary), (iii) any claims based on strict liability in tort or otherwise,
(iv) any claims based on patent, trademark or copyright infringement and (v)
any claims based on liability arising under the applicable environmental or
noise or pollution control law or regulation or (b) any failure on the part of
Debtor to perform or comply with any of the terms of the Security Instruments
or the Notes or (c) any Security Instrument or the Notes. Debtor shall not be
required to indemnify any Beneficiary for any claims resulting from acts which
would constitute the willful misconduct or gross negligence of such
Beneficiary. Debtor shall give Secured Party prompt notice of any occurrence,
event or condition known to Debtor as a consequence of which any Beneficiary is
or is reasonably likely to be entitled to indemnification hereunder. Debtor
shall promptly upon demand of any such Beneficiary reimburse such Beneficiary
for amounts expended by it in connection with any of the foregoing or pay such
amounts directly. Debtor shall be subrogated to a Beneficiary's rights in any
matter with respect to which Debtor has actually reimbursed such Beneficiary
for amounts expended by it or has actually paid such amounts directly pursuant
to this Section 6.1. In case any action, suit or Proceeding is brought against
any Beneficiary in connection with any claim indemnified against hereunder,
such Beneficiary will, after receipt of notice of the commencement of such
action, suit or Proceeding, notify Debtor thereof, enclosing a copy of all
papers served upon such Beneficiary. Debtor may, and upon any Beneficiary's
request will, at Debtor's expense, resist and defend such action, suit or
Proceeding, or cause the same to be resisted or defended by counsel selected by
Debtor and reasonably satisfactory to such Beneficiary and in the event of any
failure by Debtor to do so, Debtor shall pay all costs, fees and expenses
(including, without limitation, reasonable attorney's fees and expenses)
incurred by such Beneficiary in connection with such action, suit or
Proceeding.
SECTION 6.2 General Tax Indemnity. Debtor agrees to pay, and
indemnify and hold each Beneficiary harmless on an after-tax basis from, any
and all federal, state, local and foreign taxes,
28
<PAGE> 29
fees, withholdings, levies, imposts, duties, assessments and charges of any
kind and nature whatsoever, together with any penalties, fines or interest
therein (herein called "Taxes or Other Impositions") howsoever imposed, whether
levied or imposed upon or asserted against such Beneficiary, Debtor, any item
of Equipment or any part thereof, by any federal, state or local government or
taxing authority in the United States, or by any taxing authority or
governmental subdivision of a foreign country, upon or with respect to (a) any
item of Equipment (b) the manufacture, construction, ordering, purchase,
ownership, financing, delivery, leasing, re-leasing, possession, use,
maintenance, registration, titling, licensing, documentation, return, sale
(including, without limitation, sale to a third party) or other application or
disposition thereof, (c) the payments, receipts or earnings arising from any
item of Equipment or (d) the Bills of Sale, the Security Instruments or the
Notes, or upon the payments by Debtor under the Bills of Sale, the Notes or the
Security Instruments; provided, however, that the foregoing indemnity shall not
apply to any taxes or other impositions to the extent based upon or measured by
any Beneficiary's net income (unless such tax or other imposition is a Covered
Income Tax as hereinafter defined), and which are imposed or levied by any
federal, state or local taxing authority in the United States. For purposes
hereof, a "Covered Income Tax" shall mean an income tax (including, without
limitation, a tax imposed upon gross income or receipts) imposed on any
Beneficiary by any taxing authority (excluding the United States federal
government) in whose jurisdiction such Beneficiary (including for this purpose
all entities with which it is combined, integrated or consolidated in such
taxing authority's jurisdiction) would not engage in business, would not
maintain an office or other place of business and would not otherwise be
located therein, but for such Beneficiary's role in the transaction associated
with the financing of the Equipment, the operation of the Equipment in such
jurisdiction, the presence of Debtor or any use of the Equipment or the
transactions contemplated by the Bills of Sale, the Security Instruments or the
Notes.
Each Beneficiary shall furnish Debtor with copies of any requests for
information received by such Beneficiary from any taxing authority relating to
any taxes or other impositions with respect to which Debtor is required to
indemnify hereunder, and if a claim is made against such Beneficiary for any
such taxes or other impositions, with respect to which Debtor is liable for a
payment or indemnity hereunder, such Beneficiary shall give Debtor notice in
writing within (10) Business Days of such Beneficiary's receipt of such claim.
Debtor may, at its sole cost and expense, either in its own name or in the name
of any Beneficiary, contest the validity, applicability or amount of any such
tax or other imposition by means of a Permitted Contest. If any Beneficiary
shall obtain a refund of any amount paid by Debtor pursuant to this Section
6.2, such Beneficiary shall pay to Debtor the amount of such refund, together
with the amount of any interest actually received by such beneficiary on
account of such refund. Debtor will promptly notify Secured Party of all
reports or returns required to be made with respect to any tax or other
imposition with respect to which Debtor is required to indemnify hereunder and
will promptly provide each Beneficiary with all information necessary for the
making and timely filing of such reports or returns by such Beneficiary. If
any Beneficiary requests that any such reports or returns be prepared and filed
by Debtor, Debtor will prepare and file the same if permitted by applicable law
to do so, and if not so permitted, Debtor shall prepare such reports or returns
for signature by such Beneficiary, and shall forward the same, together with
29
<PAGE> 30
immediately available funds for payment of any tax or other imposition due, to
such Beneficiary, at least ten (10) Business Days in advance of the date such
payment is to be made. Upon written request, Debtor shall furnish each
Beneficiary with copies of all paid receipts or other appropriate evidence of
payment for all taxes or other impositions paid by Debtor pursuant to this
Section 6.2.
ARTICLE VII
FURTHER ASSURANCES; ATTORNEY-IN-FACT; DISCHARGE
SECTION 7.1 Further Assurances.
(a) Debtor agrees that from time to time, at the expense
of Debtor, Debtor will promptly execute and deliver all further
instruments and documents, and take all further action that Secured
Party may reasonably deem necessary or desirable, or that Secured Party
may otherwise reasonably request, in order to perfect and protect any
security interest Granted or purported to be Granted hereby or to enable
Secured Party to exercise and enforce its rights and remedies hereunder
with respect to any Collateral. Without limiting the generality of the
foregoing, Debtor will cooperate to execute and file financing or
continuation statements, or amendments hereto or thereto, and such other
instruments or notices, as may be necessary or reasonably desirable, or
as Secured Party may reasonably request, in order to perfect and
preserve the security interests Granted or purported to be Granted
hereby.
(b) A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement where permitted by
law.
(c) Debtor will furnish to Secured Party from time to time
statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
Secured Party may reasonably request, all in reasonable detail.
SECTION 7.2 Secured Party Appointed Attorney-in-Fact. Debtor
hereby irrevocably appoints Secured Party to serve as Debtor's attorney-in-fact
(provided, the parties hereto agree that Secured Party may not act as Debtor's
attorney-in-fact until the occurrence and during the continuation of an Event
of Default), with full authority in the place and stead of Debtor and in the
name of Debtor, Secured Party or otherwise, from time to time in Secured
Party's discretion, to take any action and to execute any instrument, including
without limitation financing statements or amendments thereto, which Secured
Party may deem necessary or advisable to accomplish the purposes of this
Agreement, including without limitation:
(a) to obtain and adjust insurance required to be paid to
Secured Party hereunder;
30
<PAGE> 31
(b) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for monies due and to become
due under or in respect of any of the Collateral;
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with subsections
(a) or (b) above; and
(d) to file any claims or take any action or institute any
Proceedings which Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights
of Secured Party with respect to any of the Collateral.
SECTION 7.3 Secured Party May Perform. If Debtor fails to perform
any agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Debtor under Section 6.1.
SECTION 7.4 Secured Party's Duties. The powers conferred on
Secured Party hereunder are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any such powers. Secured
Party shall have no duty as to any Collateral or as to the taking of any
necessary steps to preserve rights against other parties or any other rights
pertaining to any Collateral.
SECTION 7.5 Continuing Security Interest; Transfer of Note;
Termination. This Agreement shall: (a) create a continuing security interest
in the Collateral and shall remain in full force and effect until payment in
full of the Secured Obligations, be binding upon Debtor, its successors and
assigns and (b) inure to the benefit of Secured Party and its permitted
successors, transferees and assigns. Without limiting the generality of the
foregoing clause, Secured Party may assign or otherwise transfer all or any
part of Secured Party's interest in the Notes and/or the Security Instruments
to one or more persons or entities, and such other persons or entities shall
thereupon become vested with all the benefits in respect thereof Granted to
Secured Party herein. Upon the payment in full of the Secured Obligations, the
security interest Granted hereby shall terminate and all rights to the
Collateral shall revert to Debtor. Upon any such termination, Secured Party
will execute and deliver to Debtor such documents as Debtor shall reasonably
request to evidence such termination.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices. Except as expressly permitted herein to the
contrary, all notices and other communications provided for hereunder shall be
in writing (including communication by telecopier) and mailed (postage prepaid,
by registered or certified mail, return receipt requested), telecopied or hand
delivered:
31
<PAGE> 32
if to Secured Party, at:
NationsBanc Leasing Corporation of
North Carolina
101 South Tryon Street, NC1-002-38-20
Charlotte, North Carolina 28255
Attention: Manager of Corporate Lease
Administration
Telecopy: (704) 386-0892
or if to Debtor, at:
Seitel Geophysical, Inc.
50 Briar Hollow Lane, 7th Floor-West
Houston, Texas 77027
Attention: Debra D. Valice
Telecopy: (713) 627-1114
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other party. All such notices and
communications shall be effective (a) five (5) days after such have been
deposited in the mail or (b) immediately (i) after such have been telecopied to
the appropriate telecopy number and (ii) after such have been hand delivered to
the appropriate address.
SECTION 8.2 Risk of Loss. Debtor shall bear all risk of any loss
of or damage to the Collateral and in no event shall Secured Party be liable
for such loss or damage.
SECTION 8.3 Powers and Agencies. Whenever in this Agreement
Secured Party is Granted the power of attorney or is appointed the agent and
attorney-in-fact with respect to any Person, such Grant or appointment is
irrevocable and coupled with an interest. Secured Party shall have full power
of substitution and delegation in respect of all such Grants and appointment.
SECTION 8.4 Entire Agreement. The Notes, this Agreement and the
other Security Instruments embody the entire agreement between the parties and
supersede all prior agreements and understandings, if any, relating to the
subject matter hereof.
SECTION 8.5 Lawful Interest. No provision in the Notes, this
Agreement or any Security Instrument or other document in favor of Secured
Party shall require or permit the collection of interest in excess of the
maximum lawful rate which Debtor may contract for, stipulate or agree to pay as
determined by a court of competent jurisdiction over the holder of the Notes or
any such document. In determining whether or not the interest paid or payable
under any specific contingency exceeds such maximum lawful rate, Debtor and
Secured Party shall, to the full extent permitted by applicable law, prorate,
allocate and spread, in equal parts, the total amount of interest throughout
the entire contemplated term of the Notes or other document, as the case may
32
<PAGE> 33
be, so that the interest rate is uniform throughout the entire term of the
Notes or such document. If it is so determined that any interest in excess of
such maximum lawful rate is provided for, such excess shall be applied first to
any other amounts not constituting interest due or which may become due and
payable to Debtor under the Notes or any of such other documents, and the
balance, if any, shall be refunded to Debtor; provided, however, that in no
event shall Debtor be obligated to pay, and Secured Party hereby waives payment
of, the amount of interest to the extent it is in excess of the amount
permitted by applicable law.
SECTION 8.6 Survival; Severability. If any word, phrase,
sentence, paragraph, provision or section of this Agreement, the Notes or any
other Security Instrument shall be held, declared or pronounced void, voidable,
invalid, unenforceable or inoperative for any reason by any court of competent
jurisdiction, governmental authority or otherwise, such holding, declaration or
pronouncement shall not adversely affect any other word, phrase, sentence,
paragraph, provision or section of this Agreement, the Notes or any other
Security Instrument, which shall otherwise remain in full force and effect and
be enforced in accordance with their respective terms, and the effect of such
holding, declaration or pronouncement shall be limited to the territory or the
jurisdiction in which made. All agreements, covenants, representations,
warranties and conditions contained in this Agreement or made pursuant to the
provisions hereof shall survive the execution and delivery of this Agreement
until the Secured Obligations shall have been paid and performed in full. All
statements by Debtor contained in any certificate or other instrument delivered
pursuant to the provisions of this Agreement or any other Security Instrument
shall constitute the representations and warranties of Debtor.
SECTION 8.7 Binding Effect. This Agreement shall be binding upon
and inure to the benefit of Debtor and Secured Party and their respective
successors and assigns, except that Debtor shall not have the right to assign
its rights hereunder of any interest herein without the prior written consent
of Secured Party. Secured Party may assign all or any part of, or any interest
in, its rights and benefits hereunder, under the Notes and any Security
Instrument as permitted under Section 7.5 hereof, and to the extent of such
permitted assignment each such assignee shall have the same rights and benefits
against Debtor as it would have had if it were Secured Party hereunder.
SECTION 8.8 Amendment and Waiver. No amendment or waiver of any
provision of the Notes, this Agreement or any of the other Security
Instruments, or consent to any departure by Debtor therefrom, shall in any
event be effective unless the same shall be in writing and signed by Secured
Party and Debtor, and such waiver and consent shall be effective only in the
specific instance and for the specific purpose for which given. No failure on
the part of Secured Party to exercise, and no delay in exercising, any right
under the Notes, this Agreement or any of the other Security Instruments shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right under any such instrument or agreement preclude any other or further
exercise thereof or the exercise of any other right.
SECTION 8.9 Headings; Execution in Counterpart. The section and
article headings herein are for convenience of reference only, and shall not
limit or otherwise affect the meaning
33
<PAGE> 34
of any provision herein. This Agreement may be executed in counterparts, each
of which shall constitute an original, but all of which together shall
constitute one and the same Agreement.
SECTION 8.10 Transaction Costs. Debtor shall pay all reasonable
costs and out-of-pocket expenses of Secured Party incurred in connection with
preparation, negotiation, execution, modification and/or enforcement of the
Notes, this Agreement, the other Security Instruments including without
limitation (a) the reasonable legal fees and expenses of Moore & Van Allen,
PLLC, (b) all filing and registration costs, (c) all fees and disbursements
incurred by Secured Party in connection with the custody, preservation, use or
operation of, or the sale of, collection from, or other realization upon, any
of the Collateral, and (d) all fees and disbursements incurred by Secured Party
in connection with the failure by Debtor to perform or observe any of the
provisions hereof.
SECTION 8.11 APPLICABLE LAW; CONSENT TO JURISDICTION AND VENUE;
WAIVER OF JURY TRIAL. THIS AGREEMENT,THE NOTES AND THE OTHER SECURITY
INSTRUMENTS AND ALL MATTERS RELATING THERETO SHALL, EXCEPT TO THE EXTENT
OTHERWISE REQUIRED BY APPLICABLE LAW, BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT
REGARD TO CONFLICT OF LAWS PRINCIPLES. DEBTOR HEREBY SUBMITS TO THE
JURISDICTION AND VENUE OF THE STATE AND FEDERAL COURTS OF MECKLENBURG COUNTY,
NORTH CAROLINA AND AGREES THAT SECURED PARTY MAY, AT ITS OPTION, ENFORCE ITS
RIGHTS HEREUNDER AND UNDER THE NOTES AND OTHER SECURITY INSTRUMENTS IN SUCH
COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES THE DEFENSE OF AN INCONVENIENT FORUM
TO MAINTENANCE OF ANY ACTION OR PROCEEDING BY SECURED PARTY IN SUCH COURTS.
DEBTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE
NOTES OR ANY OTHER SECURITY INSTRUMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED
HEREBY OR THEREBY.
SECTION 8.12 Break-Funding Costs. Upon any early termination of
this Agreement and/or any early prepayment of the Notes for any reason which is
not expressly permitted under the Notes, Debtor shall promptly pay Secured
Party (in addition to all other amounts due and owing hereunder) an amount
equal to the Break-Funding Costs incurred by Secured Party, as such are (a)
determined by Secured Party at such time in its reasonable discretion and (b)
specified in writing to Debtor.
SECTION 8.13 Intention of the Parties. It is the intention of
the parties to this Agreement that the Equipment be and remain personal
property, and at no time (so long as any of the Secured Obligations remain
outstanding) shall such Equipment be attached, affixed or otherwise become a
part of any vehicle or vessel. Further, each of the parties hereto agree that
it is their intent that the provisions of the UCC govern the creation and
perfection of a security interest in the Collateral.
34
<PAGE> 35
IN WITNESS WHEREOF, Debtor and Secured Party have caused this Agreement
to be executed by their respective officers thereunto duly authorized as of the
date first above written.
SEITEL GEOPHYSICAL, INC., as Debtor
By: /s/ Horace A. Calvert
Name: Horace A. Calvert
Title: Executive Vice President
NATIONSBANC LEASING CORPORATION OF
NORTH CAROLINA, as Secured Party
By: /s/ George L. Robinson, Jr.
Name: George L. Robinson, Jr.
Title: Senior Vice President
35
<PAGE> 36
SCHEDULE 1.3(a)
SECURED TERM NOTE A
DUE JULY 12, 2001
$5,902,372.00 July 12, 1996
FOR VALUE RECEIVED, the undersigned SEITEL GEOPHYSICAL, INC., a Delaware
corporation ("Debtor") HEREBY PROMISES TO PAY to the order of NATIONSBANC
LEASING CORPORATION OF NORTH CAROLINA, a North Carolina corporation ("Secured
Party"), the principal sum of FIVE MILLION NINE HUNDRED TWO THOUSAND THREE
HUNDRED AND SEVENTY-TWO DOLLARS ($5,902,372.00) (the "Original Amount")
pursuant to the terms and conditions of that certain Loan and Security
Agreement dated as the date hereof between the Debtor and the Secured Party, as
amended, modified or replaced from time to time (as so amended, modified or
replaced, the "Agreement" - all the terms, conditions, definitions and
covenants of such Agreement are expressly made a part hereof in the same manner
and with the same effect as if set forth herein at length, any holder of this
Secured Term Note A (the "Note") being entitled to the benefits and remedies
provided for in the Agreement).
The Bank has made a term loan to the Borrower as provided in Section
1.3(a) of the Loan Agreement. The outstanding principal balance hereof shall
be due and payable as provided in Section 1.3(a)(i) of the Agreement.
Notwithstanding the foregoing, the final payment made on this Note shall be an
amount sufficient to discharge in full the unpaid Original Amount and all
accrued and unpaid interest on, and any other amounts due under this Note and
under the Agreement.
This Note shall bear interest on the outstanding balance hereof, and
such interest shall be payable hereunder, as provided in Section 1.3(a)(i) and
(a)(ii) of the Agreement.
In the event the amounts owing under this Note shall be accelerated in
accordance with the terms of the Agreement, the amounts owing hereunder shall
become immediately due and payable without presentation, demand, protest or
notice of any kind, all of which are hereby expressly waived. Further, in the
event amounts owing hereunder are not paid when due (including any stated or
accelerated maturity), the Debtor agrees to pay promptly upon demand, in
addition to principal, interest and other amounts owing hereunder, all costs of
collection, including reasonable attorneys' fees.
All payments shall be payable, in lawful money of the United States and
in immediately available funds without setoff or counterclaim, to Secured Party
at its office at NationsBank Plaza, 101 South Tryon Street, NC1-002-38-20,
Charlotte, North Carolina 28255 or such other address as the holder thereof
shall notify Debtor in writing.
In determining whether or not the interest paid or payable, under any
specific contingency, exceeds the maximum lawful rate permitted by law, Debtor
and Secured Party shall, to the full
<PAGE> 37
extent permitted by applicable law, exclude voluntary prepayment and the
effects thereof and amortize, prorate, allocate and spread, in equal parts, the
total amount of interest throughout the entire contemplated term of this Note
so that the interest rate is uniform throughout the entire term of this Note.
If it is so determined that any interest in excess of such maximum lawful rate
is provided for, then such excess shall be applied first to any other amounts
not constituting interest due or which may become due under this Note or the
Agreement and the balance, if any, shall be refunded to Debtor; provided,
however, that in no event shall Debtor be obligated to pay, and Secured Party
hereby waives payment of, the amount of interest to the extent it is in excess
of the amount permitted by applicable law. No provision in this Note or the
Agreement shall require or permit the collection of interest in excess of the
maximum lawful rate.
This Note may be prepaid by the Debtor in accordance with Section 1.3(c)
of the Agreement only if all amounts owing with respect to this Note, Agreement
and the other Security Instruments are paid in full. Except as otherwise
provided for herein and in the Agreement, this Note shall not be subject to
prepayment.
THIS NOTE, THE AGREEMENT AND THE SECURITY INSTRUMENTS AND ALL MATTERS
RELATING THERETO SHALL, EXCEPT TO THE EXTENT OTHERWISE REQUIRED BY APPLICABLE
LAW, BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NORTH CAROLINA WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
DEBTOR HEREBY SUBMITS TO THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL
COURTS OF NORTH CAROLINA AND AGREES THAT THE SECURED PARTY MAY, AT ITS OPTION,
ENFORCE ITS RIGHTS HEREUNDER AND UNDER THE AGREEMENT AND THE OTHER SECURITY
INSTRUMENTS IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES THE DEFENSE OF AN
INCONVENIENT FORUM TO MAINTENANCE OF ANY ACTION OR PROCEEDING BY SECURED PARTY
IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTE,
THE AGREEMENT OR ANY OTHER SECURITY INSTRUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
IN WITNESS WHEREOF, the Debtor has caused this Note to be executed as of
the date appearing above.
SEITEL GEOPHYSICAL, INC.
By:
--------------------------------
Name (Printed):
--------------------
Title:
-----------------------------
<PAGE> 38
SCHEDULE 1.3(b)
SECURED TERM NOTE B
DUE AUGUST 31, 1999
$1,361,839.13 July 12, 1996
FOR VALUE RECEIVED, the undersigned SEITEL GEOPHYSICAL, INC., a Delaware
corporation ("Debtor") HEREBY PROMISES TO PAY to the order of NATIONSBANC
LEASING CORPORATION OF NORTH CAROLINA, a North Carolina corporation ("Secured
Party"), the principal sum of ONE MILLION THREE HUNDRED SIXTY-ONE THOUSAND
EIGHT HUNDRED THIRTY-NINE AND 13/100 DOLLARS ($1,361,839.13) (the "Original
Amount") pursuant to the terms and conditions of that certain Loan and Security
Agreement dated as of the date hereof between the Debtor and the Secured Party,
as amended, modified or replaced from time to time (as so amended, modified or
replaced, the "Agreement" - all the terms, conditions, definitions and
covenants of such Agreement are expressly made a part hereof in the same manner
and with the same effect as if set forth herein at length, any holder of this
Secured Term Note B (the "Note") being entitled to the benefits and remedies
provided for in the Agreement).
The Bank has made a term loan to the Borrower as provided in Section
1.3(b) of the Loan Agreement. The outstanding principal balance hereof shall
be due and payable as provided in Section 1.3(b)(ii) of the Agreement.
Notwithstanding the foregoing, the final payment made on this Note shall be an
amount sufficient to discharge in full the unpaid Original Amount and all
accrued and unpaid interest on, and any other amounts due under this Note and
under the Agreement.
This Note shall bear interest on the outstanding balance hereof, and
such interest shall be payable hereunder, as provided in Section 1.3(b)(ii) and
(b)(iii) of the Agreement.
In the event the amounts owing under this Note shall be accelerated in
accordance with the terms of the Agreement, the amounts owing hereunder shall
become immediately due and payable without presentation, demand, protest or
notice of any kind, all of which are hereby expressly waived. Further, in the
event amounts owing hereunder are not paid when due (including any stated or
accelerated maturity), the Debtor agrees to pay promptly upon demand, in
addition to principal, interest and other amounts owing hereunder, all costs of
collection, including reasonable attorneys' fees.
All payments shall be payable, in lawful money of the United States and
in immediately available funds without setoff or counterclaim, to Secured Party
at its office at NationsBank Plaza, 101 South Tryon Street, NC1-002-38-20,
Charlotte, North Carolina 28255 or such other address as the holder thereof
shall notify Debtor in writing.
<PAGE> 39
In determining whether or not the interest paid or payable, under any
specific contingency, exceeds the maximum lawful rate permitted by law, Debtor
and Secured Party shall, to the full extent permitted by applicable law,
exclude voluntary prepayment and the effects thereof and amortize, prorate,
allocate and spread, in equal parts, the total amount of interest throughout
the entire contemplated term of this Note so that the interest rate is uniform
throughout the entire term of this Note. If it is so determined that any
interest in excess of such maximum lawful rate is provided for, then such
excess shall be applied first to any other amounts not constituting interest
due or which may become due under this Note or the Agreement and the balance,
if any, shall be refunded to Debtor; provided, however, that in no event shall
Debtor be obligated to pay, and Secured Party hereby waives payment of, the
amount of interest to the extent it is in excess of the amount permitted by
applicable law. No provision in this Note or the Agreement shall require or
permit the collection of interest in excess of the maximum lawful rate.
This Note may be prepaid by the Debtor in accordance with Section 1.3(c)
of the Agreement only if all amounts owing with respect to this Note, the
Agreement and the other Security Instruments are paid in full. Except as
otherwise provided for herein and in the Agreement, this Note shall not be
subject to prepayment.
THIS NOTE, THE AGREEMENT AND THE SECURITY INSTRUMENTS AND ALL MATTERS
RELATING THERETO SHALL, EXCEPT TO THE EXTENT OTHERWISE REQUIRED BY APPLICABLE
LAW, BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NORTH CAROLINA WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
DEBTOR HEREBY SUBMITS TO THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL
COURTS OF NORTH CAROLINA AND AGREES THAT THE SECURED PARTY MAY, AT ITS OPTION,
ENFORCE ITS RIGHTS HEREUNDER AND UNDER THE AGREEMENT AND THE OTHER SECURITY
INSTRUMENTS IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES THE DEFENSE OF AN
INCONVENIENT FORUM TO MAINTENANCE OF ANY ACTION OR PROCEEDING BY SECURED PARTY
IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTE,
THE AGREEMENT OR ANY OTHER SECURITY INSTRUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
<PAGE> 40
IN WITNESS WHEREOF, the Debtor has caused this Note to be executed as of
the date appearing above.
SEITEL GEOPHYSICAL, INC.
By:
--------------------------------
Name (Printed):
--------------------
Title:
-----------------------------
<PAGE> 41
SCHEDULE 1.3(b)(i)
NOTICE OF BORROWING
NationsBanc Leasing Corporation of
North Carolina
101 South Tryon Street, NC1-002-38-20
Charlotte, North Carolina 28255
Attn: Manager of Corporate Lease Administration
Facsimile No.: (704) 386-0892
Re: Notice of Borrowing under Loan and Security Agreement dated as of July
___, 1996 (the "Loan Agreement") between Seitel Geophysical, Inc.
("Debtor") and NationsBanc Leasing Corporation of North Carolina
("Secured Party")
Dear Sir:
The Debtor hereby requests an advance under the above-referenced Loan Agreement
in accordance with the following information:
1. Debtor:
-------------------------------------------
2. Date of Requested Advance:
------------------------
3. Amount of Requested Advance:
----------------------
4. Bill of Sale Supporting Requested Advance: See Attached Rider
The Debtor hereby certifies that as of the date hereof no Default or Event of
Default currently exists under the Loan Agreement and no Default or Event of
Default shall exist as a result of the making of the Requested Advance.
Sincerely,
[DEBTOR]
<PAGE> 1
SCHEDULE 10.1.2
ASSUMPTION AND CONSENT
THIS ASSUMPTION AND CONSENT is entered into effective as of December
31, 1996 (this "Agreement") and is by and among SEITEL GEOPHYSICAL, INC., a
Delaware corporation ("Seitel"), EAGLE GEOPHYSICAL, INC., a Delaware
corporation ("Eagle"), NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a
North Carolina corporation ("NBLC") and SEITEL, INC., a Delaware corporation
(the "Guarantor").
All defined terms used herein but not otherwise defined shall have the
meaning set forth in that certain Loan and Security Agreement dated as of July
9, 1996 (the "Loan Agreement") between Seitel, as debtor, and NBLC, as secured
party.
W I T N E S S E T H:
WHEREAS, Seitel and NBLC are parties to the Loan Agreement.
WHEREAS, the Guarantor has provided to NBLC a guaranty of all amounts
due and payable by Seitel under the Loan Agreement, the Notes and all other
documents executed in connection therewith.
WHEREAS, Seitel wishes to assign to Eagle all of its right, title,
interests and obligations in, to and under the Loan Agreement, the Notes, the
Bills of Sales and the Equipment and Eagle wishes to accept such assignment.
WHEREAS, the parties hereto entered into this Assumption and Consent
to, among other things, (a) acknowledge and consent to the assignment from
Seitel to Eagle and (b) provide for the Guarantor to acknowledge its continuing
obligations under the Guaranty with respect to Eagle.
A G R E E M E N T
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledge, the parties hereto agree as
follows:
1. Assignment and Assumption. Seitel, in its capacity as Debtor
under the Loan Agreement, the Notes and all other documents executed in
connection therewith, hereby assigns to Eagle all of Seitel's right, title,
interests and obligations in, to and under the Loan Agreement, the Notes, the
Bills of Sale and the Equipment in accordance with that certain Contribution
and Assumption Agreement effective as of December 31, 1996 (the "Contribution
Agreement") between Seitel and Eagle. Eagle hereby acknowledges and agrees
that from and after December 31, 1996 (the "Effective Date") it shall be a
party to and Debtor under the Loan Agreement, the Notes, the Bills of Sale and
all other documents executed in connection therewith and agrees to be bound by
all of the terms of, and to assume and undertake all the obligations and
liabilities of,
<PAGE> 2
the Debtor as set forth therein whether such obligations and liabilities arise
prior to, on or after the Effective Date.
2. Consent to Assignment. NBLC hereby consents to the assignment
by Seitel to Eagle of all of Seitel's right, title, interests and obligations
in, to and under the Loan Agreement, the Notes, the Bills of Sale, the
Equipment and all other documents executed in connection therewith.
3. Acknowledgement by Guarantor. The Guarantor hereby
acknowledges and consents to the Contribution Agreement and this Agreement.
Further, the Guarantor agrees that the Guaranty Agreement dated as of July 9,
1996 from the Guarantor to NBLC guaranteeing all obligations of Seitel to NBLC
shall guarantee all obligations of Eagle to NBLC as if Eagle were the original
beneficiary of such Guaranty.
4. Representations, Warranties and Covenants. Eagle, as Debtor,
and the Guarantor hereby represent and warrant that as of the date hereof (a)
the representations and warranties of the Debtor set forth in Section 3.1 of
the Loan Agreement are true and correct in all material respects, (b) Debtor
shall comply with all covenants set forth in Sections 3.2 and 3.3 of the Loan
Agreement and (ii) no Default or Event of Default currently exists and is
continuing with respect to the Debtor or the Guarantor.
5. Conditions Precedent. The effectiveness of this Agreement is
contingent upon the receipt by NBLC of the following items, each in form and
substance satisfactory to NBLC: (a) the Contribution Agreement duly executed by
the parties thereto; (b) this Agreement duly executed by the parties hereto;
(c) Amended, Restated and Substituted Secured Term Note A duly executed by
Eagle in favor of NBLC; (d) Amended, Restated and Substituted Secured Term Note
B duly executed by Eagle in favor of NBLC; (e) an Officer's Certificate of
Eagle stating that (i) no Default or Event of Default has occurred and is
continuing and (ii) the assignment to and assumption by Eagle complies with the
terms and conditions of Section 3.3(k) of the Loan Agreement; (f) a Secretarial
Certificate of Eagle certifying as true and accurate the Articles of
Incorporation, By-Laws and Resolutions of Eagle, which such resolutions shall
authorize the transactions contemplated by this Agreement; (f) Good Standing
Certificates from Eagle's state of incorporation and each state where it is
required to qualify in order to do business; (g) a legal opinion of counsel to
Eagle and the Guarantor in form and substance satisfactory to NBLC; and (h)
such other certificates, financing statements, resolutions and opinions as
deemed necessary or advisable by NBLC.
6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
7. No Other Amendments. Except as modified hereby, all of the
terms and conditions of the Operative Agreements shall remain in full force and
effect.
2
<PAGE> 3
8. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of North Carolina.
[The remainder of this page has been intentionally left blank.]
3
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the Effective Date.
SEITEL GEOPHYSICAL, INC.
By: /s/ JAY N. SILVERMAN
------------------------------
Name: Jay N. Silverman
----------------------------
Title: President
---------------------------
EAGLE GEOPHYSICAL, INC.
By: /s/ JAY N. SILVERMAN
------------------------------
Name: Jay N. Silverman
----------------------------
Title: President
---------------------------
ACKNOWLEDGED, AGREED AND CONSENTED TO:
SEITEL, INC.
By: /s/ DEBRA D. VALICE
------------------------------
Name: Debra D. Valice
----------------------------
Title: Sr. Vice President - CFO
---------------------------
NATIONSBANC LEASING CORPORATION
NORTH CAROLINA
By: /s/ GEORGE L. ROBINSON JR.
------------------------------
Name: George L. Robinson Jr.
----------------------------
Title: Senior Vice President
---------------------------
4
<PAGE> 1
10.2
LOAN AND SECURITY AGREEMENT
between
EAGLE GEOPHYSICAL, INC.,
as Debtor,
and
NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA,
as Secured Party
dated as of February 6, 1997
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINED TERMS; CREDIT FACILITIES; CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SECTION 1.2 Other Terms. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.3 Term Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
SECTION 1.4 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE II SECURITY INTEREST . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.1 Grant of Security Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
SECTION 2.2 Security for Secured Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.3 Security Interest Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
SECTION 2.4 Debtor as Agent for Secured Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
ARTICLE III REPRESENTATIONS, WARRANTIES AND COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.1 Debtor's Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SECTION 3.2 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
SECTION 3.3 Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE IV INSURANCE, TRANSFER, CONDEMNATION AND EVENT OF LOSS . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.1 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.2 Transfer of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
SECTION 4.3 Condemnation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 4.4 Certain Events of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE V EVENTS OF DEFAULT AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.1 Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
SECTION 5.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
SECTION 5.3 Proceeds of Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
SECTION 5.4 Waiver of Rights; Receiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE VI INDEMNITY AND EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.1 General Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
SECTION 6.2 General Tax Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE VII FURTHER ASSURANCES; ATTORNEY-IN-FACT; DISCHARGE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.1 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
SECTION 7.2 Secured Party Appointed Attorney-in-Fact . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.3 Secured Party May Perform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.4 Secured Party's Duties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
SECTION 7.5 Continuing Security Interest; Transfer of Note; Termination . . . . . . . . . . . . . . . . . . 28
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8.2 Risk of Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8.3 Powers and Agencies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 8.5 Lawful Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.6 Survival; Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.7 Binding Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.8 Amendment and Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
SECTION 8.9 Headings; Execution in Counterpart . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.10 Transaction Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
<PAGE> 3
<TABLE>
<S> <C> <C>
SECTION 8.11 APPLICABLE LAW; CONSENT TO JURISDICTION AND VENUE; WAIVER OF JURY TRIAL . . . . . . . . . . . 31
SECTION 8.12 Break-Funding Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 8.13 Intention of the Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
</TABLE>
EXHIBIT A - Equipment Description
Schedule 1.3 - Notice of Borrowing
Schedule 1.3(a) - Form of Secured Term Note A
Schedule 1.3(b) - Form of Secured Term Note B
<PAGE> 4
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT dated as of February 6, 1997 (as
amended, modified, supplemented, restated and/or replaced from time to time,
the "Agreement") is between EAGLE GEOPHYSICAL, INC., a Delaware corporation
("Debtor"), and NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a North
Carolina corporation ("Secured Party").
PRELIMINARY STATEMENTS:
(1) Debtor has requested that Secured Party make loans in the
aggregate principal amount of $7,563,920.18 to Debtor pursuant to the terms of
the Agreement as evidenced by promissory notes in such amount to finance
Debtor's acquisition of the Equipment (hereinafter defined).
(2) Secured Party has agreed to make the Loans to Debtor on the
condition, among other things, that Debtor shall have executed and delivered
the Notes (hereinafter defined) payable to Secured Party, this Agreement, any
required amendment or supplement hereto Granting (hereinafter defined) Secured
Party a first priority security interest in the Collateral (hereinafter
defined), related UCC-1 financing statements and other filings reasonably
deemed necessary or prudent by Secured Party to perfect such security interest.
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor and Secured Party hereby agree as follows:
ARTICLE I
DEFINED TERMS; CREDIT FACILITIES; CONDITIONS PRECEDENT
SECTION 1.1 DEFINITIONS.
When used in this Agreement, the following capitalized terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Affiliate" means a Person (i) which directly or indirectly through
one or more intermediaries controls, or is controlled by, or is under common
control with, Debtor; (ii) which beneficially owns or holds 10% or more of any
class of the voting stock of Debtor, or (iii) of which 10% or more of the
voting stock is beneficially owned or held by Debtor or a Subsidiary.
"Amortization Rate" means (i) for Term Loan A, the interpolated
generic two year U.S. Treasury yield as quoted by the Dow Jones/Telerate
Inc. system at approximately 11:00 a.m. (Charlotte, North Carolina time) five
(5) Business Days prior to the Term Loan A Draw Termination Date plus 1.48% and
(ii) for Term Loan B, the interpolated generic three year U.S. Treasury yield
as quoted by the Dow Jones/Telerate Inc. system at approximately 11:00 a.m.
(Charlotte, North Carolina time) plus 1.56%, in each case expressed on a per
annum basis; or, if such data for any reason ceases to be available on the Dow
Jones/Telerate Inc. system, the applicable U.S. Treasury yield shall be
determined from any publicly available source of similar market data
selected by Secured Party; provided, however, to the extent any such date on
which the U.S. Treasury yield is to be determined is not a Business Day, then
the applicable U.S. Treasury yield in effect on the immediately preceding
Business Day shall be the effective yield.
"Assigned Agreements" has the meaning set forth in Section 2.1 lb)
hereof.
"Beneficiary" has the meaning set forth in Section 6.1 hereof.
<PAGE> 5
"Bills of Sale" means each warranty bill of sale in favor of the
Debtor duly executed by the Seller of the Equipment or other evidence of title
transfer satisfactory to Secured Party.
"Break-Funding Costs" means, in the case of any voluntary prepayment
of all or any portion of the unamortized balance of the Loans, an amount
reasonably Secured Party as shall compensate Secured Party as a result of the
inability of Secured Party in its reasonable discretion to redeploy the amount
so prepaid at an interest rate equal to or greater than the interest rate
on the applicable Loan and for a term equal to the remaining average life of
the applicable Loan.
"Business Day" means any day other than a day on which banking
institutions in the states of North Carolina or Georgia are authorized or
required by law to close.
"Closing Date" means February 6, 1997.
"Collateral" shall have the meaning set forth in Section 2.1 hereof.
"Default" shall mean an event or occurrence which upon the giving of
notice and/or the of time shall constitute an Event of Default.
"Equipment" means all items of equipment described in Exhibit A
attached hereto, together with any replacement parts which may from time to
time be incorporated in such equipment and title to which shall have vested in
Debtor.
"Equipment Cost" means, with respect to any item of Equipment, an
amount equal to the sum of (a) the total cost paid by Debtor for such item of
Equipment plus b) all excise, sales and use taxes and registration fees paid by
Debtor on or with respect to the acquisition of such item of Equipment, both as
evidenced by invoices, appraisals and/or bills of sale in form and
substance reasonably satisfactory to Secured Party.
"ERISA" has the meaning set forth in Section 3.1 (t) hereof.
"Eurodollar Rate" for a particular day means the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in U.S. dollars at approximately 11:00 a.m. (London time) for a
period of one month an amount substantially equal to the requested Term Loan A
advance or the requested Term Loan B advance, as appropriate. If for any
reason such rate is not available, the term "Eurodollar Rate" shall mean the
rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
appearing on Reuters Screen LIBO Page as the London interbank offered rate for
deposits in U.S. dollars at approximately 11:00 a.m. (London time) for a period
of one month and in an amount substantially equal to the requested Term Loan A
Advance or the requested Term Loan B advance, as appropriate; provided,
however, if more than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such rates.
"Event of Default" has the meaning set forth in Section 5.1 hereof.
"Event of Loss" with respect to an item of Equipment means any of the
following events: (i) loss of any item of Equipment or of the use thereof due
to theft or disappearance prior to the expiration or termination of this
Agreement, or the non-existence of any item of Equipment at the expiration or
termination of this Agreement, (ii) destruction, damage beyond repair, or
rendition of any item of Equipment permanently unfit for normal use for any
reason whatsoever, (iii) any damage to any item of Equipment which results in
an insurance settlement with respect to such item of Equipment on the basis of
a total loss, or (iv) the condemnation, confiscation, seizure, or requisition
of use or title to any item of Equipment by any governmental authority under
the power of eminent domain or otherwise.
5
<PAGE> 6
"Event of Loss Payment Date" has the meaning set forth in Section 4.3
hereof.
"Grant" means to grant, bargain, sell, warrant, remise, release,
convey, assign, transfer, mortgage, pledge, deposit, set over, confirm or
create a security interest under the North Carolina UCC. A grant with respect
to any instrument, document or agreement shall include all rights, powers and
options (but none of the obligations) of the granting party thereunder,
including without limitation the right to generally do anything which the
granting party then is or thereafter may be entitled to do thereunder or with
respect thereto.
"Guarantor" means Seitel, Inc., a Delaware corporation.
"Guaranty" means the Guaranty Agreement dated as of the date hereof,
as such may be amended, modified, supplemented, restated and/or replaced from
time to time, executed by Guarantor for the benefit of Secured Party.
"Installment Payment Date" means the last day of each calendar month
with respect to Term Loan A and/or Term Loan B.
"Lien" means any lien, claim, charge, security interest, mortgage
and/or other encumbrance.
"Loans" means each of Term Loan A and Term Loan B.
"North Carolina UCC" or "UCC" means the North Carolina Uniform
Commercial Code, N.C. Gen. Stat. Chapter 25, Articles 1-11, as now in effect
and as hereafter amended from time to time.
"Notes" means each of Secured Term Note A and Secured Term Note B.
"Notice of Borrowing" means a notice of borrowing delivered pursuant
to Section 1.3(a) or 1.3(b) substantially in the form of Schedule 1.3 hereto.
"PBGC" has the meaning set forth in Section 3.1 (t) hereof.
"Permitted Contest" means any contest by Debtor with respect to any
Lien, tax or imposition referred to in Section 6.2 hereof, so long as Debtor
shall contest, in good faith and at its expense, the existence, the amount or
the validity thereof, the amount of the damages caused thereby, or the extent
of its liability therefor, by appropriate Proceedings which do not result in
(i) the collection of, or other realization upon, the tax, assessment, levy,
fee, rent or Lien so contested, (ii) the sale, forfeiture or loss of any item
of Equipment or any material part thereof, or (iii) any interference with the
use of any item of Equipment or any material part thereof.
"Permitted Encumbrances", with respect to the Collateral, means (i)
this Agreement and any assignment permitted hereby, (ii) any Lien affecting the
Collateral for work or service performed or materials furnished securing
amounts which are not yet due and payable or which are not otherwise delinquent
and (iii) any Lien which is the subject of a Permitted Contest and (iv) any
other Lien incurred in the ordinary course of business which such Lien does not
exceed $50,000.
"Permitted Lease" shall mean a lease of all the Equipment or any
portion thereof entered into between Debtor and a Permitted Lessee; provided,
that the following conditions shall be met with respect to each such lease: (i)
Secured Party shall have given its prior written consent to such lease; (ii)
upon the effective date of such lease, there shall exist no Default or Event of
Default and no Liens on any of the Collateral other than the Permitted
Encumbrances; (iii) each such lease shall specify explicitly as a condition to
the effectiveness of such lease that (A) Debtor shall remain fully obligated
and in compliance with the terms and conditions of this Agreement and (B) upon
Secured Party's delivery to the lessee of notice specifying that an Event of
Default has occurred and is continuing and that the Secured Party has commenced
the exercise of remedies with respect to the Equipment, such lease will
6
<PAGE> 7
automatically terminate and be of no further force or effect and the lessee
will cause each item of Equipment then subject to such lease to be delivered to
Secured Party at a place to be designated by Secured Party.
"Permitted Lessee" shall mean any Person which (i) is domiciled in the
United States, (ii) in Debtor's reasonable opinion, is financially responsible
and (iii) at the time Debtor enters into such lease, is not the subject of any
filing by or against such Person of a petition under any federal bankruptcy law
or any federal law replacing or superseding such law or any state bankruptcy
law in which such Person is named as debtor.
"Person" means an individual or a corporation, partnership, trust,
association, joint venture, joint stock company, firm or other enterprise or
government (or a political subdivision or any agency, department or
instrumentality thereof) or other entity of any kind.
"Plan" means any "employee benefit pension plan" or other "plan"
(including a "multiemployer plan" as defined in Section 3(37) of ERISA)
established or maintained, as to which contributions have been made, by Debtor
or any Affiliate for either of their respective employees and which is covered
by Title IV of ERISA or to which Section 412 of the Internal Revenue Code of
1986, as amended applies.
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Replacement Equipment" means an item (i) of comparable make, model
and manufacture as the item of Equipment with respect to which an Event of Loss
has occurred, (ii) selected by Debtor and consented to by Secured Party, such
consent not to be unreasonably withheld or delayed, (iii) owned by Debtor free
and clear of all Liens and other encumbrances other than Permitted Encumbrances
and (iv) having a value, utility and useful life at least equal to, and being
in as good operating condition as, the item of Equipment with respect to which
the Event of Loss occurred, assuming such item of Equipment was in the
condition and repair required by the terms hereof immediately prior to the
occurrence of the Event of Loss.
"Secured Obligations" has the meaning set forth in Section 2.2 hereof.
"Secured Party" means NationsBanc Leasing Corporation of North
Carolina, a North Carolina corporation, and its successors and assigns.
"Security Instrument" means each of this Agreement, and any other
instrument, document, financing statement or agreement with respect to which
any right or interest in or with respect to the Collateral has been
Granted to Secured Party or has been recorded with the appropriate filing
office.
"Secured Term Note A" means the promissory note of the Debtor in
favor of the Secured Party dated the Closing Date evidencing Term Loan A as
provided pursuant to Section 1.3(a)(iii), as amended, modified,
supplemented, extended, renewed or replaced from time to time.
"Secured Term Note B" means the promissory note of the Debtor in favor
of the Secured Party dated the Closing Date evidencing Term Loan B as provided
pursuant to Section 1.3(b)(iii), as amended, modified, supplemented, extended,
renewed or replaced from time to time.
"Seller" means each Person executing a Bill of Sale in favor of Debtor
with respect to any Equipment.
"Subsidiary" means any corporation, limited liability company,
partnership, joint venture, trust or estate of which (i) more than 50% of the
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation; or (ii) the interest in the capital
or profits of such corporation, limited liability company, partnership or joint
venture; or (iii) the beneficial interest of such trust or estate is owned
directly or indirectly by Guarantor and/or one of its Subsidiaries.
7
<PAGE> 8
"Taxes or Other Impositions" has the meaning set forth in Section 6.2
hereof.
"Term Loan A" means the term loan made pursuant to the provisions of
Section 1.3(a).
"Term Loan A Commitment" has the meaning set forth in Section 1.3(a)
hereof.
"Term Loan B" means the term loan made pursuant to the provisions of
Section 1.3(b).
"Term Loan B Commitment" has the meaning set forth in Section 1.3(b)
hereof.
"Term Loan A Draw Termination Date" has the meaning set forth in
Section 1.3(a) hereof.
"Term Loan B Draw Termination Date" has the meaning set forth in
Section 1.3(b) hereof.
"Termination Value" means, with respect to any or all item(s) of
Equipment, an amount equal to the Equipment Cost of such item(s) of Equipment
multiplied by the Termination Value Percentage as of such Installment Payment
Date.
"Termination Value Percentage" means the termination value percentage
for Term Loan A and/or Term Loan B, as appropriate, as of each Installment
Payment Date calculated as of the date on which the Amortization Rate is
determined for each of Term Loan A and Term Loan B.
SECTION 1.2 OTHER TERMS.
Unless otherwise defined in this Agreement, all terms defined in the
North Carolina UCC and used in this Agreement have the meanings set forth in
the North Carolina UCC.
SECTION 1.3 TERM LOANS.
(a) Term Loan A. Subject to and upon the terms and
conditions and relying upon the representations and warranties herein
set forth, the Secured Party agrees to make advances ("Term Loan A")
to the Debtor from time to time from the Closing Date to and including
February 28, 1997 (as such date may be extended from time to time in
the sole discretion of the Secured Party, the "Term Loan A Draw
Termination Date") in an aggregate principal amount of up to FIVE
HUNDRED FIFTY-SEVEN THOUSAND SEVEN HUNDRED SIXTY-EIGHT AND 14/100
DOLLARS ($557,768.14) (the "Term Loan A Commitment") for the purposes
hereinafter set forth. Amounts repaid on Term Loan A may not be
reborrowed.
(i) Term Loan A Advances. So long as the
conditions to advances have been satisfied, the Secured Party
will make Term Loan A advances to the Debtor from time to time
from the Closing Date to the Term Loan A Draw Termination Date
upon submission of a Notice of Borrowing substantially in the
form of Schedule 1.3 to the Secured Party five (5) Business
Days prior to the date of the requested advance. Each such
notice shall specify (A) the date of the requested advance
(which shall be a Business Day), (B) shall not exceed, taking
into account all prior Term Loan A advances, the Term Loan A
Commitment, (C) shall be in a minimum amount of $100,000 and
(D) shall be accompanied by any supporting invoices and
requisitions relating to the requested advance. The Secured
Party shall make such Term Loan A advances available by
deposit to the Debtor's account at the office of Bank One,
Texas, N.A. in Houston, Texas.
(ii) Payment of Principal and Interest.
8
<PAGE> 9
(A) Interest During Draw Period. Term Loan A
shall be subject to a draw period during which accrued
interest shall be payable monthly in arrears on the last day
of each calendar month beginning with the first of such dates
to occur after the Closing Date. Interest during such draw
period shall accrue at the applicable Eurodollar Rate plus
1.30% (computed on the basis of the actual number of days
elapsed over a year of 360 days) with respect to the Term Loan
A advance made on the Closing Date and with respect to each
Term Loan A advance made thereafter throughout the draw
period. The Eurodollar Rate applicable to the Term Loan A
advance made on the Closing Date shall be determined five (5)
Business Days prior to the Closing Date. The Eurodollar Rate
applicable to each Term Loan A advance made after the Closing
Date shall be determined five (5) Business Days prior to the
date of the requested advance.
(B) Principal and Interest after Draw Period.
The Term Loan A Commitment shall bear interest at a fixed rate
equal to the Amortization Rate. The Amortization Rate for
Term Loan A shall be determined five (5) Business Days prior
to the Term Loan A Draw Termination Date. Principal and
interest on Term Loan A shall be amortized and payable in
thirty-six (36) consecutive level monthly installments
beginning with the payment due on March 31, 1997. Payments
received on Term Loan A shall be applied first to accrued
interest and then to principal in inverse order of maturity.
Upon the occurrence and during the continuation of an Event of
Default hereunder, the principal of and, to the extent permitted by
law, interest on Term Loan A hereunder shall bear interest, payable on
demand, at a rate equal to 2.0% per annum in excess of the rate
otherwise applicable hereunder.
(iii) Secured Term Note A. Term Loan A shall be
evidenced by a duly executed promissory note of the Debtor to
the Secured Party dated the Closing Date in an original
principal amount equal to the Term Loan A Commitment and
substantially in the form of Schedule 1.3(a) hereto.
(b) Term Loan B. Subject to and upon the terms and
conditions and relying upon the representations and warranties herein
set forth, the Secured Party agrees to make advances ("Term Loan B")
to the Debtor from time to time from the Closing Date to and including
April 30, 1997 (as such date may be extended from time to time in the
sole discretion of the Secured Party, the "Term Loan B Draw
Termination Date") in an aggregate principal amount of up to SEVEN
MILLION SIX THOUSAND ONE HUNDRED FIFTY-TWO AND 04/100 DOLLARS
($7,006,152.04) (the "Term Loan B Commitment") for the purposes
hereinafter set forth. Amounts repaid on Term Loan B may not be
reborrowed.
(i) Term Loan B Advances. So long as the
conditions to advances have been satisfied, the Secured Party
will make Term Loan B advances to the Debtor from time to time
from the Closing Date to the Term Loan B Draw Termination
Date upon submission of a Notice of Borrowing substantially in
the form of Schedule 1.3 to the Secured Party five (5)
Business Days prior to the date of the requested advance.
Each such notice shall specify (A) the date of the requested
advance (which shall be a Business Day), (B) shall not exceed,
taking into account all prior Term Loan B advances, the Term
Loan B Commitment, (C) shall be in a minimum amount of
$100,000 and (D) shall be accompanied by any supporting
invoices and requisitions relating to the requested advance.
The Secured Party shall make such Term Loan B advances
available by deposit to the Debtor's account at the office of
Bank One, Texas, N.A. in Houston, Texas.
(ii) Payment of Principal and Interest.
(A) Interest during Draw Period. Term Loan B
shall be subject to a draw period during which accrued
interest shall be payable monthly in arrears on the last day
of each calendar month beginning with the first of such dates
to occur after the Closing Date. Interest during such
9
<PAGE> 10
draw period shall accrue at the applicable Eurodollar Rate
plus 1.30% (computed on the basis of the actual number of days
elapsed over a year of 360 days) with respect to the Term Loan
B advance made on the closing Date and with respect to each
Term Loan B advance made thereafter throughout the draw
period. The Eurodollar Rate applicable to the Term Loan B
advance made on the Closing Date shall be determined five (5)
Business Days prior to the Closing Date. The Eurodollar Rate
applicable to each Term Loan B advance made after the Closing
Date shall be determined five (5) Business Days prior to the
date of the requested advance.
(B) Principal and Interest after Draw Period. The
Term Loan B Commitment shall bear interest at a fixed rate
equal to the Amortization Rate. The Amortization Rate for
Term Loan B shall be determined five (5) Business Days prior
to the Term Loan 8 Draw Termination Date. Principal and
interest on Term Loan B shall be amortized and payable in
sixty (60) consecutive level monthly installments beginning
with the payment due on May 31, 1997. Payments received on
Term Loan B shall be applied first to accrued interest and
then to principal in inverse order of maturity.
Upon the occurrence and during the continuation of an
Event of Default hereunder, the principal of and, to the extent
permitted by law, interest on Term Loan B shall bear interest, payable
on demand, at a rate equal to 2.0% per annum in excess of the rate
otherwise applicable hereunder.
(iii) Secured Term Note B. Term Loan B shall be
evidenced by a duly executed promissory note of the Debtor to
the Secured Party dated the Closing Date in an original
principal amount equal to the Term Loan B Commitment and
substantially in the form of Schedule 1.3(b) hereto.
(c) Early Termination. (i) On any Installment Payment
Date on or after the second anniversary of the Closing Date, Debtor
may, upon sixty (60) days' prior written notice to Secured Party,
terminate the Loans and this Agreement. Debtor shall pay to Secured
Party on the applicable Installment Payment Date the sum of: (A) the
Termination Value as of such Installment Payment Date, plus (B) any
Break-Funding Costs, plus (C) any accrued but unpaid interest with
respect to either Loan, plus (D) all other obligations owing under the
Agreement on the termination date. Upon receipt of the amounts set
forth in (A)-(D) above, Secured Party shall release its Lien on the
Collateral.
(ii) On any Installment Payment Date on or after the second
anniversary of the Closing Date, Debtor may, upon sixty (60) days'
prior written notice to Secured Party, prepay a portion of the Loans
in accordance with the terms hereof. Debtor shall have the option to
make up to three (3) prepayments in the aggregate on the Loans, each
prepayment in an amount not less than $200,000. Debtor shall pay to
Secured Party on the applicable Installment Payment Date the sum of:
(A) the prepayment amount, plus (B) any Break-Funding Costs, plus (C)
any accrued but unpaid interest with respect to the prepayment.
Amounts so prepaid under this subsection (c)(ii) shall be applied to
outstanding obligations owing under this Agreement in the reasonable
discretion of the Secured Party.
SECTION 1.4 CONDITIONS PRECEDENT.
The obligation of Secured Party to make any Loan advance shall be
subject to the following conditions, as appropriate:
(a) Conditions to All Advances on Closing Date. Each
Loan advance on the Closing Date shall be subject to the delivery to
Secured Party of the following originally executed documents (unless
otherwise noted) each in form and substance satisfactory to Secured
Party and the satisfaction of the other conditions set forth herein:
10
<PAGE> 11
(i) the Agreement;
(ii) the Notes;
(iii) the Guaranty;
(iv) evidence of payment (or evidence of
exemption) of any and all sales, transfer, use, documentation
or similar taxes due in connection with the acquisition of the
Equipment by Debtor;
(v) a secretarial certificate from Debtor: (A)
certifying Debtor's articles of incorporation, by-laws and
resolutions, with such resolutions authorizing the overall
transaction and Debtor's execution, delivery and performance
of this Agreement and (B) containing an incumbency
certification of Debtor with the name(s), title(s) and
specimen signature(s) of the person or persons authorized on
behalf of Debtor to execute this Agreement.
(vi) an officer's certificate from Debtor: (A)
stating that no material adverse change has occurred in the
condition of Debtor (financial or otherwise) since the date of
the last financial statement of Guarantor which has been
delivered to Secured Party which would impair the ability of
Debtor to pay and perform its obligations under this Agreement
and (B) stating that no Default or Event of Default shall have
occurred and be continuing as of such date;
(vii) a secretarial certificate from Guarantor:
(A) certifying Guarantor's articles of incorporation, by-laws
and resolutions, with such resolutions authorizing the overall
transaction and Guarantor's execution, delivery and
performance of the Guaranty and (B) containing an incumbency
certification of Guarantor with the name(s), title(s) and
specimen signature(s) of the person or persons authorized on
behalf of Guarantor to execute the Guaranty;
(viii) an officer's certificate from Guarantor: (A)
stating that no material adverse change has occurred in the
condition of Guarantor (financial or otherwise) since the date
of the last financial statement of Guarantor which has been
delivered to Secured Party which would impair the ability of
Guarantor to pay and perform its obligations under the
Guaranty and (B) stating that no Default or Event of Default
shall have occurred and be continuing as of such date;
(ix) a written opinion of counsel for Debtor and
Guarantor;
(x) copies of the Bills of Sale;
(xi) certificates of insurance evidencing the
coverages required hereunder;
(xii) Uniform Commercial Code filings as deemed
appropriate by Secured Party's counsel duly executed by Debtor
and necessary third parties;
(xiii) good standing certificates from the Secretary
of State of Debtor's state of incorporation and the state of
Debtor's chief executive office; and
(xiv) good standing certificates from the Secretary
of State of Guarantor's state of incorporation and Guarantor's
chief executive office.
(xv) UCC, tax and judgment lien searches as deemed
necessary or advisable by Secured Party;
11
<PAGE> 12
(xvi) the absence on the date hereof of any Liens
on the Collateral, other than any Permitted Encumbrance in
favor of Secured Party; and
(xvii) Secured Party shall have received such other
documents, certificates, financing statements and other items,
in form and substance satisfactory to Secured Party, as
Secured Party may request.
(b) Term Loan Advances after the Closing Date. The
obligation of the Secured Party to make Term Loan A advances and/or
Term Loan B advances after the Closing Date is subject to satisfaction
of the following conditions:
(i) delivery to the Secured Party of a Notice of
Borrowing;
(ii) no material adverse change in the condition
of the Debtor (financial or otherwise) shall have occurred
since the Closing Date;
(iii) the absence on the date of such advance of
any Default or Event of Default; and
(iv) no Lien or other interest shall have been
permitted to attach to the Collateral superior or subordinate
to the interest of the Secured Party under this Agreement,
except for Permitted Encumbrances.
ARTICLE II
SECURITY INTEREST
SECTION 2.1 GRANT OF SECURITY INTEREST.
Debtor hereby Grants to Secured Party a first priority security
interest in the following (collectively, the items described in subsections
(a)-(d) may be referred to herein as the "Collateral"):
(a) All right, title and interest of the Debtor in and to
the Equipment as the same is now and will hereafter be constituted,
whether now owned by the Debtor or hereafter acquired, together with
all accessories, equipment, parts and appurtenances appertaining or
attached to the Equipment whether now owned or hereafter acquired, and
all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Equipment together
with all the rents, issues, income, profits and avails thereof.
(b) All right, title, interest, claims and demands of
Debtor in, to and under the following (collectively the "Assigned
Agreements"):
(i) the Bills of Sale;
(ii) the Permitted Leases; and
(iii) any and all other contracts and agreements
(excluding this Agreement and any supplement or modification
thereto and the Notes) relating to the Equipment or any rights
or interests therein to which Debtor is now or may hereafter
be a party (excluding contracts or agreements by the Debtor
with vendors providing for the use of certain Equipment by
Debtor to record, produce and distribute seismic data),
together with all rights, powers, privileges, licenses,
easements, options and other benefits of Debtor under each
thereof, including without limitation the right to make all
waivers and agreements, to give and receive all notices and
other instruments
12
<PAGE> 13
or communications, to take such action upon the occurrence of
a default thereunder, including the commencement, conduct and
consummation of legal, administrative or other Proceedings, as
shall be permitted thereby or by law, and to do any and all
other things which Debtor is or may be entitled to do
thereunder.
(c) The proceeds from a sale or transfer of any right,
title or interest of Debtor in the Equipment or any portion thereof.
(d) All proceeds of any and all of the foregoing
Collateral, whether now owned or hereafter acquired by Debtor and
wherever located, including without limitation:
(i) cash, accounts receivable, instruments,
contract rights, chattel paper, documents of title and any
other obligation due to Debtor with respect to or in
connection with the foregoing Collateral; and
(ii) to the extent not otherwise included, all
payments under any casualty insurance (whether or not Secured
Party is the loss payee thereof), condemnation award,
indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing
Collateral.
The Collateral shall mean and include all personal property
and the proceeds of such personal property described in any and all
amendments to this Agreement hereafter executed by Debtor and Secured
Party in connection with the Loan.
SECTION 2.2 SECURITY FOR SECURED OBLIGATIONS.
This Agreement secures the payment of all indebtedness and other
obligations of Debtor to Secured Party with respect to: the Loans, whether now
or hereafter existing, including without limitation Debtor's obligations to
Secured Party under the Notes or any other instrument and all amendments
thereto and renewals and extensions thereof, whether for principal, interest,
fees, expenses or otherwise; all of Debtor's obligations of payment and
performance now or hereafter existing under this Agreement, including, without
limitation, all amendments hereto and renewals and extensions hereof (all such
obligations of Debtor described in this Section 2.2 being, collectively, the
"Secured Obligations").
SECTION 2.3 SECURITY INTEREST ABSOLUTE.
All rights of Secured Party and security interests hereunder and all
Secured Obligations shall be absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of the Notes,
this Agreement or any other Security Instrument or any other agreement
or instrument relating thereto;
(ii) any change in the time, manner, or place or payment
of, or in any other term of, all or any of the Secured Obligations or
any other amendment or waiver of or any consent to any departure from
the Notes, this Agreement or any other Security Instrument; or
(iii) any exchange, release or non-perfection of any other
collateral, or any release, amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured
Obligations.
13
<PAGE> 14
SECTION 2.4 DEBTOR AS AGENT FOR SECURED PARTY.
Title to each item of Equipment shall at all times remain in Debtor so
long as any Loans or other obligations under this Agreement remain outstanding;
provided, however, that with respect to each item of Equipment subject to motor
vehicle titling and registration laws, Secured Party appoints Debtor as the
agent of Secured Party and grants Debtor a limited power of attorney for the
sole and limited purpose of causing each item of such Equipment to be titled in
the name of Debtor with Secured Party noted as the first, and sole, lienholder.
Debtor shall keep possession of such original certificates of title and upon
reasonable notice Secured Party shall have the right to review such original
certificates of title during Debtor's normal business hours. In the case of a
Default or an Event of Default, Debtor shall promptly deliver within five (5)
Business Days the original certificates of title to Secured Party. The agency
and power of attorney created hereby shall immediately terminate upon the
occurrence of any Default or Event of Default under this Agreement.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1 DEBTOR'S REPRESENTATIONS AND WARRANTIES.
Debtor hereby represents and warrants to Secured Party that:
(a) Debtor is a corporation duly organized and validly
existing under the laws of the State of Delaware and has all requisite
corporate power, authority and legal right to own its properties,
including without limitation the Collateral, to conduct its business
as is now being conducted and to execute, deliver and perform its
obligations under the Notes, this Agreement, each other Security
Instrument to which it is a party and each other document or agreement
related to the Collateral to which it is a party. Debtor is fully
qualified to do business and is in good standing in each jurisdiction
in which the failure to be in good standing would have a material
adverse effect on the business or operations of Debtor.
(b) The execution, delivery and performance by Debtor of
the Notes, this Agreement and each other Security Instrument to which
it is a party are within Debtor's corporate powers, have been duly
authorized by all requisite corporate action, do not contravene
Debtor's charter or by-laws or any law, governmental rule or
regulation, or any order, writ, injunction, decree, determination or
award currently in effect applicable to, or any contractual
restriction binding on or affecting, Debtor or any of its properties,
including without limitation the Collateral, and do not result in or
require the creation of any Lien, security interest, right of
acceleration, charge or encumbrance (other than pursuant to this
Agreement) upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and
no notice to or filing (other than the filings referred to in
subparagraph (f) below) with, any governmental authority or regulatory
body, shareholders or any other Person is required for the due
execution, delivery and performance by Debtor of this Agreement or any
other Security Instrument to which it is a party.
(d) The Notes, this Agreement and each other Security
Instrument to which Debtor is a party are the legal, valid and binding
obligations of Debtor, enforceable against Debtor in accordance with
their respective terms, subject, in the case of enforceability, to
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws affecting creditors' rights generally and to the
application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(e) The proceeds of the Loans will be used only to
finance the purchase by Debtor of the Equipment; Debtor owns good and
marketable title to the Equipment; the Collateral is free and clear of
all Liens (except for Permitted Encumbrances in favor of Secured
Party); and the Equipment is in good
14
<PAGE> 15
condition and ready for operation. The Equipment is and will retain
its character as personal property, and neither Debtor, Guarantor, or
any Affiliate or Subsidiary of either Debtor or Guarantor shall affix
or attach any item of Equipment in any manner so as to alter the
character of the Equipment as personal property subject to the UCC.
(f) Except for the notation on the certificates of title
naming Secured Party as first lienholder with respect to all items of
Equipment subject to motor vehicle titling and registration laws, the
filing of Uniform Commercial Code financing statements in the office
of the Secretary of State of the State of Texas will create a valid
perfected first priority security interest in the Collateral, securing
the payment of the Secured Obligations, and all filings and other
actions necessary or desirable to perfect and protect such security
interests will have been taken. No Person other than Secured Party
holds any security interest affecting the Collateral. No effective
Security Instrument or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office,
except such as may have been filed in favor of Secured Party relating
to this Agreement.
(g) Debtor's chief executive office is located in Harris
County, Houston, Texas. The Debtor has not used any trade names or
other names.
(h) Contemporaneously with the execution and delivery of
this Agreement, Debtor is delivering to Secured Party evidence of
insurance satisfying the requirements of Section 4.1 hereof.
(i) Debtor is not currently insolvent, as defined in 11
U.S.C. 101(32) nor will it be rendered insolvent by virtue of entering
into the Notes, this Agreement or any other Security Instrument to
which it is a party or carrying out any of the transactions
contemplated hereby or thereby.
(j) Each financial statement of Guarantor which has been
furnished to Secured Party fairly presents the financial condition of
Guarantor as of the date of such financial statement. There has been
no material adverse change in Guarantor's financial condition since
the date of the most current financial statement delivered to Secured
Party.
(k) There is no pending, or to the Debtor's knowledge,
threatened, action or Proceeding affecting Debtor, Guarantor or any of
their properties before any court, governmental agency or arbitrator
which may materially and adversely affect the condition (financial or
otherwise) or operations of Debtor, Guarantor or any of their
properties or which purports to affect the validity or enforceability
of the Notes, this Agreement or any other Security Instrument to which
Debtor is a party.
(l) No Default or Event of Default has occurred and is
continuing.
(m) All sales, transfer, use, documentation or similar
taxes, fees or other charges due and payable prior to or as of the
date hereof have been paid to the extent such are in connection with
the sale to and purchase by Debtor of the Equipment.
(n) Debtor is not a party to, nor bound by, any contract,
agreement or instrument that would conflict with this Agreement, the
Notes or any other contracts, agreements or instruments executed in
connection with the transactions contemplated by this Agreement.
(o) Debtor has agreed, and hereby acknowledges, to accept
service of process at its address set forth in Section 8.1 hereof in
person or by registered or certified mail return receipt requested,
postage prepaid, in connection with any Proceeding initiated by
Secured Party in any of the courts referenced in Section 8.11 hereof.
(p) The Debtor has no Subsidiaries.
15
<PAGE> 16
(q) Debtor has not incurred any accumulated unfunded
deficiency within the meaning of the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA") nor has
Debtor incurred any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") established under such Act (or any successor
thereto under such Act) in connection with any Plan. Debtor and its
Affiliates are in compliance in all material respects with those
provisions of ERISA and the regulations and public interpretations
thereunder which are applicable to Debtor and its Affiliates, except
for such noncompliance as would not have a material adverse effect on
the financial condition of Debtor and its Affiliates, taken as a
whole.
(r) Debtor has filed all income tax returns required to
be filed prior to the date hereof with the various governmental
entities having taxing authority with respect to Debtor.
(s) Debtor (i) is not an "investment company" as such
term is defined in, or otherwise subject to regulations under, the
Investment Company Act of 1940 and (ii) is not a Holding company" as
that term is defined in, and is not otherwise subject to regulations
under, the Public Utility Holding Company Act of 1935.
(t) Debtor has not sold, extended any offer to sell nor
accepted any offer to purchase regarding any of Debtor's interest in
the Collateral or with respect to the transactions described in the
Security instruments or the Notes.
(u) Debtor has delivered true and accurate copies of the
Bills of Sale executed by each Seller with respect to the transfer of
the Equipment to Debtor.
SECTION 3.2 AFFIRMATIVE COVENANTS.
Until all the Secured Obligations shall have been fully paid and
satisfied, Debtor covenants and agrees that it shall, unless Secured Party
shall have otherwise consented in writing:
(a) promptly pay the principal of, interest on, and any
other amounts due under the Notes as and when the same become due,
whether at maturity, by acceleration or otherwise;
(b) (i) duly, punctually and faithfully perform its
obligations under the Notes, this Agreement and each other Security
Instrument to which it is a party; (ii) maintain the Liens and
security interests created by this Agreement and each other Security
Instrument to which it is a party as valid and perfected Liens on and
security interests in all of the Collateral, prior in right to any
other Lien, security interest, claim or other encumbrance; (iii)
warrant and defend its interest in and to the Collateral against the
claims and demands of all Persons; and (iv) defend, at Debtor's cost,
any action, claim or Proceeding affecting the Collateral;
(c) use the proceeds of the Loans only to finance the
purchase by Debtor of the Equipment and maintain good and marketable
title to the Equipment, free and clear of any Liens, security
interests, charges or encumbrances except for the security interest
created by this Agreement and Permitted Encumbrances;
(d) notify Secured Party at least thirty (30) days prior
to the changing of the chief executive office of the Debtor from the
location specified in Section 3.1 (g);
(e) at no expense to Secured Party, cause each item of
Equipment to be serviced, maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and
tear excepted, and in accordance with any manufacturer's suggested or
approved maintenance program and warranty requirements, and shall, in
the case of any loss or damage to any item of Equipment, promptly
16
<PAGE> 17
furnish to Secured Party a statement respecting any such loss or
damage and (unless an Event of Loss shall have occurred with respect
to an item of Equipment) as quickly as practicable after the
occurrence thereof make or cause to be made all repairs, replacements
and other improvements in connection therewith which are necessary or
desirable to keep each item of Equipment in proper working order;
(f) permit Secured Party to inspect the Equipment during
normal business hours upon reasonable prior notice to Debtor;
(g) from time to time execute and deliver all such
supplements and amendments hereto and to any other Security
Instrument, and all such financing statements, continuation
statements, instruments of further assurance and other instruments,
and take such other action, as the Secured Party requests and
reasonably deems necessary or advisable to: (i) further Grant,
maintain or preserve the Lien and security interest contemplated by
this Agreement or carry out more effectively the purposes hereof; (ii)
perfect or protect the validity of any Security Instrument or of any
Grant made or to be made by this Agreement; or (iii) enforce any
Security Instrument or preserve and defend title to the Collateral and
the rights of the Secured Party therein against the claims of all
Persons and parties;
(h) comply with all of its representations, warranties
and covenants set forth in this Agreement, in the Notes and each
Security Instrument to which it is a party; and punctually perform and
observe all of its obligations and agreements contained in this
Agreement, in the Notes and each Security Instrument to which it is a
party;
(i) promptly notify the Secured Party of any default by
any Person under any Security Instrument;
(j) remain a duly organized and validly existing
corporation under the laws of the state of its incorporation and
remain duly qualified to do business and in good standing in each
jurisdiction in which the failure to be in good standing would have a
material adverse effect on the business or operations of Debtor;
(k) comply in all material respects with all applicable
laws, rules, regulations and orders; and preserve and maintain all
federal, state and local licenses, privileges, franchises,
certificates and other permits necessary for the operation of its
business and the operation of each item of Equipment;
(l) pay or cause to be paid promptly when due (i)
(subject to the right of Debtor, in accordance with the provisions of
this Agreement to obtain extensions of the date on which such taxes
are due) all property and other taxes (including without limitation
income, sales, use, franchise and gross receipts taxes) and
governmental charges or levies which are at any time or from time to
time levied upon or assessed against it or any item of Equipment or
are otherwise associated with the ownership, use or operation of any
item of Equipment (except such taxes levied on the net income of
Secured Party) and (ii) all claims (including without limitation
claims for labor, materials and supplies) against any item of
Equipment; provided, that Debtor may contest any such tax or claim by
appropriate Proceedings so long as such Proceedings shall suspend the
collection thereof, no part of the Collateral would be subject to
sale, forfeiture or diminution during the pendency of such
Proceedings, Debtor shall have furnished such security as may be
required in the Proceedings or reasonably requested by Secured Party,
Debtor conducts such contests in good faith and with due diligence,
and promptly after the final determination of each such contest,
Debtor pays all amounts which shall be determined to be payable in
respect thereof;
(m) within 120 days after the end of each fiscal year
furnish to the Secured Party unaudited year end financial reports of
the Debtor including without limitation (i) a balance sheet and (ii)
statements of income and retained earnings, all prepared in accordance
with generally accepted accounting principles consistently applied and
certified by the president, chief financial officer or any vice
president of Debtor
17
<PAGE> 18
who prepared such financial statements as being true and accurate and
fairly representing the financial condition of Debtor;
(n) promptly report to Secured Party the commencement of
any Proceeding against Debtor if such litigation reasonably would be
expected to, in the event of an unfavorable outcome, cause an Event of
Default, have a material adverse effect on Debtor's financial
condition or operations, affect the validity or enforceability of the
Notes, this Agreement or any of the Security Instruments or affect
priority or enforceability of Secured Party's security interest in any
of the Collateral;
(o) promptly notify Secured Party in writing if a Default
or an Event of Default has occurred;
(p) upon the replacement of an item of Equipment with
Replacement Equipment, Debtor, at its own expense, will promptly (i)
cause a supplement hereto, in form and substance satisfactory to
Secured Party, subjecting such Replacement Equipment to this
Agreement, to be duly executed by Debtor, (ii) furnish Secured Party
with such evidence of Debtor's title to such Replacement Equipment, of
the condition of such Replacement Equipment, and of compliance with
the insurance provisions hereof with respect to such Replacement
Equipment and (iii) take such other action as Secured Party may
request in order that such Replacement Equipment be duly and properly
titled in Debtor and subject to this Agreement to the same extent as
the item of Equipment replaced thereby;
(q) (i) at all times, make prompt payment of all
contributions required under its Plans and required to meet the
minimum funding standard set forth in ERISA with respect to its Plans;
(ii) notify Secured Party immediately of any fact, including, but not
limited to, any Reportable Event (as defined in ERISA) arising in
connection with any of its Plans, which might constitute grounds for
termination thereof by the PBGC or for the appointment by the
appropriate United States District Court of a trustee to administer
such Plan, together with a statement, if requested by the Secured
Party, as to the reason therefor and the action, if any, proposed to
be taken with respect therefor; and (iii) furnish to Secured Party
upon its request, such additional information concerning any of its
Plans as may be reasonably requested;
(r) Debtor shall pay, and save Secured Party harmless
against, any and all losses, judgments, decrees and costs (including,
without limitation, all reasonable attorneys' fees and expenses) in
connection with any Permitted Contest and shall promptly after the
final settlement, compromise or determination (including any appeals)
of such contest, fully pay and discharge the amounts which shall be
levied, assessed, charged or imposed or be determined to be payable
therein or in connection therewith, together with all penalties,
fines, interest, costs and expenses thereof or in connection
therewith, and perform all acts, the performance of which shall be
ordered or decreed as a result thereof.
SECTION 3.3 NEGATIVE COVENANTS.
Until the Secured Obligations shall have been fully paid and
satisfied, Debtor shall not, without the prior written consent of Secured
Party:
(a) (i) sell, lease, assign, transfer, convey, Grant an
interest in, exchange or otherwise dispose of any of the Collateral or
any part thereof or (ii) cause or permit any subleasing of any of the
Equipment (except that Debtor may lease any or all items of Equipment
to a Permitted Lessee pursuant to a Permitted Lease);
(b) create or suffer to exist any Lien affecting the
Collateral or any part thereof, other than in favor of Secured Party
or other Permitted Encumbrances;
(c) use the Equipment for any unlawful purpose;
18
<PAGE> 19
(d) dissolve, wind up or liquidate or seek or permit the
dissolution or liquidation of Debtor in whole or in part;
(e) [intentionally omitted];
(f) as against Secured Party, claim any credit on, or
make any deduction from, the principal or interest payable on the
Notes, whether by reason of the payment of any taxes levied or
assessed upon any of the Collateral, or otherwise;
(g) take or permit any action which would result in an
Event of Default;
(h) [intentionally omitted];
(i) [intentionally omitted];
(j) enter into any new line of business or operation not
currently in existence with respect to the Debtor or materially alter
its existing operations;
(k) consolidate with or merge into any other corporation
or sell, assign, convey, transfer or lease substantially all of its
assets as an entirety to any Person unless:
(i) Debtor is the surviving entity of any such
consolidation or merger; or
(ii) (A) the corporation formed by such
consolidation or into which Debtor is merged, or the Person
which acquires by conveyance, transfer or lease of
substantially all of the assets of Debtor as an entirety,
shall be a solvent corporation organized and existing under
the laws of the United States or any state thereof or the
District of Columbia and shall execute and deliver to Secured
Party an agreement containing an effective assumption by such
successor, transferee or lessee corporation of the due and
punctual performance and observance of each covenant and
condition of this Agreement;
(B) immediately prior to and after
giving effect to such transaction, no Default or
Event of Default shall have occurred and be
continuing;
(C) Debtor shall have delivered to
Secured Party a certificate signed by an officer of
Debtor and an opinion of Debtor's counsel
satisfactory in form and substance to Secured Party
stating that such consolidation, merger, conveyance,
transfer or lease and the assumption agreement
mentioned in clause 3.3(k)(ii)(A) above comply with
the requirements of this Section 3.3(k) and that all
conditions precedent herein provided for relating to
such transaction have been complied with.
Upon any consolidation or merger in which Debtor is not the surviving
corporation, or any conveyance, transfer or lease of substantially all the
assets of Debtor as an entirety in accordance with this Section 3.3(k), the
successor corporation formed by such consolidation or into which Debtor is
merged or to which such conveyance, transfer or lease is made (x) shall succeed
to, and be substituted for (but without release of Debtor from any of its
obligations hereunder) and (y) may exercise every right and power of, Debtor
under this Agreement with the same effect as if such successor corporation had
been named as a Debtor herein.
(l) attach or affix any item of Equipment in any manner
so as to alter the character of the Equipment as personal property
subject to the UCC.
19
<PAGE> 20
ARTICLE IV
INSURANCE, TRANSFER, CONDEMNATION AND EVENT OF LOSS
SECTION 4.1 INSURANCE.
(a) Property and Liability Insurance. So long as this
Agreement is in effect, Debtor shall maintain and keep in force, or
cause to be maintained and kept in force, without cost or expense to
Secured Party, with respect to all items of Equipment prior to the
expiration or earlier termination of this Agreement (i) all-risk
property damage insurance in an amount not less than the aggregate
Termination Value for all items of Equipment of such type as shall be
satisfactory to Secured Party and (ii) commercial general liability
insurance, including blanket contractual and personal injury
insurance, covering any risks which Secured Party or Debtor might
incur by reason of the use or operation of the Equipment in or over
any area, in an amount not less than $6,000,000 per occurrence. Such
insurance policy or policies referenced to in clause (i) of the
preceding sentence will name Secured Party as a loss payee to the
extent of its interest; provided, that upon verification by Secured
Party that all amounts owing to Secured Party under the Agreement, the
Notes or any other Security Instrument have been paid in full, then
Secured Party shall remit all remaining property damage insurance
proceeds, respecting any item of Equipment, to the extent such
proceeds are controlled by Secured Party, to Debtor. Such insurance
policy or policies referenced to in clause (ii) of the preceding
sentence will name Secured Party as an additional insured. Each of the
policies required by this Section 4.1 will provide that (A) the same
may not be invalidated against Secured Party by reason of (1) any
violation of a condition or breach of warranty of the policies or the
application therefor by any Person excepting Secured Party, (2) the
use of any item of Equipment for purposes not permitted by such
policies by any Person excepting Secured Party, (3) any foreclosure
proceeding or notice of sale regarding any item of Equipment or (4)
the title or beneficial ownership of any item of Equipment being held
by a party other than Debtor; (B) the policies may be canceled or
materially amended by the insurer only after thirty (30) days' prior
written notice to Secured Party; (C) the interests of Secured Party in
such insurance policies (except with respect to commercial general
liability) are assignable and (D) such insurance policies shall be
primary insurance. Each of the policies required by this Section 4.1
shall otherwise be reasonably satisfactory to Secured Party. The
policies of insurance required under this Section shall be valid and
enforceable policies issued by insurers of recognized responsibility
acceptable to Secured Party. On or before the date hereof, and
thereafter at intervals of not more than twelve months, Debtor will
furnish or cause to be furnished to Secured Party a certificate or
other evidence satisfactory to Secured Party signed by an independent
insurance broker certifying to Secured Party's satisfaction that
Debtor has insurance in place with respect to all items of Equipment
which complies with the insurance requirements of this Agreement. If
Debtor shall fait to cause the insurance required under this Section
4.1 to be carried and maintained, Secured Party may, but shall have no
obligation to, provide such insurance and Debtor shall reimburse
Secured Party upon demand for the cost thereof as a supplemental
payment hereunder in addition to other amounts owing with respect to
the Notes or this Agreement.
SECTION 4.2 TRANSFER OF COLLATERAL.
Except as otherwise expressly provided by the provisions of this
Agreement, Debtor will not (prior to the satisfaction of all Obligations)
lease, Grant or otherwise transfer the Collateral or any part thereof or any
interest therein to any party other than Secured Party without Secured Party's
prior written consent and any and all such transfers shall be made under and
subject to Secured Party's security interest in such Collateral hereunder.
Prior to or simultaneously with any such transfer, the transferee shall accept,
agree to and execute an agreement assuming Debtor's Obligations to Secured
Party, in form and substance satisfactory to Secured Party.
20
<PAGE> 21
SECTION 4.3 CONDEMNATION.
Immediately upon obtaining knowledge thereof, Debtor shall notify
Secured Party of any condemnation or other eminent domain Proceedings with
respect to any item of Equipment. Secured Party may participate in any such
Proceedings, and Debtor shall provide Secured Party with all instruments
required by it to permit such participation upon obtaining actual knowledge
thereof. Debtor shall pay all reasonable fees and expenses incurred by Secured
Party in connection with Secured Party's participation in any such Proceedings.
All proceeds arising from any such eminent domain Proceedings shall be paid to
and applied by the Secured Party as specified in Section 5.3 hereof.
SECTION 4.4 CERTAIN EVENTS OF LOSS.
Upon the occurrence of an Event of Loss with respect to any item of
Equipment, Debtor shall pay Secured Party within thirty (30) days after receipt
of insurance proceeds after the occurrence of such Event of Loss (but in no
event shall such period extend 120 days beyond the date of the occurrence of
such Event of Loss) or, if such day is not a Business Day, on the next
occurring Business Day (the "Event of Loss Payment Date") an amount equal to
the sum of (a) the Termination Value (computed as of the Installment Payment
Date immediately preceding the Event of Loss Payment Date) for the items of
Equipment then subject to the Event of Loss, plus (b) all accrued but unpaid
interest, plus (c) any Break-Funding Costs with respect to the items of
Equipment then subject to the Event of Loss, plus (d) all other obligations
owing hereunder on the Event of Loss Payment Date. Upon payment of the amounts
set forth in (a)-(d) above, Secured Party shall release its Lien on the items
of Equipment then subject to the Event of Loss.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.1 EVENTS OF DEFAULT.
Any of the following occurrences or acts shall constitute an event of
default under this Agreement (individually, an "Event of Default"):
(a) Debtor shall fail to pay any principal of, or
interest on, the Notes or any other indebtedness of Debtor to Secured
Party, now or hereafter existing, within five (5) Business Days from
the date the same shall be due and payable, whether at maturity, by
acceleration or otherwise; or
(b) Except as specified in Section 5.1(a), Debtor shall
default in the payment of any costs or expenses incurred by Secured
Party in connection herewith or any other amounts hereunder or under
the Notes within ten (10) Business Days from the date on which Secured
Party notifies Debtor of such default; or
(c) Debtor shall fail to observe the terms and covenants
of Sections 3.2(b)(ii), 3.2(c), 3.2(l), 3.3(a)-(l) or 4.1; or
(d) Except as otherwise specified in Sections 5.1
(a)-(c), Debtor shall fail to perform or observe any other term,
covenant or agreement contained in the Notes, this Agreement or any
other Security Instrument and such failure shall remain unremedied for
a period of thirty (30) days from either the date Debtor first knows
of such failure or the date on which Secured Party notifies Debtor of
such failure; or
(e) Any representation or warranty made by Debtor in the
Notes, this Agreement, any other Security Instrument or in any
certificate or other document delivered pursuant hereto or thereto
shall prove to have been incorrect or misleading in any material
respect when made; or
21
<PAGE> 22
(f) Debtor shall admit in writing its inability to pay
its debts, or shall make a general assignment for the benefit of
creditors; or any Proceeding shall be instituted by or against Debtor
seeking to adjudicate it bankrupt or insolvent, or seeking
reorganization, liquidation, arrangement, adjustment or composition of
it or its debt under any law relating to bankruptcy, insolvency or
reorganization or relief of debtors, or seeking appointment of a
receiver, custodian, trustee, or other similar official for it or for
any substantial part of its property, and, in the case of any such
Proceeding instituted against Debtor, it shall remain undismissed for
a period of sixty (60) days; or Debtor shall take any action to
authorize any of the actions set forth in this subsection (f); or
(g) This Agreement shall, for any reason, except to the
extent permitted by the terms hereof, cease to create a valid first
priority Lien on and perfected first priority security interest in any
of the Collateral purported to be covered hereby; or
(h) Any provision of the Notes, this Agreement or the
other Security Instruments shall cease to be valid and binding on
Debtor, as a signatory thereto, or Debtor shall so state in writing;
or Secured Party shall be deprived of any of the benefits of the Note,
this Agreement or any other Security Instrument for any reason
whatsoever; or
(i) For any reason whatsoever, Debtor is not entitled to
or does not possess the property rights or other rights regarding the
Collateral which have been assigned or transferred to Secured Party;
or
(j) Debtor shall dissolve or any action shall be taken by
Debtor to wind up or liquidate Debtor's business, affairs or property
or assets or Debtor shall announce its intention to do so without
Secured Party's prior written consent; or
(k) Any sale, transfer, conveyance, abandonment,
condemnation, partition or change in ownership of any item or items of
Equipment in excess of $50,000, or any portion thereof shall occur,
whether in one transaction or a series of transactions without Secured
Party's prior written consent; or
(l) An attachment or other Lien shall be filed or levied
against a substantial part of the property of Debtor (or any Affiliate
of Debtor) and such judgment shall continue unstayed and in effect, or
such attachment or Lien shall continue undischarged or unbended, for a
period of sixty (60) days; or
(m) Guarantor shall fail to make a payment under the
Guaranty within five (5) Business Days from the date such payment is
due; or
(n) Except as specified in Section 5.1 (m), Guarantor
shall fail to perform or observe any other term, covenant or agreement
contained in the Guaranty and such failure shall remain unremedied for
a period of thirty (30) days from either the date Guarantor first
knows of such failure or the date on which Secured Party notifies
Guarantor of such failure; or
(o) Any representation or warranty made by Guarantor in
the Guaranty or in any certificate or other document delivered
pursuant thereto shall prove to have been incorrect or misleading in
any material respect when made; or
(p) Guarantor shall admit in writing its inability to pay
its debts, or shall make a general assignment for the benefit of
creditors; or any Proceeding shall be instituted by or against
Guarantor seeking to adjudicate it bankrupt or insolvent, or seeking
reorganization, liquidation, arrangement, adjustment or composition of
its finances or debt under any law relating to bankruptcy, insolvency
or reorganization or relief of debtors, or seeking appointment of a
receiver, custodian, trustee, or other similar official for its
finances or for any substantial part of its property, and, in the case
of any such Proceeding instituted against
22
<PAGE> 23
Guarantor, it shall remain undismissed for a period of sixty (60)
days; or Guarantor shall take any action to authorize any of the
actions set forth in this subsection (p); or
(q) Guarantor (or any Affiliate of Guarantor) shall be in
default (i) under any lease, loan agreement or other agreement,
instrument or document respecting any such obligation of Guarantor (or
any Affiliate of Guarantor) in excess of $10,000,000, now or hereafter
entered into between Guarantor (or any Affiliate of Guarantor) and
Secured Party, or between Guarantor (or any Affiliate of Guarantor)
and any parent, subsidiary or affiliate of Secured Party, and such
default shall have been declared by the party entitled to declare the
same, (ii) under any promissory note, now or hereafter executed by
Guarantor (or any Affiliate of Guarantor) and delivered to any party
referred to in clause (i) above evidencing a loan made by any such
party to Guarantor (or any Affiliate of Guarantor) or (iii) in the
payment of any single amount due by Guarantor (or any Affiliate of
Guarantor) to any Person (other than Secured Party, or any parent,
subsidiary or affiliate of Secured Party) in excess of $10,000,000
(excluding any such obligation which is being contested in good faith
by Guarantor (or any Affiliate of Guarantor) by appropriate
proceedings, and the liability for which has not been reduced to
judgment) relating to the payment of borrowed money or the payment of
rent or hire under any lease agreement and such default shall have
continued for more than thirty (30) days after the date Guarantor (or
any Affiliate of Guarantor) obtained knowledge or received notice
thereof; or an attachment or other Lien shall be filed or levied
against a substantial part of the property of Guarantor or Debtor and
such judgment shall continue unstayed and in effect, or such
attachment or Lien shall continue undischarged or unbended, for a
period of sixty (60) days; or
(r) Any provision of the Guaranty shall cease to be valid
and binding on Guarantor, as a signatory thereto, or Guarantor shall
so state in writing; or Secured Party shall be deprived of any of the
benefits of the Guaranty for any reason whatsoever; or
(s) Any action shall be taken by Guarantor to wind up or
liquidate Guarantor's business, affairs or property or assets or
Guarantor shall announce his intention to do so without Secured
Party's prior written consent.
SECTION 5.2 REMEDIES.
If any Event of Default shall have occurred and be continuing:
(a) the Secured Party may do one or more of the
following:
(i) declare the Notes and all interest thereon
and all other Secured Obligations to be forthwith due and
payable, whereupon the Notes, all such interest and all
Secured Obligations shall become and be forthwith due and
payable, without presentation, demand, protest or further
notice of any kind, all of which are hereby expressly waived
by Debtor;
(ii) exercise, in respect of the Collateral, in
addition to other rights and remedies provided for herein or
otherwise available to it, all the rights and remedies of a
secured party on default under the UCC and/or other applicable
law and also (A) require Debtor to, and Debtor hereby agrees
that it will at its expense and upon the request of Secured
Party forthwith, assemble all or part of the Collateral as
directed by Secured Party and make it available to Secured
Party at a place to be designated by Secured Party and (B)
without notice except as specified below, sell the Collateral
or any part thereof in one or more parcels at public or
private sale, at any of Secured Party's offices or elsewhere,
for cash, on credit or for future delivery, and upon such
other terms as Secured Party may deem commercially reasonable.
Debtor agrees that, to the extent notice of sale shall be
required by law, at least fifteen (15) days' notice to Debtor
of the time and place of any public sale or the time after
which any private sale is to be made shall constitute
reasonable notification. Secured Party shall not be obligated
to make any sale of Collateral regardless of notice
23
<PAGE> 24
of sale having been given. Secured Party may adjourn any
public or private sale from time to time by announcement at
the time and place fixed therefor, and such sale may, without
further notice, be made at the time and place to which it was
so adjourned;
(iii) to the extent permitted by applicable law,
bring suit at law, in equity or through other appropriate
Proceedings, whether for the specific performance of any
covenant or agreement contained in this Agreement or any of
the other Security Instruments, for an injunction against a
violation of any of the terms hereof or thereof, in aid of the
exercise of any power Granted hereby or thereby, or by law, to
recover judgment for any and all amounts due on the Notes,
this Agreement, any of the other Security Instruments or
otherwise, including, without limitation, any deficiency
remaining after foreclosure hereunder;
(iv) exclude Debtor from the Collateral and take
immediate possession of interest therein, and, at the expense
of Debtor, maintain, repair, alter, use, add to, improve,
insure, lease, operate and manage the Collateral in such
manner as Secured Party shall see fit; and
(v) take any other appropriate action to protect
and enforce the rights and remedies of Secured Party
hereunder, or under or in respect of any other Security
Instrument, or otherwise.
(b) Notwithstanding any provision to the contrary
contained in this Agreement, the Notes or any other Security
Instrument, the unpaid principal amount of the Notes and all accrued
interest and other sums payable under the Notes or under this
Agreement shall be forthwith payable upon a sale of any portion of the
Collateral pursuant to subsection (a)(ii) of this Section 5.2. All
earnings, revenues, proceeds, rents, issues, profits and income
derived pursuant to subsection (a)(iv) of this Section 5.2 (after
deducting costs and expenses of operation and other proper charges),
all proceeds of any such sale and ail other money and property
received or recovered by the Secured Party pursuant to this Section
5.2 shall be held and applied as set forth in Section 5.3 hereof.
(c) The power to effect any sale under this Section 5.2
shall not be exhausted by any one or more sales as to any portion of
the Collateral remaining unsold, but shall continue unimpaired until
all of the Collateral shall have been sold or all of the Secured
Obligations shall have been paid in full.
(d) Secured Party may bid for and acquire any portion of
the Collateral in connection with a sale thereof under this Section
5.2, and may pay all or part of the purchase price by crediting
against amounts owing on the Secured Obligations, all or part of the
net proceeds of such sale after deducting the costs, charges and
expenses incurred by Secured Party in connection with such sale. The
Notes need not be produced in order to complete any such sale or
effect such credit. Secured Party may hold, lease, operate, manage or
otherwise deal with any property so acquired in any manner permitted
by law.
(e) Secured Party shall execute and deliver an
appropriate instrument of conveyance transferring its interest in any
portion of the Collateral in connection with a sale thereof under this
Section 5.2. In addition, Debtor hereby irrevocably appoints Secured
Party as its agent and attorney-in-fact to transfer and convey its
interest in any portion of the Collateral in connection with such a
sale thereof and to take all action necessary to effect such sale. No
purchaser or transferee at such a sale shall be bound to ascertain
Secured Party's authority, inquire into the satisfaction of any
condition precedent or see to the application of any monies.
(f) Secured Party's right to seek and recover judgment on
the Secured Obligations shall not be affected by the seeking,
obtaining or application of any other relief under or with respect to
this Agreement. Neither the Lien of this Agreement nor any rights or
remedies of Secured Party shall be impaired by the recovery of any
judgment by Secured Party against Debtor or by the levy of an
execution under such judgment upon any portion of the Collateral.
24
<PAGE> 25
(g) All rights and remedies from time to time conferred
upon or reserved to the Secured Party are cumulative, and none is
intended to be exclusive of another and shall be in addition to every
other right or remedy permitted by law. No delay or omission in
insisting upon the strict observance or performance of any provision
of this Agreement, or in exercising any right or remedy, shall be
construed as a waiver or relinquishment of such provision, nor shall
it impair such right or remedy. Every right and remedy may be
exercised from time to time and as often as deemed expedient in any
combination and order desired by Secured Party; provided, however,
that Secured Party shall exercise none of the remedies referenced in
this Section 5.2 with respect to the Collateral unless and until an
Event of Default shall have occurred and be continuing.
(h) Anything contained in this Agreement to the contrary
notwithstanding, until an Event of Default shall occur and be
continuing: (i) all rights, powers, privileges and other benefits of
or accruing to Debtor under the Assigned Agreements shall be
exercisable only by Debtor, without the consent or approval of the
Secured Party, (ii) Debtor shall retain full right to make all waivers
and agreements, to give and receive all notices and other instruments
or communications, and to take all action upon the occurrence of a
default under any Assigned Agreement, including the commencement,
conduct and consummation of legal, administrative or other
proceedings, as shall be permitted thereby or by law, and to do any
and all other things which Debtor is or may be entitled to do under
any Assigned Agreement.
SECTION 5.3 PROCEEDS OF COLLATERAL.
All cash proceeds received by Secured Party in respect of any sale of,
collection from, or other realization upon all or any part of the Collateral
shall be held by Secured Party as collateral for, and then promptly thereafter
applied by Secured Party against, all or any part of the amounts due under the
Notes and the other Secured Obligations in such order as Secured Party shall
elect. Any surplus of such cash or cash proceeds held by Secured Party and
remaining after payment in full of all the Secured Obligations shall be paid
over to Debtor or to whomsoever may be lawfully entitled to receive such
surplus.
SECTION 5.4 WAIVER OF RIGHTS; RECEIVER.
(a) Debtor consents to the appointment of one or more
receivers of all or part of the Collateral, upon the request of
Secured Party, if an Event of Default shall have occurred and be
continuing.
(b) To the extent permitted by law, Debtor hereby waives
its right to seek, and hereby agrees that it will not seek or derive
any benefit or advantage from, any of the following whether now
existing or hereafter in effect:
(i) any stay, extension, moratorium or similar
law with respect to the Collateral or the Secured Obligations;
(ii) any law allowing for the redemption of any
portion of the Collateral after a sale thereof under Section
5.2 hereof; and
(iii) any right to have any portion of the
Collateral after an Event of Default shall have occurred.
Debtor covenants not to hinder, delay or impede the exercise of any
right or remedy of Secured Party under or in respect of this Agreement
and agrees to suffer and permit the exercise of each such remedy.
25
<PAGE> 26
ARTICLE VI
INDEMNITY AND EXPENSES
SECTION 6.1 GENERAL INDEMNITY.
Debtor hereby assumes liability for, and does hereby agree, whether or
not any of the transactions contemplated hereby, by the Security Instruments or
the Notes are consummated, to indemnify, protect, save, defend and hold
harmless Secured Party and each of its officers, directors, stockholders,
successors, assigns, agents and servants (for purposes of this Article VI, each
of the foregoing may be referred to individually as a "Beneficiary") from and
against any and all obligations, fees, liabilities, losses, damages, penalties,
claims, demands, actions, suits, judgments, costs and expenses, including,
without limitation, reasonable legal fees and expenses, of every kind and
nature whatsoever imposed on, incurred by, or asserted against any Beneficiary,
in any way relating to or arising out of (a) the manufacture, construction,
ordering, purchase, acceptance or rejection, financing, ownership, titling or
retitling, registration or re-registration, acceptance, leasing, subleasing,
possession, use, operation, maintenance, storage, removal, sale, delivery or
other disposition of any item of Equipment, including, without limitation, any
of such as may arise from (i) loss or damage to any property or death or injury
to any person, (ii) patent or latent defects in any item of Equipment (whether
or not discoverable by Debtor or any Beneficiary), (iii) any claims based on
strict liability in tort or otherwise, (iv) any claims based on patent,
trademark or copyright infringement and (v) any claims based on liability
arising under the applicable environmental or noise or pollution control law or
regulation or (b) any failure on the part of Debtor to perform or comply with
any of the terms of the Security instruments or the Notes or (c) any Security
Instrument or the Notes. Debtor shall not be required to indemnify any
Beneficiary for any claims resulting from acts which would constitute the
willful misconduct or gross negligence of such Beneficiary. Debtor shall give
Secured Party prompt notice of any occurrence, event or condition known to
Debtor as a consequence of which any Beneficiary is or is reasonably likely to
be entitled to indemnification hereunder. Debtor shall promptly upon demand of
any such Beneficiary reimburse such Beneficiary for amounts expended by it in
connection with any of the foregoing or pay such amounts directly. Debtor shall
be subrogated to a Beneficiary's rights in any matter with respect to which
Debtor has actually reimbursed such Beneficiary for amounts expended by it or
has actually paid such amounts directly pursuant to this Section 6.1. In case
any action, suit or Proceeding is brought against any Beneficiary in connection
with any claim indemnified against hereunder, such Beneficiary will, after
receipt of notice of the commencement of such action, suit or Proceeding,
notify Debtor thereof, enclosing a copy of all papers served upon such
Beneficiary. Debtor may, and upon any Beneficiary's request will, at Debtor's
expense, resist and defend such action, suit or Proceeding, or cause the same
to be resisted or defended by counsel selected by Debtor and reasonably
satisfactory to such Beneficiary and in the event of any failure by Debtor to
do so, Debtor shall pay ail costs, fees and expenses (including, without
limitation, reasonable attorney's fees and expenses) incurred by such
Beneficiary in connection with such action, suit or Proceeding.
SECTION 6.2 GENERAL TAX INDEMNITY.
Debtor agrees to pay, and indemnify and hold each Beneficiary harmless
on an after-tax basis from, any and all federal, state, local and foreign
taxes, fees, withholdings, levies, imposts, duties, assessments and charges of
any kind and nature whatsoever, together with any penalties, fines or interest
therein (herein called "Taxes or Other Impositions") howsoever imposed, whether
levied or imposed upon or asserted against such Beneficiary, Debtor, any item
of Equipment or any part thereof, by any federal, state or local government or
taxing authority in the United States, or by any taxing authority or
governmental subdivision of a foreign country, upon or with respect to (a) any
item of Equipment (b) the manufacture, construction, ordering, purchase,
ownership, financing, delivery, leasing, releasing, possession, use,
maintenance, registration, titling, licensing, documentation, return, sale
(including, without limitation, sale to a third party) or other application or
disposition thereof, (c) the payments, receipts or earnings arising from any
item of Equipment or (d) the Bills of Sale, the Security Instruments or the
Notes, or upon the payments by Debtor under the Bills of Sale, the Notes or the
Security Instruments; provided, however, that the foregoing indemnity shall not
apply to any taxes or other impositions to the extent based upon or measured by
any Beneficiary's net income (unless such tax or other imposition is a Covered
Income Tax as hereinafter defined), and
26
<PAGE> 27
which are imposed or levied by any federal, state or local taxing authority in
the United States. For purposes hereof, a "Covered Income Tax" shall mean an
income tax (including, without limitation, a tax imposed upon gross income or
receipts) imposed on any Beneficiary by any taxing authority (excluding the
United States federal government) in whose jurisdiction such Beneficiary
(including for this purpose all entities with which it is combined, integrated
or consolidated in such taxing authority's jurisdiction) would not engage in
business, would not maintain an office or other place of business and would not
otherwise be located therein, but for such Beneficiary's role in the
transaction associated with the financing of the Equipment, the operation of
the Equipment in such jurisdiction, the presence of Debtor or any use of the
Equipment or the transactions contemplated by the Bills of Sale, the Security
Instruments or the Notes.
Each Beneficiary shall furnish Debtor with copies of any requests for
information received by such Beneficiary from any taxing authority relating to
any taxes or other impositions with respect to which Debtor is required to
indemnify hereunder, and if a claim is made against such Beneficiary for any
such taxes or other impositions, with respect to which Debtor is liable for a
payment or indemnity hereunder, such Beneficiary shall give Debtor notice in
writing within (10) Business Days of such Beneficiary's receipt of such claim.
Debtor may, at its sole cost and expense, either in its own name or in the name
of any Beneficiary, contest the validity, applicability or amount of any such
tax or other imposition by means of a Permitted Contest. If any Beneficiary
shall obtain a refund of any amount paid by Debtor pursuant to this Section
6.2, such Beneficiary shall pay to Debtor the amount of such refund, together
with the amount of any interest actually received by such Beneficiary on
account of such refund. Debtor will promptly notify Secured Party of all
reports or returns required to be made with respect to any tax or other
imposition with respect to which Debtor is required to indemnify hereunder and
will promptly provide each Beneficiary with all information necessary for the
making and timely filing of such reports or returns by such Beneficiary. If any
Beneficiary requests that any such reports or returns be prepared and filed by
Debtor, Debtor will prepare and file the same if permitted by applicable law to
do so, and if not so permitted, Debtor shall prepare such reports or returns
for signature by such Beneficiary, and shall forward the same, together with
immediately available funds for payment of any tax or other imposition due, to
such Beneficiary, at least ten (10) Business Days in advance of the date such
payment is to be made. Upon written request, Debtor shall furnish each
Beneficiary with copies of all paid receipts or other appropriate evidence of
payment for all taxes or other impositions paid by Debtor pursuant to this
Section 6.2.
ARTICLE VII
FURTHER ASSURANCES; ATTORNEY-IN-FACT; DISCHARGE
SECTION 7.1 FURTHER ASSURANCES.
(a) Debtor agrees that from time to time, at the expense
of Debtor, Debtor will promptly execute and deliver all further
instruments and documents, and take all further action that Secured
Party may reasonably deem necessary or desirable, or that Secured
Party may otherwise reasonably request, in order to perfect and
protect any security interest Granted or purported to be Granted
hereby or to enable Secured Party to exercise and enforce its rights
and remedies hereunder with respect to any Collateral. Without
limiting the generality of the foregoing, Debtor will cooperate to
execute and file financing or continuation statements, or amendments
hereto or thereto, and such other instruments or notices, as may be
necessary or reasonably desirable, or as Secured Party may reasonably
request, in order to perfect and preserve the security interests
Granted or purported to be Granted hereby.
(b) A carbon, photographic or other reproduction of this
Agreement or any financing statement covering the Collateral or any
part thereof shall be sufficient as a financing statement where
permitted by law.
27
<PAGE> 28
(c) Debtor will furnish to Secured Party from time to
time statements and schedules further identifying and describing the
Collateral and such other reports in connection with the Collateral as
Secured Party may reasonably request, all in reasonable detail.
SECTION 7.2 SECURED PARTY APPOINTED ATTORNEY-IN-FACT.
Debtor hereby irrevocably appoints Secured Party to serve as Debtor's
attorney-in-fact (provided, the parties hereto agree that Secured Party may not
act as Debtor's attorney-in-fact until the occurrence and during the
continuation of an Event of Default), with full authority in the place and
stead of Debtor and in the name of Debtor, Secured Party or otherwise, from
time to time in Secured Party's discretion, to take any action and to execute
any instrument, including without limitation financing statements or amendments
thereto, which Secured Party may deem necessary or advisable to accomplish the
purposes of this Agreement, including without limitation:
(a) to obtain and adjust insurance required to be paid to
Secured Party hereunder;
(b) to ask, demand, collect, sue for, recover, compound,
receive and give acquittance and receipts for monies due and to become
due under or in respect of any of the Collateral;
(c) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with
subsections (a) or (b) above; and
(d) to file any claims or take any action or institute
any Proceedings which Secured Party may deem necessary or desirable
for the collection of any of the Collateral or otherwise to enforce
the rights of Secured Party with respect to any of the Collateral.
SECTION 7.3 SECURED PARTY MAY PERFORM.
If Debtor fails to perform any agreement contained herein, Secured
Party may itself perform, or cause performance of, such agreement, and the
expenses of Secured Party incurred in connection therewith shall be payable by
Debtor under Section 6.1.
SECTION 7.4 SECURED PARTY'S DUTIES.
The powers conferred on Secured Party hereunder are solely to protect
its interest in the Collateral and shall not impose any duty upon it to
exercise any such powers. Secured Party shall have no duty as to any Collateral
or as to the taking of any necessary steps to preserve rights against other
parties or any other rights pertaining to any Collateral.
SECTION 7.5 CONTINUING SECURITY INTEREST; TRANSFER OF NOTE;
TERMINATION.
This Agreement shall: (a) create a continuing security interest in the
Collateral and shall remain in full force and effect until payment in full of
the Secured Obligations, be binding upon Debtor, its successors and assigns and
(b) inure to the benefit of Secured Party and its permitted successors,
transferees and assigns. Without limiting the generality of the foregoing
clause, Secured Party may assign or otherwise transfer all or any part of
Secured Party's interest in the Notes and/or the Security Instruments to one or
more persons or entities, and such other persons or entities shall thereupon
become vested with all the benefits in respect thereof Granted to Secured Party
herein. Upon the payment in full of the Secured Obligations, the security
interest Granted hereby shall terminate and all rights to the Collateral shall
revert to Debtor. Upon any such termination, Secured Party will execute and
deliver to Debtor such documents as Debtor shall reasonably request to evidence
such termination.
28
<PAGE> 29
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 NOTICES.
Except as expressly permitted herein to the contrary, all notices and
other communications provided for hereunder shall be in writing (including
communication by telecopier) and mailed (postage prepaid, by registered or
certified mail, return receipt requested), telecopied or hand delivered:
if to Secured Party, at:
NationsBanc Leasing Corporation of
North Carolina
101 South Tryon Street, NC1-002-38-20
Charlotte, North Carolina 28255
Attention: Manager of Corporate Lease
Administration
Telecopy: (704) 386-0892
or if to Debtor, at:
Eagle Geophysical, Inc.
50 Briar Hollow Lane, 7th Floor-West
Houston, Texas 77027
Attention: Debra D. Valice
Telecopy: (713) 627-1114
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other party. All such notices and
communications shall be effective (a) five (5) days after such have been
deposited in the mail or (b) immediately (i) after such have been telecopied to
the appropriate telecopy number and (ii) after such have been hand delivered to
the appropriate address.
SECTION 8.2 RISK OF LOSS.
Debtor shall bear all risk of any loss of or damage to the Collateral
and in no event shall Secured Party be liable for such loss or damage.
SECTION 8.3 POWERS AND AGENCIES.
Whenever in this Agreement Secured Party or Debtor is Granted the
power of attorney or is appointed the agent and attorney-in-fact with respect
to any Person, such Grant or appointment is irrevocable and coupled with an
interest. Secured Party shall have full power of substitution and delegation
in respect of all such Grants and appointment.
SECTION 8.4 ENTIRE AGREEMENT.
The Notes, this Agreement and the other Security Instruments embody
the entire agreement between the parties and supersede all prior agreements and
understandings, if any, relating to the subject matter hereof.
29
<PAGE> 30
SECTION 8.5 LAWFUL INTEREST.
No provision in the Notes, this Agreement or any Security Instrument
or other document in favor of Secured Party shall require or permit the
collection of interest in excess of the maximum lawful rate which Debtor may
contract for, stipulate or agree to pay as determined by a court of competent
jurisdiction over the holder of the Notes or any such document. In determining
whether or not the interest paid or payable under any specific contingency
exceeds such maximum lawful rate, Debtor and Secured Party shall, to the full
extent permitted by applicable law, prorate, allocate and spread, in equal
parts, the total amount of interest throughout the entire contemplated term of
the Notes or other document, as the case may be, so that the interest rate is
uniform throughout the entire term of the Notes or such document. If it is so
determined that any interest in excess of such maximum lawful rate is provided
for, such excess shall be applied first to any other amounts not constituting
interest due or which may become due and payable to Debtor under the Notes or
any of such other documents, and the balance, if any, shall be refunded to
Debtor; provided, however, that in no event shall Debtor be obligated to pay,
and Secured Party hereby waives payment of, the amount of interest to the
extent it is in excess of the amount permitted by applicable law.
SECTION 8.6 SURVIVAL; SEVERABILITY.
If any word, phrase, sentence, paragraph, provision or section of this
Agreement, the Notes or any other Security Instrument shall be held, declared
or pronounced void, voidable, invalid, unenforceable or inoperative for any
reason by any court of competent jurisdiction, governmental authority or
otherwise, such holding, declaration or pronouncement shall not adversely
affect any other word, phrase, sentence, paragraph, provision or section of
this Agreement, the Notes or any other Security Instrument, which shall
otherwise remain in full force and effect and be enforced in accordance with
their respective terms, and the effect of such holding, declaration or
pronouncement shall be limited to the territory or the jurisdiction in which
made. All agreements, covenants, representations, warranties and conditions
contained in this Agreement or made pursuant to the provisions hereof shall
survive the execution and delivery of this Agreement until the Secured
Obligations shall have been paid and performed in full. All statements by
Debtor contained in any certificate or other instrument delivered pursuant to
the provisions of this Agreement or any other Security Instrument shall
constitute the representations and warranties of Debtor.
SECTION 8.7 BINDING EFFECT.
This Agreement shall be binding upon and inure to the benefit of
Debtor and Secured Party and their respective successors and assigns, except
that Debtor shall not have the right to assign its rights hereunder of any
interest herein without the prior written consent of Secured Party. Secured
Party may assign all or any part of, or any interest in, its rights and
benefits hereunder, under the Notes and any Security Instrument as permitted
under Section 7.5 hereof, and to the extent of such permitted assignment each
such assignee shall have the same rights and benefits against Debtor as it
would have had if it were Secured Party hereunder.
SECTION 8.8 AMENDMENT AND WAIVER.
No amendment or waiver of any provision of the Notes, this Agreement
or any of the other Security Instruments, or consent to any departure by Debtor
therefrom, shall in any event be effective unless the same shall be in writing
and signed by Secured Party and Debtor, and such waiver and consent shall be
effective only in the specific instance and for the specific purpose for which
given. No failure on the part of Secured Party to exercise, and no delay in
exercising, any right under the Notes, this Agreement or any of the other
Security Instruments shall operate as a waiver thereof; nor shall any single or
partial exercise of any right under any such instrument or agreement preclude
any other or further exercise thereof or the exercise of any other right.
30
<PAGE> 31
SECTION 8.9 HEADINGS; EXECUTION IN COUNTERPART.
The section and article headings herein are for convenience of
reference only, and shall not limit or otherwise affect the meaning of any
provision herein. This Agreement may be executed in counterparts, each of which
shall constitute an original, but all of which together shall constitute one
and the same Agreement.
SECTION 8.10 TRANSACTION COSTS.
Debtor shall pay all reasonable costs and out-of-pocket expenses of
Secured Party incurred in connection with preparation, negotiation, execution,
modification and/or enforcement of the Notes, this Agreement, the other
Security Instruments including without limitation (a) the reasonable legal fees
and expenses of Moore & Van Allen, PLLC, (b) all filing and registration costs,
(c) all fees and disbursements incurred by Secured Party in connection with the
custody, preservation, use or operation of, or the sale of, collection from, or
other realization upon, any of the Collateral, and (d) all fees and
disbursements incurred by Secured Party in connection with the failure by
Debtor to perform or observe any of the provisions hereof.
SECTION 8.11 APPLICABLE LAW; CONSENT TO JURISDICTION AND VENUE;
WAIVER OF JURY TRIAL.
THIS AGREEMENT, THE NOTES AND THE OTHER SECURITY INSTRUMENTS AND ALL
MATTERS RELATING THERETO SHALL, EXCEPT TO THE EXTENT OTHERWISE REQUIRED BY
APPLICABLE LAW, BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NORTH CAROLINA WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES. DEBTOR HEREBY SUBMITS TO THE JURISDICTION AND VENUE OF THE STATE
AND FEDERAL COURTS OF MECKLENBURG COUNTY, NORTH CAROLINA AND AGREES THAT
SECURED PARTY MAY, AT ITS OPTION, ENFORCE ITS RIGHTS HEREUNDER AND UNDER THE
NOTES AND OTHER SECURITY INSTRUMENTS IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY
WAIVES THE DEFENSE OF AN INCONVENIENT FORUM TO MAINTENANCE OF ANY ACTION OR
PROCEEDING BY SECURED PARTY IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES,
TO THE EXTENT PERMITTED BY APPLICABLE LAW, ALL RIGHT TO TRIAL BY JURY IN ANY
ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT, THE NOTES OR ANY OTHER SECURITY INSTRUMENT OR ANY OF THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 8.12 BREAK-FUNDING COSTS.
Upon any early termination of this Agreement and/or any early
prepayment of the Notes for any reason which is not expressly permitted under
the Notes, Debtor shall promptly pay Secured Party (in addition to all other
amounts due and owing hereunder) an amount equal to the Break-Funding Costs
incurred by Secured Party, as such are (a) determined by Secured Party at such
time in its reasonable discretion and (b) specified in writing to Debtor.
SECTION 8.13 INTENTION OF THE PARTIES.
It is the intention of the parties to this Agreement that the
Equipment be and remain personal property, and at no time (so long as any of
the Secured Obligations remain outstanding) shall such Equipment be attached,
affixed or otherwise become a part of any vehicle or vessel. Further, each of
the parties hereto agree that it is their intent that the provisions of the UCC
govern the creation and perfection of a security interest in the Collateral.
[The remainder of this page has been intentionally left blank.]
31
<PAGE> 32
IN WITNESS WHEREOF, Debtor and Secured Party have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
EAGLE GEOPHYSICAL, INC., as Debtor
By: /s/ Debra D. Valice
Name: Debra D. Valice
Title: Vice President
NATIONSBANC LEASING CORPORATION OF
NORTH CAROLINA, as Secured Party
By: /s/ George L. Robinson, Jr.
Name: George L. Robinson, Jr.
Title: Senior Vice President
32
<PAGE> 33
SCHEDULE 1.3(a)
SECURED TERM NOTE A
DUE FEBRUARY 29, 2000
$557,768.14 February 6, 1997
FOR VALUE RECEIVED, the undersigned EAGLE GEOPHYSICAL, INC., a
Delaware corporation (-Debtor") HEREBY PROMISES TO PAY to the order of
NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a North Carolina corporation
("Secured Party"), the principal sum of FIVE HUNDRED FIFTY-SEVEN THOUSAND SEVEN
HUNDRED SIXTY-EIGHT AND 14/100 DOLLARS ($557,768.14) (the "Original Amount")
pursuant to the terms and conditions of that certain Loan and Security
Agreement dated as of the date hereof between the Debtor and the Secured Party,
as amended, modified or replaced from time to time (as so amended, modified or
replaced, the "Agreement" - all the terms, conditions, definitions and
covenants of such Agreement are expressly made a part hereof in the same manner
and with the same effect as if set forth herein at length, any holder of this
Secured Term Note A (the "Note") being entitled to the benefits and remedies
provided for in the Agreement).
The Bank has made a term loan to the Borrower as provided in Section
1.3(a) of the Loan Agreement. The outstanding principal balance hereof shall be
due and payable as provided in Section 1.3(a)(ii) of the Agreement.
Notwithstanding the foregoing, the final payment made on this Note shall be an
amount sufficient to discharge in full the unpaid Original Amount and all
accrued and unpaid interest on, and any other amounts due under this Note and
under the Agreement.
This Note shall bear interest on the outstanding balance hereof, and
such interest shall be payable hereunder, as provided in Section 1.3(a)(ii) of
the Agreement.
In the event the amounts owing under this Note shall be accelerated in
accordance with the terms of the Agreement, the amounts owing hereunder shall
become immediately due and payable without presentation, demand, protest or
notice of any kind, all of which are hereby expressly waived. Further, in the
event amounts owing hereunder are not paid when due (including any stated or
accelerated maturity), the Debtor agrees to pay promptly upon demand, in
addition to principal, interest and other amounts owing hereunder, all costs of
collection, including reasonable attorneys' fees.
All payments shall be payable, in lawful money of the United States
and in immediately available funds without setoff or counterclaim, to Secured
Party at its office at NationsBank Plaza, 101 South Tryon Street,
NC1-002-38-20, Charlotte, North Carolina 28255 or such other address as the
holder thereof shall notify Debtor in writing.
In determining whether or not the interest paid or payable, under any
specific contingency, exceeds the maximum lawful rate permitted by law, Debtor
and Secured Party shall, to the full extent permitted by applicable law,
exclude voluntary prepayment and the effects thereof and amortize, prorate,
allocate and spread, in equal parts, the total amount of interest throughout
the entire contemplated term of this Note so that the interest rate is uniform
throughout the entire term of this Note. If it is so determined that any
interest in excess of such maximum lawful rate is provided for, then such
excess shall be applied first to any other amounts not constituting interest
due or which may become due under this Note or the Agreement and the balance,
if any, shall be refunded to Debtor; provided, however, that in no event shall
Debtor be obligated to pay, and Secured Party hereby waives payment of, the
amount of interest to the extent it is in excess of the amount permitted by
applicable law. No provision in this Note or the Agreement shall require or
permit the collection of interest in excess of the maximum lawful rate.
1
<PAGE> 34
This Note may be prepaid by the Debtor in accordance with Section
1.3(c) of the Agreement only if all amounts owing with respect to this Note,
Agreement and the other Security Instruments are paid in full. Except as
otherwise provided for herein and in the Agreement, this Note shall not be
subject to prepayment.
THIS NOTE, THE AGREEMENT AND THE SECURITY INSTRUMENTS AND ALL MATTERS
RELATING THERETO SHALL, EXCEPT TO THE EXTENT OTHERWISE REQUIRED BY APPLICABLE
LAW, BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NORTH CAROLINA WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
DEBTOR HEREBY SUBMITS TO THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL
COURTS OF NORTH CAROLINA AND AGREES THAT THE SECURED PARTY MAY, AT ITS OPTION,
ENFORCE ITS RIGHTS HEREUNDER AND UNDER THE AGREEMENT AND THE OTHER SECURITY
INSTRUMENTS IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES THE DEFENSE OF AN
INCONVENIENT FORUM TO MAINTENANCE OF ANY ACTION OR PROCEEDING BY SECURED PARTY
IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTE,
THE AGREEMENT OR ANY OTHER SECURITY INSTRUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
IN WITNESS WHEREOF, the Debtor has caused this Note to be executed as
of the date appearing above.
EAGLE GEOPHYSICAL, INC.
By:
-----------------------------------
Name (Printed):
-----------------------
Title:
--------------------------------
2
<PAGE> 35
SCHEDULE 1.3(b)
SECURED TERM NOTE B
DUE APRIL 30, 2002
$7,006,152.04 February 6, 1997
FOR VALUE RECEIVED, the undersigned EAGLE GEOPHYSICAL, INC., a
Delaware corporation ("Debtor") HEREBY PROMISES TO PAY to the order of
NATIONSBANC LEASING CORPORATION OF NORTH CAROLINA, a North Carolina corporation
("Secured Party"), the principal sum of SEVEN MILLION SIX THOUSAND ONE HUNDRED
FIFTY-TWO AND 04/100 DOLLARS ($7,006,152.04) (the "Original Amount") pursuant
to the terms and conditions of that certain Loan and Security Agreement dated
as of the date hereof between the Debtor and the Secured Party, as amended,
modified or replaced from time to time (as so amended, modified or replaced,
the "Agreement" - all the terms, conditions, definitions and covenants of such
Agreement are expressly made a part hereof in the same manner and with the same
effect as if set forth herein at length, any holder of this Secured Term Note B
(the "Note") being entitled to the benefits and remedies provided for in the
Agreement).
The Bank has made a term loan to the Borrower as provided in Section
1.3(b) of the Loan Agreement. The outstanding principal balance hereof shall be
due and payable as provided in Section 1.3(b)(ii) of the Agreement.
Notwithstanding the foregoing, the final payment made on this Note shall be an
amount sufficient to discharge in full the unpaid Original Amount and all
accrued and unpaid interest on, and any other amounts due under this Note and
under the Agreement.
This Note shall bear interest on the outstanding balance hereof, and
such interest shall be payable hereunder, as provided in Section 1.3(b)(ii) of
the Agreement.
In the event the amounts owing under this Note shall be accelerated in
accordance with the terms of the Agreement, the amounts owing hereunder shall
become immediately due and payable without presentation, demand, protest or
notice of any kind, all of which are hereby expressly waived. Further, in the
event amounts owing hereunder are not paid when due (including any stated or
accelerated maturity), the Debtor agrees to pay promptly upon demand, in
addition to principal, interest and other amounts owing hereunder, all costs of
collection, including reasonable attorneys' fees.
All payments shall be payable, in lawful money of the United States
and in immediately available funds without setoff or counterclaim, to Secured
Party at its office at NationsBank Plaza, 101 South Tryon Street,
NC1-002-38-20, Charlotte, North Carolina 28255 or such other address as the
holder thereof shall notify Debtor in writing.
In determining whether or not the interest paid or payable, under any
specific contingency, exceeds the maximum lawful rate permitted by law, Debtor
and Secured Party shall, to the full extent permitted by applicable law,
exclude voluntary prepayment and the effects thereof and amortize, prorate,
allocate and spread, in equal parts, the total amount of interest throughout
the entire contemplated term of this Note so that the interest rate is uniform
throughout the entire term of this Note. If it is so determined that any
interest in excess of such maximum lawful rate is provided for, then such
excess shall be applied first to any other amounts not constituting interest
due or which may become due under this Note or the Agreement and the balance,
if any, shall be refunded to Debtor; provided, however, that in no event shall
Debtor be obligated to pay, and Secured Party hereby waives payment of, the
amount of interest to the extent it is in excess of the amount permitted by
applicable law. No provision in this Note or the Agreement shall require or
permit the collection of interest in excess of the maximum lawful rate.
This Note may be prepaid by the Debtor in accordance with Section
1.3(c) of the Agreement only if ail amounts owing with respect to this Note,
the Agreement and the other Security Instruments are paid in full. Except as
otherwise provided for herein and in the Agreement, this Note shall not be
subject to prepayment.
1
<PAGE> 36
THIS NOTE, THE AGREEMENT AND THE SECURITY INSTRUMENTS AND ALL MATTERS
RELATING THERETO SHALL, EXCEPT TO THE EXTENT OTHERWISE REQUIRED BY APPLICABLE
LAW, BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NORTH CAROLINA WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.
DEBTOR HEREBY SUBMITS TO THE JURISDICTION AND VENUE OF THE STATE AND FEDERAL
COURTS OF NORTH CAROLINA AND AGREES THAT THE SECURED PARTY MAY, AT ITS OPTION,
ENFORCE ITS RIGHTS HEREUNDER AND UNDER THE AGREEMENT AND THE OTHER SECURITY
INSTRUMENTS IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES THE DEFENSE OF AN
INCONVENIENT FORUM TO MAINTENANCE OF ANY ACTION OR PROCEEDING BY SECURED PARTY
IN SUCH COURTS. DEBTOR HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN
ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS NOTE,
THE AGREEMENT OR ANY OTHER SECURITY INSTRUMENT OR ANY OF THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
IN WITNESS WHEREOF, the Debtor has caused this Note to be executed as
of the date
EAGLE GEOPHYSICAL, INC.
By:
-----------------------------------
Name (Printed):
-----------------------
Title:
--------------------------------
2
<PAGE> 1
EXHIBIT 10.3
CSA 960930
CONDITIONAL SALES AGREEMENT
THIS CONDITIONAL SALES AGREEMENT (the "Agreement") is made and entered
into by and between INPUT/OUTPUT, INC. ("I/O"), a Delaware corporation having
offices at 11104 West Airport, Stafford, Texas 77477, and HORIZON EXPLORATION,
LTD. ("Purchaser"), having offices at 6 Pembroker Rd., Sevenoaks, Kent, TN13
1XR England.
1. Sale of Equipment. I/O hereby agrees to sell and Purchaser
hereby agrees to purchase from I/O the goods and equipment described in
attached Schedule A (the "Equipment").
2. Sales Price. The sales price for the Equipment is US
$3,354,825 (the "Sales Price").
3. Terms of Payment. Purchaser agrees to pay the Sales Price to
I/O as follows:
(a) Down Payment. Purchaser shall make a cash down
payment of the Sales Price in the amount of $100,000 on or before August 30,
1996 and a cash down payment of $235,483 which is due and payable on or before
March 1, 1997.
(c) Payment of Principal and Interest. The remaining
unpaid balance of the Sales Price in the amount of US $3,019,342 is payable in
thirty (30) monthly installments, including principal and interest in strict
accordance with the amortization schedule attached hereto as Schedule B and
forming part of this Agreement.
(e) Prepayments. Purchaser may prepay the unpaid
principal balance, in whole or in part, without penalty. All prepayments shall
be applied to the unpaid principal balance of the Sales Price in the inverse
order of maturity.
4. Title and Insurance. Title to the Equipment shall not pass to
Purchaser, but shall remain with I/O, until Purchaser has paid the Sales Price
in full, all interest accrued thereon and all other amounts due hereunder.
Upon payment of the Sales Price in full, I/O shall deliver to Purchaser an
unconditional bill of sale for the Equipment. Purchaser shall keep and
maintain insurance on the Equipment against loss, damage, destruction or fire
in an amount not less than the outstanding balance of the Sales Price with an
insurance company or companies acceptable to I/O. All such policies of
insurance shall name I/O or its assignee as loss payee and named insured and
Purchaser shall provide certificates of insurance to evidence such coverage.
5. Default and Remedies.
(a) If Purchaser fails or neglects to comply with any
term or condition of this Agreement, or to make any payment provided for
herein, when due or payable, or violates any of the provisions hereof, or if
the Purchaser becomes insolvent or bankrupt or if the Purchaser makes any
material misrepresentation (hereinafter collectively and individually referred
to as a "default"), and Purchaser has not cured such event of default after 10
days written notice by I/O, I/O, at its option, may declare the entire amount
owing hereunder to I/O immediately due and payable.
<PAGE> 2
CSA 960930
(b) In the event of default by Purchaser hereunder I/O
may, without notice to Purchaser, declare all of Purchaser's rights with
respect to the Equipment under this Agreement terminated, and exercise any and
all remedies, legal or equitable that it may have against Purchaser under
applicable law, including, but not limited to, without demand first made, and
with or without legal process, immediately take possession of the Equipment,
together with all additions, equipment and accessories thereto, wherever the
same may be found, using reasonable force if necessary, and hold the same,
together with title thereto, and Purchaser hereby waives all claims for damages
due to or arising from, or connected with any such taking.
(c) If I/O takes possession of the Equipment, all of
Purchaser's rights with respect to the equipment under this Agreement shall
immediately terminate, and all payments theretofore made by Purchaser shall
belong absolutely to I/O, or its assignee. I/O and its assignee shall be
entitled to apply all such payments, as well as amounts otherwise received in
subsequent sale of the Equipment, first to the payment of all its reasonable
expenses, including attorney's fees and legal expenses, incurred in taking
possession of the Equipment, or any part thereof, for sale or other
disposition, in arranging for any such sale or other disposition, and in
actually selling same, and next toward payment of the balance due hereunder, in
such order and manner as I/O or its assignee, as applicable, may deem
advisable. I/O shall remit to Purchaser any net surplus received from a sale
of the Equipment after payment in full of the Sales Price, accrued interest and
all costs of repossession and sale. If such payments and such sales proceeds
are not sufficient to pay the amounts due hereunder, the Purchaser shall remain
fully liable for any deficiency.
(d) In addition to any other obligation of Purchaser or
remedy of I/O herein or at law, Purchaser shall reimburse I/O for all of I/O's
expenses, including legal expenses, which I/O may incur in enforcing the rights
under this Agreement.
(e) Notwithstanding anything contained herein to the
contrary, in the event the Purchaser fails to pay any monies owing hereunder,
such past due amounts shall bear interest at the rate of 1-1/2% per month.
6. Confidentiality. The terms and conditions of this Agreement
are confidential in nature and I/O and Purchaser agree that said terms will not
be disclosed to anyone outside of I/O's and Purchaser's respective
organizations.
7. Taxes. All sales, value added, use, excise and other taxes
arising from the transaction are to be paid by Purchaser. Purchaser agrees to
indemnify and hold I/O harmless from and against any liability for such sales,
use, excise, or other taxes arising from the transaction.
8. Limited Warranty. I/O hereby agrees to provide a limited
warranty on Equipment covered under this Agreement as per attached Schedule C.
9. Arbitration. In the event Purchaser is an entity formed,
incorporated or existing outside of the United States of America, I/O and
Purchaser agree that any controversy arising between the Parties shall be
submitted to arbitration using the Rules of Conciliation and
2
<PAGE> 3
CSA 960930
Arbitration of the International Chamber of Commerce. In the event Purchaser
is an entity formed, incorporated or existing within the United States of
America, I/O and Purchaser agree that this sale shall not be subject to
arbitration.
10. Export Restrictions. Purchaser agrees that it shall comply
with any and all laws, regulations, orders, or other restrictions of the United
States of America relating to the export and re-export of commodities and
technical data which may be imposed from time to time. Purchaser will not
export or re-export, directly or indirectly any Products or information to any
destination prohibited by such laws, regulations, orders or other restrictions
without the prior authorization of the appropriate U.S. Government authorities.
Purchaser agrees that its obligations under this section shall survive and
continue after any termination of rights under this Sales Agreement.
11. Unanticipated Advice. If, in the course of completing work
required under this agreement, Purchaser personnel should solicit advice or
information from I/O's personnel not covered by this Agreement, and then
subsequently choose to act upon this advice or information, the Purchaser
agrees to indemnify and hold I/O harmless from any and all subsequent
occurrences arising from the advice or information.
12. Location of Equipment. Purchaser agrees to use the Equipment
offshore within the territorial boundaries of North West Europe until the Sales
Price is paid in full, unless I/O otherwise agreed in writing. Purchaser
agrees to provide written notice to I/O, on the first day of each month during
which any portion of the Sales Price remains unpaid, stating the location of
the Equipment and shall from time to time, upon twenty-four hours prior notice,
advise I/O in writing of the exact location of the equipment.
13. Proprietary Rights, License and Confidentiality.
(a) Purchaser acknowledges that the Equipment contains
certain hardware components and software proprietary to I/O. I/O hereby grants
to Purchaser a non-exclusive, irrevocable license to use the software for the
purpose of operating the Equipment. The license granted hereunder is for an
undetermined period and shall survive the termination of this Agreement
provided such termination does not arise from a default by Purchaser under this
Agreement.
(b) Purchaser acknowledges that any hardware and software
proprietary to I/O are trade secrets and constitute a valuable asset of I/O.
Purchaser agrees that it shall exercise at least the same degree of care and
discretion with respect to the hardware and software as it exercises in
protecting its own confidential information; that it shall not disclose or
otherwise make available, without the prior written consent of I/O, the
hardware or software or any copies of it to any other person and that it shall
not copy or reproduce the hardware or software. Purchaser agrees that this
provision shall survive the expiration or termination of this Agreement.
(c) Purchaser further acknowledges that it shall not,
without the prior written consent of I/O, divulge any information relating to
the terms of this Agreement to any third party, except as to the extent
required by law, and shall take all reasonable action to prevent its employees
and all others, if any, involved in this Agreement from divulging such
information to
3
<PAGE> 4
CSA 960930
third parties. This obligation shall remain in force after the expiration or
termination of this Agreement.
14. Other Conditions:
(a) Mandatory Prepayment. The unpaid principal balance
and accrued unpaid interest on the Sales Price shall be due and payable in full
on or before the expiration of ten (10) days following a "Corporate Change." A
"Corporate Change" shall mean any of the following: (A) Purchaser sells or
otherwise disposes of all or substantially all of its assets or (B) Purchaser
issues or sells shares of its common stock (other than issuance of stock to
employees or directors as part of any employee benefit plan) and receives
proceeds from such sale of stock in an amount that is equal to $20 million or
greater.
(b) Vessel Owner Waivers. Purchaser shall at all times
provide I/O with Vessel Owner Waivers from vessel contractors for all vessels
on which the Equipment is located.
15. General.
(a) This Agreement shall be construed in accordance with
the laws of the State of Texas. All sales of goods or services hereunder will
be F.O.B. I/O's plant in Stafford, Texas, if any of the Equipment is being
shipped by I/O, and shall be deemed to have been delivered and accepted upon
execution with respect to all Equipment which is currently in possession of
Purchaser pursuant to rental agreements with I/O or another party. All terms
and conditions of this sale, including all payments, are due, performable and
payable in Stafford, Fort Bend County, Texas. This writing is intended by the
parties as a final expression of their agreement and the parties agree that
there are no understandings, agreements or representations, expressed or
implied, not specified herein, respecting the sale, and that this writing
contains the entire agreement between I/O and Purchaser.
(b) Any action or proceeding relating to or concerning
this Agreement or any breach thereof must be commenced within one (1) year
after the asserted claim or cause of action shall have occurred (whether or not
the party asserting such claim or cause of action had any knowledge or notice
thereof, and, if no action or proceeding is commenced within such one (1) year
period, the party in whose favor the claim or cause of action arises shall be
deemed to have waived the same).
(c) The invalidity in whole or in part of any of the
foregoing provisions will not affect the remainder of such provisions.
Purchaser warrants it is not a consumer and is a Merchant in the type of
equipment sole hereunder and that the goods or services represented by this
sale are purchased for commercial purposes. If allowed by applicable law,
Purchaser agrees to hold I/O harmless and agrees to indemnify I/O from all
damages resulting from suits under the Texas Deceptive Trade Practices Act
insofar as they include recovery for damages in excess of those allowed
hereunder and the Uniform Commercial Code as adopted by the State of Texas.
Purchaser hereby waives the right to all remedies provided by the Deceptive
Trade Practices/Consumer Protection Act of the Texas Business & Commerce Code,
in accordance with Section 17.42 of the Business & Commerce Code.
4
<PAGE> 5
CSA 960930
16. Notice Between Parties. Any notice or delivery to be given
hereunder by either party to the other may be effected by personal delivery in
writing, certified mail, postage prepaid, mailgram or telegram, and shall be
deemed communicated as of delivery, unless otherwise provided in this Agreement
in accordance with this paragraph.
to the Purchaser at:
HORIZON EXPLORATION, LTD.
6 Pembroke Rd.
Sevenoaks, Kent TN13 1XR
England
Attention: Gerry Harrison
Fax: 44-1732-742-746
to the Seller at:
INPUT/OUTPUT, INC.
11104 West Airport
Stafford, TX 77477
Attention: Robert P. Brindley
Fax: 713-879-3632
17. Usury Laws. Any provision in this agreement or any other
document executed or delivered in connection herewith, or in any other
agreement or commitment, whether written or oral, expressed or implied, to the
contrary notwithstanding, neither I/O nor any holder or assignee hereof shall
in any event be entitled to receive or collect, nor shall or may amounts
received hereunder be credited, so that I/O or any other holder hereof shall be
paid, as interest, a sum greater than the maximum amount permitted by
applicable law to be charged to the person, partnership, firm or corporation
primarily obligated to pay under this Agreement at the time in question. If
any construction of this Agreement or any document securing this Agreement, or
any and all other papers, agreements or commitments, indicate a different right
given to I/O or any holder hereof to ask for, demand or receive any larger sum
as interest, such is a mistake in calculation or wording which this clause
shall override and control, it being the intention of the parties that this
Agreement, and all other instruments securing the payment of this Agreement or
executed or delivered in connection herewith shall in all things comply with
applicable law and proper adjustments shall automatically be made accordingly.
In the event that I/O or any holder ever receives, collects or applies as
interest, any sum in excess of the maximum rate allowed by law, if any, such
excess amount shall be applied to the reduction of the unpaid principal balance
of this Agreement, and if this Agreement is paid in full, any remaining excess
shall be paid to Purchaser. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the maximum rate allowable by
law, if any, Purchaser and I/O or any holder hereof shall, to the maximum
extent permitted under applicable law, (a) exclude voluntary prepayments and
the effects thereof, or (b) "spread" the total amount of interest throughout
the entire term of this Agreement so that the interest rate is uniform
throughout the entire term of this Agreement; provided, that if this Agreement
is paid and performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence
5
<PAGE> 6
CSA 960930
thereof exceeds the maximum lawful rate, if any, I/O or any holder hereof shall
refund to Purchaser the amount of such excess or credit the amount of such
excess against the aggregate unpaid principal balance of all advances made by
the I/O or any holder under this Agreement at the time in question.
18. Entire Agreement. This Agreement constitutes the entire
agreement between I/O and Purchaser with respect to the purchase and sale of
the Equipment and no representation or statement not contained herein shall be
binding upon I/O or Purchaser as a warranty or otherwise, unless in writing and
executed by the party to be bound thereby. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Purchaser acknowledges that it has read this
Agreement, understands it, and agrees to all terms and conditions stated
herein.
HORIZON EXPLORATION, LTD. INPUT/OUTPUT, INC.
By: /s/ G. M. Harrison By: /s/ Robert P. Brindley
Name: G.M. Harrison Name: Robert P. Brindley
Title: Managing Director Title: Senior Vice President,
Chief Financial Officer
Date: 10th February 1997 and Secretary
Date: 2/19/97
I/O hereby assigns to Global Charter Corporation all of its right, title and
interest in and to the Sales Price and any interest payable with respect
thereto under this Agreement.
6
<PAGE> 7
CSA 960930
GLOBAL CHARTER CORPORATION
By: /s/ Robert P. Brindley
Name: Robert P. Brindley
Title: Chief Executive Officer
Date: 2/19/97
7
<PAGE> 8
INPUT/OUTPUT INC.
CSA Number: 960930
Customer: HORIZON EXPLORATION INC
Schedule A
<TABLE>
<CAPTION>
PART NUMBER SERIAL NUMBER DESCRIPTION
<S> <C> <C>
1441200001 218134 SLIP-RING ELEC/OPTIC W/JNC BOX
1441200001 218137 SLIP-RING ELEC/OPTIC W/JNC BOX
1441200001 218146 SLIP-RING ELEC/OPTIC W/JNC BOX
21037803 No Serial # KIT, SHIPBOARD SPARES, MSX
21289300 60001 MODULE STREAMER, WG-24A
21289300 60002 MODULE STREAMER, WG-24A
21289300 60004 MODULE STREAMER, WG-24A
21289300 60005 MODULE STREAMER, WG-24A
21289300 60006 MODULE STREAMER, WG-24A
21289300 60007 MODULE STREAMER, WG-24A
21289300 60009 MODULE STREAMER, WG-24A
21289300 60012 MODULE STREAMER, WG-24A
21289300 60013 MODULE STREAMER, WG-24A
21289300 60014 MODULE STREAMER, WG-24A
21289300 60015 MODULE STREAMER, WG-24A
21289300 60017 MODULE STREAMER, WG-24A
21289300 60018 MODULE STREAMER, WG-24A
21289300 60019 MODULE STREAMER, WG-24A
21289300 60021 MODULE STREAMER, WG-24A
21289300 60022 MODULE STREAMER, WG-24A
21289300 60023 MODULE STREAMER, WG-24A
21289300 60024 MODULE STREAMER, WG-24A
21289300 60025 MODULE STREAMER, WG-24A
21289300 60031 MODULE STREAMER, WG-24A
21289300 60032 MODULE STREAMER, WG-24A
21289300 60033 MODULE STREAMER, WG-24A
21289300 60035 MODULE STREAMER, WG-24A
21289300 60036 MODULE STREAMER, WG-24A
21289300 60037 MODULE STREAMER, WG-24A
21289300 60038 MODULE STREAMER, WG-24A
</TABLE>
Page: 1
<PAGE> 9
INPUT/OUTPUT INC.
CSA Number: 960930
Customer: HORIZON EXPLORATION INC
Schedule A
<TABLE>
<CAPTION>
PART NUMBER SERIAL NUMBER DESCRIPTION
<S> <C> <C>
21289300 60039 MODULE STREAMER, WG-24A
21289300 60040 MODULE STREAMER, WG-24A
21289300 60041 MODULE STREAMER, WG-24A
21289300 60043 MODULE STREAMER, WG-24A
21289300 60045 MODULE STREAMER, WG-24A
21289300 60046 MODULE STREAMER, WG-24A
21289300 60048 MODULE STREAMER, WG-24A
21289300 60049 MODULE STREAMER, WG-24A
21289300 60050 MODULE STREAMER, WG-24A
21289300 60051 MODULE STREAMER, WG-24A
21289300 60052 MODULE STREAMER, WG-24A
21289300 60053 MODULE STREAMER, WG-24A
21289300 60054 MODULE STREAMER, WG-24A
21289300 60055 MODULE CABLE HEAD, WG-24A
21295500 80025 MODULE CABLE HEAD, WG-24A
21295500 80035 MODULE CABLE HEAD, WG-24A
21295500 80039 MODULE CABLE HEAD, WG-24A
21295600 70360 MODULE CONNECTOR, WG-24A
21295600 70393 MODULE CONNECTOR, WG-24A
21295600 70398 MODULE CONNECTOR, WG-24A
21295600 70404 MODULE CONNECTOR, WG-24A
21295600 70410 MODULE CONNECTOR, WG-24A
21295600 70413 MODULE CONNECTOR, WG-24A
21295600 70414 MODULE CONNECTOR, WG-24A
21295600 70417 MODULE CONNECTOR, WG-24A
21295600 70418 MODULE CONNECTOR, WG-24A
21295600 70423 MODULE CONNECTOR, WG-24A
21295600 70428 MODULE CONNECTOR, WG-24A
21295600 70435 MODULE CONNECTOR, WG-24A
21295600 70436 MODULE CONNECTOR, WG-24A
</TABLE>
Page: 2
<PAGE> 10
INPUT/OUTPUT INC.
CSA Number: 960930
Customer: HORIZON EXPLORATION INC
Schedule A
<TABLE>
<CAPTION>
PART NUMBER SERIAL NUMBER DESCRIPTION
<S> <C> <C>
21295600 70437 MODULE CONNECTOR, WG-24A
21295600 70438 MODULE CONNECTOR, WG-24A
21295600 70443 MODULE CONNECTOR, WG-24A
21295600 70444 MODULE CONNECTOR, WG-24A
21295600 70445 MODULE CONNECTOR, WG-24A
21295600 70449 MODULE CONNECTOR, WG-24A
21295600 70450 MODULE CONNECTOR, WG-24A
21295600 70451 MODULE CONNECTOR, WG-24A
21295600 70452 MODULE CONNECTOR, WG-24A
21295600 70453 MODULE CONNECTOR, WG-24A
21295600 70455 MODULE CONNECTOR, WG-24A
21295600 70457 MODULE CONNECTOR, WG-24A
21295600 70458 MODULE CONNECTOR, WG-24A
21295600 70459 MODULE CONNECTOR, WG-24A
21295600 70460 MODULE CONNECTOR, WG-24A
21295600 70461 MODULE CONNECTOR, WG-24A
21295600 70462 MODULE CONNECTOR, WG-24A
21295600 70464 MODULE CONNECTOR, WG-24A
21295600 70469 MODULE CONNECTOR, WG-24A
21295600 70470 MODULE CONNECTOR, WG-24A
21295600 70471 MODULE CONNECTOR, WG-24A
21295600 70472 MODULE CONNECTOR, WG-24A
21295600 70478 MODULE CONNECTOR, WG-24A
21295600 70485 MODULE CONNECTOR, WG-24A
21295600 70486 MODULE CONNECTOR, WG-24A
21295600 70488 MODULE CONNECTOR, WG-24A
21295600 70489 MODULE CONNECTOR, WG-24A
21295700 90022 MODULE TERMINATOR, WG-24A
21295700 90025 MODULE TERMINATOR, WG-24A
21295700 90048 MODULE TERMINATOR, WG-24A
</TABLE>
Page: 3
<PAGE> 11
INPUT/OUTPUT INC.
CSA Number: 960930
Customer: HORIZON EXPLORATION INC
Schedule A
<TABLE>
<CAPTION>
PART NUMBER SERIAL NUMBER DESCRIPTION
<S> <C> <C>
52174 No Serial # OOKITT, MSX SHIPBOARD SYS
5750007 596-044020-1 DECABL WG-24, ELECTRICAL, 75 MET
5750007 596-044020-2 DECABL WG-24, ELECTRICAL, 75 MET
5750025 5750025-23 DECABL WG-24, OPTICAL, 75 METERS
5750025 5750025-24 DECABL WG-24, OPTICAL, 75 METERS
5750027 996-066350-1 JUMPER WG-24, DECK/HUB BOX BYPA
5750027 996-066350-2 JUMPER WG-24, DECK/HUB BOX BYPA
57520028 996-064840-3 ELAST MSX24, SERIES 3, HEAD
57520028 996-064840-4 ELAST MSX24, SERIES 3, HEAD
57520028 996-064840-6 ELAST MSX24, SERIES 3, HEAD
57520028 996-064840-7 ELAST MSX24, SERIES 3, HEAD
5752003 1096-068510-1 ELAST MSX24, 70 METER, HEAD
5752003 1096-068510-2 ELAST MSX24, 70 METER, HEAD
5752003 1096-068510-3 ELAST MSX24, 70 METER, HEAD
5752003 1096-068510-4 ELAST MSX24, 70 METER, HEAD
5753019 895-014790-2A LEADIN WG-24, SERIES 2, HAIRED, S
5753019 895-014790-2B LEADIN WG-24, SERIES 2, HAIRED, S
5753019 996-066830-1 LEADIN WG-24, SERIES 2, HAIRED, S
5754006-75 996-066790-1 CABASY STICK, POWER TAIL SWIVEL
5754006-75 996-066790-2 CABASY STICK, POWER TAIL SWIVEL
5801902 No serial # -1 BRACKT TOWING ASSEMBLY, 217" D
5801902 No serial # -2 BRACKT TOWING ASSEMBLY, 217" D
5804003 996-067500-1 TRANSITION, MXS, ADAPTER CBL HD
5804003 996-067500-2 TRANSITION, MXS, ADAPTER CBL HD
5804003 996-067500-3 TRANSITION, MXS, ADAPTER CBL HD
5805001 896-63180-10 ELAST MSX24A, TAIL, 85M
5805001 896-63180-11 ELAST MSX24A, TAIL, 85M
5805001 896-63180-8 ELAST MSX24A, TAIL, 85M
5805001 896-63180-9 ELAST MSX24A, TAIL, 85M
5806002 996-066280-5 ADAPTER MSX-24A, TAIL, SWIVEL, PW
</TABLE>
Page: 4
<PAGE> 12
INPUT/OUTPUT INC.
CSA Number: 960930
Customer: HORIZON EXPLORATION INC
Schedule A
<TABLE>
<CAPTION>
PART NUMBER SERIAL NUMBER DESCRIPTION
<S> <C> <C>
5806002 996-066280-6 ADAPTER MSX-24A, TAIL, SWIVEL, PW
5831002 396-044940-1 ACTIVE MSX-24A, 125M GROUP, 3R
5831002 396-044940-11 ACTIVE MSX-24A, 125M GROUP, 3R
5831002 396-044940-12 ACTIVE MSX-24A, 125M GROUP, 3R
5831002 396-044940-13 ACTIVE MSX-24A, 125M GROUP, 3R
5831002 396-044940-14 ACTIVE MSX-24A, 125M GROUP, 3R
5831002 396-044940-15 ACTIVE MSX-24A, 125M GROUP, 3R
5831002 396-044940-16 ACTIVE MSX-24A, 125M GROUP, 3R
5831002 396-044940-17 ACTIVE MSX-24A, 125M GROUP, 3R
5831002 396-044940-18 ACTIVE MSX-24A, 125M GROUP, 3R
</TABLE>
Page: 5
<PAGE> 1
10.4.1
NAME OF PROMISSOR: Horizon Exploration LTD
AMOUNT PROMISED: $306,180.00 U.S. Dollars
INTEREST RATE: 11.25% PER ANNUM
Installment Note
1. For value received, the undersigned, Horizon Exploration LTD
("Borrower") promises to pay to TELEDYNE BROWN ENGINEERING MARINE PRODUCTS, A
DIVISION OF TELEDYNE INDUSTRIES, INC. or its assignee, the principal sum of
$306,180.00 U.S. Dollars, with interest at the rate of 11.25% per annum on the
unpaid balance of that principal sum until paid. The Borrower promises to pay
that principal sum and interest in installments as follows: $54,214.00 U.S.
Dollars on the 10th day of April, 1977, and five (5) successive installments of
$54,214.00 U.S. Dollars on the same day of each succeeding calendar month until
all such installment payments have been made, on which date the entire unpaid
balance of principal and interest shall be due and payable.
Allocation of Payments
2. Each installment, when paid, shall be credited first to the
interest then due, and the remainder shall be credited to principal. Interest
shall cease to accrue on the principal so credited.
Acceleration
3. In the event Borrower fails to make payment of any part or
installment of principal or interest when due, the whole sum of the principal
then unpaid, together with accrued interest, shall become immediately due and
payable at the option of the holder of this Note. Borrower expressly waives
demand for payment, notice of intention to accelerate, and notice of
acceleration.
<PAGE> 2
Collection Costs
4. Borrower agrees to pay the actual expenditures made in any
attempt to collect the amount due to pursuant to this Note, including any
reasonable attorney's fees incurred by the holder.
Collateral
5. Syntrak Active Sections as listed on Teledyne Brown Engineering
Marine Products invoice number 12293 dated 12/25/96 (Serial Numbers
1296-42160A-001 through 1296-42160A-010 and 1296-42160B-011 through
1296-42160B-028).
Additional Conditions
6. Legal title to the equipment covered by this agreement shall
remain with Teledyne Brown Engineering Marine Products for the term of this
agreement.
7. Borrower shall at all times insure the equipment against all
risk of loss or damage from every cause whatsoever, for not less than its full
replacement value as determined by Teledyne Brown Engineering Marine Products,
and shall carry public liability, contractual liability, and proper damage
insurance covering the equipment, its operation and use. All such insurance
shall be in a form and amount and with companies approved by Teledyne Brown
Engineering Marine Products, and shall be in the joint names of Teledyne Brown
Engineering Marine Products and Borrower. The Borrower shall pay the premium
therefore and deliver said policies, duplicates or certificates of insurance
thereof to Teledyne Brown Engineering Marine Products.
<PAGE> 3
The undersigned Corporation has caused this Note to be executed by its
officers duly authorized to execute instruments of indebtedness.
BORROWER,
BY: /s/ [illegible signature]
-------------------------------------
signature
[illegible]
----------------------------------------
typed name and title
BY: /s/ Neil A.H. Campbell
-------------------------------------
signature
Neil A.H. Campbell Finance Director
----------------------------------------
typed name and title
<PAGE> 1
10.4.2
PROMISSORY NOTE
NAME OF PROMISSOR: Horizon Exploration LTD
AMOUNT PROMISED: $330,000.00 U.S. Dollars
INTEREST RATE: 12.00% PER ANNUM
INSTALLMENT NOTE
1. For value received, the undersigned, Horizon Exploration LTD
("Borrower") promises to pay to TELEDYNE BROWN ENGINEERING MARINE PRODUCTS, an
ALLEGHENY TELEDYNE COMPANY or its assignee, the principal sum of $330,000.00
U.S. Dollars, with interest at the rate of 12.00% per annum on the unpaid
balance of that principal sum until paid. The Borrower promises to pay that
principal sum and interest in installments as follows: $56,941.00 U.S. Dollars
on the 30th day of May, 1997, and five (5) successive installments of
$56,941.00 U.S. Dollars on the same day of each succeeding calendar month until
all such installment payments have been made, on which date the entire unpaid
balance of principal and interest shall be due and payable.
ALLOCATION OF PAYMENTS
2. Each installment, when paid, shall be credited first to the
interest then due, and the remainder shall be credited to principal. Interest
shall cease to accrue on the principal so credited.
ACCELERATION
3. In the event Borrower fails to make payment of any part or
installment of principal or interest when due, the whole sum of the principal
then unpaid, together with accrued interest, shall become immediately due and
payable at the option of the holder of this Note. Borrower expressly waives
demand for payment, notice of intention to accelerate, and notice of
acceleration.
<PAGE> 2
COLLECTION COSTS
4. Borrower agrees to pay the actual expenditures made in any
attempt to collect the amount due to pursuant to this Note, including any
reasonable attorney's fees incurred by the holder.
COLLATERAL
5. Teledyne Brown Engineering Marine Products Model 41260 Digital
Active Sections Serial Numbers 297- 42160B-035 through 297-42160B-064.
ADDITIONAL CONDITIONS
6. Legal title to the equipment covered by this agreement shall
remain with Teledyne Brown Engineering Marine Products for the term of this
agreement.
7. Borrower shall at all times insure the equipment against all
risk of loss or damage from every cause whatsoever, for not less than its full
replacement value as determined by Teledyne Brown Engineering Marine Products,
and shall carry public liability, contractual liability, and proper damage
insurance covering the equipment, its operation and use. All such insurance
shall be in a form and amount and with companies approved by Teledyne Brown
Engineering Marine Products, and shall be in the joint names of Teledyne Brown
Engineering Marine Products and Borrower. The Borrower shall pay the premium
therefore and deliver said policies, duplicates or certificates of insurance
thereof to Teledyne Brown Engineering Marine Products.
2
<PAGE> 3
The undersigned Corporation has caused this Note to be
executed by its officers duly authorized to execute instruments of
indebtedness.
BORROWER
By: /s/ Neil A.M. Campbell
Signature
Neil A.M. Campbell - Director
typed name and title
By: /s/ [illegible signature]
Signature
Director
typed name and title
3
<PAGE> 1
EXHIBIT 10.5.1
METLIFE CAPITAL LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT entered into as of the 22nd day of
February, 1996, by and between MetLife Capital Corporation, a Delaware
corporation, whose address is 10900 NE 4th, Suite #500, Bellevue, WA 98004
("Lender") and Seitel Geophysical, Inc., a Delaware corporation whose address
is 50 Briar Hollow Lane, West Bldg., 7th Floor, Houston, Texas 77027
("Borrower").
WHEREAS, Lender has agreed to make a commercial loan or loans to
Borrower; and
WHEREAS, as a condition to making the loans, and in order to secure
the repayment thereof, Lender has required Borrower to execute and deliver to
Lender this Loan and Security Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. CREATION OF SECURITY INTEREST. As security for the due and
punctual payment of any and all of the present and future obligations of the
Borrower to Lender, whether direct of contingent or joint or several. Borrower
hereby conveys, assigns and grants to Lender a continuing security interest in
all of Borrower's rights, title and interests in and to the equipment described
in the Supplemental Security Agreement(s) entered into pursuant to this Loan
and Security Agreement from time to time ("Equipment") including all present
and future additions, attachments and accessories thereto, all substitutions
therefor and replacements thereof and all proceeds thereof, including all
proceeds of insurance (such Equipment and property hereinafter called
"Collateral").
2. THE LOANS. (a) Subject to the terms and conditions of this
Loan and Security Agreement, Lender agrees to make a loan or loans to Borrower.
The maximum principal amount of any loan or loans to be made by Lender to
Borrower shall be within Lender's discretion, subject to the exercise of
Lender's reasonable business judgment, and shall be as stated in the loan
commitment letter issued by Lender, in Lender's internal credit approval (each
such loan or loans shall be referred to as "the Loan Amount").
(b) The Loan Amount shall be repaid by Borrower as a term loan or
term loans ("Term Loan"). The Term Loan shall be evidenced by
a promissory note or notes in the form attached hereto as
Exhibit "A" ("Term Note"). The payment provisions of each
Term Note shall be stated therein.
<PAGE> 2
(c) If requested by Borrower, and in accordance with the terms and
conditions of Section 3 hereof, Lender shall make interim
fundings to Borrower of a Term Loan as partial advances of the
Loan Amount ("Interim Loans"). The Interim Loans shall either
be for the payment of the acquisition cost of any items of
Equipment delivered and accepted by Borrower prior to the
expiration date of Lender's loan commitment to Borrower
("Commitment Expiration Date") or to fund progress payments to
the vendor or manufacturer of the Equipment, if the making of
progress payments was agreed to by Lender in its commitment or
approval to make the loan or loans to Borrower. The interim
Loans shall be evidenced by promissory notes in the form
attached hereto as Exhibit "B" ("Interim Note"). Interest on
all Interim Loans shall be payable as provided therein. The
principal amount due under the Interim Loans shall be due as
provided in the Interim Notes, at which time, provided no
Event of Default hereunder has occurred and is continuing or
event which with the passing of time or giving of notice or
both would become an event of default hereunder has occurred
and is continuing. Lender shall consolidate all Interim Loans
and convert them to a Term Loan evidenced by a Term Note or
Notes. Whether or not a Term Loan is evidenced by one or more
Term Notes shall be as agreed between Lender and Borrower, or
in the absence of such an agreement, as decided by Lender, in
the exercise of its reasonable business judgment.
(d) In the event that the amount loaned pursuant to the Interim
Loans is less than the Loan Amount, subject to Borrower's
compliance with the terms and conditions of this Loan and
Security Agreement (including the satisfaction of the
conditions of borrowing set forth in Section 7 of this Loan
and Security Agreement, including but not limited to providing
Lender with a description of the items of Equipment), Lender
shall disburse to Borrower the balance of the Loan Amount on
the same date that the Interim Loans are converted into a term
loan.
3. METHOD FOR BORROWING ON INTERIM LOAN. Borrower shall give
Lender at least five (5) business days written notice of a request for the
disbursement of an Interim Loan ("Request"), specifying the date on which the
Interim Loan is to disbursed. Such Request shall be in the form attached
hereto as Exhibit "C". Such Request shall be accompanied by an original copy
of the invoice or invoices to be paid from the Interim Loan. Such Request
shall constitute a representation and warranty by the Borrower that (i) as of
the date of the Request no Event of Default or event which with the passing of
time or the giving of notice or both would constitute an Event of Default
hereunder has occurred and is
<PAGE> 3
continuing and (ii) in the event items of Equipment have been delivered to the
Borrower, Borrower has unconditionally accepted the Equipment from the vendor
thereof. Subject to the conditions of this Loan and Security Agreement, Lender
shall disburse the Interim Loan to the invoicing party, or if Borrower shall
have paid the amount of such invoice, Lender shall reimburse Borrower, upon
receipt of proof of payment from Borrower.
4. CROSS COLLATERAL/CROSS DEFAULT. All Collateral shall secure
the payment and performance of all of Borrower's liabilities and obligations to
Lender hereunder and under any of the loan documents relating hereto including,
but not limited to, all Interim Notes and all Term Notes (the Loan and Security
Agreement, the Interim Notes, the Term Notes, the Supplemental Security
Agreement(s) and all other loan documents may be referred to herein
collectively as the "Loan Documents"). Lender's security interest in the
Collateral shall not be terminated until and unless all of Borrower's
obligations to Lender under any of the Loan Documents are fully paid and
performed. The occurrence of an event of default under any other of the Loan
Documents shall be deemed to be Event of Default hereunder and an Event of
Default hereunder shall be deemed to be an event of default under any other of
the Loan Documents.
5. REPRESENTATION AND WARRANTIES. Borrower hereby represents and
warrants as follows:
(a) POWER AND AUTHORIZATION. Borrower has the full power and
(corporate) authority to execute, deliver and perform
Borrower's obligations under the Loan Documents. The
execution and delivery of the Loan Documents have been
authorized by all requisite corporate (or partnership) action
on the part of Borrower. The execution, delivery and
performance of the Loan Documents have not constituted and
will not constitute a breach, default, or violation of or
under Borrower's articles of incorporation, by- laws
(partnership agreement), or any other agreement, indenture,
contract, lease, law, order, decree, judgment, or injunction
to which Borrower is a party or may be bound and have not
resulted and will not result in the creation of any lien upon
the Equipment pursuant to any agreement, indenture, lease,
contract or other instrument to which Borrower is a party,
except the lien created by this Loan and Security Agreement.
(b) EXISTENCE. If Borrower is a corporation, Borrower (i) is duly
incorporated, validly existing and in good standing under the
laws of its state of incorporation, (ii) has all corporate
powers and all governmental licenses, authorizations, consents
and approvals required to carry on its business as now
conducted, and (iii) is duly
<PAGE> 4
qualified to transact business as a foreign corporation in
each jurisdiction where the Equipment will be located and in
the jurisdiction where its principal place of business is
located. If Borrower is a partnership, Borrower (i) has been
duly formed as a (limited or general) partnership under the
laws of the state of its organization, (ii) is comprised of
the general partner(s) listed on the Schedule of Partners
attached to this Loan and Security Agreement, and (iii) is in
good standing under the laws of the state of its formation.
(c) BINDING EFFECT. This Loan and Security Agreement constitutes
the valid and binding agreement of the Borrower; the Interim
Notes and the Term Note, when executed and delivered, will
constitute the valid and binding obligations of the Borrower;
and the Loan Documents are enforceable in accordance with
their terms except as (i) the enforceability thereof may be
limited by the bankruptcy laws, and (ii) rights of
acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(d) LITIGATION. There is no action, suit or proceeding against,
or to the knowledge of the Borrower, threatened against or
affecting the Borrower, before any court or arbitrator or any
governmental body, agency or official which has not been
previously disclosed to the Lender in writing and in which
there is a reasonable possibility of an adverse decision which
could materially adversely affect the business, financial
condition or results of operations of the Borrower or which
would in any manner draw into question the validity of any of
the Loan Documents.
(e) FILING OF TAX RETURNS. The Borrower has filed all tax returns
required to have been filed and has paid all taxes shown to be
due and payable on such returns, including interest and
penalties, and all other taxes which are payable by it, to the
extent the same have become due and payable. The Borrower
knows of no proposed tax assessment against it and all tax
liabilities of the Borrower are adequately provided for.
(f) TITLE. The Borrower has or shall have at the time it executes
the Term Note good and indefeasible title to the Collateral
free and clear of all liens other than the Lender's lien.
(g) COMPLIANCE WITH LAW. The business and operations of the
Borrower have been and are being conducted in accordance with
all applicable laws, rules and regulations, other
<PAGE> 5
than violations which could not (either individually or
collectively) have a material adverse effect on the financial
condition or operations of the Borrower.
(h) FULL DISCLOSURE. All documents, records, instruments,
certificates, statements (including, but not by way of
limitation, financial statements of Borrower) and information
provided to Lender by Borrower in connection with this Loan
and Security Agreement are true and accurate in all material
respects and do not contain any untrue statement, or fail to
contain any statement of a material fact necessary to make the
statements contained herein or therein not misleading. There
is no fact known to the Borrower that Borrower has not
disclosed in writing which could materially and adversely
affect the financial condition or operations of Borrower.
(i) SECURITY INTEREST. The security interest granted to Lender
hereunder is a valid, first priority security interest in the
Collateral and has been or promptly after the execution of the
Supplemental Security Agreement describing the Collateral will
be, perfected in accordance with the requirements of all
states in which any item of the Collateral is located.
(j) PERSONAL PROPERTY. Under the laws of the state(s) in which
the Collateral is deemed to consist solely of personal
property.
(k) POLLUTION AND ENVIRONMENTAL CONTROL. Borrower has obtained
all permits, licenses and other authorizations which are
required under, and is in material compliance with, all
federal, state, and local laws and regulations relating to
pollution, reclamation, or protection of the environment,
including laws relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants, or hazardous
or toxic materials or wastes into air, water, or land, or
otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants or hazardous or toxic
materials or wastes. Borrower shall maintain all such
permits, licenses, and authorizations current.
6. COVENANTS. Borrower hereby agrees and covenants as follows:
(a) PAYMENT. Borrower shall pay the indebtedness secured hereby
as provided herein and in the Interim Notes and Term Notes.
<PAGE> 6
(b) LOCATION OF COLLATERAL. Borrower will keep the Collateral
located at the location or locations stated on the
Supplemental Security Agreements, provided, however, that
Borrower may change the location of the collateral with
Lender's prior written consent.
(c) NO LIENS. Except for the security interest granted hereby or
under any other agreement under which Lender is the secured
party, whether as mortgagee, beneficiary or otherwise,
Borrower shall keep the Collateral free and clear of any
security interest, lien or encumbrance of any kind and
Borrower shall not sell, assign (by operation of law or
otherwise) exchange or otherwise dispose of any of the
Collateral.
(d) INSURANCE. Borrower shall procure and continuously maintain
and pay for (a) all risk physical damage and property
insurance covering loss or damage to the equipment for not
less than the full replacement value thereof naming Lender as
loss payee and (b) bodily injury and property damage combined
single limit liability insurance, all in such amounts and
against such risks and hazards as are reasonably required by
Lender, with insurance companies and pursuant to contracts or
policies with deductibles to Lender. All contracts and
policies shall include provisions for the protection of
Borrower, shall provide for payment of insurance proceeds to
Lender, shall provide that they may not be modified,
terminated or cancelled unless Lender is given at least thirty
(30) days advance written notice thereof, and shall provide
that the coverage is "primary coverage" for the protection of
Borrower or Lender notwithstanding any other coverage carried
by Lender protecting against similar risks. Borrower shall
promptly notify any appropriate insurer and Lender of each and
every occurrence, which may become the basis of a claim or
cause of action against the insured and provide Lender with
all data pertinent to such occurrence. Borrower shall furnish
Lender with certificates of such insurance or copies of
policies upon request and shall furnish Lender with renewal
certificates not less than thirty (30) days prior to the
renewal date. Proceeds of all insurance are payable first to
Lender to the extent of its interest.
(e) FINANCING STATEMENTS. At the request of Lender, Borrower will
join Lender in executing one or more financing statements
pursuant to the Uniform Commercial Code and other documents
deemed necessary by Lender under applicable law to record or
perfect its security interest in the Collateral, including
continuation statements, in
<PAGE> 7
form satisfactory to Lender and will pay the cost of filing
the same in all public offices wherever filing is deemed by
Lender to be necessary or desirable. Borrower hereby
authorizes Lender, in such jurisdictions where such action is
authorized by law, to effect any such recordation or filing of
financing statements or other documents without Borrower's
signature thereto.
(f) CHANGE OF NAME OR ADDRESS. Borrower will immediately notify
Lender in writing of any change in its place of business or
the adoption or change of any tradename or fictitious business
name, and will upon request of Lender, execute any additional
financing statements or other similar documents necessary to
perfect or maintain its security interest.
(g) USE OF EQUIPMENT, MAINTENANCE. Borrower will cause the
Equipment to be used in a careful and proper manner, will
comply with and conform to all governmental laws, rules and
regulations relating thereto, and will cause the Equipment to
be operated in accordance with the manufacture's or supplier's
instructions or manuals and only by competent and duly
qualified personnel. Borrower will cause the Equipment to be
kept and maintained in good repair, condition and working
order and will furnish all parts, replacements, mechanisms,
devices and servicing required therefor so that the value,
condition and operating efficiency thereof will at all times
be maintained and preserved, normal wear and tear excepted.
All such repairs, parts, mechanisms, devices and replacements
shall immediately, without further act, become part of the
Equipment and subject to the security interest created by this
Loan and Security Agreement. Borrower will not make any
improvement, change, addition or alteration to the Equipment
if such improvement, change, addition or alteration will
impair the originally intended function or use of the
Equipment or impair the value of the Equipment as it existed
immediately prior to such improvement, change, addition or
alteration. Any part added to the Equipment in connection
with any improvement, change, addition or alteration shall
immediately, without further act, become part of the Equipment
and subject to the security interest created by this Loan and
Security Agreement.
(h) INSPECTION. Lender may at any reasonable time or times
inspect the Equipment and may at any reasonable time or times
inspect the books and records of Borrower.
(i) TAXES. Borrower shall promptly pay, when due, all charges,
fees, assessments and taxes (excluding all taxes
<PAGE> 8
measured by Lender's income) which may now or hereafter be
imposed upon the ownership, leasing, possession, sale or use
of the Collateral.
(j) PERFORMANCE BY LENDER. If Borrower fails to perform any
agreement or obligation contained herein, Lender may itself
perform, or cause the performance of such agreement or
obligation. Borrower will pay, or reimburse Lender, on
demand, for any and all fees, including attorneys' fees, costs
and expenses of whatever kind or nature incurred by Lender in
connection with (i) the creation, preservation and protection
of Lender's security interest in the Collateral, including,
without limitation, all fees and taxes in connection with the
recording or filing of instruments and documents in public
offices, (ii) payments or discharge of any taxes or liens upon
or in respect of the Collateral, (iii) premiums for insurance
with respect to the Equipment and (iv) this Loan and Security
Agreement and with protecting, maintaining or preserving the
Collateral and Lender's interests therein, whether through
judicial proceedings or otherwise, or in connection with
defending or prosecuting any actions, suits or proceedings
arising out of or related to the Loan and Security Agreement
and the Loan Documents or in connection with any debt
restructuring, loan workout negotiations or bankruptcy or
insolvency case or proceedings. All such amounts shall
constitute obligations of Borrower secured by the Collateral,
in the event that Borrower fails to perform any of its
agreements contained herein, Borrower will, on demand,
reimburse Lender for all such expenditure until fully
reimbursed at the rate of two percent (2%) per month on the
outstanding balance of such expenditures or the highest rate
permitted by law, whichever is less.
(k) POWER OF ATTORNEY. Borrower hereby irrevocably appoints
Lender Borrower's attorney-in-fact, with full authority in the
place and stead of Borrower and in the name of Borrower or
otherwise, from time to time in the Lender's discretion, to
take any action and to execute any instrument which Lender may
deem necessary or advisable to accomplish the purposes of this
Loan and Security Agreement, including, without limitation:
(i) to obtain, compromise and adjust insurance required to be
paid to Lender; (ii) to ask, demand, collect, sue for,
recover, receive, and give acquittance and receipts for moneys
due and to become due under or in respect of any of the
Collateral; (iii) to receive, endorse, and collect any drafts
or other instruments, documents, and chattel paper in
connection with clause (i) or (ii) above; and (iv) to file any
claims or take any action or institute any
<PAGE> 9
proceedings which Lender may deem necessary or desirable for
the collection of any of the Collateral or otherwise to
enforce the rights of lender with respect to any of the
Collateral.
(l) NO DUTIES. The powers conferred on Lender hereunder are
solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except
for the safe custody of any Collateral in its possession and
the accounting for moneys actually received by it hereunder,
Lender shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights against prior
parties or any other rights pertaining to any Collateral.
(m) FINANCIAL DATA. Borrower will furnish to Lender and will
cause any guarantor of Borrower's obligations to furnish to
Lender on request (i) annual balance sheet and profit and loss
statements prepared in accordance with generally accepted
accounting principles and practices consistently applied and,
if Lender so requires, accompanied by the annual audit report
of an independent certified public accountant reasonably
acceptable to Lender, and (ii) all other financial information
and reports that Lender may from time to time reasonably
request, including, if Lender so requires, income tax returns
of Borrower and any guarantor of Borrower's obligations
hereunder.
7. CONDITIONS OF BORROWING. Lender shall not be obligated to
make any loan hereunder unless:
(a) The Interim Notes or Term Notes evidence such loan shall have
been duly executed and delivered to Lender.
(b) Borrower shall have executed and delivered to Lender the
Supplemental Security Agreement describing the Collateral and
stating, except with respect to progress payment fundings, the
location thereof.
(c) Except with respect to progress payment fundings, Lender shall
have received evidence (as described in Section 6d hereof)
that insurance has been obtained in accordance with the
provisions of this Loan and Security Agreement.
(d) Lender shall have received any and all third party consents,
waivers, or releases deemed necessary or desirable by it in
connection with the loan and the Collateral being financed,
including, without limitation, Uniform Commercial Code lien
releases and the consent and waiver, in form and substance
satisfactory to Lender, of each and every realty owner,
landlord and mortgagee
<PAGE> 10
holding an interest in or encumbrance on the real property
where any of the Collateral is to be located.
(e) All filings, recordings and other actions deemed necessary or
desirable by Lender in order to establish, protect, preserve
and perfect its security interest in the Collateral being
financed by such loan as a valid perfected first priority
security interest shall have been duly effected, including,
without limitation, the filing of financing statements and the
recordation of landlord (owners) and/or mortgagee waivers or
disclaimers, all in form and substance satisfactory to Lender,
and all fees, taxes and other charges relating to such filings
and recordings shall have been paid by Borrower.
(f) The representations and warranties contained in this Loan and
Security Agreement shall be true and correct in all respects
on and as of the date of the making of any loan hereunder with
the same effect as if made on and as of such date.
(g) In the sole judgment of Lender, there shall have been no
material adverse change in the financial condition, business
or operations of Borrower from the earliest date of any
financial statement, credit report, business report or similar
document submitted to Lender for its review.
(h) All Loan Documents shall be satisfactory to Lender's
attorneys; and
(i) Lender shall have received, in form and substance satisfactory
to Lender, such other documents as Lender shall require
including, but not limited to a Request, proof of payment,
vendor invoices and certificates of authority and incumbency.
8. DEFAULT. The occurrence of any of the following events,
following the giving of any required notice and/or the expiration of any
applicable period of grace, shall constitute an event of default ("Event of
Default") hereunder.
(a) Borrower's default in payment of any installment of the
principal of or interest on any Interim Note or Term Note when
and after the same shall become due and payable, whether at
the due date thereof or by acceleration or otherwise, which
default shall continue unremedied for ten (10) days; or
(b) The failure by Borrower to make payment of any other
<PAGE> 11
amount payable hereunder or under any Interim Note or Term Note, and
the continuance of such failure for more than ten (10) days after
written notice thereby by Lender to Borrower; or
(c) The failure by Borrower to perform or observe any covenant,
condition, obligation or agreement to be performed or observed
by it hereunder, which failure shall continue unremedied for
thirty (30) days after written notice thereof by Lender to
Borrower; or
(d) The occurrence of a default described in Section 4 hereof; or
(e) Any warranty, representation or statement made or furnished
with respect to Borrower or the Collateral to Lender by or on
behalf of Borrower, in connection with this Loan and Security
Agreement, or the indebtedness secured hereby, shall prove to
have been false in any adverse, material respect when made or
furnished; or
(f) Borrower shall become insolvent or bankrupt or make an
assignment for the benefit of creditors or consent to the
appointment of a trustee or receiver; or a trustee or a
receiver shall be appointed for Borrower or for a substantial
part of its property without its consent and shall not be
dismissed for a period of sixty (60) days; or bankruptcy,
reorganization, liquidation, insolvency or dissolution
proceedings shall be instituted by or against Borrower and, if
instituted against Borrower, shall be consented to or be
pending and not dismissed for a period of sixty (60) days; or
any execution or writ of process shall be issued under any
action or proceeding against Borrower in such capacity whereby
any of the Collateral may be taken or restrained; Borrower
shall cease doing business as a going concern; or, without the
prior written consent of Lender, Borrower shall sell, transfer
or dispose of all or substantially all of its assets or
property; or
(g) The liquidation, merger, consolidation, reorganization,
conversion to an "S" status or dissolution, if Borrower is a
corporation or partnership, of Borrower, if in Lender's
reasonable opinion, such act shall materially and adversely
affect Borrower's ability to perform under any of the Loan
Documents; or
(h) Any item of Collateral is seized or levied on under legal or
governmental process or for any reason Lender deems itself
insecure. Lender shall be entitled to deem itself insecure
when some event occurs, fails to occur or is
<PAGE> 12
threatened or some objective condition exists or is threatened
which significantly impairs the prospects that any of
Borrower's obligations to Lender will be paid when due, which
significantly impairs the value of the Collateral to Lender or
which significantly affects the financial or business
condition of Borrower.
The occurrence of an Event of Default shall terminate
any commitment or obligation by Lender to make any of the
loans contemplated by this Loan and Security Agreement.
9. REMEDIES UPON DEFAULT. Upon the occurrence of an Event of
Default hereunder. Lender may, at its option, do any one or more of the
following:
(a) Declare all obligations of Borrower to Lender to be
immediately due and payable, whereupon all unpaid principal of
and interest on said indebtedness and other amounts declared
due and payable shall be and become immediately due and
payable.
(b) Take possession of all or any of the Collateral and exclude
therefrom Borrower and all others claiming under Borrower, and
thereafter hold, store, use, operate, manage, maintain and
control, make repairs, replacements, alterations, additions
and improvements to and exercise all rights and powers of
Borrower in respect to the Collateral or any part thereof. In
the event Lender demands, or attempts to take possession of
the Collateral in the exercise of any rights under this Loan
and Security Agreement, Borrower promises and agrees to
promptly turn over and deliver complete possession thereof to
Lender.
(c) Require Borrower to assemble the Collateral, or any portion
thereof, at a place designated by Lender and reasonably
convenient to both parties, and promptly to deliver such
Collateral to Lender, or an agent or representative designated
by it;
(d) Sell, lease or otherwise dispose of the Collateral at public
or private sale, without having the Collateral at the place of
sale, and upon terms and in such manner as Lender may
determine (and Lender may be a purchaser at any sale); and
(e) Exercise any remedies of a secured party under the Uniform
Commercial Code as adopted in the state where the Collateral
is located or any other applicable law.
<PAGE> 13
Except as to portions of the Collateral which are
perishable or threaten to decline speedily in value or are of
a type customarily sold on a recognized market. Lender shall
give Borrower at least ten (10) days prior written notice of
the time and date of any public or private sale of the
Collateral or other intended disposition thereof to be made.
Such notice may be mailed to Borrower at the address set forth
in the first paragraph of this Loan and Security Agreement.
Borrower hereby specifically agrees (to the extent that
applicable law and public policy allows it to effectively do
so) that any public or private sale held in accordance with
the terms of this Loan and Security Agreement shall, for the
purpose of the Uniform Commercial Code as adopted in the state
where the Collateral is located and for all other purposes, be
deemed to have been conducted in a commercially reasonable
manner and in good faith.
The proceeds of any sale under Section 9(d) shall be
applied as follows:
(i) To the repayment of the costs and expenses of
taking, holding and preparing for the sale
and the selling of the Collateral (including
legal expenses and attorneys' fees) and the
discharge of all assessments, encumbrances,
charges or liens, if any, on the Collateral
prior to the lien hereof (except any taxes,
assessments, encumbrances, charges or liens
subject to which such sale shall have been
made);
(ii) To the payment of the whole amount then due
and unpaid of the indebtedness of Borrower to
Lender;
(iii) To the payment of other amounts then secured
hereunder; and
(iv) The surplus, if any shall be paid to the
Borrower or to whomsoever may be lawfully
entitled to received the same.
Lender shall have the right to enforce one or more
remedies hereunder, successively or concurrently, and such
action shall not operate to estop or prevent Lender from
pursuing any further remedy which it may have, and any
repossession or retaking or sale of the Collateral pursuant to
the terms hereof shall not operate to release Borrower until
full payment of any deficiency has been made in cash.
<PAGE> 14
10. LIMITATION ON INTEREST. It is the intent of the parties to
this Loan and Security Agreement to contract in strict compliance with
applicable usury laws from time to time in effect. In furtherance thereof, the
parties stipulate and agree that none of the terms and provisions contained in
the Loan Documents shall ever be construed to create a contract to pay for the
use, forbearance or detention of money at a rate in excess of the maximum
interest rate permitted to be charged by applicable law from time to time in
effect.
11. PERSONAL PROPERTY/TAGS. No item of Equipment will be attached
or affixed to realty or any building without Lender's prior knowledge and
written consent and waiver of the landlord and the mortgagee, if any, of the
real property. If so requested by Lender, Borrower will affix tags supplied by
Lender, reflecting Lender's security interest in the Equipment.
12. LOSS AND DAMAGE. Borrower shall bear the risk of damage,
loss, theft, or destruction, partial or complete of the Equipment, whether or
not such loss or damage is covered by insurance, except that while Borrower is
not in default. Lender agrees to apply toward payment of obligations of
Borrower insurance proceeds payable to Lender by reason of such damage, loss,
theft or destruction. In the event of any damage, loss, theft, or destruction,
partial or complete, of any item of Equipment, Borrower shall promptly notify
Lender in writing and at the option of Lender (a) repair or restore the
Equipment to good condition and working order, or (b) replace the Equipment
with similar equipment in good repair, condition and working order, or (c) pay
Lender, in cash, an amount equal to the unamortized equipment cost for the item
or if the Equipment was not purchased with the loan proceeds, the pro rata
portion of the outstanding principal balance due under the interim Note or Term
Note, as the case may be, and all other amounts relating to that item of
Equipment then due and owing hereunder, and upon payment of that amount,
Lender's lien shall be terminated with respect to that item of Equipment only,
and Lender will release its interest in that item of Equipment.
13. ASSIGNMENT. Borrower may not assign or transfer any rights
under this Loan and Security Agreement or to the Collateral without Lender's
prior written consent.
14. INDEMNIFICATION. Borrower shall indemnify and hold harmless
Lender from and against any and all claims, losses, liabilities, causes of
action, costs and expenses (including the fees of Lender's attorneys)
("Claims") in any way relating to or arising out of this Loan and Security
Agreement, the other Loan Documents or the Collateral, except for any Claims
resulting solely and directly from Lender's gross negligence or willful
misconduct.
<PAGE> 15
15. NOTICES. Whenever Borrower or Lender shall desire to give or
service any notice, demand, request or other communication with respect to this
Loan and Security Agreement, each such notice, demand, request or communication
shall be in writing and shall be effective only if the same is physically
delivered or is by certified mail, postage prepaid, return receipt requested,
or by overnight courier, postage prepaid, mailed to the parties at the
addresses set forth in the first paragraph of this Loan and Security Agreement,
with a copy to Lender's Vice President of Credit. Any party hereto may change
its address for such notices by delivering or mailing to the other parties
hereto, as aforesaid, a notice of such change.
16. NO WAIVER BY LENDER. By exercising or failing to exercise any
of its rights, options or elections hereunder, Lender shall not be deemed to
have waived any breach or default on the part of Borrower from any of the
obligations secured hereby, unless such waiver or release is in writing and is
signed by Lender. In addition, the waiver by Lender of any breach hereof for
default in payment of an indebtedness secured hereby shall not be deemed to
constitute a waiver of any succeeding breach or default.
17. FURTHER AGREEMENTS. From time to time, Borrower will execute
such further instruments as Lender may reasonably require, in order to protect,
preserve, and maintain the security interest granted hereby.
18. BINDING UPON SUCCESSORS. All agreements, covenants,
conditions and provisions of this Loan and Security Agreement shall apply to
and hold the successors and assigns of all parties hereto.
19. GOVERNING LAWS. This Loan and Security Agreement shall be
governed by the laws of the State of Washington.
20. AMENDMENT. This Loan and Security Agreement can be modified
or rescinded only by a writing expressly referring to this Loan and Security
Agreement, signed by both of the parties hereto.
21. INVALIDITY OF PROVISIONS. Every provision of this Loan and
Security Agreement is intended to be severable. In the event that any term or
provision hereof is declared by a court to be illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the balance of the
terms and provisions hereof, which terms and provisions shall remain binding
and enforceable, then to the extent possible all of the other provisions shall
nonetheless remain in full force and effect.
IN WITNESS WHERE, Borrower and Lender have duly executed this Loan and Security
Agreement the day and year first above written.
<PAGE> 16
Lender: MetLife Capital Corporation Borrower: Seitel Geophysical, Inc.
--------------------------- -------------------------
By: /s/ Judy Johnston By: /s/ Debra D. Valice
--------------------------- --------------------------
(Print Name): Judy Johnston (Print Name): Debra D. Valice
Title: Vice President Title: Secretary/Treasurer
Social Security No.:
-------------------
(If Borrower is an individual)
Federal Tax
Identification No.: 76-0388456
<PAGE> 1
EXHIBIT 10.5.2
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (the "Agreement") is entered
into as of the 31st day of December, 1996, between SEITEL GEOPHYSICAL, INC.
("Assignor") a Delaware corporation, with its principal place of business at 50
Briar Hollow Lane West, 7th Floor, Houston, Texas 77027 and EAGLE GEOPHYSICAL,
INC. ("Assignee"), a Delaware corporation, with its principal place of business
at 50 Briar Hollow Lane West, 7th Floor, Houston, Texas 77027.
WITNESSETH:
WHEREAS, Assignor, as Debtor, entered into a certain Loan and Security
Agreement dated February 22, 1996 and Supplemental Security Agreement No. One,
thereto dated February 22, 1996 (the "LSA") with MetLife Capital Corporation, a
Delaware corporation ("MetLife"), as secured party/payee, whereby Assignor
granted to MetLife a security interest in certain collateral more specifically
described in the Supplemental Security Agreement No. One (the "Collateral")
attached hereto as part of Exhibit "A"; and
WHEREAS, pursuant to such LSA, MetLife made a loan to Assignor and
Assignor executed a certain Term Promissory Note dated March 14, 1996 in the
original principal amount of $433,000.00 ("Note") payable to MetLife to
evidence its obligation to MetLife and to set forth the terms of repayment.
The LSA and the Note are sometimes collectively referred to herein as the
"Loan." (Copies of the Loan and Security Agreement, Supplemental Security
Agreement No. One and the Note are attached hereto and made a part hereof as
EXHIBIT "A"); and
WHEREAS, Assignor has assigned or now wishes to assign to Assignee all
of Assignor's right, title and interest in and to the Collateral; and
WHEREAS, Assignor desires to assign its rights and obligations under
the Loan to Assignee, and Assignee desires to accept such assignment and to
assume Assignor's obligations under the Loan; and
WHEREAS, the Loan provides that MetLife's prior consent is required
for the effectiveness and enforceability of any such assignment and assumption;
and
WHEREAS, MetLife is willing to give such consent provided that the
parties enter into the covenants and make the representations and warranties
set forth in this Agreement;
NOW THEREFORE, for good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
<PAGE> 2
1. Defined Terms. Terms used in this Agreement are, unless
otherwise defined herein, used as defined in the Loan.
2. Assignment and Assumption. Assignor hereby sells, assigns,
transfers and sets over unto Assignee and unto Assignee's successors and
assigns, all right, title, interest and obligations of Assignor under, in and
to the Collateral and the Loan. Assignee hereby accepts such assignment, and
hereby assumes, and covenants with Assignor and MetLife to perform fully, all
the duties of the Assignor under the Loan. It is expressly understood and
agreed that Assignee assumes all such obligations notwithstanding the fact that
some of such obligations may have accrued prior to the date hereof.
3. Security Interest. Assignee acknowledges and agrees that it
acquires the Collateral subject to MetLife's prior security interest. As
security for the obligations referred to in this Agreement, including but not
limited to the Notes, now existing or hereafter arising, Assignee hereby
conveys, warrants, mortgages, assigns, pledges and grants to MetLife, its
successors and assigns, a security interest in all of Assignee's right, title
and interest in and to the properties, rights, interests, and privileges in the
Collateral.
4. Representations and Warranties of Assignor and Assignee.
Assignor and Assignee represent and warrant individually and respectively, as
applicable, to MetLife as follows:
a. The Assignee is a corporation duly organized and
validly existing in good standing under the laws of the State of
Delaware and has the power and authority to enter into and perform its
obligations under this Agreement;
b. The execution, delivery and performance of this
Agreement has been duly authorized by all necessary action on the part
of the Assignee and the Assignor, does not require any stockholder
approval, or approval or consent of any general or limited partner,
trustee or holders of any indebtedness or obligations of the Assignee
or Assignor except such as have been duly obtained and does not and
will not contravene any law, judgment, governmental rule, regulation
or order applicable to or binding on the Assignee or Assignor or any
of their subsidiaries or the certificates of incorporation or bylaws
of the Assignee or Assignor or any of their subsidiaries or contravene
the provisions of, or constitute a default under, or result in the
creation of any lien (other than as permitted under the Loan) upon the
property of the Assignee or Assignor under any indenture, mortgage,
chattel mortgage, deed of trust, conditional sales contract, bank loan
or agreement or instrument, or other contract or agreement to which
the Assignee or Assignor or any of their subsidiaries
- 2 -
<PAGE> 3
are a party or by which they or any of their subsidiaries may be bound
or affected;
c. This Agreement constitutes the legal, valid and
binding obligation of Assignee and Assignor enforceable against said
parties in accordance with its terms;
d. Except for the filings and recordings consummated at
the time of execution of the Loan and except for the filing and
recording of this Agreement, no further action, including any filing
or recording of any document, is necessary or advisable in order to
establish and protect MetLife's interest in the Collateral as against
the Assignee, the Assignor, and any third parties in any applicable
jurisdictions in the United States.
5. Assignor's Continuing Obligation and Guaranty. Assignor
covenants with MetLife that notwithstanding its assignment of the Loan to the
Assignee, Assignor will duly and punctually perform and observe each and every
obligation, covenant, representation, warranty and agreement to be performed
and observed by the Debtor under the provisions of the Loan, notwithstanding
the fact that Assignee is similarly obligated by the terms of this Agreement to
perform or observe those obligations, covenants, representations or warranties
of Debtor arising pursuant to the terms of the Loan; provided, however, that
Assignor shall have no obligation hereunder to make any payment to MetLife
required by any Loan provision to the extent that Assignee has satisfied the
obligations of the Debtor arising pursuant to such Loan provision. Except as
expressly set forth in the preceding sentence, Assignor is not released in any
respect from its obligations to MetLife arising under the Loan or related
documents. The Assignor hereby acknowledges and consents that MetLife may
agree with the Assignee to extend the time for making payments for any or all
of the amounts due or to become due under the Loan and documents executed in
conjunction therewith or that the Loan and documents in conjunction therewith
may be changed in any manner at the option of said Assignee and without
Assignor's consent and that Assignor's obligation to perform in accordance with
this Paragraph 5 shall extend to such agreements as changed in the same manner
as if such changes had been part of the agreements as originally executed and
delivered.
Assignor hereby absolutely and unconditionally guarantees to MetLife
the full and timely performance by Assignee of all obligations whatsoever which
the Assignee has incurred or is under or which the Assignee may at any time
incur or be under to MetLife pursuant to or in connection with any of the
transactions contemplated by the Loan and this Agreement; including but not
limited to all obligations of the Assignee for the payment of money whether by
reason of covenant, indemnity, breach of warranty or otherwise. MetLife shall
not be bound to exhaust its recourse nor
- 3 -
<PAGE> 4
to take any other action against the Assignee or other parties or on any
Collateral it may hold before being entitled to payment by Assignor of all
amounts hereby guaranteed. Assignor specifically agrees that it shall not be
necessary or required in order to enforce the obligations of the Assignor
hereunder that there be, and specifically waives: notice of performance or
nonperformance of the Loan; demand of payment from the Assignee; presentment
for payment upon Assignee or the making of any protest; notice of the amount of
guaranteed obligations outstanding at any time; notice of nonpayment or failure
to perform on the part of the Assignee; and any other circumstances which might
otherwise constitute a legal or equitable defense or discharge of a guarantor.
6. Financial Data. During the term of this Agreement, Assignee
will furnish to MetLife and will cause any guarantor of Assignee's obligations
to furnish to MetLife on request (i) annual balance sheet and profit and loss
statements prepared in accordance with generally accepted accounting principles
and practices consistently applied and, if MetLife so requires, accompanied by
the annual audit report of an independent certified public accountant
reasonably acceptable to MetLife, and (ii) all other financial information and
reports that MetLife may from time to time reasonably request, including, if
MetLife so requires, income tax returns of Assignee and any guarantor of
Assignee's obligations hereunder.
Assignee shall, from time to time, furnish all such information as
MetLife may reasonably request concerning Assignee and its affairs and shall
execute and deliver such documents and perform all such other acts that MetLife
may reasonably request in order to carry out any transactions contemplated by
this Agreement.
7. Miscellaneous.
a. The representations, warranties and agreements made
herein shall survive the execution and delivery of this Agreement or
any other agreements or documents executed in connection herewith, and
the performance of this Agreement.
b. This Agreement shall be binding upon, and inure to
the benefit of the parties hereto and their respective successors and
assigns.
c. Neither Assignor nor Assignee may assign or transfer
any rights under this Agreement without MetLife's prior written
consent.
d. This Agreement shall be governed by and construed
according to the laws of the State of Washington.
e. This Agreement shall not be altered or amended except
by an agreement in writing signed by the parties hereto
- 4 -
<PAGE> 5
or their successors or assigns, and may not be altered or amended
without the express written consent of MetLife.
f. This Agreement constitutes the entire agreement
between the parties relating to the assignment from Assignor to
Assignee of the Assignor's rights and obligations under the Loan or in
the Collateral, superseding all prior agreements between the parties.
8. Counterparts.
This Agreement may be signed in any number of counterparts required
for the convenience of the parties, all of which when taken together shall form
one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ASSIGNOR: ASSIGNEE:
SEITEL GEOPHYSICAL, INC. EAGLE GEOPHYSICAL, INC.
By: Jay N. Silverman By: /s/ Jay N. Silverman
Its: President Its: President
By: /s/ [illegible signature] By: /s/ [illegible signature]
Its: Assistant Secretary Its: Assistant Secretary
CONSENT OF METLIFE
On the terms and conditions set forth above, MetLife Capital Corporation hereby
consents to the assignment by SEITEL GEOPHYSICAL, Inc. of its rights and
obligations under the Loan described above to EAGLE GEOPHYSICAL, INC. dated
this 30th day of December, 1996.
METLIFE CAPITAL CORPORATION
By: /s/ Judy Johnston
Its: Vice President
- 5 -
<PAGE> 6
Exhibit "A"
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT entered into as of the 22nd day of February,
1996 by and between MetLife Capital Corporation, a Delaware corporation, whose
address is 10900 NE 4th, Suite #500, Bellevue, WA 98004 ("Lender") and Seitel
Geophysical, Inc., a Delaware corporation whose address is 50 Briar Hollow
Lane, West Building, 7th Floor, Houston, TX 77027 ("Borrower").
WHEREAS, Lender has agreed to make a commercial loan or loans to
Borrower; and
WHEREAS, as a condition to making the loans, and in order to secure
the repayment thereof, Lender has required Borrower to execute and deliver to
Lender this Loan and Security Agreement.
NOW THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, Borrower and Lender agree as
follows:
1. Creation of Security Interest. As security for the due and
punctual payment of any and all of the present and future obligations of the
Borrower to Lender, whether direct or contingent or joint or several, Borrower
hereby conveys, assigns and grants to Lender a continuing security interest in
all of Borrower's rights, title and interests in and to the equipment described
in the Supplemental Security Agreement(s) entered into pursuant to this Loan
and Security Agreement from time to time ("Equipment") including all present
and future additions, attachments and accessories thereto, all substitutions
therefor and replacements thereof and all proceeds thereof, including all
proceeds of insurance (such Equipment and property hereinafter called
"Collateral").
2. The Loans. (a) Subject to the terms and conditions of this
Loan and Security Agreement, Lender agrees to make a loan or loans to Borrower.
The maximum principal amount of any loan or loans to be made by Lender to
Borrower shall be within Lender's discretion, subject to the exercise of
Lender's reasonable business judgment, and shall be as stated in the loan
commitment letter issued by Lender to Borrower, or in the event a commitment
letter is not issued by Lender, in Lender's internal credit approval (each such
loan or loans shall be referred to as "the Loan Amount").
(b) The Loan Amount shall be repaid by Borrower as a term
loan or term loans ("Term Loan"). The Term Loan shall
be evidenced by a promissory note or notes in the
form attached hereto as Exhibit "A" ("Term Note").
The payment provisions of each Term Note shall be
stated therein.
<PAGE> 7
(c) If requested by Borrower, and in accordance with the
terms and conditions of Section 3 hereof, Lender
shall make interim fundings to Borrower of a Term
Loan as partial advances of the Loan Amount ("Interim
Loans"). The Interim Loans shall either be for the
payment of the acquisition cost of any items of
Equipment delivered and accepted by Borrower prior to
the expiration date of Lender's loan commitment to
Borrower ("Commitment Expiration Date") or to fund
progress payments to the vendor or manufacturer of
the Equipment, if the making of progress payments was
agreed to by Lender in its commitment or approval to
make the loan or loans to Borrower. The Interim
Loans shall be evidenced by promissory notes in the
form attached hereto as Exhibit "B" ("Interim Note").
Interest on all Interim Loans shall be payable as
provided therein. The principal amount due under the
Interim Loans shall be due as provided in the Interim
Notes, at which time, provided no Event of Default
hereunder has occurred and is continuing or event
which with the passing of time or giving of notice or
both would become an Event of Default hereunder has
occurred and is continuing, Lender shall consolidate
all Interim Loans and convert them to a Term Loan
evidenced by a Term Note or Notes. Whether or not a
Term Loan is evidenced by one or more Term Notes
shall be as agreed between Lender and Borrower, or in
the absence of such an agreement, as decided by
Lender, in the exercise of its reasonable business
judgment.
(d) In the event that the amount loaned pursuant to the
Interim Loans is less than the Loan Amount, subject
to Borrower's compliance with the terms and
conditions of this Loan and Security Agreement
(including the satisfaction of the conditions of
borrowing set forth in Section 7 of this Loan and
Security Agreement, including but not limited to
providing Lender with a description of the items of
Equipment), Lender shall disburse to Borrower the
balance of the Loan Amount on the same date that the
Interim Loans are convened into a term loan.
3. Method For Borrowing On Interim Loan. Borrower shall give
Lender at least five (5) business days written notice of a request for the
disbursement of an Interim Loan ("Request"), specifying the date on which the
Interim Loan is to be disbursed. Such Request shall be in the form attached
hereto as Exhibit "C". Such Request shall be accompanied by an original copy of
the invoice or invoices to be paid from the Interim Loan. Such Request shall
constitute a representation and warranty by the Borrower that
- 7 -
<PAGE> 8
(i) as of the date of the Request no Event of Default or event which with the
passing of time or the giving of notice or both would constitute an Event of
Default hereunder has occurred and is continuing and (ii) in the event items of
Equipment have been delivered to the Borrower, Borrower has unconditionally
accepted the Equipment from the vendor thereof. Subject to the conditions of
this Loan and Security Agreement, Lender shall disburse the Interim Loan to the
invoicing party, or if Borrower shall have paid the amount of such invoice,
Lender shall reimburse Borrower, upon receipt of proof of payment from
Borrower.
4. Cross Collateral/Cross Default. All Collateral shall secure
the payment and performance of all of Borrower's liabilities and obligations to
Lender hereunder and under any of the loan documents relating hereto including,
but not limited to, all Interim Notes and all Term Notes (the Loan and Security
Agreement, the interim Notes, the Term Notes, the Supplemental Security
Agreement(s) and all other loan documents may be referred to herein
collectively as the "Loan Documents"). Lender's security interest in the
Collateral shall not be terminated until and unless all of Borrower's
obligations to Lender under any of the Loan Documents are fully paid and
performed. The occurrence of an event of default under any other of the Loan
Documents shall be deemed to be an Event of Default hereunder and an Event of
Default hereunder shall be deemed to be an event of default under any other of
the Loan Documents.
5. Representations And Warranties. Borrower hereby represents
and warrants as follows:
(a) Power and Authorization. Borrower has the full power
and (corporate) authority to execute, deliver and
perform Borrower's obligations under the Loan
Documents. The execution and delivery of the Loan
Documents have been authorized by all requisite
corporate (or partnership) action on the part of
Borrower. The execution, delivery and performance of
the Loan Documents have not constituted and will not
constitute a breach, default, or violation of or
under Borrower's articles of incorporation, by-laws
(partnership agreement), or any other agreement,
indenture, contract, lease, law, order, decree,
judgment, or injunction to which Borrower is a party
or may be bound and have not resulted and will not
result in the creation of any lien upon the Equipment
pursuant to any agreement, indenture, lease, contract
or other instrument to which Borrower is a party,
except the lien created by this Loan and Security
Agreement.
(b) Existence. If Borrower is a corporation, Borrower
(i) is duly incorporated, validly existing and in
- 8 -
<PAGE> 9
good standing under the laws of its state of
incorporation, (ii) has all corporate powers and all
governmental licenses, authorizations, consents and
approvals required to carry on its business as now
conducted, and (iii) is duly qualified to transact
business as a foreign corporation in each
jurisdiction where the Equipment will be located and
in the jurisdiction where its principal place of
business is located. If Borrower is a partnership,
Borrower (i) has been duly formed as a (limited or
general) partnership under the laws of the state of
its organization, (ii) is comprised of the general
partner(s) listed on the Schedule of Partners
attached to this Loan and Security Agreement, and
(iii) is in good standing under the laws of the state
of its formation.
(c) Binding Effect. This Loan and Security Agreement
constitutes the valid and binding agreement of the
Borrower; the Interim Notes and the Term Note, when
executed and delivered, will constitute the valid and
binding obligations of the Borrower; and the Loan
Documents are enforceable in accordance with their
terms except as (i) the enforceability thereof may be
limited by the bankruptcy laws, and (ii) rights of
acceleration and the availability of equitable
remedies may be limited by equitable principles of
general applicability.
(d) Litigation. There is no action, suit or proceeding
pending against, or to the knowledge of the Borrower,
threatened against or affecting the Borrower, before
any court or arbitrator or any governmental body,
agency or official which has not been previously
disclosed to the Lender in writing and in which there
is a reasonable possibility of an adverse decision
which could materially adversely affect the business,
financial condition or results of operations of the
Borrower or which would in any manner draw into
question the validity of any of the Loan Documents.
(e) Filing of Tax Returns. The Borrower has filed all
tax returns required to have been filed and has paid
all taxes shown to be due and payable on such
returns, including interest and penalties, and all
other taxes which are payable by it, to the extent
the same have become due and payable. The Borrower
knows of no proposed tax assessment against it and
all tax liabilities of the Borrower are adequately
provided for.
- 9 -
<PAGE> 10
(f) Title. The Borrower has or shall have at the time it
executes the Term Note good and indefeasible title to
the Collateral free and clear of all liens other than
the Lender's lien.
(g) Compliance with Law. The business and operations of
the Borrower have been and are being conducted in
accordance with all applicable laws, rules and
regulations, other than violations which could not
(either individually or collectively) have a material
adverse effect on the financial condition or
operations of the Borrower.
(h) Full Disclosure. All documents, records,
instruments, certificates, statements (including, but
not by way of limitation, financial statements of
Borrower) and information provided to Lender by
Borrower in connection with this Loan and Security
Agreement are true and accurate in all material
respects and do not contain any untrue statement, or
fail to contain any statement of a material fact
necessary to make the statements contained herein or
therein not misleading. There is no fact known to
the Borrower that Borrower has not disclosed in
writing which could materially and adversely affect
the financial condition or operations of Borrower.
(i) Security Interest. The security interest granted to
Lender hereunder is a valid, first priority security
interest in the Collateral and has been or promptly
after the execution of the Supplemental Security
Agreement describing the Collateral will be,
perfected in accordance with the requirements of all
states in which any item of the Collateral is
located.
(j) Personal Property. Under the laws of the state(s) in
which the Collateral is to be located, the Collateral
is deemed to consist solely of personal property.
(k) Pollution and Environmental Control. Borrower has
obtained all permits, licenses and other
authorizations which are required under, and is in
material compliance with, all federal, state, and
local laws and regulations relating to pollution,
reclamation, or protection of the environment,
including laws relating to emissions, discharges,
releases or threatened releases of pollutants,
contaminants, or hazardous or toxic materials or
wastes into air, water, or land, or otherwise
relating to the manufacture, processing,
- 10 -
<PAGE> 11
distribution, use, treatment, storage, disposal,
transport, or handling of pollutants, contaminants or
hazardous or toxic materials or wastes. Borrower
shall maintain all such permits, licenses, and
authorizations current.
6. Covenants. Borrower hereby agrees and covenants as follows:
(a) Payment. Borrower shall pay the indebtedness secured
hereby as provided herein and in the Interim Notes
and Term Notes.
(b) Location of Collateral. Borrower will keep the
Collateral located at the location or locations
stated on the Supplemental Security Agreements,
provided, however, that Borrower may change the
location of the collateral with Lender's prior
written consent.
(c) No Liens. Except for the security interest granted
hereby or under any other agreement under which
Lender is the secured party, whether as mortgagee,
beneficiary or otherwise, Borrower shall keep the
Collateral free and clear of any security interest,
lien or encumbrance of any kind and Borrower shall
not sell, assign (by operation of law or otherwise)
exchange or otherwise dispose of any of the
Collateral.
(d) Insurance. Borrower shall procure and continuously
maintain and pay for (a) all risk physical damage and
property insurance covering loss or damage to the
equipment for not less than the full replacement
value thereof naming Lender as loss payee and (b)
bodily injury and property damage combined single
limit liability insurance, all in such amounts and
against such risks and hazards as are reasonably
required by Lender, with insurance companies and
pursuant to contracts or policies held with
deductibles satisfactory to Lender. All contracts
and policies shall include provisions for the
protection of Lender notwithstanding any act or
neglect of or breach or default by Borrower, shall
provide for payment of insurance proceeds to Lender
shall provide that they may not be modified,
terminated or cancelled unless Lender is given at
least thirty (30) days' advance written notice
thereof, and shall provide that the coverage is
"primary coverage" for the protection of Borrower or
Lender notwithstanding any other coverage carried by
Lender protecting against similar risks.
- 11 -
<PAGE> 12
Borrower shall promptly notify any appropriate
insurer and Lender of each and every occurrence,
which may become the basis of a claim or cause of
action against the insured and provide Lender with
ail data pertinent to such occurrence. Borrower
shall furnish Lender with certificates of such
insurance or copies of policies upon request and
shall furnish Lender with renewal certificates not
less than thirty (30) days prior to the renewal date.
Proceeds of all insurance are payable first to Lender
to the extent of its interest.
(e) Financing Statements. At the request of Lender,
Borrower will join Lender in executing one or more
financing statements pursuant to the Uniform
Commercial Code and other documents deemed necessary
by Lender under applicable law to record or perfect
its security interest in the Collateral, including
continuation statements, in form satisfactory to
Lender and will pay the cost of filing the same in
all public offices wherever filing is deemed by
Lender to be necessary or desirable. Borrower hereby
authorizes Lender, in such jurisdictions where such
action is authorized by law, to effect any such
recordation or filing of financing statements or
other documents without Borrower's signature thereto.
(f) Change of Name or Address. Borrower will immediately
notify Lender in writing of any change in its place
of business or the adoption or change of any
tradename or fictitious business name, and will upon
request of Lender, execute any additional financing
statements or other similar documents necessary to
perfect or maintain its security interest.
(g) Use of Equipment, Maintenance. Borrower will cause
the Equipment to be used in a careful and proper
manner, will comply with and conform to all
governmental laws, rules and regulations relating
thereto, and will cause the Equipment to be operated
in accordance with the manufacturer's or supplier's
instructions or manuals and only by competent and
duly qualified personnel. Borrower will cause the
Equipment to be kept and maintained in good repair,
condition and working order and will furnish all
pans, replacements, mechanisms, devices and servicing
required therefor so that the value, condition and
operating efficiency thereof will at all times be
maintained and preserved, normal wear and tear
excepted. All such repairs,
- 12 -
<PAGE> 13
pans, mechanisms, devices and replacements shall
immediately, without further act, become part of the
Equipment and subject to the security interest
created by this Loan and Security Agreement.
Borrower will not make any improvement, change,
addition or alteration to the Equipment if such
improvement, change, addition or alteration will
impair the originally intended function or use of the
Equipment or impair the value of the Equipment as it
existed immediately prior to such improvement,
change, addition or alteration. Any part added to
the Equipment in connection with any improvement,
change, addition or alteration shall immediately,
without further act, become part of the Equipment and
subject to the security interest created by this Loan
and Security Agreement.
(h) Inspection. Lender may at any reasonable time or
times inspect the Equipment and may at any reasonable
time or times inspect the books and records of
Borrower.
(i) Taxes. Borrower shall promptly pay, when due, all
charges, fees, assessments and taxes (excluding all
taxes measured by Lender's income) which may now or
hereafter be imposed upon the ownership, leasing,
possession, sale or use of the Collateral.
(j) Performance by Lender. If Borrower fails to perform
any agreement or obligation contained herein, Lender
may itself perform, or cause the performance of such
agreement or obligation. Borrower will pay, or
reimburse Lender, on demand, for any and all fees,
including attorneys' fees, costs and expenses of
whatever kind or nature incurred by Lender in
connection with (i) the creation, preservation and
protection of Lender's security interest in the
Collateral, including, without limitation, all fees
and taxes in connection with the recording or filing
of instruments and documents in public offices, (ii)
payments or discharge of any taxes or liens upon or
in respect of the Collateral, (iii) premiums for
insurance with respect to the Equipment and (iv) this
Loan and Security Agreement and with protecting,
maintaining or preserving the Collateral and Lender's
interests therein, whether through judicial
proceedings or otherwise, or in connection with
defending or prosecuting any actions, suits or
proceedings arising out of or related to the Loan and
Security Agreement and the Loan Documents or in
connection with any debt
- 13 -
<PAGE> 14
restructuring, loan workout negotiations or
bankruptcy or insolvency case or proceedings. All
such amounts shall constitute obligations of Borrower
secured by the Collateral. In the event that
Borrower fails to perform any of its agreements
contained herein, Borrower will, on demand, reimburse
Lender for all such expenditures, together with
interest thereon from the date of such expenditure
until fully reimbursed at the rate of two percent
(2%) per month on the outstanding balance of such
expenditures or the highest rate permitted by law,
whichever is less.
(k) Power of Attorney. Borrower hereby irrevocably
appoints Lender Borrower's attorney-in-fact, with
full authority in the place and stead of Borrower and
in the name of Borrower or otherwise, from time to
time in the Lender's discretion, to take any action
and to execute any instrument which Lender may deem
necessary or advisable to accomplish the purposes of
this Loan and Security Agreement, including, without
limitation: (i) to obtain, compromise and adjust
insurance required to be paid to Lender; (ii) to ask,
demand, collect, sue for, recover, receive, and give
acquittance and receipts for moneys due and to become
due under or in respect of any of the Collateral;
(iii) to receive, endorse, and collect any drafts or
other instruments, documents, and chattel paper in
connection with clause (i) or (ii) above; and (iv) to
file any claims or take any action or institute any
proceedings which Lender may deem necessary or
desirable for the collection of any of the Collateral
or otherwise to enforce the rights of Lender with
respect to any of the Collateral.
(l) No Duties. The powers conferred on Lender hereunder
are solely to protect its interest in the Collateral
and shall not impose any duty upon it to exercise any
such powers. Except for the safe custody of any
Collateral in its possession and the accounting for
moneys actually received by it hereunder, Lender
shall have no duty as to any Collateral or as to the
taking of any necessary steps to preserve rights
against prior parties or any other rights pertaining
to any Collateral.
(m) Financial Data. Borrower will furnish to Lender and
will cause any guarantor of Borrower's obligations to
furnish to Lender on request (i) annual balance sheet
and profit and loss statements prepared in accordance
with generally accepted
- 14 -
<PAGE> 15
accounting principles and practices consistently
applied and, if Lender so requires, accompanied by
the annual audit report of an independent certified
public accountant reasonably acceptable to Lender,
and (ii) all other financial information and reports
that Lender may from time to time reasonably request,
including, if Lender so requires, income tax returns
of Borrower and any guarantor of Borrower's
obligations hereunder.
7. Conditions of Borrowing. Lender shall not be obligated to
make any loan hereunder unless:
(a) The Interim Notes or Term Notes evidencing such loan
shall have been duly executed and delivered to
Lender;
(b) Borrower shall have executed and delivered to Lender
the Supplemental Security Agreement describing the
Collateral and stating, except with respect to
progress payment fundings, the location thereof;
(c) Except with respect to progress payment fundings,
Lender shall have received evidence (as described in
Section 6d hereof) that insurance has been obtained
in accordance with the provisions of this Loan and
Security Agreement;
(d) Lender shall have received any and all third party
consents, waivers or releases deemed necessary or
desirable by it in connection with the loan and the
Collateral being financed, including, without
limitation, Uniform Commercial Code lien releases and
the consent and waiver, in form and substance
satisfactory to Lender, of each and every realty
owner, landlord and mortgagee holding an interest in
or encumbrance on the real property where any of the
Collateral is to be located;
(e) All filings, recordings and other actions deemed
necessary or desirable by Lender in order to
establish, protect, preserve and perfect its security
interest in the Collateral being financed by such
loan as a valid perfected first priority security
interest shall have been duly effected, including,
without limitation, the filing of financing
statements and the recordation of landlord (owners)
and/or mortgagee waivers or disclaimers, all in form
and substance satisfactory to Lender, and all fees,
taxes and other charges
- 15 -
<PAGE> 16
relating to such filings and recordings shall have
been paid by Borrower;
(f) The representations and warranties contained in this
Loan and Security Agreement shall be true and correct
in all respects on and as of the date of the making
of any loan hereunder with the same effect as if made
on and as of such date;
(g) In the sole judgment of Lender, there shall have been
no material adverse change in the financial
condition, business or operations of Borrower from
the earliest date of any financial statement, credit
report, business report or similar document submitted
to Lender for its review;
(h) All Loan Documents shall be satisfactory to Lender's
attorneys; and
(i) Lender shall have received, in form and substance
satisfactory to Lender, such other documents as
Lender shall require including, but not limited to a
Request, proof of payment, vendor invoices and
certificates of authority and incumbency.
8. Default. The occurrence of any of the following events,
following the giving of any required notice and/or the expiration of any
applicable period of grace, shall constitute an event of default ("Event of
Default") hereunder:
(a) Borrower's default in payment of any installment of
the principal of or interest on any Interim Note or
Term Note when and after the same shall become due
and payable, whether at the due date thereof or by
acceleration or otherwise, which default shall
continue unremedied for ten (10) days; or
(b) The failure by Borrower to make payment of any other
amount payable hereunder or under any Interim Note or
Term Note, and the continuance of such failure for
more than ten (10) days after written notice thereof
by Lender to Borrower; or
(c) The failure by Borrower to perform or observe any
covenant, condition, obligation or agreement to be
performed or observed by it hereunder, which failure
shall continue unremedied for thirty (30) days after
written notice thereof by Lender to Borrower; or
(d) The occurrence of a default described in Section 4
hereof; or
- 16 -
<PAGE> 17
(e) Any warranty, representation or statement made or
furnished with respect to the Borrower or the
Collateral to Lender by or on behalf of Borrower, in
connection with this Loan and Security Agreement, or
the indebtedness secured hereby, shall prove to have
been false in any adverse, material respect when made
or furnished; or
(f) Borrower shall become insolvent or bankrupt or make
an assignment for the benefit of creditors or consent
to the appointment of a trustee or receiver; or a
trustee or a receiver shall be appointed for Borrower
or for a substantial pan of its property without its
consent and shall not be dismissed for a period of
sixty (60) days; or bankruptcy, reorganization,
liquidation, insolvency or dissolution proceedings
shall be instituted by or against Borrower and, if
instituted against Borrower, shall be consented to or
be pending and not dismissed for a period of sixty
(60) days; or any execution or writ of process shall
be issued under any action or proceeding against
Borrower in such capacity whereby any of the
Collateral may be taken or restrained; Borrower shall
cease doing business as a going concern; or, without
the prior written consent of Lender, Borrower shall
sell, transfer or dispose of all or substantially all
of its assets or property; or
(g) The liquidation, merger, consolidation,
reorganization, conversion to an "S" status or
dissolution, if Borrower is a corporation or
partnership, of Borrower, if in Lender's reasonable
opinion, such act shall materially and adversely
affect Borrower's ability to perform under any of the
Loan Documents; or
(h) Any item of Collateral is seized or levied on under
legal or governmental process or for any reason
Lender deems itself insecure. Lender shall be
entitled to deem itself insecure when some event
occurs, fails to occur or is threatened or some
objective condition exists or is threatened which
significantly impairs the prospects that any of
Borrower's obligations to Lender will be paid when
due, which significantly impairs the value of the
Collateral to Lender or which significantly affects
the financial or business condition of Borrower.
The occurrence of an Event of Default shall
terminate any commitment or obligation by Lender to
- 17 -
<PAGE> 18
make any of the loans contemplated by this Loan and
Security Agreement.
9. Remedies Upon Default. Upon the occurrence of an Event of
Default hereunder, Lender may, at its option, do any one or more of the
following:
(a) Declare all obligations of Borrower to Lender to be
immediately due and payable, whereupon all unpaid
principal of and interest on said indebtedness and
other amounts declared due and payable shall be and
become immediately due and payable;
(b) Take possession of all or any of the Collateral and
exclude therefrom Borrower and all others claiming
under Borrower, and thereafter hold, store, use,
operate, manage, maintain and control, make repairs,
replacements, alterations, additions and improvements
to and exercise all rights and powers of Borrower in
respect to the Collateral or any pan thereof. In the
event Lender demands, or attempts to take possession
of the Collateral in the exercise of any rights under
this Loan and Security Agreement, Borrower promises
and agrees to promptly turn over and deliver complete
possession thereof to Lender;
(c) Require Borrower to assemble the Collateral, or any
portion thereof, at a place designated by Lender and
reasonably convenient to both parties, and promptly
to deliver such Collateral to Lender, or an agent or
representative designated by it;
(d) Sell, lease or otherwise dispose of the Collateral at
public or private sale, without having the Collateral
at the place of sale, and upon terms and in such
manner as Lender may determine (and Lender may be a
purchaser at any sale); and
(e) Exercise any remedies of a secured party under the
Uniform Commercial Code as adopted in the state where
the Collateral is located or any other applicable
law.
Except as to portions of the Collateral which
are perishable or threaten to decline speedily in
value or are of a type customarily sold on a
recognized market, Lender shall give Borrower at
least ten (10) days' prior written notice of the time
and place of any public or private sale of the
Collateral or other intended disposition thereof to
be made. Such notice may be mailed to Borrower at
- 18 -
<PAGE> 19
the address set forth in the first paragraph of this
Loan and Security Agreement. Borrower hereby
specifically agrees (to the extent that applicable
law and public policy allows it to effectively do so)
that any public or private sale held in accordance
with the terms of this Loan and Security Agreement
shall, for the purpose of the Uniform Commercial Code
as adopted in the state where the Collateral is
located and for all other purposes, be deemed to have
been conducted in a commercially reasonable manner
and in good faith.
The proceeds of any sale under Section 9(d)
shall be applied as follows:
(i) To the repayment of the costs and
expenses of retaking, holding and
preparing for the sale and the
selling of the Collateral (including
legal expenses and attorneys' fees)
and the discharge of all
assessments, encumbrances, charges
or liens, if any, on the Collateral
prior to the lien hereof (except any
taxes, assessments, encumbrances,
charges or liens subject to which
such sale shall have been made);
(ii) To the payment of the whole amount
then due and unpaid of the
indebtedness of Borrower to Lender;
(iii) To the payment of other amounts then
secured hereunder; and
(iv) The surplus, if any shall be paid to
the Borrower or to whomsoever may be
lawfully entitled to receive the
same.
Lender shall have the right to enforce one or
more remedies hereunder, successively or
concurrently, and such action shall not operate to
estop or prevent Lender from pursuing any funkier
remedy which it may have, and any repossession or
retaking or sale of the Collateral pursuant to the
terms hereof shall not operate to release Borrower
until full payment of any deficiency has been made in
cash.
10. Limitation on Interest. It is the intent of the parties to
this Loan and Security Agreement to contract in strict compliance with
applicable usury laws from time to time in effect. In furtherance thereof, the
parties stipulate and agree that none
- 19 -
<PAGE> 20
of the terms and provisions contained in the Loan Documents shall ever be
construed to create a contract to pay for the use, forbearance or detention of
money at a rate in excess of the maximum interest rate permitted to be charged
by applicable law from time to time in effect.
11. Personal Property/Tags. No item of Equipment will be attached
or affixed to realty or any building without Lender's prior knowledge and
written consent and waiver of the landlord and the mortgagee, if any, of the
real property. If so requested by Lender, Borrower will affix tags supplied by
Lender, reflecting Lender's security interest in the Equipment.
12. Loss and Damage. Borrower shall bear the risk of damage,
loss, theft, or destruction, partial or complete of the Equipment, whether or
not such loss or damage is covered by insurance, except that while Borrower is
not in default, Lender agrees to apply toward payment of obligations of
Borrower insurance proceeds payable to Lender by reason of such damage, loss,
theft, or destruction. In the event of any damage, loss, theft, or
destruction, partial or complete, of any item of Equipment, Borrower shall
promptly notify Lender in writing and at the option of Lender (a) repair or
restore the Equipment to good condition and working order, or (b) replace the
Equipment with similar equipment in good repair, condition and working order,
or (c) pay Lender, in cash, an amount equal to the unamortized equipment cost
for the item or if the Equipment was not purchased with the loan proceeds, the
pro rata portion of the outstanding principal balance due under the Interim
Note or Term Note, as the case may be, and all other amounts relating to that
item of Equipment then due and owing hereunder, and upon payment of that
amount, Lender's lien shall be terminated with respect to that item of
Equipment only and Lender will release its interest in that item of Equipment.
13. Assignment. Borrower may not assign or transfer any rights
under this Loan and Security Agreement or to the Collateral without Lender's
prior written consent.
14. Indemnification. Borrower shall indemnify and hold harmless
Lender from and against any and all claims, losses, liabilities, causes of
action, costs and expenses (including the fees of Lender's attorneys)
("Claims") in any way relating to or arising out of this Loan and Security
Agreement, the other Loan Documents or the Collateral, except for any Claims
resulting solely and directly from Lender's gross negligence or willful
misconduct.
15. Notices. Whenever Borrower or Lender shall desire to give or
serve any notice, demand, request or other communication with respect to this
Loan and Security Agreement, each such notice, demand, request or communication
shall be in writing and shall be effective only if the same is physically
delivered or is by certified mail, postage prepaid, return receipt requested,
or by
- 20 -
<PAGE> 21
overnight courier, postage prepaid, mailed to the parties at the addresses set
forth in the first paragraph of this Loan and Security Agreement, with a copy
to Lender's Vice President of Credit. Any party hereto may change its address
for such notices by delivering or mailing to the other parties hereto, as
aforesaid, a notice of such change.
16. No Waiver by Lender. By exercising or failing to exercise any
of its rights, options or elections hereunder, Lender shall not be deemed to
have waived any breach or default on the pan of Borrower or to have released
Borrower from any of the obligations secured hereby, unless such waiver or
release is in writing and is signed by Lender. In addition, the waiver by
Lender of any breach hereof for default in payment of an indebtedness secured
hereby shall not be deemed to constitute a waiver of any succeeding breach or
default.
17. Further Agreements. From time to time, Borrower will execute
such further instruments as Lender may reasonably require, in order to protect,
preserve, and maintain the security interest granted hereby.
18. Binding upon Successors. All agreements, covenants,
conditions and provisions of this Loan and Security Agreement shall apply to
and bind the successors and assigns of all parties hereto.
19. Governing Laws. This Loan and Security Agreement shall be
governed by the laws of the State of Washington.
20. Amendment. This Loan and Security Agreement can be modified
or rescinded only by a writing expressly referring to this Loan and Security
Agreement, signed by both of the parties hereto.
21. Invalidity of Provisions. Every provision of this Loan and
Security Agreement is intended to be severable. In the event that any term or
provision hereof is declared by a court to be illegal or invalid for any reason
whatsoever, such illegality or invalidity shall not affect the balance of the
terms and provisions hereof, which terms and provisions shall remain binding
and enforceable, then to the extent possible all of the other provisions shall
nonetheless remain in full force and effect.
IN WITNESS WHEREOF, Borrower and Lender have duly executed this Loan and
Security Agreement the day and year first above written.
Lender: Borrower:
----------------------- ---------------------
By: By:
--------------------------- ---------------------------
(Print Name): (Print Name):
----------------- -----------------
Title: Title:
------------------------ --------------------------
- 21 -
<PAGE> 22
Social Security Number: ______
(If Borrower is an Individual)
Federal Tax Identification
Number: ______________________
- 22 -
<PAGE> 23
SUPPLEMENTAL SECURITY AGREEMENT NO. ONE
LOAN #2004096-001
This Supplemental Security Agreement is executed by SEITEL
GEOPHYSICAL, INC. ("Borrower") pursuant to the terms of a Loan and Security
Agreement dated February 22, 1996 between Borrower and MetLife Capital
Corporation ("Lender"). All capitalized terms used herein that are not
otherwise defined herein shall have the respective meanings given to such terms
in the Loan and Security Agreement.
In order to provide security for the payment and performance of
Borrower's obligations under the Loan Documents, Borrower has granted to Lender
a first priority security interest in the Collateral. In addition to said
grant, Borrower intends by this Supplemental Security Agreement to grant to
Lender a first priority security interest in the items of Equipment identified
herein.
1. To further secure the payment and performance of all of
Borrower's obligations to lender under the Loan Documents, Borrower hereby
grants to Lender a first priority security interest in the items of Collateral
described below, including all present and future additions, attachments and
accessories thereto, all substitutions therefor and replacements thereof and
all proceeds thereof, including all proceeds of insurance:
<TABLE>
<CAPTION>
Qty. Model/Mfr. Description Serial No. Cost or Appraised Value
---- ---------- ----------- ---------- -----------------------
<S> <C> <C> <C>
50 Configurable SAR 830 thru 879 $433,000.00
</TABLE>
2. Borrower hereby (a) affirms that the representations and
warranties set forth in Section 5 of the Loan and Security Agreement are true
and correct as of the date hereof; (b) represents and warrants that Lender has
a first priority security interest in the Collateral; and (c) represents and
warrants that the above described equipment will be maintained at the following
location(s):
59 Highway South
Rosenberg, TX 77471
3. The Loan Amount for loans to be made pursuant to this
Supplemental Security Agreement is $433,000.00.
4. The Commitment Expiration Date for loans to be made pursuant
to this Supplemental Security Agreement is March 31, 1996.
5. The amount of liability insurance required to be maintained by
Borrower pursuant to Section 6(d) of the Loan and Security Agreement is
$300,000.00.
- 23 -
<PAGE> 24
6. All of the terms and provisions of the Loan and Security
Agreement are hereby incorporated in and made a part of this Supplemental
Security Agreement to the same extent as if fully set forth herein.
In witness whereof, Borrower has executed and delivered this
Supplemental Security Agreement this _____day of ___________, 1996.
Borrower: SEITEL GEOPHYSICAL, INC.
By:
--------------------------
(Print Name):
--------------------------
Title:
--------------------------
- 24 -
<PAGE> 25
No. 2004096-001 TERM PROMISSORY NOTE
$433,000.00 March 14, 1996
FOR VALUED RECEIVED, the undersigned, SEITEL GEOPHYSICAL, INC.,
("Maker"), promises to pay to the order of MetLife Capital Corporation
("Payee"), at its office at P.O. Box C-97550, Bellevue, Washington 98009, the
principal sum of Four Hundred Thirty Three Thousand and no/100ths ($433,000.00)
Dollars together with interest on unpaid principal from the date of
disbursement of such principal amount until payment in full at a rate of 7.52
percent (7.52%) per annum ("Rate") computed on the basis of a 360 day year of
twelve consecutive thirty day months. Interest hereunder shall be paid on the
unpaid principal, together with principal, in Thirty Six (36) installments of
Thirteen Thousand Four Hundred Seventy Two Dollars and 97/100ths ($13,472.97)
commencing on April 14, 1996 and monthly thereafter until March 14, 1999, on
which date the entire balance of principal and interest unpaid shall be due and
payable. It is agreed that each installment, when paid, shall be applied by
the holder hereof, first so much as shall be required to the payment of
interest accrued as specified hereto, and the balance thereof to the repayment
of the principal sum.
Except as may be otherwise expressly provided herein, this Note may
not be prepaid in whole or in part, except with the prior written consent of
Payee. Maker shall have the privilege of prepaying all (but not part) of the
then outstanding balance under this Note on March 14, 1998 or on any
installment due date thereafter, subject to giving thirty (30) days prior
written notice to Payee specifying the date of prepayment and further subject
to payment of a prepayment premium equal to the amount, if any, required to
offset the adverse impact to Payee of any decline in interest rates. The
prepayment premium is determined by (i) calculating the decrease, expressed in
basis points (but not less than zero) in the current weekly average yield for
Two (2)-year U.S. Treasury Constant Maturities as published in Federal Reserve
Statistical Release H.15(519) (the "Index") from the weekly average yield of
5.040 as of January 23, 1996 to the Friday (or, if Friday is not a business
day, the last business day) of the week immediately preceding the prepayment
date (ii) dividing the difference by 100, (iii) multiplying the result by the
applicable "Premium Factor" set forth below, and (iv) multiplying the product
by the principal to be prepaid. Any prepayment shall be applied first to the
prepayment premium, if any, next to accrued interest and late charges (if any),
and thereafter to the principal then outstanding. The Premium Factor shall be
the amount shown on the following chart for the month in which prepayment
occurs.
<TABLE>
<CAPTION>
Number of Months Remaining (Years) Premium Factor
- -------------------------- ------- --------------
<S> <C> <C>
12 - 1 (1) .005
</TABLE>
- 25 -
<PAGE> 26
In the event the Federal Reserve Board ceases to publish Statistical
Release H.15(519), then the decrease in Two-Year U.S. Treasury Constant
Maturities will be determined from another source designated by Payee.
If Maker shall have given to Payee notice of Maker's intention to so
prepay, Maker shall not then be entitled to withdraw such notice, and the
indebtedness proposed to be prepaid in such notice together with the aforesaid
prepayment fee, if applicable, shall be due and payable upon the date specified
for such prepayment in such notice. Upon the occurrence of an Event of Default
and acceleration of payment of indebtedness evidenced hereby during a period
open to prepayment, Maker shall pay to Payee, in addition to any and all other
sums due and payable hereunder, as liquidated damages for the loss of Payee's
investment and not as a penalty, an amount equal to the prepayment fee which
would have been payable hereunder on such date of acceleration in the event of
a voluntary prepayment. Maker and Payee agree that the foregoing amounts do
not constitute penalties but rather constitute reasonable calculations of the
investment loss that would be sustained by Payee in the event of such
prepayment.
It is specifically understood and agreed by Maker that, in the event
of a default under this Note or under any instrument securing the Note, a
tender of payment of the unpaid principal and accrued interest then outstanding
shall be deemed a prepayment, and, accordingly, said tender must include the
premium herein above required, or if said tender is made prior to the time this
privilege is operative, then said tender must include a premium equal to six
(6) months' interest at the Rate computed on the principal amount so tendered.
It is further understood and agreed by Maker that Payee shall not be obligated
to accept said tender, and said tender shall for all purposes be deemed
ineffectual and deficient, unless said tender shall include the premium herein
above required.
In the event that Payee does not receive any payment on the date due,
Maker will pay Payee a late charge of five percent (5%) of the payment
outstanding together with the payment and, provided said sum is received within
ten (10) days of the date due, Payee agrees not to demand immediate payment of
the whole sum of principal and interest as otherwise permitted herein.
If, from any circumstances whatsoever, payment of any obligation due
under this Note at the time such performance shall be due shall involve
exceeding the maximum amount currently prescribed by any applicable usury
statute or any other applicable law, then such obligation shall be reduced to
such maximum amount, so that in no event shall any payment be possible under
this Note, or under any other instrument evidencing or securing the
indebtedness evidenced hereby, that is in excess of such maximum amount.
- 26 -
<PAGE> 27
In the event that an Event of Default shall occur under the Loan and
Security Agreement (as hereinafter defined) or any other instrument now or
hereafter securing repayment hereof, following any required notice and/or the
expiration of any applicable period of grace, then, and in such event, the
principal indebtedness evidenced hereby, and any other sums advanced hereunder,
together with all unpaid interest accrued thereon, shall, at the option of
Payee, at once become due and payable and may be collected forthwith,
regardless of the stipulated date of maturity. TIME is OF THE ESSENCE WITH
RESPECT TO THIS NOTE. Interest shall accrue on the outstanding principal for
so long as such default continues, regardless of whether or not there has been
an acceleration of the indebtedness evidenced hereby as set forth herein, at
the rate equal to the lesser of fifteen percent (15%) per annum or the maximum
rate allowable under law. All such interest shall be paid at the time of and
as a condition precedent to the curing of any such default should Payee, at its
sole option, allow such default to be cured. In the event this Note, or any
part thereof, is collected by or through an attorney-at-law, Maker agrees to
pay all costs of collection including, but not limited to, reasonable
attorneys' fees, whether or not suit is filed.
This Note is one of the notes referred to in and is secured by the
Loan and Security Agreement dated February 22, 1996 between Maker and Payee.
The terms of the Loan and Security Agreement are incorporated herein by
reference.
This Note consolidates the following Interim Notes executed by Maker
in favor of Payee
<TABLE>
<CAPTION>
Interim Note Number Date Principal Amount
------------------- ---- ----------------
<S> <C> <C>
Request for Loan Proceeds One March 14, 1996 $433,000.00
</TABLE>
Maker waives any right of exemption and waives presentment, protest
and demand and notice of protest, demand and of dishonor and nonpayment of this
Note, and consents that any holder hereof shall have the right, without notice,
to grant any extension or extensions of time for payment of this Note or any
part thereof or any other indulgences or forbearances whatsoever, or may
release any of the security for this Note without in any way affecting the
liability of any other party for the payment of this Note.
The due payment and performance of Maker's obligations hereunder shall
be without regard to any counterclaim, right of offset, or any other
counterclaim whatsoever which Maker may have against Payee and without regard
to any other obligations of any nature whatsoever which Payee may have to
Maker, and no such counterclaim or offset shall be asserted by Maker in any
action, suit or proceeding instituted by Payee for payment of Maker's
obligations hereunder.
- 27 -
<PAGE> 28
This Note and the Loan and Security Agreement shall be governed by and
construed in accordance with the laws of the State of Washington.
Maker acknowledges that there is no presumption that the value of the
property securing this Note is equal to the face amount of the Note, and that a
deficiency judgment may be necessary in proceedings taken for enforcement
hereof.
No amendment to this Note shall be binding upon Payee unless it is in
writing and duly signed by Payee.
IN WITNESS WHEREOF, the Maker has caused these presents to be duly
signed the date first above written.
Borrower: SEITEL GEOPHYSICAL, INC.
By:
---------------------------
Witness: (Print Name)
-------------------- ---------------------------
Title:
---------------------------
- 28 -
<PAGE> 1
[ ] METROPOLITAN LIFE 10.6.1
AND AFFILIATED COMPANIES
MASTER EQUIPMENT LEASE AGREEMENT
METLIFE CAPITAL CORPORATION
THIS AGREEMENT is entered into the 20th day of May, 1994 between METLIFE
CAPITAL, LIMITED PARTNERSHIP ("Lessor") whose address is 10900 N. E. 8th
Street, mailing address C-97550, Bellevue, Washington 98009 and Seitel
Geophysical, Inc. d/v/a Eagle Geophysical ("Lessee") whose address is 50 Briar
Hollow Lane West, 7th Floor, Houston, Texas 77027, Lessor and Lessee from time
to time may enter into written agreements in the form of "Request to Purchase
Addenda" for the purchase by Lessor of equipment and leasing of such equipment
to Lessee. To facilitate such transactions, Lessor and Lessee are entering
into this Master Equipment Lease Agreement (the "Master Lease"), the terms and
provisions of which shall be incorporated by reference in each such Request to
Purchase, and they MUTUALLY AGREE AS FOLLOWS:
1. REQUEST TO PURCHASE
If Lessor agrees to acquire and lease equipment when requested by Lessee, the
parties shall sign a Request to Purchase Addendum ("Request to Purchase")
setting forth the particulars regarding the transaction, including, without
limitation, the list of items of equipment (individually, an "Item" and,
collectively, the "Equipment"), the prices of each Item (including disclosure
of all rebates, discounts and other incentives received or receivable with
respect thereto), "Related Costs," including taxes, transportation,
installation and other applicable costs, the aggregate of the foregoing ("Total
Cost"), length of the Basic Term, rental rates and other applicable provisions.
"Cost of an Item" shall mean the price of the Item plus its applicable portion
of Related Costs. In the absence of a signed Request to Purchase, this Master
Lease shall not constitute a lease or a commitment by either party to enter
into a lease.
2. PURCHASE; ACCEPTANCE
(a) REQUEST; SPECIFICATIONS. Signing a Request to Purchase shall
constitute the request from Lessee to Lessor to purchase the Equipment, and the
Request to Purchase and this Master Lease shall constitute the lease and
agreement (the "Lease") regarding the Equipment. Lessee will assign to Lessor
purchase orders or agreements issued or entered into by Lessee for the
Equipment, or Lessor shall issue Lessor's purchase orders to the suppliers of
the Equipment, as Lessor at the time shall deem appropriate, all in form and
substance satisfactory to Lessor. At the time of signing the Request to
Purchase, Lessee shall furnish Lessor detailed specifications
("Specifications") for the purchase of the Items, including descriptions,
prices, delivery terms and instructions, installation provisions and all other
applicable specifications. Lessee assumes full responsibility with respect to
the selection of Items supplied for lease and the specification thereof; the
Lessor shall have no liability or responsibility with respect thereto
regardless of whether the specifications prove inadequate for the intended
purpose or use.
(b) INSPECTION; ACCEPTANCE. It is Lessee's responsibility to
receive and promptly inspect and test each Item tendered for delivery by a
supplier and the installation thereof. Lessee shall give Lessor written notice
of acceptance of an Item as soon as it can be determined that the Item and its
installation are in compliance with Specifications. As between Lessee and
Lessor, the giving of such written notice shall constitute Lessee's irrevocable
acceptance of the Item or Items designated in the notice, whether or not such
items or their installation or Lessor's title to the same are defective in any
respect, and notwithstanding any failure of an Item or its installation to
conform to Specifications, without prejudice however to rights which Lessor and
Lessee, or either of them, may have against any other person, whether with
respect to design, manufacture, condition or otherwise.
(c) PURCHASE CUT-OFF DATE. If, by the "Purchase Cut-Off Date" set
forth in a Request to Purchase, Lessee shall not have given Lessor written
notice of acceptance of an Item, Lessor shall have no obligation to purchase
the Item or to lease it to Lessee. In such event, Lessee shall immediately pay
all accrued interim Rental and reimburse Lessor for all sums Lessor may have
paid for or with respect to the Item and for all Lessor's costs and expenses
with respect thereto, and Lessee shall indemnify and defend Lessor against and
hold Lessor harmless from any and all cost, expense, loss, liability and damage
that Lessor may suffer or that may be asserted against Lessor by reason of
Lessor's failure or refusal to purchase such Item. Any such item shall be
deemed to be deleted from the Request to Purchase and no longer included in the
Equipment.
1
<PAGE> 2
(d) CONDITIONS. Lessee shall deliver to Lessor such further
instruments, documents and certifications as Lessor reasonably may request,
including without limitation evidences of authority (e.g., corporate
certificates, corporate resolutions, partnership documents and authorizations),
evidence of insurance, purchase orders and acceptances thereof, purchase and
sale agreements and financial information, and instruments and documents to
implement, perfect or continue the perfection of Lessor's rights and remedies
as owner and Lessor of the Equipment, including Uniform Commercial Code forms.
Notwithstanding the execution, delivery or filing of any instruments or
documents, it is agreed that this transaction is a lease and is not intended as
security. Lessee's delivery of the foregoing and of the Specifications are
conditions precedent to any obligation of Lessor to purchase or to make any
commitments to purchase or pay for the Equipment or any item.
(e) SUPPLEMENTAL LEASE SCHEDULE. If at any time prior to the
Closing Date Lessee requests Lessor to add further Items to the Equipment, and
if Lessor so agrees, Lessee shall execute a Supplemental Request to Purchase in
a form supplied by Lessor, which shall become part of the Request to Purchase,
subject to all of its provisions and the provisions of this Master Lease, and
the equipment specified therein shall be Items of Equipment under the Lease.
If at any time after the Closing Date Lessee requests Lessor to add further
Items to the Equipment, and if Lessor so agrees, Lessee shall execute an
additional Request to Purchase Addendum, amending the Lease to include such
Items as part of the equipment and setting forth the particulars with respect
thereto. The Basic Term with respect to all Equipment, including Items covered
by a Supplemental Lease Schedule, shall terminate in accordance with the
provisions of the original Request to Purchase.
(f) CLOSING. Following the date ("Closing Date") which is the
earlier of (i) the date Lessee gives Lessor written notice of acceptance of the
last Item or (ii) the Purchase Cut-Off Date (or on such other day as is
mutually agreed), Lessor shall send Lessee a Closing Schedule, setting forth
any adjustments to descriptions and Costs of Items and Total Cost and
confirming the Closing Date and amount of Periodic Rental installments and
payment schedules. Such Closing Schedule and the facts and determinations set
forth therein shall be conclusive unless, within sixty (60) days after the
Closing Schedule is sent by Lessor to Lessee, Lessee shall give Lessor written
notice specifying any claimed error therein. Notwithstanding any such notice,
Lessee shall pay all rentals as they become due. If Lessee establishes an
error that affects the amount of rentals, Lessor shall give Lessee a credit for
any overpayment of rentals, and Lessee promptly shall pay Lessor any
underpayments.
3. LESSEE'S WARRANTIES
(a) Lessee represents and warrants to Lessor that it is a
corporation or partnership duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and that it is
qualified to do business in every jurisdiction where the failure to qualify
would have a materially adverse effect on Lessor's rights hereunder; it has
taken all corporate or partnership action which may be required to authorize
the execution, delivery and performance of this Lease, and such execution,
delivery and performance will not conflict with or violate any provision of its
Charter or Articles or Certificate of Incorporation, By-laws or any provisions
thereof, or in the case of a partnership, its Certificate of Partnership or
Limited Partnership and its Partnership Agreement, or result in a default or
acceleration of any obligation under any agreement, order, decree or judgment
to which it is a party or by which it is bound, nor is it now in default under
any of the same; there is no litigation or proceeding pending or threatened
against it which may have a materially adverse effect on Lessee or which would
prevent or hinder the performance by it of its obligation hereunder; this lease
and the attendant documents constitute valid obligations of the Lessee, binding
and enforceable against it in accordance with their respective terms; no action
by or with any commission or administrative agency is required in connection
herewith; it has the power to own its assets and to transact business in which
it is engaged; it will give to Lessor prompt notice of any change in its name,
identity or structure.
(b) Lessee's written acceptance of an Item and its installation
shall constitute a REPRESENTATION AND WARRANTY BY Lessee to Lessor that: (i)
the Item is personal property in good order and condition and, unless Lessor
otherwise agrees in writing, has not been used prior to the time of such
written notice of acceptance, the Equipment does not constitute "imported
property covered by an Executive order" as defined in Section 168(g)(6) of the
Internal Revenue Code of 1986 ("Code"), and that the recovery period set forth
in the Request to Purchase is the period applicable under the Code to the
Equipment; and (ii) at all times Lessee shall keep the Equipment in Lessee's
possession at the address specified in the Request to Purchase unless Lessor
shall otherwise consent in
2
<PAGE> 3
writing. Lessee shall not cause, suffer or permit any Item to be attached or
affixed to real property or improvements thereon (collectively, "Realty")
unless Lessor first shall consent thereto in writing and Lessee shall have
obtained from all persons having any interest in the Realty written consents
which approve such attachment, waive any claims to or encumbrances upon
attached Items and consent to the detachment and removal of such Items at any
time by Lessor or Lessee. Notwithstanding attachment of any Items to Realty,
all the Equipment at all times shall be and remain personal property. Upon
termination of Lessee's right to possession of the Equipment, whether by
expiration of the Term or otherwise, Lessee at its sole cost and expense shall
detach and remove the Equipment from the Realty and save Lessor harmless from
and indemnify and defend Lessor against any claim, demand, loss, liability, and
damage arising from such detachment, removal or both.
4. TERM OF LEASE
The term of the Lease ("Term") shall consist of an "Interim Term" and a "Basic
Term." The Interim Term shall begin on the date that Lessee first gives Lessor
written notice of acceptance of an Item or written approval for partial
payment, whichever is earlier, and shall continue until the time the Basic Term
begins. The Basic Term shall begin on the Closing Date and shall continue for
the length of the Basic Term set forth in the Request to Purchase.
5. INTERIM RENTAL
During the Interim Term, Lessee shall pay rent monthly ("Interim Rental"), on a
calendar month basis, in an amount determined by Lessor by applying the
"Interim Rental Rate" set forth in the Request to Purchase to portions of the
Total Cost then or theretofore expended by Lessor, for the number of days such
sums are outstanding during such calendar month. The "prime rate" referred to
in this Lease shall mean the rate per annum announced by Chase Manhattan Bank,
New York City, from time to time as its prime rate, whether or not such rate is
applied by said bank to any then outstanding loans, changing with each
announced change of such prime rate. Lessee shall pay Lessor each installment
of Interim Rental on the fifteenth day after the end of such calendar month.
6. PERIODIC RENTAL
Lessee shall pay rent ("Periodic Rental") for the Basic Term in an amount
calculated by multiplying the Total Cost by the Periodic Rental Rate set forth
in the Request to Purchase multiplied by the number of months constituting the
length of the Basic Term. Lessee shall pay installments of Periodic Rental to
Lessor in accordance with the payment schedule set forth in the Request to
Purchase.
7. LATE PAYMENT
If any installment of rent or other sum owing under the Lease shall not be paid
when due and shall remain unpaid for ten (10) days, Lessee shall pay Lessor a
late charge equal to five percent (5%) of the amount delinquent, but in no
event at a rate greater than limited by any applicable law. Such late charge
is in addition to and not in lieu of other rights and remedies Lessor may have.
8. INSURANCE
Lessee shall procure and continuously maintain and pay for (a) all risk
physical damage insurance covering loss or damage to the Equipment for not less
than the full replacement value thereof naming Lessor as Loss Payee and (b)
bodily injury and property damage combined single limit liability insurance
naming Lessor as Additional Insured, all in such amounts and against such risks
and hazards as are set forth in the Request to Purchase, with insurance
companies and pursuant to contract or policies and with deductibles thereon
satisfactory to Lessor. All contracts and policies shall include provisions
for the protection of Lessor notwithstanding any act or neglect of or breach or
default by Lessee, shall provide that they may not be modified, terminated or
cancelled unless Lessor is given at least ten (10) days' advance written notice
thereof, and shall provide that the coverage is "primary coverage" for the
protection of Lessee or Lessor notwithstanding any other coverage carried by
Lessee or Lessor protecting against similar risks. Lessee shall promptly
notify any appropriate insurer and Lessor of each and every occurrence which
may become the basis of a claim or cause of action against the insureds and
provide Lessor with all data pertinent to such occurrence. Lessee shall
furnish Lessor with certificates of such insurance or copies of policies upon
request,
3
<PAGE> 4
and shall furnish Lessor with renewal certificates not less than ten (10) days
prior to the renewal date. Proceeds of all insurance shall be payable first to
Lessor to the extent of its liability or interest as the case may be.
9. TAXES
Lessee shall pay or reimburse Lessor for the payment of all taxes, fees,
assessments and other governmental charges of whatsoever kind or character and
by whomsoever payable on or relating to any Item of Equipment or the sale,
purchase, ownership, use, value, value added, possession, shipment,
transportation, delivery or operation thereof or the exercise of any option,
election or performance of any obligation by Lessee hereunder, which may accrue
or be levied, assessed or imposed during the Term and any Renewal Term or which
remain unpaid as of the date of surrender of such Item to Lessor, and all taxes
of any kind imposed by any federal, state, local or foreign taxing authority
against Lessor on or measured by any amount payable by Lessee hereunder,
including, without limitation, all license and registration fees and all sales,
use, value, ad valorem, personal property, excise, gross receipts, stamp or
other taxes, imposts, duties and charges together with any penalties, fines or
interest thereon, except taxes of Lessor on net income imposed by the United
States or any state. Lessee shall reimburse Lessor for any payments made by
Lessor which are the obligation of Lessee under the Lease, but Lessee shall not
be obligated to pay any amount under this Section so long as it shall in good
faith and by appropriate proceedings contest the validity or the amount
thereof, unless such contest would adversely affect the title of Lessor to any
Item of Equipment or would subject any Item to forfeiture or sale. Lessee
shall indemnify Lessor on an after-tax basis against any loss, claim, demand
and expense, including legal expense, resulting from such nonpayment or
contest, and further agrees to indemnify Lessor against any and all taxes,
assessments and other charges imposed upon Lessor under the laws of any
federal, state, local or foreign government or taxing authority, as a result of
any payment made by Lessee pursuant to this Section. Whenever this lease
terminates as to any Item, Lessee will, on request, advance to Lessor the
amount estimated by Lessor to equal personal property taxes on the Item which
are not yet payable but for which Lessee will afterward become liable
hereunder; Lessor will account to Lessee for such advances. On request of
either Lessor or Lessee, the other will submit written evidence of all payments
required of it under this section.
10. MAINTENANCE, ETC.
(a) Lessee at its expense at all times shall: (i) keep the
Equipment in good and efficient working order, condition and repair, ordinary
wear and tear excepted, and make all inspections and repairs, including
replacement of worn parts, to effect the foregoing and to comply with
requirements of laws, regulations, rules and provisions and conditions of
insurance policies; and (ii) pay all costs, expenses, fees and charges incurred
in connection with the use or operation of the Equipment and of each Item,
including but not limited to repairs, maintenance, storage and servicing.
Lessee shall not make any alterations, substitutions, improvements or additions
to the Equipment or Items, except those required in order to comply with laws,
regulations, rules and insurance policies, unless Lessor first shall have
consented thereto in writing. Notwithstanding any consent by Lessor, Lessee
shall pay all costs and expenses of the foregoing. All replacements, repairs,
improvements, alterations, substitutions and additions shall constitute
accessions to the Equipment and title thereto shall vest in Lessor.
(b) Lessor hereby transfers and assigns to Lessee, for so long
during the Term and any Renewal Term as Lessee is not in default, Lessor's
right, title and interest in, under and to any assignable factory and dealer
warranty, whether express or implied, with respect to the Equipment. All
claims and actions upon any warranty shall be made and prosecuted by Lessee at
its sole cost and expense. Lessor shall have no obligation to make or
prosecute any claim upon or under a warranty. So long as Lessee shall not be
in default, Lessor shall cooperate with Lessee with respect to a claim on a
non-assignable warranty, at Lessee's expense. Lessee shall have proceeds of a
warranty claim or recovery paid to Lessor. Lessor shall make such proceeds
available for any repair, restoration or replacement to correct such warranted
condition. Excess proceeds shall be used to reduce Lessee's Lease obligations.
11. USE
So long as Lessee shall not be in default, Lessee shall be entitled to the
possession, use and quiet enjoyment of the Equipment during the Term and any
Renewal Term in accordance with the terms of the Lease. Unless a purchase
option is exercised, Lessee shall deliver and surrender the Equipment to Lessor
at the end of the Term or Renewal
4
<PAGE> 5
Term in accordance with paragraph 20, hereof. Lessee warrants that the
Equipment will at all times be used and operated solely in the conduct of
Lessee's business for the purpose for which it was designed and intended and
under and in compliance with applicable laws and all lawful acts, rules,
regulations and orders of any governmental bodies or officers having power to
regulate or supervise the use of such property, except that Lessee may in good
faith and by appropriate proceedings contest the application of any such rule,
regulation or order in any reasonable manner that will not adversely affect the
title of Lessor to any Equipment or subject the same to forfeiture or sale.
Lessee will not permit its rights or interests hereunder to be subject to any
lien, charge or encumbrance and will keep the Equipment free and clear of any
and all liens, charges, encumbrances and adverse claims (except those arising
from acts of Lessor).
12. NET LEASE; LOSS AND DAMAGE
(a) This is a net lease. Lessee assumes all risk of and shall
indemnify Lessor against all damage to and loss of the Equipment from any cause
whatsoever, whether or not such loss or damage is or could have been covered by
insurance. Except as otherwise specifically provided herein, the Lease shall
not terminate and there shall be no abatement, reduction, suspension or
deferment of Interim or Periodic Rental for any reason, including damage to or
loss of the Equipment or any one or more Items. Lessee promptly shall give
Lessor written notice of any material loss or damage, describing completely and
in detail the cause and the extent of loss and damage. At its option, Lessee
shall (i) repair or restore the damaged or lost Items to good condition and
working order; or (ii) replace the damaged or lost Items with similar equipment
in good condition and working order; or (iii) pay Lessor in cash the Stipulated
Loss Value of the damaged or lost Items. Upon Lessee's complying with the
foregoing, Lessor shall pay or cause to be paid over to Lessee the net proceeds
of insurance, if any, with respect to such damage or loss. "Damage" and "loss"
shall include damages and losses of any kind whatsoever including, without
limitation, physical damage and partial or complete destruction, including
intentionally caused damage and destruction, and theft.
(b) If Lessee pays Lessor the Stipulated Loss Value for an Item,
then the Lease shall terminate with respect to that Item, that Item shall no
longer be deemed part of the Equipment and Lessee shall be entitled to retain
the Item. However, it is understood that Lessor makes no representation or
warranty with respect to the Item, and further that Lessor shall have no
obligation to pay any tax with respect thereto. In the event that Lessee pays
Lessor the Stipulated Loss Value for an Item, no further Interim Rental shall
be payable with respect to the Item, and Periodic Rental for the remainder of
the Term shall be reduced by multiplying the Cost of that Item by the Periodic
Rental Rate by the number of months then remaining in the Basic Term.
13. STIPULATED LOSS VALUE
The Stipulated Loss Value of an Item shall be a sum computed by Lessor, which
shall not exceed the amount determined by multiplying the Cost of the Item by
the Stipulated Loss Factor as set forth in the Request to Purchase for the
Lease Year during which the loss of the Item occurs. Stipulated Loss Value is
based on the recovery period specified in the Request to Purchase.
14. OWNERSHIP AND MARKING
Lessee has not and by execution and performance hereof will not have or obtain
any title to the Equipment or any other interest therein except as Lessee
hereunder and subject to all the terms hereof. Title to the Equipment shall at
all times remain in Lessor and Lessee at its expense shall protect and defend
the title of Lessor and keep it free of all claims and liens other than the
rights of Lessee hereunder and claims and liens created by or arising through
Lessor. Lessee will treat this transaction as a lease for tax purposes and
will not claim any credit or deduction inconsistent with Lessor's ownership of
the Equipment. On or before the delivery thereof, Lessee will cause each Item
of Equipment (to the extent practicable and, to the extent not practicable,
then each major component) to be plainly, permanently and conspicuously marked
by stenciling or by a metal tag or plate or decal affixed thereto with the
following legend:
PROPERTY OF AND LEASED FROM METLIFE CAPITAL, LIMITED PARTNERSHIP
10900 N.E. 4TH, SUITE 500 C-97550, BELLEVUE, WASHINGTON 98009
5
<PAGE> 6
Lessee shall replace any such marking which may be removed or destroyed or
become illegible and keep the Equipment free from any markings or labelings
which might be interpreted as a claim of ownership thereof by Lessee or any
other person except Lessor or its assigns.
15. LESSEE'S INDEMNITIES
(a) GENERAL INDEMNITIES. Lessee will defend, indemnify and hold
harmless Lessor from and against any claim, cause of action, damage, liability,
cost or expense (including but not limited to legal fees and costs) which may
be asserted against or incurred in any manner by or for the account of Lessor
or Lessee (i) relating to the Equipment or any part thereof, including without
limitation the manufacture, construction, purchase, delivery, acceptance or
rejection, installation, ownership, sale, leasing, removal or return of the
Equipment, or as a result of the use, maintenance, repair, replacement,
operation or the condition thereof (whether defects are latent or
discoverable); (ii) by reason or as a result of any act or omission of Lessee
for itself; (iii) as a result of claims for patent, trademark or copyright
infringement; or (iv) as a result of product liability claims or claims for
strict liability.
(b) FEDERAL TAX INDEMNITIES. If Lessor shall lose the right to
claim, suffer a disallowance of or be required to recapture all or any portion
of (i) the accelerated cost recovery deductions pursuant to Code Section 168
with respect to the Total Cost for property with recovery period(s) referred to
in the Request to Purchase, then, unless such result is due to Lessor's act or
omission (other than its exercise of remedies after default) or to a loss for
which Lessee pays the Stipulated Loss Value of the affected Equipment, Lessee
shall pay to Lessor on demand a sum equal to the amount of deductions or
credits lost by Lessor as a result of such event, plus the amount of any
interest, penalties and additions to tax payable by Lessor as a result of such
event. The amount of lost deductions and credits to be paid by Lessee pursuant
to this Section shall be computed by Lessor so as to cause Lessor's after-tax
rate of return on investment and after-tax cash flows in respect of the Lease
to equal that which would have been realized by Lessor if such event had not
occurred, but without regard to whether Lessor has or would have had taxable
income sufficient to use the lost deductions or credits.
(c) Lessee shall indemnify Lessor against any and all taxes,
assessments and other charges imposed upon Lessor under the laws of any
federal, state, local or foreign government or taxing authority, as a result of
any payment made by Lessee pursuant to this Section 15.
16. PURCHASE AND RENEWAL OPTIONS
(a) PURCHASE OPTION. Lessee may purchase all, but not less than
all of the Equipment on the last day of the Term or any Renewal Term (the
"Option Date"), for cash, at the Equipment's then Fair Market Value, provided
Lessee is not then in breach or default and that Lessee gives Lessor written
notice of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all Rentals and other sums owing
or to become owing to and including the Option Date, Lessor shall transfer to
Lessee all of Lessor's right, title and interest in the Equipment, in its then
condition, without any representation or warranty other than the warranty that
the Equipment is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an amount agreed
upon by Lessor and Lessee or if such parties are unable to agree prior to the
Option Date, such value shall be determined by an appraiser chosen by mutual
agreement. Lessee shall pay the fees and expenses of the appraiser.
(b) RENEWAL OPTION. At the end of the Term or of a Renewal Term
(the "Option Date"), provided there shall be no breach or default by Lessee or
event which with the giving of notice or passage of time, or both, might mature
into an event of default, Lessee may renew the lease for such additional period
of time (the "Renewal Term") as may be agreed upon by Lessor and Lessee, by
giving Lessor written notice of election to renew at least sixty (60) days
before the Option Date. If Lessor and Lessee do not otherwise agree on the
length of the Renewal Term, it shall be for a period of twelve (12) calendar
months. The rental for the Renewal Term shall be the Equipment's fair market
rental value as of the first day of the Renewal Term. If by the Option Date
the parties do not agree as to the rental, the fair market rental value shall
be determined by an independent appraiser selected by mutual agreement. Lessee
shall pay rental installments based on Lessor's estimate of fair market rental
value until the issue is resolved, at which time appropriate additional
payments or credits shall be made or given. Lessee shall pay the fees and
expenses of the appraiser. All provisions of the Lease shall continue in full
force and effect during a Renewal Term except for the amount of the rental.
6
<PAGE> 7
17. LESSOR MAY PERFORM
If Lessee at any time shall fail to pay to any person any sum which Lessee is
required by the Lease to pay or shall fail to do or perform any other thing
Lessee is required by the Lease to do or perform, Lessor at its option may pay
such sum or do or perform such thing, and Lessee shall reimburse Lessor on
demand for the amount of such payment and for the cost and expense which may be
incurred by Lessor for such acts or performance, together with interest thereon
at the Default Rate from the date of demand until paid.
18. DEFAULT
(a) EVENTS OF DEFAULT. Each of the following shall constitute an
event of default: (i) failure to perform and comply with the provisions and
conditions of Section 8 hereof or to pay any sum, including installments of
rental, on the date when due; (ii) failure to perform and comply with any other
provision or condition of the Lease within thirty (30) days after Lessor shall
have given Lessee written notice of default with respect thereto, or failure to
make good, within thirty (30) days after written notice by Lessor to Lessee,
any representation or warranty, whether made in the Lease or in any
certificate, agreement, instrument or statement, including income and financial
statements, which shall prove to have been incorrect in any material respect
when made; (iii) any event of default occurs with respect to any obligations of
Lessee to Lessor on or with respect to any transactions, debts, undertakings or
agreements other than the Lease; (iv) the failure of Lessee generally to pay
debts as they become due in the ordinary course of business or the filing of
any application for the appointment of a receiver for a major part of Lessee's
assets or the filing of any petition or application by or against Lessee under
any present or future laws for the relief of debtors or for the subjection of
the property of a debtor to the control of any court, tribunal or agency for
the benefit of creditors, including proceedings under the Bankruptcy Code, if
the proceeding commenced by such filing shall not be dismissed within sixty
(60) days from the date of filing; (v) the execution by Lessee of a general
assignment for the benefit of creditors; (vi) the merger, consolidation,
reorganization, conversion to a Subchapter "S" status or dissolution of a
corporate or partnership Lessee, which has a materially adverse effect upon
Lessor's position under the Lease.
(b) EFFECT ON REQUEST TO PURCHASE. Upon the occurrence of an
Event of Default, Lessor shall have no further obligation to Lessee to purchase
Equipment or Items or to lease any thereof to Lessee.
(c) REMEDIES. (i) Upon the occurrence of an event of default as
provided above, Lessor may at its option (1) proceed by appropriate court
action or actions, either at law or in equity, to enforce performance by the
Lessee of the applicable covenants of this Lease or to recover damages for the
breach thereof; or (2) by notice in writing to the Lessee terminate Lessee's
right of possession of the Equipment, whereupon all rights of the Lessee to use
the Equipment shall absolutely cease and terminate, but Lessee shall remain
liable as herein provided. Upon such a termination, Lessee at its expense
shall redeliver the Equipment to Lessor. If Lessee shall fail to do so, Lessor
may retake possession of the Equipment by entering upon any premises at any
reasonable time and thereafter Lessor may hold, possess, sell, upgrade, lease
to others or enjoy the same, free from any right of Lessee, or its successors
or assigns. If Lessor is required to retake possession, Lessee upon demand
shall reimburse Lessor for all costs and expenses relating thereto.
Notwithstanding such redelivery or retaking Lessor shall have a right to
recover from Lessee any and all amounts which under the terms of the Lease may
be then due or which may have accrued to the date of such termination, and also
to recover forthwith from the Lessee its damages for loss of a bargain and not
as a penalty, an amount equal to the higher of Fair Market Value or the
Stipulated Loss Value of the Equipment as of the rent payment date on or next
preceding the date of default, less: (1) the amount Lessor in fact receives
from the sale of the Equipment, after deduction of all estimated expenses of
such sale (Equipment which Lessor is unable to recover shall at Lessor's option
be deemed worthless.) or, (2) at Lessor's election, the present value of the
non-cancellable regularly scheduled rentals receivable from a subsequent lease
of all or part of the Equipment entered into by Lessor (discounted at the
Default Rate), and taking into account only the rentals receivable from the
commencement date of such subsequent lease until the end of the Lease Term
specified in the Request to Purchase for such Equipment. In addition, Lessee
shall be liable to Lessor for all costs and expenses incurred by Lessor by
reason of Lessee's breach or default. In addition to the foregoing, the Lessee
shall be liable for interest on any of the above referenced amounts from and
after the due date at the Default Rate, or the legal limit, whichever is
smaller. (ii) "Lessor's costs and expenses incurred by reason of Lessee's
breach or default" shall include, without limitation, costs and expenses of
receiving or retaking possession of the Equipment, storing, holding,
transporting, insuring,
7
<PAGE> 8
caring for, servicing, maintaining and renting the Equipment or Items and
collecting rents and professional fees and expenses with respect to or incurred
by reason of the breach or default, including legal fees and expenses for
advice and legal services in any actions or proceedings which Lessor may
commence or in which Lessor may appear or participate to exercise or enforce
any rights or remedies or to protect or preserve any rights or interests, and
in all reviews of and appeals from any such actions or proceedings. (iii) The
"Default Rate" of interest shall be a rate per annum computed monthly which
shall be five (5) percentage points above the prime rate, but not greater than
the maximum rate, if any, limited by applicable law.
19. RIGHTS CUMULATIVE
Unless otherwise expressly provided herein, all rights and remedies of Lessor
are concurrent and cumulative. The exercise or partial exercise of any remedy
shall not restrict Lessor from further exercise of that remedy or any other
remedy.
20. SURRENDER
At any time that Lessee is required to deliver the Equipment to Lessor, Lessee
shall immediately cease using the Equipment and at Lessee's expense shall
redeliver and surrender the Equipment to Lessor in good order, condition and
repair, ordinary wear and tear excepted, securely crated and safely packed, at
a place to be designated by Lessor in the State where the Equipment by the
terms of the Request to Purchase is required to be kept, and, if Lessor so
specifies, loaded FOB a common or contract carrier designated by Lessor.
21. HOLDOVER
If Lessee shall not immediately redeliver and surrender any Item of Equipment
to Lessor when required by the terms hereof, Lessee shall pay Lessor, at such
time or times as Lessor may demand, a sum equal to a one-month installment of
Periodic Rental for each calendar month or fraction of a month during which
such failure to redeliver and surrender continues.
22. INSPECTION; REPORTS
Lessor, its agents and employees shall have the right to enter upon any
premises where the Equipment or Items are then located to inspect and examine
the same during normal business hours and at any other times if Lessor
reasonably believes any Items or Lessor's rights are in jeopardy of damage or
loss. So long as Lessee's not in default, Lessor shall give Lessee not less
than twenty-four (24) hours notice of such inspection. Lessee shall
immediately give Lessor written notice of any damage to or loss of the
Equipment or any Items from any cause, including without limitation damage or
loss caused by accident, the elements, intentional acts and theft. Such notice
shall set forth an itemization of the affected Items and a detailed account of
the event, including names of any injured persons and a description of any
damaged property arising from any such event or from any use or operation of
the Equipment or any Items. All rights granted to Lessor herein are for the
benefit of Lessor and shall not be construed to impose any obligation on
Lessor, whether or not Lessor makes any inspections or receives any reports.
23. FINANCIAL AND OTHER DATA
During the Term and any Renewal Term, Lessee: (a) shall furnish Lessor annual
balance sheets and profit and loss statements of Lessee and any guarantor of
Lessee's obligations accompanied, at Lessor's request, by the audit report of
an independent certified public accountant acceptable to Lessor; and (b) at
Lessor's request, shall furnish Lessor all other financial information and
reports reasonably requested by Lessor at any time, including quarterly or
other interim balance sheets and profit and loss statements of Lessee and any
such guarantor. Lessee shall furnish such other information as Lessor may
reasonably request at any times concerning Lessee and its affairs.
24. WARRANTY OF INFORMATION
Lessee warrants that all information furnished and to be furnished to Lessor is
accurate and that all financial statements it has furnished and hereafter may
furnish Lessor, including operating statements and statements of condition, are
and will be prepared in accordance with generally accepted accounting
principles, consistently applied,
8
<PAGE> 9
and reasonably reflect and will reflect, as of their respective dates, results
of the operations and the financial condition of Lessee and any other entity
they purport to cover.
25. NON-WAIVER
Neither the acceptance by Lessor of any payment or any other performance, nor
any act or failure of Lessor to act or to exercise any rights, remedies or
options in any one or more instances shall constitute a waiver of any such
right, remedy or option or of any other then existing or thereafter accruing
right, remedy or option, or of any breach of default then existing or
thereafter occurring. No purported waiver by Lessor of any right, remedy,
option, breach or default shall be binding unless in writing and signed by an
officer of Lessor. A written waiver by Lessor of any right, remedy, option,
breach or default shall not constitute a waiver or any other then existing or
thereafter accruing right, remedy or option or of any other then existing or
thereafter occurring breach or default.
26. NOTICES; PAYMENTS
(a) A written notice may be given: (i) by delivering the same to a
corporate officer of the party to whom it is directed (the "Addressee"), or to
a general partner if the Addressee is a partnership, or to the owner if the
Addressee is a sole proprietorship; or (ii) by mailing the notice to the
Addressee by first class mail, registered or certified, with postage prepaid,
addressed to the Addressee at the address following its name in the opening
paragraph of the Request to Purchase or to such other address as Addressee may
specify by notice in writing given in accordance with this Section. A notice
so mailed shall be deemed given on the third business day following the date of
mailing. A "business day" shall be any day that is not a Saturday or Sunday or
legal holiday.
(b) The Lessee shall make all payments to Lessor at the place
where the notice is to be mailed to Lessor pursuant to subparagraph (a).
Payments are deemed paid when received by Lessor.
27. ASSIGNMENT
(a) Lessee shall not assign the Lease or any rights in or to the
Equipment or Items. Any attempted assignment shall be of no effect, unless
Lessor first shall have consented thereto in writing. Lessor's consent to an
assignment in any one or more instances shall not impose any obligation upon
Lessor to consent to any other or further assignments. Lessor's consent to an
assignment shall not release Lessee from any obligations with respect to the
Lease unless expressly so stated in the written consent.
(b) All rights of Lessor hereunder may be assigned, pledged,
mortgaged, transferred or otherwise disposed of, either in whole or in part,
without notice to Lessee but subject always to the rights of Lessee under this
Lease. If Lessee is given notice of any such assignment, Lessee shall
acknowledge receipt thereof in writing. In the event that Lessor assigns this
Lease or the rent due or to become due hereunder or any other interest herein,
whether as security for any of its indebtedness or otherwise, no breach of
default by Lessor hereunder or pursuant to any other agreement between Lessor
and Lessee, should there be one, shall excuse performance by Lessee of any
provision hereof, it being understood that in no event of such default or
breach by Lessor that Lessee shall pursue any rights on account thereof solely
against Lessor. No such assignee shall be obligated to perform any duty,
covenant or condition requested to be performed by Lessor under the terms of
this Lease.
28. SURVIVAL
The representations warranties, indemnities and agreements of Lessee, and
Lessee's obligations under any and all provisions of the Lease, shall survive
the expiration or other termination of the Lease, shall be binding upon its
successors and assigns and are expressly made for the benefit of and shall be
enforceable by Lessor and its successors and assigns.
29. MISCELLANEOUS
(a) The term "Lessor" shall mean the Lessor named herein and its
successors and assigns.
(b) Whenever the context so requires, any pronoun gender includes
all other genders, and the singular includes the plural. If more than one
person constitute Lessee, whether as a partnership or otherwise, all such
persons are and shall be jointly and severally liable for all agreements,
undertakings and obligations of Lessee.
9
<PAGE> 10
(c) All captions and section, paragraph and other divisions and
subdivisions are for convenience of reference only and shall not affect the
construction, interpretation or meaning of the agreement or Lease or of any of
the provisions thereof.
(d) This Lease shall be governed by and construed according to the
law of the State of Washington.
(e) This Lease shall be binding upon and, except as limited in
Section 27 hereof, shall inure to the benefit of Lessor and Lessee and their
respective successors and assigns.
(f) This lease cannot be cancelled or terminated except as
expressly provided herein.
(g) Wherever Lessor's consent is required hereunder, such consent
will not be unreasonably withheld.
(h) Lessee's obligation to pay or reimburse Lessor for expenses as
provided hereunder shall be limited to reasonable expenses.
30. LESSOR'S DISCLAIMER
Lessee acknowledges and agrees that it has selected both the Equipment of the
type and quantity which is the subject of this Lease and the supplier from whom
Lessor purchased the Equipment. LESSOR MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE DESIGN, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, QUALITY, WORKMANSHIP, OR THE SUITABILITY, ADEQUACY, OPERATION, USE
OR PERFORMANCE OF THE EQUIPMENT OR AS TO ITS MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE. ANY DELAY IN DELIVERY SHALL NOT AFFECT THE VALIDITY OF
THIS LEASE. The Lessee understands and agrees that neither the supplier nor
any salesman or any agent of the supplier is an agent of Lessor. No salesman
or agent of supplier is authorized to waive or alter any term or condition of
this Lease, and no representation as to the Equipment or any other matter by
the supplier shall in any way affect Lessee's duty to pay the rent and perform
its obligations as set forth in this Lease. Lessor shall not be liable to
Lessee for any incidental, consequential, or indirect damages or for any act,
neglect, omission, breach or default by any third party.
31. NO AFFILIATION WITH SUPPLIERS
Lessee warrants that neither it nor any of its officers, directors (if a
corporation) or partners (if a partnership) has, directly or indirectly, a
substantial financial interest in the manufacturer or supplier of any Equipment
except as previously disclosed in writing to Lessor.
32. ENTIRE AGREEMENT.
This Lease and any Requests to Purchase hereto shall constitute the entire
agreement between the parties and shall not be altered or amended except by an
agreement in writing signed by the parties hereto or their successors or
assigns.
IN WITNESS WHEREOF Lessor and Lessee have signed this agreement as of the day
and year first hereinabove written.
LESSOR: LESSEE:
METLIFE CAPITAL, SEITEL GEOPHYSICAL, INC.
Limited Partnership dba Eagle Geophysical
By METLIFE CAPITAL CORPORATION, By: /s/ [illegible signature]
General Partner
Its: President
By:___________________________________
Its: Vice President
10
<PAGE> 11
ADDENDUM NO. ONE
Addendum No. One to that certain Master Equipment Lease Agreement ("Lease")
dated May 20, 1994 by and between MetLife Capital, Limited Partnership
("Lessor") and Seitel Geophysical, Inc. DBA Eagle Geophysical ("Lessee").
Whereas, the parties desire to enter into the Lease provided that this Addendum
No. One is executed contemporaneously therewith;
NOW THEREFORE, it is agreed as follows:
Section 2(c) is amended to include the following at the end of the paragraph:
Notwithstanding anything to contrary herein, Lessee shall not be
responsible for any sums expended or costs and expenses incurred by
Lessor that were not pre-approved in writing by Lessee.
Section 10(b) is amended to include the following at the end of the paragraph:
Notwithstanding the foregoing, Lessor shall only be entitled to the
proceeds of a warranty claim or recovery to the extent such proceeds
reflect cost of repair, restoration or replacement of Equipment, and
Lessee shall retain any proceeds for other costs or damages,
including, without limitations, consequential damages and attorneys'
fees.
Section 15(a) is amended to include the following at the end of the paragraph:
Notwithstanding the above, Lessee shall not be required or obligated
to indemnify Lessor for claims arising solely from the gross
negligence or willful misconduct of Lessor.
Section 15 is amended to include the following additional section:
(d) This Lease assumes that the provisions of the Internal Revenue
Code of 1986 (as enacted October 22, 1986) govern this transaction. In
the event a material adverse change in tax law, including but not
limited to technical corrections, modifications or official
interpretations of the Tax Reform Act of 1986, occurs prior to the
Closing Date, then the rental factor shall be adjusted to preserve the
Lessor's after-tax economics.
Section 18(a)(ii) is amended to include the following:
The word "written" shall be inserted after the phrase fin the Lease or
in any" and before the phrase "certificate, agreement, instrument or
statement".
Section 23(a) is deleted and replaced with the following:
(a) shall furnish Lessor annual balance sheets and profit and loss
statements of Lessee. Additionally, Lessee shall furnish Lessor annual
balance sheets and profit and loss statements of the guarantor of
Lessee's obligations, Seitel, Inc. accompanied at Lessor's request by
the audit report of such guarantor's independent certified public
accountant, Arthur Anderson & Company, or other such independent
certified public accountant reasonably acceptable to Lessor.
1
<PAGE> 12
IN WITNESS WHEREOF, parties have executed this Addendum No. One this 20th day
of May 1994.
LESSOR: LESSEE:
MetLife Capital, Limited Partnership Seitel Geophysical, Inc.
DBA Eagle Geophysical
By: /s/ [illegible signature] By: /s/ [illegible signature]
Its: Sr. Vice President Its: President
By:
Its:
2
<PAGE> 13
Amendment No. One
Amendment No. One to that certain Master Equipment Lease Agreement dated May
20, 1994, ("Agreement") by and between MetLife Capital, Limited Partnership as
Lessor and Seitel Geophysical, Inc. dba Eagle Geophysical as Lessee.
W I T N E S S E T H:
WHEREAS, the parties desire to enter into the Agreement provided that this
Amendment No. One is executed contemporaneously therewith;
NOW THEREFORE, it is agreed as follows:
With respect to this Master Equipment Lease Agreement, the representation and
warranty of Lessee set forth in Paragraph 3(b)(ii) of the Master Equipment
Lease Agreement is hereby amended and restated in its entirety to read as
follows:
3(b)(ii) Lessee will provide Lessor with an accurate list of
all states in which Equipment is located and shall
promptly update this list to reflect any changes or
additions. Provided that Lessor (i) has properly
filed all UCC-1's and/or similar documents that are
required pursuant to the law of the applicable
jurisdiction as set forth on the list provided by
Lessee, and (ii) has filed or will file any and all
required continuation statements and/or similar
documents required by the laws of the applicable
jurisdiction, the security interest granted to Lessor
hereunder will be perfected in accordance with the
requirements of all states in which any item of the
Equipment is located. Lessee hereby notified Lessor
that Equipment is or may be located in the states set
forth on Exhibit "A" which is attached hereto and
incorporated as a part hereof by this reference.
3(b)(iii) Location of Equipment. Lessee will keep the Equipment
located in the states set forth on Exhibit "A" as
such list may be updated from time to time in
accordance with Paragraph 3(b)(ii) above.
3(b)(iv) Condition of Leasing Related to Location of
Equipment. Lessee shall have executed and delivered
to Lessor the Master Equipment Lease Agreement No.
One describing the Equipment, and the location of
such Equipment shall be the states set forth on
Exhibit "A" thereto as such list may be updated from
time to time in accordance with Paragraph 3(b)(ii)
above.
1
<PAGE> 14
3(b)(v) Upon the occurrence of an Event of Default under the
Master Equipment Lease Agreement, Lessee shall
immediately upon Lessor's request provide Lessor with
a current listing of the specific location of each
item of Equipment.
IN WITNESS WHEREOF, the parties have executed this Amendment No. One this 20th
day of May, 1994.
LESSOR: LESSEE:
METLIFE CAPITAL, LIMITED SEITEL GEOPHYSICAL, INC.
PARTNERSHIP DBA EAGLE GEOPHYSICAL
By: MetLife Capital Corporation,
General Partner
By: /s/ [illegible signature] By: /s/ [illegible signature]
Its: Sr. Vice President Its: President
By:
----------------------------------
Its:
---------------------------------
2
<PAGE> 15
Exhibit "A"
This Exhibit "A" is attached to and made part of that Amendment No. One to that
certain Master Equipment Lease Agreement dated May 20, 1994 by and between
MetLife Capital, Limited Partnership as Lessor and Seitel Geophysical, Inc. dba
Eagle Geophysical as Lessee.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------
Description Location Estimated Cost
<S> <C>
- ------------------------------------------------------------------------------------------------------------------
Copiers $4,200.00
- ------------------------------------------------------------------------------------------------------------------
$36,500.00
- ------------------------------------------------------------------------------------------------------------------
1994 Polaris Big Boss 6x6 400L ATV (Qty:3)
- ------------------------------------------------------------------------------------------------------------------
1993 Polaris Big Boss 6x6 350 ATV (Qty:1)
- ------------------------------------------------------------------------------------------------------------------
1994 Polaris 4x4 400L ATV (Qty:2)
- ------------------------------------------------------------------------------------------------------------------
1994 Circle M 16 ft flatbed trailer for use w/ATV's (Qty:3) $3,800.00
- ------------------------------------------------------------------------------------------------------------------
Freight, parts & accessories
- ------------------------------------------------------------------------------------------------------------------
Total Quotation dated 2/1/94
- ------------------------------------------------------------------------------------------------------------------
TM51-35/T-100 galvanized dual axle trailer with 100' heavy duty $13,000.00
aluminum crankup tower (100 ft fixed base antenna mast w/cables)
- ------------------------------------------------------------------------------------------------------------------
One Opseis Eagle recording system 1300 ch complete $3,878,292.00
- ------------------------------------------------------------------------------------------------------------------
750 two-group marsh phone cables $346,850.00
- ------------------------------------------------------------------------------------------------------------------
750 two-group land phone cables $276,700.00
- ------------------------------------------------------------------------------------------------------------------
One Mark Products MGA geophone analyzer $11,000.00
- ------------------------------------------------------------------------------------------------------------------
TOTAL $4,570,342.00
- ------------------------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE> 16
Amendment No. Two
Amendment No. Two to that certain Master Equipment Lease Agreement dated May
20, 1994, ("Agreement") by and between MetLife Capital, Limited Partnership as
Lessor and Seitel Geophysical, Inc. dba Eagle Geophysical as Lessee.
WITNESSETH:
WHEREAS, the parties entered into the Agreement as aforesaid; and
WHEREAS, the parties now desire to amend the Agreement in certain respects;
NOW, THEREFORE, it is agreed as follows:
Exhibit "A" is deleted in its entirety and replaced with the following:
<TABLE>
<CAPTION>
Description Location Cost
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
One Opseis Eagle Telemetry Seismic Data Hwy 59 South $3,852,119.00
Acquisition System Rosenberg, TX 77471
One Belarus Engine and One Newage same as above $5,636.23
Generator
Two 1994 Polaris ATV's, Model W948140- same as above $10,000.00
400, 4x4L
Two 1993 Polaris ATV's Model 938739 Big same as above $11,892.50
Boss, 6x6
Two 1994 Polaris ATV's Model W948740 Big same as above $12,292.50
Boss, 6x6
Helmets, Polaris Plugs, Brushguards, Bumpers same as above $1,169.64
Three 1994 Circle M. Utility Trailers same as above $3,584.16
(750) Cable strings, MJC 20DX 10-395 Land same as above $229,500.00
70%
(750) Cable strings, MJC 20DX 10-395 1K same as above $358,500.00
Marsh
(750) Geophone Connector Assembly same as above $28,585.00
</TABLE>
1
<PAGE> 17
<TABLE>
<S> <C> <C>
One MGA with hardware, Geophone Analyzer same as above $11,366.25
Test Equipment
(1500) Cable, SNGL 20DX 10-395 1 K 901 same as above $48,009.60
Single Marsh Drop with geophones
(141,486) SVL 2-225CB-310/F Gel Cable same as above $134,203.83
(100) 610' Single Drop Cables same as above
(150) Cables SCL 4-50-250-F 610' w/molded same as above
pigtail at 210'
(100) 610' cables SCL 4-50-250/F Gel Wire same as above
w/molded pigtail at 210' ~A" end
(100) cables SCL4-50-250-F Gelled Wire same as above
610'w/molded pigtails
(150) cables SCL4-50-250-F Gelled Wire same as above
610' w/drop pigtail at 210'
(150) cables SCL 4-50-250 Gelled Wire 61 same as above
w/pigtail drops at 210'
(250) Cable, SNGL MP24L3 1.82K 1 MTR same as above $73,908.05
One IFR/A7550 Spectrum Analyzer 107 Corne Road $8,394.35
Broussard, LA 70518
(1500) RM2F/PCR Pigtail Cables, 20' BC8222 same as above $54,071.19
(742) CA-2001 Interconnect CBL, 610' BC- same as above $157,820.60
1009, w/RM2M/PCR, CFM Eagle Conn.
(40) Wireline Opseis Cable Gel Filled at 10020' same as above $17,929.52
w/LTI Connectors
(40) Terminators Cables Gel-Filled at 9" w/L TI same as above
Connectors
(80) B1167 LTI Female connectors same as above
(80) B1143 LTI Male Connectors same as above
TOTAL $5,018,982.42
</TABLE>
2
<PAGE> 18
IN WITNESS WHEREOF, the parties have executed this Amendment No. Two this 16th
day of September, 1994.
LESSOR: LESSEE:
METLIFE CAPITAL, LIMITED SEITEL GEOPHYSICAL, INC.
PARTNERSHIP DBA EAGLE GEOPHYSICAL
By: MetLife Capital Corporation,
General Partner
By: /s/ [illegible signature] /s/ [illegible signature]
Its: Senior Vice President Its: President
3
<PAGE> 19
REQUEST TO PURCHASE ADDENDUM NO. One
THIS ADDENDUM is entered into the 20th day of May, 1994 between
MetLife Capital, Limited Partnership ("Lessor") whose mailing address is
C-97550, Bellevue, Washington 98009 and Seitel Geophysical, Inc. DBA Eagle
Geophysical. ("Lessee") whose address is 50 Briar Hollow Lane West, 7th Floor,
Houston, Texas 77027.
Lessee has requested that Lessor purchase the following items of
personal property (individually, an "Item" and, collectively, the "Equipment")
for the prices and for delivery as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Name and Address Complete Description of Equipment
of Supplier Quantity Price
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
(New unless otherwise specified) See
Attached Schedule, [ ] check if applicable
To be determined
New Opseis Eagle recording system and
ancillary equipment.
----------------------------------------------------------------
TOTAL PRICE $4,275,392.00
----------------------------------------------------------------
FED. EXCISE TAX $
----------------------------------------------------------------
TRANSPORTATION $
----------------------------------------------------------------
OTHER $
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
Date Delivery instructions to be TOTAL COST: $4,275,392.00
Delivery as specified by Lessee
Expected: to be determined to Supplier
- --------------------------- -----------------------------------------------------------------------------------
<S> <C> <C> <C>
Street City County State
</TABLE>
SHIP TO
LESSEE AT: 50 Briar Hollow Lane West, 7th Floor Houston, Harris County Texas
1
<PAGE> 20
Lessee and Lessor AGREE that subject to the conditions and agreements herein
and in the Master Lease referred to below (i) Lessor shall so purchase the
Equipment, (ii) Lessor shall lease the Equipment to Lessee, and (iii) Lessee
shall lease the Equipment from Lessor and perform and comply with the
provisions of this Agreement.
Certain Definitions and Stipulations:
Purchase Cut-Off Date: December 31, 1994
Particular Lease Terms:
Length of Basic Term: Sixty (60) months
Interim Rental Rate: Daily rental factor equivalent
Periodic Rental Rate (for each installment) 1.79636% percent
(%) of Lessor's Cost of the Equipment
Payment Schedule: monthly in advance
Premises where Equipment will be kept: Lessee to provide locations
periodically (see Amendment
No. One to Master Lease)
Lessee warrants and represents that the Equipment is Five (5) year
MACRS property.
The rental factor will be converted to a simple interest
equivalent rate that is then increased or decreased 1% for
each 1% (or pro rata for any fraction of 1 %) change in the
average yield of 3 year U.S. Treasury Notes (as published in
Federal Reserve Statistical Release H.15 [5191]) from the
complete one week period immediately preceding the date of
this proposal and the complete one week period immediately
preceding date of lease closing. The average yield for the
week prior to the proposal was 4.43%
Insurance Required:
Liability. Not less than $1,000,000.00 Combined Single Limit Liability
insurance, including bodily injury and death and property damage,
naming Lessor as additional insured.
Physical Damage. Not less than $4,278,792.00 All risk physical damage
insurance, including loss by burglary, theft, and malicious mischief,
for full replacement value of the equipment, naming Lessor as loss
payee.
Other: N/A
Stipulated Loss Factors:
First Year 102.53604%
Second Year 87.43912%
Third Year 70.87822%
Fourth Year 53.06907%
Fifth Year 34.06900%
*A "Lease Year" is a twelve-month period beginning on the Closing Date or on
any anniversary thereof.
Master Lease: Lessor and Lessee are entering into or have entered into a
Master Equipment Lease Agreement ("Master Lease") dated May 20, 1994. All of
the terms, conditions, agreements and provisions of the Master Lease are
incorporated herein by finis reference and constitute a part of this Addendum.
If there shall be any conflict between any provision of the Master Lease and a
provision of this Addendum, the provision of the Addendum shall govern.
Lessor's Disclaimer: Lessee acknowledges and agrees that it has selected
both the Equipment of the type and quantity which is the subject of this
Addendum and the supplier from whom Lessor purchased the Equipment. LESSOR
MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE DESIGN,
COMPLIANCE WITH SPECIFICATIONS, CONDITION, QUALITY, WORKMANSHIP, OR THE
SUITABILITY, ADEQUACY, OPERATION, USE OR PERFORMANCE OF THE EQUIPMENT OR AS TO
ITS MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. ANY DELAY IN
DELIVERY SHALL NOT AFFECT THE VALIDITY OF THE MASTER LEASE OR THIS ADDENDUM.
The Lessee understands and agrees that neither the supplier nor any salesman
nor any agent of the supplier is authorized to waive or alter any term or
condition of the Master Lease or this Addendum, and no representation as to the
Equipment or any other matter by the supplier shall in any way affect Lessee's
duty to pay the rent and perform its obligations as set forth in the Master
Lease or this Addendum. Lessor shall not be liable to Lessee for incidental,
consequential, or indirect damages or for any act, neglect omission, breach or
default by any third party.
LESSOR: LESSEE:
METLIFE CAPITAL, LIMITED PARTNERSHIP SEITEL GEOPHYSICAL, INC.
DBA EAGLE GEOPHYSICAL
By: MetLife Capital Corporation,
General Partner
By: /s/ [illegible signature] By: /s/ [illegible signature]
Its: Sr. Vice President Its: President
By:
Its:
2
<PAGE> 21
AMENDMENT NO. ONE
AMENDMENT NO. ONE to that certain Master Equipment Lease Agreement
("Lease") dated May 20, 1994 and only with respect to Request to Purchase
Addendum No. One by and between MetLife Capital, Limited Partnership ("Lessor")
and Seitel Geophysical, Inc. DBA Eagle Geophysical ("Lessee").
W I T N E S S E T H
Section 16(a) Purchase Option is deleted in its entirety and replaced with the
following:
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice."
Section 1 6(b) Renewal Option is deleted in its entirety and replaced with the
following:
"At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal option with respect to all but
not less than all the Equipment for a period of Twelve (12) months
beginning with the expiration of the Term at a Periodic Rental Rate of
.85095% per month. At the expiration of this initial Twelve (12) month
renewal period, and provided there shall be no breach or default by
Lessee or event which with the giving of notice or passage of time, or
both, might mature into an event of default, and provided Lessee
notifies Lessor of its election to renew, in writing at least sixty
(60) days prior to the expiration of the initial Twelve (12) month
period, Lessee shall have the right to renew the Lease with respect to
all but not less than all of the Equipment on an annual basis for its
then Fair Market Rental Value as determined below. If the parties
shall not have agreed upon the rental for the renewal period prior to
the commencement thereof, then the fair market value shall be
determined by an independent appraiser selected by mutual agreement;
Lessee shall pay rental installments based on Lessor's estimate of
fair market rental value until the rental is determined by appraisal
or otherwise, at which time appropriate additional payment or credits
shall be made or given. Lessee shall pay the fees and expenses of the
appraiser. All provisions of the Lease shall continue in full force
and effect during the initial Twelve (N) month renewal period and any
subsequent renewal term except for the amount of the rental during any
subsequent renewal term."
1
<PAGE> 22
IN WITNESS WHEREOF, the parties have executed this Amendment No. One this 20th
day of May, 1994.
METLIFE CAPITAL, LIMITED PARTNERSHIP Seitel Geophysical Inc. DBA Eagle
Geophysical
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature] By:
----------------------------------
Its: Sr. Vice President Its:
---------------------------------
2
<PAGE> 23
AMENDMENT NO. TWO
Amendment No. TWO to that certain Request to Purchase Addendum No. One
dated May 20, 1994 ("Agreement") by and between Seitel Geophysical, Inc. dba
Eagle Geophysical as Lessee and MetLife Capital, Limited Partnership as Lessor.
W I T N E S S E T H:
WHEREAS, the parties entered into the Agreement as aforesaid; and
WHEREAS, the parties now desire to amend the Agreement in certain
respects;
NOW, THEREFORE, it is agreed as follows:
The purchase price of the equipment is decreased to $3,852,119.00.
The renewal period stated in Section 16(b) is reduced from twelve (12)
months to eight (8) months.
IN WITNESS WHEREOF, the parties have executed the Amendment No. TWO
this 16th day of September, 1994.
LESSOR: LESSEE:
METLIFE CAPITAL, LIMITED SEITEL GEOPHYSICAL, INC.
PARTNERSHIP DBA EAGLE GEOPHYSICAL
By: MetLife Capital Corporation,
General Partner
By: /s/ [illegible signature] By: /s/ [illegible signature]
Its: Senior Vice President Its: President
1
<PAGE> 24
REQUEST TO PURCHASE ADDENDUM NO. TWO
THIS ADDENDUM is entered into the 20th day of May, 1994 between
MetLife Capital, Limited Partnership ("Lessor") whose mailing address is
C-97550, Bellevue, Washington 98009 and Seitel Geophysical, Inc. DBA Eagle
Geophysical. ("Lessee") whose address is 50 Briar Hollow Lane West, 7th Floor,
Houston, Texas 77027.
Lessee has requested that Lessor purchase the following items of
personal property (individually, an "Item" and, collectively, the "Equipment")
for the prices and for delivery as follows:
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------
Name and Address Complete Description of Equipment
of Supplier Quantity Price
- ---------------------------------------------------------------------------------------------------
<S> <C> <C>
(New unless otherwise specified) See
Attached Schedule, [ ] check if applicable
To be determined
New All Terrain Vehicles, Cable Strings
and attachments
--------------------------------------------------------------
TOTAL PRICE $700,000.00
--------------------------------------------------------------
FED. EXCISE TAX $
--------------------------------------------------------------
TRANSPORTATION $
--------------------------------------------------------------
OTHER $
- ---------------------------------------------------------------------------------------------------
</TABLE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
Date Delivery instructions to be TOTAL COST: $4,275,392.00
Delivery as specified by Lessee
Expected: to be determined to Supplier
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Street City County State
</TABLE>
SHIP TO
LESSEE AT: 50 Briar Hollow Lane West, 7th Floor Houston, Harris County Texas
1
<PAGE> 25
Lessee and Lessor AGREE that subject to the conditions and agreements herein
and in the Master Lease referred to below (i) Lessor shall so purchase the
Equipment, (ii) Lessor shall lease the Equipment to Lessee, and (iii) Lessee
shall lease the Equipment from Lessor and perform and comply with the
provisions of this Agreement.
Certain Definitions and Stipulations:
Purchase Cut-Off Date: December 31, 1994
Particular Lease Terms:
Length of Basic Term: Thirty Six (36) months
Interim Rental Rate: Daily rental factor equivalent
Periodic Rental Rate (for each installment) 2.81507% percent
(%) of Lessor's Cost of the Equipment
Payment Schedule: monthly in advance
Premises where Equipment will be kept: Lessee to provide locations
periodically (see Amendment
No. One to Master Lease)
Lessee warrants and represents that the Equipment is Five (5) year
MACRS property.
The rental factor will be converted to a simple interest
equivalent rate that is then increased or deceased 1% for each
1% (or pro rata for any fraction of 1%) change in the average
yield of 3 year U.S. Treasury Notes (as published in Federal
Reserve Statistical Release H.15 [5191) from the complete one
week period immediately preceding the date of this proposal
and the complete one week period immediately preceding date of
lease closing. The average yield for the week prior to the
proposal was 4.43
Insurance Required:
Liability. Not less than $1,000,000.00 Combined Single Limit Liability
insurance, including bodily injury and death and property damage,
naming Lessor as additional insured.
Physical Damage. Not less than $700,000.00 All risk physical damage
insurance, including loss by burglary, theft, and malicious mischief,
Or full replacement value of the equipment, naming Lessor as loss
payee.
Other: N/A
Stipulated Loss Factors:
First Year 103.2069%
Second Year 75.5369%
Third Year 45.77257%
*A "Lease Year" is a twelve-month period beginning on the Closing Date or on
any anniversary thereof.
Master Lease: Lessor and Lessee are entering into or have entered into a
Master Equipment Lease Agreement ("Master Lease") dated May 20, 1994. All of
the terms, conditions, agreements and provisions of the Master Lease are
incorporated herein Within reference and constitute a part of this Addendum.
If there shall be any conflict between any provision of the Master Lease and a
provision of this Addendum, the provision of the Addendum shall govern.
Lessor's Disclaimer: Lessee acknowledges and agrees that it has selected
both the Equipment of the type and quantity which is the subject of this
Addendum and the supplier from whom Lessor purchased the Equipment LESSOR MAKES
NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE DESIGN, COMPLIANCE
WITH SPECIFICATIONS, CONDITION, QUALITY, WORKMANSHIP, OR THE SUITABILITY,
ADEQUACY, OPERATION, USE OR PERFORMANCE OF THE EQUIPMENT OR AS TO ITS
MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE. ANY DELAY IN DELIVERY
SHAWL NOT AFFECT THE VALIDITY OF THE MASTER LEASE OR THIS ADDENDUM. The Lessee
understands and agrees that neither the supplier nor any salesman nor any agent
of the supplier is authorized to waive or alter any term or condition of the
Master Lease or this Addendum, and no representation as to the Equipment or any
other matter by the supplier shall in any way affect Lessee's dud to pay Me
rent and perform its obligations as set forth in the Master Lease or this
Addendum. Lessor shall not be liable to Lessee for incidental, consequential,
or indirect damages or for any act, neglect omission, breach or default by any
third party.
LESSOR: LESSEE:
METLIFE CAPITAL, LIMITED PARTNERSHIP SEITEL GEOPHYSICAL, INC.
DBA EAGLE GEOPHYSICAL
By: MetLife Capital Corporation,
General Partner
By: /s/ [illegible signature] By: /s/ [illegible signature]
Its: Sr. Vice President Its: President
By:
----------------------------------
Its:
---------------------------------
2
<PAGE> 26
AMENDMENT NO. ONE
AMENDMENT NO. ONE to that certain Master Equipment Lease Agreement
("Lease") dated May 20, 1994 and only with respect to Request to Purchase
Addendum No. Two by and between MetLife Capital, Limited Partnership ("Lessor")
and Seitel Geophysical, Inc. DBA Eagle Geophysical ("Lessee").
W I T N E S S E T H
Section 16(a) Purchase Option is deleted in its entirety and replaced with the
following:
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice."
Section 16(b) Renewal Option is deleted in its entirety and replaced with the
following:
"At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal option with respect to all but
not less than all the Equipment for a period of Twelve (12) months
beginning with the expiration of the Term at a Periodic Rental Rate of
.88102% per month. At the expiration of this initial Twelve (12) month
renewal period, and provided there shall be no breach or default by
Lessee or event which with the giving of notice or passage of time, or
both, might mature into an event of default, and provided Lessee
notifies Lessor of its election to renew, in writing at least sixty
(60) days prior to the expiration of the initial Twelve (12) month
period, Lessee shall have the right to renew the Lease with respect to
all but not less than all of the Equipment on an annual basis for its
then Fair Market Rental Value as determined below. If the parties
shall not have agreed upon the rental for the renewal period prior to
the commencement thereof, then the fair market value shall be
determined by an independent appraiser selected by mutual agreement;
Lessee shall pay rental installments based on Lessor's estimate of
fair market rental value until the rental is determined by appraisal
or otherwise, at which time appropriate additional payment or credits
shall be made or given. Lessee shall pay the fees and expenses of the
appraiser. All provisions of the Lease shall continue in full force
and effect during the initial Twelve (12) month renewal period and any
subsequent renewal term except for the amount of the rental during any
subsequent renewal term."
1
<PAGE> 27
IN WITNESS WHEREOF, the parties have executed this Amendment No. One this 20th
day of May, 1994.
METLIFE CAPITAL, LIMITED PARTNERSHIP Seitel Geophysical Inc. DBA Eagle
Geophysical
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature] By:
----------------------------------
Its: Sr. Vice President Its:
---------------------------------
2
<PAGE> 28
AMENDMENT NO. TWO
Amendment No. TWO to that certain Request to Purchase Addendum No. Two
dated May 20, 1994 ("Agreement") by and between Seitel Geophysical, Inc. dba
Eagle Geophysical as Lessee and MetLife Capital, Limited Partnership as Lessor.
WITNESSETH:
WHEREAS, the parties entered into the Agreement as aforesaid; and
WHEREAS, the parties now desire to amend the Agreement in certain
respects;
NOW, THEREFORE, it is agreed as follows:
The purchase price of the equipment is increased to $1,166,863.42.
Physical Damage insurance must be provided at an amount not less than
$1,166,863.42.
The renewal period stated in Section 16(b) is reduced from twelve (12)
months to eight (8) months.
IN WITNESS WHEREOF, the parties have executed the Amendment No. TWO
this 16th day of September, 1994.
LESSOR: LESSEE:
METLIFE CAPITAL, LIMITED SEITEL GEOPHYSICAL, INC.
PARTNERSHIP DBA EAGLE GEOPHYSICAL
By: MetLife Capital Corporation,
General Partner
By: /s/ [illegible signature] By: /s/ [illegible signature]
Its: Senior Vice President Its: President
1
<PAGE> 29
LEASE CLOSING SCHEDULE
Lessee Name: Seitel Geophysical, Inc. dba Eagle Geophysical
Equipment Lease No.: 1004194
Dated: May 20, 1994
Schedule No.: 001
Closing Date: July 29 , 1994
1. Description of Equipment:
One (1) Opseis Eagle Telemetry Seismic Data Acquisition System
2. Location of Equipment: (Lessee agrees that the Equipment will at all
times remain in the possession and control of Lessee at the
location(s) specified below, and will not be removed without Lessor's
prior written consent.)
Hwy 59 South
Rosenberg, TX 77471
3. Total Equipment Cost: $3,852,119.00
4. Periodic Rent:
The total sum of $4,348,934.40
Dollars in sixty (60) installments of $72,482.24 plus applicable sales
taxes
Dollars each, payable commencing on July 29, 1994 and at monthly
intervals thereafter.
5. Purchase Option
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice.
6. Renewal Option
At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal option with respect to all but
not less than all the Equipment for a period of twelve (12) months
beginning
1
<PAGE> 30
with the expiration of the Term at a Periodic Rental Rate of 0.94081%
per month. At the expiration of this initial twelve (12) month
renewal period, and provided there shall be no breach or default by
Lessee or event which with the giving of notice or passage of time, or
both, might mature into an event of default, and provided Lessee
notifies Lessor of its election to renew, in writing at least sixty
(60) days prior to the expiration of the initial twelve (12) month
period, Lessee shall have the right to renew the Lease with respect to
all but not less than all of the Equipment on an annual basis for its
then Fair Market Rental Value as determined below. If the parties
shall not have agreed upon the rental for the renewal period prior to
the commencement thereof, then the fair market value shall be
determined by an independent appraiser selected by mutual agreement;
Lessee shall pay rental installments based on Lessor's estimate of
fair market rental value until the rental is determined by appraisal
or otherwise, at which time appropriate additional payment or credits
shall be made or given. Lessee shall pay the fees and expenses of the
appraiser. All provisions of the Lease shall continue in full force
and effect during the initial twelve (12) month renewal period and any
subsequent renewal term except for the amount of the rental during any
subsequent renewal term.
7. Insurance Required (All policies to require at lease 10 days' notice
of cancellation to Lessor):
a. Combined Single Limit Liability, including bodily injury and
property damage, of not less than $1,000,000.00 naming Lessor
as additional insured.
b. All risk physical damage, including burglary and theft, for
the full replacement value of the equipment, based on the
original equipment cost of $3,852,119.00 and Loss Payable
Endorsement naming Lessor as loss payee.
c. Other:
8. Stipulated Loss Values:
First Year: 102.7078% Fourth Year: 54.2477%
Second Year: 88.3686% Fifth Year: 34.87919
Third Year: 72.1251%
Accepted and agreed this 27th day of July, 1994 as Schedule No. One to that
certain Master Equipment Lease Agreement dated May 20, 1994 by and between the
parties hereto.
LESSOR: LESSEE:
SEITEL GEOPHYSICAL, INC. DBA EAGLE
METLIFE CAPITAL, LIMITED PARTNERSHIP GEOPHYSICAL
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature]
Its: Vice President
2
<PAGE> 31
LEASE CLOSING SCHEDULE
Lessee Name: Seitel Geophysical, Inc. dba Eagle Geophysical
Equipment Lease No.: 1004194
Dated: May 20, 1994
Schedule No.: 002
Closing Date: July 7, 1994
1. Description of Equipment:
ATV's, Engine and Generator more fully described on the attached
Exhibit "A" herein incorporated by this reference.
2. Location of Equipment: (Lessee agrees that the Equipment will at all
times remain in the possession and control of Lessee at the
location(s) specified below, and will not be removed without Lessor's
prior written consent.)
Hwy 59 South
Rosenberg, TX 77471
3. Total Equipment Cost: $40,990.87
4. Periodic Rent:
The total sum of $42,776.64
Dollars in thirty-six (36) installments of $1,188.24 plus applicable
sales taxes
Dollars each, payable commencing on July 7, 1994 and at monthly
intervals thereafter.
5. Purchase Option
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice.
6. Renewal Option
At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal option with respect to all but
not less than all the Equipment for a period of eight (8) months
beginning with the expiration of the Term at a Periodic Rental Rate of
1.4494% per month. At the expiration of this
1
<PAGE> 32
initial eight (8) month renewal period, and provided there shall be no
breach or default by Lessee or event which with the giving of notice
or passage of time, or both, might mature into an event of default,
and provided Lessee notifies Lessor of its election to renew, in
writing at least sixty (60) days prior to the expiration of the
initial eight (8) month period, Lessee shall have the right to renew
the Lease with respect to all but not less than all of the Equipment
on an annual basis for its then Fair Market Rental Value as determined
below. If the parties shall not have agreed upon the rental for the
renewal period prior to the commencement thereof, then the fair market
value shall be determined by an independent appraiser selected by
mutual agreement; Lessee shall pay rental installments based on
Lessor's estimate of fair market rental value until the rental is
determined by appraisal or otherwise, at which time appropriate
additional payment or credits shall be made or given. Lessee shall pay
the fees and expenses of the appraiser. All provisions of the Lease
shall continue in full force and effect during the initial eight (8)
month renewal period and any subsequent renewal term except for the
amount of the rental during any subsequent renewal term.
7. Insurance Required (All policies to require at lease 10 days' notice
of cancellation to Lessor):
a. Combined Single Limit Liability, including bodily injury and
property damage, of not less than $1,000,000.00 naming Lessor
as additional insured.
b. All risk physical damage, including burglary and theft, for
the full replacement value of the equipment, based on the
original equipment cost of $40,990.87 and Loss Payable
Endorsement naming Lessor as loss payee.
c. Other:
8. Stipulated Loss Values:
First Year: 103.3529%
Second Year: 76.1357%
Third Year: 46.3118%
Accepted and agreed this 25th day of July, 1994 as Schedule No. One to that
certain Master Equipment Lease Agreement dated May 20, 1994 by and between the
parties hereto.
LESSOR: LESSEE:
SEITEL GEOPHYSICAL, INC. DBA EAGLE
METLIFE CAPITAL, LIMITED PARTNERSHIP GEOPHYSICAL
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature]
Its: Vice President
2
<PAGE> 33
This Exhibit "A" is attached to and made a part
of that Lease Closing Schedule for the transaction by and between
MetLife Capital, Limited Partnership as Lessor and
Seitel Geophysical, Inc. dba Eagle Geophysical as Lessee
<TABLE>
<CAPTION>
Vendor/Invoice Equipment Description Equipment Cost
<S> <C> <C>
Diesel Engine Center/L42221 One (1) Belarus Engine, SN 2984267Z 3,370 .00
One (1) Newage Generator, SN C041234/05 1,873 .00
Sales Tax 393 .23
Sammy Broussard's Lawn
& Tractor
3231 One (1) 1994 Polaris ATV, Model W948140-400, 5,000 .00
4x4L, SN 2266344, Engine Model No. 38PL01,
Engine SN 9400147, Ignition Key 3110
3232 One (1) 1994 Polaris ATV, Model W948140-400, 5,000 .00
4x4L, SN 2268384, Engine Model No. 38PL01,
Engine SN 9402472, Ignition Key 3213
3233 One (1) 1993 Polaris ATV, Model W938739 Big 5,946 .25
Boss 6x6, SN 2105475, Engine Model No. 35PL02,
Engine SN 9328787, Ignition Key 3132
3234 One (1) 1993 Polaris ATV, Model W938739 Big 5,946 .25
Boss 6x6, SN 2104563, Engine Model No. 35PL02,
Engine SN 9320918, Ignition Key 3108
3235 One (1) 1994 Polaris ATV, Model W948740 Big 6,146 .25
Boss 6x6, SN 2268972, Engine Model No. 38PL01,
Engine SN 9403930, Ignition Key 3231
3236 One (1) 1994 Polaris ATV, Model W948740 Big 6,146 .25
Boss 6x6, SN 2269645, Engine Model No. 38PL01,
Engine SN 9405790, Ignition Key 3128
N000000 (6) Helmets, Oil, Polaris Plugs, Brushguards, 1,169 .64
Aluminum bumpers
TOTAL 1004194-002 40,990 .87
</TABLE>
3
<PAGE> 34
LEASE CLOSING SCHEDULE
Lessee Name: Seitel Geophysical, Inc. dba Eagle Geophysical
Equipment Lease No.: 1004194
Dated: May 20, 1994
Schedule No.: 003
Closing Date: July 7, 1994
1. Description of Equipment:
Three (3) 1994 Circle M Utility Trailers, 8 x 18 ft long, GVWR 7000
Ibs, VIN #s 1C9US1829RM364019, 1 C9US1825RM364020, 1 C9US1827RM364021
2. Location of Equipment: (Lessee agrees that the Equipment will at all
times remain in the possession and control of Lessee at the
location(s) specified below, and will not be removed without Lessor's
prior written consent.)
Hwy. 59 South
Rosenberg, TX 77471
3. Total Equipment Cost: $3,584.16
4. Periodic Rent:
The total sum of $3,740.40
Dollars in thirty six (36) installments of $103.90
Dollars each, payable commencing on July 7, 1994 and at monthly
intervals thereafter.
5. Purchase Option
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice.
6. Renewal Option
At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal option with respect to all but
not less than all the Equipment for a period of eight (8) months
beginning
1
<PAGE> 35
with the expiration of the Term at a Periodic Rental Rate of 1.4494%
per month. At the expiration of this initial eight (8) month renewal
period, and provided there shall be no breach or default by Lessee or
event which with the giving of notice or passage of time, or both,
might mature into an event of default, and provided Lessee notifies
Lessor of its election to renew, in writing at least sixty (60) days
prior to the expiration of the initial eight (8) month period, Lessee
shall have the right to renew the Lease with respect to all but not
less than all of the Equipment on an annual basis for its then Fair
Market Rental Value as determined below. If the parties shall not have
agreed upon the rental for the renewal period prior to the
commencement thereof, then the fair market value shall be determined
by an independent appraiser selected by mutual agreement; Lessee shall
pay rental installments based on Lessor's estimate of fair market
rental value until the rental is determined by appraisal or otherwise,
at which time appropriate additional payment or credits shall be made
or given. Lessee shall pay the fees and expenses of the appraiser. All
provisions of the Lease shall continue in full force and effect during
the initial eight (8) month renewal period and any subsequent renewal
term except for the amount of the rental during any subsequent renewal
term.
7. Insurance Required (All policies to require at lease 10 days' notice of
cancellation to Lessor):
a. Combined Single Limit Liability, including bodily injury and
property damage, of not less than $1,000,000.00 naming Lessor
as additional insured.
b. All risk physical damage, including burglary and theft, for
the full replacement value of the equipment, based on the
original equipment cost of $3,584.16 and Loss Payable
Endorsement naming Lessor as loss payee.
c. Other:
8. Stipulated Loss Values:
First Year: 103.3529%
Second Year: 76.1357%
Third Year: 46.3118%
Accepted and agreed this 25th day of July, 1994 as Schedule No. Three to that
certain Master Equipment Lease Agreement dated May 20, 1994 by and between the
parties hereto.
LESSOR: LESSEE:
SEITEL GEOPHYSICAL, INC. DBA EAGLE
METLIFE CAPITAL, LIMITED PARTNERSHIP GEOPHYSICAL
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature]
Its: Vice President
2
<PAGE> 36
LEASE CLOSING SCHEDULE
Lessee Name: Seitel Geophysical, Inc. dba Eagle Geophysical
Equipment Lease No.: 1004194
Dated: May 20, 1994
Schedule No.: 004
Closing Date: July 25 ,1994
1. Description of Equipment:
One (1) IFR/A7550 Spectrum Analyzer, SN #2864 8,394 .35
(1,500) RM2F/PCR Pigtail Cables, 20' BC822, 54,071 .19
One (1) Interconnect Cable 610", BC-1009, CFM Eagle Conn. 218 .60
Total $62,684.14
2. Location of Equipment: (Lessee agrees that the Equipment will at all
times remain in the possession and control of Lessee at the
location(s) specified below, and will not be removed without Lessor's
prior written consent.)
107 Corne Road
Broussard, LA 70518
3. Total Equipment Cost: $62,684.14
4. Periodic Rent:
The total sum of $65,480.76
Dollars in thirty six (36) installments of $1,818.91 plus applicable
sales taxes
Dollars each, payable commencing on July 25, 1994 and at monthly
intervals thereafter.
5. Purchase Option
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice.
6. Renewal Option
At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal
1
<PAGE> 37
option with respect to all but not less than all the Equipment for a
period of eight (8) months beginning with the expiration of the Term
at a Periodic Rental Rate of 1.45085% per month. At the expiration of
this initial eight (8) month renewal period, and provided there shall
be no breach or default by Lessee or event which with the giving of
notice or passage of time, or both, might mature into an event of
default, and provided Lessee notifies Lessor of its election to renew,
in writing at least sixty (60) days prior to the expiration of the
initial eight (8) month period, Lessee shall have the right to renew
the Lease with respect to all but not less than all of the Equipment
on an annual basis for its then Fair Market Rental Value as determined
below. If the parties shall not have agreed upon the rental for the
renewal period prior to the commencement thereof, then the fair market
value shall be determined by an independent appraiser selected by
mutual agreement; Lessee shall pay rental installments based on
Lessor's estimate of fair market rental value until the rental is
determined by appraisal or otherwise, at which time appropriate
additional payment or credits shall be made or given. Lessee shall
pay the fees and expenses of the appraiser. All provisions of the
Lease shall continue in full force and effect during the initial eight
(8) month renewal period and any subsequent renewal term except for
the amount of the rental during any subsequent renewal term.
7. Insurance Required (All policies to require at lease 10 days' notice
of cancellation to Lessor):
a. Combined Single Limit Liability, including bodily injury and
property damage, of not less than $1,000,000.00 naming Lessor
as additional insured.
b. All risk physical damage, including burglary and theft, for
the full replacement value of the equipment, based on the
original equipment cost of $62,684.14 and Loss Payable
Endorsement naming Lessor as loss payee.
c. Other:
8. Stipulated Loss Values:
First Year: 103.3568%
Second Year: 76.1471%
Third Year: 46.3144%
Accepted and agreed this 25th day of July, 1994 as Schedule No. One to that
certain Master Equipment Lease Agreement dated May 20, 1994 by and between the
parties hereto.
LESSOR: LESSEE:
SEITEL GEOPHYSICAL, INC. DBA EAGLE
METLIFE CAPITAL, LIMITED PARTNERSHIP GEOPHYSICAL
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature]
Its: Vice President
2
<PAGE> 38
LEASE CLOSING SCHEDULE
Lessee Name: Seitel Geophysical, Inc. dba Eagle Geophysical
Equipment Lease No.: 1004194
Dated: May 20, 1994
Schedule No.: 005
Closing Date: July 25, 1994
1. Description of Equipment:
(750) Cable strings, MIMIC 20DX 10-395 Land 70% $229,500.00
(750) Cable strings, MJC 20DX 10-395 1K Marsh 358,500.00
(750) Geophone Connector Assembly 28,585.00
One (1) MGA with hardware, Geophone Analyzer Test Equip. 11,366.25
Total $627,951.25
2. Location of Equipment: (Lessee agrees that the Equipment will at all
times remain in the possession and control of Lessee at the
location(s) specified below, and will not be removed without Lessor's
prior written consent.)
Hwy 59 South
Rosenberg, TX 77471
3. Total Equipment Cost: $627,951.25
4. Periodic Rent:
The total sum of $655,965.36
Dollars in thirty six (36) installments of $18,221.26 plus applicable
sales taxes
Dollars each, payable commencing on July 25, 1994 and at monthly
intervals thereafter.
5. Purchase Option
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become&.`owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice.
6. Renewal Option
At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal
1
<PAGE> 39
option with respect to all but not less than all the Equipment for a
period of eight (8)months beginning with the expiration of the Term at
a Periodic Rental Rate of 1.45085% per month. At the expiration of
this initial eight (8) month renewal period, and provided there shall
be no breach or default by Lessee or event which with the giving of
notice or passage of time, or both, might mature into an event of
default, and provided Lessee notifies Lessor of its election to renew,
in writing at least sixty (60) days prior to the expiration of the
initial eight (8) month period, Lessee shall have the right to renew
the Lease with respect to all but not less than all of the Equipment
on an annual basis for its then Fair Market Rental Value as determined
below. If the parties shall not have agreed upon the rental for the
renewal period prior to the commencement thereof, then the fair market
value shall be determined by an independent appraiser selected by
mutual agreement; Lessee shall pay rental installments based on
Lessor's estimate of fair market rental value until the rental is
determined by appraisal or otherwise, at which time appropriate
additional payment or credits shall be made or given. Lessee shall pay
the fees and expenses of the appraiser. All provisions of the Lease
shall continue in full force and effect during the initial eight (8)
month renewal period and any subsequent renewal term except for the
amount of the rental during any subsequent renewal term.
7. Insurance Required (All policies to require at lease 10 days' notice
of cancellation to Lessor):
a. Combined Single Limit Liability, including bodily injury and
property damage, of not less than $1,000,000.00 naming Lessor
as additional insured.
b. All risk physical damage, including burglary and theft, for
the full replacement value of the equipment, based on the
original equipment cost of $627,951.25 and Loss Payable
Endorsement naming Lessor as loss payee.
c. Other:
8. Stipulated Loss Values:
First Year: 103.356868%
Second Year: 76.1471%
Third Year: 46.3144%
Accepted and agreed this 25th day of July, 1994 as Schedule No. Five to that
certain Master Equipment Lease Agreement dated May 20, 1994 by and between the
parties hereto.
LESSOR: LESSEE:
SEITEL GEOPHYSICAL, INC. DBA EAGLE
METLIFE CAPITAL, LIMITED PARTNERSHIP GEOPHYSICAL
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature]
Its: Vice President
2
<PAGE> 40
LEASE CLOSING SCHEDULE
Lessee Name: Seitel Geophysical, Inc. dba Eagle Geophysical
Equipment Lease No.: 1004194
Dated: May 20, 1994
Schedule No.: 006
Closing Date: July 29, 1994
1. Description of Equipment:
Multiple cables more fully described on the attached Exhibit "A"
herein incorporated by this reference.
2. Location of Equipment: (Lessee agrees that the Equipment will at all
times remain in the possession and control of Lessee at the
location(s) specified below, and will not be removed without Lessor's
prior written consent.)
Hwy 59 South
Rosenberg, TX 77471
3. Total Equipment Cost: $182,213.43
4. Periodic Rent:
The total sum of $189,961.20
Dollars in thirty six (36) installments of $5,276.70 plus applicable
sales taxes
Dollars each, payable commencing on July 29, 1994 and at monthly
intervals thereafter.
5. Purchase Option
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice.
6. Renewal Option
At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal option with respect to all but
not less than all the Equipment for a period of eight (8) months
beginning with the expiration of the Term at a Periodic Rental Rate of
1.44794% per month. At the expiration of this
1
<PAGE> 41
initial eight (8) month renewal period, and provided there shall be no
breach or default by Lessee or event which with the giving of notice
or passage of time, or both, might mature into an event of default,
and provided Lessee notifies Lessor of its election to renew, in
writing at least sixty (60) days prior to the expiration of the
initial eight (8) month period, Lessee shall have the right to renew
the Lease with respect to all but not less than all of the Equipment
on an annual basis for its then Fair Market Rental Value as determined
below. If the parties shall not have agreed upon the rental for the
renewal period prior to the commencement thereof, then the fair market
value shall be determined by an independent appraiser selected by
mutual agreement; Lessee shall pay rental installments based on
Lessor's estimate of fair market rental value until the rental is
determined by appraisal or otherwise, at which time appropriate
additional payment or credits shall be made or given. Lessee shall pay
the fees and expenses of the appraiser. All provisions of the Lease
shall continue in full force and effect during the initial eight (8)
month renewal period and any subsequent renewal term except for the
amount of the rental during any subsequent renewal term.
7. Insurance Required (All policies to require at lease 10 days' notice of
cancellation to Lessor):
a. Combined Single Limit Liability, including bodily injury and
property damage, of not less than $1,000,000.00 naming Lessor
as additional insured.
b. All risk physical damage, including burglary and theft, for
the full replacement value of the equipment, based on the
original equipment cost of $182,213.43 and Loss Payable
Endorsement naming Lessor as loss payee.
c. Other:
8. Stipulated Loss Values:
First Year: 103.3465%
Second Year: 76.1044%
Third Year: 46.2758%
Accepted and agreed this 28th day of July, 1994 as Schedule No. Three to that
certain Master Equipment Lease Agreement dated May 20, 1994 by and between the
parties hereto.
LESSOR: LESSEE:
SEITEL GEOPHYSICAL, INC. DBA EAGLE
METLIFE CAPITAL, LIMITED PARTNERSHIP GEOPHYSICAL
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature]
Its: Vice President
2
<PAGE> 42
1004194-006 Page 1 of 1
This Exhibit "A" is attached to and made a part
of that Lease Closing Schedule for the transaction by and between
MetLife Capital, Limited Partnership as Lessor and
Seitel Geophysical, Inc. dba Eagle Geophysical as Lessee
<TABLE>
<CAPTION>
Vendor/Invoice Equipment Description Equipment Cost
- -------------- --------------------- --------------
<S> <C> <C>
Geospace Corporation (1500) Cable, SNGL 20DX 10-395 1 K 901 Single 48,009 .60
110938 Marsh Drop with geophones
Steward Cable Repair (141,486) SVL 2-225CB-310/F Gel Cable 134,203.83
5103, 5129, 5147, 5193, (100) 610' Single Drop Cables
5199, 5205, 5220, 5221, (150) Cables SCL 4-50-250-F 610'w/molded pigtail
5225, 5226, 5204, 5247, at 210'
5246, 5245 (100) 610' cables SCL 4-50-250/F Gel Wire
w/molded pigtail at 210'~A" end
(100) cables SCL-4-50-250-F Gelled Wire 610'
w/molded pigtails
(150) cables SCL 4-50-250-F Gelled Wire 610'
w/drop pigtail at 210'
(150) cables SCL 4-50-250 Gelled Wire 610'
w/pigtail drops at 210'
TOTAL 1004194-006 182,213.43
</TABLE>
3
<PAGE> 43
LEASE CLOSING SCHEDULE
Lessee Name: Seitel Geophysical, Inc. dba Eagle Geophysical
Equipment Lease No.: 1004194
Dated: May 20, 1994
Schedule No.: 007
Closing Date: July 29, 1994
1. Description of Equipment:
Multiple cables more fully described on the attached Exhibit "A"
herein incorporated by this reference.
2. Location of Equipment: (Lessee agrees that the Equipment will at all
times remain in the possession and control of Lessee at the
location(s) specified below, and will not be removed without Lessor's
prior written consent.)
107 Corne Road
Broussard, LA
3. Total Equipment Cost: $175,531.52
4. Periodic Rent:
The total sum of $182,995.20
Dollars in thirty six (36) installments of $5,083.20 plus applicable
sales taxes
Dollars each, payable commencing on July 29, 1994 and at monthly
intervals thereafter.
5. Purchase Option
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice.
6. Renewal Option
At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal option with respect to all but
not less than all the Equipment for a period of eight (8) months
beginning with the expiration of the Term at a Periodic Rental Rate of
1.44794% per month. At the expiration of this
1
<PAGE> 44
initial eight (8) month renewal period, and provided there shall be no
breach or default by Lessee or event which with the giving of notice
or passage of time, or both, might mature into an event of default,
and provided Lessee notifies Lessor of its election to renew, in
writing at least sixty (60) days prior to the expiration of the
initial eight (8) month period, Lessee shall have the right to renew
the Lease with respect to all but not less than all of the Equipment
on an annual basis for its then Fair Market Rental Value as determined
below. If the parties shall not have agreed upon the rental for the
renewal period prior to the commencement thereof, then the fair market
value shall be determined by an independent appraiser selected by
mutual agreement; Lessee shall pay rental installments based on
Lessor's estimate of fair market rental value until the rental is
determined by appraisal or otherwise, at which time appropriate
additional payment or credits shall be made or given. Lessee shall pay
the fees and expenses of the appraiser. All provisions of the Lease
shall continue in full force and effect during the initial eight (8)
month renewal period and any subsequent renewal term except for the
amount of the rental during any subsequent renewal term.
7. Insurance Required (All policies to require at lease 10 days' notice of
cancellation to Lessor):
a. Combined Single Limit Liability, including bodily injury and
property damage, of not less than $1,000,000.00 naming Lessor
as additional insured.
b. All risk physical damage, including burglary and theft, for
the full replacement value of the equipment, based on the
original equipment cost of $175,531.52 and Loss Payable
Endorsement naming Lessor as loss payee.
c. Other:
8. Stipulated Loss Values:
First Year: 103.3465%
Second Year: 76.1044%
Third Year: 46.2758%
Accepted and agreed this 28th day of July, 1994 as Schedule No. Three to that
certain Master Equipment Lease Agreement dated May 20, 1994 by and between the
parties hereto.
LESSOR: LESSEE:
SEITEL GEOPHYSICAL, INC. DBA EAGLE
METLIFE CAPITAL, LIMITED PARTNERSHIP GEOPHYSICAL
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature]
Its: Vice President
2
<PAGE> 45
1004194-007 Page 1 of 1
This Exhibit "A" is attached to and made a part
of that Lease Closing Schedule for the transaction by and between
MetLife Capital, Limited Partnership as Lessor and
Seitel Geophysical, Inc. dba Eagle Geophysical as Lessee
<TABLE>
<CAPTION>
Vendor/Invoice Equipment Description Equipment Cost
- -------------- --------------------- --------------
<S> <C> <C>
Tescorp Seimic Products (741) CA-2001 Interconnect CBL, 610' BC-1009, 156,041.58
21113, 21063, 21077, w/RM2M/PCR, CFM Eagle Conn.
21084, 21088, 21101
Steward Cable Repair
5051 (40) Wireline Opseis Cable Gel Filled at 1000' 17,752 .00
w/LTI Connectors
(40) Terminators Cables Gel-Filled at 9"
w/LTI Connectors
(80) B1167 LTI Female Connectors
(80) B1143 LTI Male Connectors
Louisiana Dept of Revenue Sales Tax upfront of 1 % 1,737 .94
TOTAL 1004194007 175,531.52
</TABLE>
3
<PAGE> 46
LEASE CLOSING SCHEDULE
Lessee Name: Seitel Geophysical, Inc. dba Eagle Geophysical
Equipment Lease No.: 1004194
Dated: May 20, 1994
Schedule No.: 008
Closing Date: September 19, 1994
1. Description of Equipment:
Two Hundred fifty (250) Cable, SNGL MP24L3 1.82K 1 MTR
2. Location of Equipment: (Lessee agrees that the Equipment will at all
times remain in the possession and control of Lessee at the
location(s) specified below, and will not be removed without Lessor's
prior written consent.)
Hwy. 59 South
Rosenberg, TX 77471
3. Total Equipment Cost: $73,908.05
4. Periodic Rent:
The total sum of $77,227.20
Dollars in thirty six (36) installments of $2,145.20 plus applicable
sales taxes
Dollars each, payable commencing on September 19, 1994 and at monthly
intervals thereafter.
5. Purchase Option
"Lessee may purchase all, but not less than all of the Equipment on
the last day of the Term (the "Option Date"), for cash, at the
Equipment's then Fair Market Value or Ten percent (10%) of the
original Equipment Cost, whichever is greater, provided Lessee is not
then in breach or default and the Lessee gives Lessor written notice
of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all rentals and other
services owing or to become owing to and including the Option Date,
Lessor shall transfer to Lessee all of Lessor's rights, title and
interest in the Equipment, in its then condition, without any
representation or warranty other than the warranty that the Equipment
is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an
amount agreed upon by Lessor and Lessee or if such parties are unable
to agree prior to the Option Date, such value shall be determined by
an appraiser chosen by mutual agreement. Lessee shall pay the fees and
expenses of the appraiser. If Lessee elects not to purchase the
Equipment on the last day of the Term then lessee shall exercise the
renewal option as stated in paragraph 16(b). At the end of the initial
renewal period stated in paragraph 16(b) or any subsequent renewal
period Lessee may purchase all but not less than all of the Equipment
for cash at the Equipment's then Fair Market Value provided Lessee is
not then in breach or default and gives Lessor at least sixty (60)
days prior written notice.
6. Renewal Option
At the end of the Term, provided there shall be no breach or default
by Lessee or event which with the giving of notice or passage of time,
or both, might mature into event of default and provided Lessee has
not exercised the purchase option as stated above in paragraph 16(a),
then Lessee shall exercise a renewal option with respect to all but
not less than all the Equipment for a period of eight (8) months
beginning with the expiration of the Term at a Periodic Rental Rate of
1.4494% per month. At the expiration of this
1
<PAGE> 47
initial eight (8) month renewal period, and provided there shall be no
breach or default by Lessee or event which with the giving of notice
or passage of time, or both, might mature into an event of default,
and provided Lessee notifies Lessor of its election to renew, in
writing at least sixty (60) days prior to the expiration of the
initial eight (8) month period, Lessee shall have the right to renew
the Lease with respect to all but not less than all of the Equipment
on an annual basis for its then Fair Market Rental Value as determined
below. If the parties shall not have agreed upon the rental for the
renewal period prior to the commencement thereof, then the fair market
value shall be determined by an independent appraiser selected by
mutual agreement; Lessee shall pay rental installments based on
Lessor's estimate of fair market rental value until the rental is
determined by appraisal or otherwise, at which time appropriate
additional payment or credits shall be made or given. Lessee shall pay
the fees and expenses of the appraiser. All provisions of the Lease
shall continue in full force and effect during the initial eight (8)
month renewal period and any subsequent renewal term except for the
amount of the rental during any subsequent renewal term.
7. Insurance Required (All policies to require at lease 10 days' notice of
cancellation to Lessor):
a. Combined Single Limit Liability, including bodily injury and
property damage, of not less than $1,000,000.00 naming Lessor
as additional insured.
b. All risk physical damage, including burglary and theft, for
the full replacement value of the equipment, based on the
original equipment cost of $73,908.05 and Loss Payable
Endorsement naming Lessor as loss payee.
c. Other:
8. Stipulated Loss Values:
First Year: 103.3690%
Second Year: 76.2104%
Third Year: 46.3894%
Accepted and agreed this 16th day of September, 1994 as Schedule No. Three to
that certain Master Equipment Lease Agreement dated May 20, 1994 by and between
the parties hereto.
LESSOR: LESSEE:
SEITEL GEOPHYSICAL, INC. DBA EAGLE
METLIFE CAPITAL, LIMITED PARTNERSHIP GEOPHYSICAL
By: MetLife Capital Corporation By: /s/ [illegible signature]
Its: General Partner Its: President
By: /s/ [illegible signature]
Its: Vice President
2
<PAGE> 48
CORRECTION TO LEASE CLOSING SCHEDULES
1004194-001
1004194-002
1004194-003
1004194-004
1004194-005
1004194-006
1004194-007
1004194-008
September 16, 1994
Mr. Horace A. Calvert
SEITEL GEOPHYSICAL, INC. dba EAGLE GEOPHYSICAL
50 Briar Hollow Lane West, 7th Floor
Houston, TX 77027
Dear Mr. Calvert:
During a recent review of our documentation on transactions 1004194-001 through
1004194-008 for equipment being leased to you we found a discrepancy in the
information presently in our files.
As a result, we are making the following corrections to the Lease Closing
Schedules:
5. Purchase Option. The words "paragraph 16(b)" are replaced with the
words "6. Renewal Option".
Section 6. Renewal Option. The words "paragraph 16(a)" are replaced with the
words "5. Purchase Option".
Accepted and agreed this 16th day of September, 1994.
LESSOR: LESSEE:
METLIFE CAPITAL, LIMITED PARTNERSHIP SEITEL GEOPHYSICAL, INC.
DBA EAGLE GEOPHYSICAL
By: MetLife Capital Corporation,
General Partner
By: By:
Its: Senior Vice President Its: President
3
<PAGE> 1
EXHIBIT 10.6.2
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement (the "Agreement") is entered
into as of the 31st day of December, 1996, between SEITEL GEOPHYSICAL. INC.,
dba, Eagle Geophysical ("Assignor") a Delaware corporation, with its principal
place of business at 50 Briar Hollow Lane West, 7th Floor, Houston, Texas 77027
and EAGLE GEOPHYSICAL. INC. ("Assignee"), a Delaware corporation, with its
principal place of business at 50 Briar Hollow Lane West, 7th Floor, Houston,
Texas 77027.
RECITALS
A. Assignor, as Lessee, has entered into a Master Equipment Lease
Agreement, dated May 20, 1994, and the respective schedules,
amendments, and addendums thereto, (collectively referred to herein as
the "Lease") with MetLife Capital, Limited Partnership, a Delaware
limited partnership ("MetLife"), as Lessor, whereby Assignor has
leased from MetLife: Opseis Eagle Recording System and Ancillary
Equipment; Opseis Eagle Telemetry Seismic Data Acquisition System;
ATV's, Engine and Generator, Three 1994 Circle M Utility Trailers; One
Spectrum Analyzer with Cables; Cable Strings Land/Marsh; MGA with
hardware, Geophone Analyzer Test Equipment; Multiple Cables, all more
fully described in the attached copies of the Lease documents herein
as Exhibit "A" (the "Equipment"). Terms used in the agreement are,
unless defined herein, used as defined in the Lease.
B. Lease documents attached as Exhibit "A". herein incorporated by this
reference, are as follows: Master Equipment Lease Agreement dated
5/20/94; Addendum No. One dated 5/20/94; Amendment No. One dated
5/20/94; Amendment No. Two dated 9/16/94; Request to Purchase Addendum
No. One dated 5/20/94 as amended by Amendment No. One dated 5/20/94
and Amendment No. Two dated 9/16/94; Request to Purchase Addendum No.
Two dated 5/20/94 as amended by Amendment No. One dated 5/20/94 and
Amendment No. Two dated 9/16194; Lease Closing Schedules 001, 002,
003, 004, 005, 006, 007, and 008 dated 7129194, 717194, 717194,
7125194, 7125194, 7129194, 7129194, and 9/19/94, consecutively; and
the 9/16/94 Letter of Correction (collectively referred to herein as
"the Lease").
C. The Assignor wishes to assign to the Assignee, and the Assignee wishes
to accept an assignment from the Assignor, of the Assignor's right,
title and interest in and to the Lease.
D. Pursuant to the terms of the Lease, MetLife's consent to the
assignment of Assignor's interest in the Lease is required. One of the
conditions to MetLife's willingness to give that consent is that the
parties enter into the covenants and make the representations and
warranties set forth in this Agreement.
NOW, THEREFORE, The parties agree as follows:
1. Assignment and Assumption.
Assignor hereby sells, assigns, transfers and sets over unto Assignee
and unto Assignee's successors and assigns, all right, title, and
interest of Assignor under, in and to the Lease. The Assignee hereby
assumes, and covenants with Assignor and MetLife to perform fully, all
the duties of the Assignor under the Lease. It is expressly understood
and agreed that Assignee assumes all such obligations notwithstanding
the fact that some of such obligations may have accrued prior to the
date hereof.
2. Representations and Warranties of Assignee and Assignor.
Assignee and Assignor represent and warrant individually and
respectively as applicable, to MetLife as follows:
a. The Assignee is a corporation duly organized and validly
existing in good standing under the laws of the State of
Delaware and has the power and authority to enter into and
perform its obligations under this Agreement. The execution,
delivery and performance of this Agreement has been duly
1
<PAGE> 2
authorized by all necessary action on the part of the Assignee
and the Assignor, does not require any stockholder approval, or
approval or consent of any general or limited partner, trustee
or holders of any indebtedness or obligations of the Assignee
or Assignor except such as have been duly obtained and does not
and will not contravene any law, judgment, governmental rule,
regulation or order applicable to or binding on the Assignee or
Assignor or any of their subsidiaries or the certificates of
incorporation or bylaws of the Assignee or Assignor or any of
their subsidiaries or contravene the provisions of, or
constitute a default under, or result in the creation of any
lien (other than as permitted under the Lease) upon the
property of the Assignee or Assignor under any indenture,
mortgage, chattel mortgage, deed of trust, conditional sales
contract, bank loan or agreement or instrument, or other
contract or agreement to which the Assignee or Assignor or any
of their subsidiaries are a party or by which they or any of
their subsidiaries may be bound or affected;
b. This agreement constitutes the legal, valid and binding
obligation of the Assignee and Assignor enforceable against
said pa ties in accordance with its terms;
c. Except for the filings and recordings consummated at the time
of execution of the Lease and except for the filing and
recording of this Agreement, no further action, including any
filing or recording of any document, is necessary or advisable
in order to establish and protect MetLife's title to and
interest in the Equipment as against the Assignee, the
Assignor, and any third parties in any applicable
jurisdictions in the United States.
3. Assignor's Continuing Obligation and Guaranty.
Assignor covenants with MetLife that notwithstanding its assignment of
the Lease to the Assignee, Assignor will duly and punctually perform
and observe each and every obligation, covenant, representation,
warranty and agreement to be performed and observed by the Lessee
under the provisions of the Lease, notwithstanding the fact that
Assignee is similarly obligated by the terms of this Agreement to
perform or observe those obligations, covenants, representations or
warranties of Lessee arising pursuant to the terms of the Lease;
provided, however, that Assignor shall have no obligation hereunder to
make any payment to MetLife required by any Lease provision to the
extent that Assignee has satisfied the obligations of the Lessee
arising pursuant to such Lease provision. Except as expressly set
forth in the preceding sentence, Assignor is not released in any
respect from its obligations to MetLife arising under the Lease or
related documents. The Assignor hereby acknowledges and consents that
MetLife may agree with the Assignee to extend the time for making
payments for any or all of the amounts due or to become due under the
Lease and documents executed in conjunction therewith or that the
Lease and documents in conjunction therewith may be changed in any
manner at the option of said Assignee and without Assignor's consent
and that Assignor's obligation to perform in accordance with this
Paragraph 3 shall extend to such agreements as changed in the same
manner as if such changes had been part of the agreements as
originally executed and delivered.
The Assignor hereby absolutely and unconditionally guarantees to
MetLife the full and timely performance by the Assignee of all
obligations whatsoever which the Assignee has incurred or is under or
which the Assignee may at any time incur or be under to MetLife
pursuant to or in connection with any of the transactions contemplated
by the Lease and this Agreement; including but not limited to all
obligations of the Assignee for the payment of money whether by reason
of covenant, indemnity, breach of warranty or otherwise. MetLife shall
not be bound to exhaust their recourse nor to take any other action
against the Assignee or other parties or on any collateral they may
hold before being entitled to payment by the Assignor of all amounts
hereby guaranteed. The Assignor specifically agrees that it shall not
be necessary or required in order to enforce the obligations of the
Assignor hereunder that there be, and specifically waives: notice of
performance or nonperformance of the Lease; demand of payment from the
Assignee; presentment for payment upon Assignee or the making of any
protest; notice of the amount of guaranteed obligations outstanding at
any time; notice of nonpayment or failure to perform on the part of
the Assignee;
2
<PAGE> 3
and any other circumstances which might otherwise constitute a legal
or equitable defense or discharge of a Guarantor.
4. Financial Data. During the term of this Agreement, Assignee will
furnish to MetLife and will cause any guarantor of Assignees
obligations to furnish to MetLife on request (i) annual balance sheet
and profit and loss statements prepared in accordance with generally
accepted accounting principles and practices consistently applied and,
if MetLife so requires, accompanied by the annual audit report of an
independent certified public accountant reasonably acceptable to
MetLife, and (ii) all other financial information and reports that
MetLife may from time to time reasonably request, including, if
MetLife so requires, income tax returns of Assignee and any guarantor
of Assignee's obligations hereunder.
Assignee shall, from time to time, furnish all such information as
MetLife may reasonably request concerning Assignee and its affairs and
shall execute and deliver such documents and perform all such other
acts that MetLife may reasonably request in order to carry out any
transactions contemplated by this Agreement.
5. Miscellaneous.
This Agreement may not be amended without the express written consent
of MetLife. This Agreement supersedes all prior agreements between the
parties relating to the assignment from Assignor to Assignee of the
Assignor's interest in the Lease or the Equipment.
6. Counterparts.
This Agreement may be signed in any number of counterparts required
for the convenience of the parties, all of which when taken together
shall form one and the same Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
ASSIGNOR:
SEITEL GEOPHYSICAL, INC., dba EAGLE GEOPHYSICAL
By /s/ Jay N. Silverman
Its President
By /s/ Marcia H. Kindrick
Its Assistant Secretary
ASSIGNEE:
EAGLE GEOPHYSICAL, INC.
By /s/ Jay N. Silverman
Its President
By /s/ Marcia H. Kindrick
Its Assistant Secretary
3
<PAGE> 4
CONSENT OF METLIFE
On the terms and conditions set forth above, MetLife Capital, Limited
Partnership hereby consents to the assignment by SEITEL GEOPHYSICAL, INC., dba
Eagle Geophysical of its interest under the Lease described above to EAGLE
GEOPHYSICAL, INC. dated this 30th day of December, 1996.
METLIFE CAPITAL, LIMITED PARTNERSHIP
By: MetLife Capital Corporation
Its: General Partner
By /s/ [illegible signature]
Its Vice President
4
<PAGE> 5
[ ] METROPOLITAN LIFE
AND AFFILIATED COMPANIES
MASTER EQUIPMENT LEASE AGREEMENT
METLIFE CAPITAL CORPORATION
THIS AGREEMENT is entered into the 20th day of May, 1994 between METLIFE
CAPITAL, LIMITED PARTNERSHIP ("Lessor") whose address is 10900 N. E. 8th
Street, mailing address C-97550, Bellevue, Washington 98009 and Seitel
Geophysical, Inc. d/v/a Eagle Geophysical ("Lessee") whose address is 50 Briar
Hollow Lane West, 7th Floor, Houston, Texas 77027, Lessor and Lessee from time
to time may enter into written agreements in the form of "Request to Purchase
Addenda" for the purchase by Lessor of equipment and leasing of such equipment
to Lessee. To facilitate such transactions, Lessor and Lessee are entering
into this Master Equipment Lease Agreement (the "Master Lease"), the terms and
provisions of which shall be incorporated by reference in each such Request to
Purchase, and they MUTUALLY AGREE AS FOLLOWS:
1. REQUEST TO PURCHASE
If Lessor agrees to acquire and lease equipment when requested by Lessee, the
parties shall sign a Request to Purchase Addendum ("Request to Purchase")
setting forth the particulars regarding the transaction, including, without
limitation, the list of items of equipment (individually, an "Item" and,
collectively, the "Equipment"), the prices of each Item (including disclosure
of all rebates, discounts and other incentives received or receivable with
respect thereto), "Related Costs," including taxes, transportation,
installation and other applicable costs, the aggregate of the foregoing ("Total
Cost"), length of the Basic Term, rental rates and other applicable provisions.
"Cost of an Item" shall mean the price of the Item plus its applicable portion
of Related Costs. In the absence of a signed Request to Purchase, this Master
Lease shall not constitute a lease or a commitment by either party to enter
into a lease.
2. PURCHASE; ACCEPTANCE
(a) REQUEST; SPECIFICATIONS. Signing a Request to Purchase shall
constitute the request from Lessee to Lessor to purchase the Equipment, and the
Request to Purchase and this Master Lease shall constitute the lease and
agreement (the "Lease") regarding the Equipment. Lessee will assign to Lessor
purchase orders or agreements issued or entered into by Lessee for the
Equipment, or Lessor shall issue Lessor's purchase orders to the suppliers of
the Equipment, as Lessor at the time shall deem appropriate, all in form and
substance satisfactory to Lessor. At the time of signing the Request to
Purchase, Lessee shall furnish Lessor detailed specifications
("Specifications") for the purchase of the Items, including descriptions,
prices, delivery terms and instructions, installation provisions and all other
applicable specifications. Lessee assumes full responsibility with respect to
the selection of Items supplied for lease and the specification thereof; the
Lessor shall have no liability or responsibility with respect thereto
regardless of whether the specifications prove inadequate for the intended
purpose or use.
(b) INSPECTION; ACCEPTANCE. It is Lessee's responsibility to
receive and promptly inspect and test each Item tendered for delivery by a
supplier and the installation thereof. Lessee shall give Lessor written notice
of acceptance of an Item as soon as it can be determined that the Item and its
installation are in compliance with Specifications. As between Lessee and
Lessor, the giving of such written notice shall constitute Lessee's irrevocable
acceptance of the Item or Items designated in the notice, whether or not such
items or their installation or Lessor's title to the same are defective in any
respect, and notwithstanding any failure of an Item or its installation to
conform to Specifications, without prejudice however to rights which Lessor and
Lessee, or either of them, may have against any other person, whether with
respect to design, manufacture, condition or otherwise.
(c) PURCHASE CUT-OFF DATE. If, by the "Purchase Cut-Off Date" set
forth in a Request to Purchase, Lessee shall not have given Lessor written
notice of acceptance of an Item, Lessor shall have no obligation to purchase
the Item or to lease it to Lessee. In such event, Lessee shall immediately pay
all accrued interim Rental and reimburse Lessor for all sums Lessor may have
paid for or with respect to the Item and for all Lessor's costs and expenses
with respect thereto, and Lessee shall indemnify and defend Lessor against and
hold Lessor harmless from any and all cost, expense, loss, liability and damage
that Lessor may suffer or that may be asserted against Lessor by reason of
Lessor's failure or refusal to purchase such Item. Any such item shall be
deemed to be deleted from the Request to Purchase and no longer included in the
Equipment.
5
<PAGE> 6
(d) CONDITIONS. Lessee shall deliver to Lessor such further
instruments, documents and certifications as Lessor reasonably may request,
including without limitation evidences of authority (e.g., corporate
certificates, corporate resolutions, partnership documents and authorizations),
evidence of insurance, purchase orders and acceptances thereof, purchase and
sale agreements and financial information, and instruments and documents to
implement, perfect or continue the perfection of Lessor's rights and remedies
as owner and Lessor of the Equipment, including Uniform Commercial Code forms.
Notwithstanding the execution, delivery or filing of any instruments or
documents, it is agreed that this transaction is a lease and is not intended as
security. Lessee's delivery of the foregoing and of the Specifications are
conditions precedent to any obligation of Lessor to purchase or to make any
commitments to purchase or pay for the Equipment or any item.
(e) SUPPLEMENTAL LEASE SCHEDULE. If at any time prior to the
Closing Date Lessee requests Lessor to add further Items to the Equipment, and
if Lessor so agrees, Lessee shall execute a Supplemental Request to Purchase in
a form supplied by Lessor, which shall become part of the Request to Purchase,
subject to all of its provisions and the provisions of this Master Lease, and
the equipment specified therein shall be Items of Equipment under the Lease.
If at any time after the Closing Date Lessee requests Lessor to add further
Items to the Equipment, and if Lessor so agrees, Lessee shall execute an
additional Request to Purchase Addendum, amending the Lease to include such
Items as part of the equipment and setting forth the particulars with respect
thereto. The Basic Term with respect to all Equipment, including Items covered
by a Supplemental Lease Schedule, shall terminate in accordance with the
provisions of the original Request to Purchase.
(f) CLOSING. Following the date ("Closing Date") which is the
earlier of (i) the date Lessee gives Lessor written notice of acceptance of the
last Item or (ii) the Purchase Cut-Off Date (or on such other day as is
mutually agreed), Lessor shall send Lessee a Closing Schedule, setting forth
any adjustments to descriptions and Costs of Items and Total Cost and
confirming the Closing Date and amount of Periodic Rental installments and
payment schedules. Such Closing Schedule and the facts and determinations set
forth therein shall be conclusive unless, within sixty (60) days after the
Closing Schedule is sent by Lessor to Lessee, Lessee shall give Lessor written
notice specifying any claimed error therein. Notwithstanding any such notice,
Lessee shall pay all rentals as they become due. If Lessee establishes an
error that affects the amount of rentals, Lessor shall give Lessee a credit for
any overpayment of rentals, and Lessee promptly shall pay Lessor any
underpayments.
3. LESSEE'S WARRANTIES
(a) Lessee represents and warrants to Lessor that it is a
corporation or partnership duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization and that it is
qualified to do business in every jurisdiction where the failure to qualify
would have a materially adverse effect on Lessor's rights hereunder; it has
taken all corporate or partnership action which may be required to authorize
the execution, delivery and performance of this Lease, and such execution,
delivery and performance will not conflict with or violate any provision of its
Charter or Articles or Certificate of Incorporation, By-laws or any provisions
thereof, or in the case of a partnership, its Certificate of Partnership or
Limited Partnership and its Partnership Agreement, or result in a default or
acceleration of any obligation under any agreement, order, decree or judgment
to which it is a party or by which it is bound, nor is it now in default under
any of the same; there is no litigation or proceeding pending or threatened
against it which may have a materially adverse effect on Lessee or which would
prevent or hinder the performance by it of its obligation hereunder; this lease
and the attendant documents constitute valid obligations of the Lessee, binding
and enforceable against it in accordance with their respective terms; no action
by or with any commission or administrative agency is required in connection
herewith; it has the power to own its assets and to transact business in which
it is engaged; it will give to Lessor prompt notice of any change in its name,
identity or structure.
(b) Lessee's written acceptance of an Item and its installation
shall constitute a REPRESENTATION AND WARRANTY BY Lessee to Lessor that: (i)
the Item is personal property in good order and condition and, unless Lessor
otherwise agrees in writing, has not been used prior to the time of such
written notice of acceptance, the Equipment does not constitute "imported
property covered by an Executive order" as defined in Section 168(g)(6) of the
Internal Revenue Code of 1986 ("Code"), and that the recovery period set forth
in the Request to Purchase is the period applicable under the Code to the
Equipment; and (ii) at all times Lessee shall keep the Equipment in Lessee's
possession at the address specified in the Request to Purchase unless Lessor
shall otherwise consent in writing. Lessee shall not cause, suffer or permit
any Item to be attached or affixed to real property or improvements
6
<PAGE> 7
thereon (collectively, "Realty") unless Lessor first shall consent thereto in
writing and Lessee shall have obtained from all persons having any interest in
the Realty written consents which approve such attachment, waive any claims to
or encumbrances upon attached Items and consent to the detachment and removal
of such Items at any time by Lessor or Lessee. Notwithstanding attachment of
any Items to Realty, all the Equipment at all times shall be and remain
personal property. Upon termination of Lessee's right to possession of the
Equipment, whether by expiration of the Term or otherwise, Lessee at its sole
cost and expense shall detach and remove the Equipment from the Realty and save
Lessor harmless from and indemnify and defend Lessor against any claim, demand,
loss, liability, and damage arising from such detachment, removal or both.
4. TERM OF LEASE
The term of the Lease ("Term") shall consist of an "Interim Term" and a "Basic
Term." The Interim Term shall begin on the date that Lessee first gives Lessor
written notice of acceptance of an Item or written approval for partial
payment, whichever is earlier, and shall continue until the time the Basic Term
begins. The Basic Term shall begin on the Closing Date and shall continue for
the length of the Basic Term set forth in the Request to Purchase.
5. INTERIM RENTAL
During the Interim Term, Lessee shall pay rent monthly ("Interim Rental"), on a
calendar month basis, in an amount determined by Lessor by applying the
"Interim Rental Rate" set forth in the Request to Purchase to portions of the
Total Cost then or theretofore expended by Lessor, for the number of days such
sums are outstanding during such calendar month. The "prime rate" referred to
in this Lease shall mean the rate per annum announced by Chase Manhattan Bank,
New York City, from time to time as its prime rate, whether or not such rate is
applied by said bank to any then outstanding loans, changing with each
announced change of such prime rate. Lessee shall pay Lessor each installment
of Interim Rental on the fifteenth day after the end of such calendar month.
6. PERIODIC RENTAL
Lessee shall pay rent ("Periodic Rental") for the Basic Term in an amount
calculated by multiplying the Total Cost by the Periodic Rental Rate set forth
in the Request to Purchase multiplied by the number of months constituting the
length of the Basic Term. Lessee shall pay installments of Periodic Rental to
Lessor in accordance with the payment schedule set forth in the Request to
Purchase.
7. LATE PAYMENT
If any installment of rent or other sum owing under the Lease shall not be paid
when due and shall remain unpaid for ten (10) days, Lessee shall pay Lessor a
late charge equal to five percent (5%) of the amount delinquent, but in no
event at a rate greater than limited by any applicable law. Such late charge
is in addition to and not in lieu of other rights and remedies Lessor may have.
8. INSURANCE
Lessee shall procure and continuously maintain and pay for (a) all risk
physical damage insurance covering loss or damage to the Equipment for not less
than the full replacement value thereof naming Lessor as Loss Payee and (b)
bodily injury and property damage combined single limit liability insurance
naming Lessor as Additional Insured, all in such amounts and against such risks
and hazards as are set forth in the Request to Purchase, with insurance
companies and pursuant to contract or policies and with deductibles thereon
satisfactory to Lessor. All contracts and policies shall include provisions
for the protection of Lessor notwithstanding any act or neglect of or breach or
default by Lessee, shall provide that they may not be modified, terminated or
cancelled unless Lessor is given at least ten (10) days' advance written notice
thereof, and shall provide that the coverage is "primary coverage" for the
protection of Lessee or Lessor notwithstanding any other coverage carried by
Lessee or Lessor protecting against similar risks. Lessee shall promptly
notify any appropriate insurer and Lessor of each and every occurrence which
may become the basis of a claim or cause of action against the insureds and
provide Lessor with all data pertinent to such occurrence. Lessee shall
furnish Lessor with certificates of such insurance or copies of policies upon
request, and shall furnish Lessor with renewal certificates not less than ten
(10) days prior to the renewal date. Proceeds of all insurance shall be
payable first to Lessor to the extent of its liability or interest as the case
may be.
7
<PAGE> 8
9. TAXES
Lessee shall pay or reimburse Lessor for the payment of all taxes, fees,
assessments and other governmental charges of whatsoever kind or character and
by whomsoever payable on or relating to any Item of Equipment or the sale,
purchase, ownership, use, value, value added, possession, shipment,
transportation, delivery or operation thereof or the exercise of any option,
election or performance of any obligation by Lessee hereunder, which may accrue
or be levied, assessed or imposed during the Term and any Renewal Term or which
remain unpaid as of the date of surrender of such Item to Lessor, and all taxes
of any kind imposed by any federal, state, local or foreign taxing authority
against Lessor on or measured by any amount payable by Lessee hereunder,
including, without limitation, all license and registration fees and all sales,
use, value, ad valorem, personal property, excise, gross receipts, stamp or
other taxes, imposts, duties and charges together with any penalties, fines or
interest thereon, except taxes of Lessor on net income imposed by the United
States or any state. Lessee shall reimburse Lessor for any payments made by
Lessor which are the obligation of Lessee under the Lease, but Lessee shall not
be obligated to pay any amount under this Section so long as it shall in good
faith and by appropriate proceedings contest the validity or the amount
thereof, unless such contest would adversely affect the title of Lessor to any
Item of Equipment or would subject any Item to forfeiture or sale. Lessee
shall indemnify Lessor on an after-tax basis against any loss, claim, demand
and expense, including legal expense, resulting from such nonpayment or
contest, and further agrees to indemnify Lessor against any and all taxes,
assessments and other charges imposed upon Lessor under the laws of any
federal, state, local or foreign government or taxing authority, as a result of
any payment made by Lessee pursuant to this Section. Whenever this lease
terminates as to any Item, Lessee will, on request, advance to Lessor the
amount estimated by Lessor to equal personal property taxes on the Item which
are not yet payable but for which Lessee will afterward become liable
hereunder; Lessor will account to Lessee for such advances. On request of
either Lessor or Lessee, the other will submit written evidence of all payments
required of it under this section.
10. MAINTENANCE, ETC.
(a) Lessee at its expense at all times shall: (i) keep the
Equipment in good and efficient working order, condition and repair, ordinary
wear and tear excepted, and make all inspections and repairs, including
replacement of worn parts, to effect the foregoing and to comply with
requirements of laws, regulations, rules and provisions and conditions of
insurance policies; and (ii) pay all costs, expenses, fees and charges incurred
in connection with the use or operation of the Equipment and of each Item,
including but not limited to repairs, maintenance, storage and servicing.
Lessee shall not make any alterations, substitutions, improvements or additions
to the Equipment or Items, except those required in order to comply with laws,
regulations, rules and insurance policies, unless Lessor first shall have
consented thereto in writing. Notwithstanding any consent by Lessor, Lessee
shall pay all costs and expenses of the foregoing. All replacements, repairs,
improvements, alterations, substitutions and additions shall constitute
accessions to the Equipment and title thereto shall vest in Lessor.
(b) Lessor hereby transfers and assigns to Lessee, for so long
during the Term and any Renewal Term as Lessee is not in default, Lessor's
right, title and interest in, under and to any assignable factory and dealer
warranty, whether express or implied, with respect to the Equipment. All
claims and actions upon any warranty shall be made and prosecuted by Lessee at
its sole cost and expense. Lessor shall have no obligation to make or
prosecute any claim upon or under a warranty. So long as Lessee shall not be
in default, Lessor shall cooperate with Lessee with respect to a claim on a
non-assignable warranty, at Lessee's expense. Lessee shall have proceeds of a
warranty claim or recovery paid to Lessor. Lessor shall make such proceeds
available for any repair, restoration or replacement to correct such warranted
condition. Excess proceeds shall be used to reduce Lessee's Lease obligations.
11. USE
So long as Lessee shall not be in default, Lessee shall be entitled to the
possession, use and quiet enjoyment of the Equipment during the Term and any
Renewal Term in accordance with the terms of the Lease. Unless a purchase
option is exercised, Lessee shall deliver and surrender the Equipment to Lessor
at the end of the Term or Renewal Term in accordance with paragraph 20, hereof.
Lessee warrants that the Equipment will at all times be used and operated
solely in the conduct of Lessee's business for the purpose for which it was
designed and intended and under and in compliance with applicable laws and all
lawful acts, rules, regulations and orders of any governmental bodies or
officers having power to regulate or supervise the use of such property, except
that Lessee may in good faith and by appropriate proceedings contest the
application of any such rule, regulation or order in any reasonable manner
8
<PAGE> 9
that will not adversely affect the title of Lessor to any Equipment or subject
the same to forfeiture or sale. Lessee will not permit its rights or interests
hereunder to be subject to any lien, charge or encumbrance and will keep the
Equipment free and clear of any and all liens, charges, encumbrances and
adverse claims (except those arising from acts of Lessor).
12. NET LEASE; LOSS AND DAMAGE
(a) This is a net lease. Lessee assumes all risk of and shall
indemnify Lessor against all damage to and loss of the Equipment from any cause
whatsoever, whether or not such loss or damage is or could have been covered by
insurance. Except as otherwise specifically provided herein, the Lease shall
not terminate and there shall be no abatement, reduction, suspension or
deferment of Interim or Periodic Rental for any reason, including damage to or
loss of the Equipment or any one or more Items. Lessee promptly shall give
Lessor written notice of any material loss or damage, describing completely and
in detail the cause and the extent of loss and damage. At its option, Lessee
shall (i) repair or restore the damaged or lost Items to good condition and
working order; or (ii) replace the damaged or lost Items with similar equipment
in good condition and working order; or (iii) pay Lessor in cash the Stipulated
Loss Value of the damaged or lost Items. Upon Lessee's complying with the
foregoing, Lessor shall pay or cause to be paid over to Lessee the net proceeds
of insurance, if any, with respect to such damage or loss. "Damage" and "loss"
shall include damages and losses of any kind whatsoever including, without
limitation, physical damage and partial or complete destruction, including
intentionally caused damage and destruction, and theft.
(b) If Lessee pays Lessor the Stipulated Loss Value for an Item,
then the Lease shall terminate with respect to that Item, that Item shall no
longer be deemed part of the Equipment and Lessee shall be entitled to retain
the Item. However, it is understood that Lessor makes no representation or
warranty with respect to the Item, and further that Lessor shall have no
obligation to pay any tax with respect thereto. In the event that Lessee pays
Lessor the Stipulated Loss Value for an Item, no further Interim Rental shall
be payable with respect to the Item, and Periodic Rental for the remainder of
the Term shall be reduced by multiplying the Cost of that Item by the Periodic
Rental Rate by the number of months then remaining in the Basic Term.
13. STIPULATED LOSS VALUE
The Stipulated Loss Value of an Item shall be a sum computed by Lessor, which
shall not exceed the amount determined by multiplying the Cost of the Item by
the Stipulated Loss Factor as set forth in the Request to Purchase for the
Lease Year during which the loss of the Item occurs. Stipulated Loss Value is
based on the recovery period specified in the Request to Purchase.
14. OWNERSHIP AND MARKING
Lessee has not and by execution and performance hereof will not have or obtain
any title to the Equipment or any other interest therein except as Lessee
hereunder and subject to all the terms hereof. Title to the Equipment shall at
all times remain in Lessor and Lessee at its expense shall protect and defend
the title of Lessor and keep it free of all claims and liens other than the
rights of Lessee hereunder and claims and liens created by or arising through
Lessor. Lessee will treat this transaction as a lease for tax purposes and
will not claim any credit or deduction inconsistent with Lessor's ownership of
the Equipment. On or before the delivery thereof, Lessee will cause each Item
of Equipment (to the extent practicable and, to the extent not practicable,
then each major component) to be plainly, permanently and conspicuously marked
by stenciling or by a metal tag or plate or decal affixed thereto with the
following legend:
PROPERTY OF AND LEASED FROM METLIFE CAPITAL, LIMITED PARTNERSHIP
10900 N.E. 4TH, SUITE 500 C-97550, BELLEVUE, WASHINGTON 98009
Lessee shall replace any such marking which may be removed or destroyed or
become illegible and keep the Equipment free from any markings or labelings
which might be interpreted as a claim of ownership thereof by Lessee or any
other person except Lessor or its assigns.
15. LESSEE'S INDEMNITIES
9
<PAGE> 10
(a) GENERAL INDEMNITIES. Lessee will defend, indemnify and hold
harmless Lessor from and against any claim, cause of action, damage, liability,
cost or expense (including but not limited to legal fees and costs) which may
be asserted against or incurred in any manner by or for the account of Lessor
or Lessee (i) relating to the Equipment or any part thereof, including without
limitation the manufacture, construction, purchase, delivery, acceptance or
rejection, installation, ownership, sale, leasing, removal or return of the
Equipment, or as a result of the use, maintenance, repair, replacement,
operation or the condition thereof (whether defects are latent or
discoverable); (ii) by reason or as a result of any act or omission of Lessee
for itself; (iii) as a result of claims for patent, trademark or copyright
infringement; or (iv) as a result of product liability claims or claims for
strict liability.
(b) FEDERAL TAX INDEMNITIES. If Lessor shall lose the right to
claim, suffer a disallowance of or be required to recapture all or any portion
of (i) the accelerated cost recovery deductions pursuant to Code Section 168
with respect to the Total Cost for property with recovery period(s) referred to
in the Request to Purchase, then, unless such result is due to Lessor's act or
omission (other than its exercise of remedies after default) or to a loss for
which Lessee pays the Stipulated Loss Value of the affected Equipment, Lessee
shall pay to Lessor on demand a sum equal to the amount of deductions or
credits lost by Lessor as a result of such event, plus the amount of any
interest, penalties and additions to tax payable by Lessor as a result of such
event. The amount of lost deductions and credits to be paid by Lessee pursuant
to this Section shall be computed by Lessor so as to cause Lessor's after-tax
rate of return on investment and after-tax cash flows in respect of the Lease
to equal that which would have been realized by Lessor if such event had not
occurred, but without regard to whether Lessor has or would have had taxable
income sufficient to use the lost deductions or credits.
(c) Lessee shall indemnify Lessor against any and all taxes,
assessments and other charges imposed upon Lessor under the laws of any
federal, state, local or foreign government or taxing authority, as a result of
any payment made by Lessee pursuant to this Section 15.
16. PURCHASE AND RENEWAL OPTIONS
(a) PURCHASE OPTION. Lessee may purchase all, but not less than
all of the Equipment on the last day of the Term or any Renewal Term (the
"Option Date"), for cash, at the Equipment's then Fair Market Value, provided
Lessee is not then in breach or default and that Lessee gives Lessor written
notice of election to purchase at least sixty (60) days prior to the Option
Date. Upon payment of the purchase price and all Rentals and other sums owing
or to become owing to and including the Option Date, Lessor shall transfer to
Lessee all of Lessor's right, title and interest in the Equipment, in its then
condition, without any representation or warranty other than the warranty that
the Equipment is not subject to any liens resulting from acts of Lessor. For
purposes of this Lease, the term "Fair Market Value" shall be an amount agreed
upon by Lessor and Lessee or if such parties are unable to agree prior to the
Option Date, such value shall be determined by an appraiser chosen by mutual
agreement. Lessee shall pay the fees and expenses of the appraiser.
(b) RENEWAL OPTION. At the end of the Term or of a Renewal Term
(the "Option Date"), provided there shall be no breach or default by Lessee or
event which with the giving of notice or passage of time, or both, might mature
into an event of default, Lessee may renew the lease for such additional period
of time (the "Renewal Term") as may be agreed upon by Lessor and Lessee, by
giving Lessor written notice of election to renew at least sixty (60) days
before the Option Date. If Lessor and Lessee do not otherwise agree on the
length of the Renewal Term, it shall be for a period of twelve (12) calendar
months. The rental for the Renewal Term shall be the Equipment's fair market
rental value as of the first day of the Renewal Term. If by the Option Date
the parties do not agree as to the rental, the fair market rental value shall
be determined by an independent appraiser selected by mutual agreement. Lessee
shall pay rental installments based on Lessor's estimate of fair market rental
value until the issue is resolved, at which time appropriate additional
payments or credits shall be made or given. Lessee shall pay the fees and
expenses of the appraiser. All provisions of the Lease shall continue in full
force and effect during a Renewal Term except for the amount of the rental.
17. LESSOR MAY PERFORM
If Lessee at any time shall fail to pay to any person any sum which Lessee is
required by the Lease to pay or shall fail to do or perform any other thing
Lessee is required by the Lease to do or perform, Lessor at its option may pay
such sum or do or perform such thing, and Lessee shall reimburse Lessor on
demand for the amount of such payment
10
<PAGE> 11
and for the cost and expense which may be incurred by Lessor for such acts or
performance, together with interest thereon at the Default Rate from the date
of demand until paid.
18. DEFAULT
(a) EVENTS OF DEFAULT. Each of the following shall constitute an
event of default: (i) failure to perform and comply with the provisions and
conditions of Section 8 hereof or to pay any sum, including installments of
rental, on the date when due; (ii) failure to perform and comply with any other
provision or condition of the Lease within thirty (30) days after Lessor shall
have given Lessee written notice of default with respect thereto, or failure to
make good, within thirty (30) days after written notice by Lessor to Lessee,
any representation or warranty, whether made in the Lease or in any
certificate, agreement, instrument or statement, including income and financial
statements, which shall prove to have been incorrect in any material respect
when made; (iii) any event of default occurs with respect to any obligations of
Lessee to Lessor on or with respect to any transactions, debts, undertakings or
agreements other than the Lease; (iv) the failure of Lessee generally to pay
debts as they become due in the ordinary course of business or the filing of
any application for the appointment of a receiver for a major part of Lessee's
assets or the filing of any petition or application by or against Lessee under
any present or future laws for the relief of debtors or for the subjection of
the property of a debtor to the control of any court, tribunal or agency for
the benefit of creditors, including proceedings under the Bankruptcy Code, if
the proceeding commenced by such filing shall not be dismissed within sixty
(60) days from the date of filing; (v) the execution by Lessee of a general
assignment for the benefit of creditors; (vi) the merger, consolidation,
reorganization, conversion to a Subchapter "S" status or dissolution of a
corporate or partnership Lessee, which has a materially adverse effect upon
Lessor's position under the Lease.
(b) EFFECT ON REQUEST TO PURCHASE. Upon the occurrence of an
Event of Default, Lessor shall have no further obligation to Lessee to purchase
Equipment or Items or to lease any thereof to Lessee.
(c) REMEDIES. (i) Upon the occurrence of an event of default as
provided above, Lessor may at its option (1) proceed by appropriate court
action or actions, either at law or in equity, to enforce performance by the
Lessee of the applicable covenants of this Lease or to recover damages for the
breach thereof; or (2) by notice in writing to the Lessee terminate Lessee's
right of possession of the Equipment, whereupon all rights of the Lessee to use
the Equipment shall absolutely cease and terminate, but Lessee shall remain
liable as herein provided. Upon such a termination, Lessee at its expense
shall redeliver the Equipment to Lessor. If Lessee shall fail to do so, Lessor
may retake possession of the Equipment by entering upon any premises at any
reasonable time and thereafter Lessor may hold, possess, sell, upgrade, lease
to others or enjoy the same, free from any right of Lessee, or its successors
or assigns. If Lessor is required to retake possession, Lessee upon demand
shall reimburse Lessor for all costs and expenses relating thereto.
Notwithstanding such redelivery or retaking Lessor shall have a right to
recover from Lessee any and all amounts which under the terms of the Lease may
be then due or which may have accrued to the date of such termination, and also
to recover forthwith from the Lessee its damages for loss of a bargain and not
as a penalty, an amount equal to the higher of Fair Market Value or the
Stipulated Loss Value of the Equipment as of the rent payment date on or next
preceding the date of default, less: (1) the amount Lessor in fact receives
from the sale of the Equipment, after deduction of all estimated expenses of
such sale (Equipment which Lessor is unable to recover shall at Lessor's option
be deemed worthless.) or, (2) at Lessor's election, the present value of the
non-cancellable regularly scheduled rentals receivable from a subsequent lease
of all or part of the Equipment entered into by Lessor (discounted at the
Default Rate), and taking into account only the rentals receivable from the
commencement date of such subsequent lease until the end of the Lease Term
specified in the Request to Purchase for such Equipment. In addition, Lessee
shall be liable to Lessor for all costs and expenses incurred by Lessor by
reason of Lessee's breach or default. In addition to the foregoing, the Lessee
shall be liable for interest on any of the above referenced amounts from and
after the due date at the Default Rate, or the legal limit, whichever is
smaller. (ii) "Lessor's costs and expenses incurred by reason of Lessee's
breach or default" shall include, without limitation, costs and expenses of
receiving or retaking possession of the Equipment, storing, holding,
transporting, insuring, caring for, servicing, maintaining and renting the
Equipment or Items and collecting rents and professional fees and expenses with
respect to or incurred by reason of the breach or default, including legal fees
and expenses for advice and legal services in any actions or proceedings which
Lessor may commence or in which Lessor may appear or participate to exercise or
enforce any rights or remedies or to protect or preserve any rights or
interests, and in all reviews of and appeals from any such actions or
proceedings. (iii) The "Default Rate" of interest shall be a rate per
11
<PAGE> 12
annum computed monthly which shall be five (5) percentage points above the
prime rate, but not greater than the maximum rate, if any, limited by
applicable law.
19. RIGHTS CUMULATIVE
Unless otherwise expressly provided herein, all rights and remedies of Lessor
are concurrent and cumulative. The exercise or partial exercise of any remedy
shall not restrict Lessor from further exercise of that remedy or any other
remedy.
20. SURRENDER
At any time that Lessee is required to deliver the Equipment to Lessor, Lessee
shall immediately cease using the Equipment and at Lessee's expense shall
redeliver and surrender the Equipment to Lessor in good order, condition and
repair, ordinary wear and tear excepted, securely crated and safely packed, at
a place to be designated by Lessor in the State where the Equipment by the
terms of the Request to Purchase is required to be kept, and, if Lessor so
specifies, loaded FOB a common or contract carrier designated by Lessor.
21. HOLDOVER
If Lessee shall not immediately redeliver and surrender any Item of Equipment
to Lessor when required by the terms hereof, Lessee shall pay Lessor, at such
time or times as Lessor may demand, a sum equal to a one-month installment of
Periodic Rental for each calendar month or fraction of a month during which
such failure to redeliver and surrender continues.
22. INSPECTION; REPORTS
Lessor, its agents and employees shall have the right to enter upon any
premises where the Equipment or Items are then located to inspect and examine
the same during normal business hours and at any other times if Lessor
reasonably believes any Items or Lessor's rights are in jeopardy of damage or
loss. So long as Lessee's not in default, Lessor shall give Lessee not less
than twenty-four (24) hours notice of such inspection. Lessee shall
immediately give Lessor written notice of any damage to or loss of the
Equipment or any Items from any cause, including without limitation damage or
loss caused by accident, the elements, intentional acts and theft. Such notice
shall set forth an itemization of the affected Items and a detailed account of
the event, including names of any injured persons and a description of any
damaged property arising from any such event or from any use or operation of
the Equipment or any Items. All rights granted to Lessor herein are for the
benefit of Lessor and shall not be construed to impose any obligation on
Lessor, whether or not Lessor makes any inspections or receives any reports.
23. FINANCIAL AND OTHER DATA
During the Term and any Renewal Term, Lessee: (a) shall furnish Lessor annual
balance sheets and profit and loss statements of Lessee and any guarantor of
Lessee's obligations accompanied, at Lessor's request, by the audit report of
an independent certified public accountant acceptable to Lessor; and (b) at
Lessor's request, shall furnish Lessor all other financial information and
reports reasonably requested by Lessor at any time, including quarterly or
other interim balance sheets and profit and loss statements of Lessee and any
such guarantor. Lessee shall furnish such other information as Lessor may
reasonably request at any times concerning Lessee and its affairs.
24. WARRANTY OF INFORMATION
Lessee warrants that all information furnished and to be furnished to Lessor is
accurate and that all financial statements it has furnished and hereafter may
furnish Lessor, including operating statements and statements of condition, are
and will be prepared in accordance with generally accepted accounting
principles, consistently applied, and reasonably reflect and will reflect, as
of their respective dates, results of the operations and the financial
condition of Lessee and any other entity they purport to cover.
25. NON-WAIVER
Neither the acceptance by Lessor of any payment or any other performance, nor
any act or failure of Lessor to act or to exercise any rights, remedies or
options in any one or more instances shall constitute a waiver of any such
right, remedy or option or of any other then existing or thereafter accruing
right, remedy or option, or of any breach of
12
<PAGE> 13
default then existing or thereafter occurring. No purported waiver by Lessor
of any right, remedy, option, breach or default shall be binding unless in
writing and signed by an officer of Lessor. A written waiver by Lessor of any
right, remedy, option, breach or default shall not constitute a waiver or any
other then existing or thereafter accruing right, remedy or option or of any
other then existing or thereafter occurring breach or default.
26. NOTICES; PAYMENTS
(a) A written notice may be given: (i) by delivering the same to a
corporate officer of the party to whom it is directed (the "Addressee"), or to
a general partner if the Addressee is a partnership, or to the owner if the
Addressee is a sole proprietorship; or (ii) by mailing the notice to the
Addressee by first class mail, registered or certified, with postage prepaid,
addressed to the Addressee at the address following its name in the opening
paragraph of the Request to Purchase or to such other address as Addressee may
specify by notice in writing given in accordance with this Section. A notice
so mailed shall be deemed given on the third business day following the date of
mailing. A "business day" shall be any day that is not a Saturday or Sunday or
legal holiday.
(b) The Lessee shall make all payments to Lessor at the place
where the notice is to be mailed to Lessor pursuant to subparagraph (a).
Payments are deemed paid when received by Lessor.
27. ASSIGNMENT
(a) Lessee shall not assign the Lease or any rights in or to the
Equipment or Items. Any attempted assignment shall be of no effect, unless
Lessor first shall have consented thereto in writing. Lessor's consent to an
assignment in any one or more instances shall not impose any obligation upon
Lessor to consent to any other or further assignments. Lessor's consent to an
assignment shall not release Lessee from any obligations with respect to the
Lease unless expressly so stated in the written consent.
(b) All rights of Lessor hereunder may be assigned, pledged,
mortgaged, transferred or otherwise disposed of, either in whole or in part,
without notice to Lessee but subject always to the rights of Lessee under this
Lease. If Lessee is given notice of any such assignment, Lessee shall
acknowledge receipt thereof in writing. In the event that Lessor assigns this
Lease or the rent due or to become due hereunder or any other interest herein,
whether as security for any of its indebtedness or otherwise, no breach of
default by Lessor hereunder or pursuant to any other agreement between Lessor
and Lessee, should there be one, shall excuse performance by Lessee of any
provision hereof, it being understood that in no event of such default or
breach by Lessor that Lessee shall pursue any rights on account thereof solely
against Lessor. No such assignee shall be obligated to perform any duty,
covenant or condition requested to be performed by Lessor under the terms of
this Lease.
28. SURVIVAL
The representations warranties, indemnities and agreements of Lessee, and
Lessee's obligations under any and all provisions of the Lease, shall survive
the expiration or other termination of the Lease, shall be binding upon its
successors and assigns and are expressly made for the benefit of and shall be
enforceable by Lessor and its successors and assigns.
29. MISCELLANEOUS
(a) The term "Lessor" shall mean the Lessor named herein and its
successors and assigns.
(b) Whenever the context so requires, any pronoun gender includes
all other genders, and the singular includes the plural. If more than one
person constitute Lessee, whether as a partnership or otherwise, all such
persons are and shall be jointly and severally liable for all agreements,
undertakings and obligations of Lessee.
(c) All captions and section, paragraph and other divisions and
subdivisions are for convenience of reference only and shall not affect the
construction, interpretation or meaning of the agreement or Lease or of any of
the provisions thereof.
(d) This Lease shall be governed by and construed according to the
law of the State of Washington.
(e) This Lease shall be binding upon and, except as limited in
Section 27 hereof, shall inure to the benefit of Lessor and Lessee and their
respective successors and assigns.
(f) This lease cannot be cancelled or terminated except as
expressly provided herein.
(g) Wherever Lessor's consent is required hereunder, such consent
will not be unreasonably withheld.
13
<PAGE> 14
(h) Lessee's obligation to pay or reimburse Lessor for expenses as
provided hereunder shall be limited to reasonable expenses.
30. LESSOR'S DISCLAIMER
Lessee acknowledges and agrees that it has selected both the Equipment of the
type and quantity which is the subject of this Lease and the supplier from whom
Lessor purchased the Equipment. LESSOR MAKES NO REPRESENTATION OR WARRANTY,
EXPRESS OR IMPLIED, AS TO THE DESIGN, COMPLIANCE WITH SPECIFICATIONS,
CONDITION, QUALITY, WORKMANSHIP, OR THE SUITABILITY, ADEQUACY, OPERATION, USE
OR PERFORMANCE OF THE EQUIPMENT OR AS TO ITS MERCHANTABILITY OR FITNESS FOR ANY
PARTICULAR PURPOSE. ANY DELAY IN DELIVERY SHALL NOT AFFECT THE VALIDITY OF
THIS LEASE. The Lessee understands and agrees that neither the supplier nor
any salesman or any agent of the supplier is an agent of Lessor. No salesman
or agent of supplier is authorized to waive or alter any term or condition of
this Lease, and no representation as to the Equipment or any other matter by
the supplier shall in any way affect Lessee's duty to pay the rent and perform
its obligations as set forth in this Lease. Lessor shall not be liable to
Lessee for any incidental, consequential, or indirect damages or for any act,
neglect, omission, breach or default by any third party.
31. NO AFFILIATION WITH SUPPLIERS
Lessee warrants that neither it nor any of its officers, directors (if a
corporation) or partners (if a partnership) has, directly or indirectly, a
substantial financial interest in the manufacturer or supplier of any Equipment
except as previously disclosed in writing to Lessor.
32. ENTIRE AGREEMENT.
This Lease and any Requests to Purchase hereto shall constitute the entire
agreement between the parties and shall not be altered or amended except by an
agreement in writing signed by the parties hereto or their successors or
assigns.
IN WITNESS WHEREOF Lessor and Lessee have signed this agreement as of the day
and year first hereinabove written.
LESSOR: LESSEE:
METLIFE CAPITAL, SEITEL GEOPHYSICAL, INC.
Limited Partnership dba Eagle Geophysical
By METLIFE CAPITAL CORPORATION,
General Partner By: /s/ [illegible signature]
By: /s/ [illegible signature] Its President
Its: Sr. Vice President By ___________________________________
Its __________________________________
14
<PAGE> 1
McCULLAGH 10.7.1
- --------------------------------------------------------------------------------
(GE) A Unit of GE Capital Fleet Services
MASTER LEASE AGREEMENT CUSTOMER # 61824
(NATIONAL)
- --------------------------------------------------------------------------------
This Lease Agreement (herein the "Agreement") is made and entered into by and
between Gelco Corporation, a Minnesota corporation with its administrative
offices in Eden Prairie, Minnesota, doing business as MCCULLAGH LEASING (herein
the "LESSOR"), and Seitel Geophysical, Inc., a/an Delaware corporation (herein
the "LESSEE").
(1) LEASE OF VEHICLES:
(a) LEASE. LESSOR hereby agrees to lease to LESSEE and
LESSEE hereby agrees to lease from LESSOR certain automobiles, trucks, trailers
and/or equipment (herein "Vehicle(s)") from time to time during the term of
this Agreement.
(b) NEW VEHICLE ORDER. LESSEE shall evidence its
agreement to lease a Vehicle hereunder by executing a written or electronic New
Vehicle Order for such Vehicle on the form from time to time established by
LESSOR. The New Vehicle Order shall set forth complete specifications as to
each Vehicle including all equipment necessary to its lawful operation, and the
place and desired date of delivery, and the lease term of the Vehicle (herein
"Lease Term"). In the event any New Vehicle Order is canceled by LESSEE,
LESSEE agrees to reimburse LESSOR for any expenses or losses incurred as a
result of such cancellation.
(c) ACCEPTANCE AND DELIVERY. LESSEE's execution of a New
Vehicle Order shall obligate LESSEE to lease the Vehicle specified therein
effective upon its delivery to LESSEE. At the time of delivery of such
Vehicle, such New Vehicle Order, together with the Delivery Receipt for such
Vehicle, if any, shall become a part of this Agreement. The Delivery Receipt
shall be on the form from time to time established by LESSOR. LESSEE's
acceptance of a Vehicle shall constitute a warranty by LESSEE that the party
accepting such Vehicle has the authority to do so on behalf of LESSEE, and that
the Vehicle conforms to the New Vehicle Order. Upon acceptance of each
Vehicle, LESSEE agrees that LESSEE's obligation to pay rent and other amounts
hereunder with respect to such Vehicle shall be unconditional; and LESSEE shall
not be entitled to any reduction of, or setoff against, such amounts (provided,
however, that any payment by LESSEE shall not prejudice LESSEE's right to claim
adjustment or reimbursement), nor shall this Agreement terminate or the
obligations of LESSEE be affected by reason of any defect in, damage to or loss
of possession, use or destruction of any Vehicle from any cause, unless such
obligations have been terminated pursuant to the express terms hereof. When a
Vehicle is available for delivery, LESSEE shall take delivery within five (5)
business days of notice.
(2) TERM:
(a) TERM OF AGREEMENT. The term of this Agreement shall
be indefinite commencing on the date hereof, and continuing until canceled in
the manner set forth in this Agreement, or until either party hereto terminates
the same upon thirty (30) days' written notice to the other. Even after the
cancellation or termination of this Agreement, all Vehicles then leased by
LESSEE shall continue to be subject to the terms, conditions and covenants
contained in this Agreement, until each of such terms, conditions and covenants
has been fulfilled and no such cancellation or termination shall affect any
rights or obligations in existence prior to the effective date of such
cancellation or termination. Vehicles for which New Vehicle Orders have been
signed by LESSEE but which Vehicles have not been delivered to LESSEE
1991 Gelco Corporation 1 of 11
<PAGE> 2
as of the effective date of such cancellation or termination, at the option of
LESSOR, shall be deemed leased hereunder.
(b) VEHICLE LEASE TERM. The Lease Term for each Vehicle
shall be as specified in the respective New Vehicle Order. With respect to any
Vehicle leased pursuant t this Agreement, the minimum non-cancelable term of
lease for such Vehicle shall be twelve (12) months, commencing on the date of
delivery of such Vehicle to LESSEE, and thereafter the term of the lease shall
be on a month-to-month basis. Unless a different Lease Term is set forth in
the New Vehicle Order, the term of lease for each Vehicle shall not extend
beyond a maximum of fifty (50) months for automobiles, seventy-two (72) months
for light trucks and ninety-six (96) months for medium and heavy duty trucks.
In no event shall LESSEE keep any Vehicle beyond the Lease Term of the Vehicle
set forth in the New Vehicle Order for such Vehicle; or, if a Lease Term is,
for any reason, not so specified beyond the maximum term of lease provided
herein.
(3) LESSEE'S OPERATION OF VEHICLES: LESSEE shall use the Vehicles
in the United States for business purposes and in a safe and lawful manner, and
shall comply with all federal, state, county and municipal statutes, ordinances
and regulations which may be applicable to the leasing, use or operation of the
Vehicles. In addition, LESSEE shall prepare and furnish to LESSOR all
documents, returns or forms legally required to be prepared by LESSEE. LESSEE
shall be solely responsible for any fines or penalties assessed for violations
of any statute, ordinance, bylaw or regulation of any governmental authority,
as a result of the use or operation of the Vehicles by any of LESSEE's
employees, agents, sublessees, subcontractors, or any third party, and shall
keep the Vehicles free from any liens and encumbrances. LESSEE agrees to
operate only those Vehicles which have adequate insurance coverage and to
comply with all conditions of insurance related to the Vehicles, to maintain
the Vehicles and all accessories and equipment thereon in safe and good
mechanical condition and running order at all times and to furnish all
supplies, accessories, and other essentials required for the use or operation
of the Vehicles. LESSEE shall comply and shall cause all persons operating the
Vehicles to comply with such instructions covering the operation and
maintenance of the Vehicles as LESSOR may furnish from time to time, and with
the manufacturer's operating procedures and warranty requirements. LESSEE
shall not make any addition, alteration, or improvement to a Vehicle without
the prior written consent of LESSOR, which shall not be unreasonably withheld.
All repairs, replacement parts, additions, alterations, or improvements made to
a Vehicle become the property of LESSOR and shall be surrendered with the
Vehicle at the termination or cancellation of that Vehicle's Lease Term. In no
event will the Vehicles be used to transport any hazardous substances or for
the transportation of persons for hire.
(4) WARRANTIES:
(a) Assignment of Manufacturer's Warranties. LESSOR
hereby assigns to LESSEE, for and during the Lease Term of a Vehicle, any
warranty of the manufacturer, express or implied, issued on such Vehicle, and
hereby authorizes LESSEE to obtain the customary service furnished by the
manufacturer in connection therewith, at LESSEE's expense. LESSEE ACKNOWLEDGES
AND AGREES LESSOR IS NOT THE MANUFACTURER, DESIGNED OR A DISTRIBUTOR OF THE
VEHICLES, AND THAT EACH VEHICLE IS OF A SIZE, DESIGN, CAPACITY AND MANUFACTURE
SELECTED BY LESSEE AND SUITABLE FOR ITS PURPOSES.
(b) LESSOR DISCLAIMER. THERE ARE NO WARRANTIES OR OTHER
RIGHTS PROVIDED BY LESSOR OR THE MANUFACTURER OTHER THAN THE MANUFACTURER'S
WARRANTIES ASSIGNED TO LESSEE, COPIES OF WHICH LESSEE ACKNOWLEDGES HAVING
PREVIOUSLY RECEIVED. LESSOR MAKES NO REPRESENTATION OR WARRANTY OF ANY KIND,
EXPRESS OR IMPLIED, WITH RESPECT TO ANY VEHICLE, INCLUDING, BUT NOT LIMITED TO:
THE MERCHANTABILITY OF A VEHICLE OR ITS FITNESS FOR A PARTICULAR PURPOSE; THE
DESIGN,
1991 Gelco Corporation 2 of 11
<PAGE> 3
QUALITY OR CAPACITY OF A VEHICLE; COMPLIANCE OF A VEHICLE WITH THE REQUIREMENTS
OF ANY LAW, RULE, SPECIFICATION OR CONTRACT PERTAINING THERETO; IT BEING AGREED
THAT THE VEHICLES ARE LEASED "AS IS." WITHOUT LIMITING THE GENERALITY OF THE
FOREGOING, LESSOR SHALL NOT BE LIABLE TO LESSEE, ITS CUSTOMERS, OR THIRD
PARTIES FOR ANY DEFECTS, EITHER LATENT OR PATENT, IN ANY VEHICLE, OR FOR ANY
DIRECT, INDIRECT, SPECIAL OR CONSEQUENTIAL DAMAGES OF ANY KIND OR NATURE
DIRECTLY OR INDIRECTLY ARISING OUT OF THIS AGREEMENT OR ANY VEHICLE, OR FOR ANY
DAMAGES BASED ON STRICT OR ABSOLUTE TORT LIABILITY OR NEGLIGENCE, OR FOR ANY
LOSS OF USE OF ANY VEHICLE, OR FOR ANY INTERRUPTION IN LESSEE'S BUSINESS BY ITS
INABILITY TO USE ANY VEHICLE FOR ANY REASON. LESSOR SHALL HAVE NO LIABILITY
FOR ANY FAILURE OF OR DELAY IN DELIVERY OF THE VEHICLES OR FOR THE BREACH OF
ANY REPRESENTATION OR WARRANTY MADE BY THE MANUFACTURER. LESSOR MAKES NO
REPRESENTATION AS TO THE TREATMENT BY LESSEE OF THIS LEASE FOR FINANCIAL
STATEMENT OR TAX PURPOSES.
(5) COSTS, EXPENSES, FEES AND CHARGES: LESSEE covenants that it
will pay all costs, expenses, fees, charges and taxes (other than federal
income or state income taxes of LESSOR) incurred in connection with the
titling, registration, delivery, purchase, sale, rental, installation, use or
operation of the Vehicles during the term of this Agreement in addition to the
rental herein provided. If LESSOR incurs or is compelled to pay any of such
costs, LESSEE shall, upon demand from LESSOR, promptly reimburse LESSOR for the
same. If LESSOR pays any fines, tickets, penalties or other charges related to
a violation by LESSEE of any local, state or federal law or regulation, or if
LESSOR is served with any legal process, LESSEE shall, upon demand, promptly
reimburse LESSOR for the same and pay the then current administrative charge
assessed by LESSOR for processing each fine, ticket, penalty or other such
charge on behalf of LESSEE.
(6) REGISTRATION PLATES, ETC.: LESSEE shall at its own expense,
obtain in the name of LESSOR all registration plates and other plates, permits
or licenses required to be obtained in connection with the Vehicles, or related
to their operation or use except for the initial registration plates which
LESSOR shall obtain at LESSEE'S expense. LESSOR shall issue to LESSEE for such
purpose, appropriate limited powers of attorney and/or such authority as may be
necessary or required. Both LESSOR and LESSEE covenant and agree to cooperate
and to furnish any and all information or documentation which may be reasonably
necessary to enable compliance with the provisions of this Section or any
local, state or federal law or regulation. LESSEE shall not, without LESSOR's
written consent, permit any Vehicle to be located in a state other than the
state in which such Vehicle is then titled for any continuous period of time
that would require such Vehicle to become subject to the titling and/or
registration laws of such other state.
(7) RENTAL CHARGES:
(a) MONTHLY RENTAL. LESSEE will pay LESSOR and LESSOR
will accept as payment from LESSEE, as rental for each Vehicle, the Monthly
Rental set forth in the Lease Schedule hereto, as such Lease Schedule may be
amended from time to time, plus all other rental charges provided for in this
Agreement. Monthly Rental shall be paid as follows:
(i) The payment of Monthly Rentals for each Vehicle shall
begin on the first (1st) day of the calendar month in which the
Vehicle is delivered to LESSEE, if delivered on or before the
fifteenth (15th) day of the month, or on the first (1) day of the next
succeeding calendar month, if delivered on or after the sixteen (16th)
day of the month.
(ii) The payment of Monthly Rentals for each Vehicle shall
begin on the first (1st) day of the calendar month in which the
Vehicle is delivered to LESSEE, if delivered on or before the
1991 Gelco Corporation 3 of 11
<PAGE> 4
fifteenth (15th) day of the month, or on the first day of the next
succeeding calendar month, if delivered on or after the sixteenth
(16th) day of the month.
(iii) Monthly Rentals shall be paid on the first (1st) day
of each calendar month during the rental payment period with respect
to each Vehicle. If a Vehicle is delivered to Lessee on or before the
fifteenth (15th) day of a month, the first month's rental shall be
paid on the first (1st) day of the next succeeding calendar month,
together with the rental payment for such next succeeding calendar
month.
Monthly Rentals shall be paid without abatement, setoff, counterclaim or
defense for any reason whatsoever, regardless of the actual use of the Vehicles
by LESSEE.
LESSEE acknowledges that the Monthly Rental has been established based
on a presumed after-tax return to LESSOR. If any changes in federal or state
tax laws or regulations cause LESSOR's after-tax return to be reduced, LESSOR
may, in compensation, prospectively adjust the Monthly Rental.
(b) INVOICES. LESSOR shall render to LESSEE each month
an invoice for Monthly Rentals due that month for all Vehicles, together with a
statement of all miscellaneous fees, taxes, costs, expenses, and charges due to
LESSOR from LESSEE. Time is of the essence. All charges are due and payable
upon receipt of an invoice. LESSEE shall pay to LESSOR a late payment penalty
in the amount of one and one-half percent (1 1/2%) or the highest legal
interest rate, whichever is less, per month or fraction thereof on any invoice
the payment of which is not in the possession of LESSOR on or before the tenth
(10th) day from the date of such invoice (or if such 10th day falls on a
weekend or holiday, then the immediately preceding business day). LESSEE
agrees to carefully review each invoice or other statement provided by LESSOR.
All invoices and statements rendered by LESSOR shall be presumed correct and
accurate and constitute an account stated between LESSOR and LESSEE unless,
within thirty (30) days after receipt thereof, LESSEE shall deliver written
objection thereto specifying any errors in the invoice or statement. In such
event, LESSOR's sole liability and LESSEE's exclusive remedy shall be to make
appropriate adjustments in LESSEE's account. All charges are based upon
LESSOR's standard operating routines, computer systems capabilities, and
existing business policy and are subject to change upon notice. Additional
services and special handling required by LESSEE will be subject to
negotiation. Nothing contained in this Agreement shall prevent LESSOR from
obtaining compensation from manufacturers, suppliers or other vendors.
(8) SURRENDER AND DISPOSITION OF VEHICLES:
(a) EARLY TERMINATION. So long as LESSEE is not in
default, LESSEE may, at any time after the minimum non-cancelable term of lease
of twelve (12) months, terminate the Lease Term of any Vehicle by giving LESSOR
written notice of surrender as provided below. If LESSEE surrenders a Vehicle
prior to the end of the minimum Lease Term, LESSEE shall pay the Interest
Adjustment Charge provided for in the Lease Schedule, if any.
(b) NOTICE OF SURRENDER. At the end of the Lease Term or
in the event of an early termination as provided above, LESSEE shall provide
LESSOR with written notice of its desire to surrender a Vehicle. LESSOR shall
use its best efforts to pick up or to cause a Vehicle to be picked up within
thirty (30) days of the date of such notice. In such notice, LESSEE may
designate the date upon which it desires a Vehicle to be picked up, and LESSOR
shall endeavor to accommodate such request. Vehicles shall continue to be
subject to the terms and conditions of this Agreement through the date of
surrender, which shall be the date LESSOR takes actual possession of the
respective Vehicle.
1991 Gelco Corporation 4 of 11
<PAGE> 5
(c) SURRENDER. Any Vehicle that LESSOR advises LESSEE is
outside of its custom pickup area shall be surrendered to LESSOR at such place
as LESSOR and LESSEE may agree upon in writing. Each vehicle, whether picked
up by LESSOR or dropped off by LESSEE, shall be surrendered in good and safe
operating condition. At the time of surrender, LESSEE shall complete, sign and
deliver to LESSOR, a Used Vehicle Condition Report on a form supplied by LESSOR
with respect to such Vehicle. Such surrender shall include all license plates,
registration certificates, documents of title and odometer certifications and
other documentation necessary to effect the sale or other disposition of the
Vehicle. LESSEE shall remove any personal property prior to surrender. Any
personal property left in a Vehicle after surrender shall be deemed abandoned
and may be disposed of by LESSOR without liability. LESSOR shall sell each
Vehicle within a reasonable time after the date of surrender.
(d) DISPOSITION OF VEHICLES. LESSOR shall, and LESSEE
may, solicit from prospective purchasers in the wholesale vehicle market cash
bids for surrendered Vehicles on an AS IS, WHERE IS BASIS, WITHOUT RECOURSE OR
WARRANTY. Such Vehicles shall be sold in a commercially reasonable manner for
cash payable in full upon delivery. If repairs to a Vehicle surrendered by
LESSEE shall be deemed advisable by LESSOR before sale, LESSOR shall so notify
LESSEE and LESSEE shall pay all costs for such repairs. Without limiting the
generality of the foregoing, LESSOR shall have the right to sell Vehicles to
any dealer or broker or any other party, including to or through companies
affiliated with LESSOR.
(e) TERMINAL RENTAL ADJUSTMENT. From the proceeds
realized from any sale of a Vehicle, there shall first be deducted all direct
expenses paid or incurred by LESSOR in connection with such Vehicle and its
sale from time of surrender through date of sale, the balance remaining to
constitute the net proceeds (herein the "Net Proceeds"). The Net Proceeds from
the sale of any such Vehicle shall be payable to LESSOR.
(i) If the Net Proceeds exceed the Capitalized
Cost (as defined in the Lease Schedule) of such Vehicle
reduced by an amount equal to the aggregate of the
amortization (calculated using the amortization rate set forth
in the Lease Schedule) paid on such Vehicle (herein the
"Unamortized Book Value"), LESSOR shall retain an amount equal
to the Unamortized Book Value on the Vehicle sold, and LESSEE
shall receive the remaining excess as a refund of rental;
provided, however, if LESSEE is in default hereunder, such
remaining excess, if any, shall be applied to reduce the
amount of default.
(ii) If the Net Proceeds are less than the
Unamortized Book Value of the Vehicle sold, LESSEE shall pay
LESSOR, in cash, as a rental charge adjustment, the amount of
such deficiency.
(9) INSURANCE:
(a) COVERAGES. LESSEE shall, at LESSEE's expense,
procure from a responsible insurance company acceptable to LESSOR, prior to
delivery of each Vehicle, and shall maintain during the time that any Vehicles
are leased by LESSEE from LESSOR, the following insurance coverage:
(i) Public liability and property damage
insurance (comprehensive automobile liability) insuring
LESSOR, and its assigns, if any, LESSEE and any person having
possession of or using a Vehicle, against liability for death,
bodily injury, and property damage resulting from ownership,
maintenance, use or operation of a Vehicle with limits of
coverage as LESSOR may require but in no event less than one
million dollars
1991 Gelco Corporation 5 of 11
<PAGE> 6
($1,000,000.00) combined single limit per occurrence (five
million dollars ($5,000,000.00) for multi- passenger or I.C.C.
regulated vehicles).
(ii) Comprehensive and collision insurance
insuring LESSOR, and its assigns, if any, against loss and/or
damage to each Vehicle arising out of any risk covered by such
insurance (including without limitation, fire, theft,
casualty, malicious mischief, falling objects, missiles, glass
breakage, smoke, riot or civil commotion) with limits of
coverage as LESSOR may require but in no event less than the
actual cash value of each Vehicle subject to a five hundred
dollar ($500.00) deductible. In the event of loss or damage
to the Vehicle, LESSEE agrees to immediately reimburse LESSOR
the amount of the deductible hereunder, without regard to who
is responsible.
The above insurance shall also include the following, in amounts not less than
the applicable minimum legal requirements: (i) uninsured/underinsured motorist
coverage, and (ii) no fault protection. LESSEE shall in addition provide
general liability insurance covering LESSEE's indemnification responsibilities
hereunder.
(b) CONDITIONS. LESSOR shall be named as an Additional
Insured on the required liability and property damage insurance, and as the
Loss Payee on the required collision and comprehensive damage insurance. All
insurance policies required hereunder shall provide for thirty (30) days' prior
written notice to LESSOR and its assigns, if any, of any cancellation or
reduction in coverage. LESSEE shall deliver to LESSOR, prior to the delivery
of any Vehicle to LESSEE, or prior to the effective date of any cancellation or
expiration of such insurance as the case may be, the insurance policy, a
certificate or other satisfactory evidence of the maintenance of the insurance
required hereunder. LESSOR shall be under no duty to examine such policies,
certificates, or other evidence of insurance, or to advise LESSEE in the event
that its insurance is not in compliance with this Agreement. LESSEE, in the
event of default, hereby appoints LESSOR as LESSEE's attorney-in-fact to
receive payment of and endorse all checks and other documents and to take nay
other actions necessary to pursue insurance claims and recover payments if
LESSEE fails to do so. Any expense of LESSOR in adjusting or collecting
insurance shall be borne by LESSEE.
(c) COOPERATION. LESSEE, its drivers, employees and
agents shall cooperate fully with LESSOR and the insurance carriers insuring
the hazards enumerated herein in the investigation, defense and prosecution of
any and all claims or suits arising from the operation of the Vehicles. If any
claim is made or action commenced for death, personal injury or property damage
resulting from the ownership, maintenance, use or operation of any Vehicle,
LESSEE shall promptly notify LESSOR thereof and forward to LESSOR a copy of
every demand, notice, summons or other process received in connection
therewith. LESSEE shall furnish to LESSOR a report of any accident involving a
Vehicle (on the form furnished by the insurer) within three (3) days of such
accident. LESSEE shall make all filings or reports required by state, local or
municipal law or regulations as a result of any accident involving a Vehicle.
(10) INDEMNIFICATION BY LESSEE: LESSEE COVENANTS AND AGREES TO
INDEMNIFY, SAVE HARMLESS AND DEFEND LESSOR, ANY EMPLOYEE OF LESSOR, AND ANY
PARENT, SUBSIDIARY OR AFFILIATE OF LESSOR, AGAINST ANY AND ALL LIABILITY,
CLAIMS FOR LOSS, DAMAGE, OR INJURY AND FROM AND AGAINST ANY SUITS, ACTIONS, OR
LEGAL PROCEEDINGS OF ANY KIND BROUGHT AGAINST LESSOR FOR OR ON ACCOUNT OF ANY
PERSON(S) OR LEGAL ENTITY, OR ON ACCOUNT OF ANY INJURIES RECEIVED OR SUSTAINED
BY ANY PERSON(S) OR LEGAL ENTITY IN ANY MANNER, DIRECTLY OR INDIRECTLY CAUSED
BY, INCIDENT TO, OR SUSTAINED BY ANY PERSON(S) OR LEGAL ENTITY IN ANY MANNER,
DIRECTLY OR INDIRECTLY CAUSED BY, INCIDENT TO, OR GROWING OUT OF WHOLLY OR IN
PART, THE LEASING,
1991 Gelco Corporation 6 of 11
<PAGE> 7
MAINTENANCE, USE, CONDITION (INCLUDING, BUT NOT LIMITED TO, PATENT OR LATENT
DEFECTS WHETHER OR NOT DISCOVERABLE BY LESSOR OR LESSEE, PRODUCT LIABILITY
CLAIMS, AND THE CONDITION OF ANY VEHICLE UPON SALE OR OTHER DISPOSITION),
OPERATION, RETURN, SURRENDER, SALE OR OTHER DISPOSITION OF ANY VEHICLE, OR THE
PREACH BY LESSEE OF ANY COVENANT OR CONDITION OF THIS AGREEMENT. IN THE EVENT
LESSOR SELLS ANY VEHICLE TO LESSEE, TO ANY EMPLOYEE OF LESSEE OR TO ANY
PURCHASER FROM WHOM LESSEE OBTAINS AN OFFER, LESSEE'S COVENANTS OF INDEMNITY
SHALL CONTINUE. LESSEE FURTHER AGREES TO TAKE UPON ITSELF THE SETTLEMENT OF
ALL SUCH CLAIMS AND THE DEFENSE OF ANY SUIT OR SUITS, OR LEGAL PROCEEDINGS OF
ANY KIND BROUGHT TO ENFORCE SUCH CLAIM OR CLAIMS, AND TO PAY ALL JUDGMENTS
ENTERED IN SUCH SUIT OR SUITS AND ALL COSTS, ATTORNEYS' FEES OR OTHER EXPENSES.
IN ANY INSTANCE WHERE SAID CLAIMS IN ANY WAY AFFECT LESSOR'S INTERESTS UNDER
THIS AGREEMENT, LESSEE SHALL NOT CONSUMMATE ANY SETTLEMENT WITHOUT LESSOR'S
PRIOR WRITTEN CONSENT.
THE FOREGOING LESSEE'S COVENANTS OF INDEMNITY DO NOT ENCOMPASS ANY
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT BY LESSOR, BUT ARE OTHERWISE ABSOLUTE
AND UNCONDITIONAL AND SHALL CONTINUE IN FULL FORCE AND EFFECT REGARDLESS OF
WHERE, HOW OR BY WHOM ANY VEHICLE IS OPERATED, AND NOTWITHSTANDING ANY
INSURANCE COVERAGE THAT LESSEE MAY CARRY OR THE TERMINATION OR CANCELLATION OF
THIS AGREEMENT.
THE PROVISIONS OF THIS SECTION COMPREHEND, BUT WITHOUT LIMITATION,
LIABILITY AND CLAIMS, HOWSOEVER ARISING, WHETHER BY REASON OF NEGLIGENCE,
BREACH OF WARRANTY, DEFECT IN MANUFACTURE OR MAINTENANCE OR OTHERWISE, AND EVEN
THOUGH STRICT LIABILITY BE CLAIMED.
(11) LESSOR-LESSEE RELATIONSHIP: THE PARTIES INTEND THAT THIS
AGREEMENT BE A TRUE LEASE. The parties agree that this is not an agreement of
partnership or employment of LESSOR or of any of LESSOR's employees by LESSEE
and that LESSOR is an independent contractor. Except as may be specifically
provided in an executed Power of Attorney, neither LESSEE nor any employee of
LESSEE shall have any authority to act on behalf of LESSOR or be deemed to be
the agent, servant or employee of LESSOR. Nothing herein contained shall give
or convey to LESSEE any right, title or interest in and to any Vehicle leased
hereunder except as LESSEE, and LESSEE shall have no option to purchase any
Vehicle. LESSOR shall have the right at any time to mark the Vehicle stating
its interest as owner and LESSEE will execute such statements as LESSOR may
request confirming LESSOR's ownership. In the event that, contrary to the
intention of the parties hereto, this Agreement is deemed to be other than a
lease, LESSEE hereby grants LESSOR a security interest in the Vehicles and all
proceeds, accessions, chattel paper, equipment and general intangibles related
thereto to secure all of LESSEE's obligations hereunder. At LESSOR's request,
LESSEE agrees to execute any financing statements or other instruments
necessary or expedient for filing, recording or perfecting the interest and
title of LESSOR. A photostatic copy or other reproduction of this Agreement
shall be sufficient as a financing statement.
(12) STATEMENTS AND RIGHTS OF INSPECTION: LESSOR shall have the
right to inspect any Vehicle and the records of LESSEE pertaining to the
Vehicles at any reasonable time upon reasonable notice. The creditworthiness
of LESSEE and any guarantor is a material condition to this Agreement. LESSEE
shall provide LESSOR with LESSEE's financial statements and any other
information LESSOR may require from time to time during the term of this
Agreement.
(13) DEFAULT:
1991 Gelco Corporation 7 of 11
<PAGE> 8
(a) EVENT OF DEFAULT. In the event LESSEE shall fail to
make the payments as herein provided or, after ten (10) days' written notice,
shall fail to perform any of its covenants under this Agreement, or in the
event LESSEE or any guarantor shall (i) make an assignment for the benefit of
creditors, or suffer a receiver or trustee to be appointed, or file or suffer
to be filed any petition under any bankruptcy or insolvency law of any
jurisdiction, or (ii) suspend business or commit any act amounting to a
business failure; or (iii) suffer an attachment or tax lien against any of its
property; or (iv) make a voluntary assignment or transfer of any Vehicle or of
any or all of its interest hereunder (in a manner or to a person not permitted
by the terms hereof), or of all or substantially all of its property; or (v)
die (if an individual), or its corporate or partnership existence (as the case
may be) shall cease or terminate; or (vi) commit or omit any act which LESSOR
reasonably determines impairs LESSEE's prospect of making payments or
performing any of the other covenants required by LESSEE hereunder; or (vii) be
in default under any other Agreement it may have with LESSOR or any parent,
subsidiary or affiliate of LESSOR; or (viii) suffer a material adverse change
in operating or financial condition which impairs LESSEE's ability to perform
its obligations hereunder or LESSOR's title or rights to the Vehicles; or (ix)
deliver or make any representation or warranty herein, or in any document
delivered to LESSOR in connection herewith, which shall prove to be false or
misleading in any material respect; or (x) fail to complete an odometer
disclosure form or make a false statement on an odometer disclosure form; then
in such event LESSEE shall be in default under this Agreement, and LESSOR shall
have the rights and remedies hereinafter specified together with all other
remedies available at law or in equity.
(b) REMEDIES. Upon an event of default, LESSOR may, at
its option:
(i) Cancel this agreement with respect to any or
all of the Vehicles hereunder, in which event LESSEE shall
immediately deliver, at its sole cost and expense, any and all
such Vehicles to a location or locations specified by LESSOR,
and collect from LESSEE damages as provided below; or
(ii) Repossess any and all Vehicles hereunder
wherever they may be found (and for that purpose LESSOR or its
agents may enter upon any premises of or under the control of
LESSEE or any other person) without canceling this Agreement
and collect damages as provided below.
LESSOR's rights and remedies are cumulative and not exclusive and the
exercise of one remedy shall not preclude any other remedy.
(c) DAMAGES. Notwithstanding repossession and sale made
by LESSOR of any Vehicle, LESSOR shall have the right to recover from LESSEE
all damages that LESSOR sustains by reason of LESSEE's default. Such damages
shall include but not be limited to:
(i) The full amount of Monthly Rentals then due
and unpaid, if any;
(ii) Any and all expenses of repossession of the
Vehicle(s);
(iii) All other amounts of any nature due under
this Agreement including, without limitation, any applicable
interest Adjustment Charge and any amount due as a Terminal
Rental Adjustment; and
(iv) A sum representing fifteen percent (15%) of
the total of the above, in the event that LESSOR is required
to refer collection of any balance to its attorney, not a
salaried employee of LESSOR.
1991 Gelco Corporation 8 of 11
<PAGE> 9
Nothing contained in this Agreement shall effect LESSOR's right to
claim against any receiver or trustee or representative of debtor in bankruptcy
or reorganization, or against any of the assets of the LESSEE, for sums due for
any Vehicles used during the period of such bankruptcy or reorganization.
(d) COMPLIANCE. In case of failure by LESSEE to comply
with any provision of this agreement, LESSOR shall have the right, but not the
obligation, at its option, to effect such compliance as in LESSOR's sole
discretion is appropriate, in whole or in part, and all expenses of LESSOR
incurred in effecting such compliance plus LESSOR's then standard handling fee
shall be immediately due and payable. LESSOR's effecting such compliance shall
not in any way be deemed to constitute a waiver of any default by LESSEE.
(14) FORCE MAJEURE AND NO CONSEQUENTIAL DAMAGES: LESSOR shall not
be liable for any failure or delay in delivering any Vehicle for any reason, or
for any failure to perform any provisions hereof, resulting from fire or other
casualty, riot, strike, or other labor difficulty, governmental regulation or
restriction or any cause beyond LESSOR's control. In no event shall LESSOR be
liable for any loss of profits or other consequential damages or any
inconveniences resulting from any theft, damage to, loss of, defect in or
failure of any Vehicle or the time consumed in recovering, repairing,
adjusting, servicing or replacing the same and there shall be no abatement or
apportionment of rental during such time. LESSEE AGREES THAT LESSEE'S SOLE AND
EXCLUSIVE REMEDY FOR ANY MATTER OR CAUSE OF ACTION RELATED DIRECTLY OR
INDIRECTLY TO ANY BREACH BY LESSOR OF THIS AGREEMENT OR ANY OTHER AGREEMENT
BETWEEN LESSEE AND LESSOR SHALL BE A CAUSE OF ACTION SOUNDING IN CONTRACT AND
WITH DAMAGES LIMITED TO ACTUAL AND DIRECT DAMAGES INCURRED.
(15) ASSIGNMENTS: LESSOR may from time to time assign all or any
part of its right, title and interest in this Agreement, including all moneys
and claims for moneys due and to become due hereunder; provided, however, that
LESSEE may remain in possession of any Vehicle until expiration of its
respective Lease Term as long as LESSEE shall not be in default.
LESSEE SHALL NOT ASSIGN, SUBLET, LIEN, ENCUMBER OR TRANSFER ANY
INTEREST IN ANY OF THE VEHICLES OR ANY INTEREST IN THIS AGREEMENT TO ANY PARTY
WITHOUT THE WRITTEN CONSENT OF LESSOR. ANY SUCH CONSENT BY LESSOR SHALL NOT
RELIEVE LESSEE OF ITS OBLIGATIONS AND LIABILITIES HEREUNDER.
(16) SUBSIDIARIES, PARENTS AND AFFILIATES: Any Vehicles leased by
LESSOR to, or operated or used by, present or future subsidiaries, parents or
affiliates of LESSEE shall be within the terms and conditions of this
Agreement, unless covered by a separate lease agreement with such subsidiary,
parent or affiliate, and LESSEE agrees that, in the event such subsidiary,
parent or affiliate does not perform according to the terms and conditions of
the Agreement, LESSEE will, upon fifteen (15) days' notice of any default,
perform according to the tenor of this Agreement regarding the Vehicles on
lease to such subsidiary, parent or affiliate. Such performance shall be
absolute and unconditional and, with respect to amounts owing, constitute a
guaranty of payment.
(17) EXECUTION AND GOVERNING LAW: THIS AGREEMENT SHALL NOT BECOME
EFFECTIVE UNTIL EXECUTED BY AN AUTHORIZED REPRESENTATIVE OF LESSOR IN EDEN
PRAIRIE, MINNESOTA. THE LAWS OF THE STATE OF MINNESOTA SHALL GOVERN ALL
QUESTIONS OR DISPUTES, WHETHER SOUNDING IN TORT OR CONTRACT, RELATING TO THE
INTERPRETATION, PERFORMANCE, VALIDITY, ENFORCEMENT, OR EFFECT OF THIS
AGREEMENT, WITHOUT REGARD TO CHOICE OF LAW PRINCIPLES THEREOF. WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, ALL VEHICLES LEASED HEREUNDER SHALL
BE SUBJECT TO MINNESOTA STATUTES SECTION 168A.17 SUBD. 1A.
1991 Gelco Corporation 9 of 11
<PAGE> 10
(18) SEVERABILITY: If any portion of this Agreement shall be found
to be illegal, invalid or contrary to public policy, the same may be modified
or stricken by a Court of competent jurisdiction to the extent necessary to
allow the Court to enforce such provision in a manner which is as consistent
with the original intent of the provision as possible. the striking or
modification by the Court of any provision shall not have the effect of
invalidating the Agreement as a whole.
(19) WAIVER OF JURY TRIAL: BOTH PARTIES TO THIS AGREEMENT HEREBY
WAIVE ANY AND ALL RIGHT TO ANY TRIAL BY JURY IN ANY ACTION OR PROCEEDING
ARISING DIRECTLY OR INDIRECTLY HEREUNDER.
(20) MISCELLANEOUS: This Agreement is for the benefit of and may
be enforced by the respective parties and their successors and permitted
assignees and is not for the benefit of and may not be enforced by any third
party. This Agreement is the product of negotiations between the parties.
Each provision hereof shall be read and interpreted in accordance with its
common and ordinary meaning and no ambiguity in language shall be read or
interpreted in favor of or against either party.
(21) ODOMETER DISCLOSURE STATEMENT: Federal law (and state law, if
applicable) requires that LESSEE disclose, and LESSEE shall disclose, the
mileage of each Vehicle to LESSOR in connection with the transfer of ownership
of the Vehicle. Failure to complete an odometer disclosure form or making a
false statement may result in fines and/or imprisonment.
(22) LOSS OF OR DAMAGES TO VEHICLES:
(a) RISK OF LOSS. LESSEE shall bear all risk of los,
damage or destruction to the Vehicle, however caused and included without
limitation, collision, fire, theft, flood, or conversion, abandonment, or
unauthorized sale or concealment by agents or employees of LESSEE, or any other
cause or combination of causes which may occur after the moment of delivery of
the Vehicle to the moment of surrender to or repossession by LESSOR or its
agent. LESSEE shall advise LESSOR of any loss, destruction or damage to the
Vehicle, within three (3) days from the occurrence thereof.
(b) DAMAGES. In the event the Vehicle
suffers total loss, destruction or irreparable damage, LESSEE
shall pay to LESSOR the Unamortized Book Value for such Vehicle
upon receipt of an invoice for the same. If such total loss,
destruction or irreparable damage shall occur during the period Initials
when LESSEE would be required by the respective Vehicle Order
to pay an Early Termination Charge, then LESSEE shall /s/ J.S.
additionally pay the Early Termination Charge. LESSEE's
obligation to pay rental and other expenses shall continue during --------
any period of repairs, and in the case of total loss or irreparable
damage, until LESSOR's receipt of payment thereof. LESSEE
understands that such Unamortized Book Value plus Interest
Adjustment Charge, if any, amy exceed the actual cash value of
he Vehicle as determined by the insurer of the Vehicle
and that LESSEE shall be required to pay such excess to LESSOR
(23) MODIFICATIONS: This Agreement, all Exhibits
and addenda, and each respective New Vehicle Order and Initials
Delivery Receipt contain the entire understanding of the parties
and merge all oral understandings. Any modifications, changes, /s/ J.S.
or amendments may be made only in writing subscribed by LESSEE
and LESSOR. Failure of either party to enforce any right granted --------
herein shall not be deemed a waiver of such right.
1991 Gelco Corporation 10 of 11
<PAGE> 11
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by duly authorized representatives.
Effective as of the 2nd of February, 1994.
MCCULLAGH LEASING (LESSOR) Seitel Geophysical, Inc. (LESSEE)
Address: 30803 Little Mack Avenue Principal Place of Business and
Roseville, MI 48066-1787 Mailing Address 50 Briar Hollow Lane West
--------------------------
Regional Office Representative: Houston, Texas 77027
-----------------------------------------
By: /s/ [illegible signature] By: /s/ Jay N. Silverman
Title: Regional V.P. Title: President
Date: 2-22-94 Date: 2-16-94
ACCEPTED AT:
Eden Prairie, MN Representative:
By: /s/ [illegible signature]
Date: 2/24/94
1991 Gelco Corporation 11 of 11
<PAGE> 12
EXHIBIT O Customer #61824
This Exhibit amends and modifies that certain Lease Agreement (hereinafter
"Agreement") by and between the undersigned.
1. For the purposes of this Exhibit, the following definitions shall
apply:
Contingent Rentals Costs incurred or assessed by LESSOR to repair or
recondition Vehicles that are surrendered for sale with excessive wear
and tear.
Guaranteed Residual Sixteen percent (16%) of the Capitalized Cost for
Vehicles sold at or prior to twelve (12) months from the date of
delivery of the Vehicle to LESSEE, and thirteen percent (13%) of the
Unamortized Book Value for Vehicles sold thereafter.
2. Section 8(e)(ii) of the Agreement is amended in its entirety to read as
follows:
If the Net Proceeds are less than the Unamortized Book Value of
the Vehicle sold, but equal to or greater than the Guaranteed Residual,
then LESSEE shall pay LESSOR, as a rental charge adjustment, the
difference between the Net Proceeds and the Unamortized Book Value,
plus Contingent Rentals, if any. If the Net Proceeds are less than the
Guaranteed Residual of the Vehicle sold, then LESSEE shall pay LESSOR,
as a rental charge adjustment, the difference between the Guaranteed
Residual and the Unamortized Book Value, plus Contingent Rentals, if
any.
3. This Amendment is effective as of 2-16-94 for all Vehicles on lease at
that date and all Vehicles placed in service thereafter. Except as
amended by this Exhibit, all other terms and conditions of the
Agreement are ratified and confirmed and remain in full force and
effect.
McCULLAGH LEASING (LESSOR) Seitel Geophysical, Inc. (LESSEE)
By: /s/ [illegible signature] By: /s/ Jay N. Silverman
Title: Regional V.P. Title: President
Date: 2-22-94 Date: 2-16-94
1 of 1
<PAGE> 1
EXHIBIT 10.7.2
GE CAPITAL
Fleet Services Partial Assignment
This is a partial assignment of the Lease Agreement and, if indicated in
Section 2. below, related Service Agreement(s), by and between Gelco
Corporation doing business as GE Capital Fleet Services with its principal
offices at Three Capital Drive, Eden Prairie, Minnesota 55344 ("GECFS") and the
Assignor identified herein to the Assignee identified herein. The foregoing
Lease Agreement (the "Lease") and, if applicable Service Agreements
("Services"), are collectively referred to herein as the "Agreements".
WITNESSETH:
WHEREAS, a valid Lease dated February 22, 1994 presently exists between GECFS
and Assignor and, if applicable, valid Services, identified on Exhibit B and
Assignor has previously provided Assignee with a copy of each of the Agreements
and Assignee hereby acknowledges receipt of same; and
WHEREAS, the Assignor desires to assign and transfer to the Assignee identified
herein, and the Assignee desires to acquire from the Assignor its interest
under the Lease in certain vehicles (the "Vehicles") described on the Exhibit A
attached hereto; and, if applicable, the related Services.
Assignor Information:
Name: SEITEL GEOPHYSICAL, INC.
Address: 50 Briar Hollow Lane, Houston, TX 77027
State of Incorporation: Delaware
Assignee Information:
Name: EAGLE GEOPHYSICAL, INC.
Address: 50 Briar Hollow Lane, Houston, TX 77027
State of Incorporation: Delaware
WHEREAS, GECFS is willing to consent to such assignment and transfer on the
terms and conditions hereinafter set forth:
NOW, THEREFORE, in consideration of the foregoing recitals and other good and
valuable considerations, the receipt and sufficiency of which are hereby
acknowledged by GECFS, Assignor and Assignee, the parties to this Partial
Assignment, intending to be legally bound, hereby mutually agree as follows:
1. ASSIGNMENT. As of the Effective Date established herein, Assignor
hereby assigns and transfers to Assignee the Assignor's interest under the
Lease with respect to the Vehicles including its leasehold interest in and to
the Vehicles and its interest in and to the Services; Assignee hereby accepts
and takes the foregoing assignment of the Assignor's interest as Assignee under
the Lease including its leasehold interest in and to the Vehicles and under the
Services; and GECFS consents to the foregoing assignment in each and every case
on and subject to the terms and conditions herein set forth.
2. SERVICES. Services with respect to the Vehicles which are included in
this Assignment are as provided in the following documents: None
1
<PAGE> 2
3. SPECIFIC TERMS AND CONDITIONS MODIFYING AGREEMENTS. Nothing to the
contrary in the Agreements notwithstanding, the following provisions shall
apply to Assignee as conditions of GECFS' consent to this Partial Assignment:
A. Insurance. As of the Effective Date of this Assignment and continuing
for the Lease Term of each Vehicle, Assignee shall maintain the following
coverages with an insurance company acceptable to GECFS and deliver to GECFS a
certificate thereof:
a. Automobile liability insurance naming GECFS as an Additional Insured
with limits of coverage as GECFS may require, but in no event less than $1
million combined single limit per occurrence ($5 million for Vehicles capable
of transporting 9 or more passengers). No self-insured retention or deductible
is permissible.
b. Comprehensive and collision insurance naming GECFS as Loss Payee with
coverage for the actual cash value of each Vehicle and subject to a deductible
no greater than $500. Assignee shall bear all risk of loss, damage or
destruction to the Vehicle (which may exceed actual cash value), however
caused, from the time of acceptance until surrender to GECFS.
c. Conditions. All insurance policies shall provide for 30 days' prior
written notice to GECFS of any cancellation or reduction in coverage. Assignee
authorizes GECFS to endorse Assignee's name to insurance checks related to the
Vehicles.
B. 365-Day Interest Basis. As of the Effective Date, the interest
component of all rental charges shall be calculated on a 365 day basis.
C. Further Assignment. ASSIGNEE SHALL NOT ASSIGN, SUBLET, LIEN,
ENCUMBER, OR TRANSFER ANY INTEREST IN ANY OF THE VEHICLES OR ANY INTEREST IN
THIS AGREEMENT TO ANY PARTY WITHOUT THE WRITTEN CONSENT OF GECFS. ANY SUCH
CONSENT AS GECFS SHALL NOT RELIEVE ASSIGNEE OF ITS OBLIGATIONS AND LIABILITIES
HEREUNDER UNLESS ASSIGNEE IS RELEASED BY GECFS.
D. Maximum Lease Term. The lease term of any Vehicle shall not exceed 50
months for automobiles, 72 months for light trucks and 96 months for medium and
heavy trucks. If a Vehicle reaches its Maximum Lease Term, Assignee agrees
that it has no right to continued possession of such Vehicle and that it will
surrender such Vehicle to GECFS for sale. If a Vehicle is or becomes fully
amortized, but has not reached its Maximum Lease Term, Assignee agrees to pay
GECFS an extended administration fee of $50.00 per month.
E. Execution and Governing Law: THIS ASSIGNMENT SHALL NOT BECOME
EFFECTivE UNTIL EXECUTED BY GECFS IN EDEN PRAIRIE, MINNESOTA. THE LAWS OF THE
STATE OF MINNESOTA SHALL GOVERN ALL QUESTIONS OR DISPUTES, WHETHER SOUNDING IN
TORT OR CONTRACT, RELATING TO THE INTERPRETATION, PERFORMANCE, VALIDITY,
ENFORCEMENT, OR EFFECT OF THIS AGREEMENT, WITHOUT REGARD TO CHOICE OF LAW
PRINCIPLES THEREOF. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, ALL
LEASES OF VEHICLES HEREUNDER SHALL BE SUBJECT TO MINNESOTA STATUTES SECTION
168A.17 SUBD.1A.
F. Odometer Disclosure Statement: At the time of surrender of a Vehicle
to GECFS for sale, Federal law (and State law, if applicable) requires that
Assignee disclose, and Assignee shall disclose, the mileage of each Vehicle to
GECFS in connection with the transfer of ownership of the Vehicle. Failure to
complete an odometer disclosure form or making a false statement may result in
fines and/or imprisonment.
G. Hazardous Substances: In no event will the Vehicles be used to
transport any hazardous substances.
2
<PAGE> 3
4. ASSUMPTION OF LEASE AND SERVICES. The Assignee acknowledges that the
Assignee has read the Lease and Services and all Exhibits and Schedules
attached thereto and hereby assumes as of the Effective Date all of the
obligations, liabilities and duties of Assignor under the Lease and Services
directly or indirectly related to the Vehicles, as though the Assignee had
originally entered into the Agreements including, without limitation, the
covenants of indemnification and GECFS' disclaimer of any warranties provided
that Assignee hereby assumes the obligations of rental payments and other
payments or reimbursements with respect to the Vehicles and Services as of the
Billing Effective Date.
5. ASSIGNOR GUARANTY. The Assignor herein agrees that Assignor will
remain fully bound to the observance and performance of each and every term and
condition imposed upon it under the Agreements for the full remainder of the
term of each Vehicle, notwithstanding this Partial Assignment, and that in
event the Assignee fails to perform its obligations, the Assignor agrees to do
so. Such performance shall be absolute and unconditional and, with respect to
amounts owing, constitute a guaranty of payment.
6. BILLING EFFECTIVE DATE. For purposes of monthly rental billing and
other monetary obligations, this Assignment is effective as of the 1st day of
or such subsequent date as the parties mutually agree. (Must be the 1st day of
the month.)
7. EFFECTIVE DATE. For purposes of all obligations, liabilities and
duties, other than monthly rental billing and other monetary obligations, the
Effective Date of this Partial Assignment shall be the later of the date upon
which this Partial Assignment is accepted by an authorized representative of
GECFS in Eden Prairie, Minnesota or the date upon which the parties agree that
possession of the Vehicles will be transferred to Assignee. Date of agreed
transfer of possession: December 31, 1996.
8. COSTS AND EXPENSES. Assignor agrees to reimburse GECFS for any out of
pocket expenses related to this assignment and to pay a setup and documentation
fee for this assignment of $330.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed
by duly authorized representatives
SEITEL GEOPHYSICAL, INC. EAGLE GEOPHYSICAL, INC.
Assignor Assignee
By /s/ Jay N. Silverman By /s/ Jay N. Silverman
Title Jay N. Silverman, President Title Jay N. Silverman, President
GE Capital Fleet Services
By: /s/ Melinda L. Ackerman
Title: Authorized Signatory
Effective Date: 4-8-97
No Assignment will be accepted until GECFS receives a Certificate of Insurance
from Assignee providing required coverage. Certificate should accompany
document or be faxed to (800) 668-8879
EXHIBIT A
PARTIAL ASSIGNMENT
SEE ATTACHED VEHICLE LISTING 2
3
<PAGE> 4
GE CAPITAL
Fleet Services
Assignee Business Use Certification
(Pursuant to the Internal Revenue Code)
1. Assignee certifies under penalty of perjury that it intends the
Vehicles leased pursuant to this Agreement to be used more than 50% in
the trade or business of Assignee; and
2. Assignee has been advised that GECFS and not Assignee will be treated
as the owner of the Vehicles for Federal Income Tax purposes.
EAGLE GEOPHYSICAL, INC.
By: /s/ Jay N. Silverman
Title: Jay N. Silverman, President
4
<PAGE> 5
EXHIBIT A
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fleet 61824 Level 2 1 Vin 1FDNF77HXCVA23202 Inservice Date 2/28/94 Name and Address
Unit #94601106 Level 3 1000 Cont./Sub L2 1400 Lic. No. 0593VU UNASSIGNED
Level 4 Year 1982 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 03/31/96 50 BRIAR HOLLOW LAND
Level 6 Model F700 Date HOUSTON TX 77027
Client Reference No. MIS/Term 26 / 36
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1NNEF4223BM053637 Inservice Date 2/28/94 Name and Address
Unit #94601118 Level 3 1000 Cont./Sub L2 1400 Lic. No. Y38092 UNASSIGNED
Level 4 Year 1981 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make TRLRX Lic. Renew 03/31/96 50 BRIAR HOLLOW LAND
Level 6 Model TRAILER Date HOUSTON TX 77027
Client Reference No. MIS/Term 26 / 24
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FBJS31H5THA31629 Inservice Date 3/18/96 Name and Address
Unit #96000359 Level 3 1000 Cont./Sub L2 0001 Lic. No. UNASSIGNED
Level 4 Year 1996 Lic. St. LA SEITEL GEOPHYSICAL, INC.
Level 5 Make FORDX Lic. Renew 107 CORNER ROAD
Level 6 Model E350 CLUBWAG Date 0 / 60 BROUSSARD LA 70518
Client Reference No. MIS/Term
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FTEX15B5RKA92137 Inservice Date 2/26/94 Name and Address
Unit #94601116 Level 3 1000 Cont./Sub L2 0001 Lic. No. S394896 UNASSIGNED
Level 4 Year 1994 Lic. St. LA SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 01/31/98 50 BRIAR HOLLOW LAND
Level 6 Model F150 SUPER C Date HOUSTON TX 77027
Client Reference No. MIS/Term 26 / 36
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FDKF38M5RNB17388 Inservice Date 5/2/94 Name and Address
Unit #94SG1107 Level 3 1000 Cont./Sub L2 0001 Lic. No. FL4340 UNASSIGNED
Level 4 Year 1994 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 05/31/96 50 BRIAR HOLLOW LAND
Level 6 Model F350 REGULAR Date HOUSTON TX 77027
Client Reference No. MIS/Term 24 / 36
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FDKF38M1RNB17386 Inservice Date 5/2/94 Name and Address
Unit #94SG1108 Level 3 1000 Cont./Sub L2 0001 Lic. No. FL4341 UNASSIGNED
Level 4 Year 1994 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 05/31/96 50 BRIAR HOLLOW LAND
Level 6 Model F350 REGULAR Date HOUSTON TX 77027
Client Reference No. MIS/Term 24 / 36
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FDKF38M3RNB17387 Inservice Date 5/4/94 Name and Address
Unit #94SG1109 Level 3 1000 Cont./Sub L2 0001 Lic. No. HX7900 UNASSIGNED
Level 4 Year 1994 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 06/30/96 50 BRIAR HOLLOW LAND
Level 6 Model F350 REGULAR Date HOUSTON TX 77027
Client Reference No. MIS/Term 24 / 36
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FTHX26H9RKB39195 Inservice Date 5/10/94 Name and Address
Unit #94SG1110 Level 3 1000 Cont./Sub L2 0001 Lic. No. JJ9206 UNASSIGNED
Level 4 Year 1994 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 04/30/96 50 BRIAR HOLLOW LAND
Level 6 Model F250 SUPER C Date HOUSTON TX 77027
Client Reference No. MIS/Term 24 / 36
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE> 6
<TABLE>
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Fleet 61824 Level 2 1 Vin 1FTHF26H8RLA77219 Inservice Date 3/11/94 Name and Address
Unit #94SG1111 Level 3 1000 Cont./Sub L2 0001 Lic. No. HD5552 UNASSIGNED
Level 4 Year 1994 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 03/31/96 50 BRIAR HOLLOW LAND
Level 6 Model F250 REGULAR Date HOUSTON TX 77027
Client Reference No. MIS/Term 26 / 36
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FTHF26H4RLA77220 Inservice Date 3/31/94 Name and Address
Unit #94SG1112 Level 3 1000 Cont./Sub L2 0001 Lic. No. HD5550 UNASSIGNED
Level 4 Year 1994 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 03/31/96 50 BRIAR HOLLOW LAND
Level 6 Model F250 REGULAR Date HOUSTON TX 77027
Client Reference No. MIS/Term 25 / 36
Client Unit No.
- ---------------------------------------- ------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FTEX Inservice Date 5/2/94 Name and Address
Unit #94SG1113 Level 3 14N3RKB28389 Lic. No. JY9576 UNASSIGNED
Level 4 1000 Cont./Sub L2 0001 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Year 1994 Lic. Renew 04/30/96 50 BRIAR HOLLOW LAND
Level 6 Make FORDX Date HOUSTON TX 77027
Client Reference No. Model F150 SUPER C MIS/Term 24 / 36
Client Unit No.
- ---------------------------------------- ------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FTEX14NXRKB28390 Inservice Date 5/2/94 Name and Address
Unit #94SG1114 Level 3 1000 Cont./Sub L2 0001 Lic. No. JY8941 UNASSIGNED
Level 4 Year 1994 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 04/30/96 50 BRIAR HOLLOW LAND
Level 6 Model F150 SUPER C Date HOUSTON TX 77027
Client Reference No. MIS/Term 24 / 36
Client Unit No.
- ---------------------------------------- ------------------------------------------------------------------------------------
Fleet 61824 Level 2 1 Vin 1FTJW36M6REA30022 Inservice Date 5/17/94 Name and Address
Unit #94SG1115 Level 3 1000 Cont./Sub L2 0001 Lic. No. FL4019 UNASSIGNED
Level 4 Year 1994 Lic. St. TX SEITEL GEOPHYSICAL INC.
Level 5 Make FORDX Lic. Renew 04/30/96 50 BRIAR HOLLOW LAND
Level 6 Model F350 CREW CA Date HOUSTON TX 77027
Client Reference No. MIS/Term 23 / 36
Client Unit No.
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE> 1
10.8.1
TERM CREDIT AND SECURITY AGREEMENT
This Term Credit and Security Agreement (the "Agreement") is executed
and delivered this 15th day of July, 1993 by and between SEITEL GEOPHYSICAL,
INC., a Delaware corporation ("Borrower"), with its chief executive office and
its principal place of business at 50 Briar Hollow Lane, 7th Floor-West,
Houston, Texas 77027 and CENTRAL BANK OF THE SOUTH, an Alabama banking
corporation ("Bank"), with its principal offices at 15 South 20th Street,
Birmingham, Alabama 35233. Borrower has applied to Bank for a term loan in
the principal amount of FOUR MILLION THREE HUNDRED THOUSAND AND NO/100 Dollars
($4,300,000) to be evidenced by a Term Note (the "Note") in such amount, and to
be secured by a security interest in all of the Collateral (as defined herein)
on the terms hereinafter set forth.
Bank is willing to extend such $4,300,000 term loan (the "Term Loan") to
Borrower to provide Borrower with financing for the purchase of an Opseis Eagle
seismic data gathering and recording system upon the security of the Collateral
on the terms and subject to the conditions hereinafter set forth.
Accordingly, Borrower and Bank in consideration of the premises, the
credit to be extended hereunder, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, agree as follows:
SECTION 1. DEFINITIONS - AS HEREIN USED.
1.1 "Account" and "Account Receivable" shall include all
accounts, accounts receivable, notes, notes receivable, contracts,
contract rights, leases, lease payments, rental agreements, rentals,
drafts, documents, title retention and lien instruments, security
agreements, acceptances, instruments, conditional sales contracts,
chattel mortgages, chattel paper, general intangibles, and other forms
of obligation and rights to payment and receivables whether or not yet
earned by performance (including, without limitation, state and
federal tax refunds).
1.2 "Account Debtor" shall mean the party other than
Borrower who is obligated on or under any Account Receivable or
contract right.
1.3 "Borrower's Loan Account" shall mean the account on the
books of Bank in which Bank will record the Term Loan advance made by
Bank to or on behalf of Borrower pursuant to this Agreement, payments
received on such Term Loan and other appropriate debits and credits as
provided by this Agreement or the Note.
1.4 "Collateral" shall mean any and all property in which
Bank acquired, now has, by this Agreement or any of the other Loan
Documents (as defined herein) acquires, or hereafter acquires a
security interest or other rights or interests as security for the
Liabilities (as defined herein).
1.5 "Insolvency" of Borrower or any other person or
entity shall mean that there shall have occurred with respect to
Borrower or such other person or entity one or more of the following
events: death, incapacity, dissolution, termination of existence,
liquidation, insolvency, business failure, appointment of a receiver
of any part of title property of, assignment for the benefit of
creditors by Borrower or such other person or entity, or institution
of any action or proceeding by Borrower or such
Term Credit and Security Agreement Page 1
<PAGE> 2
other person or entity under or pursuant to any insolvency laws
relating to the relief of debtors by Borrower or such other person or
entity, institution of proceedings in bankruptcy or with respect to
the readjustment of indebtedness, reorganization, composition or
extension by Borrower or such other person or entity (including,
without limitation, under or pursuant to the United States Bankruptcy
Code, as amended, or under any similar law at any time enacted (the
"Bankruptcy Code")), or if any corporate action shall be taken for the
purpose of effecting any of the foregoing.
1.6 "Inventory" shall mean all of Borrower's (or other
entities', as applicable) inventory (as defined in the Uniform
Commercial Code as enacted in the State of Alabama, or in any other
jurisdiction), including, without limitation, all goods, merchandise
and other personal property now owned or hereafter acquired by
Borrower (or other entities, as applicable) which are held for sale,
lease, rental or licensing or are furnished or to be furnished under a
contract of service and all raw materials, work in process, and
materials or supplies used or to be used, or consumed or to be
consumed, in Borrower's (or other entities', as applicable) business,
and related products, wherever located, and all goods represented
thereby, and all such goods that may be reclaimed or repossessed from
or returned by Borrower's (or other entities', as applicable)
customers wheresoever the same may be located, and all shipping and
packaging materials relating to any of the foregoing.
1.7 "Liabilities" shall mean any and all obligations,
indebtedness and liabilities of (i) Borrower and (ii) Seitel, Inc.
("Related Borrower") to Bank of every kind and description, whether
direct or indirect, absolute or contingent, joint or several, due or
to become due, liquidated or unliquidated, now existing or hereafter
arising, and all extensions, modifications, renewals, and refinancings
thereof, regardless of how such Liabilities arise or by what agreement
or instrument (if any) they may be evidenced and include obligations
to perform acts and refrain from taking actions as well as obligations
to pay money. Without limiting the foregoing, Liabilities shall
specifically include all liabilities and obligations of (i) Borrower
arising under or in connection with (a) this Agreement and (b) the
Note and (ii) Related Borrower arising under or in connection with (a)
that certain Revolving Credit and Security Agreement executed by
Related Borrower in favor of Bank on or about the date hereof (the
"Related Loan Agreement") in connection with Related Borrower's
$10,000,000 revolving line of credit from Bank (the "Revolving Line"),
(b) that certain $10,000,000 Master Revolving Promissory Note executed
by Related Borrower in connection with the Revolving Line (the
"Revolving Note"), and the other documents and instruments executed in
connection with the Revolving Line (jointly and severally with the
Related Loan Agreement and the Revolving, Note as the same may be
amended, referred to as the "Related Loan Documents") and (c) the
Continuing Unlimited Guaranty (the "Guaranty") executed by Related
Borrower in connection with the Term Loan.
1.8 "Loan Documents" shall mean and include the Note,
this Agreement, the Guaranty, the Related Loan Documents, the Side
Letter Agreement executed by Bank, Borrower and Related Borrower dated
July 15, 1993, and any other agreement, document or instrument now or
hereafter evidencing, securing, guaranteeing or relating to the Term
Loan or any other Liability, obligation or indebtedness of Borrower or
Related Borrower to Bank, as the same may be amended.
1.9 "Net Worth" and "Current Maturities of Long Term
Debt" shall be defined and calculated in accordance with generally
accepted accounting principles consistently applied.
1.10 "Proceeds" shall mean all cash proceeds, non-cash
proceeds and all forms of payment and other property received by or
due to Borrower, et al. from the collection, sale, lease, rental,
transfer, exchange, disposition, licensing or use of Accounts and
other property constituting Collateral hereunder and any and all
claims against any third party for loss of or damage to any
Collateral, including insurance, contract and tort claims, and
further, without limiting the generality of the foregoing, Proceeds
shall include all Accounts, checks, cash, money orders, drafts,
chattel paper, general intangibles, instruments,
Term Credit and Security Agreement Page 2
<PAGE> 3
notes and other documents evidencing payment and payment obligations
for the sale, lease, rental, transfer, exchange, use, disposition,
licensing, or collection of Collateral.
1.11 "Tangible Net Worth" shall mean Related Borrower's
Net Worth less (i) any and all loans and other advances to Related
Borrower's affiliates, subsidiaries, owners, parent, employees,
officers, shareholders, directors or other related entities; (ii)
notes, notes receivable, accounts, accounts receivable, intercompany
receivables, and other amounts owing from Related Borrower's
affiliates, subsidiaries, owners, parent, employees, officers,
shareholders, directors or other related entities; (iii) any and all
intangibles; plus Related Borrower's existing 12-1/2% subordinated
debentures due in 1999 and Related Borrower's existing 9% convertible
subordinated debentures due in 2002 ("Related Borrower's Subordinated
Debentures").
1.12 "Total Debt" shall mean all of Related Borrowers'
indebtedness and liabilities owing to Bank or any other person or
entity, whether now or hereafter existing, created or arising,
absolute or contingent, direct or indirect, joint or several,
including without limitation, the Liabilities.
1.13 "Permitted Encumbrances" shall mean any of the
following (but only to the extent the same do not or could not, in
Bank's reasonable opinion, jeopardize Bank's rights or priority in or
to any Collateral):
(a) liens of vendors, carriers, warehousemen, landlords,
mechanics, laborers and materialmen arising by law
for sums which are not yet due or which are being
diligently contested in good faith;
(b) liens for taxes not yet due or which are being
diligently contested in good faith by appropriate
proceedings;
(c) security interests in the Related Borrower's
equipment (other than equipment constituting Seismic
Data, if any) provided that they are limited to those
securing a portion of the purchase price of said
equipment;
(d) pledges or deposits in connection with or to secure
worker's compensation or unemployment insurance;
(e) Geo Seismic Services, Inc.'s security interest in the
Assets (as that term is defined in the letter from
Related Borrower to Bank dated October 14, 1992 (the
"Letter")) purchased from Geo Seismic Services, Inc.
but only to the extent described in and permitted by
the Letter; and
(f) security interests in Borrower's equipment (other
than the equipment described or referenced in Exhibit
B hereto).
1.14 Any terms used to describe Bank's security interest
hereunder not specifically defined herein shall have the meanings and
definitions given those terms under the Uniform Commercial Code of
Alabama as in effect on the date hereof. Any capitalized terms used
but not defined in this Agreement shall have the meaning given the
same in the Related Loan Agreement.
SECTION 2. BORROWER'S REPRESENTATIONS AND WARRANTIES; CERTAIN
COVENANTS.
To induce Bank to enter into this Agreement, Borrower represents,
warrants and covenants as follows:
Term Credit and Security Agreement Page 3
<PAGE> 4
2.1 Borrower (a) is a duly organized Delaware
corporation, validly existing, and in good standing under the laws of
the States of Delaware, Texas and Louisiana; (b) has all necessary
licenses and corporate power and authority to own its assets and
conduct its business as now conducted or presently proposed to be
conducted; (c) has no subsidiaries (except as set forth on Schedule
2.1 hereto; and (d) is duly qualified and in good standing (and will
remain so qualified and in good standing) in every jurisdiction in
which it is or shall be doing business or in which the failure so to
qualify and remain in good standing would or could have a material
adverse effect on its business or properties or the Collateral.
2.2 The execution, delivery, and performance hereof are
within Borrower's corporate powers, have been duly and validly
authorized and are not in contravention of the law or the terms of
Borrower's charter, by-laws, or other incorporation papers, or of any
indenture, agreement, or undertaking or any law, regulation or order
to which Borrower is a party or by which it or any of its properties
is or may be bound. Upon execution and delivery hereof, this
Agreement will be a valid and binding obligation of Borrower
enforceable in accordance with its terms.
2.3 Except for the security interests granted to Bank
hereby or by any of the other Loan Documents in favor of Bank, either
Related Borrower or Borrower is and, as to the Accounts Receivable and
other Collateral arising or to be acquired after the date hereof,
shall be the sole and exclusive owner of the Accounts and all other
Collateral free from any lien, claim, charge, security interest,
mortgage, secondary financing or encumbrance or other interests except
for (i) Permitted Encumbrances; (ii) Approved Seismic Data Licenses
(defined below); and (iii) those approved in advance in writing by
Bank, and Borrower shall defend the Accounts and all other Collateral
and all Proceeds and products thereof against all claims and demands
of all persons at any time claiming the same or any interest therein
adverse to the interests of Bank.
2.4 Borrower will promptly pay, all taxes or charges
levied on or with respect to, and will at all times keep the Accounts
and all other Collateral, free and clear of all liens, claims,
charges, security interests, mortgages, secondary financing and
encumbrances and other interests whatsoever, other than (i) Approved
Seismic Data Licenses; (ii) the security interests granted to Bank
hereby or by any of the other Loan Documents, (iii) Permitted
Encumbrances; and (iv) those approved in advance in writing by Bank.
Borrower agrees to take all actions that Bank may request to establish
and maintain a valid title and security interest in the Accounts and
all other Collateral, free and clear of all other liens, claims,
charges, security interests, mortgages, secondary financing and
encumbrances whatsoever, including, without limitation, the payment
of any amounts, taxes, assessments, fees and/or charges necessary to
perfect Bank's security interest in the same. If such amounts, taxes
or assessments, fees and/or charges remain unpaid after the date fixed
for the payment of same, or if any lien, claim, charge, security
interest, mortgage, secondary financing or encumbrance shall arise,
or be claimed or asserted with respect to the Accounts or any other
Collateral, Bank may, without notice to Borrower, pay such taxes,
assessments, charges or claims, or take any and all other actions
(including the payment of money) deemed desirable by Bank to remove
any such lien, claim, charge, security interest, mortgage, secondary
financing or encumbrance, and Borrower agrees that the amounts
thereof, along with any amounts necessary to perfect and note Bank's
interest in any Collateral, may be charged to Borrower's Loan Account
described herein and shall bear interest at the rate of interest borne
by Borrower's obligations under the Note.
2.5 Neither Borrower nor Related Borrower will (nor will
allow or suffer any other person or entity to) (except-for the
non-exclusive licensing of Related Borrower's Seismic Data pursuant to
Participation Agreements and Licensing Agreements entered into in the
normal and ordinary course of business ("Approved Seismic Data
Licenses')), sell, transfer, lease, convey or otherwise dispose of the
Collateral, any portion thereof, or any interest therein (or any of
the Proceeds thereof, including, without limitation, money, checks,
money orders, drafts, notes, instruments, documents, chattel paper,
Accounts, returns or repossessions), without Bank's prior written
consent.
Term Credit and Security Agreement Page 4
<PAGE> 5
2.6 Borrower will deliver to Bank, so long as any of the
Liabilities shall remain outstanding, such documents, instruments,
data or information of any type requested by Bank with respect to the
Accounts Receivable and any other Collateral.
2.7 At the time Borrower pledges, sells, assigns or
transfers to Bank any instruments, document of title, security,
chattel paper or other property, or any interest therein, Borrower
shall be the lawful owner thereof and shall have good right to pledge,
sell, assign or transfer the same; none of such property shall have
been pledged, sold, assigned or transferred to any person other
than Bank or in any way encumbered (except as otherwise allowed under
the terms of this Agreement), and Borrower shall defend the same
against the lawful claims and demands of all persons other than Bank.
2.8 Borrower shall give Bank written notice of each
location at which tangible Collateral is or will be kept, whether for
temporary processing, storage, like purposes or otherwise. Except as
such notice is given, all tangible Collateral is and shall be kept at
(a) Borrower's places of business listed on Schedule 2.9 hereto or (b)
Related Borrower's places of business noted in Section 2.9 of the
Related Loan Agreement.
2.9 Borrower shall give Bank written notice of each
office of Borrower at which records of Borrower pertaining to
Borrower's Accounts Receivable, general intangibles and contract
rights are kept. Except as such notice is given, all records of
Borrower pertaining to Borrower's Accounts Receivable, general
intangibles and contract rights are and shall be kept at Borrower's
chief executive office as noted on the first page of this Agreement
(which Borrower represents and warrants is Borrower's chief executive
office).
2.10 Subject to any limitations stated therein or in
connection therewith, all balance sheets, earnings statements and
other financial data which have been or may hereafter be furnished to
Bank to induce it to enter into this Agreement, or otherwise furnished
in connection herewith, do or shall fairly represent the financial
condition of Borrower or Related Borrower (or other person or entity,
as applicable) as of the dates and results of operations for the
periods for which the same are furnished in accordance with generally
accepted accounting principles consistently applied, and all other
information, reports and other papers and data furnished to Bank shall
be accurate, as of the relevant date, and correct in all material
respects and complete insofar as completeness may be necessary to give
Bank a true and accurate knowledge of the subject matter.
2.11 With respect to any and all equipment which may now
or hereafter constitute Collateral hereunder, Borrower or Related
Borrower shall maintain possession of same, keep the same in good
repair, and maintain casualty insurance on the same naming Bank as
loss payee under a New York (long form) standard mortgagee
endorsement.
2.12 Borrower's name, chief executive office and principal
place of business are and always have been as set forth on the first
page of this Agreement, except as otherwise disclosed in writing to
Bank. Borrower will promptly advise Bank in writing of any charge in
Borrower's name, chief executive office or principal place of
business.
2.13 Borrower is not now in default under any agreement
evidencing an obligation for the payment of money, performance,
delivery, or licensing, demand under which, or acceleration of the
maturity of which would render Borrower insolvent or unable to meet
its other debts as they become due or conduct its business as usual.
2.14 In the event (a) any of Borrower's warranties or
representations shall prove to have been false or misleading when
made; or (b) an Account Debtor in judicial proceeding, shall assert
against the
Term Credit and Security Agreement Page 5
<PAGE> 6
Bank a claim or defense arising out of any transaction between such
Account Debtor and Borrower, Borrower agrees to indemnify and hold
Bank harmless from and against any liability, judgment, cost,
attorneys' fees or other expense whatsoever arising therefrom.
2.15 Borrower will pay any and all taxes, with the
exception of taxes measured by income, charges and expenses of every
kind or description paid or incurred by Bank under or with respect to
the Term Loan or any Collateral therefor or the collection of or
realization upon the same. Borrower hereby authorizes Bank to debit
such and other charges, taxes and expenses provided for in this
Agreement (including, without limitation, those taxes, charges and
expenses for which Borrower is liable under Section 13) to Borrower's
Loan Account.
2.16 None of the Collateral is patented, copyrighted or
trademarked or subject to any existing copyright, patent or trademark.
Prior to the time any Collateral is copyrighted, licensed, patented or
trademarked by Borrower or subjected to any copyright, license, patent
or trademark by Borrower, Borrower shall notify Bank and shall take
(or cause to be taken) all actions necessary to preserve the
perfection and priority of Bank's security interest in such
Collateral.
2.17 Borrower shall notify Bank of any filing under the
Bankruptcy Code by, for or against Borrower within two (2) business
days of its having knowledge of such filing.
2.18 There are no judgments, actions, suits, claims,
proceedings or investigations existing, outstanding, pending, or to
the best of Borrower's knowledge after due inquiry, threatened or in
prospect, before any court, agency or tribunal, or governmental
authority against or involving Borrower which do or could reasonably
be expected to materially affect the business, properties, prospects,
financial condition, earnings, results of operations or earnings
capacity of Borrower or which question the validity of the Term Loan
or any of the Loan Documents or any action or instrument contemplated
by any of them.
Nothing in this Section 2 shall be deemed to extend the maturity date
of the Term Loan beyond the time noted in Section 14 hereof.
SECTION 3. BANK'S AGREEMENT TO MAKE ADVANCE.
3.1 The $4,300,000 Term Loan advance shall be made
contemporaneously herewith in a manner acceptable to Bank subject to
the terms and conditions of this Agreement and Borrower's and Related
Borrower's (as applicable) performance of and compliance with each of
the Loan Documents, and so long as no event of default (including,
without limitation, the breach of any warranty or representation)
hereunder or under any of the other Loan Documents shall have occurred
or be continuing (unless waived in writing by Bank).
3.2 The Term Loan advance shall be entered as a debit to
Borrower's Loan Account. Bank shall also record in Borrower's Loan
Account all other charges, expenses and items properly chargeable to
Borrower hereunder, all payments made by Borrower on account of
indebtedness under the Term Loan and other appropriate debits and
credits. The debit balance of Borrower's Loan Account shall reflect
the amount of Borrower's indebtedness from time to time hereunder.
Nothing in this Section 3 shall be deemed to extend the maturity date
of the Term Loan beyond the time noted in Section 14 hereof.
SECTION 4. INSPECTION OF RECORDS; FURTHER ASSURANCE.
4.1 Borrower shall at reasonable times and from time to
time, and in any event, not less than quarterly, allow Bank, by or
through any of its officers, agents, employees, attorneys or
accountants to (i) examine, inspect and make extracts from Borrower's
books and records; (ii) analyze Borrower's
Term Credit and Security Agreement Page 6
<PAGE> 7
financial statements; (iii) arrange for verification of Borrower's
Accounts Receivable under reasonable procedures, directly with Account
Debtors or by other methods; and (iv) inspect, review and audit any
Collateral at any time during normal business hours, without prior
notice to Borrower. Borrower shall allow, do, make, execute and
deliver all such additional and further acts, things, deeds,
assurances and instruments which Bank may require more completely to
vest in and assure to Bank its rights hereunder or in any Collateral.
SECTION 5. SECURITY INTEREST OF BANK IN COLLATERAL.
5.1 As security for the payment and performance of all
Liabilities, Bank shall have and is hereby granted a continuing lien
on and security interest in the following Collateral:
(a) Borrower's Opseis Eagle seismic data gathering and
recording system, whether now or hereafter owned,
existing, created, arising or acquired;
(b) all Borrower's Accounts, Accounts Receivable, notes,
notes receivable, contracts, contract rights, leases,
lease payments, rental agreements, rentals, drafts,
documents, title retention and lien instruments,
security agreements, acceptances, instruments,
conditional sales contracts, chattel mortgages,
chattel paper, general intangibles and other forms of
obligation and rights to payment and receivables
whether or not yet earned by performance, whether
now or hereafter owned, existing, created, arising or
acquired;
(c) all Borrower's Inventory, goods, merchandise and
other personal property held for sale, lease, rental
or licensing by Borrower, or furnished or to be
furnished under a contract of service, raw
materials, work in process, component parts,
materials, and supplies used or to be used, or
consumed or to be consumed in Borrower's business,
and related products, wherever located, all goods
represented thereby, and all such goods that may be
reclaimed or repossessed from or returned by
Borrower's customers and all shipping and packaging
materials related to the foregoing, whether now or
hereafter owned, existing, created, arising or
acquired;
(d) all Borrower's general intangibles, whether now or
hereafter owned, existing, created, arising or
acquired;
(e) all Borrower's equipment described or referenced in
Exhibit B hereto, whether now or hereafter owned,
existing, created, arising or acquired;
(f) all goods, instruments, notes, notes receivable,
documents, documents of title, contracts, policies
and certificates of title and policies and
certificates of insurance, securities, chattel paper,
deposits, papers, agreements, cash and other property
now or hereafter owned by Borrower or in which it now
or hereafter has an interest, which are now or may
hereafter be in the possession of Bank, or which are
otherwise assigned to Bank, or as to which Bank may
now or hereafter control possession by documents of
title or otherwise; and
(g) all substitutions, accessions, additions, parts,
accessories, attachments, replacements, Proceeds and
products of, to and for any and all of the foregoing,
including, without limitation, any and all tort and
insurance proceeds and any and all income and other
proceeds and payments from the sale, lease,
collection, licensing, transfer, exchange,
disposition or use of any and all of the foregoing,
and any and all substitutions, accessions, additions,
parts, accessories, attachments, replacements,
Proceeds and
Term Credit and Security Agreement Page 7
<PAGE> 8
products in the form of any of the property described
or referenced in (a) through (f) above.
No submission by Borrower to Bank of any schedule or other
particular identification of Collateral shall be necessary to
vest in Bank title to or a security interest in each and every
item of Collateral now existing or hereafter created or
acquired, but rather, such title and security interest shall
vest in tank immediately upon the creation or acquisition of
any item of Collateral, without the necessity for any other or
further action by Borrower or Bank, provided, however, that
Borrower shall execute such other and additional documents,
instruments and agreements as reasonably may be required by
Bank to evidence the security interests contemplated hereby.
5.2 To the extent allowable under applicable law, the
Uniform Commercial Code of Alabama shall govern the security interests
provided for herein. In connection therewith, Borrower (at
Borrower's expense) shall take such steps and execute, deliver and
file (as applicable) (or cause the execution, delivery and filing (as
applicable) of) such financing statements, continuation statements,
agreements (including, without limitation, security agreements and
landlord, creditor and mortgagee subordination agreements), documents,
and papers (all in form and substance acceptable to Bank) as Bank may
from time to time request to perfect or preserve the perfection and
priority of Bank's security interests granted hereby or by any of the
other Loan Documents.
5.3 If, notwithstanding the foregoing, by reason of
location of Borrower, the Collateral or otherwise, the creation,
validity, or perfection of security interests provided for herein are
governed by the law of a jurisdiction other than Alabama, Borrower
shall take such steps and execute and deliver such documents,
agreements, papers and financing statements as Bank may from time to
time request to comply with the Uniform Commercial Code, the Uniform
Trust Receipts Act, the Factors Lien Act, or other laws of other
states or jurisdictions. Borrower hereby appoints and empowers Bank,
or any employee of Bank which Bank may designate for the purpose, as
its attorney-in-fact, to execute (and file, as appropriate) on its
behalf any documents, agreements, papers and financing statements (at
Borrower's expense) which, in Bank's sole judgment, are necessary to
be executed and/or filed in order to perfect or preserve the
perfection and priority of Bank's security interests granted hereby or
by any of the other Loan Documents.
5.4 Borrower shall not pledge, mortgage, or create or
suffer to exist a security interest in any of the Collateral or any
Proceeds or products thereof,or sell, assign or create a security
interest in any of the Collateral or any Proceeds or products thereof
in favor of any person other than Bank unless (i) otherwise allowed
under the terms of this Agreement or the Related Loan Agreement or
(ii) such security interest is expressly subordinate to Bank's
security interest therein and Bank has approved in writing the
existence and priority of such security interest. Nothing in this
Section 5 shall be deemed to extend the maturity date of the Term Loan
beyond the time noted in Section 14 hereof.
SECTION 6. COLLECTION OF ACCOUNTS RECEIVABLE.
6.1 Until Bank requests that Account Debtors on
Accounts Receivable of Borrower be notified of Bank's security
interest therein, Borrower shall continue to collect such Accounts
Receivable. Proceeds transmitted to Bank may be handled and
administered in and through a remittance or special account; the
maintenance of any such account shall be solely for the convenience of
Bank, and Borrower shall not have any right, title, or interest in or
to any such account or in the amounts at any time appearing to the
credit thereof. Bank may apply and credit Proceeds so transmitted or
otherwise received by Bank against the outstanding balance in
Borrower's Loan Account, however, Bank shall not be required to credit
Borrower's Loan Account with the amount of any check or other
instrument constituting provisional payment until Bank has received
final payment thereof at its office in cash or solvent credits
accepted by Bank. After the occurrence of an event of default
hereunder, Borrower shall, at the request of Bank, notify
Term Credit and Security Agreement Page 8
<PAGE> 9
the Account Debtors of the security interest of Bank in any Account
and shall instruct Account Debtors to remit payments directly to Bank;
and Bank may itself so notify Account Debtors.
6.2 Borrower (i) shall (a) deliver any instrument
evidencing an Account to Bank, and (b) use its best efforts to collect
all of its Accounts in a commercially reasonable manner; and (ii)
agrees that no court action or other legal proceeding or garnishment,
attachment, repossession of property, detinue, sequestration or any
other repossession shall be attempted by Borrower except by or under
the direction of competent legal counsel. Borrower hereby agrees to
indemnify and hold Bank harmless for any loss or liability of any kind
or character which may be asserted against Bank by virtue of any suit
filed, process issued, or any repossession or attempted repossession
done or attempted by Borrower or by virtue of any other actions or
endeavors which Borrower may make to collect any Collateral. Nothing
in this Section 6 shall be deemed to extend the availability of the
Revolving Line beyond the time noted in Section 14 hereof.
SECTION 7. ADDITIONAL AFFIRMATIVE COVENANTS.
Until all indebtedness of Borrower to Bank has been paid in full and
all Liabilities have been satisfied:
7.1 Borrower shall submit or cause to be submitted to
Bank such financial and other information which Bank shall request
regarding Borrower, Related Borrower, the Collateral and any endorser,
guarantor or surety of any of the Liabilities when and as requested
by Bank, including without limitation: (i) Related Borrower's 10-Q
reports together with Related Borrower's internally prepared
quarterly financial statements within forty-five (45) days after
the close of each quarter in each fiscal year including a balance
sheet as of the close of such period, an income statement, and a
reconciliation of surplus for such period, prepared and analyzed in
accordance with generally accepted accounting principles and attested
to by an authorized officer of Related Borrower; (ii) Related
Borrower's 10-K reports and audited fiscal year-end financial
statements, within ninety (90) days after the close of each fiscal
year, including a balance sheet as of the close of such period, an
income statement, and a reconciliation of stockholders' equity
certified by an independent certified public accountant acceptable to
Bank and analyzed in accordance with generally accepted accounting
principles; (iii) Related Borrower's 8-K reports and all other
documents filed by or on behalf of Related Borrower with the
Securities and Exchange Commission (the "SEC") within thirty (30)
days, following the filing thereof with the SEC; and (iv) together
with each delivery of the financial statements and the 8-K reports
required by (ii) or (iii) above, the certificate of Borrower stating
that no event has occurred which constitutes an event of default or
would constitute an event of default but for the requirement that
notice be given, or time elapse or both, under any loans, notes,
debentures, bonds, leases, or other obligations of Borrower then
outstanding, including, but not limited to, the Term Loan (such
certificate shall publish the accounting calculations used to
determine compliance or noncompliance with Related Borrower's
financial obligations, including those noted in this Agreement), or,
if any such event of default or defaults exists, specifying the nature
thereof.
7.2 Borrower shall (i) maintain insurance (written by
insurance companies acceptable to Bank) in form, amount and substance
acceptable to Bank; (ii) furnish to Bank, upon request, a statement of
the insurance coverage; and (iii) cause Bank to be named as (a) an
additional insured on all Borrower's liability insurance policies; and
(b) a payee as to all insurance covering Collateral hereunder,
pursuant to a New York (long form) standard mortgagee endorsement. All
insurance policies shall provide for a minimum of ten (10) days'
written cancellation notice to Bank and, at Bank's request, all
policies shall be delivered to and held by Bank. In the event of
default hereunder, Bank is hereby made attorney-in-fact for Borrower
to obtain, adjust, and settle, in its sole discretion, such insurance
and to endorse any drafts or checks issued in connection with such
insurance. In the event of failure to provide and maintain insurance
required by this Agreement, Bank may, at its option, provide such
insurance and charge the costs and expenses incurred to Borrower's
Loan Account.
Term Credit and Security Agreement Page 9
<PAGE> 10
7.3 Borrower does and shall at all times while any
Liabilities remain unsatisfied comply with all laws, ordinances, rules
and regulations of any governmental authority or entity governing or
affecting Borrower, any of its property, the Collateral or any part
thereof, and shall immediately notify Bank of any and all actual,
alleged or asserted violations of any such laws, ordinances, rules or
regulations if such violation would or could have a material adverse
effect on Borrower. Without limitation to the generality of the
foregoing, Borrower shall comply, and cause to be complied with, all
laws, governmental standards and regulations applicable to Borrower or
any Collateral in respect of occupational health and safety, toxic and
hazardous waste and substances and environmental matters. Borrower
promptly shall notify Bank of receipt of any notice of any actual,
alleged or asserted violation of any such law, standard or regulation.
Borrower hereby agrees to indemnify, defend and hold Bank harmless
from all loss, cost, damage, claim and expense incurred by Bank on
account of Borrower's breach of any representation, warranty or
requirement of this Section, Borrower's failure to perform the
obligations of this Section, and/or Borrower's or any Collateral's
violating any applicable laws, ordinances, rules or regulations,
including, without limitation, any environmental or occupational
health and safety laws or regulations. This indemnification shall
survive the closing of the Term Loan, payment of the Term Loan and the
exercise of any right or remedy under any of the Loan Documents.
Borrower represents that there are no pending claims or threats of
claims by private or governmental or administrative authorities
relating to environmental impairment, conditions, or regulatory
requirements involving Borrower or any Collateral.
7.4 Borrower shall cause Related Borrower to have
maintained, as tested at the end of each fiscal year, a minimum Gross
Cash Flow (defined as net profit plus depreciation, amortization and
any other expenses which would be classified as non-cash expenses in
accordance with generally accepted accounting principles) to Current
Maturities of Long Term Debt plus investments in new Seismic Data
coverage ratio of .75 to 1 for such fiscal year.
7.5 Borrower shall cause Related Borrower to maintain a
minimum Tangible Net Worth of not less than $48,000,000 on and after
the date hereof. In addition, Borrower shall cause Related Borrower's
Tangible Net Worth to increase as of the end of each fiscal year by
not less than the greater of (i) $2,500,000 or (ii) fifty percent
(50%) of Related Borrower's net income after taxes for the fiscal year
then ending.
7.6 Borrower shall cause Related Borrower to have a
minimum net earnings each fiscal year of not less than the greater of
(i) $2,500,000 or (ii) fifty percent (50%) of Related Borrower's net
income after taxes for the fiscal year then ending.
7.7 Promptly after the same shall have become known to
Borrower, Borrower shall notify Bank in writing of any action, suit or
proceeding at law or in equity or by or before any governmental
instrumentality or other agency which, if adversely determined, could
reasonably be expected to materially impair the ability of Borrower to
perform its obligations under the Loan Documents, materially impair
the ability of Borrower to carry on its business substantially as now
conducted, or which might materially affect the business, operations,
properties, assets or conditions, financial or otherwise, of Borrower.
Nothing in this Section 7 shall be deemed to extend the maturity date
of the Term Loan beyond the time noted in Section 14 hereof.
SECTION 8. ADDITIONAL NEGATIVE COVENANTS.
Until all indebtedness of Borrower to Bank has been paid in full and
all Liabilities have been satisfied:
8.1 Borrower shall not create or permit the creation of
any lien upon any of its property, except for Permitted Encumbrances.
Term Credit and Security Agreement Page 10
<PAGE> 11
8.2 Borrower shall not borrow any money other than for
trade credit in the ordinary course of business unless such loans
shall be fully subordinated hereto. Borrower shall not guarantee,
endorse or assume, either directly or indirectly, any indebtedness of
any other corporation, person, or entity.
8.3 Without Bank's prior written consent, Borrower shall
not (i) liquidate, discontinue or materially reduce its normal
operations with intention to liquidate; (ii) cause, allow or suffer to
occur (a) the merger or consolidation of or involving Borrower with or
into any corporation, partnership, or other entity; or (b) the sale,
leasing, licensing, transfer or other disposal of all or any
substantial part of its assets; (iii) acquire any interest(s) in any
corporation, partnership or other entity, whether by stock or asset
purchase or acquisition or otherwise; (iv) enter into any lease which
could be characterized a-s a capitalized lease; or (v) cause, allow,
or suffer to occur any change in the nature of the business of
Borrower.
8.4 Borrower shall not cause, allow or suffer to occur
Related Borrower to make any payment of principal upon Related
Borrower's Subordinated Debentures without Bank's prior written
consent.
8.5 Borrower shall not cause, allow or suffer to occur
Related Borrower's Total Debt to Tangible Net worth ratio to exceed 1
to 1.
8.6 Borrower shall not make or extend or allow to remain
outstanding any loans or advances to or investments in Borrower's
affiliates, parent, subsidiaries, shareholders, owners, directors,
employees, officers, partners, management or other related persons or
entities without the prior written consent of Bank in excess of
$500,000 in the aggregate. Nothing in this Section 8 shall be deemed
to extend the maturity date of the Term Loan beyond the time noted in
Section 14 hereof.
SECTION 9. EVENTS OF DEFAULT; ACCELERATION.
Any or all of the Liabilities, shall be, at the option of Bank and
notwithstanding any time or credit allowed by any instrument
evidencing any of the Liabilities, immediately due and payable without
notice or demand, and the obligation of Bank to make any advances to
or on behalf of Borrower shall immediately cease and terminate upon
the occurrence of any of the following events of default:
(a) default in the payment or performance, when due or
payable, of any of the Liabilities, or of any
liability or obligation (whether now or hereafter
existing, arising or incurred, direct or indirect,
conditional or unconditional) of any endorser,
guarantor, or surety for any of the Liabilities;
(b) failure by Borrower or any other person or entity, as
applicable, to (i) pay or perform any act or
obligation imposed hereby or by any of the other Loan
Documents, or (ii) comply with any of the terms,
conditions, warranties, covenants or requirements
contained or referenced in one or more of the Loan
Documents;
(c) failure of Borrower or any other person or entity, as
applicable, to pay when due (i) any tax (unless such
tax is being diligently contested in good faith by
appropriate proceedings which contest does not or
could not, in Bank's reasonable opinion, materially
jeopardize Bank's rights or priority in or to any
Collateral) or (ii) any premium on any (a) insurance
policy assigned to Bank, or (b) any insurance
covering any Collateral;
(d) if any warranty or representation contained herein
shall prove false or materially misleading or if
Borrower or any endorser, guarantor or surety for any
of the Liabilities made or makes any other material
misrepresentation to Bank for the purpose of
obtaining credit or any extension of credit;
Term Credit and Security Agreement Page 11
<PAGE> 12
(e) failure of Borrower or any endorser, guarantor, or
surety for any of the Liabilities to furnish
financial information or to permit the inspection of
the books or records or Collateral of Borrower or of
any endorser, guarantor or surety for any of the
Liabilities;
(f) issuance of an injunction, attachment or judgment
against Borrower or any endorser, guarantor or surety
for any of the Liabilities, or of any property of
such persons or entities, if such injunction,
attachment or judgment does or could, in Bank's
reasonable opinion, materially jeopardize Bank's
rights or priority in or to any Collateral and is not
dissolved, discharged or bonded within thirty (30)
days of the issuance thereof; the general assignment
for the benefit of creditors, or filing a petition in
bankruptcy, by Borrower or any endorser, guarantor or
surety for any of the Liabilities; the filing of a
petition in bankruptcy against Borrower or any
endorser, guarantor or surety for any of the
Liabilities if such petition is not dismissed within
sixty (60) days; if Borrower or any endorser,
guarantor or surety for any of the Liabilities shall
file an application in any court for the appointment
of a receiver for Borrower or any such other person
or entity; the appointment of a receiver for Borrower
or any endorser, guarantor or surety for any of the
Liabilities; or the death, dissolution, incapacity or
liquidation of Borrower or any endorser, guarantor or
surety for any of the Liabilities;
(g) calling of a meeting of creditors, appointment of a
committee of creditors or liquidation agents, or
offering of a composition or extension to creditors
by Borrower or by any endorser, guarantor or surety
for any of the Liabilities;
(h) bankruptcy or Insolvency of Borrower or of any
endorser, guarantor or surety for any of the
Liabilities;
(i) any change in the nature of the business of or
acquisition by a person, entity, corporation or group
of more than fifty percent (50%) of the outstanding
voting stock or securities of Borrower or Related
Borrower (except for such an acquisition of Borrower,
voting stock or securities by a fifty-one percent
(51%) or more owned subsidiary of Related Borrower)
without the prior written consent of Bank;
(j) failure of Borrower or any other person or entity, as
applicable, to maintain any insurance required
hereunder and/or assigned or pledged to Bank in
connection herewith;
(k) occurrence or continuation of any default or event of
default by or attributable to Borrower under or in
connection with any mortgage, lease, Participation
Agreement, Licensing Agreement, security agreement,
note, bond indenture, loan agreement or similar
instrument or agreement to which Borrower is now or
may hereafter be a party or by which Borrower or any
of its property (including, without limitation, the
Collateral) is now or may hereafter be bound or
affected if such default or event of default would or
could have a material adverse effect on Borrower;
(l) fraud or material misrepresentation by Borrower (or
any of its agents or employees) in connection with
any transactions contemplated hereby;
(m) such a change in the condition or affairs (financial
or otherwise) of Borrower or of any endorser,
guarantor or surety for any of the Liabilities or of
the Collateral or any other source of repayment of or
security for any of the Liabilities which, in the
opinion of Bank, impairs Bank's security or increases
its risk;
Term Credit and Security Agreement Page 12
<PAGE> 13
(n) breach or violation of or failure to abide by any
covenant, term or provision of this Agreement, the
Note or any of the other Loan Documents; or the
termination, cancellation or revocation of any Loan
Document without Bank's consent or the determination
by Bank that a material portion of the Accounts or
any of the Loan Documents is void, voidable or
unenforceable;
(o) Borrower's discontinuing doing business for any
reason; or
(p) any default or event of default under the Note, the
Related Loan Documents or any of the other Loan
Documents.
Provided, however, that Borrower shall not be in default
hereunder upon the failure by Borrower or any other person or entity,
as applicable, to perform any act or obligation, or comply with any of
the terms, conditions, covenants or requirements contained in, any of
Sections 2.6, 7.1 or 7.2 hereof, or upon the occurrence of any event
of default described in Section 9(c), 9(j) or 9(m) hereof unless
Borrower has failed to cure any such default within five (5) business
days after notice from Bank of the existence of such default.
SECTION 10. POWER TO SELL OR COLLECT COLLATERAL UPON THE OCCURRENCE OF
ANY OF THE ABOVE EVENTS OF DEFAULT AND AT ANY TIME THEREAFTER. Upon
the occurrence of an), of the above events of default and at any time
thereafter, Bank shall have, in addition to all other rights and
remedies, the remedies of a secured party under the Uniform Commercial
Code of Alabama (regardless of whether the Uniform Commercial Code has
been enacted in the jurisdiction where rights or remedies are
asserted), including, without limitation, the right to take possession
of the Collateral, and for that purpose Bank may, so far as Borrower
can give authority therefor, enter upon any premises on which the
Collateral may be situated and remove the same therefrom or take
possession of same and/or store the same on such premises pending
disposition under the terms of this Agreement or applicable law; and
insofar as Collateral shall consist of Accounts Receivable, insurance
policies, instruments, chattel paper, general intangibles, choices in
action or the like, Bank may demand, collect, receipt for, settle,
compromise, adjust, sue for, foreclose or realize upon Collateral as
Bank may determine, whether or not Liabilities or Collateral are then
due, and for the purpose of realizing Bank's rights therein, Bank may
receive, open and dispose of mail addressed to Borrower and endorse
notes, checks, drafts, money orders, documents of title or other
evidences of payment, shipment or storage or any form of Collateral on
behalf of and in the name of Borrower as Borrower's attorney-in-fact
for such purpose. Bank may require Borrower to assemble the Collateral
and make it available to Bank at a place designated by Bank which is
reasonably convenient to both parties. Unless the Collateral is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market, Bank shall give to Borrower
at least five (5) days' written notice of the time and place of any
public sale of Collateral or of the time after which any private sale
or any other intended disposition is to be made. Bank may, at any
time, in its discretion, transfer any securities or other property
constituting Collateral into its own name or that of its nominee and
receive the income therefrom and hold the same as security for the
Liabilities or apply it on principal, interest, charges or expenses
due on Liabilities in any manner deemed appropriate by Bank. Bank may
apply Collateral and the Proceeds from any Collateral against the
Liabilities secured hereby in any manner deemed appropriate by Bank.
The enumeration of the foregoing rights is not intended to be
exhaustive, and the exercise of any right shall not preclude the
exercise of any other rights, all of which shall be cumulative. As
against the obligations secured hereby, to the extent allowed by law,
Borrower hereby expressly waives all claims and all rights to claim
any exemptions, both as to personal and real property, allowed or
allowable under the Constitution or laws of the United States, the
State of Alabama or any other jurisdiction. Any notice to Borrower of
sale, disposition or other intended action by Bank, required by law to
be given to Borrower, sent to Borrower at the address of Borrower
shown on the first page of this Agreement or at such other address
Term Credit and Security Agreement Page 13
<PAGE> 14
of Borrower as may from time to time be shown on Bank's records, at
least five (5) days prior to such action, shall constitute reasonable
notice to Borrower.
SECTION 11. SET OFF. Bank and any participant and any holder of all
or any part of the Liabilities are hereby given as additional security
for all Liabilities a continuing lien and security interest in and
upon any and all moneys, securities and other property of Borrower,
and the Proceeds thereof, now or hereafter held or received by or in
transit to Bank (or such participant or holder) from or for Borrower,
whether for safekeeping, custody, pledge, transmission, collection or
otherwise, and also upon any and all deposit balances (general or
special) and credits of Borrower with, and any and all claims of
Borrower against Bank (or such participant or holder) at any time
existing, and upon the occurrence of an event of default hereunder,
Bank (or such participant or holder) may apply or set off the same
against the Liabilities secured hereby in any manner deemed
appropriate by Bank (or such participant or holder). Borrower agrees
that any other person or entity purchasing a participation from Bank
may exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such person
or entity were the direct creditor of Borrower in the amount of such
participation.
SECTION 12. NO WAIVERS. Borrower waives demand, presentment, protest,
notice of protest, notice of intent to accelerate, notice of
acceleration, notice of acceptance of this Agreement, and notice of
advances and loans made, credit extended, Collateral received or
delivered or other action taken in reliance hereon and all other
demands and notices of any description. With respect both to the
Liabilities and Collateral, Borrower assents to any extension or
postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of any or all of the Collateral, to
the addition or release of any party or person primarily or
secondarily liable, to the acceptance of partial payments thereon and
the settlement, compromising or adjusting of any thereof, all in such
manner and at such time or times as Bank may deem advisable. Bank
shall have no duty as to the collection or protection of any or all of
the Collateral or any income therefrom, nor as to the preservation of
any rights against prior parties, nor as to the preservation of any
rights pertaining thereto beyond the safe custody of Collateral in its
possession. Bank may exercise its rights with respect to Collateral
without resorting or regard to other Collateral or sources of
reimbursement for the Liabilities. Bank shall not be deemed to have
waived any of its rights upon or under any of the Liabilities or
Collateral unless such waiver be in writing and signed by Bank. No
course of dealing and no delay or omission on the part of Bank in
exercising any right shall operate as a waiver of such right or any
other right. A waiver on any one occasion shall not be construed as a
bar to or waiver of any right on any further occasion. All rights and
remedies of Bank with respect to Liabilities or Collateral, whether
evidenced hereby, by any of the other Loan Documents or by any other
instrument or paper, shall be cumulative and may be exercised
singularly or concurrently.
SECTION 13. EXPENSES, PROCEEDS OF COLLATERAL. Irrespective of whether
the proceeds of the Term Loan are disbursed, Borrower shall pay all
fees and expenses, including, without limitation, legal fees and
expenses, filing fees, insurance premiums and expenses, appraisal
fees, liabilities and expenses, recording costs and taxes incurred by
Bank or Borrower from time to time in connection with the preparation
and closing, filing, administration, amendment, and modification of
the Term Loan, this Agreement, the Note, and other Loan Documents and
those documents and instruments associated with the perfection and
creation of the security interests granted pursuant hereto or pursuant
to any of the other Loan Documents. Borrower shall pay to Bank on
demand any and all such fees and expenses together with any and all
fees, expenses and costs (a) of collection or (b) otherwise incurred
or paid by Bank in protecting or enforcing its rights upon or with
respect to any of the Liabilities, the Loan Documents or the
Collateral (including, without limitation, reasonable counsel fees,
including, without limitation, those incurred in connection with any
appeal or any bankruptcy proceedings). After deducting all of said
expenses, the residue of any proceeds of collection or sale of
Liabilities or Collateral shall be applied to the payment of principal
of, interest on, and charges and expenses related to the Liabilities
in such order or preference as Bank may
Term Credit and Security Agreement Page 14
<PAGE> 15
determine, and, lo the extent allowed by law, any excess shall be
returned to Borrower and Borrower shall remain liable for any
deficiency.
SECTION 14. DURATION; EXTENSION. The final maturity date of the Term
Loan shall be June 1, 1998, at which time all principal, interest,
charges and expenses outstanding hereunder, under the Note or under
any of the other Loan Documents (regarding the Term Loan) shall be due
and payable in full unless due sooner under the terms of the Note,
this Agreement or any of the other Loan Documents. No modification or
amendment of this Agreement or extension of the maturity date of the
Term Loan shall be effective unless placed in writing and.duly
executed by Bank and Borrower. It is expressly agreed that this
Agreement shall survive the maturity of the Term Loan in all respects
necessary for Bank to exercise its rights and remedies hereunder and
with respect to the Collateral. The maturity of the Term Loan shall in
no way affect any transactions entered into or rights created or
obligations incurred prior to such maturity; rather, such rights and
obligations shall be fully operative until the same are fully disposed
of, concluded and/or liquidated. Without limitation to the generality
of the foregoing, such maturity shall not release nor diminish any of
(i) Borrower's obligations and agreements, or (ii) Bank's rights and
remedies arising hereunder or in connection herewith until full
payment and performance of all of the Liabilities. This Agreement
shall be a continuing agreement in every respect.
SECTION 15. GENERAL. Any demand upon or notice to Borrower that Bank
may elect to give shall be effective upon delivery if such notice is
given personally, or upon dispatch if deposited in the mails or
delivered to a telegraph, wireless or radio company addressed to
Borrower at the address noted on the first page of this Agreement or,
if Borrower has notified Bank in writing of a change of address, to
Borrower's last address so notified. Demands or notices addressed to
Borrower's address at which Bank customarily communicates with
Borrower shall also be effective. If at any time or times by
assignment or otherwise Bank transfers any Liabilities (either
separately or together with the Collateral therefor), such transfer
shall carry with it Bank's powers and rights under this Agreement with
respect to the Liabilities and/or Collateral transferred, and the
transferee shall become vested with said powers and rights whether or
not they are specifically referred to in the transfer. If and to the
extent Bank retains any other Liabilities or Collateral, Bank will
continue to have the rights and powers herein set forth with respect
thereto. THIS AGREEMENT AND ALL RIGHTS AND OBLIGATIONS HEREUNDER,
INCLUDING MATTERS OF CONSTRUCTION, VALIDITY, AND PERFORMANCE, SHALL BE
GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
ALABAMA, EXCEPT THAT ANY CONFLICT OF LAWS RULE OF SUCH JURISDICTION
THAT WOULD REQUIRE REFERENCE TO THE LAWS OF SOME OTHER JURISDICTION
SHALL BE DISREGARDED. ANY SUITS, CLAIMS OR CAUSES OF ACTION ARISING
DIRECTLY OR INDIRECTLY FROM THIS AGREEMENT, THE NOTE, OR ANY OTHER
AGREEMENTS OR INSTRUMENTS BETWEEN BANK AND BORROWER RELATING TO SUCH
DOCUMENTS SHALL BE BROUGHT IN A COURT OF APPROPRIATE JURISDICTION ONLY
IN JEFFERSON COUNTY, ALABAMA AND OBJECTIONS TO VENUE AND PERSONAL
JURISDICTION IN SUCH FORUM ARE HEREBY EXPRESSLY WAIVED. BORROWER
AGREES THAT THE TERM LOAN, THIS AGREEMENT AND ALL OF THE OTHER LOAN
DOCUMENTS, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, SHALL BE GOVERNED BY AND CONSTRUED UNDER THE LAWS OF THE
STATE OF ALABAMA, INCLUDING, WITHOUT LIMITATION, APPLICABLE USURY
LAWS. THIS AGREEMENT HAS BEEN NEGOTIATED AND IS BEING EXECUTED AND
DELIVERED IN THE STATE OF ALABAMA, OR IF EXECUTED ELSEWHERE, SHALL
BECOME EFFECTIVE UPON BANK'S RECEIPT AND ACCEPTANCE OF THE EXECUTED
ORIGINAL OF THIS AGREEMENT IN THE STATE OF ALABAMA; PROVIDED, HOWEVER,
THAT BANK SHALL HAVE NO OBLIGATION TO GIVE, NOR SHALL BORROWER BE
ENTITLED TO RECEIVE ANY NOTICE OF SUCH ACCEPTANCE FOR THIS AGREEMENT
TO BECOME A BINDING OBLIGATION OF BORROWER. IT IS INTENDED, AND
BORROWER AND BANK SPECIFICALLY AGREE, THAT THE LAWS OF THE STATE OF
ALABAMA GOVERNING INTEREST SHALL APPLY TO THIS
Term Credit and Security Agreement Page 15
<PAGE> 16
TRANSACTION. BORROWER HEREBY ACKNOWLEDGES THAT (I) THE NEGOTIATION,
EXECUTION, AND DELIVERY OF THE LOAN DOCUMENTS CONSTITUTE THE
TRANSACTION OF BUSINESS WITHIN THE STATE OF ALABAMA, (II) ANY CAUSE OF
ACTION ARISING UNDER ANY OF SAID LOAN DOCUMENTS WILL BE A CAUSE OF
ACTION ARISING FROM SUCH TRANSACTION OF BUSINESS, AND (III) BORROWER
UNDERSTANDS, ANTICIPATES, AND FORESEES THAT ANY ACTION FOR ENFORCEMENT
OF PAYMENT OF BORROWER'S LIABILITIES OR THE LOAN DOCUMENTS MAY BE
BROUGHT AGAINST IT IN THE STATE OF ALABAMA. TO THE EXTENT ALLOWED BY
LAW, BORROWER HEREBY SUBMITS TO JURISDICTION IN THE STATE OF ALABAMA
FOR ANY ACTION OR CAUSE OF ACTION ARISING OUT OF OR IN CONNECTION WITH
BORROWER'S LIABILITIES OR THE LOAN DOCUMENTS AND WAIVES ANY AND ALL
RIGHTS UNDER THE LAWS OF ANY STATE OR JURISDICTION TO OBJECT TO
JURISDICTION OR VENUE WITHIN JEFFERSON COUNTY, ALABAMA;
NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED IN THIS PARAGRAPH
SHALL PREVENT BANK FROM BRINGING ANY ACTION OR EXERCISING ANY RIGHTS
AGAINST BORROWER, ANY GUARANTOR, ANY SECURITY FOR THE LIABILITIES, OR
ANY OF BORROWER'S OR ANY GUARANTOR'S PROPERTIES IN ANY OTHER COUNTY,
STATE, OR JURISDICTION. INITIATING SUCH ACTION OR PROCEEDING OR TAKING
ANY SUCH ACTION IN ANY OTHER STATE SHALL IN NO EVENT CONSTITUTE A
WAIVER BY BANK OF ANY OF THE FOREGOING. Nothing contained herein, or
in any of the documents contemplated hereby, shall be deemed to render
Bank on the one hand, and Borrower on the other hand, partners or
venturers for any purpose. This Agreement is intended to take effect
as a sealed instrument.
SECTION 16. COMPLIANCE WITH LAWS. It is the intention of Bank and
Borrower to conform strictly to any applicable usury laws (including,
without limitation, the laws of Texas and the United States if and to
the extent such laws other than Alabama laws are deemed applicable
notwithstanding Section 15 above). Accordingly, if the transactions
contemplated hereby would be usurious under any applicable law
(notwithstanding Section 15 above) then, in that event,
notwithstanding anything to the contrary in this Agreement, the other
Loan Documents, or any other agreement or instrument entered into in
connection with or as security for or guaranteeing the Term Loan, it
is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under applicable law that is contracted for,
taken, reserved, charged, or received by Bank under the Loan Documents
or under any other agreement or instrument entered into in connection
with or as security for or guaranteeing the Term Loan shall under no
circumstances exceed the Highest Lawful Rate (as defined below), and
any excess shall be cancelled automatically and, if theretofore paid,
shall, at the option of Bank, be credited by Bank on the principal
amount of any indebtedness owed to Bank by Borrower or refunded by
Bank to Borrower, and (ii) in the event that the payment of the Term
Loan is accelerated or in the event of any required or permitted
prepayment, then such consideration that constitutes interest under
law applicable to Bank may never include more than the Highest Lawful
Rate and excess interest, if any, to Bank provided for in the Loan
Documents or otherwise shall be cancelled automatically as of the date
of such acceleration or prepayment and, if theretofore paid, shall, at
the option of Bank, be credited by Bank on the principal amount of any
indebtedness owed to Bank by Borrower or refunded by Bank to Borrower.
"Highest Lawful Rate" means the maximum non-usurious interest rate
(computed on the basis of a year of 365 or 366 days, as applicable)
that at any time or from time to time may be contracted for, taken,
reserved, charged, or received on amounts due to Bank, under laws
applicable to Bank with regard to this Agreement that are presently in
effect or, to the extent allowed by law, under such applicable laws
that allow a higher maximum non-usurious rate than applicable laws now
allow.
SECTION 17. MISCELLANEOUS. In the event of actual conflict in the
terms and provisions of this Agreement and any of the other Loan
Documents or any other document, instrument or agreement executed in
connection with this Agreement or described or referred to in this
Agreement, the terms and provisions
Term Credit and Security Agreement Page 16
<PAGE> 17
most favorable to Bank shall control. No modification, consent,
amendment or waiver of any provision of this Agreement or any of the
other Loan Documents, nor consent to any departure by Borrower or
Related Borrower (as applicable) therefrom, shall be effective unless
the same shall be in writing and signed by Bank, and then shall be
effective only in the specific instance and for the purpose for which
given. This Agreement and each of the other Loan Documents are binding
upon Borrower and Related Borrower (as applicable), their respective
successors and assigns, and inure to the benefit of Bank, its
respective successors and assigns. All representations and warranties
of Borrower and Related Borrower (as applicable) herein, and all
covenants and agreements herein, in the other Loan Documents, or in
any other document delivered hereunder or in connection herewith that
are not fully performed before the date of this Agreement, shall
survive such date.
This Agreement and each of the other Loan Documents shall be deemed to
be drafted by all parties hereto and shall not be construed against
any party hereto. In the event any one or more of the terms or
provisions contained in this Agreement, in any of the other Loan
Documents or in any other instrument or agreement referred to herein
or executed in connection with or as security for the Liabilities, or
any application thereof to any person or circumstances, shall be
declared prohibited, illegal, invalid or unenforceable to any extent
in any jurisdiction, as determined by a court of competent
jurisdiction, such term or provision, in that jurisdiction, shall be
ineffective only to the extent of such prohibition, illegality,
invalidity or unenforceability, or as applied to such persons or
circumstances, without invalidating or rendering unenforceable the
remaining terms or provisions hereof or thereof or affecting the
validity or enforceability of such term or provision in any other
jurisdiction or as to other persons or circumstances in such
jurisdiction, unless such would effect a substantial deviation from
the general intent and purpose of the parties, make a significant
change in the economic effect of the transactions contemplated herein
on Bank, or impair the validity or perfection of Bank's security
interest in any Collateral or the validity of any guaranty or other
security for the Liabilities, in which event a substitute provision
shall be supplied by the court in order to provide Bank with the
benefits intended by such invalid term or provision.
IN WITNESS WHEREOF, the parties hereto have hereunder set their hands
and seals on this 15th day of July, 1993.
BORROWER:
WITNESS: SEITEL GEOPHYSICAL, INC.
By: /s/ [illegible signature] By: /s/ Debra D. Valice
Its: Secretary/Treasurer
BANK:
CENTRAL BANK OF THE SOUTH
By: /s/ Terry W. Gasken
Its: Vice President
Term Credit and Security Agreement Page 17
<PAGE> 18
STATE OF
-----------
COUNTY OF
----------
I, the undersigned Notary Public, in and for said County in said
State, hereby certify that Debra D. Valice, whose name as Secretary/Treasurer
of SEITEL GEOPHYSICAL, INC., a Delaware corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, she, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this the 15th day of July, 1993.
/s/
Notary Public
[NOTARIAL SEAL] My commission expires: 4-18-94
STATE OF
--------------
COUNTY OF
-------------
Before me, the undersigned notary public in and for said County in
said State, on this day personally appeared ________________, known to me to be
the person whose name is subscribed to the foregoing instrument, and known to
me to be ______________ of SEITEL GEOPHYSICAL, INC., a Delaware corporation,
and acknowledged to me that _he executed said instrument for the purposes and
consideration therein expressed, and as the act of said corporation.
Given under my hand this the day of , 1993.
--- ------------------
--------------------------------------
Notary Public
[NOTARIAL SEAL] My commission expires:
Term Credit and Security Agreement Page 18
<PAGE> 19
STATE OF ALABAMA
COUNTY OF JEFFERSON
I, the undersigned Notary Public, in and for said County in said
State, hereby certify that Terry W. Gasken, whose name as Vice President of
CENTRAL BANK OF THE SOUTH, an Alabama banking corporation, is signed to the
foregoing instrument and who is known to me, acknowledged before me on this day
that, being informed of the contents of the instrument, he, as such officer and
with full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this the 15th day of July, 1993.
/s/
Notary Public
[NOTARIAL SEAL] My commission expires: 4/18/94
Term Credit and Security Agreement Page 19
<PAGE> 20
LOAN MODIFICATION AGREEMENT
AND AMENDMENT TO LOAN DOCUMENTS
THIS LOAN MODIFICATION AGREEMENT AND AMENDMENT TO LOAN DOCUMENTS (this
"Agreement") is being entered into effective as of the 28th day of December,
1995, by and between COMPASS BANK, an Alabama state banking corporation
("Bank") and SEITEL GEOPHYSICAL, INC., a Delaware corporation ("Borrower").
P R E A M B L E
In July, 1993, Bank and Borrower executed that certain Term Credit and
Security Agreement (the "Agreement") governing Borrower's $4,300,000 term loan
(the "Term Loan"). In connection with the Term Loan, Borrower executed in favor
of Bank that certain Term Note in the principal amount of FOUR MILLION THREE
HUNDRED THOUSAND AND NO/100 DOLLARS ($4,300,000.00) (the "Note"), along with
other loan documents and instruments evidencing, securing, relating to,
guaranteeing or otherwise executed or delivered in connection with the Term
Loan (jointly and severally with the Agreement and the Note, the "Loan
Documents").
Effective as of the date set forth above, Borrower requested, and Bank
agreed, to modify certain financial covenants relating to the Term Loan as more
specifically set forth below.
A G R E E M E N T
NOW, THEREFORE, in consideration of the premises, the mutual
agreements of the parties as set forth herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
and to induce Bank to modify certain financial covenants relating to the Term
Loan, the parties, intending to be legally bound hereby, agree as follows:
1. AMENDMENT OF AGREEMENT. The Agreement shall be and the same
hereby is amended as follows:
LOAN MODIFICATION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS -- 12/27/95 Page 1
<PAGE> 21
(i) Section 7.4 of the Agreement shall be deleted and replaced as
follows:
"7.4 Reserved for Future Use."
(ii) Section 7.5 of the Agreement shall be deleted and replaced as
follows:
"7.5 Reserved For Future Use."
(iii) Section 7.6 of the Agreement shall be deleted and replaced as
follows:
"7.6 Reserved For Future Use."
(iv) Section 8.5 of the Agreement shall be deleted and replaced as
follows:
"8.5 Reserved For Future Use."
(v) New Section 8.7 of the Agreement shall be inserted after
existing Section 8.6 and read in its entirety as follows:
"8.7 The Borrower shall not cause, allow or suffer the Company
nor any Subsidiary of the Company to incur any Debt if after
giving effect thereto, the ratio of the Company's Consolidated
Debt to Total Capitalization would exceed fifty percent
(50%)."
(vi) New Section 8.8 of the Agreement shall be inserted thereafter
and read in its entirety as follows:
"8.8 The Borrower shall not cause, allow or suffer to occur at
any time the Company's Consolidated Net Worth to be less than
the sum of (a) Ninety Million Dollars ($90,000,000) plus (b)
an aggregate amount equal to fifty percent (50%) of
Consolidated Net Income (but, in each case, only if a positive
number) for each completed fiscal year of the Company
beginning with the fiscal year ending December 31, 1995."
(vii) New Section 8.9 of the Agreement shall be inserted thereafter
and read in its entirety as follows:
"8.9 The Borrower shall not cause, allow or suffer to occur at
any time (a) EBITDA for the period of four consecutive fiscal
quarters of the Company then most recently ended to be less
than (b) five hundred percent (500%) of Consolidated Interest
Expense for such period."
(viii) New Section 8.10 shall be inserted thereafter and read in its
entirety as follows:
"8.10 As used in Sections 8.7, 8.8 and 8.9, capitalized terms
shall have the meaning attributed to the same in Schedule B
hereto."
LOAN MODIFICATION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS -- 12/27/95 Page 2
<PAGE> 22
(ix) By adding Schedule B hereto as Schedule B to the Agreement.
2. EFFECT ON LOAN DOCUMENTS. Each of the Loan Documents shall be
deemed amended as set forth hereinabove and to the extent necessary to carry
out the intent of this Agreement. Without limiting the generality of the
foregoing, each reference in the Loan Documents to the Agreement or any other
Loan Documents shall be deemed to be references to said documents, as amended
hereby. Except as is expressly set forth herein, all of the Loan Documents
shall remain in full force and effect in accordance with their respective terms
and shall continue to evidence, secure, guarantee or relate to, as the case may
be, the Term Loan.
3. REPRESENTATIONS AND WARRANTIES. Each representation and
warranty contained in the Loan Documents is hereby reaffirmed as of the date
hereof, and Borrower hereby represents that Borrower has no offsets or claims
against Bank arising under, related to, or connected with the Term Loan or any
of the Loan Documents.
4. ADDITIONAL DOCUMENTATION: EXPENSES. If Bank shall request,
Borrower shall provide to Bank certified copies of resolutions properly
authorizing the transactions contemplated hereby and the execution of this
Agreement, all other documents and instruments being executed in connection
herewith and all other documents and instruments required by Bank, all in form
and substance satisfactory to Bank. Borrower shall pay any recording fees and
all other expenses (including, without limitation, legal fees) incurred by Bank
and Borrower in connection with the modification of the Term Loan and any other
transactions contemplated hereby.
5. EXECUTION AND EFFECTIVENESS. This Agreement has been
negotiated, and is being executed and delivered, in the State of Alabama, or,
if executed elsewhere, shall become effective upon Bank's receipt and
acceptance of the original of this Agreement (or a facsimile thereof) in the
State of Alabama; provided, however, that Bank shall have no obligation to
give, nor shall Borrower be entitled to receive, any notice of such acceptance
for this Agreement to become a binding obligation of Borrower.
LOAN MODIFICATION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS -- 12/27/95 Page 3
<PAGE> 23
IN WITNESS WHEREOF, the undersigned have caused this instrument to be
duly executed effective as of the date first set forth above.
BORROWER:
WITNESS: SEITEL GEOPHYSICAL, INC.
/s/ MARCIA H. KENDRICK By /s/ DEBRA D. VALICE
- ---------------------------------- ------------------------------------
Its Vice President and Secretary
Treasurer
-----------------------------------
BANK:
WITNESS: COMPASS BANK
/s/ ANNE CHANDLER By /s/ JAY P. ACKLEY
- ---------------------------------- ------------------------------------
Its Assistant Vice President
-----------------------------------
STATE OF TEXAS )
-------------------------
:
COUNTY OF HARRIS )
------------------------
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Debra D. Valice whose name as Secretary/Treasurer of
SEITEL GEOPHYSICAL, INC., a corporation, is signed to the foregoing instrument
and who is known to me, acknowledged before me on this day that, being informed
of the contents of the instrument, _he, as such officer, and with full
authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this the 7th day of February 1996.
/s/ JON R. FONTENOT
---------------------------------------
Notary Public
[NOTARY SEAL]
My Commission Expires: April 13, 1999
----------------
LOAN MODIFICATION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS -- 12/27/95 Page 4
<PAGE> 24
STATE OF Alabama )
:
COUNTY OF Jefferson )
I, the undersigned, Notary Public in and for said County in said
State, hereby certify that Jay P. Ackley whose name as Assistant Vice President
of COMPASS BANK, an Alabama banking corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument, _he, as such officer, and
with full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this the 13th day of February 1996.
/s/ ANNE H. CHANDLER
---------------------------------------
Notary Public
[NOTARY SEAL]
My Commission Expires: April 13, 1998
-----------------
LOAN MODIFICATION AGREEMENT AND
AMENDMENT TO LOAN DOCUMENTS -- 12/27/95 Page 5
<PAGE> 25
SCHEDULE B
DEFINED TERMS
As used in Sections 8.7, 8.8, and 8.9 of the Agreement, the following
terms have the respective set forth below:
Bank -- means Compass Bank, an Alabama state banking corporation.
Board of Directors -- means the Board of Directors of the Company.
Borrower -- means Seitel Geophysical, Inc., a Delaware corporation.
Capital Lease -- means a lease with respect to which the lessee is
required concurrently to recognize the acquisition of an asset and the
incurrence of a liability in accordance with GAAP.
Capital Lease Obligation -- means, with respect to any Person and a
Capital Lease, the amount of the obligation of such Person as the lessee under
such Capital Lease which would, in accordance with GAAP, appear as a liability
on a balance sheet of such Person.
Company -- means Seitel, Inc., a Delaware corporation and the parent
corporation of Borrower.
Consolidated Debt -- means, as of any date of determination, the total
of all Debt of the Company and the Restricted Subsidiaries outstanding on such
date, after eliminating all offsetting debits and credits between the Company
and the Restricted Subsidiaries and all other items required to be eliminated
in the course of the preparation of consolidated financial statements of the
Company and the Restricted Subsidiaries in accordance with GAAP.
Consolidated Interest Expense -- means, with respect to any period,
the sum (without duplication) of the following (in each case, eliminating all
offsetting debits and credits between the Company and the Restricted
Subsidiaries and all other items required to be eliminated in the course of the
preparation of consolidated financial statements of the Company and the
Restricted Subsidiaries in accordance with GAAP):
(a) all interest in respect of Debt of the Company and
the Restricted Subsidiaries (including imputed interest on Capital
Lease Obligations) deducted in determining Consolidated Net Income for
such period, and
(b) all debt discount and expense amortized or required
to be amortized in the determination of Consolidated Net Income for
such period.
Consolidated Net Income -- means, with reference to any period, the
net income (or loss) of the Company and the Restricted Subsidiaries for such
period (taken as a cumulative whole), as determined in accordance with GAAP,
after eliminating all offsetting debits and credits between the Company and the
Restricted Subsidiaries and all other items required to be eliminated in the
course of the preparation of consolidated financial statements of the Company
and the Restricted Subsidiaries in accordance with GAAP, provided, there shall
be excluded:
1
<PAGE> 26
(a) any gains resulting from any write-up of any assets
(but not any loss resulting from any write-down of any assets),
(b) the income (or loss) of any Person accrued prior to
the date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or a Restricted Subsidiary, and the
income (or loss) of any Person, substantially all of the assets of
which have been acquired in any manner by the Company or any
Restricted Subsidiary, realized by such other Person prior to the date
of acquisition,
(c) in the case of a successor to the Company by
consolidation or merger or as a transferee of its assets, any earnings
of the successor corporation prior to such consolidation, merger or
transfer of assets,
(d) any aggregate net gain (but not any aggregate net
loss) during such period arising from the sale, conversion, exchange
or other disposition of capital assets (such term to include, without
limitation, (i) all non-current assets and, without duplication, (ii)
the following, whether or not current: all fixed assets, whether
tangible or intangible, all inventory sold in conjunction with the
disposition of fixed assets, and all securities),
(e) any portion of such net income that cannot be freely
converted into United States Dollars,
(f) the income (or loss) of any Person (other than a
Restricted Subsidiary) in which the Company or any Restricted
Subsidiary has an ownership interest, except to the extent that any
such income has been actually received by the Company or such
Restricted Subsidiary in the form of cash dividends or similar cash
distributions,
(g) any gain arising from the acquisition of any
security, or the extinguishment, under GAAP, of any Debt of the
Company or any Restricted Subsidiary,
(h) any net income or gain or any net loss during such
period from (i) any change in accounting principles in accordance with
GAAP or (ii) any prior period adjustments resulting from any change in
accounting principles in accordance with GAAP, and
(i) any net income or gain (but not any net loss) during
such period from (i) any extraordinary items or (ii) any discontinued
operations or the disposition thereof.
Consolidated Net Worth -- means, at any time, the total stockholders'
equity which would be shown in consolidated financial statements of the Company
and the Restricted Subsidiaries prepared at such time in accordance with GAAP.
Debt -- means, with respect to any Person, without duplication
(a) its obligations for borrowed money;
(b) its obligations in respect of banker's acceptances,
other acceptances, letters of credit and other instruments serving a
similar function issued or accepted by banks and other
2
<PAGE> 27
financial institutions for the account of such Person (whether or not
incurred in connection with the borrowing of money);
(c) its obligations that are evidenced by bonds, notes,
debentures or similar instruments;
(d) its obligations for the deferred purchase price of
property acquired by such Person (excluding accounts payable arising
in the ordinary course of business but including, without limitation,
all obligations created or arising under any conditional sale or other
title retention agreement with respect to any such property);
(e) its Capital Lease Obligations;
(f) its obligations in respect of all mandatorily
redeemable preferred stock of such Person;
(g) its obligations for borrowed money secured by any
Lien with respect to any property owned by such Person (whether or not
it has assumed or otherwise become liable for such obligations); and
(h) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a) through (g)
hereof.
Debt of any Person shall include all obligations of such Person of the
character described in clauses (a) through (h) to the extent such Person
remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
EBITDA -- means, in respect of any period, Consolidated Net Income for
such period minus
(a) to the extent added in the computation of such
Consolidated Net Income, each of the following:
(i) extraordinary gains net of extraordinary
losses, and
(ii) gains, net of losses, arising from the
disposition of property other than in the ordinary course of
business, plus
(b) to the extent deducted in the computation of such
Consolidated Net Income, each of the following:
(i) Consolidated Interest Expense, net of
interest and other investment income,
(ii) taxes imposed on or measured by income or
excess profits of the Company and the Restricted Subsidiaries,
(iii) the amount of all depreciation, depletion and
amortization allowances and other non-cash expenses of the
Company and the Restricted Subsidiaries,
3
<PAGE> 28
(iv) extraordinary losses, net of extraordinary
gains, and
(v) losses, net of gains, arising from the
disposition of property other than in the ordinary course of
business.
Equity Interest -- means
(a) the outstanding Voting Stock of a corporation or
other business entity,
(b) the interest in the capital or profits of a
corporation, limited liability company, partnership or joint venture,
or
(c) the beneficial interest in a trust or estate.
GAAP -- means accounting principles as promulgated from time to time
in statements, opinions and pronouncements by the American Institute of
Certified Public Accountants and the Financial Accounting Standards Board and
in such statements, options and pronouncements of such other entities with
respect to financial accounting of for-profit entities as shall be accepted by
a substantial segment of the accounting profession in the United States.
Guaranty -- means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments
for deposit or collection) of such Person guaranteeing or in effect
guaranteeing any indebtedness, dividend or other obligation of any other Person
in any manner, whether directly or indirectly, including (without limitation)
obligations incurred through an agreement, contingent or otherwise, by such
Person:
(a) to purchase such indebtedness or obligation or any
property constituting security therefor;
(b) to advance or supply funds (i) for the purchase or
payment of such indebtedness or obligation, or (ii) to maintain any
working capital or other balance sheet condition or any income
statement condition of any other Person or otherwise to advance or
make available funds for the purchase or payment of such indebtedness
or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of such
indebtedness or obligation of the ability of any other Person to make
payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such indebtedness or
obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the obliger
under any Guaranty, the indebtedness or other obligations that are the subject
of such Guaranty shall be assumed to be direct obligations of such obliger.
Person -- means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
4
<PAGE> 29
Restricted Subsidiary -- means and includes each and every Subsidiary
other than any Subsidiary which, at the time of any determination hereunder,
has been designated by the Board of Directors and by written notice to the Bank
to be an Unrestricted Subsidiary; provided in any event, that each of the
following shall at all times constitute a Restricted Subsidiary:
(a) each Subsidiary of the Company as of December 28,
1995; and
(b) each Subsidiary which owns, directly -or indirectly,
more than fifty percent (demo) of the Equity Interest of a Restricted
Subsidiary.
Subsidiary -- means, as to any Person, any corporation, limited
liability company, partnership, joint venture, trust or estate in which such
Person or one or more of the Subsidiaries or such Person and one or more of the
Subsidiaries own more than fifty percent (judo) of the Equity Interest. Unless
the context otherwise clearly requires, any reference to a "Subsidiary" is a
reference to a Subsidiary of the Company.
Total Capitalization -- means, at any time, the sum of Consolidated
Debt plus Consolidated Net Worth, in each case at such time.
Unrestricted Subsidiary -- means each Subsidiary other than a
Restricted Subsidiary.
Voting Stock -- shall mean the capital stock or similar interest of
any class or classes (however designated) of a corporation or other business
entity, the holders of which are ordinarily, in the absence of contingencies,
entitled to vote for the election of the members of the board of directors (or
Persons performing similar functions) of a corporation or other business
entity.
5
<PAGE> 30
ASSUMPTION AND LOAN MODIFICATION AGREEMENT
THIS ASSUMPTION AND LOAN MODIFICATION AGREEMENT (this "Agreement") is
entered into effective as of December 31, 1996 (this "Agreement") and is by and
among SEITEL GEOPHYSICAL, INC. a Delaware corporation ("Seitel"), EAGLE
GEOPHYSICAL, INC., a Delaware corporation ("Eagle"), COMPASS BANK (f/k/a
Central Bank of the South), an Alabama state banking corporation ("Compass"),
and SEITEL, INC., a Delaware corporation (the "Guarantor").
All capitalized terms used herein but not otherwise defined herein
shall have the meaning set forth in that certain Term Credit and Security
Agreement dated as of July 15, 1993, together with any Schedules thereto, al as
amended (the "Loan Agreement") between Seitel and Compass.
W I T N E S S E T H:
WHEREAS, Seitel and Compass are parties to the Loan Agreement.
WHEREAS, the Guarantor has provided to Compass a guaranty of, inter
alia, all amounts due and payable by Seitel under the Loan Agreement, the Note
and all other Loan Documents pursuant to that certain Continuing Guaranty
(Unlimited) dated July 15, 1993 executed by Guarantor in favor of Compass, as
amended (the "Guaranty").
WHEREAS, Seitel wishes to assign and delegate to Eagle all of its
right, title, interests and obligations in, to and under the Loan Agreement,
the Note, and the Loan Documents and Eagle wishes to accept such assignment and
delegation.
WHEREAS, the parties hereto have entered into this Agreement to, among
other things, (a) acknowledge and consent to the assignment and delegation from
Seitel to Eagle on the terms and conditions hereinafter set forth and (b)
provide for the Guarantor to acknowledge its continuing obligations under the
Guaranty with respect to Eagle.
A G R E E M E N T
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
1. Assignment, Assumption and Modification. Seitel, in its
capacity as Borrower under the Loan Agreement, the Note and all the other Loan
Documents, hereby assigns and delegates to Eagle all of Seitel's rights, title,
interests and obligations in, to and under the Loan Agreement, the Note, and
the other Loan Documents pursuant to that certain Contribution and Assumption
Agreement effective as of December 31, 1996 (the "Contribution Agreement")
between Seitel and Eagle. Eagle hereby accepts and agrees to perform such
assignment and delegation and acknowledges and agrees that from and after
December 31, 1996 (the "Effective Date") it shall be a party to and be the
"Borrower" for all purposes under the Loan Agreement, the Note, the Guaranty
and all the other Loan Documents executed in connection therewith and agrees to
be bound by all of the terms of, and to assume, undertake and perform all the
obligations and liabilities of, the Borrower as set forth therein whether such
obligations and liabilities arise prior to, on or after the Effective Date.
Without limiting the foregoing, the Loan Documents shall be and the same hereby
are amended by deleting any and all references to the name "Seitel Geophysical,
Inc." and substituting in place thereof the name "Eagle Geophysical, Inc." The
Loan Documents also shall be and the same hereby are amended by deleting any
and all references to "Central Bank of the South" and substituting in place
thereof "Compass Bank".
2. Consent to Assignment. Compass hereby, subject to the terms
of this Agreement, consents to the Contribution Agreement and the assignment
and delegation by Seitel to Eagle of all of Seitel's right, title, interests
<PAGE> 31
and obligations in, to and under the Loan Agreement, the Note and the other
Loan Documents.
3. Acknowledgement by Guarantor. The Guarantor hereby
acknowledges and consents to the Contribution Agreement and this Agreement.
Further, the Guarantor agrees that the Guaranty from the Guarantor to Compass
guaranteeing all obligations of Seitel to Compass shall guarantee all
obligations of Eagle to Compass. Without limiting the foregoing, (i) any and
all references in said Guaranty to "Seitel Geophysical, Inc." shall be and
hereby are amended to read and refer to "Eagle Geophysical, Inc." and (ii) any
and all references in said Guaranty to "Central Bank of the South" shall be and
hereby are amended to read and refer to "Compass Bank".
4. Absence of Defaults. Eagle, as Borrower, and the Guarantor
hereby represent and warrant that as of the date hereof no default or event of
default currently exists and is continuing with respect to the Borrower or the
Guarantor under any of the Loan Documents.
5. Conditions Precedent. Eagle, as Borrower, and Guarantor agree
to deliver to Compass the following items on or before the Effective Date, each
in form and substance satisfactory to Compass: (a) the Contribution Agreement
duly executed by the parties thereto; (b) this Agreement duly executed by the
parties hereto; (c) Good Standing Certificates from business; (d) a legal
opinion of counsel to Eagle and the Guarantor in form and substance
satisfactory to Compass; and (e) such other certificates, financing statements,
resolutions and opinions as deemed necessary or advisable by Compass.
6. Counterparts. This Agreement may be executed in any number of
counterparts, each of which when executed and delivered shall be deemed to be
an original and it shall not be necessary in making proof of this Agreement to
produce or account for more than one such counterpart.
7. Effect on Loan Documents. Each of the Loan Documents shall be
deemed amended set forth hereinabove and to the extent necessary to carry out
the intent of this Agreement. Without limiting the generality of the
foregoing, each reference in the Loan Documents to the Note, the Guaranty or
any other Loan Documents shall be deemed to be references to said documents, as
heretofore and hereby amended. Except as is expressly set forth herein, all of
the Loan Documents shall remain in full force and effect in accordance with
their respective terms and shall continue to evidence, secure, guarantee or
relate to, as the case may be, the Term Loan.
8. Representations, Warranties, Covenants, etc. Each
representation, warranty, covenant, grant of security interest and other
agreement originally made by Seitel and contained or referenced in the Loan
Documents is hereby expressly affirmed, adopted, stated and ratified and agreed
to by Eagle, and incorporated herein by reference, as if fully set forth
herein. Seitel, Eagle and Guarantor hereby represent that neither Seitel,
Eagle nor Guarantor has any offsets or claims against Compass arising under,
related to, or connected with the Term Loan, the Loan Agreement, the Guaranty
or any of the other Loan Documents.
9. Expenses. Eagle shall pay any recording fees and all other
expenses incurred by Compass in connection with this Agreement and any other
transactions contemplated hereby, including, without limitation, legal
expenses, filing fees and taxes.
10. Execution by Guarantor. Guarantor has executed this Agreement
to evidence its consent to the modification, amendments and other matters
described herein, and to acknowledge the continuing effect of its Guaranty and
the obligations contained therein.
11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Alabama.
12. Continuation of Lien and Security Interest. It is expressly
acknowledged and agreed that Eagle is taking the Assets (as defined in the
Contribution Agreement) subject to all liens and security interests of Compass
<PAGE> 32
in such Assets and nothing contained or implied herein shall be deemed to be,
constitute or result in the release of any such liens and security interests.
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the Effective Date.
SEITEL GEOPHYSICAL, INC.
By:/s/ Jay N. Silverman
Name: Jay N. Silverman
Title:President
EAGLE GEOPHYSICAL, INC.
By:/s/ Jay N. Silverman
Name: Jay N. Silverman
Title: President
ACKNOWLEDGED, AGREED AND CONSENTED TO:
SEITEL, INC.
By:/s/ Paul A. Frame
Name: Paul A. Frame
Title:President
COMPASS BANK
By: /s/ Jay P. Ackley
Name: Jay P. Ackley
Title: Asst. Vice President
<PAGE> 33
TERM NOTE
$4,300,000 July 15, 1993
Alabama
FOR VALUE RECEIVED, the undersigned SEITEL GEOPHYSICAL, INC., a
Delaware corporation ("Borrower"), hereby promises to pay to the order of
CENTRAL BANK OF THE SOUTH ("Bank"; Bank and any subsequent holder hereof being
hereinafter referred to as "Holder"), without grace at its office at 15 South
20th Street, Birmingham, Alabama 35233, or such other place as Holder may
direct, in lawful money of the United States of America, with interest, charges
and expenses, the principal amount of FOUR MILLION THREE HUNDRED THOUSAND AND
NO/1OO DOLLARS ($4,300,000). Payment of principal, interest, charges and
expenses shall be in accordance with the following provisions:
1. Payments. Borrower promises to pay (i) monthly
principal and interest installment payments of $86,388.12 each on the first
(1st) day of each month beginning August 1, 1993; and (ii) a final payment of
all outstanding principal, accrued and unpaid interest and all related charges
and expenses hereunder on June 1, 1998, unless due sooner pursuant to the terms
of this Term Note or any of the Security Documents (defined below). In the
event Borrower tenders or otherwise desires to make principal reduction
pre-payments with good and immediately available funds, Bank will accept such
pre-payments and apply the same against the principal balance outstanding
hereunder, without penalty.
2. Interest. Except for purposes of calculating the
Highest Lawful Rate (defined below), interest shall be calculated on the basis
of a 360-day year applied to the actual number of days upon which principal is
outstanding by multiplying the principal amount outstanding by the applicable
interest rate, multiplying the product thereof by the actual number of days
elapsed, and dividing the product so obtained by 360. The applicable interest
rate is and shall be equal to 7.61%; provided, however, that in no event shall
the interest rate contracted for, taken, reserved, charged or received under
this Promissory Note be greater than the Highest Lawful Rate at any time.
Adjustments due to changes in the Highest Lawful Rate will be made on the
effective date of any change in the Highest Lawful Rate. Unless changed in
accordance with law, the applicable method of calculating the usury ceiling
rate under Texas law (if and to the extent the same shall be deemed applicable
notwithstanding Section 7 below) shall be the indicated (weekly) ceiling rate
from time to time in effect, as provided in Tex. Rev. Civ. Stat. Ann. art.
5069-1.04, as amended, unless changed in accordance with law.
It is the intention of Holder and Borrower to conform strictly to any
applicable usury laws (including, without limitation the laws of Texas and the
United States if and to the extent such laws, other than Alabama laws, are
deemed applicable notwithstanding Section 7 below). Accordingly, if the
transactions contemplated hereby would be usurious under any applicable law,
then, in that event, notwithstanding anything to the contrary in this Term
Note, the Security Documents, or any other agreement or instrument entered into
in connection with or as security for or guaranteeing payment of the
indebtedness evidenced by this Term Note, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under applicable law
that is contracted for, taken, reserved, charged, or received by Holder
under this Term Note, the Security Documents or under any other agreement or
instrument entered into in connection with or as security for or guaranteeing
payment of the indebtedness evidenced by this Term Note shall under no
circumstances exceed the Highest Lawful Rate, and any excess shall be canceled
automatically and, if theretofore paid, shall, at the option of Holder, be
credited by Holder on the principal amount of any indebtedness owed to Holder
by Borrower or refunded by Holder to Borrower, and (ii) in the event that the
payment of the indebtedness evidenced by this Term Note or any of the other
Liabilities (as defined in the Term Agreement (defined below)) is accelerated
or in the event of any required or permitted pre-payment, then such
consideration that constitutes interest under law applicable to Holder may
never include more
1
Initials: /s/
<PAGE> 34
than the Highest Lawful Rate and excess interest, if any, to Holder, provided
for in this Term Note, the Security Documents or otherwise shall be canceled
automatically as of the date of such acceleration or pre-payment and, if
theretofore paid, shall, at the option of Holder, be credited by Holder on the
principal amount of any indebtedness owed to Holder by Borrower or refunded by
Holder to Borrower.
"Highest Lawful Rate" means the maximum non-usurious interest rate
(computed on the basis of a year of 365 or 366 days, as applicable) that at any
time or from time to time may be contracted for, taken, reserved, charged, or
received on amounts due to Holder, under laws applicable to Holder with regard
to this Term Note that are presently in effect or, to the extent allowed by
law, under such applicable laws that allow a higher maximum non-usurious rate
than applicable laws now allow.
Any principal amounts outstanding hereunder shall continue to bear
interest at the rates set forth herein after maturity.
3. Security Documents. The indebtedness evidenced hereby is
secured by the following, along with other documents (the "Security
Documents"):
(a) Term Credit and Security Agreement executed by
Borrower on or about the date hereof, and all collateral and security
referred to therein (the "Term Agreement");
(b) Continuing (Unlimited) Guaranty executed by Seitel,
Inc. ("Guarantor"); and
(c) Revolving Credit and Security Agreement executed by
Guarantor on or about the date hereof, and all collateral and security
referenced to therein.
This Term Note is included in the indebtedness referred to in the
Security Documents and is entitled to the benefits of those documents, but
neither this reference to those documents nor any provisions thereof shall
affect or impair the absolute and unconditional obligation of Borrower to pay
the principal of, interest on, and charges and expenses related to this Term
Note as and when due.
4. Events of Default. In case of the happening of any one
or more of the following events of default:
(a) Default in the payment of the principal of, interest
on, or charges and expenses related to this Term Note, as and when
due;
(b) Failure by Borrower or Guarantor to pay or perform
any other loan, indebtedness, liability or obligation to as and when
due;
(c) Failure by Borrower or Guarantor or any other person
or entity to observe or comply with any covenant, obligation or
provision contained or referenced in this Term Note or in any of the
Security Documents or in any other document, agreement or instrument
executed in connection with or securing this Term Note (which failure
continues beyond any applicable cure period agreed upon by Bank in the
Security Documents or otherwise in writing); or
(d) The occurrence or continuation of any default or
event of default contained, specified or referenced in any of the
Security Documents or in any other document, agreement or instrument
executed in connection with or securing this Term Note (which is not
cured within any applicable cure period agreed upon by Bank in the
Security Documents or otherwise in writing); then, or at any time
thereafter, Holder may, with or without notice to Borrower, declare
this Term Note to be forthwith due and payable, as to principal and
interest and related charges and expenses, without presentment,
demand, protest, notice of
2
Initials: /s/
<PAGE> 35
intent to accelerate, notice of acceleration, or other notice of any
kind, all of which are hereby expressly waived, anything contained
herein or in any of the Security Documents or in any other instrument
executed in connection with or securing this Term Note to the contrary
notwithstanding.
5. Waivers. Borrower and any endorser or guarantor hereof
hereby waive demand, presentment for payment, notice of dishonor, protest,
notice of protest, notice of intent to accelerate, notice of acceleration, and
diligence in collection or bringing suit and agree that Holder may accept
partial payment, or release or exchange security or collateral, without
discharging or releasing any unreleased collateral or the obligations evidenced
hereby. To the extent permitted by applicable law, Borrower further waives any
and all rights of exemption, both as to personal and real property, under the
constitution or laws of the United States, the State of Alabama, or any other
state or jurisdiction.
6. Attorneys' Fees and Costs. Borrower agrees to pay
reasonable attorneys' fees and costs incurred by Holder in collecting or
attempting to collect this Term Note, whether by suit or otherwise.
7. Applicable Law: Assigns. THIS TERM NOTE AND ALL RIGHTS AND
OBLIGATIONS HEREUNDER, INCLUDING MATTERS OF CONSTRUCTION, VALIDITY AND
PERFORMANCE, SHALL BE GOVERNED AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF ALABAMA, EXCEPT THAT ANY CONFLICT OF LAWS RULE OF SUCH JURISDICTION
THAT WOULD REQUIRE REFERENCE TO THE LAWS OF SOME OTHER JURISDICTION SHALL BE
DISREGARDED. ANY SUITS, CLAIMS OR CAUSES OF ACTION ARISING DIRECTLY OR
INDIRECTLY FROM THIS TERM NOTE, THE SECURITY DOCUMENTS OR ANY OTHER AGREEMENTS
OR INSTRUMENTS BETWEEN BANK AND BORROWER RELATING TO SUCH DOCUMENTS SHALL BE
BROUGHT IN A COURT OF APPROPRIATE JURISDICTION ONLY IN JEFFERSON COUNTY,
ALABAMA AND OBJECTIONS TO VENUE AND PERSONAL JURISDICTION IN SUCH FORUM ARE
HEREBY EXPRESSLY WAIVED. BORROWER AGREES THAT THIS TERM NOTE AND ALL OTHER
AGREEMENTS, INSTRUMENTS AND DOCUMENTS REFERRED TO HEREIN SHALL BE GOVERNED BY
AND CONSTRUED UNDER THE LAWS OF THE STATE OF ALABAMA (WITHOUT REGARD TO CHOICE
OF LAW CONSIDERATIONS), INCLUDING, WITHOUT LIMITATION, APPLICABLE USURY LAWS.
THIS TERM NOTE HAS BEEN NEGOTIATED, AND IS BEING EXECUTED AND DELIVERED IN THE
STATE OF ALABAMA, OR, IF EXECUTED ELSEWHERE, SHALL BECOME EFFECTIVE UPON BANK'S
RECEIPT AND ACCEPTANCE OF THE EXECUTED ORIGINAL OF THIS TERM NOTE IN THE STATE
OF ALABAMA; PROVIDED, HOWEVER, THAT BANK SHALL HAVE NO OBLIGATION TO GIVE, NOR
SHALL BORROWER BE ENTITLED TO RECEIVE, ANY NOTICE OF SUCH ACCEPTANCE FOR THIS
TERM NOTE TO BECOME A BINDING OBLIGATION OF BORROWER. IT IS INTENDED, AND
BORROWER AND BANK SPECIFICALLY AGREE, THAT THE LAWS OF THE STATE OF ALABAMA
GOVERNING INTEREST SHALL APPLY TO THIS TERM NOTE AND THIS TRANSACTION.
BORROWER HEREBY ACKNOWLEDGES THAT (I) THE NEGOTIATION, EXECUTION, AND DELIVERY
OF THIS TERM NOTE AND THE SECURITY DOCUMENTS CONSTITUTES THE TRANSACTION OF
BUSINESS WITHIN THE STATE OF ALABAMA; (II) ANY CAUSE OF ACTION ARISING UNDER
THIS TERM NOTE AND/OR ANY OF THE SECURITY DOCUMENTS WILL BE A CAUSE OF ACTION
ARISING FROM SUCH TRANSACTION OF BUSINESS; AND (III) BORROWER UNDERSTANDS,
ANTICIPATES AND FORESEES THAT ANY ACTION FOR ENFORCEMENT OF THIS TERM NOTE
AND/OR ANY OF THE SECURITY DOCUMENTS MAY BE BROUGHT AGAINST BORROWER, ET AL.,
IN THE STATE OF ALABAMA. TO THE EXTENT ALLOWED BY LAW, BORROWER HEREBY
SUBMITS TO JURISDICTION IN THE STATE OF ALABAMA FOR ANY ACTION OR CAUSE OF
ACTION ARISING OUT OF OR IN CONNECTION WITH THIS TERM NOTE AND/OR ANY OF THE
SECURITY DOCUMENTS AND HEREBY WAIVES ANY AND ALL RIGHTS UNDER THE LAWS OF ANY
STATE OR JURISDICTION TO OBJECT TO JURISDICTION OR VENUE WITHIN JEFFERSON
COUNTY, ALABAMA. NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED IN THIS
PARAGRAPH SHALL PREVENT BANK FROM BRINGING ANY ACTION OR
3
Initials: /s/
<PAGE> 36
EXERCISING ANY RIGHTS AGAINST BORROWER, ANY GUARANTOR, ANY SECURITY FOR THIS
TERM NOTE OR ANY OF BORROWER'S OR ANY GUARANTOR'S PROPERTIES IN ANY OTHER
COUNTY, STATE OR JURISDICTION. INITIATING SUCH ACTION OR PROCEEDING OR
TAKING ANY SUCH ACTION IN ANY OTHER STATE OR JURISDICTION SHALL IN NO EVENT
CONSTITUTE A WAIVER BY BANK OF ANY OF THE FOREGOING. As used herein, the terms
"Borrower", "Bank", "Guarantor" and "Holder" shall be deemed to include their
respective successors, legal representatives and assigns, whether by voluntary
action of the parties or by operation of law. This Term Note is given under
the seal of all parties hereto and it is intended that this Term Note shall
constitute and have the effect of a sealed instrument according to law.
IN WITNESS WHEREOF, Borrower has caused this Term Note to be
executed and delivered by its duly authorized officer in Alabama on this the
15th day of July, 1993.
BORROWER:
WITNESS: SEITEL GEOPHYSICAL, INC.
/s/ Debra D. Valice
By: /s/ [illegible signature] By: Debra D. Valice
---------------------------------- Secretary/Treasurer
STATE OF ALABAMA
COUNTY OF JEFFERSON
I, the undersigned, Notary Public in and for, said County in said
State, hereby certify that Debra D. Valice, whose name as Secretary/Treasurer
of SEITEL GEOPHYSICAL, INC., a Delaware corporation, is signed to the foregoing
instrument and who is known to me, acknowledged before me on this day that,
being informed of the contents of the instrument she, as such officer and with
full authority, executed the same voluntarily for and as the act of said
corporation.
Given under my hand this 15th day of July, 1993.
/s/
----------------------------------------
Notary Public
My Commission Expires: 4-18-94
[NOTARIAL SEAL]
4
Initials: /s/
<PAGE> 37
CENTRAL BANK OF THE SOUTH P.O. BOX 10566 BIRMINGHAM, ALABAMA 35296
SIDE LETTER AGREEMENT
July 15, 1993
Ms. Debra Valice
Seitel, Inc.
Seitel Geophysical, Inc.
50 Briar Hollow Lane
7th Floor West
Houston, Texas 77027
Dear Ms. Valice:
Reference is made to that certain Revolving Credit and Security Agreement (the
"Revolving Agreement") and that certain Master Revolving Promissory Note (the
"Revolving Note") executed by Seitel, Inc. (the "Borrower") on or about the
date hereof in connection with Borrower's $10,000,000 revolving line of credit
(the "Revolving Line") and that certain Term Credit and Security Agreement (the
"Term Agreement") and that certain Term Note (the "Term Note") executed by
Seitel Geophysical, Inc. ("Related Borrower") on or about the date hereof in
connection with Related Borrower's $4,300,000 term loan (the "Term Loan").
Notwithstanding anything to the contrary contained or implied in the Revolving
Agreement, the Term Agreement, the Revolving Note and/or the Term Note
(collectively with all other documents executed in connection therewith, the
"Loan Documents"), Central Bank of the South (the "Bank") agrees as follows:
Subject to and conditioned upon (i) Related Borrower paying in full (in
good and immediately available funds) all interest, charges, principal
and expenses outstanding under and in connection with the Term Loan,
(ii) the non-existence of any default or event of default under the
Revolving Agreement or the Revolving Note, (iii) Bank not having any
obligation to advance any funds to or on behalf of Related Borrower and
(iv) Related Borrower not having any Liabilities (as defined in the Term
Agreement) to Bank under the Term Agreement, the Bank agrees upon the
written request of Related Borrower (and receipt by Bank of such
certifications as Bank shall request concerning satisfaction of the
foregoing conditions) to then release its security interest in Related
Borrower's accounts, general intangibles, inventory and equipment (the
"Release") and terminate the Term Agreement (the "Termination"),
provided that (a) Borrower and Related Borrower shall pay to Bank any
and all expenses (including legal expenses), costs, taxes, filing fees,
and other costs and expenses associated or incurred by Bank in
connection with said Release and Termination and (b) Borrower and
Related Borrower shall (at Borrower's and Related Borrower's expense)
execute and deliver to Bank all such other documents, instruments and
agreements (in form and substance satisfactory to Bank) as may be
reasonably requested by Bank to effectuate the foregoing; provided,
however, that if Bank ever is required to repay or disgorge any payment
<PAGE> 38
received under or in connection with the Term Loan ("Disgorged
Payment"), the Release and Termination shall be voided and the Term
Agreement and all of Bank's rights, remedies and interests shall be
reinstated in full as the same existed prior to the Bank's receiving the
Disgorged Payment without any loss of lien or priority.
CENTRAL BANK OF THE SOUTH
By: /s/ Terry W. Gasken
Its: Vice President
Acknowledged and agreed:
SEITEL, INC.
By: /s/ Debra D. Valice
Its: Vice President - Finance
SEITEL GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
Its: Secretary/Treasurer
<PAGE> 1
10.9.1
BAREBOAT CHARTER BY WAY OF SUB-DEMISE
SIMON-HORIZON LIMITED (1)
- and -
HORIZON EXPLORATION LIMITED (2)
Simmons & Simmons
14 Dominion Street
London EC2M 2RJ
5A/P37800/AZM/1040m
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Clause Heading Page
- ------ ------- ----
<S> <C> <C>
1 Definitions 1
2 Representations and Warranties 9
3 Term of Charter 12
4 Conditions Precedent 15
5 Delivery and Acceptance 15
6 Extent of Simon's Liability; Third Party Warranties 16
7 Charterhire 17
8 Payments, Interest and Calculations 18
9 Costs and Indemnities 19
10 Taxation 22
11 General Undertakings 24
11.1
(a) Notification of Relevant Event
(b) Consents and Authorisations
(c) Preparation of Accounts
(d) Supply of Accounts
(e) Information concerning the Charterer
(f) Information concerning the Ship
(g) Observance of Covenants
11.2 Protection of Owner's and Simon's Rights
(a) Disposal of the Ship
(b) Encumbrances
(c) Notification of Arrest
(d) Prevention of and Release from Arrest
(e) No pledging of Simon's or Owner's Credit
(f) Protection of Simon's and the Owner's Rights in the Ship
</TABLE>
(i)
<PAGE> 3
<TABLE>
<S> <C> <C>
(g) Notice of Owner's and Simon's Rights
(h) Release from Arrest: Owner's and Simon's Vessels
12 Sub Chartering 28
13 Use and Trade of the Ship 28
13.1 Permitted Use
13.2
(a) Ship's Registration
(b) Employment
(c) Payment of Outgoing and Evidence of Payments
(d) Operation in the U.S.A. or Canada
(e) Use for Qualifying Purpose
(f) Bills of Lading
14 Title, Registration, Name and House Flag 30
14.1 Title
14.2 Initial Registration
14.3 Transfer of Flag or Registry
14.4 Name and House Flag
15 Maintenance and Operation 32
15.1 Possession and Control of Ship by Charterer
15.2 Undertakings concerning Maintenance and Operation
(a) Maintenance of Classification; Compliance with Regulations
(b) Supply and Crewing
(c) Surveys
(d) Repair
(e) Drydocking
(f) Inspection of the Ship
(g) Manuals and Technical Records
(h) Modification; Removal of Parts; Equipment owned by Third
Parties
(i) Manager
(j) Notification of certain Events
(k) Repairers' Liens
(l) Health and Safety
(m) No Operational Interest
(n) Safe Operation
(o) Fitness to go to Sea
</TABLE>
(ii)
<PAGE> 4
<TABLE>
<S> <C> <C>
16 Insurance Undertakings; Wreck Removal and Insurance Assignment 37
16.1 Insurance
(a) Insured Risks
(b) Brokers and Insurers
(c) Fleet Cover
(d) Payment of Premiums
(e) Renewal
(f) Guarantees
(g) Custody of Policy Documents; Letters of Undertaking; Loss
Payable Clauses
(h) Club Letters of Undertaking; Certificates of Entry
(i) Broker's Report
(j) Collection
(k) Compliance with Insurances
(l) Application of Recoveries
(m) Other Insurances and Assureds
(n) Information concerning Insurances
16.2 Wreck Removal
16.3 Further Requirements
16.4 Insurance Assignment
17 Powers of Simon and/or the Owner to Remedy Defaults 42
17.1 Failure to Perform Insurance Undertakings
17.2 Failure to Perform Maintenance Undertakings
17.3 Failure to Prevent or Release from Arrest
17.4 Failure to comply with other Obligations
17.5 Costs of Remedying Defaults
17.6 Hire Still Payable
18 Redelivery 43
18.1 Redelivery Procedure and Condition
18.2 Redelivery Survey
19 Consumable Stores 44
19.1 Upon Delivery
19.2 Upon Redelivery
</TABLE>
(iii)
<PAGE> 5
<TABLE>
<S> <C> <C>
20 Use of Equipment and Replacement 44
20.1 Use of Equipment and Manuals and Technical Records
20.2 Renewal of Equipment
20.3 Alteration of Equipment; Additional Equipment
21 Loss and Damage 46
22 Salvage 49
23 Requisition 49
24 Termination Events 50
25 Simon's Rights Following a Termination Event 54
26 Increased Costs, Funding Problems and Illegality 56
27 Notices 56
28 Assignment 58
29 Miscellaneous 58
30 Law 59
Schedule
1 List of Documents and Evidence 60
2 Excluded Equipment, Retained Equipment and Additional Equipment 62
3 Charterhire 63
4 Termination Sum 81
5 Forms of Loss Payable Clauses 86
6 Payment of Charterhire 87
</TABLE>
(iv)
<PAGE> 6
A CHARTERPARTY BY WAY OF SUB-DEMISE dated 15 July, 1994, and made
BETWEEN:
(1) SIMON-HORIZON LIMITED registered no. 467924 whose registered office is
at Horizon House, Azalea Drive, Swanley, Kent BR8 8JR ("Simon"); and
(2) HORIZON EXPLORATION LIMITED registered no. 2804983 of 6 Pembroke Road,
Sevenoaks, Kent TN13 1XR (the "Charterer")
BY WHICH IT IS AGREED as follows:
1 Definitions
1.1 In this Charterparty, unless the context otherwise requires:
"Additional Equipment" means the equipment so defined in and for the
purposes of Clause 3.2.1(a) of the Agreement and which (to the extent
the same has been identified at the date hereof) is referred in Part III
of Schedule 2;
"Agreement" means the agreement of even date herewith between Simon and
the Charterer pursuant to which Simon has agreed, inter alia, to enter
into this Charterparty, certain sub-lease contracts and other
transactions relating to the Ship;
"Approved Brokers" means such firm of insurance brokers, appointed by
the Charterer, as may from time to time be approved in writing by or on
behalf of Simon for the purposes of this Charterparty;
"Assignment Agreement" means the agreement so defined in and for the
purposes of the Agreement;
"Banking Day" means a day (other than a Saturday) on which banks are
open for business in London and Edinburgh;
"BFE" means the equipment, machinery and parts supplied by Simon to the
Owner pursuant to the Conversion and Supply Agreement;
"CAA" means the Capital Allowances Act 1990;
"Casualty Amount" means Two hundred and fifty thousand Pounds
(L.250,000) (or the equivalent in any other currency);
1
<PAGE> 7
"Charterhire Payment Dates" means, subject to Clause 8.2, in relation to
the Primary Period, each of the dates referred to in paragraph 2.2 of
Schedule 3 and, in relation to the Secondary Period, means each of the
dates referred to in paragraph 6.2 of Schedule 3;
"Charter Period" means the period during which the Charterer shall be
entitled to the possession and use of the Ship in accordance with this
Charterparty;
"Charterer" means Horizon Exploration Limited of 6 Pembroke Road,
Sevens, Kent TN13 1XR and includes its successors and permitted
assignees and transferees;
"Classification" means "DNV + Al (MV), EO, SF, Supply Vessel, Helidecke"
with the Classification Society or such other classification as the
Owner and Simon shall, at the request of the Charterer, have agreed in
writing shall be treated as the Classification for the purposes of this
Charterparty;
"Classification Society" means Det Norske Veritas or such other
classification society which the Owner and Simon shall at the request of
the Charterer, have agreed in writing shall be treated as the
Classification Society for the purposes of this Charterparty;
"Compulsory Acquisition" means requisition of title or other compulsory
acquisition, requisition, appropriation, expropriation, deprivation or
confiscation for any reason of the Ship by any Government Entity or
other competent authority, whether de jure or de facto, but shall
exclude requisition for use or hire not involving requisition of title;
"Conversion and Supply Agreement" means the agreement dated 20th
December 1990 between the Owner and Simon with regard to the Ship and
relating to certain conversion works carried out to the Ship and the
purchase of certain equipment installed thereon;
"Conversion and Supply Price" means the aggregate amount in Pounds of
the payments made to Simon pursuant to certificates presented under
Clauses 2.5 and 3.4 of the Conversion and Supply Agreement;
"Corporation Tax" means corporation tax in the context of the scheme of
taxation contained in the United Kingdom Tax Acts (as defined in section
831 ICTA) and any applicable Finance Act or any other tax on companies
imposed in the United Kingdom in substitution for corporation tax;
"Deed of Assignment" means the deed so defined under and for the
purposes of the Agreement;
"Delivery" means the time specified in the Protocol of Delivery and
Acceptance in respect of the Ship signed by the Charterer and Simon
pursuant to Clause 7 of the Agreement;
2
<PAGE> 8
"Delivery Date" means the date specified in the Protocol of Delivery and
Acceptance in respect of the Ship aforesaid;
"Encumbrance" means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, security interest, title
retention or other encumbrance of any kind securing, or any right
conferring a priority of payment in respect of, any obligation of any
person;
"Excluded Equipment" means the equipment machinery and parts owned by or
leased to Simon listed in Part I of Schedule 2 which although installed
by Simon on the Ship by the Delivery Date are not chartered by the Owner
to Simon pursuant to the Simon Charterparty;
"Goods" means any goods the subject of the Goods Contracts;
"Goods Contracts" means the Master Lease and any other contract or
guarantee between Simon and the Charterer relating to the Goods;
"Government Entity" means and includes (whether having a distinct legal
personality or not) any national or local government authority, board,
commission, department, division, organ, instrumentality, court or
agency and any association, organisation or institution of which any of
the foregoing is a member or to whose jurisdiction any of the foregoing
is subject or in whose activities any of the foregoing is a participant;
"Guarantees" means the guarantees issued or, as the context may require,
to be issued by the Guarantors in favor of Simon;
"Guarantors" means Horizon Seismic Inc., Exploration Holdings Limited,
HEL and each of their subsidiaries from time to time;
"ICTA" means the Income and Corporation Taxes Act 1988;
"Indebtedness" means any obligation for the payment or repayment of
money, whether as principal or as surety, and whether present or future,
actual or contingent;
"Insurances" means all policies and contracts of insurance (which
expression includes all entries of the Ship in a protection and
indemnity or war risks association) which are from time to time during
the Charter Period in place or taken out or entered into by the
Charterer pursuant to Clause 16 for the benefit of itself, Simon and the
Owner in respect of the Ship or otherwise howsoever in connection with
the Ship and all benefits thereof (including claims of whatsoever nature
and return of premiums);
"Loss Payable Clauses" means the provisions regulating the manner of
payment of sums receivable under the Insurances which are to be
incorporated in the relevant insurance
3
<PAGE> 9
documents, such Loss Payable Clauses to be in the forms set out in
Schedule 5 or in such other forms as may from time to time be agreed in
writing by Simon and the Owner;
"Manager" means Ervik Marine Services A/S of Brunholmgt 2, N6004
Aalesund, Norway or any other person appointed by the Charterer, with
the prior written consent of Simon and the Owner, as the manager of the
Ship;
"Management Agreement" means the agreement (as the same may be amended,
supplemented and/or novated from time to time) approved by the Owner
dated 19th December, 1990 and made between Simon and the Manager or any
other agreement, previously agreed in writing by Simon and the Owner,
between the Charterer and the Manager providing (inter alia) for the
Manager to manage the Ship;
"Manuals and Technical Records" means all such books, records, logs,
manuals, technical data, drawings and other materials and documents
(whether kept or to be kept in compliance with any applicable laws or
the requirements of the Classification Society or otherwise) relating to
the Ship;
"Master Leases" means the master lease of even date herewith between
Simon and the Charterer and the sub lease contracts entered into
pursuant thereto;
"month" means a period beginning in one calendar month and ending in the
next calendar month on the day numerically corresponding to the day of
the calendar month on which it started, provided that (i) if the period
started on the last Banking Day in a calendar month or if there is no
such numerically corresponding day, it shall end on the last Banking Day
in such next calendar month and (ii) if such numerically corresponding
day is not a Banking Day, the period shall end on the preceding Banking
Day and "months" and "monthly" shall be construed accordingly;
"MWB Conversion Contract" means the agreement dated 18th October, 1990
and made between Simon and the Yard relating to certain conversion works
carried out and for the supply of certain equipment, to the Ship;
"Net Sale Proceeds" means, in relation to a sale of the Ship, the amount
actually received by the Owner from a purchaser of the Ship after
deducting the Owner's expenses in connection with such sale including
without limitation (where applicable) broker's commissions, Owner's
marketing expenses, legal costs, agency fees and port charges, insurance
premiums, stamp duties, registration fees and any expenses relating to
the overhaul or repair of the Ship (including putting the Ship in class)
incurred to restore the Ship to the condition required by this
Charterparty and the Simon Charterparty or pursuant to the provisions of
any sale and purchase agreement in respect of the sale of the Ship;
"Original Cost" means an amount equal to the aggregate of:
4
<PAGE> 10
(i) the Purchase Price; and
(ii) the Conversion and Supply Price;
"Owner" means Royal Bank of Scotland (Industrial Leasing) Limited and
includes successors and assignees of the Owner;
"Permitted Encumbrance" means in respect of the Ship:
(a) any Encumbrance arising from the Owner's own acts or defaults;
(b) any Encumbrance for Taxes either not yet assessed or, if
assessed, not yet due and payable or being contested in good
faith by appropriate proceedings (and for the payment of which
adequate reserves have been provided) so long as any such
proceedings or the continued existence of such Encumbrance does
not involve any likelihood of the sale, forfeiture or loss of or
of any interest in, the Ship;
(c) liens arising in the ordinary course of business by statute or by
operation of law in respect of obligations which are not overdue
or which are being contested in good faith by appropriate
proceedings (and for the payment of which adequate reserves have
been provided) so long as any such proceedings or the continued
existence of such items do not involve any likelihood of the
sale, forfeiture or loss of or of any interest in, the Ship; and
(d) any lien for General Average or for Master's, officer's or crew's
wages outstanding in the ordinary course of trading, any lien for
salvage and any ship repairer's or outfitters' possessory lien
for a sum not exceeding the Casualty Amount;
"Pounds" and the sign "L." means pounds sterling of the United Kingdom;
"Pre-Primary Period" means the period commencing on the "Delivery Date"
(as defined pursuant to the Simon Charterparty) and terminating, subject
to the terms and conditions of this Charterparty, on the Start Date;
"Primary Period" means the period commencing on the Start Date and
terminating, subject to the terms and conditions of this Charterparty,
on 1st April 2001;
"Purchase Agreement" means the Memorandum of Agreement dated December,
1990 and made between Simon and the Owner under which Simon sold and the
Owner purchased the Ship;
"Purchase Price" means the sum of Five million five hundred thousand
Pounds (L.5,500,000) paid by the Owner to Simon for the Ship under the
Purchase Agreement;
5
<PAGE> 11
"Relevant Documents" means this Charterparty, the Agreement, the
Conversion and Supply Agreement, the Guarantees, the Goods Contracts,
the Assignment Agreement, the Deed of Assignment and any other document
or instrument from time to time executed as a guarantee and/or security
for the obligations of the Charterer and/or any sums of money from time
to time owing, whether actually or contingently, under or pursuant to
this Charterparty and all notices, consents, certificates and other
documents and agreements issued or, as the case may be, to be issued
pursuant to any of the foregoing, and until expiry of the warranties
given to Simon pursuant to the MWB Conversion Contract, includes the MWB
Conversion Contract;
"Relevant Event" means any Termination Event or any event which with the
giving of notice or lapse of time or the satisfaction of any other
condition (or any combination thereof) would constitute a Termination
Event;
"Relevant Party" means all or any one of the Charterer, the Guarantors
or any other party (other than the Owner and Simon) to any of the
Relevant Documents;
"Relevant Rate of Interest" means the rate of interest determined by the
Owner to be two per cent (2%) per annum above the base rate of The Royal
Bank of Scotland plc;
"Requisition Compensation" means all moneys or other compensation from
time to time payable in respect of the Compulsory Acquisition of the
Ship;
"Retained Equipment" means the equipment, machinery and parts set out in
Part II of Schedule 2;
"Secondary Period" means the period for which the Charter is extended or
further extended in accordance with Clause 3.2;
"Ship" means the m.v. "Simon Labrador" (ex "Seaway Labrador") purchased
by the Owner pursuant to the Purchase Contract presently registered
under the Bahamian flag at the Port of Nassau with Official Number
715224 and includes any share or interest therein and her engines,
machinery, boats, tackle, outfit equipment, compressors, computers,
seismic survey equipment, spare gear, fuel, consumables or other stores
belongings and appurtenances whether on board or ashore (but excluding
Excluded Equipment, Retained Equipment, Additional Equipment, consumable
stores and provisions, bunkers, domestic fuel, lubricants, rented
equipment, and Charterer's additions as contemplated in Clause 20.3)
which became the property of the Owner pursuant to the Purchase Contract
and the Conversion and Supply Agreement and belong to the Owner as at
Delivery or installed on the Ship thereafter or which, having been
removed therefrom remain the property of the Owner pursuant to this
Charterparty or the Simon Charterparty together with any and all
substitutions therefor and replacements and renewals thereof from time
to time made in or to her in accordance with the provisions of this
Charterparty and, where the context permits, "Ship" shall include the
Manuals and Technical Records and "Ship" shall include
6
<PAGE> 12
Goods while such Goods are on board the Ship, save that where there is
reference herein to insurance of the Ship, "Ship" shall not include
Goods if the Goods on board the ship are insured separately from the
Ship in accordance with the terms of the Master Lease;
"Simon Charterparty" means that Charterparty by way of Demise dated 20th
December, 1990 and made between the Owner and Simon in respect of the
Ship as amended and supplemented from time to time;
"Simon RBS Documents" means all documents between Simon and the Owner
relating to the Ship, the Goods or otherwise relating to any of them,
including (without limitation)
(a) Master Lease Agreement between the Owner and Simon and
dated 31st March 1992
(b) Lease Contract RS920/0017 dated 31st March 1992 and made
between the Owner and Simon
(c) Lease Contract RS920/0022 dated 31st March 1992 and made
between the Owner and Simon
(d) the Simon Charterparty
(e) Addendum to the Simon Charterparty dated 31st March 1992
and made between the parties thereto
(f) Letters dated 30th April 1992 from Royal Bank Leasing
Limited to Neil Campbell, Finance Director of Simon
relating to each of documents (b) and (c) above
incorporating a "drop-lock" provision into such contracts.
Countersigned 13th May 1992 by Mr. Campbell.
(g) Letter of same date between same parties and countersigned
on same date relating to amendment to insurance provisions
of Clause 11.01(b) of the Master Lease Agreement referred
to above;
"Start Dates" means 31st March, 1991;
"Subsidiary" of a person means any company or entity directly or
indirectly controlled by such person for which purpose "control" means
either ownership of more than 50 per cent of the voting share capital
(or equivalent right of ownership) of such company or entity, or power
to direct its policies and management whether by contract or otherwise;
"Taxes" includes all present and future taxes, levies, imposts, duties,
fees or charges of whatever nature, including, without limitation,
corporation, capital gains, income, gross receipts, franchise, transfer,
sales, use, business, occupation, transaction, purchase, value
7
<PAGE> 13
added, excise, personal property, real property, stamp, documentary,
national insurance, or similar taxes at the rate applicable for the time
being imposed by any national or local taxing authority or any other
agency or government, together with interest thereon and penalties in
respect thereof and "Taxation" shall be construed accordingly;
"Termination Events" means any of the events or circumstances described
in Clause 24;
"Termination Sum" means at any relevant time the amount calculated in
accordance with Schedule 4 as being applicable at such time in respect
of the Ship excluding the Goods;
"Total Loss" means any of the following events:
(i) the actual or constructive total loss of the Ship
(including any damage to the Ship which results in an
insurance settlement on the basis of a total loss, or
requisition for use or hire of the Ship which results in
an insurance settlement on the basis of a total loss);
(ii) the Compulsory Acquisition of the Ship; or
(iii) the hijacking, theft, condemnation, confiscation, arrest,
capture, detention, seizure or requisition for use or hire
of the Ship (other than where the same amounts to
Compulsory Acquisition of the Ship) unless the Ship be
released and restored to the Charterer from such
hijacking, theft, condemnation, confiscation, arrest,
capture, detention, seizure or requisition for use or hire
within thirty (30) days after the occurrence thereof,
"Total Loss Date" shall have the meaning ascribed thereto in Clause
21.2(b);
"Value Added Tax" or "VAT" means value added tax as provided for in the
Value Added Tax Act 1983 or any similar tax replacing or introduced in
addition to the same;
"Yard" means Motorenwerk Bremerhaven GmbH of Barkhausenstrasse, D-2850
Bremerhaven, Federal Republic of Germany.
1.2 Insurance Definitions
In Clause 16:
(i) "excess risks" means the proportion (if any) of claims for
general average, salvage and salvage charges and under the
ordinary collision clause not recoverable in consequence
of the value at which a vessel is assessed for the purpose
of such claims exceeding her insured value;
8
<PAGE> 14
(ii) "fire and usual marine risks" mean hull and machinery
coverage in accordance with Institute Time Clauses Bulls
including Institute Additional Perils Clause, or
equivalent thereof;
(iii) "protection and indemnity risks" means the usual risks
covered by an English protection and indemnity association
including the proportion (if any) not recoverable in case
of collision under the ordinary collision clause; and
(iv) "war risks" includes the risk of mines and all risks
excluded from the standard form of English marine policy
by the free of capture and seizure clause.
1.3 Clause headings and the Index are inserted for convenience of reference
only and shall be ignored in the interpretation of this Charterparty.
1.4 In this Charterparty, unless the context otherwise requires:
(a) references to Clauses and Schedules are to be construed as
references to the clauses of, and schedules to, this Charterparty
and references to this Charterparty include its Schedules;
(b) references to (or to any specified provision of) this
Charterparty or any other document shall be construed as
references to this Charterparty, that provision or that document
as in force for the time being and as amended in accordance with
the terms thereof, or as the case may be, with the agreement of
the relevant parties and (where such consent is, by the terms of
this Charterparty or the relevant document required to be
obtained as a condition to such amendment being permitted) the
prior written consent of the Owner;
(c) words importing the plural shall include the singular and vice
versa;
(d) references to a person shall be construed as including, without
limitation, references to an individual, firm, company,
corporation, unincorporated body of persons and any Government
Entity; and
(e) without prejudice to any provisions in this Charterparty
providing for payments to be made or for adjustments to be made
to amounts payable hereunder in the event of a change in any
statute or statutory provisions references to statutory
provisions shall be construed as references to those provisions
as respectively amended or re-enacted (whether before or after
the date hereof) from time to time and shall include any
provisions of which they are re-enactments (whether with or
without modification) and any subordinate legislation made under
such provisions so far as such modification or re-enactment
applies or is capable of
9
<PAGE> 15
applying to any transactions entered into prior to the date
hereof and (so far as liability thereunder may exist or can
arise) shall include also any past statutory provisions or
regulations (as from time to time modified or re-enacted) which
such provisions or regulations have directly or indirectly
replaced.
2 Representations and Warranties
2.1 The Charterer represents and warrants to Simon that:
(a) the Charterer is duly incorporated and validly existing under the
laws of England as a limited liability company and has power to
carry on its business as it is now being conducted and to own its
property and other assets;
(b) the Charterer has the power to execute, deliver and perform its
obligations under the Relevant Documents to which it is a party
and all necessary corporate, shareholder and other action has
been taken to authorise the execution, delivery and performance
of the same;
(e) the Relevant Documents to which the Charterer is a party,
constitute or will, upon execution thereof constitute valid and
legally binding obligations of the Charterer enforceable in
accordance with their respective terms;
(d) the execution and delivery of, the performance of its obligations
under, and compliance with the provisions of the Relevant
Documents to which it is a party by the Charterer will not (i)
contravene any existing applicable law, statute, rule or
regulation, or any judgment, decree or permit to which the
Charterer is subject (ii) conflict with, or result in any breach
of any of the teems of, or constitute a default under, any
agreement or other instrument to which the Charterer is a party
or is subject or by which it or any of its property is bound,
(iii) contravene or conflict with any provision of the
Charterer's Memorandum and Articles of Association;
(e) no litigation, arbitration or administrative proceeding is taking
place, pending or, to the knowledge of the officers of the
Charterer, threatened against the Charterer which has not been
notified to Simon in writing and which is neither frivolous nor
vexatious and could have a material adverse effect on the
business, assets or financial condition of the Charterer or its
ability to perform its obligations under the Relevant Documents
and such proceedings remain unstayed or unresolved for a period
exceeding thirty (30) days unless contested by the Charterer in
good faith;
(f) the audited financial statements of the Charterer in respect of
the financial year ended on 31st December, 1993 as delivered to
Simon have been prepared in accordance with generally accepted
accounting principles and practices in the United Kingdom which
have been consistently applied and present fairly and
10
<PAGE> 16
accurately the financial position of the Charterer as at such
date and the results of the operations of the Charterer for the
financial year ended on such date, and as at such date the
Charterer did not have any significant liabilities (contingent or
otherwise) which are not disclosed by, or reserved against in,
such financial statements and the Charterer did not have any
unrealised or anticipated losses.
2.2 The Charterer further represents and warrants to Simon that
(a) there has been no material adverse change in the financial
position of the Charterer from that set forth in the financial
statements referred to in Clause 2.1 (f);
(b) every consent, authorisation, license or approval of, or
registration with, or declaration to, governmental or public
bodies or authorities or courts required by the Charterer to
authorise, or required by the Charterer in connection with the
execution, delivery, validity, enforceability or admissibility in
evidence of the Relevant Documents, or the performance by the
Charterer of its obligations under the Relevant Documents has
been obtained or made and is in full force and effect, and there
has been no default in the observance of the conditions or
restrictions (if any) imposed in, or in connection with, any of
the same;
(c) the obligations of the Charterer under the Relevant Documents are
direct, general and unconditional obligations of the Charterer
and rank at least pari passu with all other present and future
unsecured and unsubordinated obligations (including contingent
obligations) of the Charterer with the exception of such
obligations as are mandatorily preferred by law and not by
contract;
(d) the Charterer is not (nor would with the giving of notice or
lapse of time or both be) in breach of or in default under any
agreement relating to Indebtedness to which it is a party or by
which it may be bound;
(e) the information, exhibits and reports furnished by the Charterer
to Simon in connection herewith or with the negotiation and
preparation of this Charterparty are true and accurate in all
material respects and not misleading, do not omit material facts
and all reasonable enquiries have been made to verify the facts
and statements contained therein; there are no other facts the
omission of which would make any fact or statement therein
misleading;
(f) no Relevant Event has occurred and is continuing; and
(g) neither the Charterer's interest in the Insurances or any
Requisition Compensation nor any part thereof will on Delivery be
subject to any Encumbrances save for any Permitted Encumbrance.
11
<PAGE> 17
2.3 The representations and warranties in Clause 2.1 (and so that the
representation and warranty in Clauses 2.1(f) shall for this purpose
refer to the then latest audited financial statements delivered to Simon
under Clause 11.1(d)) shall be deemed to be repeated by the Charterer on
and as of each day from the date of this Charterparty until the end of
the Charter Period as if made with reference to the facts and
circumstances existing on each such date.
2.4 The rights and remedies of Simon in relation to any misrepresentation or
breach of warranty on the part of the Charterer shall not be prejudiced
by any investigation by or on behalf of Simon into the affairs of any
person (other than Simon) being a party to any of the Relevant
Documents, by the performance of any of the Relevant Documents or by any
other act or thing which may be done or omitted to be done by Simon
under any of the Relevant Documents and which would or might, but for
this Clause 2.4, prejudice such rights and remedies.
3 Term of Charter
3.1 Simon shall let and sub-demise and the Charterer shall take on hire the
Ship, subject to the terms and conditions of this Charterparty, for the
Primary Period and, if applicable, for the Secondary Period.
3.2 The Charterer shall be entitled (subject as hereinafter provided) on
giving to Simon notice (which notice, when given shall be irrevocable)
not less than two hundred and ten (210) days prior to the end of the
Primary Period, to extend the Charter Period for a period of ten years
from the last day of the Primary Period.
3.3 Subject to the Charterer indemnifying Simon for all losses, costs and
expenses incurred by Simon as a result of such termination, the
Charterer shall be entitled on giving to Simon not less than one hundred
and fifty (150) days notice (which notice, when given, shall be
irrevocable) to terminate the Charter Period on any date falling on or
after the first anniversary of the Delivery Date. Upon such termination
the Charterer shall re-deliver the Ship to Simon in accordance with
Clause 18 and shall pay to Simon an amount equal to the Termination Sum
on the date of such termination together with all amounts of Charterhire
and other moneys then due and owing to Simon under this Charterparty or
any of the other Relevant Documents PROVIDED THAT the Charterer shall,
not later than one hundred and thirty (130) days prior to such proposed
termination date have provided to Simon such security as Simon may
reasonably require for the payment of such amount equal to the
Termination Sum and all such amounts of Charterhire and such other
moneys.
3.4 If (a) the Charter terminates on the expiry of the Primary Period, or
(b) the Charterer shall give notice to terminate the Charter Period
pursuant to Clause 3.3, then, provided that the Ship shall have been
returned to Simon in accordance with the subsequent provisions of this
Clause 3.4 and in accordance with Clause 18 and that Simon shall not be
prevented
12
<PAGE> 18
from so doing for any reason whatsoever, Simon shall use all reasonable
endeavors to procure the Owner to sell the Ship pursuant to the Simon
Charterparty for delivery on, or as soon as possible after, in the case
of (a) above, the expiry of the Primary Period or, in the case of (b)
above, the date of the termination of the Charter Period pursuant to
Clause 3.2. All costs and expenses (including legal, advisory,
printing, advertising, agency and out-of-pocket expenses) incurred by
Simon in connection with the negotiation, preparation, and execution of
all documents, the sale of the Ship and delivery shall be for the
account of the Charterer and shall be reimbursed to Simon from the
proceeds of sale or, if not sold, on demand. Notwithstanding anything
to the contrary in this Charterparty, where the Charter Period expires
by effluxion of time or if the Charterer gives notice to terminate the
Charter Period pursuant to Clause 3.3, the Charter Period shall continue
until and end on the date on which the Ship shall be delivered to a
purchaser thereof pursuant to a sale of the Ship as contemplated by
Clause 3.6, whenever such delivery shall take place; it being agreed
that if by reason of the foregoing the Charter Period continues beyond
1st April 2001, the Secondary Period shall be deemed to have commenced
and charterhire shall be payable accordingly. Immediately prior to such
termination of the Charter Period the Charterer shall re-deliver the
Ship to Simon in accordance with Clause 18 and shall pay to Simon an
amount equal to the Termination Sum on the date of such termination
together with all amounts of charterhire and other moneys then due and
owing to Simon under this Charterparty and/or any of the other Relevant
Documents.
3.5 Upon the termination of the Charter Period and the sale of the Ship in
accordance with the foregoing provisions of this Clause 3, the Net Sale
Proceeds shall be applied by Simon (subject to Clause 10.4) as follows:
(a) The proportion of the Net Sale Proceeds attributable to the Goods
shall be calculated and subject to the rights and obligations of
Simon to the Owner under the Simon Charterparty having first been
discharged from them (or, if Simon shall previously have
discharged any such obligations, subject to Simon first
reimbursing itself in respect thereof) paid to Simon for
application in accordance with the terms of the Master Lease; and
the balance shall be applied:
(b) Firstly, in or towards settlement of any amounts due and owing by
the Charterer to Simon under the Charterparty or any other
Relevant Documents other than the Goods Contracts (including any
interest due in respect thereof);
(c) Secondly, in settlement of all sums due to Simon under the Goods
Contracts insofar as such sums have not been satisfied by
application of the sums referred to in Clause 3.5(a);
(d) Thirdly, if the Charterer shall on or before the date of
application of the Net Sale Proceeds by Simon have paid the
Termination Sum, or a part thereof in accordance with Clauses 3.3
or 3.4, in or towards refunding by way of rebate of
13
<PAGE> 19
charterhire to the Charterer the amount of the Termination Sum or
part thereof so paid by the Charterer; and
(e) Subject always to the proviso that an amount equal to two per
cent (2%) of the Net Sale Proceeds shall be retained by the
Owner, any balance remaining shall (provided Simon shall receive
the same from the Owner) be paid by Simon to the Charterer by way
of rebate of charterhire and/or payment of sales commission or
otherwise as appropriate.
3.6 In respect of any sale or the Ship on termination or expiry of the
Charter Period (other than pursuant to Clauses 21.3 or 25.1), the
Charterer shall act as the sole and exclusive agent of Simon and sub-
agent of the Owner for the purpose of negotiating the sale of the Ship
on the following terms:
(a) the Charterer will endeavor to arrange the sale of the Ship for a
cash consideration on the best terms (including price) reasonably
obtainable on the open market provided that the Ship shall not be
sold to
(i) the Charterer or Simon or any person or persons connected
with the Charterer or Simon (as the term "connected
persons" is used in section 839 ICTA); or
(ii) any person acting in trust for, as nominee or as agent or
otherwise as representative of or on behalf of any of the persons
referred to in (i) above;
and the Charterer will keep Simon informed from time to time of its
progress;
(b) the Charterer's authority will not extend to concluding a
contract for the sale of the Ship for which the Owner's and
Simon's specific written authority will be required;
(c) the Ship shall be offered for sale and for delivery on, or as
soon as practicable after, such termination or expiry of the
Charter Period and any contract for its sale shall include terms
to the following effect:
(i) that all conditions, representations or warranties,
expressed or implied by statute or otherwise, whether as
to the state or quality of the Ship or as to description,
fitness for purpose, merchantable quality or otherwise,
are, so far as is permitted by law, expressly excluded as
between the Owner and Simon and the buyer save in respect
of the warranty that the Owner shall be passing such title
to the Ship as received from Simon free from any
Encumbrances created by the Owner and that Simon has not
created any Encumbrances; and
14
<PAGE> 20
(ii) that the sale is conditional upon the Owner first
recovering possession of the Ship;
Provided always that nothing in this Clause 3.6(c) shall prevent
the Charterer including any other representations and warranties
to be given directly by the Charterer to a buyer in connection
with such sale; and
(d) the Charterer's agency and authority pursuant to the foregoing
provisions shall terminate if a Relevant Event shall occur and
Simon shah give notice to the Charterer terminating such
sub-agency.
4 Conditions Precedent
4.1 The obligation of Simon to charter the Ship to the Charterer under this
Charterparty is subject to the condition that on Delivery Simon shall
have received the documents and evidence specified in Schedule 1 in form
and substance satisfactory to Simon.
4.2 The obligation of Simon to charter the Ship to the Charterer under this
Charterparty is subject to the further conditions:
(a) that the representations and warranties set out in Clause 2.1 and
2.2 are true and correct as if each were made with respect to the
facts and circumstances existing immediately prior to the time
when Delivery is to take place;
(b) that no Relevant Event shall have occurred and be continuing or
would arise by reason of Delivery taking place.
4.3 The conditions specified in Clauses 4.1 and 4.2 are inserted for the
sole benefit of Simon and may be waived in whole or in part and with or
without conditions by Simon provided that if any of the said conditions
are outstanding after Delivery has taken place then, unless Simon shall
have given a specific written waiver or deferral in respect thereof the
Charterer shall ensure that such outstanding conditions are fulfilled
within thirty (30) days of the Delivery Date and Simon shall be entitled
to treat the failure of the Charterer to perform such outstanding
conditions within such period of thirty (30) days as a Termination
Event.
5 Delivery and Acceptance
5.1 On Delivery the Ship shall be delivered to the Charterer and the
Charterer shall take delivery of the Ship under this Charterparty. The
Ship shall become subject to and governed by this Charterparty and the
Charter Period shall commence.
5.2 The Charterer acknowledges and confirms that the conversion works
carried out to the Ship and the equipment supplied thereto and BFE
pursuant to the Conversion and Supply
15
<PAGE> 21
Agreement and/or the MWB Conversion Contract, shall be part of the Ship
and deemed delivered to the Charterer and shall become subject to and
governed by this Charterparty and the Charterer shall be deemed to have
taken delivery thereof under this Charterparty.
5.3 The Charterer acknowledges that prior to Delivery the Charterer has in
accordance with management arrangements with Simon conducted its seismic
survey business on and by use of the Ship through the services of its
own employed personnel and has thereby had sufficient opportunity to
carry out any inspections of the Ship, her condition and any and all
equipment installed or used thereon and the condition of the Ship on
delivery to the Charterer shall be the sole responsibility of the
Charterer, and the Charterer shall not be entitled for any reason
whatsoever to refuse to accept delivery of the Ship under this
Charterparty and Simon shall not be liable for any loss or expense, or
any loss of profit, resulting directly or indirectly from any defect or
alleged defect in the Ship or failure or alleged failure of the Ship to
comply in all respects with the terms of the Simon Charterparty and the
Charterer agrees that upon delivery the Charterer shall accept the Ship
"as is, where is" and shall indemnify and hold Simon harmless in respect
of any failure of the Ship to comply with the terms of the Simon
Charterparty or any failure of any Goods to comply with the terms of any
of the Simon RBS Documents.
6 Extent of Simon's Liability: Third Party Warranties
6.1.1 Simon warrants that, subject to Clause 21.1 and Clause 25, Simon
shall not interfere during the Charter Period with the use,
possession and quiet enjoyment of the Ship by the Charterer on
the terms of this Charterparty.
6.1.2 If the Owner shall be in breach of the Owner's obligations
pursuant to Clause 6.1 of the Simon Charterparty, Simon will at
the cost and request of the Charterer take such steps as the
Charterer may reasonably require to enforce Simon's rights
against the Owner to have such breach remedied.
6.2 The Charterer expressly agrees and acknowledges that, save only as
provided in Clauses 6.1 and 14.2, no condition, warranty or
representation of any kind is or has been given by or on behalf of Simon
in respect of the Ship or any part thereof or any work during conversion
or any part or equipment then installed or any BFE, and accordingly the
Charterer confirms that it has not, in entering into this Charterparty,
relied on any condition, warranty or representation by Simon or any
person on Simon's behalf (whether authorised or not), express or
implied, whether arising by law or otherwise in relation to the Ship or
any part thereof or any work during conversion or any part or equipment
then installed or any BFE, including, without limitation, warranties or
representations as to the description, seaworthiness, merchantability,
fitness for any purpose, value, condition, design or operation of any
kind or nature of the Ship or any part thereof or any work during
conversion or any part or equipment then installed or any BFE, and the
benefit of any such condition, warranty or representation by the Owner
is hereby irrevocably and unconditionally waived by Simon. To the
extent permissible under applicable lam,
16
<PAGE> 22
Charterer hereby also waives any rights which it may have in tort in
respect of any of the matters referred to above and irrevocably agrees
that Simon shall have no greater liability in tort in respect of any
such matter than it would be in contract after taking account of all of
the foregoing exclusions. No third party making any representation or
warranty relating to the Ship or any part thereof is the agent of Simon
nor has any such third party authority to bind Simon thereby.
6.3 During the Charter Period Simon will use reasonable endeavors to extend
to the Charterer the benefit of all warranties and indemnities given by
any manufacturer or supplier of any part of the Ship or any work during
conversion or any part or equipment then installed or any BFE or the
Goods. The Charterer shall be entitled during the Charter Period, with
the prior written approval of Simon, to take such action upon any such
warranty or indemnity in the name of Simon and (with the consent of the
Owner) the Owner against any such manufacturer or supplier as the
Charterer shall see fit, but subject to the Charterer first ensuring
that each of Simon and the Owner is indemnified and secured to its
reasonable satisfaction against all costs and expenses thereby incurred
or to be incurred.
7 Charterhire
7.1 During the Primary Period the Charterer shall pay to Simon on the
respective Charterhire Payment Dates installments of Charterhire for the
Ship in arrears, each such installment being of the amount specified in
paragraph 2 of Schedule 3 one such installment being payable on each
Charterhire Payment Date falling during the Primary Period.
7.2 During the Secondary Period the Charterer shall pay to Simon on the
respective Charterhire Payment Dates installments of charterhire for the
Ship in advance, each such installment being of the amount specified in
paragraph 6 of Schedule 3 one such installment being payable on each
Charterhire Payment Date falling during the Secondary Period.
7.3 The installments of Charterhire and all other sums payable by the
Charterer to Simon under this Charterparty are exclusive of any Value
Added Tax or similar tax payable in respect thereof which shall in each
case be paid in addition thereto.
7.4 The Charterer's obligation to pay Charterhire and make other payments in
accordance with this Charterparty shall subject to Clause 21.3, be
absolute and unconditional irrespective of any contingency whatsoever
including (but not limited to) (i) any right of set-off, counterclaim,
recoupment, defense or other right which either party hereto may have
against the other, (ii) any unavailability of the Ship for any reason,
including, but not limited to, any lack or invalidity of title or any
other defect in the title, seaworthiness, merchantability, fitness for
any purpose, condition, design, or operation of any kind or nature of
the Ship, or the ineligibility of the Ship for any particular use or
trade, or for registration or documentation under the laws of any
relevant jurisdiction, or any damage
17
<PAGE> 23
to the Ship, (iii) any failure or delay on the part of either party
hereto, whether with or without fault on its part, in performing or
complying with any of the terms or conditions of this Charterparty, (iv)
any insolvency, bankruptcy, administration, reorganisation, arrangement
readjustment of debt, dissolution, liquidation or similar proceedings by
or against Simon, or the Charterer, (v) any lack of due authorisation of
or other defect in this Charterparty.
7.5 The provisions of this Clause 7 with regard to the calculation and
payment of charterhire during the Pre-Primary Period and the Primary
Period are subject to adjustment in accordance with the charterhire
adjustment provisions contained in Schedule 3.
7.6 No charterhire paid in advance shall (except as expressly contemplated
by the provisions of this Charterparty) be repayable by or recoverable
from Simon.
7.7 Notwithstanding any other Clause of this Charterparty, payments of
charterhire pursuant to this Charterparty shall be in respect of the
Ship excluding the Goods.
8 Payments, Interest and Calculations
8.1 Subject as provided in Schedule 6 the Charterer shall pay the stipulated
charterhire on the Charterhire Payment Dates falling on or after the
date hereof. All payments to be made by the Charterer under this
Charterparty shall be made (unless specifically otherwise provided in
this Charterparty) without prior demand and in full, without any set-off
or counterclaim whatsoever and, subject as provided in Clause 10.3, free
and clear of any deductions or withholdings in Pounds (or, in the case
of indemnity payments, in the currency in which the cost or expense
which is the subject of the indemnity payment is incurred) for value on
the day on which payment is due to the account of the Owner with The
Royal Bank of Scotland plc, 45 The Promenade, Cheltenham,
Gloucestershire GL50 1PY (Sort Code: 16-16-13 and Account Number:
12176088) or to such other account as Simon may from time to time notify
to the Charterer in writing.
8.2 Other than any sum payable on demand, which shall be payable in
accordance with such demand, when any payment under any of the Relevant
Documents would otherwise be due on a day which is not a Banking Day,
the due Date for payment shall be the preceding Banking Day.
8.3 If the Charterer fails to pay any sum (including without limitation, any
sum payable pursuant to this Clause 8.3) on its due date for payment
under this Charterparty the Charterer shall pay to Simon on demand
interest on such sum compounded daily, from the due date up to the date
of actual payment (as well after as before any relevant judgment) at the
Relevant Rate of Interest.
8.4 All interest under this Charterparty shall accrue from day to day and
shall be calculated on the basis of the actual days elapsed and a 365
day year.
18
<PAGE> 24
8.5 Any certificate or determination of the Owner or Simon as to any rate of
interest or any other amount payable under this Charterparty shall in
the absence of manifest error, be conclusive and binding on the
Charterer in the case of a certificate or determination of the Owner and
prima facie evidence of such rate or amount in the case of a certificate
or determination of Simon.
8.6 If any sum due from the Charterer under any of the Relevant Documents or
under any order or judgment given or made in relation thereto has to be
converted from the currency ("the first currency") in which the same is
payable under any of the Relevant Documents or under such order or
judgment into another currency ("the second currency") for the purpose
of (i) making or filing a claim or proof against the Charterer, (ii)
obtaining an order or judgment in any court or other tribunal or (iii)
enforcing any order or judgment given or made in relation to such
Relevant Document, the Charterer shall indemnify and hold harmless Simon
from and against any loss suffered as a result of any difference between
(a) the rate of exchange used for such purpose to convert the sum in
question from the first currency into the second currency and (b) the
rate or rates of exchange at which Simon may in the ordinary course of
business purchase the first currency with the second currency upon
receipt of a sum paid to it in satisfaction, in whole or in part, of any
such order, judgment, claim or proof. Any amount due from the Charterer
under this Clause 8.6 shall be due as a separate debt and shall not be
affected by judgment being obtained for any other sums due under or in
respect of any of the Relevant Documents and the term "rate of exchange"
includes any premium and costs of exchange payable in connection with
the purchase of the first currency with the second currency.
9 Costs and Indemnities
9.1 The Charterer shall pay promptly all costs or expenses of or arising
from, delivery, import, export, design, registration, classification,
ownership, possession, control, use, management, manning, victualling,
the provision of bunkers and lubricating oils, chartering,
sub-chartering, insurance, maintenance, conversion, repair, dry docking,
survey, refurbishment, condition, service, overhaul, modification,
change, alteration, loss, damage, storage, laying up, removal,
re-delivery, sale or disposal of in or to the Ship, and all costs or
expenses otherwise arising in connection with the Ship or the
performance of the Charterer's obligations under any of the Relevant
Documents.
9.2 The Charterer shall pay all stamp, documentary, registration or other
like Taxes (including any such Taxes payable by Simon) imposed on or in
connection with the Relevant Documents and shall indemnify Simon against
any liability arising by any delay or omission of the Charterer to pay
such duties or Taxes.
9.3 The Charterer shall pay to Simon on demand all expenses (including
legal, survey and other costs) incurred by Simon in contemplation of, or
otherwise in connection with, the enforcement of, or preservation of any
rights under, any of the Relevant Documents, or otherwise in respect of
moneys owing under any of the Relevant Documents, or in respect
19
<PAGE> 25
of breach of any representation, warranty, covenant, agreement,
condition or stipulation therein contained or in respect of the
repossession of the Ship. All expenses payable pursuant to this Clause
9.3 shall be paid together with any irrecoverable Value Added Tax or
similar tax thereon, and in the currency in which the same are incurred
by Simon.
9.4 The Charterer shall indemnify and hold harmless Simon, without prejudice
to any of Simon's or the Owner's other rights under any of the Relevant
Documents, from and against:
(a) any costs or expenses which the Charterer has agreed to pay but
which shall nevertheless be claimed from or assessed against or
paid by Simon, and against any liability incurred by Simon by
reason of any delay or failure of the Charterer to pay any such
costs or expenses;
(b) any Taxes which the Charterer has agreed to pay but which shall
nevertheless be claimed from or assessed against or paid by
Simon, and against any liability incurred by Simon by reason of
any delay or failure of the Charterer to pay any such Taxes
including without limitation, any delay or failure of the
Charterer to make any such deduction or withholding as is
referred to in Clause 10.3 or by reason of any increased payment
as is referred to in Clause 10.3 not being made on the due date
for such payment.
9.5 Without prejudice to the Charterer's obligations under Clauses 9.1 to
9.4 inclusive, the Charterer agrees at all times, whether before, during
or after the Charter Period, to indemnify and hold harmless Simon from
and against all costs, expenses, payments, charges, losses, demands,
liabilities, claims, actions, proceedings (whether civil or criminal),
penalties, fines, damages, judgments, orders or other sanctions, liens,
salvage, General Average (in this Clause 9.5 together referred to as
"Losses") which may be incurred by, or made or asserted against Simon or
the Owner at any time:
(a) relating to, or arising directly or indirectly in any manner or
for any cause or reason whatsoever out of the design, nature,
description, manufacture, testing, purchase, delivery, import,
export, registration, flag, classification, certification,
ownership, possession, control, use, operation, manning, crewing,
navigation, victualling, supply or servicing (whether at sea or
not), provision of bunkers and lubricating oils, chartering, sub-
chartering, insurance, maintenance, conversion, repair, dry
docking, surveys, refurbishment, condition, service, overhaul,
modification, change, alteration, loss, damage, removal, laying
up, storage, re-delivery, sale or disposal of, in or to the Ship,
conversion works, parts and equipment installed and BFE or
otherwise in connection with the Ship, conversion works, parts,
equipment and BFE, or relating to loss or destruction of or
damage to any property, or death or injury of, or other loss of
whatsoever nature suffered by, any person caused by, relating to,
or arising from or out of (in each case whether directly or
indirectly) any of the foregoing matters;
20
<PAGE> 26
(b) which may be made or brought on the ground that any design,
article or material in the Ship or in respect of the conversion
works, parts, equipment and BFE installed and supplied or to be
installed and supplied to the Ship pursuant to the Conversion and
Supply Agreement or the operation or use thereof constitutes an
infringement of patent, intellectual property right or any other
right whatsoever;
(c) in preventing or attempting to prevent the arrest confiscation,
seizure, taking in execution, impounding, forfeiture or detention
of the Ship, or in securing the release of the Ship or any of the
parts, equipment or BFE installed or to be installed on the Ship
except to the extent any Losses are incurred in this respect as a
result of Simon's breach of Clause 6.1 due to any Encumbrance on
the Ship directly created by Simon (or by the Owner) which
adversely affects the operation of the Ship;
(d) as a consequence of any default in payment by the Charterer of
any sum under any of the Relevant Documents when due or any other
default by the Charterer in the due and punctual performance of
its obligations under any of the Relevant Documents.
9.6 Notwithstanding anything to the contrary contained in this Charterparty,
the indemnities by the Charterer in favor of Simon contained in this
Charterparty shall continue in full force and effect notwithstanding any
breach by Simon or the Charterer of the terms of this Charterparty
(including any fundamental breach) or any of the other Relevant
Documents, the termination of the chartering of the Ship to the
Charterer under this Charterparty, the repudiation by Simon or the
Charterer of this Charterparty, the termination of the leasing of the
Goods under Clause 3.03 of the Master Lease or the expiration of the
Charter Period by effluxion of time or otherwise.
9.7 Moneys becoming due by the Charterer to Simon under the indemnities
contained in this Clause 9 or elsewhere in the Relevant Documents shall
be paid on demand made by Simon and shall be paid together with interest
thereon at the Relevant Rate of Interest from the date of demand by
Simon to the date of reimbursement by the Charterer to Simon (after as
well as before judgment).
10 Taxation
10.1 The Charterer shall pay promptly all Taxes levied or assessed on or in
respect of the Ship, any payments made under any of the Relevant
Documents or any of the transactions contemplated by any of the Relevant
Documents but, subject to the remaining provisions of this Clause 10,
excluding any Taxes assessed against Simon (or the Owner) by reference
to its overall profits, or by reference to its gains, if any, realised
in connection with the ultimate disposal of the Ship, or arising out of
a Total Loss.
21
<PAGE> 27
10.2 (a) Sums payable to Simon by the Charterer under any Relevant Document
by way of indemnity or reimbursement shall be calculated on an after-tax
basis. Accordingly, if and to the extent that any such sum payable to
Simon is taxable in the hands of Simon as the auditors of Simon (acting
as experts and not as arbitrators) shall certify from time to time such
sum shall be increased to an amount which (after subtracting any
Taxation suffered by Simon on the increased payment and after taking
into account any deduction for Taxation purposes available to Simon in
respect of the discharge by Simon of any corresponding liability to a
third party) shall equal the amount which Simon would have received had
the sum payable by the Charterer not been taxable in the hands of Simon.
If the sum payable by the Charterer is initially paid on the basis that
it is not taxable in the hands of Simon and it is subsequently
determined to be taxable or vice versa, such adjustment and payment
shall be made between Simon and the Charterer as the auditors of Simon
(acting as experts and not as arbitrators) shall certify as appropriate
to restore the after-tax position of Simon to that which it would have
been had the adjustment not been necessary.
(b) If and to the extent that any sum (the "indemnity sum")
constituting (directly or indirectly) an indemnity to Simon but
paid by the Charterer to any person other than Simon, shall be
treated as taxable in the hands of Simon, the Charterer shall pay
to Simon such sum (the "compensating sum") as (after subtracting
any Taxation suffered by Simon on the compensating sum and after
taking into account any deductions for the purposes of Taxation
available to such person in respect of any corresponding payment
treated as made by Simon to such person) shall reimburse Simon
for any Taxation suffered by it in respect of the indemnity sum.
(c) For the purposes of this Clause 10.2 a sum shall be deemed to be
taxable in the hands of Simon if it fails to be taken into
account in computing the profits or gains of Simon for the
purposes of Taxation and if so Simon shall be deemed to have
suffered Taxation thereon at the rate of Taxation applicable to
Simon's profits or gains for the period in which the payment
fails to be taken into account for the purposes of such Taxation.
10.3 If at any time any applicable law, regulation or regulatory requirement,
or any governmental authority, monetary agency or central bank requires
the Charterer to make any deduction or withholding in respect of Taxes
from any payment due under the Relevant Documents:
(i) the sum due from the Charterer in respect of such payment shall
be increased to the extent necessary to ensure that, after the
making of such deduction or withholding, Simon receives on the
due date for such payment a net sum equal to the sum which it
would have received had no such deduction or withholding been
required to be made;
22
<PAGE> 28
(ii) the Charterer shall pay to the relevant authority within the
period for payment permitted by applicable law the full amount of
the deduction or withholding (including, but without prejudice to
the generality of the foregoing, the full amount of any deduction
or withholding from any increased amount paid pursuant to this
Clause 10.3); and
(iii) the Charterer shall furnish to Simon within the period for
payment permitted by applicable law, evidence of payment to the
relevant authority of all amounts deducted or withheld as
aforesaid.
10.4 If Simon is required to pay any sum to the Owner, the Charterer or any
other party under any of the Relevant Documents and such sum is payable
out of or represents a reimbursement of an amount which is brought into
account in computing the profits or gains of Simon for the purposes of
Taxation and such payment will not be allowed to Simon as a deductible
trading expense or as a basis for, or otherwise as, a deduction or
off-set for Taxation purposes in the accounting period of Simon in which
it is required to be paid as the auditors of Simon (acting as experts
and not as arbitrators) shall certify from time to time, the Charterer
shall pay to Simon such amount as shall put Simon in the same after-tax
position as Simon would have been in had the payment been allowed as a
deductible trading expense or as a basis for, or otherwise as, a
deduction or set-off as aforesaid. If any such payment is initially
made on the basis that it is a deductible trading expense, or that it
will be allowed as a basis for, or otherwise as, a deduction or off-set
of Simon for tax purposes in the accounting period of Simon in which it
is incurred and it is subsequently determined that it is not, or vice
versa, such adjustment and payments, if any, shall be made between the
Owner and the Charterer as Simon's auditors from time to time (acting as
experts and not as arbitrators) may certify as appropriate in order to
restore the after-tax position of Simon to that which it would have been
had the adjustment not been necessary.
11 General Undertakings
11.1 The Charterer undertakes with Simon that it will :
(a) Notification of Relevant Event
promptly inform Simon of any Relevant Event forthwith upon
becoming aware thereof;
(b) Consents and Authorisations
without prejudice to Clauses 2.2 and 4, obtain or cause to be
obtained, maintain in full force and effect and comply in all
material respects with the conditions and restrictions (if any)
imposed in, or in connection with, every consent, authorisation,
license or approval of governmental or public bodies or
authorities
23
<PAGE> 29
or courts and do, or cause to be done, all other acts and things,
which may from time to time be necessary or desirable under
applicable law for the continued due performance of all its
obligations under any of the Relevant Documents;
(c) Preparation of Accounts
cause to be prepared in each financial year and cause to be
certified by its auditors consolidated financial statements which
are prepared in accordance with generally accepted accounting
principles and practices in England which have been consistently
applied and present fairly and accurately the financial position
of the Charterer as at the end of the relevant financial year and
the results of the operations of the Charterer for the relevant
financial year, which discloses all significant liabilities
(contingent or otherwise) of the Charterer;
(d) Supply of Accounts
deliver to Simon a copy of the financial statements referred to
in Clause 11.1 (c) as soon as practicable but not later than two
hundred and forty (240) days after the end of the financial
period to which they relate and a copy of every report, notice or
like document issued by it to its shareholders or creditors
generally (in each case at the time of issue thereof);
(e) Information concerning the Charterer and the Guarantors
promptly provide to the Owner following a request by Simon or the
Owner with financial and other information concerning the
Charterer and the Guarantors and their respective affairs as the
Owner (or Simon, in order to comply with its obligations pursuant
to the Simon charterparty) may from time to time reasonably
require;
(f) Information concerning the Ship
upon request by Simon or the Owner furnish:
(i) Simon promptly with all such information as it may from
time to time reasonably require regarding the Ship, her
insurance, condition, and maintenance; and
(ii) the Owner promptly with all such information as it may
from time to time reasonably require regarding the Ship,
her insurance, condition, maintenance, employment,
position and engagements, particulars of all towages and
salvages, and copies of all charters and other contracts
for her employment, or otherwise howsoever concerning her;
and
24
<PAGE> 30
(g) Observance of Covenants
duly and punctually perform each of its obligations under this
Charterparty and the other Relevant Documents.
11.2 Protection of Owner's and Simon's Rights
The Charterer hereby further undertakes with Simon that throughout the
Charter Period it will :
(a) Disposal of the Ship
not attempt or hold itself out as having any power to sell agree
to sell transfer or otherwise dispose of or (except to avoid loss
of life or personal injury or as otherwise agreed pursuant to
Clause 21) abandon the Ship, any share or interest therein;
(b) Encumbrances
not create or agree or purport to create any Encumbrance over the
Ship, any share or interest therein or in the Insurances or
Requisition Compensation or any part thereof (other than
Permitted Encumbrances);
(c) Notification of Arrest
notify Simon promptly by telex or fax of any arrest or detention
of the Ship or any exercise or purported exercise of a lien or
other claim on the Ship or the Insurances or any part thereof;
(d) Prevention of and Release from Arrest
promptly pay and discharge all debts, damages, liabilities and
outgoings whatsoever which have given or may give rise to
maritime, statutory or possessory liens on, or claim enforceable
against, the Ship or the Insurances or any part thereof and, in
the event of a writ or libel being filed against the Ship or the
Insurances or any part thereof or of any of the same being
arrested, attached or levied upon pursuant to legal process or
purported legal process or in the event of detention of the Ship
in exercise or purported exercise of any such lien or claim as
aforesaid, to procure the release of the Ship and the Insurances
from such arrest, detention, attachment or levy or, as the case
may be, the discharge of the writ or libel forthwith upon
receiving notice thereof by providing bail or procuring the
provision of security or otherwise as the circumstances may
require;
25
<PAGE> 31
(e) No Pledging of Simon's Credit
not pledge the credit of Simon or the Owner for any maintenance,
service, repairs, drydocking, or modifications to, or changes or
alterations in, the Ship or for any other purpose whatsoever;
(f) Protection of Simon's and the Owner's Rights in the Ship
not do or permit to be done any act or thing which might
jeopardise the title, rights and interest of Simon and the Owner
in the Ship and/or omit or permit to be omitted to be done any
act which might prevent that title and those rights and interest
from being jeopardised;
(g) Notice of Owner's and Simon's Rights
generally on all occasions when the ownership of the Ship is
relevant make clear to third parties that the same is the
property of the Owner and is chartered by way of sub-demise from
Simon and the Charterer agrees to fasten to the Ship in a
conspicuous place and to keep so fastened during the Charter
Period a notice reading as follows:
"This Ship is the property of and is registered in the
name of ROYAL BANK OF SCOTLAND (INDUSTRIAL LEASING)
LIMITED. It is under demise charter to SIMON-HORIZON
LIMITED ("Simon") and chartered by sub-demise by Simon to
Horizon Exploration Limited and, by the terms of each such
Charterparty, neither the Charterer nor the Master nor any
servant or agent thereof nor any other person has any
right, power or authority whatsoever to contract on behalf
of the Owner or Simon or to pledge the Owner's or Simon's
credit or to involve the Owner or Simon in any liability
whatsoever and neither has the Owner nor Simon nor the
Charterer nor the Master nor any servant or agent thereof
nor any other person has any right, power or authority
whatsoever to create, incur, or permit to be imposed on
the Ship any lien whatsoever except for General Average,
crews' wages and salvage."
or in such other form as the Owner or (subject to the Owner's
consent) Simon may require from time to time;
the Charterer shall not remove or cover up such notice, and will
not place or permit to be placed any other notice (affecting the
ownership of the Ship or otherwise relating to the rights of the
Owner or Simon and dealing with the rights of any person other
than the Owner in or on the Ship or any part thereof) without
prior written consent of the Owner or (subject to the Owner's
consent) Simon such consent not to be unreasonably withheld so
long as the some is not inconsistent with the rights of the Owner
of the Ship;
26
<PAGE> 32
the Charterer agrees to give written instructions with regard to
the foregoing matters to the Master of the Ship, such
instructions to be in such terms as may from time to time be
required by the Owner or (subject to the Owner's consent) Simon;
and
(h) Release from Arrest: Owner's and Simon's Vessels
if the Ship or any other vessel for the time being owned (in
whole or in part) by or chartered to the Owner or Simon shall at
any time have a writ or libel filed against it or be arrested,
attached or levied upon pursuant to any legal process or
purported legal process or be detained in exercise or purported
exercise of any, lien or claim of whatsoever nature, whether
arising out of the use or operation of the Ship or out of the use
or operation of any other vessel owned by or chartered to the
Charterer or other company (other than the Owner or Simon)
associated with, the Charterer or its subsidiaries or associated
companies or otherwise by reason of the act or omission of any of
the aforesaid Charterer or other company (other than the Owner or
Simon) associated with the Charterer or its subsidiaries or
associated companies, the Charterer shall forthwith upon
receiving notice thereof at its expense procure the release of
the Ship or such other vessel (as the case may require) from such
arrest, detention, attachment or levy or, as the case may be, the
discharge of the writ or libel by providing bail or procuring the
provision of security or otherwise as the circumstances may
require and the Charterer shall be responsible for discharging
each and every liability in connection with any such process,
claim, lien or other action. Without prejudice to the generality
of the other indemnities contained in this Charterparty, should
any other vessel owned by the Owner or Simon and chartered by the
Owner or Simon otherwise than to the Charterer be arrested,
detained, attached or levied upon or be the subject of a writ or
libel in such circumstances, the Charterer shall indemnify the
Owner and Simon against all claims made on the Owner and Simon by
the charterers of such other vessel in connection with such
arrest, detention, attachment levy, writ or libel.
12 Sub-Chartering
The Charterer will not at any time without the prior written consent of
Simon (which shall be subject to the consent of the Owner under the
Simon Charterparty and Simon shall have full liberty to withhold except
in the case of a sub-charter to a Guarantor, if the prior written
consent of the Owner shall have been obtained, when Simon shall not
unreasonably withhold or delay consent) and, if such consent is given,
only subject to such conditions as Simon may impose, part with the
possession or operational control of the Ship (except for the purpose of
maintenance, service, repair or overhaul work or any modifications,
changes or alterations permitted under this Charterparty and the
Conversion and Supply Agreement) or sub-charter the Ship:
27
<PAGE> 33
(a) on demise charter for any period;
(h) by any time or consecutive voyage charter for a term which
exceeds or which by virtue of any optional extensions therein
contained may exceed thirteen months' duration;
(c) on terms whereby more than two months' hire (or the equivalent)
is payable in advance;
(d) below the market rate prevailing at the time when the Ship is
fixed or on any other than arms' length terms;
(e) on any charter for a period extending or capable of extending
beyond the end of the Charter Period as extended pursuant to
Clause 3.2;
(f) on terms involving any transfer or purported transfer of title or
interest in the Ship or part thereof or which would contravene
the provisions of this Charterparty or any of the other Relevant
Documents (including, without limitation, the provisions of
Clause 13.2(d) relating to qualifying use during the requisite
period as therein referred to).
13 Use and Trade of the Ship
13.1 Permitted Use
Subject to the other terms and conditions of this Charterparty and the
other Relevant Documents, the Charterer shall have the full and
exclusive use control and command of the Ship during the Charter Period
and may operate the Ship or employ her throughout the world in any
lawful trade for which she is suitable.
13.2 Undertakings concerning Use
The Charterer hereby undertakes with Simon that throughout the Charter
Period it will:
(a) Ship's Registration
not do or suffer to be done anything whereby the documentation of
the Ship for the time being in accordance with the provisions of
Clause 14.2 may be forfeited or imperilled;
(b) Employment
not employ the Ship or permit her employment in any manner, trade
or business which is forbidden by international law, or which is
unlawful or illicit under the
28
<PAGE> 34
law of any relevant jurisdiction, or in carrying illicit or
prohibited goods, or in any manner whatsoever which may render
her liable to condemnation in a Prize Court, or to destruction,
seizure, confiscation, penalty or sanctions and, in the event of
hostilities in any part of the world (whether war be declared or
not), not employ the Ship or permit her employment in carrying
any contraband goods, or enter or trade to or continue to trade
in any zone which is declared a war zone by any government or by
the Ship's war risks insurers unless such special insurance cover
as Simon may require shall have been effected by the Charterer
and at its expense;
(c) Payment of Outgoings and Evidence of Payments
pay all tolls, dues and other outgoings whatsoever in respect of
the Ship and the Insurances and keep proper books of account in
respect of the Ship and, as and when Simon may so require, make
such books available for inspection on behalf of Simon or the
Owner and furnish satisfactory evidence that the wages and
allotments and the insurance and pension contributions of the
Master and crew are being promptly and regularly paid and that
all deductions from crew's wages in respect of United Kingdom tax
liability are being properly accounted for and that the Master
has no claim for disbursements other than those incurred by him
in the ordinary course of trading on the voyage then in progress;
(d) Operation in the U.S.A. or Canada
give Simon at least fourteen (14) Banking Days prior written
notice if the Ship is to be operated in or into or offshore from
the United States of America or Canada, and prior to the
commencement of such operation, to increase the amount of
protection and indemnity, pollution risk and other legal
liability insurance referred to in Clause 16.1 (a) to such amount
as the Owner may require;
(e) Use for a Qualifying Purpose
not to use the Ship or permit the Ship to be used and shall
procure that the Ship is not used other than for a qualifying
purpose during the requisite period (as each such term is defined
in section 40 CAA) so as to result in the application of sections
42, 43, 44 and 46 CAA and shall immediately notify Simon if at
any time within such requisite period the Ship is used for
leasing to a non-resident within the meaning of section 50 CAA
and also notify Simon of any event or matter which under section
48 CAA ought to be notified by the Owner to the Board of the
Inland Revenue or any Inspector of Taxes in connection with the
Ship or the chartering thereof and shall promptly furnish when
the Owner or Simon may require such information as may properly
be required to be so furnished by the Owner to the Board of the
Inland Revenue and Inspector of Taxes regarding the chartering of
the Ship or the use to which it is being put or has been put, in
order
29
<PAGE> 35
to enable the Owner to comply with the provisions of section 48
CAA or to respond to such a request; and
(f) Bills of Lading
if applicable, procure that all Bills of Lading issued for
carriage of goods by the Ship shall contain a Paramount Clause
incorporating any legislation relating to carrier's liability for
cargo compulsorily acquired applicable in the trade or, if no
such legislation exists, Bills of Lading incorporating the
British Carriage of Goods by Sea Act 1971 and that all such Bills
of Lading shall also contain the amended New Jason Clause and the
Both-Blame Collision Clause and, without prejudice to provisions
of Clause 30.4, provide that the General Average, if any, shall
be settled according to the York-Antwerp Rules of 1974 in London.
14 Title, Registration, Name and House Flag
14.1 Title
Title to the Ship shall remain vested in the Owner. The Charterer shall
have no right, title or interest in or to the Ship or any part thereof
except the right to use the same upon the terms and conditions contained
in this Charterparty. It is hereby expressly declared that the
Charterer shall not have any option or right to acquire title to or any
proprietary interest in the Ship or any part thereof Subject to Clause
6.1, nothing in this Clause 14.1 shall be construed as imposing any
liability on or on the part of Simon or the Owner to the Charterer in
respect of or arising out of the acts or omissions of any third party
(including any charterer or lessee of any other vessel or assets of the
Owner or Simon) affecting the Charterer or the Ship or otherwise.
14.2 Initial Registration
The Ship is registered under the laws of the Commonwealth of the Bahamas
at the Port of Nassau in the name of the Owner as owner and subject to
Clause 14.3 Simon shall during the Charter Period use all reasonable
endeavors on its part to maintain such registration in force.
14.3 Transfer of Flag or Registry
The Charterer may at any time and from time to time during the Charter
Period, request that Simon approaches the Owner to transfer the register
of the Ship to any port and/or to re-document the Ship under laws of any
jurisdiction other than the port and/or jurisdiction at which the Ship
is for the time being registered and/or under whose laws the Ship is for
the time being documented. If the Owner approves of such transfer of
register and/or re-documentation of the Ship, Simon shall, at the
request and for the account of the Charterer (but subject to any
requirements of the Owner), co-operate with
30
<PAGE> 36
and permit the Charterer to take all necessary steps within its power to
comply with such request and thereafter shall during the Charter Period
co-operate with the Charterer to take such actions as the Charterer may
reasonably require to maintain the documentation of the Ship at the port
to which the register of the Ship is so transferred and/or under the
laws of the jurisdiction under whose laws the Ship is so re-documented.
For the purposes of this Clause 14.3, the Owner shall be deemed to
approve the transfer of the register of the Ship to any port of registry
in the United Kingdom or in any relevant British possession (as that
expression is defined in section 9 of the Merchant Shipping
(Registration etc.) Act 1993) and having their principal place of
business in the United Kingdom or any such possession.
If, in the reasonable opinion of the Owner it shall become impossible,
unlawful, impracticable or undesirable for the Owner to maintain the
documentation of the Ship under the laws of any jurisdiction (other than
the United Kingdom or any other such relevant British possession) under
whose laws the Ship is for the time being documented and, the Owner
shall have given notice thereof to Simon and/or the Charterer, Simon and
the Charterer shall forthwith enter into negotiations in good faith with
a view to agreeing with the Owner upon an alternative jurisdiction for
the documentation of the Ship as a British ship, but if no such
agreement shall be reached within thirty (30) days after the Owner shall
have given such notice to Simon neither the Charterer nor Simon shall be
able to prevent the Owner from re-documenting the Ship as a British ship
at a port of registry in the United Kingdom or in any other relevant
British possession and/or to transfer the registry of the Ship to a port
of registry in the United Kingdom or in any other such relevant British
possession and in either case the Charterer shall do all that may be
necessary on its part to give effect to such re-documentation and/or
transfer of register. Without prejudice to the generality of the
provisions of Clause 9, the Charterer shall indemnify and hold harmless
Simon and the Owner against all losses, costs, expenses and liabilities
of whatsoever nature (including penalties, claims, demands, orders and
or judgments) which Simon and the Owner may suffer or incur and which
arise directly or indirectly out of the documentation of the Ship under
the laws of any jurisdiction at the request of the Charterer as
aforesaid.
14.4 Name and House Flag
(a) Subject to the prior written consent of the Owner having been
obtained the name of the Ship shall at the cost of the Charterer
as soon as possible after the Delivery Date be changed to such
name as the Charterer shall select (not being a name including
"Simon" or any other name indicating any continuing relationship
with Simon or the Simon Engineering plc group of companies) and
the Ship shall be painted in such colors, display such funnel
insignia and fly such house flag as the Charterer may require.
The Charterer shall notify Simon and the Owner of any intended
change in the name of the Ship. No future name shall include
"Simon" or otherwise indicate or imply any continuing
relationship with Simon or the Simon Engineering plc group of
companies; and
31
<PAGE> 37
(b) Simon will use all reasonable endeavors to procure the consent of
the Owner to such change of name.
15 Maintenance and Operation
15.1 Possession and Control of Ship by Charterer
During the Charter Period the Ship shall, subject to the terms and
conditions of this Charterparty, be in the full and exclusive possession
and at the absolute disposal of the Charterer for all purposes and under
its complete control in every respect.
Notwithstanding any other provision of this Charterparty, without
prejudice to any of the obligations of the Charterer under this
Charterparty or any of the other Relevant Documents imposing any higher
standard of performance upon the Charterer, the Charterer shall make or
procure to be made, and shall have sole responsibility for making or
procuring to be made, all such arrangements as may be necessary to
ensure that the Ship is fit to go to sea without serious danger to human
life.
15.2 Undertakings concerning Maintenance and Operation
The Charterer further undertakes with Simon that throughout the Charter
Period it will:
(a) Maintenance of Classification; Compliance with Regulations
maintain the Classification as the present class of the Ship with
the Classification Society and with such other certificates
required by statute and the Ship's insurers in force at all times
and so as to comply with the provisions of all other regulations
and requirements (statutory or otherwise) from time to time
applicable to vessels registered at the Ship's port of registry
or otherwise applicable to the Ship, her Master, officers and
crew wherever the Ship may proceed or trade and (without
prejudice to the generality of the foregoing) at its own expense
maintain in force for the Ship all safety, radio, loadline and
other certificates whatsoever and all licenses and permits which
may from time to time be prescribed by any legislation in force
in the United Kingdom or other applicable jurisdiction.
(b) Supply and Crewing
ensure that at all times during the Charter Period the Ship is
properly manned, victualled, navigated, operated, supplied,
fuelled and repaired;
(c) Surveys
submit the Ship to continuous surveys and such periodical or
other surveys as may be required for classification purposes,
comply with all recommendations and
32
<PAGE> 38
requirements of the Classification Society in accordance with
their terms and, upon the Owner's or Simon's request supply to
the Owner or Simon copies of all survey reports issued in respect
thereof;
(d) Repair
keep the Ship and every part of her in a good and efficient state
of repair, in efficient operating condition, seaworthy in all
respects and in accordance with good maintenance practice (fair
wear and tear excepted and having regard to the type and age of
the Ship) and procure that all repairs to, or replacement of, any
damaged, worn or lost parts or equipment are effected in such
manner (both as regards workmanship and quality of materials) as
not to diminish the value of the Ship;
(e) Drydocking
drydock the Ship and clean and paint her underwater parts in
accordance with good commercial practice for vessels of the type
and age of the Ship;
(f) Inspection of the Ship
permit the Owner and/or Simon by surveyors or other persons
appointed by them or either of them for such purpose to board the
Ship at all reasonable times for the purpose of inspecting her
and to afford all proper facilities for such inspections and for
this purpose to give the Owner and/or Simon on request reasonable
advance notice of any intended drydocking of the Ship (whether
for the purpose of classification, survey or otherwise). The cost
of any such inspection and survey shall be paid by the Charterer.
All time taken in respect of such inspection or survey shall form
part of the Charter Period. Inspection or survey of the Ship in
drydock shall be made only when the Ship shall be in drydock for
the purpose of the surveys referred to in Clause 15.1(e);
(g) Manuals and Technical Records
maintain all such other records, logs, manuals, technical data
and other materials and documents which are required to be
maintained in respect of the Ship to comply with any applicable
laws or the requirements of the Classification Society and, keep
accurate, complete and up to date logs and records of all voyages
made by the Ship and of all maintenance, repairs, alterations,
modifications and additions to the Ship and, on reasonable
advance notice from the Owner or Simon permit the Owner or Simon
or their respective representatives at any time to examine and
take copies of such logs and records and other records;
(h) Modification: Removal of Parts:
33
<PAGE> 39
Equipment owned by Third Parties
not without the prior written consent of the Owner and Simon (and
then only on and subject to such terms as Simon and the Owner may
agree and, in the case of Simon such consent not to be
unreasonably withheld or delayed):
(i) make any modification to the Ship in consequence of which
her structure, type or performance characteristics could
or might be materially altered or her value materially
reduced; or
(ii) remove any material part of the Ship or any equipment the
value of which is such that its removal from the Ship
would materially reduce the value of the Ship without
replacing the same with equivalent parts or equipment
which are owned by the Owner free from Encumbrances (other
than Permitted Encumbrances); or
(iii) install on the Ship any equipment owned by a third party
which cannot be removed without causing damage to the
structure or fabric of the Ship.
(i) Manager
not without the previous consent in writing of Simon and the
Owner (which Simon shall not unreasonably withhold or delay) and
subject to such terms as Simon and the Owner may require
(including approval of the new manager and the terms of any
Management Agreement), appoint any manager of the Ship other than
the Manager or to terminate or amend the terms of the Management
Agreement (and for the purposes of this Charterparty "manager"
shall include any ship manager or other person providing to the
Charterer analogous specialised services in respect of the Ship)
(j) Notification of certain Events
notify Simon and the Owner forthwith by telex of:
(i) any damage to the Ship requiring repairs the cost of which
will or might exceed the Casualty Amount and furnish Simon
and the Owner with full information regarding any single
casualty or other accident or damage to the Ship which may
involve repairs costing more than the Casualty Amount;
(ii) any occurrence in consequence of which the Ship has or may
become a Total Loss;
(iii) any requisition of the Ship for hire;
34
<PAGE> 40
(iv) any requirement or recommendation made by any insurer or
the Classification Society or by any competent authority
which is not complied with in accordance with its terms;
(v) any serious injury to a third party caused by, or in
connection with, the Ship;
(vi) any substantial damage to property caused by, or in
connection with the Ship;
(vii) any assistance which has been given to the Ship which has
resulted or may result in a lien for salvage being
acquired over the Ship; and
(viii) any other event which occurs in connection with the Ship
which affects or might affect the rights of Simon or the
Owner or involves any material loss or liability.
(k) Repairers' Liens
not without the previous consent in writing of Simon (which shall
not be unreasonably withheld but which may be given only on and
subject to such terms as Simon and/or the Owner may agree) put
the Ship into the possession of any person for the purpose of
work being done upon her in an amount exceeding or likely to
exceed the Casualty amount unless such person shall first have
given to Simon and the Owner and in terms satisfactory to each
other, a written undertaking not to exercise any lien on the Ship
for the cost of such work or otherwise;
(1) Health and Safety
take such steps as are reasonably practicable to ensure that the
Ship and all constituent parts thereof will be safe and without
risk to health when properly used and specifically (without
prejudice to the generality of the foregoing) that it will:
(i) take such steps as are reasonably practicable to ensure
that any defects in the Ship and all constituent parts
thereof which could be or cause a danger to safety and a
risk to health shall be made good;
(ii) for such purpose, have a detailed inspection of the Ship
carried out from time to time including all electrical,
fluid, oil and gas connections (being either supplies to
or discharges from the Ship) and all constituent parts
thereof as well as all life saving and other safety
equipment;
35
<PAGE> 41
(iii) take such action as is reasonably practicable to see that
appropriate safety measures are adopted; and
(iv) not use or permit the Ship or any constituent parts
thereof to be used beyond their limits and capacities.
(m) No Operational Interest
procure that neither Simon nor the Owner is at any time
represented as carrying goods or passengers or providing any
other service on or from the Ship, or as being in any way
connected or associated with any operation of carriage or other
service which may be undertaken by the Charterer, or as having
any operational interest in, or responsibility for, the Ship;
(n) Safe Operation
take all reasonable steps to secure that the Ship is navigated
and operated in a proper, safe and seaman-like manner; and
(o) Fitness to go to Sea
shall procure that the Ship shall at all times be fit to go to
sea without serious danger to life (by reason of the condition,
or the unsuitability for its purpose, of either the Ship or its
machinery or equipment or any part of the Ship or its machinery
or equipment or undermanning or overloading or unsafe or improper
loading or any other matter relevant to the safety of the Ship)
unless arrangements have been made which are appropriate to
ensure that before the Ship goes to sea it is made fit to do so
without serious danger to human life by reason of any such
matters or it is reasonable for such arrangements not to be made
at such time.
16 Insurance Undertakings: Wreck Removal and Insurance Assignment
16.1 Insurance Undertakings
The Charterer hereby covenants with Simon and undertakes that throughout
the Charter Period and thereafter until sale of Ship pursuant to any
provision of this Charterparty it will:
(a) Insured Risks
insure and keep the Ship insured free of cost and expense to
Simon and the Owner and in the joint names of the Charterer,
Simon and the Owner (but without liability on the part of Simon
and the Owner for premiums or calls) and, at the request of the
Charterer, the Manager or other third party providing specialist
36
<PAGE> 42
services to the Charterer in connection with the operation of the
Ship (each as their interests may appear):
(i) against fire and usual marine risks (including excess
risks) and war risks, on an agreed value basis, in such
amounts (but not in any event less than whichever shall be
the greater of the market value of the Ship for the time
being and One hundred and ten per cent (110%) of the
Termination Sum applicable during the period of the
policy) and upon such terms as shall from time to time be
approved in writing by Simon and the Owner;
(ii) against protection and indemnity risks (including
pollution risks) for the full value and tonnage of the
Ship in a protection and indemnity association (as
approved in writing by Simon and the Owner) for a full and
unlimited entry (other than for oil pollution risks which
shall be for a minimum sum of U.S. $500,000,000 or
equivalent thereof) and upon such terms as shall from time
to time be approved in writing by Simon and the Owner; and
(iii) in respect of such other matters of whatsoever nature and
howsoever arising in respect of which insurance would be
maintained by a prudent owner of the Ship having regard to
the financial resources and liabilities of the Charterer
and to the situation and method of operation of the Ship;
(b) Brokers and Insurers
effect the insurances aforesaid in Pounds or such other currency
as Simon and the Owner may approve and through the Approved
Brokers and with such insurance companies and/or underwriters as
shall from time to time be approved in writing by Simon and the
Owner provided however that the insurances against war risks and
protection and indemnity risks may be effected by the entry of
the Ship with such war risks and protection and indemnity
associations as shall from time to time be approved in writing by
Simon and the Owner;
(c) Fleet Cover
If any of the insurances referred to in Clause 16.1(a) form part
of a fleet cover, procure that the Approved Brokers and/or
insurers and protection and indemnity or war risks associations
(as appropriate) shall undertake to Simon and the Owner that they
shall neither set off against any claims in respect of the Ship
any premiums due in respect of other vessels under such fleet
cover or any premiums due for other insurances, nor cancel the
insurance for reason of non-payment of premiums for other vessels
under such fleet cover or of premiums for such other insurances,
and shall undertake to issue a separate policy in respect of the
Ship if and when so requested by Simon and/or the Owner;
37
<PAGE> 43
(d) Payment of Premiums
Punctually pay all premiums, calls, contributions or other sums
payable in respect of all such insurances and to produce all
relevant receipts or other evidence of payment when so required
by Simon or the Owner;
(e) Renewal
at least 14 days before the relevant policies, contracts or
entries expire, notify Simon and the Owner of the names of the
brokers and/or the war risks and protection and indemnity risks
associations proposed to be employed by the Charterer for the
purposes of the renewal of such insurances and of the amounts in
which such insurances are proposed to be renewed and the risks to
be covered and, subject to compliance with any requirements of
Simon and/or the Owner pursuant to this Clause 16.1, procure that
appropriate instructions for the renewal of such insurances on
the terms so specified are given to the Approved Brokers and/or
to the approved war risks and protection and indemnity risks
associations at least ten (10) days before the relevant policies,
contracts or entries expire, and that the Approved Brokers and/or
the approved war risks and protection and indemnity risks
associations will at least seven (7) days before such expiry (or
within such shorter period as Simon and/or the Owner may from
time to time agree) confirm in writing to Simon and the Owner as
and when such renewals have been effected in accordance with the
instructions so given;
(f) Guarantees
arrange for the execution and delivery of such guarantees or
indemnities as may from time to time be required by any
protection and indemnity or war risks association;
(g) Custody of Policy Documents: Letters of Undertaking: Loss Payable
Clauses
deposit with the Approved Brokers (or procure the deposit of) all
slips, cover notes, policies, certificates of entry or other
instruments of insurance from time to time issued in connection
with such of the insurances referred to in Clause 16.1(a) as are
effected through the Approved Brokers and procure that the
interest of the Owner shell be endorsed thereon by incorporation
of the relevant Lose Payable Clause and that the Owner shall be
furnished with pro forma copies thereof and a letter or letters
of undertaking from the Approved Brokers in such form as shall
from time to time be required by the Owner;
(h) Club Letters of Undertaking: Certificates of Entry
38
<PAGE> 44
procure that any protection and indemnity and/or war risks
associations in which the Ship is for the time being entered
shall endorse the relevant Loss Payable Clause on the relevant
certificate of entry or policy and shall furnish Simon and the
Owner with a copy of such certificate of entry or policy and a
letter or letters of undertaking in such form as shall from time
to time be required by Simon and the Owner;
(i) Broker's Report
if so requested by Simon or the Owner but at the cost of the
Charterer (except where the insurances maintained on the Ship
have not been Changed since the time of the last such report),
furnish Simon or (as the case may be) the Owner from time to time
with a detailed report signed by an independent firm of marine
insurance brokers appointed by the Owner dealing with the
insurances maintained on the Ship and stating the opinion of such
firm as to the adequacy thereof;
(j) Collection
do all things necessary and provide all documents, evidence and
information to enable the Owner and/or Simon to collect or
recover any moneys which shall at any time become due in respect
of the Insurances;
(k) Compliance with Insurances
comply with the terms and conditions of the Insurances, not do,
consent to or permit any act or omission which might invalidate
or render unenforceable the whole or any part of the Insurances
and not (without first obtaining the consent of the insurers to
such employment and complying with such requirements as to extra
premium or otherwise as the insurers may prescribe) employ the
Ship or suffer the ship to be employed otherwise than in
conformity with the terms of the Insurances (including any
warranties express or implied therein);
(l) Application of Recoveries
apply all sums receivable under the Insurances which are paid to
the Charterer in accordance with the Loss Payable Clauses and
Clause 21 in repairing all damage and/or in discharging the
liability in respect of which such sums shall have been received;
(m) Other Insurances and Assureds
not, without the prior written consent of Simon and the Owner,
take out additional insurances for the Charterer's sole benefit,
or permit the Charterer or Simon or the Owner or any other person
to be named insured in insurances with respect to the
39
<PAGE> 45
Ship, other than as required under this Charterparty or the
Conversion and Supply Agreement, where such additional insurances
will or may prejudice the Insurances or recovery thereunder or
will exceed the amount permitted by the warranties or other
conditions of the Insurances (unless the insurers under the
Insurances have consented thereto) and will upon Simon's or the
Owner's request, immediately furnish Simon and/or the Owner with
particulars of any such additional insurances (including copies
of any cover notes or policies) and of the written consent of the
insurers under the Insurances in any case where such consent is
necessary;
(n) Information concerning Insurances
supply to Simon and the Owner all necessary information,
documentation and assistance which may be required by Simon and
the Owner in connection with making any claim under the
Insurances.
Provided however that if, in the event of requisition of the Ship for
hire, it is proved to the satisfaction of Simon and the Owner that such
requisition is upon terms whereby the requisitioning authority has
assumed the responsibility of the Charterer to Simon and to the Owner to
indemnify or recompense it in respect of or otherwise to make good all
losses which would ordinarily be covered by the insurances required to
be effected by the Charterer under this Charterparty, the Charterer
shall be relieved from its insurance obligations under this Charterparty
in respect of such period of requisition or in the event that the
requisitioning authority shall have assumed only a partial
responsibility as aforesaid the insurance obligations of the Charterer
under this Charterparty shall be modified in such manner and to such
extent as Simon and the Owner may approve, and provided further that in
this Clause 16, wherever a matter is subject to the approval of the
Owner and Simon and the Owner and Simon shall not be in complete
agreement or their respective requirements shall be different then the
Owner's requirements shall prevail unless, within seven days after
receiving written notice from the Charterer requiring it to do so, Simon
shall have demonstrated in writing to the Charterer that Simon's
interest differs from the interest of the Owner in respect of such
matter and (subject to any necessary approval or consent of the Owner
having previously been obtained by Simon) notified the Charterer of its
requirements and provided that the Charterer can (or ought reasonably to
have been able to) place the insurance in the open market within seven
days of notification, the Charterer will then at the Charterer's expense
take out such additional coverage.
16.2 Wreck Removal
In the event of the Ship becoming a wreck or obstruction to navigation
the Charterer shall (in addition to any other obligation it may have
under Clause 9 to indemnify and hold harmless the Owner and Simon as
therein provided) indemnity and hold harmless the Owner and Simon
against all costs, expenses, payments, charges, losses, demands, any
liabilities, claims, actions, proceedings (whether civil or criminal),
penalties, fines,
40
<PAGE> 46
damages, judgments, orders or other sanctions which may be incurred, by,
or made or asserted against the Owner and/or Simon by reason that the
Ship shall have become a wreck or obstruction to navigation (including,
without limitation) in respect of the removal or destruction of the
wreck or obstruction under statutory powers but only to the extent that
such has not been recovered from the Ship's insurers.
16.3 Further Requirements
Notwithstanding the other provisions of this Clause 16, the Charterer
shall comply with such further reasonable requirements relative to
insurance (and if applicable any requirements relative to reinsurance)
as the Owner and/or Simon may from time to time request.
16.4 Insurance Assignment
As continuing security for the payment of all sums due and payable to
the Owner by Simon under the Simon Charterparty and by the Charterer to
Simon under or pursuant to this Charterparty and the other Relevant
Documents, the Charterer as beneficial owner assigns and agrees to
assign to the Owner and/or Simon all its right, title and interest in
and to the Insurances and any Requisition Compensation and agrees and
undertakes to do all that may be necessary (by way of giving notice,
lending its name to any action or otherwise howsoever) to enable Simon
and the Owner to perfect and/or enjoy the full benefits of such
assignment. Simon shall (subject to the rights of the Owner in respect
thereof) reassign to the Charterer the property so assigned upon receipt
by Simon of all such sums and provided the Charter Period shall have
ended.
17 Powers of Simon and/or the Owner to Remedy Defaults
17.1 Failure to Perform Insurance Undertakings
If the Charterer fails to comply with any of the provisions of Clause
16.1, Simon and/or the Owner may, without being in any way obliged so to
do, or responsible for so doing, and without prejudice to the ability of
Simon to treat that non-compliance as a Termination Event (but only
after the expiry of seven days after Simon shall have given the
Charterer written notice of its requirements where these differ from
those of the Owner and the second proviso to Clause 16.1 applies), to
effect and thereafter to maintain all such insurances upon the Ship as
in its discretion it may think fit in order to procure the compliance
with such provisions or alternatively, to require the Ship (at the
Charterer's risk) to remain in, or to proceed to and remain in a port
designated by Simon until such provisions are fully complied with.
17.2 Failure to Perform Maintenance Undertakings
41
<PAGE> 47
If the Charterer fails to comply with any of the provisions of Clauses
15.2(a), (c), (d) or (e), Simon may, without being in any way obliged so
to do, or responsible for so doing, and without prejudice to the ability
of Simon to treat that non-compliance as a Termination Event, to arrange
for the carrying out of such repairs, changes or surveys as it may deem
expedient or necessary in order to procure the compliance with such
provisions.
17.3 Failure to Prevent or Release from Arrest
If the Charterer fails to comply with any of the provisions of Clause
11.2(d) Simon may, without being in any way obliged so to do, or
responsible for so doing, and without prejudice to the ability of Simon
to treat that non-compliance as a Termination Event, pay and discharge
all such debts, damages, liabilities and outgoings as are therein
mentioned and/or take any such measures as it may deem expedient or
necessary for the purpose of securing the release of the Ship in order
to procure the compliance with such provisions.
17.4 Failure to comply with other Obligations
If the Charterer fails to comply with any of its other obligations under
this Charterparty or any of the other Relevant Documents, Simon may,
without being in any way obliged to do so or responsible for so doing,
and without prejudice to the ability of Simon to treat that
non-compliance as a Termination Event take such action as it may deem
expedient or necessary in order to procure the compliance with such
provisions.
17.5 Costs of Remedying Defaults
Without prejudice to Clause 25.1, all losses, liabilities, costs,
charges, expenses, damages and outgoings of whatsoever nature
(including, without limitation, Taxes, repair costs, registration fees
and insurance premiums) suffered, incurred or paid by Simon in
connection with the exercise by Simon of any of its powers under Clauses
17.1, 17.2, 17.3 and 17.4 and interest on all such losses, liabilities,
costs, charges, expenses, damages and outgoings from the date on which
the same were suffered, incurred or paid by Simon until the date of
receipt or recovery thereof (both before and after any relevant
judgment) at the Relevant Rate of Interest shall be repayable by the
Charterer to Simon on demand.
17.6 Hire Still Payable
Notwithstanding any exercise by Simon of any of the powers contained in
this Clause 17, charterhire shall continue to accrue during such time.
18 Redelivery
18.1 Redelivery Procedure and Condition
42
<PAGE> 48
Except in the event of a Total Loss of the Ship and subject to the
provisions of Clause 23.5, the Charterer shall at the end of the Charter
Period redeliver the Ship to Simon free of all Encumbrances (other than
Permitted Encumbrances), and Simon shall accept such redelivery, at a
safe port to be mutually agreed between the parties or, in the absence
of such agreement, at such nearby safe port in the United Kingdom as
Simon may require. Subject to the provisions of Clause 23.5, the
Charterer shall at its expense before such redelivery make all such
repairs and do all such work as may be necessary so that the Ship at the
date of redelivery shall have installed the machinery and other
equipment installed pursuant to the MWB Conversion Contract, or
replacements for the same made in accordance with the provisions of this
Charterparty, shall maintain the Classification unexpired and shall be
in as good structure, state and condition as at Delivery or, fair wear
and tear and changes and alterations properly made by the Charterer as
permitted under this Charterparty excepted.
18.2 Redelivery Survey
At or about the time of redelivery a survey shall, if Simon so requires,
be made to determine the state and condition of the Ship, her machinery
and equipment. In that event, the Charterer and Simon shall each
appoint surveyors to be present at such survey and the surveyors present
shall determine the condition of the Ship, her machinery and equipment
and shall state the repairs or work necessary to place the Ship at the
date of redelivery in the structure state, condition and classification
referred to in Clause 18.1. If the said surveyors disagree they shall
refer the matter to a senior surveyor of the Classification Society
whose decision shall be final and binding on the parties hereto. All
reasonable costs occasioned by any such survey including the costs of
the said surveyors appointed by the Charterer and Simon and, if
appointed, the costs of the senior surveyor of the Classification
Society shall be payable by the Charterer but if the ship is found to be
in the condition provided for Clause 18.1 fair wear and tear and changes
and alterations properly made by the Charterer as permitted under this
Charterparty excepted, such cost shall be payable by Simon.
19. Consumable Stores
19.1 Upon Delivery
All consumable stores on board the Ship at Delivery (including, but not
limited to, lubricating oils, fuel, water, provisions and stores) shall
pass to the Charterer without payment therefor by the Charterer to
Simon.
19.2 Upon Redelivery
All consumable stores, unused diesel and lubricating oils and bunkers on
board the Ship at the time of re-delivery shall be purchased by Simon
from the Charterer and sold by the
43
<PAGE> 49
Owner to the purchaser of the Ship. The price payable by Simon to the
Charterer shall be the same as that received from the said purchaser of
the Ship.
20. Use of Equipment and Replacement
20.1 Use of Equipment and Manuals and Technical Records
The Charterer shall have the use of all outfit, equipment (including
cabin, crew and galley equipment), furnishings, furniture and fittings,
spare and replacement parts which are chartered or leased by Simon from
the Owner on board the Ship at the time of Delivery and the Manuals and
Technical Records and the Goods and the same or their substantial
equivalent shall be returned to Simon on redelivery in good order and
condition fair wear and tear alone and changes and alterations properly
made by the Charterer as permitted under this Charterparty or the Master
Lease excepted.
20.2 Renewal of Equipment
The Charterer shall at its own expense from time to time during the
Charter Period replace, renew or obtain substitutes for such items of
equipment as shall be so damaged or worn as to be unfit for use provided
always that in any such case title to any part replaced, renewed or
substituted shall remain with the Owner until the part which replaced it
or the new or substituted part becomes the property of the Owner or is
replaced, renewed or substituted by a part which thereupon becomes the
property of the Owner and the Charterer agrees that if any replaced,
renewed or substituted part is not the property of the Owner it will as
soon as practicable replace the same with a part which thereupon becomes
the property of the Owner.
20.3 Alteration of Equipment: Additional Equipment
The Charterer may at any time alter or remove all or any items of
equipment or may fit any additional equipment required to render the
Ship available for any purpose for which the Charterer may require to
use her under the provisions of Clause 13 provided that the Charterer
shall first have obtained the prior written consent of Simon (and, where
appropriate, the Owner) thereto if and to the extent such consent may be
required pursuant to Clause 15.2(h) (or otherwise). Notwithstanding any
other provision of this Charterparty any such equipment which is
Additional Equipment shall become the property of Simon immediately upon
its installation (or, where acquired upon leasing terms previously
agreed between Simon and the Charterer, immediately upon payment out of
the relevant lease), but be deemed either to be chartered to the
Charterer pursuant to the terms hereof or leased to the Charterer
pursuant to the terms of the Master Lease as appropriate, taking into
account the nature of the equipment and the basis of its installation
upon the Vessel, at no additional charterhire or rental payment, for the
Charter Period or until such time as title thereto is transferred to HEL
pursuant to Clause 5 of the Agreement. The Charterer shall deliver to
Simon promptly after acquiring any such equipment which is
44
<PAGE> 50
Additional Equipment (whether purchased or leased) details of the
equipment acquired and either (where such equipment is purchased) Bills
of Sale in respect thereof so as formally to implement such transfer of
title or (where such equipment is leased) a copy of the relevant lease
contract or contracts. The Charterer hereby undertakes that it will if
required by Simon forthwith upon payment out of the relevant lease or
leases deliver to Simon Bills of Sale in respect of any such Additional
Equipment so as to transfer title thereto to Simon. Unless Simon shall
otherwise require by notice to the Charterer (except where the Charterer
shall remove such equipment in accordance with the terms of this
Charterparty) the Charterer shall not without the prior written consent
of Simon remove any such equipment as is referred to in this Clause
20.3. The cost of fitting or removing any equipment together with the
cost of making good any damage caused by such fitting or removal shall
be payable in full by the Charterer who shall redeliver the Ship's
equipment to Simon in accordance with the provisions of Clause 18.1
unless it is agrees by Simon that any extra fittings or equipment which
have been supplied by the Charterer during the Charter Period shall
remain on the Ship after redelivery to the Owner in which event such
fittings or equipment shall as from redelivery become the property of
the Owner.
21 Loss and Damage
21.1 Notwithstanding Clause 6.1, the Ship shall throughout the Charter Period
be in every respect at the risk of the Charterer who shall bear all
risks howsoever arising whether of navigation, operation and maintenance
of the Ship or otherwise and of any other occurrence of whatever kind
which shall deprive the Charterer of the use, possession or enjoyment
thereof provided however that nothing in this Clause 21.1 shall restrict
any claim by the Charterer against Simon for any default of Simon in
respect of its obligations under Clause 6.1.
21.2 (a) If the Ship shall become a Total Loss during the Charter Period,
the Charterer shall pay, or procure that the insurers pay, to the
Owner within one hundred and twenty (120) days (or such longer
period as may be agreed between the Owner, Simon and the
Charterer) of the Total Loss Date, the Termination Sum as at the
Total Loss Date together with interest thereon calculated at the
Relevant Rate of Interest from the Total Loss Date to the date of
payment and together with all amounts of charterhire and any
other amounts then due and payable under this Charterparty and
the other Relevant Documents.
(b) For the purposes of this Charterparty a Total Loss shall be
deemed to have occurred on the following date (Total Loss Date):
(i) in the rare of an actual total loss, at noon (London time)
on the actual date the Ship was lost, or if such date is
not known, noon (London time) on the day on which the Ship
was last reported;
45
<PAGE> 51
(ii) in the case of a constructive total loss of the Ship, upon
the date and at the time notice of abandonment of the Ship
is given to the insurers of the Ship for the time being
(provided a claim for such constructive total loss is
admitted by the insurers) or, if the insurers do not admit
such a claim, at the date and time at which a constructive
total loss is subsequently ad judged by a competent court
of law to have occurred;
(iii) in the case of a compromised or arranged total loss, at
the date upon which a binding agreement as to such
compromised or arranged total loss has been entered into
by the insurers of the Ship;
(iv) in the case of Compulsory Acquisition, upon the date upon
which the relevant compulsory acquisition, requisition,
appropriation, expropriation, deprivation or confiscation
occurs; and
(v) in the case of any of the events described in subparagraph
(c) of the definition of Total Loss, upon the expiry of
the period of thirty (30) days referred to in such
sub-paragraph (c) after the date upon which the relevant
hijacking, theft, condemnation, confiscation, capture,
detention, seizure or requestion for use or hire occurred.
21.3 The Charter Period shall terminate on the Total Loss Date and, subject
to the payment by the Charterer to Simon of all amounts of charterhire
then due and payable under this Charterparty, the Charterer shall cease
to be under any liability to pay charterhire (but not any other amounts)
thereafter becoming due and payable under this Charterparty or any of
the other Relevant Documents.
21.4 In the event of the Compulsory Acquisition of the Ship after Delivery,
all Requisition Compensation received by Simon shall be applied by Simon
(or, if received by the Charterer, shall be held in trust by the
Charterer for application) in accordance with Clause 21.5. Where such
Requisition Compensation is received by the Owner, Simon shall use all
reasonable endeavors to procure that the Owner shall apply it in
accordance with Clause 21.5.
21.5 Simon shall at the cost of the Charterer endeavor to procure that all
moneys received by the Owner as loss payee under the Insurances from
insurers or others in respect of a Total Loss shall be applied by the
Owner subject to Clause 10.4 as follows:
(a) the proportion (as calculated by Simon) attributable to the Goods
shall subject to the rights and obligations of the Owner in
respect thereof be paid to Simon for application in accordance
with the terms of the Master Lease; and the balance shall be
applied:
46
<PAGE> 52
(b) Firstly, in or towards settlement of any amounts due and owing by
the Charterer to Simon under this Charterparty or any of the
other Relevant Documents other than the Goods Contracts;
(c) Secondly, in settlement of all sums due to Simon under the Goods
Contract insofar as such sums have not been satisfied by
application of the sums referred to in Clause 21.5(a);
(d) Thirdly, if the Charterer shall on or before the date of
application of such moneys have paid the Termination Sum or a
part thereof, in accordance with Clause 21.2(a) in or towards
refunding by way of rebate of hire or otherwise as appropriate to
the Charterer the amount of the Termination Sum or part thereof
so paid by the Charterer; and
(e) Subject always to the proviso that an amount equal to two per
cent (2%) of such moneys received by the Owner as loss payee
under the insurances shall be retained by the Owner, any balance
shall be paid to the Charterer or to its order by way of rebate
of Charterhire or otherwise as appropriate.
21.6 In the event of repairable damage to the Ship, Simon shall at the cost
of the Charterer, use all reasonable endeavors to procure that the Owner
as loss payee under the Insurances shall pay any insurance moneys
received by it to the Charterer upon the Charterer furnishing evidence
to the Owner that such damage has been made good or repaired or put in
hand for repair Provided always that if a Relevant Event has occurred
and is continuing, the Owner show be entitled to require that such
insurance moneys be applied in or towards settlement of any amounts
owing by the Charterer to Simon under this Charterparty or any of the
Relevant Documents or by Simon to the Owner under the Simon Charterparty
or any other of the Simon RBS Documents.
21.7 Any insurance moneys paid under the insurances taken out or entries made
referred to in Clause 16.1 (a) (ii) shall be paid to the person to whom
the liability (or alleged liability) covered by such insurances or entry
was incurred or if the liability (or alleged liability) to such person
has previously been discharged by the Charterer, Simon shall at the cost
of the Charterer endeavor to procure that such moneys shall be paid to
the Charterer in reimbursement of the moneys so expended by it in
satisfaction of such liability or alleged liability and, in such case
Simon shall at the cost of the Charterer endeavor to procure that the
Owner shall pay any insurance moneys received by it in respect of such
liability or alleged liability to the Charterer upon the Charterer
furnishing evidence to the Owner that such liability or alleged
liability has previously been discharged provided always that if a
Relevant Event has occurred and is continuing, the Owner shall be
entitled to apply such insurance moneys in or towards settlement of any
amounts due and owing by the Charterer to the Owner under this
Charterparty or any of the other Relevant Documents.
47
<PAGE> 53
21.8 In the event of repairable damage to the Ship or a liability or alleged
liability covered by the insurances taken out or entries mate referred
to in Clause 16.1(a) being incurred or alleged, and of the insurance
moneys paid in respect thereof are insufficient to pay the cost or
estimated cost of making good or repairing such damage or discharging
the liability or alleged liability, the Charterer will pay the
deficiency.
21.9 (a) The Charterer shall have the sole right to determine whether or
not a case has arisen for the giving of notice of abandonment to
abandon the Ship to the insurers and/or claim a constructive
total loss and the Charterer is hereby irrevocably authorised by
Simon to give the same on behalf of itself and Simon if it so
determines.
(b) Simon shall at the cost of the Charterer endeavor to procure that
the Owner shall upon the request of the Charterer promptly
execute such documents as may be required to enable the Charterer
to abandon the Ship to the insurers and/or claim a constructive
total loss and Simon shall use all reasonable endeavors to
procure that the Owner shall give the Charterer all possible
assistance in pursuing the said claim on behalf of itself and
Simon.
21.10 Any moneys payable under the Insurances shall be payable in accordance
with the terms of the relevant Loss Payable Clause and, unless and until
a Relevant Event shall occur (whereupon all insurance recoveries shell
be receivable by the Owner and applied in accordance with the foregoing
provisions of this Clause 21), the Owner shall not give any notice or
direction to the contrary to the insurers as contemplated by the Loss
Payable Clauses.
21.11 If the insurers of the Ship have satisfied or admitted in full their
obligations under the Insurances and have expressly waiver any rights
they may have, or would or might acquire, in the Ship, Simon shall use
all reasonable endeavors to procure that the Owner shall as soon as
practicable after the date of Total Loss of the Ship endeavor to sell
the Ship, to the extent that the Owner retains title therein. Any such
sale shall comply with Clauses 3.5 and 3.6.
22 Salvage
22.1 All salvage and towage and all proceeds from derelicts shall, subject to
the Owner's prior right to retain thereout any sums which may be due
from Simon to the Owner under the Simon Charterparty or any of the other
Relevant Documents, be for the Charterer's benefit and the cost of
repairing damage occasioned thereby shall be borne by the Charterer.
23 Requisition
23.1 If the Ship is requisitioned for hire by any Government Entity or other
competent authority during the Charter Period then, unless and until the
Ship becomes a Total Loss
48
<PAGE> 54
following such requisition and the Charterer shall have made payment of
all sums due pursuant to Clause 21.2 (a), the charter of the Ship to the
Charterer under this Charterparty shall continue in full force and
effect (subject always to the provisions of Clause 25) for the remainder
of the Charter Period and the Charterer shall remain fully responsible
for the due compliance with all its obligations under this Charterparty
other than such obligations which the Charterer is unable to comply with
solely by virtue of such requisition.
23.2 If the Charterer shall duly comply with all of its obligations under
this Charterparty, save as mentioned in Clause 23.1, the Charterer shall
during the Charter Period, be entitled as between the Charterer and
Simon to all requisition hire paid to the Owner, Simon or to the
Charterer on account of such requisition.
23.3 The Charterer shall as soon as practicable after the end of any
requisition for hire, cause the Ship to be put into the condition
required by this Charterparty, and where that requisition shall end
after the expiry or termination of the Charter Period, the Charterer
shall, as soon as practicable, cause the Ship to be put into the
redelivery condition required by Clause 18, allowance being made for
fair wear and tear in respect of the period from the expiry or
termination of the Charter Period.
23.4 Simon shall be entitled to all compensation payable in respect of any
change in the structure, state or condition of the Ship arising during
the period of requisition for hire. Simon shall apply such compensation
in reimbursing the Charterer for the cost of complying with its
obligations under Clause 23.3, provided always that if a Relevant Event
has occurred and is continuing, Simon shall be entitled to apply such
compensation in or towards settlement of any amounts owing by the
Charterer under this Charterparty and any of the other Relevant
Documents.
23.5 Should the Ship be under requisition for hire at the end of the Chanter
Period:
(a) the charter of the Ship under this Charterparty shall (unless
otherwise agreed between the parties hereto) nevertheless be
terminated at such end but without prejudice to the accrued
rights of the parties, including, without prejudice to the
generality of the foregoing, the obligations of the Charterer
contained in Clause 23.3, and (as between the Charterer and
Simon) Simon shall be entitled to receive and retain any
requisition hire payable in respect of the period from the expiry
or termination of the Charter Period;
(b) the Charterer shall, if it is prevented by reason of the
requisition for hire from redelivering the Ship under Clause 18,
be relieved from its obligations so to do, but shall consult with
Simon as to the most convenient method of enabling Simon to
obtain redelivery of the Ship when the Ship is released from such
requisition; and
49
<PAGE> 55
(c) after such release the Charterer shall be given a reasonable
opportunity of removing any additional equipment as is referred
to in Clause 20.3 on the terms therein referred.
23.6 If the Ship shall be requisitioned for hire upon terms whereby the
Charterer is not relieved from its insurance obligations pursuant to the
proviso to Clause 16.1, insurance recoveries in respect of all claims
whatsoever (otherwise than in respect of a Total Loss) arising during
the period or requisition shall (to the extent to which such recoveries
have not been expended by the Charterer in repairs to the Ship) at the
end of the Charter Period be paid to the Owner and in respect of any
amount so paid the Charterer shall to that extent be relieved from its
obligations under the last sentence of Clause 18.1 and under Clause
20.3.
24. Termination Events
24.1 If the Charterer commits a repudiatory breach of any Relevant Document
or any Guarantor commits a repudiatory breach of the Guarantee Simon may
accept such breach as repudiation of this Charterparty.
24.2 Without prejudice to the generality of Clause 24.1, Simon and the
Charterer agree that it is a fundamental term and condition of this
Charterparty that none of the following events shall occur during the
Charter Period and that the occurrence of any of the following events
shall constitute a repudiatory breach of this Charterparty
(a) any Relevant Party fails to pay any sum payable by it under any
of the Relevant Documents when due or on demand within two (2)
Banking Days of such due date or date of demand (as the case may
be) or
(b) the Charterer falls to obtain and/or maintain the Insurances or
if any insurer in respect of any part of the Insurances cancels
any part of the Insurances or disclaims or repudiates liability
by reason, in either case, of any misstatement in any proposal
for the Insurances or for any other failure or default on the
part of the Charterer; or
(c) any Relevant Party commits any breach of or omits to observe any
of the obligations or undertakings expressed to be assumed by it
under any of the Relevant Documents (other than those referred to
in sub-clauses (a) and (b) above) and in respect of any such
breach or omission which in the opinion of Simon is capable of
remedy, such action as Simon may require shall not have been
taken within fourteen (14) days of Simon notifying any Relevant
Party of such default and of such required action;
(d) any representation or warranty made or deemed to be made or
repeated by any Relevant Party in or pursuant to any of the
Relevant Documents or any document, certificate or statement
referred to in or delivered under any of the Relevant
50
<PAGE> 56
Documents is or proves to have been incorrect in any material
respect when made or deemed repeated; or
(e) any Indebtedness of any Relevant Party becomes due or capable of
being declared due prior to the date when it would otherwise have
become due whether or not such breach or default shall be waived
by the person to whom the same is payable or is not paid on the
due date and in the opinion of Simon the ability of any Relevant
Party to perform all or any of its obligations under, or
otherwise to comply with the terms of any Relevant Documents
shall or may reasonably be expected to be materially adversely
prejudiced as a consequence thereof; or
(f) any consent, authorisation, license or approval of or
registration with or declaration to governmental or public bodies
or authorities or courts required by any Relevant Party to
authorise, or required by any Relevant Party in connection with,
the execution, delivery, validity, enforceability or
admissibility in evidence of any of the Relevant Documents or the
performance by any Relevant Party of its obligations under any of
the Relevant Documents is modified in a manner unacceptable to
Simon or is not granted or is revoked or terminated or expires
and is not renewed or otherwise ceases to be in full force and
effect; or
(g) a creditor attaches or takes possession of, or a distress,
execution, sequestration or other process is levied or enforced
upon or sued out against any of the undertakings, assets, rights
or revenues of any Relevant Party and is not discharged within
seven days; or
(h) any Relevant Party (other than Horizon Seismic Inc., where it is
affected by any of the following events or circumstances only as
a result of litigation successfully prosecuted against it)
suspends payment of its debts or becomes or is deemed to be
insolvent or unable to pay its debts within the meaning of
Section 123 of the Insolvency Act 1986 as they fall due or
commences negotiations with one or more of its creditors with a
view to the general re-adjustment or re-scheduling of all or part
of its Indebtedness or proposes or enters into any composition or
other arrangement for the benefit of its creditors generally or
any class of creditors or proceedings are commenced in relation
to any Relevant Party under any law, regulation or procedure
relating to reconstruction or readjustment of debts; or
(i) any Relevant Party takes any action or any legal proceedings are
started or other steps taken for (or for the consideration of)
(i) any Relevant Party to be adjudicated or found bankrupt or
insolvent, (ii) the winding-up or dissolution of any Relevant
Party or (iii) the appointment of a liquidator, trustee,
receiver, administrator or similar officer of any Relevant Party
of the whole or any part of their respective undertakings,
assets, rights or revenues; or
51
<PAGE> 57
(j) any event occurs or proceeding is taken with respect to any
Relevant Party in any jurisdiction to which it is subject which
has an effect equivalent or similar to any of the events
mentioned in Clauses 24.2 (g), (h) or (i); or
(k) any Relevant Party suspends or ceases or threatens to suspend or
cease to carry on its business; or
(l) all or a material part of the undertakings, assets, rights or
revenues of or shares or other ownership interests in, any
Relevant Party are seized, nationalised, expropriated or
compulsorily acquired by or under the authority of any
government; or
(m) any Relevant Party disposes or threatens to dispose of all or a
material part of its assets, whether by one or a series of
transactions, related or not, other than for the purpose of a
reconstruction or amalgamation the terms of which have received
the previous consent in writing of Simon; or
(n) there occurs, in the reasonable opinion of Simon, a material
adverse change in the financial condition of the Charterer or any
Guarantor by reference to the financial statements referred to in
Clause 2.1(f) of this Charterparty and Clause 5.1(i) of the
Guarantee respectively; or
(o) any of the Relevant Documents at any time and for any reason is
or becomes invalid or unenforceable or otherwise ceases to remain
in full force and effect, or the validity or enforceability of
any of the Relevant Documents at any time and for any reason is
contested by any party thereto (other than Simon), or any such
party denies that it has any, or any further, liability
thereunder or it becomes impossible or unlawful for the Charterer
or any other Relevant Party to fulfil any of its covenants and
obligations contained in any of the Relevant Documents; or
(p) any Relevant Party repudiates any of its obligations under the
Relevant Documents or does or causes or permits to be done any
act or thing evidencing an intention to repudiate any of its
obligations under the Relevant Documents; or
(q) the Ship is arrested, confiscated, seized, taken in execution,
impounded, forfeited, detained in exercise or purported exercise
of any possessory lien or other claim, or otherwise taken from
the possession of any Relevant Party or any operator thereof
other than pursuant to a breach of Clause 6.1 by Simon, as a
result of any Encumbrance directly created by Simon which
adversely affects the operation of the Ship and any Relevant
Party shall fail to procure the release of the Ship at the
earliest possible time and in any event within a period of
fourteen (14) days; or
52
<PAGE> 58
(r) the registration of the Ship is cancelled or terminated
(otherwise than upon the Ship being redocumented or its
registration transferred as contemplated by Clause 14.3) except
by reason of Simon's default in its obligations under Clause
14.2; or
(s) any other event (other than a Total Loss) occurs or state of
affairs exists which has or may reasonably be expected to have a
prejudicial effect on Simon's or the Owner's title to the Ship
(other than pursuant to a breach of Clause 6.1 by Simon or the
Owner as a result of any Encumbrance directly created by Simon or
the Owner which adversely affects the operation of the Ship) or a
prejudicial effect on its rights under any of the Relevant
Documents, or an adverse effect on the ability of any Relevant
Party to perform all or any of its obligations under, or
otherwise to comply with the terms of, any of the Relevant
Documents; or
(t) in the "requisite period", the Ship shall be used for any purpose
other than a "qualifying purpose" as those expressions are
described in Clause 13.2(e); or
(u) there shall occur a material adverse change, from the position
applicable immediately following Delivery, in the business,
affairs or condition (financial or otherwise) of any Relevant
Party the effect of which is (in the reasonable opinion of Simon)
materially to imperil, delay or prevent the due fulfillment by
any Relevant Party of any of their obligations and undertakings
contained in any of the Relevant Documents; or
(v) except with the prior written consent of Simon less than the
whole, or none, of the legal and beneficial ownership of the
issued share capital of the Charterer shall be owned, directly or
indirectly, by Exploration Holdings Limited.
25 Simon's Rights Following a Termination Event
25.1 At any time after any repudiation of this Charterparty by the Charterer,
including the occurrence of any Termination Event (and provided that the
same is continuing) Simon may, by notice to the Charterer, accept such
repudiation and immediately terminate the Charter Period (whereupon, as
the Charterer hereby agrees and acknowledges, the Charterer's right,
title and interest in and to the Ship and to possess and operate the
Ship, shall terminate) and retake possession of the Ship, (the Charterer
agreeing, in such circumstances, that Simon shall be entitled to retain
as part of the Ship (as between itself and the Charterer), any and all
equipment belonging to the Charterer (but not any such equipment as may
be leased from third parties who are not Relevant Parties or the Owner)
installed in or on the Ship (whether such equipment shall have been
installed pursuant to Clause 20.3 or otherwise, if for any reason title
thereto shall remain with the Charterer), and the Charterer agrees that
Simon may for this purpose enter upon any premises belonging to or in
the occupation or under the control of the Charterer where the Ship or
any part thereof may be located, and the Charterer shall pay to Simon
forthwith upon such termination such sum as shall equal the aggregate
of:
53
<PAGE> 59
(a) all amounts due under the Charterparty or any of the other
Relevant Documents as shall be payable and remain outstanding;
(b) all losses incurred by Simon in connection with such termination
including, without prejudice to the generality of the foregoing,
all costs and expenses so incurred in recovering possession of
the Ship, and in carrying out any works or modifications required
to bring the Ship up to the condition specified in Clause 18.1;
and the Charterer shall also pay to Simon forthwith upon such
termination by way of agreed compensation and not as a penalty, the
amount of the Termination Sum at the date of termination.
25.2 Without prejudice to the obligation of the Charterer to make the
payments referred to in Clause 25.1, upon any such termination as is
referred to in Clause 25.1 and provided that Simon shall not be
prevented from so doing for any reason whatsoever, Simon may (but shall
not be obliged to) elect (with the prior written consent of the Owner)
to endeavor to sell the Ship as soon as practicable. The Net Sale
Proceeds from any such sale shall be applied by Simon subject to Clause
10.4 as follows:
(a) the proportion of the Net Sale Proceeds attributable to the Goods
shall be calculated and subject to the rights and obligations of
the Owner in respect thereof paid to Simon for application in
accordance with the terms of the Master Lease; and the balance
shall be applied:
(b) Firstly, in or towards settlement of any amounts due and owing by
the Charterer to Simon under this Charterparty or any of the
other Relevant Documents other than the Goods Contracts
(including any interest due in respect thereof);
(c) Secondly, in settlement of all sums due to Simon under the Goods
Contracts insofar as such sums have not been satisfied by
application of the sums referred to in Clause 25.2(a);
(d) Thirdly, if the Charterer shall on or before the date of
application of the Net Sale Proceeds by Simon have paid the
Termination Sum, or a part thereof, in accordance with Clause
25.1, in or towards refunding by way of rebate of charterhire or
otherwise as appropriate to the Charterer the amount of the
Termination Sum or part thereof so paid by the Charterer
PROVIDED THAT an amount equal to two per cent (2%) of the Net Sale
Proceeds shall be retained by the Owner.
25.3 If the Charterer fails to comply with any of its obligations under this
Charterparty or any of the other Relevant Documents Simon may, without
being in any way obliged so to do,
54
<PAGE> 60
or responsible for so doing, and without prejudice to the ability of
Simon to treat that non-compliance as a Termination Event, effect
compliance on the Charterer's behalf, and if Simon incurs any
expenditure in effecting such compliance Simon shall be entitled
(without prejudice to Clause 25.1) to recover such expenditure from the
Charterer together with interest thereon at the Relevant Rate of
Interest from the date on which such expenditure is incurred by Simon
until the date of reimbursement thereof by the Charterer (both before
and after any relevant judgment).
25.4 The rights and remedies of Simon provided in this Charterparty are
cumulative and are not exclusive of any rights and remedies provided by
law.
26 Increased Costs, Funding Problems and Illegality
26.1 If the Owner notifies Simon that adequate and fair means do not exist
for calculating the variable portion of the charterhire then Simon shall
give notice thereof to the Charterer and Simon and the Charterer shall
meet together with the Owner to discuss the matter in good faith and,
unless within thirty (30) days of the giving of such notice the Owner,
Simon and the Charterer arrive, by negotiation in good faith, at an
alternative basis acceptable to each of them for continuing the Owner's
funding of its purchase of the Ship and/or continuing the chartering of
the Ship by the Owner to Simon and calculating the variable portion of
charterhire (and any alternative basis agreed in writing shall be
retroactive to and effective from the commencement of the relevant
period and shall continue until the Owner determines that circumstances
are such that such alternative basis may cease to be effective) the
Charterer shall indemnify Simon from and against all liability, loss or
expense suffered or incurred by Simon during the relevant period
(provided that Simon shall take all reasonable steps as may be open to
it to mitigate the effect of this Clause) and charterhire shall be
adjusted as provided and for so long as shall apply pursuant to Clause
26.1 of the Simon Charterparty.
26.2 If any law, regulation or regulatory requirement or any judgment, order
or direction of any court, tribunal or authority binding upon Simon in
the jurisdiction in which it is formed or in which any action is
required to be performed by it for the purposes of any of the Relevant
Documents (whether or not in force before the date of this Charterparty)
renders it unlawful for Simon to continue to charter the Ship to the
Charterer under this Charterparty or for the Owner to continue to
charter the Ship to Simon under the Simon Charterparty, Simon shall
promptly inform the Charterer and Simon and the Charterer shall both be
entitled by written notice to the other to terminate the Charter Period.
Such termination shall be deemed to be a voluntary termination of the
Charter Period in accordance with Clause 3.3 (notwithstanding that such
termination shall not have occurred on a date falling on or after the
first (1st) anniversary of the Delivery Date or that Simon shall not
have received two hundred and ten (210) days' notice thereof) and the
provisions of Clauses 3.3 to 3.5 shall apply thereto.
27 Notices
55
<PAGE> 61
27.1 Every notice, request, demand or other communication under this
Charterparty shall:
(a) be in writing delivered personally or by prepaid first class
letter, telex or facsimile transmission (confirmed in the case of
a telex or facsimile transmission, by prepaid first class letter
sent within 24 hours of despatch but so that the non-receipt of
such confirmation shall not affect in any way the validity of the
telex or facsimile transmission in question);
(b) be deemed to have been received, subject as otherwise provided In
this Charterparty, in the case of a telex, at the time of
despatch with confirmed answerback of the addressee appearing at
the beginning and end of the communication, in the case of a
facsimile translation, at the time of despatch with confirmation
that the communication was well received (Provided that, in the
case of a telex or facsimile transmission, if the date of
despatch is not a business day in the country of the addressee it
shall be deemed to have been, received at the opening of business
on the next such business day), and in the case of a letter, when
delivered personally or five (5) days after being put in the
post;
(c) be sent:
(1) to Simon:
Simon-Horizon Limited
Horizon House
Azalea Drive
Swanley
Kent BR8 8JR
Telex: 8960SO EXPLOR G
Fax: 0322 613650
(Attention: Company Secretary)
and copied to:
Simon Engineering plc
Simon House
Bird Ball Lane
Stockport
Cheshire SK3 ORT
Telex: 665923 SIKENG G
Fax: 061 491 2472
(Attention: Company Secretary)
(2) to the Charterer:
56
<PAGE> 62
Horizon Exploration Limited
6 Pembroke Road
Sevenoaks Kent TN13 1XR
Telex: 957840 EXPLOR G
Fax: 0732 742977
(Attention: Company Secretary)
or to such other address, telex number or facsimile number as is
notified by one party to the other under this Charterparty.
28 Assignment
28.1 Save as hereinafter provided, neither Simon nor the Charterer may assign
or otherwise transfer any of its rights or obligations under this
Charterparty without the prior written consent of the other party hereto
PROVIDED ALWAYS that Simon may with the consent of the Owner assign or
otherwise transfer any or all of its rights under, and the benefit of,
this Charterparty without the consent of the Charterer, except that
Simon shall not without the prior written consent of the Charterer (such
consent not to be unreasonably withheld or delayed) so assign or
otherwise transfer any or all of such rights and benefit to an assignee
who is a business competitor of the Charterer (which shall, for the
purposes hereof have the same meaning as "Business Competitor of HEL" as
defined in the Agreement). In the event of any such assignment or
transfer by Simon, such assignment or transfer shall not impose any
greater liabilities on the Charterer at the date of completion thereof
towards Simon than those liabilities which the Charterer would have had
to Simon had no such assignment or transfer taken place.
29 Miscellaneous
29.1 This Charterparty contains the entire agreement between Simon and the
Charterer relating to the chartering of the Ship, and the terms and
conditions of this Charterparty shall not be varied otherwise than by an
instrument in writing of even date herewith or subsequent hereto
executed by or on behalf of Simon and the Charterer.
29.2 No failure or delay on the part of Simon in exercising any right, power
or remedy under this Charterparty shall operate as a waiver thereof nor
shall any single or partial exercise by Simon of any such right, power
or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided in this
Charterparty are cumulative and are not exclusive of any remedies
provided by law.
29.3 Subject to the periods of grace referred to in Clause 24, time shall be
of the essence as regards the performance by the Charterer of its
obligations under this Charterparty.
29.4 All rights and liabilities in respect of the Ship by way of General
Average shall be for the account of the Charterer.
57
<PAGE> 63
29.5 If any term or provision of this Charterparty or any of the other
Relevant Documents or the application thereof to any person or
circumstances shall to any extent be invalid or unenforceable, the
remainder of this Charterparty and the other Relevant Documents or
application of such term or provision to persons or circumstances (other
than those as to which it is already invalid or unenforceable) shall not
be affected thereby and each term and provision of this Charterparty and
the other Relevant Documents shall be valid and be enforceable to the
fullest extent permitted by law.
29.6 The Charterer authorises Simon without prejudice to any of Simon's
rights of set-off at law, in equity or otherwise, at any time and with
notice to the Charterer to set off or withhold from any sum or sums
expressed in this Charterparty or one of the other Relevant Documents to
be payable to the Charterer by Simon any amount due and payable to Simon
from the Charterer under this Charterparty or any of the other Relevant
Documents. For any such purpose Simon is authorised to purchase with
the sums which would but for this Clause 29.6 be so payable to the
Charterer, such other currencies as may be necessary to effect such set
off or withholding. Simon shall not be obliged to exercise any right
given to it by this Clause 29.6. Simon shall notify the Charterer
forthwith upon the exercise or purported exercise of any right of
set-off or withholding full details in relation thereto.
29.7 The Charterer undertakes that it will at its expense execute, sign,
perfect and do any and every such further assurance, document, act or
thing as in the reasonable opinion of Simon may be necessary or
desirable to carry out the purpose of this Charterparty or any of the
other Relevant Documents or protect or enforce any right of Simon
hereunder or thereunder or the title of Simon or the Owner in the Ship.
29.8 In the event of any conflict between this Charterparty and any of the
other Relevant Documents, the provisions of this Charterparty shall
prevail.
30 Law
30.1 This Charterparty is governed by and shall be construed in accordance
with English law.
IN WITNESS whereof the parties hereto have entered into this Charterparty the
day and year first above written.
58
<PAGE> 64
SCHEDULE 1
List of Documents and Evidence
1. A copy certified by a Director or the Secretary of the relevant person
to be a true, complete and up-to-date copy, of the Certificate of
Incorporation and Memorandum and Articles of Association of the
Charterer and each of the Relevant Parties.
2. A copy, certified by a Director or the Secretary (or similar officer) of
the relevant person to be a true copy, and as being in full force and
effect and not amended or rescinded, of resolutions of the board of
directors of each of the Charterer and the other Relevant Parties:
(i) approving the transactions contemplated by such of the Relevant
Documents to which the relevant person is a party;
(ii) authorising a person or persons to sign and deliver on behalf of
the relevant person or, as the case may be, authorising the
sealing by the relevant person of the Relevant Documents to which
it is a party and any notices or other documents to be driven
pursuant thereto.
3. A copy certified by a Director or the Secretary (or similar officer) of
the relevant person to be a true copy, and as being in full force and
effect and not revoked or withdrawn, of any power of attorney issued by
the relevant person pursuant to the said resolutions.
4. A list, certified as true, complete and up to date by a Director or the
Secretary (or similar officer) of each of the Relevant Parties of its
directors and officers.
5. Evidence that all governmental and other licenses, approvals, consents,
registrations and filings necessary for any matter or thing contemplated
by the Relevant Documents and for the legality, validity,
enforceability, admissibility in evidence and effectiveness thereof have
been obtained or effected on an unconditional basis and remain in full
force and effect (or, in the case of effecting of any registrations and
filings, that arrangements satisfactory to Simon have been made for the
effecting of the same within any applicable time limit).
6. Evidence that, on Delivery, the Ship is and will remain insured in
accordance with the provisions of this Charterparty and all requirements
of this Charterparty in respect of such insurance have been complied
with.
7. Evidence that on delivery, the Goods will be insured in accordance with
the provisions of the Master Lease and all requirements of the Master
Lease in respect of such insurance have been complied with.
59
<PAGE> 65
8. The Agreement duly executed by the Charterer.
9. The Guarantees duly executed by the Guarantors.
10. An Assignment Agreement between Simon and the Charterer in respect of
the Management Agreement.
11. Such legal opinions as Simon may require in relation to the laws of any
jurisdiction to which any Relevant Party is or may be subject or which
may affect the perforce of the obligations of any Relevant Party.
60
<PAGE> 66
SCHEDULE 2
Excluded Equipment, Retained Equipment and Additional Equipment
Part I EXCLUDED EQUIPMENT
1 Herringbone System
64 TI Sleeve Guns
2 Umbilical Winches, MPD
2 Umbilical Winches, low pull, MPD
4 Slipring Units
4 Stowing Winches
1 Air Conditioning Unit, Instrument Room
1 Streamer Reel, MPD
1 Litton Streamer, 20 Sections
36 Syntrak Digitising Modules
1 Uninterruptible Power Supply Unit 1040 S/25
1 Uninterruptible Power Supply Unit AST 3350/380/60
1 Umbilical Reel, accessories, scrivers
4 Hamworthy Compressors 4TH 565W 100
1 Lasertrak System
PART II RETAINED EQUIPMENT
1 IBM RS 6000/370W/128Mb
4 IBM Disc Drives & Enclosure
2 IBM Disc Drives Internal
1 IBM Exabyte Tape Drive
2 Fujitsu Cartridge Tape Controller
3 Fujitsu Tape Streamer & Autoloader
3 Power Supply Unit
1 Laser Printer, QMS PS815
1 Colour Monitor, Keyboard, Mouse
SCSI Controllers, Planers, Graphics Adapter, Plotter Board,
Sterling Card
PART III ADDITIONAL EQUIPMENT
Digicourse Acoustic System US$750,000
3D Binning System US$200,000
61
<PAGE> 67
SCHEDULE 3
Charterhire
1 Definitions
1.1 In addition to the definitions comprised in Clause 1 and Schedule 4 of
this Charterparty the following expressions shall have the following
meanings:
"Accounting Period" means an accounting period for the
purposes of section 12 ICTA;
"Applicable Rate" means in relation to any Interest
Reference Period where the Applicable
Rate is being applied to a negative
balance of Notional Capital Outstanding,
the greater of (i) LIBOR for that period
and (ii) 7 per cent per annum, in either
case, plus the Reserve Asset Rate for
that period;
"Assumptions" means the assumptions set out in
paragraph 3 of this Schedule 3;
"Corporation Tax
Applicable Rate" means in relation to any Accounting Period
of the Owner, the effective rate of
Corporation Tax which is or would be
applicable to companies generally in
respect of taxable profits (if there were
such profits and ignoring for this purpose
the special rate applicable to small
companies) of such Accounting Period, such
rate to be a weighted average calculated
on a time apportionment basis where
different rates apply for more than one
Financial Year within which such
Accounting Period falls. Without
prejudice to the foregoing, if, at any
date on which a calculation is to be made
hereunder, the Corporation Tax rates are
fixed retrospectively or for some other
reason the relevant rate is not known at
the time, such calculation shall (without
prejudice to any provision of this
Schedule providing for such calculation to
be adjusted
62
<PAGE> 68
once the rate of Corporation Tax is
fixed by law) be made on the basis that
the rate of Corporation Tax last fixes
will not change;
"Final Date" means the date falling nine months and
one day after the last day of the
Accounting Period of the Owner in which
(i) the last Primary Period
Charterhire (or any adjustment
thereto) falls due to be paid; or
(ii) any Termination Sum (or any
adjustment thereto) falls due to
be paid;
whichever is later;
"Financial Year" has the meaning given to that expression
in Schedule 1 of the Interpretation Act
1978;
"Interest Payment Date" means, for any Interest Reference
Period, the date specified in respect
thereof in Column 2 of the table annexed
to this Schedule 3, or if any such date
is not a Banking Day, the immediately
preceding Banking Day;
"Interest Reference
Period" means each of the following successive
periods:
(i) the period commencing on 1st
April, 1991 and ending on 30th
June, 1991, and thereafter each
successive period of three (3)
months commencing on the date
specified in Column 1 of the table
annexed to this Schedule 3 and
ending on the day immediately
preceding the first day of the
next Interest Reference Period;
and
(ii) the period from the expiry of the
last three (3) month period
referred to in (1) above to the
Final Date;
63
<PAGE> 69
"LIBOR" means in relation to any Interest
Reference Period, the annual percentage
rate of interest (as certified by The
Royal Bank of Scotland plc whose
certificate shall in the absence of
manifest error be conclusive and
binding) at which deposits in Pounds for
the period in question in amounts
comparable with the sum in respect of
which such interest rate falls to be
determined were offered by The Royal
Bank of Scotland plc to prime banks in
the London Interbank Market at or about
11.00 a.m. on the first day of such
period or, if such day is not a Banking
Day then on the immediately preceding
day which is a Banking Day;
"Notional Capital
Outstanding" means the amount of the Owner's
investment in the Charterparty from time
to time;
"Owner's Group" means all those companies which at any
particular time constitute a group of
companies for the purposes of the
provisions relating to group relief
contained in Chapter IV Part X ICTA and
of which the Owner is a member;
"Owner's Return" means the Owner's after-tax profit take
out rate of return;
"Pre-Primary
Applicable Rate" means in relation to any Pre-Primary
Interest Reference Period where the
Pre-Primary Applicable Rate is being
applied to a negative balance of
Notional Capital Outstanding, the
greater of (i) Pre-Primary LIBOR for
that period and (ii) 7 per cent per
annum, in either case, plus the Reserve
Asset Rate for that period;
"Pre-Primary Interest
Payment Date" means each of 31st December 1990 and
31st March 1991;
"Pre-Primary Interest
Reference Period" means each of the following successive
periods:
64
<PAGE> 70
(i) the period commencing on the
"Delivery Date" (which, for the
purposes of this and the two next
following definitions means
"Delivery Date" as defined for the
purpose of the Simon Charterparty)
and ending on 31st December 1990;
(ii) the period commencing on the
expiry of the period referred to
in (i) above and ending on the
date three (3) months thereafter;
"Pre-Primary LIBOR" means, in relation to any Pre-Primary
Interest Reference Period, the annual
percentage rate of interest (as certified by
The Royal Bank of Scotland plc whose
certificate shall in the absence of manifest
error be conclusive and binding) at which
deposits in Pounds for a period of one month
in amounts comparable with the sum in
respect of which such interest rate falls to
be determined were offered by The Royal Bank
of Scotland plc to prime banks in the London
Interbank Market at or about 11.00 a.m. on
the first day of such period or, if such day
is not a Banking Day then on the immediately
preceding day which is a Banking Day;
"Pre-Primary Period" means the period commencing on the "Delivery
Date" and ending on the last day of the last
Pre-Primary Interest Reference Period;
"Primary Period
Charterhire" means the charterhire calculated and payable
in accordance with paragraph 2 of this
Schedule 3 and, where applicable, as
adjusted in accordance with paragraph 4 of
this Schedule 3;
"Reference Rate" means thirteen (13) per cent per annum;
65
<PAGE> 71
"Reserve Asset Rate" means for any period the annual percentage
rate of interest derived from the following
formula:
CL+D(L-X)+(M-D)(L-T)+S(L-Z)% per annum
100-(C+S+M)
Where
C = The amount required to be held on
non-operational non-interest bearing
deposit account with the Bank of England
pursuant to the Cash Ratio deposit
requirement of the Bank of England,
expressed as a percentage of The Royal
Bank of Scotland plc's Eligible
Liabilities (the "Cash Ratio Deposit")
L = LIBOR
D = The amount required to be held on
secured Loans to members of the London
Discount Market Association and/or on
secured call Loans with those money
brokers and gilt-edged primary market
makers recognised for this purpose by
the Bank of England, expressed as the
normal average percentage of The Royal
Bank of Scotland plc's Eligible
Liabilities to be so maintained
("Discount House Deposits")
X = The rate of interest per annum at which
Sterling deposits can be places on
secured Loan with a member of the London
Discount Market Association at or about
11.00 on the relevant day for a period,
comparable to the relevant Interest
Reference Period or for three months,
66
<PAGE> 72
whichever is the shorter. ("Discount
House Deposit Rate")
M = The amount required by the Bank of
England to be maintained in specific
liquid assets, expressed as the normal
average percentage of The Royal Bank of
Scotland plc's Eligible Liabilities to
be so maintained ("Mandatory Liquid
Assets")
T = The yield on Treasury Bills having a
period remaining to maturity comparable
to the relevant Interest Reference
Period, or for 91 days, whichever is
shorter. If for 91 days the yield shall
be calculated by reference to the
average discount rate for Treasury Bills
at the tender as published by the Bank
of England weekly, usually on Friday; if
for any lesser period the yield shall be
calculated by reference to the discount
rate quoted for the sale of Treasury
Bills having that period remaining to
maturity by a member of the London
Discount Market Association at or about
11.00 a.m. on the relevant day
("Treasury Bill Yield")
S = The amount required to be placed as
Special Deposits with the Bank of
England, expressed as a percentage of
The Royal Bank of Scotland plc's
Eligible Liabilities ("Special
Deposits")
Z = The rate of interest, per annum, allowed
by the Bank of England, from time to
time, on Special Deposits ("Interest on
Special Deposits")
67
<PAGE> 73
In making any calculation under this
formula:
any negative factor shall be given
the value zero; and
each calculation shall be rounded
up to the next one-sixteenth per
cent.
Provided that if such formula ceases in
the reasonable opinion of The Royal Bank
of Scotland plc to be a realistic and
accurate basis for calculating the cost
of The Royal Bank of Scotland plc
complying with any reserve assets,
interest free, special deposit or other
requirements of a similar nature imposed
on it by any competent authority
(including, without limitation, the Bank
of England) with similar intent (whether
or not such requirements have the force
of law) or if such a cost is imposed
directly on the Owner then the Owner
shall be entitled to modify, expand or
replace such formula to the extent that
the Owner in its discretion and acting
in good faith considers necessary to
make it a realistic basis for recovery
of any reserve asset costs arising in
connection with the funding of the
transactions contemplated by this
Charterparty provided that any
modification, expansion or replacement
shall be of similar effect to other
formulae having a like purpose being or
to be applied by clearing banks or
(where such cost is imposed directly on
the Owner) of undertakings comparable to
the Owner in the United Kingdom;
"Secondary Period
Charterhire" means the charterhire calculated and
payable in accordance with paragraph 6
of this Schedule 3;
"Variable Assumption" means each of the Assumptions set out in
paragraphs 3(i) - (xx) (inclusive) of
this Schedule 3;
68
<PAGE> 74
1.2 For the purposes of this Schedule 3, references to the Ship shall
exclude references to the Goods.
2 Primary Period Charterhire
2.1.1 During the Primary Period the Charterhire payable on each
Charterhire Payment Date shall be L.14.768 per L.1000 of Original
Cost.
2.1.2 The Charterhire equates to a monthly rental of L.172,434 based on
a capital cost of L.11,699,962.05.
2.2 Charterhire in respect of the Primary Period shall be payable in monthly
installments in arrears on the first day of each month up to (and
including) 1st April 2001.
2.3 Each Primary Period Charterhire shall be subject to adjustment in the
manner specified in paragraph 4 of this Schedule 3.
3 Assumptions in relation to Primary Period
The Primary Period Charterhire has been calculated on the following
Assumptions:
(i) that the Original Cost would be incurred in seven installments in
the following amounts on the following dates:
<TABLE>
<CAPTION>
Date Amount per L.1,000
of Original Cost
<S> <C>
20.12.90 470.09
31.12.90 109.63
25.02.91 65.17
28.03.91 355.11
</TABLE>
and;
(ii) that the Primary Period would commence on 31st March 1991; and
(iii) that in accordance with the provisions of Chapter I Part II CAA
writing down allowances of 25 per cent per annum on a reducing
balance basis in respect of Original Cost will be available to
the Owner such writing down allowances to commence in respect of
all installments of Original Cost in the Accounting Period of the
Owner ending 31st March 1991 and to continue in each subsequent
Accounting Period of the Owner until the Accounting Period of the
Owner in which the Primary Period expires by effluxion of time,
that the writing down
69
<PAGE> 75
allowances so available will not be withdrawn, either wholly or
in part, and that there will be no delay in the agreement of the
Owner's claim for such allowances; and
(iv) that the Ship will be sold in the Accounting Period of the Owner
in which the Primary Period expires by effluxion of time and that
the amount which the Owner is required to bring into account as
disposal value on such sale in accordance with section 24 (6) CAA
will be the balance of the Original Cost on which writing down
allowances are assumed to be available for that Accounting Period
by assumption (iii) above; and
(v) that any interest paid or assumed to be paid in respect of funds
borrowed or assumed to be borrowed by the Owner for the purpose
of this transaction is or would had it actually been paid have
been allowed as a trading expense or as a charge on income in the
Accounting Period of the Owner to which such interest relates or
is paid (or assumed to be paid); and
(vi) that in the "requisite period" (as that expression is defined in
section 40 CAA) the Ship will not be used for a purpose which
results in section 42 CAA applying; and
(vii) that, in relation to Original Cost, no charge will arise under
section 46 CAA in respect of any excess relief (as therein
defined) or under section 42 CAA as the same may be amended,
extended, substituted or replaced from time to time; and
(viii) that any losses for taxation purposes arising to the Owner in
connection with the transactions contemplated by this
Charterparty (including losses arising as a result of the
availability of the said allowances) will be available for offset
against other profits of the Owner pursuant to section 393(2)
ICTA or for surrender by way of group relief in accordance with
the provisions of sections 402 to 413 ICTA (as amended, and in
force, as at the date hereof) and that there will be no change in
the law or practice in relation to group relief which would
affect or in any way restrict the Owner's ability to surrender
such losses to any company in the Owner's Group or the ability of
any company in the Owner's Group to whom such losses are
surrendered to claim or enjoy the benefit of such surrender; and
(ix) that the Corporation Tax Applicable Rate applicable to Accounting
Periods of the Owner commencing on or after 1st April 1990 and
ending with the Accounting Period of the Owner in which the Final
Date falls will be 35 per cent; and
(x) that the Owner will not be required to bring into account as
disposal value (within the meaning of and in accordance with the
provisions of section 24 CAA) in respect of the Original Cost an
amount greater than the Net Sale Proceeds and/or insurance
proceeds in respect of the Ship actually received by the Owner;
and
70
<PAGE> 76
(xi) that no change occurs in the nature, method or application of any
relevant United Kingdom taxation by reason of any enactment,
provision, practice or ruling of or by any authority, whether
legislative, judicial, administrative or revenue, after the date
of this Charterparty; and
(xii) that the provisions of section 10 ICTA will not be amended after
the date hereof so as to result in the Owner first becoming
liable to pay any Corporation Tax on profits for any Accounting
Period on a date other than the date which is nine months and one
day after the end of that Accounting Period; and
(xiii) that the Owner will not be required by law or accounting practice
to draw up its accounts for any period other than 12 months
and/or as at any date other than 31st March in any year; and
(xiv) that the only amounts which the Owner will be required to bring
into account as income in calculating its profits by reference to
the chartering of the Ship will be the charterhire in Pounds
payable pursuant to paragraph 2 of Schedule 3 to the Simon
Charterparty; and
(xv) that all installments of charterhire to be received by the Owner
under the Simon Charterparty will be fully taxable on their full
amount in the Accounting Period of the Owner in which they fall
due to be paid; and
(xvi) that the Pre-Primary Applicable Rate will be equal to the
Reference Rate; and
(xvii) that the Owner would incur professional fees and disbursements of
L.2 per L.1000 of Original Cost (exclusive of Value Added Tax) in
respect of the transactions contemplated by the Simon
Charterparty excluding the funding arrangements; and
(xviii) that the fees incurred by the Owner referred to in paragraph
(xvii) above would be deductible as a trading expense in the
Accounting Period of the Owner in which such fees are (or were)
payable; and
(xix) that the interest assumed to be received and paid in Assumptions
(xxii) and (xxiv) will be treated as accruing on a daily basis
for the purpose of Corporation Tax and will be accrued on
positive or negative balances of Notional Capital Outstanding (as
the case may be) until the Final Date; and
(xx) (1) that all losses arising in an Accounting Period of the
Owner as referred to in assumption (viii) will be
surrendered to members of the Owner's Group;
(2) that the Owner will receive payments for group relief on
the date assumed to be the date for payment of Corporation
Tax by the Owner in assumption (xii), that no refund of
such payments shall be made by the Owner and
71
<PAGE> 77
that, in accordance with section 402(6) ICTA, such
payments will not be taken into account (either as a
receipt or a deduction) for Corporation Tax purposes; and
(xxi) that the Inland Revenue will not treat the respective disposal
values of the Ship (excluding the Goods) and the Goods as being
any amount different from that assumed by the Owner; and
(xxii) that on the Interest Payment Date in respect of each Interest
Reference Period during which the Notional Capital Outstanding is
(i) a negative figure the Owner will pay interest calculated
on a daily basis using a 365 day year on the daily
balances of Notional Capital Outstanding during such
Interest Reference Period at the Reference Rate; or
(ii) a positive figure the Owner will receive interest
calculated on a daily basis using a 365 day year on the
daily balances of Notional Capital Outstanding during such
Interest Reference Period at a rate of 7 per cent per
annum; and
(xxiii) the acquisition of the Ship by the Owner, its conversion pursuant
to the Conversion and Supply Agreement, the chartering of the
Ship under the Simon Charterparty, the sale of the Ship by the
Owner under the Simon Charterparty and the funding of the
transactions in relation thereto are the only transactions
carried out by the Owner and the Owner shall be regarded as
having no assets in respect of which capital allowances are
available other than the Ship provided that nothing in this
paragraph shall deem a balancing allowance to be received by the
Owner at any time; and
(xxiv) that on each Pre-Primary Interest Payment Date in respect of each
Pre-Primary Interest Reference Period during which Notional
Capital Outstanding is a negative figure, the Owner will pay
interest at the Pre-Primary Applicable Rate calculated on a daily
basis using a 365 day year on the daily balances of Notional
Capital Outstanding during each Pre-Primary Interest Reference
Period and that such interest is compounded on 31st December 1990
and 31st March 1991; and
(xxv) that no fees would be payable to London Financial Group Limited;
and
(xxvi) that the interest referred to in assumptions (xxii) and (xxiv)
will be payable to a person carrying on a bona fide banking
business in the UK.
4 Adjustments to Primary Period Charterhire
4.1 Change in Assumptions
72
<PAGE> 78
On or as soon as reasonably practicable after any date on which the
Owner becomes aware or is notified by Simon or the Charterer that there
has been a change in any of the Variable Assumptions on the basis of
which the Primary Period Charterhire has been calculated and the effect
of such change would require the Primary Period Charterhire to be
adjusted if the Owner's Return is neither to be increased or decreased,
the Owner shall notify Simon who shall notify the Charterer of the
amount by which the Primary Period Charterhire is required to be
adjusted upwards or downwards. Any such adjustment shall:
(a) subject to sub-paragraphs (b) and (c) below, be calculated on the
same basis as the Primary Period Charterhire was calculated and
by reference to the Assumptions in order to ensure that the
Owner's Return is neither increased nor decreased; and
(b) take into account any changes in any of the Variable Assumptions
which have occurred (and are known to the Owner) between the date
of this Charterparty and the date of notification of such
adjustment; and
(c) be such as to ensure that, subject to the payment by the
Charterer of the adjusted Primary Period Charterhire on each
subsequent Charterhire Payment Date and on the basis that each
installment of the adjusted Charterhire shall bear to each other
such installment the same ratio as each installment of the
Primary Period Charterhire has to each other Primary Period
Charterhire installment, the Notional Capital Outstanding on the
Final Date will be zero or as near thereto as may be.
4.2 Adjusted Primary Period Charterhire
As from the date any notification of adjusted Primary Period Charterhire
is to take effect in accordance with this Charterparty the amount of
Charterhire to be paid on each Charterhire Payment Date during the
Primary Period shall be the adjusted Primary Period Charterhire so
notified.
4.3 Change in Assumptions after the Primary Period
If the Owner shall become aware or is notified by Simon or the Charterer
that there has been a change in any of the Variable Assumptions on the
basis of which any Primary Period Charterhire has been calculated at a
time when no Primary Period Charterhire remains to be paid the Owner
shall as soon as reasonably practicable determine a single amount
calculated on the basis of the Assumptions but taking into account any
changes in any of the Variable Assumptions which have occurred and are
known to the Owner between the date of the Simon Charterparty and the
date of such calculation which shall be either payable by Simon to the
Owner by way of additional Charterhire or by the Owner to Simon by way
of rebate of Charterhire and which amount shall be calculated so that
the Owner's Return is neither increased nor decreased. No account shall
be taken of a change in a Variable Assumption occurring more than six
years after the last day of
73
<PAGE> 79
the Accounting Period in which the final installment of Primary Period
Charterhire falls to be paid.
4.4 Correcting adjustments
If a Variable Assumption which has been regarded as incorrect
subsequently proves to have been correct or to be incorrect in a
different manner or with a different effect from that which such
Assumption was originally regarded as incorrect, then, such further
adjustments shall be made under paragraph 4 as may be required to ensure
that the Owner's Return is the same as it would have been had the
relevant Assumption (and all such other Assumptions) proved to be
correct at all times (but fully taking into account the amount of any
previous adjustments).
4.5 Exclusion of Adjustments
No adjustment of charterhire shall be made under Paragraph 4 if and to
the extent that any of the Variable assumptions shall prove to be
incorrect solely as a result of:
(i) otherwise than as a result of Assumption (xi) proving to be
incorrect, the Owner not being or ceasing to be resident in the
UK for the purpose of Corporation Tax or not being or ceasing to
be within the charge to Corporation Tax in respect of the Ship;
(ii) otherwise than as a result of Assumption (xi) proving to be
incorrect or a default by Simon under the Simon Charterparty or
by the Charterer, the Owner (or any member of the Owner's Group
to which it might surrender or purport or wish to surrender group
relief) not having a sufficiency of profits, or gains or income,
in any Accounting Period or part thereof;
(iii) otherwise than as a result of Assumption (xi) proving to be
incorrect, the Owner (or member of the Owner's Group as
aforesaid) voluntarily causing any or permitting any of its
Accounting Periods to be other than twelve months ending on a
date other than on 31st March in each year;
(iv) the Owner failing duly to claim in the appropriate amount and in
the correct manner or disclaiming any capital allowance to which
it is properly entitled (or to which but for any of the facts or
circumstances referred to in this paragraph 4.5 it would be
properly entitled) in respect of the Ship;
(v) the Owner disposing of the Ship (or any interest therein)
otherwise than in accordance with or as contemplated by the Simon
Charterparty;
(vi) the Owner materially failing to meet its obligations under clause
2.5 and/or clause 3.4 of the Conversion and Supply Agreement;
74
<PAGE> 80
4.6 Notification and Disputes
(a) Simon shall endeavor to procure that the Owner shall certify in
writing the amount of any calculation or adjustment under
Schedule 3 or Schedule 4 or the determination of any rate of
interest or other amount payable together with reasonably
sufficient detail to substantiate such calculation, adjustment or
determination and in the event of there being a dispute as to the
amount of such calculation, adjustment or determination, then
without prejudice to the obligation of the Charterer to pay
amounts as certified pending resolution of such dispute, the same
shall immediately be referred to the auditors for the time being
of the Owner ("the Accountants") (acting as experts and not as
arbitrators) whose decision shall, in the absence of manifest
error, be final and binding on the parties.
(b) Simon shall endeavor to procure that the Owner shall supply to
the Accountants a copy of the example cash flow on which the
Owner has based the calculation of Primary Period Charterhire and
the Owner shall provide the Accountants with any revised cash
flow on the basis of which the Owner calculates an adjustment to
the charterhire payable hereunder.
(c) Where the decision of the Accountants results in an adjustment to
any calculation certified as aforesaid by the Owner, such payment
shall be made between the parties as the Accountants (acting as
experts and not as arbitrators) shall certify as appropriate to
give effect to such adjustment (after taking into account any
financial or cash flow advantage or disadvantage to either of the
parties resulting from the making of such adjustments and
payments). The costs of and in connection with such reference to
the Accountants shall unless otherwise agreed, be payable by the
Charterer unless the Accountants' decision shall reveal that the
Owner's calculation of such adjustment or determination was
significantly inaccurate, having regard to the size of the
transaction of which the Simon Charterparty forms part and the
result thereof would have been adverse to Simon and the
Charterer.
(d) Simon shall notify the Charterer of any notification received by
it from the Owner of any communication ("Claim") it receives from
the Inland Revenue indicating that any matter relating to or
affecting the correctness of any of the Variable Assumptions
and/or Variable Termination Assumptions is being disputed by the
Inland Revenue and as a result there is or it appears that there
is likely to be an upward adjustment of charterhire under the
Agreement or upward adjustment in the Termination Sum.
(e) Following such notification and provided that Simon continues to
receive from the Charterer all amounts of Charterhire and all
other sums payable under this Charterparty Simon shall endeavor
to procure discussions with the Owner concerning the Claim with
Simon and the Charterer and Simon shall (subject to
75
<PAGE> 81
the prior written consent of the Owner having been obtained)
provide the Charterer such relevant extracts of the
correspondence with the Inland Revenue concerning such Claim as
it receives from the Owner. It is, for the avoidance of doubt,
accepted and agreed by the Charterer that the Owner shall not be
required to provide any information or correspondence which is in
the opinion of the Owner confidential or of a sensitive nature
having regard to the business of the Owner or of the Owner's
Group. Such discussions (if any) shall take place with a view to
agreeing the form and content of the Owner's response to such
Claim.
(f) If the subject matter of the Claim is not resolved by negotiation
with the Inland Revenue Simon will at the request of the
Charterer require the Owner to obtain (at the expense of the
Charterer) the opinion of leading tax counsel ("Counsel")
concerning the merits of the subject matter of the claim. The
Owner and Simon, after consultation with the Charterer, will
instruct such Counsel as the Owner and Simon may mutually agree
provided that if the parties shall not reach such agreement the
Owner shall instruct the Counsel of its choice. The Owner's
legal advisers will prepare Instructions to Counsel. Simon,
after consultation with the Charterer, may make representations
as to the contents of such Instructions but the Owner shall not
be obliged to reflect those representations in the Instructions
submitted to Counsel. Simon, after consultation with the
Charterer and its professional advisers, may attend any
conference with Counsel save that Simon and its professional
advisers shall withdraw from such conference at the request of
the Owner when in the opinion of the Owner matters which in the
Owner's opinion are confidential or of a sensitive nature having
regard to the business of the Owner or the Owner's Group may be
discussed during such conference.
(g) The Owner shall have the sole right to decide whether to pursue
any appeal to the Special or General Commissioners (as the case
may be) or beyond. The Owner and Simon, after consultation with
the Charterer, agree to consult in such circumstances with a view
to agreeing whether or not any application for postponement of
payment of tax should be made.
(h) Simon has agreed, but as between Simon and the Charterer, for the
account of the Charterer to keep the Owner indemnified against
any costs, expenses or charges (including, without limitation,
interest or penalties in respect of Taxes) arising to or incurred
by the Owner in respect of any action taken by the Owner under
the provisions of sub-paragraph 4.6(d) to (g) or their equivalent
in the Simon Charterparty (inclusive) and it shall be a condition
precedent to the Owner's obligations under those sub-paragraphs
that Simon (but only if properly indemnified and secured to
Simon's satisfaction by the Charterer) shall provide or procure
security to the reasonable satisfaction of the Owner in respect
of its obligations under this paragraph 4.6(h).
76
<PAGE> 82
4.7 Limitation
In the event of any assignment or transfer of the Simon Charterparty by
the Owner pursuant to Clause 28 other than to a member of the Owner's
Group the Charterer shall have or incur (at that or at any subsequent
time) no greater liability to pay any charterhire, additional
charterhire, Termination Sum or other moneys under the Charterparty or
have or enjoy (at that or any subsequent time) any lesser entitlement to
a reduction, refund, repayment or rebate of any charterhire, additional
charterhire, Termination Sum or any other moneys than it would have had
if no such sale or disposal had been made and had Royal Bank of Scotland
(Industrial Leasing) Limited continued to be the Owner at all material
times.
5. Adjustment to Charterhire for chances in Interest Rates
5.1 The Primary Period Charterhire has been calculated on the assumption
that the Applicable Rate for each Interest Reference Period will be 13
per cent per annum. Where for any Interest Reference Period the
Applicable Rate shall be more or less than 13 per cent per annum then on
the relevant Interest Payment Date the Charterer shall pay to Simon by
way of additional charterhire or Simon shall pay to the Charterer
(provided Simon shall have received such amount from the Owner pursuant
to the Simon Charterparty) by way of rebate of Charterhire the amount
calculated by multiplying for each 1 per cent increase or decrease in
the Applicable Rate above or below 13 per cent (with adjustments for
variation other than an integral multiple of 1 per cent being made pro
rata to two decimal places) the Original Cost by the amount listed
opposite the relevant Interest Reference Period in Column 3 of the Table
annexed to this Schedule 3 and dividing the result by 1,000.
5.2 The amounts specified in Column 3 of the Table annexed to this Schedule
3 are calculated by the Owner on the basis of the Assumptions. In the
event that any of the Variable Assumptions proves to be incorrect then
the Owner will provide Simon, who will provide it to the Charterer, with
a revised Table prepared on the same basis as the Table annexed to this
Schedule 3 except in so far as is necessary to reflect the change in any
Variable Assumptions which have proved to be incorrect. Thereupon this
paragraph shall continue to apply in respect of such revised Table
mutatis mutandis and so on.
5.3 The Primary Period Charterhire payable under paragraph 2 of this
Schedule 3 (including any adjustments thereto which may be required
pursuant to the terms of this Schedule) may be replaced by agreement
between the Owner and Simon, after consultation with the Charterer, by
Primary Period Charterhire calculated on the same basis but adjusted to
reflect the availability of fixed-rate funding to be obtained by the
Owner in place of variable rate fuming obtained or assumed to be
obtained by the Owner for the purposes of the transactions contemplated
by this Charterparty. In such event the Owner and Simon shall enter
into a memorandum specifying the terms on which the Primary Period
Charterhire shall be adjusted and the Table annexed to this Schedule 3
(or replacement Table) shall be revised accordingly to take account of
such fixed rate funding on the basis that the Owner's Return shall
77
<PAGE> 83
SCHEDULE 4
Termination Sum
1.1 In addition to the definitions comprised in Clause 1 and paragraph 1 of
Schedule 3 to this Charterparty the following expressions shall have the
following meanings:
"Table" means the table annexed to this Schedule 4;
"Revised Table" means any revised Table produced pursuant to
paragraph 3 of this Schedule 4;
"Settlement Date" means each of the dates set out in Column 1
of the Table or any Revised Table
"Variable Termination means the assumptions set out in
Assumptions" paragraph 3.2 of this Schedule 4.
1.2 For the purposes of this Schedule 4, references to the Ship shall
exclude references to the Goods.
2 The Termination Sum on any relevant date shall be the sum calculated
according to the following formula:
A X B
-----
1000
where:
(i) A = Original Cost of the Ship; and
(ii) B = the amount listed in Column 2 of the Table or any Revised
Table opposite, where the relevant date is not a
Settlement Date, the next following Settlement Date or
where the relevant date is a Settlement Date, that
Settlement Date.
3.1 The amounts specified in Column 2 of the Table are calculated on the
basis of the Assumptions and the Variable Termination Assumptions.
3.2 The Variable Termination Assumptions are:
(a) that for the purposes of section 24 CAA the amount of the Net
Sale Proceeds (in the case of a sale of the Ship) and/or any
moneys actually received by the Owner in respect of a Total Loss
will be equal to the qualifying expenditure in respect of the
Original Cost at the commencement of the Accounting Period of the
Owner in which the Termination Sum is payable;
78
<PAGE> 84
(b) that for the purposes of section 24 CAA the Ship will be sold or
a Total Loss will occur and Net Sales Proceeds or, as the case
may be, insurance proceeds will be received by the Owner in the
same Accounting Period as that in which the Termination Sum is
payable;
(c) that the refund of charterhire or payment of sales agency
commission in respect of Net Proceeds of Sale and/or moneys
received by the Owner in respect of a Total Loss due in
accordance with Clauses 3.5, 21.5 and 25.2 of the Simon
Charterparty:
(i) will occur in the Accounting Period of the Owner in which
the Termination Sum is payable;
(ii) that any refund of charterhire will be wholly deductible
for Corporation Tax purposes as a trading expense in the
Accounting Period of the Owner in which the Termination
Sum is payable;
(iii) that any payment of sales agency commission (excluding
recoverable Value Added Tax) will be deductible from and
in computing the amount to be brought into account as
disposal value under section 24 CAA in the Accounting
Period of the Owner in which such disposal value falls to
be brought into account;
(iv) that the Owner will be able effectively to deduct the
trading expense referred to in paragraph 3.2(c)(ii) above
in computing its Corporation tax liability in respect of
the Net Proceeds of Sale and/or any moneys received by the
Owner in respect of a Total Loss; and
(d) that all and no more or no less of the Net Proceeds of Sale (less
any sales agency commission) and/or any moneys received by the
Owner in respect of Total Loss in excess of Original Cost shall
be treated as a Chargeable gain for United Kingdom Corporation
Tax purposes in the Accounting Period of the Owner in which the
Termination Sum falls due and that the rate of Corporation Tax in
respect of chargeable gains is the same as the rate assumed in
paragraph 3.1(ix) of Schedule 3;
3.3 On or as soon as reasonably practicable after any date on which the
Owner becomes aware that any of the Variable Assumptions or any of the
Variable Termination Assumptions has become or will become incorrect
(which shall be referred to in this Schedule 4 as a change in a Variable
Assumption or Variable Termination Assumption) then the Owner will
provide Simon who will provide it to the Charterer with a Revised Table
(but only if such Revised Table would differ from the existing Table)
prepared on the same basis as the Table except that the preparation of
such Revised Table shall take account of the change in any Variable
Assumption or Variable Termination Assumption
79
<PAGE> 85
and except that such Revised Table shall take account of the Termination
Sum due and payable on the Termination Date where the Revised Table is
produced after such date and which Revised Table shall be calculated so
that the Owner's Return shall be neither increased nor decreased.
Insofar as a Change in Variable Termination Assumption 3.2(d) is
concerned no account shall be taken in preparing any Revised Table of
(a) any rollover or holdover of gains to another asset or (b) of any
allowable losses arising to the Owner from the disposal of assets other
than losses arising to the Owner from the disposal of assets other than
the Ship or (c) of relief for any losses for the purpose of capital
gains tax or Corporation Tax on chargeable gains arising from the
disposal of the Ship. Any Revised Table shall be deemed to take effect
from the date when the change in any such Variable Assumption or
Variable Termination Assumption occurs.
3.4 Following production by the Owner to Simon who will produce it to the
Charterer of a Revised Table pursuant to paragraph 3.3 of Schedule 4 to
the Simon Charterparty at a time after the Termination Sum has been paid
or the obligation to pay the Termination Sum has been discharged the
Owner shall recalculate the amount of the Termination Sum using such
Revised Table with effect from the date on which the Termination Sum was
first calculated and shall notify Simon who will notify the Charterer of
the amount thereof and of the amount of difference between the
Termination Sum as so calculated and as immediately previously
calculated. Within 30 days of such notification the Charterer shall pay
to the Owner by way of additional charterhire the amount of the
difference so notified where that amount is a positive figure or the
Owner shall pay to Simon who will remit the Charterer by way of rebate
of charterhire the amount of the difference so notified where the amount
is a negative figure.
3.5 As from the date any Revised Table is to take effect in accordance with
this Charterparty the same shall be deemed to be incorporated herein in
substitution for the Table or any previous Revised Table and payments to
be made hereunder shall be determined by reference thereto.
3.6 No Revised Table may be produced pursuant to paragraph 3.3 above if the
date on which the Owner became aware that there has been any change in a
Variable Assumption or Variable Termination Assumption falls seven years
after the date which is nine months and one day after the last day of
the Accounting Period of the Owner in which the Termination Sum
initially fell due to be paid.
4. Paragraphs 4.4 to 4.7 of Schedule 3 to this Charterparty shall apply
with all necessary and/or appropriate adaptations to this Schedule in
relation to Variable Termination Assumptions, revisions to the Table and
adjustments to or repayments of Termination Sums (and other matters
contemplated hereby) as it applies to that Schedule in relation to
Variable Assumptions or adjustments of charterhire (and other matters
contemplated thereby).
80
<PAGE> 86
Table to Schedule
<TABLE>
<CAPTION>
Termination Termination Termination Termination
- ----------- ----------- ----------- -----------
Date Amount Date Amount
- ---- ------ ---- ------
<S> <C> <C> <C>
1 May 1991 1053.68 1 January 1995 829.35
1 June 1991 1051.50 1 February 1995 823.29
1 July 1991 1048.89 1 March 1995 816.30
1 August 1991 1046.59 1 April 1995 797.80
1 September 1991 1044.34 1 May 1995 791.13
1 October 1991 1037.63 1 June 1995 784.63
1 November 1991 1035.10 1 July 1995 777.80
1 December 1991 1032.28 1 August 1995 771.13
1 January 1992 1029.83 1 September 1995 764.37
1 February 1992 1026.73 1 October 1995 757.28
1 March 1992 1022.83 1 November 1995 750.34
1 April 1992 1009.96 1 December 1995 743.07
1 May 1992 1006.28 1 January 1996 735.95
1 June 1992 1002.92 1 February 1996 728.77
1 July 1992 999.15 1 March 1996 721.00
1 August 1992 995.70 1 April 1996 702.17
1 September 1992 992.20 1 May 1996 694.38
1 October 1992 988.30 1 June 1996 686.73
1 November 1992 984.71 1 July 1996 678.75
1 December 1992 980.71 1 August 1996 ------
1 January 1993 977.02 1 September 1996 662.94
1 February 1993 972.96 1 October 1996 654.67
1 March 1993 967.82 1 November 1996 646.50
1 April 1993 952.12 1 December 1996 638.02
1 May 1993 947.46 1 January 1997 629.65
1 June 1993 943.09 1 February 1997 621.25
1 July 1993 938.32 1 March 1997 612.14
1 August 1993 933.82 1 April 1997 593.45
1 September 1993 929.26 1 May 1997 584.46
1 October 1993 924.31 1 June 1997 575.55
1 November 1993 919.63 1 July 1997 566.34
1 December 1993 914.56 1 August 1997 557.20
1 January 1994 909.75 1 September 1997 547.94
1 February 1994 904.72 1 October 1997 538.39
1 March 1994 898.68 1 November 1997 528.89
1 April 1994 881.20 1 December 1997 519.11
1 May 1994 875.56 1 January 1998 509.37
1 June 1994 870.16 1 February 1998 499.65
1 July 1994 864.38 1 March 1998 489.33
</TABLE>
81
<PAGE> 87
<TABLE>
<CAPTION>
Termination Termination Termination Termination
- ----------- ----------- ----------- -----------
Date Amount Date Amount
- ---- ------ ---- ------
<S> <C> <C> <C>
1 August 1994 858.83 1 April 1998 471.22
1 September 1994 853.20 1 May 1988 460.91
1 October 1994 847.21 1 June 1998 450.63
1 November 1994 841.43 1 July 1998 440.08
1 December 1994 835.29 1 August 1998 429.54
1 September 1998 418.86 1 January 2000 224.15
1 October 1998 407.93 1 February 2000 211.39
1 November 1998 396.98 1 March 2000 198.29
1 December 1998 385.77 1 April 2000 182.39
1 January 1999 374.55 1 May 2000 169.08
1 February 1999 363.38 1 June 2000 155.66
1 March 1999 351.74 1 July 2000 142.06
1 April 1999 334.57 1 August 2000 128.28
1 May 1999 322.83 1 September 2000 114.35
1 June 1999 311.05 1 October 2000 100.24
1 July 1999 299.04 1 November 2000 85.97
1 August 1999 286.96 1 December 2000 71.61
1 September 1999 274.73 1 January 2001 57.18
1 October 1999 262.28 1 February 2001 42.66
1 November 1999 249.75 1 March 2001 28.04
1 December 1999 236.99 1 April 2001 14.43
</TABLE>
Where a Termination Sum falls due on a rental payment date the rental payable
on such a date is included in the Termination Sum quoted.
82
<PAGE> 88
SCHEDULE 5
Forms of Loss Payable Clauses
(A) Hull and Machinery (Marine and War Risks)
By a Charterparty by way of Demise made the day of December,
1990, Royal Rank of Scotland (Industrial Leasing) Limited (the "Owner")
has demise chartered m.v. "Seaway Labrador" (the "Ship") to
Simon-Horizon Limited ("Simon") and Simon has pursuant to a first
priority assignment contained in such Charterparty assigned to the Owner
all of Simon's right, title and interest in all policies and contracts
of insurance from time to time taken out or entered into by or for the
benefit of Simon or the Owner; Simon has by a Charterparty by way of
sub-demise dated [ 1994] chartered the Ship to Horizon
Exploration Limited (the "Charterer") and the Charterer has pursuant to
a first priority assignment (the "Horizon Assignment") contained in such
Charterparty assigned to Simon all of the right, title and interest of
the Charterer in any and all policies and contracts of insurance from
time to time taken out or entered into by or for the benefit of the
Charterer and Simon and the Owner in respect of the Ship Simon has
pursuant to a further assignment dated [ 1994] assigned to the
Owner all of the rights, title and interest so assigned to Simon
pursuant to the Horizon Assignment.
All recoveries under this policy shall be applied as follows:
- all claims hereunder shall be paid in full to the Owner or to its
order;
(B) Protection and Indemnity Risks
Payment of any recovery which Royal Bank of Scotland (Industrial
Leasing) Limited of 42 St. Andrew Square, Edinburgh EH2 2YE (the
"Owner") or Simon-Horizon Limited of Horizon House, Azalea Drive,
Swanley, Kent BR8 8JR ("Simon") or Horizon Exploration Limited (the
"Charterer") is entitled to make out of the funds of the Association in
respect of any liability, costs or expenses incurred by the Owner or
Simon or the Charterer, shall be paid to the person to whom the
liability (or alleged liability) covered by the entry was incurred or if
the liability (or alleged liability) to such person has previously been
discharged by the Owner or Simon or the Charterer, such moneys shall be
paid to the Owner or its order or, as the case may be, to Simon or the
Charterer or to their respective order in reimbursement of the moneys so
expended by them in satisfaction of such liability or alleged liability,
unless and until the Association receives notice to the contrary from
the Owner; provided that no liability whatsoever shall attach to the
Association, its Managers or their agents for failure to comply with the
later obligation until the expiry of two clear business days from the
receipt of such notice.
83
<PAGE> 89
SCHEDULE 6
Notwithstanding the other terms of this Charterparty by way of Sub-Demise Simon
and the Charterer agree that:
1. (a) Simon shall continue to be responsible for payments to the Owner
currently provided for in respect of the Simon Charterparty
without variation or alteration thereof and the Charterer's
obligation to pay charterhire under this Charterparty shall not
(except in case of default by the Charterer in respect of any of
its obligations hereunder) commence until such time as the
aggregate amount of such payments by Simon to the Owner after
30th June 1994 shall exceed, in aggregate, L.2,336,000;
(b) Simon shall notify the Charterer in writing of the payment or
payments to be made by Simon which will cause such aggregate
figure to be exceeded and Simon shall direct the Charterer to pay
direct to the Owner the balance of such payment or payments and
the Charterer shall make such payments on the due date or dates
therefor; and
(c) the Charterer shall thereafter make payments in full under this
Charterparty strictly in accordance with the terms hereof.
2. (a) If, in relation to any period prior to 30th June 1994, there
shall be any increase or decrease in rental payable by Simon by
way of adjustment of rental pursuant to paragraph 4 of Schedule 3
to the Simon Charterparty or any amount shall be payable or
received by Simon pursuant to paragraph 4 of such Schedule 3,
such increase or decrease in rental or amount payable shall be
for the exclusive account or benefit of Simon whenever such
adjustment shall become effective or such payment be made;
(b) If any such adjustment or payment as aforesaid shall relate to
any period after 30th June 1994, such increase or decrease in
rental or such amount payable shall be for the exclusive account
or benefit of the Charterer.
Provided always that the obligation of Simon to pay such aggregate
L.2,336,000 sum referred to in paragraph 1 above in respect of
charterhire payable after 30th June 1994 shall be to pay such aggregate
sum net of all such adjustments of rental and such amounts as may be
payable in relation to the period after 30th June 1994.
84
<PAGE> 90
SIGNED by )
for and on behalf of )
SIMON-HORIZON LIMITED )
in the presence of: )
/s/ Andrew R. Murray
Andrew R. Murray
Solicitor
14 Diminion St.
ECZ
SIGNED by )
for and on behalf of ) /s/ J.M. Harrison
HORIZON EXPLORATION LIMITED )
in the presence of: )
/s/ Andrew R. Murray
85
<PAGE> 1
10.9.2
MANAGEMENT AGREEMENT
between
SIMON-HORIZON LIMITED
and
ERVIK MARINE SERVICES A/S
M.V. "SEAWAY LABRADOR"
<PAGE> 2
MANAGEMENT AGREEMENT
for
M.V. "SEAWAY LABRADOR"
It is agreed between Simon-Horizon Limited, Horizon House, Azalea Drive,
Swanley, Kent BR8 8JR, United Kingdom (hereinafter called the "Company") (being
disponent owners of M.V. "SEAWAY LABRADOR" (hereinafter called the "Vessel")
under a demise charterparty ("the Head Charter") to be entered into between
Company and the Royal Bank of Scotland (Industrial leasing) Limited ("the
Registered Owners") as registered owners of the vessel) of the first part and
Ervik Marine Services A/S, Brunholmgt 2, N-6004, Alesund, Norway (hereinafter
called the "Mangers") of the second part as follows:
1. Nature of Service
1.1 Company hereby appoints Managers to manage the Vessel and to perform
and provide, inter alia, the services specified in this Agreement and
Managers hereby agree to manage the vessel as described in Schedule A
herein and to perform and provide such services from the time
specified in Clause 2.1 of this agreement.
1.2 Company shall employ the Vessel throughout the world in lawful
activities for marine geophysical and/or oceanographic and/or
associated or related duties as required by Company.
2. Commencement
2.1 Management of the Vessel by Mangers shall commence on the 20th day of
December, 1990.
2.2 Upon commencement of the Management of the Vessel under this Agreement
by Managers, a joint survey of the Vessel shall be undertaken by
Company and Managers to determine the precise condition of the Vessel
and its equipment.
3. Managers to Provide
3.1 In consideration of the payment by Company of the Management Fees in
accordance with Clause 9.1. of this Agreement, Managers shall provide
(except as otherwise specified) all services, spares, replacement
parts (excluding same for seismic equipment) and other items referred
to herein entirely at the cost of Managers without any right of
reimbursement from Company.
1
<PAGE> 3
3.2 The Managers shall provide and pay for all wages for Officers and Crew
(including all overtime and bonus payments), travel expenses within
the United Kingdom for Officers and Crew, provisions, insurance of the
Vessel (including hull and machinery and protection and indemnity
insurance) for all deck and engineroom store, and the expenses of
maintaining the hull and machinery (excluding seismic equipment) in
the thoroughly efficient state during the duration of this agreement
including (but not limited to) the expenses of providing replacement
parts, equipment or spares, drydocking and other external services
provided in relation to the maintenance of the hull and machinery as
aforesaid.
3.3 The Managers shall also provide and pay for all bedding, crockery and
galley equipment, including the necessary renewal of same, for
officers, Crew and Company's personnel and their representatives,
cleaning materials for all cabins, common areas and work areas.
4. Managers to Provide and Company to Pay
4.1 Company shall be responsible for bunkers. Managers shall provide at
the best available price (with benefit of any reductions, rebates or
commissions) and Company shall reimburse Managers in respect of all
lubricating oils and fresh water (it being understood that the
acceptance of each supply (including bunkers) is the responsibility of
the Chief Engineer). Managers shall pay for and Company shall
reimburse Managers in respect of port charges, pilotages (whether
compulsory or not), canal charges and steersman, boatage, lights, tug
assistance in port when compulsory or at the Company's request or in a
situation when the Master deems same necessary for safety, consular
charges (except those pertaining to the Master, Officers and Crew),
agencies, meals supplied to Company or officials in their service and
their clients' representatives.
4.2 Company shall be responsible for reimbursing Managers for any
extraordinary or special taxes, other than those of the Nation of the
Vessel's Registry, levied on the Managers and/or the Vessel and/or the
Crew.
5. Excluded Ports
5.1 The Vessel shall not be ordered to nor bound to enter any place where
fever or epidemics are prevalent or to which the Master, Officers and
Crew are by Law not bound to follow the Vessel.
5.2 The Vessel shall not be ordered to nor bound to enter any ice bound
place where lights, lightships, marks or buoys are or are likely to be
withdrawn by reason of ice on the Vessel's arrival or where there is
risk that ordinarily the Vessel will not be able on account of ice to
reach her destination or get out. If, on account of ice, the Master
considers it dangerous to remain in any area or place for fear of the
Vessel being frozen in and/or damaged, he has liberty to sail to a
convenient open place and await the Company's fresh instructions.
2
<PAGE> 4
5.3 The Vessel shall not be obligated to force ice.
5.4 Save the above, the Company shall be entitled to require Managers to
sail the Vessel to any port or ports around the world without
exclusion.
6. The Vessel
6.1 From the time the Management of the Vessel commences this Agreement,
Managers warrant that the Vessel shall fully conform to the
specifications stated in Schedule A herein and shall in every way be
fitted and ready for service throughout the world (unless otherwise
stated in Schedule A).
6.2 Unless otherwise agreed in writing, the Vessel shall remain under the
Bahamas flag for the duration of the Management Agreement.
6.3 The Mangers may, subject to the approval of Company, appoint a
sub-manager for the Vessel. The Managers shall ensure that the
sub-managers duly appointed are made aware of the Managers obligations
under this Management Agreement.
6.4 The Managers shall not make any changes in the appointment of the
Vessel's sub-managers during the first year of this agreement unless
otherwise mutually agreed between Company and Managers beforehand.
6.5 The Company reserves the right, should they be dissatisfied with the
original sub-managers, to require the appointment of an alternative
sub-management company. Any alternative sub-manager shall be
nominated by Managers subject to Company's approval.
6.6 During the period of the Agreement, with the exception only of the
standby period, as per Clauses 7.2 and 9.2 herein, the Vessel shall at
all times with a minimum crew of twelve, namely:
Master
Chief Officer
Second Officer
Chief Engineers
Motorman
Second Engineer
Electrician
Two Able Seamen
Three Catering Personnel
See also Clause 9.3 herein.
3
<PAGE> 5
6.7 The Managers warrant that throughout the period of this agreement the
Vessel will be manned only by Officers and Senior Crew members who
shall be British Nationals and up to a maximum of four other Crew
members who can be Foreign Nationals however, should the Company and
Managers agree to amend this requirement any savings made shall be
divided equally between the Company and Managers. Should the Company
have reason to be dissatisfied with any amended crewing arrangement,
then Managers shall revert back to a one hundred percent complement of
British Nationals.
6.8 Throughout the duration of this agreement, the Managers warrant the
Vessel will be fully certificated and shall conform in every respect
with the Bahamas Flag and that all national and international trading
certificates, loadline, firefighting, life saving and other relevant
regulations are fully complied with and remain in full force and
effect.
6.9 The Managers warrant and agree to, at their sole expense: (1) keep the
Vessel in a thoroughly efficient state in hull, machinery and
equipment in good running order and in every respect seaworthy (2) pay
all wages, salaries, taxes and other benefits prescribed by Law for
the Master, Officers and Crew (3) operate and maintain the Vessel,
excluding seismic equipment, in accordance with all applicable State
and Federal Laws, rules and regulations of jurisdictions in which the
Vessel is working and carry onboard required documents.
6.10 Mangers shall comply with the requirements of Company in ensuring the
whole reach and burden and lawful decks of the Vessel shall be
available for Company's marine activities.
6.11 Managers have receive from Company copies of the following documents:
1. the Head Charter
2. The Conversion Contract dated 18 October, 1990 between
Moterenwerk Bremerhaven GMBH, Shipyard Germany.
3. the Conversion Contract to be entered into between the
Registered Owners and Company.
and hereby warrants to Company that Managers are fully aware of the
contents thereof and will comply at all times with the provisions
thereof.
7. Period of Management
7.1 Subject to Clause 8., Company's appointment of Managers as Managers of
the Vessel shall continue for a period of 10 years from the date of
commencement of the Management of the Vessel hereunder.
4
<PAGE> 6
7.2 The period of management will comprise of three parts:
AA. Pre-Conversion Period
An interim management period from the time the Vessel
is taken over by the Managers in December, 1990 until
the Vessel arrives at Motorenwerk Bremerhaven GMBH
(MWB) Shipyard, Germany on or about early January,
1991. During this period the terms of this agreement
shall apply in full.
BB. Conversion Period
A standby management period during the time the
Vessel arrives at the shipyard until the Vessel is
ready for Sea Trials on or about mid March, 1990.
During this period only limited management services
are required as may be specified by the Company to
the Managers.
CC. Post-Conversion Period
Upon completion of the conversion of the vessel, when
the Vessel is ready to commence Sea Trials, the terms
of the agreement shall apply in full thereafter, for
the remainder of this agreement.
8. Early Termination of Management Agreement
8.1 The Company shall have the sole right to terminate this Management
Agreement upon 35 days notice to Managers at any time and upon the
expiry of such notice the Company shall pay a lumpsum cancellation fee
of L. 150,000.00 (One Hundred and Fifty Thousand Pounds Sterling) to
the Managers. However, should the Company terminate this agreement in
accordance with Clause 17. of this agreement, no cancellation fee
shall then apply.
8.2 In the event of a termination of this Agreement in accordance with
Clause 8.1. above the liability of Company to pay the Management Fees
to Managers shall cease forthwith without prejudice to the rights of
the parties in respect of any amounts due from one to the other at the
time of termination and without prejudice to any claims which have
arisen between the parties prior to the date of termination.
8.3 In the event of a termination of this Agreement for any reason
whatsoever, Company and Managers shall undertake a joint survey of the
Vessel to determine the condition of the Vessel and its equipment at
such time, and Managers hereby warrant that the Vessel shall at the
time of termination of this Agreement be in the same condition as at
the time management of the Vessel commenced under Clause 2.1. above,
fair wear and tear
5
<PAGE> 7
excepted, and Managers shall indemnify Company in respect of any
breach of this warranty.
9. Management Fees
9.1 Commencing from the time of commencement of the management of the
Vessel by Managers until the time such management terminates in
accordance with the provisions hereof and subject to Clauses 15, 19
and 36, and the other relevant provisions of this Agreement Company
shall pay to Managers the following fixed daily Management Fees (or
pro rata for part thereof):
AA. Pre-Conversion Period - L. 2,625 (Two Thousand Six
Hundred and Twenty Five
Pounds Sterling) Per day.
BB. Conversion Period - As AA, less the costs not
incurred whilst under
conversion.
CC. Post-Conversion Period - As AA, plus "escalation"
Clause 9.5 plus any insurance
rate differential.
DD. Should the Vessel operate outside Europe, the daily rates as
hereinabove stated shall be increased, whilst specifically in
such areas, by the following maximum percentages:
Mediterranean/Middle East/Africa - 1.58% (One Point
Five Eight Percent)
United States Gulf and the Americas - 2.37% (Two Point
Three Seven Percent)
Far East/Australasia/Pacific - 3.15% (Three Point
One Five Percent)
9.2 The daily management fee stated in BB, hereinabove shall apply from
the time the Vessel is delivered to Shipyard, whilst the Vessel is
being converted by the Shipyard and shall be payable until such time
that the Vessel proceed to sea after conversion or until latest 1st
April 1991, whichever the earlier. It is agreed that during the
standby period, Managers will maintain a skeleton crew onboard, which
will include at least one engineer and one catering member. Company
shall have use of the Vessel's passenger accommodation during the
standby period and Managers shall provide catering facilities for the
Company's personnel, as required, with Company paying Managers the
victualling rate stated in Clause 10 herein.
6
<PAGE> 8
9.3 Should the Company require Managers to increase the manning level, as
stated in Clause 6. herein, Managers shall immediately increase the
manning levels whereupon Company shall pay Managers daily increases in
total costs, including all travelling expenses.
9.4 If due to special Local Legislation in any areas where the Vessel may
operate during the currency of the agreement, where the Managers are
required to change part of all of the Crew or increase the manning
levels of the Vessel to comply with such special Legislation, Company
shall reimburse Managers for any proven increase in crewing costs.
This Clause shall not be construed to relieve Managers from their
responsibility to provide at all times a fully qualified and
certificated Crew onboard the Vessel for worldwide trading.
9.5 The daily Management Fees stated in Clause 9.1.CC shall be firm and
remain fixed (subject to adjustment in accordance with the provisions
of Clause 9.1.DD, 9.3. and 9.4. herein) until 31st March 1991.
Thereafter the daily Management Fees referred to in clause 9.1.CC
shall be increased on 1st April each year during the term of this
Agreement by an amount equal to 85% of the percentage increase (if
any) in the United Kingdom Retail Prices Index (or such other official
United Kingdom Retail Price Index published in substitution thereof)
for the month of March in that year over the figure of the United
Kingdom Retail Price Index in respect of the month of March in the
previous year.
10. Victualling.
10.1 Managers will provide victualling, which shall include three main
meals per day for the Company's personnel and/or their representatives
onboard the Vessel at the fixed rate of L. 9 (Nine Pounds Sterling)
per man per day. For the Pre-Conversion Period, then at a rate to be
agreed by latest 15th March, 1991 covering the balance of this
Agreement. However, this shall be subject to regular review between
Company and Managers.
10.2 Managers shall maintain a qualified catering team consisting of three
persons onboard the Vessel and meals shall be of high standard and
menus will be varied. The cook will provide the Company's Party
Manager onboard with a monthly menu in advance and Company reserves
the right to amend proposed menus, to ensure an acceptable level of
victualling is always maintained.
10.3 Company's personnel on night duty shall be allowed access to the
galley or other suitably designated area, where they can obtain cold
salads or light snacks, it always being understood that the Vessel's
catering personnel will not be on duty and that Company's own
personnel shall not interfere with galley equipment.
10.4 The Vessels' stewards shall clean Company's cabins at least twice per
week and change the linen once a week. Company's personnel shall have
access to at least one washing machine and a drying machine onboard.
7
<PAGE> 9
10.5 The Master shall maintain a bond onboard the Vessel limited to beer,
spirits and tobacco, which he shall procure at his own expense. The
Company's Party Chief, solely on behalf of the Company's own
personnel, shall be at liberty to purchase such items from the Master
at cost plus ten percent.
10.6 Company and Managers agree that any personnel in their employment
found to be under the influence of alcohol or drugs whilst onboard the
Vessel, shall be subject to instant dismissal.
11. Payment
11.1 Managers shall invoice Management Fees and victualling charges or
other amounts due from time to time hereunder per calendar month,
whereby Managers shall invoice Company on the fifteenth day of each
month worked and Company shall pay Managers so that the funds are
received by managers within thirty days of their invoice date.
11.2 In default of payment the Managers shall immediately inform Company in
writing of such default and should such default not be rectified
within seven days from such notice being given, the Mangers shall have
the right to withdraw their services from the Vessel after first
proceeding to a safe port, without noting any protest and without
interference by any Court or any other formality whatsoever and
without prejudice to any claim the Managers may otherwise have on the
Company under this Agreement.
11.3 Managers invoices for other costs due from Company shall be
accompanied by supporting documentation and shall be submitted to
Company whereafter Company shall make payment to Mangers within thirty
days from the invoice date.
12. Modifications and Additions to Vessel
12.1 Upon commencement of the management of the Vessel under Clause 2.1.
herein, Managers shall always ensure Company, their agents and
servants have full access at all times to the Vessel to undertake
modifications to the Vessel and embark and install their equipment.
12.2 All structural modifications and alterations undertaken by the Company
their agents or servants to the Vessel shall be at the Company's own
cost and shall be to the approval of the Vessel's Classification
Society and/or other relevant safety authorities.
13. Responsibility & Exemption
13.1 Company shall not be responsible for loss or damage to any property of
Managers, nor any personal injury or death of Managers personnel
howsoever or by whomsoever caused, even if caused by act, neglect,
default of Company, and Managers agree to indemnify
8
<PAGE> 10
Company against all consequences and liabilities arising from and in
connection with such loss or damage of personal injury or death of
Managers' personnel.
13.2 Provided Managers shall have complied with the insurance requirements
of Clause 14. hereof Managers shall not be responsible for damage to
property of Company nor for personal injury or death of Company's
personnel howsoever or by whomsoever caused, even if caused by act,
neglect or default of Managers and Company agrees to indemnify
Managers against all consequences and liabilities arising from or in
connection with such loss or damages or personal injury or death of
Company's personnel.
13.3 The Managers hereby agree to indemnify and hold harmless Company from
and against any loss of liability (including legal expenses) arising
out of any claim or cause of action for loss of damage to property of
third parties or for injury to or loss of life of any third person,
caused by neglect or default on the part of Company.
14. Insurance
14.1 The Managers agree to maintain at their expense, for the
Pre-Conversion Period, until the Vessel enters the Shipyard, the
marine insurance policies for the Vessel within Norwegian trading
warranties, namely:
"Hull and Machinery" (All Risks) including War Risks and
Collision Liability - sum insured up to full value of the
vessel being N.Kr 100,000,000 (One Hundred Million Norwegian
Kroner).
"Protection & Indemnity" - sum insured up to full value of the
Vessel, including Wreck Removal with unlimited, as per rules
of P&I Club and including Oil Pollution liability indemnity up
to a maximum of US$ 500,000,000 (Five Hundred Million United
States Dollars).
"Workman's Compensation and Employees' Liability" insurance or
coverage of a comparable nature to the full extent required by
the Laws applicable in any jurisdiction relative to Managers
employees.
The above insurances will be subject to review prior to the
Vessel completing conversion.
14.2 The Registered Owners and Company shall be named as joint assured in
Managers placed in insurance policies for Hull & Machinery for the
Protection & Indemnity. In the context of this provision, Company
shall include any of its named clients having an interest in the
operation for which the activities as described in Clause 1 hereof are
being performed.
9
<PAGE> 11
14.3 Whenever called for under any contracts with Company's clients,
managers to produce to Company a certificate or a certified copy of
the insurance policies effected in accordance with the provisions of
this Agreement or such other confirmation as may be acceptable to the
Company.
If Managers fail to or refuse to obtain or maintain any insurances
required by the clients under Company's contracts with them, then
Company shall have the right to procure such insurance at Managers'
expense in which event any amount paid to secure such insurance shall
immediately become due and payable by Managers.
14.4 Neither party to this agreement shall be liable to the other for any
consequential or special damage.
15. Damage or Breakdown of Vessel
15.1 Subject to Clause 19, any event of whatsoever nature which hinders or
prevents the full working of the Vessel including (but not limited to
the generality of the foregoing) drydocking or other necessary
measures to maintain the efficient operation of the Vessel, deficiency
of men or stores, strike of Master, officers or crew, breakdown of
machinery or equipment, damage to hull or other accident (whether or
not required by Company and whether or not due to negligence of
Managers), no Management Fees shall be payable by Company during the
period in which the Vessel and her equipment is not fully operational
(whether or not required for service) and pro rata for any part
thereof.
15.2 The provisions of Clause 15.1 herein shall include the specific events
stipulated in Clause 36 whereby Company shall be released from any
liability to pay Management Fees for the duration of such events as
further specified in Clause 36 herein.
16. Loss of Vessel
16.1 Should the Vessel be lost or missing, this Agreement shall be deemed
to have been terminated and management fees to cease from the date
when the Vessel was lost. If the date cannot be ascertained, fifty
percent of the daily management fee shall be paid from the date the
Vessel was last reported until the calculated date of arrival at her
destination.
17. Cancellation
17.1 In the event of Company being released from its liability to pay to
Managers the management Fees in accordance with the terms of this
Management Agreement for thirty consecutive days or in the event of a
material breach by Managers of the provisions of this Agreement,
Company shall have the option of cancelling this Agreement. Company,
if required by Managers, to declare within forty-eight hours after
receiving notice whether they cancel this Agreement or not. In
default of any written notice from Managers
10
<PAGE> 12
Company have the right of automatically cancelling this Agreement at
any time after the said period of 30 days or breach, without noting
any protest and without interference by any Court, any formality
whatsoever and without prejudice to any claim the Company may
otherwise have on the Managers.
18. Masters and Crew
18.1 The Master to prosecute all voyages and operations with the utmost
diligence and despatch, and, so comply fully and accurately with the
operating schedules laid down by the Company and their party manager,
without compromising the safety of the ship and/or of the Crew. The
Master to be under the orders of Company as regards employment or
agency.
The Company shall advise the Master as to general location of
the Vessel's operational area and the Master shall be solely
responsible for the selection of the route from and to such
area.
If the Master shall reasonably consider that the instructions
given by the Company or their party manager may endanger the
safety of the Vessel and/or of the Crew, he must advise the
party manager accordingly and the Master is entitled not to
follow such instructions.
The Master, Officers and Manager's Crew will fully
co-operation with the Company, their party manager and crew,
with a view to the full and satisfactory performance of the
service.
18.2 If the Company has good reason to be dissatisfied with the conduct of
the Master, Officers or ratings of Managers crew, the Manager shall as
soon as possible replace the person or persons in question.
Immediately after such replacement or replacements a joint
investigation by Company and Managers shall be conducted in order to
ascertain that such complaint or replacement was reasonable to ensure
a continuous smooth operation. Notwithstanding the foregoing, any
member of the Vessel's crew found to be under the influence of alcohol
or drugs, shall be, as far as practically possible, immediately
removed from the Vessel.
18.3 The Vessel to work day and night, if required, without any extra
payment by the Company.
18.4 The Master and engineer to keep full and correct logs accessible to
the Company or their agents at all times.
18.5 Decisions concerning the safety of the Vessel and/or the personnel
onboard shall be the responsibility of the Vessel's Master. The
safety of the Company's seismic equipment,
11
<PAGE> 13
whether on board or deployed from the Vessel, is, however, the sole
responsibility of the Company, through the auspices of the Party
Chief.
18.6 Should the Company have reason to be dissatisfied with anything for
which the Managers are responsible, Company shall promptly inform
Managers in writing whereafter Managers will promptly look into the
matter.
19. Maintenance of Vessel
19.1 Notwithstanding the provisions of Clause 15 herein, Company shall
allow Managers one day of 24 hours per calendar month or pro rata for
part thereof for maintenance and/or overhaul and/or repairs at times
to be mutually agreed between both parties and during such period
Company shall continue to be liable to pay to Managers the Management
Fees. Days can be accumulated up to a maximum of twelve days but days
not taken by managers will not be compensated by Company at the end of
this agreement. Any planned drydocking and/or overhauls and/or
repairs are to be coordinated with Company but should be scheduled
between 1st December and 1st March each year. Company shall, however,
have the right to request Managers to bring forward planned
maintenance and/or drydockings and/or overhauls and/or repairs or,
subject to classification approval, delay same to be coordinated with
Company's own planned maintenance, repairs and renewals.
19.2 Notwithstanding the provisions of Clause 15 herein, Company shall
allow Managers to carry out maintenance or overhaul of the Vessel when
Company's own equipment is being maintained, repaired or overhauled
provided that the services of the Vessel are not immediately required
by Company and during such period Company shall continue to pay to
Managers the Management Fees. Should, however, the Vessel not be
ready to sail as required by Company the Management Fees for such
period shall cease to be payable by Company to the Managers, backdated
to the time Managers originally commenced any maintenance or overhaul
of the Vessel (other than days allowed in accordance with Clause 19.1
above).
20. Salvage
20.1 All salvage and all proceeds from derelicts other than Company's
property shall be divided equally between the company and Managers
after deducting the Master's, Officers', Crews' and Company's
personnel's share, hire of Vessel for time lost and cost of the fuel
consumed and all other expenses (including Crew and Company's
personnel costs) incurred. Apportionment of all loss of time and all
expenses paid, excluding damage to or loss of the Vessel incurred in
saving or attempting to save life and in unsuccessful attempts to
salve shall be mutually agreed between Company and Managers prior to
any salvage attempts. No attempt to undertake salvage shall be made
by the Vessel unless such has been mutually agreed between the parties
or unless there is a legal obligation upon the Master or Managers to
carry out salvage.
12
<PAGE> 14
21. War
21.1 The Vessel, unless the consent of the Managers be first obtained, not
to be ordered nor continue to any place or on any voyage nor be used
on any service which will bring her within a zone which is dangerous
as a result of any actual or threatened act of war, war hostilities,
warlike operations, acts of piracy or of hostility or malicious damage
against this or any other Vessel or its cargo by any person, body or
state whatsoever, revolution, civil war, civil commotion or the
operation of international law, nor be exposed in any way to any risks
or penalties whatsoever consequent upon the imposition of sanctions
nor carry any goods that may in any way expose her to any risks of
seizure, capture, penalties or any other interference of any kind
whatsoever by the belligerent or fighting powers or parties or by any
Government or Ruler.
21.2 Should the Vessel approach or be brought or ordered within such zone,
or be exposed in any way to the said risks (1) Managers to be entitled
from time to time to insure their interests against any of the risks
likely to be involved thereby on such terms as they shall think fit,
Company to make a refund to the managers of the premium on demand and
(2) notwithstanding the provisions of Clause 15 Management Fees to be
paid by Company to Managers for all time lost, including any time lost
owing to loss or injury to the Master, officers or crew or to the
action of the crew in refusing to proceed to such zone or to be
exposed to such risks.
21.3 Any action of Managers in accordance with the provisions of this
Clause 21 shall not be deemed contrary to the instructions of Company.
21.4 If in the compliance of the provisions of this Clause anything is done
or is not done, such not to be deemed a deviation.
22. Secrecy
22.1 All information regarding Company's and their clients' operation,
investigations and findings, together with the nature and
specification of Company's equipment installed on board the Vessel
shall be regarded as confidential to Company and under no
circumstances shall any such information be divulged to unauthorized
persons or the Press without the prior written permission of Company.
23. Assignment
23.1 Managers rights and obligations under this Agreement are not
assignable or transferable in whole or in part without Company's prior
written approval which it shall have the right to withhold.
13
<PAGE> 15
24. Travel Expenses
24.1 Outside United Kingdom traveling expenses related to crew changes
shall be borne by Company and shall be re- invoiced by managers to
Company at cost in accordance with Clause 11 herein.
25. Vessel's Name/Colours/Markings
25.1 During this Agreement Managers shall not change the name, markings or
colours of the Vessel without Company's permission or unless Company
instructs Managers to do so.
26. Force Majeure
26.1 Any delay or failure to carry out the duties imposed upon either party
under this agreement shall not be deemed to be a breach thereof if
such delay or failure results from a force majeure event beyond the
control of the party affected. In the event that a force majeure
situation occurs, both parties shall promptly consult and agree a
course of action.
27. Arbitration
This agreement shall be governed by English law and any dispute
arising under this Charter shall be referred to arbitration in London.
One Arbitrator to be nominated by Company and the other by the
Managers and in case the Arbitrators shall not agree then to the
decision of an Umpire to be appointed by them, the award of the
Arbitrators or the Umpire to be final and binding upon both parties.
28. Notices
All notices due under this agreement shall be given in writing to:
<TABLE>
<CAPTION>
Company Managers
<S> <C>
Simon-Horizon Limited Ervik Marine Services A/S
Horizon House, Brunholmgt 2,
Azalea Drive, N-6004 Alesund,
Swanley, Norway.
Kent, BR8 8JR
United Kingdom
Mr. B.E. Timmins Mr. E.A. With
Corporate Development Director Member of the Board
For the Company For the Managers
</TABLE>
14
<PAGE> 16
SCHEDULE A
<TABLE>
<CAPTION>
1. Main Description
<S> <C> <C>
Vessel "SEAWAY LABRADOR"
Flag Bahamas
Built Brattvag Skipsinredning A/S
(1982/1983)
Converted Brattvag/Liaaen (1983)
Design ME 202 Platform Supply/Liaaen
ROV-Survey
Classification DnV + 1A1 (MV), EO, SF Supply
Vessel, Helideck
Call Sign C6DQ3
2. Measurements
Dimensions
Length o.a. 67.2m (220.4')
Length b.p. 60.0m (196.8')
Breadth 16.8m (55.1')
Depth moulded 7.1m (23.3')
Max Draft 6.07m (19.9')
Draft 5.5m (18.03')
Gross Registered Tons 1905 tons
Max. Speed 12.5 knots
Max. Deck Load abt. 300 tons (as presently
configured)
3. Capacities
Fuel oil 950 m3
Fresh water 650 m3
Ballast water 1130 tons
Lube oil 29,000 litres
4. Lube Oil Consumption
Lube Oil 83 litres per day
</TABLE>
15
<PAGE> 17
<TABLE>
<CAPTION>
5. Machinery
<S> <C>
Main Engines 4 x Wartsila WASA 8 R 22 HF each
1725 BHP, total 6900 BHP. Diesel
electric system designed to burn MDO.
Bow thrusters 2 x 900 BHP (1324 kw) Brunvoll var.
pitch. Thrust: 2 x 10.6 tons.
Stern thrusters 2 x 2000 BHP (2940 kw), Main
Azimuth, 360 degrees rotating
thrusters. Two speeds available
for economical operations.
Main Generators 4 x 1220 kw
Harbour Generator 165 kw
</TABLE>
Power for computers and other electronic equipment (3 Phae, 440 V, 60
Hz) is available through a "smooth current" clean power system.
7. Helicopter Deck
Helideck installed midship designed for BELL 212 helicopters according
to Norwegian Maritime Directorate regulations and in compliance with
Helicopter service's recommendations.
8. Stabilization
Passive stabilization for roll reduction.
<TABLE>
<CAPTION>
9. Moonpool
<S> <C>
Dimensions 2.8 x 4.5 m (nominal)
</TABLE>
<TABLE>
<CAPTION>
10. Navigation and Electrical Instrumentation
<S> <C>
Radar Two Furuno FR 1221 (3 cm)
Gyro Two Robertson SKR 82 Gyros
Autopilot Robertson
Radiodirection finder Furuno FD 120B
AP Navigator Type FD (decca main chain)
</TABLE>
16
<PAGE> 18
<TABLE>
<S> <C>
Echosounder Furuno FE 881
Echosounder Simrad EA 200 with dual transducers
(38 and 200 KHz) and Anschutz heave
compensator
Electromagnetic log
(Doppler) JRC Type JLN 203
Magnetic Compass Neptun 10" RK10
Two SSB radios SKANTI TRP 500 (Radiostation is not
approved for Worldwide trading).
One Telex SAIT XH 5111 TP
Four VHF Radios Sailor RT 143/145
3 Handheld UHF radios
</TABLE>
A platform above obstructions for mounting of navigation antennae.
<TABLE>
<CAPTION>
11. Accommodation
<S> <C>
Cabin capacity: 21 single cabins w/shower (11-12 available to charterer)
8 double cabins w/shower (305 available to charterer)
4 double cabins without shower (4 available to charterer)
1 hospital
</TABLE>
All accommodation fully air conditioned.
+++++++++++
Post-Conversion specifications to be inserted and attached to this
agreement.
17
<PAGE> 19
FIRST ADDENDUM OF M.V. "SEAWAY LABRADOR" MANAGEMENT AGREEMENT DATED
19TH DECEMBER, 1990 BETWEEN SIMON-HORIZON LIMITED AND ERVIK MARINE SERVICES
- --------------------------------------------------------------------------------
This first Addendum dated 19th December, 1990 is deemed to be incorporated in
the Management Agreement dated 19th December, 1990.
36. Special Conditions
If any of the undermentioned events shall occur Company's liability to
pay the Management Fees shall be suspended in full for the duration of
such event or events when and as often as the same shall from time to
time occur.
The right of Company to suspend payment of the Management Fees during
the occurrence of such event may be waived temporarily by the Party
Chief on behalf of Company but cannot be permanently waived unless
expressly agreed in writing between Company and Managers. A temporary
waiver may be withdrawn at any time by notice from the Party Chief to
the Master. During the period of any such waiver the full daily
Management Fees shall continue to be paid.
36.1 Accommodation
Failure to provide accommodation as follows:
A. All accommodation in the aft deck module shall be available to the
Company at all times unless, if required through operational necessity
of legal requirement, there is a need to release one berth for
Manager's Radio Officer.
B. The conference room and offices (within the module) may be
redesignated by the Party Chief even if this curtails their use as
public areas by Crew.
C. The Party Chief shall be allocated the former Chief Engineer's suite
in the bridge accommodation.
D. All other accommodation shall be available to Manager's Crew. It is
recognised that Manager's accommodation exceeds actual requirements
and when necessary this excess accommodation shall be made available
to Company's personnel.
18
<PAGE> 20
36.2 Catering
Failure to provide the following catering facilities:
A. Company requires three cooked means per day.
B. Company requires reasonable access between 1900 and 0500 hours to cold
and dry stores to provide light refreshments and means for themselves.
36.3 Propulsion
Failure to meet the minimum technical requirements set out below:
A. The Vessel should have four working diesel generators sets at all
times. Any one diesel generator set may be shut down for up to twelve
continuous hours for minor repairs and maintenance, after prior notice
(if possible) to Company's representative. This condition can be
waived by prior agreement between Company and Managers.
B. The Vessel shall have two fully operational azimuth thrusters at all
times.
C. The Vessel shall have one of the two bow thrusters fully operational
at all times.
36.4 Electrical Supply
Failure to meet the following electrical requirements:
A. A minimum of one megawatt of power 600 volts is required at a
distribution point in the aft working module.
B. A domestic power supply suitable for domestic appliances and
instrument room and work shop lighting shall be maintained.
4A and 4B are required 24 hours a day.
36.5 Specific Equipment
Failure of any of the following specific equipment to operate as
reasonably expected by Company or to manufacturer's specifications:
A. Bridge radar (both radars to be working when Vessel leaves port).
B. Auto pilot.
C. Gyro compass.
19
<PAGE> 21
D. Aft deck crane.
E. Ship's intercom.
F. VHF/MF radios.
36.6 General Equipment, Services, Crew
A. Any failure to meet the requirements of the appropriate classification
society, flagging authority or insurance requirements.
36.7 Performance
Failure to meet any of the following performance requirements:
A. The Vessel shall be capable of an average cruising speed of 10 knots
at an average fuel consumption of 10 tonnes per twenty four hours, or
less.
B. The Vessel shall be able to demonstrate and maintain a speed of 12
knots in a sea state of up to force four, using an average of 15
tonnes of fuel oil, or less, per twenty four hours.
C. The Vessel shall be capable of meeting the requirements of 4B and 9E
(electrical supply) whilst in port, by using a standby or 'shore
generator' with a fuel consumption or less than 2 tonnes per twenty
four hours.
D. The Vessel shall be capable of anchoring in water depths of up to 100
metres.
36.8 Endurance
Failure to maintain the following:
The Vessel shall have a potential endurance of 65 days and in
particular shall have the following usable tank capacities:
<TABLE>
<S> <C> <C>
A. Fuel oil tank capacity 950 cubic metres
B. Lube oil tank capacity 29 cubic metres
C. Fresh water tanker capacity 650 cubic metres
</TABLE>
36.9 Provision of Equipment
Managers shall provide the following equipment for unsupervised use by
Company's personnel. Maintenance, repair and provision of consumables
for the equipment shall be for Company's account:
20
<PAGE> 22
A. Echosounder Type Simrad EA 200 or similar.
B. Satellite Communications System Type Magnavox and one Telefax machine.
C. Instrument Room Radar Repeater System Type Furuno or similar.
36.10 Additional
A. Fuel, port calls and other charges accuring during the period where
Company is not liable to pay the Management Fees in accordance with
the terms of this Agreement shall be charged to Managers Account.
B. No Management Fees shall be payable by Company to Managers should the
Vessel fail to maintain course/speed to Company's requirements due to
Vessel malfunctions or operator error/deficiency.
C. Company shall not pay to Managers the Management Fees in respect of
delays to the Vessel in leaving port due to the Vessel/personnel not
being ready and any consequential delays (e.g., tides, etc.) provided
reasonable notice shall have been given to Managers by Company for
departure.
D. In relation to any event where Company is relieved from its obligation
to pay Management Fees in accordance with this Agreement Company shall
only be obliged to recommence payment of the Management Fees upon
reasonable evidence from Managers to Company that the relevant event
has ceased and the Vessel is returned to an equally favourable
position after the occurrence of such event.
/s/ B.E. Timmins /s/ [signature illegible]
For the Company For the Managers
19 Dec '90
21
<PAGE> 1
EXHIBIT 10.9.3
[SIMON GEOPHYSICAL SERVICES LOGO]
Simon-Horizon Ltd.
Horizon House
Azalea Drive
Swanley
Kent BR8 8JR
England
Telephone 0322 68011
Telex 896050 EXPLOR G
Facsimile 0322 613650
Ervik Marine Services A/S
Brunholmst 2
N-6004 Alesund
Norway
Dear Sirs,
RE: M.V. "SEAWAY LABRADOR"
In consideration of Simon-Horizon Limited ("SHL") entering into an agreement to
sell the M.V. "Seaway Labrador" to Royal Bank of Scotland (Industrial Leasing)
Limited and charter the vessel back under a demise charter party to be entered
into, for a period of 10 years, it is agreed that:
"Net Residual Value" - the market value of the vessel (excluding all seismic
equipment on board the vessel) at the expiry if the ten year demise charter
term, less the termination costs of the demise charter, less the costs of
valuation, broking and legal fees.
1. SHL covenants to Ervik Marine Services A/S ("EMS") (or substitute
company thereof as approved by SHL) the right to 56% of the Net
Residual Value of the vessel on completion of the 10 year Management
Agreement.
2. Should SHL exercise their right under the Management Agreement dated
19th December, 1990, to terminate the Management Agreement in
accordance with Clause 8.1. thereof, EMS's right to x% of the New
Residual Value of the vessel shall remain frozen from the time the
Management Agreement is terminated until the expiry of the ten year
demise charter term.
"x" percent is to be 24% from the outset to year one, rising after
year one from 24% to 56% after 10 years. Pro-rata values apply to
interim periods at monthly intervals.
<PAGE> 2
-2-
3. In the event that SHL exercise their right to cancel the Management
Agreement under Clause 17, subject to Clause 26, thereof, EMS's right
to y% of the New Residual Value of the vessel shall remain frozen from
the time the Management Agreement is terminated until the expiry of
the ten year demise charter term.
"y" percent is to be 24% after one year and 49% after ten years.
Pro-rata values apply to interim periods at monthly intervals.
Signed Signed
/s/ B.E. Timmons /s/ [illegible signature]
Simon-Horizon Ltd. Ervik Marine Services A/S
Dated 19th December, 1990
<PAGE> 3
Draft illustrations to
side letter No. 2 19/12/91
Proposed pro-rata accrual
of "Net Residual Value"
[DIAGRAM NOT SHOWN]
1. Where termination of the agreement is undo clause two
of the side letter the proportion of "Net Residual
Value" earned is higher proportion of the value.
2. Where termination of the agreement is under clause
three the proportion is as previously agreed.
3. In both cases EMS is entitled to 24% of NRV after the
first year.
4. All time points in between should be given pro-rata
values.
<PAGE> 1
10.9.4
DATED 15th July 1994
- --------------------------------------------------------------------------------
SIMON-HORIZON LIMITED
- and -
HORIZON EXPLORATION LIMITED
- --------------------------------------------------------------------------------
ASSIGNMENT AGREEMENT
Relating to
A Ship Management Agreement
dated 19th December, 1990 (as amended)
- --------------------------------------------------------------------------------
SIMMONS & SIMMONS
14 Dominion Street
London LC2M 2RJ
<PAGE> 2
THIS ASSIGNMENT AGREEMENT is made the 15th day of July 1994
B E T W E E N:
(1) SIMON-HORIZON LIMITED registered no. 467924 whose registered office is
at Horizon House, Azalea Drive, Swanley, Kent BR8 8JR (the
"Assignors); and
(2) HORIZON EXPLORATION LIMITED registered no. 2804983 of 6 Pembroke Road,
Sevenoaks, Kent TN13 1XR (the Assignees)
WHEREAS:
(A) By a management agreement (the "Management Agreement") dated 19th
December, 1990 as amended by a First Addendum thereto of the same date
the Assignor appointed Ervik Marine Services A/S as manager (the
"Manager") of the Vessel M.V. "SIMON LABRADOR".
(B) The Assignor has by three "side letters" (the "Side Letters") each
signed by Simon Petroleum Technology and addressed to and
countersigned by the Manager by way of agreement with the terms
thereof and dated 19th December, 1990 agreed certain other matters
(C) The Assignor and Assignee have agreed subject to the satisfaction of
certain terms and conditions that the Assignor shall (inter alia)
charter the M.V. "Simon Labrador" (the "Vessel") to the Assignee by
way of sub-demise and that the Assignee shall (inter alia) assume and
be responsible for the discharge of all liabilities of the Assignor in
respect of the Vessel including under and in connection with the
Management Agreement
(D) It has been agreed that, upon and subject to the terms and conditions
of this Agreement, the Assignor will assign to the Assignee all rights
and benefits of the Assignor under the Management Agreement.
NOW THEREFORE IT IS HEREBY AGREED as follows:
1. Definitions
(a) Terms defined in the Management Agreement shall, unless
otherwise defined herein, have the same meanings in this
Agreement and, in addition to the expressions defined above,
in this Agreement and in the Recitals:
"Agreement" means this agreement as amended or modified from
time to time and includes all other documents supplemental to,
collateral with, or derived from this Agreement;
- 2 -
<PAGE> 3
"Assigned Rights" means all of the right, title and interest
of the Assignor in and to and all benefits of the Assignor
under the Management Agreement and the Side Letters; and
"Effective Date" means 30th June, 1994.
(b) Unless the context forbids, any references in this Agreement
to:
(1) an "agreement" also includes a concession, contract,
deed, franchise, license, treaty or undertaking and
any waiver or release (in each case whether oral,
written, implied or by operation of law);
(2) a "consent" also includes an approval, authorization,
exemption, filing, license, order, permission,
recording or registration (and references to
obtaining consents shall be construed accordingly);
(3) a "law" includes common or customary law and any
decree, judgment, legislation, order, regulation,
statute, treaty or other legislative measure, in each
case of any jurisdiction whatever (and "legislation",
"lawful" and "unlawful" shall be construed
accordingly);
(4) a "person" includes any individual, company,
corporation, firm, partnership, joint venture,
association, organization or trust (in each case,
whether or not having separate legal personality) and
references to any of the same shall include a
reference to the others;
(5) "writing" or "written" includes any means of visible
reproduction;
(6) words denoting the singular shall include the plural
and vice versa;
(7) any legislation are to that legislation as from time
to time amended or re-enacted, and to any document,
agreement or deed whatsoever shall include the same
as it or they may at any time be amended, varied or
supplemented;
(8) Clauses, references to clauses hereof; and
- 3 -
<PAGE> 4
(9) subclauses are, unless otherwise stated, references
to subclauses of the Clause in which the reference
appears.
(c) Clause headings and sub-headings are for convenience only and
shall not affect the construction hereof.
2. Assignment
(a) With effect from the Effective Date the Assignor hereby
assigns (subject to the terms and conditions of this
Agreement) to the Assignee without recourse the Assigned
Rights together with all (subject as otherwise provided
herein) rights and benefits accruing to the Assignor in
relation thereto under the Management Agreement, such
assignment being made in consideration of the undertakings by
the Assignee contained in Clause 3 below.
(b) Immediately following the execution and delivery of this
Agreement by the parties hereto they shall jointly give notice
to the Manager of the assignment to the Assignee of the
Assigned Rights.
3. Undertakings
In consideration of the assignment by the Assignor to the Assignee of the
Assigned Rights, the Assignee agrees with effect from the Effective Date to
accept the assignment in Clause 2 without recourse, and undertakes to perform
the obligations of the Assignor arising on or after the Effective Date under
the Management Agreement and in respect of the Assigned Rights and the Side
Letters and to be bound by the terms of the Management Agreement and the Side
Letters as if originally named therein as a party thereto in place of the
Assignor.
In addition, the Assignee undertakes in consideration of the assignment
aforesaid that it will use all reasonable endeavors to supply at the cost of
the Assignor all information that may reasonably be requested by the Assignor
in respect of any matter or thing that may have occurred in connection with the
Management Agreement and/or the Side Letters prior to the Effective Date and
otherwise to assist the Assignor in connection with any dispute or discussion
with the Manager in respect of any matter or thing prior to the Effective Date
arising out of the Management Agreement and/or the Side Letters.
4. Excluded Rights
(a) The Assignee shall not be entitled to sums due or owing by or
claimed against the Manager arising, accruing or paid prior to
the Effective Date to the Assignor in connection filth the
Assigned Rights and all such amounts
- 4 -
<PAGE> 5
(together "Retained Amounts") shall belong to and be retained
by the Assignor.
(b) If any amount (other than any Retained Amounts) is received or
recovered by the Assignor in respect of the Assigned Rights on
or after the Effective Date, the Assignor shall promptly (and
in any event within 15 days of receipt) pay such amount to the
Assignee.
(c) If any amount of the Retained Amounts is received or recovered
by the Assignee, the Assignee shall promptly (and in any event
within 15 days of receipt) pay such amount to the Assignor.
5. Payments
Any payment to be made between the Assignor and the Assignee hereunder shall be
made in the currency in which such amount was received by the party so paying
and shall be made in immediately available funds and clear of all withholdings
for or on account of any taxes, counterclaims or set-offs or otherwise
howsoever arising.
6. Representations
The Assignee represents and warrants to the Assignor that:
(a) it has full power and authority and has taken all action
necessary to execute this Agreement and all other documents to
be executed in accordance herewith and no governmental
authorisations are required in connection with the execution,
delivery or performance of this Agreement and such other
documents; and
(b) this Agreement constitutes its legal, valid and binding
obligations.
7. Regulations and other Requirements
(a) Neither the Assignor nor any of the Assignor's directors,
officers, employees or agents shall be responsible for the due
execution, legality, validity, effectiveness, enforceability
or sufficiency of the Management Agreement or the Side
Letters, or any notice, certificate or document executed or
delivered thereunder nor for any action taken or omitted to be
taken thereunder or for any loss, liability or expense
suffered or incurred in consequence thereof by the Assignee
and the Assignee hereby acknowledges the absence of any such
obligation as is referred to in this sub-clause.
- 5 -
<PAGE> 6
(b) The Assignee acknowledges that the Assignor is not agent for
the Manager or Royal Bank of Scotland (Industrial Leasing)
Limited ("RBS") nor does the Assignor have any responsibility
for either of them.
(c) The Assignor makes no representation or warranty and assumes
no responsibility with respect to any statement, warranty or
representation by RBS or the Manager or by any other person in
or in connection with the Management Agreement or the Side
Letters or in any notice, certificate or document executed
thereunder or with respect to the performance by either of
them or any other person of any of its or their respective
obligations under or in relation to the Management Agreement
or the Side Letters or any notice, certificate or document
executed or delivered thereunder; in particular, without
limitation, if the Manager shall fail to perform any of its
obligations under the Management Agreement or any document
relating thereto, the Assignee shall have no recourse to the
Assignor in respect of such failure and the Assignee hereby
acknowledges the absence of any such obligation as is referred
to in this sub-clause.
(d) The Assignor and the Assignee agree and acknowledge that the
Assignor does not have and shall not at any time hereafter
have any obligation to repurchase or accept a re-assignment of
the Assigned Rights or any part thereof.
8. Indemnity by Assignee
(a) The Assignee shall indemnify the Assignor and keep the
Assignor indemnified from and against all losses, costs,
expenses, demands and damages whatsoever which the Assignor
may suffer or incur in respect of any liability or obligation
arising on or after the Effective Date under the Management
Agreement and the Side Letters in respect of any period
commencing on or after the Effective Date and in respect of
any other of the Assigned Rights or any part thereof.
(b) This indemnity shall continue in full force and effect
notwithstanding completion of the other matters referred to in
or connected with this Agreement.
(c) The certificate of the Assignor as to the amount of any such
loss, cost, expense, demand or damage suffered or incurred by
it as aforesaid shall be prima facie evidence of such matters.
- 6 -
<PAGE> 7
9. Indemnity by Assignor
(a) Save as otherwise provided in Clauses 5 and 8, the Assignor
shall indemnify the Assignee and keep the Assignee indemnified
from and against all losses, costs, expenses, demands and
damages whatsoever which the Assignee may suffer or incur in
respect of any liability or obligation arising at any time
under the Management Agreement in respect of any period prior
to the Effective Date and in respect of the Assigned Rights or
any part thereof notwithstanding that such liability or
obligation may not actually become due and payable until on or
after the Effective Date.
(b) This indemnity shall continue in full force and effect
notwithstanding completion of the other matters referred to in
or connected with this Agreement.
(c) The certificate of the Assignee as to the amount of any such
loss, cost, expense, demand or damage suffered or incurred by
it as aforesaid shall be prima facie evidence of such matters.
10. Notices
All notices, demands or other communications under or in connection with this
Agreement shall be sent by letter, telefax or telex:
(a) if to the Assignor
Horizon House
Azalea Drive
Swanley
Kent TN13 1XR
Attn: Company Secretary
Telex No: 896050 EXPLOR G
Fax No: 0322 613650
(b) if to the Assignee to its office at
6 Pembroke Road
Sevenoaks
Kent TN1 1XR
Attn: Company Secretary
Telex No: 957840 EXPLOR G
Fax No: 0732 742977
or to such other address or telex number as such party may
from time to time notify to the other party hereto
- 7 -
<PAGE> 8
11. Costs
All costs and expenses (including legal fees) incurred in connection with the
negotiation, preparation and execution of this Agreement and in the completion
of the transactions contemplated hereby shall be for the account of the party
incurring the same.
12. Severability
If any provision hereof shall be held to be void, illegal or unenforceable it
shall be deemed severable from the remaining provisions hereof which shall
remain in full force and effect.
13. Assignments
This Agreement shall be binding upon and shall enure to the benefit of each of
the parties hereto and their respective successors and assigns.
14. Counterparts
This Agreement may be executed in any number of counterparts and all such
counterparts taken together shall be deemed to constitute one and the same
instrument.
15. Further Assurance
Each party will promptly execute and deliver all further instruments and
documents, and take all further action, as may be necessary or appropriate to
implement the terms of this Agreement.
16. Law and Jurisdiction
This Agreement shall be governed by and construed in accordance with English
law and any dispute or difference shall be referred to the exclusive
Jurisdiction of the English Courts.
IN WITNESS whereof this Agreement has been executed by the parties hereto the
day and year first above written.
THE ASSIGNOR
SIMON HORIZON LIMITED
By: /s/ [illegible signature]
- 8 -
<PAGE> 9
THE ASSIGNEE
HORIZON EXPLORATION LIMITED
By: /s/ G.M. Harrison
- 9 -
<PAGE> 1
10.9.5
DATED July 1994
- --------------------------------------------------------------------------------
(1) HORIZON EXPLORATION LIMITED
(2) SIMON-HORIZON LIMITED
- --------------------------------------------------------------------------------
D E E D O F A S S I G N M E N T
of
Insurances
Relating to Goods used in connection with the
M.V. "SIMON LABRADOR"
- --------------------------------------------------------------------------------
SIMMONS & SIMMONS
14 Dominion Street
London ECZM 2RJ
<PAGE> 2
T H I S D E E D O F A S S I G N M E N T is made the 15th day of July,
1994
BETWEEN:
(1) HORIZON EXPLORATION LIMITED, a company incorporated in England and
Wales with registration number 2804983 (the "Assignor"); and
(2) SIMON-HORIZON LIMITED, a company incorporated in England and Wales
with registration number 467924 (the "Assignee")
WHEREAS:
(A) The Assignor has by a charterparty (the "Charter") by way of
sub-demise dated the date hereof agreed to sub-charter the m.v. Simon
Labrador (the "Vessel") from the Assignee and by a Master Lease
Agreement and two Lease Contracts (together, the "Leases") all of even
date herewith has further agreed to sub-lease certain equipment from
the Assignee to be used in connection with the Vessel.
(B) It is a condition precedent to the obligations of the Assignee to
deliver to the Assignor the Vessel and the Goods pursuant to the terms
of the Charter and the Leases respectively that (inter alia) the
Assignor execute this Assignment and thereby secure all of its
obligations to the Assignee under or pursuant to the Charter and the
Leases
NOW THIS ASSIGNMENT WITNESSES:
1. Interpretation
(A) Terms used herein and in the recitals hereto and not otherwise defined
shall have the meanings given to them in the Charter and/or the
Leases.
(B) In this Assignment:
(a) "Approved Brokers" means such insurance brokers as the
assignee may have approved in writing;
(b) "Insurers" means the underwriters or insurance companies with
whom any of the Insurances are effected and (to the extent, if
any, applicable) the managers of any protection and indemnity
or war risks association in which the Vessel may at any time
be entered if cover in respect of the Goods is provided
thereby;
(c) "Insurances" means all policies and contracts of insurance and
(to the extent, if any, applicable) all entries in a
protection and indemnity or war risks
2
<PAGE> 3
association which are now or may hereafter be taken out or
effected in respect of the Goods, earnings or profits
therefrom or otherwise howsoever and all the benefits thereof,
including all claims whatsoever and returns of premiums;
(d) any reference to a total loss shall be read to include a
reference to an actual total or constructive total or an
agreed, arranged or compromised total loss.
2. Representations
The Assignor represents that:
(A) it has power to enter into and perform this Assignment and has taken
all necessary corporate or other action required to authorise the
execution and delivery of this Assignment and its performance
according to its terms;
(B) it is not necessary to ensure the legality, validity, enforceability
or admissibility in evidence of this Assignment (i) that it be filed,
except for registration with the registrar of Companies in England and
Vales, in the United Kingdom or in any country where the Assignor
carries on business or (ii) that it be stamped with any stamp or
similar transaction tax in any such country;
(C) all consents, licenses, approvals or authorisations of or declarations
to or registrations with governmental authorities or agencies or
courts required to make this Assignment legal, valid, enforceable or
admissible in evidence and to enable it lawfully to enter into and
perform its obligations hereunder have been obtained or made and are
in full force and effect;
(D) the execution and delivery of this Assignment and its performance
according to its terms will not violate (i) the Memorandum and
Articles of Association of the Assignor, (ii) any applicable law or
regulation or order or decree of any governmental authority or agency,
or (iii) any mortgage, deed or agreement which is binding upon the
Assignor or any of its assets; and
(E) it has not heretofore assigned, charged or pledged all or any part of
the Insurances.
3. Title to Insurances
The Assignor:
(A) as beneficial owner assigns all its right, title and interest in and
to the Insurances to the Assignee provided that on discharge by the
Assignor of all of its obligations under the
3
<PAGE> 4
Charter and Leases, provided the Assignor is under no further actual
or contingent liability under the Agreement or any other of the HEL
Documents (as such phrase is defined in and for the purposes of the
Agreement), the Assignee will at the request and cost of the Assignor
without recourse or warranty as to the subject-matter of such
assignment re-assign the Insurances to the Assignor or whomsoever may
be entitled thereto;
(B) shall forthwith on the execution hereof give notice of the aforesaid
assignment to the Insurers (or will procure that the Approved Brokers
do so) substantially in the following form:
NOTICE OF ASSIGNMENT
SIMON-HORIZON LIMITED (the "Assignee") and HORIZON EXPLORATION LIMITED (the
"Assignor") HEREBY GIVE NOTICE that by a first assignment dated 15th July 1994
the Assignor assigned to the Assignee all of its right, title and interest in
and to the benefit of all insurances now or hereafter taken out in respect of
the [Goods] the subject of the insurances [constituted by the policy]
[evidenced by the certificate of entry] whereon this notice is endorsed.
Dated [ ] [July] 1994
For and on behalf of For and on behalf of
The Assignor The Assignee
(C) shall forthwith upon the coming into effect of any of the Insurances
after the date hereof, give (or procure that the Approved Brokers, if
any, give) to the Insurers notice of the aforesaid assignment in the
form specified in sub-clause (B) of this Clause;
(D) shall execute all such documents and do all such things as may be
necessary to create in the Assignee a legal title to each of the
Insurances and will, in particular but without limitation, (i) notify
the Approved Brokers and the Insurers of the interest of the Assignee
in each of the Insurances, and (ii) secure that each of the Insurances
contains a Loss Payable and Notice of Cancellation Clause
substantially in the following form (or otherwise as may reasonably be
agreed between the Owner, the Assignee and the Assignor):
4
<PAGE> 5
"LOSS PAYABLE AND NOTICE OF
CANCELLATION CLAUSE
By an assignment dated [ ] July, 1994 the Assignor has assigned to
Simon-Horizon Limited (the "Assignee") this policy and all benefits thereof
including all claims of whatsoever nature thereunder.
(A) Until the Assignee notifies the underwriters to the contrary:
- all claims hereunder whatsoever shall be paid to the Assignee
without any deduction or deductions whatsoever unless the
Assignee has given prior written instructions to the contrary.
(B) The Assignee shall be advised:
(1) immediately of any material changes which are proposed to be
made in the terms of the insurances or if the underwriters
cease to be underwriters for any purposes connected with the
insurances;
(2) not later than fourteen days prior to the expiry of any of the
insurances if instructions have not been received for the
renewal or further renewal thereof and, in the event of
instructions being received to renew or further to renew, of
the details thereof;
(3) immediately of any instructions or notices received by
underwriters with regard to the cancellation or invalidity of
any of the insurances aforesaid."
(E) shall cause the Insurers (or, in the case of any of the Insurances
which are effected through Approved Brokers, the Approved Brokers) and
(to the extent, if any, applicable) the managers of any relevant
protection and indemnity or war risks association (i) to hold to the
order of the Assignee the originals of all policies, contracts,
binders, insurance slips, cover notes and, where applicable,
certificates of entry relating to the Goods and the benefits thereof
and to deliver certified copies thereof to the Assignee on request,
and (ii) to agree to advise the Assignee promptly:
(a) if any underwriter, insurance company or protection
and indemnity or war risks association cancels any of
the Insurances;
(b) of any alteration to any of the Insurances or any
default in the payment of any premium, call or
contribution or any failure to renew any of the
Insurances at least fourteen days before its expiry;
and
5
<PAGE> 6
(c) of any other act, omission or event of which they
have knowledge which would or might render invalid or
unenforceable any of the Insurances in whole or in
part;
(F) shall not hereafter assign, charge or pledge its right, title and
interest in and to the Insurances in whole or in part without the
Assignee's prior written consent;
(G) shall not without the prior written consent of the Assignee settle,
compromise or abandon any claim under any of the Insurances.
4. Application of Insurance Moneys
All monies payable under, pursuant to or in respect of the insurances shall be
applied as provided pursuant to Clause 11 of the Master Lease.
5. Law
This Assignment shall be governed by and construed in accordance with the laws
of England.
IN WITNESS whereof the Assignor has caused this Deed to be executed as its Deed
the day and year first before written.
SIGNED by )
and by ) /s/ Neil A.M. Campbell
and thereby executed by ) /s/ G.M. Harrison
HORIZON EXPLORATION LIMITED )
as its Deed )
SIGNED by )
for and on behalf of ) /s/ [illegible signature]
SIMON-HORIZON LIMITED )
in the presence of: )
6
<PAGE> 1
10.9.6
DATED 15th July, 1994 1994
HORIZON SEISMIC INC.
and
EXPLORATION HOLDINGS LIMITED
and
HORIZON EXPLORATION LIMITED
- --------------------------------------------------------------------------------
DEED OF CONTINUING INTER-COMPANY
CROSS GUARANTEE AND INDEMNITY
- --------------------------------------------------------------------------------
in favour of
SIMON-HORIZON LIMITED
SIMON PETROLEUM TECHNOLOGY LIMITED
and
SIMON ENGINEERING PLC
SIMMONS & SIMMONS
14 DOMINION STREET
LONDON EC2M 2RJ
(Ref: 5A/P.37800/AZM/2566m)
<PAGE> 2
T H I S D E E D is made the 15th day of July, 1994
- -------------------------------
BETWEEN:
(1) THE COMPANIES whose names, registration numbers and registered offices
are specified in the Schedule hereto (the "Companies") of the one
part; and
(2) SIMON-HORIZON LIMITED, registration number 467924, a company
incorporated in England and Wales with registered office at Horizon
House, Azalea Drive, Swanley, Kent, BR8 8JR SIMON PETROLEUM TECHNOLOGY
LIMITED registration number 2720413, a company incorporated in England
and Wales with registered office at Ty'n-y-Coed, Llanrhos, Llandudno,
North Wales; and SIMON ENGINEERING PLC registration number 52665, a
company incorporated in England and Wales with registered office at
Simon House, Bird Hall Lane, Stockport, Cheshire SK3 ORJ (hereinafter
together called the "Beneficiaries" and each a "Beneficiary" which
expression shall include their respective successors and assigns) of
the other part.
WHEREAS:
(A) By an Agreement of even date herewith (the "Agreement") made between
the Beneficiaries and Horizon Exploration Limited ("HEL") HEL is to
enter into the Charterparty by way of sub-demise referred to in
Recital (B) below with Simon-Horizon Limited ("Simon") and certain
other arrangements with the Beneficiaries in relation to the m.v.
"SIMON LABRADOR" registered under the Bahamian flag at the port of
Nassau under Official Number 715224 (the "Ship") upon the terms and
conditions therein mentioned.
(B) By a Charterparty by way of Sub-Demise (the "Charterparty") of even
date herewith and made between Simon (1) and HEL (2) Simon has agreed
to let and DEL has agreed to take the Ship on demise charter upon the
terms and conditions therein mentioned.
(C) By the Agreement HEL has agreed with the Beneficiaries (inter alia) to
procure that certain works be carried out to the Ship and equipment be
installed thereon at the expense of HEL upon the terms and conditions
therein mentioned.
(D) The execution and delivery of this Deed of Inter-Company
Cross-Guarantee and Indemnity by the Companies is one of the
conditions precedent (inter alia) to Simon letting and demising the
Ship to HEL pursuant to the Charterparty.
- 2 -
<PAGE> 3
IT IS AGREED as follows:
1. INTERPRETATION
1.1 In this Deed of Continuing Inter-Company Cross Guarantee and
Indemnity, unless the context otherwise requires or unless otherwise
defined herein, words and expressions defined in the Charterparty and
used herein shall have the same meaning where used in this Deed.
1.2 In this Deed, unless the context otherwise requires:
"Deed" means this Deed of Continuing Inter-Company Cross Guarantee and
Indemnity;
"Guarantee" includes each separate or independent stipulation or
agreement by the Companies and each one of them contained in this
Deed;
"Guaranteed Indebtedness" means the Indebtedness of HEL to the
Beneficiaries guaranteed pursuant to Clause 2.1 and indemnified
pursuant to Clause 2.2;
"Guaranteed Liabilities" means the Liabilities of HEL to the
Beneficiaries, the discharge of which is guaranteed pursuant to Clause
2.1 and indemnified pursuant to Clause 2.2;
"Guarantors" means the Companies and each of them;
"Incapacity" means in relation to a person the death, bankruptcy,
unsoundness of mind, insolvency, liquidation, dissolution, winding-up,
administration, receivership, amalgamation, reconstruction or other
incapacity of that person whatsoever (and, in the case of a
partnership, includes the termination or change in the composition of
the partnership);
"Indebtedness" means any obligation for the payment or repayment of
money, whether as principal or as surety and whether present or
future, actual or contingent;
"Liabilities" means all obligations and liabilities whatsoever,
whether express or implied, whether as principal or surety, whether
present or future, actual or contingent, whether joint or several in
whatever style, name or form and in whatever currency denominated.
1.3 Clause headings are inserted for convenience of reference only and
shall be ignored in the interpretation of this Deed.
1.4 In this Deed, unless the context otherwise requires:
(a) references to Clauses are to be construed as references to the
clauses of this Deed;
- 3 -
<PAGE> 4
(b) references to (or to any specifies provision of) this Deed or
any other document shall be construed as references to this
Deed, that provision or that document as in force for the time
being and as amended in accordance with the terms thereof, or,
as the case may be, with the agreement of the relevant parties
and (where such consent is, by the terms of this Deed or the
relevant document, required to be obtained as a condition to
such amendment being permitted) the prior written consent of
the Beneficiaries or any of them;
(c) words importing the plural shall include the singular and vice
versa;
(d) references to a person shall be construed as references to an
individual, firm, company, corporation, unincorporated body of
persons or any Government Entity; and
(e) references to statutory provisions shall be construed as
references to those provisions as replaced, amended or
reenacted from time to time.
2. GUARANTEE
In consideration of Simon chartering the Ship to HEL pursuant to the
Charterparty and of each of the Beneficiaries entering into the Agreement and
of other good and valuable consideration (the adequacy whereof is hereby
acknowledged by the Guarantors and each of them) the Guarantors jointly and
severally agree:
2.1 As a primary obligation and not merely as a surety, they hereby
guarantee:
(a) the full, due and punctual performance of all obligations of
HEL to the Beneficiaries howsoever arising, including, without
limitation, procuring the fulfillment of all the works and
supply of equipment to the Ship as contemplated by the
Agreement; and
(b) payment when due of all moneys due on any account whatsoever
by HEL to the Beneficiaries or to any of them, howsoever
arising, together with all other Indebtedness or Liabilities
whatsoever of HEL to the Beneficiaries or to any of them,
howsoever arising, whether under the Agreement the
Charterparty, any of the Relevant Documents or otherwise
so that in case of either (a) or (b), if HEL shall default, each of
the Guarantors shall itself be liable fully to perform the same or
make the relevant payment.
2.2 Unconditionally and irrevocably as a primary obligation to indemnify
the Beneficiaries on a full and unqualified indemnity basis and hold
the Beneficiaries harmless against any breach, default or failure by
HEL duly and punctually to perform and observe the terms,
- 4 -
<PAGE> 5
conditions, covenants or obligations on its part contained in the
Charterparty, the Agreement or any of the other Relevant Documents.
2.3 The Guarantee and the rights of the Beneficiaries under it shall not
be affected or prejudiced by the Beneficiaries or any of them holding
or taking any other or further securities or guarantees or by any
Beneficiary varying, releasing, exchanging, enforcing or omitting or
neglecting to enforce any such securities or guarantees (including
this Guarantee in whole or in part and against one Guarantor or more
than one Guarantor or by the introduction of any new Guarantor) or by
the Beneficiaries giving time for payment or granting any other
indulgence to or making any other arrangements with or accepting any
composition from the Guarantors or any of them or any person liable on
any securities or guarantees or indemnities held or to be held by the
Beneficiaries or by any other act or thing (including the invalidity
or unenforceability of any guarantee herein contained) which (apart
from this provision) would or might afford an equitable defense to a
surety. Each of the Guarantors agrees that the Beneficiaries shall
have no duty to any of the Guarantors in the enforcement or
realization of any such security, suretyship or indemnity and, in
particular, but without prejudice to the foregoing, the Beneficiaries
shall owe no duty to any of the Guarantors in the conduct of any
enforcement of any security over any of the assets of HEL or any other
Guarantor or any co-surety and each of the Guarantors' liability
hereunder shall not be reduced by the sale of any such assets at an
undervalue.
2.4 The Beneficiaries shall be at liberty but not bound to resort for
their own benefit to any other means of payment at any time and in any
order they think fit without thereby diminishing the liability of any
of the Guarantors and the Beneficiaries may enforce any of the
guarantees herein contained either for the payment of the ultimate
balance after resorting to other means of payment (including any other
of such guarantees) or for the balance due at any time notwithstanding
that any such other means of payment have not been resorted to and in
each case without entitling any of the Guarantors to any benefit from
such other means of payment so long as any Guaranteed Indebtedness or
Guaranteed Liabilities remain due or owing or payable or undischarged.
2.5 The bankruptcy, winding-up, liquidation, dissolution administration,
receivership or insolvency of any one or more of the Guarantors shall
not affect or determine the liability of the other Guarantors or any
of them under this Deed. All dividends, compositions and moneys
received by the Beneficiaries or any of them from any Guarantor
subject to such Incapacity or from any other company, person or estate
capable of being applied by the Beneficiaries in reduction of the
indebtedness, liabilities or obligations of any of any such Guarantor
shall be regarded for all purposes as payments in gross and the
Beneficiaries shall be entitled to prove in the bankruptcy,
winding-up, liquidation, dissolution, receivership or insolvency of
any such Guarantor in respect of the whole of such Guarantor's
obligations to the Beneficiaries and without any right on the part of
any other Guarantor to be subrogated to the Beneficiaries or any of
them in respect of any such proof to the intent that this Guarantee
shall apply to and secure the whole of any ultimate
- 5 -
<PAGE> 6
balance which shall remain due to the Beneficiaries or any of them
from each of the Guarantors.
2.6 Any settlement or discharge between the Beneficiaries and any of the
Guarantors shall be subject to the condition that no security or
payment to the Beneficiaries by any of the Guarantors or any other
person shall be avoided, invalidated, reduced, repaid or surrendered
by virtue of any provisions or enactments relating to bankruptcy,
winding-up, liquidation, dissolution, administration, receivership or
insolvency for the time being in force and if any such security or
payment shall be so avoided or reduced the Beneficiaries shall be
entitled to recover the value or amount thereof from such Guarantor
subsequently just as if such settlement or discharge had not occurred.
2.7 The Guarantee shall take effect as a guarantee of the whole and every
part of the Guaranteed Indebtedness and the Guaranteed Liabilities and
none of the Guarantors shall be entitled as against the Beneficiaries
to any right of proof in the bankruptcy, winding-up, liquidation,
dissolution or insolvency of any other Guarantor or any other surety
or other right of a surety (including any right of contribution from
any other surety) discharging, in whole or in part, his liability in
respect of the principal debt or to share in any security, suretyship
or indemnity held or money received by any Beneficiary on account of
the obligations of such Guarantor or any other surety or to have or
exercise any rights as surety (including any such right of
contribution as aforesaid) in competition with the Beneficiaries
unless and until the whole of the Guaranteed Indebtedness and the
Guaranteed Liabilities shall have first been completely discharged and
satisfied nor until the Guaranteed Indebtedness and Guaranteed
Liabilities shall have been discharged and satisfied in full shall any
of the Guarantors take any step to enforce any right or claim against
any other Guarantor in respect of any moneys paid by such first
Guarantor to the Beneficiaries hereunder or to exercise any other
rights, claims or remedies of any kind which may accrue howsoever to
any of the Guarantors in respect either of the amount so payable or so
paid (including any such right of contribution as aforesaid) or of any
other moneys for the time being due or owing to any of the Guarantors
from any other Guarantor or any other surety or otherwise, provided
that in the event of the bankruptcy, winding-up, liquidation,
dissolution or insolvency of any of the Guarantors or any other surety
each other Guarantor shall, if so directed by the Beneficiaries, but
not otherwise, prove for (to the fullest extent permitted by law) the
whole or any part of the moneys due or owing to it from such other
Guarantor or any other surety as aforesaid on terms that the benefit
of such proof and of all moneys received by it in respect thereof
shall be held on trust for the Beneficiaries. Furthermore, for the
purpose of enabling the Beneficiaries to sue any of the Guarantors or
any other surety or prove in the bankruptcy, winding-up, liquidation,
dissolution or insolvency of any of the Guarantors (the First
Guarantors) or any other surety in relation to or in respect of the
whole of the Guaranteed Indebtedness and the Guaranteed Liabilities,
or to preserve intact the liability of any other party, the
Beneficiaries may at any time place and keep, for such time as it may
think prudent, any moneys received, recovered or realized on account
of the obligations of the First Guarantor whether from any other
Guarantor hereunder or under any other guarantee or
- 6 -
<PAGE> 7
security to the credit either of such other Guarantor or of such other
person or transaction (if any) as the Beneficiaries may think fit,
without any intermediate obligation on the part of the Beneficiaries
to apply the same or any part thereof in or towards the discharge of
the Guaranteed Indebtedness and the Guaranteed Liabilities, or any
intermediate right on the part of such other Guarantor to sue the
First Guarantor or any other surety or prove in the bankruptcy,
winding-up, liquidation, dissolution or insolvency of the First
Guarantor or any other surety in competition filth or so as to
diminish any dividend or other advantage that would or might come to
the Beneficiaries or to treat the liability of the First Guarantor as
diminished provided that any such moneys shall be held in an interest
bearing account with whichever bank the Beneficiary shall designate.
As used in this Clause 2.7 and Clause 2.11 hereof the expression "any
other surety" includes, without prejudice to the generality of such
term, any other person constituting any of the Guarantors and any
party to any security, suretyship or indemnity or other person
referred to in Clause 2.3.
2.8 For all purposes, including any legal proceedings, a certificate
signed by any of the officers of any Beneficiary as to the sums,
obligations and liabilities for the time being due or incurred to it
by HEL and/or any other of the Guarantors shall be prima facie
evidence thereof against each Guarantor.
2.9 As a separate and independent stipulation each of the Guarantors
agrees, both severally and also jointly with every other Guarantor,
that any Indebtedness, Liability or obligation incurred or purported
to be incurred by any of the Guarantors or by any person purporting to
act on behalf of any of the Guarantors which may not be recoverable
from or enforceable against such Guarantor by reason of any legal
limitation, disability or incapacity on or of such Guarantor or any
other fact or circumstance and whether known to the Beneficiaries or
any of them or to any of the Guarantors or not, shall nevertheless be
recoverable from the other Guarantors as though the same had been
incurred or undertaken by the other Guarantors and the other
Guarantors were jointly and severally liable as sole or principal
debtors in respect thereof and shall be paid by the other Guarantors
on demand.
2.10 This Deed shall continue to bind the Guarantors and continue to apply
to future or subsequent Indebtedness, Liabilities and other
obligations incurred or undertaken or to be incurred or undertaken by
any of HEL and the other Guarantors to or in favour of the
Beneficiaries or any of them notwithstanding any amalgamation or
merger that may be effected by the Beneficiaries or any of them with
any other company and notwithstanding any reconstruction by any
Beneficiary involving the formation of and transfer of the whole or
any of its undertaking and assets to a new company and notwithstanding
the sale or transfer of all or any part of its undertaking to another
company whether the company with which the Beneficiary amalgamates or
merges or the company to which it transfers all or any part of its
undertaking and assets either on a reconstruction or sale or transfer
as aforesaid shall or shall not differ from such Beneficiary in its
objects, character or constitution and notwithstanding any transfer or
assignment of the benefit of the
- 7 -
<PAGE> 8
provisions herein contained and any rights conferred on the
Beneficiaries hereby to any other person, it being the intent of each
of the Guarantors that the Guarantee shall remain valid and effectual
in all respects in favour of, against and with reference to, and that
the benefit thereof and all rights conferred upon the Beneficiaries
hereby may be assigned to and enforced by, any such company or other
person and proceeded on in the same manner to all intents and purposes
as if such company or other person had been named herein instead of or
in addition to the Beneficiaries and the Beneficiaries shall be at
liberty (subject to the provisions of Clause 6, but otherwise without
liability to any of the Guarantors) to disclose any information
regarding the financial affairs of any of the Guarantors to any
transferee or assignee or proposed transferee or assignee or other
person entering into or proposing to enter into contractual
arrangements with the Beneficiaries in relation to this Deed and/or
the liabilities or obligations of any of the Guarantors to the
Beneficiaries.
2.11 While any amount from time to time remains payable under this Deed any
right of any of the Guarantors, arising whether by way of subrogation
or otherwise out of or in connection with the performance of any of
its duties and obligations, whether express or implied, under this
Deed, to be indemnified by HEL or any other Guarantor or to proceed
on, take the benefit of or enforce any other mortgage, security,
guarantee, indemnity or other right shall only be exercised or
enforced by such Guarantor with the previous written consent of the
Beneficiaries and subject to such terms and conditions as such consent
may specify. Any proceeds of or amounts received or recovered
pursuant to or in connection with any such exercise or enforcement
shall in any event and without prejudice to the provisions of Clause
2.7 hereof be paid and transferred immediately to the Beneficiaries or
as the Beneficiaries may otherwise direct and pending such payment and
transfer shall be held in trust absolutely for the benefit of the
Beneficiaries. Each of the Guarantors declares that it has not
received any mortgage, pledge, charge or other security from any of
HEL and the other Guarantors or any other surety for the giving of the
guarantee on its part herein contained and each of the Guarantors
agrees that it will not, so long as such guarantee remains in force,
take any mortgage, pledge, charge or other security in respect of its
liability hereunder or exercise any right of lien or set-off against
any of HEL and the other Guarantors or any other surety without first
obtaining the written consent of the Beneficiaries.
2.12 No assurance, security, guarantee or payment which may be avoided
under any law relating to bankruptcy, insolvency, administration or
winding-up (including without limitation sections 238, 239, 242, 243,
or 245 of the Insolvency Act 1986), and no release, settlement,
discharge or arrangement given or made by the Beneficiaries on the
faith of any such assurance, security, guarantee or payment, shall
prejudice or affect the right of the Beneficiaries to enforce this
security to the full extent of the indebtedness, liabilities and
obligations referred to in Clause 2 hereof. The Beneficiaries may in
their absolute discretion retain the security so created for a period
of one month plus such statutory period within which any assurance,
security, guarantee or payment can be avoided or invalidated after all
financial accommodation from time to time made available
- 8 -
<PAGE> 9
to any Guarantor by the Beneficiaries shall have ceased to be
available or (if longer) all such liabilities and obligations shall
have been paid and discharged in full, notwithstanding any release,
settlement, discharge or arrangement given or made by the
Beneficiaries on, or as a consequence of, such cessation or, as the
case may be, payment. If at any time within such period a petition
shall be presented to a competent court for an order for the
bankruptcy, insolvency or winding-up of any of the Guarantors or any
of the Guarantors shall commence to be wound up voluntarily, or an
application for an administration order shall be made to a competent
court in respect of that Guarantor the Beneficiaries may,
notwithstanding as aforementioned, continue to retain the security or
any part thereof for and during such further period as the
Beneficiaries in their absolute discretion shall determine. Each
Guarantor agrees that such security shall be deemed to have been and
to have remained held by the Beneficiaries as and by way of security.
In the event that any Beneficiary shall be required under section 234
of the Insolvency Act 1986 to pay any sum to an office-holder (as
defined in the said section) of any of the Guarantors, then such sum
when paid by the Beneficiary shall be deemed to form part of the
liabilities hereby secured and any release, settlement, discharge or
arrangement given or made by the Beneficiary on the faith of any
payment on account of such liabilities which the Beneficiary shall be
so required to pay to the said office-holder shall be treated as
having been given or made by the Beneficiary, and accepted by such
Guarantor, upon the express condition that the same shall be subject
and without prejudice to the Beneficiary's right to recover the same
under this Deed.
3. PAYMENTS
3.1 The obligations of each of the Guarantors hereunder shall be to make
payment to the Beneficiaries in the currency in which the applicable
obligation ought to have been or ought to be discharged by the party
concerned, strictly in accordance with the terms and provisions of the
relevant agreement, express or implied, between the relevant
Beneficiary or Beneficiaries and such party applicable to each
respective obligation of such party, regardless of any law, regulation
or decree, now or hereafter in effect, which affects or might in any
manner affect any of such terms or provisions or the rights of the
Beneficiaries as against such party.
3.2 Each payment to be made by any of the Guarantors hereunder shall be
made to the Beneficiaries, in the appropriate currency in accordance
with the terms hereof, to the credit of the relevant Beneficiary's
account with whichever bank or banks located in the country of such
currency as shall be designated by such Beneficiary. All such
payments shall be made without set-off or counterclaim and free and
clear of and without deduction or withholding for any tax of any
nature now or hereafter imposed by any country or any sub-division or
taxing authority thereof or therein or any federation or organization
of which such country is a member. If any such payment shall be
subject to any such tax or if any of the Guarantors shall be required
to make any such seduction or withholding, such Guarantor shall pay to
the relevant Beneficiary such additional amount as may be necessary to
enable the Beneficiary to receive and retain, after all deductions and
- 9 -
<PAGE> 10
withholdings, a net amount equal to the full amount payable hereunder.
As used in this Clause the term "tax" includes all levies, imposts,
duties, charges, fees, deductions, withholdings, turnover tax,
transaction tax, stamp tax, stamp duty and any restrictions or
conditions of any nature resulting in a charge.
3.3 It is further agreed by each of the Guarantors, both severally and
also jointly with every other Guarantor, that the Guarantors will
indemnify each Beneficiary against any loss incurred as a result of
any judgment or order being given or made for the payment of any
amount due hereunder and such judgment or order being expressed in a
currency other than that in which such amount is payable by the
Guarantors hereunder and as a result of any variation having occurred
in rates of exchange between the date as at which such amount is
converted into such other currency for the purposes of such judgment
or order and the date of actual payment pursuant thereto. The
foregoing indemnity shall constitute a separate and independent
obligation of the Guarantors and shall apply irrespective of any
indulgence granted to any of the Guarantors from time to time and
shall continue in full force and effect notwithstanding any such
judgment or order as aforesaid.
4. REPRESENTATIONS AND WARRANTIES
4.1 The Guarantors jointly and severally represent and warrant to the
Beneficiaries and to each of them that:
(a) each Guarantor is duly incorporated and validly existing in
good standing under the laws of England or the State of Texas
as the case may be, as limited company and has power to carry
on its businesses as now being conducted and to own its
property and other assets;
(b) each Guarantor has power to execute, deliver and perform its
obligations under this Deed, and all necessary corporate,
shareholder and other action has been taken to authorize its
execution, delivery and performance of the same and no
limitation on the power of any Guarantor to borrow or give
guarantees will be exceeded as a result of this Deed;
(c) this Guarantee constitutes valid, binding and enforceable
obligations of each Guarantor;
(d) the execution and delivery of this Deed, the performance of
its obligations hereunder, and compliance with the provisions
of this Deed by each of the Guarantors will not (i) contravene
any existing applicable law, statute, rule or regulation or
any judgment, decree or permit to which such Guarantor is
subject, or (ii) contravene or conflict with any provision of
any Guarantor's respective Memorandum and Articles of
Association, By-Laws, Statutes or other constitutional
documents;
- 10 -
<PAGE> 11
(e) it is not necessary to ensure the legality, validity,
enforceability or admissibility in evidence of this Deed that
it or any other instrument be notarized, filed, recorded,
registered or enrolled in any court, public office or
elsewhere in England or in any other Jurisdiction or that any
stamp, registration or similar tax or charge be paid in
England or in any other Jurisdiction on or in relation to this
Deed and this Deed is in proper form for its enforcement in
the courts of England, the State of Texas and the Federal
Courts of the United States of America;
(f) neither is any Guarantor or any of its assets entitled to
immunity on the grounds of sovereignty or otherwise from any
legal action or proceeding (which shall include, without
limitation, suit, attachment prior to judgment, execution or
other enforcement).
4.2 Each Guarantor further represents and warrants that:
(a) every consent, authorization, license or approval of, or
registration with or declaration to, governmental or public
bodies or authorities or courts required by the Guarantor to
authorize, or required by the Guarantor in connection with,
the execution, delivery, validity, enforceability or
admissibility in evidence of this Deed or the performance by
the Guarantor of its obligations under this Deed has been
obtained or made and is in full force and effect and there has
been no default in the observance of the conditions or
restrictions (if any) imposed in, or in connection with, any
of the same;
(b) the obligations of the Guarantor under this Deed are direct,
general and unconditional obligations of the Guarantor and
rank at least pari passu with all other present and future
unsecured and unsubordinated Indebtedness of the Guarantor
with the exception of any obligations which are mandatorily
preferred by law and not by contract;
(c) as at the date of this Deed, Exploration Holdings Limited is
the holding company (and "holding company" shall have the
meaning ascribed thereto pursuant to section 736 of the
Companies Act 1985) and is, directly or indirectly, the
beneficial owner of all of the issued share capital of HEL;
(d) no Relevant Event has occurred and is continuing; and
(e) save as disclosed, no action, suit, proceeding, litigation or
dispute against the Guarantor is taking place or pending or to
the Guarantors's knowledge threatened before any court, board
of arbitration or other body nor is there subsisting any
judgment or award given against the Guarantor which in each
case would or might result in any material adverse change in
the business or condition (financial or otherwise) of the
Guarantor.
- 11 -
<PAGE> 12
4.3 The representations and warranties in Clauses 4.1 and 4.2 shall be
deemed to be repeated by the Guarantors on and as of each day from the
date of this Deed until all the Guaranteed Indebtedness and Guaranteed
Liabilities shall have been fully and finally paid and discharged
whether by HEL and/or by the Guarantors or any of them pursuant to
this Deed as if made with reference to the facts and circumstances
existing on each such day.
5. UNDERTAKINGS
5.1 Each of the Guarantors undertakes that as from the date of this Deed
until all the Guaranteed Indebtedness and Guaranteed Liabilities shall
have been fully and finally paid and discharged, it will:
(a) promptly inform the Beneficiaries of any occurrence of which
it becomes aware which might adversely affect its ability to
perform its obligations under this Deed forthwith upon
becoming aware thereof;
(b) without prejudice to Clause 4.2, obtain or cause to be
obtained, maintain in full force and effect and comply in all
material respects with the conditions and restrictions (if
any) imposed in or in connection with, every consent,
authorization, license or approval of governmental or public
bodies or authorities or courts and do, or cause to be done,
all other acts and things which may from time to time be
necessary or desirable under applicable law for the continued
due performance of all its obligations under this Deed; and
(c) prepare financial statements in accordance with generally
accepted accounting principles and practices in England or the
United States, as appropriate, consistently applied in respect
of each financial year and cause the same to be reported on by
its auditors and deliver copies of the same to Simon as soon
as practicable but not later than 180 days after the end of
the financial period to which they relate.
5.2 Each Guarantor further undertakes with the Beneficiaries that it will:
(a) pay to the Beneficiaries on demand (whether any such
Indebtedness, Liabilities or obligations shall be its sole
Indebtedness, Liabilities or obligations or shall be joint
with any person, firm or company) all of its present and
future Indebtedness to the Beneficiaries on any account
whatsoever, all of its other Liabilities whatsoever to the
Beneficiaries, present or future, actual or contingent,
howsoever arising (including, but without prejudice to the
provisions of Clause 2 hereof, liabilities and obligations as
surety or guarantor whether pursuant to this Deed or
otherwise) and that it will fully and faithfully perform and
discharge all of its other obligations to the Beneficiaries,
howsoever arising; and
- 12 -
<PAGE> 13
(b) it will (except in the case of HEL which shall itself so
perform and discharge all of such obligations) use its best
endeavors to procure that HEL shall fully and faithfully
perform and discharge all of its obligations to the
Beneficiaries pursuant to the Agreement and the Relevant
Documents.
6. BENEFIT OF THIS DEED AND ASSIGNMENT
6.1 This Deed shall be binding upon the Guarantors and their respective
successors in title and shall enure for the benefit of the
Beneficiaries and their respective successors in title, assignees and
transferees.
6.2 The Guarantors may not assign or transfer any of their respective
rights or obligations under this Deed. The Beneficiaries or any of
them may at any time transfer all or any part of their or its rights,
benefits and obligations under this Deed by assigning to any other of
them or to any third party (each of which is hereinafter in this
Clause called an "Assignee") which is not a Business Competitor of HEL
(as such term is defined in and for the purposes of the Agreement) all
or any part of its respective rights and benefits hereunder in
consideration (except in the case of any assignment to Royal Bank of
Scotland (Industrial Leasing) Limited or any other company within the
Royal Bank of Scotland plc group of companies when no such
consideration shall be required) of the agreement of each such
Assignee to perform, or to reimburse the assignor for having
performed, the assignor's obligations hereunder as so assigned to such
Assignee. If any such third party is a Business Competitor of HEL the
Beneficiaries shall not, without the prior written consent of HEL
(such consent not to be unreasonably withheld or delayed), so transfer
all or any part of its respective rights, benefits and obligations.
If any of the Beneficiaries does so transfer its rights, benefits and
obligations in accordance with the provisions of this Clause 6, all
references in this Deed to it shall thereafter be construed as a
reference to the Assignee.
6.3 The Beneficiaries may not disclose to a potential assignee or any
other person proposing to enter into contractual arrangements with any
of them in relation to the HEL Documents (as such term is defined in
and for the purposes of the Agreement) information about the HEL, the
Guarantors, the m.v. "Simon Labrador" and the HEL Documents except
with the prior written consent of HEL (such consent not to be
unreasonably withheld or delayed).
7. NOTICES
Any demand or notice by the Beneficiaries hereunder shall be in writing and may
be served on the Guarantor on whom the demand is to be made by leaving the
same, or sending it through the post or by telex or facsimile transmission
addresses to such Guarantor, at the address set out opposite its name in the
Schedule to this Deed or at the address last known to the Beneficiaries as the
registered or principal office or, as the case may be, place of business of
such Guarantor, and a demand or notice so served shall be effective
notwithstanding that it may later be returned
- 13 -
<PAGE> 14
undelivered if left at such address, at the time it was so left or, if sent by
post, 48 hours after the time it was posted and in proving such service by post
it shall be sufficient to prove that the envelope containing the demand or
notice was properly addressed, stamped and posted. Any such demand or notice
by telex or facsimile transmission shall be deemed to have been duly served at
the time when in the ordinary course of transmission it would have been
received.
8. OTHER MATTERS
8.1 No delay or omission of the Beneficiary in exercising any right, power
or privilege hereunder shall impair such right, power or privilege or
be construed as a waiver of such right, power or privilege nor shall
any single or partial exercise of any such right, power or privilege
preclude any further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies of the Beneficiary
herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
8.3 The illegality, invalidity or unenforceability of any provision of
this Deed under the law of any Jurisdiction shall not affect its
legality, validity or enforceability under the law of any other
jurisdiction or the legality, validity, or enforceability of any other
provision of this Deed.
8.4 This Deed may be executed in one or more parts or counterparts and all
such parts or counterparts shall be construed and read together as one
Deed.
8.5 This Deed shall be governed by and construed in accordance with
English law and each of the Guarantors hereby irrevocably agrees for
the benefit of the Beneficiaries that the English Courts are to have
jurisdiction to settle any suit, action or proceeding which may arise
out of or in connection with this Deed and accordingly any suit,
action or proceeding so arising (in this Clause referred to as
"Proceedings") may be brought in such court. Without prejudice to the
foregoing, the parties hereto further irrevocably agree that any
Proceedings may be brought in the Courts of such other jurisdiction or
jurisdictions as the relevant Beneficiary may from time to time select
and each of the Guarantors hereby waives absolutely any immunity to
which it is or may be entitled in any Jurisdiction. Horizon Seismic
Inc. hereby irrevocably appoints Exploration Holdings Limited at its
address set out in the Schedule hereto as its agent for service of
process in England.
IN WITNESS whereof each of the Companies has caused this Continuing
Inter-Company Cross Guarantee and Indemnity to be executed as its deed, and the
Companies and the Beneficiaries have (with the intention of giving full effect
to any provision of this Continuing Inter-Company Cross Guarantee and Indemnity
which may for any reason not be made fully effective and binding on each of the
Companies by its execution of this Continuing Inter-Company Cross Guarantee and
Indemnity as its deed) caused this Continuing Inter-Company Cross Guarantee and
Indemnity to be signed, on their respective behalves on the day and year first
before written.
- 14 -
<PAGE> 15
SIGNED by )
and ) /s/ Neil A.M. Campbell
and thereby executed by ) /s/ G.M. Harrison
HORIZON SEISMIC INC. )
as its deed )
SIGNED by )
and ) /s/ Neil A.M. Campbell
and thereby executed by ) /s/ G.M. Harrison
EXPLORATION HOLDINGS )
LIMITED as its deed )
SIGNED by )
and ) /s/ Neil A.M. Campbell
and thereby executed by ) /s/ G.M. Harrison
HORIZON EXPLORATION )
LIMITED as its deed )
- 15 -
<PAGE> 16
THE SCHEDULE
<TABLE>
<CAPTION>
REG OFFICE/
ADDRESS
COMPANY REG NO. FOR NOTICES
- ------- ------- -----------
<S> <C> <C>
Exploration 2812999 6 Pembroke Road
Holdings Limited Sevenoaks
Kent TN13 1XR
Attn: The Company Secretary
Telex: 957840 EXPLOR G
Fax: 0732 742977
Horizon Seismic Inc. 11200 Westheimer
Suite 200
Houston
Texas 77042
Attn: The Senior
Vice-President
Fax: (0101) 713 977 3408
Horizon Exploration 2804983 6 Pembroke Road
Limited Sevenoaks
Kent TN13 1XR
Attn: The Company Secretary
Telex: 957840 EXPLOR G
Fax: 0732 742977
</TABLE>
- 16 -
<PAGE> 1
EXHIBIT 10.9.7
Dated 15th July, 1994
--------------------------------------
(1) SIMON-HORIZON LIMITED
(2) HORIZON EXPLORATION LIMITED
SUB-LEASE CONTRACT
Number 1
SIMMONS & SIMMONS
14 DOMINION STREET
LONDON EC2M 2RJ
REF: 5A/P37800/A2M 1024m
[Contract No: RS920/0022]
-----------------------
<PAGE> 2
THIS SUB-LEASE CONTRACT is made the 15th day of July, 1994
- -------------------------
BETWEEN:
(1) Simon-Horizon Limited, registered no. 467924, of Horizon House, Azalea
Drive, Swanley, Kent BR8 8JR (.Simon.)
(2) Horizon Exploration Limited, registered no. 2804983, of 6 Pembroke
Road, Seven Oaks, Kent TN13 1XR ("the Lessee")
WHEREAS:
(A) Simon has pursuant to a Master Leasing Agreement dated 31st March 1992
between Simon and Royal Bank of Scotland (Industrial Leasing) Limited
(the "Owners") and a lease contract, contract number RS920/0022 (dated
31st March 1992) (together the "RBS Leasing Contracts") between Simon
and the Owner leased from the Owner all the assets and equipment the
subject of this Sub-Lease Contract and it is the intention of Simon
and the Lessee that the Lessee shall enter into this Sub-Lease
Contract upon terms and conditions substantially identical in all
material respects to the terms and conditions of the RBS Leasing
Contract.
(B) The parties hereto have entered into a Master Leasing Agreement
("Master Agreement") of even date herewith.
(C) This Sub-Lease Contract (incorporating Schedules I, II and III hereto)
is entered into pursuant to the Master Agreement.
NOW IT IS HEREBY AGREED as follows:
1. (a) The terms defined in and for the purposes of the Master
Agreement shall have the same meanings herein.
(b) The provisions of the Master Agreement and any special terms
stated in Schedules II and III hereto shall be deemed to be
incorporated herein. In the event of any conflict between the
provisions of the Master Agreement and the remaining
provisions of this Agreement the latter shall prevail.
2. Simon shall let and the Lessee shall take on lease the Goods as
described in Schedule I hereto.
3. The Original Cost of the Goods exclusive
of recoverable Value Added Tax is L.469,047.79
Recoverable VAT is L.82,083.36
2
<PAGE> 3
TOTAL COST L.551.131.15
4. (a) The Primary Period shall be deemed to have commenced on 1992
("the Prime Date"), and the last day of this period shall be 1
April 2001.
(b) The Secondary Period shall terminate in accordance with the
provisions of Clause 3.06 of the Master Agreement.
5. (a) The Rentals for the Goods during the Primary Period are
(subject to adjustment pursuant to Clause 5.04 of the Master
Agreement) set out in the table below;
<TABLE>
<CAPTION>
Number Rental Rental Rental Payments
of Rentals Amount Frequency Commencing on
----------- ------- ---------- -------------
<S> <C> <C> <C>
1 L.6,594.81 Monthly 1 March 1992
followed by
109 L.6,594.81 Monthly 1 April 1992
</TABLE>
(b) The Rentals for the Goods during the Secondary Period shall be
L.938.10 p.a. All Secondary Period Rentals shall be paid
annually in advance with the first rental payment being due on
2 April 2001.
(c) Value Added Tax will be applied to the Primary and Secondary
Period Rentals at the applicable rate.
(d) Unless otherwise agreed by Simon the method for payment of
Rentals shall be by Standing Order. Payment of Rentals (and
any other payments falling due) shall be effected for full
value in cleared funds in the hands of Simon on or before the
relevant date of payment; if a date of payment is not a
business day in England then the date for payment shall be
deemed to be the previous such business day occurring.
(e) The bank account for payment of Rentals and other amounts due
is unless otherwise notified to the Lessee the account of
Royal Bank of Scotland (Industrial Leasing) Limited, account
number 12176088 with The Royal Bank of Scotland plc, 45 The
Promenade, Cheltenham Gloucestershire, GL50 1PY.
(f) The Rentals and Termination Sums are subject to the Special
Terms set out in Schedules II and III.
6. For the purposes of Clause 5.04 (a) (ii) of the Master Agreement it is
assumed that:
(a) the Owner shall be entitled to capital allowances in
3
<PAGE> 4
respect of the Original Cost of the Goods namely, Writing Down
Allowances on the reducing balance of Original Cost, on the
following basis.
<TABLE>
<CAPTION>
Accounting Period Capital Allowances
of Owner Writing Down %
----------------- ------------------
<S> <C>
31 March 1992 25%
(and thereafter)
</TABLE>
(b) The Calculation Rates shall be at the rate specified below:
<TABLE>
<S> <C> <C>
In the period from 01.04.90 to 31.03.91 34%
01.04.91 to 31.03.92 33% and
thereafter 33%
</TABLE>
7. The Site of the Goods is on the seismic survey vessel the MV Simon
Labrador.
8. If the Lessee acts as sales sub-agent for Simon or agent for the Owner
to dispose of the Goods the Lessee will be entitled to 98% of the net
sales proceeds by way of rebate of rentals under Clause 17.02 of the
Master Agreement. The Sales Agency shall end six months after the
Lease Period expires.
9. The discount rate (referred to in Clause 14.03(b)(ii) of the Master
Leasing Agreement) shall be 5% per annum.
10. This Contract shall be governed by and construed in accordance with
English Law.
11. The Lessee's attention is drawn to Clause 5.09 of the Master
Agreement, under which irrespective of the accounting treatment to be
adopted by the Lessee, the Lessee is not entitled to claim capital
allowances on the Goods.
IN WITNESS whereof this Agreement has been entered into the day and year first
before written.
4
<PAGE> 5
SCHEDULE I
DESCRIPTION OF GOODS
1 Sony Colour Monitor
1 Slipring Unit
2 AST 386 PC Unit
2 Streamer Diverter Bodies
3 Break Out Box Components
1 Digital Dead Section
2 Hydro Streamer Cables
2 Streamer Fish
2 Spooler Block Control Valves
Tow Upgrade Connectors
1 Gun Depth Monitoring System
1 Modified Gun Fish
Streamer Connectors
2 Umbilical Upgrades
Umbilical Termination Components
Installation Costs
Computer Upgrades
Pneumatic Power Tools
Acoustics Upgrades
Air Start Motor
Spares Pack for Compressor
Seawater De-Salination Plant
DNV Classification Fee
Additional Shipyard's Costs
Miscellaneous Small Value Items
5
<PAGE> 6
SCHEDULE II
SPECIAL TERMS
The Rentals in this contract are variable for interest throughout the Primary
Period. For the purposes of Clause 5.04 of the Master Agreement each Rental is
based on the assumption that on the first relevant date as shown below the
Sterling London Interbank Rate Offered by The Royal Rank of Scotland Plc for
monies of the relevant amount and period at or about 11.00 am ("LIBOR") will be
10% p.a and that on each successive relevant date Three Month Sterling London
Interbank Rate Offered by the Royal Bank of Scotland plc for monies of the
relevant amount at or about 11 a.m. "LIBOR") on the relevant date as shown
below will be log per annum. LIBOR will be conclusively certified by the Owner
to Simon who will notify the Lessee of such certificate.
If LIBOR is greater on the relevant date the Lessee shall pay to Simon a
supplemental rental on the settlement date as shown below. If LIBOR is less on
the relevant date Simon shall following receipt of an equal amount from the
Owner pay to the Lessee a rebate of rental on the settlement date. The
supplemental rental or rebate of rental will be calculated by multiplying the
difference between LIBOR on the relevant date and 10% per annum (rounded to two
decimal places above) by the appropriate rental adjustment factor shown below.
Provided always that if there is any change to the rentals in accordance with
Clause 5.04 of the Master Agreement new rental adjustment factors will be
provided.
6
<PAGE> 7
<TABLE>
<CAPTION>
Rental Adjustment Factors
per L.1.000 of Original
Relevant Date Cost for each 1% p.a.
for Setting LIBOR Settlement Date movements in LIBOR
- ----------------- ---------------- ------------------
<S> <C> <C>
10.02.92 01.04.92 L.1.42
01.04.92 01.07.92 L.2.49
01.07.92 01.10.92 L.2.48
01.10.92 01.01.93 L.2.43
01.01.93 01.04.93 L.2.14
01.04.93 01.07.93 L.2.12
01.07.93 01.10.93 L.2.09
01.10.93 01.01.94 L.2.04
01.01.94 01.04.94 L.1.86
01.04.94 01.07.94 L.1.83
01.07.94 01.10.94 L.1.79
01.10.94 01.01.95 L.1.73
01.01.95 01.04.95 L.1.60
01.04.95 01.07.95 L.1.56
01.07.95 01.10.95 L.1.51
01.10.95 01.01.96 L.1.44
01.01.96 01.04.96 L.1.36
01.04.96 01.07.96 L.1.29
01.07.96 01.10.96 L.1.23
01.10.96 01.01.97 L.1.16
01.01.97 01.04.97 L.1.09
01.04.97 01.07.97 L.1.03
01.07.97 01.10.97 L.0.96
01.10.97 01.01.98 L.0.88
01.01.98 01.04.98 L.0.83
01.04.98 01.07.98 L.0.76
01.07.98 01.10.98 L.0.68
01.10.98 01.01.99 L.0.59
01.01.99 01.04.99 L.0.57
01.04.99 01.07.99 L.0.49
01.07.99 01.10.99 L.0.40
01.10.99 01.01.00 L.0.30
01.01.00 01.04.00 L.0.29
01.04.00 01.07.00 L.0.20
01.07.00 01.10.00 L.0.10
01.10.00 and thereafter NIL
</TABLE>
If any of the above dates are not business days the previous business day will
be used.
The calculation of the supplemental rental or rebate of rental are subject to a
minimum LIBOR of 7% per annum.
7
<PAGE> 8
SCHEDULE III
<TABLE>
<CAPTION>
Termination Termination Termination Termination
Date Sum Date Sum
- ----- ---- ----- ---
<S> <C> <C> <C> <C>
1 March 1992 1032.91 1 October 1995 751.40
1 April 1992 1025.55 1 November 1995 743.71
1 May 1992 1021.01 1 December 1995 735.72
1 June 1992 1016.79 1 January 1996 727.85
1 July 1992 1012.21 1 February 1996 719.91
1 August 1992 1007.93 1 March 1996 711.03
1 Sept. 1992 1003.60 1 April 1996 696.09
1 Oct. 1992 998.90 1 May 1996 687.67
1 Nov. 1992 994.48 1 June 1996 679.34
1 Dec. 1992 989.70 1 July 1996 670.74
1 January 1993 985.17 1 August 1996 662.25
1 Feb. 1993 980.10 1 September 1996 653.66
1 March 1993 973.43 1 October 1996 644.79
1 April 1993 962.62 1 November 1996 636.03
1 May 1993 957.07 1 December 1996 627.00
1 June 1993 951.74 1 January 1997 618.04
1 July 1993 946.06 1 February 1997 609.06
1 August 1993 940.63 1 March 1997 599.15
1 Sept. 1993 935.13 1 April 1997 583.88
1 October 1993 929.28 1 May 1997 574.44
1 Nov. 1993 923.67 1 June 1997 565.04
1 Dec. 1993 917.71 1 July 1997 553.39
1 January 1994 911.96 1 August 1997 545.81
1 Feb. 1994 905.96 1 September 1997 536.11
1 March 1994 898.52 1 October 1997 526.18
1 April 1994 885.64 1 November 1997 516.30
1 May 1994 879.15 1 December 1997 506.17
1 June 1994 872.83 1 January 1998 496 07
1 July 1994 866.20 1 February 1998 485.99
1 August 1994 859.76 1 March 1998 475.16
I Sept. 1994 853.24 1 April 1998 459.95
1 October 1994 846.40 1 May 1998 449.42
1 Nov. 1994 839.76 1 June 1998 438.89
1 Dec. 1994 832.79 1 July 1998 428.14
1 January 1995 825.99 1 August 1998 417.40
1 Feb. 1995 819.03 1 September 1998 406.55
1 March 1995 810.80 1 October 1998 395.48
1 April 1995 796.57 1 November 1998 384.41
1 May 1995 789.13 1 December 1998 373.13
1 June 1995 781.83 1 January 1999 361.83
1 July 1995 774.22 1 February 1999 350.58
1 August 1995 766.77 1 March 1999 338.77
1 Sept. 1995 759.23 1 April 1999 323.90
1 May 1999 312.21 1 May 2000 162,29
1 June 1999 300.48 1 June 2000 149.28
1 July 1999 288.55 1 July 2000 136.10
1 August 1999 276.59 1 August 2000 122.82
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C> <C> <C> <C>
1 Sept. 1999 264.50 1 September 2000 109.41
1 October 1999 252.23 1 October 2000 95.85
1 Nov. 1999 239.90 1 November 2000 82.18
1 Dec. 1999 227.39 1 December 2000 68.40
1 January 2000 214.81 1 January 2001 54.57
1 February 2000 202.30 1 February 2001 40.72
1 March 2000 189.49 1 March 2001 26.76
1 April 2000 175.22 1 April 2001 14.06
</TABLE>
The Termination Sums detailed above (which are stated per L.1000 of
Original Cost) have been calculated on the basis of the assumptions contained
in Clause 5.04(a) of the Master Agreement and Clause 6 of this Sub-Lease
Contract. The Termination Sums also assume that LIBOR in the Rental Period
during which termination occurs is log per annum, and that termination will
occur on one of the dates detailed above. In the event that a termination
occurs on any date other than a date detailed above, or that any of the other
aforementioned assumptions prove to be incorrect as at the date of termination,
with the result that the Return of the Owner in relation to the Goods in
respect of which such termination has occurred is altered, the amount of the
Termination Sums which falls due on such termination date shall be adjusted
upwards or downwards by such amount required to ensure that the Return of the
Owner, in relation to those Goods, is the same as it would have been had the
relevant assumption (and all other assumptions) proved to be correct.
The above Termination Sums will not apply in the event of the Lessee
repudiating the Master Agreement by a breach of the terms thereof in which case
the terms of Clause 14.03(b) apply. The above Termination Sums have been
calculated on the assumption that the Goods are sold for their tax written down
value in the accounts of the Owner at the time such disposal is completed; in
the event that this assumption proves to be incorrect the above Termination
Sums will be adjusted in such a manner as to maintain the Owner's Return taking
into account the actual disposal proceeds.
9
<PAGE> 10
AS WITNESS the hands of the representatives duly authorized on behalf of the
parties hereto the day and year first written above,
SIGNED BY SIGNED BY
------------------------ ------------------------------
SIGNATURE /s/[illegible signature] SIGNATURE /s/ G.M. Harrison
DESIGNATION DESIGNATION
------------------------ ----------------------------
on behalf of Simon for and on behalf of the Lessee
in the presence of: in the presence of:
WITNESS /s/ Andrew R. Murray WITNESS /s/ Andrew R. Murray
*FULL NAME Andrew R. Murray *FULL NAME Andrew R. Murray
ADDRESS ADDRESS
--------------------------- --------------------------------
- ---------------------------------- ---------------------------------
- ---------------------------------- ---------------------------------
*Complete name in full in typewriting or block capitals
10
<PAGE> 11
Note
Lessee must complete acceptance certificate overleaf.
11
<PAGE> 1
EXHIBIT 10.9.8
Dated 15th July, 1994
(1) SIMON-HORIZON LIMITED
(2) HORIZON EXPLORATION LIMITED
SUB-LEASE CONTRACT
Number 2
SIMMONS & SIMMONS
14 DOMINION STREET
LONDON EC2M 2RJ
REF: 5A/P37800/AZM 1030m
<PAGE> 2
[Contract No: RS920/00171
THIS SUB-LEASE CONTRACT is made the 15th day of July, 1994
BETWEEN:
(1) Simon-Horizon Limited, registered no. 467924, of Horizon House, Azalea
Drive, Swanley, Kent BR8 8JR ("Simon")
(2) Horizon Exploration Limited, registered no. 2804983 of 6 Pembroke
Road, Sevenoaks, Kent TN13 1XR ("the Lessee")
WHEREAS:
(A) Simon has pursuant to a Master Leasing Agreement dated 31st March 1992
between Simon and Royal Bank of Scotland (Industrial Leasing) Limited
(the "Owners") and a lease contract, contract number RS920/0017 (dated
31st March 1992) (together the "RBS Leasing Contracts") between Simon
and the Owner leased from the Owner all the assets and equipment the
subject of this Sub-Lease Contract and it is the intention of Simon
and the Lessee that the Lessee shall enter into this Sub-Lease
Contract upon terms and conditions substantially identical in all
material respects to the terms and conditions of the RBS Leasing
Contract
(B) The parties hereto have entered into a Master Leasing Agreement
("Master Agreement") of even date herewith.
(C) This Lease Contract (incorporating Schedules I, II and III hereto) is
entered into pursuant to the Master Agreement.
NOW IT IS HEREBY AGREED as follows.
1. (a) The terms defined in and for the purposes of the Master
Agreement shall have the same meanings herein.
(b) The provisions of the Master Agreement and any special terms
stated in Schedules II and III hereto shall be deemed to be
incorporated herein. In the event of any conflict between the
provisions of the Master Agreement and the remaining
provisions of this Agreement the latter shall prevail.
2. Simon shall let and the Lessee shall take on lease the Goods as
described in Schedule I hereto.
<TABLE>
<S> <C> <C>
3. The Original Cost of the Goods exclusive
of recoverable Value Added Tax is L.1,000,212.47
Recoverable VAT is L. 175,037.18
TOTAL COST L.1,175,249.65
</TABLE>
2
<PAGE> 3
4. (a) The Primary Period shall be deemed to have commenced on 1992
("the Prime Date"), and the last day of this period shall be 1
April 2001.
(b) The Secondary Period shall terminate in accordance with the
provisions of Clause 3.06 of the Master Agreement.
5. (a) The Rentals for the Goods during the Primary Period are
(subject to adjustment pursuant to Clause 5.04 of the Master
Agreement) set out in the table below:
<TABLE>
<CAPTION>
Number of Rental Rental Rental Payments
Rentals Amount Frequency Commencing on
------- ------ --------- -------------
<S> <C> <C> <C>
1 L.14,353.05 Monthly 1 May 1992
followed by
109 L.14,363.05 Monthly 1 June 1992
</TABLE>
(b) The Rentals for the Goods during the Secondary Period shall be
L.938.10 p.a. All Secondary Period Rentals shall be paid
annually in advance with the first rental payment being due on
April 2001.
(c) Value Added Tax will be applied to the Primary and Secondary
Period Rentals at the applicable rate.
(d) Unless otherwise agreed by Simon the method for payment of
Rentals shall be by Standing Order. Payment of Rentals (and
any other payments falling due) shall be effected for full
value in cleared funds in the hands of Simon on or before the
relevant date of payment; if a date of payment is not a
business day in England then the date for payment shall be
deemed to be the previous such business day occurring.
(e) The bank account of Simon for payment of Rentals and other
amounts due is unless otherwise notified to the Lessee the
account of Royal Bank of Scotland (Industrial Leasing) Limited
account number 12176088 with The Royal Bank of Scotland plc,
45 The Promenade, Cheltenham, Gloucestershire, GL50 1PY.
(f) The Rentals and Termination Sums are subject to the Special
Terms set out in Schedules II and III.
6. For the purposes of Clause 5.04 (a) (ii) of the Master Agreement it is
assumed that:
(a) the Owner shall be entitled to capital allowance in respect of
the Original Cost of the Goods namely, Writing Down Allowances
on the reducing balance of Original Cost, on the following
basis.
3
<PAGE> 4
<TABLE>
<CAPTION>
Accounting Period Capital Allowances
of Owner Writing Down %
-------- --------------
<S> <C>
31 March 1992 25%
</TABLE>
(and thereafter)
(b) The Calculation Rates shall be at the rate specified below:
<TABLE>
<S> <C> <C>
In the period from 01.04.90 to 31.03.91 34%
01.04.91 to 31.03.91 33% and
thereafter 33%
</TABLE>
7. The Site of the Goods is on the seismic survey vessel the MV Simon
Labrador.
8. If the Lessee acts as sales sub-agent for Simon or agent for the Owner
to dispose of the Goods the Lessee will be entitled to 98% of the net
sales proceeds by way of rebate or rentals under Clause 17.02 of the
Master Agreement. The Sales Agency shall end six months after the
Lease Period expires.
9. The discount rate (referred to in Clause 14.03(b)(ii) of the Master
Leasing Agreement) shall be 5% per annum.
10. This Contract shall be governed by and construed in accordance with
English law.
11. The Lessee's attention is drawn to Clause 5.09 of the Master
Agreement, under with irrespective of the accounting treatment to be
adopted by the Lessee, the Lessee is not entitled to claim capital
allowances on the Goods.
IN WITNESS whereof this Agreement has been entered into the day and year first
before written.
4
<PAGE> 5
SCHEDULE I
DESCRIPTION OF GOODS
4 Armoured Tow Leaders
60 Active Sections
15 Digitising Modules
1 Spooler Block
Gun Fish/Float Components
ISC-72 Computer
2 Lead-in Winches
32 RCL-5 Compass/Levellers
1 RTB I/P System
3 HGPS Transceivers
2 XSRS Transceivers
2 Streamer Diverter Bodies
66 Streamer Connections
2 Syntrak Cartridge Drive System
1 Storagetelle Tape Drive Unit
1 Tape Cleaner
1 Syntrak Memory Upgrade
Miscellaneous Small Value Items
5
<PAGE> 6
SCHEDULE II
SPECIAL TERMS
The Rentals in this contract are variable for interest throughout the Primary
Period. For the purposes of Clause 5.04 of the Master Agreement each Rental is
based on the assumption that on the first relevant date as shown below the
Sterling London Interbank Rate Offered by The Royal Bank of Scotland plc for
monies of the relevant amount and period at or about 11.00 am ("LIBOR") will be
10% p.a and that on each successive relevant date Three Month Sterling London
Interbank Rate Offered by the Royal Bank of Scotland Plc for monies of the
relevant amount at or about 11 a.m. "LIBOR") on the relevant date as shown
below will be 10% per annum. LIBOR will be conclusively certified by the Owner
to Simon who will notify the Lessee of such certification.
If LIBOR is greater on the relevant date the Lessee shall pay to Simon a
supplemental rental on the settlement date as shown below. If LIBOR is less on
the relevant date Simon shall following receipt of an equal amount from the
Owner pay to the Lessee a rebate of rental on the settlement date. The
supplemental rental or rebate of rental will be calculated by multiplying the
difference between LIBOR on the relevant date and log per annum (rounded to two
decimal places above) by the appropriate rental adjustment factor shown below.
Provided always that if there is any change to the rentals in accordance with
Clause 5.04 of the Master Agreement new rental adjustment factors will be
provided.
6
<PAGE> 7
<TABLE>
<CAPTION>
Rental Adjustment Factors
per L.1,000 of Original
Relevant Date Cost for each 1% p.a.
for Setting LIBOR Settlement Date movements in LIBOR
- ----------------- --------------- ------------------
<S> <C> <C>
01.04.92 01.07.92 L.2.52
01.07.92 01.10.92 L.2.50
01.10.92 01.01.93 L.2.46
01.01.93 01.04.93 L.2.14
01.04.93 01.07.93 L.2.14
01.07.93 01.10.93 L.2.10
01.10.93 01.01.94 L.2.05
01.01.94 01.04.94 L.1.86
01.04.94 01.07.94 L.1.86
01.07.94 01.10.94 L.1.80
01.10.94 01.01.95 L.1.74
01.01.95 01.04.95 L.1.60
01.04.95 01.07.95 L.1.57
01.07.95 01.10.95 L.1.52
01.10.95 01.01.96 L.1.45
01.01.96 01.04.96 L.1.36
01.04.96 01.07.96 L.1.30
01.07.96 01.10.96 L.1.24
01.10.96 01.01.97 L.1.18
01.01.97 01.04.97 L.1.10
01.04.97 01.07.97 L.1.04
01.07.97 01.10.97 L.0.97
01.10.97 01.01.98 L.0.89
01.01.98 01.04.98 L.0.84
01.04.98 01.07.98 L.0.77
01.07.98 01.10.98 L.0.69
01.10.98 01.01.99 L.0.60
01.01.99 01.04.99 L.0.57
01.04.99 01.07.99 L.0.49
01.07.99 01.10.99 L.0.40
01.10.99 01.01.00 L.0.30
01.01.00 01.04.00 L.0.29
01.04.00 01.07.00 L.0.20
01.07.00 01.10.00 L.0.10
01.10.00 and thereafter NIL
</TABLE>
If any of the above dates are not business days the previous business day will
be used.
The calculation of the supplemental rental or debate of rental are subject to a
minimum LIBOR of 7% per annum.
7
<PAGE> 8
SCHEDULE III
<TABLE>
<CAPTION>
Termination Termination Termination Termination
Date Sum Date Sum
- ----- ---- ----- ---
<S> <C> <C> <C>
1 May 1992 1030.49 1 November 1995 754.88
1 June 1992 1026.37 1 December 1995 746.87
1 July 1992 1021.89 1 January 1996 738.97
1 August 1992 1017.76 1 February 1996 731.00
1 September 1992 1013.56 1 March 1996 722.52
1 October 1992 1008.98 1 April 1996 706.91
1 November 1992 1004.70 1 May 1996 698.44
1 December 1992 1000.04 1 June 1996 690.07
1 January 1993 995.64 1 July 1996 681.42
1 February 1993 990.68 1 August 1996 672.87
1 March 1993 984.75 1 September 1996 664.23
1 April 1993 973.17 1 October 1996 655.30
1 May 1993 967.71 1 November 1996 646.48
1 June 1993 962.48 1 December 1996 637.37
1 July 1993 956.89 1 January 1997 628.34
1 August 1993 951.55 1 February 1997 619.29
1 September 1993 946.14 1 March 1997 609.63
1 October 1993 940.38 1 April 1997 593.77
1 November 1993 934.86 1 May 1997 584.23
1 December 1993 928.98 1 June 1997 574.75
1 January 1994 923.31 1 July 1997 565.01
1 February 1994 917.35 1 August 1997 555.32
1 March 1994 910.51 1 September 1997 545.53
1 April 1994 896.88 1 October 1997 535.49
1 May 1994 890.42 1 November 1997 525.49
1 June 1994 884.15 1 December 1997 515.24
1 July 1994 877.54 1 January 1998 505.02
1 August 1994 871.13 1 February 1998 494.82
1 September 1994 864.64 1 March 1998 484.12
1 October 1994 857.82 1 April 1998 468.38
1 November 1994 851.20 1 May 1998 457.70
1 December 1994 844.24 1 June 1998 447.04
1 January 1995 837.45 1 July 1998 436.15
1 February 1995 830.50 1 August 1998 425.26
1 March 1995 822.76 1 September 1998 414.25
1 April 1995 807.83 1 October 1998 403.03
1 May 1995 800.38 1 November 1998 391.79
1 June 1995 793.08 1 December 1998 380.33
1 July 1995 785.46 1 January 1999 368.85
1 August 1995 778.00 1 February 1999 357.44
1 September 1995 770.45 1 March 1999 345.62
1 October 1995 762.59 1 April 1999 330.28
1 May 1999 318.40 1 May 2000 165.73
1 June 1999 306.47 1 June 2000 152.45
</TABLE>
8
<PAGE> 9
<TABLE>
<S> <C> <C> <C>
1 July 1999 294.35 1 July 2000 139.01
1 August 1999 282.18 1 August 2000 125.47
1 September 1999 269.88 1 September 2000 111.78
1 October 1999 257.39 1 October 2000 97.93
1 November 1999 244.83 1 November 2000 83.96
1 December 1999 232.09 1 December 2000 69.89
1 January 2000 219.27 1 January 2001 55.76
1 February 2000 206.54 1 February 2001 41.62
1 March 2000 193.57 1 March 2001 27.36
1 April 2000 178.90 1 April 2001 14.36
</TABLE>
The Termination Sums detailed above (which are stated per L.1000 of Original
Cost) have been calculated on the basis of the assumptions contained in Clause
5.04(a) of the Master Agreement and Clause 6 of this Sub-Lease Contract. The
Termination Sums also assume that LIBOR in Rental Period during which
termination occurs is 10% per annum, and that termination will occur on one of
the dates detailed above. In the event that a termination occurs on any date
other than a date detailed above, or that any of the other aforementioned
assumptions prove to be incorrect as at the date of termination, with the
result that the Return of the Owner in relation to the Goods in respect of
which such termination has occurred is altered, the amount of the Termination
Sums which falls due on such termination date shall be adjusted upwards or
downwards by such amount required to ensure that the Return of the Owner, in
relation to those Goods, is the same as it would have been had the relevant
assumption (and all other assumptions) proved to be correct.
The above Termination Sums will not apply in the event of the Lessee
repudiating the Master Agreement by a breach of the terms thereof in which case
the terms of Clause 14.03(b) apply. The above Termination Sums have been
calculated on the assumption that the Goods are sold for their tax written down
value in the accounts of the Owner at the time such disposal is completed; in
the event that this assumption proves to be incorrect the above Termination
Sums will be adjusted in such a manner as to maintain the Owner's Return taking
into account the actual disposal proceeds.
9
<PAGE> 10
AS WITNESS the hands of the representatives duly authorized on behalf of the
parties hereto the day and year first written above.
SIGNED BY ___________________ SIGNED BY _____________________
SIGNATURE /s/ [illegible signature] SIGNATURE /s/ G.M. Harrison
DESIGNATION _________________ DESIGNATION ___________________
for and on behalf of Simon for and on behalf of the Lessee
in the presence of: in the presence of:
WITNESS /s/ Andrew R. Murray WITNESS /s/ Andrew R. Murray
*FULL NAME Andrew R. Murray FULL NAME Andrew R. Murray
ADDRESS _____________________ ADDRESS _______________________
_____________________________ _______________________________
_____________________________ _______________________________
*Complete name in full in typewriting or block capitals
Note
Lessee must complete acceptance certificate overleaf.
10
<PAGE> 11
ACCEPTANCE CERTIFICATE
Attachment to Sub-Lease Contract
To be completed by the Lessee in Duplicate (where required)
From:
Name in Full Horizon Exploration Limited
Business The Provision of Geophysical Services
Address 6 Pembroke Road
Sevenoaks
Kent TN 13 1XR
Bankers
------------------------------------------------------
Insurance Broker
or Company
---------------------------------------------
Address
------------------------------------------------------
To Simon-Horizon Limited
We hereby confirm and certify to you that:
(i) We have duly received the Goods and we hereby acknowledge that these
goods are the Goods referred to in Schedule I to the Sub-Lease
Contract detailed below;
(ii) We have duly inspected the Goods on at and we are
satisfied that the Goods are complete and the Goods are in all
respects in good working order and condition;
(iii) All safety regulations in relation to the Goods have been complied
with and all required or recommended safety apparatus or appliances
(if any) have been correctly installed or supplied with the Goods as
the case may be;
(iv) Insurance cover in respect of the Goods has been effected in
accordance with the terms of the Master Agreement.
Description of Goods
As per Schedule I to the said Sub-Lease Contract No. 2 dated 15th July
1994
For and on behalf of Horizon Exploration Limited.
- ---------------------------------
Dated
------------------
11
<PAGE> 1
EXHIBIT 10.9.9
AGREEMENT
THIS AGREEMENT is made this 15th day of July, 1994 between
(1) SIMON-HORIZON LIMITED registered number 467924 ("Simon") a company
incorporated in England and Wales with registered office at Horizon
House, Azalea Drive, Swanley, Kent BR8 8JR; and
(2) SIMON PETROLEUM TECHNOLOGY LIMITED registered number 2720413 ("SPT") a
company incorporated in England and Wales with registered office at
Ty'n-y-Coed, Llanrhos, Llandudno, North Wales; and
(3) SIMON ENGINEERING PLC registered number 52665 ("SEL") a company
incorporated in England and Wales with registered office at Simon
House, Bird Hall Lane, Stockport, Cheshire SK3 ORJ; and
(4) HORIZON EXPLORATION LIMITED registered number 2804983 ("HEL") a
company incorporated in England and Wales with registered office at 6
Pembroke Road, Sevenoaks, Kent, TN13 1XR.
1. Interpretation
1.1 In this Agreement, including the Schedules:
1.1.1 The following words and expressions shall have the following
meanings unless they are inconsistent with the context:
"Additional Equipment" the equipment referred to in Clause 3.2.1;
"Agreement" this agreement;
"Assignment Agreement" the assignment agreement in Agreed Form of
even date herewith made between Simon and HEL
in respect of the Management Agreement;
"Business Competitor a competitor of HEL or of Exploration
of HEL" Holdings Limited or any of such company's
subsidiaries from time to time in relation
to the provision of offshore seismic data
acquisition services;
1
<PAGE> 2
"Charter" the charterparty in Agreed Form by sub-demise
of even date herewith made between Simon and
HEL in respect of the Vessel;
"Connected" for the purposes of Clause 3.2.5 has the
meaning set out in Section 249 of the
Insolvency Act 1986;
"Deed of Assignment" the Deed of Assignment of insurances of Goods
subject to the Leases in Agreed Form of even
date herewith between Simon and HEL;
"Effective Date" 30th June, 1994;
"Ervik" Ervik Marine Services A/S;
"Excluded Equipment" the equipment so defined in the Charter;
"Guarantee" the continuing cross-guarantee and indemnity
in Agreed Form to be entered into by the
companies comprising the HEL Group in favor
of Simon, SPT and SEL;
"HEL Group" Horizon Seismic Inc., Exploration Holdings
Limited, HEL and each of their subsidiaries
from time to time;
"Leases" the sub-leases in Agreed Form of even date
herewith entered into between Simon and HEL
in respect of seismic and other equipment to
be used on and in connection with the Vessel;
"Management Agreement" the management agreement dated 19th December
1990, together with the First Addendum
thereto also dated the same date between
Simon and Ervik;
"Master Lease Agreement" the master lease agreement in Agreed Form of
even date herewith entered into between Simon
and HEL;
"Owner" Royal Bank of Scotland (Industrial Leasing)
Limited;
"RBS Charter" the charterparty by way of Demise dated 20th
December, 1990 and made between the Owner and
Simon;
"RBS Leases" if the Master Lease Agreement dated 31st
March, 1992 and the Lease Contracts Nos.
RS920/0017 and
2
<PAGE> 3
RS920/0022 each dated 31st March, 1992, all
made between the Owner and Simon;
"Retained Equipment" the equipment so defined in the Charter;
"Sale Agreement" the undated "Agreement for Sale of a
Business" executed in July 1993 between
Simon, SPT and HEL;
"SEL Guarantee" the Guarantee by Simon Engineering Plc in
favour of the Owner dated 20th December, 1990
"Simon Labrador" the M.V. "Simon Labrador" (ex M.V. "Seaway
and "Vessel" Labrador");
"Subsidiaries" shall have the meaning ascribed thereto
pursuant to section 736 of the Companies Act
1985;
"Syntron" Syntron Europe Limited, a company supplying
and repairing marine seismic equipment;
"Syntron Letter" letter from SPT to HEL dated 18th August 1993
agreeing to pay for streamer refurbishment on
deferred terms.
1.1.2 Reference to any document being in the "Agreed Form" means in
the form or in the terms agreed between the parties'
respective solicitors or attornies and references to any
document include references to that document as the same may
be amended from time to time.
1.1.3 All references to a statutory provision shall be construed as
including references to:
(a) any statutory modification, consolidation,
re-enactment (whether before or after the
date of this Agreement) for the time being in
force;
(b) all statutory instruments or orders made
pursuant to it; and
(c) any statutory provisions of which it is a
consolidation, re-enactment or modification.
1.1.4 Except where the context otherwise requires, words denoting
the singular include the plural and vice versa; words denoting
any gender include all genders; words denoting persons include
firms and corporations and vice versa.
3
<PAGE> 4
1.1.5 Unless otherwise stated, a reference to a clause, sub-clause
or Schedule is a reference to a clause or a sub-clause of, or
a Schedule to, this Agreement.
2. Agreement
2.1.1 HEL hereby undertakes for itself and to procure on the part of
each of the companies of the HEL Group the due exercise and
performance by HEL and of each of such companies of all of its
or their respective duties, obligations and liabilities under
the terms of the Charter, the Master Lease Agreement, the
Leases, the Guarantee, the Management Agreement, the
Assignment Agreement, the Deed of Assignment and this
Agreement (together the "HEL Documents") strictly in
accordance with such terms. Subject only to the provisions of
Clause 4.1 and notwithstanding the provisions of any other HEL
Document, HEL hereby agrees unconditionally and irrevocably to
indemnify each of Simon, SPT and SEL and keep it and each of
them indemnified fully against any and all liabilities,
obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements which may be imposed
on, incurred or suffered by or asserted against any of Simon,
SPT and SEL under or which are in any way related to the RBS
Charter, the RBS Leases, the Management Agreement, the SEL
Guarantee, the Syntron Letter, the Vessel, its ownership or
operation arising on or after the Effective Date in respect of
any period commencing on or after the Effective Date. In
addition, HEL hereby agrees unconditionally and irrevocably to
indemnify each of Simon, SPT and SEL and keep it and each of
them indemnified fully against any and all liabilities,
obligations, losses, damages, penalties, actions, judgements,
suits, costs, expenses or disbursements which may be imposed
or incurred or suffered by or asserted against any of Simon,
SPT and SEL which directly or indirectly result from or are in
any way connected with or related to any act or omission under
or default by HEL or any HEL Group Company in the performance
of any of its obligations thereunder or under the HEL
Documents or any of them. Notwithstanding the other
provisions of this Agreement or any provision of any other of
the HEL Documents, nothing contained herein or therein shall
avoid, exclude or limit in any way the liability of HEL in
respect of any act or omission for which HEL would have been
liable but for the entering into of the HEL Documents and the
transactions contemplated thereby.
2.1.2 Each of Simon, SPT and SEL shall give prompt notice to HEL of
any action commenced against it or any claim or demand made
upon it in respect of which indemnity may be sought pursuant
to the indemnity in Clause 2.1.1. HEL may participate at its
own expense in the defence of any such action, claim or
demand. If it so elects within a reasonable time after
receipt of such notice, HEL may assume the defence of such
action claim or demand with legal advisers chosen by it and
approved by Simon, SPT and SEL (or the relevant one or more of
them against or upon whom such action, claim or demand is
4
<PAGE> 5
made) unless they or the relevant one or more of them
reasonably object to the assumption on the grounds that there
may be legal defences available to them or it which are
different from or in addition to those available to HEL. If
HEL so assumes the defense of such action claim or demand HEL
shall not be liable for the fees and expenses of more than one
legal adviser or firm of legal advisers of Simon, SPT and SEL
or the relevant one or more of them incurred thereafter in
connection therewith. In no event shall HEL be liable for the
fees of more than one legal adviser or firm of legal advisers
of Simon or SPT or SEL in connection with any one action,
claim or demand or separate but similar or related actions in
the same jurisdiction arising out of the same general
allegations or circumstances. HEL shall not be liable to
indemnify the relevant one or more of Simon, SPT and SEL for
any settlement of any action, claim or demand effected without
the consent of HEL (such consent not to be unreasonably
withheld or delayed).
2.1.3 HEL shall pay to Simon and/or SPT and/or SEL (as the case may
be) on first demand such sum or sums as it or they may certify
as being payable to them pursuant to the indemnity in Clause
2.1.1. Any certificate by Simon and/or SPT and/or SEL (as the
case may be) as to the amount of such costs shall, in the
absence of manifest error, be conclusive and binding upon HEL
and the HEL Group and each member company thereof.
2.1.4 All payments pursuant to the indemnity referred to in Clause
2.1.1 shall be free and clear of and without deduction or
withholding for any tax of any nature now or hereafter imposed
by any country or any sub-division or taxing authority thereof
or therein or any federation or organization of which such
country is a member. If any such payment shall be subject to
any such tax or if HEL shall be required to make any such
deduction or withholding, HEL shall pay to Simon and/or SPT
and/or SEL such additional amount as may be necessary to
enable Simon and/or SPT and/or SEL to receive, after all
deductions and withholdings, a net amount equal to the full
amount payable thereunder. As used in this Clause the term
"tax" includes all levies, imposts, duties, charges, fees,
deductions, withholdings, turnover tax, transaction tax, stamp
tax and any interest or penalties thereon and any restrictions
or conditions resulting in a charge.
2.2 HEL agrees:
2.2.1 to enter into the Charter, the Master Lease Agreement and
Leases on the date hereof;
2.2.2 (a) that the undated 1993 Management Agreement between
SPT, Simon and HEL shall terminate on the date
hereof, but without prejudice to the rights and
liabilities of the parties previously accrued; and
5
<PAGE> 6
(b) that the undated D.P. Software License Agreement made
between SPT and HEL executed in July 1993 is hereby
renewed for a period of twelve months from 1st July
1994 at an annual rental of US$120,000 (subject to
the addition of VAT and other applicable tax) for the
first 548 ship days and then at $110 per ship day
thereafter. Such annual rental of $120,000 shall be
payable quarterly in advance in equal installments.
The first such instalment shall be payable on the
date hereof and the following installments shall be
payable on 1st October 1994, 1st January 1995 and 1st
April 1995 respectively. Rental due for days in
excess of the first 548 ship days shall be payable
monthly in arrears;
SPT agrees that it will during the period of such
license continue to support such software under the
terms of the DP Software License Agreement and shall
give to HEL not less than nine months prior written
notice of ceasing to support such software. HEL
shall give SPT not less than nine months prior
written notice of termination of the DP Software
License Agreement.
2.3 HEL hereby agrees that the terms of the undated letter agreement
regarding apportionment of insurance deductibles (a copy of which is
attached to this Agreement as Annex 1) shall cease for all purposes to
have effect on and after the Effective Date and that HEL shall have no
liability, present or future, thereunder.
2.4 Simon, SPT, SEL and HEL agree to use all reasonable endeavors to
procure that the Owner shall agree to amend the provisions regarding
the insurances of the Vessel:
2.4.1 to reflect current market conditions in relation to
deductibles; and
2.4.2 so that all losses payable thereunder shall be payable to the
Owner (except where, in relation to P & I payments such
payments are to be made to third parties who have suffered the
relevant loss if none of the parties to this Agreement has
previously paid or partly paid out such third party claim, or,
following such a payment or part payment out, where the
relevant party to this Agreement is entitled to be reimbursed
in respect thereof) regardless of the severity of the loss
sustained, but so that the Owner shall apply all sums received
which are less than L.250,000 in aggregate in respect of any
claim under the Hull and Machinery policies either by making
payment direct to contractors or yards in respect of works or
repairs done or to be done in respect of the relevant loss
payable or by payment in reimbursement of the relevant one of
Simon, SPT, SEL or HEL for sums expended by such party in
procuring the repair or works occasioned in relation to such
loss payable and so paid to the Owner.
6
<PAGE> 7
3. Continuing Obligations of HEL
3.1 HEL hereby covenants and agrees with and for the benefit of Simon, SPT
and SEL that HEL will at all times hereafter fully perform its
obligations pursuant to the Charter, the Master Lease Agreement and
the Leases in a timely manner so as at all times to maintain and
adhere to all the terms and conditions of the RBS Charter and the RBS
Leases and maintain the same in full force and effect in accordance
with their respective terms.
3.2 HEL further undertakes to Simon, SPT and SEL that HEL will:
3.2.1 without prejudice to its obligations pursuant to the Charter
and the Leases (a) invest a minimum of US$950,000 in seismic
equipment for the Vessel within 3 months from the date of this
Agreement provided that if such investment is financed wholly
or partly by way of any leasing transaction it shall be upon
terms that such lease will be fully paid up within 18 months
from 1st June 1994 and will require only even monthly payments
on the part of the lessee (and shall not contain any balloon
payment obligations); and (b) continue to invest in the Vessel
to maintain it fit for purpose and in particular at all times
procure appropriate equipment and maintain all equipment from
time to time used on or in connection with the Vessel
sufficient to obtain three-dimensional seismic work in
accordance with current best practice and so as to remain (and
so that the Vessel shall remain) competitive in its field on
the basis (at any time and from time to time) of best
available techniques not involving excessive costs;
3.2.2 use all reasonable endeavors to procure that whenever it
invests in equipment or assets for the Vessel by way of
leasing all such leases shall be made upon teems such that if
Simon shall pursuant to the terms of the Charter repossess the
Vessel, Simon shall be entitled to elect either to return such
leased assets to the respective lessors or take over the
relevant leases;
3.2.3 deliver to Simon promptly after acquiring any such equipment
referred to in Clause 3.2.1 (a) (whether purchased or leased)
details of the equipment acquired and either (where such
equipment is purchased) Bills of Sale in respect thereof so as
formally to implement such transfer of title or (where such
equipment is leased) a copy of the relevant lease contract or
contracts. HEL hereby undertakes that it will if required by
Simon forthwith upon payment out of the relevant lease or
leases deliver to Simon Bills of Sale in respect of any such
Additional Equipment so as to transfer title thereto to Simon.
All such equipment so transferred to Simon shall thereafter
for all purposes be deemed to be leased to HEL as if
specifically referred to in the Leases, provided that no
additional rental shall be paid in respect thereof;
7
<PAGE> 8
3.2.4 meet the remaining payments due to Syntron for the
refurbishment of the third streamer pursuant to the Syntron
Letter and agrees that none of Simon, SPT and SEL shall have
any further liability under or pursuant to the Syntron Letter;
3.2.5 itself and will procure that HEL Group will maintain a
dividend cover of no less than four times earnings and
operating cash flows (determined in accordance with generally
accepted accounting principles in the United Kingdom) and
provide to Simon a certificate from HEL's or (if different)
HEL Group's principal auditors upon request as to the
compliance by HEL Group with such requirements. For the
purposes of this Clause, dividends shall include all
distributions and disbursements to third parties or to persons
(not being companies within the HEL Group) connected with any
company which is a member of the HEL Group from any member of
the HEL Group whether by way of dividends on ordinary shares,
repurchase of shares, cancellation of shares, management
charges and fees or otherwise but, for the avoidance of doubt,
shall not include the repayment of bona fide loans and debts.
HEL will further procure that all transactions between the HEL
Group or any company which is a member thereof with any person
connected with the HEL Group or any company which is a member
thereof shall be on arm's length terms and for full value;
3.2.6 itself and will procure that HEL Group (and any company which
shall in future become a member of HEL Group) provide cross
guarantees in Agreed Form relating to all undertakings,
covenants and obligations expressed or intended to be binding
upon HEL and the HEL Group under or pursuant to the terms of
this agreement and the documents to be entered into pursuant
hereto.
3.3 HEL undertakes to Simon, SPT ant SEL to use its best endeavors to
ensure that not later than 27th November 1994 or such later date as
Simon may agree it will either:
3.3.1 procure the giving of a guarantee of all of its obligations to
Simon, SPT and SEL as described in this Agreement and in the
documents to be entered into pursuant hereto in form and
substance satisfactory to and by a bank acceptable to Simon,
SPT and SEL as Simon, SPT and SEL shall in their discretion
determine; or
3.3.2 refinance the Vessel entirely in such manner as shall ensure,
that neither in relation to the RBS Leases or the RBS Charter
nor in respect of any arrangements touching upon or concerning
them or the Vessel shall Simon or SPT or SEL or any other
company in the Simon Engineering Plc group of companies
thereafter have any actual or contingent liability in respect
of the Vessel whether as principal or surety or otherwise
howsoever provided that in connection with any such
refinancing the obligations of Simon and SEL
8
<PAGE> 9
pursuant to Clause 4.1 shall be varied and instead of HEL's
obligations to pay charterhire to Simon not commencing until
the specified aggregate sum has been paid by Simon under the
RBS Charter, the obligation of Simon and SEL shall be to pay
the balance of such aggregate sum to the provider of the
relevant finance to HEL (which shall be applied in or towards
discharge of the obligations of HEL in respect of such
refinancing), but in any such case Simon and SEL shall not be
obliged to pay any moneys in any different amounts or at any
different times to the amounts and times which would have
applied under the RBS Charter unless Simon and SEL shall
otherwise so agree;
but if unable to complete such arrangements by 27th November 1994 (or
such later date as may be agreed) as aforesaid it will thereafter
continue to use its best endeavors to do so as quickly as possible
until it is able to complete such arrangements.
Provided that when and if HEL shall complete such arrangements as
described in 3.3.1 or 3.3.2 above the obligations of HEL pursuant to
3.2.5 above and Clause 12 of the Charter shall cease thereafter to
have effect (except, in the latter case, to the extent that any
consent of the Owner may be required pursuant to the RBS Charter or
RBS Leases).
4. Continuing Obligations of Simon
4.1 Each of Simon and SEL undertakes that it will after the Effective Date
continue to make payments in respect of the obligations of the
Charterer under the RBS Charter (or, when applicable, make payments
which would otherwise be for the account of HEL pursuant to any such
refinancing as is referred to in and in accordance with the provisions
of 3.3.2 above) as the same shall fall due as shall equal the
aggregate sum of L.2,336,000 and hereby agrees that provided HEL shall
not be in breach of any of its obligations to Simon under the Leases
and/or the Charter HEL's obligation to make payment of charterhire
under the Charter shall not commence until such time as the aggregate
amount of payments by Simon to the Owner after the Effective Date
shall have exceeded, in aggregate, L.2,336,000. The obligation of
Simon and SEL to pay such aggregate L.2,336,000 sum referred to above
in respect of charterhire payable after the Effective Date shall be to
pay such aggregate sum net of all adjustments of rental and cash
amounts payable as may apply or be payable in relation to the period
after the Effective Date as a result of any increase or decrease in
rental payable by Simon by way of adjustment of rental pursuant to
paragraph 4 of Schedule 3 to the RBS Charter or of any amount payable
or received by Simon pursuant to paragraph 4 of such Schedule 3.
4.2 HEL agrees that provided Simon shall notify HEL in writing of the
payment or payments to be made by Simon which will cause such
aggregate figure to be exceeded HEL will pay direct to the Owner the
balance of such payment or payments; and HEL
9
<PAGE> 10
shall thereafter make payments to Simon in full under the Charter
strictly in accordance with the terms thereof.
4.3 Subject to any necessary consents previously having been obtained from
the Owner, HEL shall within one month of the Effective Date, and Simon
shall permit HEL to (and will at HEL's expense take all such steps as
HEL may reasonably require in connection therewith), change the name
of the Vessel provided (and HEL hereby agrees) that no future name
shall without the consent of Simon include "Simon" or otherwise imply
any continuing relationship with Simon or any company in the Simon
Engineering plc group of companies. Simon will use all reasonable
endeavors to procure the consent of the Owner to such change of name.
4.4 If the Owner shall not previously have agreed with Simon and HEL that
HEL shall have the sole right to exercise the Drop-Lock Option set out
in Clause 5.3 of Schedule 3 to the RBS Charter and incorporated into
the RBS Leases by two letters dated 30th April 1992 from the Owner's
agent (Royal Bank Leasing Limited) countersigned on behalf of Simon on
13th May 1992 in respect of each such lease Simon agrees that it will
at the request of HEL exercise such option as soon as reasonably
possible following HEL's written request to it in respect of the same.
5. Transfer of Assets
5.1 Property in and the use of assets used on or in connection with the
Vessel shall be dealt with in accordance with the provisions of this
Clause 5.
5.2 Excluded Equipment is and will remain the property of Simon, but HEL
shall be deemed to lease the Excluded Equipment upon the same terms as
equipment subject to the Leases except that no additional rental shall
be payable in respect thereof. When and if any of the Excluded
Equipment shall become obsolete HEL shall (subject to having
previously given Simon prior notice in writing thereof so as to permit
Simon, if it wishes, to remove such equipment) be entitled to dispose
of the same for scrap or otherwise provided that it shall, where
appropriate or necessary to comply with its obligations pursuant to
this Agreement or the Charter, replace such equipment with
appropriate, up-to-date equipment. Such replacement equipment shall,
subject to the terms of this Agreement and the Charter, be and remain
the property of HEL. Property in and title to the Excluded Equipment
shall pass to HEL upon the expiration by affluxion of time of the
Primary Period under the Charter and the Leases. Simon shall if
requested by and at the expense of HEL then execute such bills of sale
or other documents as HEL may reasonably require to complete or
evidence such transfer of title.
5.3 Retained Equipment shall be and remain at all times the property of
Simon and made available to HEL's use upon the terms of such leases or
licenses as have been or may from time to time be agreed by and
between Simon and HEL. Subject to the terms
10
<PAGE> 11
thereof, Simon shall be entitled to remove or to require the return of
such equipment at any time and, for the avoidance of doubt, Simon
shall be entitled to exercise such rights immediately or at any time
after any "Termination Event" shall have occurred under the Charter or
either of the Leases.
5.4 HEL represents and warrants that the floating charge created by HEL
over all of its undertaking, property and assets, present and future,
in favor of National Westminster Bank plc has not crystallized and
that nothing, whether contained in the mortgage debenture dated 17th
December, 1993 creating the same, or otherwise, would cause it to
crystallize in relation to any Additional Equipment. HEL shall
acquire the Additional Equipment in accordance with the terms of
Clause 3.2 and any equipment so purchased in accordance with Clause
3.2.1(a) by HEL shall upon acquisition become the property of Simon
(and HEL shall execute and deliver to Simon such bills of sale and/or
other documents as Simon may require to effect such transfer of title
in each case free and clear of any encumbrance). Any equipment
acquired pursuant to Clause 3.2.1(a) by means of any leasing
arrangement as provided for by Clause 3.2 shall immediately upon
payment out of such lease become the property of Simon (and HEL shall
execute and deliver to Simon such bills of sale or other documents as
Simon may require to effect such transfer of title). Once title to
Additional Equipment has been transferred to or vested in Simon, such
equipment shall for the purposes of this Agreement thereafter be
deemed for all purposes to be Excluded Equipment and subject to the
provisions of Clause 5.2.
5.5 Equipment which is acquired by or utilised by HEL on the Vessel and
which is not Excluded Equipment, Retained Equipment or Additional
Equipment, whether owned by HEL or any party other than HEL, Simon, or
the Owner, shall (subject to Clause 5.6) remain the property of the
owner thereof. Where any such equipment shall not be the property of
HEL HEL shall at all times ensure that neither it nor any part thereof
shall become subject to the terms of Clause 5.6.
5.6 Notwithstanding any other provisions of this Agreement or the Charter,
where any equipment installed or used on the Vessel by HEL would, if
so installed or used by Simon, become the property of the Owner
pursuant to the RBS Charter and/or the RBS Leases then such equipment
shall (unless the prior agreement of the Owner to the contrary shall
have been obtained) become the property of the Owner as if the
relevant terms of the RBS Charter and/or the RBS leases applied
thereto and were set out herein mutatis mutandis so as to bind HEL to
the terms thereof.
6. Apportionments
6.1 In lieu of apportionment the expenses and earnings of the Vessel shall
be dealt with as follows as from the Effective Date:
11
<PAGE> 12
6.1.1 Subject to 6.1.2, HEL shall be responsible for payment of the
following obligations outstanding as at the Effective Date:
(i) all creditors for goods, repairs and services
supplied or to be supplied and whether or not
invoiced prior to the date of this Agreement; and
(ii) all replacement, repair and servicing of equipment on
the Vessel.
6.1.2 HEL shall not be responsible in relation to the period ended
on the Effective Date for payment of the following
obligations:
(i) payments due to the Owner pursuant to the RBS Charter
and the RBS Leases
(ii) payments due to Ervik whether under or pursuant to
the Management Agreement or otherwise
(iii) the sum of L.125,000 due to HEL in respect of overdue
creditors and
(iv) Taxes relating to the use and operations of the
Vessel at any time prior to the Effective Date
6.1.3 Simon shall pay to HEL on the date of completion (or, if
later, the date upon which all necessary consents have been
received by Simon in relation to the transactions contemplated
hereby) a sum of not more than $100,000 in relation to
in-water equipment damaged or lost on 3rd July 1994 in full
and final settlement of any claims which HEL might otherwise
have against Simon, SPT or SEL in respect thereof
6.1.4 HEL shall be entitled to all income arising from debtors
outstanding at the Effective Date in relation to the
acquisition of seismic data, but not income arising from on
board processing services, which shall (and shall thereafter
continue to) belong to Simon in respect of the client
contracted with HEL as at the Effective Date
6.1.5 Except as otherwise provided in this Clause 6.1 and subject to
Clause 4.1, as from the Effective Date all expenses relating
to the Vessel and all income derived from its use shall be for
the account of HEL.
6.2 Notwithstanding that delivery thereof pursuant to the terms of the
Charter and the Leases respectively shall occur after the date of this
Agreement, on and after the date of this Agreement all risk of loss of
or damage to the Vessel or the goods subject to the Leases shall as
between Simon and HEL pass to HEL with effect from the Effective Date.
12
<PAGE> 13
7. Completion
Completion shall take place at the offices of Simmons & Simmons, 14
Dominion Street, EC2 at midday on 15th July 1994 when all of the
documents referred to herein and as conditions precedent to the
Charter and the Master Lease shall be delivered and shall become
binding upon the parties thereto subject only to the obtaining by
Simon, SPT and SEL of the relevant consents of the Owner and their
other financiers in form and substance satisfactory to them. Simon
shall notify HEL forthwith of receipt of such consents and upon the
giving of such notice all of the terms of this Agreement and the
transactions and documents referred to herein shall become effective
and be implemented as envisaged hereby and the Vessel and the
equipment subject to the Leases shall be delivered to and accepted by
HEL. Simon and HEL shall sign date and deliver a protocol of delivery
and acceptance in Agreed Form to confirm delivery and acceptance of
the Vessel. Simon and HEL shall use all reasonable endeavors to
obtain the consent of the Owner (including confirmation in terms
reasonably acceptable to Simon and HEL of the Owner's requirements
regarding the insurances of the Vessel) within 14 days after the date
of this Agreement and Simon and SEL shall use all reasonable endeavors
to obtain the consent of certain US Noteholders within 28 days after
the date of this Agreement. If all such consents have not been
received within 28 days after the date of this Agreement the parties
shall endeavor to agree an appropriate extension of such period but in
the absence of such agreement this Agreement shall be deemed to be of
no further effect.
8. Costs
Each party to this agreement shall be responsible for its own costs
and expenses (including legal fees) incurred in connection with the
negotiation, preparation and execution of this agreement and in the
completion of the transactions contemplated hereby.
9. Announcements
No announcement about this Agreement or any part of its subject-matter
shall be made unless agreed by all parties hereto or as required by
law or applicable regulations (including any relevant Stock Exchange
regulations) and the matters herein shall be kept strictly
confidential.
10. Assignment
10.1 The HEL Documents shall benefit and be binding on the parties, their
respective successors and any permitted assignee or transferee of some
or all of a party's rights or obligations thereunder. Any reference
in the HEL Documents to any party shall be construed accordingly.
13
<PAGE> 14
10.2 Neither HEL nor any member of the HEL Group may assign, transfer or
otherwise dispose of all or part of its rights or obligations under
the HEL Documents.
10.3 Simon, SPT and SEL or any of them may at any time transfer all or any
part of its rights, benefits and obligations under the HEL Documents
by assigning to any other of them or to any third party (each of which
is hereinafter in this Clause called an "Assignee") which is not a
Business Competitor of HEL all or any part of its respective rights
and benefits hereunder in consideration of the agreement of each such
Assignee to perform, or to reimburse the assignor for having
performed, the assignor's obligations thereunder as so assigned to
such Assignee. If any such third party is a Business Competitor of
HEL Simon, SPT and SEL shall not, without the prior written consent of
HEL (such consent not to be unreasonably withheld or delayed) so
transfer all or any part of its respective rights, benefits and
obligations. If any of Simon, SPT and/or SEL does so transfer its
rights, benefits and obligations in accordance with the provisions of
this Clause 10, all references in the HEL Documents to it shall
thereafter be construed as a reference to the Assignee.
10.4 Simon, SPT and SEL may not disclose to a potential assignee or any
other person proposing to enter into contractual arrangements with it
in relation to the HEL Documents information about the HEL Group, the
Vessel and the HEL Documents except with the prior written consent of
HEL (such consent not to be unreasonably withheld or delayed).
11. Notices
All notices, demands or other communications under or in connection
with this Agreement shall be sent by letter, telefax or telex:
(a) if to Simon or SPT
Horizon House
Azalea Drive
Swanley
Kent TN13 1XR
Attn: Company Secretary
Telex No: 896050 EXPLOR G
Fax No: 0322 613650
with copy to:
Simon Engineering Plc
Simon House
Bird Hall Lane
Stockport
14
<PAGE> 15
Cheshire
SK3 ORT
Attn: Company Secretary
Telex No: 665923 SIMENG G
Fax No: 061 491 2472
(b) if to HEL
6 Pembroke Road
Sevenoaks
Kent TN1 1XR
Attn: Company Secretary
Telex No: 957840 EXPLOR G
Fax No: 0732 742977
or to such other address or telex number as such party may
from time to time notify to the other parties hereto.
12. Law and Jurisdiction
12.1 This agreement shall be governed by and construed in accordance with
English law.
12.2 Any dispute or difference hereunder shall be referred to the exclusive
jurisdiction of the English courts.
IN WITNESS whereof this Agreement has been executed by the parties hereto the
day and year first above written.
SIMON HORIZON LIMITED
By: /s/ [illegible signature]
SIMON PETROLEUM TECHNOLOGY LIMITED
By: /s/ [illegible signature]
SIMON ENGINEERING plc
By: /s/ [illegible signature]
15
<PAGE> 16
HORIZON EXPLORATION LIMITED
By: /s/ [illegible signature]
16
<PAGE> 17
ANNEX - 1
[Insurance Deductibles Letter]
17
<PAGE> 1
10.9.10
Dated 20th December, 1990
ROYAL BANK OF SCOTLAND
(INDUSTRIAL LEASING) LIMITED
and
SIMON-HORIZON LIMITED
CHARTERPARTY BY WAY OF DEMISE
in respect of m.v. "SEAWAY LABRADOR"
and Equipment
<PAGE> 2
INDEX
<TABLE>
<CAPTION>
Clause Heading Page
- ------ ------- ----
<S> <C> <C>
1 Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2 Representations and Warranties . . . . . . . . . . . . . . . . . . 9
3 Term of Charter . . . . . . . . . . . . . . . . . . . . . . . . . 11
4 Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . 13
5 Delivery and Acceptance . . . . . . . . . . . . . . . . . . . . . 14
6 Extent of Owner's Liability; Third Party Warranties . . . . . . . 16
7 Charterhire . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
8 Payments, Interest and Calculations . . . . . . . . . . . . . . . 18
9 Costs and Indemnities . . . . . . . . . . . . . . . . . . . . . . 19
10 Taxation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
11 General Undertakings . . . . . . . . . . . . . . . . . . . . . . . 23
11.1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
(a) Notification of Relevant Event . . . . . . . . . 24
(b) Consents and Authorisations . . . . . . . . . . . 24
(c) Preparation of Accounts . . . . . . . . . . . . . 24
(d) Supply of Accounts . . . . . . . . . . . . . . . 24
(e) Information concerning the Charterer . . . . . . 24
(f) Information concerning the Ship . . . . . . . . . 24
(g) Observance of Covenants . . . . . . . . . . . . . 25
11.2 Protection of Owner's Rights . . . . . . . . . . . . . . . 25
(a) Disposal of the Ship . . . . . . . . . . . . . . 25
(b) Encumbrances . . . . . . . . . . . . . . . . . . 25
(c) Notification of Arrest . . . . . . . . . . . . . 25
(d) Prevention of and Release from Arrest . . . . . . 25
(e) No pledging of Owner's Credit . . . . . . . . . . 26
(f) Protection of Owner's Rights in the Ship . . . . 26
(g) Notice of Owner's Rights . . . . . . . . . . . . 26
</TABLE>
i
<PAGE> 3
<TABLE>
<S> <C> <C>
(h) Release from Arrest Owner's Vessels . . . . . . . 27
12 Sub Chartering . . . . . . . . . . . . . . . . . . . . . . . . . . 27
13 Use and Trade of the Ship . . . . . . . . . . . . . . . . . . . . 28
13.1 Permitted Use . . . . . . . . . . . . . . . . . . . . . . 28
13.2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
(a) Ship's Registration . . . . . . . . . . . . . . . 28
(b) Employment . . . . . . . . . . . . . . . . . . . 28
(c) Payment of Outgoings and Evidence of
Payments . . . . . . . . . . . . . . . . . . . . 29
(d) Operation in the U.S.A. or Canada . . . . . . . . 29
(e) Use for a Qualifying Purpose . . . . . . . . . . 29
(f) Bills of Lading . . . . . . . . . . . . . . . . . 30
14 Title, Registration, Name and House Flag . . . . . . . . . . . . . 30
14.1 Title . . . . . . . . . . . . . . . . . . . . . . . . . . 30
14.2 Initial Registration . . . . . . . . . . . . . . . . . . . 30
14.3 Transfer of Flag or Registry . . . . . . . . . . . . . . . 30
14.4 Name and House Flag . . . . . . . . . . . . . . . . . . . 31
15 Maintenance and Operation . . . . . . . . . . . . . . . . . . . . 31
15.1 Possession and Control of Ship by Charterer . . . . . . . 31
15.2 Undertakings concerning Maintenance and Operation . . . . 32
(a) Maintenance of Classification;
Compliance with Regulations . . . . . . . . . . . 32
(b) Supply and Crewing . . . . . . . . . . . . . . . 32
(c) Surveys . . . . . . . . . . . . . . . . . . . . . 32
(d) Repair . . . . . . . . . . . . . . . . . . . . . 32
(e) Drydocking . . . . . . . . . . . . . . . . . . . 33
(f) Inspection of the Ship . . . . . . . . . . . . . 33
(g) Manuals and Technical Records . . . . . . . . . . 33
(h) Modification; Removal of Parts;
Equipment owned by Third Parties . . . . . . . . 33
(i) Manager . . . . . . . . . . . . . . . . . . . . . 34
(j) Notification of certain Events . . . . . . . . . 34
(k) Repairers' Liens . . . . . . . . . . . . . . . . 35
(l) Health and Safety . . . . . . . . . . . . . . . . 35
(m) No Operational Interest . . . . . . . . . . . . . 35
(n) Safe Operation . . . . . . . . . . . . . . . . . 36
(o) Fitness to go to Sea . . . . . . . . . . . . . . 36
16 Insurance Undertakings; Wreck Removal and Insurance Assignment . . 36
16.1 Insurance Undertakings . . . . . . . . . . . . . . . . . . 36
(a) Insured Risks . . . . . . . . . . . . . . . . . . 36
</TABLE>
ii
<PAGE> 4
<TABLE>
<S> <C> <C>
(b) Brokers and Insurers . . . . . . . . . . . . . . 37
(c) Fleet Cover . . . . . . . . . . . . . . . . . . . 37
(d) Payment of Premiums . . . . . . . . . . . . . . . 37
(e) Renewal . . . . . . . . . . . . . . . . . . . . . 37
(f) Guarantees . . . . . . . . . . . . . . . . . . . 38
(g) Custody of Policy Documents; Letters
of Undertaking; Loss Payable Clauses . . . . . . 38
(h) Club Letters of Undertaking; Certificates of
Entry . . . . . . . . . . . . . . . . . . . . . . 38
(i) Broker's Report . . . . . . . . . . . . . . . . . 38
(j) Collection . . . . . . . . . . . . . . . . . . . 39
(k) Compliance with Insurances . . . . . . . . . . . 39
(l) Application of Recoveries . . . . . . . . . . . . 39
(m) Other Insurances and Assureds . . . . . . . . . . 39
(n) Information concerning Insurances . . . . . . . . 40
16.2 Wreck Removal . . . . . . . . . . . . . . . . . . . . . . 40
16.3 Further Requirements . . . . . . . . . . . . . . . . . . . 40
16.4 Insurance Assignment . . . . . . . . . . . . . . . . . . . 40
17 Powers of Owner to Remedy Defaults . . . . . . . . . . . . . . . . 41
17.1 Failure to Perform Insurance Undertakings . . . . . . . . 41
17.2 Failure to Perform Maintenance Undertakings . . . . . . . 41
17.3 Failure to Prevent or Release from Arrest . . . . . . . . 41
17.4 Failure to comply with other Obligations . . . . . . . . . 41
17.5 Costs of Remedying Defaults . . . . . . . . . . . . . . . 42
17.6 Hire Still Payable . . . . . . . . . . . . . . . . . . . . 42
18 Redelivery . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
18.1 Redelivery Procedure and Condition . . . . . . . . . . . . 42
18.2 Redelivery Survey . . . . . . . . . . . . . . . . . . . . 42
19 Consumable Stores . . . . . . . . . . . . . . . . . . . . . . . . 43
19.1 Upon Delivery . . . . . . . . . . . . . . . . . . . . . . 43
19.2 Upon Redelivery . . . . . . . . . . . . . . . . . . . . . 43
20 Use of Equipment and Replacement . . . . . . . . . . . . . . . . . 43
20.1 Use of Equipment and Manuals and Technical Records . . . . 43
20.2 Renewal of Equipment . . . . . . . . . . . . . . . . . . . 43
20.3 Alteration of Equipment; Additional Equipment . . . . . . 44
21 Loss and Damage . . . . . . . . . . . . . . . . . . . . . . . . . 44
22 Salvage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
23 Requisition . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
</TABLE>
iii
<PAGE> 5
<TABLE>
<S> <C> <C>
24 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . 49
25 Owners Rights Following a Termination Event . . . . . . . . . . . 52
26 Increased Costs, Funding Problems and Illegality . . . . . . . . . 53
27 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
28 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 55
29 Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . 56
30 Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
</TABLE>
iv
<PAGE> 6
<TABLE>
<S> <C>
SCHEDULE 1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
List of Documents and Evidence . . . . . . . . . . . . . . . . . . 58
SCHEDULE 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
Form of Delivery Notice . . . . . . . . . . . . . . . . . . . . . 60
SCHEDULE 3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Charterhire . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
SCHEDULE 4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 77
Temination Sum . . . . . . . . . . . . . . . . . . . . . . . . . . 77
SCHEDULE 5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Forms of Loss Payable Clauses . . . . . . . . . . . . . . . . . . 82
SCHEDULE 6 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 83
List of Excluded Equipment . . . . . . . . . . . . . . . . . . . . 83
</TABLE>
v
<PAGE> 7
A CHARTERPARTY BY WAY OF DEMISE dated 20th December, 1990, and made BETWEEN:
(1) ROYAL BANK OF SCOTLAND (INDUSTRIAL LEASING) LIMITED whose registered
office is at 42 St. Andrew Square, Edinburgh EH2 2YE, Scotland (the
"Owner"); and
(2) SIMON-HORIZON LIMITED whose registered office is at Horizon House,
Azalea Drive, Swanley, Kent BR8 8JR (the "Charterer")
BY WHICH IT IS AGREED as follows:
1 DEFINITIONS
1.1 In this Charterparty, unless the context otherwise requires:
"Approved Brokers" means such firm of insurance brokers appointed by
the Charterer, as may from time to time be approved in writing by or
on behalf of the Owner for the purposes of this Charterparty;
"Banking Day" means a day (other than a Saturday) on which banks are
open for business in London and Edinburgh;
"BFE" means the equipment, machinery and parts to be supplied by the
Charterer to the Owner pursuant to the Conversion and Supply
Agreement;
"CAA" means the Capital Allowances Act 1990;
"Casualty Amount" means Two hundred and fifty thousand Pounds
(L.250,000) (or the equivalent in any other currency);
"Charterhire Payment Dates" means, subject to Clause 8.2, in relation
to the Primary Period, each of the dates referred to in paragraph 2.2
of Schedule 3 and, in relation to the Secondary Period, means each of
the dates referred to in paragraph 6.2 of Schedule 3;
"Charter Period" means the period during which the Charterer shall be
entitled to the possession and use of the Ship in accordance with this
Charterparty;
"Charterer" means Simon-Horizon limited of Horizon House, Azalea
Drive, Swanley, Kent BR8 8JR and includes its successors and permitted
assignees and transferees;
"Classification" means "DNV + Al (MV), EO, SF, Supply Vessel Helideck"
with the Classification Society or such other classification as the
Owner shall, at the request of
1
<PAGE> 8
the Charterer, have agreed in writing shall be treated as the
Classification for the purposes of this Charterparty;
"Classification Society" means Det Norske Veritas or such other
classification society which the Owner shall at the request of the
Charterer, have agreed in writing shall be treated as the
Classification Society for the purposes of this Charterparty;
"Compulsory Acquisition" means requisition of title or other
compulsory acquisition, requisition, appropriation expropriation,
deprivation or confiscation for any reason of the Ship by any
Government Entity or other competent authority, whether de jure or de
facto, but shall exclude requisition for use or hire not involving
requisition of title;
"Conversion and Supply Agreements" means an agreement of even date
herewith between the Owner and the Charterer with regard to the Ship
and relating to certain conversion works to be carried out to the Ship
and the purchase of certain equipment to be installed thereon;
"Conversion and Supply Price" means the aggregate amount in Pounds of
the payments made to the Charterer pursuant to certificates presented
under Clauses 2.5 and 3.4 of the Conversion and Supply Agreement;
"Corporation Tax" means corporation tax in the context of the scheme
of taxation contained in the United Kingdom Tax Acts (as defined in
section 831 ICTA) and any applicable Finance Act or any other tax on
companies imposed in the United Kingdom in substitution for
corporation tax;
"Delivery" means the time when the Owner shall accept, and obtain
title to, the Ship under the Purchase Agreement;
"Delivery Date" means the date on which Delivery shall occur;
"Encumbrance" means any mortgage, charge (whether fixed or floating),
pledge, lien, hypothecation, assignment, security interest, title
retention or other encumbrance of any kind securing, or any right
conferring a priority of payment in respect of, any obligation of any
person;
"Expected Delivery Date" means the date specified in the notice to be
given by the Charterer to the Owner pursuant to Clause 5.2 as being
the date upon which it is expected that the Charterer will deliver the
Ship to the Owner pursuant to the Purchase Agreement;
"Excluded Equipment" means the equipment, machinery and parts owned by
or leased to the Charterer listed in Schedule 6 which although
installed or to be installed on the
2
<PAGE> 9
Ship by the Start Date are not chartered by the Owner to the Charterer
pursuant to this Charterparty;
"Government Entity" means and includes (whether having a distinct
legal personality or not) any national or local government authority,
board, commission, department, division, organ, instrumentality, court
or agency and any association, organisation or institution of which
any of the foregoing is a member or to whose jurisdiction any of the
foregoing is subject or in whose activities any of the foregoing is a
participant;
"Guarantee" means the guarantee issued or, as the context may require,
to be issued by the Guarantor in favour of the Owner;
"Guarantor" means Simon Engineering plc whose registered office is at
Simon House, Bird Hall Lane, Stockport, Cheshire SK3 0RJ;
"ICTA" means the Income and Corporation Taxes Act 1988;
"Indebtedness" means any obligation for the payment or repayment of
money, whether as principal or as surety, and whether present or
future, actual or contingent;
"Insurances" means all policies and contracts of insurance (which
expression includes all entries of the Ship in a protection and
indemnity or war risks association) which are from time to time during
the Charter Period in place or taken out or entered into by the
Charterer pursuant to Clause 16 for the benefit of itself and the
Owner in respect of the Ship or otherwise howsoever in connection with
the Ship and all benefits thereof (including claims of whatsoever
nature and return of premiums);
"Loss Payable Clauses" means the provisions regulating the manner of
payment of sums receivable under the Insurances which are to be
incorporated in the relevant insurance documents, such Loss Payable
Clauses to be in the forms set out in Schedule 5 or in such other
forms as may from time to time be agreed in writing by the Owner;
"Manager" means Ervik Marine Services A/S of Brunholmgt 2, N6004
Aalesund, Norway or any other person appointed by the Charterer, with
the prior written consent of the Owner, as the manager of the Ship;
"Management Agreement" means the agreement approved by the Owner dated
19th December, 1990 and made between the Charterer and the Manager or
any other agreement, previously agreed in writing by the Owner,
between the Charterer and the Manager providing (inter alia) for the
Manager to manage the Ship;
"Manuals and Technical Records" means all such books, records, logs,
manuals, technical data, drawings and other materials and documents
(whether kept or to be kept
3
<PAGE> 10
in compliance with any applicable laws or the requirements of the
Classification Society or otherwise) relating to the Ship;
"Month" means a period beginning in one calendar month and ending in
the next calendar month on the day numerically corresponding to the
day of the calendar month on which it started, provided that (i) if
the period started on the last Banking Day in a calendar month or if
there is no such numerically corresponding day, it shall end on the
last Banking Day in such next calendar month and (ii) if such
numerically corresponding day is not a Banking Day, the period shall
end on the preceding Banking Day and "months" and "monthly" shall be
construed accordingly;
"MWB Conversion Contract" means the agreement dated 18th October, 1990
and made between the Charterer and the Yard relating to certain
conversion works to be carried out, and for the supply of certain
equipment, so the Ship;
"Net Sale Proceeds" means, in relation to a sale of the Ship, the
amount actually received by the Owner from a purchaser of the Ship
after deducting the Owners expenses in connection with such sale
including without limitation (where applicable) broker's commissions,
Owner's marketing expenses, legal costs, agency fees and port charges,
insurance premiums, stamp duties, registration fees and any expenses
relating to the overhaul or repair of the Ship (including putting the
Ship in class) incurred to restore the Ship to the condition required
by this Charterparty or pursuant to the provisions of any sale and
purchase agreement in respect of the sale of the Ship;
"Original Cost" means an amount equal to the aggregate of
(i) the Purchase Price; and
(ii) the Conversion and Supply Price;
"Owner" includes successors and assignees of the Owner;
"Permitted Encumbrance" means in respect of the Ship:
(a) any Encumbrance arising from the Owner's own acts or defaults;
(b) any Encumbrance for Taxes either not yet assessed or, if
assessed, not yet due and payable or being contested in good
faith by appropriate proceedings (and for the payment of which
adequate reserves have been provided) so long as any such
proceedings or the continued existence of such Encumbrance do
not involve any likelihood of the sale, forfeiture or loss of,
or of any interest in, the Ship;
(c) liens arising in the ordinary course of business by statute or
by operation of law in respect of obligations which are not
overdue or which are being contested in
4
<PAGE> 11
good faith by appropriate proceedings (and for the payment of
which adequate reserves have been provided) so long as any
such proceedings or the continued existence of such liens do
not involve any likelihood of the sale, forfeiture or loss of,
or of any interest in, the Ship;
(d) any lien for General Average or for Master's, officer's or
crew's wages outstanding in the ordinary course of trading,
any lien for salvage and any ship repairer's or outfitters'
possessory lien for a sum not exceeding the Casualty Amount;
and
(e) during the period of the conversion of the Ship pursuant to
the MWB Conversion Contract, any lien or right of the Yard to
retain the Ship to the extent that it arises as a result of,
or is provided for in, the MWB Conversion Contract and does
not become exercisable by reason of a default by the Charterer
in its performance of its obligations under the MWB Conversion
Contract;
"Pounds" and the sign "L." means pounds sterling of the United
Kingdom;
"Pre-Primary Period" means the period commencing on the Delivery Date
and terminating, subject to the terms and conditions of this
Charterparty, on the Start Date;
"Primary Period" means the period commencing on the Start Date and
terminating, subject to the terms and conditions of this Charterparty,
on 1st April, 2001;
"Purchase Agreement" means the Memorandum of Agreement dated December,
1990 and made between the Charterer and the Owner under which the
Charterer is to sell and the Owner is to purchase the Ship;
"Purchase Price" means the sum of Five million five hundred thousand
Pounds (L.5,500,000) payable by the Owner to the Charterer for the
Ship under the Purchase Contract;
"Relevant Documents" means this Charterparty, the Conversion and
Supply Agreement, the Guarantee and any other document or instrument
from time to time executed as a guarantee and/or security for the
obligations of the Charterer and/or any sums of money from time to
time owing, whether actually or contingently, under or pursuant to
this Charterparty and all notices, consents, certificates and other
documents and agreements issued or, as the case may be, to be issued
pursuant to any of the foregoing, and until expiry of the warranties
given to the Charterer pursuant to the MWB Conversion Contract,
includes the MWB Conversion Contract;
"Relevant Event" means any Termination Event or any event which with
the giving of notice or lapse of time or the satisfaction of any other
condition (or any combination thereof) would constitute a Termination
Event;
5
<PAGE> 12
"Relevant Party" means all or any one of the Charterer, the Guarantor
or any other party (other than the Owner) to any of the Relevant
Documents;
"Relevant Rate of Interest" means the rate of interest determined by
the Owner to be Two percent (2%) per annum above the base rate of The
Royal Bank of Scotland plc;
"Requisition Compensation" means all moneys or other compensation from
time to time payable in respect of the Compulsory Acquisition of the
Ship;
"Secondary Period" means the period for which the Charter Period is
extended or further extended in accordance with Clause 3.2;
"Ship" means the m.v. "Seaway Labrador" to be purchased by the Owner
pursuant to the Purchase Contract presently registered under the
Bahamian flag at the Port of Nassau with Official Number 715224 and
includes any share or interest therein and her engines, machinery,
boats, tackle, outfit, equipment, compressors, computers, seismic
survey equipment, spare gear, fuel consumables or other stores
belongings and appurtenances whether on board or ashore (but excluding
Excluded Equipment, consumable stores and provisions, bunkers,
domestic fuel lubricants, rented equipment, and charterer's additions
as contemplated in Clause 20.3) which become the property of the Owner
pursuant to the Purchase Contract and the Conversion and Supply
Agreement and belong to the Owner as at Delivery or installed on the
Ship thereafter or which, having been removed therefrom remain the
property of the Owner pursuant to this Charterparty together with any
and all substitutions therefor and replacements and renewals thereof
from time to time made in or to her in accordance with the provisions
of this Charterparty and, where the context permits, "Ship" shall
include the Manuals and Technical Records;
"Start Date" means 31st March, 1991;
"Subsidiary" of a person means any company or entity directly or
indirectly controlled by such person for which purpose "control" means
either ownership of more than 50 per cent of the voting share capital
(or equivalent right of ownership) of such company or entity, or power
to direct its policies and management whether by contract or
otherwise;
"Taxes" includes all present and future taxes, levies, imposts,
duties, fees or charges of whatever nature, including, without
limitation, corporation, capital gains, income, gross receipts
franchise, transfer, sales, use, business, occupation, transaction,
purchase, value added, excise, personal property, real property,
stamp, documentary, national insurance, or similar taxes at the rate
applicable for the time being, imposed by any national or local taxing
authority or any other agency or government, together with interest
thereon and penalties in respect thereof and "Taxation" shall be
construed accordingly;
"Termination Event" means any of the events or circumstances described
in Clause 24;
6
<PAGE> 13
"Termination Sum" means at any relevant time the amount calculated in
accordance with Schedule 4 as being applicable at such time;
"Total Loss" means any of the following events:
i) the actual or constructive total loss of the Ship (including
any damage to the Ship which results in an insurance
settlement on the basis of a total loss, or requisition for
use or hire of the Ship which results in an insurance
settlement on the basis of a total loss);
ii) the Compulsory Acquisition of the Ship; or
iii) the hijacking, theft, condemnation, confiscation, arrest,
capture, detention, seizure or requisition for use or hire of
the Ship (other than where the same amounts to Compulsory
Acquisition of the Ship) unless the Ship be released and
restored to the Charterer from such hijacking, theft,
condemnation, confiscation,, arrest, capture, detention,
seizure or requisition for use or hire within thirty (30) days
after the occurrence thereof,
"Total Loss Date" shall have the meaning ascribed thereto in Clause
21.2(b);
"Value Added Tax" or "VAT" means value added tax as provided for in
the Value Added Tax Act 1983 or any similar tax replacing or
introduced in addition to the same;
"Yard" means Motorenwerk Bremerhaven GmbH of Barkhausenstrasse, D-2850
Bremerhaven, Federal Republic of Germany.
1.2 Insurance Definitions
In Clause 16:
(i) "excess risks" means the proportion (if any) of claims for
general average, salvage and salvage charges and under the
ordinary collision clause not recoverable in consequence of
the value at which a vessel is assessed for the purpose of
such claims exceeding her insured value;
(ii) "fire and usual marine risks" means hull and machinery
coverage in accordance with Institute Time Clauses Hulls
including Institute Additional Perils Clause or equivalent
thereof;
(iii) "protection and indemnity risks" means the usual risks covered
by an English protection and indemnity association including
the proportion (if any) not recoverable in case of collision
under the ordinary collision clause; and
7
<PAGE> 14
(iv) "war risks" includes the risk of mines and all risks excluded
from the standard form of English marine policy by the free of
capture and seizure clause.
1.3 Clause headings and the Index are inserted for convenience of
reference only and shall be ignored in the interpretation of this
Charterparty.
1.4 In this Charterparty, unless the contact otherwise requires:
(a) references to Clauses and Schedules are to be construed as
references to the clauses of, and schedules to, this
Charterparty and references to this Charterparty include its
Schedules;
(b) references to (or to any specified provision of) this
Charterparty or any other document shall be construed as
references to this Charterparty, that provision or that
document as in force for the time being and as amended in
accordance with the terms thereof, or as the case may be, with
the agreement of the relevant parties and (where such consent
is, by the terms of this Charterparty or the relevant document
required to be obtained as a condition to such amendment being
permitted) the prior written consent of the Owner;
(c) words importing the plural shall include the singular and vice
versa;
(d) references to a person shall be construed as including,
without limitation, references to an individual, firm,
company, corporation, unincorporated body of persons and any
Government Entity, and
(e) without prejudice to any provisions in this Charterparty
providing for payments to be made or for adjustments to be
made to amounts payable hereunder in the event of a change in
any statute or statutory provisions references to statutory
provisions shall be construed as references to those
provisions as respectively amended or re-enacted (whether
before or after the date hereof) from time to time and shall
include any provisions of which they are re-enactments
(whether with or without modification) and any subordinate
legislation made under such provisions so far as such
modification or re-enactment applies or is capable of applying
to any transactions entered into prior to the date hereof and
(so far as liability thereunder may exist or can arise) shall
include also any past statutory provisions or regulations (as
from time to time modified or re-enacted) which such
provisions or regulations have directly or indirectly
replaced.
8
<PAGE> 15
2 REPRESENTATIONS AND WARRANTIES
2.1 The Charterer represents and warrants to the Owner that:
(a) the Charterer is duly incorporated and validly existing under
the laws of England as a limited liability company and has
power to carry on its business as it is now being conducted
and to own its property and other assets;
(b) the Charterer has the power to execute, deliver and perform
its obligations under the Relevant Documents to which it is a
party and all necessary corporate, shareholder and other
action has been taken to authorise the execution, delivery and
performance of the same;
(c) the Relevant Documents to which the Charterer is a party,
constitute or will upon execution thereof, constitute valid
and legally binding obligations of the Charterer enforceable
in accordance with their respective terms;
(d) the execution and delivery of, the performance of its
obligations under, and compliance with the provisions of, the
Relevant Documents to which it is a party by the Charterer
will not (i) contravene any existing applicable law, statute,
rule or regulation, or any judgment, decree or permit to which
the Charterer is subject (ii) conflict with, or result in any
breach of any of the terms of, or constitute a default under,
any agreement or other instrument to which the Charterer is a
party or is subject or by which it or any of its property is
bound, (iii) contravene or conflict with any provision of the
Charterer's Memorandum and Articles of Association;
(e) no litigation, arbitration or administrative proceeding is
taking place, pending or, to the knowledge of the officers of
the Charterer, threatened against the Charterer which has not
been notified to the Owner in writing and which is neither
frivolous nor vexatious and could have a material adverse
effect on the business, assets or financial condition of the
Charterer or its ability to perform its obligations under the
Relevant Documents and such proceedings remain unstayed or
unresolved for a period exceeding thirty (30) days unless
contested by the Charterer in good faith;
(f) the audited financial statements of the Charterer in respect
of the financial year ended on 31st December, 1989 as
delivered to the Owner have been prepared in accordance with
generally accepted accounting principles and practices in the
United Kingdom which have been consistently applied and
present fairly and accurately the financial position of the
Charterer as at such date and the results of the operations of
the Charterer for the financial year ended on such date, and
as at such date the Charterer did not have any significant
liabilities (contingent or
9
<PAGE> 16
otherwise) which are not disclosed by, or reserved against in,
such financial statements and the Charterer did not have any
unrealised or anticipated losses.
2.2 The Charterer further represents and warrants to the Owner that:
(a) there has been no material adverse change in the financial
position of the Charterer from that set forth in the financial
statements referred to in Clause 2.1 (f);
(b) every consent, authorisation, license or approval of, or
registration with, or declaration to, governmental or public
bodies or authorities or courts required by the Charterer to
authorise, or required by the Charterer in connection with the
execution, delivery, validity, enforceability or admissibility
in evidence of the Relevant Documents, or the performance by
the Charterer of its obligations under the Relevant Documents
has been obtained or made and is in full force and effect, and
there has been no default in the observance of the conditions
or restrictions (if any) imposed in, or in connection with,
any of the same;
(c) the obligations of the Charterer under the Relevant Documents
are direct, general and unconditional obligations of the
Charterer and rank at least pari passu with all other present
and future unsecured and unsubordinated obligations (including
contingent obligations) of the Charterer with the exception of
such obligations as are mandatorily preferred by law and not
by contract;
(d) the Charterer is not (nor would with the giving of notice or
lapse of time or both be) in breach of or in default under any
agreement relating to Indebtedness to which it is a party or
by which it may be bound;
(e) the information, exhibits and reports furnished by the
Charterer to the Owner in connection herewith or with the
negotiation and preparation of this Charterparty are true and
accurate in all material respects and not misleading, do not
omit material facts and all reasonable enquiries have been
made to verify the facts and statements contained therein;
there are no other facts the omission of which would make any
fact or statement therein misleading,
(f) no Relevant Event has occurred and is continuing,
(g) the Ship is and will on Delivery be free from all Encumbrances
other than Permitted Encumbrances; and
(h) neither the Charterer's interest in the Insurances or any
Requisition Compensation nor any part thereof will on Delivery
be subject to any Encumbrances save for any Permitted
Encumbrance.
10
<PAGE> 17
2.3 The representations and warranties in Clause 2.1 (and so that the
representation and warranty in Clauses 2.1(f) shall for this purpose
refer to the then latest audited financial statements delivered to the
Owner under Clause 11.1(d)) shall be deemed to be repeated by the
Charterer on and as of each day from the date of this Charterparty
until the end of the Charter Period as if made with reference to the
facts and circumstances existing on each such date.
2.4 The rights and remedies of the Owner in relation to any
misrepresentation or breach of warranty on the part of the Charterer
shall not be prejudiced by any investigation by or on behalf of the
Owner into the affairs of any person (other than the Owner) being a
party to any of the Relevant Documents, by the performance of any of
the Relevant Documents or by any other act or thing which may be done
or omitted to be done by the Owner under any of the Relevant Documents
and which would or might, but for this Clause 2.4, prejudice such
rights and remedies.
3 TERM OF CHARTER
3.1 The Owner shall let and demise and the Charterer shall take on hire
the Ship, subject to the terms and conditions of this Charterparty,
for the Pre-Primary Period and the Primary Period.
3.2 The Charterer shall be entitled (subject as hereinafter provided) on
giving to the Owner notice (which notice, when given shall be
irrevocable) not less than one hundred and eighty (180) days prior to
the end of the Primary Period, to extend the Charter Period for a
period of ten (10) years from the last day of the Primary Period.
3.3 Subject to the Charterer indemnifying the Owner for all losses, costs
and expenses incurred by the Owner (including any losses, costs or
expenses incurred by the Royal Bank of Scotland plc or any other party
providing funds to the Owner in connection with the payments to be
made and received by the Owner under the Purchase Agreement and the
Relevant Documents) as a result of such termination, the Charterer
shall be entitled on giving to the Owner not less than one hundred and
twenty (120) days notice (which notice, when given, shall be
irrevocable) to terminate the Charter Period on any date falling on or
after the first anniversary of the Start Date. Upon such termination
the Charterer shall re-deliver the Ship to the, Owner in accordance
with Clause 18 and shall pay to the Owner an amount equal to the
Termination Sum on the date of such termination together with all
amounts of charterhire and other moneys then due and owing to the
Owner under this Charterparty or any of the other Relevant Documents.
3.4 If (a) the Charterer does not elect to extend the Charter Period
pursuant to Clause 3.2, or (b) the Charterer shall give notice to
terminate the Charter Period pursuant to Clause 3.3, then, provided
that the Ship shall have been returned to the Owner in accordance with
the subsequent provisions of this Clause 3.4 and in accordance with
Clause 18 and that the Owner shall not be prevented from so doing for
any reason whatsoever, the
11
<PAGE> 18
Owner shall endeavour to sell the Ship for delivery on, or as soon as
possible after, in the case of (a) above, the expiry of the Primary
Period or, in the case of (b) above, the date of the termination of
the Charter Period pursuant to Clause 3.3. Notwithstanding anything
to the contrary in this charterparty, where the Charter Period expires
by effluxion of time or if the Charterer gives notice to terminate the
Charter Period pursuant to Clause 33, the Charter Period shall
continue until and end on the date on which the Ship shall be
delivered to a purchaser thereof pursuant to a sale of the Ship as
contemplated by Cause 3.6, whenever such delivery shall take place; it
being agreed that if by reason of the foregoing the Charter Period
continues beyond 1st April 2001, the Secondary Period shall be deemed
to have commenced and charterhire shall be payable accordingly.
Immediately prior to such termination of the Charter Period the
Charterer shall re-deliver the Ship to the Owner in accordance with
Clause 18 and shall pay to the Owner an amount equal to the
Termination Sum on the date of such termination together with all
amounts of charterhire and other moneys then due and owing to the
Owner under this Charterparty and/or any of the other Relevant
Documents.
3.5 Upon the termination of the Charter Period and the sale of the Ship in
accordance with the foregoing provisions of this Clause 3, the Net
Sale Proceeds shall be applied by the Owner (subject to Clause 10.4)
as follows:
(a) Firstly in or towards settlement of any amounts due and owing
by the Charterer to the Owner under the Charterparty or any
other Relevant Documents (including any interest due in
respect thereof);
(b) Secondly if the Charterer shall on or before the date of
application of the Net Sale Proceeds by the Owner have paid
the Termination Sum, or a part thereof, in accordance with
Clauses 3.3 or 3.4, in or towards refunding by way of rebate
of charterhire to the Charterer the amount of the Termination
Sum or part thereof so paid by the Charterer; and
(c) Thirdly an amount equal to two per cent (2%) of the Net Sale
Proceeds shall be retained by the Owner and any balance
remaining shall be paid to the Charterer by way of rebate of
charterhire and/or payment of sales commission or otherwise as
appropriate.
3.6 In respect of any sale of the Ship on termination or expiry of the
Charter Period (other than pursuant to Clauses 21.3 or 25.1), the
Charterer shall act as the sole and exclusive agent of the Owner for
the purpose of negotiating the sale of the Ship on the following
terms:
(a) the Charterer will endeavor to arrange the sale of the Ship
for a cash consideration on the best terms (including price)
reasonably obtainable on the open market provided that the
Ship shall not be sold to
12
<PAGE> 19
(i) the Charterer or any person or persons connected with
the Charterer (as the term "connected persons" is
used in section 839 ICTA); or
(ii) any person acting in trust for, as nominee of, as
agent or otherwise as representative of or on behalf
of any of the persons referred to in (i) above;
and the Charterer will keep the Owner informed from time to
time of its progress;
(b) the Charterers authority will not extend to concluding a
contract for the sale of the Ship for which the Owner's
specific written authority will be required;
(c) the Ship shall be offered for sale and for delivery on, or as
soon as practicable after, such termination or expiry of the
Charter Period and any contract for its sale shall include
terms to the following effect:
(i) that all conditions, representations or warranties,
expressed or implied by statute or otherwise, whether
as to the state or quality of the Ship or as to
description, fitness for purpose, merchantable
quality or otherwise, are, so far as is permitted by
law, expressly excluded as between the Owner and the
buyer save in respect of the warranty that the Owner
shall be passing such title to the Ship as received
from the Charterer free from any Encumbrances created
by the Owner, and
(ii) that the sale is conditional upon the Owner first
recovering possession of the Ship;
Provided always that nothing in this Clause 3.6(c) shall
prevent the Charterer including any other representations and
warranties to be given directly by the Charterer to a buyer in
connection with such sale; and
(d) the Charterer's agency and authority pursuant to the foregoing
provisions shall terminate if a Relevant Event shall occur and
the Owner shall give notice to the Charterer terminating such
agency.
4 CONDITIONS PRECEDENT
4.1 The obligation of the Owner to charter the Ship to the Charterer under
this Charterparty is subject to the condition that, not less than
seven (7) Banking Days prior to the Expected Delivery Date (or by such
later time prior to Delivery as the Owner may agree) the Owner shall
have received the documents and evidence specified in Schedule 1 in
form and substance satisfactory to the Owner.
13
<PAGE> 20
4.2 The obligation of the Owner to charter the Ship to the Charterer under
this Charterparty is subject to the further conditions:
(a) that the representations and warranties set out in Clause 2.1
and 2.2 are true and correct as if each were made with respect
to the facts and circumstances existing immediately prior to
the time when Delivery is to take place;
(b) that no Relevant Event shall have occurred and be continuing
or would arise by reason of Delivery taking place;
(c) that Delivery shall have occurred.
4.3 The conditions specified in Clauses 4.1 and 4.2 are inserted for the
sole benefit of the Owner and may be waived in whole or in part and
with or without conditions by the Owner provided that if any of the
said conditions are outstanding after Delivery has taken place then,
unless the Owner shall have given a specific written waiver or
deferral in respect thereof, the Charterer shall ensure that such
outstanding conditions are fled within thirty (30) days of the
Delivery Date and the Owner shall be endued to treat the failure of
the Charterer to perform such outstanding conditions within such
period of thirty (30) days as a Termination Event.
5 DELIVERY AND ACCEPTANCE
5.1 The Owner appoints the Charterer and the Charterer accepts such
appointment as the Owner's agent:
(a) to perform all duties required of the Owner under the Purchase
Agreement other than the payment of the Purchase Price of the
Ship thereunder;
(b) to carry out or procure the carrying out of all inspections
necessary or desirable to supervise the works agreed to be
carried out pursuant to the Conversion and Supply Agreement
and to evaluate the condition, seaworthiness and performance
of the Ship when it is tendered for redelivery after such
conversion works and all relevant parts and equipment
installed thereon; and
(c) to accept delivery of the Ship on behalf of the Owner when it
is tendered for delivery in accordance with the Purchase
Agreement, and on redelivery from conversion, and to sign on
behalf of the Owner any necessary documents evidencing such
delivery and acceptance provided in both cases that the
Charterer is first satisfied that on Delivery the Owner will
obtain good title to the Ship free from Encumbrances other
than Encumbrances within paragraphs (a), (b), (c) and (d) of
the definition of Permitted Encumbrances, and that both on
Delivery and redelivery from conversion, the Charterer is
satisfied that the Ship is and remains free from Encumbrances
other than Encumbrances within paragraphs (a), (b), (c)
14
<PAGE> 21
and (d) of the definition of Permitted Encumbrances and is
seaworthy, and that the condition of the Ship is satisfactory
and accords on Delivery, with the Purchase Agreement, and on
redelivery from conversion, the specifications of the
Conversion and Supply Agreement.
5.2 The Charterer will give the Owner at least five (5) Banking Days prior
written notice, in the form contained in Schedule 2, of the date upon
which it is expected that the Charterer will deliver the Ship to the
Owner pursuant to the Purchase Agreement.
5.3 Subject to Clause 4, immediately following Delivery the Ship shall be
deemed delivered to the Charterer and shall become subject to and
governed by this Charterparty, the Charter Period shall commence and
the Charterer shall be deemed to have taken delivery of the Ship under
this Charterparty.
5.4 The Charterer acknowledges and confirms that immediately upon title
passing to the Owner in respect of the relevant conversion works to be
carried out to the Ship and the supply of certain equipment thereto
and BFE pursuant to the Conversion and Supply Agreement and/or the MWB
Conversion Contract, such conversion works, equipment and BFE shall be
part of the Ship and deemed delivered to the Charterer and shall
become subject to and governed by this Charterparty and the Charterer
shall be deemed to have taken delivery thereof under this
Charterparty.
5.5 The Charterer acknowledges that prior to Delivery the Ship was
chartered to the Charterer and owned by the Charterer, that the
condition of the Ship on delivery to the Charterer and its compliance
with the provisions and specifications of the Purchase Agreement shall
be the sole responsibility of the Charterer, and the Charterer shall
not be entitled for any reason whatsoever to refuse to accept delivery
of the Ship under this Charterparty once the same has been accepted by
it, on behalf of the Owner, under the Purchase Agreement and the Owner
shall not be liable for any loss or expense, or any loss of profit,
resulting directly or indirectly from any defect or alleged defect in
the Ship or failure or alleged failure of the Ship to comply with the
Purchase Agreement.
5.6 The conversion works, BFE and other equipment to be installed on the
Ship pursuant to the Conversion and Supply Agreement are carried out
at the sole risk of the Charterer. Accordingly the Charterer shall not
be entitled for any reason whatsoever to reject the Ship under this
Charterparty even if the Ship is unseaworthy or suffering from any
defect as a result of such conversion works or installation of parts
and equipment.
5.7 The Owner shall not be responsible for any loss or expense, or any
loss of profit, arising from any delay in the delivery of, or failure
to deliver, the Ship to the Charterer under this Charterparty.
5.8 If for any reason the Ship shall not have been delivered to and
accepted by the Charterer in accordance with Clause 5.3 by 31st
December, 1990 then the Owner shall have no
15
<PAGE> 22
further obligation under this Charterparty to charter the Ship to the
Charterer (unless the Owner and Charterer shall otherwise agree in
writing) and the Charterer shall (in addition to any other obligation
it may then have under Clause 9 to indemnify and hold harmless the
Owner as therein provided) reimburse to the Owner forthwith on demand
all amounts which the Owner shall have expended or shall thereafter be
required to expend under the Purchase Agreement or otherwise in
connection with the purchase of the Ship, together with interest on
each amount so demanded at the Relevant Rate of Interest from the date
of demand until the date of reimbursement (both before and after any
relevant judgment).
5.9 The Charterer shall indemnify the Owner in respect of any liabilities,
losses, costs or expenses incurred by the Owner as a consequence of
any delay in the delivery of or non-delivery of the Ship to the Owner
under the Purchase Agreement and/or to the Charterer under this
Charterparty.
6 EXTENT OF OWNER'S LIABILITY; THIRD PARTY WARRANTIES
6.1 The Owner warrants that, subject to Clause 21.1 and Clause 25, the
Owner shall not interfere during the Charter Period with the use,
possession and quiet enjoyment of the Ship by the Charterer on the
terms of this Charterparty.
6.2 The Charterer expressly agrees and acknowledges that, save only as
provided in Clauses 6.1 and 14.2, no condition, warranty or
representation of any kind is or has been given by or on behalf of the
Owner in respect of the Ship or any part thereof or any work during
conversion or any part or equipment then installed or any BFE, and
accordingly the Charterer confirms that it has not, in entering into
this Charterparty, relied on any condition, warranty or representation
by the Owner or any person on the Owner's behalf (whether authorised
or not), express or implied, whether arising by law or otherwise in
relation to the Ship or any part thereof or any work during conversion
or any part or equipment then installed or any BFE, including, without
limitation, warranties or representations as to the description,
seaworthiness, merchantability, fitness for any purpose, value,
condition, design or operation of any kind or nature of the Ship or
any part thereof or any work during conversion or any part or
equipment then installed or any BFE, and the benefit of any such
condition, warranty or representation by the Owner is hereby
irrevocably and unconditionally waived by the Charterer. The Charterer
further acknowledges and agrees that the Ship is to be designed,
manufactured, assembled and erected pursuant to the Conversion and
Supply Agreement without reference to or involvement of the Owner
other than payments of the Conversion and Supply Price. To the extent
permissible under applicable law, the Charterer hereby also waives any
rights which it may have in tort in respect of any of the matters
referred to above and irrevocably agrees that the Owner shall have no
greater liability in tort in respect of any such matter than it would
have in contract after taking account of all of the foregoing
exclusions. No third party making any representation or warranty
relating to the Ship or any part thereof or any work during conversion
or any part or equipment then installed
16
<PAGE> 23
or any BFE is the agent of the Owner nor has any such third party
authority to bind the Owner thereby.
6.3 During the Charter Period the Owner will use reasonable endeavors to
extend to the Charterer the benefit of all warranties and indemnities
given by any manufacturer or supplier of any part of the Ship or any
work during conversion or any part or equipment then installed or any
BFE. The Charterer shall be entitled during the Charter Period, with
the prior written approval of the Owner, to take such action upon any
such warranty or indemnity in the name of the Owner against any such
manufacturer or supplier as the Charterer shall see fit, but subject
to the Charterer first ensuring that the Owner is indemnified and
secured to its reasonable satisfaction against all costs and expenses
thereby incurred or to be incurred.
7 CHARTERHIRE
7.1 During the Primary Period the Charterer shall pay to the Owner on the
respective Charterhire Payment Dates installments of charterhire for
the Ship in arrears, each such instalment being of the amount
specified in paragraph 2 of Schedule 3 one such instalment being
payable on each Charterhire Payment Date falling during the Primary
Period.
7.2 During the Secondary Period the Charterer shall pay to the Owner on
the respective Charterhire Payment Dates installments of charterhire
for the Ship in advance, each such instalment being of the amount
specified in paragraph 6 of Schedule 3 one such installment being
payable on each Charterhire Payment Date falling during the Secondary
Period.
7.3 The installments of charterhire and all other sums payable by the
Charterer to the Owner under this Charterparty are exclusive of any
Value Added Tax or similar tax payable in respect thereof which shall
in each case be paid in addition thereto.
7.4 The Charterer's obligation to pay charterhire and make other payments
in accordance with this Charterparty shall, subject to Clause 21.3, be
absolute and unconditional irrespective of any contingency whatsoever
including (but not limited to) (i) any right of set-off, counterclaim,
recoupment, defense or other right which either party hereto may have
against the other, (ii) any unavailability of the Ship for any reason,
including, but not limited to, any lack or invalidity of title or any
other defect in the title, seaworthiness, merchantability, fitness for
any purpose, condition, design, or operation of any kind or nature of
the Ship, or the ineligibility of the Ship for any particular use or
trade, or for registration or documentation under the laws of any
relevant jurisdiction, or any damage to the Ship, (iii) any failure or
delay on the part of either party hereto, whether with or without
fault on its part, in perforating or complying with any of the terms
or conditions of this Charterparty, (iv) any insolvency, bankruptcy,
administration, reorganisation, arrangement, readjustment of debt,
dissolution, liquidation or similar
17
<PAGE> 24
proceedings by or against the Owner or the Charterer, (v) any lack of
due authorisation of, or other defect in, this Charterparty.
7.5 The provisions of this Clause 7 with regard to the calculation and
payment of charterhire during the Pre-Primary Period and the Primary
Period are subject to adjustment in accordance with the charterhire
adjustment provisions contained in Schedule 3.
7.6 No charterhire paid in advance shall (except as expressly contemplated
by the provisions of this Charterparty be repayable by or recoverable
from the Owner.
8 PAYMENTS, INTEREST AND CALCULATIONS
8.1 All payments to be made by the Charterer under this Charterparty shall
be made (unless specifically otherwise provided in this Charterparty)
without prior demand in full, without any set-off or counterclaim
whatsoever and, subject as provided in Clause 10.3, free and clear of
any deductions or withholdings in Pounds (or, in the case of indemnity
payments, in the currency in which the cost or expense which is the
subject of the indemnity payment is incurred) for value on the day on
which payment is due to the account of the Owner with The Royal Bank
of Scotland PLC, 45 The Promenade, Cheltenham, Gloucestershire GL50
lPY (Sort Code: 16-16-13 and Account Number: 12176088) or to such
other account as the Owner may from time to time notify the Charterer
in writing.
8.2 Other than any sum payable on demand, which shall be payable in
accordance with such demand, when any payment under any of the
Relevant Documents would otherwise be due on a day which is not a
Banking Day, the due date for payment shall be the preceding Banking
Day.
8.3 If the Charterer fails to pay any sum (including without limitation,
any sum payable pursuant to this Clause 8.3) on its due date for
payment under this Charterparty the Charterer shall pay to the Owner
on demand interest on such sum, compounded daily, from the due date up
to the date of actual payment (as well after as before any relevant
judgment) at the Relevant Rate of Interest.
8.4 All interest under this Charterparty shall accrue from day to day and
shall be calculated on the basis of the actual days elapsed and a 365
day year.
8.5 Any certificate or determination of the Owner as to any rate of
interest or any other amount payable under this Charterparty shall in
the absence of manifest error, be conclusive and binding on the
Charterer.
8.6 If any sum due from the Charterer under any of the Relevant Documents
or under any order or judgment given or made in relation thereto has
to be converted from the currency, ("the first currency") in which the
same is payable under any of the Relevant
18
<PAGE> 25
Documents or under such order or judgment into another currency ("the
second currency") for the purpose of (i) making or filing a claim or
proof against the Charterer, (ii) obtaining an order or judgment in
any court or other tribunal or (iii) enforcing any order or judgment
given or made in relation to such Relevant Document, the Charterer
shall indemnify and hold harmless the Owner from and against any loss
suffered as a result of any difference between (a) the rate of
exchange used for such purpose to convert the sum in question from the
first currency into the second currency and (b) the rate or rates of
exchange at which the Owner may in the ordinary course of business
purchase the first currency with the second currency upon receipt of a
sum paid to it in satisfaction, in whole or in part, of any such
order, judgment, claim or proof. Any amount due from the Charterer
under this Clause 8.6 shall be due as a separate debt and shall not be
affected by judgment being obtained for any other sums due under or in
respect of any of the Relevant Documents and the term "rate of
exchange" includes any premium and costs of exchange payable in
connection with the purchase of the first currency with the second
currency.
9 COSTS AND INDEMNITIES
9.1 The Charterer shall pay promptly all costs or expenses (other than
payment of the Purchase Price pursuant to the Purchase Agreement) of,
or arising from, the purchase, delivery, import, export, design,
registration, classification, ownership, possession, control, use,
management, manning, victualling, the provision of bunkers and
lubricating oils, chartering, sub-chartering, insurance, maintenance,
conversion, repair, dry docking, survey, refurbishment, condition,
service, overhaul modification, change, alteration, loss, damage,
storage, laying up, removal, re-delivery, sale or disposal of, in or
to the Ship, and all costs or expenses otherwise arising in connection
with the Ship or the performance of the Charterer's obligations under
any of the Relevant Documents.
9.2 The Charterer shall pay all stamp, documentary, registration or other
like Taxes (including any such Taxes payable by the Owner) imposed on
or in connection with the Relevant Documents and shall indemnify the
Owner against any liability arising by any delay or omission of the
Charterer to pay such duties or Taxes.
9.3 Whether or not the Ship is delivered to the Charterer pursuant to this
Charterparty, the Charterer shall pay to the Owner on demand:
(a) all expenses (including legal advisory, printing, and
out-of-pocket expenses) incurred by the Owner in connection
with the negotiation, preparation, and execution of the
Relevant Documents, and of any amendment or extension of, or
the granting of any waiver or consent under, any of the
Relevant Documents, and
(b) all expenses (including legal, survey and other costs)
incurred by the Owner in contemplation of, or otherwise in
connection with, the enforcement of, or preservation of any
rights under, any of the Relevant Documents, or otherwise
19
<PAGE> 26
in respect of moneys owing under any of the Relevant
Documents, or in respect of breach of any representation,
warranty, covenant, agreement, condition or stipulation
therein contained or in respect of the repossession of the
Ship.
All expenses payable pursuant to this Clause 9.3 shall be paid
together with any irrecoverable Value Added Tax or similar tax
thereon, and in the currency in which the same are incurred by
the Owner.
9.4 The Charterer shall indemnify and hold harmless the Owner, without
prejudice to any of the Owner's other rights under any of the Relevant
Documents, from and against:
(a) any costs or expenses which the Charterer has agreed to pay
but which shall nevertheless be claimed from or assessed
against or paid by the Owner, and against any liability
incurred by the Owner by reason of any delay or failure of the
Charterer to pay any such costs or expenses;
(b) any Taxes which the Charterer has agreed to pay but which
shall nevertheless be claimed from or assessed against or paid
by the Owner, and against any liability incurred by the Owner
by reason of any delay or failure of the Charterer to pay any
such Taxes including without limitation, any delay or failure
of the Charterer to make any such deduction or withholding as
is referred to in Clause 10.3 or by reason of any increased
payment as is referred to in Clause 10.3 not being made on the
due date for such payment.
9.5 Without prejudice to the Charterer's obligations under Clauses 9.1 to
9.4 inclusive, the Charterer agrees at all times, whether before,
during or after the Charter Period, to indemnify and hold harmless the
Owner from and against all costs, expenses, payments (other than the
payment by the Owner to the Charterer of the Purchase Price pursuant
to the Purchase Agreement and the Conversion and Supply Price pursuant
to the Conversion and Supply Agreement), charges, losses, demands,
liabilities, claims, actions, proceedings (whether civil or criminal),
penalties, fines, damages, judgments, orders or other sanctions,
liens, salvage, General Average (in this Clause 9.5 together referred
to as "Losses") which may be incurred by, or made or asserted against
the Owner at any time:
(a) relating to, or arising directly or indirectly in any manner
or for any cause or reason whatsoever out of, the design,
nature, description, manufacture, testing, purchase, delivery,
import, export, registration, flag, classification,
certification, ownership, possession, control, use, operation,
manning, crewing, navigation, victualling, supply or servicing
(whether at sea or not), provision of bunkers and lubricating
oils, chartering, sub-chartering, insurance, maintenance,
conversion, repair, dry docking, surveys, refurbishment,
condition, service, overhaul, modification, change,
alteration, loss, damage, removal, laying up, storage,
re-delivery, sale or disposal of, in or to the Ship,
conversion works, parts and
20
<PAGE> 27
equipment installed and BFE or otherwise in connection with
the Ship, conversion works, parts, equipment and BFE, or
relating to loss or destruction of or damage to any property,
or death or injury of, or other loss of whatsoever nature
suffered by, any person caused by, relating to, or arising
from or out of (in each case whether directly or indirectly)
any of the foregoing matters;
(b) which may be made or brought on the ground that any design,
article or material in the Ship or in respect of the
conversion works, parts, equipment and BFE to be installed and
supplied to the Ship pursuant to the Conversion and Supply
Agreement or the operation or use thereof constitutes an
infringement of patent, intellectual property right or any
other right whatsoever;
(c) in preventing or attempting to prevent the arrest,
confiscation, seizure, taking in execution, impounding,
forfeiture or detention of the Ship, or in securing the
release of the Ship or any of the parts, equipment or BFE to
be installed on the Ship except to the extent any Losses are
incurred in this respect as a result of the Owner's breach of
Clause 6.1 due to any Encumbrance on the Ship directly created
by the Owner which adversely affects the operation of the
Ship;
(d) as a consequence of any default in payment by the Charterer of
any sum under any of the Relevant Documents when due or any
other default by the Charterer in the due and punctual
performance of its obligations under any of the Relevant
Documents.
9.6 Notwithstanding anything to the contrary contained in this
Charterparty, the indemnities by the Charterer in favour of the Owner
contained in this Charterparty shall continue in full force and effect
notwithstanding any breach by the Owner or the Charterer of the terms
of this Charterparty (including any fundamental breach) or any of the
other Relevant Documents, the termination of the chartering of the
Ship to the Charterer under this Charterparty, the repudiation by the
Owner or the Charterer of this Charterparty, or the expiration of the
Charter Period by effluxion of time or otherwise.
9.7 Moneys becoming due by the Charterer to the Owner under the
indemnities contained in this Clause 9 or elsewhere in the Relevant
Documents shall be paid on demand made by the Owner and shall be paid
together with interest thereon at the Relevant Rate of Interest from
the date of demand by the Owner to the date of reimbursement by the
Charterer to the Owner (after as well as before judgment).
10 TAXATION
10.1 The Charterer shall pay promptly all Taxes levied or assessed on or in
respect of the Ship, any payments made under any of the Relevant
Documents or any of the transactions contemplated by any of the
Relevant Documents but, subject to the remaining provisions of this
Clause 10, excluding any Taxes assessed against the Owner
21
<PAGE> 28
by reference to its overall profits, or by reference to its gains, if
any, realised in connection with the ultimate disposal of the Ship, or
arising out of a Total Loss.
10.2 (a) Sums payable to the Owner by the Charterer under any Relevant
Document by way of indemnity or reimbursement shad be
calculated on an after-tax basis. Accordingly, if and to the
extent that any such sum payable to the Owner is taxable in
the hands of the Owner as the auditors of the Owner (acting as
experts and not as arbitrators) shall certify from time to
time such sum shall be increased to an amount which (after
subtracting any Taxation suffered by the Owner on the
increased payment and after taking into account any deduction
for Taxation purposes available to the Owner in respect of the
discharge by the Owner of any corresponding liability to a
third party) shall equal the amount which the Owner would have
received had the sum payable by the Charterer not been taxable
in the hands of the Owner. If the sum payable by the Charterer
is initially paid on the basis that it is not taxable in the
hands of the Owner and it is subsequently determined to be
taxable or vice versa, such adjustment and payment shall be
made between the Owner and the Charterer as the auditors of
the Owner (acting as experts and not as arbitrators) shall
certify as appropriate to restore the after-tax position of
the Owner to that which it would have been had the adjustment
not been necessary.
(b) If and to the extent that any sum (the "indemnity sum")
constituting (directly or indirectly) an indemnity to the
Owner but paid by the Charterer to any person other than the
Owner, shall be treated as taxable in the hands of the Owner,
the Charterer shall pay to the Owner such sum (the
"compensating sum") as (after subtracting any Taxation
suffered by the Owner on the compensating sum and after taking
into account any deductions for the purposes of Taxation
available to the Owner in respect of any corresponding payment
treated as made by the Owner to such person) shall reimburse
the Owner for any Taxation suffered by it in respect of the
indemnity sum.
(c) For the purposes of this Clause 10.2 a sum shall be deemed to
be taxable in the hands of the Owner if it falls to be taken
into account in computing the profits or gains of the Owner
for the purposes of Taxation and if so the Owner shall be
deemed to have suffered Taxation thereon at the rate of
Taxation applicable to the Owner's profits or gains for the
period in which the payment falls to be taken into account for
the purposes of such Taxation.
10.3 If at any time any applicable law, regulation or regulatory
requirement, or any governmental authority, monetary agency or central
bank requires the Charterer to make any deduction or withholding in
respect of Taxes from any payment due under the Relevant Documents:
22
<PAGE> 29
(i) the sum due from the Charterer in respect of such
payment shall be increased to the extent necessary to
ensure that, after the making of such deduction or
withholding, the Owner receives on the due date for
such payment a net sum equal to the sum which it
would have received had no such deduction or
withholding been required to be made;
(ii) the Charterer shall pay to the relevant authority
within the period for payment permitted by applicable
law the full amount of the deduction or withholding
(including, but without prejudice to the generality
of the foregoing, the full amount of any deduction or
withholding from any increased amount paid pursuant
to this Clause 103); and
(iii) the Charterer shall furnish to the Owner within the
period for payment permitted by applicable law,
evidence of payment to the relevant authority of all
amounts deducted or withheld as aforesaid.
10.4 If the Owner is required to pay any sum to the Charterer or any other
party under any of the Relevant Documents and such sum is payable out
of or represents a reimbursement of an amount which is brought into
account in computing the profits or gains of the Owner for the
purposes of Taxation and such payment will not he allowed to the Owner
as a deductible trading expense or as a basis for, or otherwise as, a
deduction or off-set for Taxation purposes in the accounting period of
the Owner in which it is required to he paid as the auditors of the
Owner (acting as experts and not as arbitrators) shall certify from
time to time, the Charterer shall pay to the Owner such amount as
shall put the Owner in the same after-tax position as the Owner would
have been in had the payment been allowed as a deductible trading
expense or as a basis for, or otherwise as, a deduction or set-off as
aforesaid. If any such payment is initially made on the basis that it
is a deductible trading expense, or that it will be allowed as a basis
for, or otherwise as, a deduction or off-set of the Owner for tax
purposes in the accounting period of the Owner in which it is incurred
and it is subsequently determined that it is not, or vice versa, such
adjustment and payments, if any, shad be made between the Owner and
the Charterer as the Owner's auditors from time to time (acting as
experts and not as arbitrators) may certify as appropriate in order to
restore the after-tax position of the Owner (or any company within the
group of companies of which the Owner is a member to which relief from
corporation tax in respect of the payment was surrendered) to that
which it would have been had the adjustment not been necessary.
11 GENERAL UNDERTAKINGS
11.1. The Charterer undertakes with the Owner that it will:
23
<PAGE> 30
(a) Notification of Relevant Event
promptly inform the Owner of any Relevant Event forthwith upon
becoming aware thereof;
(b) Consents and Authorisations
without prejudice to Clauses 2.2 and 4, obtain or cause to be
obtained, maintain in full force and effect and comply in all
material respects with the conditions and restrictions (if
any) imposed in, or in connection with, every consent,
authorisation, licence or approval of governmental or public
bodies or authorities or courts and do, or cause to be done,
all other acts and things, which may from time to time be
necessary or desirable under applicable law for the continued
due performance of all its obligations under any of the
Relevant Documents;
(c) Preparation of Accounts
cause to be prepared in each financial year and cause to be
certified by its auditors consolidated financial statements
which are prepared in accordance with generally accepted
accounting principles and practices in England which have been
consistently applied and present fairly and accurately the
financial position of the Charterer as at the end of the
relevant financial year and the results of the operations of
the Charterer for the relevant financial year, which discloses
all significant liabilities (contingent or otherwise) of the
Charterer;
(d) Supply of Accounts
deliver to the Owner a copy of the financial statements
referred to in Clause 11.1 (c) as soon as practicable but not
later than two hundred and forty (240) days after the end of
the financial period to which they relate and a copy of every
report, notice or like document issued by it to its
shareholders or creditors generally (in each case at the time
of issue thereof);
(e) Information concerning the Charterer
promptly provide the Owner with such financial and other
information concerning the Charterer and its affairs as the
Owner may from time to time reasonably require;
(f) Information concerning the Ship
furnish the Owner promptly with all such information as it may
from time to time reasonably require regarding the Ship, her
insurance, condition, maintenance,
24
<PAGE> 31
employment, position and engagements, particulars of all
towages and salvages, and copies of all charters and other
contracts for her employment, or otherwise howsoever
concerning her; and
(g) Observance of Covenants
duly and punctually perform each of its obligations under this
Charterparty and the other Relevant Documents.
11.2 Protection of Owner's Rights
The Charterer hereby further undertakes with the Owner that throughout
the Charter Period it will:
(a) Disposal of the Ship
not attempt or hold itself out as having any power to sell,
agree to selL transfer or otherwise dispose of or (except to
avoid loss of life or personal injury or as otherwise agreed
pursuant to Clause 21) abandon the Ship, any share or interest
therein;
(b) Encumbrances
not create or agree or purport to create any Encumbrance over
the Ship, any share or interest therein or in the Insurances
or Requisition Compensation or any part thereof (other than
Permitted Encumbrances);
(c) Notification of Arrest
notify the Owner promptly by telex of any arrest or detention
of the Ship or any exercise or purported exercise of a lien or
other claim on the Ship or the Insurances or any part thereof;
(d) Prevention of and Release from Arrest
promptly pay and discharge all debts, damages, liabilities and
outgoings whatsoever which have given or may give rise to
maritime, statutory or possessory liens on, or claims
enforceable against, the Ship or the Insurances or any part
thereof and, in the event of a writ or libel being filed
against the Ship or the Insurances or any part thereof, or of
any of the same being arrested, attached or levied upon
pursuant to legal process or purported legal process or in the
event of detention of the Ship in exercise or purported
exercise of any such lien or claim as aforesaid, to procure
the release of the Ship and the Insurances from such arrest,
detention, attachment or levy or, as the case may be, the
discharge of the writ or libel forthwith upon receiving notice
thereof by providing
25
<PAGE> 32
bail or procuring the provision of security or otherwise as
the circumstances may require;
(e) No pledging of Owner's Credit
not pledge the credit of the Owner for any maintenance,
service, repairs, drydocking or modifications to, or changes
or alterations in, the Ship or for any other purpose
whatsoever,
(f) Protection of Owner's Rights in the Ship
not do or permit to be done any act or thing which might
jeopardise the title, rights and interest of the Owner in the
Ship and/or omit or permit to be omitted to be done any act
which might prevent that title and those rights and interest
from being jeopardized;
(g) Notice of Owner's Rights
generally on all occasions when the ownership of the Ship is
relevant make clear to third parties that the same is the
property of the Owner and the Charterer agrees to fasten to
the Ship in a conspicuous place and to keep so fastened during
the Charter Period a notice reading as follows:
"This Ship is the property of and is registered in
the name of ROYAL BANK OF SCOTLAND (INDUSTRIAL
LEASING) LIMITED. It is under demise charter to
SIMON-HORIZON LIMITED and, by the terms of the
Charterparty, neither the Charterer nor the Master
nor any servant or agent thereof nor any other person
has any right, power or authority whatsoever to
contract on behalf of the Owner or to pledge the
Owner's credit or to involve the Owner in any
liability whatsoever and neither has the Owner nor
the Charterer nor the Master nor any servant or agent
thereof nor any other person has any right, power or
authority whatsoever to create, incur, or permit to
be imposed on the Ship any lien whatsoever except for
General Average, crews' wages and salvage"
or in such other form as the Owner may require from time to
time;
the Charterer shall not remove or cover up such notice, and
will not place or permit to be placed any other notice
(affecting the ownership of the Ship or otherwise relating to
the rights of the Owner and dealing with the rights of any
person other than the Owner in or on the Ship or any part
thereof) without prior written consent of the Owner such
consent not to be unreasonably withheld so long as the same is
not inconsistent with the rights of the Owner of the Ship;
26
<PAGE> 33
the Charterer agrees to give written instructions with regard
to the foregoing matters to the Master of the Ship, such
instructions to be in such terms as may from time to time be
required by the Owner; and
(h) Release from Arrest Owner's Vessels
if the Ship or any other vessel for the time being owned (in
whole or in part) by or chartered to the Owner shall at any
time have a writ or libel filed against it or be arrested,
attached or levied upon pursuant to any legal process or
purported legal process or be detained in exercise or
purported exercise of any, lien or claim of whatsoever nature,
whether arising out of the use or operation of the Ship or out
of the use or operation of any other vessel owned by or
chartered to the Charterer or other company (other than the
Owner) associated with, the Charterer or its subsidiaries or
associated companies or otherwise by reason of the act or
omission of any of the aforesaid persons, the Charterer shall
forthwith upon receiving notice thereof at its expense procure
the release of the Ship or such other vessel (as the case may
require) from such arrest, detention, attachment or levy or,
as the case may be, the discharge of the writ or libel by
providing bail or procuring the provision of security or
otherwise as the circumstances may require and the Charterer
shall be responsible for discharging each and every liability
in connection with any such process, claim, lien or other
action. Without prejudice to the generality of the other
indemnities contained in this Charterparty, should any other
vessel owned by the Owner and chartered by the Owner otherwise
than to the Charterer be arrested, detained, attached or
levied upon or be the subject of a writ or libel in such
circumstances, the Charterer shall indemnify the Owner against
all claims made on the Owner by the charterers of such other
vessel in connection with such arrest, detention, attachment,
levy, writ or libel.
12 SUB CHARTERING
The Charterer will not at any time without the prior written consent
of the Owner (which the Owner shall have full liberty to withhold)
and, if such consent is given, only subject to such conditions as the
Owner may impose, part with the possession or operational control of
the Ship (except for the purpose of maintenance, service, repair or
overhaul work or any modifications, changes or alterations permitted
under this Charterparty and the Conversion and Supply Agreement) or
sub-charter the Ship:
(a) on demise charter for any period;
(b) by any time or consecutive voyage charter for a term which
exceeds or which by virtue of any optional extensions therein
contained may exceed thirteen months' duration;
27
<PAGE> 34
(c) on terms whereby more than two months' hire (or the
equivalent) is payable in advance;
(d) below the market rate prevailing at the time when the Ship is
fixed or on any other than arms' length terms;
(e) on any charter for a period extending or capable of extending
beyond the end of the Charter Period as extended pursuant to
Clause 3.2;
(f) on terms involving any transfer or purported transfer of title
or interest in the Ship or part thereof or which would
contravene the provisions of this Charterparty or any of the
other Relevant Documents (including, without limitation, the
provisions of Clause 13.2(d) relating to qualifying use during
the requisite period as therein referred to).
13 USE AND TRADE OF THE SHIP
13.1 Permitted Use
Subject to the other terms and conditions of this Charterparty and the
other Relevant Documents, the Charterer shall have the full and
exclusive use control and command of the Ship during the Charter
Period and may operate the Ship or employ her throughout the world in
any lawful trade for which she is suitable.
13.2 Undertakings concerning Use
The Charterer hereby undertakes with the Owner that throughout the
Charter Period it will:
(a) Ship's Registration
not do or suffer to be done anything whereby the documentation
of the Ship for the time being in accordance with the
provisions of Clause 14.2 may be forfeited or imperilled;
(b) Employment
not employ the Ship or permit her employment in any manner,
trade or business which is forbidden by International Law, or
which is unlawful or illicit under the law of any relevant
jurisdiction, or in carrying illicit or prohibited goods, or
in any manner whatsoever which may render her liable to
condemnation in a Prize Court, or to destruction, seizure,
confiscation, penalty or sanctions and, in the event of
hostilities in any part of the world (whether war be declared
or not), not
28
<PAGE> 35
employ the Ship or permit her employment in carrying any
contraband goods, or enter or trade to or continue to trade in
any zone which is declared a war zone by any government or by
the Ship's war risks insurers unless such special insurance
cover as the Owner may require shall have been effected by the
Charterer and at its expense;
(c) Payment of Outgoings and Evidence of Payments
pay all tolls, dues and other outgoings whatsoever in respect
of the Ship and the Insurances and keep proper books of
account in respect of the Ship and, as and when the Owner may
so require, make such books available for inspection on behalf
of the Owner and furnish satisfactory evidence that the wages
and allotments and the insurance and pension contributions of
the Master and crew are being prompter and regularly paid and
that all deductions from crew's wages in respect of United
Kingdom tax liability are being properly accounted for and
that the Master has no claim for disbursements other than
those incurred by him in the ordinary course of trading on the
voyage then in progress;
(d) Operation in the U.S.A. or Canada
give the Owner at least ten (10) Banking Days prior written
notice if the Ship is to be operated in or into or offshore
from the United States of America or Canada, and prior to the
commencement of such operation, to increase the amount of
protection and indemnity, pollution risk and other legal
liability insurance referred to in Clause 16.1 (a) to such
amount as the Owner may require;
(e) Use for a Qualifying Purpose
not to use the Ship or permit the Ship to be used and shall
procure that the Ship is not used other than for a qualifying
purpose during the requisite period (as each such term is
defined in section 40 CAA) so as to result in the application
of sections 42, 43, 44 and 46 CAA and shall immediately notify
the Owner if at any time within such requisite period the Ship
is used for leasing to a non-resident within the meaning of
section 50 CAA and also notify the Owner of any event or
matter which under section 48 CAA ought to be notified by the
Owner to the Board of the Inland Revenue or any Inspector of
Taxes in connection with the Ship or the chartering thereof
and shall promptly furnish when the Owner may require such
information as may properly be required to be so furnished by
the Owner to the Board of the Inland Revenue and Inspector of
Taxes regarding the chartering of the Ship or the use to which
it is being put or has been put, in order to enable the Owner
to comply with the provisions of section 48 CAA or to respond
to such a request; and
29
<PAGE> 36
(f) Bills of Lading
if applicable, procure that all Bills of Invading issued for
carriage of goods by the Ship shall contain a Paramount Clause
incorporating any legislation relating to carrier's liability
for cargo compulsorily acquired applicable in the trade or, if
no such legislation exists, Bills of Lading incorporating the
British Carriage of Goods by Sea Act 1971 and that all such
Bills of Lading shall also contain the amended New Jason
Clause and the Both-Blame Collision Clause and, without
prejudice to provisions of Clause 30.4, provide that the
General Average, if any, shall be settled according to the
York-Antwerp Rules of 1974 in London.
14 TITLE, REGISTRATION, NAME AND HOUSE FLAG
14.1 Title
Title to the Ship shall remain vested in the Owner. The Charterer
shall have no right, title or interest in or to the Ship or any part
thereof except the right to use the same upon the terms and conditions
contained in this Charterparty. It is hereby expressly declared that
the Charterer shall not have any option or right to acquire title to
or any proprietary interest in the Ship or any part thereof. Subject
to Clause 6.1, nothing in this Clause 14.1 shah be construed as
imposing any liability on the Owner to the Charterer in respect of or
arising out of the acts or omissions of any third party (including any
charterer or lessee of any other vessel or assets of the Owner)
affecting the Charterer or the Ship or otherwise.
14.2 Initial Registration
The Owner shall take all necessary steps to register itself as the
registered owner of the Ship upon Delivery under the laws of the
Commonwealth of the Bahamas at the Port of Nassau in the name of the
Owner and thereafter subject to Clause 14.3 shall during the Charter
Period do all that may be necessary on its part to maintain such
registration in force.
14.3 Transfer of Flag or Registry
The Charterer may at any time and from time to time during the Charter
Period, request the Owner to transfer the register of the Ship to any
port and/or to re-document the Ship under laws of any jurisdiction
other than the port and/or jurisdiction at which the Ship is for the
time being registered and/or under whose laws the Ship is for the time
being documented. If the Owner approves of such transfer of register
(such approval not to be unreasonably withheld) and/or
re-documentation of the Ship, the Owner shall at the request of the
Charterer, co- operate with and permit the Charterer to take all
necessary steps to comply with such request and thereafter shall
during the Charter Period co-operate with the Charterer to take such
actions as the Charterer may reasonably
30
<PAGE> 37
require to maintain the documentation of the Ship at the port to which
the register of the Ship is so transferred and/or under the laws of
the jurisdiction under whose laws the Ship is so re-documented. For
the purposes of this Clause 14.3, the Owner shall be deemed to approve
the transfer of the register of the Ship to any port of registry in
the United Kingdom or in any relevant overseas territory (as that
expression is defined in section 57(1) of the Merchant Shipping Act
1988).
If, in the reasonable opinion of the Owner it shall become impossible,
unlawful, impracticable or undesirable for the Owner to maintain the
documentation of the Ship under the laws of any jurisdiction (other
than the United Kingdom or any other such relevant overseas territory)
under whose laws the Ship is for the time being documented, the Owner
shall give notice thereof to the Charterer and the Owner and the
Charterer shall forthwith enter into negotiations in good faith with a
view to agreeing upon an alternative jurisdiction for the
documentation of the Ship as a British ship, but if no such agreement
shall be reached within thirty (30) days after the Owner shall have
given such notice to the Charterer, the Owner shall be at liberty to
take and/or require the Charterer to take such action to re-document
the Ship as a British ship at a port of registry in the United Kingdom
or in any other relevant overseas territory and/or to transfer the
registry of the Ship to a port of registry in the United Kingdom or in
any other such relevant overseas territory and in either case the
Charterer shall do all that may be necessary on each part to give
effect to such re-documentation and/or transfer of register.
Without prejudice to the generality of the provisions of Clause 9, the
Charterer shall indemnify and hold harmless the Owner against all
losses, costs, expenses and liabilities of whatsoever nature
(including penalties, claims, demands, orders or judgments) which the
Owner may suffer or incur and which arise directly or indirectly out
of the documentation of the Ship under the laws of any jurisdiction at
the request of the Charterer as aforesaid.
14.4 Name and House Flag
The name of the Ship shall as from the Delivery Date remain unchanged
or shall be such other name as the Charterer shall select and the Ship
shall be painted in such colours, display such funnel insignia and fly
such house flag as the Charterer may require. The Charterer shall
notify the Owner of any intended change in the name of the Ship.
15 MAINTENANCE AND OPERATION
15.1 Possession and Control of Ship by Charterer
During the Charter Period the Ship shall, subject to the terms and
conditions of this Charterparty, be in the full and exclusive
possession and at the absolute disposal of the Charterer for all
purposes and under its complete control in every respect.
31
<PAGE> 38
Notwithstanding any other provision of this Charterparty, without
prejudice to any of the obligations of the Charterer under this
Charterparty or any of the other Relevant Documents imposing any
higher standard of performance upon the Charterer, the Charterer shall
make or procure to be made, and shall have sole responsibility for
making or procuring to be made, all such arrangements as may be
necessary to ensure that the Ship is fit to go to sea without serious
danger to human life.
15.2 Undertakings concerning Maintenance and Operation
The Charterer further undertakes with the Owner that throughout the
Charter Period it will:
(a) Maintenance of Classification; Compliance with Regulations
maintain the Classification as the present class of the Ship
with the Classification Society and with such other
certificates required by statute and the Ship's insurers in
force at all times and so as to comply with the provisions of
all other regulations and requirements (statutory or
otherwise) from time to time applicable to vessels registered
at the Ship's port of registry or otherwise applicable to the
Ship, her Master, officers and crew wherever the Ship may
proceed or trade and (without prejudice to the generality of
the foregoing) at its own expense maintain in force for the
Ship all safety, radio, loadline and other certificates
whatsoever and all licenses and permits which may from time to
time be prescribed by any legislation in force in the United
Kingdom or other applicable jurisdiction;
(b) Supply and Crewing
ensure that at all times during the Charter Period the Ship is
properly manned, victualled, navigated, operated, supplied,
fuelled and repaired;
(c) Surveys
submit the Ship to continuous surveys and such periodical or
other surveys as may be required for classification purposes,
comply with all recommendations and requirements of the
Classification Society in accordance with their terms and,
upon the Owner's request, supply to the Owner copies of all
survey reports issued in respect thereof;
(d) Repair
keep the Ship and every part of her in a good and efficient
state of repair, in efficient operating condition, seaworthy
in all respects and in accordance with good maintenance
practice (fair wear and tear excepted and having regard to the
type and age of the Ship) and procure that all repairs to, or
replacement of, any
32
<PAGE> 39
damaged, worn or lost parts or equipment are effected in such
manner (both as regards workmanship and quality of materials)
as not to diminish the value of the Ship;
(e) Drydocking
drydock the Ship and clean and paint her underwater parts in
accordance with good commercial practice for vessels of the
type and age of the Ship;
(f) Inspection of the Ship
permit the Owner by surveyors or other persons appointed by it
for such purpose to board the Ship at all reasonable times for
the purpose of inspecting her and to afford all proper
facilities for such inspections and for this purpose to give
the Owner on request reasonable advance notice of any intended
drydocking of the Ship (whether for the purpose of
classification, survey or otherwise). The cost of any such
inspection and survey shall be paid by the Charterer. All time
taken in respect of such inspection or survey shall form part
of the Charter Period. Inspection or survey of the Ship in
drydock shall be made only when the Ship shall be in drydock
for the purpose of the surveys referred to in Clause 15.1(e);
(g) Manuals and Technical Records
maintain all such other records, logs, manuals, technical data
and other materials and documents which are required to be
maintained in respect of the Ship to comply with any
applicable laws or the requirements of the Classification
Society and, keep accurate, complete and up to date logs and
records of all voyages made by the Ship and of all
maintenance, repairs, alterations, modifications and additions
to the Ship and, on reasonable advance notice from the Owner
permit the Owner or its representatives at any time to examine
and take copies of such logs and records and other records;
(h) Modification; Removal of Parts;
Equipment owned by Third Parties
not without the prior written consent of the Owner (and then
only on and subject to such terms as the Owner may agree):
(i) make any modification to the Ship in consequence of
which her structure, type or performance
characteristics could or might be materially altered
or her value materially reduced; or
(ii) remove any material part of the Ship or any equipment
the value of which is such that its removal from the
Ship would materially reduce the value
33
<PAGE> 40
of the Ship without replacing the same with
equivalent parts or equipment which are owned by the
Owner free from Encumbrances (other than Permitted
Encumbrances); or
(iii) install on the Ship any equipment owned by a third
party which cannot be removed without causing damage
to the structure or fabric of the Ship;
(i) Manager
not without the previous consent in writing of the Owner
(which shall not be unreasonably withheld) and subject to such
terms as the Owner may require (including approval of the new
manager and the terms of any Management Agreement), appoint
any manager of the Ship other than the Manager or to terminate
or amend the terms of the Management Agreement (and for the
purposes of this Charterparty "Manager" shall include any ship
manager or other person providing to the Charterer analogous
specialised services in respect of the Ship);
(j) Notification of certain Events
notify the Owner forthwith by telex of
(i) any damage to the Ship requiring repairs the cost of
which Drill or might exceed the Casualty Amount and
furnish the Owner with full information regarding any
single casualty or other accident or damage to the
Ship which may involve repairs costing more than the
Casualty Amount;
(ii) any occurrence in consequence of which the Ship has
or may become a Total Loss;
(iii) any requisition of the Ship for hire;
(iv) any requirement or recommendation made by any insurer
or the Classification Society or by any competent
authority which is not complied with in accordance
with its terms;
(v) any serious injury to a third party caused by, or in
connection with, the Ship;
(vi) any substantial damage to property caused by, or in
connection with the Ship;
34
<PAGE> 41
(vii) any assistance which has been given to the Ship which
has resulted or may result in a lien for salvage
being acquired over the Ship; and
(viii) any other event which occurs in connection with the
Ship which affects or might affect the rights of the
Owner or involves any material loss or liability;
(k) Repairers' Liens
other than pursuant to the Conversion and Supply Agreement,
not without the previous consent in writing of the Owner
(which shall not be unreasonably withheld but which may be
given only on and subject to such terms as the Owner may
agree) put the Ship into the possession of any person for the
purpose of work being done upon her in an amount exceeding or
likely to exceed the Casualty Amount unless such person shall
first have given to the Owner and in terms satisfactory to it,
a written undertaking not to exercise any lien on the Ship for
the cost of such work or otherwise;
(l) Health and Safety
take such steps as are reasonably practicable to ensure that
the Ship and all constituent parts thereof will be safe and
without risk to health when properly used and specifically
(without prejudice to the generality of the foregoing) that it
will:
(i) take such steps as are reasonably practicable to
ensure that any defects in the Ship and all
constituent parts thereof which could be or cause a
danger to safety and a risk to health shall be made
good;
(ii) for such purpose, have a detailed inspection of the
Ship carried out from time to time including all
electrical, fluid, oil and gas connections (being
either supplies to or discharges from the Ship) and
all constituent parts thereof as well as all life
saving and other safety equipment;
(iii) take such action as is reasonably practicable to see
that appropriate safety measures are adopted; and
(iv) not use or permit the Ship or any constituent parts
thereof to be used beyond their limits and
capacities;
(m) No Operational Interest
procure that the Owner is not at any time represented as
carrying goods or passengers or providing any other service on
or from the Ship, or as being in any
35
<PAGE> 42
way connected or associated with any operation of carriage or
other service which may be undertaken by the Charterer, or as
having any operational interest in, or responsibility for, the
Ship;
(n) Safe Operation
take all reasonable steps to secure that the Ship is navigated
and operated in a proper, safe and seaman-like manner; and
(o) Fitness to go to Sea
shall procure that the Ship shall at all times be fit to go to
sea without serious danger to life (by reason of the
condition, or the unsuitability for its purpose, of either the
Ship or its machinery or equipment or any part of the Ship or
its machinery or equipment or undermining or overloading or
unsafe or improper loading or any other matter relevant to the
safety of the Ship) unless arrangements have been made which
are appropriate to ensure that before the Ship goes to sea it
is made fit to do so without serious danger to human life by
reason of any such matters or it is reasonable for such
arrangements not to be made at such time.
16 INSURANCE UNDERTAKINGS; WRECK REMOVAL AND INSURANCE ASSIGNMENT
16.1 Insurance Undertakings
The Charterer hereby covenants with the Owner and undertakes that
throughout the Charta Period and thereafter until sale of Ship
pursuant to any provision of this Charterparty it will:
(a) Insured Risks
insure and keep the Ship insured free of cost and expense to
the Owner and in the joint names of the Charterer and the
Owner (but without liability on the part of the Owner for
premiums or calls) and, at the request of the Charterer, the
Manager or other third party providing specialist services to
the Charterer in connection with the operation of the Ship
(each as their interests may appear):
(i) against fire and usual marine risks (including excess
risks) and war risks, on an agreed value basis, in
such amounts (but not in any event less than
whichever shall be the greater of the market value of
the Ship for the time being and One hundred and ten
per cent (110%) of the maximum Termination Sum
applicable during the period of the policy) and upon
such terms as shall from time to time be approved in
writing by the Owner;
36
<PAGE> 43
(ii) against protection and indemnity risks (including
pollution risks) for the full value and tonnage of
the Ship in a protection and indemnity association
(as approved in writing by the Owner) for a full and
unlimited entry (other than for oil pollution risks
which shall be for a minimum sum of U.S.$500,000,000
or equivalent thereof) and upon such terms as shall
from time to time be approved in writing by the
Owner; and
(iii) in respect of such other matters of whatsoever nature
and howsoever arising in respect of which insurance
would be maintained by a prudent owner of the Ship
having regard to the financial resources and
liabilities of the Charterer and to the situation and
method of operation of the Ship;
(b) Brokers and Insurers
effect the insurances aforesaid in Pounds or such other
currency as the Owner may approve and through the Approved
Brokers and with such insurance companies and/or underwriters
as shall from time to time be approved in writing by the Owner
provided however that the insurances against war rusks and
protection and indemnity risks may be effected by the entry of
the Ship with such war risks and protection and indemnity
associations as shall from time to time be approved in writing
by the Owner;
(c) Fleet Cover
if any of the insurances referred to in Clause 16.1 (a) form
part of a fleet cover, procure that the Approved Brokers
and/or insurers and protection and indemnity or war risks
associations (as appropriate) shall undertake to the Owner
that they shall neither set off against any claims in respect
of the Ship any premiums due in respect of other vessels under
such fleet cover or any premiums due for other insurances, nor
cancel the insurance for reason of non-payment of premiums
other vessels under such fleet cover or of premiums for such
other insurances, and shall undertake to issue a separate
policy in respect of the Ship if and when so requested by the
Owner;
(d) Payment of Premiums
punctually pay all premiums, calls, contributions or other
sums payable in respect of all such insurances and to produce
all relevant receipts or other evidence of payment when so
required by the Owner;
(e) Renewal
at least 14 days before the relevant policies, contracts or
entries expire, notify the Owner of the names of the brokers
and/or the war risks and protection and
37
<PAGE> 44
indemnity risks associations proposed to be employed by the
Charterer for the purposes of the renewal of such insurances
and of the amounts in which such insurances are proposed to be
renewed and the risks to be covered and, subject to compliance
with any requirements of the Owner pursuant to this Clause
16.1 procure that appropriate instructions for the renewal of
such insurances on the terms so specified are given to the
Approved Brokers and/or to the approved war risks and
protection and indemnity risks associations at least ten (10)
days before the relevant policies, contracts or entries
expire, and that the Approved Brokers and/or the approved war
risks and protection and indemnity risks associations will at
least seven (7) days before such expiry (or within such
shorter period as the Owner may from time to time agree)
confirm in writing to the Owner as and when such renewals have
been effected in accordance with the instructions so given;
(f) Guarantees
arrange for the execution and delivery of such guarantees or
indemnities as may from time to time be required by any
protection and indemnity or war risks association;
(g) Custody of Policy Documents; Letters of Undertaking; Loss
Payable Clauses
deposit with the Approved Brokers (or procure the deposit of
all slips, cover notes, policies, certificates of entry or
other instruments of insurance from time to time issued in
connection with such of the insurances referred to in Cause
16.1(a) as are effected through the Approved Brokers and
procure that the interest of the Owner shall be endorsed
thereon by incorporation of the relevant Loss Payable Clause
and that the Owner shall be furnished with pro forma copies
thereof and a letter or letters of undertaking from the
Approved Brokers in such form as shall from time to time be
required by the Owner;
(h) Club Letters of Undertaking; Certificates of Entry
procure that any protection and indemnity and/or war risks
associations in which the Ship is for the time being entered
shall endorse the relevant Loss Payable Clause on the relevant
certificate of entry or policy and shall furnish the Owner
with a copy of such certificate of entry or policy and a
letter or letters of undertaking in such form as shall from
time to time be required by the Owner;
(i) Broker's Report
if so requested by the Owner but at the cost of the Charterer
(except where the insurances maintained on the Ship have not
been changed since the time of the last such report), furnish
the Owner from tune to time with a detailed report
38
<PAGE> 45
signed by an independent firm of marine insurance brokers
appointed by the Owner dealing with the insurances maintained
on the Ship and stating the opinion of such firm as to the
adequacy thereof,
(j) Collection
do all things necessary and provide all documents, evidence
and information to enable the Owner to collect or recover any
moneys which shall at any time become due in respect of the
Insurances;
(k) Compliance with Insurances
comply with the terms and conditions of the Insurances, not
do, consent to or permit any act or omission which might
invalidate or render unenforceable the whole or any part of
the Insurances and not (without first obtaining the consent of
the insurers to such employment and complying with such
requirements as to extra premium or otherwise as the insurers
may prescribe) employ the Ship or suffer the Ship to be
employed otherwise than in conformity with the terms of the
Insurances (including any warranties express or implied
therein);
(l) Application of Recoveries
apply all sums receivable under the Insurances which are paid
to the Charterer in accordance with the Loss Payable Clauses
and Clause 21 in repairing all damage and/or in discharging
the liability in respect of which such sums shall have been
received;
(m) Other Insurances and Assureds
not, without the prior written consent of the Owner, take out
additional insurances for the Charterer's sole benefit, or
permit the Charterer or the Owner or any other person to be
named insured in insurances with respect to the Ship, other
than as required under this Charterparty or the Conversion and
Supply Agreement where such additional insurances will or may
prejudice the Insurances or recovery thereunder or will exceed
the amount permitted by the warranties or other conditions of
the Insurances (unless the insurers under the Insurances have
consented thereto) and will, upon the Owner's request,
immediately furnish the Owner with particulars of any such
additional insurances (including copies of any cover notes or
policies) and of the written consent of the insurers under the
Insurances in any case where such consent is necessary;
39
<PAGE> 46
(n) Information concerning Insurances
supply to the Owner all necessary information, documentation
and assistance which may be required by the Owner in
connection with making any claim under the Insurances.
Provided however that if, in the event of requisition of the Ship for
hire, it is proved to the satisfaction of the Owner that such
requisition is upon terms whereby the requisitioning authority has
assumed the responsibility of the Charterer to the Owner to indemnify
or recompense it in respect of or otherwise to make good all losses
which would ordinarily be covered by the insurances required to be
effected by the Charterer under this Charterparty, the Charterer shall
be relieved from its insurance obligations under this Charterparty in
respect of such period of requisition or in the event that the
requisitioning authority shall have assumed only a partial
responsibility as aforesaid the insurance obligations of the Charterer
under this Charterparty shall be modified in such manner and to such
extent as the Owner may approve.
16.2 Wreck Removal
In the event of the Ship becoming a wreck or obstruction to navigation
the Charterer shall (in addition to any other obligation it may have
under Clause 9 to indemnify and hold harmless the Owner as therein
provided) indemnify and hold harmless the Owner against all costs,
expenses, payments, charges, losses, demands, any liabilities, claims,
actions, proceedings (whether civil or criminal), penalties, fines,
damages, judgments, orders or other sanctions which may be incurred,
by, or made or asserted against the Owner by reason that the Ship
shall have become a wreck or obstruction to navigation (including,
without limitation) in respect of the removal or destruction of the
wreck or obstruction under statutory powers but only to the extent
that such has not been recovered from the Ship's insurers.
16.3 Further Requirements
Notwithstanding the other provisions of this Clause 16, the Charterer
shall comply with such further reasonable requirements relative to
insurance (and if applicable any requirements relative to reinsurance)
as the Owner may from time to time request.
16.4 Insurance Assignment
As continuing security for the payment of all sums due and payable to
the Owner by the Charterer under or pursuant to this Charterparty and
the other Relevant Documents, the Charterer as beneficial owner
assigns and agrees to assign to the Owner all its right, title and
interest in and to the Insurances and any Requisition Compensation and
agrees and undertakes to do all that may be necessary (by covey of
giving notice, lending its name to any action or otherwise howsoever)
to enable the Owner to perfect and/or enjoy the
40
<PAGE> 47
full benefits of such assignment. The Owner shall re-assign to the
Charterer the property so assigned upon receipt by the Owner of all
such sums and provided the Charter Period shall have ended.
17 POWERS OF OWNER TO REMEDY DEFAULTS
17.1 Failure to Perform Insurance Undertakings
If the Charterer fails to comply with any of the provisions of Clause
16.1, the Owner may, without being in any way obliged so to do, or
responsible for so doing, and without prejudice to the ability of the
Owner to treat that non-compliance as a Termination Even, to effect
and thereafter to maintain all such insurances upon the Ship as in its
discretion it may think fit in order to procure the compliance with
such provisions or alternatively, to require the Ship (at the
Charterer's risk) to remain in, or to proceed to and remain in a port
designated by the Owner until such provisions are fully complied with.
17.2 Failure to Perform Maintenance Undertakings
If the Charterer fails to comply with any of the provisions of Clauses
15.2(a), (c), (d) or (e), the Owner may, without being in any way
obliged so to do, or responsible for so doing, and without prejudice
to the ability of the Owner to treat that non-compliance as a
Termination Event, to arrange for the carrying out of such repairs,
changes or surveys as it may deem expedient or necessary in order to
procure the compliance with such provisions.
17.3 Failure to Prevent or Release from Arrest
If the Charterer fails to comply with any of the provisions of Clause
11.2(d) the Owner may, without being in any way obliged so to do, or
responsible for so doing, and without prejudice to the ability of the
Owner to treat that non-compliance as a Termination Event, pay and
discharge all such debts, damages, liabilities and outgoings as are
therein mentioned and/or take any such measures as it may deem
expedient or necessary for the purpose of securing the release of the
Ship in order to procure the compliance with such provisions.
17.4 Failure to comply with other Obligations
If the Charterer fails to comply with any of its other obligations
under this Charterparty or any of the other Relevant Documents, the
Owner may, without being in any way obliged to do so or responsible
for so doing, and without prejudice to the ability of the Owner to
treat that non-compliance as a Termination Event, take such action as
it may deem expedient or necessary in order to procure the compliance
with such provisions.
41
<PAGE> 48
17.5 Costs of Remedying Defaults
Without prejudice to Clause 25.1, all losses, liabilities, costs,
charges, expenses, damages and outgoings of whatsoever nature
(including, without limitation, Taxes, repair costs, registration fees
and insurance premiums) suffered, incurred or paid by the Owner in
connection with the exercise by the Owner of any of its powers under
Clauses 17.1, 17.2, 17.3 and 17.4 and interest on all such losses,
liabilities, costs, charges, expenses, damages and outgoings from the
date on which the same were suffered, incurred or paid by the Owner
until the date of receipt or recovery thereof (both before and after
any relevant judgement) at the Relevant Rate of Interest shall be
repayable by the Charterer to the Owner on demand.
17.6 Hire Still Payable
Notwithstanding any exercise by the Owner of any of the powers
contained in this Clause 17, charterhire shall continue to accrue
during such time.
18 REDELIVERY
18.1 Redelivery Procedure and Condition
Except in the event of a Total Loss of the Ship and subject to the
provisions of Clause 23.5, the Charterer shall at the end of the
Charter Period redeliver the Ship to the Owner free of all
Encumbrances (other than Permitted Encumbrances), and the Owner shall
accept such redelivery, at a safe port to be mutually agreed between
the parties or, in the absence of such agreement, at such nearby safe
port in the United Kingdom as the Owner may require. Subject to the
provisions of Clause 23.5, the Charterer shall at its expense before
such redelivery make all such repairs and do all such work as may be
necessary so that the Ship at the date of redelivery shall have
installed the machinery and other equipment installed on the Ship at
Delivery or, after redelivery from the Yard pursuant to the MWB
Conversion Contract, as on redelivery from the Yard or replacements
for the same made in accordance with the provisions of this
Charterparty, shall maintain the Classification unexpired and shall be
in as good structure, state and condition as at Delivery or, after
redelivery from the Yard pursuant to the MWB Conversion Contract, as
on redelivery from the Yard, fair wear and tear and changes and
alterations properly made by the Charterer as permitted under this
Charterparty excepted.
18.2 Redelivery Survey
At or about the time of redelivery a survey shall, if the Owner so
requires, be made to determine the state and condition of Me Ship, her
machinery and equipment. In that event, the Charterer and the Owner
shall each appoint surveyors to be present at such survey and the
surveyors present shall determine the condition of the Ship, her
machinery and equipment and shall state the repairs or work necessary
to place the Ship at the date
42
<PAGE> 49
of redelivery in the structure state, condition and classification
referred to in Clause 18.1. If the said surveyors disagree they shall
refer the matter to a senior surveyor of the Classification Society
whose decision shall be final and binding on the parties hereto. All
reasonable costs occasioned by any such survey including the costs of
the said surveyors appointed by the Charterer and the Owner and, if
appointed, the costs of the senior surveyor of the Classification
Society shall be payable by the Charterer but if the Ship is found to
be in the condition provided for Clause 18.1 fair wear and tear and
changes and alterations properly made by the Charterer as permitted
under this Charterparty excepted, such cost shall be payable by the
Owner.
19 CONSUMABLE STORES
19.1 Upon Delivery
It is acknowledged and agreed that all consumable stores, unused
diesel and lubricating oils and bunkers on board the Ship at Delivery
belong to the Charterer.
19.2 Upon Redelivery
All consumable stores, unused diesel and lubricating oils and bunkers
on board the Ship at the time of re-delivery shall be purchased by the
Owner from the Charterer and sold by the Owner to the purchaser of the
Ship. The price payable by the Owner to the Charterer shall be the
same as that received from the said purchaser of the Ship.
20 USE OF EQUIPMENT AND REPLACEMENT
20.1 Use of Equipment and Manuals and Technical Records
The Charterer shall have the use of all outfit, equipment (including
cabin, crew and galley equipment), furnishings, furniture and
fittings, spare and replacement parts which are the property of the
Owner on board the Ship at the time of Delivery or installed on the
Ship pursuant to the Conversion and Supply Agreement and as
redelivered by the Yard pursuant to the MWB Conversion Contract and
the Manuals and Technical Records and the same or their substantial
equivalent shall be returned to the Owner on redelivery in good order
and condition fair wear and tear alone and changes and alterations
properly made by the Charterer as permitted under this Charterparty
excepted.
20.2 Renewal of Equipment
The Charterer shall at its own expense from time to time during the
Charter Period replace, renew or obtain substitutes for such items of
equipment as shall be so damaged or worn as to be unfit for use
provided always that in any such case title to any part replaced,
renewed or substituted shall remain with the Owner until the part
which replaced it or the new or substituted part becomes the property
of the Owner or is
43
<PAGE> 50
replaced, renewed or substituted by a part which thereupon becomes the
property of the Owner and the Charterer agrees that if any replaced,
renewed or substituted part is not the property of the Owner it will
as soon as practicable replace the same with a part which thereupon
becomes the properly of the Owner.
20.3 Alteration of Equipment; Additional Equipment
The Charterer may at any time alter or remove all or any items of
equipment or may fit any additional equipment required to render the
Ship available for any purpose for which the Charterer may require to
use her under the provisions of Clause 13 provided that the Charterer
shall first have obtained the prior written consent of the Owner
thereto if and to the extent such consent may be required pursuant to
Clause 15.2(h). Any additional equipment so fitted by the Charterer
shall be considered the property of the Charterer who may remove such
additional equipment and/or any Excluded Equipment at any time before
the expiration of the Charter Period. The cost of fitting or removing
any equipment together with the cost of making good any damage caused
by such fitting or removal shall be payable in full by the Charterer
who shall redeliver the Ship's equipment to the Owner in accordance
with the provisions of Clause 20.1 unless it is agreed between the
Owner and the Charterer that any extra fittings or equipment which
have been supplied by the Charterer during the Charter Period shall
remain on the Ship after redelivery in which event such fittings or
equipment shall as from redelivery become the property of the Owners.
21 LOSS AND DAMAGE
21.1 Notwithstanding Clause 6.1, the Ship shall throughout the Charter
Period be in every respect at the risk of the Charterer who shall bear
all risks howsoever arising whether of navigation, operation and
maintenance of the Ship or otherwise and of any other occurrence of
whatever kind which shall deprive the Charterer of the use, possession
or enjoyment thereof provided however that nothing in this Clause 21.1
shall restrict any claim by the Charterer against the Owner for any
default of the Owner in respect of its obligations under Clause 6.1.
21.2 (a) If the Ship shall become a Total Loss during the Charter
Period, the Charterer shall pay, or procure that the insurers
pay, to the Owner within one hundred and twenty (120) days (or
such longer period as may be agreed) of the Total Loss Date,
the Termination Sum as at the Total Loss Date together with
interest thereon calculated at the Relevant Rate of Interest
from the Total Loss Date to the date of payment and together
with all amounts of charterhire and any other amounts then due
and payable under this Charterparty and the other Relevant
Documents.
44
<PAGE> 51
(b) For the purposes of this Charterparty a Total Loss shall be
deemed to have occurred on the following date ("Total Loss
Date"):
(i) in the case of an actual total loss, at noon (London
time) on the actual date the Ship was lost, or if
such date is not known, noon (London time) on the day
on which the Ship was last reported;
(ii) in the case of a constructive total loss of the Ship,
upon the date and at the time notice of abandonment
of the Ship is given to the insurers of the Ship for
the time being (provided a claim for such
constructive total loss is admitted by the insurers)
or, if the insurers do not admit such a claim at the
date and time at which a constructive total loss is
subsequently adjudged by a competent court of law to
have occurred;
(iii) in the case of a compromised or arranged total loss,
at the date upon which a binding agreement as to such
compromised or arranged total loss has been entered
into by the insurers of the Ship;
(iv) in the case of Compulsory Acquisition, upon the date
upon which the relevant compulsory acquisition,
requisition, appropriation, expropriation,
deprivation or confiscation occurs; and
(v) in the case of any of the events described in sum
paragraph (c) of the definition of Total Loss, upon
the expiry of the period of thirty (30) days referred
to in such sub-paragraph (c) after the date upon
which the relevant hijacking, theft, condemnation,
confiscation, capture, detention, seizure or
requisition for use or hire occurred.
21.3 The Charter Period shall terminate on the Total Loss Date and, subject
to the payment by the Charterer to the Owner of all amounts of
charterhire then due and payable under this Charterparty, the
Charterer shall cease to be under any liability to pay charterhire
(but not any other amounts) thereafter becoming due and payable under
this Charterparty or any of the other Relevant Documents.
21.4 In the event of the Compulsory Acquisition of the Ship after Delivery,
all Requisition Compensation received by the Owner shall be applied by
the Owner (or, if receded by the Charterer, shall be held in trust by
the Charterer for application) in accordance with Clause 21.5.
21.5 All moneys received by the Owner as loss payee under the Insurances
from insurers or others in respect of a Total Loss shall be applied by
the Owner subject to Clause 10.4 as follows:
45
<PAGE> 52
(a) Firstly, in or towards settlement of any amounts due and owing
by the Charterer to the Owner under this Charterparty or any
of the other Relevant Documents;
(b) Secondly, if the Charterer shall on or before the date of
application of such moneys have paid the Termination Sum, or a
part thereof, in accordance with Clause 21.2 (a) in or towards
refunding by way of rebate of hire or otherwise as appropriate
to the Charterer the amount of the Termination Sum or part
thereof so paid by the Charterer, and
(c) Thirdly, an amount equal to two per cent. (2%) of such moneys
received by the Owner as loss payee under the Insurances shall
be retained by the Owner, and the balance shall be paid to the
Charterer or to its order by way of rebate of charterhire or
otherwise as appropriate.
21.6 In the event of repairable damage to the Ship, the Owner as loss payee
under the Insurances shall pay any insurance moneys received by it to
the Charterer upon the Charterer furnishing evidence to the Owner that
such damage has been made good or repaired or put in hand for repair
Provided always that if a Relevant Event has occurred and is
continuing, the Owner shall be entitled to require that such insurance
moneys be applied in or towards settlement of any amounts owing by the
Charterer to the Owner under this Charterparty or any of the Relevant
Documents.
21.7 Any insurance moneys paid under the insurance taken out or entries
made referred to in Clause 16.1 (a) (ii) shall be paid to the person
to whom the liability (or alleged liability) covered by such
insurances or entry was incurred or if the liability (or alleged
liability) to such person has previously been discharged by the
Chatterer, such moneys shall be paid to the Charterer in reimbursement
of the moneys so expended by it in satisfaction of such liability or
alleged liability and, in such case, the Owner shall pay any insurance
moneys received by it in respect of such liability or alleged
liability to the Charterer upon the Charterer furnishing evidence to
the Owner that such liability or alleged liability has previously been
discharged provided always that if a Relevant Event has occurred and
is continuing, the Owner shall be entitled to apply such insurance
moneys in or towards settlement of any amounts due and owing by the
Charterer to the Owner under this Charterparty or any of the other
Relevant Documents.
21.8 In the event of repairable damage to the Ship or a liability or
alleged liability covered by the insurances taken out or entries made
referred to in Clause 16.1 (a) being incurred or alleged, and if the
insurance moneys paid in respect thereof are insufficient to pay the
cost or estimated cost of making good or repairing such damage or
discharging the liability or alleged liability, the Charterer will pay
the deficiency.
21.9 (a) The Charterer shall have the sole right to determine whether
or not a case has arisen for the giving of notice of
abandonment to abandon the Ship to the insurers
46
<PAGE> 53
and/or claim a constructive total loss and the Charterer is
hereby irrevocably authorised by the Owner to give the same if
it so determines.
(b) The Owner shall upon the request of the Charterer promptly
execute such documents as may be required to enable the
Charterer to abandon the Ship to the insurers and/or claim a
constructive total loss and the Owner shall give the Charterer
all possible assistance in pursuing the said claim.
21.10 Any moneys payable under the Insurances shall be payable in accordance
with the terms of the relevant Loss Payable Clause and, unless and
until a Relevant Event shall occur (whereupon all insurance recoveries
shall be receivable by the Owner and applied in accordance with the
foregoing provisions of this Clause 21), the Owner shall not give any
notice or direction to the contrary to the insurers as contemplated by
the Loss Payable Clauses.
21.11 If the insurers of the Ship have satisfied or admitted in full their
obligations under the Insurances and have expressly waived any rights
they may have, or would or might acquire, in the Ship, the Owner shall
as soon as practicable after the date of Total Loss of the Ship
endeavour to sell the Ship, to the extent that the Owner retains title
therein. Any such sale shall comply with Clauses 3.5 and 3.6.
22 SALVAGE
22.1 All salvage and towage and all proceeds from derelicts shall, subject
to the Owner's prior right to retain thereout any sums which may be
due from the Charterer to the Owner under this Charterparty or any of
the other Relevant Documents, be for the Charterer's benefit and the
cost of repairing damage occasioned thereby shall be borne by the
Charterer.
23 REQUISITION
23.1 If the Ship is requisitioned for hire by any Government Entity or
other competent authority during the Charter Period then, unless and
until the Ship becomes a Total Loss following such requisition and the
Charterer shall have made payment of all sums due pursuant to Clause
21.2 (a), the charter of the Ship to the Charterer under this
Charterparty shall continue in full force and effect (subject always
to the provisions of Clause 25) for the remainder of the Charter
Period and the Charterer shall remain fully responsible for the due
compliance with all its obligations under this Charterparty other than
such obligations which the Charterer is unable to comply with solely
by virtue of such requisition.
23.2 If the Charterer shall duly comply with all its obligations under this
Charterparty, save as mentioned in Clause 23.1, the Charterer shall
during the Charter Period, be entitled
47
<PAGE> 54
to all requisition hire paid to the Owner or to the Charterer on
account of such requisition.
23.3 The Charterer shall as soon as practicable after the end of any
requisition for hire, cause the Ship to be put into the condition
required by this Charterparty, and where that requisition shall end
after the expiry or termination of the Charter Period, the Charterer
shall, as soon as practicable, cause the Ship to be put into the
redelivery condition required by Clause 18, allowance being made for
fair wear and tear in respect of the period from the expiry or
termination of the Charter Period.
23.4 The Owner shall be entitled to all compensation payable in respect of
any change in the structure, state or condition of the Ship arising
during the period of requisition for hire. The Owner shall apply such
compensation in reimbursing the Charterer for the cost of complying
with its obligations under Clause 23.3, provided always that if a
Relevant Event has occurred and is continuing, the Owner shall be
entitled to apply such compensation in or towards settlement of any
amounts owing by the Charterer under this Charterparty and any of the
other Relevant Documents.
23.5 Should the Ship be under requisition for hire at the end of the
Charter Period:
(a) the charter of the Ship under this Charterparty shall (unless
otherwise agreed between the parties hereto) nevertheless be
terminated at such end but without prejudice to the accrued
rights of the parties, including, without prejudice to the
generality of the foregoing, the obligations of the Charterer
contained in Clause 23.3, and the Owner shall be entitled to
receive and retain any requisition hire payable in respect of
the period from the expiry or termination of the Charter
Period;
(b) the Charterer shall if it is prevented by reason of the
requisition for hire from redelivering the Ship under Clause
18, be relieved from its obligations so to do, but shall
consult with the Owner as to the most convenient method of
enabling the Owner to obtain redelivery of the Ship when the
Ship is released from such requisition; and
(c) after such release the Charterer shall be given a reasonable
opportunity of removing the Excluded Equipment and any
additional equipment as is referred to in Clause 20.3 on the
terms therein referred.
23.6 If the Ship shall be requisitioned for hire upon terms whereby the
Charterer is not relieved from its insurance obligations pursuant to
the proviso to Clause 16.1, insurance recoveries in respect of all
claims whatsoever (otherwise than in respect of a Total Loss) arising
during the period or requisition shall (to the extent to which such
recoveries have not been expended by the Charterer in repairs to the
Ship) at the end of the Charter Period be paid to the Owner and in
respect of any amount so paid the Charterer shall to
48
<PAGE> 55
that extent be relieved from its obligations under the last sentence
of Clause 18.1 and under Clause 20.3.
24 TERMINATION EVENTS
24.1 If the Charterer commits a repudiatory breach of any Relevant Document
or the Guarantor commits a repudiatory breach of the Guarantee the
Owner may accept such breach as repudiation of this Charterparty.
24.2 Without prejudice to the generality of Clause 24.1 the Owner and the
Charterer agree that it is a fundamental term and condition of this
Charterparty that none of the following events shall occur during the
Charter Period and that the occurrence of any of the following events
shall constitute a repudiatory breach of this Charterparty
(a) any Relevant Party fails to pay any sum payable by it under
any of the Relevant Documents when due or on demand within
five (5) Banking Days of such due date or date of demand (as
the case may be); or
(b) the Charterer fails to obtain and/or maintain the Insurances
or if any insurer in respect of any part of the Insurances
cancels any part of the Insurances or disclaims or repudiates
liability by reason, in either case, of any mis-statement in
any proposal for the Insurances or for any other failure or
default on the part of the Charterer, or
(c) any Relevant Party commits any breach of or omits to observe
any of the obligations or undertakings expressed to be assumed
by it under any of the Relevant Documents (other than those
referred to in sub-clauses (a) and (b) above) and in respect
of any such breach or omission which in the opinion of the
Owner is capable of remedy, such action as the Owner may
require shall not have been taken within fourteen (14) days of
the Owner notifying any Relevant Party of such default and of
such required action;
(d) any representation or warranty made or deemed to be made or
repeated by any Relevant Party in or pursuant to any of the
Relevant Documents or any document, certificate or statement
referred to in or delivered under any of the Relevant
Documents is or proves to have been incorrect in arty material
respect when made or deemed repeated; or
(e) any Indebtedness of any Relevant Party becomes due or capable
of being declared due prior to the date when it would
otherwise have become due whether or not such breach or
default shall be waived by the person to whom the same is
payable or is not paid on the due date and in the opinion of
the Owner the ability of any Relevant Party to perform all or
any of its obligations under, or otherwise to
49
<PAGE> 56
comply with the terms of any Relevant Documents shall or may
reasonably be expected to be materially adversely prejudiced
as a consequence thereof; or
(f) any consent, authorisation, licence or approval of or
registration with or declaration to governmental or public
bodies or authorities or courts required by any Relevant Party
to authorise, or required by any Relevant Party in connection
with, the execution, delivery, validity, enforceability or
admissibility in evidence of any of the Relevant Documents or
the performance by any Relevant Party of its obligations under
any of the Relevant Documents is modified in a manner
unacceptable to the Owner or is not granted or is revoked or
terminated or expires and is not renewed or otherwise ceases
to be in full force and effect; or
(g) a creditor attaches or takes possession of, or a distress,
execution, sequestration or other process is levied or
enforced upon or sued out against any of the undertakings,
assets, rights or revenues of any Relevant Party and is not
discharged within seven days; or
(h) any Relevant Party suspends payment of its debts or becomes or
is deemed to be insolvent or unable to pay its debts within
the meaning of Section 123 of the Insolvency Act 1986 as they
fall due or commences negotiations with one or more of its
creditors with a view to the general re-adjustment or
re-scheduling of all or part of its Indebtedness or proposes
or enters into any composition or other arrangement for the
benefit of its creditors generally or any class of creditors
or proceedings are commenced in relation to any Relevant Party
under any law, regulation or procedure relating to
reconstruction or readjustment of debts; or
(i) any Relevant Party takes any action or any legal proceedings
are started or other steps taken for (or for the consideration
of) (i) any Relevant Party to be adjudicated or found bankrupt
or insolvent, (ii) the winding-up or dissolution of any
Relevant Party or (iii) the appointment of a liquidator,
trustee, receiver, administrator or similar officer of any
Relevant Party of the whole or any part of their respective
undertakings, assets, rights or revenues; or
(j) any event occurs or proceeding is taken with respect to any
Relevant Party in any jurisdiction to which it is subject
which has an effect equivalent or similar to any of the events
mentioned in Clauses 24.2 (g), (h) or (i); or
(k) any Relevant Party suspends or ceases or threatens to suspend
or cease to carry on its business; or
(l) all or a material part of the undertakings, assets, rights or
revenues of or shares or other ownership interests in, any
Relevant Party are seized, nationalised, expropriated or
compulsorily acquired by or under the authority of any
government; or
50
<PAGE> 57
(m) any Relevant Party disposes or threatens to dispose of all or
a material part of its assets, whether by one or a series of
transactions, related or not, other than for the purpose of a
reconstruction or amalgamation the terms of which have
received the previous consent in writing of the Owner;
(n) there occurs, in the reasonable opinion of the Owner, a
material adverse change in the financial condition of the
Charterer or the Guarantor by reference to the financial
statements referred to in Clause 2.1(f) of this Charterparty
and Clause 5.1(i) of the Guarantee respectively; or
(o) any of the Relevant Documents at any time and for any reason
is or becomes invalid or unenforceable or otherwise ceases to
remain in full force and effect, or the validity or
enforceability of any of the Relevant Documents at any time
and for any reason is contested by any party thereto (other
than the Owner), or any such party denies that it has any, or
any further, liability thereunder or it becomes impossible or
unlawful for the Charterer or any other Relevant Party to
fulfil any of its covenants and obligations contained in any
of the Relevant Documents; or
(p) any Relevant Party repudiates any of its obligations under the
Relevant Documents or does or causes or permits to be done any
act or thing evidencing an intention to repudiate any of its
obligations under the Relevant Documents; or
(q) the Ship is arrested, confiscated, seized, taken in execution,
impounded, forfeited, detained in exercise or purported
exercise of any possessory lien or other claim, or otherwise
taken from the possession of any Relevant Party or any
operator thereof other than pursuant to a breach of Clause 6.1
by the Owner, as a result of any Encumbrance directly created
by the Owner which adversely affects the operation of the Ship
and any Relevant Party shall fail to procure the release of
the Ship at the earliest possible time and in any event within
a period of fourteen (14) days or if the Ship is not
redelivered under the MWB Conversion Contract with the works
provided for under that contract completed to the satisfaction
of the Owner on or before 1st May 1991 or such later date as
the Owner may agree in writing; or
(r) the registration of the Ship is cancelled or terminated
(otherwise than upon the Ship being redocumented or its
registration transferred as contemplated by Clause 14.3)
except by reason of the Owner's default in its obligations
under Clause 14.2; or
(s) any other event (other than a Total Loss) occurs or state of
affairs exists which has or may reasonably be expected to have
a prejudicial effect on the Owner's title to the Ship (other
than pursuant to a breach of Clause 6.1 by the Owner as a
result of any Encumbrance directly created by the Owner which
adversely affects the operation of the Ship) or a prejudicial
effect on its rights under any of
51
<PAGE> 58
the Relevant Documents, or an adverse effect on the ability of
any Relevant Party to perform all or any of its obligations
under, or otherwise to comply with the terms of, any of the
Relevant Documents; or
(t) in the "requisite period", the Ship shall be used for any
purpose other than a "qualifying purpose" as those expressions
are described in Clause 13.2(e); or
(u) there shall occur a material adverse change, from the position
applicable immediately following Delivery, in the business,
affairs or condition (financial or otherwise) of any Relevant
Party the effect of which is (in the reasonable opinion of the
Owner) materially to imperil, delay or prevent the due
fulfillment by any Relevant Party of any of their obligations
and undertakings contained in any of the Relevant Documents;
or
(v) except with the prior written consent of the Owner the whole
of the legal and beneficial ownership of the whole of the
issued share capital of the Charterer ceases to be owned
directly or indirectly by the Guarantor.
25 OWNERS RIGHTS FOLLOWING A TERMINATION EVENT
25.1 At any time after any repudiation of this Charterparty by the
Charterer, including the occurrence of any Termination Event (and
provided that the same is continuing) the Owner may, by notice to the
Charterer, accept such repudiation and immediately terminate the
Charter Period (whereupon, as the Charterer hereby agrees and
acknowledges, the Charterer's right, title and interest in and to the
Ship and to possess and operate the Ship, shall terminate) and retake
possession of the Ship, (the Owner agreeing, in such circumstances,
that provided that the seaworthiness of the Ship is not thereby
diminished nor the value of the Ship thereby materially altered the
Charterer may first remove or that the Owner will at the Charterer's
cost and expense remove and deliver to the Charterer, or to whomever
else may be entitled thereto, any equipment belonging to the Charterer
installed in or on the Ship, and the Charterer agrees that the Owner
may for this purpose enter upon any premises belonging to or in the
occupation or under the control of the Charterer where the Ship or any
part thereof may be located, and the Charterer shall pay to the Owner
forthwith upon such termination such sum as shall equal the aggregate
of:
(a) all amounts due under the Charterparty or any of the other
Relevant Documents as shall be payable and remain outstanding;
(b) all losses incurred by the Owner in connection with such
termination including, without prejudice to the generality of
the foregoing, all costs and expenses so incurred in
recovering possession of the Ship, and in carrying out any
works or modifications required to bring the Ship up to the
condition specified in Clause 18.1;
52
<PAGE> 59
and the Charterer shall also pay to the Owner forthwith upon such
termination by way of agreed compensation and not as a penalty, the
amount of the Termination Sum at the date of termination.
25.2 Without prejudice to the obligation of the Charterer to make the
payments referred to in Clause 25.1 upon any such termination as is
referred to in Clause 25.1 and provided that the Owner shall not be
prevented from so doing for any reason whatsoever, the Owner shall
endeavour to sell the Ship as soon as practicable. The Net Sale
Proceeds shall be applied by the Owner subject to Clause 10.4 as
follows:
(a) Firstly in or towards settlement of any amounts due and owing
by the Charterer to the Owner under this Charterparty or any
of the other Relevant Documents (including any interest due in
respect thereof);
(b) Secondly if the Charterer shall on or before the date of
application of the Net Sale Proceeds by the Owner have paid
the Termination Sum, or a part thereof, in accordance with
Clause 25.1, in or towards refunding by way of rebate of
charterhire or otherwise as appropriate to the Charterer the
amount of the Termination Sum or part thereof so paid by the
Charterer; and
(c) Thirdly an amount equal to two per cent (2%) of the Net Sale
Proceeds shall be retained by the Owner and any balance shall
be paid to any Relevant Party by way of rebate of charterhire
or otherwise as appropriate.
25.3 If the Charterer fails to comply with any of its obligations under
this Charterparty or any of the other Relevant Documents the Owner
may, without being in any way obliged so to do, or responsible for so
doing, and without prejudice to the ability of the Owner to treat that
non-compliance as a Termination Event, effect compliance on the
Charterer's behalf, and if the Owner incurs any expenditure in
effecting such compliance the Owner shall be entitled (without
prejudice to Clause 25.1) to recover such expenditure from the
Charterer together with interest thereon at the Relevant Rate of
Interest from the date on which such expenditure is incurred by the
Owner until the date of reimbursement thereof by the Charterer (both
before and after any relevant judgment).
25.4 The rights and remedies of the Owner provided in this Charterparty are
cumulative and are not exclusive of any rights and remedies provided
by law.
26 INCREASED COSTS, FUNDING PROBLEMS AND ILLEGALITY
26.1 If the Owner notifies the Charterer that adequate and fair means do
not exist for calculating the variable portion of the charterhire then
the Owner shall give notice thereof to the Charterer and the Owner and
the Charterer shall meet together to discuss the matter in good faith
and, unless within thirty (30) days of the giving of such notice the
Owner and the Charterer arrive, by negotiation in good faith, at an
alternative basis
53
<PAGE> 60
acceptable to the Owner and the Charterer for continuing the Owner's
funding of its purchase of the Ship and/or continuing the chartering
of the Ship hereunder and calculating the variable portion of
charterhire (and any alternative basis agreed in writing shall be
retroactive to and effective from the commencement of the relevant
period and shall continue until the Owner determines that
circumstances are such that such alternative basis may cease to be
effective) the Charterer shall indemnify the Owner from and against
any liability, loss or expense suffered or incurred by the Owner
during the relevant period provided that the Owner shall take all
reasonable steps as may be open to it to mitigate the effect of this
Clause.
26.2 If any law, regulation or regulatory requirement or any judgment,
order or direction of any court, tribunal or authority binding upon
the Owner in the jurisdiction in which it is formed or in which any
action is required to be performed by it for the purposes of any of
the Relevant Documents (whether or not in force before the date of
this Charterparty) renders it unlawful for the Owner to continue to
charter the Ship to the Charterer under this Charterparty the Owner
shall promptly inform the Charterer and the Owner and the Charterer
shall both be entitled by written notice to the other to terminate the
Charter Period. Such termination shall be deemed to be a voluntary
termination of the Charter Period in accordance with Clause 3.3
(notwithstanding that such termination shall not have occurred on a
date falling on or after the first (1st) anniversary of the Delivery
Date or that the Owner shall not have received one hundred and eighty
(180) days' notice thereof) and the provisions of Clauses 33 to 35
shall apply thereto.
27 NOTICES
27.1 Every notice, request, demand or other communication under this
Charterparty shall:
(a) be in writing delivered personally or by prepaid first class
letter, telex or facsimile transmission (confirmed in the case
of a telex or fax transmission, by prepaid first class letter
sent within 24 hours of despatch but so that the non-receipt
of such confirmation shall not affect in any way the validity
of the telex or facsimile transmission in question);
(b) be deemed to have been received, subject as otherwise provided
in this Charterparty, in the case of a telex, at the time of
despatch with confirmed answerback of the addressee appearing
at the beginning and end of the communication, in the case of
a facsimile transmission, at the time of despatch with
confirmation that the communication was well received
(provided that, in the case of a telex or facsimile
transmission, if the date of despatch is not a business day in
the country of the addressee it shall be deemed to have been
received at the opening of business on the next such business
day), and in the case of a letter, when delivered personally
or five (5) days after being put in the post;
54
<PAGE> 61
(c) be sent:
(1) to the Owner to:
Royal Bank of Scotland (Industrial Leasing) Limited
The Quadrangle
The Promenade
Cheltenham
Gloucestershire GL50 1PY
Telex : 43466 SMTCHT
Fax: 0242-224238
(Attention: Managing Director)
(2) to the Charterer:
Simon-Horizon Limited
Horizon House
Azalea Drive
Swanley
Kent BR8 8JR
Telex 896050 EXPLOR G
Fax: 0322 613650
(Attention: Neil Campbell)
or to such other address, telex number or facsimile number as
is notified by one party to the other under this Charterparty.
28 ASSIGNMENT
28.1 Save as hereinafter provided, neither the Owner nor the Charterer may
assign or otherwise transfer any of its rights or obligations under
this Charterparty without the prior written consent of the other party
hereto PROVIDED ALWAYS that the Owner may assign or otherwise transfer
any or all of its rights under, and the benefit of, this Charterparty
without the consent of the Charterer to any Subsidiary for the time
being of The Royal Bank of Scotland Group plc. In the event of any
such assignment or transfer by the Owner to any Subsidiary of The
Royal Bank of Scotland Group plc, such assignment or transfer shall
not impose any greater liabilities on the Charterer towards the Owner
then those liabilities which the Charterer would have had to the Owner
had no such assignment or transfer taken place.
55
<PAGE> 62
29 MISCELLANEOUS
29.1 This Charterparty contains the entire agreement between the Owner and
the Charterer relating to the chartering of the Ship, and the terms
and conditions of this Charterparty shall not be varied otherwise than
by an instrument in writing of even date herewith or subsequent hereto
executed by or on behalf of the Owner and the Charterer.
29.2 No failure or delay on the part of the Owner in exercising any right,
power or remedy under this Charterparty shall operate as a waiver
thereof nor shall any single or partial exercise by the Owner of any
such right, power or remedy preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The
remedies provided in this Charterparty are cumulative and are not
exclusive of any remedies provided by law.
29.3 Subject to the periods of grace referred to in Clause 24, time shall
be of the essence as regards the performance by the Charterer of its
obligations under this Charterparty.
29.4 All rights and liabilities in respect of the Ship by way of General
Average shall be for the account of the Charterer.
29.5 If any term or provision of this Charterparty or any of the other
Relevant Documents or the application thereof to any person or
circumstances shall to any extent be invalid or unenforceable, the
remainder of this Charterparty and the other Relevant Documents or
application of such term or provision to persons or circumstances
(other than those as to which it is already invalid or unenforceable)
shall not be affected thereby and each term and provision of this
Charterparty and the other Relevant Documents shall be valid and be
enforceable to the fullest extent permitted by law.
29.6 The Charterer authorises the Owner without prejudice to any of the
Owner's rights of set-off at law, in equity or otherwise, at any time
and with notice to the Charterer to set off or withhold from any sum
or sums expressed in this Charterparty or one of the other Relevant
Documents to be payable to the Charterer by the Owner any amount due
and payable to the Owner from the Charterer under this Charterparty or
any of the other Relevant Documents. For any such purpose the Owner is
authorised to purchase with the sums which would but for this Clause
29.6 be so payable to the Charterer, such other currencies as may be
necessary to effect such set off or withholding. The Owner shall not
be obliged to exercise any right given to it by this Clause 29.6. The
Owner shall notify the Charterer forthwith upon the exercise or
purported exercise of any right of set-off or withholding full details
in relation thereto.
29.7 The Charterer undertakes that it will at its expense execute, sign,
perfect and do any and every such further assurance, document, act or
thing as in the reasonable opinion of the Owner may be necessary or
desirable to carry out the purpose of this Charterparty or any
56
<PAGE> 63
of the other Relevant Documents or protect or enforce any right of the
Owner hereunder or thereunder or the title of the Owner in the Ship.
29.8 In the event of any conflict between this Charterparty and any of the
other Relevant Documents, the provisions of this Charterparty shall
prevail.
30 LAW
30.1 This Charterparty is governed by and shall be construed in accordance
with English law.
IN WITNESS whereof the parties hereto have entered into this Charterparty the
day and year first above written.
57
<PAGE> 64
SCHEDULE 1
List of Documents and Evidence
1 A copy certified by a Director or the Secretary of the relevant person
to be a true, complete and up-to-date copy, of the Certificate of
Incorporation and Memorandum and Articles of Association of each of
the Charterer and the Guarantor.
2 A copy, certified by a Director or the Secretary (or similar officer)
of the relevant person to be a true copy, and as being in full force
and effect and not amended or rescinded, of resolutions of the board
of directors of each of the Charterer and the other Relevant Parties:
(i) approving the transactions contemplated by such of the
Relevant Documents to which the relevant person is a party;
(ii) authorising a person or persons to sign and deliver on behalf
of the relevant person or, as the case may be, authorising the
sealing by the relevant person of the Relevant Documents to
which it is a party and any notices or other documents to be
given pursuant thereto;
3 A copy certified by a Director or the Secretary (or similar officer)
of the relevant person to be a true copy, and as being in full force
and effect and not revoked or withdrawn, of any power of attorney
issued by the relevant person pursuant to the said resolutions.
4 A list, certified as true, complete and up to date by a Director or
the Secretary (or similar officer) of each of the Relevant Parties of
its directors and officers.
5 Evidence that all governmental and other licenses, approvals,
consents, registrations and filings necessary for any matter or thing
contemplated by the Relevant Documents and for the legality, validity,
enforceability, admissibility in evidence and effectiveness thereof
have been obtained or effected on an unconditional basis and remain in
full force and effect (or, in the case of effecting of any
registrations and filings, that arrangements satisfactory to the Owner
have been made for the effecting of the same within any applicable
time limit).
6 Certified true copies of the Memorandum of Agreement relative to the
Ship between the Charterer and K/S Safir A/S and the Bill of Sale in
respect thereof.
7 An independent valuation by valuers acceptable to the Owner of the
current value of the Ship immediately prior to Delivery satisfactory
to the Owner in all respects.
58
<PAGE> 65
8. An independent valuation of the current value of the Ship after the
conversion works have been carried out and equipment installed in
accordance with the Conversion and Supply Agreement or otherwise as
proposed by the Charterer and confirming that the anticipated
life-span of the Ship is not less than the Primary Period satisfactory
to the Owner by valuers acceptable to the Owner.
9 An auditor's certificate in form and content satisfactory to the Owner
confirming that the costs incurred by the Charterer in connection with
the Ship (other than the Purchase Price) as at Delivery exceed One
million two hundred thousand Pounds (L.1,200,000).
10 Evidence that, on Delivery, the Ship:
(a) will be registered forthwith in the name of the Owner as a
Bahamian ship at the Port of Nassau and that the Ship, the
Insurances and any Requisition Compensation are free of
Encumbrances other than Permitted Encumbrances;
(b) is safely afloat undamaged and maintains the Classification
with the Classification Society; and
(c) is insured in accordance with the provisions of this
Charterparty and all requirements of this Charterparty in
respect of such insurance have been complied with.
11 The Purchase Agreement duly executed by the Charterer.
12 The legal Bill of Sale referred to in the Purchase Agreement duly
executed by the Charterer in favour of the Owner in such form as the
Owner may have approved for the purposes of the Purchase Agreement
together with all other documents to be delivered by the Charterer to
the Owner pursuant to the Purchase Agreement.
13 The Guarantee duly executed by the Guarantor.
14 The Conversion and Supply Agreement duly executed by the Charterer.
15 A certified true copy of the MWB Conversion Contract.
16 Original invoices issued by the Yard prior to Delivery and in respect
of which a reimbursement is claimed by the Charterer or made by the
Owner to the Charterer pursuant to Clauses 3.3 or 3.4 of the
Conversion and Supply Agreement.
17 The legal opinion of Dr. Schackow & Partner, special German legal
advisers to the Owner, in form and content satisfactory to the Owner.
59
<PAGE> 66
SCHEDULE 2
Form of Delivery Notice
To: Royal Bank of Scotland (Industrial Leasing) Limited
[Address]
(dated)
Charterparty by way of Demise
dated December, 1990
in respect of m.v. "Seaway Labrador"
We refer to the above Charterparty and hereby give you notice that the
Expected Delivery Date is December, 1990.
We confirm that the representations and warranties contained in
Clauses 2.1 and 2.2 of the Charterparty are true and correct at the date hereof
as if made with respect to the facts and circumstances existing at such date.
Words and expressions defined in the Charterparty shall have the same
meanings when used herein.
For and on behalf of
SIMON-HORIZON LIMITED
.......................
60
<PAGE> 67
SCHEDULE 3
Charterhire
1 Definitions
In addition to the definitions comprised in Clause 1 and Schedule 4 of
this Charterparty the following expressions shall have the following
meanings:
"Accounting Period" means an accounting period for the
purposes of section 12 ICTA;
"Applicable Rate" means in relation to any Interest
Reference Period where the
Applicable Rate is being applied to
a negative balance of Notional
Capital Outstanding, the greater of
(i) LIBOR for that period and (ii) 7
per cent per annum, in either case,
plus the Reserve Asset Rate for that
period;
"Assumption" means the assumptions set out in
paragraph 3 of this Schedule 3;
"Corporation Tax means in relation to any Accounting
Applicable Rate" Period of the Owner,
the effective rate of Corporation
Tax which is or would be applicable
to companies generally in respect of
taxable profits (if there were such
profits and ignoring for this
purpose the special rate applicable
to small companies) of such
Accounting Period, such rate to be a
weighted average calculated on a
time apportionment basis where
different rates apply for more than
one Financial Year within which such
Accounting Period falls. Without
prejudice to the foregoing, if, at
any date on which a calculation is
to be made hereunder, the
Corporation Tax rates are fixed
retrospectively or for some other
reason the relevant rate is not
known at the time, such calculation
shall (without prejudice to any
provision of this Schedule providing
for such calculation to be adjusted
once the rate of Corporation Tax is
fixed by law) be made on the basis
that the rate of Corporation Tax
last fixed will not change;
"Final Date" means the date falling nine months
and one day after the last day of
the Accounting Period of the Owner
in which:
61
<PAGE> 68
(i) the last Primary Period
Charterhire (or any
adjustment thereto) falls due
to be paid; or
(ii) any Termination Sum (or any
adjustment thereto) falls due
to be paid;
whichever is later;
"Financial Year" has the meaning given to that
expression in Schedule 1 of the
Interpretation Act 1978;
"Interest Payment means, for any Interest Reference
Date" Period, the date specified
in respect thereof in Column 2 of
the table annexed to this Schedule
3, or if any such date is not a
Banking Day, the immediately
preceding Banking Day,
"Interest Reference means each of the following
Period" successive periods:
(i) the period commencing on 1st
April, 1991 and ending on
30th June, 1991, and
thereafter each successive
period of three (3) months
commencing on the date
specified in Column 1 of the
table annexed to this
Schedule 3 and ending on the
day immediately preceding the
first day of the next
Interest Reference Period;
and
(ii) the period from the expiry of
the last three (3) month
period referred to in (i)
above to the Final Date;
"LIBOR" means in relation to any Interest Reference
Period, the annual percentage rate of
interest (as certified by The Royal Bank of
Scotland plc whose certificate shall in the
absence of manifest error be conclusive and
binding) at which deposits in Pounds for the
period in question in amounts comparable with
the sum in respect of which such interest
rate falls to be determined were offered by
The Royal Bank of Scotland plc to prime banks
in the London Interbank Market at or about
11.00 a.m. on the first day of such period
or, if such day is not a Banking Day then on
the immediately preceding day which is a
Banking Day;
"Notional Capital means the amount of the Owner's investment in
the Outstanding Charterparty from time to time;
62
<PAGE> 69
"Owner's Group" means all those companies which at any
particular time constitute a group of
companies for the purposes of the provisions
relating to group relief contained in Chapter
IV Part X ICTA and of which the Owner is a
member;
"Owner's Return" means the Owner's after-tax profit take out
rate of return;
"Pre-Primary means in relation to any Pre-Primary Interest
Applicable Rate" Reference Period where the PrePrimary
Applicable Rate is being applied to a
negative balance of Notional Capital
Outstanding, the greater of (i) Pre-Primary
LIBOR for that period and (ii) 7 per cent per
annum, in either case, plus the Reserve Asset
Rate for that period;
"Pre-Primary Interest means each of 31st December 1990 and 31st
Payment Date: March 1991;
"Pre-Primary Interest means each of the following successive
Reference Period" periods:
(i) the period commencing on the
Delivery Date and ending on 31st
December 1990;
(ii) the period commencing on the expiry
of the period referred to in (i)
above and ending on the date three
(3) months thereafter;
"Pre-Primary means, in relation to any Pre-Primary
LIBOR" Interest Reference Period, the annual
percentage rate of interest (as certified by
The Royal Bank of Scotland plc whose
certificate shall in the absence of manifest
error be conclusive and binding) at which
deposits in Pounds for a period of one month
in amounts comparable with the sum in respect
of which such interest rate falls to be
determined were offered by The Royal Bank of
Scotland plc to prime banks n the London
Interbank Market at or about 11:00 am on
the first day of such period or, if such day
is not a Banking Day then on the immediately
preceding day which is a Banking Day;
"Pre-Primary means the period commencing on the Delivery
Period" Date and ending on the last day of the last
Pre-Primary Interest Reference Period;
"Primary Period means the charterhire calculated and payable
in accordance
63
<PAGE> 70
Charterhire" with paragraph 2 of this Schedule 3 and,
where applicable, as adjusted in accordance
with paragraph 4 of this Schedule 3;
"Reference Rate" means thirteen per cent (13%) per annum;
"Reserve Asset means for any period the annual percentage
Rate" rate of interest derived from the following
formula:
CL+D(L-X)+(M-D)(L-T)+S(L-Z)% per annum
100-(C+S+M)
Where
C = The amount required to be held on
non-operational non-interest bearing
deposit account with the Bank of
England pursuant to the Cash Ratio
deposit requirement of the Bank of
England, expressed as a percentage
of The Royal Bank of Scotland plc's
Eligible Liabilities ("The Cash
Ratio Deposit")
L = LIBOR
D = The amount required to be held on
secured Loans to members of the
London Discount Market Association
and/or on secured call Loans with
those money brokers and gilt-edged
primary market makers recognised for
this purpose by the Bank of England,
expressed as the normal average
percentage of The Royal Bank of
Scotland plc's Eligible Liabilities
to be so maintained ("Discount House
Deposits")
X = The rate of interest per annum at
which Sterling deposits can be
placed on secured Loans with a
member of the London Discount Market
Association at or about 11.00 on the
relevant day for a period comparable
to the relevant Interest Reference
Period or for three months,
whichever is the shorter. ("Discount
House Deposit Rate")
M = The amount required by the Bank of
England to be maintained in specific
liquid assets, expressed as the
64
<PAGE> 71
normal average percentage of line
Royal Bank of Scotland plc's
Eligible Liabilities to be so
maintained ("Mandatory Liquid
Assets")
T = The yield on Treasury Bills having a
period remaining to maturity
comparable to the relevant Interest
Reference Period, or for 91 days,
whichever is shorter. If for 91 days
the yield shall be calculated by
reference to the average discount
rate for Treasury Bills at the
tender as published by the Bank of
England weekly, usually on Friday;
if for any lesser period the yield
shall be calculated by reference to
the discount rate quoted for the
sale of Treasury Bills having that
period remaining to maturity by a
member of the London Discount Market
Association at or about 11.00 am. on
the relevant day ("Treasury Bill
Yield")
S = The amount required to be placed as
Special Deposits with the Bank of
England, expressed as a percentage
of The Royal Bank of Scotland plc's
Eligible Liabilities ("Special
Deposits")
Z = The rate of interest, per annum,
allowed by the Bank of England, from
time to time, on Special Deposits
("Interest on Special Deposits")
In making any calculation under this formula:
any negative factor shall be given the value
zero; and
each calculation shall be rounded up to the
next one-sixteenth per cent.
Provided that if such formula ceases in the
reasonable option of The Royal Bank of
Scotland plc to be a realistic and accurate
basis for calculating the cost of The Royal
Bank of Scotland plc complying with any
reserve assets, interest free, special
deposit or other requirements of a similar
nature imposed on it by any competent
authority (including, without limitation, the
Bank of England) with similar intent (whether
or not such requirements have the force of
law) or if such a cost is imposed directly on
the Owner then the Owner shall be entitled to
modify, expand
65
<PAGE> 72
or replace such formula to the extent that
the Owner in its discretion and acting in
good faith considers necessary to make it a
realistic basis for recovery of any reserve
asset costs arising in connection with the
funding of the transactions contemplated by
this Charterparty provided that any
modification, expansion or replacement shall
be of similar effect to other formulae having
a like purpose being or to be applied by
clearing banks or (where such cost is imposed
directly on the Owner) of undertakings
comparable to the Owner in the United
Kingdom;
"Secondary Period means the Charterhire calculated and payable
Charterhire" in accordance with paragraph 6 of this
Schedule 3;
"Variable means each of the Assumptions set out in
Assumption" paragraphs 3 (i) - (xx) (inclusive) of this
Schedule 3;
2 Primary Period Charterhire
2.1 During the Primary Period the Charterhire payable on each Charterhire
Payment Date shall be L.14.82 per L.1000 of Original Cost.
2.2 Charterhire in respect of the Primary Period shall be payable in
monthly installments in arrears. The first such instalment shall be
payable on 1st May 1991 and a further instalment of Charterhire shall
be payable on the first day of each month following after 1st May 1991
up to (and including) 1st April 2001.
2.3 Each Primary Period Charterhire shall be subject to adjustment in the
manner specified in paragraph 4 of this Schedule 3.
3 Assumptions in relation to Primary Period
The Primary Period Charterhire has been calculated on the following
Assumptions:
(i) that the Original Cost will be incurred in seven installments
in the following amounts on the following dates:
<TABLE>
<CAPTION>
Date Amount per L.1,000
of Original Cost
<S> <C>
15.11.90 571.20
15.12.90 12.50
10. 1.91 87.50
31. 1.91 41.50
28. 2.91 33.30
10. 3.91 62.50
31. 3.91 191.50
</TABLE>
66
<PAGE> 73
and;
(ii) that the Primary Period will commence on 31st March 1991; and
(iii) that in accordance with the provisions of Chapter I Part II
CAA writing down allowances of 25 per cent per annum on a
reducing balance basis in respect of Original Cost will be
available to the Owner such writing down allowances to
commence in respect of all installments of Original Cost in
the Accounting Period of the Owner ending 31st March 1991 and
to continue in each subsequent Accounting Period of the Owner
until the Accounting Period of the Owner in which the Primary
Period expires by effluxion of time, that the writing down
allowances so available will not be withdrawn, either wholly
or in part, and that there will be no delay in the agreement
of the Owner's claim for such allowances; and
(iv) that the Ship will be sold in the Accounting Period of the
Owner in which the Primly Period expires by effluxion of time
and that the amount which the Owner is required to bring into
account as disposal value on such sale in accordance with
section 24 (6) CAA will be the balance of the Original Cost on
which writing down allowances are assumed to be available for
that Accounting Period by paragraph 3(iii) above; and
(v) that any interest paid or assumed to be paid in respect of
funds borrowed or assumed to be borrowed by the Owner for the
purpose of this transaction is or would had it actually been
paid have been allowed as a trading expense or as a charge on
income in the Accounting Period of the Owner to which such
interest relates or is paid (or assumed to be paid); and
(vi) that in the "requisite period", (as that expression is defined
in section 40 CAA) the Ship will not be used for a purpose
which results in section 42 CAA applying; and
(vii) that, in relation to Original Cost, no charge will arise under
section 46 CAA in respect of any excess relief (as therein
defined) or under section 42 CAA as the same may be amended,
extended, substituted or replaced from time to time; and
(viii) that any losses for taxation purposes arising to the Owner in
connection with the transactions contemplated by this
Charterparty (including losses arising as a result of the
availability of the said allowances) will be available for
offset against other profits of the Owner pursuant to section
393(2) ICTA or for surrender by way of
67
<PAGE> 74
group relief in accordance with the provisions of sections 402
to 413 ICTA (as amended, and in force, as at the date hereof)
and that there will be no change in the law or practice in
relation to group relief which would affect or in any way
restrict the Owner's ability to surrender such losses to any
company in the Owner's Group or the ability of any company in
the Owner's Group to whom such losses are surrendered to claim
or enjoy the benefit of such surrender, and
(ix) that the Corporation Tax Applicable Rate applicable to
Accounting Periods of the Owner commencing on or after 1st
April 1990 and ending with the Accounting Period of the Owner
in which the Final Date falls will be 35 per cent; and
(x) that the Owner will not be required to bring into account as
disposal value (within the meaning of and in accordance with
the provisions of section 24 CAA) in respect of the Original
Cost an amount greater than the Net Sale Proceeds and/or
insurance proceeds in respect of the Ship actually received by
the Owner, and
(xi) that no change occurs in the nature, method or application of
any relevant United Kingdom taxation by reason of any
enactment, provision, practice or ruling of or by any
authority, whether legislative, judicial, administrative or
revenue, after the date of this Charterparty, and
(xii) that the provisions of section 10 ICTA will not be amended
after the date hereof so as to result in the Owner first
becoming liable to pay any Corporation Tax on profits for any
Accounting Period on a date other than the date which is nine
months and one day after the end of that Accounting Period;
and
(xiii) that the Owner will not be required by law or accounting
practice to draw up its accounts for any period other than 12
months and/or as at any date other than 31st March in any
year; and
(xiv) that the only amounts which the Owner will be required to
bring into account as income in calculating its profits by
reference to the chartering of the Ship will be the
charterhire in Pounds payable pursuant to paragraph 2 of this
Charterparty, and
(xv) that all installments of charterhire to be received by the
Owner under this Charterparty will be fully taxable on their
full amount in the Accounting Period of the Owner in which
they fall due to be paid; and
(xvi) that the Pre-Primary Applicable Rate will be equal to the
Reference Rate; and
(xvii) that the Owner will incur professional fees and disbursements
of L.2 per L.1000 of Original Cost (exclusive of Value Added
Tax) in respect of the transactions contemplated by this
Charterparty excluding the funding arrangements; and
68
<PAGE> 75
(xviii) that the fees incurred by the Owner referred to in paragraph
(xvii) above will be deductible as a trading expense in the
Accounting Period of the Owner in which such fees are payable;
and
(xix) that the interest assumed to be received and paid in
Assumptions 3 (xxi) and (xxiii) will be treated as accruing on
a daily basis for the purpose of Corporation Tax and will be
accrued on positive or negative balances of Notional Capital
Outstanding (as the case may be) until the Final Date; and
(xx) (1) that all losses arising in an Accounting Period of
the Owner as referred to in paragraph 3 (viii) will
be surrendered to members of the Owner's Group;
(2) that the Owner will receive payments for group relief
on the date assumed to be the date for payment of
Corporation Tax by the Owner in paragraph 3 (xii),
that no refund of such payments shall be made by the
Owner and that, in accordance with section 402(6)
ICTA, such payments will not be taken into account
(either as a receipt or a deduction) for Corporation
Tax purposes; and
(xxi) that on the Interest Payment Date in respect of each Interest
Reference Period during which the Notional Capital Outstanding
is
(i) a negative figure the Owner will pay interest
calculated on a daily basis using a 365 day
year on the daily balances of Notional
Capital Outstanding during such Interest
Reference Period at the Reference Rate; or
(ii) a positive figure the Owner will receive
interest calculated on a daily basis using a
365 day year on the daily balances of
Notional Capital Outstanding during such
Interest Reference Period at a rate of 7 per
cent per annum; and
(xxii) the acquisition of the Ship by the Owner, its conversion
pursuant to the Conversion and Supply Agreement, the
chartering of the Ship under this Charterparty, the sale of
the Ship by the Owner under this Charterparty and the funding
of the transactions in relation thereto are the only
transactions carried out by the Owner and the Owner shall be
regarded as having no assets in respect of which capital
allowances are available other than the Ship provided that
nothing in this paragraph shall deem a balancing allowance to
be received by the Owner at any time; and
(xiii) that on each Pre-Primary Interest Payment Date in respect of
each Pre-Primary Interest Reference Period during which
Notional Capital Outstanding is a negative
69
<PAGE> 76
figure, the Owner will pay interest at the Pre-Primary
Applicable Rate calculated on a daily basis using a 365 day
year on the daily balances of Notional Capital Outstanding
during each Pre-Primary Interest Reference Period and that
such interest is compounded on 31st December 1990 and 31st
March 1991; and
(xiv) that no fees will be payable to London Financial Group
limited; and
(xv) that the interest referred to in paragraphs 3(xxi) and (xxiii)
will be payable to a person carrying on a bona fide banking
business in the UK.
4 Adjustments to Primary Period Charterhire
4.1 Change in Assumptions
On or as soon as reasonably practicable after any date on which the
Owner becomes aware or is notified by the Charterer that there has
been a change In any of the Variable Assumptions on the basis of which
the Primary Period Charterhire has been calculated and the effect of
such change would require the Primary Period Charterhire to be
adjusted if the Owner's Return is neither to be increased or
decreased, the Owner shall notify the Charterer of the amount by which
the Primary Period Charterhire is required to be adjusted upwards or
downwards. Any such adjustment shall:
(a) subject to sub-paragraphs (b) and (c) below, be calculated on
the same basis as the Primly Period Charterhire was calculated
and by reference to the Assumptions in order to ensure that
the Owner's Return is neither increased nor decreased; and
(b) take into account any changes in any of the Variable
Assumptions which have occurred (and are known to the Owner)
between the date of this Charterparty and the date of
notification of such adjustment; and
(c) be such as to ensure that, subject to the payment by the
Charterer of the adjusted Primary Period Charterhire on each
subsequent Charterhire Payment Date and on the basis that each
instalment of the adjusted Charterhire shall bear to each
other such instalment the same ratio as each instalment of the
Primary Period Charterhire bears to each other Primary Period
Charterhire instalment, the Notional Capital Outstanding on
the Final Date will be zero or as near thereto as may be.
4.2 Adjusted Primary Period Charterhire
As from the date any notification of adjusted Primly Period
Charterhire is to take effect in accordance with this Charterparty the
amount of charterhire to be paid on each Charterhire Payment Date
during the Primary Period shall be the adjusted Primary Period
Charterhire so notified.
70
<PAGE> 77
4.3 Change in Assumptions after the Primary Period
If the Owner shall become aware or is notified by the Charterer that
there has been a change in any of the Variable Assumptions on the
basis of which any Primary Period Charterhire has been calculated at a
time when no Primary Period Charterhire remains to be paid the Owner
shall as soon as reasonably practicable determine a single amount
calculated on the basis of the Assumptions but taking into account any
changes in any of the Variable Assumptions which have occurred and are
known to the Owner between the date of this Charterparty and the date
of such calculation which shall be either payable by the Charterer to
the Owner by way of additional charterhire or by the Owner to the
Charterer by way of rebate of charterhire and which amount shall be
calculated so that the Owners Return is neither increased nor
decreased. No account shall be taken of a change in a Variable
Assumption occurring more than six years after the last day of the
Accounting Period in which the final instalment of Primary Period
Charterhire falls to be paid.
4.4 Correcting adjustments
Of a Variable Assumption which has been regarded as incorrect
subsequently proves to have been correct or to be incorrect in a
different manner or with a different effect from that which such
Assumption was originally regarded as incorrect, then, such further
adjustments shall be made under paragraph 4 as may be required to
ensure that the Owners Return is the same as it would have been had
the relevant Assumption (and all such other Assumptions) proved to be
correct at all times (but fully taking into account the amount of any
previous adjustments).
4.5 Exclusion of Adjustments
No adjustment of charterhire shall be made under Paragraph 4 if and to
the extent that any of the Variable Assumptions shall prove to be
incorrect solely as a result of:
(i) otherwise than as a result of Assumption (xi) proving to be
incorrect, the Owner not being or ceasing to be resident in
the UK for the purpose of Corporation Tax or not being or
ceasing to be within the charge to Corporation Tax in respect
of the Ship;
(ii) otherwise than as a result of Assumption (xi) proving to be
incorrect or a default by the Charterer, the Owner (or any
member of the Owner's Group to which it might surrender or
purport or wish to surrender group relief) not having a
sufficiency of profits, or gains or income, in any Accounting
Period or part thereof;
(iii) otherwise than as a result of Assumption (xi) proving to be
incorrect, the Owner (or member of the Owner's Group as
aforesaid) voluntarily causing any or
71
<PAGE> 78
permitting any of its Accounting Periods to be other than
twelve months ending on a date other than on 31st March in
each year,
(iv) the Owner failing duly to claim in the appropriate amount and
in the correct manner or disclaiming any capital allowance to
which it is properly entitled (or to which but for any of the
facts or circumstances referred to in this paragraph 4.5 it
would be properly entitled) in respect of the Ship;
(v) the Owner disposing of the Ship (or any interest therein)
otherwise than in accordance with or as contemplated by this
Charterparty;
(vi) the Owner materially failing to meet its obligations under
clause 2.5 and/or clause 3.4 of the Conversion and Supply
Agreement.
4.6 Notification and Disputes
(a) The Owner shall certify in writing the amount of any
calculation or adjustment under this Schedule 3 or Schedule 4
or the determination of any rate of interest or other amount
payable under this Agreement together with reasonably
sufficient detail to substantiate such calculation, adjustment
or determination and in the event of there being a dispute as
to the amount of such calculation, adjustment or
determination, then without prejudice to the obligation of the
Charterer to pay amounts as certified pending resolution of
such dispute, the same shall immediately be referred to the
auditors for the time being of the Owner ("the Accountants")
(acting as experts and not as arbitrators) whose decision
shall in the absence of manifest error, be final and binding
on the parties.
(b) The Owner shall supply to the Accountants a copy of the
example cash flow on which the Owner has based the calculation
of Primly Period Charterhire and the Owner shall provide the
Accountants with any revised cash flow on the basis of which
the Owner calculates an adjustment to the charterhire payable
hereunder.
(c) Where the decision of the Accountants results in an adjustment
to any calculation certified as aforesaid by the Owner, such
payment shall be made between the parties as the Accountants
(acting as experts and not as arbitrators) shall certify as
appropriate to give effect to such adjustment (after taking
into account any financial or cash flow advantage or
disadvantage to either of the parties resulting from the
making of such adjustments and payments). The costs of and in
connection with such reference to the Accounts shall unless
otherwise agreed, be payable by the Charterer unless the
Accountants' decision shall reveal that the Owner's
calculation of such adjustment or determination was
significantly inaccurate, having regard to the size of the
transaction of which this Charterparty forms part and the
result thereof would have been adverse to the Charterer.
72
<PAGE> 79
(d) The Owner agrees to notify the Charterer of any communication
("Claim") it receives from the Inland Revenue indicating that
any matter relating to or affecting the correctness of any of
the Variable Assumptions and/or Variable Termination
Assumptions is being disputed by the Inland Revenue and as a
result there is or it appears that there is likely to be an
upward adjustment of charterhire under this Agreement or
upward adjustment in the Termination Sum.
(e) Following such notification and provided that the Owner
continues to receive from the Charterer all amounts of
charterhire and all other sums payable under this Agreement
the Owner agrees to discuss the Claim with the Charterer and
upon request to provide to the Charterer relevant extracts of
the correspondence with the Inland Revenue concerning such
Claim save that the Owner shall not be required to provide any
information or correspondence which is in the opinion of the
Owner confidential or of a sensitive nature having regard to
the business of the Owner or of the Owner's Group. Such
discussions shall take place with a view to agreeing the form
and content of the Owner's response to such claim.
(f) If the subject matter of the Claim is not resolved by
negotiation with the Inland Revenue the Charterer may require
the Owner to obtain (at the Charterer's expense) the opinion
of leading tax counsel ("Counsel") concerning the merits of
the subject matter of the claim. The Owner and Charterer will
instruct such Counsel as they may mutually agree provided that
if the parties shall not reach such agreement the Owner shall
instruct the Counsel of its choice. The Owner's legal advisers
will prepare Instructions to Counsel. The Charterer may make
representations as to the contents of such Instructions but
the Owner shall not be obliged to reflect those
representations in the Instructions submitted to Counsel. The
Charterer and its professional advisers may attend any
conference with Counsel save that the Charterer and its
professional advisers shall withdraw from such conference at
the request of the Owner when in the of opinion of the Owner
matters which in the Owner's opinion are confidential or of a
sensitive nature having regard to the business of the Owner or
the Owners Group may be discussed during such conference.
(g) The Owner shall have the sole right to decide whether to
pursue any appeal to the Special or General Commissioners (as
the case may be) or beyond. The Owner and the Charterer agree
to consult in such circumstances with a view to agreeing
whether or not any application for postponement of payment of
tax should be made.
(h) The Charterer hereby agrees to keep the Owner indemnified
against any costs, expenses or charges (including, without
limitation, interest or penalties in respect of Taxes) arising
to or incurred by the Owner in respect of any action taken by
the Owner under the provisions of sub-paragraph 4.6(d) to (g)
(inclusive) and it shall be a condition precedent to the
Owner's obligations under those
73
<PAGE> 80
sub-paragraphs that the Charterer shall provide or procure
security to the reasonable satisfaction of the Owner in
respect of its obligations under this paragraph 4.6 (h).
4.7 Limitation
In the event of any assignment or transfer of this Charterparty by the
Owner pursuant to Clause 28 other than to a member of the Owner's
Group the Charterer shall have or incur (at that or at any subsequent
time) no greater liability to pay any charterhire, additional
charterhire, Termination Sum or other moneys under this Charterparty
or have or enjoy (at that or any subsequent time) any lesser
entitlement to a reduction, refund, repayment or rebate of any
charterhire, additional charterhire, Termination Sum or any other
moneys than it would have had if no such sale or disposal had been
made and had Royal Bank of Scotland (Industrial Leasing ) Limited
continued to be the Owner at all material times.
5 Adjustment to Charterhire for changes in Interest Rates
5.1 The Primary Period Charterhire has been calculated on the assumption
that the Applicable Rate for each Interest Reference Period will be 13
per cent per annum. Where for any Interest Reference Period the
Applicable Rate shall be more or less than 13 per cent per annum then
on the relevant Interest Payment Date the Charterer shall pay to the
Owner by way of additional charterhire or the Owner shall pay to the
Charterer by way of rebate of charterhire the amount calculated by
multiplying for each 1 per cent increase or it decrease in the
Applicable Rate above or below 13 per cent (with adjustments for
variation other than an integral multiple of 1 per cent being made pro
rata to two decimal places) the Original Cost by the amount listed
opposite the relevant Interest Reference Period in Column 3 of the
Table annexed to this Schedule 3 and dividing the result by 1,000.
5.2 The amounts specified in Column 3 of the Table annexed to this
Schedule 3 are calculated on the basis of the Assumptions. In the
event that any of the Variable Assumptions proves to be incorrect then
the Owner will provide the Charterer with a revised Table prepared on
the same basis as the Table annexed to this Schedule 3 except in so
far as is necessary to reflect the change in any Variable Assumptions
which have proved to be incorrect. Thereupon this paragraph shall
continue to apply in respect of such revised Table mutatis mutandis
and so on.
5.3 The Primary Period Charterhire payable under paragraph 2 of this
Schedule 3 (including any adjustments thereto which may be required
pursuant to the terms of this Schedule) may be replaced by agreement
between the Owner and the Charterer by Primary Period Charterhire
calculated on the same basis but adjusted to reflect the availability
of fixed-rate funding to be obtained by the Owner in place of variable
rate funding obtained or assumed to be obtained by the Owner for the
purposes of the transactions
74
<PAGE> 81
contemplated by this Charterparty. In such event the Owner and the
Charterer shall enter into a memorandum specifying the terms on which
the Primary Period Charterhire shall be adjusted and the Table annexed
to this Schedule 3 (or replacement Table) shall be revised accordingly
to take account of such fixed rate funding on the basis that the
Owner's Return shall be neither increased nor decreased. The Charterer
will bear any commitment commission or other fee (including legal
fees) incurred by the Owner in obtaining that fixed rate funding and
in connection with the memorandum provided that such commission or
other fee (other than legal fees) shall be notified in advance to the
Charterer (or the basis for calculating the same) and specifically
referred to in the memorandum.
5.4 The Charterer undertakes and agrees to indemnify the Owner on demand
against any loss, cost, expense or detriment (as certified to the
Charterer by the Owner) sustained or incurred by the Owner (including
without limitation any damages, penalties or premiums incurred by the
Owner) as a result of the Owner repaying prior to its specified
maturity any funding obtained by the Owner or re-employing or
liquidating any funds received from third parties acquired in relation
to the transactions contemplated by this Charterparty, the Purchase
Contract and the Conversion and Supply Agreement in consequence of the
service or deemed service by the Charterer of a notice pursuant to
Clause 3.3 or Clause 3.4 of this Charterparty, a Total Loss or the
occurrence of a Termination Event in the event the same is actually
accepted by the Owner as a repudiation of this Charterparty.
6 Secondary Period Charterhire
6.1 The Secondary Period Charterhire shall be payable annually in advance
and each installment of Secondary Period Charterhire shall be L.2 for
every L.1000 of Original Cost.
6.2 An installment of Secondary Period Charterhire shall be due on 2nd
April 2001 and on each anniversary thereof during the Secondary
Period.
75
<PAGE> 82
Annexure to Schedule 3
<TABLE>
<CAPTION>
Simon-Horizon Limited Royal Bank of Scotland (Industrial Leasing) Limited.
- --------------------- ----------------------------------------------------
Rental Variation Factor
- -----------------------
1% Interest 1% Interest
Fixing Settlement Variation Fixing Settlement Variation
Date Date Factor Date Date Factor
---- ---- ------ ---- ---- ------
<S> <C> <C> <C> <C> <C>
1.04.91 1.07.91 L.2.59 1.07.96 1.10.96 L.1.17
1.07.91 1.10.91 L.2.59 1.10.96 1.01.97 L.1.10
1.10.91 1.01.92 L.2.58 1.01.97 1.04.97 L.1.04
1.01.92 1.04.92 L.2.27 1.04.97 1.07.97 L.0.98
1.04.92 1.07.92 L.2.23 1.07.97 1.10.97 L.0.92
1.07.92 1.01.93 L.2.22 1.10.97 1.01.98 L.0.84
1.10.92 1.01.93 L.2.19 1.01.98 1.04.98 L.0.80
1.01.93 1.04.93 L.1.97 1.04.98 1.07.98 L.0.73
1.04.93 1.07.93 L.1.95 1.07.98 1.10.98 L.0.65
1.07.93 1.10.93 L.1.93 1.10.98 1.01.99 L.0.56
1.10.93 1.01.94 L.1.89 1.01.99 1.04.99 L.0.54
1.01.94 1.04.94 L.1.74 1.04.99 1.07.99 L.0.45
1.04.94 1.07.94 L.1.71 1.07.99 1.10.99 L.0.36
1.07.94 1.10.94 L.1.67 1.10.99 1.01.00 L.0.26
1.10.94 1.01.95 L.1.62 1.01.00 1.04.00 L.0.26
1.01.95 1.04.95 L.1.51 1.04.00 1.07.00 L.0.16
1.04.95 1.07.95 L.1.47 1.10.00 1.10.00 L.0.16
1.07.95 1.10.95 L.1.42 1.10.00 and Nil
thereafter
1.01.96 1.04.96 L.1.29
1.04.96 1.07.96 L.1.23
</TABLE>
76
<PAGE> 83
SCHEDULE 4
Temination Sum
1 In addition to the definitions comprised in Clause 1 and paragraph 1
of Schedule 3 to this Charterparty the following expressions shall
have the following meanings:
"Table" means the table annexed to this Schedule 4;
"Revised Table" means any revised Table produced pursuant to
paragraph 3 of this Schedule 4;
"Settlement Date" means each of the dates set out in Column 1
of the Table or any Revised Table;
"Variable Termination means the assumptions set out in paragraph
Assumptions" 3.2 of this Schedule 4.
2 The Termination Sum on any relevant date shall be the sum calculated
according to the following formula:
A X B
1000
where:
(i) A = Original Cost of the Ship; and
(ii) B = the amount listed in Column 2 of the Table or any
Revised Table opposite, where the relevant date is
not a Settlement Date, the next following Settlement
Date or where the relevant date is a Settlement Date,
that Settlement Date.
3.1 The amounts specified in Column 2 of the Table arc calculated on the
basis of the Assumptions and the Variable Termination Assumptions.
3.2 The Variable Termination Assumptions are:
(a) that for the purposes of section 24 CAL the amount of the Net
Sale Proceeds (in the case of a sale of the Ship) and/or any
moneys actually received by the Owner in respect of a Total
Loss will be equal to the equaling expenditure in respect of
the Original Cost at the commencement of the Accounting Period
of the Owner in which the Termination Sum is payable;
(b) that for the purposes of section 24 CAA the Ship will be sold
or a Total Loss will occur and Net Sales Proceeds or, as the
case may be, insurance proceeds will be received by
77
<PAGE> 84
the Owner in the same Accounting Period as that in which the
Termination Sum is payable;
(c) that the refund of charterhire or payment of sales agency
commission in respect of Net Proceeds of Sale and/or moneys
received by the Owner in respect of a Total Loss due in
accordance with Clauses 3.5, 21.5 and 25.2 of the
Charterparty:
(i) will occur in the Accounting Period of the Owner in
which the Termination Sum is payable;
(ii) that any refund of charterhire will be wholly
deductible for Corporation Tax purposes as a trading
expense in the Accounting Period of the Owner in
which the Termination Sum is payable;
(iii) that any payment of sales agency commission
(excluding recoverable Value Added Tax) will be
deductible from and in computing the amount to be
brought into account as disposal value under section
24 CAA in the Accounting Period of the Owner in which
such disposal value falls to be brought into account;
(iv) that the Owner will be able effectively to deduct the
trading expense referred to in paragraph 3.2(c)(ii)
above in computing its Corporation tax liability in
respect of the Net Proceeds of Sale and/or any moneys
received by the Owner in respect of a Total Loss; and
(d) that all and no more or no less of the Net Proceeds of Sale
(less any sales agency commission) and/or any moneys received
by the Owner in respect of Total Loss in excess of Original
Cost shall be treated as a chargeable gain for United Kingdom
Corporation Tax purposes in the Accounting Period of the Owner
in which the Termination Sum falls due and that the rate of
Corporation Tax in respect of chargeable gains is the same as
the rate assumed in paragraph 3.1(ix) of Schedule 3;
3.3 On or as soon as reasonably practicable after any date on which the
Owner becomes aware that any of the Variable Assumptions or any of the
Variable Termination Assumptions has become or will become incorrect
(which shall be referred to in this Schedule 4 as a change in a
Variable Assumption or Variable Termination Assumption) then the Owner
will provide the Charterer with a Revised Table (but only if such
Revised Table would differ from the existing Table) prepared on the
same basis as the Table except that the preparation of such Revised
Table shall take account of the change in say Variable Assumption or
Variable Termination Assumption and except that such Revised Table
shall take account of the Termination Sum due and payable on the
Termination Date where the Revised Table is produced after such date
and which Revised Table shall be calculated so that the Owner's Return
shall be neither increased nor decreased. Insofar as a change in
Variable Termination Assumption 3.2 (d) is concerned no account shall
be taken in preparing any Revised Table of (a) any rollover or
holdover of gains to another asset or (b) of any allowable losses
arising to the Owner from the disposal of assets other than the Ship
or (c) of relief for any losses for the purpose of capital gains tax
or Corporation Tax on chargeable gains arising from the disposal of
the Ship. Any Revised Table shall be deemed to
78
<PAGE> 85
take effect from the date when the change in any such Variable
Assumption or Variable Termination Assumption occurs.
3.4 Following production by the Owner to the Charterer of a Revised Table
pursuant to paragraph 3.3 of this Schedule 4 at a time after the
Termination Sum has been paid or the obligation to pay the Termination
Sum has been discharged the Owner shall recalculate the amount of the
Termination Sum using such Revised Table with effect from the date on
which the Termination Sum was first calculated and shall notify the
Charterer of the amount thereof and of the amount of difference
between the Termination Sum as so calculated and as immediately
previously calculated. Within 30 days of such notification the
Charterer shall pay to the Owner by way of additional charterhire the
amount of the difference so notified where that amount is a positive
figure or the Owner shall pay to the Charterer by way of rebate of
charterhire the amount of the difference so notified where the amount
is a negative figure.
3.5 As from the date any Revised Table is to take effect in accordance
with this Charterparty the same shall be deemed to be incorporated
herein in substitution for the Table or any previous Revised Table and
payments to be made hereunder shall be determined by reference
thereto.
3.6 No Revised Table may be produced pursuant to paragraph 3.3 above if
the date on which the Owner became aware that there has been any
change in a Variable Assumption or Variable Termination Assumption
falls seven years after the date which is nine months and one day
after the last day of the Accounting Period of the Owner in which the
Termination Sum initially fell due to be paid.
4. Paragraphs 4.4 to 4.7 of Schedule 3 to this Charterparty shall apply
with all necessary and/or appropriate adaptations to this Schedule in
relation to Variable Termination Assumptions, revisions to the Table
and adjustments to or repayments of Termination Sums (and other
matters contemplated hereby) as it applies to that Schedule in
relation to Variable Assumptions or adjustments of charterhire (and
other matters contemplated thereby).
79
<PAGE> 86
Table to Schedule 4
SIMON-HORIZON LIMITED
<TABLE>
<CAPTION>
Termination Termination Termination Termination
- ----------- ----------- ----------- -----------
Date Amount Date Amount
- ---- ------ ---- ------
<S> <C> <C> <C>
1 May 1991 1059.87 1 January 1995 837.65
1 June 1991 1057.69 1 February 1995 831.56
1 July 1991 1055.06 1 March 1995 824.56
1 August 1991 1052.76 1 April 1995 805.09
1 September 1991 1050.50 1 May 1995 798.39
1 October 1991 1047.80 1 June 1995 791.87
1 November 1991 1045.43 1 July 1995 785.00
1 December 1991 1042.69 1 August 1995 778.30
1 January 1992 1040.31 1 September 1995 771.51
1 February 1992 1037.26 1 October 1995 764.38
1 March 1992 1033.41 1 November 1995 757.41
1 April 1992 1019.75 1 December 1995 750.10
1 May 1992 1016.11 1 January 1996 742.95
1 June 1992 1012.79 1 February 1996 735.73
1 July 1992 1009.06 1 March 1996 727.93
1 August 1992 1005.66 1 April 1996 708.20
1 September 1992 1002.20 1 May 1996 700.37
1 October 1992 998.34 1 June 1996 692.67
1 November 1992 994.79 1 July 1996 684.65
1 December 1992 990.83 1 August 1996 676.74
1 January 1993 987.18 1 September 1996 668.74
1 February 1993 983.15 1 October 1996 660.42
1 March 1993 978.03 1 November 1996 652.20
1 April 1993 961.40 1 December 1996 643.67
1 May 1993 956.76 1 January 1991 635.24
1 June 1993 952.39 1 February 1997 626.79
1 July 1993 947.64 1 March 1997 617.64
1 August 1993 943.15 1 April 1997 598.16
1 September 1993 938.60 1 May 1997 589.11
1 October 1993 933.67 1 June 1997 580.14
1 November 1993 928.99 1 July 1997 570.88
1 December 1993 923.93 1 August 1997 561.67
1 January 1994 919.13 1 September 1997 552.35
1 February 1994 914.10 1 October 1997 542.74
1 March 1994 908.06 1 November 1997 533.18
1 April 1994 889.61 1 December 1997 523.33
1 May 1994 883.96 1 January 1998 513.52
1 June 1994 878.55 1 February 1998 503.74
1 July 1994 872.76 1 March 1998 493.37
1 August 1994 867.19 1 April 1998 474.60
1 September 1994 861.56 1 May 1998 464.24
1 October 1994 855.55 1 June 1998 453.89
1 November 1994 849.75 1 July 1998 443.27
1 December 1994 843.60 1 August 1998 432.66
</TABLE>
80
<PAGE> 87
<TABLE>
<CAPTION>
Termination Termination Termination Termination
- ----------- ----------- ----------- -----------
Date Amount Date Amount
- ---- ------ ---- ------
<S> <C> <C> <C>
1 September 1998 421.91 1 January 2000 225.63
1 October 1998 410.91 1 February 2000 212.80
1 November 1998 399.88 1 March 2000 199.64
1 December 1998 388.61 1 April 2000 183.47
1 January 1999 377.31 1 May 2000 170.09
1 February 1999 366.07 1 June 2000 156.60
1 March 1999 354.37 1 July 2000 142.90
1 April 1999 336.72 1 August 2000 129.07
1 May 1999 324.92 1 September 2000 115.07
1 June 1999 313.07 1 October 2000 100.87
1 July 1999 300.98 1 November 2000 86.56
1 August 1999 288.83 1 December 2000 72.15
1 September 1999 276.53 1 January 2001 57.68
1 October 1999 264.00 1 February 2001 43.11
1 November 1999 251.39 1 March 2001 23.44
1 December 1999 238.55 1 April 2001 14.83
</TABLE>
Where a Termination Sum falls due on a rental payment date the rental payable
on such a date is included in the Termination Sum quoted.
81
<PAGE> 88
SCHEDULE 5
Forms of Loss Payable Clauses
(A) Hull and Machinery (Marine and War Risks)
By a Charterparty by way of Demise made the ___ day of December, 1990,
Royal Bank of Scotland (Industrial Leasing) Limited (the "Owner") has
demise chartered m.v. "Seaway Labrador" (the "Ship") to Simon-Horizon
Limited (the "Charterer") and the Charterer has pursuant to a first
priority assignment contained in such Charterparty assigned to the
Owner all of the right, title and interest of the Charterer in any and
all policies and contracts of insurance from time to time taken out or
entered into by or for the benefit of the Charterer and the Owner in
respect of the Ship.
All recoveries under this policy shall be applied as follows:
(a) all claims hereunder in respect of an actual or constructive
or compromised or arranged total loss, and all claims in
respect of a major casualty (that is to say any casualty the
claim in respect of which exceeds L.250,000 (or the
equivalent) inclusive of any deductible) shall be paid in full
to the Owner or to its order; and
(b) all other claims hereunder shall be paid in full to the
Charterer or to its order, unless and until the Owner shall
have notified insurers hereunder to the contrary, whereupon
all such claims shall be paid to the Owner or to its order.
(B) Protection and Indemnity Risks
Payment of any recovery which Royal Bank of Scotland (Industrial
Leasing) Limited of 42 St. Andrew Square, Edinburgh EH2 2YE (the
"Owner") or Simon-Horizon Limited of Horizon House, Azalea Drive,
Swanley, Kent BR8 8JR (the "Charterer") is entitled to make out of the
funds of the Association in respect of any liability, costs or
expenses incurred by the Owner or the Charterer, shall be paid to the
person to whom the liability (or alleged liability) covered by the
entry was incurred or if the liability (or alleged liability) to such
person has previously been discharged by the Owner or the Charterer,
such moneys shall be paid to the Owner or its order or, as the case
may be, the Charterer or its order in reimbursement of the moneys so
expended by it in satisfaction of such liability or alleged liability,
unless and until the Association receives notice to the contrary from
the Owner; provided that no liability whatsoever shall attach to the
Association, its Managers or their agents for failure to comply with
the later obligation until the expiry of two clear business days from
the receipt of such notice.
82
<PAGE> 89
SCHEDULE 6
List of Excluded Equipment
1 HERRINGBONE SYSTEM
64 T.I. SLEEVE GUNS
2 UMBILICAL WINCHES, MPD
2 UMBILICAL WINCHES, LOW PULL, MPD
4 SLIPRING UNITS PLUS ASSY
4 STOWING WINCHES
1 AIR CONDITIONING UNIT, INST ROOM
1 STREAMER REEL, MPD
1 LITTON STREAMER Z6010390/6010430
1 LEAD IN Z6010392
1 STREAMER CONNECTOR SET 10-303132
1 SYNTRAK DIGITISING MODULE 10-305002
1 SYNTRAK REPEATER UNIT 10-309501
1 SYNTRAK QC SYSTEM 10-308301
1 UNINTERRUPTIBLE POWER SUPPLY UNIT 1040S/25
1 UNINTERRUPTIBLE POWER SUPPLY UNIT AST 3350/380/60
UMBILICAL REEL ACCESSORIES, STRIVERS
4 HAMWORTHY COMPRESSORS 4TH565W100
1 MAGNAVOX INTEGRATED NAVIGATION SYSTEM
1 HYDROLINK SYSTEM
83
<PAGE> 90
SIGNED by )
for and on behalf of )
ROYAL BANK OF SCOTLAND ) /s/ Andrew
Robertson (INDUSTRIAL LEASING) LIMITED )
in the presence of: )
[illegible name]
Royscot House
Cheltsham
SIGNED by )
for and on behalf of )
SIMON-HORIZON LIMITED ) /s/ B.E. Timmins in
the presence of: )
Judith Kelbilt
Berwin Height
Soliciters
Adelaide House
London Bridge
London EC4
84
<PAGE> 1
EXHIBIT 10.9.11
DATED 31 MARCH 1992
ROYAL BANK OF SCOTLAND (INDUSTRIAL LEASING) LIMITED
SIMON-HORIZON LIMITED
ADDENDUM TO CHARTERPARTY
M.V. "SIMON LABRADOR"
Norton Rose
London
<PAGE> 2
THIS ADDENDUM dated 31 MARCH 1992 is supplemental to a CHARTERPARTY BY WAY OF
DEMISE in respect of m.v. "SIMON LABRADOR" (therein called m.v. "SEAWAY
LABRADOR") (the "Ship"), dated 20th December 1990 (hereafter the
"Charterparty") BETWEEN:
(1) ROYAL BANK OF SCOTLAND (INDUSTRIAL LEASING) LIMITED (the "Owner"); and
(2) SIMON-HORIZON LIMITED (the "Charterer")
WHEREAS
(1) the Charterer wishes new seismic survey equipment (the "Equipment") to
be installed on the Ship and has asked the Owner to assist in the
finance of the Equipment,
(2) the Owner and the Charterer have entered or will enter into sale and
purchase agreements relating to the Equipment whereby the Equipment
will be sold from the Charterer to the Owner,
(3) the Owner and the Charterer have agreed to enter into a master lease
and lease contracts executed pursuant thereto in respect of the
Equipment whereby the Equipment shall be leased from the Owner to the
Charterer and
(4) the Owner and the Charterer wish the Charterparty to be amended to
accommodate appropriate references to the Equipment and the
transaction documentation relating to the Equipment,
NOW, IN CONSIDERATION of the Charterer taking on lease from the Owner the
Equipment pursuant to a master lease and lease contracts executed pursuant
thereto
IT IS HEREBY AGREED that:
1 EFFECTIVE DATE
1.1 The Effective Date shall be the first date of Delivery relating to any
of the Goods ("Delivery" and "Goods" being as defined in the master
lease referred to in Recital 3 above).
2 AMENDMENTS TO THE CHARTERPARTY
2.1 The following amendments shall be made to the Charterparty with effect
from the Effective Date, references to Clauses and Schedules being
references to Clauses and Schedules of the Charterparty unless
indicated otherwise herein:
<PAGE> 3
-2-
(a) There shall be inserted in the definitions set out in Clause 1
the following:
"Goods" means any goods the subject of the Goods Contracts;
"Goods Contracts" means the Master Lease and the Goods
Guarantee;
"Goods Guarantee" means the Guarantee entered into in relation
to the Master Lease by Simon Engineering plc;
"Goods Sale Agreements" means each of or all of (as the
context allows) the agreements between the Charterer and the
Owner whereby the Owner buys and the Charterer sells any goods
which are to become Goods;
"Master Lease" means the master lease dated 31-03-92 between
the parties hereto and the lease contracts entered into
pursuant thereto;
(b) There shall be inserted after The Guarantee" in line 2 of the
definition of "Relevant Documents" in Clause 1;
", the Goods Contracts".
(c) There shall be inserted at the end of the definition of "Ship"
in Clause 1;
And "Ship" shall indeed Goods while such Goods are on board
the Ship, save that where there is reference herein to
insurance of the Ship, "Ship" shall not include Goods if the
Goods on board the Ship are insured separately from the Ship
in accordance with the terms of the Master Lease".
(d) There shall be inserted at the end of the definition of
Termination Sum" in Clause 1;
"in respect of the Ship excluding the Goods".
(e) Clause 35 shall be deleted and the following inserted in its
place:
"Upon the termination of the Charter Period and the sale of
the Ship in accordance with the foregoing provisions of this
Clause 3, the Net Sale Proceeds shall be applied by the Owner
(subject to Clause 10.4) as follows:
(a) The proportion of the Net Sale Proceeds attributable
to the Goods shall be calculated and paid to the
Owner for application in accordance with the terms of
the Master Lease; and the balance shall be applied:
<PAGE> 4
-3-
(b) Firstly, in or towards settlement of any amounts due
and owing by the Charterer to the Owner under the
Charterparty or any other Relevant Documents other
than the Goods Contracts (including any interest due
in respect thereof);
(c) Secondly, in settlement of all sums due to the Owner
under the Goods Contracts insofar as such sums have
not been satisfied by application of the sums
referred to in Clause 3.5(a);
(d) Thirdly, if the Charterer shall on or before the date
of application of the Net Sale Proceeds by the Owner
have paid the Termination Sum, or a part thereof, in
accordance with Clauses 3.3 or 3.4, in or towards
refunding by way of rebate of charterhire to the
Charterer the amount of the Termination Sum or part
thereof so paid by the Charterer; and
(e) Fourthly, an amount equal to two per cent. (2%) of
the Net Sale Proceeds shall be retained by the Owner
and any balance remaining shall be paid to the
Charterer by way of rebate of charterhire and/or
payment of sales commission or otherwise as
appropriate."
(f) There shall be inserted after "BFE" in line 5 of
Clause 63;
"or the Goods".
(g) A new Clause 7.7 shall be inserted after Clause 7.6:
"7.7 Notwithstanding any other Clause of this
Charterparty, payments of charterhire
pursuant to this Charterparty shall be in
respect of the Ship excluding the Goods."
(h) There shall be inserted after "Purchase Agreement" at
the end of line 2 of Clause 9.1;
"and payment for the Goods".
(i) There shall be inserted after "Conversion and Supply
Agreement" in line 7 of Clause 9.5;
"and payment for the Goods".
(j) There shall be inserted after "Charterparty" in line
8 of Clause 9.6;
"the termination of the leasing of the Goods under
Clause 3.03 of the Master Lease".
<PAGE> 5
-4-
(k) There shall be inserted after "Technical Records" in
line 7 of Clause 20.1;
"and the Goods"
and there shall be inserted after "Charterparty" in
line 10 of that Clause;
"or the Master Lease".
(l) Clause 21.5 shall be deleted and the following inserted in its
place:
"All moneys received by the Owner as loss payee under the
Insurances from insurers or others in respect of a Total Loss
shall be applied by the Owner subject to Clause 10.4 as
follows:
(a) the proportion attributable to the Goods shall be
paid to the Owner for application in accordance with
the terms of the Master Lease; and the balance shall
be applied:
(b) Firstly, in or towards settlement of any amounts due
and owing by the Charterer to the Owner under this
Charterparty or any of the other Relevant Documents
other than the Goods Contracts;
(c) Secondly, in settlement of all sums due to the Owner
under the Goods Contracts insofar as such sums have
not been satisfied by application of the sums
referred to in Clause 21.5(a);
(d) Thirdly, if the Charterer shall on or before the date
of application of such moneys have paid the
Termination Sum, or a part thereof, in accordance
with Clause 21.2(a) in or towards refunding by way of
rebate of hire or otherwise as appropriate to the
Charterer the amount of the Termination Sum or part
thereof so paid by the Charterer; and
(e) Fourthly, an amount equal to two per cent. (2%) of
such moneys received by the Owner as loss payee under
the Insurances shall be retained by the Owner, and
the balance shall be paid to the Charterer or to its
order by way of rebate of charterhire or otherwise as
appropriate."
(m) Clause 25.2 shall be deleted and the following shall be
inserted in its place:
"Without prejudice to the obligation of the Charterer to make
the payments referred to in Clause 25.1, upon any such
termination as is referred to in Clause 25.1 and provided that
the Owner shall not be prevented from so doing for any reason
whatsoever, the Owner shall endeavour to sell the Ship as soon
as
<PAGE> 6
-5-
practicable. The Net Sale Proceeds shall be applied by the Owner
subject to Clause 10.4 as follows:
(a) the proportion of the Net Sale Proceeds attributable
to the Goods shall be calculated and paid to the
Owner for application in accordance with the terms of
the Master Lease; and the balance shall be applied:
(b) Firstly, in or towards settlement of any amounts due
and owing by the Charterer to the Owner under this
Charterparty or any of the other Relevant Documents
other than the Goods Contracts (including any
interest due in respect thereof);
(c) Secondly, in settlement of all sums due to the Owner
under the Goods Contracts insofar as such sums have
not been satisfied by application of the sums
referred to in Clause 25.2(a);
(d) Thirdly, if the Charterer shall on or before the date
of application of the Net Sale Proceeds by the Owner
have paid the Termination Sum, or a part thereof, in
accordance with Clause 25.1, in or towards refunding
by way of rebate of charterhire or otherwise as
appropriate to the Charterer the amount of the
Termination Sum or part thereof so paid by the
Charterer; and
(e) Fourthly, an amount equal to two per cent. (2%) of
the Net Sale Proceeds shall be retained by the Owner
and any balance shall be paid to any Relevant Party
by way of rebate of charterhire or otherwise as
appropriated
(n) Clause 1 of Schedule 3 shall become Clause 1.1 of Schedule 3
and a new Clause 1.2 as follows shall be inserted at the end
of Clause 1.1 of Schedule 3:
"1.2 For the purposes of this Schedule 3, references to
the Ship shall exclude references to the Goods."
(o) The reference to paragraphs 3(i)-(xx) (inclusive) of Schedule
3 contained in line 2 of the definition of Variable
Assumption. in Clause 1 of Schedule 3, shall be amended to
refer to paragraphs 3(i)-(xxA) (inclusive) of Schedule 3.
(p) There shall be inserted between paragraphs (xx) and (xxi) of
Cause 3 of Schedule 3 the following:
"(xxA) that the Inland Revenue will not treat the respective
disposal values of the Ship (excluding the Goods) and
the Goods as being any amount different from that
assumed by the Owner; and"
<PAGE> 7
-6-
(q) Clause 1 of Schedule 4 shall become Clause 1.1 of Schedule 4
and a new Clause 1.2 as follows shall be inserted at the end
of Clause 1.1 of Schedule 6:
"1.2 For the purposes of this Schedule 4, references to
the Ship shall exclude references to the Goods."
3 CONTINUING EFFECT
3.1 The Owner and the Charterer agree that subject to the amendments set
out in Clause 1 hereof the Charterparty shall continue with full force
and effect.
4 LAW AND JURISDICTION
4.1 This Addendum shall be governed by and construed in accordance with
the laws of England and the Courts of England shall have non-exclusive
jurisdiction over matters arising in relation to this Addendum.
IN WITNESS whereof the parties hereto have entered into this Addendum the day
and year first above written
SIGNED by )
for and on behalf of )
ROYAL BANK OF SCOTLAND ) /s/ Andrew Robertson
(INDUSTRIAL LEASING) LIMITED )
in the presence of )
SIGNED by )
for and on behalf of ) /s/ B.E. Timmins
SIMON-HORIZON LIMITED )
in the presence of )
<PAGE> 1
EXHIBIT 10.9.12
DATED 18th August 1994
- --------------------------------------------------------------------------------
(1) SIMON-HORIZON LIMITED
(2) ROYAL BANK OF SCOTLAND
(INDUSTRIAL LEASING) LIMITED
(3) HORIZON EXPLORATION LIMITED
and
(4) SIMON ENGINEERING PLC
- --------------------------------------------------------------------------------
QUADRIPARTITE AGREEMENT
in respect of the chartering of
M.V. "Simon Labrador" and the
leasing and sub-leasing of
certain seismic equipment
- --------------------------------------------------------------------------------
<PAGE> 2
1.
THIS AGREEMENT is made the 18th day of August 1994 BETWEEN:
1. SIMON-HORIZON LIMITED registered number 467924 whose registered office
is at Horizon House, Azalea Drive, Swanley, Kent BR8 8JR ("Simon");
2. ROYAL BANK OF SCOTLAND (INDUSTRIAL LEASING) LIMITED whose registered
office is at 42 St. Andrew Square, Edinburgh EH2 2YE, Scotland (the
"Owner");
3. HORIZON EXPLORATION LIMITED whose registered office is at 6 Pembroke
Road, Sevenoaks, Kent TN13 1XR ("HEL"); and
4. SIMON ENGINEERING PLC whose registered office is at Simon House, Bird
Hall Lane, Stockport, Cheshire SK3 ORJ (the "Guarantor").
WHEREAS:
(A) The Owner is the sole owner of all the shares in the seismic survey
vessel M.V. "Simon Labrador" (ex "Seaway Labrador") which is
registered in the name of the Owner under the Bahamian flag at the
port of Nassau Commonwealth of the Bahamas with official number 715224
(the "Vessel") subject to and with the benefit of a charterparty by
way of demise dated 20th December 1990 (together with an addendum
thereto dated 31st March 1992 called the "Head Charter") made between
(1) the Owner and (2) Simon under which the Owner has chartered the
Vessel to Simon for a primary period expiring on 1st April 2001 on the
terms and conditions therein contained.
(B) By a master lease dated 31st March 1992 (the "Head Master Lease") made
between (1) the Owner and (2) Simon and lease contracts bearing
numbers RS920/0017 and RS920/0022 also dated 31st March 1992 (the
"Head Leasing Contracts") made between (1) the Owner and (2) Simon,
the Owner leased to Simon certain assets and equipment the subject of
the Head Leasing Contracts (the "Goods") for use on board the Vessel
on the terms and conditions therein contained.
(C) Simon has requested the consent of the Owner pursuant to clause 12 of
the Head Charter to the sub-chartering of the Vessel to HEL and
pursuant to clause 8.01 of the Head Master Lease to the sub-leasing of
the Goods. HEL has also requested that it be appointed agent for the
sale of the Vessel and the Goods in the place of Simon which the Owner
and Simon have agreed to upon the terms hereof.
NOW IT IS HEREBY AGREED as follows:
1. Definitions
1.1 Words and expressions used herein shall have the same meanings as in
the Head Charter unless defined herein to the contrary or the context
otherwise requires. In addition the following expressions shall have
the following meanings:
"Cure Period" means, in respect of a Potential Termination
Event, any period of grace given by the Owner
to HEL in a Default Notice for the remedy of
such Potential Termination Event which period
shall be not less than the relevant period of
grace allowed by clause 24.2 of the Head
Charter and clause 14.02 of the Head Master
Lease for its remedy before the Default
constitutes a Termination Event, and in
respect of an Immediate Termination Event
means five (5) Banking Days (except in the
case of a Default in compliance with any
obligation to insure in which event the Cure
Period shall be one (1) Banking Day)
<PAGE> 3
2.
"Default" means an event or circumstance which
constitutes or which with the giving of
notice or the passage of time would
constitute a Termination Event
"Default Notice" means a notice from the Owner to Simon and
HEL referred to in clause 4.1 hereof and in
the form or substantially in the form of
Appendix 1 hereto
"Financial means any of the events or Termination Event"
circumstances described in sub-clauses (g),
(h), (i), (j), (k), (l), (m) and (n) of
clause 24 of the Head Charter and sub-clauses
(iii), (iv), (v), (vi) and (vii) of clause
14.02 of the Head Master Lease
"Head Lease Documents" means the Head Charter, the Head Master Lease
and the Head Leasing Contracts as amended
hereby and as the same may be further amended
from time to time
"HEL Guarantee" means a joint and several guarantee and
indemnity to be given by the HEL Guarantors
in favour of the Owner of the obligations of
HEL to the Owner pursuant to the Substituted
Leases in form and substance satisfactory to
the Owner
"HEL Guarantors" means Horizon Seismic Inc., and Exploration
Holdings Limited
"HEL Termination Event" means any of the events or circumstances more
particularly described in clause 24 of the
Sub-Demise Charter or clause 14 of the
Sub-Master Lease
"Immediate means an event or circumstance (other than a
Financial Termination Event" Termination
Event) which may be relied upon by the Owner
immediately upon its occurrence as
constituting a Termination Event
"Potential means an event or circumstance which upon the
expiry of Termination Event" any stated
period of grace would constitute a
Termination Event
"Security Assignment" means a security assignment of even date
herewith by Simon in favour of the Owner
under the terms of which Simon has assigned
its right, title and interest in and to the
Sub-Lease Documents and insurances relating
to the Ship and the Goods
"Simon Guarantees" means the guarantee dated 20th December 1990
given by the Guarantor in favour of the Owner
of Simon's obligations (inter alia) under the
Head Charter and the guarantee dated 31st
March 1992 given by the Guarantor in favour
of the Owner of Simon's obligations under the
Head Master Lease and the Head Leasing
Contracts;
"Sub-Demise Charter" means a sub-charter of the Ship by way of
demise between Simon and HEL dated 15th July
1994
"Sub-Lease Documents" means the Sub-Demise Charter, the Sub-Master
Lease and the Sub-Leasing Contracts
"Sub-Leasing Contracts" means sub-leases of the Goods between Simon
and HEL dated 15th July 1994 pursuant to the
Sub-Master Lease
<PAGE> 4
3.
"Sub-Master Lease" means a master lease of the Goods
between Simon and HEL dated 15th
July 1994
"Substitute Leases" means a demise charter of the Ship
and a lease of the Goods by the
Owner to HEL pursuant to clause 4.3
hereof;
"Termination Event" means any of the events or
circumstances described in clause 24
of the Head Charter or clause 14 of
the Head Master Lease
"Termination Sum" means at any relevant time the
amount calculated in accordance with
schedule 4 of the Head Charter (as
the same may have been or may be
substituted or amended from time to
time) in respect of the Ship and the
amount calculated in accordance with
clause 14.03 of the Head Master
Lease in respect of the Goods save
that in clause 6 hereof all
references to the Termination Sum
shall have the same meaning as in
the Head Charter.
2. Consent of Owner
The Owner hereby consents to the sub-demise chartering of the Ship by
Simon to HEL and the sub-leasing of the Goods by Simon to HEL in
accordance with the terms of the Sub-Lease Documents, such consent
being conditional upon receipt by the Owner of:
(i) the Security Assignment duly executed by Simon and all notices
consents and acknowledgements relating thereto;
(ii) the execution of this Agreement by Simon, HEL and the
Guarantor;
(iii) resolutions of the board of directors of Simon HEL and the
Guarantor approving the execution of this Agreement and of
Simon approving the execution of the Security Assignment;
(iv) evidence that all consents that may be required by Simon
pursuant to any other agreement to which Simon is a party have
been obtained; and
(v) reimbursement for all costs (including legal costs) and any
value added tax payable thereon incurred by the Owner in
connection with the granting of such consent and the
preparation and negotiation of all documents relating thereto
on a full and unqualified indemnity basis.
3. Subordination
HEL hereby acknowledges and agrees that its rights under the Sub-Lease
Documents are in all respects subordinate to the Head Lease Documents
and the rights of the Owner thereunder and that the exercise by the
Owner of any of its rights under any of the Head Lease Documents shall
not in any way be prejudiced or limited by any rights of HEL under the
Sub-Lease Documents.
4. Right to cure and substitute charterparty
4.1 If either an Immediate Termination Event or a Potential Termination
Event occurs under any of the Head Lease Documents, the Owner shall
give written notice thereof to both Simon and HEL in the form of
Appendix 1 hereto (a "Default Notice").
4.2 If either:
<PAGE> 5
4.
(a) an Immediate Termination Event or a Potential Termination
Event has not been cured within the Cure Period prescribed in
the Default Notice issued pursuant to clause 4.1; or
(b) a Financial Termination Event occurs,
the Owner may issue to Simon, with a copy to HEL, a notice in the form
of Appendix 2 hereto (a "Termination Notice") accepting such Default
as a repudiation of the Head Lease Documents pursuant to clause 25.1
of the Head Charter and clause 14.03(a) of the Head Master Lease.
Upon the receipt by Simon of a Termination Notice the following shall
occur:
(i) Simon's right to possess and operate the Ship and to possess
the Goods shall terminate and Simon shall pay the Termination
Sum to the Owner; and
(ii) HEL's right to possess and operate the Ship and to possess the
Goods under the Sub-Lease Documents shall terminate but
without prejudice to any rights and liabilities of the parties
thereto accrued thereunder,
and the Termination Sum shall be paid by Simon or the Guarantor to the
Owner within three (3) Banking Days of the date of the Termination
Notice.
4.3 If any Termination Sum payable by Simon under the Head Lease Documents
is received by the Owner from Simon or the Guarantor within the time
specified in clause 4.2 hereof the rights of the Owner and Simon shall
be as stated in the Head Lease Documents subject only to clause 5
hereof and HEL shall have no right to a charter of the Ship or a lease
of the Goods.
4.4 If the Termination Sum is not received by the Owner within the time
specified in clause 4.2 the Owner shall notify HEL. HEL may, within
two (2) Banking Days of notification from the Owner that the
Termination Sum has not been received, notify the Owner by a notice in
the form of Appendix 3 hereto (an "Option Notice") that it wishes to
enter into a new charter of the Ship and a new lease of the Goods from
the Owner ("Substitute Leases") upon the same terms mutatis mutandis
as the Head Lease Documents and for the period remaining under the
Head Lease Documents. If no Option Notice is received by the Owner
within such period the provisions of clause 25.2 of the Head Charter
and clause 14.03(c) of the Head Master Lease shall apply and no sales
agency shall arise pursuant to clause 5 hereof or any other document.
4.5 Upon receipt of an Option Notice and provided no HEL Termination Event
shall have occurred the Owner and HEL shall enter into Substitute
Leases within not more than ten (10) Banking Days of the date of the
Option Notice provided that the following conditions have been
complied with to the Owner's satisfaction (which conditions may, if
the Owner so agrees, be conditions subsequent to the Substitute
Leases):
(a) the HEL Guarantee shall have been executed by the HEL
Guarantors and delivered to the Owner;
(b) HEL shall have remedied all outstanding Defaults pursuant to
the Head Lease Documents (other than Financial Termination
Events) and paid or discharged all liabilities owing to the
Owner thereunder (other than any liability to pay any
Termination Sum thereunder) and any liabilities arising in
respect of the period between the date of the Termination
Notice and the date of the Substitute Leases had a Termination
Notice not been issued; and
(c) the Owner shall have received all corporate resolutions, legal
opinions and other confirmations that it may require of HEL or
otherwise in connection with the Substitute Leases,
and all costs and expenses including legal costs incurred by the Owner
in connection with the Substitute Leases and the security therefore
will be for the account of HEL who shall indemnify the Owner in
respect
<PAGE> 6
5.
thereof upon the Owner's first written demand.
4.6 If HEL shall not enter into Substitute Leases on the terms specified
in clause 4.4 or shall fail to satisfy any of the conditions specified
in sub-clauses 4.5(a), 4.5(b) or 4.5(c) above within such period of
ten (10) Banking Days of the date of the Option Notice (or such longer
period as the Owner may have agreed in its sole discretion) then the
terms of clauses 4.4 and 4.5 shall cease to apply or be of any further
effect. In such circumstances the terms of sub-clauses (i) and (ii) of
clause 4.2 above shall continue to apply and the Owner shall be
entitled to enforce its rights under the Head Lease Documents (on the
basis that a Termination Event has occurred and has been accepted as a
repudiation of the Head Lease Documents by the Owner) without further
reference to or obligation on HEL but without prejudice to the rights
and obligations of Simon and HEL as between themselves pursuant to the
Sub-Lease Documents.
4.7 It is expressly agreed between the parties hereto that nothing
contained in this clause shall prejudice any of the rights of the
Owner against Simon under the Head Lease Documents and against the
Guarantor pursuant to the Simon Guarantees and shall not discharge
Simon or the Guarantor from any liability arising pursuant thereto or
affect the right of the Owner to make any claim against Simon or the
Guarantor pursuant thereto.
4.8 In the event that a Termination Sum is received by the Owner from
Simon or the Guarantor after the Substitute Leases have been entered
into, HEL's right to possession of the Ship and the Goods pursuant to
the Substitute Leases shall cease and the provisions of clause 5.1
hereof shall apply.
5. Appointment of HEL as agent for sale of the Ship and the Goods
5.1 In the event that Simon's right to possession of the Ship and the
Goods terminates either:
(i) by effluxion of time pursuant to clause 3.2 of the Head
Charter or clause 4(a) of the Head Lease Contracts;
(ii) by a voluntary termination by Simon pursuant to clause 3.3 of
the Head Charter or clause 3.03 of the Head Master Lease; or
(iii) by the occurrence of a Termination Event pursuant to clause 24
of the Head Charter or clause 14 of the Head Master Lease,
and the Owner has received all sums payable pursuant to the Head Lease
Documents as a consequence thereof including any Termination Sum, the
Ship and/or the Goods shall be sold by the Owner in accordance with
the terms of the Head Lease Documents. For the purpose of any such
sale and provided that no HEL Termination Event has occurred the Owner
hereby appoints HEL as its agent (in substitution for Simon) on the
following terms:
(a) HEL will endeavor to arrange the sale of the Ship and the
Goods for a cash consideration on the best terms (including
price) reasonably obtainable on the open market provided that
neither the Ship nor the Goods shall be sold to:
(i) Simon or any person or persons connected with Simon
(as the term "connected persons" is used in section
839 ICTA) or any person acting in trust for, as
nominee of, as agent or otherwise as representative
of or on behalf of Simon; or
(ii) HEL or any person connected with HEL or any person
acting in trust for, as nominee of, as agent or
otherwise as representative of HEL unless the Owner
has received prior written confirmation from the
Inland Revenue that any such right to purchase the
Ship or
<PAGE> 7
6.
the Goods would not preclude writing down allowances
being made to the Owner under section 24 Capital
Allowances Act 1994. Any such sale shall be on arms
length terms;
(b) HEL's authority will not extend to concluding a contract for
the sale of the Ship or the Goods for which the Owner's
specific written authority will be required;
(c) the Ship and the Goods shall be offered for sale and for
delivery on, or as soon as practicable after, such termination
or expiry of the Charter Period or the Lease Period as the
case may be and any contract for their sale shall include
terms to the following effect:
(i) that all conditions, representations or warranties,
expressed or implied by statute or otherwise, whether
as to the state or quality of the Ship or the Goods
or as to description, fitness for purpose,
merchantable quality or otherwise, are, so far as is
permitted by law, expressly excluded as between the
Owner and the buyer save in respect of the warranty
that the Owner shall be passing such title to the
Ship and the Goods as the Owner received from Simon
free from any Encumbrances created by the Owner; and
(ii) that the sale is conditional upon the Owner first
recovering possession of the Ship and/or the Goods;
Provided always that nothing in this clause 5.2 shall prevent
HEL including any other representations and warranties to be
given directly by HEL to a buyer in connection with such sale.
5.2 On a sale of the Ship and/or the Goods HEL shall procure that the sale
proceeds are paid directly to the Owner. If the Owner shall have
received the sale proceeds, the Net Sale Proceeds shall be applied by
the Owner in accordance with the terms of the Head Charter as amended
by clause 6 hereof but subject to clause 5.3 hereof.
5.3 Provided that no HEL Termination Event has occurred Simon directs the
Owner that all rebates of Charterhire payable to Simon pursuant to
clauses 3.5, 21.5 and 25.2 of the Head Charter as amended by clause 6
hereof (other than in respect of refunds of the Termination Sum or
such part thereof as may have been received by the Owner) shall be
paid to HEL it being Agreed between the Owner and Simon that any
payment made by the Owner to HEL pursuant to this clause shall be in
satisfaction of the Owner's obligations to Simon under clauses 3.5,
21.5 and 25.2 of the Head Charter as amended by clause 6 hereof. All
rebates of charterhire in respect of refunds of the Termination Sum or
part thereof shall be paid to Simon or the Guarantor as the case may
be depending upon which of them made payment of the same to the Owner.
5.4 The appointment of HEL as agent shall determine upon the earlier of
(i) the breach by HEL of any of its obligations under this clause 5
and notice hereof to HEL from the Owner (ii) the occurrence of an HEL
Termination Event or (iii) the date falling 6 months from the
termination or expiry of the Charter Period and the Lease Period (the
"Agency Termination Date").
5.5 If the Ship has not been sold by the Agency Termination Date it shall
be redelivered to the Owner free from all Encumbrances (other than
Permitted Encumbrances) at a safe port as may be mutually agreed or,
in the absence of such agreement, at such safe port in the United
Kingdom as the Owner may require. HEL shall at its expense before
such redelivery make all such repairs and do all such work as may be
necessary so that the Ship at the date of redelivery shall have
installed the machinery and other equipment installed on the Ship
after redelivery from the yard pursuant to the MWB Conversion Contract
or replacements for the same in accordance with the terms of the Head
Charter, shall maintain the classification unexpired and shall be in
as good structure state and condition as at delivery of the Ship by
the Owner to HEL under the Head Charter, fair, wear and tear and
changes and alterations properly made as permitted under the Head
Charter
<PAGE> 8
7.
excepted.
5.6 If the Goods have not been sold by the Agency Termination Date then
the Owner will direct HEL to deliver the Goods to a place specified by
the Owner with all removal, transport, necessary insurance and storage
costs being payable by HEL. HEL will ensure that the Goods when so
delivered shall be complete and in reasonable working condition (fair
wear and tear excepted). If the Owner has to bear any expenses in
carrying out the removal and storage of the Goods or remedying any
defect in them then the Owner shall be entitled to interest at the
Interest Rate from the time the Owner incurs such expenses until the
same are reimbursed to the Owner by HEL.
5.7 HEL agrees to indemnify and keep indemnified the Owner against any
liability, claim, demand, proceeding or expense which may result from
any claim (whether justified or not) being made against the Owner in
respect of or concerning the Ship or the Goods by a purchaser of the
Ship or the Goods or any third party following any sale by HEL as
agent.
5.8 If the Owner and HEL enter into Substitute Leases in accordance with
the terms of clause 4.5 above then HEL shall be the agent of the Owner
for the purpose of effecting a sale of the Ship and the Goods in the
circumstances and on the conditions more particularly specified in the
Substitute Leases.
6. Application of monies
6.1 Clause 3.5 of the Head Charter shall be deleted and the following
shall be inserted in its place:
"Upon the termination of the Charter Period and the sale of the Ship
in accordance with the foregoing provisions of this clause 3 the Net
Sale Proceeds shall be applied by the Owner (subject to clause 10.4)
as follows:
(a) The proportion of the Net Sale Proceeds attributable to the
Goods shall be calculated and paid to the Owner for
application in accordance with the terms of the Master Lease:
and the balance shall be applied;
(b) Firstly, in or towards settlement of any amounts due and owing
by the Charterer to the Owner under the Charterparty or any
other Relevant Documents other than the Goods Contracts
(including any interest due in respect thereof);
(c) Secondly, in settlement of all sums due to the Owner under the
Goods Contracts insofar as such sums have not been satisfied
by application of the sums referred to in clause 3.5(a);
(d) Thirdly, if the Owner shall on or before the date of
application of the Net Sale Proceeds by the Owner have
received the Termination Sum, or a part thereof, in accordance
with clauses 3.3 or 3.4, in or towards refunding by way of
rebate of charterhire to the Charterer an amount equal to the
Termination Sum or such part thereof (provided that the
balance of the Net Sale Proceeds is sufficient);
(e) Fourthly an amount equal to two per cent (2%) of the Net Sale
Proceeds (prior to the deductions Firstly through Thirdly
above) shall be retained by the Owner and any balance of the
Net Sale Proceeds remaining shall be paid to the Charterer by
way of rebate of charterhire and/or payment of sales
commission.
6.2 Clause 21.5 of the Head Charter shall be deleted and the following
inserted in its place:
"All moneys received by the Owner as loss payee under the insurances
from insurers or others in respect
<PAGE> 9
8.
of a Total Loss shall be applied by the Owner (subject to clause 10.4)
as Follows:
(a) the proportion attributable to the Goods shall be paid to the
Owner for application in accordance with the terms of the
Master Lease: and the balance shall be applied;
(b) Firstly, in or towards settlement of any amounts due and owing
by the Charterer to the Owner under the Charterparty or any of
the other Relevant Documents other than the Goods Contracts;
(c) Secondly, in settlement of all sums due to the Owner under the
Goods Contracts insofar as such sums have not been satisfied
by application of the sums referred to in clause 21.5(a);
(d) Thirdly, if the Owner shall on or before the date of
application of such moneys have received the Termination Sum,
or a part thereof, in accordance with clause 21.2(a), in or
towards refunding by way of rebate of hire or otherwise as
appropriate to the Charterer an amount equal to the
Termination Sum or such part thereof (provided that the
balance of the monies received by the Owner as loss payee is
sufficient);
(e) Fourthly, an amount equal to two percent (2%) of the monies
received by the Owner as loss payee (prior to the deductions
Firstly through Thirdly above) shall be retained by the Owner
and any balance of the monies received by the Owner as loss
payee remaining shall be paid to the Charterer by way of
rebate of charterhire.
6.3 Clause 25.2 of the Head Charter shall be deleted and the following
inserted in its place:
"Without prejudice to the obligation of the Charterer to make the
payments referred to in clause 25.1 upon any such termination as is
referred to in clause 25.1 and provided that the Owner shall not be
prevented from so doing for any reason whatsoever, the Owner shall
endeavor to sell the Ship as soon as practicable. The Net Sale
Proceeds shall be applied by the Owner subject to clause 10.4 as
follows:
(a) The proportion of the Net Sale Proceeds attributable to the
Goods shall be calculated and paid to the Owner for
application in accordance with the terms of the Master Lease:
and the balance shall be applied;
(b) Firstly, in or towards settlement of any amounts due and owing
by the Charterer to the Owner under this Charterparty or any
of the other Relevant Documents other than the Goods Contracts
(including any interest due in respect thereof);
(c) Secondly, in settlement of all sums due to the Owner under the
Goods Contracts insofar as such sums have not been satisfied
by application of the sums referred to in clause 25.2(a);
(d) Thirdly, if the Owner shall on or before the date of
application of the Net Sale Proceeds by the Owner have
received the Termination Sum, or a part thereof, in accordance
with clauses 25.1, in or towards refunding by way of rebate of
charterhire or otherwise as appropriate to the Charterer an
amount equal to the Termination Sum or such part thereof so
received by the Owner (provided that the balance of the Net
Sale Proceeds is sufficient);
(e) Fourthly, an amount equal to two per cent (2%) of the Net Sale
Proceeds (prior to the deductions Firstly through Thirdly
above) shall be retained by the Owner and any balance of the
Net Sale Proceeds remaining shall be paid to the Charterer by
way of rebate of charterhire and/or payment of sales
commission.
7. Clause paramount
<PAGE> 10
9.
In the event that there is any conflict between anything contained in
this Agreement and the terms of the Head Lease Documents the terms of
this Agreement shall prevail.
8. Non-derogation of rights
Nothing contained in this Agreement or in any of the Sub-Charter
Documents shall detract from or reduce or limit in any way from
Simon's obligations and liabilities to the Owner pursuant to the Head
Lease Documentation and the Simon Guarantees shall continue in full
force and effect.
9. Governing Law
This agreement shall be governed by and construed in accordance with
English law.
<PAGE> 11
10.
APPENDIX 1
[Royal Bank of Scotland (Industrial Leasing) Limited letterheading]
To: Simon-Horizon Limited
Horizon House
Azalea Drive
Swanley
Kent BR8 8JR
and to:
Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent TN13 1XR
Date:
Dear Sirs
CHARTER OF M.V. "SIMON LABRADOR" DATED 20TH DECEMBER 1990 BETWEEN (1) ROYAL
BANK OF SCOTLAND (INDUSTRIAL LEASING) LIMITED ("RBL") AND (2) SIMON-HORIZON
LIMITED ("SIMON") (THE "HEAD CHARTER") LEASE OF CERTAIN SEISMIC EQUIPMENT (THE
"GOODS") DATED 31ST MARCH 1992 BETWEEN (1) RBL AND (2) SIMON (THE "HEAD MASTER
LEASE") AND LEASE CONTRACTS BEARING NUMBERS RS290/0017 AND RS920/0022 DATED
31ST MARCH 1992 BETWEEN (1) RBL AND (2) SIMON (THE "HEAD LEASING CONTRACTS")
QUADRIPARTITE AGREEMENT DATED [ ] BETWEEN (1) RBL (2) SIMON AND (3)
HORIZON EXPLORATION LIMITED ("HEL") (THE "AGREEMENT")
Words and expressions used herein shall have the same meanings as in the
Agreement.
We refer to terms of clause 4.1 of the Agreement and hereby give you notice
that [a Potential] [an Immediate] Termination Event has occurred under the Head
Charter, namely [specify default] (the "Default").
If such Default is cured by HEL within [specify Cure Period] days of the date
hereof we shall not issue Simon with a Termination Notice pursuant to clause
4.2 of the Agreement in respect of such Default but without prejudice to our
right to do so in respect of any other default or in respect of such Default
should it reoccur or not be cured to our satisfaction.
Yours faithfully
.................................
For and on behalf of
Royal Bank of Scotland
(Industrial Leasing) Limited
<PAGE> 12
11.
APPENDIX 2
[Royal Bank of Scotland (Industrial Leasing) Limited letterheading]
To: Simon-Horizon Limited
Horizon House
Azalea Drive
Swanley
Kent BR8 8JR
and to:
Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent TN13 1XR
Date:
Dear Sirs
CHARTER OF M.V. "SIMON LABRADOR" DATED 20TH DECEMBER 1990 BETWEEN (1) ROYAL
BANK OF SCOTLAND (INDUSTRIAL LEASING) LIMITED ("RBL") AND (2) SIMON-HORIZON
LIMITED ("SIMON") (THE "HEAD CHARTER") LEASE OF CERTAIN SEISMIC EQUIPMENT (THE
"GOODS") DATED 31ST MARCH 1992 BETWEEN (1) RBL AND (2) SIMON (THE "HEAD MASTER
LEASE") AND LEASE CONTRACTS BEARING NUMBERS RS290/0017 AND RS920/0022 DATED
31ST MARCH 1992 BETWEEN (1) RBL AND (2) SIMON (THE "HEAD LEASING CONTRACTS")
QUADRIPARTITE AGREEMENT DATED [ ] BETWEEN (1) RBL (2) SIMON AND (3)
HORIZON EXPLORATION LIMITED ("HEL") (THE "AGREEMENT")
Words and expressions used herein shall have the same meanings as in the
Agreement.
* [We refer to the Default Notice dated [ ] and hereby give
you notice that the Default referred to therein has not been remedied to our
satisfaction within the Cure Period stated in the said Default Notice].
* [It has come to our attention that a Financial Termination Event has
occurred pursuant to the Head Charter namely [specify].].
As a consequence your right to possession of the Ship and the Goods are hereby
terminated.
We hereby require that there be paid to the account specified below within 3
Banking Days hereof the sum of [ ] pursuant to clause 25 of the Head Charter
and the sum of [ ] pursuant to clause 14.03 of the Head Master
Lease. We reserve our rights to require payment of any other sums that may be
payable to us pursuant to the terms of the Head Lease Documents.
Payment should be made to the following account:
<PAGE> 13
12.
Account name: Royal Bank of Scotland (Industrial Leasing) Limited
Account number: 12176088
Bank: Royal Bank of Scotland PLC
45 The Promenade
Cheltenham
Gloucestershire
GL50 1PY
Sort Code: 16-16-13
Ref: "Simon Labrador"
Yours faithfully
- ---------------------------------------------------
For and on behalf of
Royal Bank of Scotland (Industrial Leasing) Limited
* Delete as appropriate
<PAGE> 14
13.
APPENDIX 3
[Horizon Exploration Limited letterheading]
To: Royal Bank of Scotland (Industrial Leasing) Limited
45 The Promenade
Cheltenham
Gloucestershire
GL50 1PY
Date: 19
Dear Sirs
QUADRIPARTITE AGREEMENT DATED [ ] BETWEEN (1) ROYAL BANK OF SCOTLAND
(INDUSTRIAL LEASING) LIMITED ("RBL") (2) SIMON HORIZON LIMITED ("SIMON") (3)
HORIZON EXPLORATION LIMITED ("HEL") AND (4) SIMON ENGINEERING PLC (THE
"GUARANTOR") (THE "AGREEMENT")
Words and expressions used herein shall have the same meanings as in the
Agreement.
We refer to the Termination Notice dated [ ] and hereby confirm
that we wish to enter into a demise charter of the Ship and a lease of the
Goods with you (the "Substitute Leases") on the same terms, mutatis mutandis,
as the Head Lease Documents.
In consideration of your entering into Substitute Leases with us we confirm
that we shall within 10 Banking Days from the date hereof
(1) deliver to you an executed guarantee of our obligations thereunder
from Horizon Seismic Inc and Exploration Holdings Limited together
with appropriate board resolutions.
(2) remedy all outstanding Defaults pursuant to the Head Lease Documents
other than Financial Termination Events.
(3) pay and discharge all liabilities owing to you under the Head Lease
Documents as at the date of the Substitute Leases (other than the
liability to pay the Termination Sum) but including any liabilities in
respect of the period between the date of the Termination Notice and
the commencement of the Substitute Leases for which Simon would have
been liable had the Termination Notice not been issued.
(4) deliver to you all corporate resolutions legal opinions and other
confirmations that you may require in connection with the Substitute
Leases.
and shall indemnify you in respect of all costs and expenses including legal
costs incurred by you in connection with the Substitute Leases and the security
therefor.
Yours faithfully
- ---------------------------
For and on behalf of
Horizon Exploration Limited
<PAGE> 15
14.
IN WITNESS whereof the parties have executed this instrument as a deed and have
delivered it upon dating it.
Signed as a deed by ROYAL BANK )
OF SCOTLAND (INDUSTRIAL LEASING) )
LIMITED acting by , ) /s/ [illegible signature]
a director and , ) Director
a director/its secretary )
/s/ [illegible signature]
Director
Signed as a deed by SIMON-HORIZON )
LIMITED acting by John Greener, )
its duly authorised attorney ) /s/ John Greener
under a power of attorney dated ) Simon-Horizon Limited
August 1994 in the ) by its duly authorised
presence of: ) attorney John Greener
Signature of witness: /s/ M.A. Ferrett
Name: M.A. Ferrett
Address: 10B Kingswood Road, Shortlands
Bramley, Kent BR2 ONJ
Occupation: Director
Signed as a deed by SIMON )
ENGINEERING PLC acting by )
, its duly authorised ) /s/ [illegible signature]
attorney under a power of ) Simon Engineering Plc
attorney dated August 1994 ) by its duly authorised
in the presence of: ) attorney
Signature of witness: /s/ Richard Carr
Name: Richard Carr
Address: 46 Sutton Road
London N10 1HE
Occupation: Company Secretary
<PAGE> 16
15.
Signed as a deed by HORIZON )
EXPLORATION LIMITED acting by ) -----------------------------
, a director and ) Director
, a director/ its )
secretary )
-----------------------------
Director/Secretary
<PAGE> 1
EXHIBIT 10.9.13
Dated 15th July, 1994 1994
- --------------------------------------------------------------------------------
(1) SIMON-HORIZON LIMITED
(2) HORIZON EXPLORATION LIMITED
- --------------------------------------------------------------------------------
MASTER LEASING AGREEMENT
- --------------------------------------------------------------------------------
SIMMONS & SIMMONS
14 DOMINION STREET
LONDON EC2M 2RJ
<PAGE> 2
MASTER LEASING AGREEMENT
THIS MASTER LEASING AGREEMENT is made the 15th July, 1994 BETWEEN:
1. Simon-Horizon Limited whose registered office is at Horizon House,
Azalea Drive, Swanley, Kent, BR8 8JR ("Simon")
2. Horizon Exploration Limited whose registered office is at 6 Pembroke
Road, Sevenoaks, Kent TN13 1XR (the "Lessee")
WHEREBY IT IS AGREED as follows:
1. DEFINITIONS
1.01 In this Master Leasing Agreement the terms defined in or for the
purposes of the Charter shall have the same meanings when used herein
unless otherwise defined below and the following terms shall have the
meanings given below:
Term Meaning
"Accounting Period" an accounting period within the
meaning of Section 12 of the Income
and Corporation Taxes Act 1988
"CAA" the Capital Allowances Act 1990
"Calculation Rates" the standard rates of corporation
tax, applicable to the Rental during
the Primary Period as stated in the
Lease Contract
"Charter" the charterparty by way of
sub-demise in respect of the ship MV
"Simon Labrador" (ex MV "Seaway
Labrador") between the parties
hereto and of even date herewith
"Delivery" the time at which the Lessee takes
possession of the Ship under the
Charter as stated in the Protocol of
Delivery and Acceptance signed by
Simon and the Lessee
"Disposal Periods" the accounting period of the Owner
in which the Primary Period comes to
an end
"Effective Date" the date so defined in and for the
purposes of the Agreement
"Event of Default" any of the events specified in
Clauses 14.01 or 14.02
<PAGE> 3
"Goods" in relation to each Lease Contract,
the goods specified in Schedule I
thereof or any of them together with
all replacements, renewals and
component parts thereof and all
additions and accessories thereto
which form an integral part thereof
"Goods Capital means the amount of the Owner's
Outstanding" investment in the relevant Lease
Contract from time to time
"Interest Rate" the interest rate calculated as
specified in Clause 15
"Lease Contract" a contract for the sub-leasing of
Goods entered into between Simon and
the Lessee pursuant to this Master
Agreement
"Lease Period" the period from the entering into of
a Lease Contract until the Prime
Date plus the Primary Period and
(unless the context does not so
admit) the Secondary Period or until
the leasing of the Goods under such
Lease Contract terminates for any
reason
"Master Agreement" this Master Leasing Agreement
"Original Cost" the expenditure incurred by the
Owner, exclusive of recoverable
value added tax (or other tax
relating to the purchase of the
Goods), on acquisition of the Goods
as specified in Clause 3 of the
relevant Lease Contract
"Owner" Royal Bank of Scotland (Industrial
Leasing) Limited and includes its
successors and assigns
"Primary Period" the primary period of leasing
starting as specified in the
relevant Lease Contract and
terminating subject to the terms and
conditions of the Charter and this
Agreement, on 1st April 2001
"Prime Date" the date specified in the relevant
Lease Contract as the date on which
the Primary Period commences
"RBS Master Leasing the Master Leasing Agreement dated
Agreement" 31st March 1992 and made between the
Owner and Simon
2
<PAGE> 4
"RBS Lease Contracts" means the contracts for the Leasing
of Goods by the Owner to Simon made
pursuant to the RBS Master Leasing
Agreement
"Rental" the rental payable by the Lessee for
the use of Goods under the Lease
Contract as the same may be from
time to time adjusted, increased or
supplemented pursuant to Clause 5 of
this Master Agreement
"Rental Period" the period specified in the Lease
Contract in respect of which a
payment of rental is due
"Return" a profit take out rate of return,
such rate being equivalent to a rate
of interest and being the rate at
which the Owner assumes in relation
to any relevant RBS Lease Contract
relating to Goods the subject of a
Lease Contract that profit will be
withdrawn by the Owner at annual
intervals during the investment
period of such RBS Lease Contract
(relating to such Goods) in
proportion to the investment in such
RBS Lease Contract and after taking
account of taxation
"Secondary Period" any period starting at the same time
as the secondary period under the
Charter (therein defined as the
"Secondary Period") and, subject to
the terms of this Master Agreement
and the Charter, coterminous with
such secondary period
"Site" the Ship
"Supplier" the supplier of any of the Goods
referred to in the relevant Lease
Contract
"Termination Sum" in relation to a Lease Contract the
amount, calculated in accordance
with Clause 14.03, payable by the
Lessee to Simon upon termination of
the Lease Contract prior to the end
of the Primary Period
1.02 References in this Master Agreement to Clauses and Schedules are,
unless the context otherwise requires, to Clauses of and Schedules to
this Master Agreement.
3
<PAGE> 5
2. REPRESENTATIONS AND WARRANTIES
2.01 The Lessee represents and warrants to Simon that:
(a) there has been no material adverse change in the
financial position of the Lessee from that set forth
in the latest audited financial statements delivered
to Simon under Clause 11.1(d) of the Charter;
(b) every consent, authorisation, license or approval of,
or registration with, or declaration to, governmental
or public bodies or authorities or courts required by
the Lessee to authorise, or required by the Lessee in
connection with the execution, delivery, validity,
enforceability or admissibility in evidence of this
Master Agreement and any Lease Contract, or the
performance by the Lessee of its obligations under
this Master Agreement and any Lease Contract has been
obtained or made and is in full force and effect, and
there has been no default in the observance of the
conditions or restrictions (if any) imposed in, or in
connection with, any of the same;
(c) the obligations of the Lessee under the Goods
Contracts are direct, general and unconditional
obligations of the Lessee and rank at least pari
passu with all other present and future unsecured and
unsubordinated obligations (including contingent
obligations) except as are mandatorily preferred by
law and not by contract;
(d) the Lessee is not (nor would with the giving of
notice or lapse of time or both be) in breach of or
in default under any agreement relating to
Indebtedness to which it is a party or by which it
may be bound;
(e) all information, exhibits ant reports furnished by
the Lessee to Simon in connection herewith or with
the negotiation and preparation of this Master
Agreement are true and accurate in all material
respects and not misleading, do not omit material
facts and all reasonable enquiries have been made to
verify the facts and statements contained therein;
there are no other facts the omission of which would
make any fact or statement therein misleading;
(f) no Relevant Event has occurred and is continuing;
(g) the Goods are and will on Delivery be free from all
Encumbrances other than Permitted Encumbrances; and
4
<PAGE> 6
(h) neither the Lessee's interest in the insurances
relating to the Goods or any Requisition Compensation
nor any part thereof will on Delivery be subject to
any Encumbrances save for any Permitted Encumbrance.
3. LEASE CONTRACTS
3.01 Simon shall lease to the Lessee and the Lessee shall take on lease the
Goods for the Lease Period. Provided however that the obligation of
Simon to lease the Goods to the Lessee under this Master Agreement or
any Lease Contract is subject to the conditions that, (a) on Delivery
Simon shall have received the documents and evidence specified in
Schedule 1 in form and substance satisfactory to Simon and (b) on the
date Delivery is to take place the representations and warranties set
out in Clause 2.01 (a)-(f) (inclusive) of the Charter are and remain
true and correct in all respects and (c) no Relevant Event would arise
by reason of Delivery taking place.
3.02 The lease of the Goods under each Lease Contract shall start on the
date on which the Lease Contract is entered into by the Lessee; the
Primary Period shall commence on the Prime Date and irrespective of
all other provisions hereof all the obligations of the Lessee
hereunder as regards any Goods shall commence on Delivery.
3.03 Subject to the Lessee indemnifying Simon for all losses, costs and
expenses incurred by Simon as a result of such termination, the Lessee
shall be entitled on giving to Simon not less than one hundred and
fifty (150) days notice (which notice, when given, shall be
irrevocable) to terminate the Lease Period of the Goods on any date
falling on or after the first anniversary of the Start Date. Upon
such termination (which shall be called "Voluntary Termination"
herein) the Lessee shall re-deliver the Goods to Simon in accordance
with Clause 13 and shall pay to Simon an amount equal to the
Termination Sum on the date of such termination, calculated in
accordance with Clause 14.03 together with all amounts of Rentals and
other moneys then due and owing to Simon under this Agreement.
(In the event that the Lessee serves a notice of voluntary termination
under Clause 3.3 of the Charter it shall be deemed that a notice of
Voluntary Termination shall have been served to terminate the Lease
Period of the Goods on the same date as the Charter Period of the Ship
is due to terminate under such notice of voluntary termination).
3.04 The terms of this Master Agreement shall be deemed to be incorporated
into the terms of each Lease Contract provided that in the event of
any conflict between the terms hereof and the terms specified in a
Lease Contract the latter shall prevail. Each Lease Contract shall be
deemed to form a separate agreement for the lease of the Goods therein
described but so that any breach of the provisions of this Master
Agreement or any Lease Contract for the time being in force shall be
deemed to be a breach of this
5
<PAGE> 7
Master Agreement and of every such Lease Contract in force between the
parties hereto.
3.05 The Lessee's right to use the Goods is conditional upon the due
performance by the Lessee of its obligations hereunder and every Lease
Contract, subject to which, the Lessee shall be entitled peaceably to
hold and use the Goods without interference from Simon or any person
claiming title through Simon. If the Owner shall be in breach of the
Owner's obligations pursuant to Clause 3.05 of the RBS Master Inuring
Agreement, Simon will at the cost and request of the Lessee take such
steps as the Lessee may reasonably require to enforce Simon's rights
against the Owner to have such breach remedied.
3.06 Provided that the Lessee has duly performed all of the terms and
conditions of each Lease Contract and that no Event of Default has
occurred the leasing of Goods under a Lease Contract shall continue
after the end of the Primary Period until the termination of the
Secondary Period under the Charter.
3.07 The Lessee hereby warrants and undertakes to Simon that no leasing of
the Goods under any Lease Contract shall be within the scope of or
regulated by the Consumer Credit Act 1974 (or as amended, replaced,
extended or re-enacted from time to time) or any similar legislation
or regulatory controls. In the event that the Goods or any Lease
Contract are or become subject to such statutory controls, and the
same shall materially affect the rights of Simon hereunder, Simon
shall be entitled to terminate the relevant Lease Contract and the
provisions of Clause 13 of this Master Agreement shall apply mutatis
mutandis as though an Event of Default had occurred.
4. DELIVERY OF GOODS
4.01 All risk of loss of or damage to the Goods shall as between Simon and
the Lessee pass to the Lessee in accordance with the terms of the
Agreement. Delivery of the Goods shall occur at the same time as
Delivery of the Ship occurs under the Charter and the Goods shall be
held by the Lessee subject to and in accordance with the provisions of
this Master Agreement and the Lease Contracts.
4.02 The Lessee acknowledges that prior to Delivery the Charterer has in
accordance with management arrangements with Simon conducted its
seismic survey business on and by use of the Ship through the services
of its own employed personnel and has thereby had sufficient
opportunity to carry out any inspections of the Ship, her condition
and any and all Goods and the condition of the Goods on delivery to
the Lessee shall be the sole responsibility of the Lessee, and the
Lessee shall not be entitled for any reason whatsoever to refuse to
accept delivery of the Goods and Simon shall not be liable for any
loss or expense, or any loss of profit, resulting directly or
indirectly from any defect or alleged defect in the Goods or failure
or alleged failure of the Goods to comply in all respects with the
terms of the RBS Lease Contracts and the RBS Master
6
<PAGE> 8
Leasing Agreement and the Lessee agrees that upon delivery the Lessee
shall accept the Goods "as is, where is" and shall indemnify and hold
Simon harmless in respect of any failure of any Goods to comply with
the terms of any of the RBS Lease Contracts and the RBS Master Leasing
Agreement.
4.03 The liability of the Lessee to pay rent under any Lease Contract shall
not be affected by any defect or shortage in the Goods which are the
subject thereof discovered on Delivery.
5. RENTALS AND TAXES
5.01 The Lessee shall pay to Simon in respect of the lease of the Goods the
Rentals and other payments specified in the Lease Contract relating
thereto.
5.02 Rentals shall be due and payable at the times and for the periods
specified in the Lease Contract.
5.03 The Lessee shall not be entitled to withhold payment of Rentals or to
any remission of Rentals in respect of any period during which the
Goods are unusable or unserviceable and Simon shall not be liable to
provide the Lessee with any replacement goods during any such period.
5.04 (a) The Rentals have been calculated on the following assumptions
("Assumptions"):
(i) that all rentals to be received by the Owner pursuant
to the RBS Lease Contracts will for tax purposes be
accrued over the period to which they relate, by
reference to the relevant Leasing Contract;
(ii) that there will be available to the Owner in respect
of the Accounting Period of the Owner during which
the Original Cost is incurred a 25% writing down
allowance and in each subsequent Accounting Period in
which the Goods continue to be leased by the Owner to
Simon a writing down allowance at the rate of 25% per
annum (or at the rate specified in the Leasing
Contract, if different) on a reducing balance basis
all as provided by Section 24 of the CAA in force as
at the date thereof, and that the capital allowances
so available will not be withdrawn either wholly or
in part, and that there will be no delay in the
agreement of the Owner's claim for said allowances;
and
(iii) that any losses arising to the Owner in respect of
the said allowances will be available for surrender
by way of group relief in accordance with the
provisions of Chapter IV of Part X of the Income and
7
<PAGE> 9
Corporation Taxes Act 1988 (as amended, and in force,
as at the date hereof); and
(iv) that the standard rate of United Kingdom corporation
tax is and will continue to be fixed at the
Calculation Rates specified in the Lease Contract;
and
(v) that the Goods will be sold in the Accounting Period
of the Owner in which the Primary Period expires by
effluxion of time and that the amount which the Owner
is required to bring into account as disposal value
on such sale in accordance with section 24(6) CAA
will be the balance of the Original Cost on which
writing down allowances are assumed to be available
for that Accounting Period by Assumption 5.04(a)(ii)
above; and
(vi) that any interest paid or assumed to be paid in
respect of funds borrowed or assumed to be borrowed
by the Owner for the purpose of this transaction is
or would had it actually been paid have been allowed
as a trading expense or as a charge on income in the
Accounting Period of the Owner to which such interest
relates or is paid (or assumed to be paid); and
(vii) that in the "requisite period" (as that expression is
defined in section 40 CAA) the Goods will not be used
for a purpose which results in section 42 CAA
applying; and
(viii) that, in relation to Original Cost, no charge will
arise under section 46 CAA in respect of any excess
relief (as therein defined) or under section 42 CAA
as the same may be amended, extended, substituted or
replaced from time to time; and
(ix) that the Owner would incur professional fees and
disbursements of L.5 per L.1000 of Original Cost
(exclusive of Value Added Tax) in respect of the
transaction contemplated by the RBS Lease Contract
excluding the funding arrangements; and
(x) that the fees incurred by the Owner referred to in
Assumption (ix) above would be deductible as a
trading expense in the Accounting Period of the Owner
in which such fees are payable; and
(xi) that the interest assumed to be received and paid in
Assumption 5.04(a)(xiii) will be treated as accruing
on a daily basis for the purpose of Corporation Tax
and will be accrued on positive or negative balances
8
<PAGE> 10
of Goods Capital Outstanding (as the case may be)
until the Final Date; and
(xii) (1) that all losses arising in an Accounting
Period of the Owner as referred to in
Assumption 5.04(a)(iii) will be surrendered
to members of the Owner's Group;
(2) that the Owner will receive payments for
group relief on the date for payment of
Corporation Tax that no refund of such
payments shall be made by the Owner and that,
in accordance with section 402(6) ICTA, such
payments will not be taken into account
(either as a receipt or a deduction) for
Corporation Tax purposes; and
(xiii) that on the Interest Payment Date in respect of each
Interest Reference Period during which the Goods
Capital Outstanding is
(i) a negative figure the Owner will pay interest
calculated on a daily basis using a 365 day
year on the daily balances of Goods Capital
Outstanding during such Interest Reference
Period at the Reference Rate; or
(ii) a positive figure the owner will receive
interest calculated on a daily basis using a
365 day year on the daily balances of Goods
Capital Outstanding during such Interest
Reference Period at a rate of 7 per cent per
annum; and
(xiv) that the interest referred to in Assumption
5.04(a)(xiii) will be payable to a person carrying on
a bona fide banking business in the UK;
(xv) that any rebate of rentals made by the Owner to Simon
pursuant to Clauses 14.02(c) or 16.06 or 17.02 of the
RBS Master Leasing Agreement will be an allowable
deduction in the accounting period of the Owner in
which the Termination Sum is paid for the purposes of
computing the Owner's corporation tax liability; and
(xvi) that the Owner will not be required to bring into
account any disposal value for the purposes of
calculating a balancing allowance or charge in
respect of the Goods other than a disposal value
equal to the net proceeds of sale and/or insurance
proceeds of the Goods; and
(xvii) that no change occurs in the nature, method or
application of any relevant United Kingdom taxation
by reason of any enactment, provision,
interpretation, practice or ruling of or by an
authority,
9
<PAGE> 11
whether legislative, judicial, administrative or
revenue, after the date of this Agreement; and
(xviii) that the Goods leased under each RBS Lease Contract
will be treated independently of any of the Owner's
other Goods, for the purposes of calculating the said
allowances, and any balancing allowance or charge
arising on disposal;
(xix) any other additional Assumptions detailed in the RBS
Lease Contracts are correct; and
(xx) that the Inland Revenue will not treat the respective
disposal values of the Ship (excluding the Goods) and
the Goods as any amount different from that assumed
by the Owner; and
(b) If, and as often as, any of the Assumptions other than
Assumptions (xiii), (xiv) and (xviii) on the basis of which
the Rentals are calculated proves to be incorrect during the
Primary Period with the result that the Return, in relation to
any Goods, is altered the amounts of those Rentals or
Termination Sum (as the case may be) which fall due after the
relevant Assumption has proved to be incorrect shall be
adjusted either upwards or downwards by such amount as the
Owner shall certify in writing to Simon (which certificates
shall be conclusive in the absence of manifest error and
copies of which Simon will forward to the Lessee) to be the
amount required to ensure that the Return of the Owner, in
relation to those Goods, is the same as it would have been had
the relevant Assumption (and all other such Assumptions)
proved to be correct.
(c) If any of the Assumptions on the basis of which the Rentals
are calculated proves to be incorrect with the result that the
Return, in relation to any Goods, is altered after the expiry
or termination of the Primary Period or at a time when no
further Rentals or Termination Sum in relation to those Goods
fall due a further payment of rental or Termination Sum (as
the case may be) or a rebate of rental or Termination Sum (as
the case may be) shall become due of such amount as the Owner
shall certify in writing to Simon (which certificate shall be
conclusive in the absence of manifest error and copies of
which Simon will forward to the Lessee) to be the amount
required to ensure that the Return in relation to those Goods
is the same as it would have been had the relevant Assumption
(and all other such Assumptions) proved to be correct.
(d) An Assumption will be deemed to have been proved to be
incorrect either upon the receipt of written notification from
the Inland Revenue or, in the case of an Assumption changing
due to a change in legislation, on the date that such
legislation comes into force.
10
<PAGE> 12
(e) Simon shall be under no obligation to reduce the Rental if it
transpires that the Owner is entitled to capital allowances at
a rate in excess of that stated in Clause 5.04 (a) (ii) above
or in the Lease Contract (as may be amended).
5.05 All payments of Rentals and all other payments due under this
Agreement or any Lease Contract shall be made in sterling without
prior demand and without any right of set-off or counterclaim and free
and clear of all deductions or withholdings whatsoever unless the same
are required by law in which event the Lessee undertakes to pay to
and/or indemnify Simon for such additional amounts as may be necessary
in order that the net amounts received by Simon after all deductions
and withholdings shall not be less than such payments would have been
in the absence of any requirement to make any deduction or
withholding.
5.06 The Lessee shall pay to Simon at the rates applicable all Value Added
Tax on the Rentals and other payments due under the Master Agreement
or any Lease Contract and any other taxes assessments or charges
levied against or payable by Simon on account of the RBS Lease
Contracts or by the Owner on account of its ownership of the Goods or
the leasing, use or operation thereof or the Rentals or other sums
payable in respect thereof excluding however any taxes payable on the
net income of Simon and/or the Owner.
5.07 Payment of Rentals shall be made in the manner specified in the Lease
Contract. Time of payment shall be of the essence as regards all
Rentals and other payments payable to Simon hereunder or under any
Lease Contract.
5.08 The Lessee undertakes promptly upon demand by Simon to provide Simon
or the Owner with such certificate and/or information as Simon or the
Owner may reasonably request from time to time to enable the Owner to
claim any allowances in respect of its expenditure on the Goods and to
remain entitled to such allowances.
5.09 For the purposes of United Kingdom taxation and irrespective of the
accounting treatment to be adopted by the Lessee, the Lessee shall not
claim capital allowances on the Goods.
6. LOCATION, USE AND MAINTENANCE OF GOODS
6.01 Notwithstanding the provisions of the Charter, the Goods shall be
located at the Site and shall not be removed therefrom during the
Lease Period without the prior consent in writing of Simon and the
Owner except as may be required in the ordinary course of operating
and maintaining the Ship.
6.02 Without prejudice to the terms of the Charter the Lessee shall use the
Goods in a careful and proper manner and in accordance with any
operating instructions issued in respect thereof by the Supplier
thereof. The Lessee shall not permit the Goods to be
11
<PAGE> 13
used for any purpose for which they are not designed or for any
unlawful purpose. The Lessee shall ensure that the Goods are used or
operated by properly skilled personnel.
6.03 Without prejudice to the terms of the Charter the Lessee shall at all
times keep the Goods in good repair and condition and in working order
and shall, at its own expense, replace all worn and damaged parts
thereof. For this purpose the Lessee shall, at its own expense, if
required by Simon and/or the Owner, enter into and maintain in full
force and effect throughout the Lease Period a maintenance agreement
in terms approved by Simon and/or the Owner with the Supplier or other
party approved by Simon and/or the Owner and the Lessee undertakes to
comply promptly with all its obligations under such agreement. The
Lessee shall supply a copy of such agreement to Simon and or the Owner
if so requested. The Lessee shall at all times ensure that any repair
or servicing of the Goods is undertaken by properly skilled and
qualified persons and in accordance with the instructions or
recommendations of the Supplier of the Goods.
6.04 (a) The Lessee shall keep an up-to-date record of the whereabouts
of the Goods which it will supply to Simon and/or the Owner on
request.
(b) The Lessee shall not be obliged to enter into a maintenance
agreement as provided by clause 6.03 above, but shall procure
that the Goods are properly serviced in accordance with the
recommendations of the Supplier thereof.
6.05 The Lessee shall at its own expense obtain and keep in full force and
effect all permissions, licenses and other authorisations which may at
any time be required in connection with the possession or use of the
Goods and/or any premises in which the same are located at any time
during the Lease Period and the due performance by the Lessee of its
obligations under this Master Agreement and each Lease Contract and,
if so requested, shall provide a copy of each thereof to Simon and the
Owner. The Lessee shall comply with all statutory and other
obligations relating to the possession and/or use of the Goods and
shall at is own expense add to or install with the Goods any safety or
other equipment required by any applicable law or regulation to be so
added or installed for the lawful use or operation of the Goods. If
any such liability shall be discharged by Simon or the Owner, the
Lessee shall repay the same to Simon or the Owner (as the case may be)
on demand with interest calculated at the Interest Rate from the time
of the same having been discharged until such repayment.
6.06 The Lessee agrees to indemnify and hold harmless Simon from and
against any and all claims, demands and proceedings brought against
Simon and/or the Owner in respect of any injury, damage or loss caused
to persons or property arising directly or indirectly out of the
possession, operation, transportation or condition of the Goods during
the Lease Period or out of the ownership of the Goods or out of any
disposal of the Goods by the Lessee pursuant to Clause 16 or 17 or as
a result of any claim that
12
<PAGE> 14
the use of the Goods is an infringement of any patent or intellectual
property right or otherwise in connection with the Goods.
7. OWNERSHIP PLATES AND INSPECTION
7.01 The Lessee shall if so requested by Simon or the Owner affix or cause
to be affixed to the Goods, or any separate part or parts thereof,
plates or other forms of marking ("Plates") indicating in terms
approved by the Owner that the Goods are the property of the Owner,
are leased by the Owner to Simon and are on sub-lease to the Lessee.
The Lessee shall ensure that such Plates remain so affixed and that
the same are conspicuous and are at no time removed, obliterated,
defaced or covered up.
7.02 Simon and/or the Owner or its/their agents or representatives shall at
all reasonable times have access to the Goods (and for this purpose
shall be entitled to enter on the Site or on any land or premises on
or in which the same are reasonably believed to be situated) for the
purpose of inspecting the same and the Lessee shall provide Simon
and/or the Owner or its/their agents or representatives with
reasonable facilities for any such inspection.
8. PROHIBITION AGAINST DEALING WITH THE GOODS
8.01 The Lessee shall not and shall not purport to sell or offer for sale,
grant security over, charge, assign, pledge, mortgage, sub-lease or
otherwise dispose of the Goods or any of them or permit any lien
(other than a repairer's lien) to arise over any of the Goods or
sublease or part with possession of any of the Goods without the
previous written consent of Simon and the Owner.
8.02 The Lessee shall not without the previous written consent of Simon and
the Owner attach any of the Goods to any land or premises other than
the Ship so that they become or, in the reasonable opinion of the
Owner, may become a fixture thereon.
8.03 The Lessee shall during the Lease Period promptly notify (i) the
holders of any fixed security or floating charge over all or any of
the goods of the Lessee and (ii) any landlord of the land or premises
where the Goods are at any time located, that the Goods are the
property of the Owner and held upon a sub-lease from Simon and the
Lessee shall provide satisfactory evidence of such notification and,
where requested by Simon or the Owner, a written acknowledgement from
the holders of any such security or charge that the Goods and the
Lessee's leasehold interest therein are not within the scope of any
such security or charge or from any landlord that the Goods have not
and will not become a landlord's fixture, and (in the case of a
landlord of premises in Scotland) are not and will not be secured by
the landlord's right of hypothec.
8.04 The Lessee further undertakes to give to Simon and the Owner during
the Lease Period 14 days notice of the proposed creation of any
security mortgage or charge
13
<PAGE> 15
created by the Lessee whether fixed or floating over its goods
generally or over its stocks and/or its machinery or plant and/or over
any land or premises on or in which the Goods are located and the
Lessee shall notify Simon and the Owner promptly of any enforcement
thereof or of the appointment of any receiver of all or part of the
Goods.
8.05 The Lessee further undertakes that forthwith upon becoming aware of
the assignment of any security or charge as is referred to in Clause
8.03 hereof or of the disposal by the landlord of his interest in any
such land or premises as are there referred to, the Lessee will notify
the assignee or disponee that the Goods are the property of the Owner
and held upon a sub-lease from Simon and will provide satisfactory
evidence of such notifications and, where requested by Simon or the
Owner, such acknowledgement by the assignee or disponee as is referred
to in Clause 8.03 hereof.
8.06 The Lessee shall not permit any of the Goods to be seized or taken out
of its possession or control under any diligence, distress, execution
or other legal process but if the Goods are so seized or taken the
Lessee shall promptly notify Simon and the Owner thereof and shall
indemnify Simon and/or the Owner against all losses costs or charges
incurred by Simon and/or the Owner by reason thereof in retaking
possession or otherwise in reacquiring the Goods or in acquiring
substitutes therefor.
9. ALTERATION TO THE GOODS
9.01 Subject to due compliance with Clause 6.03 the Lessee shall not
without the prior written consent of Simon and the Owner make any
addition alteration or modification to the Goods or attach any
accessories thereto which cannot be removed without damaging or
impairing the Goods. Any accessories so attached whether in breach of
this provision or otherwise shall automatically, and without prejudice
to any entitlement of Simon and/or the Owner to damages, become the
property of the Owner.
10. WARRANTIES RELATING TO THE GOODS
10.01 It is expressly agreed and acknowledged that no condition, warranty or
representation of any kind is or has been given by or on behalf of
Simon or the Owner in respect of any of the Goods. All conditions or
warranties expressed or implied by law relating to the specifications,
quality, description, merchantability or otherwise of the Goods or as
to their fitness for any purpose are hereby expressly excluded. The
Lessee agrees and acknowledges that neither Simon nor the Owner shall
be liable for any claim, loss, damage, expense or other liability of
any kind or nature caused directly or indirectly by any of the Goods
or by any inadequacy thereof for any purpose or by any deficiency or
defect thereof or the use or performance thereof or any repairs
thereto or servicing thereof and the Lessee shall not by reason
thereof be released from any
14
<PAGE> 16
liability to pay rental or any other payment due hereunder or under
any Lease Contract.
10.02 Simon will at the expense of the Lessee endeavor to extend to the
Lessee the benefit of any guarantee, condition or warranty which may
have been given to the Owner (or Simon) by the Supplier or which is
implied by law in favor of the Owner (or Simon) provided always
however that (i) the Lessee is not in default under this Master
Agreement or any Lease Contract or any other agreement between the
Owner or Simon and the Lessee (ii) the Lessee fully indemnifies the
Owner and/or Simon against all costs, claims, damages and expenses
incurred or which may be incurred in connection with the making of any
claim thereunder and (iii) the Lessee gives such security in advance
in respect of such indemnity as the Owner and/or Simon may deem
appropriate.
10.03 The Lessee acknowledges that the Supplier is not and has not been the
agent of the Owner or Simon and neither the Owner nor Simon shall be
bound by any representation or warranty made by or on behalf of the
Supplier.
11. INDEMNITY AND INSURANCE
11.01 The Lessee shall from the Effective Date until the end of the Lease
Period keep the Goods comprehensively insured at the expense of the
Lessee for an amount equal to whichever is the greater from time to
time of (a) full replacement value and (b) one hundred and ten per
cent. (110%) of the maximum Termination Sum (in the case of a
variable rate lease, on the Assumption that the base rate specified in
the Lease Contract will apply throughout the Primary Period) and shall
indemnify Simon and the Owner in respect of any claim arising out of
the use or possession of the Goods. The insurance policies shall be
taken out with reputable insurers and shall cover (i) all risks of
loss or damage whatsoever (ii) all third party and public liability
and (iii) other matters in respect of which the Goods are or the
Lessee is for the time being required by statute or otherwise to be
insured. Such insurance policy shall not have any excess unless
agreed by the Owner and Simon in writing. The Lessee shall at all
times maintain third party and public liability insurance in respect
of the business carried on by the Lessee in which the Goods are used
for amounts which are prudent and reasonable having regard to the type
of business being carried on by the Lessee. Such insurance shall name
the Owner and Simon as joint assureds and contain an endorsement to
the effect that the Goods are the property of the Owner (and
sub-leased from Simon), that all moneys payable under such policy
shall be payable to or to the order of the Owner and that the Owner
shall be given 30 days prior notice of any intention of the Lessee or
the insurance company to cancel the policy or to alter its terms or
not renew the policy on the same terms.
11.02 The Lessee shall if required produce to the Owner and Simon:
15
<PAGE> 17
(i) a cover note in respect of the Goods within 10 days of
assuming the risk in the Goods in accordance with the
provisions of Clause 3.01 hereof;
(ii) the insurance policy within 10 days of its becoming available;
(iii) each premium receipt within 10 days of the due date of premium
payment;
(iv) any amendments to the insurance policy by way of note,
endorsement or otherwise forthwith upon notification to the
Lessee.
11.03 If the Lessee shall fail to keep the Goods so insured or to produce
such policy or receipt as aforesaid, the Owner and/or Simon shall be
entitled, at the expense of the Lessee, to insure the Goods as
aforesaid and the Lessee shall pay to Simon on demand any sums
expended by the Owner and/or Simon for such purpose together with
interest at the Interest Rate accruing on a day to day basis from the
time of the same having been expended until such payment.
11.04 The Lessee irrevocably authorises the Owner (and/or Simon) to give a
good discharge to the insurance company for any moneys paid under such
insurance policy. The Lessee shall, if so requested by the Owner
(and/or, where appropriate, Simon), assign to the Owner (and/or Simon)
or to its (or their) order the rights, claims and benefits arising
under any such policy and shall indemnify the Owner (and/or Simon) in
respect of any stamp duty on such assignment.
11.05 If the Goods will be used in any nuclear power station or in any
nuclear process where the Goods or those using them may be subjected
to any risk of ionising radiations or contamination by radioactivity,
then before the leasing of the Goods starts the Lessee shall inform
Simon in writing and in consultation with Simon shall effect such
additional insurance cover as Simon may require.
11.06 The Lessee shall ensure that nothing is done or omitted to be done
which is contrary to the terms of any such policy of insurance or
which might entitle the insurance company to cancel the policy or
reduce or avoid any liability thereunder.
11.07 The Lessee shall forthwith notify the Owner and Simon in writing of
any occurrence which gives rise or might reasonably be expected to
give rise to a claim under such policy of insurance. The Lessee shall
ensure that any claim is made promptly and in accordance with the
terms of the policy and shall not agree any settlement of a claim
without the prior written consent of the Owner and Simon.
11.08 If any item specified in the Schedule annexed and executed as relative
to a Lease Contract as forming part of the Goods for the purposes of
such Lease Contract becomes a total loss or constructive total loss as
a result of the Ship becoming a Total Loss or as a result of that item
being lost, stolen, seized, confiscated, damaged beyond
16
<PAGE> 18
economic repair or otherwise the hiring of such item shall terminate,
and on such event the Lessee shall either:
(i) acquire a replacement for the lost item of equivalent size and
condition acting for this purpose as agent for the Owner, in
which event the replacement shall be deemed to be included in
the relevant RBS Lease Contract and the relevant Lease
Contract for all purposes, the Lessee shall continue to be
liable to pay Rental, and other payments in accordance with
the Lease Contract and this Master Agreement as if such loss
had not taken place, and Simon shall only be liable to
reimburse the Lessee in respect of expenditure incurred as its
agent to the extent that the Simon receives insurance proceeds
in respect of such loss or
(ii) notify Simon of such loss and forthwith pay to Simon a
Termination Sum calculated by reference to the proportion of
the rental attributable to the lost Goods. All insurance
proceeds shall be paid to the Owner and until such Termination
Sum is received the obligations of the Lessee under this
Master Agreement and the Lease Contract shall continue in all
respects and in particular the Lessee shall continue to be
liable to pay Rental, and other payments falling due in
respect of such lost Goods subject to Clause 11.12 on receipt
of the Termination Sum in full Simon agrees to pay to the
Lessee any insurance proceeds it receives in respect of the
loss of the Goods.
Provided always that the Lessee shall only be entitled to
acquire replacements under (i) above during the Primary Period
in respect of lost items which have an aggregate original cost
not exceeding 10% of the total Original Cost for the Goods as
specified in the relevant Lease Contract. If the Original
Cost of Goods lost in the Primary Period exceeds such figure
then the loss shall be notified to Simon and dealt with in
accordance with Assumption (ii) above.
11.09 The Lessee shall be liable to reinstate or repair at its own expense
Goods which have not become a total loss or a constructive total loss
provided however that, subject to Clause 11.10 below any insurance
proceeds which are paid otherwise than in respect of a total loss or a
constructive total loss of the Goods shall be applied either in or
towards the cost of reinstating or repairing the Goods to the
satisfaction of Simon and the Owner or, if the Goods have been so
reinstated or repaired at the expense of the Lessee, in or towards
reimbursement of the Lessee for the cost thereof.
11.10 If the Lessee shall be in default of any obligation under this Master
Agreement or any Lease Contract, such insurance proceeds may, at the
option of Simon and the Owner, be applied first in or towards payment
of any amounts then owing by the Lessee to Simon.
11.11 Notwithstanding the other sub-clauses of this Clause 11 if, in the
event of requisition of the Ship for hire, it is proved to the
satisfaction of Simon and the Owner that such
17
<PAGE> 19
requisition is upon terms whereby the requisitioning authority has
assumed the responsibility of the Lessee to Simon and the Owner to
indemnify or recompense it in respect of or otherwise to make good all
losses which would ordinarily be covered by the insurances required to
be effected by the Lessee under this Agreement, the Lessee shall be
relieved from its insurance obligations under this Agreement in
respect of such period of requisition or in the event that the
requisitioning authority shall have assumed only a partial
responsibility as aforesaid the insurance obligations of the Lessee
under this Agreement shall be modified in such a manner and to such
extent as Simon and the Owner may approve.
11.12 All moneys received by the Owner (or Simon) as loss payee under the
insurances of the Goods from insurers or others in respect of a Total
Loss (this sum being, when the Goods are insured as part of the Ship,
that part of the Insurances in respect of the Goods) shall be applied
subject to Clause 10.04 of the Charter (which shall be read for this
purpose as if referring to the Goods Contracts and not the Relevant
Documents) as follows:
(a) Firstly, in or towards settlement of all amounts due and owing
by Simon to the Owner under the RBS Master Leasing Agreement
or any of the other Goods Contracts (as therein defined);
(b) Secondly, if the Lessee shall on or before the date of
application of such moneys have paid the Termination Sum, or a
part thereof, in accordance with Clause 11.08 in or towards
refunding by way of rebate of Rentals or otherwise as
appropriate to the Lessee the amount of the Termination sum or
part thereof so paid by the Lessee; and
(c) Thirdly, an amount equal to two per cent (2%) of such moneys
received by the Owner as loss payee under the insurances of
the Goods shall be retained by the Owner, and any balance paid
to Simon shall be paid by Simon to the Lessee or to its order
by way of rebate of Rentals or otherwise as appropriate.
11.13 If the Owner shall require and at any time when the Goods are
installed on the Ship, Clauses 11.01 to 11.04 shall not apply (save
for the indemnity contained in Clause 11.01) and the Goods shall be
insured as part of the Ship in accordance with Clause 16 of the
Charter provided such insurances clearly show an agreed value for the
Goods, approved by Simon and the Owner and such insurances are
otherwise on terms approved by Simon and the Owner.
12. PROPERTY IN THE GOODS
12.01 The Goods shall at all times throughout the Lease Period remain the
sole and exclusive property of the Owner (but subject to the leasehold
interest of Simon) and the Lessee
18
<PAGE> 20
shall not do or permit to be done anything which could prejudice or
jeopardise the rights of the Owner or Simon in respect of the Goods.
13. RETURN OF THE GOODS
13.01 Subject to the provisions of Clause 16 the Lessee shall, at the risk
and expense of the Lessee, return the Goods to Simon, at such address
in the U.K. as Simon may require, at the termination of the Lease
Contract, howsoever occurring, unencumbered and in good working
condition (reasonable wear and tear only excepted).
13.02 Simon shall be entitled to require the Lessee at the expense of the
Lessee to store the Goods in a suitable place and in reasonably
protective conditions for a period not exceeding 180 days following
the termination of the Lease Contract howsoever arising. During such
period the Goods shall not be used, modified or in any way interfered
with and at the end of such period the Lessee shall return the Goods
to Simon in accordance with its obligations under Clause 13.01.
13.03 In the event of any breach by the Lessee of the provisions of Clauses
13.01 or 13.02 Simon and/or the Owner shall be entitled to repossess
the Goods without notice and for that purpose shall be entitled to
enter upon any land or premises on or in which the Goods are or are
reasonably believed to be situated and to remove or sever the Goods.
13.04 Without prejudice to any other remedies or rights which may be
available to Simon if the Lessee commits any breach of the terms or
conditions of the leasing of any Goods hereunder and fails to remedy
the same within 21 days of being required so to do by Simon shall have
the right immediately to terminate the lease thereof and the
provisions of this Clause 13 shall thereupon apply.
13.05 Should the Ship be under requisition for hire at the end of the Lease
Period:
(a) the lease of the Goods under this Agreement shall (unless
otherwise agreed between the Parties hereto) nevertheless be
terminated at such end but without prejudice to the accrued
rights of the parties, including, without prejudice to the
generality of the foregoing, the obligations of the Lessee
contained in Clause 23.3 of the Charter, and Simon shall be
entitled to receive and retain any requisition hire payable in
respect of the Goods and in respect of the period from the
expiry of termination of the Lease Period;
(b) the Lessee shall, if it is prevented by reason of the
requisition for hire from redelivering the Goods under Clause
18 of the Charter or under Clause 13 hereof, be relieved from
its obligations so to do, but shall consult with Simon as to
the redelivery of the Goods when the Ship is released from
such requisition; and
19
<PAGE> 21
(c) after such release the Lessee shall be given a reasonable
opportunity of removing the Goods.
14. DEFAULT AND BREACH
14.01 If the Lessee repudiates this Master Agreement by a breach of its
obligations hereunder and/or under any Lease Contract Simon may by
notice to the Lessee accept such breach as terminating this Master
Agreement and all Lease Contracts entered pursuant hereto or as
terminating any Lease Contract in relation to which any such breach
has occurred.
14.02 Without prejudice to the generality of Clause 14.01 above Simon and
the Lessee hereby agree that any of the following events or any of the
Termination Events shall constitute a repudiatory breach by the Lessee
of this Master Agreement and each Lease Contract entered into pursuant
hereto:
(i) if the Lessee shall fail to pay any sum payable by it
hereunder or under any Lease Contract in full when due or on
demand within two (2) Banking Days of such due date or date of
demand (as the case may be); or
(ii) if the Lessee shall commit or cause to be committed any breach
of any other term or condition of this Master Agreement or any
Lease Contract provided that in the case of a breach capable
of remedy Simon shall have first given written notice to the
Lessee specifying the fault or breach complained of and
requiring the same to be remedied within fourteen (14) days of
the service of the said notice and the Lessee shall have
failed to comply therewith; or
(iii) if the Lessee shall convene any meeting of creditors or make
any assignment or arrangement for the benefit of creditors
generally or if a meeting be convened for the purpose of
considering a resolution that the Lessee be wound up
voluntarily or if the Lessee shall fail to answer the
allegations contained in any petition for a winding up of the
Lessee followed by an amalgamation or reconstruction on terms
approved by Simon or if an order to wind up the Lessee shall
be made or if any application for the appointment of an
administrator of the Lessee shall be presented or a receiver
shall be appointed over all or any part of the Lessee's
undertaking or assets; or
(iv) if any obligation of the Lessee under any hire purchase or
credit or conditional sale or lease agreement or any loan,
debt, or other financial obligation of the Lessee shall not be
paid at maturity or when due or if the same shall become due
prior to its specified maturity by reason of default, or if
the Lessee shall fail to meet its obligations under any
guarantee or indemnity when properly called upon to do so; or
20
<PAGE> 22
(v) if any diligence, distress or execution (other than arrestment
to found jurisdiction) shall be issued, levied or sued out
upon or against any part of the property of the Lessee and is
not discharged within 7 days; or
(vi) if the Lessee shall cease or threaten to cease to carry on its
business (other than for the purpose of a reconstruction or
amalgamation the terms of which have received the previous
consent in writing of Simon) or shall transfer or dispose of
all or a substantial part of its assets or if all or a
substantial part of the assets of the Lessee are appropriated
by any governmental authority; or
(vii) if the Lessee shall be unable or shall admit in writing its
inability to pay its lawful debts as they fall due or shall
present a petition to be wound up or shall seek any
reorganization or an arrangement with creditors to take
advantage of any insolvency law; or
(viii) if the Lessee shall do or permit to be done anything which
prejudices or jeopardises the rights of Simon or the Owner in
or over any of the Goods; or
(ix) if the Lessee shall fail to give Simon not less than six
weeks' notice in writing of any intended change in the
ownership of the issued share capital of the Lessee; or
(x) except with the prior written consent of Simon less than the
whole, or none, of the legal and beneficial ownership of the
issued share capital of the Lessee shall be owned directly or
indirectly by Exploration Holdings Limited.
14.03 (a) Upon Voluntary Termination or upon Simon electing to terminate
this Master Agreement (which Simon has the right to do)
following receipt by Simon of notice of any intended change in
the ownership of the issued share capital of the Lessee or
upon acceptance by Simon of any repudiatory breach by the
Lessee under this Master Agreement or under any Lease Contract
as terminating this Master Agreement and all or any other
Lease Contracts entered into pursuant hereto, then Simon shall
be entitled to recover on demand a Termination Sum in relation
to each Lease Contract so terminated.
(b) Without prejudice to the provisions of Clause 5.04 hereof a
Termination Sum shall be calculated as at the termination of
leasing under any Lease Contract and shall be a sum equal to
the aggregate of:
(i) all arrears of Rental and all other amounts accrued
due under the terms of this Master Agreement and such
Lease Contract;
(ii) all Rentals which would have been payable but for
such termination during the unexpired term of the
Primary Period, but discounted to
21
<PAGE> 23
present day value at the discount rate specified in
the Lease Contract to reflect early receipt;
(iii) any costs and expenses incurred by Simon in locating,
repossessing or recovering or valuing the Goods or
collecting any payments due under this Master
Agreement and/or the Lease Contract or otherwise in
obtaining the due performance of the obligations of
the Lessee under this Master Agreement and each Lease
Contract;
(iv) all losses, costs and expenses suffered or incurred
by Simon in consequence of such termination in
repaying or otherwise redeploying funds borrowed to
finance the acquisition of the Goods or in
terminating or otherwise redeploying any agreements
relating to such borrowing including, without
limitation, interest rate or currency swap
agreements, foreign exchange contracts or other
contracts for differences. The certificate of the
Owner or Simon as to such losses, costs and expenses
shall be final and binding on the Lessee in the
absence of manifest error in the case of a
certificate of the Owner and prima facie evidence of
such losses, costs and expenses in the case of a
certificate of Simon.
(v) an amount equal to interest on all sums specified in
paragraphs (i), (ii), (iii) or (iv) of this
sub-clause (b) at the Interest Rate from the date on
which such payments become due until the date of
payment thereof
and in the case of paragraphs (iii), (iv) and (v) of this
sub-clause (b) shall include any and all sums payable by Simon
to the Owner under any RBS Lease Contract or the RBS Master
Leasing Agreement in respect of any losses costs and expenses
of a similar nature which Simon is obliged to pay to the Owner
thereunder.
(c) If a Lease Contract terminates as a result of an
Event of Default Simon may, but shall not be obliged
(unless the Termination Sum payable shall have been
paid in full and the Ship is to be sold at the same
time in accordance with the provisions of Clause 25.3
of the Charter) to take such steps as in its sole
opinion are reasonable to sell the Goods in the six
months following such termination and thereafter may
dispose of the same for scrap. Simon shall, provided
any Termination Sum due has been paid in full pay to
the Lessee an amount equal to 98% of the net sale
proceeds of the Goods (if any).
14.04 Upon the termination of the leasing of the Goods under any Lease
Contract pursuant to Clause 13.04 or Clauses 14.01 or 14.02 the Lessee
shall cease to be in possession of the Goods with the consent of Simon
and shall, upon receiving notice of such termination from Simon,
forthwith cease to use the Goods for any purpose and return
22
<PAGE> 24
or store the same in accordance with Clauses 13.01 or 13.02, failing
which the provisions of Clause 13.03 shall apply. Provided however
that if at the date of such termination the Goods are part of the Ship
the provisions of Clause 25.1 of the Charter shall apply.
14.05 If the Lessee is in breach of any of the obligations under this Master
Agreement or the Lease Contracts and Simon incurs any expenditure in
respect of the Goods or in obtaining the due performance by the Lessee
of its obligations under this Master Agreement or the Lease Contract,
Simon shall be entitled (without prejudice to any other rights it may
have hereunder) to recover such expenditure from the Lessee together
with interest thereon at the Interest Rate from the date on which such
expenditure is incurred to the date of payment thereof to Simon.
15. INTEREST FOR LATE PAYMENT
15.01 Any payment due under this Master Agreement or due under any Lease
Contract from the Lessee to Simon, whether by way of rental, damages,
reimbursement, indemnity or otherwise howsoever, not received for
cleared money value by Simon on the due date (which shall, in the case
of a payment by way of reimbursement or indemnity, be deemed to be the
date on which Simon incurred the expenditure the subject of such
reimbursement or indemnity) shall bear interest (which shall accrue
both before and after any decree or judgment) at the rate of 2 per
cent per annum over The Royal Bank of Scotland plc (or any successor
thereof) Base Rate for the time being calculated on a day-to-day basis
("the Interest Rate") compounded quarterly from the due date. The
Lessee shall on demand, pay to Simon the amount of such interest free
from all deductions or withholdings of whatsoever nature.
16. VOLUNTARY TERMINATION SALES AGENCY
16.01 Following Voluntary Termination and provided that the Lessee has duly
performed all the terms and conditions of this Master Agreement and of
the Lease Contract and provided the Lessee is not in default under any
other Lease Contract entered into pursuant to this Master Agreement,
then upon expiry of the Lease Period the Lessee is appointed agent on
behalf of Simon and shall act as sub-agent of the Owner (unless agreed
in writing between Simon and the Lessee) to arrange a sale of the
Goods which are the subject of the Lease Contract in accordance with
the terms and conditions of this Clause and shall not be obliged to
return the Goods to Simon pursuant to Clause 13.01 pending sale or
termination of this agency appointment.
16.02 Any sale of the Goods shall be to a third party which is not dealing
as a consumer for the purposes of the Unfair Contract Terms Act 1977
(and is not connected with the Lessee or Simon within the meaning of
the Income and Corporation Taxes Act 1988 as from time to time amended
or re-enacted) at an arm's length price to be agreed with Simon before
the sale is finalised.
23
<PAGE> 25
16.03 Any sale of the Goods shall include terms to the following effect:
(i) that all conditions, representations or warranties, expressed
or implied by statute or otherwise, whether as to the state or
quality of the Goods or as to description, fitness for
purpose, merchantable quality or otherwise, are, so far as is
permitted by law, expressly excluded as between the owner and
the buyer save in respect of the warranty that the Owner shall
be passing such title to the Goods as received from the Lessee
and Simon free from any Encumbrances created by the Owner; and
(ii) that the sale is conditional upon the Owner first recovering
possession of the Goods.
Provided always that nothing in this Clause 16.03 shall prevent the
Lessee including any other representations and warranties to be given
directly by the Lessee to a buyer in connection with such sale.
The Lessee agrees to indemnify and keep indemnified the Owner and
Simon against any liability, claim, demand, proceeding or expense
which may result from any claim (whether justified or not) being made
against the Owner or Simon in respect of or concerning the Goods by a
purchaser of the Goods or any third party following any sale by the
Lessee as agent of Simon and sub-agent of the Owner and such indemnity
shall continue after the determination of this Master Agreement and/or
Lease Contract for any reason.
16.04 The appointment of the Lessee as agent of Simon and sub-agent of the
Owner shall determine on the date which is 6 months after the expiry
of the Lease Period (as that term is defined in the relevant Lease
Contract). If the Goods have not been sold within the period of the
agency then Simon or the Owner will direct the Lessee to deliver the
Goods to a place specified by the Owner or Simon with all removal,
transport, necessary insurance and storage costs being payable by the
Lessee. The Lessee will ensure that the Goods when so delivered shall
be complete and in reasonable working conditions (fair wear and tear
excepted). If Simon or the Owner has to bear any expenses in carrying
out the removal and storage of the Goods when remedying any defect in
them then Simon or the Owner shall be entitled to interest at the
Interest Rate from the time the Owner incurs such expenses until the
same are reimbursed to Simon or the Owner (as appropriate) by the
Lessee.
16.05 In the event of any breach by the Lessee of any of its obligations
under this Clause or of any Lease Contract current while the agency is
continuing, then the appointment of the Lessee as agent of Simon and
sub-agent of the Owner and the authority of the Lessee to act as agent
of Simon and sub-agent of the Owner may forthwith be terminated by
notice given by Simon or the Owner to the Lessee.
24
<PAGE> 26
16.06 If the Lessee is successful in arranging a sale of the Goods as
sub-agent for Simon then the Lessee shall be entitled by way of rebate
of rentals for acting as sub-agent of Simon to a sum equal to the
percentage of the net sale proceeds stated in the Lease Contract. The
net sale proceeds shall be the gross sale proceeds of the sale less
any reasonable expenses (excluding all Value Added Tax). Any
reasonable expenses incurred by the Lessee in arranging the sale which
shall be reimbursed out of the gross sale proceeds. Unless otherwise
agreed with Simon the Lessee shall arrange that the gross sale
proceeds are paid to the Owner.
17. CHARTER SALES AGENCY
17.01 Provided that the Lessee has duly performed all the terms and
conditions of this Master Agreement and of the Lease Contract and
provided the Lessee is not in default under any other Lease Contract
entered into pursuant to this Master Agreement, then upon expiry of
the Lease Period other than by way of Voluntary Termination the Lessee
is appointed sub-agent on behalf of Simon (unless agreed in writing
between the Owner Simon and the Lessee) to arrange a sale of the Goods
which are the subject of the Lease Contract as part of the Ship in
accordance with the terms and conditions of Clause 3.6 of the Charter
and shall not be obliged to return the Goods to Simon pursuant to
Clause 13.01 pending sale or termination of this agency appointment.
17.02 If the Lessee is successful in arranging a sale of the Goods as
sub-agent for Simon then the Lessee shall be entitled by way of rebate
of rentals for acting as agent to a sum equal to the percentage of the
net sale proceeds stated in the Lease Contract. The net sale proceeds
shall be that part of the Net Sale Proceeds which relates to the
Goods, calculated in accordance with clause 3.5 of the Charter but
excluding all Value Added Tax, less any reasonable expenses incurred
by the Lessee in arranging the sale which shall be reimbursed by Simon
to the extent that Simon receives such payment from the Owner. Unless
otherwise agreed with Simon the Lessee shall arrange that the gross
sale proceeds are paid to the Owner.
17.03 It is confirmed that the Lessee's obligations to insure the Goods and
all other obligations of the Lessee with respect to the Goods under
the terms of this Master Agreement and the Lease Contract, including
the obligation to pay rental, shall continue until the Goods have been
sold in accordance with the terms of Clause 16 or this Clause 17 or
redelivered to the Owner.
18. RIGHTS AND WAIVER
18.01 No right or remedy conferred upon Simon by this Agreement shall be
exclusive of any remedy provided for herein or by law and all such
rights and remedies shall be cumulative.
25
<PAGE> 27
18.02 The exercise of any power or remedy or the enforcement of any right
shall not be construed as a waiver of the right to exercise any other
power or remedy or to enforce any other right. Any forbearance or
indulgence granted by Simon shall not constitute a waiver of the right
or remedy of Simon in respect of which such forbearance or indulgence
is granted and Simon shall be entitled to exercise such right or
remedy at any time thereafter.
19. NOTICES
19.01 Every notice, request, demand or other communication under this Master
Agreement shall:
(a) be in writing delivered personally or by prepaid first class
letter, telex or facsimile transmission (confirmed in the case
of a telex or facsimile transmission, by prepaid first class
letter sent within 24 hours of despatch but so that the
non-receipt of such confirmation shall not affect in any way
the validity of the telex or facsimile transmission in
question);
(b) be deemed to have been received, subject as otherwise provided
in this Master Agreement, in the case of a telex, at the time
of despatch with confirmed answerback of the addressee
appearing at the beginning and end of the communication, in
the case of a facsimile transmission, at the time of despatch
with confirmation that the communication was well received
(provided that, in the case of a telex or facsimile
transmission, if the date of dispatch is not a business day in
the country of the addressee it shall be deemed to have been
received at the opening of business on the next such business
day), and in the case of a letter, when delivered personally
or five (5) days after being put in the post;
(c) be sent:
(1) to Simon to:
Simon-Horizon Limited
Horizon House
Azalea Drive
Swanley
Kent BR8 8JR
Telex: 896050 EXPLOR G
Fax: 0322 613650
(Attention: Company Secretary)
26
<PAGE> 28
with a copy to:
Simon Engineering PLC
Simon House
Bird Hall Lane
Stockport
Cheshire SK3 ORT
Telex: 665923 SIMENG G
Fax: 061 491 2472
(Attention: Company Secretary)
(2) to the Lessee to:
Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent BR8 8JR
Telex: 957840 EXPLOR G
Fax: 0732 742977
(Attention: Company Secretary)
or to such other address, telex number of facsimile number as is
notified by one party to the other under this Master Agreement.
20. GENERAL
20.01 This Master Agreement shall be governed by and construed in accordance
with English Law and the parties hereby submit to the exclusive
jurisdiction of the High Court of Justice in England.
20.02 Save as hereinafter provided, neither Simon nor the Lessee may assign
or otherwise transfer any of its rights or obligations under this
Master Agreement without the prior written consent of the other party
hereto PROVIDED ALWAYS that Simon may with the consent of the Owner
assign or otherwise transfer any or all of its rights under, and the
benefit of, this Master Agreement without the consent of the Lessee,
except that Simon shall not without the prior written consent of the
Lessee (such consent not to be unreasonably withheld or delayed) so
assign or otherwise transfer any or all of such rights and benefits to
an assignee who is a Business Competitor of HEL (as such term is
defined in and for the purposes of the Agreement). In the event of
any such assignment or transfer by Simon such assignment or transfer
shall not impose any
27
<PAGE> 29
greater liabilities on the Lessee towards Simon than those liabilities
which the Lessee would have had to Simon at the time of such
assignment had no such assignment or transfer taken place.
20.03 The Lessee undertakes to provide Simon copies of its audited balance
sheet and profit and loss account as soon as possible after the ending
of its financial year or other accounting period and to supply such
other information about the Goods, their insurance, condition and
maintenance as Simon may from time to time reasonably require.
The Lessee shall promptly provide to the Owner following a request by
Simon or the Owner with financial and other information concerning the
Lessee and the Guarantors and their respective affairs as the Owner
(or Simon, in order to comply with its obligations pursuant to the RBS
Master Leasing Agreement and the RBS Lease Contracts) may from time to
time reasonably require.
20.04 The Lessee represents and warrants with Simon that it will not by
entering into or performing its obligations under any Lease Contract
be in breach of or default under any mortgage or other agreement or
commitment whatsoever binding on the Lessee.
AS WITNESS the hands of the representatives duly authorised on behalf of the
parties hereto the day and year first written above.
SIGNED BY SIGNED BY
--------------------------- ------------------------------
SIGNATURE /s/ [illegible signature] SIGNATURE /s/ G.M. Harrison
DESIGNATION DESIGNATION
------------------------- ----------------------------
for and on behalf of Simon for and behalf of the Lessee
in the presence of: in the presence of:
WITNESS /s/ Andrew R. Murray WITNESS /s/ Andrew R. Murray
FULL NAME Andrew R. Murray FULL NAME
------------------------------
ADDRESS ADDRESS
----------------------------- --------------------------------
- ------------------------------------ ---------------------------------------
- ------------------------------------ ---------------------------------------
28
<PAGE> 30
SCHEDULE 1
List of Documents and Evidence
1. A copy certified by a Director or the Secretary of the relevant person
to be a true, complete and up-to-date copy, of the Certificate of
Incorporation and Memorandum and Articles of Association of the Lessee
and each of the Relevant Parties.
2. A copy, certified by a Director or the Secretary (or similar officer)
of the relevant person to be a true copy, and as being in full force
and effect and not amended or rescinded, of resolutions of the board
of directors of each of the Lessee and the other Relevant Parties:
(i) approving the transactions contemplated by such of the
Relevant Documents to which the relevant person is a party;
(ii) authorizing a person or persons to sign and deliver on behalf
of the relevant person or, as the case may be, authorizing the
sealing by the relevant person of the Relevant Documents to
which it is a party and any notices or other documents to be
given pursuant thereto;
3. A copy certified by a Director or the Secretary (or similar officer)
of the relevant person to be a true copy, and as being in full force
and effect and not revoked or withdrawn, of any power of attorney
issued by the relevant person pursuant to the said resolutions.
4. A list, certified as true, complete and up to date by a Director or
the Secretary (or similar officer) of each of the Relevant Parties of
its directors and officers.
5. Evidence that all governmental and other licenses, approvals,
consents, registrations and filings necessary for any matter or thing
contemplated by the Relevant Documents and for the legality, validity,
enforceability, admissibility in evidence and effectiveness thereof
have been obtained or effected on an unconditional basis and remain in
full force and effect (or, in the case of effecting of any
registrations and filings, that arrangements satisfactory to Simon
have been made for the effecting of the same within any applicable
time limit).
6. Evidence that on Delivery, the Ship is and will remain insured in
accordance with the provisions of the Charter and all requirements of
the Charter in respect of such insurance have been complied with.
7. Evidence that on delivery, the Goods will be insured in accordance
with the provisions of this Master Leasing Agreement and all
requirements of this Master Leasing Agreement in respect of such
insurance have been complied with.
29
<PAGE> 31
8. The agreement duly executed by the Lessee.
9. The Guarantees duly executed by the Guarantors.
10. An Assignment Agreement between Simon and the Lessee in respect of the
Management Agreement.
11. Such legal opinions as Simon may require in relation to the laws of
any jurisdiction to which any Relevant Party is or may be subject or
which may affect the performance of the obligations of any Relevant
Party.
12. The Deed of Assignment as so defined in the Agreement.
30
<PAGE> 1
EXHIBIT 10.10
CONTRIBUTION AND ASSUMPTION AGREEMENT
This Contribution and Assumption Agreement ("Agreement") is entered
into effective as of the 31st day of December, 1996, by and between Seitel
Geophysical, Inc., a Delaware corporation ("SGI"), and Eagle Geophysical, Inc.,
a Delaware corporation ("Eagle").
WHEREAS, Eagle is a wholly-owned subsidiary of Eagle Horizon, Inc., a
Delaware corporation ("Eagle Horizon");
WHEREAS, Eagle Horizon is a wholly-owned subsidiary of EHI Holdings,
Inc., a Delaware corporation ("EHI Holdings");
WHEREAS, EHI Holdings is a wholly-owned subsidiary of SGI, so that
Eagle is an indirect wholly-owned subsidiary of SGI;
WHEREAS, SGI owns certain seismic data acquisition equipment and
related assets;
WHEREAS, SGI wishes to contribute to Eagle as an additional equity
contribution all of its assets and other rights, subject to the assumption by
Eagle of all of SGI's liabilities and obligations; and
WHEREAS, in order to effectuate the foregoing, SGI and Eagle now
desire for SGI to contribute all of its assets to Eagle, and for Eagle to
assume from SGI all of its liabilities, all as more particularly described
herein.
NOW, THEREFORE, for and in consideration of $10.00 and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto agree as follows:
1. Contribution of Assets by SGI.
(a) SGI hereby sells, conveys, transfers, assigns,
contributes, and delivers to Eagle all of its right, title, and
interest in and to all of its assets (the "Assets") other than the
Excluded Assets (as hereinafter defined).
(b) As used herein, the term "Assets" shall include but
not be limited to:
(i) all right, title and interest of SGI in the
seismic data acquisition equipment described on Exhibit "A"
attached hereto (the "Equipment");
(ii) all right, title and interest of SGI in, to and
under all contracts related to the operation, use, rental or
other exploitation of the Equipment or otherwise related to
the acquisition of seismic data, including but not limited to
those agreements and contracts listed on Exhibit "B" attached
hereto;
<PAGE> 2
(iii) all right, title and interest of SGI in, to and
under all contracts related to the acquisition, lease,
financing, storage, and maintenance of the Equipment,
including but not limited to those agreements and contracts
listed on Exhibit "C" attached hereto;
(iv) all cash and accounts receivable;
(v) all price lists, customers lists, sales promotion
and advertising materials, vendor lists, catalogs, research
material, technical information, management information
systems, software and rights thereto, technology,
specifications, designs, drawings and other data, copyrights,
trade secrets, know- how, inventions, patents, patent
applications, and other intellectual property rights, whether
registered or unregistered, owned by SGI and used in the
operation of the Assets or otherwise in connection with any
Asset;
(vi) all right, title and interest of SGI in, to and
under all licenses, permits, consents, approvals,
authorizations, qualifications, orders and franchises issued
by any federal, state, provincial or municipal authority or
any other entity relating to the maintenance, use or operation
of the Assets; and
(vii) all rights, claims or choses in action of SGI
arising out of occurrences before or after the date hereof
against any person relating to the Assets.
(c) As used herein, the term "Excluded Assets" shall mean
and be limited to (i) the issued and outstanding shares of stock of
EHI Holdings, Inc., a wholly-owned subsidiary of SGI, and the rights
and privileges relating thereto, (ii) all of the issued and
outstanding shares of stock of African Geophysical, Inc., a Cayman
Island corporation and a wholly-owned subsidiary of SGI, and (ii) the
rights of SGI under any agreements relating to the potential
acquisition of an ocean bottom cable seismic data acquisition system.
2. Assumption of Liabilities by Eagle. Eagle hereby assumes all
of SGI's obligations and liabilities, including but not limited to those
related to the Assets, except for those liabilities and obligations (A) related
to the Excluded Assets, (B) arising under the Guaranty dated as of December 28,
1996 guaranteeing the obligations of Seitel, Inc. under Seitel's $75 Million
Senior Notes, and (C) arising under the Subsidiary Guaranty dated as of July
22, 1996 guaranteeing the obligations of Seitel, Inc. under Seitel's $25
Million Revolving Credit Agreement. Such assumed liabilities and obligations
shall include, without limitation, the obligations under those agreements
listed on Exhibits "B" and "C" hereto.
3. Third-Party Consents. To the extent that SGI's rights under
any agreement or other Asset that is assigned hereunder may not be assigned
without the consent or approval of another person, including any governmental
approval, which has not been obtained as of the date hereof, this Agreement
shall not constitute an agreement to assign the same if an attempted assignment
would constitute a breach thereof or be unlawful, and SGI shall use its
reasonable efforts to obtain any such required consent or approval as promptly
as possible. If any such consent or approval shall not be obtained or if any
attempted assignment would be ineffective or impair Eagle's rights to the Asset
in question so that Eagle would not in effect acquire the benefit of all such
rights, SGI, to the maximum extent permitted by law, shall act after the date
hereof
2
<PAGE> 3
as Eagle's agent in order to obtain for Eagle the benefits thereunder, and
shall cooperate to the maximum extent permitted by law, with Eagle in any other
reasonable arrangements designed to provide such benefits to Eagle. Without
limiting the generality of the foregoing, SGI acknowledges and agrees that its
obligation under this Section is to place Eagle in a position from and after
the effective date hereof to effectively manage the operations of the Assets
and to receive all revenues derived therefrom to the same extent that it would
have received such revenues had Eagle obtained all required consents and
approvals and Eagle had obtained title to all of the Assets as of the effective
date hereof.
4. General Provisions.
(a) This Agreement sets forth the entire understanding of
the parties hereto with resect to the transactions contemplated
hereby. It shall not be amended or modified except by written
instrument duly executed by all of the parties hereto. Any and all
previous agreements and understandings between or among any or all of
the parties regarding the subject matter hereof, whether written or
oral, are superseded by this Agreement.
(b) This Agreement may only be assigned by a party with
the prior written consent of the other party hereto.
(c) All of the terms and provisions of this Agreement
shall be binding upon, inure to the benefit of, and be enforceable by
the successors and assigns of SGI and Eagle.
(d) A benefit, right or duty provided by this Agreement
shall be deemed waived only by a writing expressly referring to this
Agreement that is signed by the party entitled to the benefit thereof.
The waiver of one instance of any act, omission, condition or
requirement shall not constitute a continuing waiver unless
specifically so stated in the aforesaid written waiver.
(e) All communications under this Agreement shall be made
in writing to the respective addresses first above written, or such
other addresses as may be designated in writing by notice given
hereunder. Such communications shall be deemed to have been duly
given if either delivered personally or by air courier service, sent
by facsimile, or mailed by postage prepaid registered or certified
U.S. mail, return receipt requested. All communications under this
Agreement shall be effective upon personal delivery or facsimile
transmission, or deposit in the U.S. mail or with an air courier
service.
(f) This Agreement shall be governed by and interpreted
and enforced in accordance with the laws of the State of Texas,
without giving effect to any conflicts of law.
(g) Subject to the terms and conditions herein provided,
each of the parties hereto shall use its best efforts to take, or
cause to be taken such action, to execute and deliver, or cause to be
executed and delivered, such additional documents and instruments,
and to do, or cause to be done, all things necessary, per or advisable
under
3
<PAGE> 4
the provisions of this Agreement and under applicable law to
consummate and make effective the transactions contemplated by this
Agreement.
(h) If any one or more of the provisions of this
Agreement shall for any reason be held by a court of competent
jurisdiction to be invalid, illegal, or unenforceable in any respect,
such invalidity, illegality, or unenforceability shall not affect the
remaining provisions of this Agreement, and this Agreement shall be
construed as if such invalid, illegal, or unenforceable provision had
never been a part hereof.
(i) This Agreement may be executed in any number of
counterparts and any party hereto may execute any such counterpart,
each of which when executed and delivered shall be deemed to be an
original and all of which counterparts taken together shall constitute
but one and the same instrument.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their duly authorized officers effective as of the date first
written above.
SEITEL GEOPHYSICAL, INC.
BY: /s/ Jay N. Silverman
------------------------------
Jay N. Silverman
President
EAGLE GEOPHYSICAL, INC.
BY: /s/ Jay N. Silverman
------------------------------
Jay N. Silverman
President
4
<PAGE> 5
EXHIBIT "A"
LIST OF EQUIPMENT
(attached)
<PAGE> 6
EXHIBIT "B"
LIST OF OPERATING AGREEMENTS
1. Supplemental Agreement between SGI and Southwestern Energy Production
Company dated August 12, 1996.
2. Supplemental Agreement between SGI and Enron Oil and Gas Company.
3. Supplemental Agreement between SGI and Couba Operating Company dated
November 18, 1996.
4. Supplemental Agreement between SGI and Broughton Associates, J.V.
dated May 30, 1996.
5. Supplemental Agreement between SGI and Aspect Resources Limited
Liability Company dated September 20, 1995.
6. Supplemental Agreement between SGI and TEPCO, INC. dated March 28,
1996.
7. Supplemental Agreement between SGI and Hunt Oil Company dated July 23,
1996.
8. Geophysical Data Acquisition Contract between SGI and Fina Oil and
Chemical Company dated March 25, 1996.
9. Supplemental Agreement between SGI and Forman Petroleum Corporation
dated July 17, 1996.
10. Supplement No. 2 between SGI and Burlington Resources (formerly
Meridian Oil Inc.) dated November 1, 1995.
11. All Master Agreements, including but not limited to the Master
Agreements relating to the above-listed supplements.
12. Operating Leases between SGI and Horizon Exploration Limited and/or
Horizon Seismic, Inc.
<PAGE> 7
EXHIBIT "C"
LIST OF ACQUISITION/FINANCING AGREEMENTS
1. Equipment Purchase Agreement between SGI and Opseis Inc. dated January
5, 1994.
2. Equipment Purchase Agreement between SGI and Sercel Incorporated dated
September 30, 1996.
3. Equipment Purchase Agreements between SGI and Geospace Corporation
dated October 3, 1996.
4. Term Credit and Security Agreement between SGI and Compass Bank dated
July 1993, as modified and amended, and Term Note in the original amount of
$4,300,000, and all Addenda, Schedules, and Amendments thereto.
5. Master Lease Agreement between SGI and McCullagh Leasing, a unit of GE
Capital Fleet Services, dated February 22, 1994 and Addenda, Schedules and
Amendments thereto.
6. Master Equipment Lease between SGI and MetLife Capital, Limited
Partnership, dated May 20, 1994 and Addenda, Schedules and Amendments thereto.
7. Loan and Security Agreement between SGI and MetLife Capital
Corporation dated February 22, 1996, Supplemental Security Agreement No. One
between SGI and MetLife Capital Corporation dated February 22, 1996, and
Promissory Note in the original amount of $433,000 payable to MetLife Capital
Corporation, and all Addenda, Schedules, and Amendments thereto.
8. Loan and Security Agreement between SGI and NationsBanc Leasing
Corporation of North Carolina dated as of July
9, 1996, Secured Term Note A in the original amount of $5,902,372, and Secured
Term Note B in the original amount of $1,361,839.13, and all Addenda,
Schedules, and Amendments thereto.
<PAGE> 1
10.11.1
DATED 11th JULY 1994
J. MARR LIMITED
- and -
HORIZON EXPLORATION LIMITED
AGREEMENT to extend the Charterparty
of "PACIFIC HORIZON"
HILL DICKINSON DAVIS CAMPBELL
PEARL ASSURANCE HOUSE
DERBY SQUARE
LIVERPOOL L2 9XL
<PAGE> 2
THIS AGREEMENT is made the 11th day of July 1994 BETWEEN: J. MARR LIMITED
(registered number 73874 of St. Andrews Dock, Hull HU3 4PN ("the Owners") of
the one part and HORIZON EXPLORATION LIMITED (registered number 2804983) of 6,
Pembroke Road, Sevenoaks, Kent ("Horizon")
WHEREAS:
(1) By a charterparty dated 4th February 1981, ("the Charterparty") the
Owners let by way of charter to Horizon (formerly Simon-Horizon
Limited whose name at the time of entering into the Charterparty was
Horizon Exploration Limited (registered number 467924) the motor
vessel "PACIFIC HORIZON" formerly known as "SUB-SEA 1" (hereinafter
called "the Vessel") as more fully described in the Charterparty
(2) The Charterparty was due to expire on 30th June 1993 and the parties
have now agreed to extend the term of such charter for a period of ten
years from 1st July 1993 (subject to termination by either party
giving to the other one month's notice) in the terms following
IT IS HEREBY AGREED as follows:
1. CLAUSE 3 of the Charterparty shall be amended to read:
"Owners agree to continue to let and the Charterers agree to
continue to hire the Vessel for the purpose of all lawful
activities associated with off-shore geophysical survey
operations as Charterers shall direct for a period of ten
years from 1st July 1993 unless during such period one party
gives to the other at least one month's notice of its desire
to determine the Charterparty whereupon such Charterparty
shall cease on expiry of such notice and the Vessel shall be
re-delivered in accordance with clause 36 of the Charterparty.
Charterers shall not send the Vessel beyond the limits of the
Limited European Trading Area as defined in the second
schedule to the Merchant Shipping (Certification of Marine
Engineer Officers and Licensing of Marine Engineer Operators)
Regulations 1986 without Owners' consent but such consent
shall not be unreasonably withheld provided Charterers agree
to the rate of hire being increased from the date the vessel
leaves such area to take account the anticipated increased
operational costs consequent upon the Vessel trading outside
such area. The Vessel shall be loaded and unloaded safely
afloat in any dock or at any wharf or place or anchorage
within such area (or outside such area with Owners' consent)
2
<PAGE> 3
according to the custom of the port or place as the Charterers
may direct"
The proviso shall be the same as in the clause 3 in Charterparty
2. CLAUSE 4 of the Charterparty shall be deleted and the remaining
clauses re-numbered accordingly
3. CLAUSE 5 shall be amended so as to substitute 1st July 1993 for 8th
May 1981
4. CLAUSE 6 shall be amended so as to read:
(a) "Charterers shall pay for the use and hire of the vessel at
the rate of L.2250 per day commencing at and from her delivery
as aforesaid and continuing until the date of her re-delivery
to Owners after completion of refurbishment as provided in
clause 18 (as re-numbered in accordance with clause 2 hereof)
except as mentioned in sub-clauses (b) and (c) hereof
(b) On each subsequent 1st July should there be any increase in
the United Kingdom Retail Prices Index ("RPI") published by
H.M. Stationery Office or any official Publication substituted
for it over that existing on the 1st July in the previous year
then for the next ensuing 12 months period until the next
following 30th June the rate per day specified in sub clause
(a) hereof shall be increased by the same percentage increase
in the RPI. Should there be no such increase in the RPI at
the relevant 3Oth June then the rate per day then prevailing
shall continue for the ensuing 12 month period
(c) In addition to any such increase as is described in sub-clause
(b) hereof on each subsequent 1st July should there be any
increase in insurance premium and/or mutual club call then
such increase shall be added pro rata to the rate per day
described in sub clause (a) as increased from time to time in
accordance with sub clause (b) for the ensuing 12 month
period. Such increase in premium and/or mutual club call
shall be added pro rata to the said rate per day even if there
is no increase under the terms of sub clause (b) hereof".
5. CLAUSE 16 shall be deleted and substituted by the words:
"Charterers shall not assign the benefit of this charter or
sub-let the Vessel without the written consent of, and in
terms and conditions acceptable to, the Owners and the owners
of the vessel"
3
<PAGE> 4
6. CLAUSE 25 shall be deleted and substituted by the words:
"If the Vessel shall be required by charterers to be laid up
in Hull the rate of hire shall be reduced by L.1000 per day
when such layup exceeds 30 continuous days. Such reduced rate
shall apply only upon the expiry of 7 days prior written
notice received from charterers who shall be obligated to give
7 days prior written notice of remobilisation when such layup
is to terminate"
7. ALL remaining clauses of the Charterparty shall stand unless impliedly
amended by the above
SIGNED by )
) /s/ [illegible signature]
for and on behalf of: )
the Owners )
SIGNED by )
) /s/ George Purdie (George Purdie)
for and on behalf of: )
the Charterers )
4
<PAGE> 1
10.11.2
DATED 11 JULY 1994
SIMON-HORIZON LIMITED
- and -
J. MARR LIMITED
- and -
HORIZON EXPLORATION LIMITED
DEED OF NOVATION
m.v. "PACIFIC HORIZON"
HILL DICKINSON DAVIS CAMPBELL
LIVERPOOL
REF:JGW
<PAGE> 2
THIS DEED OF NOVATION made the 11th day of July 1994
BETWEEN:
(1) SIMON-HORIZON LIMITED (registered number 467924) of Horizon House,
Azalea Drive, Swanley, Kent, BR8 8JR ("Simon")
(2) J. MARR LIMITED (registered number 73874) of St. Andrews Dock, Hull,
HU3 4PN ("the Owners") and
(3) HORIZON EXPLORATION LIMITED (registered number 2804983) of 6, Pembroke
Road, Sevenoaks, Kent ("Horizon")
WITNESSES as follows:
1. SIMON (formerly Horizon Exploration Limited registered number 467924)
and the Owners (formerly J. Marr & Son Limited registered number
73874) are parties to a charterparty dated 4th February 1993 as
amended by an agreement dated 30th March 1988 and by a supplemental
agreement dated 6th July 1990 ("the Charterparty") for the charter of
motor vessel "PACIFIC HORIZON" formerly known as the "SUBSEA 1"
(hereinafter called "the Vessel") as more fully described in the
Charterparty
2. SIMON wishes to transfer its rights and obligations under the
Charterparty to Horizon effective from 1st July 1993 and the Owners
have consented to such novation
3. HORIZON shall from 1st July 1993 be substituted for Simon under the
Charterparty as if Horizon had originally been a party to the
Charterparty instead of Simon. Horizon shall be bound by the
Charterparty as it relates to Simon and shall enjoy all rights and
benefits conferred on Simon under the Charterparty
4. THE Owners represent and warrant that they are the registered
disponent owners of the Vessel that the charter is valid and
enforceable and now in full force and that the owners of the Vessel
have consented to this novation
5. THE Owners release Simon from its obligations under the Charterparty
and all claims, actions, demands, proceedings and liability which it
may have or claim to have or but for this release might have had
against Simon connected with the Charterparty in respect of any
matter, act or omission of Simon from 1st July 1993 subject to hire
having been paid by Simon to the Owners and all other obligations on
the part of Simon having been complied with up to and including the
date hereof
6. HORIZON shall indemnify Simon against each claim, action, proceeding,
judgment, damage, loss, expense or liability
2
<PAGE> 3
incurred or suffered by or brought or made or recovered against Simon
by the Owners or any other person connected with the Charterparty in
respect of any matter, act or omission of Simon after 30th June 1993
7. HORIZON covenants with the Owners that Horizon will duly observe and
perform all the conditions and obligations imposed upon it by the
Charterparty
8. THE provisions of clause 35 of the Charterparty shall apply to this
deed
IN WITNESS whereof the parties hereto have hereunto executed and delivered this
document as a deed
EXECUTED as a deed by )
SIMON-HORIZON LIMITED )
acting by: )
director J.W. Greener /s/ J.W. Greener
secretary C.J. Matthews /s/ C.J. Matthews
EXECUTED as a deed by )
J. MARR LIMITED )
acting by: )
director /s/ [illegible signature]
director/secretary /s/ [illegible signature]
EXECUTED as a deed by )
HORIZON EXPLORATION )
LIMITED )
acting by: )
director /s/ George Purdie (George Purdie)
director /s/ G.M. Harrison
3
<PAGE> 1
10.11.3
Item 30 Operations
PACIFIC HORIZON -
CHARTER
<PAGE> 2
January, 1981.
IT IS THIS DAY AGREED between J. MARR AND SON LIMITED of St. Andrews Dock Hull
HU3 4PN (hereinafter called "Owners") being disponent owners of the good motor
vessel called "Subsea 1" (hereinafter called "the Vessel") described as per
clause 1 hereof and HORIZON EXPLORATION LIMITED of Horizon House, Azalea Drive,
Swanley, Kent BR8 8JR (hereinafter called "Charterers")
1. DESCRIPTION AND PERFORMANCE OF VESSEL:
Owners guarantee that at the date of delivery of the Vessel under this charter
(a) She shall be classed with Lloyds Class 100 + A1.
(b) She shall be in every way fitted for burning diesel oil in main
motors.
(c) She shall be of the description set out in appendix "A" attached
hereto and signed by Owners and Owners undertake to use their best
endeavours so to maintain the Vessel during the period of her service
hereunder. In the event of any conflict between the particulars set
out in the aforesaid appendix "A" and any provision of this charter
such latter provision shall prevail
2. CONDITION OF VESSEL:
Owners shall, before and at the date of delivery of the Vessel under this
charter, exercise due diligence to make the Vessel in every way fit for service
in accordance with clause 3 hereof in all weather working conditions with her
machinery equipment and hull in such a state as to obtain the most economic
working and with a full and efficient complement of master officers and crew.
Owners undertake that throughout the period of service under this charter they
will, whenever the passage of time, wear and tear or any event requires steps
to be taken to maintain the Vessel as stipulated in clause 1 hereof and in this
clause or to restore the Vessel to such condition, exercise due diligence to
maintain or restore the Vessel as aforesaid
3. PERIOD, PURPOSE AND TRADING LIMITS:
Owners agree to let and the Charterers agree to hire the Vessel for a period of
7 years commencing from the date of delivery of the Vessel, for the purpose of
all lawful activities associated with offshore geophysical survey operations as
Charterers shall direct.
- 2 -
<PAGE> 3
Charterers shall not send the Vessel beyond the limits of the Near Continental
Trading Area as defined in the Second Schedule to the Merchant Shipping
(Certification of Marine Engineer Officers) Regulations 1971 and 1980 without
Owners' consent but such consent shall not be unreasonably withheld provided
Charterers agree to the rate of hire being increased from the date the Vessel
leaves such area to take account of the anticipated increased operational costs
consequent upon the Vessel trading outside such area. The Vessel shall be
loaded and unloaded safely afloat in any dock or at any wharf or place or
anchorage within such area (or outside such area with Owners' consent)
according to the custom of the port or place as Charterers may direct.
PROVIDED THAT
(a) The Vessel shall not be ordered to nor bound to enter without Owners'
written permission
(i) Any place where fever or epidemics are prevalent or to which
the master officers and crew by law are not bound to follow
the Vessel
(ii) Any ice-bound place or any place where lightships marks and
buoys are or are likely to be withdrawn by reason of ice on
the Vessel's arrival or where there is risk that ordinarily
the Vessel will not be able on account of ice to reach the
place or to get out after having completed her operations.
The Vessel shall not be obliged to force ice nor to follow
icebreaker. If, on account of ice, the master considers it
dangerous to remain at the loading or discharging place for
fear of the Vessel being frozen in and/or damaged, he has
liberty to sail to a convenient open place and await
Charterers' fresh instructions.
(b) The Charterer shall not employ the Vessel or suffer her employment in
any trade or business which is forbidden by international law or is
otherwise illicit or in carrying illicit or prohibited goods or in any
manner whatsoever which may render her liable to condemnation in a
prize court or to destruction seizure confiscation and in event of
hostilities in any part of the world (whether war be declared or not)
shall not employ the Vessel or suffer her employment in carrying any
contraband goods and shall not permit or suffer the Vessel to enter or
trade to any zone which is declared a war zone by the Vessel's War
Risks insurers unless there shall have been effected by the Charterer
and at its expense such special insurance coverage as matters may
require.
(c) The Charterer shall not do or suffer to be done anything whereby the
registration of the Vessel as a British ship at a port of registry in
the United Kingdom may be forfeited or imperilled.
- 3 -
<PAGE> 4
(d) The Charterers shall not use the Vessel in any manner or for any
purpose excepted from any insurance policy or policies effected on the
Vessel from time to time or for the purpose of the carriage of goods
of any description excepted from the said insurance policy or policies
and shall not do or suffer to be done anything which would reasonably
be expected to invalidate any of the said insurance policy or policies
nor shall the Charterer do any act or voluntarily permit or suffer any
act to be done whereby: any insurance required hereunder shall or may
be suspended impaired or become defective
4. EXTENSION TO CHARTER:
Charterers have the option of extending the period of this charter for a
further three consecutive periods of 12 months. Charterers will be required to
declare by written notice to Owners an intention to extend the charter by each
extension six months in advance, but for the period of any such extension the
rate of hire will be calculated in accordance with clause 6 hereof.
5. DELIVERY:
The Vessel shall be delivered to Charterers at Hull on or about 8th May 1981
and re-delivered to Owners at a safe U.K. port or any other place agreed upon
between the parties. The Vessel shall be delivered to Charterers upon
successful completion of Owners' sea trial. Full charter rate is to apply from
the date of delivery.
6. RATE OF HIRE:
(a) Subject as herein provided Charterers shall pay for the use and hire
of the Vessel at the rate of L.2,100 per day commencing at and from
the date of her delivery, as aforesaid and continuing until the date
of her re-delivery to Owners after completion of refurbishment as
provided in clause 18.
(b) During the Primary Period of the bareboat charter referred to below
the rate in this clause is based on (i) L.980 being operating costs
per day relating to master, officers and crew, hire and maintenance of
electronics, insurance, stores, management, repatriation and hull and
machinery repairs and (ii) L.1,120 depreciation and interest per day
in respect of the Vessel. On 1st April 1982 and each 1st April
thereafter for the duration of the Charter the rate of hire shall be
increased by the amount of increase, if any, of either the said
operating costs and/or the rate of hire payable during the immediately
previous 12 months under the bareboat charter to the Owners the
relevant terms of which have been produced to Charterers. During the
Secondary Period of the said bareboat charter a sum equal to 75% of
the reduction in the bareboat charter rate of hire will be deducted
from the said figure of L.1,120 or such other figure which may be
applying at
- 4 -
<PAGE> 5
the end of such Primary Period representing depreciation and interest
during the said Primary Period in order to determine the figure
representing depreciation and interest during the period of any
extension of the charter as provided under clause 4 hereof.
(c) The rate of hire in this clause is based, inter alia, on the
employment of ex fishermen to man the Vessel. If at any time during
the charter Owners are required by the government and/or by union
pressure or for any other reason whatsoever to engage as master and/or
officers and/or crew members of the Merchant Navy Officers Association
and/or the National Union of Seamen then any extra cost to Owners as a
result thereof in addition to any increase payable under (b) hereof
shall be borne by Charterers for the remaining part of this charter
and shall be added to the charter hire
7. PAYMENT OF HIRE:
Payment of hire shall be made in cash in pounds sterling without discount
monthly in advance on the 1st day of each month at Williams & Glyn's Bank
Limited, Silver Street, Hull less any advances for disbursements made on
Owners' behalf. In default of payment, Owners have the right of withdrawing
the Vessel from the service of Charterers without noting any protest and
without interference by any court or any other formality whatsoever and without
prejudice to any claim Owners may otherwise have on Charterers under this
charter. Failure to or delay in exercising such right shall not amount to a
waiver of such right
8. BUNKERS AT DELIVERY AND RE-DELIVERY:
Charterers shall accept and pay for all bunkers lubricants greases and oils on
board at the time of delivery and Owners shall on expiry of this charter pay
for all bunkers and oils then remaining on board at the prices listed at the
respective ports of delivery and re-delivery at the time of such delivery or
redelivery
9. CHARTERERS' PERSONNEL:
Charterers may send upon any voyage made under this charter their own personnel
or those of their associated companies sub-contractors or clients in the
Vessel's available accommodation up to a number not exceeding that stated in
the Vessel's current Department of Trade Life Saving Appliance Certificate
(including the Vessel's complement of master officers and crew), Owners finding
provisions (except liquors). The cost of provisions for each month shall be
calculated at the end of the month and an average daily rate of such cost shall
then be calculated. Charterers shall pay to Owners by the end of the
following month their share of such daily rate which share shall be the ratio
that the average daily number of personnel on board serving for them or
- 5 -
<PAGE> 6
on their behalf during that month bears to the average daily total number of
personnel on board during that month serving both Owners and Charterers or on
their behalf.
10. LIEN:
Owners shall have a lien upon all goods and equipment owned by the Charterers
or their associated companies and installed on board the Vessel or being
carried in the Vessel for any amounts due under this charter and Charterers
shall have a lien on the Vessel for all monies paid in advance and not earned
and for all claims for damages arising from any breach of this charter by
Owners.
11. OWNERS TO PROVIDE:
Owners undertake to provide and to pay for insurance of their liabilities as
provided under clauses 29 and 31 hereof and for all provisions wages and all
other expenses of the master officers and crew; also for all deck cabin and
ships engine room and propulsion motor room stores. Owners' obligation under
this clause extends to cover all liability for customs or import duties arising
at any time during the performance of this charter in relation to the personal
effects of the master officers and crew and in relation to the stores
provisions and other matters aforesaid which Owners are to provide and/or pay
for and Owners shall refund to Charterers any sum they or their agents may have
paid or been compelled to pay in respect of such liability. Any amounts
allowable in general average for wages and provisions and stores shall be
credited to Charterers insofar as such amounts are in respect of a period when
the Vessel is on hire
12. CHARTERERS TO PROVIDE:
Charterers shall provide and pay for insurance of their liabilities as provided
under clause 31 hereof and for all pilotage and boatmen whether compulsory or
not fuel lubricants greases fresh water for boilers port charges light dues tug
assistance mooring lines at rig site or offshore installation or other place
agency fees port charges expenses of loading and unloading Charterers' stores
and equipment canal dues and steersmen dock dues all dock harbour and tonnage
dues at the port of delivery and redelivery agencies commission and all charges
other than those payable by Owners in accordance with clause 11 hereof provided
that all charges for the said items shall be paid by Owners when incurred for
Owners' purposes whether the Vessel is on hire or off hire. The foregoing
provision as to fuel shall not apply to any fuel used in connection with
general average sacrifice or expenditure or with the preparation for the dry
docking or repair of the Vessel and whilst the Vessel is in dry dock or under
repair. Fuel consumed under those circumstances shall be paid for by Owners.
PROVIDED that if Charterers use Owners' agency or facilities for obtaining fuel
for their own account and such is debited to Owners' account then
- 6 -
<PAGE> 7
Charterers shall pay Owners for such fuel with the next payment of hire due
after invoice has been rendered to Charterers by Owners
13. SPACE AVAILABLE TO CHARTERERS:
The whole reach and burthen of the Vessel's upper and main decks abaft the aft
bulkhead of the accommodation shall be at Charterers' disposal reserving for
Owners only the engineer's store and workshop, lamp room and safety equipment
store on the main deck and a small section of the starboard lower store for the
storage of paint. Additionally there shall be made available at all times to
Charterers on the upper and main decks in the accommodation all those cabins or
spaces described in the drawing No. RW/0006 of the Vessel dated October 1980 as
being for ratings, cadets, senior seismic, canteen, secondary navigation
control room lounge and officers' mess together with client's suite, party
chief's suite and senior seismic single berth on the forecastle deck
14. DUTIES OF MASTER AND CREW:
The master shall carry out his duties with the utmost despatch during the day
and night as required by Charterers and shall render all customary assistance
with the Vessel's crew and equipment. The Master shall be under the orders of
the Charterers as regards employment agency and other arrangements. The
Charterers shall furnish the master with all instructions and sailing
directions and the master and engineer shall keep full and correct logs
accessible to the Charterers and their agents. Notwithstanding anything
contained in this clause the Master may refuse to comply with any order of the
Charterers if in his opinion the safety of the Vessel is likely to be
endangered whereupon notice in writing shall be given to Charterers and/or
their agents to that effect. Owners undertake that the Vessel's crew:
(a) Will connect and disconnect fuel and water in port or any other
installations;
(b) Will assist when necessary in operations associated with the
employment of the Vessel in surveying operations
15. CONDUCT OF VESSEL'S PERSONNEL:
If Charterers shall complain of the conduct of the master or of any of the
officers or if Owners shall complain of the conduct of the Charterers'
personnel or of personnel invited aboard the Vessel by Charterers Owners and
Charterers shall jointly and immediately investigate the complaint and if the
complaint proves to be well founded shall take such action as is necessary and
practicable
- 7 -
<PAGE> 8
16. SUB-LET AND ASSIGNMENT:
Charterers shall not assign the benefit of this charter or sub-let the Vessel
except to a company within the Horizon group of companies and in such event the
assignment or sub-letting shall be on terms and conditions acceptable to Owners
and the owners of the Vessel. It is hereby acknowledged by Charterers that
Owners may assign the benefit of this charter to Ship Mortgage Finance Company
Limited the present owners of the Vessel.
17. DANGEROUS GOODS:
Subject to the provisions of clause 3 hereof Charterers shall at the discretion
of the master have the liberty of carrying explosive and dangerous commodities
provided such are packed and stowed in accordance with all relevant regulations
of the country of the Vessel's flag and any other permitted regulation and/or
IMCO Dangerous Goods Code. Any additional expenses incurred in complying with
such regulations shall be for Charterers' Account
18. CHARTERERS' EQUIPMENT:
Charterers shall have the right to install equipment on board the Vessel with
the written consent of Owners which consent shall not be unreasonably withheld
provided Owners have first obtained consent from the owners of the Vessel and
provided always that the installation of the equipment complies with the
requirements of the Vessel's classification Society and the regulating
authority of the Vessel's flag. The equipment shall be carried at the risk of
the Charterers. The Owners shall in no way be responsible for any consequences
arising from or in connection with the equipment and Charterers to indemnify
Owners against all consequences and liabilities arising therefrom. The cost of
installation survey operation maintenance and removal of the equipment together
with the refurbishing of the Vessel to original condition after removal of
equipment shall be to Charterers' account. Provided that no removal and
refurbishing shall take place in the event of a terminating event as specified
in clause 19 (v) and (xii) of the bareboat charterparty between the owners of
the Vessel and the Owners. In such event there shall be effected a sale by the
owners of the Vessel together with the equipment as agreed between the owners
of the Vessel and the parties hereto. Refurbishing of the Vessel shall include
all work required to make seaworthy and restore the Vessel after removal of
equipment including restoring the Vessel to its classification if required but
shall not include the removal of basic structural strengthening and alterations
built into the Vessel during initial conversion to accommodate Charterers'
equipment
- 8 -
<PAGE> 9
19. SALVAGE:
All salvage and all proceeds from derelicts shall be divided equally between
Owners and Charterers after deducting the master's officers' and crews' share
hire of Vessel for time lost and cost of fuel consumed and all other damage
costs and expenses incurred. Subject as aforesaid and subject to the
provisions of clauses 21 and 22 hereof all loss of time and all expenses paid
excluding any damage to or loss of the Vessel incurred in saving or attempting
to save life and in unsuccessful attempts to salve shall be borne equally by
Owners and an attempt to undertake salvage shall be made by the Vessel unless
such has been mutually agreed between the parties or unless there is a legal
obligation upon the master or Owners to carry out salvage.
20. MAINTENANCE AND REPAIRS:
Notwithstanding the provisions of clauses 21 and 22 hereof Charterers shall
allow Owners up to 20 days in each year cumulative during the period of the
charter on hire for necessary maintenance and/or overhaul and/or repairs
including dry docking in connection with Owners' duties under Clause 2 hereof
such days to be taken at the discretion and decision of the Owners who will as
far as possible take into account the exigencies of the service when making
such decision. Any accumulated time for dry docking maintenance and repairs
saved but not used shall be payable by Charterers annually and any balance upon
re-delivery at the then prevailing daily hire.
21. SUSPENSION OF HIRE:
(A) If as a result of any deficiency of crew or Owners' stores, strike of
master, officers and crew, breakdown of machinery, damage to hull or
other accident, the Vessel is prevented from working for a period of
time more than 12 hours per week no hire shall be payable from the
commencement of such loss of time until the Vessel is again ready and
in an efficient state to resume her service from a position not less
favourable to Charterers than that at which such loss of time
commenced; and any hire paid in advance shall be adjusted accordingly.
If such loss of time shall not exceed the said period of 12 hours full
hire shall be paid by Charterers Provided always however that hire
shall not cease in the event of the Vessel being prevented from
working as aforesaid as a result of:
(i) The carriage of dangerous goods.
(ii) Quarantine or risk of quarantine unless caused by the master,
officers or crew having communication with the shore at any
infected area not in connection with the employment of the
Vessel and without consent or the instructions of Charterers.
- 9 -
<PAGE> 10
(iii) Deviation from her charter duties or exposure to abnormal
risks at the request of Charterers.
(vi) Working alongside or in the proximity of any off-shore unit
provided that there has been no gross dereliction of duty on
the part of the master, officers or crew of the Vessel.
(v) Detention in consequence of being driven into port or to
anchorage through stress of weather or trading to shallow
harbours or to rivers or ports with bars when the expenses
resulting from such detention shall be for Charterers' account
howsoever incurred.
(vi) Any act or omission of the Charterers their servants or
agents.
(vii) Detention or damage by ice.
(B) Owners shall be under no liability whatsoever to Charterers for any
loss damage or delay sustained by Charterers as a result of the Vessel
being prevented from working by any cause whatsoever other than
Owners' failure to comply with their obligation to make the Vessel
seaworthy and fit for her duties in accordance with this charter when
such liability shall be limited as provided under clauses 31 and 32.
(C) The Vessel shall be dry docked at regular intervals to be mutually
agreed and fuel consumed during the dry docking period and dry dock
costs to be for Owners' account. Charterers shall place the Vessel at
Owners' disposal clear of Charterers' moveable or detachable equipment
(if required by Owners) at the nearest port suitable for the purpose.
The Vessel shall be off-hire unless the full time allowed in clause 20
is not used from the time of arrival at the dry docking port when
clear of such equipment and shall remain off-hire until ready to
resume Charterers' service at the place at which the off-hire period
commenced.
22. DEVIATION:
Further and without prejudice to the provisions of clause 21 in the event of
the Vessel deviating (which expression includes putting back putting into any
port other than that to which she is bound under the instructions of
Charterers) for any cause or for any purpose previously mentioned in clause 21
no hire shall be payable as from the commencement of such deviation until the
time when the Vessel is again ready and in an efficient state to resume her
service from a position not less favourable to Charterers than that at which
the deviation commenced unless such deviation in the opinion of the master was
necessary in the interests of the
- 10 -
<PAGE> 11
Charterers or the safety of the Vessel and unless the loss of time in
consequence thereof shall exceed 12 hours. In the event of the Vessel for any
cause or for any purpose previously mentioned in clause 21 putting into any
port other than the port to which she is bound on the instructions of
Charterers the port charges and other expenses at such port shall be borne by
Owners. Should the Vessel be driven into port or any anchorage by stress of
weather hire shall continue to be due and payable during any loss of time
caused thereby
23. LOSS OF VESSEL:
Should the Vessel be lost hire shall cease at noon on the day of her loss and
should the Vessel be missing hire shall cease at noon on the day on which she
was last heard of and any hire in advance and not earned shall be returned to
Charterers
24. INFECTED AREA AND INFRACTION OF LOCAL LAWS:
Owners shall be liable for any delay in quarantine arising from the Owners,
master officers or crew having communication with the shore at any infected
area without the written consent or instructions of Charterers or their agents
also for any loss of time through detention by customs or other authorities
caused by smuggling or other infraction of local law on the part of the master
officers or crew
25. LAYING UP:
Charterers shall have the option of laying up the Vessel in which case the hire
provided for under this charter shall be reduced by the amount by which Owners
can reasonably reduce the expenditure otherwise falling upon them under this
Charter subject however to a minimum of 30 days being required for laying up
the Vessel otherwise full hire will be required by Owners
26. REQUISITION:
Should the Vessel be requisitioned by any government during the period of this
charter the Vessel shall be deemed to be off-hire during the period of such
requisition and any hire paid by the said government in respect of such
requisition period shall be for Owners' account. The period during which the
Vessel is on requisition to the said government shall count as part of the
period provided for in clause 3 of this charter. Negotiations with the
requisitioning government to secure hire or compensation for the Vessel and/or
the Charterers' equipment shall be conducted after agreement between the
parties by either party or jointly. In the event of the charter period
terminating within the period of requisition Charterers shall fulfil their
obligations under the terms of clauses 3, 5, 8 and 36 upon the Vessel being
released from requisition the cost of the re-delivery voyage shall be that cost
- 11 -
<PAGE> 12
including steaming from the port or place of initial requisition or that port
or place of release from requisition whichever is the lesser.
27. OUT BREAK OF WAR:
In the event of war or hostilities preventing the operation of this Vessel in a
particular area of the world where Charterers require it to be operated
Charterers shall not have the right of cancelling this charter but shall order
the Vessel to a part of the world free of such war or hostilities
28. WAR RISK:
(a) The Vessel (unless the consent of the Owners be first obtained)
(i) shall not be bound to proceed to any place on any voyage and
shall not be used on any service which will bring her within a
zone which is known to be dangerous as a result of any actual
or threatened act of war, war, hostilities, war like
operations revolutions civil war civil commotion or the
operation of international law or of any acts of piracy or of
hostility or malicious damage against this or any other Vessel
or its cargo by any person party or state whatsoever
(ii) shall not be exposed in any way to any risks in respect of
penalties or otherwise howsoever consequent upon the
impositions of sanctions by any government or governments and
(iii) shall not carry any goods or equipment that may in any way
expose her to any risks of seizure capture penalties or any
other interference of any kind whatsoever by any belligerent
or fighting power or party or by any "de jure" or "de facto"
government or ruler
(b) The Vessel shall have liberty to comply with any orders or direction
as to departure arrival routes ports of call stoppages destinations
delivery or in any other wise whatsoever given by the government of
the nation under whose flag the Vessel sails or any other government
or by any other person (or body) acting or purporting to act with the
authority of any such government or by any committee or person having
under the terms of the war risks insurance on the Vessel the right to
give any such orders or directions
- 12 -
<PAGE> 13
(c) If in compliance with the provisions of this clause anything is done
or is not done such shall be deemed to be a permissible deviation
29. WAR INSURANCE:
War and/or mine risk insurance if any shall be for Owners' account but
notwithstanding the provisions of clause 11 hereof war risk insurance on hull
and machinery on mutually agreed value in excess of the rate ruling at the date
hereof shall be for Charterers' account
30. ADDITIONAL WAR RISKS:
Any extra expenses which may be incurred by Owners if the Vessel with the
consent of Owners is obliged by Charterers or on Charterers' requirements to
trade in areas where there is war (de facto or de jure) shall be borne by
Charterers, provided that before such expenses are incurred Charterers are
given an opportunity to signify their approval
31. RESPONSIBILITY AND INDEMNITY:
(a) Charterers shall not be responsible for damage to or in connection
with loss of the Vessel howsoever caused including personal injury or
death of Owners' servants or anyone to whom Owners may be responsible
in this respect howsoever or by whomsoever caused even if caused by
act neglect or default of anyone for whom otherwise Charterers might
be responsible and Owners shall indemnify Charterers against all
consequences and liabilities arising from or in connection with such
loss or damage or personal injury or death of Owners' servants or
anyone to whom Owners may be responsible
(b) Owners shall not be responsible for any damage to or loss of
Charterers' goods or equipment or that of their associated companies
or clients fitted in or to or carried on board or towed by the Vessel
or any damage to or loss of the off shore installation to which the
Vessel is ordered by Charterers howsoever or by whomsoever caused even
if caused by act neglect or default of any one for whom otherwise
Owners might be responsible and Charterers shall hold harmless and
indemnify Owners from and against all liabilities arising from or
relating to such loss or damage including liability for personal
injury or death sustained by Charterers' servants and/or those of
their associated companies or of their clients and/or anyone to whom
Charterers may be responsible resulting from or occurring in
connection with such loss or damage insofar as such person was in
attendance and/or was on board the Vessel and/or was at any time that
the personal injury or death was caused or incurred being carried by
the Vessel to or
- 13 -
<PAGE> 14
from such off shore installation and/or other place or places at
Charterers' request
32. LIMITATIONS:
Nothing herein contained in this agreement shall be construed or held to
deprive Owners or Charterers of any right to claim limitation of liability
provided by any applicable law statute or convention
33. PRESERVATION OF SECRECY:
All information regarding Charterers' client operation investigations and
findings together with the nature and specification of Charterers' equipment
installed on board the Vessel shall be regarded as confidential to the
Charterers and under no circumstances shall any such information be divulged to
unauthorized persons or the press without prior permission of Charterers. This
ruling shall be incumbent upon all personnel for whom Owners have
responsibility. Owners shall ensure that all Owners' subcontractors give an
indemnity to observe the requirements of this clause
34. CHANGE OF OWNERSHIP:
(a) Owners' rights and obligations under this charter are not
transferrable by sale without Charterers' consent and Owners will make
application for consent to sale in good and sufficient time for
Charterers' consideration. Should any such sale take place Owners
shall reimburse Charterers with any hire paid in advance and not
earned and the cost of fuel and bunkers.
(b) Owners shall be entitled to require the affixing to the Vessel of a
suitably worded notice indicating that the Vessel is bareboat
chartered to Owners and that no liens are to be created
(c) Charterers shall be entitled to affix notices to their equipment
indicating ownership of the same and that no liens shall be created on
this equipment other than under clause 10 hereof.
35. LAW AND LITIGATION:
(a) This charter shall be construed and the relations between the parties
determined in accordance with the Law of England
(b) If any dispute difference or question shall arise at any time
hereafter between the parties hereto concerning any matter or thing
whatsoever herein contained or the operation or construction thereof
or any matter or thing in any way
- 14 -
<PAGE> 15
connected with these presents or the rights duties or liabilities of
either party under or in connection with this Agreement then and in
every such case the dispute or difference shall be referred to a
single arbitrator in London to be agreed between the parties hereto or
failing agreement within fourteen days after either party has given to
the other a written request to concur in the appointment of an
arbitrator one arbitrator to be appointed by each party hereto in
accordance with the Arbitration Acts 1950 and 1979 or any statutory
modification or re-enactment thereof for the time being in force. It
is further agreed that such arbitration shall be a condition precedent
to the commencement of any action of law
36. REDELIVERY:
The Vessel shall be re-delivered on the expiration or earlier termination of
this Charter Party in the same good order as when delivered to the Charterers
(fair wear and tear excepted) but after refurbishing as provided in clause 18
(except as therein provided in the event of the sale by the owners of the
Vessel together with the equipment). "On hire" and "off hire" surveys will be
carried out by a surveyor mutually agreed between both parties. Repairs of any
damage that may have occurred during time period of the charter by the nature
of the charter shall be for Charterers' expense together with the cost of
survey and charter hire to be paid for the time incurred in carrying out such
repairs.
DATED this fourth day of February 1981.
SIGNED by /s/ [illegible signature]
on behalf of Owners /s/ [illegible signature]
/s/ [illegible signature]
SIGNED by
on behalf of Charterers /s/ [illegible signature]
In the presence
of Stephen Williams
Solicitor
- 15 -
<PAGE> 16
"SUBSEA 1" to be re-named
"PACIFIC HORIZON"
O/N. 6413807
PORT OF REGISTRY: LONDON SIGNAL LETTERS: G.U.Q.A.
BUILT BY: A.G. "WESER" WERK SEEBECK, BREMERHAVEN, W. GERMANY. 1964
REBUILT: GLOBE ENGINEERING (HULL) LIMITED, HULL. 1981
PRINCIPAL DIMENSIONS: 79.69m x 12.65m x 4.80lm
DISPLACEMENT: G.R.T. N.R.T.
LOADED DRAUGHT:
CLASSIFICATION: LLOYDS + 100A1 SEISMIC SURVEY VESSEL
SAFCON: YES LOADLINE: YES
U.K. D.O.T. CLASSIFICATION: CLASS VII UNRESTRICTED
MAIN PROPULSION: 3 DEUTZ DIESEL ELECTRIC GENERATORS 2700 B.H.P.
MAIN PROPULSION MOTOR: A.E.G.
SPEED: CONSUMPTION:
MANOEUVRING/SECONDARY PROPULSION: SCHOTTEL UNIT
BUNKERS: ENDURANCE:
FRESH WATER: CRUISING:
ACCOMMODATION: CHARTERERS
AND CREW ) TOTAL 43 PERSONS
L.S.A. CERTIFICATION: 50 PERSONS
NAVIGATIONAL AND ELECTRONIC AIDS:
MAIN AND SECONDARY SSB TRANSEIVERS
TELEX FOR OPERATION WITH MAIN TRANSEIVER
R408 COMMUNICATION RECEIVER
STANDBY DISTRESS RECEIVER
DEBEG V.H.F. RECEIVER
- 16 -
<PAGE> 17
ROBERTSON V.H.F. RECEIVER
EMERGENCY TRANSEIVER SOLAS TYPE 3
TWO 1022 FURONO RADARS
ONE RM426 DECCA RADAR KODEN WEATHER FAX
WALKER SPEED LOG DECCA NAV. MK.21
ELAC ECHO SOUNDER ANSCHULTZ GYRO/A. PILOT
- 17 -
<PAGE> 1
EXHIBIT 10.12
TERMS AND CONDITIONS OF EMPLOYMENT
P A R T I C U L A R S
PARTIES AND DEFINITIONS:
Statement of employment particulars required in accordance with the Employment
Protection (Consolidation) Act 1978 (as amended) Sections 1 to 6 inclusive:
<TABLE>
<S> <C> <C> <C>
1. Name of the Company : Exploration Holdings Limited of 6 Pembroke Road, Sevenoaks, Kent TN13
IXR
2. Name of the Executive : Gerald Martin Harrison of Gorsey Down Farm, Ricketts Hill Road,
Tatsfield, Surrey TN16 2NB
3. Date of commencement
of employment :
4. Date of commencement of
continuous employment :
5. Job title : Managing Director
6. Salary : L.134,000
7. Annual Review Data : 1st May
8. Payment Date : 15th of each month
9. Hours of work : See clause 1.3
10. Holiday : 25 working days per calendar year
11. Place of work : See clause 1.2
12. Disciplinary rules : See clause 27
13. Period of notice to be given : 36 months
</TABLE>
<PAGE> 2
RECITAL:
The Company has agreed to employ the Executive and the Executive has agreed to
serve the Company from the date shown in the Particulars upon the following
terms.
1. EMPLOYMENT AND DUTIES
1.1 The Company will employ the Executive and the Executive will
serve the Company in accordance with the Job Title shown in the Particulars and
in such capacity shall perform the duties and exercise the powers which may
from time to time be assigned in or vested in the Executive by the board of
directors of the Company ("the Board") and shall in the discharge of such
duties and the exercise of such powers observe and comply with all resolutions
and directors from time to time made or given by the Board and shall devote
substantially the whole of the Executive's time and attention during normal
business hours (unless prevented by ill health) to the performance of the
Executive's duties under the terms of this Agreement.
1.2 The duties of the Executive will be performed principally from
the Company's premises provided that:
1.2.1 the Executive shall travel to and from work at such
locations both within and outside the United Kingdom as are required
for the proper performance of the Executive's duties and
1.2.2 the Executive may be required to work at any of the
Company's premises or at the premises of its customers' clients or
suppliers on a temporary basis.
1.3 The Executive shall comply with the Company's normal hours of work for
office staff and shall perform any additional hours of work which are
reasonably required for the proper performance of the Executive's duties. The
Executive shall not be entitled to any additional remuneration for work
performed outside the Company's normal hours of business.
1.4 The Company reserves the right to change the Company's premises and
will give the Executive at least one month's notice of the change and details
of its relocation policy where appropriate. PROVIDED THAT
1.4.1 the relocation shall have no negative financial
impact on the Executive
1.4.2 the relocation shall be within England.
2. APPOINTMENT AS DIRECTOR
2
<PAGE> 3
During the term of this Agreement the Executive will if required by
the Board serve as a director of the Company and (if so required by the Board)
as a director or officer of any subsidiary or associated company of the Company
but shall not be entitled to any director's fees or other remuneration except
as provided in this Agreement in respect of any such directorship or office.
3. TERM OF EMPLOYMENT
The Executive shall continue to hold such office until this Agreement
is terminated by either Party giving to the other the period of notice provided
in the particulars.
4. SALARY
The Company shall during the continuance of the Executive's
appointment under the terms of this Agreement pay to the Executive the salary
shown in the Particulars by equal monthly installments on the Payment Date such
salary to be reviewed annually as at the Annual Review Date in each year.
5. SALARY REVIEW
5.1 The salary shall be reviewed with effect from the Annual
Review Date and each succeeding year during the continuance of this Agreement.
5.2 Any change in salary will be made at the Company's absolute
discretion.
6. EXPENSES
In addition to the salary the Company shall pay to the Executive
during the continuance of the Executive's appointment under the terms of this
Agreement such travelling hotel and other expenses as may be properly incurred
by the Executive in the performance of the Executive's duties under the terms
of this Agreement subject to the presentation of all necessary vouchers or
receipts in respect of such expenses.
7. PROVISION OF CAR
During the Executive's employment under the terms of this Agreement,
the Company will supply the Executive with a car of a design and manufacturer
to be determined by the Company in accordance with the Company's executive car
policy from time to time in force and will maintain the car and pay all running
expenses in connection with the car including the Road Fund License and
insurance premiums and the cost of petrol consumed in the course of private
motoring.
8. PROVISION OF MEDICAL INSURANCE
3
<PAGE> 4
During the Executive's employment under the term of this Agreement the
Company shall provide, at the Company's expense, medical insurance on an
international basis, including repatriation, for the Executive, the Executive's
spouse and the Executive's children subject to the children being under the age
of 18 or in full-time education.
9. PERSONAL EFFECTS
During the Executive's employment under the term of this Agreement the
Company shall indemnify the Executive against any loss of or damage of personal
effects (with the exception of a motor vehicle) whilst the Executive is at work
or travelling to and from work or required to stay away from the Executive's
normal residence for the purpose of or related to the business of the Company.
10. HOLIDAYS
The Executive shall in addition to the normal public bank holidays be
entitled to the holiday shown in the Particulars to be taken at such times as
shall be agreed between the Executive and the Board (and in termination of the
Executive's employment the Executive's entitlement to accrued holiday pay will
be in direct proportion to the length of the Executive's service during the
calendar year in which termination takes place).
11. INCAPACITY
11.1 In the case of illness of the Executive or any other cause
incapacitating the Executive from duly attending to the Executive's duties, the
Executive shall receive the Executive's full salary during the first six months
or any shorter period AND if the Executive shall continue so incapacitated for
a longer period than 6 consecutive months or if the Executive shall be so
incapacitated at different times for more than 180 days in one period of 52
consecutive weeks then and in ether such case the Executive's employment shall
at the option of the Board be determined on one month's notice or such further
period of notice to which the Executive may be entitled by statute and all
arrears of salary and expenses shall be paid to the Executive.
11.2 If the Executive is absent from work due to sickness or injury
which continues for more than 7 days (including weekends) the Executive may be
required by the Company to provide a medical certificate by the eight day of
sickness or injury. Thereafter, medical certificates may be required by the
Company to cover any continued absence.
11.3 Immediately following the Executive's return to work after a
period of absence which has previously been authorized by the Company, the
Executive is required to complete a self-certification form stating the dates
and reason for the Executive's absence including details of sickness on
non-working days as this information is required by the Company for calculating
statutory sick pay entitlement. Self-certification forms will be retained in
the Company's records.
4
<PAGE> 5
11.4 The salary due to the Executive during the period of
incapacity will be inclusive of any Statutory Sick Pay to which the Executive
is entitled.
11.5 The Company reserves the right for the Executive to be
examined at any time by an independent doctor at its expense and to cease
payment of any form of sick pay if it is advised by the doctor that the
Executive is fit to return to work.
12. PENSION SCHEME
During the Executive's employment under the terms of this Agreement
the Company will make all necessary arrangements for the Executive to be a
member of whatever contributory pension scheme the Company may arrange or may
have arranged providing such benefits as have been agreed between the parties
and are set out in the documents constituting such scheme copies of which have
been or will be supplied to the Executive including membership of a permanent
health and injury scheme which shall provide, subject to insurers' conditions,
income in the Executive of not less that 66% of current net income in the event
o f illness or incapacity of more than 6 months or 6 months in any consecutive
period of 52 weeks.
13. INCENTIVE SCHEME
13.1 The Executive shall be entitled to participate in a Company
Executive Incentive Scheme ("the Scheme") which, subject to the conditions
below, shall give the Executive the potential to receive additional
remuneration of up to 50% of salary each year.
13.1.1 The Company shall define the Scheme annually on or
before February 28th in each year for the Calendar year to which it
relates.
13.1.2 The Scheme may take the form of a single Company goal
for example profit performance or several individual targets such as
productivity, etc., and may be varied each year.
13.1.3 Any remuneration earned under the Scheme for a
particular year shall be paid on or before 1st June of the following
calendar year.
14. TERMINATION
This Agreement shall be subject to summary termination by the Company
by notice in writing if the Executive shall have committed any serious breach
or continued in any persistent breach of the Executive's obligations under the
terms of this Agreement or shall have committed an act of bankruptcy or
compounded with the Executive's creditors generally.
15. RESIGNATION FROM DIRECTORSHIP
5
<PAGE> 6
Upon the termination of this Agreement for whatever reason, the
Executive shall, upon the request of the Company, resign without claim for
compensation from office as a director of the Company and from all offices held
by the Executive in subsidiary or associated companies of the Company and in
the event of the Executive's failure to do so. THE COMPANY IS IRREVOCABLY
AUTHORIZED to appoint some person in the Executive's name and on the
Executive's behalf to execute any documents and to do all things requisite to
give effect thereto PROVIDED THAT any such resignation shall be without
prejudice to any claims arising out of or in respect of the termination of the
Executive's employment by the Company.
16. CONFIDENTIAL INFORMATION
16.1 The Executive shall not, except as authorized or required by
the Executive's duties, reveal to any person or company any of the trade
secrets, secret or confidential operations or dealings or any information
concerning the organization business finances transactions or affairs of the
Company which may come to the Executive's knowledge during the Executive's
employment under the terms of this Agreement and shall keep with complete
secrecy all confidential information entrusted to the Executive and shall not
use or attempt to use any such information in any manner which may injure or
cause loss either directly or indirectly to the Company or the Company's
business or which may be likely to do so.
16.2 If the Company shall have obtained trade secrets or other
confidential information from any third party under an agreement including
restrictions on disclosure known to the Executive, then the Executive will not,
without the consent of the Company at any time (whether during the Executive's
service or after the termination of the Executive's service), infringe such
restrictions.
16.3 The Executive shall not during the continuance of this
Agreement make otherwise than for the benefit of the Company any notes or
memoranda relating to any matter within the scope of the business of the
Company or concerning any of the Company's dealings or affairs nor shall the
Executive either during the continuance of this Agreement or afterwards use or
permit to be used any such notes or memoranda otherwise than for the benefit of
the Company it being the intention of the parties that all such notes or
memoranda made by the Executive shall be the property of the Company and left
at the Company's registered office upon the termination of the Executive's
employment under the terms of this Agreement.
17. RESTRICTIVE COVENANT
17.1 The Executive AGREES that the Executive will not, following
the termination of this Agreement, for whatever cause:
17.1.1 within a period of twelve months thereafter seek to
employ (in relation to any business which competes with the business
of the Company as at the date of such termination) any person who was
employed by the Company during a period of three months prior to the
termination of this Agreement nor procure that any such
6
<PAGE> 7
period be employed or offered employment by any other person, firm or
company and in relation to any such business.
17.1.2 at any time thereafter represent the Executive as
being in any way connected with or interested in the Company or any
business carried on by the Company.
17.2 In this clause references to any act or conduct of the
Executive shall include such act or conduct whether done directly or indirectly
and whether along or jointly with or as employee of or agent for any other
person, firm or company.
18. REASONABLENESS OF RESTRICTIONS
The Executive ACKNOWLEDGES AND AGREES that:
18.1 the direction, extent and application of each of the
restrictions set out in clause 17 are no greater than is reasonably necessary
for the protection of the legitimate interests of the Company in its business,
and
18.2 if any such restriction shall be adjudged by any Court of
competent jurisdiction to be void or unenforceable but would be valid if part
of the wording of such restriction were deleted and/or the period of such
restriction or the area specified in such restriction was reduced then the
Executive agrees that such restriction shall apply and be binding on the
Executive as so amended and/or reduced.
19. OTHER OCCUPATIONS
The Executive shall not without the consent of the Company during the
continuance of this Agreement be engaged or interested either directly or
indirectly in any capacity in any trade business or occupation whatsoever other
than the business of the Company (save as the holder by way of investment only
of shares or securities issued by any company). In this clause, the expression
"occupation" shall include any public or private appointment office or work
which in the reasonably opinion of the Company shall hinder or otherwise
interfere with the performance by the Executive of the Executive's duties under
this Agreement.
20. INVENTIONS AND DISCOVERIES
20.1 Any discovery or invention or secret process made or
discovered by the Executive (either alone or with any other person) while in
the service of the Company in connection with or in any way affecting or
relating to the business of the Company or any of the Company's subsidiary or
associated companies for the time being or in the opinion of the Board, capable
of being used or adapted for use therein or in connection therewith shall be
forthwith disclosed to the Company and shall be the absolute property of the
Company.
7
<PAGE> 8
20.2 The Executive shall if any whenever required so to do by the
Company at the expense of the Company apply or join with the Company in
applying for letters patent or other protection in any part of the world for
any such discovery invention or process and shall, at the expense of the
Company, executive or procure to be executed all instruments or documents
necessary for vesting letters patent or other protection when obtained and all
right, title and interest thereto in the Company absolutely or in such other
person as the Company may require.
20.3 For the purpose of this clause THE EXECUTIVE IRREVOCABLY
APPOINTS the Company as the Executive's attorney in the Executive's name to
execute and do all documents and things which are required in order to give
effect to the provisions of this clause.
21. COMPULSORY PAID LEAVE
21.1 At any time after a notice has been served by either party
pursuant to clause 3 the Company may require the Executive to take paid leave
for the period (ore the balance of the period) of such notice and during such
period:
21.1.1 the Company shall have no obligation to provide work
or to require the Executive to perform any duties;
21.1.2 the Executive shall receive the Executive's full
salary and other benefits in accordance with the Agreement;
21.1.3 the provisions of clause 19 shall cease to apply but
only in respect of any occupation which is not directly or indirectly
concerned with any business which competes with any business of the
Company PROVIDED THAT the Executive shall keep accurate records of any
income or benefits received or receivable by him in respect of such
occupation and shall notify the Company thereof and the Company may at
its discretion deduct or set off all or part of such income or
benefits from or against the salary and other benefits payable by the
Company to the Executive during or in respect of such period.
22. CONTINUATION OF PROVISIONS
The expiration or determination of this Agreement howsoever arising
shall not affect such of the provisions of this Agreement as are expressed to
have effect or operate thereafter and shall be without prejudice to any right
of action already accrued to either party in respect of any breach of this
Agreement by the other party.
23. COMPANY RECONSTRUCTION
If before the termination of this Agreement:
8
<PAGE> 9
23.1 the employment of the Executive under the terms of this
Agreement shall be determined by reason of the winding up of the Company for
the purpose of the Company's reconstruction or amalgamation and the Company
shall procure that any company or undertaking resulting from such
reconstruction or amalgamation shall offer to the Executive employment on terms
as to remuneration and otherwise not less favorable to the Executive than those
provided by this Agreement and for the residue of the period of this Agreement
or for such other period as may be mutually agreed; or
23.2 the Company's holding company or any subsidiary thereof or of
the Company shall at any time during the continuance of this Agreement offer to
employ the Executive in the place of the Company on terms as to remuneration and
otherwise not less favorable to the Executive than those provided by this
Agreement and for the residue of the period of this Agreement and the Company
shall thereupon terminate this Agreement then in either such case the
termination of this Agreement shall be deemed not to be in breach of the
provisions of this Agreement and there will be no change to the date of
commencement of continuous employment shown in the Particulars and subject to
the appropriate statutory provisions the Executive shall have to claim against
the Company for damages or otherwise in connection with or arising from such
termination.
24. STATUTORY PARTICULARS
The particulars which are required to be included in the written
statement required by the Employment Protection (Consolidation) Act 1978 (as
amended) Sections 1 to 6 inclusive are set out in the Particulars.
25. INTERPRETATION
In this Agreement and unless the context otherwise requires:
25.1 the paragraph headings are for reference purposes only and
shall not affect interpretation;
25.2 unless otherwise stated a reference to a clause or sub-clause
is a reference to the clause or sub-clause so numbered to this Agreement;
25.3 the express "the Company" shall be deemed to include any
subsidiary or holding company of the Company as defined in the Companies Act
1985 Section 736 and "subsidiary company" shall have the meaning defined in the
Section;
25.4 words importing one gender include the other genders and words
importing the singular include the plural and vice versa.
26. NOTICES
9
<PAGE> 10
Notices may be given by either party by letter telegram or telex
addressed to the other party at (in the case of the Company) the Company's
registered office for the time being and (in the case of the Executive) the
Executive's last known address and any such notice given by letter shall be
deemed to have been given at the time at which the letter would be delivered in
the ordinary course of post.
27. PREVIOUS CONTRACTS OF SERVICE
This Agreement is in substitution for all previous contracts of
service between the Company and the Company's subsidiary or associated
companies and the Executive which shall be deemed to have been terminated by
mutual consent as from the date on which this Agreement commences.
28. DISPUTES
In the case of any dispute or difference arising between the parties
as to the construction of this Agreement or the rights, duties or obligations
on either party under the terms of this Agreement or any matter arising out of
or concerning the same or the Executive's employment under the terms of this
Agreement every such dispute and matter and difference shall be referred to a
single arbitrator in accordance with the provisions of the Arbitration Acts
1950 to 1979 or any statute for the time being replacing, extending or
modifying the same.
29. DISCIPLINARY AND GRIEVANCE PROCEDURE
29.1 If the Executive has a grievance relating to the Executive's
employment, the Executive should proceed in accordance with the Company's
grievance procedure which is set out in Appendix A but which does not form part
of the Executive's Terms and Conditions of Employment.
29.2 The Company deals with disciplinary matters in accordance with
its disciplinary procedures which are set out in Appendix A but which do not
form part of the Executive's Terms and Conditions of Employment.
29.3 Following any disciplinary procedure a complaint against the
Executive is upheld, the Company reserves the right to impose any one or more
of the following penalties on the Executive instead of a first or final warning
or dismissal with or without notice.
29.3.1 Demotion: The Company may demote the Executive by
notice in writing giving details of any consequential changes to the
Executive's Terms and Conditions of Employment in particular the
notice will give details of any reduction to the Executive's salary
and/or loss of any benefits and/or privileges consequent upon such
demotion.
10
<PAGE> 11
29.3.2 Suspension: The Company may suspend the Executive
from work with or without notice in writing to this effect. Such
notice will specify the dates of the Executive's suspension, the
conditions applicable to the Executive's suspension and the period of
suspension.
SIGNED AS A DEED )
BY THE COMPANY ) /s/ NEIL A.M. CAMPBELL
ACTING BY ITS DIRECTOR AND SECRETARY )
SIGNED AS A DEED ) /s/ GERALD M. HARRISON
BY THE EXECUTIVE )
11
<PAGE> 12
APPENDIX A.
GRIEVANCE AND DISCIPLINARY PROCEDURES
1. GRIEVANCE PROCEDURE.
1.1 If you have any grievance relating to your employment you
should raise the matter initially with your chairman. You may be required to
put any such grievance in writing.
1.2 Having inquired into your grievance, your Chairman will
discuss it with you and will then notify you of his decision.
1.3 If the decision of your Chairman is not acceptable, you may
then refer the matter in writing to the Company's Board ("the Board") whose
decision will be final and binding.
1.4 When stating grievances, you may be accompanied by a fellow
employee of your choice.
2. DISCIPLINARY PROCEDURES.
2.1 The purposes of the disciplinary procedures is to ensure that
the Company behaves fairly in investigating and dealing with the allegations of
unacceptable conduct or performance. Accordingly, the Company reserves the
right to depart from the precise requirements of its disciplinary procedure
where it is expedient to do so and where the resulting treatment of the
employee is no less fair.
2.2 All cases of disciplinary action under these procedures will
be recorded and placed in the Company's records. A copy of the Company's
disciplinary records concerning you will be supplied to you at your request.
2.3 Offenses under the Company's procedures fall into 3 categories
namely:
o misconduct
o gross misconduct
o incapability
2.4 The following steps will be taken, as appropriate, in all
cases of disciplinary action:
2.4.1 Investigations: No action will be taken before a
proper investigation has been undertaken by the Company into the
matter complained of. If appropriate, the Company may by written
notice suspend you while the investigation takes place. If you are so
suspended your contract of employment will continue together with all
your rights under your contract will not be entitled to access in any
of the Company's period of suspension, you will not be entitled to
access to any of the Company's premises
<PAGE> 13
except at the prior request or with the prior consent of the Company
and subject to such conditions as the Company may impose. The
decision to suspend you will be notified to you by the Company and
confirmed in writing.
2.4.2 Disciplinary Hearings: If the Company decides to
hold a disciplinary hearing about the matter complained of, you will
be given details of the complaint against you at least three working
days before the hearing. At the hearing, you will be given an
opportunity to state your case. You may be accompanied by a fellow
employee of your choice. No disciplinary penalty will be imposed
without a disciplinary hearing, but a hearing may proceed in your
absence if you fail to turn up.
2.4.3 Appeals: You have a right to appeal against any
disciplinary decision to the Board. You should inform the Board in
writing of your wish to appeal within five working days of the date of
the decision which forms the subject of your appeal.
The Chairman, as appropriate, will conduct an appeal
hearing as soon as possible thereafter at which you will be given an
opportunity to state your case and will be entitled to be accompanied
by a fellow employee of your choice.
The decision of the Chairman, as appropriate, will be
notified to you in writing and will be final and binding under this
procedure.
2.5 MISCONDUCT.
2.5.1 The following offenses are examples of misconduct:
o Bad time keeping;
o Unauthorized absence;
o Minor damages to Company property;
o Minor breach of Company rules;
o Failure to observe Company procedures;
o Abusive behavior;
o Sexual or racial harassment;
o Dishonesty of any kind;
o Negligence not amount to gross negligence.
These offenses are not exclusive or exhaustive and
offenses of a similar nature will be dealt with under this procedure.
2.5.2 The following procedure will apply in cases of
alleged misconduct:
2
<PAGE> 14
First Warning: This will be given by your Chairman
and may be oral or written according to the circumstances. In either
event, you will be advised that the warning constitutes the first
formal state of this procedure. If the warning is verbal, a note that
such a warning has been given will be placed in the Company's records.
Final Warning: This will be given by your Chairman
and confirmed to you in writing. This warning will state that, if you
commit a further offense of misconduct during the period specified in
it, your employment will be terminated.
Dismissal: The decision to dismiss you will not be
taken without reference to the Chairman and will be notified to you in
writing.
2.6 GROSS MISCONDUCT.
2.6.1 The following offenses are examples of gross
misconduct:
o Theft or unauthorized possession of any
property belonging to the Company or any
employee;
o Serious damage to Company property.
o Falsification of reports, accounts, expense
claims or self-certification forms.
o Refusal to carry out duties or reasonable
instructions.
o Intoxication by reason of drink or drugs.
o Having illegal drugs in your possession,
custody or control on the Company's premises.
o Serious breach of Company rules.
o Violent, dangerous or intimidatory conduct.
o Sexual, racial or other harassment of a
fellow employee.
o Gross negligence.
These examples are not exhaustive or exclusive and
offenses of a similar nature will be dealt with under this
procedure.
2.6.2 Gross misconduct will result in immediate dismissal
without notice or pay in lieu of notice. The decision to dismiss will
not be taken without reference to the Chairman. Dismissal will be
notified to you in writing.
2.7 INCAPABILITY.
2.7.1 The following are examples of incapability:
3
<PAGE> 15
o Poor performance;
o Incompetence;
o Unsuitability;
o Lack of application.
These examples are not exhaustive or exclusive and
instances of a similar nature will be dealt with under this procedure.
2.7.2 The following procedure will apply in cases of
incapability:
First Warning: This will be given by your Chairman
and will be confirmed to you in writing. This warning will specify
the improvement required and will state that your work will be
reviewed at the end of a specified period after the date of the
warning.
Final Warning: This will be given by your Chairman
and confirmed to you in writing. This warning will state that unless
your work improves within a specified period after the date of the
warning, your employment will be terminated.
Dismissal: The decision to dismiss you will not be
taken without reference to the Chairman. Dismissal will be notified
to you in writing.
4
<PAGE> 1
EXHIBIT 10.13
TERMS AND CONDITIONS OF EMPLOYMENT
P A R T I C U L A R S
PARTIES AND DEFINITIONS:
Statement of employment particulars required in accordance with the Employment
Protection (Consolidation) Act 1978 (as amended) Sections 1 to 6 inclusive:
<TABLE>
<S> <C> <C> <C>
1. Name of the Company : Exploration Holdings Limited of 6 Pembroke Road, Sevenoaks, Kent TN13
IXR
2. Name of the Executive : George Purdie, Merlins Brook, Park Road, Addington, West Malling,
Kent ME19 5BQ
3. Date of commencement
of employment :
4. Date of commencement of
continuous employment :
5. Job title : Director, Operations
6. Salary : L.124,000
7. Annual Review Data : 1st May
8. Payment Date : 15th of each month
9. Hours of work : See clause 1.3
10. Holiday : 25 working days per calendar year
11. Place of work : See clause 1.2
12. Disciplinary rules : See clause 27
13. Period of notice to be given : 36 months
</TABLE>
<PAGE> 2
RECITAL:
The Company has agreed to employ the Executive and the Executive has agreed to
serve the Company from the date shown in the Particulars upon the following
terms.
1. EMPLOYMENT AND DUTIES
1.1 The Company will employ the Executive and the Executive will
serve the Company in accordance with the Job Title shown in the Particulars and
in such capacity shall perform the duties and exercise the powers which may
from time to time be assigned in or vested in the Executive by the board of
directors of the Company ("the Board") and shall in the discharge of such
duties and the exercise of such powers observe and comply with all resolutions
and directors from time to time made or given by the Board and shall devote
substantially the whole of the Executive's time and attention during normal
business hours (unless prevented by ill health) to the performance of the
Executive's duties under the terms of this Agreement.
1.2 The duties of the Executive will be performed principally from
the Company's premises provided that:
1.2.1 the Executive shall travel to and from work at such
locations both within and outside the United Kingdom as are required
for the proper performance of the Executive's duties and
1.2.2 the Executive may be required to work at any of the
Company's premises or at the premises of its customers' clients or
suppliers on a temporary basis.
1.3 The Executive shall comply with the Company's normal hours of work for
office staff and shall perform any additional hours of work which are
reasonably required for the proper performance of the Executive's duties. The
Executive shall not be entitled to any additional remuneration for work
performed outside the Company's normal hours of business.
1.4 The Company reserves the right to change the Company's premises and
will give the Executive at least one month's notice of the change and details
of its relocation policy where appropriate. PROVIDED THAT
1.4.1 the relocation shall have no negative financial
impact on the Executive
1.4.2 the relocation shall be within England.
2. APPOINTMENT AS DIRECTOR
2
<PAGE> 3
During the term of this Agreement the Executive will if required by
the Board serve as a director of the Company and (if so required by the Board)
as a director or officer of any subsidiary or associated company of the Company
but shall not be entitled to any director's fees or other remuneration except
as provided in this Agreement in respect of any such directorship or office.
3. TERM OF EMPLOYMENT
The Executive shall continue to hold such office until this Agreement
is terminated by either Party giving to the other the period of notice provided
in the particulars.
4. SALARY
The Company shall during the continuance of the Executive's
appointment under the terms of this Agreement pay to the Executive the salary
shown in the Particulars by equal monthly installments on the Payment Date such
salary to be reviewed annually as at the Annual Review Date in each year.
5. SALARY REVIEW
5.1 The salary shall be reviewed with effect from the Annual
Review Date and each succeeding year during the continuance of this Agreement.
5.2 Any change in salary will be made at the Company's absolute
discretion.
6. EXPENSES
In addition to the salary the Company shall pay to the Executive
during the continuance of the Executive's appointment under the terms of this
Agreement such travelling hotel and other expenses as may be properly incurred
by the Executive in the performance of the Executive's duties under the terms
of this Agreement subject to the presentation of all necessary vouchers or
receipts in respect of such expenses.
7. PROVISION OF CAR
During the Executive's employment under the terms of this Agreement,
the Company will supply the Executive with a car of a design and manufacturer
to be determined by the Company in accordance with the Company's executive car
policy from time to time in force and will maintain the car and pay all running
expenses in connection with the car including the Road Fund License and
insurance premiums and the cost of petrol consumed in the course of private
motoring.
8. PROVISION OF MEDICAL INSURANCE
3
<PAGE> 4
During the Executive's employment under the term of this Agreement the
Company shall provide, at the Company's expense, medical insurance on an
international basis, including repatriation, for the Executive, the Executive's
spouse and the Executive's children subject to the children being under the age
of 18 or in full-time education.
9. PERSONAL EFFECTS
During the Executive's employment under the term of this Agreement the
Company shall indemnify the Executive against any loss of or damage of personal
effects (with the exception of a motor vehicle) whilst the Executive is at work
or travelling to and from work or required to stay away from the Executive's
normal residence for the purpose of or related to the business of the Company.
10. HOLIDAYS
The Executive shall in addition to the normal public bank holidays be
entitled to the holiday shown in the Particulars to be taken at such times as
shall be agreed between the Executive and the Board (and in termination of the
Executive's employment the Executive's entitlement to accrued holiday pay will
be in direct proportion to the length of the Executive's service during the
calendar year in which termination takes place).
11. INCAPACITY
11.1 In the case of illness of the Executive or any other cause
incapacitating the Executive from duly attending to the Executive's duties, the
Executive shall receive the Executive's full salary during the first six months
or any shorter period AND if the Executive shall continue so incapacitated for
a longer period than 6 consecutive months or if the Executive shall be so
incapacitated at different times for more than 180 days in one period of 52
consecutive weeks then and in ether such case the Executive's employment shall
at the option of the Board be determined on one month's notice or such further
period of notice to which the Executive may be entitled by statute and all
arrears of salary and expenses shall be paid to the Executive.
11.2 If the Executive is absent from work due to sickness or injury
which continues for more than 7 days (including weekends) the Executive may be
required by the Company to provide a medical certificate by the eight day of
sickness or injury. Thereafter, medical certificates may be required by the
Company to cover any continued absence.
11.3 Immediately following the Executive's return to work after a
period of absence which has previously been authorized by the Company, the
Executive is required to complete a self-certification form stating the dates
and reason for the Executive's absence including details of sickness on
non-working days as this information is required by the Company for calculating
statutory sick pay entitlement. Self-certification forms will be retained in
the Company's records.
4
<PAGE> 5
11.4 The salary due to the Executive during the period of
incapacity will be inclusive of any Statutory Sick Pay to which the Executive
is entitled.
11.5 The Company reserves the right for the Executive to be
examined at any time by an independent doctor at its expense and to cease
payment of any form of sick pay if it is advised by the doctor that the
Executive is fit to return to work.
12. PENSION SCHEME
During the Executive's employment under the terms of this Agreement
the Company will make all necessary arrangements for the Executive to be a
member of whatever contributory pension scheme the Company may arrange or may
have arranged providing such benefits as have been agreed between the parties
and are set out in the documents constituting such scheme copies of which have
been or will be supplied to the Executive including membership of a permanent
health and injury scheme which shall provide, subject to insurers' conditions,
income in the Executive of not less that 66% of current net income in the event
o f illness or incapacity of more than 6 months or 6 months in any consecutive
period of 52 weeks.
13. INCENTIVE SCHEME
13.1 The Executive shall be entitled to participate in a Company
Executive Incentive Scheme ("the Scheme") which, subject to the conditions
below, shall give the Executive the potential to receive additional
remuneration of up to 50% of salary each year.
13.1.1 The Company shall define the Scheme annually on or
before February 28th in each year for the Calendar year to which it
relates.
13.1.2 The Scheme may take the form of a single Company goal
for example profit performance or several individual targets such as
productivity, etc., and may be varied each year.
13.1.3 Any remuneration earned under the Scheme for a
particular year shall be paid on or before 1st June of the following
calendar year.
14. TERMINATION
This Agreement shall be subject to summary termination by the Company
by notice in writing if the Executive shall have committed any serious breach
or continued in any persistent breach of the Executive's obligations under the
terms of this Agreement or shall have committed an act of bankruptcy or
compounded with the Executive's creditors generally.
15. RESIGNATION FROM DIRECTORSHIP
5
<PAGE> 6
Upon the termination of this Agreement for whatever reason, the
Executive shall, upon the request of the Company, resign without claim for
compensation from office as a director of the Company and from all offices held
by the Executive in subsidiary or associated companies of the Company and in
the event of the Executive's failure to do so. THE COMPANY IS IRREVOCABLY
AUTHORIZED to appoint some person in the Executive's name and on the
Executive's behalf to execute any documents and to do all things requisite to
give effect thereto PROVIDED THAT any such resignation shall be without
prejudice to any claims arising out of or in respect of the termination of the
Executive's employment by the Company.
16. CONFIDENTIAL INFORMATION
16.1 The Executive shall not, except as authorized or required by
the Executive's duties, reveal to any person or company any of the trade
secrets, secret or confidential operations or dealings or any information
concerning the organization business finances transactions or affairs of the
Company which may come to the Executive's knowledge during the Executive's
employment under the terms of this Agreement and shall keep with complete
secrecy all confidential information entrusted to the Executive and shall not
use or attempt to use any such information in any manner which may injure or
cause loss either directly or indirectly to the Company or the Company's
business or which may be likely to do so.
16.2 If the Company shall have obtained trade secrets or other
confidential information from any third party under an agreement including
restrictions on disclosure known to the Executive, then the Executive will not,
without the consent of the Company at any time (whether during the Executive's
service or after the termination of the Executive's service), infringe such
restrictions.
16.3 The Executive shall not during the continuance of this
Agreement make otherwise than for the benefit of the Company any notes or
memoranda relating to any matter within the scope of the business of the
Company or concerning any of the Company's dealings or affairs nor shall the
Executive either during the continuance of this Agreement or afterwards use or
permit to be used any such notes or memoranda otherwise than for the benefit of
the Company it being the intention of the parties that all such notes or
memoranda made by the Executive shall be the property of the Company and left
at the Company's registered office upon the termination of the Executive's
employment under the terms of this Agreement.
17. RESTRICTIVE COVENANT
17.1 The Executive AGREES that the Executive will not, following
the termination of this Agreement, for whatever cause:
17.1.1 within a period of twelve months thereafter seek to
employ (in relation to any business which competes with the business
of the Company as at the date of such termination) any person who was
employed by the Company during a period of three months prior to the
termination of this Agreement nor procure that any such
6
<PAGE> 7
period be employed or offered employment by any other person, firm or
company and in relation to any such business.
17.1.2 at any time thereafter represent the Executive as
being in any way connected with or interested in the Company or any
business carried on by the Company.
17.2 In this clause references to any act or conduct of the
Executive shall include such act or conduct whether done directly or indirectly
and whether along or jointly with or as employee of or agent for any other
person, firm or company.
18. REASONABLENESS OF RESTRICTIONS
The Executive ACKNOWLEDGES AND AGREES that:
18.1 the direction, extent and application of each of the
restrictions set out in clause 17 are no greater than is reasonably necessary
for the protection of the legitimate interests of the Company in its business,
and
18.2 if any such restriction shall be adjudged by any Court of
competent jurisdiction to be void or unenforceable but would be valid if part
of the wording of such restriction were deleted and/or the period of such
restriction or the area specified in such restriction was reduced then the
Executive agrees that such restriction shall apply and be binding on the
Executive as so amended and/or reduced.
19. OTHER OCCUPATIONS
The Executive shall not without the consent of the Company during the
continuance of this Agreement be engaged or interested either directly or
indirectly in any capacity in any trade business or occupation whatsoever other
than the business of the Company (save as the holder by way of investment only
of shares or securities issued by any company). In this clause, the expression
"occupation" shall include any public or private appointment office or work
which in the reasonably opinion of the Company shall hinder or otherwise
interfere with the performance by the Executive of the Executive's duties under
this Agreement.
20. INVENTIONS AND DISCOVERIES
20.1 Any discovery or invention or secret process made or
discovered by the Executive (either alone or with any other person) while in
the service of the Company in connection with or in any way affecting or
relating to the business of the Company or any of the Company's subsidiary or
associated companies for the time being or in the opinion of the Board, capable
of being used or adapted for use therein or in connection therewith shall be
forthwith disclosed to the Company and shall be the absolute property of the
Company.
7
<PAGE> 8
20.2 The Executive shall if any whenever required so to do by the
Company at the expense of the Company apply or join with the Company in
applying for letters patent or other protection in any part of the world for
any such discovery invention or process and shall, at the expense of the
Company, executive or procure to be executed all instruments or documents
necessary for vesting letters patent or other protection when obtained and all
right, title and interest thereto in the Company absolutely or in such other
person as the Company may require.
20.3 For the purpose of this clause THE EXECUTIVE IRREVOCABLY
APPOINTS the Company as the Executive's attorney in the Executive's name to
execute and do all documents and things which are required in order to give
effect to the provisions of this clause.
21. COMPULSORY PAID LEAVE
21.1 At any time after a notice has been served by either party
pursuant to clause 3 the Company may require the Executive to take paid leave
for the period (ore the balance of the period) of such notice and during such
period:
21.1.1 the Company shall have no obligation to provide work
or to require the Executive to perform any duties;
21.1.2 the Executive shall receive the Executive's full
salary and other benefits in accordance with the Agreement;
21.1.3 the provisions of clause 19 shall cease to apply but
only in respect of any occupation which is not directly or indirectly
concerned with any business which competes with any business of the
Company PROVIDED THAT the Executive shall keep accurate records of any
income or benefits received or receivable by him in respect of such
occupation and shall notify the Company thereof and the Company may at
its discretion deduct or set off all or part of such income or
benefits from or against the salary and other benefits payable by the
Company to the Executive during or in respect of such period.
22. CONTINUATION OF PROVISIONS
The expiration or determination of this Agreement howsoever arising
shall not affect such of the provisions of this Agreement as are expressed to
have effect or operate thereafter and shall be without prejudice to any right
of action already accrued to either party in respect of any breach of this
Agreement by the other party.
23. COMPANY RECONSTRUCTION
If before the termination of this Agreement:
8
<PAGE> 9
23.1 the employment of the Executive under the terms of this
Agreement shall be determined by reason of the winding up of the Company for
the purpose of the Company's reconstruction or amalgamation a nd the Company
shall procure that nay company or undertaking resulting from such
reconstruction or amalgamation shall offer to the Executive employment on terms
as to remuneration and otherwise not less favorable to the Executive than those
provided by this Agreement and for the residue of the period of this Agreement
or for such other period as may be mutually agreed; or
23.2 the Company's holding company or any subsidiary thereof or of
the Company shall at any time during the continuance of this Agreement offer to
employ the Executive in the place of the Company on terms s to remuneration and
otherwise not less favorable to the Executive than those provided by this
Agreement and for the residue of the period of this Agreement and the Company
shall thereupon terminate this Agreement then in either such case the
termination of this Agreement shall be deemed not to be in breach of the
provisions of this Agreement and there will be no change to the date of
commencement of continuous employment shown in the Particulars and subject to
the appropriate statutory provisions the Executive shall have to claim against
the Company for damages or otherwise in connection with or arising from such
termination.
24. STATUTORY PARTICULARS
The particulars which are required to be included in the written
statement required by the Employment Protection (Consolidation) Act 1978 (as
amended) Sections 1 to 6 inclusive are set out in the Particulars.
25. INTERPRETATION
In this Agreement and unless the context otherwise requires:
25.1 the paragraph headings are for reference purposes only and
shall not affect interpretation;
25.2 unless otherwise stated a reference to a clause or sub-clause
is a reference to the clause or sub- clause so numbered to this Agreement;
25.3 the express "the Company" shall be deemed to include any
subsidiary or holding company of the Company as defined in the Companies Act
1985 Section 736 and "subsidiary company" shall have the meaning defined in the
Section;
25.4 words importing one gender include the other genders and words
importing the singular include the plural and vice versa.
26. NOTICES
9
<PAGE> 10
Notices may be given by either party by letter telegram or telex
addressed to the other party at (in the case of the Company) the Company's
registered office for the time being and (in the case of the Executive) the
Executive's last known address and any such notice given by letter shall be
deemed to have been given at the time at which the letter would be delivered in
the ordinary course of post.
27. PREVIOUS CONTRACTS OF SERVICE
This Agreement is in substitution for all previous contracts of
service between the Company and the Company's subsidiary or associated
companies and the Executive which shall be deemed to have been terminated by
mutual consent as from the date on which this Agreement commences.
28. DISPUTES
In the case of any dispute or difference arising between the parties
as to the construction of this Agreement or the rights, duties or obligations
on either party under the terms of this Agreement or any matter arising out of
or concerning the same or the Executive's employment under the terms of this
Agreement every such dispute and matter and difference shall be referred to a
single arbitrator in accordance with the provisions of the Arbitration Acts
1950 to 1979 or any statute for the time being replacing, extending or
modifying the same.
29. DISCIPLINARY AND GRIEVANCE PROCEDURE
29.1 If the Executive has a grievance relating to the Executive's
employment, the Executive should proceed in accordance with the Company's
grievance procedure which is set out in Appendix A but which does not form part
of the Executive's Terms and Conditions of Employment.
29.2 The Company deals with disciplinary matters in accordance with
its disciplinary procedures which are set out in Appendix A but which do not
form part of the Executive's Terms and Conditions of Employment.
29.3 Following any disciplinary procedure a complaint against the
Executive is upheld, the Company reserves the right to impose any one or more
of the following penalties on the Executive instead of a first or final warning
or dismissal with or without notice.
29.3.1 Demotion: The Company may demote the Executive by
notice in writing giving details of any consequential changes to the
Executive's Terms and Conditions of Employment in particular the
notice will give details of any reduction to the Executive's salary
and/or loss of any benefits and/or privileges consequent upon such
demotion.
10
<PAGE> 11
29.3.2 Suspension: The Company may suspend the Executive
from work with or without notice in writing to this effect. Such
notice will specify the dates of the Executive's suspension, the
conditions applicable to the Executive's suspension and the period of
suspension.
SIGNED AS A DEED )
BY THE COMPANY ) /s/ NEIL A.M. CAMPBELL
ACTING BY ITS DIRECTOR AND SECRETARY )
SIGNED AS A DEED ) /s/ GEORGE PURDIE
BY THE EXECUTIVE )
11
<PAGE> 12
APPENDIX A.
GRIEVANCE AND DISCIPLINARY PROCEDURES
1. GRIEVANCE PROCEDURE.
1.1 If you have any grievance relating to your employment you
should raise the matter initially with your chairman. You may be required to
put any such grievance in writing.
1.2 Having inquired into your grievance, your Chairman will
discuss it with you and will then notify you of his decision.
1.3 If the decision of your Chairman is not acceptable, you may
then refer the matter in writing to the Company's Board ("the Board") whose
decision will be final and binding.
1.4 When stating grievances, you may be accompanied by a fellow
employee of your choice.
2. DISCIPLINARY PROCEDURES.
2.1 The purposes of the disciplinary procedures is to ensure that
the Company behaves fairly in investigating and dealing with the allegations of
unacceptable conduct or performance. Accordingly, the Company reserves the
right to depart from the precise requirements of its disciplinary procedure
where it is expedient to do so and where the resulting treatment of the
employee is no less fair.
2.2 All cases of disciplinary action under these procedures will
be recorded and placed in the Company's records. A copy of the Company's
disciplinary records concerning you will be supplied to you at your request.
2.3 Offenses under the Company's procedures fall into 3 categories
namely:
o misconduct
o gross misconduct
o incapability
2.4 The following steps will be taken, as appropriate, in all
cases of disciplinary action:
2.4.1 Investigations: No action will be taken before a
proper investigation has been undertaken by the Company into the
matter complained of. If appropriate, the Company may by written
notice suspend you while the investigation takes place. If you are so
suspended your contract of employment will continue together with all
your rights under your contract will not be entitled to access in any
of the Company's period of suspension, you will not be entitled to
access to any of the Company's premises except at the prior request or
with the prior consent of the Company and subject to such
<PAGE> 13
conditions as the Company may impose. The decision to suspend you
will be notified to you by the Company and confirmed in writing.
2.4.2 Disciplinary Hearings: If the Company decides to
hold a disciplinary hearing about the matter complained of, you will
be given details of the complaint against you at least three working
days before the hearing. At the hearing, you will be given an
opportunity to state your case. You may be accompanied by a fellow
employee of your choice. No disciplinary penalty will be imposed
without a disciplinary hearing, but a hearing may proceed in your
absence if you fail to turn up.
2.4.3 Appeals: You have a right to appeal against any
disciplinary decision to the Board. You should inform the Board in
writing of your wish to appeal within five working days of the date of
the decision which forms the subject of your appeal.
The Chairman, as appropriate, will conduct an appeal
hearing as soon as possible thereafter at which you will be given an
opportunity to state your case and will be entitled to be accompanied
by a fellow employee of your choice.
The decision of the Chairman, as appropriate, will be
notified to you in writing and will be final and binding under this
procedure.
2.5 MISCONDUCT.
2.5.1 The following offenses are examples of misconduct:
o Bad time keeping;
o Unauthorized absence;
o Minor damages to Company property;
o Minor breach of Company rules;
o Failure to observe Company procedures;
o Abusive behavior;
o Sexual or racial harassment;
o Dishonesty of any kind;
o Negligence not amount to gross negligence.
These offenses are not exclusive or exhaustive and
offenses of a similar nature will be dealt with under this procedure.
2.5.2 The following procedure will apply in cases of
alleged misconduct:
First Warning: This will be given by your Chairman
and may be oral or written according to the circumstances. In either
event, you will be
2
<PAGE> 14
advised that the warning constitutes the first formal state of this
procedure. If the warning is verbal, a note that such a warning has
been given will be placed in the Company's records.
Final Warning: This will be given by your Chairman
and confirmed to you in writing. This warning will state that, if you
commit a further offense of misconduct during the period specified in
it, your employment will be terminated.
Dismissal: The decision to dismiss you will not be
taken without reference to the Chairman and will be notified to you in
writing.
2.6 GROSS MISCONDUCT.
2.6.1 The following offenses are examples of gross
misconduct:
o Theft or unauthorized possession of any
property belonging to the Company or any
employee;
o Serious damage to Company property.
o Falsification of reports, accounts, expense
claims or self-certification forms.
o Refusal to carry out duties or reasonable
instructions.
o Intoxication by reason of drink or drugs.
o Having illegal drugs in your possession,
custody or control on the Company's premises.
o Serious breach of Company rules.
o Violent, dangerous or intimidatory conduct.
o Sexual, racial or other harassment of a
fellow employee.
o Gross negligence.
These examples are not exhaustive or exclusive and
offenses of a similar nature will be dealt with under this
procedure.
2.6.2 Gross misconduct will result in immediate dismissal
without notice or pay in lieu of notice. The decision to dismiss will
not be taken without reference to the Chairman. Dismissal will be
notified to you in writing.
2.7 INCAPABILITY.
2.7.1 The following are examples of incapability:
o Poor performance;
o Incompetence;
3
<PAGE> 15
o Unsuitability;
o Lack of application.
These examples are not exhaustive or exclusive and
instances of a similar nature will be dealt with under this procedure.
2.7.2 The following procedure will apply in cases of
incapability:
First Warning: This will be given by your Chairman
and will be confirmed to you in writing. This warning will specify
the improvement required and will state that your work will be
reviewed at the end of a specified period after the date of the
warning.
Final Warning: This will be given by your Chairman
and confirmed to you in writing. This warning will state that unless
your work improves within a specified period after the date of the
warning, your employment will be terminated.
Dismissal: The decision to dismiss you will not be
taken without reference to the Chairman. Dismissal will be notified
to you in writing.
4
<PAGE> 1
EXHIBIT 10.14
TERMS AND CONDITIONS OF EMPLOYMENT
P A R T I C U L A R S
PARTIES AND DEFINITIONS:
Statement of employment particulars required in accordance with the Employment
Protection (Consolidation) Act 1978 (as amended) Sections 1 to 6 inclusive:
<TABLE>
<S> <C> <C> <C>
1. Name of the Company : Exploration Holdings Limited of 6 Pembroke Road, Sevenoaks, Kent TN13
IXR
2. Name of the Executive : Neil Alexander Macleod Campbell of Tredigo, 6 St. John's Lane,
Hartley, Kent DA3 8ET
3. Date of commencement
of employment :
4. Date of commencement of
continuous employment :
5. Job title : Director, Finance
6. Salary : L.124,000
7. Annual Review Data : 1st May
8. Payment Date : 15th of each month
9. Hours of work : See clause 1.3
10. Holiday : 25 working days per calendar year
11. Place of work : See clause 1.2
12. Disciplinary rules : See clause 27
13. Period of notice to be given : 36 months
</TABLE>
<PAGE> 2
RECITAL:
The Company has agreed to employ the Executive and the Executive has agreed to
serve the Company from the date shown in the Particulars upon the following
terms.
1. EMPLOYMENT AND DUTIES
1.1 The Company will employ the Executive and the Executive will
serve the Company in accordance with the Job Title shown in the Particulars and
in such capacity shall perform the duties and exercise the powers which may
from time to time be assigned in or vested in the Executive by the board of
directors of the Company ("the Board") and shall in the discharge of such
duties and the exercise of such powers observe and comply with all resolutions
and directors from time to time made or given by the Board and shall devote
substantially the whole of the Executive's time and attention during normal
business hours (unless prevented by ill health) to the performance of the
Executive's duties under the terms of this Agreement.
1.2 The duties of the Executive will be performed principally from
the Company's premises provided that:
1.2.1 the Executive shall travel to and from work at such
locations both within and outside the United Kingdom as are required
for the proper performance of the Executive's duties and
1.2.2 the Executive may be required to work at any of the
Company's premises or at the premises of its customers' clients or
suppliers on a temporary basis.
1.3 The Executive shall comply with the Company's normal hours of work for
office staff and shall perform any additional hours of work which are
reasonably required for the proper performance of the Executive's duties. The
Executive shall not be entitled to any additional remuneration for work
performed outside the Company's normal hours of business.
1.4 The Company reserves the right to change the Company's premises and
will give the Executive at least one month's notice of the change and details
of its relocation policy where appropriate. PROVIDED THAT
1.4.1 the relocation shall have no negative financial
impact on the Executive
1.4.2 the relocation shall be within England.
2. APPOINTMENT AS DIRECTOR
2
<PAGE> 3
During the term of this Agreement the Executive will if required by
the Board serve as a director of the Company and (if so required by the Board)
as a director or officer of any subsidiary or associated company of the Company
but shall not be entitled to any director's fees or other remuneration except
as provided in this Agreement in respect of any such directorship or office.
3. TERM OF EMPLOYMENT
The Executive shall continue to hold such office until this Agreement
is terminated by either Party giving to the other the period of notice provided
in the particulars.
4. SALARY
The Company shall during the continuance of the Executive's
appointment under the terms of this Agreement pay to the Executive the salary
shown in the Particulars by equal monthly installments on the Payment Date such
salary to be reviewed annually as at the Annual Review Date in each year.
5. SALARY REVIEW
5.1 The salary shall be reviewed with effect from the Annual
Review Date and each succeeding year during the continuance of this Agreement.
5.2 Any change in salary will be made at the Company's absolute
discretion.
6. EXPENSES
In addition to the salary the Company shall pay to the Executive
during the continuance of the Executive's appointment under the terms of this
Agreement such travelling hotel and other expenses as may be properly incurred
by the Executive in the performance of the Executive's duties under the terms
of this Agreement subject to the presentation of all necessary vouchers or
receipts in respect of such expenses.
7. PROVISION OF CAR
During the Executive's employment under the terms of this Agreement,
the Company will supply the Executive with a car of a design and manufacturer
to be determined by the Company in accordance with the Company's executive car
policy from time to time in force and will maintain the car and pay all running
expenses in connection with the car including the Road Fund License and
insurance premiums and the cost of petrol consumed in the course of private
motoring.
8. PROVISION OF MEDICAL INSURANCE
3
<PAGE> 4
During the Executive's employment under the term of this Agreement the
Company shall provide, at the Company's expense, medical insurance on an
international basis, including repatriation, for the Executive, the Executive's
spouse and the Executive's children subject to the children being under the age
of 18 or in full-time education.
9. PERSONAL EFFECTS
During the Executive's employment under the term of this Agreement the
Company shall indemnify the Executive against any loss of or damage of personal
effects (with the exception of a motor vehicle) whilst the Executive is at work
or travelling to and from work or required to stay away from the Executive's
normal residence for the purpose of or related to the business of the Company.
10. HOLIDAYS
The Executive shall in addition to the normal public bank holidays be
entitled to the holiday shown in the Particulars to be taken at such times as
shall be agreed between the Executive and the Board (and in termination of the
Executive's employment the Executive's entitlement to accrued holiday pay will
be in direct proportion to the length of the Executive's service during the
calendar year in which termination takes place).
11. INCAPACITY
11.1 In t he case of illness of the Executive or any other cause
incapacitating the Executive from duly attending to the Executive's duties, the
Executive shall receive the Executive's full salary during the first six months
or any shorter period AND if the Executive shall continue so incapacitated for
a longer period than 6 consecutive months or if the Executive shall be so
incapacitated at different times for more than 180 days in one period of 52
consecutive weeks then and in ether such case the Executive's employment shall
at the option of the Board be determined on one month's notice or such further
period of notice to which the Executive may be entitled by statute and all
arrears of salary and expenses shall be paid to the Executive.
11.2 If the Executive is absent from work due to sickness or injury
which continues for more than 7 days (including weekends) the Executive may be
required by the Company to provide a medical certificate by the eight day of
sickness or injury. Thereafter, medical certificates may be required by the
Company to cover any continued absence.
11.3 Immediately following the Executive's return to work after a
period of absence which has previously been authorized by the Company, the
Executive is required to complete a self-certification form stating the dates
and reason for the Executive's absence including details of sickness on
non-working days as this information is required by the Company for calculating
statutory sick pay entitlement. Self-certification forms will be retained in
the Company's records.
4
<PAGE> 5
11.4 The salary due to the Executive during the period of
incapacity will be inclusive of any Statutory Sick Pay to which the Executive
is entitled.
11.5 The Company reserves the right for the Executive to be
examined at any time by an independent doctor at its expense and to cease
payment of any form of sick pay if it is advised by the doctor that the
Executive is fit to return to work.
12. PENSION SCHEME
During the Executive's employment under the terms of this Agreement
the Company will make all necessary arrangements for the Executive to be a
member of whatever contributory pension scheme the Company may arrange or may
have arranged providing such benefits as have been agreed between the parties
and are set out in the documents constituting such scheme copies of which have
been or will be supplied to the Executive including membership of a permanent
health and injury scheme which shall provide, subject to insurers' conditions,
income in the Executive of not less that 66% of current net income in the event
o f illness or incapacity of more than 6 months or 6 months in any consecutive
period of 52 weeks.
13. INCENTIVE SCHEME
13.1 The Executive shall be entitled to participate in a Company
Executive Incentive Scheme ("the Scheme") which, subject to the conditions
below, shall give the Executive the potential to receive additional
remuneration of up to 50% of salary each year.
13.1.1 The Company shall define the Scheme annually on or
before February 28th in each year for the Calendar year to which it
relates.
13.1.2 The Scheme may take the form of a single Company goal
for example profit performance or several individual targets such as
productivity, etc., and may be varied each year.
13.1.3 Any remuneration earned under the Scheme for a
particular year shall be paid on or before 1st June of the following
calendar year.
14. TERMINATION
This Agreement shall be subject to summary termination by the Company
by notice in writing if the Executive shall have committed any serious breach
or continued in any persistent breach of the Executive's obligations under the
terms of this Agreement or shall have committed an act of bankruptcy or
compounded with the Executive's creditors generally.
15. RESIGNATION FROM DIRECTORSHIP
5
<PAGE> 6
Upon the termination of this Agreement for whatever reason, the
Executive shall, upon the request of the Company, resign without claim for
compensation from office as a director of the Company and from all offices held
by the Executive in subsidiary or associated companies of the Company and in
the event of the Executive's failure to do so. THE COMPANY IS IRREVOCABLY
AUTHORIZED to appoint some person in the Executive's name and on the
Executive's behalf to execute any documents and to do all things requisite to
give effect thereto PROVIDED THAT any such resignation shall be without
prejudice to any claims arising out of or in respect of the termination of the
Executive's employment by the Company.
16. CONFIDENTIAL INFORMATION
16.1 The Executive shall not, except as authorized or required by
the Executive's duties, reveal to any person or company any of the trade
secrets, secret or confidential operations or dealings or any information
concerning the organization business finances transactions or affairs of the
Company which may come to the Executive's knowledge during the Executive's
employment under the terms of this Agreement and shall keep with complete
secrecy all confidential information entrusted to the Executive and shall not
use or attempt to use any such information in any manner which may injure or
cause loss either directly or indirectly to the Company or the Company's
business or which may be likely to do so.
16.2 If the Company shall have obtained trade secrets or other
confidential information from any third party under an agreement including
restrictions on disclosure known to the Executive, then the Executive will not,
without the consent of the Company at any time (whether during the Executive's
service or after the termination of the Executive's service), infringe such
restrictions.
16.3 The Executive shall not during the continuance of this
Agreement make otherwise than for the benefit of the Company any notes or
memoranda relating to any matter within the scope of the business of the
Company or concerning any of the Company's dealings or affairs nor shall the
Executive either during the continuance of this Agreement or afterwards use or
permit to be used any such notes or memoranda otherwise than for the benefit of
the Company it being the intention of the parties that all such notes or
memoranda made by the Executive shall be the property of the Company and left
at the Company's registered office upon the termination of the Executive's
employment under the terms of this Agreement.
17. RESTRICTIVE COVENANT
17.1 The Executive AGREES that the Executive will not, following
the termination of this Agreement, for whatever cause:
17.1.1 within a period of twelve months thereafter seek to
employ (in relation to any business which competes with the business
of the Company as at the date of such termination) any person who was
employed by the Company during a period of three months prior to the
termination of this Agreement nor procure that any such
6
<PAGE> 7
period be employed or offered employment by any other person, firm or
company and in relation to any such business.
17.1.2 at any time thereafter represent the Executive as
being in any way connected with or interested in the Company or any
business carried on by the Company.
17.2 In this clause references to any act or conduct of the
Executive shall include such act or conduct whether done directly or indirectly
and whether along or jointly with or as employee of or agent for any other
person, firm or company.
18. REASONABLENESS OF RESTRICTIONS
The Executive ACKNOWLEDGES AND AGREES that:
18.1 the direction, extent and application of each of the
restrictions set out in clause 17 are no greater than is reasonably necessary
for the protection of the legitimate interests of the Company in its business,
and
18.2 if any such restriction shall be adjudged by any Court of
competent jurisdiction to be void or unenforceable but would be valid if part
of the wording of such restriction were deleted and/or the period of such
restriction or the area specified in such restriction was reduced then the
Executive agrees that such restriction shall apply and be binding on the
Executive as so amended and/or reduced.
19. OTHER OCCUPATIONS
The Executive shall not without the consent of the Company during the
continuance of this Agreement be engaged or interested either directly or
indirectly in any capacity in any trade business or occupation whatsoever other
than the business of the Company (save as the holder by way of investment only
of shares or securities issued by any company). In this clause, the expression
"occupation" shall include any public or private appointment office or work
which in the reasonably opinion of the Company shall hinder or otherwise
interfere with the performance by the Executive of the Executive's duties under
this Agreement.
20. INVENTIONS AND DISCOVERIES
20.1 Any discovery or invention or secret process made or
discovered by the Executive (either alone or with any other person) while in
the service of the Company in connection with or in any way affecting or
relating to the business of the Company or any of the Company's subsidiary or
associated companies for the time being or in the opinion of the Board, capable
of being used or adapted for use therein or in connection therewith shall be
forthwith disclosed to the Company and shall be the absolute property of the
Company.
7
<PAGE> 8
20.2 The Executive shall if any whenever required so to do by the
Company at the expense of the Company apply or join with the Company in
applying for letters patent or other protection in any part of the world for
any such discovery invention or process and shall, at the expense of the
Company, executive or procure to be executed all instruments or documents
necessary for vesting letters patent or other protection when obtained and all
right, title and interest thereto in the Company absolutely or in such other
person as the Company may require.
20.3 For the purpose of this clause THE EXECUTIVE IRREVOCABLY
APPOINTS the Company as the Executive's attorney in the Executive's name to
execute and do all documents and things which are required in order to give
effect to the provisions of this clause.
21. COMPULSORY PAID LEAVE
21.1 At any time after a notice has been served by either party
pursuant to clause 3 the Company may require the Executive to take paid leave
for the period (ore the balance of the period) of such notice and during such
period:
21.1.1 the Company shall have no obligation to provide work
or to require the Executive to perform any duties;
21.1.2 the Executive shall receive the Executive's full
salary and other benefits in accordance with the Agreement;
21.1.3 the provisions of clause 19 shall cease to apply but
only in respect of any occupation which is not directly or indirectly
concerned with any business which competes with any business of the
Company PROVIDED THAT the Executive shall keep accurate records of any
income or benefits received or receivable by him in respect of such
occupation and shall notify the Company thereof and the Company may at
its discretion deduct or set off all or part of such income or
benefits from or against the salary and other benefits payable by the
Company to the Executive during or in respect of such period.
22. CONTINUATION OF PROVISIONS
The expiration or determination of this Agreement howsoever arising
shall not affect such of the provisions of this Agreement as are expressed to
have effect or operate thereafter and shall be without prejudice to any right
of action already accrued to either party in respect of any breach of this
Agreement by the other party.
23. COMPANY RECONSTRUCTION
If before the termination of this Agreement:
8
<PAGE> 9
23.1 the employment of the Executive under the terms of this
Agreement shall be determined by reason of the winding up of the Company for
the purpose of the Company's reconstruction or amalgamation a nd the Company
shall procure that nay company or undertaking resulting from such
reconstruction or amalgamation shall offer to the Executive employment on terms
as to remuneration and otherwise not less favorable to the Executive than those
provided by this Agreement and for the residue of the period of this Agreement
or for such other period as may be mutually agreed; or
23.2 the Company's holding company or any subsidiary thereof or of
the Company shall at any time during the continuance of this Agreement offer to
employ the Executive in the place of the Company on terms s to remuneration and
otherwise not less favorable to the Executive than those provided by this
Agreement and for the residue of the period of this Agreement and the Company
shall thereupon terminate this Agreement then in either such case the
termination of this Agreement shall be deemed not to be in breach of the
provisions of this Agreement and there will be no change to the date of
commencement of continuous employment shown in the Particulars and subject to
the appropriate statutory provisions the Executive shall have to claim against
the Company for damages or otherwise in connection with or arising from such
termination.
24. STATUTORY PARTICULARS
The particulars which are required to be included in the written
statement required by the Employment Protection (Consolidation) Act 1978 (as
amended) Sections 1 to 6 inclusive are set out in the Particulars.
25. INTERPRETATION
In this Agreement and unless the context otherwise requires:
25.1 the paragraph headings are for reference purposes only and
shall not affect interpretation;
25.2 unless otherwise stated a reference to a clause or sub-clause
is a reference to the clause or sub- clause so numbered to this Agreement;
25.3 the express "the Company" shall be deemed to include any
subsidiary or holding company of the Company as defined in the Companies Act
1985 Section 736 and "subsidiary company" shall have the meaning defined in the
Section;
25.4 words importing one gender include the other genders and words
importing the singular include the plural and vice versa.
26. NOTICES
9
<PAGE> 10
Notices may be given by either party by letter telegram or telex
addressed to the other party at (in the case of the Company) the Company's
registered office for the time being and (in the case of the Executive) the
Executive's last known address and any such notice given by letter shall be
deemed to have been given at the time at which the letter would be delivered in
the ordinary course of post.
27. PREVIOUS CONTRACTS OF SERVICE
This Agreement is in substitution for all previous contracts of
service between the Company and the Company's subsidiary or associated
companies and the Executive which shall be deemed to have been terminated by
mutual consent as from the date on which this Agreement commences.
28. DISPUTES
In the case of any dispute or difference arising between the parties
as to the construction of this Agreement or the rights, duties or obligations
on either party under the terms of this Agreement or any matter arising out of
or concerning the same or the Executive's employment under the terms of this
Agreement every such dispute and matter and difference shall be referred to a
single arbitrator in accordance with the provisions of the Arbitration Acts
1950 to 1979 or any statute for the time being replacing, extending or
modifying the same.
29. DISCIPLINARY AND GRIEVANCE PROCEDURE
29.1 If the Executive has a grievance relating to the Executive's
employment, the Executive should proceed in accordance with the Company's
grievance procedure which is set out in Appendix A but which does not form part
of the Executive's Terms and Conditions of Employment.
29.2 The Company deals with disciplinary matters in accordance with
its disciplinary procedures which are set out in Appendix A but which do not
form part of the Executive's Terms and Conditions of Employment.
29.3 Following any disciplinary procedure a complaint against the
Executive is upheld, the Company reserves the right to impose any one or more
of the following penalties on the Executive instead of a first or final warning
or dismissal with or without notice.
29.3.1 Demotion: The Company may demote the Executive by
notice in writing giving details of any consequential changes to the
Executive's Terms and Conditions of Employment in particular the
notice will give details of any reduction to the Executive's salary
and/or loss of any benefits and/or privileges consequent upon such
demotion.
10
<PAGE> 11
29.3.2 Suspension: The Company may suspend the Executive
from work with or without notice in writing to this effect. Such
notice will specify the dates of the Executive's suspension, the
conditions applicable to the Executive's suspension and the period of
suspension.
SIGNED AS A DEED )
BY THE COMPANY ) /s/ GERALD M. HARRISON
ACTING BY ITS DIRECTOR )
SIGNED AS A DEED ) /s/ NEIL A.M. CAMPBELL
BY THE EXECUTIVE )
11
<PAGE> 12
APPENDIX A.
GRIEVANCE AND DISCIPLINARY PROCEDURES
1. GRIEVANCE PROCEDURE.
1.1 If you have any grievance relating to your employment you
should raise the matter initially with your chairman. You may be required to
put any such grievance in writing.
1.2 Having inquired into your grievance, your Chairman will
discuss it with you and will then notify you of his decision.
1.3 If the decision of your Chairman is not acceptable, you may
then refer the matter in writing to the Company's Board ("the Board") whose
decision will be final and binding.
1.4 When stating grievances, you may be accompanied by a fellow
employee of your choice.
2. DISCIPLINARY PROCEDURES.
2.1 The purposes of the disciplinary procedures is to ensure that
the Company behaves fairly in investigating and dealing with the allegations of
unacceptable conduct or performance. Accordingly, the Company reserves the
right to depart from the precise requirements of its disciplinary procedure
where it is expedient to do so and where the resulting treatment of the
employee is no less fair.
2.2 All cases of disciplinary action under these procedures will
be recorded and placed in the Company's records. A copy of the Company's
disciplinary records concerning you will be supplied to you at your request.
2.3 Offenses under the Company's procedures fall into 3 categories
namely:
o misconduct
o gross misconduct
o incapability
2.4 The following steps will be taken, as appropriate, in all
cases of disciplinary action:
2.4.1 Investigations: No action will be taken before a
proper investigation has been undertaken by the Company into the
matter complained of. If appropriate, the Company may by written
notice suspend you while the investigation takes place. If you are so
suspended your contract of employment will continue together with all
your rights under your contract will not be entitled to access in any
of the Company's period of suspension, you will not be entitled to
access to any of the Company's premises except at the prior request or
with the prior consent of the Company and subject to such
<PAGE> 13
conditions as the Company may impose. The decision to suspend you
will be notified to you by the Company and confirmed in writing.
2.4.2 Disciplinary Hearings: If the Company decides to
hold a disciplinary hearing about the matter complained of, you will
be given details of the complaint against you at least three working
days before the hearing. At the hearing, you will be given an
opportunity to state your case. You may be accompanied by a fellow
employee of your choice. No disciplinary penalty will be imposed
without a disciplinary hearing, but a hearing may proceed in your
absence if you fail to turn up.
2.4.3 Appeals: You have a right to appeal against any
disciplinary decision to the Board. You should inform the Board in
writing of your wish to appeal within five working days of the date of
the decision which forms the subject of your appeal.
The Chairman, as appropriate, will conduct an appeal
hearing as soon as possible thereafter at which you will be given an
opportunity to state your case and will be entitled to be accompanied
by a fellow employee of your choice.
The decision of the Chairman, as appropriate, will be
notified to you in writing and will be final and binding under this
procedure.
2.5 MISCONDUCT.
2.5.1 The following offenses are examples of misconduct:
o Bad time keeping;
o Unauthorized absence;
o Minor damages to Company property;
o Minor breach of Company rules;
o Failure to observe Company procedures;
o Abusive behavior;
o Sexual or racial harassment;
o Dishonesty of any kind;
o Negligence not amount to gross negligence.
These offenses are not exclusive or exhaustive and
offenses of a similar nature will be dealt with under this procedure.
2.5.2 The following procedure will apply in cases of
alleged misconduct:
First Warning: This will be given by your Chairman
and may be oral or written according to the circumstances. In either
event, you will be
2
<PAGE> 14
advised that the warning constitutes the first formal state of this
procedure. If the warning is verbal, a note that such a warning has
been given will be placed in the Company's records.
Final Warning: This will be given by your Chairman
and confirmed to you in writing. This warning will state that, if you
commit a further offense of misconduct during the period specified in
it, your employment will be terminated.
Dismissal: The decision to dismiss you will not be
taken without reference to the Chairman and will be notified to you in
writing.
2.6 GROSS MISCONDUCT.
2.6.1 The following offenses are examples of gross
misconduct:
o Theft or unauthorized possession of any
property belonging to the Company or any
employee;
o Serious damage to Company property.
o Falsification of reports, accounts, expense
claims or self-certification forms.
o Refusal to carry out duties or reasonable
instructions.
o Intoxication by reason of drink or drugs.
o Having illegal drugs in your possession,
custody or control on the Company's premises.
o Serious breach of Company rules.
o Violent, dangerous or intimidatory conduct.
o Sexual, racial or other harassment of a
fellow employee.
o Gross negligence.
These examples are not exhaustive or exclusive and
offenses of a similar nature will be dealt with under this
procedure.
2.6.2 Gross misconduct will result in immediate dismissal
without notice or pay in lieu of notice. The decision to dismiss will
not be taken without reference to the Chairman. Dismissal will be
notified to you in writing.
2.7 INCAPABILITY.
2.7.1 The following are examples of incapability:
o Poor performance;
o Incompetence;
3
<PAGE> 15
o Unsuitability;
o Lack of application.
These examples are not exhaustive or exclusive and
instances of a similar nature will be dealt with under this procedure.
2.7.2 The following procedure will apply in cases of
incapability:
First Warning: This will be given by your Chairman
and will be confirmed to you in writing. This warning will specify
the improvement required and will state that your work will be
reviewed at the end of a specified period after the date of the
warning.
Final Warning: This will be given by your Chairman
and confirmed to you in writing. This warning will state that unless
your work improves within a specified period after the date of the
warning, your employment will be terminated.
Dismissal: The decision to dismiss you will not be
taken without reference to the Chairman. Dismissal will be notified
to you in writing.
4
<PAGE> 1
EXHIBIT 10.15
EMPLOYMENT AGREEMENT AMENDMENT
This Employment Agreement Amendment ("Amendment") is entered into this
____ day of ____________, 1997, by and between Exploration Holdings Limited
(the "Company") and __________________ ("Executive").
Recitals
WHEREAS, the Company and Executive have previously entered into a
Service Agreement for Senior Directors relating to the employment of Executive
by the Company, which has been amended by an Employment Agreement Amendment
dated July 3, 1996 (as so amended, the "Agreement");
WHEREAS, Executive and the Company have agreed to enter into this
Amendment and hereby amend certain terms of the Agreement as set forth herein;
Agreement
NOW, THEREFORE, for and in consideration of the mutual promises and
covenants contained herein, the parties hereby agree as follows:
1. Executive and the Company hereby agree that the warrants to
purchase up to 5,555 ordinary shares of US$0.001 of Energy Research
International, a Cayman Islands corporation and the parent corporation of the
Company, at a price of US$300.03 per ordinary share, granted to the Executive
on July 3, 1996 pursuant to the Agreement are hereby cancelled.
2. Executive is hereby granted stock options to purchase up to
75,000 shares of Common Stock, $0.01 par value per share, of Eagle Geophysical,
Inc., a Delaware corporation and the ultimate parent corporation of the Company
("Eagle"), pursuant to Eagle's stock option plan at a price per share equal to
the initial public offering price of such stock pursuant to Eagle's initial
public offering being consummated on or about the date hereof. Such stock
options shall vest in cumulative installments of one-third of the total shares
subject thereto on each of the first, second and third anniversaries of the
date hereof and will expire ten years from the date of grant or such earlier
date as may be specified pursuant to Eagle's stock option plan. In addition,
any such options that are not vested as of any date on which the Company
terminates the Executive's employment not in accordance with this Agreement
shall become fully vested on the date of such termination.
3. The annual review date set forth in paragraph 7 of the Terms
and Conditions of Employment, Particulars, is hereby amended to be each
subsequent anniversary of the date hereof.
4. Subsection 1.4.2 of the Agreement is hereby amended to read in
its entirety as follows:
"1.4.2 the relocation shall be within England or the United
States of America; provided, however, any such
relocation to the United States shall be only
<PAGE> 2
with the consent of Executive, which consent may not
be unreasonably withheld by the Executive."
5. Subsection 5.2 of the Agreement is hereby amended to read in
its entirety as follows:
"5.2 Any change in salary will be made at the Company's absolute
discretion; provided, however in no event may the salary be
reduced below the Salary reflected as item 6 of the Terms &
Conditions of Employment attached as a part of the Agreement."
6. The Company Executive Incentive Scheme contemplated in
paragraph 13.1 of the Agreement is hereby amended for the calendar year ending
December 31, 1997 to provide that the Executive shall be entitled to receive an
amount equal to 50% of his base salary for such year under the Scheme if and
only if the Operating Profit Margin (as defined in Paragraph 13.2 of the
Agreement) of the Marine Business (as defined in Paragraph 13.2 of the
Agreement) for such year equals or exceeds 24% of revenues from the Marine
Business.
7. Section 13 of the Agreement is hereby amended by adding a new
paragraph 13.2 thereto as follows:
13.2 Additional Incentive Bonus
13.2.1 Additional Incentive Bonus. The Executive shall
receive additional incentive bonuses, if earned,with
respect to the fiscal years ending during the Term
pursuant to Subsection 13.2.3 and/or 13.2.4 (each an
"Additional Incentive Bonus"); provided, however,
that no Additional Incentive Bonus for a fiscal year
shall be payable if the Net After-Tax Profits (as
hereinafter defined) for such fiscal year do not
exceed Base Profits (as hereinafter defined).
13.2.2 Definitions.
"Base Profits" shall mean 5% of gross revenues from
the Marine Business.
"Chief Financial Officer" means the chief financial
officer of Eagle Geophysical.
"Eagle Geophysical" means Eagle Geophysical, Inc., a
Delaware corporation and the indirect parent
corporation of the Company.
"Marine Business" means the marine seismic data
acquisition business of the Company and its wholly
owned subsidiaries and of any other company that is a
direct or indirect wholly owned subsidiary of Eagle
Geophysical.
<PAGE> 3
"Net After-Tax Profits" shall, for the purposes
hereof, mean the amount of net profits of the Marine
Business calculated by the Chief Financial Officer
applying U.S. GAAP and such other accounting
principles and assumptions as may be reasonable and
taking into account expenses attributable to
allocable overhead (based on revenues) from all other
companies controlled by or under common control with
the Company engaged in the Marine Business and of
such companies' parent corporation(s), and
subtracting therefrom all income tax liabilities
attributable to the Marine Business.
"Operating Profit Margin" means the amount of revenue
less cost of sales of the Marine Business calculated
by the Chief Financial Officer applying U.S. GAAP and
such other accounting principles and assumptions as
may be reasonable.
13.2.3 Applicable Percentage Bonus. If Net After-Tax
Profits for a fiscal year exceed Base Profits for
such fiscal year, the Executive shall receive an
Additional Incentive Bonus (in addition to any
Additional Incentive Bonus pursuant to Subsection
13.2.4) equal to the Applicable Percentage set forth
in the table below multiplied by the difference
between actual Net After- Tax Profits and Base
Profits.
Net After-Tax Profits
(percent of gross revenues) Applicable Percentage
--------------------------- ---------------------
greater than 5%, but less than 2.0%
or equal to 6%
greater than 6%, but less than 2.5%
or equal to 7%
greater than 7% 3.0%
13.2.4 Significant Increase in Revenues Bonus. If Net
After-Tax Profits for a fiscal year after 1997 exceed
Base Profits for such fiscal year, and if gross
revenues of the Marine Business for such fiscal year
increase by an amount of 20% or more as compared to
the gross revenues of the Marine Business for the
previous fiscal year, the Executive shall receive an
Additional Incentive Bonus equal to 3% multiplied by
the excess, if any, of the Net After-Tax Profits for
such fiscal year over the greater of (i) the Net
After-Tax Profits for the prior fiscal year or (ii)
Base Profits for the prior fiscal year.
13.2.5 Payment of Additional Incentive Bonus. The Chief
Financial Officer shall calculate the Net After-Tax
Profits, and any Additional Incentive Bonus payable
to the Executive in connection therewith, shall
certify such calculations and shall deliver such
calculations to the Executive as soon as reasonably
practicable after the end of each fiscal year, but in
any event within seventy-five (75) days following the
end of such fiscal year. Any
3
<PAGE> 4
Additional Incentive Bonus payable hereunder shall be
paid by the Company to the Executive within seven (7)
days of delivery of such calculations by the Chief
Financial Officer and in any event within eighty-two
(82) days following the end of the applicable fiscal
year.
8. Section 28 of the Agreement is hereby amended to read in its
entirety as follows:
"28. DISPUTES
28.1 Arbitration. Any dispute, difference or question ("Dispute")
between Executive and the Company ("Disputing Parties"),
arising with respect to the Agreement or Executive's
employment under the Agreement that is not resolved promptly
by the Disputing Parties shall be resolved by binding
arbitration as follows. In the event the Parties are unable
to resolve the Dispute within 14 days following written notice
from one Disputing Party to the other setting forth the basis
of the Dispute, then either Disputing Party may request that
the Dispute be settled by binding arbitration by an arbitrator
mutually acceptable to the Disputing Parties in an arbitration
proceeding conducted in Houston, Texas in accordance with the
rules existing at the date hereof of the American Arbitration
Association. If the Disputing Parties hereto cannot agree on
an arbitrator within ten (10) business days of the initiation
of the arbitration proceeding, an arbitrator shall be selected
for the Disputing Parties by the American Arbitration
Association. The Disputing Parties shall use their reasonable
best efforts to have the arbitration proceeding concluded and
a judgment rendered by the arbitrator within forty (40)
business days of the initiation of the arbitration proceeding.
The decision of such arbitrator shall be final, and judgment
upon the award rendered by the arbitration may be entered in
any court having jurisdiction thereof, and the costs
(including, without limitation, reasonable fees and expenses
of counsel and experts for the Disputing Parties) of such
arbitration (including the costs to enforce or preserve the
rights awarded in the arbitration) shall be borne by the
Disputing Party whom the decision of the arbitrator is
against. If the decision of the arbitrator is not clearly
against one of the Disputing Parties or the decisions of the
arbitrator is against more than one Disputing Party on one or
more issues, the costs of such arbitration shall be borne
equally by the Disputing Parties.
28.2 Consent to Jurisdiction; Venue. The parties hereto agree that
all actions relating to the enforcement of this Section or any
award rendered hereunder, and over which the United States
federal courts have subject matter jurisdiction, shall be
litigated, if at all, exclusively in the United States
District Court for the Southern District of Texas, Houston
Division, and, if necessary, the corresponding appellate
courts. The parties further agree that all actions relating
to the enforcement of this Section or any award rendered
hereunder, and over which the United States federal courts do
not have subject matter jurisdiction, shall be litigated, if
at all, exclusively in the Courts of the State of Texas, in
Harris County, and, if necessary, the corresponding appellate
courts. Each party hereto hereby submits itself to the
personal jurisdiction of, and consents to venue in, any such
court, and hereby waives any claim it may otherwise have that
such court lacks personal
4
<PAGE> 5
jurisdiction over it, or that such court is an inconvenient
forum, with respect to any such matter or proceeding. Each
party hereto further agrees to voluntarily appear and to enter
a general appearance in any such proceeding which is brought
in any such court. Executive hereby appoints Carolyn Campbell
and/or Griggs & Harrison, P.C. of Houston, Texas as its agent
for service of process in any such matter or proceeding."
28.3 Governing Law. This Agreement shall be governed by, and
interpreted in accordance with, the laws of the United
Kingdom, without regard to the conflicts of laws provisions
thereunder.
9. Except as specifically amended hereby, the terms and
provisions of the Agreement shall continue in full force and effect.
SIGNED as a Deed )
by the Company )
acting by its ) -----------------------------------
-----------
-----------------------------------
SIGNED as a Deed )
by the Executive )
-----------------------------------
5
<PAGE> 1
10.17
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is entered into as of
April 24, 1997, by and between EAGLE GEOPHYSICAL, INC., a Delaware corporation
(the "Company"), and RICHARD W. MCNAIRY (the "Executive").
The Company desires to employ the Executive and the Executive desires
to accept employment with the Company, on the terms and conditions of this
Agreement.
Accordingly, the parties agree as follows:
1. Employment Duties and Acceptance.
1.1 Employment by the Company; Duties. The Company
hereby agrees to employ the Executive for a term commencing on April 24 1997,
and expiring at the end of the day on April 23, 1999 (such date, or later date
to which this Agreement is extended in accordance with the terms hereof, the
"Termination Date"), unless earlier terminated as provided in Section 4 or
unless extended as provided herein (the "Term"). The Term shall be
automatically extended commencing on the Termination Date and on each
Termination Date thereafter (each such date being a "Renewal Date"), so as to
terminate one (1) year from such Renewal Date, unless and until at least ninety
(90) days prior to a Renewal Date either party hereto gives written notice to
the other that the Term should not be further extended, in which event the
Termination Date shall be the Renewal Date following such notice. During the
Term, the Executive shall serve in the capacity of Vice President and Chief
Financial Officer of the Company and shall also serve in those offices and
directorships of subsidiary corporations or entities of the Company to which he
may from time to time be appointed or elected. During the Term, the Executive
shall devote all reasonable efforts and all of his business time and services
to the Company, subject to the direction of the Board of Directors of the
Company (the "Board"). The Executive shall not engage in any other business
activities except for passive investments in corporations or partnerships not
engaged in the Company Business (as hereinafter defined) pursuant to Section 3
hereof.
1.2 Acceptance of Employment by the Executive. The
Executive hereby accepts such employment and shall render the services and
perform the duties described above.
2. Compensation and Other Benefits.
2.1 Annual Salary. The Company shall pay to the Executive
an annual salary at a rate of not less than one hundred fifty thousand dollars
($150,000) per year (the "Annual Salary"), subject to increase at the sole
discretion of the Board. The
<PAGE> 2
Annual Salary shall be payable in accordance with the payroll policies of the
Company as from time to time in effect, but in no event less frequently than
once each month, less such deductions as shall be required to be withheld by
applicable law and regulations.
2.2 Bonuses. The Executive may receive, at the sole
discretion of the Board, an incentive bonus with respect to the fiscal years
ending during the Term (the "Incentive Bonus"), equal to one-third of the
Annual Salary for such fiscal year, unless otherwise increased by the Board.
Any Incentive Bonus payable hereunder shall be paid by the Company to the
Executive within ninety (90) days following the end of the applicable fiscal
year.
2.3 Grant of Option. The Company agrees to grant the
Executive, pursuant to the terms of the Company's Option Plan (the "Option
Plan") created in connection with the initial public offering (the "IPO") of
the Company's common stock, options to acquire twenty five thousand (25,000)
shares of the Company's common stock (the "Options"), at an exercise price
equal to the IPO issue price. The Options shall vest over a period of three
years, with Options to acquire 8,334 shares vesting one year from the date
hereof, Options to acquire 8,333 shares vesting two years from the date hereof,
and Options to acquire 8,333 shares vesting three years from the date hereof,
subject to the terms of the Option Plan. The Company agrees to use all
reasonable efforts, consistent with the foregoing, to ensure that the Options
meet all requirements for treatment as Incentive Stock Options under the
Internal Revenue Code of 1986, as amended, and that the grant of the Options
meets the requirements of Rule 16b-3, promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended (the "Act").
2.4 Vacation Policy. The Executive shall be entitled to a
paid vacation of three weeks during each year of the Term, commencing six
months after the date hereof.
2.5 Participation in Employee Benefit Plans. The Company
agrees to permit the Executive during the Term, if and to the extent eligible,
to participate in any group life, hospitalization or disability insurance plan,
health program, pension plan, similar benefit plan or other so-called "fringe
benefits" of the Company (collectively, "Benefits") which may be available to
other senior executives of the Company on terms no less favorable to the
Executive than the terms offered to such other executives. The Company agrees
to use its best efforts to obtain immediate coverage for the Executive upon the
commencement of the Term under its existing or newly adopted medical expense
and hospitalization plan for employees without premium surcharge and without
exclusions for disclosed preexisting conditions. The Executive shall cooperate
with the Company in applying for such coverage, including submitting to a
physical exam and providing all relevant health and personal data.
<PAGE> 3
2.6 General Business Expenses. The Company shall pay or
reimburse the Executive for all expenses reasonably and necessarily incurred by
the Executive during the Term in the performance of the Executive's services
under this Agreement. Such payment shall be made upon presentation of such
documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements.
2.7 Company Car and Cellular Telephone. The Company shall
pay the Executive a car allowance of six hundred and no/100 dollars ($600.00)
per month, which the Executive may apply, in his discretion, to the cost
associated with purchasing or leasing, insuring, operating and maintaining an
automobile of the Executive's choice. The Executive may use the automobile for
personal as well as business purposes. The Company shall also furnish the
Executive with a cellular telephone of his choice and the Company shall pay all
charges in connection with the use thereof, other than charges for calls not
related to the Executive's duties hereunder.
3. Non-Competition, Confidentiality and Company Property.
3.1 Covenants Against Competition. The Executive
acknowledges that (i) the Company is currently engaged in the business of
owning, managing and operating seismic data acquisition equipment and hiring
and managing crews to operate such equipment, which equipment and crews are
contracted or hired for the purpose of performing geological surveys and
acquiring seismic data onshore and offshore (the "Company Business"); (ii) his
work for the Company will give him access to trade secrets of and confidential
information concerning the Company; and (iii) the agreements and covenants
contained in this Agreement are essential to protect the business and goodwill
of the Company. Accordingly, the Executive covenants and agrees as follows:
3.1.1 Non-Compete. As an independent covenant, and
in order to enforce the provisions of Sections 3.1.3 and 3.1.5 hereof and the
other provisions of this Agreement, the Executive agrees that he shall not
during the Restricted Period (as hereinafter defined) within a fifty (50) mile
radius of the Company's principal office, directly or indirectly (except in the
Executive's capacity as an officer of the Company), (i) engage or participate
in the Company Business; (ii) enter the employ of, or render any other services
to, any person engaged in the Company Business except as permitted hereunder;
or (iii) become interested in any such person in any capacity, including,
without limitation, as an individual, partner, shareholder, lender, officer,
director, principal, agent or trustee except as permitted hereunder; provided,
however, that the Executive may own, directly or indirectly, solely as an
investment, securities of any person traded on any national securities exchange
or listed on the National Association of Securities Dealers Automated Quotation
System if the Executive is not a controlling person of, or a member of a group
which controls, such person and the Executive does not,
<PAGE> 4
directly or indirectly, own 5% or more of any class of equity securities, or
securities convertible into or exercisable or exchangeable for 5% or more of
any class of equity securities, of such person. As used herein, the
"Restricted Period" shall mean a period commencing on the date hereof and
terminating upon the first to occur of (a) the date on which the Company
terminates or is deemed to terminate the Executive's employment without Cause
(as hereinafter defined), (b) the date the Executive terminates or is deemed to
terminate his employment pursuant to Section 4.6 hereof or (c) the date of
termination of this Agreement; provided, however, that if the Company shall
have terminated the Executive's employment for Cause and such Cause in fact
exists or if the Executive shall have terminated his employment with the
Company in breach of the terms of this Agreement, the Restricted Period shall
end one (1) year following the termination of the Executive's employment
hereunder.
3.1.2 Customers. As an independent covenant, the
Executive also agrees to refrain during his employment by the Company, and in
the event of the termination of his employment for any reason, for one year
thereafter, without written permission from the Company, from diverting,
taking, soliciting and/or accepting on his own behalf or on the behalf of
another person, firm, or company, the business of any past or present customer
of the Company, its divisions, subsidiaries and/or other affiliated entities,
or any identified prospective or potential customer of the Company, its
divisions, subsidiaries and/or affiliated entities, whose identity became known
to the Executive through his employment by the Company.
3.1.3 Confidential Information.
3.1.3.1 The Executive acknowledges that the
Company has a legitimate and continuing proprietary interest in the protection
of its confidential information and that it has invested substantial sums and
will continue to invest substantial sums to develop, maintain and protect
confidential information. The Company agrees to provide the Executive access
to confidential information in conjunction with the Executive's duties,
including, without limitation, information of a technical and business nature
regarding the Company's past, current or anticipated business that may
encompass financial information, financial figures, trade secrets, customer
lists, details of client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development techniques or
plans, business acquisition plans, Company employee information, organizational
charts, new personnel acquisition plans, technical processes, designs and
design projects, inventions and research projects, ideas, discoveries,
inventions, improvements, trade secrets, design specifications, writings and
other works of authorship. In exchange, as an independent covenant, the
Executive agrees not to make any unauthorized use, publication, or disclosure,
during or subsequent to his employment by the Company, of any Intellectual
Property of a confidential or trade secret nature, generated or
<PAGE> 5
acquired by him during the course of his employment, except to the extent that
the disclosure of Intellectual Property Information is necessary to fulfill his
responsibilities as an employee of the Company. The Executive understands that
confidential matters and trade secrets include information not generally known
by or available to the public about or belonging to the Company, its divisions,
subsidiaries, and related affiliates, or belonging to other companies to whom
the Company, its divisions, subsidiaries, and related affiliates, may have an
obligation to maintain information in confidence, and that authorization for
public disclosure may only be obtained through the Company's written consent.
3.1.3.2 The Executive further agrees not to
disclose to the Company, or induce any personnel of the Company to use, any
confidential information, trade secret, or confidential material belonging to
others.
3.1.3.3 The Executive agrees that the
covenants set forth in Sections 3.1.3.1 and 3.1.3.2 are independent covenants
and indefinite obligations binding upon the Executive both during and after the
termination of the Executive's relationship with the Company.
3.1.4 Property of the Company. All memoranda,
notes, lists, records, engineering drawings, technical specifications and
related documents and other documents or papers (and all copies thereof)
relating to the Company, including such items stored in computer memories,
microfiche or by any other means, made or compiled by or on behalf of the
Executive after the date hereof, or made available to the Executive after the
date hereof relating to the Company, its affiliates or any entity which may
hereafter become an affiliate thereof, shall be the property of the Company,
and shall be delivered to the Company promptly upon the termination of the
Executive's employment with the Company or at any other time upon request;
provided, however, that the Executive's address books, diaries, chronological
correspondence files and rolodex files shall be deemed to be property of the
Executive.
3.1.5 Original Material. The Executive agrees that
any inventions, discoveries, improvements, ideas, concepts or original works of
authorship relating directly to the Company Business, including without
limitation information of a technical or business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how,
manufacturing processes, product formulae, design specifications, writings and
other works of authorship, computer programs, financial figures, marketing
plans, customer lists and data, business plans or methods and the like, which
relate in any manner to the actual or anticipated business or the actual or
anticipated areas of research and development of the Company and its divisions,
subsidiaries, affiliates, or related entities, whether or not protectable by
patent or copyright, that have been originated, developed or
<PAGE> 6
reduced to practice by the Executive alone or jointly with others during the
Executive's employment with the Company shall be the property of and belong
exclusively to the Company. The Executive shall promptly and fully disclose to
the Company the origination or development by the Executive of any such
material and shall provide the Company with any information that it may
reasonably request about such material. Either during the subsequent to the
Executive's employment, upon the request and at the expense of the Company or
its nominee, and for no remuneration in addition to that due the Executive
pursuant to his employment by the Company, but at no expense to him, the
Executive agrees to execute, acknowledge, and deliver to the Company or its
attorneys any and all instruments which, in the judgment of the Company or its
attorneys, may be necessary or desirable to secure or maintain for the benefit
of the Company adequate patent, copyright, and other property rights in the
United States and foreign countries with respect to any such inventions,
improvements, ideas, concepts, or original works of authorship embraced within
this Agreement.
3.1.6 Employees of the Company and its Affiliates.
As an independent covenant, the Executive agrees to refrain during his
employment by the Company, and in the event of the termination of his
employment for any reason for a period of one year thereafter, from inducing or
attempting to influence any employee of the Company, its divisions,
subsidiaries and/or affiliated entities to terminate his employment.
3.1.7 Company's Interest. The Executive further
agrees that these covenants are made to protect the legitimate business
interests of the Company, including interests in the Company's property
described in and pursuant to Section 3.1.4 and Section 3.1.5, and not to
restrict his mobility or to prevent him from utilizing his general technical
skills. The Executive understands as a part of these covenants that the
Company intends to exercise whatever legal recourse against him for any breach
of this Agreement and, in particular, for any breach of these covenants.
3.2 Rights and Remedies Upon Breach. If the Executive
breaches, or threatens to commit a breach of, any of the provisions contained
in Section 3.1 of this Agreement (the "Restrictive Covenants"), the Company
shall have the following rights and remedies, each of which rights and remedies
shall be independent of the others and severally enforceable, and each of which
is in addition to, and not in lieu of, any other rights and remedies available
to the Company under law or in equity:
3.2.1 Specific Performance. The right and remedy
to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and
that money damages would not provide an adequate remedy to the Company.
<PAGE> 7
3.2.2 Accounting. The right and remedy to
require the Executive to account for and pay over to the Company all
compensation, profits, monies, accruals, increments or other benefits derived
or received by the Executive as the result of any action constituting a breach
of the Restrictive Covenants.
3.3 Severability of Covenants. The Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in duration and geographical scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect without regard to the
invalid portions.
3.4 Court Review. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of, or scope of activities restrained by, such
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable.
3.5 Enforceability in Jurisdictions. The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
such Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the Company that
such determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
4. Termination.
4.1 Termination Upon Death. If the Executive dies during
the Term, this Agreement shall terminate; provided, however, that in any such
event, the Company shall pay to the Executive's estate any portion of the
Annual Salary that shall have been earned by the Executive prior to the
termination but not yet paid, any accrued Incentive Bonus and any Benefits that
have vested in the Executive at the time of such termination as a result of his
participation in any of the Company's benefit plans shall be paid to the
Executive, or to his estate or designated beneficiary, in accordance with the
provisions of such plan; and the Company shall reimburse the Executive, or his
estate, for any expenses with respect to which the Executive is entitled to
reimbursement pursuant to Section 2.6 of this Agreement, and the Executive's
right to indemnification, payment or reimbursement pursuant to Section 6 of
this Agreement
<PAGE> 8
shall not be affected by such termination and shall continue in full force and
effect, both with respect to proceedings that are threatened, pending or
completed at the date of such termination and with respect to proceedings that
are threatened, pending or completed after that date.
4.2 Termination With Cause. The Company has the right, at
any time during the Term, subject to all of the provisions hereof, exercisable
by serving notice, effective on or after the date of service of such notice as
specified therein, to terminate the Executive's employment under this Agreement
and discharge the Executive with Cause. If such right is exercised, the
Company's obligation to the Executive shall be limited solely to the payment of
unpaid Annual Salary accrued, together with any earned but unpaid Incentive
Bonus and Benefits vested up to the effective date specified in the Company's
notice of termination. As used in this Agreement, the term "Cause" shall mean
and include (i) chronic alcoholism or controlled substance abuse as determined
by a doctor mutually acceptable to the Company and the Executive, (ii) an act
of proven fraud or dishonesty on the part of the Executive with respect to the
Company or its subsidiaries; (iii) knowing and material failure by the
Executive to comply with material applicable laws and regulations relating to
the business of the Company or its subsidiaries; (iv) the Executive's
continuing failure to satisfactorily perform his duties hereunder or a material
breach by the Executive of this Agreement except, in each case, where such
failure or breach is caused by the illness or other similar incapacity or
disability of the Executive; or (v) conviction of a crime involving moral
turpitude or a felony. Prior to the effectiveness of termination for Cause
under subclause (i), (ii), (iii) or (iv) above, the Executive shall be given 30
days' prior notice from the Board specifically identifying the reasons which
are alleged to constitute Cause for any termination hereunder and an
opportunity to be heard by the Board in the event the Executive disputes such
allegations.
4.3 Termination Without Cause. The Company has the right,
at any time during the Term, subject to all of the provisions hereof,
exercisable by serving notice, effective on or after the date of service of
such notice as specified therein, to terminate the Executive's employment under
this Agreement and discharge the Executive without Cause. If the Executive is
terminated during the Term without Cause (including any termination which is
deemed to be a constructive termination without Cause under Section 4.6
hereof), the Company's obligation to the Executive shall be limited solely to
(a) the payment, at the times and upon the terms provided for herein, of the
greater of (i) the Executive's Annual Salary and Incentive Bonus for the number
of full months remaining in the Term of this Agreement had the Executive not
been so terminated and (ii) the Executive's Annual Salary for a period of
twelve months, in each case based on the Annual Salary of the Executive in
effect on the date of termination (or, if the Company has reduced the
Executive's Annual Salary in breach of this Agreement, the Executive's Annual
Salary before such
<PAGE> 9
reduction), together with all unpaid Incentive Bonus and Benefits awarded or
accrued up to the date of termination, and (b) the provision at the Company's
expense of continued medical and dental insurance for the Executive, with the
same or substantially similar coverage as provided by the Company to Executive
immediately prior to the date of termination, for the greater of twelve (12)
months or the number of full months remaining in the Term of this Agreement had
the Executive not been so terminated. If the Executive is terminated after he
has received one Incentive Bonus, the Incentive Bonus in clause (i) shall be
based on the amount of that one Incentive Bonus; if he has not yet received an
Incentive Bonus, it shall be based on the minimum Incentive Bonus (i.e., one
third of the Annual Salary). In the event of a termination by the Company
without Cause within 180 days after a Change of Control (as hereinafter
defined), including a constructive termination without Cause pursuant to
Section 4.6, the amounts due to the Executive pursuant to this Section 4.3
shall be due and payable in one lump-sum payment within 60 days after such
termination. In all other cases, any amounts due to the Executive pursuant to
this Section 4.3 shall be due and payable as and when they would have become
due and payable over the remaining Term of this Agreement had the Executive not
been so terminated.
4.4 Termination by the Executive. Any termination of this
Agreement by the Executive during the Term, except such termination as is
deemed to be a constructive termination without Cause by the Company under
Section 4.6 of this Agreement, shall be deemed to be a breach of the terms of
this Agreement for the purposes of Section 3.1.1 hereof and shall entitle the
Company to discontinue payment of all Annual Salary, Incentive Bonuses and
Benefits not earned and payable prior to the date of such termination.
4.5 Termination upon Disability. If during the Term the
Executive becomes physically or mentally disabled, whether totally or
partially, as evidenced by the written statement of a competent physician
licensed to practice medicine in the United States who is mutually acceptable
to the Company and the Executive or his closest relative if he is not then able
to make such a choice, so that the Executive is unable substantially to perform
his services hereunder for (i) a period of four consecutive months, or (ii) for
shorter periods aggregating six months during any twelve-month period, the
Company may at any time after the last day of the four consecutive months of
disability or the day on which the shorter periods of disability equal an
aggregate of six months, by written notice to the Executive, terminate the
Executive's employment hereunder and discontinue payments of the Annual Salary,
Incentive Bonuses and Benefits accruing from and after the date of such
termination. The Executive shall be entitled to the full compensation payable
to him hereunder for periods of disability shorter than the periods specified
in clauses (i) and (ii) of the previous sentence.
4.6 Constructive Termination Without Cause.
Notwithstanding any other provision of this Agreement, the
<PAGE> 10
Executive's employment under this Agreement may be terminated during the Term
by the Executive, which shall be deemed to be constructive termination by the
Company without Cause, if one of the following events shall occur without the
consent of the Executive: (i) a failure to elect or reelect or to appoint or
reappoint the Executive to the office of Vice President and Chief Financial
Officer of the Company; (ii) the assignment or reassignment by the Company of
the Executive to a location not within 35 miles of the Company's current
location; (iii) the liquidation, dissolution, consolidation or merger of the
Company, or transfer of all or substantially all of its assets, other than a
transaction in which a successor corporation with a net worth at least equal to
that of the Company assumes this Agreement and all obligations and undertakings
of the Company hereunder; (iv) a reduction in the Executive's fixed salary; (v)
the failure of the Company to continue to provide the Executive with office
space, related facilities and secretarial assistance that are commensurate with
the Executive's responsibilities to and position with the Company; (vi) the
notification by the Company of the Company's intention not to observe or
perform one or more of the obligations of the Company under this Agreement;
(vii) the failure by the Company to indemnify, pay or reimburse the Executive
at the time and under the circumstances required by Section 6 of this
Agreement; or (viii) the occurrence of any other material breach of this
Agreement by the Company or any of its subsidiaries. Any such termination
shall be made by written notice to the President of the Company, specifying the
event relied upon for such termination and given within 60 days after such
event. Any constructive termination shall be effective 60 days after the date
the President of the Company has been given such written notice setting forth
the grounds for such termination with specificity; provided, however, that the
Executive shall not be entitled to terminate this Agreement in respect of any
of the grounds set forth above if within 60 days after such notice the action
constituting such ground for termination is no longer continuing. A
constructive termination by the Company without Cause shall terminate the
Restrictive Period hereunder.
4.7 For the purposes hereof, a "Change of Control of the
Company" shall be deemed to have occurred if after the effective date and the
IPO (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding securities
without the prior approval of at least a majority of the members of the Board
in office immediately prior to such person attaining such percentage interest;
(ii) there occurs a proxy contest or a consent solicitation, or the Company is
a party to a merger, consolidation, sale of assets, plan of liquidation or
other reorganization not approved by at least a majority of the members of the
Board in office, as a consequence of which members of the Board in office
immediately prior to such transaction or event constitute less than a majority
of the Board thereafter; or (iii) during any period of
<PAGE> 11
two consecutive years, other than as a result of an event described in clause
(ii) of this Section 4.7, individuals who at the beginning of such period
constituted the Board (including for this purpose any new director whose
election or nomination for election by the Company's stockholders was approved
by a vote of at least a majority of the directors then still in office who were
directors at the beginning of such period) cease for any reason to constitute
at least a majority of the Board.
5. Insurance. The Company may, from time to time, apply for and
take out, in its own name and at its own expense, naming itself or one or more
of its affiliates as the designated beneficiary (which it may change from time
to time), policies for life, health, accident, disability or other insurance
upon the Executive in any amount or amounts that it may deem necessary or
appropriate to protect its interest. The Executive agrees to aid the Company in
procuring such insurance by submitting to medical examinations and by filling
out, executing and delivering such applications and other instruments in
writing as may reasonably be required by an insurance company or companies to
which any application or applications for insurance may be made by or for the
Company.
6. Indemnification.
6.1 The Company shall, to the maximum extent not
prohibited by law, indemnify the Executive if he is made, or threatened to be
made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Company to procure a judgment in its favor
(collectively, a "Proceeding"), by reason of the fact that the Executive is or
was a director or officer of the Company, or is or was serving in any capacity
at the request of the Company for any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against judgments,
fines, penalties, excise taxes, amounts paid in settlement and costs, charges
and expenses (including attorneys' fees and disbursements) paid or incurred in
connection with any such Proceeding.
6.2 The Company shall, from time to time, reimburse or
advance to the Executive the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding
in advance of the final disposition of such Proceeding; provided, however.
that, if required by the Texas Business Corporation Act, such expenses incurred
by or on behalf of the Executive may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Company of an undertaking,
by or on behalf of the Executive, to repay any such amount so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right of appeal that the Executive is not entitled to be indemnified
for such expenses.
6.3 The right to indemnification and reimbursement or
<PAGE> 12
advancement of expenses provided by, or granted pursuant to, this Section 6
shall not be deemed exclusive of any other rights which the Executive may now
or hereafter have under any law, by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
6.4 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall continue as to the Executive after he has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of the Executive.
6.5 The Company shall purchase and maintain director and
officer liability insurance on such terms and providing such coverage as the
Board determines is appropriate, and the Executive shall be covered by such
insurance on the same basis as the other directors and executive officers of
the Company.
6.6 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall be enforceable by the Executive in any court of competent jurisdiction.
The burden of proving that such indemnification or reimbursement or advancement
of expenses is not appropriate shall be on the Company. Neither the failure of
the Company (including its board of directors, independent legal counsel, or
its stockholders) to have made a determination prior to the commencement of
such action that such indemnification or reimbursement or advancement of
expenses is proper in the circumstances nor an actual determination by the
Company (including its board of directors, independent legal counsel, or its
stockholders) that the Executive is not entitled to such indemnification or
reimbursement or advancement of expenses shall constitute a defense to the
action or create a presumption that the Executive is not so entitled. The
Executive shall also be indemnified for any expenses incurred in connection
with successfully establishing his right to such indemnification or
reimbursement or advancement of expenses, in whole or in part, in any such
proceeding.
6.7 If the Executive serves (i) another corporation of
which a majority of the shares entitled to vote in the election of its
directors is held by the Company, or (ii) any employee benefit plan of the
Company or any corporation referred to in clause (i), in any capacity, then he
shall be deemed to be doing so at the request of the Company.
6.8 The right to indemnification or reimbursement or
advancement of expenses shall be interpreted on the basis of the applicable law
in effect at the time of the occurrence of the event or events giving rise to
the applicable Proceeding.
<PAGE> 13
7. Other Provisions.
7.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
(i) "affiliate" with respect to the Company means any
other person controlled by or under common control with the Company
but shall not include any stockholder or director of the Company, as
such.
(ii) "person" means any individual, corporation,
partnership, firm, joint Company, association, joint-stock company,
trust, unincorporated organization, governmental or regulatory body or
other entity.
(iii) "subsidiary" means any corporation 50% or more
of the voting securities of which are owned directly or indirectly by
the Company.
7.2 Notices. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such notice shall be deemed
given when so delivered personally, telegraphed, telexed or sent by facsimile
transmission or, if mailed, on the date of actual receipt thereof, as follows:
(i) if to the Company, to:
Eagle Geophysical, Inc.
50 Briar Hollow Lane
West Building, 6th Floor
Houston, Texas 77027
Attention: Jay N. Silverman, President
with a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Attention: N. L. Stevens III
(ii) if to the Executive, to:
Richard W. McNairy
6519 Lussier Drive
Sugar Land, Texas 77479
Any party may change its address for notice hereunder by notice to the other
party hereto.
7.3 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
<PAGE> 14
7.4 Waivers and Amendments. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof. Nor shall any waiver on the part of any
party of any such right, power or privilege hereunder, nor any single or
partial exercise of any right, power or privilege hereunder, preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
7.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (without giving
effect to the choice of law provisions thereof) where the employment of the
Executive shall be deemed, in part, to be performed and enforcement of this
Agreement or any action taken or held with respect to this Agreement shall be
taken in the courts of appropriate jurisdiction in Houston, Texas.
7.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by the Executive and may be assigned
by the Company (subject to Section 4.6 (iii) hereof) only to a successor by
merger or purchasers of substantially all of the assets of the Company.
7.7 Counterparts. This Agreement may be executed in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
7.8 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
7.9 No Presumption Against Interest. This Agreement has
been negotiated. drafted, edited and reviewed by the respective parties, and
therefore, no provision arising directly or indirectly herefrom shall be
construed against any party as being drafted by said party.
7.10 Validity Contest. The Company shall promptly pay any
and all legal fees and expenses incurred by the Executive from time to time as
a direct result of the Company's contesting the due execution, authorization,
validity or enforceability of this Agreement.
7.11 Binding Agreement. This Agreement shall inure to the
benefit of and bit binding upon the Company and its respective successors and
assigns and the Executive and his legal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
<PAGE> 15
EAGLE GEOPHYSICAL, INC.
By: /s/ Jay N. Silverman
-------------------------------------
Jay N. Silverman, President
EXECUTIVE
By: /s/ Richard W. McNairy
-------------------------------------
Richard W. McNairy
<PAGE> 1
EXHIBIT 10.18
TEXAS ASSOCIATION OF REALTORS
COMMERCIAL LEASE
This lease agreement is made and entered into by and between Ron Chase
d/b/a Chase Properties (Landlord) and Eagle Geophysical/Seitel Geophysical
(Tenant). Landlord hereby leases to Tenant and Tenant hereby leases from
Landlord that certain property with the improvements thereon, containing
approximately 7500 square feet, hereinafter called the "leased premises", known
as, 3713 U.S. 59, Rosenberg, Texas (Address), Lot ___________________, Block
_________________ Addition, City of _________________________________, Fort
Bend County, Texas; or as more particularly described Wow or on attached
exhibit:
1 Acre tract of land out of the southwest corner of a 13.937 acre
tract in the Emma Mayer Survey, Abstract 701, out of the H. & T. C.
R.R. Survey Section 8, Fort Bend County, Texas.
The primary term of this lease shall be 12 months commencing on the 15
day of April, 1994 and ending on the 14 day of April, 1995, upon the following
terms, conditions, and covenants:
1. TAXES. Each year during the term of this lease, Landlord shall pay
real estate taxes assessed against the leased premises in an amount
equal to the total real estate taxes assessed against the leased
premises in the base year. Each year during the term of this lease,
Tenant shall pay as additional rental, upon receipt of a statement
from Landlord together with tax statements or other verification from
the proper taxing authority, his pro rata share of any increase in
real estate taxes over the base year on the property of which the
leased premises is a part. Any increase in real estate taxes for a
fractional year shall be prorated. The base year shall be 93.
2. UTILITIES. Tenant shall pay all charges for utility services to the
leased premises except for _______________ which shall be paid by the
Landlord.
3. HOLDING OVER. Failure of Tenant to surrender the leased premises at
the expiration of the lease constitutes a holding over which shall be
construed as a tenancy from month to month at a rental of $1,625.00
per month.
4. RENT. Tenant agrees to and shall pay Landlord at P.O. Box 1187, County
of Fort Bend, Texas, or at such other place landlord shall designate
from time to time in writing, as rent for the leased premises, the
total sum of $19,500.00, payable without demand in equal monthly
payments of $1,625.00, each in advance on or before the 15th day of
each month, commencing on April 15, 1994, and continuing thereafter
until the total sum shall be paid. Adjustment to the rent, if any, for
rent escalators, for percentage of net
1
<PAGE> 2
rent, or for increases in building operation costs (including but not
limited to insurance, custodial services, maintenance and utilities)
shall be as set forth in an attached addendum. Rent received after the
first day of the month shall be deemed delinquent. If rent is not
received by Landlord by the ____________ of each month, Tenant shall
pay a late charge of $_____ plus a penalty of $20.00 per day until
rent is received in full. Tenant shall pay $25.00 for each returned
check.
5. USE. Tenant shall use the leased premises for the following purpose
and no other: Home base for Geophysical crew.
6. SECURITY DEPOSIT. Tenant shall pay to Landlord a security deposit in
the sum of $1,625.00, payable on or before the commencement of this
lease for Tenant's faithful performance hereunder. Refund thereof
shall be made upon performance of this lease agreement by Tenant,
minus any assessments or damages unless Landlord and Tenant provide
otherwise in Special Provisions.
7. INSURANCE. Landlord shall pay for fire and extended coverage insurance
on the buildings and other improvements on the leased premises in an
amount not less than $75,000.00, which amount shall be increased
yearly in proportion to the increase in market value of the premises.
If Landlord provides any insurance herein, Tenant shall pay to
Landlord, during the term hereof, the amount of any increase in
premiums for the insurance required over and above such premiums paid
during the first year of this lease. Tenant shall provide public
liability and property damage insurance for its business operations on
the leased premises in the amount of $300,000/500,000 which policy
shall cover the Landlord as well as the Tenant. Said insurance
policies required to be provided by Tenant herein shall name Landlord
as an insured and shall be issued by an insurance company approved by
Landlord. Tenant shall provide Landlord with certificates of insurance
evidencing the coverage required herein. Tenant shall be solely
responsible for fire and casualty insurance on Tenant's property on or
about the leased premises. If Tenant does not maintain such insurance
in full force and effect, Landlord may notify Tenant of such failure
and if Tenant does not deliver to Landlord within 15 days after such
notice certification showing all such insurance to be in full force
and effect, Landlord may at his option, take out the necessary
insurance to comply with the provision hereof and pay the premiums on
the items specified in such notice, and Tenant covenants thereupon on
demand to reimburse and pay Landlord any amount so paid or expended in
the payment of the insurance premiums required hereby and specified in
the notice, with interest thereon at the rate of 12 percent per annum
from the date of such payment by Landlord until repaid by Tenant.
8. CONDITION OF PREMISES. Tenant has examined and accepts the leased
premises in its present as is condition as suitable for the purposes
for which the same are leased, and does hereby accept the leased
premises regardless of reasonable deterioration between the date of
this lease and the date Tenant begins occupying the leased premises
unless
2
<PAGE> 3
Landlord and Tenant agree to repairs or refurbishment as noted in
Special Provisions.
9. MAINTENANCE AND REPAIRS. Landlord shall keep the foundation, the
exterior walls (except glass; windows; doors; door closure devices;
window and door frames, molding, locks, and hardware; and interior
painting or other treatment of exterior walls), and the roof of the
leased premises in good repair except that Landlord shall not be
required to make any repairs occasioned by the act or negligence of
Tenant, its employees, subtenants, licensees and concessionaires.
Tenant is responsible for maintenance of the common area and common
area equipment. If Landlord is responsible for any such repair and
maintenance, Tenant agrees to give Landlord written notice of needed
repairs. Landlord shall make such repairs within a reasonable time.
Tenant shall notify Landlord immediately of any emergency repairs.
Tenant shall keep the leased premises in good, clean condition and
shall at its sole cost and expense, make all needed repairs and
replacements, including replacement of cracked or broken glass, except
for repairs and replacements required to be made by Landlord under
this section. If any repairs required to be made by Tenant hereunder
are not made within ten (10) days after written notice delivered to
Tenant by Landlord, Landlord may at its option make such repairs
without liability to Tenant for any loss or damage which may result by
reason of such repairs, and Tenant shall pay to Landlord upon demand
as additional rent hereunder the cost of such repairs plus interest.
At the termination of this lease, Tenant shall deliver the leased
premises in good order and condition, normal wear and tear excepted.
10. ALTERATIONS. All alterations, additions and improvements, except trade
fixtures, installed at expense of Tenant, shall become the property of
Landlord and shall remain upon and be surrendered with the leased
premises as a part thereof on the termination of this lease. Such
alterations, additions, and improvements may only be made with the
prior written consent of Landlord, which consent shall not be
unreasonably withheld. If consent is granted for the making of
improvements or alterations to the leased premises, such improvements
and alterations shall not commence until Tenant has furnished to
Landlord a certificate of insurance showing coverage in an amount
satisfactory to Landlord protecting Landlord from liability for injury
to any person and damage to any personal property, on or off the
leased premises, in connection with the making of such improvements or
alterations. No cooling tower, equipment, or structure of any kind
shall be placed on the roof or elsewhere on the leased premises by
Tenant without prior written permission of Landlord. If such
permission is granted, such work or installation shall be done at
Tenant's expense and in such a manner that the roof shall not be
damaged thereby. If it becomes necessary to remove such cooling tower,
equipment or structure temporarily, so that repairs to the roof can be
made, Tenant shall promptly remove and reinstall the cooling tower,
equipment or structure at Tenant's expense and repair at Tenant's
expense any damage resulting from such removal or reinstallation. Upon
termination of this lease, Tenant shall remove or cause to be removed
from the roof any such cooling tower, equipment or structure if
directed to do so by Landlord. Tenant shall promptly repair at its
expense any damages resulting from such removal.
3
<PAGE> 4
At the termination of this lease, Tenant shall deliver the leased
premises in good order and condition, natural deterioration only
excepted. Any damage caused by the installation or removal of trade
fixtures shall be repaired at Tenant's expense prior to the expiration
of the lease term. All alterations, improvements, additions, and
repairs made by Tenant shall be made in good and workmanlike manner.
11. COMPLIANCE WITH LAWS AND REGULATIONS. Tenant shall, at its own
expense, comply with all laws, orders, and requirements of all
governmental entities with reference to the use and occupancy of the
leased premises. Tenant and Tenant's agents, employees and invitees
shall fully comply with any rules and regulations governing the use of
the buildings or other improvements to the leased premises as required
by Landlord. Landlord may make reasonable changes in such rules and
regulations from time to time as deemed advisable for the safety, care
and cleanliness of the leased premises, provided same are in writing
and are not in conflict with this lease.
12. ASSIGNMENT AND SUBLETTING. Tenant shall not assign this lease nor
sublet the leased premises or any interest therein without first
obtaining the written consent of Landlord. An assignment or subletting
without the written consent of Landlord shall be void and shall, at
the option of Landlord, terminate this lease.
13. DESTRUCTION. In the event the leased premises is partially damaged or
destroyed or rendered partially unfit for occupancy by fire or other
casualty, Tenant shall give immediate notice to Landlord. Landlord may
repair the damage and restore the leased premises to substantially the
same condition as immediately prior to the occurrence of the casualty.
Such repairs shall be made at Landlord's expense unless due to
Tenant's negligence. Landlord shall allow Tenant a fair reduction of
rent during the time the leased premises are partially unfit for
occupancy. If the leased premises are totally destroyed or deemed by
the Landlord to be rendered unfit for occupancy by fire or other
casualty, of if Landlord shall decide not to repair or rebuild, this
lease shall terminate and the rent shall be paid to the time of such
casualty.
14. TENANT DEFAULT. If Tenant abandons the premises or otherwise defaults
in the performance of any obligations or covenants herein, Landlord
may enforce the performance of this lease in any manner provided by
law. This lease may be terminated at Landlord's discretion if such
abandonment or default continues for a period of 10 days after
Landlord notifies Tenant of such abandonment or default and of
Landlord's intention to declare this lease terminated. Such notice
shall be sent by Landlord to Tenant at the leased premises by
certified mail or otherwise. If Tenant has not completely removed or
cured default within the 10-day period, this lease shall terminate.
Thereafter, Landlord or its agents shall have the right, without
further notice or demand, to enter the leased premises and remove all
persons and property without being deemed guilty of trespass and
without waiving any other remedies for arrears of rent or breach of
covenant. Upon abandonment or default by the Tenant, the remaining
unpaid portion of the rental from paragraph 4 herein, shall become due
and payable.
4
<PAGE> 5
15. LIEN. Landlord is granted an express contractual lien, in addition to
any lien provided by law, and a security interest in all property of
Tenant found on the leased premises to secure the compliance by Tenant
with all terms of this lease. In the event of default, Landlord or
its agents may peaceably enter the leased premises and remove all
property and dispose of same as Landlord shall see it fit.
16. SUBORDINATION. Landlord is hereby irrevocably vested with full power
and authority to subordinate this lease to any mortgage, deed of
Trust, or other lien hereafter placed on the demised premises and
Tenant agrees on demand to execute such further instruments
subordinating this lease as Landlord may request, provided such
subordination shall be on the express condition that this lease shall
be recognized by the mortgagee, and the rights of Tenant shall remain
in full force and effect during the term of this lease so long as
Tenant shall continue to perform all of the covenants and conditions
of this lease.
17. INDEMNITY. Landlord and its employees and agents shall not be liable
to Tenant or to Tenant's employees, patrons, visitors, invitees, or
any other persons for any injury to any such persons or for damage to
personal property caused by an act, omission, or neglect of Tenant or
Tenant's agents or of any other tenant of the premises of which the
leased premises is a part. Tenant agrees to indemnify and hold
Landlord and its employees and agents harmless from any and an claims
for such injury and damages, whether the injury occurs on or off the
leased premises.
18. SIGNS. Tenant shall not post or paint any signs at, on, or about the
leased premises or paint the exterior walls of the building except
with the prior written consent of the Landlord. Landlord shall have
the right to remove any sign or signs in order to maintain the leased
premises or to make any repairs or alterations thereto.
19. TENANT BANKRUPTCY. If Tenant becomes bankrupt or makes voluntary
assignment for the benefit of creditors or if a receiver is appointed
for Tenant, Landlord may terminate this lease by giving five (5) days
written notice to Tenant of Landlord's intention to do so.
20. CONDEMNATION. If the whole or any substantial part of the leased
premises is taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent
domain or should the leased premises be sold to a condemning authority
under threat of condemnation, this lease shall terminate and the rent
shall be abated during the unexpired portion of the lease effective
from the date of the physical taking of the leased premises.
5
<PAGE> 6
21. BROKER'S FEE. Travis Reese, Broker and Joe Roberts, Co-Broker, as Real
Estate Broker (the Broker), has negotiated this lease and Landlord
agrees to pay Broker in Fort Bend County, Texas, upon commencement of
this lease, a negotiated fee of $______________ or 6% of the total
rental provided for in this lease to be divided as follows: Travis
Reese 2%, Mellon Real Estate 2%, Joe Roberts 2%. In the event this
lease is extended, expanded or renewed, Landlord agrees to pay Broker
an additional negotiated fee of $_______________ or 6% of the total
rental for such extension, expansion or renewal period, payable at the
time of commencement of such extension, expansion or renewal, said fee
to be divided as follows: Reese 2%, Mellon 2%, Roberts 2%. Tenant
warrants that it has had no dealings with any real estate broker or
agents in connection with the negotiation of this lease excepting only
Reese, Mellon and Roberts and it knows of no other real estate broker
or agent who is entitled to a commission in connection with this
Lease. If Tenant during the term of this Lease, or any extension,
expansion or renewal period thereof, or within days of the expiration
of this Lease, or any extension, expansion or renewal period thereof,
or within 90 days of the expiration of this Lease, or any extension,
expansion or renewal period thereof, purchases the property herein
leased, Landlord agrees to pay Broker, Reese, Mellon & Roberts, in
Fort Bend County, Texas, a negotiated fee of $___________ or _____% of
the sales price upon closing of the sale of this property.
22. NOTICES. Notices to Tenant shall be by certified mail or other
delivery to the leased premises. Notices to Landlord shall be by
certified mail to the place where rent is payable.
23. DEFAULT BY LANDLORD. In the event of breach by Landlord of any
covenant, warranty, term or obligation of this lease, then Landlord's
failure to cure same or commence a good faith effort to cure same
within 10 days after written notice thereof by Tenant shall be
considered a default and shall entitle Tenant either to terminate this
lease or cure the default and make the necessary repairs and any
expense incurred by Tenant shall be reimbursed by the Landlord after
reasonable notice of the repairs and expenses incurred. If any
utility services furnished by Landlord are interrupted and continue to
be interrupted despite the good faith efforts of Landlord to remedy
same, Landlord shall not be liable in any respect for damages to the
person or property of Tenant or Tenant's employees, agents, or guests,
and same shall not be construed as grounds for constructive eviction
or abatement of rent Landlord shall use reasonable diligence to repair
and remedy such interruption promptly.
24. SIGNS. During the last 30 days of this lease, a "For Sale" sign and/or
a "For Lease" sign may be displayed on the leased premises and the
leased premises may be shown at reasonable times to prospective
purchasers or tenants.
25. RIGHT OF ENTRY. Landlord shall have the right during normal business
hours to enter the demised premises; (a) to inspect the general
condition and state of repair thereof, (b) to make repairs required or
permitted under this lease, or (c) for any other reasonable purpose.
6
<PAGE> 7
26. WAIVER OF BREACH. The waiver by Landlord of any breach of any
provision of this lease shall not constitute a continuing waiver or a
waiver of any subsequent breach of the same or a different provision
of this lease.
27. TIME OF ESSENCE. Time is expressly declared to be of the essence in
this lease.
28. BINDING OF HEIRS AND ASSIGNS. Subject to the provisions of this lease
pertaining to assignment of the Tenant's interest, all provisions of
this lease shall extend to and bind, or inure to the benefit not only
of the parties to this lease but to each and every one of the heirs,
executors, representatives, successors, and assigns of Landlord or
Tenant.
29. RIGHTS AND REMEDIES CUMULATIVE. The rights and remedies by this lease
agreement are cumulative and the use of any one right or remedy by
either party shall not preclude or waive its right to use any or all
other remedies. Said rights and remedies are given in addition to any
other rights the parties may have by law, statute, ordinance, or
otherwise.
30. TEXAS LAW TO APPLY. This agreement shall be construed under and in
accordance with the laws of the State of Texas.
31. LEGAL CONSTRUCTION. In case any one or more of the provisions
contained in this agreement shall for any reason be held to be
invalid, illegal, or unenforceable in any respect, such invalidity,
illegality, or unenforceability shall not affect any other provision
hereof and this agreement shall be construed as if such invalid,
illegal, or unenforceable provision had never been contained herein.
32. PRIOR AGREEMENTS SUPERCEDED. This agreement constitutes the sole and
only agreement of the parties to this lease and supersedes any prior
understandings or written or oral agreements between the parties
respecting the subject matter of this lease.
33. AMENDMENT. No amendment, modification, or alteration of the terms
hereof shall be binding unless it is in writing, dated subsequent to
the date hereof, and duly executed by the parties.
34. ATTORNEYS FEES. Any signatory to this lease agreement who is the
prevailing party in any legal proceeding against any other signatory
brought under or with relation to this lease agreement or this
transaction shall be additionally entitled to recover court costs,
reasonable attorney fees, and all other out-of-pocket costs of
litigation, including deposition, travel and witness costs, from the
nonprevailing party.
35. SPECIAL PROVISIONS. (This section to include additional factual data
not included above.)
7
<PAGE> 8
(a) Landlord to grade gravel road leading into property
from Fwy feeder maintain during term of this lease.
(b) Landlord to paint and clean office area of lease
space.
(c) Although water well is equipped with a chlorinator,
Landlord does not warrant the potability of the water
fitness.
(d) See Attached Exhibit A. Special Provision.
EXECUTED this 10 day of March, 1994.
TENANT OR TENANTS LANDLORD
Eagle Geophysical/Seitel Geophysical Chase Properties
/s/ Jay N. Silverman /s/ Ron Chase
REAL ESTATE BROKER REAL ESTATE BROKER
Reese Real Estate Mellon Real Estate
/s/ [illegible signature] /s/ [illegible signature]
8
<PAGE> 9
35. SPECIAL PROVISION/EXHIBIT A
HOLD HARMLESS/HAZARDOUS SUBSTANCES
To the full extent permitted by applicable law, Lessor hereby agrees
to defend, indemnify and hold harmless Lessee and its directors, officers,
shareholders, employees, partners, attorneys and agents (collectively called
"Indemnified Parties") from and against any and all loss, costs, expense or
liability (including attorneys' fees and court costs) incurred by any
Indemnified Party in connection with or otherwise arising out of any and all
claims or proceedings (whether brought by a private party, governmental agency
or otherwise) for bodily injury, property damage, abatement, remediation,
natural resource damage, environmental damage or impairment or any other injury
or damage resulting from or relating to any hazardous substance (herein
defined) located upon, migrating into, from or through or otherwise related to
the premises (whether or not the release of such materials was caused by
Lessor, a tenant or subtenant or Lessor, a prior owner, a tenant or subtenant
of any prior owner, a prior operator, a prior generator or transporter or any
other party and whether or not the alleged liability is attributable to the
handling, storage, generation, transportation or disposal of such hazardous
substances or the mere presence of such hazardous substances at the premises)
but excluding any hazardous substance disposed of or otherwise released on, to
or under the premises during the term of this lease (whether or not the
disposal or release of such materials were caused by Lesses).
To the full extent permitted by applicable law, Lessee hereby agrees
to defend, indemnity and hold harmless Lessor form and against any and all
loss, costs, expense or liability (including attorneys' fees and court costs)
incurred by Lessor in connection with or otherwise arising out of any and all
claims or proceedings (whether brought by a private party, governmental agency
9
<PAGE> 10
or otherwise) for bodily injury, property damage, abatement, remediation,
natural resource damage, environmental damage or impairment or any other injury
or damage resulting from or relating to any hazardous substance (herein
defined) located upon, __________ into, from or through or otherwise placed
upon on beneath the premises during the term of this lease (whether or not the
release of such materials was caused by Lessee, and whether or not the alleged
liability is attributable to the handling, storage, generation, transportation
or disposal of such hazardous substances or the mere presence of such hazardous
substances at the premises), but excluding any hazardous substance disposed of
or otherwise released on, to, or under the premises before the term of this
lease (whether or not the disposal or release of such materials was caused by
Lessor).
Lessee specifically agrees that it will not dispose of, store,
release, or in any way locate any hazardous substance upon the leased premises
during the term of this lease or at any other time.
Lessor reserves any rights Lessor may have under applicable law to
pursue civil or criminal remedies against any employees, agents or
representatives of Lessee, or against any other persons, who took part in the
disposal or release of any hazardous substance on, to, or under the leased
premises during the term of this lease.
As used herein, the term "hazardous substances" shall mean any
hazardous or toxic substance, waste pollutant or contaminated material
including, without limitation, those substances within the scope of any
federal, state, special district, regional, county or local environmental laws,
regulations or ordinances, including the Resource Conservation and Recovery
Act, as amended, the Comprehensive Environmental Response, Compensation and
10
<PAGE> 11
Liability act, as amended, the Superfund Amendment and Reauthorization Act of
1986, as amended, the Federal Board of Pollution Control Act, as amended, the
Clean Air Act, as amended, and the Safe Drinking Water Act, as amended. The
provisions contained in this Article X shall survive the expiration of the term
of this Lease and shall, notwithstanding the provisions of Articles II or XV of
this lease, continue to be binding upon and enforceable against Lessor or
Lessee (depending upon when the hazardous substance was disposed of or
otherwise released on, to, or under the leased premises) notwithstanding any
subsequent assignment of Lessor's interest in or to the premises to any third
party.
11
<PAGE> 1
EXHIBIT 10.19
MODIFICATION AND RATIFICATION OF LEASE
This Modification and Ratification of Lease Agreement is made and entered into
between Ron Chase dba Chase Properties (Lessor or Landlord) and Eagle
Geophysical/Seitel Geophysical (Lessee or Tenant) for and in consideration of
One Dollar ($1.00) and other good and valuable consideration, receipt of which
is hereby acknowledge.
WITNESSETH:
I, Lessor and Lessee hereby confirm and ratify, except as modified
below, all of the terms, conditions and covenants in that certain written Lease
Agreement dated March 10, 1994, between Lessor and Lessee, for the rental of
7500 square feet at the following location: 3713 U.S. 59, Rosenberg, Fort Bend
County, Texas.
1. The term of the lease shall be extended 24 months, commencing
on the 5th day of April, 1996 and ending on the 14th day of April, 1998.
2. The monthly rental rate shall be increased to $2,100.00.
3. All other terms and conditions shall remain in effect.
SIGNED at Fort Worth, Texas, this 24th day of April, 1996.
LESSOR:
CHASE PROPERTIES
By: /s/ Ronald Chase
Name: Ronald Chase
Title: Owner
LESSEE:
EAGLE GEOPHYSICAL/SEITEL
GEOPHYSICAL
By: /s/ Jay N. Silverman
Title: President
<PAGE> 1
EXHIBIT 10.20
KNOW ALL MEN BY THESE PRESENTS THAT THIS AGREEMENT is made and entered
into by the Partnership of Perkins-Guidry-Beazley-Ostteen, herein represented by
Bobby C. Ostteen, Partner, hereinafter referred to as Owner, and Seitel
Geophysical, Inc., herein represented by the partners executing this instrument
hereinafter, (hereinafter referred to as Tenant).
WITNESSETH:
Owner, in consideration of the rental hereinafter stated, and of the
agreements of Tenant hereinafter contained, does hereby lease and let, unto
Tenant, the following described premises situated in the City of Lafayette,
Parish of Lafayette, State of Louisiana, to wit:
That certain portion of a brick building known as building No. 22 of
the Oil Center, located on Travis Street at Hermann Boulevard, said
leased area measuring approximately 2,293 square feet including a pro
rata share of common area.
1. This lease is made and accepted for a term of two (2) years,
Commencing June 1, 1996.
2. Tenant shall pay to owner, as rent for the leased premises,
the sum of One Thousand Six Hundred Twenty-Four and No/100 ($1,624.00) Dollars
per month, payable in advance on the first day of each month during the term
hereof by check drawn to the order of Owner and mailed to P.0. Box 51877,
Lafayette, LA 70505.
3. The premises herein leased are to be used exclusively for
office use on connection with the carrying on of its business.
4. Owner agrees that the leased premises are to be equipped with
necessary and proper lighting fixtures, base receptacles, telephone outlets,
electric drinking fountain, washrooms and toilet facilities.
S. Owner will maintain the premises herein leased, and will
maintain the landscaping of the grounds surrounding the building in which the
leased premises are located. Owner agrees to make all necessary repairs caused
by usual wear and tear, and not caused by the carelessness or neglect of the
Tenant, or its employees or guests. Owner will pay for all water, heat,
electric power and sewerage used in connection with the usual building or
office utilities.
6. It is understood that year round air conditioning is to be
furnished by and at the expense of the Owner so that the building is suitably
conditioned for occupancy from 7:30 A.M. to 5:30 P.M. on week days, Saturdays,
Sundays and holidays excluded.
<PAGE> 2
If desired, however, special arrangements can be made so that service can be
furnished beyond these hours, at the same cost to Tenant as that paid by owner.
Owner will furnish Tenant janitor service for the purpose of keeping the
building clean.
7. The cost of utilities, janitorial service, property taxes, and
insurance shall be reviewed at the end of each calendar year. If it is
determined at that time that these costs with respect to the building for the
1996 year and actual expenses for said leased building for each remaining year
have increased during the calendar year, this increase shall be paid by the
Tenant on a pro rata basis, determined by the number of square feet occupied by
the Tenant. The monthly rental for the succeeding year shall be adjusted to
reflect the increase of these costs. As a basis of beginning, the 1996 costs
have been tabulated on a square foot basis as follows: Utilities - $1.58,
Janitorial Service - .92, Property Tax - .43, Insurance - .12, for a total of
$3.08. These amounts are subject to revision when the Building calculations for
1997 are complete and assessed for the 1997 increase. At that time, the
present rent will be adjusted in accordance with the provisions stated herein.
8. Owner agrees that all furniture, fixtures, or equipment
located within the building and placed therein by Tenant, whether permanent or
otherwise, may be removed by Tenant at the termination of the lease, provided
that no rent is due by Tenant at such termination, and provided further that
the Owner's building and premises are restored to its former condition, the
usual wear and tear excepted.
9. If Tenant shall fail to pay any fixed monthly rental within
thirty (30) days of its due date, Owner shall give Tenant written notice of
such delinquency, by registered mail, addressed to Tenant at 50 Briar Hollow
Lane, 7th Floor West, Houston, TX 77027, and if such rent is not paid within
thirty (30) days after receipt of such notice, then the monthly rental for the
entire remaining term of the lease shall, at Owner's option, become due and
payable without the necessity of further demand or putting in default, or Owner
may, at its election, declare the lease terminated without further action.
10. Owner grants to Tenant, as part of the consideration of this
lease, the right and option to renew this lease, at the termination hereof, for
an additional period of one (1) year. Should Tenant decide to exercise its
option, it shall give Owner written notice of such intention, addressed to
Owner, at P.O. Box 51877, Lafayette, Louisiana 70505, not less than 30 days
prior to the termination of the two-year period herein provided. Such renewal
shall be on the same terms and conditions as provided herein for the initial
period, which shall include adjustments, if any, made to the rental
consideration in connection with the property taxes, utilities, janitorial
service and insurance.
<PAGE> 3
11. Tenant accepts the premises and improvements in the condition
in which it finds the same when it takes possession under this lease, and
agrees to return the premises to the Owner, at the termination of this lease,
in good order and condition, the usual wear and tear excepted. Owner agrees to
provide a lock on tenant's office.
12. Tenant may assign this lease, or may sublease the leased
premises, in whole or in part, but Tenant's liability to Owner, under the terms
of this lease shall not be in any manner removed or affected by any such
assignment or sublease.
13. It is agreed by the parties hereto that the rights herein
granted and obligations herein made shall apply to the successors, assigns and
legal representatives of all the parties hereto.
IN WITNESS WHEREOF this instrument is signed on this 28th day of May,
1996 in the presence of the undersigned competent witnesses.
WITNESSES: PERKINS-GUIDRY-BEAZLEY-OSTTEEN
PARTNERSHIP
BY: /s/ Bobby C. Ostteen
- ----------------------- -----------------------------------
Bobby C. Ostteen, Partner
SEITEL GEOPHYSICAL, INC.
/s/ [illegible signature] BY: /s/ Jay N. Silverman
<PAGE> 1
EXHIBIT 10.23
EAGLE GEOPHYSICAL, INC.
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT is dated as of __________, 1997
(this "Agreement"), by and among EAGLE GEOPHYSICAL, INC., a Delaware
corporation (the "Company"), and EHI HOLDINGS, INC. a Delaware corporation (the
"Stockholder").
W I T N E S S E T H:
WHEREAS, the Company has undertaken the completion of an initial
public offering (the "IPO") of 4,000,000 newly-issued shares of its common
stock, $0.01 par value per share (the "Common Stock"), as well as shares of the
Common Stock held by certain selling stockholders;
WHEREAS, Stockholder currently owns 3,400,000 shares of the Common
Stock;
WHEREAS, as part of the IPO, Stockholder will sell 1,880,000 shares of
the Common Stock as a selling stockholder ("Stockholder's Distribution");
WHEREAS, in connection with the IPO, the underwriters have
overallotment options with respect to a maximum of 882,000 shares of the Common
Stock (the "Overallotment Options");
WHEREAS, up to 100,000 shares of the Common Stock that may be
purchased by the underwriters upon exercise of the Overallotment Options
("Stockholder's Share of the Overallotment") may be purchased from the
Stockholder, which shall be in addition to the Stockholder's Distribution;
WHEREAS, the Company has agreed to provide to the Stockholder the
limited registration rights set forth herein.
NOW, THEREFORE, in consideration of the premises and the mutual terms,
covenants and conditions herein contained, and intending to be legally bound
hereby, the parties hereto hereby agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized terms have the meanings specified as follows:
(a) The term "Commission" means the Securities and
Exchange Commission.
(b) The term "Common Stock" has the meaning specified in
the preamble to this Agreement.
(c) The term "Company" has the meaning specified in the
preamble to this Agreement.
<PAGE> 2
(d) The term "Exchange Act" means the Securities Exchange
Act of 1934, as amended, and the rules and regulations of the Commission issued
under such Act, as they each may, from time to time, be in effect.
(e) The term "Overallotment Options" has the meaning
specified in the preamble to this Agreement.
(f) The term "Person" means an individual, partnership,
corporation, trust or unincorporated organization, or a government or agency or
political subdivision thereof.
(g) The terms "register," "registered" and "registration"
refer to a registration of securities effected by preparing and filing a
registration statement or similar document in compliance with the Securities
Act (as defined below), and the declaration or ordering of effectiveness of
such registration statement or document.
(h) The term "Registrable Securities" means (i) the
1,520,000 shares of Common Stock held by the Stockholder after the
Stockholder's Distribution, less Stockholder's Share of the Overallotment to
the extent actually exercised by the underwriters, and (ii) any other shares of
Common Stock issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, such shares of Common Stock; provided,
however, that any such shares of Common Stock shall cease to be Registrable
Securities when such shares have been effectively registered under the
Securities Act and disposed of in accordance with a registration statement or
such shares are sold pursuant to Rule 144 (or any similar provision then in
force) under the Securities Act.
(i) The term "Securities Act" means the Securities Act of
1933, as amended, and the rules and regulations of the Commission issued under
such Act, as they each may, from time to time, be in effect.
(j) The term "Stockholder" means the person defined as
such in the preamble to this Agreement to whom registration rights are hereby
granted, and any transferee to whom the rights granted under this Agreement are
assigned in accordance with Section 13 hereof.
(k) The term "Stockholder's Distribution" has the meaning
specified in the preamble to this Agreement.
(l) The term "Stockholder's Share of the Overallotment"
has the meaning specified in the preamble to this Agreement.
2. Securities Subject to this Agreement. The securities entitled
to the benefits of this Agreement are the Registrable Securities.
Notwithstanding any provision contained herein, Stockholder hereby agrees that,
prior to the date two (2) years after the date of this Agreement, it will not
sell under any registration statement filed by the Company pursuant hereto more
than fifty percent (50%) of the Registrable Securities held by Stockholder
immediately following the completion of the IPO or, if applicable, any exercise
of the Overallotment Options by the underwriters.
2
<PAGE> 3
3. Shelf Registration. The Company shall file a "shelf"
registration statement covering the Registrable Securities on any appropriate
form pursuant to Rule 415 (or any similar rule that may be adopted by the
Commission) under the Securities Act no later than 370 days after the date of
this Agreement. The Company agrees to use its best efforts to cause such shelf
registration statement to become effective as promptly as practicable after the
filing thereof and to keep it continuously effective thereafter for a period of
two years from the effective date of such registration statement.
Notwithstanding anything herein to the contrary, the period during which the
Company is obligated to maintain the effectiveness of a registration statement
hereunder will terminate when all the Registrable Securities covered by the
shelf registration statement have been sold.
4. Piggyback Registration.
(a) If, at any time before the expiration of three years
after the date of this Agreement, the Company proposes to file a registration
statement relating to any of its equity securities under the Securities Act
other than (i) a registration statement on Form S-4 or Form S-8 or successor
forms thereto or a registration on any other form which does not include
substantially the same information as would be required to be included in a
registration statement covering the Registrable Securities; or (ii) a
registration statement filed in connection with an exchange offer or an
offering of securities solely to the Company's existing stockholders or its
employees, the Company will give written notice no less than 30 days prior to
such filing to the Stockholder offering the opportunity to register on such
registration statement such number of Registrable Securities as Stockholder may
request (such notice to specify, among other things, the proposed offering
price, the kind and number of securities proposed to be registered and the
distribution arrangements, including identification of the managing
underwriter(s)). The Company will use all reasonable efforts to include in
such registration all Registrable Securities with respect to which the Company
has received written request for inclusion within 15 days after the Company's
notice has been so given.
(b) If any registration statement is an underwritten
public offering, the right of the Stockholder to registration pursuant to this
Section 4 shall be conditioned upon such Stockholder's participation in such
reasonable underwriting arrangements as the Company shall make regarding the
offering, and the inclusion of Registrable Securities in the underwriting shall
be limited to the extent provided herein. The Stockholder shall (together with
the Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 4(b), if the managing
underwriter concludes in its reasonable judgment that the number of shares to
be registered for selling stockholders (including the Stockholder) would
materially adversely effect such offering, the number of shares of the Common
Stock to be registered, together with the number of shares of Common Stock or
other securities held by other stockholders proposed to be registered in such
offering, shall be reduced on a pro rata basis based on the number of shares
3
<PAGE> 4
of the Common Stock proposed to be sold by the Stockholder as compared to the
number of shares proposed to be sold by all stockholders. If the Stockholder
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the managing underwriter,
delivered not less than ten days before the effective date. The Registrable
Securities excluded by the managing underwriter or withdrawn from such
underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 120 days after the effective date
of the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.
5. Registration Procedures. In connection with the Company's
shelf registration obligations pursuant to Section 3 and piggyback registration
obligations pursuant to Section 4 hereof, the Company shall as expeditiously as
reasonably practicable:
(a) Prepare and file with the Commission a registration
statement on an appropriate form under the Securities Act and use its best
efforts to cause such registration statement to become effective; provided,
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company will furnish to the Stockholder and the
underwriters, if any, as soon as practicable, copies of all such documents
proposed to be filed, which documents will be subject to the review of the
Stockholder and the underwriters, and the Company will not file any
registration statement or amendment thereto, or any prospectus or any
supplement thereto, to which Stockholder or the underwriters shall reasonably
object in light of the requirements of the Securities Act and any other
applicable laws and regulations.
(b) Prepare and file with the Commission such amendments
and post-effective amendments to a registration statement as may be necessary
to keep such registration statement effective for the applicable period; cause
the related prospectus to be filed pursuant to Rule 424(b) under the Securities
Act; cause such prospectus to be supplemented by any required prospectus
supplement and, as so supplemented, to be filed pursuant to Rule 424(b) under
the Securities Act; and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during the applicable period in accordance with the intended methods
of disposition set forth in such registration statement or supplement to such
prospectus.
(c) Notify the Stockholder and the managing underwriters,
if any, promptly, and (if requested by any such Person) confirm such advice in
writing, (i) when a prospectus or any prospectus supplement or post-effective
amendment has been filed, and, with respect to a registration statement or any
post-effective amendment, when the same has become effective, (ii) of any
request by the Commission for amendments or supplements to a registration
statement or related prospectus or for additional information, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of a
registration statement or the initiation of any proceeding for that purpose,
(iv) if at any time the representations and warranties of the Company
contemplated by Section 5(m) cease to be true and correct, (v) of the receipt
by the Company of any notification with respect to the suspension or
qualification of any of the Registrable Securities for sale in any jurisdiction
or the initiation of any proceeding for such purpose, (vi) of the happening of
any event which requires the making of any changes in a registration statement
or
4
<PAGE> 5
related prospectus so that such documents will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading, and (vii)
of the Company's reasonable determination that a post-effective amendment to a
registration statement would be appropriate or that there exist circumstances
not yet disclosed to the public which make further sales under such
registration statement inadvisable pending such disclosures and post-effective
amendment.
(d) Exercise its best efforts to obtain the withdrawal of
any order suspending the effectiveness of a registration statement, or the
lifting of any suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction, at the earliest possible moment.
(e) If requested by Stockholder or the managing
underwriters in connection with an underwritten offering, promptly incorporate
in a prospectus supplement or post-effective amendment such information as
Stockholder or the managing underwriters agree should be included therein
relating to such sale and distribution of Registrable Securities, including,
without limitation, information with respect to the number of shares of
Registrable Securities being sold to such underwriters and the purchase price
being paid therefor by such underwriters and with respect to any other terms of
the underwritten (or best efforts underwritten) offering of the Registrable
Securities to be sold in such offering; make all required filings of such
prospectus supplement or post-effective amendment as soon as notified of the
matters to be incorporated in such prospectus supplement or post-effective
amendment; and supplement or make amendments to any registration statement if
requested by Stockholder or any underwriter of such Registrable Securities.
(f) Furnish to the Stockholder and each managing
underwriter, if any, without charge, at least one signed copy of the
registration statement, any post-effective amendment thereto, including
financial statements and schedules, all documents incorporated therein by
reference and all exhibits (including those incorporated by reference).
(g) Deliver without charge to the Stockholder and the
underwriters, if any, as many copies of the prospectus or prospectuses
(including each preliminary prospectus) and any amendment or supplement thereto
as such Persons may reasonably request; and the Company consents to the use of
such prospectus or any amendment or supplement thereto by the Stockholder and
the underwriters, if any, in connection with the offer and sale of the
Registrable Securities covered by such prospectus or any amendment or
supplement thereto.
(h) Prior to any public offering of Registrable
Securities, register or qualify or cooperate with the Stockholder, the
underwriters, if any, and respective counsel in connection with the
registration or qualification of such Registrable Securities for offer and sale
under the securities or blue sky laws of such jurisdictions as the Stockholder
or an underwriter reasonably requests in writing; keep each such registration
or qualification effective during the period such registration statement is
required to be kept effective and do any and all other acts or things necessary
or advisable to enable the disposition in such jurisdictions of the Registrable
Securities covered by the applicable registration statement; provided, however,
that the Company will not be required in connection therewith or as a condition
thereto to qualify generally to do business or subject itself to general
service of process in any such jurisdiction where it is not then so subject.
5
<PAGE> 6
(i) Cooperate with the Stockholder and the managing
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Securities to be sold and not bearing any
restrictive legends; and enable such Registrable Securities to be in such
denominations and registered in such names as the managing underwriters may
request at least two business days prior to any sale of Registrable Securities
to the underwriters.
(j) Use its best efforts to cause the Registrable
Securities to be listed on each national securities exchange on which similar
securities issued by the Company are then listed.
(k) Use its best efforts to cause the Registrable
Securities covered by the applicable registration statement to be registered
with or approved by such other governmental agencies or authorities as may be
necessary, if any, to consummate the disposition of such Registrable
Securities.
(l) Upon the occurrence of any event contemplated by
Section 5(c)(ii) - (vii) above, prepare a supplement or post-effective
amendment to the applicable registration statement or related prospectus or any
document incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchaser of the Registrable Securities
being sold thereunder, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact necessary to make the
statements therein not misleading.
(m) Enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith in order to
expedite or facilitate the disposition of such Registrable Securities and in
such connection, whether or not an underwriting agreement is entered into and
whether or not the Registrable Securities to be covered by such registration
are to be offered in an underwritten offering: (i) make such representations
and warranties to the Stockholder with respect to the registration statement,
prospectus and documents incorporated by reference, if any, in form, substance
and scope as are customarily made by issuers to underwriters in underwritten
offerings and confirm the same if and when requested; (ii) obtain opinions of
counsel to the Company and updates thereof with respect to the registration
statement and the prospectus in the form, scope and substance which are
customarily delivered in underwritten offerings; (iii) in the case of an
underwritten offering, enter into an underwriting agreement in form, scope and
substance as is customary in underwritten offerings and obtain opinions of
counsel to the Company and updates thereof (which counsel and opinions in form,
scope and substance shall be reasonably satisfactory to the managing
underwriters and not reasonably objected to by Stockholder) addressed to the
Stockholder and the underwriters, if any, covering the matters customarily
covered in opinions delivered in underwritten offerings and such other matters
as may be reasonably requested by Stockholder and such underwriters; (iv)
obtain "cold comfort" letters and updates thereof from the Company's
independent certified public accountants addressed to the Stockholder and the
underwriters, if any, such letters to be in customary form and covering matters
of the type customarily covered in "cold comfort" letters by accountants in
connection with underwritten offerings; (v) if any underwriting agreement is
entered into, set
6
<PAGE> 7
forth in full in such underwriting agreement the indemnification provisions and
procedures customarily included in underwriting agreements in underwritten
offerings; and (vi) deliver such documents and certificates as may be requested
by the managing underwriters, if any, and Stockholder to evidence compliance
with clause (k) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
(n) Make available for inspection by a representative of
the Stockholder, any underwriter participating in any disposition pursuant to
such registration, and any attorney or accountant retained by the Stockholder
or such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers,
directors and employees to supply all information reasonably requested by any
such representative, underwriter, attorney or accountant in connection with
such registration; provided that any records, information or documents that are
designated by the Company in writing as confidential shall be kept confidential
by such Persons unless disclosure of such records, information or documents is
required by applicable law or court or administrative order.
(o) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission and make generally available
to its security holders earnings statements satisfying the provisions of
Section 11(a) of the Securities Act and Rule 158 promulgated thereunder.
6. Contents of Registration Statement. In connection with any
registration of Registrable Securities, the Company may require Stockholder to
furnish to the Company such information regarding itself and the distribution
of such securities as the Company may from time to time reasonably request in
writing. If the Company, in the exercise of its reasonable judgment, objects to
any information relating to the Company requested by the Stockholder or the
underwriters, if any, to be included in any registration statement or
prospectus or any amendments or supplements thereto, the Company shall not be
obligated to include such objectionable information, and the Stockholder may
withdraw the Registrable Securities from such registration, in which event the
shelf registration statement or an amendment thereto shall be filed as soon as
agreement with respect to any proposed change shall be reached among the
Company, the Stockholder and the managing underwriter, if any.
7. Stand-off Agreement. Stockholder agrees that, upon receipt of
any notice from the Company of the happening of any event of the kind described
in Section 5(c)(ii)-(vii) hereof, Stockholder will forthwith discontinue
disposition of Registrable Securities covered by such registration statement or
prospectus until the Stockholder's receipt of copies of the supplemented or
amended prospectus contemplated by Section 5(l) hereof, or until it is advised
in writing by the Company that the use of the applicable prospectus may be
resumed, and has received copies of any additional or supplemental filings
which are incorporated by reference in such prospectus, and, if so directed by
the Company, Stockholder will deliver to the Company all copies, other than
permanent file copies then in Stockholder's possession, of the prospectus
covering such Registrable Securities current at the time of receipt of such
notice. In the event the Company shall give any such notice, the time period
regarding maintaining the effectiveness of such registration statement set
forth in Section 3 shall be extended by the number of days during the time
period
7
<PAGE> 8
from and including the date of the giving of such notice pursuant to Section
5(c) hereof to and including the date when the Stockholder shall have (i)
received the copies of the supplemented or amended prospectus contemplated by
Section 5(l) hereof, or (ii) been advised in writing by the Company that use of
the prospectus may be resumed.
8. Hold-back Agreement. In the event that (i) the Company
pursues an underwritten public offering on its own behalf of its Common Stock
during the period during which the Company is obligated to use its best efforts
to obtain and maintain the effectiveness of the registration statement set
forth in Section 3 (the "Effective Period"), and (ii) the managing underwriter
or underwriters of such offering determine, in their discretion, that the total
amount of Common Stock included in the distribution pursuant to the shelf
registration contemplated hereby would materially adversely affect the success
of such public offering by the Company, then Stockholder agrees not to sell any
Registrable Securities under the shelf registration statement described in
Section 3 without the prior written consent of the Company and such
underwriters, during the 14-day period prior to, and during the 120-day period
beginning on, the effective date of such registration statement (to the extent
timely notified in writing by the Company or the managing underwriters);
provided, however, that, in the event of any such offering, (1) Stockholder
shall be provided the opportunity to sell pursuant to the terms of Section 4 of
this Agreement, if it so desires, not less than twenty-five percent (25%) of
the number of Registrable Securities held by the Stockholder immediately
following the completion of the IPO or, if applicable, any exercise of the
Overallotment Options by the underwriters, and (2) the Effective Period shall
be extended by the number of days during the time period from and including the
date 14 days prior to the effective date of such registration statement and
ending 120 days after the effective date of such registration statement.
Notwithstanding the foregoing, Stockholder shall be subject to the hold-back
restrictions of this Section 8 not more than once during the Effective Period.
9. Expenses of Registration. All expenses incurred in connection
with a registration, filing or qualification pursuant to Sections 3 or 4 hereof
(other than fees and expenses of counsel for the Stockholder), including,
without limitation, registration, filing and qualification fees, printers' and
accounting fees, and the fees and disbursements of counsel for the Company,
shall be borne and paid by the Company; provided, however, that the Stockholder
shall bear and pay all underwriting discounts and selling commissions
attributable to sales of Registrable Securities.
10. Underwritten Registrations. If any of the Registrable
Securities covered by any registration under Section 3 are to be sold in an
underwritten offering, the investment banker or investment bankers and manager
or managers that will administer the offering may be selected by the
Stockholder; provided, that such investment bankers and managers must be
reasonably satisfactory to the Company.
11. Indemnification. In the event any Registrable Securities are
included in a registration statement under this Agreement:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless Stockholder, the officers and directors of
Stockholder, each underwriter of Registrable
8
<PAGE> 9
Securities and each other Person, if any, who controls Stockholder or such
underwriter within the meaning of Section 16 of the Securities Act, against any
losses, claims, damages, liabilities or expenses, joint or several, to which
any such Person may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any registration
statement under which such Registrable Securities were registered under the
Securities Act pursuant hereto, or any post-effective amendment thereof, or any
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading, or (ii) any
untrue statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, if used prior to the effective date of the
registration statement and not corrected in the final prospectus, or contained
in the final prospectus (as amended or supplemented, if the Company shall have
filed with the Commission any amendment thereof or supplement thereto), or any
omission or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading; and will
reimburse any such Person for any legal or other expenses reasonably incurred
by such Person in connection with investigating or defending any such loss,
claim, damage, liability or expense; provided, however, that the indemnity
agreement contained in this Section 11(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or expense if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld); and provided further that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage,
liability or expense arises out of or is based upon (x) any such untrue
statement or omission or alleged untrue statement or omission which has been
made in said registration statement, preliminary prospectus, prospectus or
amendment or supplement or omitted therefrom in reliance upon and in conformity
with information furnished in writing to the Company by the Stockholder or such
underwriter specifically for use in the preparation thereof, (y) the fact that
Stockholder sold Registrable Securities to a Person to whom there was not sent
or given, at or before written confirmation of such sale, a copy of the
prospectus (excluding documents incorporated by reference), or of the
prospectus as then amended or supplemented (excluding documents incorporated by
reference) if the Company has previously furnished copies thereof to
Stockholder in compliance with the Agreement and the loss, claim, damage,
liability or expense of Stockholder results from an untrue statement of
material fact contained in such preliminary prospectus which was corrected in
the prospectus (or the prospectus as amended or supplemented); and (z) any
violation by the Stockholder of its obligations under Section 7 hereof.
(b) To the extent permitted by law, Stockholder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each Person, if any, who
controls the Company within the meaning of Section 15 of the Securities Act,
each underwriter and each Person who controls any underwriter within the
meaning of Section 15 of the Securities Act, against any losses, claims,
damages, liabilities or expenses, joint or several, to which the Company or any
such Person may become subject under the Securities Act or otherwise, and will
reimburse the Company or any such Person for any legal or other expenses
reasonably incurred by the Company or such Person in connection with
investigating or defending any such loss, claim, damage, liability or expense,
but only insofar as such losses, claims, damages, liabilities or expenses (or
actions in respect thereof) arise out of or
9
<PAGE> 10
are based upon (x) any untrue statement or omission or alleged untrue statement
or omission of a material fact referred to in clause (i) or (ii) of Section
11(a) hereof, in each case to the extent (and only to the extent) that such
untrue statement or omission or alleged untrue statement or omission was made
in reliance upon and in conformity with information furnished in writing by or
on behalf of Stockholder specifically for use in connection with such
registration; (y) with respect to any preliminary prospectus, the fact that the
Stockholder sold Registrable Securities to a person to whom there was not sent
or given, at or before written confirmation of such sale, a copy of the
prospectus (excluding the documents incorporated by reference) or of the
prospectus as then amended or supplemented (excluding documents incorporated by
reference) if the Company has previously furnished copies thereof to
Stockholder in compliance with this Agreement and the loss, claim, damage,
liability or expense of the Company or such Person result from an untrue
statement or omission of a material fact contained in such preliminary
prospectus which was corrected in the prospectus (or the prospectus as amended
or supplemented); and (z) with respect to any sales made during any period in
which the Company had notified the Stockholder pursuant to Section 7 hereof to
suspend sales; provided, however, that the indemnity agreement contained in
this Section 11(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or expense if such settlement is effected
without the consent of Stockholder, which consent shall not be unreasonably
withheld; and provided further that the obligations of Stockholder under this
Section 11(b) shall be limited to an amount equal to the proceeds from the sale
by Stockholder of Registrable Securities included in a registration statement
under this Agreement.
(c) Promptly after receipt by an indemnified party under
this Section 11 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying pay under this Section 11, notify
the indemnifying party in writing of the commencement thereof; provided,
however, that the failure to so notify the indemnifying party shall not relieve
the indemnifying party from any liability hereunder except to the extent that
the indemnifying party is actually prejudiced by such failure to give notice.
The indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, to assume the defense thereof with
counsel mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the fees
and expenses to be paid by the indemnifying party, if representation of such
indemnified party by the counsel retained by the indemnifying party would be
inappropriate due to actual or potential differing interests between such
indemnified party and any other party represented by such counsel in such
proceeding.
(d) If the indemnification provided for in this Section
11 from the indemnifying party is unavailable to an indemnified party hereunder
in respect of any losses, claims, damages, liabilities or expenses referred to
herein, then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses in such
proportion as is appropriate to reflect the relative benefits received by the
indemnifying party and the indemnified parties, the relative fault of the
indemnifying party and indemnified parties in connection with the actions which
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative fault of such
indemnifying party and
10
<PAGE> 11
indemnified parties shall be determined by reference to, among other things,
whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact, has been made by, or relates to information supplied by, such
indemnifying party or indemnified parties, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 11(c) hereof, any
legal or other fees or expenses reasonably incurred by such party in connection
with any investigation or proceeding. The parties hereto agree that it would
not be just and equitable if contribution pursuant to this Section 11(d) were
determined by pro rata allocation or by any other method of allocation which
does not take into account the equitable considerations referred to in this
paragraph. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
12. Reports Under Exchange Act. With a view to making available
to the Stockholder the benefits of Rule 144 under the Securities Act and any
other rule or regulation of the Commission that may at any time permit the
Stockholder to sell securities of the Company to the public without
registration, the Company agrees, for so long as Stockholder holds the
Registrable Securities, to:
(a) file with the Commission in a timely manner all
reports and other documents required of the Company under the Securities Act
and the Exchange Act, and the rules and regulations adopted by the Commission
thereunder; and
(b) furnish to the Stockholder forthwith upon request (i)
a written statement by the Company as to whether it has complied with the
reporting requirements of Rule 144, (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents filed by
the Company pursuant to the Exchange Act, and (iii) such other information as
may be reasonably requested in availing the Stockholder of any rule or
regulation of the Commission which permits the sale of any securities without
registration.
13. Assignment of Registration Rights. The right to cause the
Company to register Registrable Securities pursuant to this Agreement may not
be transferred or assigned, in whole or in part, by Stockholder without the
prior written consent of the Company.
14. Miscellaneous.
(a) Successors and Assigns: No Third Party Benefit.
This Agreement shall be binding upon and inure to the benefit of the parties
and their respective permitted successors and assigns. Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto and their respective permitted successors and assigns any
rights or remedies under or by reason of this Agreement, except as expressly
provided in this Agreement.
11
<PAGE> 12
(b) Governing Law. This Agreement shall be governed by,
and construed and enforced in accordance with, the substantive laws of the
State of Texas, without giving effect to the principles of conflicts of law
thereof.
(c) Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument. Each counterpart may consist of a
number of copies hereof each signed by less than all, but together signed by
all, the parties hereto.
(d) Titles and Subtitles. The titles and subtitles used
in this Agreement are inserted for convenience only and are not to be
considered in construing or interpreting this Agreement.
(e) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing and shall be
delivered by (i) personal delivery, (ii) expedited delivery service, (iii)
certified or registered mail, postage prepaid, or (iv) confirmed facsimile
transmission. Any such notice shall be deemed given upon its receipt at the
following address (or such other address as may be specified by such party upon
written notice to the others in accordance with this Section 14(f)):
If to the Company: Eagle Geophysical, Inc.
50 Briar Hollow Lane West, 6th Floor
Houston, Texas 77027
Attention: Jay N. Silverman, President
Telephone: (713) 881-2893
Telefax: (713) 627-1020
If to Stockholder: EHI Holdings, Inc.
50 Briar Hollow Lane West, 7th Floor
Houston, Texas 77027
Attention: Paul A. Frame, President
Telephone: (713) 881-8900
Telefax: (713) 627-2045
(f) Amendments and Waivers. The terms and provisions of
this Agreement may not be modified or amended, or any of the provisions hereof
waived, temporarily or permanently, except pursuant to a writing executed by
the Company and the Stockholder. A waiver by any party of a breach of any term
or provision of this Agreement shall not be construed as a waiver of any
subsequent breach.
(g) Severability. If any provision or any portion of any
provision of this Agreement or the application of such provision or any portion
thereof to any Person or circumstance shall be held invalid or unenforceable,
the remaining portion of such provision, as it applies to other Persons or
circumstances and the remaining provisions, shall not be affected or impaired
thereby.
12
<PAGE> 13
(h) Entire Agreement. This Agreement is intended by the
parties as a final expression of their agreement and intended to be a complete
and exclusive statement of the agreement and understanding of the parties
hereto in respect of the subject matter herein contained. There are no
restrictions, promises, warranties or undertakings, other than those set forth
or referred to herein, with respect to the registration rights granted by the
Company. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed as of the date first above written.
EAGLE GEOPHYSICAL, INC.
By:
-------------------------------------
Jay N. Silverman, President
EHI HOLDINGS, INC.
By:
-------------------------------------
Paul A. Frame, President
13
<PAGE> 1
10.25
ADMINISTRATIVE SERVICES AGREEMENT
This Administrative Services Agreement ("Agreement") is entered into as
of ____________________, 1997 by and between Seitel, Inc., a Delaware
corporation ("Seitel"), and Eagle Geophysical, Inc., a Delaware corporation
("Eagle").
RECITALS
Prior to execution of this Agreement, Eagle was a wholly-owned
subsidiary of Seitel. Eagle has undertaken a series of transactions, including
the issuance of new shares in consideration for the acquisition of Energy
Research International and the issuance of new shares for cash in an initial
public offering (the "IPO"), consummated on the date hereof, and Seitel has
sold in such IPO a portion of the shares of Eagle that it owned, as a result of
which Eagle is no longer a wholly-owned subsidiary of Seitel.
During the period when Eagle was a wholly-owned subsidiary of Seitel,
Eagle relied on Seitel for the provision of certain administrative services
relating to Eagle's onshore seismic data acquisition business, which
administrative services Eagle intends in the future to provide for itself.
However, in order to provide for an orderly transition from Seitel providing
such administrative services to Eagle providing such services, and to allow
Eagle a reasonable time in which to assemble its own staff to provide such
services, Seitel has agreed to make available to Eagle for a transition period
of up to 90 days those administrative services formerly provided to Eagle with
respect to Eagle's onshore seismic data acquisition business, all pursuant to
the terms of this Agreement.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual agreements
contained herein, the parties hereby agree as follows:
Section 1. Defined Terms. The following terms will have the following
meanings when used in this Agreement:
"Accountant" means the certified public accounting firm most recently
retained by Seitel to audit its financial statements.
"Associate" means with respect to Seitel, any shareholder, director,
officer or employee of Seitel or any attorney, accountant, representative or
agent retained by Seitel.
"Expenses" means any reasonable and necessary out-of-pocket expenses
incurred in connection with the provision of the Services,
<PAGE> 2
including any taxes or other governmental impositions attributable to the
provision of the Services (other than income or other similar taxes assessed on
the Fees), but not including any general or administrative overhead expense of
Seitel.
"Fees" means the fees payable to Seitel pursuant to Section 3 hereof.
"Force Majeure Event" means (a) a fire, flood, explosion, riot,
rebellion, revolution, labor trouble (whether or not due to the fault of such
Party), requirements or acts of any government authority or agency or
subdivision thereof, loss of source of supplies or other inability to obtain
materials or suppliers, or (b) any other cause, whether similar or dissimilar
to the foregoing, beyond the reasonable control of the Parties hereto.
"Loss" means any and all claims, liabilities, obligations, losses,
deficiencies and damages or judgments of any kind or nature whatsoever arising
from, asserted against, or associated with the furnishing or failure to furnish
the Services, regardless of by whom asserted and regardless of whether or not
any such loss is known or unknown, fixed or contingent or asserted or
unasserted.
"Eagle Account" means a bank account established in the name of Eagle.
"Party" means either of Seitel or Eagle.
"Services" means the services described in the schedule attached as
Exhibit A to this Agreement or any other service provided by Seitel to Eagle at
the request of Eagle; provided that Seitel shall not be obligated to provide
any services to Eagle other than those set forth on Exhibit A.
Section 2. Services. Seitel will provide the Services described on
Exhibit A to Eagle. Such services will only be provided with respect to
Eagle's onshore seismic data acquisition business. Seitel may, in its sole
discretion, provide other Services to Eagle upon request by Eagle. The
Services will be of the type and at the level provided by Seitel to Eagle
before the IPO.
Section 3. Fees and Expenses. (a) Eagle will pay Seitel Fees for the
Services provided by Seitel to Eagle hereunder equal to Seitel's cost of
providing such Services, as reasonably determined by Seitel. Such Fees will
include an allocation of Seitel's general and administrative overhead expense
relating to such Services. Seitel may, but shall not be obligated to,
determine such cost using the same methods employed by Seitel to allocate costs
to Eagle for such Services prior to the IPO.
(b) Eagle will reimburse Seitel for Expenses incurred by Seitel in
connection with the provision of the Services. Seitel will not have any
obligation to advance funds on behalf of Eagle.
<PAGE> 3
(c) Seitel will invoice Eagle for the Fees and the Expenses at
intervals determined by Seitel from time to time. All invoices will be due and
payable within five calendar days after the date of the invoice, and may be
paid by Seitel on behalf of Eagle pursuant to the authority granted in Section
7 hereof.
(d) Eagle may dispute any Fee or Expense by notifying Seitel of the
dispute within 30 calendar days of the receipt of the related invoice. If
either Party determines that the dispute cannot be resolved by the Parties, the
dispute will be submitted to the Accountant. The Accountant will make such
investigation of the Fees and Expenses as it deems necessary and will finally
determine the amount of the Fees and Expenses. The fees and expenses of the
Accountant will be paid by Eagle unless the finally determined Fees and
Expenses are less than 90% of the disputed amount.
Section 4. Information and Records.
(a) Eagle will make available to Seitel on a timely basis all
information which is reasonably necessary for Seitel to provide the Services.
(b) Seitel will maintain records with respect to the Services which
are substantially similar to those maintained with respect to similar Services
provided for its own account, and will provide those records to Eagle upon
termination of this Agreement.
Section 5. Liability. (a) Seitel makes no express or implied warranty
with respect to the Services.
(b) Seitel will be liable to Eagle for any Loss suffered by Eagle as
a result of acts or omissions of Seitel or its Associates in connection with
the Services provided only if and to the extent that (i) the acts or omissions
constitute gross negligence or willful misconduct or (ii) the acts or omissions
would be covered by Seitel's insurance coverage under crime, fidelity or
fiduciary insurance (if any). In any event, except to the extent covered by
Seitel's crime, fidelity or fiduciary insurance, (i) any claim for damages from
Seitel in connection with a Service provided will be limited to the amount of
fees charged with respect to the Service, and (ii) Seitel will not be liable to
Eagle for any incidental or consequential damages, lost profits or
opportunities, or exemplary or punitive damages.
Section 6. Indemnity. Except as provided in Section 5(b), Eagle will
indemnify Seitel and its Associates and hold Seitel and its Associates harmless
from any and all Losses arising from, asserted against or associated with the
provision of Services by Seitel to Eagle.
Section 7. Authority. (a) In providing the Services, Seitel may take
such actions, make such decisions and exercise such judgment on behalf of Eagle
as Seitel has taken, made or exercised in providing the same or similar
services on behalf of Eagle prior
<PAGE> 4
to the IPO.
(b) Prior to taking action on behalf of Eagle, Seitel will use
reasonable efforts to consult with appropriate officers or employees of Eagle
(i) in those circumstances under which Seitel would have consulted officers or
employees of Eagle prior to the IPO, and (ii) in any other circumstances
required under such reasonable rules and procedures as Eagle may adopt, from
time to time, after prior consultation with Seitel.
Section 8. Force Majeure. Seitel will not be liable to Eagle for any
failure to comply with this Agreement caused, directly or indirectly, by a
Force Majeure Event.
Section 9. Term. (a) This Agreement, and Seitel's obligation to provide
Services hereunder, shall expire 90 days after the date hereof.
(b) Eagle may terminate this agreement prior to expiration on 5 days
prior written notice to Seitel.
(c) Eagle's and Seitel's obligations pursuant to Sections 3, 5 and 6
of this Agreement will survive expiration and termination of the Agreement.
Section 10. Notices. All notices, demands, requests, or other
communications which may be or are required to be given, served, or sent by a
Party pursuant to this Agreement will be in writing and will be (i) personally
delivered, (ii) mailed by first class, registered or certified mail, return
receipt requested, postage prepaid, (iii) sent by an internationally recognized
express delivery service or (iv) transmitted by facsimile, address as follows:
(a) if to Eagle:
Eagle Geophysical, Inc.
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Attn: Jay N. Silverman
Facsimile Number (713) 881-2801
(b) if to Seitel:
Seitel, Inc.
50 Briar Hollow Lane, 7th Floor West
Houston, Texas 77027
Attn: Debra D. Valice
Facsimile Number (713) 881-2806
Each Party may designate by notice in writing a new address or facsimile
number to which any notice may be given, served or sent. Each notice will be
deemed sufficiently given, served, sent or received when it is delivered to the
addressee, with an affidavit
<PAGE> 5
of personal delivery, the return receipt, the delivery receipt or when delivery
is refused by the addressee. Each notice or other communication sent by
facsimile will be deemed sufficiently given only if a copy of the notice or
communication is immediately sent by one of the methods specified in (i), (ii)
or (iii) above.
Section 11. Miscellaneous. (a) This Agreement sets forth the entire
agreement of the Parties with respect to the Services and supersedes all
previous agreements, understandings or negotiations with respect to the
Services.
(b) The rights and obligations set forth in this Agreement may be
amended, modified or supplemented only by a writing signed by each Party.
(c) A Party may waive a right under this Agreement only by a written
waiver signed by the Party. No failure to exercise or delay in exercising a
right under this Agreement will constitute a waiver of that right.
(d) If any provision of this Agreement is found invalid, illegal or
unenforceable, the provision will be ineffective only to the extent of the
invalidity, illegality or unenforceability, and the other provisions of this
Agreement will remain in full force and effect.
(e) A party may not assign its rights, and a Party may not delegate
its obligations, under this Agreement unless it first obtains the written
consent of all other Parties, provided, however, that Seitel may assign its
rights and delegate its obligations to any wholly-owned subsidiary of Seitel
without Eagle's consent. Any Party, in its discretion, may withhold consent to
any such assignment or delegation.
(f) Except as permitted under Subsection (e), this Agreement will not
inure to the benefit of any Person other than the Parties.
(g) This Agreement will be governed by and construed and enforced in
accordance with the internal laws of the State of Texas.
(h) This Agreement may be executed in counterparts.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed on their behalf as of the date first above written.
SEITEL, INC.
By:
-------------------------
Name:
Title:
EAGLE GEOPHYSICAL, INC.
By:
-------------------------
Name:
Title:
<PAGE> 6
EXHIBIT A
SERVICES
A. Accounting:
1. Establish/convert from consolidated general ledger to separate
company general ledger on Seitel's current accounting system.
(Seitel may outsource this service or hire temporary staff to
perform this service at Eagle's cost, subject to Eagle's prior
consent. If such consent is requested by Seitel but not given by
Eagle, Seitel will not be required to perform this service.)
2. Maintain a general ledger.
3. Furnish general bank account checks and reconcile general bank
account.
4. Process vendor invoices and employee expense reports approved by
Eagle for payment.
5. Input accounts receivable in accordance with instructions from
Eagle personnel; post cash receipts; provide A/R aging as
requested (not more often than once per week).
6. Maintain fixed asset records (acquisition-disposal-depreciation
schedules).
7. Provide project profit and cost accounting statements.
8. Provide quarterly financial information for use by Eagle
personnel in preparing quarterly financial statements: percentage
completion of projects to determine revenue and costs to be
recognized; commission accruals; bonus calculations; trial
balance; and financial statements of Eagle Geophysical Onshore,
Inc.
B. Payroll:
1. Maintain employee data base and input payroll information into
ADP system.
2. Distribute payroll checks.
C. Tax:
1. Prepare and file all state and federal income and sale/use tax
returns with a due date during the Term.
D. Benefits:
1. Administer 401(k) Plan.
2. Administer health and medical benefits plans.
<PAGE> 1
EXHIBIT 10.26
AMENDED AND RESTATED PROMISSORY NOTE
U.S.$2,000,000.00
July 3, 1996
FOR VALUE RECEIVED, after date, without grace, in the manner, on the
dates and in the amounts so herein stipulated, the undersigned, ENERGY RESEARCH
INTERNATIONAL, a Cayman Islands corporation ("Borrower"), 6 Pembroke Road,
Sevenoaks, Kent TN13 1XR, United Kingdom, acting by and through its duly
authorized officer, PROMISES TO PAY TO THE ORDER OF SEITEL, INC., a Delaware
corporation ("Lender"), 50 Briar Hollow Lane, 7th Floor West, Houston, Harris
County, Texas 77027, the sum of TWO MILLION DOLLARS ($2,000,000.00) in lawful
money of the United States of America, which shall be legal tender in payment
of all debts and dues, public and private, at the time of payment, and to pay
interest on the unpaid principal amount from date until maturity at a varying
rate per annum which shall from day to day be equal to the lesser of (a) the
sum of the rate of interest per annum then most recently published by the Wall
Street Journal as the Prime Rate (hereinafter defined) in effect from
day-to-day, plus 1.0% ("Stated Rate"), each such change in the rate of interest
charged hereunder to become effective, without notice to Borrower, on the
effective date of each change in the Prime Rate, computed for the actual number
of days elapsed (including the first day, but excluding the last day), or (b)
the maximum non-usurious interest rate permitted by applicable law from time to
time in effect as such law may be interpreted, amended, revised, supplemented
or enacted ("Maximum Rate"). In the event the Stated Rate subsequently
decreases to a level which would be less than the Maximum Rate or if the
Maximum Rate applicable to this Note should subsequently be changed, then
interest hereon shall accrue at a rate equal to the applicable Maximum Rate
until the aggregate amount of interest so accrued equals the aggregate amount
of interest which would have accrued at the Stated Rate without regard to any
usury limit, at which time interest hereon shall again accrue at the Stated
Rate. This Note is payable as follows:
Interest shall be due and payable monthly as it accrues, on
the first day of each and every month, beginning August 1, 1996, and
continuing regularly thereafter until July 3, 1998, when the entire
balance of principal and accrued interest shall be due and payable.
In addition, Borrower shall be obligated to make mandatory
prepayments of principal in amounts equal to 50% of the first $5
Million in aggregate proceeds received by the Borrower upon the sale
of any equity interests in the Borrower, and 100% of any aggregate
proceeds in excess of $5 Million, which payments shall be due as and
when such proceeds are received by the Borrower; provided, however,
that such proceeds shall first be applied as mandatory prepayments
under the Note made by Borrower payable to
________
Initials
<PAGE> 2
the order of Lender dated November 15, 1996 in the original principal
amount of $2,679,040.00.
It is agreed that time is of the essence of this agreement. In the
event of default in the payment of any installment of principal or interest
when due or in the event of any other default hereunder, Lender may accelerate
and declare this Note immediately due and payable without notice and
opportunity to cure. Any failure to exercise this option shall not constitute
a waiver by Lender of the right to exercise the same at any other time.
In the event of default in the making of any payment herein provided,
either of principal or interest, or in the event this Note is declared due,
interest shall accrue at the Maximum Rate.
Borrower hereby agrees to pay all expenses incurred, including
reasonable attorneys' fees, all of which shall become a part of the principal
hereof, if this Note is placed in the hands of an attorney for collection or if
collected by suit or through any probate, bankruptcy or any other legal
proceedings.
Interest charges will be calculated on amounts advanced hereunder on
the actual number of days these amounts are outstanding on the basis of a
365-day or 366-day year, as is applicable. It is the intention of the parties
hereto to comply with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provision to the contrary in this Note, or in any of the
documents securing payment hereof or otherwise relating hereto, no such
provision shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in this Note or in
any of the documents securing payment hereof or otherwise relating hereto, then
in such event (1) the provisions of this paragraph shall govern and control,
(2) neither Borrower, endorsers or guarantors, nor their heirs, legal
representatives, successors or assigns nor any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Maximum Rate, (3) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal amount hereof or refunded to Borrower, and (4) the provisions of this
Note and any documents securing payment of this Note shall be automatically
reformed so that the effective rate of interest shall be reduced to the Maximum
Rate. For the purpose of determining the Maximum Rate, all interest payments
with respect to this Note shall be amortized, prorated and spread throughout
the full term of the Note so that the effective rate of interest on account of
this Note is uniform throughout the term hereof.
Borrower agrees that the Maximum Rate to be charged or collected
pursuant to this Note shall be the applicable indicated rate ceiling as defined
in TEX. REV. CIV. STAT. ANN. Art. 5069-1.04, provided that Lender may rely on
other applicable laws, including without limitation laws of the United States,
for calculation of the Maximum Rate if the application thereof results in a
greater Maximum Rate. Except as provided above, the provisions of this Note
shall be governed by the laws of the State of Texas.
________
Initials
-2-
<PAGE> 3
Each maker, surety, guarantor and endorser waives demand, grace,
notice, presentment for payment, notice of intention to accelerate the maturity
hereof, notice of acceleration of the maturity hereof and protest, and agrees
that this Note may be renewed, and the time of payment extended from time to
time, without notice and without releasing any of the foregoing.
Borrower may prepay this Note, in whole or in part, at any time prior
to maturity without penalty, and interest shall cease on any amount prepaid.
Any partial prepayment shall be applied toward the payment of the principal
installments last maturing on the Note, that is, in the inverse order of
maturity, without reducing the amount or time of payment of the remaining
installments.
As used in this Note, the term "Prime Rate" shall mean the variable
rate of interest published from time to time by the Wall Street Journal as the
Prime Rate of interest and, without notice to the maker of this Note or any
other person, such rate of interest shall change as and when changes in that
base rate of interest are published. If at any time the "Prime Rate" is no
longer published by such publication, the owner of this Note ("Owner") will
designate as the "Prime Rate" a different variable rate of interest announced
by a national banking association of Owner's choice.
Borrower agrees that all disputes in any way relating to, arising
under, connected with, or incident to this Note, and over which the United
States federal courts have subject matter jurisdiction, shall be litigated, if
at all, exclusively in the United States District Court for the Southern
District of Texas, Houston Division, and, if necessary, the corresponding
appellate courts. Borrower further agrees that all disputes in any way
relating to, arising under, connected with, or incident to this Agreement, and
over which the United States federal courts do not have subject matter
jurisdiction, shall be litigated, if at all, exclusively in the Courts of the
State of Texas, in Harris County, and, if necessary, the corresponding
appellate courts. Borrower hereby submits itself to the personal jurisdiction
of, and consents to venue in, any such court, and hereby waives any claim it
may otherwise have that such court lacks personal jurisdiction over it, or that
such court is an inconvenient forum, with respect to any matter or proceeding
arising out of this Note. Borrower further agrees to voluntarily appear and to
enter a general appearance in any proceeding arising out of this Note which is
brought in any such court. Borrower agrees that service of process in any
matter or proceeding relating hereto may be effected upon it by certified or
registered mail to the address specified in the first paragraph of this Note or
such other address as Borrower may designate in writing to Lender from time to
time.
This Note is an Amended and Restated Note that amends and restates
that certain promissory note dated July 3, 1996 made by Borrower payable to the
order of Lender in the same original principal amount. Such original note has
been marked "Cancelled" and is replaced hereby.
ENERGY RESEARCH INTERNATIONAL
BY: /s/ Gerald Harrison
-----------------------------
Gerald Harrison, President
________
Initials
-3-
<PAGE> 1
EXHIBIT 10.27
P R O M I S S O R Y N O T E
U.S.$2,679,040.00 November 15, 1996
FOR VALUE RECEIVED, after date, without grace, in the manner, on the
dates and in the amounts so herein stipulated, the undersigned, ENERGY RESEARCH
INTERNATIONAL, a Cayman Islands corporation ("Borrower"), 6 Pembroke Road,
Sevenoaks, Kent TN13 1XR, United Kingdom, acting by and through its duly
authorized officer, PROMISES TO PAY TO THE ORDER OF SEITEL, INC., a Delaware
corporation ("Lender"), 50 Briar Hollow Lane, 7th Floor West, Houston, Harris
County, Texas 77027, the sum of TWO MILLION SIX HUNDRED SEVENTY-NINE THOUSAND
FORTY DOLLARS AND NO/100'S ($2,679,040.00) in lawful money of the United States
of America, which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, and to pay interest on the unpaid
principal amount from date until maturity at a varying rate per annum which
shall from day to day be equal to the lesser of (a) the maximum non-usurious
interest rate permitted by applicable law from time to time in effect as such
law may be interpreted, amended, revised, supplemented or enacted ("Maximum
Rate") or (b) the following rates (the "Stated Rate"):
From the date hereof until December 31, 1997, at five and
35/100 percent (5.35%) per annum;
From January 1, 1998 until December 31, 1998, eight percent
(8%) per annum; and
From January 1, 1999 until maturity, the sum of the rate of
interest per annum then most recently published by the Wall Street
Journal as the Prime Rate (hereinafter defined) in effect from
day-to-day, plus one percent (1.0%), each such change in the rate of
interest charged hereunder to become effective, without notice to
Borrower, on the effective date of each change in the Prime Rate,
computed for the actual number of days elapsed (including the first
day, but excluding the last day).
In the event the Stated Rate subsequently decreases to a level which would be
less than the Maximum Rate or if the Maximum Rate applicable to this Note
should subsequently be changed, then interest hereon shall accrue at a rate
equal to the applicable Maximum Rate until the aggregate amount of interest so
accrued equals the aggregate amount of interest which would have accrued at the
Stated Rate without regard to any usury limit, at which time interest hereon
shall again accrue at the Stated Rate. This Note is payable as follows:
Payments of accrued interest and payments of $81,753.25 in
principal shall be payable quarterly on the last day of each March,
June, September and December,
________
Initials
<PAGE> 2
beginning on March 31, 1999, until December 31, 2001, provided that,
if making such quarterly payments would cause a default under the
agreements governing the debt owed by the Company's subsidiary Horizon
Exploration Limited to the Bank of N.T. Butterfield & Sons, Ltd., such
payments shall be deferred until the sooner of such time as they can
be made without causing such default or until maturity, and provided
further that, if making such payments would cause such a default, the
Company and its subsidiaries shall use their best efforts to obtain
waivers of such potential default or to refinance such debt so as to
allow such payments to be made; and
On December 31, 2001, the entire balance of principal and
accrued interest shall be due and payable.
In addition, Borrower shall be obligated to make mandatory
prepayments of principal in amounts equal to 50% of the first $5
Million in aggregate proceeds received by the Borrower upon the sale
of any equity interests in the Borrower, and 100% of any aggregate
proceeds in excess of $5 Million, which payments shall be due as and
when such proceeds are received by the Borrower, and which shall be
applied toward the payment of the principal installments last maturing
on the Note, that is, in the inverse order of maturity, without
reducing the amount or time of payment of the remaining installments.
It is agreed that time is of the essence of this agreement. In the
event of default in the payment of any installment of principal or interest
when due or in the event of any other default hereunder, Lender may accelerate
and declare this Note immediately due and payable without notice and
opportunity to cure. Any failure to exercise this option shall not constitute
a waiver by Lender of the right to exercise the same at any other time.
In the event of default in the making of any payment herein provided,
either of principal or interest, or in the event this Note is declared due,
interest shall accrue at the Maximum Rate.
Borrower hereby agrees to pay all expenses incurred, including
reasonable attorneys' fees, all of which shall become a part of the principal
hereof, if this Note is placed in the hands of an attorney for collection or if
collected by suit or through any probate, bankruptcy or any other legal
proceedings.
Interest charges will be calculated on amounts advanced hereunder on
the actual number of days these amounts are outstanding on the basis of a
365-day or 366-day year, as is applicable. It is the intention of the parties
hereto to comply with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provision to the contrary in this Note, or in any of the
documents securing payment hereof or otherwise relating hereto, no such
provision shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in this Note or in
any of the documents securing payment hereof or otherwise relating hereto, then
in such event (1) the provisions of this paragraph shall govern and control,
(2) neither Borrower, endorsers or guarantors, nor their heirs, legal
representatives, successors or assigns nor any other
________
Initials
-2-
<PAGE> 3
party liable for the payment hereof, shall be obligated to pay the amount of
such interest to the extent that it is in excess of the Maximum Rate, (3) any
such excess which may have been collected shall be either applied as a credit
against the then unpaid principal amount hereof or refunded to Borrower, and
(4) the provisions of this Note and any documents securing payment of this Note
shall be automatically reformed so that the effective rate of interest shall be
reduced to the Maximum Rate. For the purpose of determining the Maximum Rate,
all interest payments with respect to this Note shall be amortized, prorated
and spread throughout the full term of the Note so that the effective rate of
interest on account of this Note is uniform throughout the term hereof.
Borrower agrees that the Maximum Rate to be charged or collected
pursuant to this Note shall be the applicable indicated rate ceiling as defined
in TEX. REV. CIV. STAT. ANN. Art. 5069-1.04, provided that Lender may rely on
other applicable laws, including without limitation laws of the United States,
for calculation of the Maximum Rate if the application thereof results in a
greater Maximum Rate. Except as provided above, the provisions of this Note
shall be governed by the laws of the State of Texas.
Each maker, surety, guarantor and endorser waives demand, grace,
notice, presentment for payment, notice of intention to accelerate the maturity
hereof, notice of acceleration of the maturity hereof and protest, and agrees
that this Note may be renewed, and the time of payment extended from time to
time, without notice and without releasing any of the foregoing.
Borrower may prepay this Note, in whole or in part, at any time prior
to maturity without penalty, and interest shall cease on any amount prepaid.
Any partial prepayment shall be applied toward the payment of the principal
installments last maturing on the Note, that is, in the inverse order of
maturity, without reducing the amount or time of payment of the remaining
installments.
As used in this Note, the term "Prime Rate" shall mean the variable
rate of interest published from time to time by the Wall Street Journal as the
Prime Rate of interest and, without notice to the maker of this Note or any
other person, such rate of interest shall change as and when changes in that
base rate of interest are published. If at any time the "Prime Rate" is no
longer published by such publication, the owner of this Note ("Owner") will
designate as the "Prime Rate" a different variable rate of interest announced
by a national banking association of Owner's choice.
Borrower agrees that all disputes in any way relating to, arising
under, connected with, or incident to this Note, and over which the United
States federal courts have subject matter jurisdiction, shall be litigated, if
at all, exclusively in the United States District Court for the Southern
District of Texas, Houston Division, and, if necessary, the corresponding
appellate courts. Borrower further agrees that all disputes in any way
relating to, arising under, connected with, or incident to this Agreement, and
over which the United States federal courts do not have subject matter
jurisdiction, shall be litigated, if at all, exclusively in the Courts of the
State of Texas, in Harris County, and, if necessary, the corresponding
appellate courts. Borrower hereby submits itself to the personal jurisdiction
of, and consents to venue in, any such court, and hereby waives any claim it
may otherwise have that such court lacks personal jurisdiction over it, or that
________
Initials
-3-
<PAGE> 4
such court is an inconvenient forum, with respect to any matter or proceeding
arising out of this Note. Borrower further agrees to voluntarily appear and to
enter a general appearance in any proceeding arising out of this Note which is
brought in any such court. Borrower agrees that service of process in any
matter or proceeding relating hereto may be effected upon it by certified or
registered mail to the address specified in the first paragraph of this Note or
such other address as Borrower may designate in writing to Lender from time to
time.
ENERGY RESEARCH INTERNATIONAL
BY: /s/ Gerald Harrison
--------------------------------
Gerald Harrison, President
-4-
<PAGE> 1
EXHIBIT 10.29
EAGLE GEOPHYSICAL, INC.
OUTSIDE DIRECTORS'
DEFERRED COMPENSATION PLAN
1. Purpose. The purpose of the Outside Directors' Deferred
Compensation Plan (the "Plan") of Eagle Geophysical, Inc., a Delaware
corporation (the "Company"), is to attract and retain highly qualified persons
who are not employees of the Company to serve as Directors of the Company by
providing such Directors with greater flexibility in the timing of receipt of
fees for services on the Board of Directors, and an opportunity to obtain a
greater proprietary interest in the Company's success and progress through
deferral of fees as if such fees had been invested in Common Stock of the
Company, thereby aligning such Directors' interests more closely with the
interests of stockholders of the Company.
2. Definitions. In addition to terms defined elsewhere in the
Plan, the following are defined terms under the Plan:
(a) "Account" means the account established under
Sections 6 and 7 for Participants, which may include, as subaccounts,
an Interest Bearing Account and a Stock Appreciation Account. Such
Accounts are maintained solely as bookkeeping entries by the Company
evidencing unfunded obligations of the Company.
(b) "Board" means the Board of Directors of the Company.
(c) "Common Stock" means the Common Stock, $.01 par
value, of the Company and such other securities as may be substituted
for such Common Stock or such other securities pursuant to Section 9.
(d) "Director Fees" means annual director fees payable to
a Director in his or her capacity as such for service on the Board and
meeting fees payable to a Director for his or her participation in
meetings of the Board or any committee thereof.
(e) "Exchange Act" means the Securities Exchange Act of
1934, as amended. References to any provision of the Exchange Act
include rules thereunder and successor provisions and rules thereto.
(f) "Fair Market Value" of a share of Common Stock of the
Company means, as of any given date, the closing sales price of a
share of Common Stock reported by the Nasdaq Stock Market's National
Market or such other stock exchange on which the Stock is listed;
provided that the Fair Market Value of Stock on the effective date of
the Plan will be the initial public offering price of the Stock.
(g) "Participant" means a person who has amounts credited
to his or her Account, or who has elected to defer payment of Director
Fees under the Plan.
(h) "Plan Year" means, with respect to a Participant, the
period commencing at the time of election of the Director at an annual
meeting of stockholders (or the
<PAGE> 2
election of a class of Directors if the Company then has a classified
Board), or the Director's initial appointment to the Board if not at
an annual meeting of stockholders, and continuing until the next
annual meeting of stockholders.
(i) "Stock Appreciation Right" means a credit to a
Participant's Stock Appreciation Account under Section 7 which
represents the right to receive the Fair Market Value of one share of
Common Stock of the Company upon settlement of the Account.
(j) "Valuation Date" means the last business day of a
Plan Year and the last business day preceding a date on which a
distribution is made in settlement of a Participant's Account.
3. Administration of the Plan. The Plan will be administered by
the Board; provided, however, that any action by the Board relating to the Plan
will be taken only if, in addition to any other required vote, such action is
approved by the affirmative vote of a majority of the Directors who are not
then eligible to participate in the Plan. Subject to the direction of the
Board, bookkeeping and other ministerial functions under the Plan shall be
performed by the Secretary of the Company.
4. Eligibility. Each Director of the Company who is paid
Director Fees for service on the Board may participate in the Plan. No person
other than those specified in this Section 5 will be eligible to participate in
the Plan.
5. Elections Relating to Participation. Each Director of the
Company who is eligible under Section 4 may elect, in accordance with this
Section 5, to defer receipt of Director Fees. Such deferred Director Fees will
either bear interest in an Interest Bearing Account under Section 6 or be
treated as if invested in Common Stock in a Stock Appreciation Account under
Section 7.
(a) Time of Filing of Elections; Irrevocability. A
Director shall elect to participate and the terms of such
participation by filing an election with the Secretary of the Company
prior to the beginning of a Plan Year (which generally will begin at
each annual meeting of the stockholders). Elections shall be deemed
continuing, and therefore applicable to Plan Years after the initial
Plan Year, until the election is modified or revoked by the
Participant. Elections other than those subject to Section 5(d) shall
become irrevocable at the commencement of the Plan Year to which an
election relates. Elections relating to the time of settlement of an
Interest Bearing Account or a Stock Appreciation Account shall become
irrevocable at the time specified in Section 5(d). Elections may be
modified or revoked by filing a new election prior to the time the
election to be modified or revoked has become irrevocable. The latest
election filed with the Secretary of the Company shall be deemed to
revoke all prior inconsistent elections that remain revocable at the
time of filing of the latest election.
(b) Matters to be Elected. A Director's election must
specify the following:
(i) With respect to Director Fees, the percentage
to be deferred and credited to the Participant's Interest
Bearing Account under Section 6 and the
-2-
<PAGE> 3
percentage to be deferred and credited to the Participant's
Stock Appreciation Account under Section 7. The sum of such
percentages must not exceed 100%; if such sum is less than
100%, the balance of Director Fees will be paid in accordance
with the Company's regular Director compensation policies.
(ii) The period or periods during which settlement
of the Participant's Interest Bearing Account or Stock
Appreciation Account will be deferred, subject to Section
5(d), and whether distribution will be in a lump sum or in
annual installments; provided, however, that not more than ten
installments may be elected, and any installment distributions
must commence no later than the first business day of the Plan
Year following the Plan Year in which the Participant ceases
to serve as a Director. An election as to the period or
periods in which such settlement will be deferred may relate
to a given Account in respect of such Plan Year and to any
additional amounts credited as interest or dividend
equivalents in respect of such originally credited amounts and
previously credited amounts.
(c) Form of Election. Elections under the Plan shall be
made in writing on such form or forms as may be specified from time to
time by the Secretary of the Company.
(d) Modifying the Time of Settlement. A Participant may
modify an election as to the time at which a Participant's Account
will be settled at any time prior to the earlier of (i) the calendar
year in which a lump sum settlement will occur or the first
installment will commence or (ii) the time the Participant ceases to
serve as a Director of the Company, except that such modification may
only extend the date of settlement to a date later than the previously
elected settlement date. Such modification shall be made by filing a
new election with the Secretary of the Company. The foregoing
notwithstanding, the Secretary of the Company may disapprove or limit
elections under this Section 5(d) in order to ensure that the
Participant will not be deemed to have constructively received
compensation in respect of the Participant's Account prior to
settlement.
(e) No Reallocation of Accounts. Amounts credited to a
Participant's Interest Bearing Account may not be reallocated or
switched to the Participant's Stock Appreciation Account, and amounts
credited to the Participant's Stock Appreciation Account may not be
reallocated or switched to the Participant's Interest Bearing Account.
(f) Cessation of Service as a Director. If any Director
Fees otherwise subject to an election would be paid to a Participant
after he or she has ceased to serve as a Director, such payment shall
not be subject to such election, but shall instead be paid in
accordance with the Company's regular non-employee Director
compensation policies.
6. Deferral of Director Fees in Interest Bearing Account. If a
Participant has elected to defer receipt of a specified amount of Director Fees
to be held in his or her Interest Bearing Account, an amount equal to such
specified amount shall be credited to the Participant's Interest Bearing
Account as of the date such Director Fees otherwise would have been payable to
the Participant but for such election to defer. As of the close of business on
each Valuation Date,
- 3 -
<PAGE> 4
interest shall be credited to such Cash Account in an amount equal to the
average daily balance in such Cash Account since the last Valuation Date
multiplied by a rate of interest equal to the prime interest rate as published
in THE WALL STREET JOURNAL and effective on the date of the last preceding
annual meeting of stockholders of the Company minus 1.5%.
7. Deferral of Director Fees in Stock Appreciation Account. If a
Participant has elected to defer receipt of a specified amount of Director Fees
to be held in his or her Stock Appreciation Account, a number of Stock
Appreciation Rights determined in accordance with this Section 7 shall be
credited to the Participant's Stock Appreciation Account as of the date such
Director Fees otherwise would have been payable to the Participant but for such
election to defer. The number of Stock Appreciation Rights that shall be
credited to a Participant's Stock Appreciation Account shall be determined by
dividing the amount of Director Fees to be deferred as of the date of such
deferral by the Fair Market Value of one share of Common Stock determined at
the close of business on the day the applicable Plan Year commenced. The
amount of Stock Appreciation Rights credited to a Participant's Stock
Appreciation Account shall include fractional Stock Appreciation Rights
calculated to at least three decimal places.
(a) Crediting of Dividend Equivalents - Cash and
Non-Share Dividends. If the Company declares and pays a dividend in
the form of cash or property other than Common Stock in respect of
shares of Common Stock, then a number of additional Stock Appreciation
Rights shall be credited to the Stock Appreciation Account as of the
payment date for such dividend equal to (i) the number of Stock
Appreciation Rights credited to such Account as of the record date for
such dividend, multiplied by (ii) the amount of cash plus the fair
market value, as determined by the Board, of any property other than
shares of Common Stock actually paid as a dividend on each share of
Common Stock at such payment date, divided by (iii) the Fair Market
Value of one share of Common Stock determined at the close of business
on the day the applicable Plan Year commenced.
(b) Crediting of Dividend Equivalents - Share Dividends.
If the Company declares and pays a dividend in the form of additional
shares of Common Stock payable in respect of shares of Common Stock,
then a number of additional Stock Appreciation Rights shall be
credited to the Participant's Stock Appreciation Account as of the
payment date for such dividend equal to (i) the number of Stock
Appreciation Rights credited to such Account as of the record date for
such dividend multiplied by (ii) the number of additional shares of
Common Stock actually paid as a dividend in respect of each share of
Common Stock.
8. Settlement of Accounts. The Company will settle a
Participant's Account by making one or more distributions to the Participant
(or his or her designated beneficiary, upon the Participant's death) at the
time or times, in a lump sum or installments, as specified in the Participant's
election filed in accordance with Section 5; provided, however, that Accounts
will be settled at times earlier than those specified in such election in
accordance with Sections 8(b), 8(c), and 9.
(a) Form of Distribution. Distributions in respect of a
Participant's Interest Bearing Account and Stock Appreciation Account
shall be made only in cash. Distributions in respect of a
Participant's Stock Appreciation Account shall be equal to
- 4 -
<PAGE> 5
the number of Stock Appreciation Rights to be distributed multiplied
by the Fair Market Value of one share of Common Stock on the business
day immediately preceding the date of such distribution.
(b) Termination of Service as a Director; Death.
(i) Cessation of Service Other than Due to Death.
If a Participant ceases to serve as a Director due to any
reason other than death, the Company shall make distributions
in respect of the Participant's Account to such Participant in
a lump sum or installments, as previously elected by the
Participant, except that installment payments shall commence
not later than the first business day of the calendar year
following the calendar year in which the Participant ceases to
serve as a Director.
(ii) Death. If a Participant ceases to serve as a
Director due to death or dies prior to distribution of all
amounts from his or her Account, the Company shall make a
single lump sum distribution to the beneficiary designated by
such Participant in his or her most recent beneficiary
designation form filed with the Secretary of the Company. If
there is no beneficiary designation on file with the Secretary
of the Company at the time of the Participant's death or no
surviving designated beneficiary, such distributions shall be
made to the executor or administrator of the Director's
estate. Any such distribution shall be made as soon as
practicable following notification to the Company of the
Participant's death.
(c) Financial Hardship. Other provisions
notwithstanding, at the written request of a Participant or his or her
legal representative, the Board, in its sole discretion, upon a
finding that continued deferral will result in financial hardship to
the Participant, may authorize (i) the distribution of all or a part
of a Participant's Account in a single installment or (ii) the
acceleration of payment of any multiple installments thereof.
9. Adjustment Provisions. In the event any recapitalization,
reorganization, merger, consolidation, spin- off, combination, repurchase,
exchange of Common Stock or other securities of the Company, stock split or
reverse split, liquidation, dissolution, or other similar corporate transaction
or event affects the Common Stock such that an adjustment is determined by the
Board to be appropriate in order to prevent dilution or enlargement of a
Participant's rights under the Plan, then an adjustment shall be made, in a
manner that is proportionate to the change to the Common Stock and otherwise
equitable, in the number and kind of Stock Appreciation Rights in a
Participant's Stock Appreciation Account. Upon the effective date of the
dissolution or liquidation of the Company, or of a reorganization, merger, or
consolidation of the Company with one or more other corporations in which the
Company is not the surviving corporation, or of the transfer of substantially
all of the assets or shares of the Company to another corporation, the Plan
shall terminate and all distributions shall be completed five business days
before the scheduled completion of such corporate event unless provision is
made in writing in connection with such corporate event for the continuance of
the Plan and for the assumption of Accounts maintained under the Plan
immediately prior to the effectiveness of such corporate event.
- 5 -
<PAGE> 6
10. Changes to the Plan. The Board may amend, alter, suspend,
discontinue, or terminate the Plan without the consent of stockholders or
Participants; provided, however, that, without the consent of an affected
Participant, no such action may materially impair the rights of such
Participant with respect to any previously deferred Director Fees.
11. General Provisions.
(a) Agreements; Account Statements. The rights or
obligations under the Plan may be evidenced by Agreements or other
documents executed by the Company and the Participant incorporating
the terms and conditions set forth in the Plan, together with such
other terms and conditions not inconsistent with the Plan, as the
Board may from time to time approve. The Secretary of the Company
shall provide each Participant, not less frequently than once per Plan
Year, with an account statement reflecting Account balances under the
Plan, Account transactions during the period covered by the statement,
and such other information as the Secretary of the Company may deem
relevant.
(b) Limitations on Transferability. Rights under the
Plan will not be transferable by a Participant except by will or the
laws of descent and distribution, or to a designated beneficiary in
the event of a Participant's death, except with the prior consent of
the Board. The Company may rely upon the beneficiary designation last
filed in accordance with Section 8(b).
(c) Nonforfeitability. The interest of each Participant
in his or her Account shall be nonforfeitable.
(d) Continued Service as an Employee. If a Participant
ceases to serve as a Director and, immediately thereafter, is employed
by the Company or any subsidiary of the Company, then such Participant
will not be deemed to have ceased to serve as a Director at that time
for the purposes of Section 8(b)(1) of this Plan, and his or her
continued employment by the Company or any subsidiary will be deemed
to be continued service as a Director for the purposes of Section
8(b)(1) of this Plan only.
(e) No Right to Continue as a Director. Nothing
contained in the Plan or any Agreement will confer upon any
Participant any right to continue to serve as a Director of the
Company or to be nominated for re-election as a Director.
(f) No Stockholder Rights Conferred. Nothing contained
in the Plan or any Agreement will confer upon any Participant (or any
person claiming rights by or through a Participant) any rights of a
stockholder of the Company.
(g) Unfunded Status of Accounts. The Plan is intended to
constitute an "unfunded" plan to provide deferred compensation. With
respect to any rights to payment of a Participant under his or her
Account, nothing contained in the Plan or any Agreement shall give any
such Participant any rights that are greater than those of a general
creditor of the Company.
- 6 -
<PAGE> 7
(h) Nonexclusivity of the Plan. The adoption of the Plan
by the Board shall not be construed as creating any limitations on the
power of the Board to adopt such other compensatory arrangements for
Directors as it may deem desirable.
(i) Governing Law. The validity, construction, and
effect of the Plan and any Agreement will be determined in accordance
with the laws of the State of Delaware and applicable federal law.
- 7 -
<PAGE> 1
EXHIBIT 10.30
EAGLE GEOPHYSICAL, INC.
INDEPENDENT DIRECTORS'
STOCK OPTION PLAN
1. Purpose. The purpose of this Independent Directors' Stock Option
Plan (the "Plan") of Eagle Geophysical, Inc. (the "Company") is to promote
ownership by Independent Directors of a greater proprietary interest in the
Company, thereby aligning such Directors' interests more closely with the
interests of stockholders of the Company, and to assist the Company in
attracting and retaining qualified persons to serve as independent Directors.
2. Definitions. In addition to terms defined elsewhere in the Plan, the
following are defined terms under the Plan:
(a) "Code" means the Internal Revenue Code of 1986, as amended.
References to any provision of the Code include regulations thereunder and
successor provisions and regulations.
(b) "Exchange Act" means the Securities Exchange Act of 1934,
as amended. References to any provision of the Exchange Act include rules
thereunder and successor provisions and rules.
(c) "Fair Market Value" of Stock means the closing price of the
Stock on the date on which such value is to be determined, as reported for
such day by the Nasdaq Stock Market's National Market or such other stock
exchange on which the Stock is listed; provided that the Fair Market Value
of Stock on the effective date of the Plan will be the initial public
offering price of the Stock.
(d) "Independent Director" means a Director of the Company who
is not, and has not been during the preceding three months, an employee of
the Company or any parent or subsidiary of the Company, and who is not
entitled to receive any compensation from the Company or any of its
subsidiaries other than (i) directors' fees, (ii) meeting fees, (iii)
reimbursement of expenses incurred in connection with such director
position, and (iv) Options under this Plan.
(e) "Option" means the right, granted to a Participant under
Sections 6 or 7, to purchase Stock at the specified exercise price for a
specified period of time under the Plan.
(f) "Participant" means a Director who is eligible to receive
and is granted Options under the Plan.
(g) "Stock" means the Common Stock, $.01 par value, of the
Company and such other securities as may be substituted for Stock or such
other securities pursuant to Section 8.
<PAGE> 2
3. Shares Available Under the Plan. The total number of shares of Stock
reserved and available for delivery under the Plan is 100,000, subject to
adjustment as provided in Section 8 below. Such shares may be authorized but
unissued shares or treasury shares. If any Option expires or terminates for
any reason without having been exercised in full, the shares remaining subject
to such Option will again be available for delivery under the Plan.
4. Administration of the Plan. The Plan will be administered by the
Board of Directors of the Company; provided, however, that any action by the
Board of Directors relating to the Plan will be taken only if, in addition to
any other required vote, such action is approved by the affirmative vote of a
majority of the Directors who are not then eligible to participate under the
Plan.
5. Eligibility. Each Director of the Company who, on any date on which
an Option is to be granted hereunder, is an Independent Director will be
eligible to receive a grant of an Option at such date. No person other than
those specified in this Section 5 will participate in the Plan.
6. Stock Options. An option to purchase 5,000 shares of Stock will be
granted under the Plan to each person who is an existing Independent Director
of the Company on the effective date of the Plan. Additionally, an option to
purchase 5,000 shares of Stock will be granted under the Plan to each person
who, after the effective date of the Plan, is first elected or appointed to
serve as a Director of the Company, such grant to be effective at the date of
such first selection or appointment, if such Director is then eligible to
receive an Option grant. Also, an Option to purchase 5,000 shares of Stock
will be granted each year to each Director of the Company who is then eligible
to receive an Option grant at the close of business on the day of the Company's
annual meeting of stockholders at which Directors (or a class of Directors if
the Company then has a classified Board of Directors) are elected or reelected
by the Company's stockholders. The foregoing notwithstanding, no Director may
be granted an Option more than once during any one calendar year under the
Plan. No further Options will be granted under the Plan when the remaining
number of shares of Stock reserved for issuance under the Plan upon the
exercise of Options granted under the Plan becomes insufficient to grant
Options as otherwise required by the Plan. Options granted under the Plan will
be non-qualified stock options which will be subject to the following terms and
conditions:
(a) Exercise Price. The exercise price per share of Stock
purchasable under an Option will be equal to 100% of the Fair Market Value
of Stock on the date of grant of the Option.
(b) Option Term. Each Option will expire at the earlier of (i)
five years after the date of grant, (ii) twelve months after the
Participant ceases to serve as a Director of the Company due to death,
disability, or retirement at or after age 65, or (iii) sixty days after
the Participant ceases to serve as a Director of the Company for any
reason other than death, disability, or retirement at or after age 65.
2
<PAGE> 3
(c) Exercisability. Each Option will become fully exercisable
beginning one year after the date of grant, and will thereafter remain
exercisable until the Option expires; provided, however, that an Option
previously granted to a Participant will be exercisable after the
Participant ceases to serve as a Director of the Company for any reason
other than death, disability, or retirement at or after age 65 only if the
Option was exercisable at the date of such cessation of service.
(d) Method of Exercise. Each Option may be exercised, in whole
or in part, at such time as it is exercisable and prior to its expiration
by giving written notice of exercise to the Company specifying the Option
to be exercised and the number of shares to be purchased, and accompanied
by payment in full of the exercise price in cash (including by check) or
by surrender of shares of Stock of the Company acquired by the Participant
prior to the exercise date and having a Fair Market Value at the time of
exercise equal to the exercise price, or a combination of a cash payment
and surrender of such Stock.
7. Initial Grant to Chairman. Notwithstanding anything herein to the
contrary, William L. Lurie, Chairman of the Board of Directors of the Company,
will be granted upon the effective date of the Plan an initial grant of options
to purchase 25,000 shares of Stock in lieu of the automatic grant of options to
purchase 5,000 shares upon the effective date of the Plan. Such options shall
vest in cumulative installments of one- third of the number of shares subject
thereto on each of the first, second and third anniversaries of the effective
date of the Plan and will expire on the tenth anniversary of the date of grant,
subject to earlier expiration 12 months after Mr. Lurie ceases to be a director
for any reason. The exercise price and method of exercise of such Options
shall be as set forth in paragraphs 6(a) and (d) above.
8. Adjustment Provisions. In the event any recapitalization,
reorganization, merger, consolidation, spin-off, combination, repurchase,
exchange of shares or other securities of the Company, stock split or reverse
split, extraordinary dividend having a value in excess of 150% of the quarterly
dividends paid during the preceding twelve-month period, liquidation,
dissolution, or other similar corporate transaction or event affects Stock such
that an adjustment is determined by the Board of Directors to be appropriate in
order to prevent dilution or enlargement of Participants' rights under the
Plan, then the Board of Directors will, in a manner that is proportionate to
the change to the Stock and is otherwise equitable, adjust (i) any or all of
the number or kind of shares of Stock reserved for issuance and delivery under
the Plan, (ii) the number or kind of shares of Stock to be subject to each
automatic grant of Options under Section 6, and (iii) the number and kind of
shares of Stock issuable or deliverable upon exercise of outstanding Options,
and/or the exercise price per share thereof (provided that no fractional shares
will be issued upon exercise of any Option). The foregoing notwithstanding, no
adjustment may be made hereunder except as shall be necessary to preserve,
without exceeding, the value of outstanding Options and potential grants of
Options. If at any date an insufficient number of shares are available for the
automatic grant of Options at that date, Options will be automatically granted
under Section 6 proportionately to Participants to the extent shares are
available.
3
<PAGE> 4
9. Changes to the Plan. The Board of Directors may amend, alter,
suspend, discontinue, or terminate the Plan or authority to grant Options under
the Plan without the consent of stockholders or Participants, except that any
such action will be subject to the approval of the Company's stockholders at
the next annual meeting of stockholders having a record date after the date
such action was taken if such stockholder approval is required by any federal
or state law or regulation or the rules of any automated quotation system or
stock exchange on which the Stock may then be quoted or listed, or if the Board
of Directors determines in its discretion to seek such stockholder approval;
provided, however, that, without the consent of an affected Participant, no
such action may materially impair the rights of such Participant with respect
to any previously granted Option.
10. General Provisions.
(a) Consideration for Grants; Agreements. Options will be
granted under the Plan in consideration of the services of the
Participants and, except for the payment of the Option exercise price upon
exercise of the options, no other consideration shall be required
therefor. Grants of Options will be evidenced by agreements executed by
the Company and the Participant containing the terms and conditions set
forth in the Plan together with such other terms and conditions not
inconsistent with the Plan as the Board of Directors may from time to time
approve.
(b) Compliance with Laws and Obligations. The Company will not
be obligated to issue or deliver Stock in connection with any Option in a
transaction subject to the registration requirements of the Securities Act
of 1933, as amended, or any state securities law, any requirement under
any listing agreement between the Company and any automated quotation
system or national securities exchange, or any other law, regulation or
contractual obligation, until the Company is satisfied that such laws,
regulations, and other obligations of the Company have been complied with
in full. Certificates representing shares of Stock delivered under the
Plan will be subject to such stop-transfer orders and other restrictions
as may be applicable under such laws, regulations, and other obligations
of the Company, including any requirement that a legend or legends be
placed thereon.
(c) Non-transferability. Options and any other right under the
Plan that may constitute a "derivative security" as generally defined in
Rule 16a-1(c) under the Exchange Act will not be transferable by a
Participant except by will or the laws of descent and distribution (or to
a designated beneficiary in the event of a Participant's death), and will
be exercisable during the lifetime of a Participant only by such
Participant or his or her guardian or legal representative.
(d) Compliance with Rule 16b-3. It is the intent of the
Company that this Plan comply in all respects with applicable provisions
of Rule 16b-3 under the Exchange Act in connection with any grant of
Options to a Participant. Accordingly, this Plan and the grants to be
made hereunder shall be made under a formula plan as referred to in Note
4
<PAGE> 5
(3) to Rule 16b-3. If any provision of this Plan or any agreement
hereunder does not comply with the requirements of Rule 16b-3 as then
applicable to any such grant to a Participant, such provision will be
construed or deemed amended to the extent necessary to conform to such
requirements with respect to such Participant. In addition, the Board of
Directors shall have no authority to make any amendment, alteration,
suspension, discontinuation, or termination of the Plan or any agreement
hereunder, to make any adjustment under Section 8, or take other action if
and to the extent such authority would cause a Participant's transactions
under the Plan not to be exempt under Rule 16b-3 under the Exchange Act.
(e) Continued Service as an Employee. If a Participant ceases
to serve as a Director and, immediately thereafter, is employed by the
Company or any subsidiary of the Company, then solely for purposes of
Sections 6(b) and (c) of the Plan, such Participant will not be deemed to
have ceased service as a Director at that time, and his or her continued
employment by the Company or any subsidiary will be deemed to be continued
service as a Director; provided, however, that such former Director will
not be eligible for additional grants of Options under the Plan.
(f) No Right to Continue as a Director. Nothing contained in
the Plan or any agreement hereunder will confer upon any Participant any
rights to continue to serve as a Director of the Company or to be
nominated for re-election as a Director.
(g) No Stockholder Rights Conferred. Nothing contained in the
Plan or any agreement hereunder will confer upon any Participant any
rights of a stockholder of the Company unless and until an Option is duly
exercised hereunder.
(h) Governing Law. The validity, construction, interpretation
and effect of the Plan and all rights of any of the persons having or
claiming to have any interest in the Plan shall be governed by the laws of
the State of Delaware.
11. Effective Date and Duration of Plan. The Plan will be effective upon
consummation of the initial public offering of the Company's Stock. Unless
earlier terminated by action of the Board of Directors, the Plan will remain in
effect until such time as no Stock remains available for issuance or delivery
under the Plan and the Company has no further rights or obligations with
respect to outstanding Options under the Plan.
5
<PAGE> 1
EXHIBIT 10.31
1997 STOCK OPTION PLAN
EAGLE GEOPHYSICAL, INC.
Eagle Geophysical, Inc., a Delaware corporation (the "Company"),
hereby establishes and adopts the following 1997 Stock Option Plan (the
"Plan"):
I. PURPOSE
The Plan is intended as an employment incentive, to retain in the
employment of the Company and its subsidiaries persons of experience and
ability, to attract new employees whose services are considered unusually
valuable, to encourage the sense of proprietorship of such persons, and to
stimulate the active interest of such persons in the development and financial
success of the Company.
II. DEFINITIONS
As used in this Plan, the following words and phrases shall have the
following meanings:
(1) Board of Directors or "Board" shall mean the Board of
Directors of the Company.
(2) Code shall mean the Internal Revenue Code of 1986, as
amended.
(3) Committee shall mean the Compensation Committee of
the Board or such other committee of the Board designated by the Board
to administer the Plan as provided herein.
(4) Company means Eagle Geophysical, Inc. and any
successor thereto by merger, consolidation, liquidation or other
reorganization which has made provision for adoption of the Plan and
the assumption of the Company's obligations hereunder.
(5) Eligible Employee shall mean any person who is
employed by the Company or a Subsidiary, including, but not limited
to, any employee who is also an officer and director of the Company or
a Subsidiary, but not including any director who serves on the
Committee.
(6) Fair Market Value of a share of Common Stock of the
Company shall mean the closing sales price per share of such stock as
reported in the Wall Street Journal (or any other nationally
recognized newspaper or other source should such price not be
published in the Wall Street Journal) as of the applicable date.
(7) Options shall mean the Incentive Stock Options and
the Non-Qualified Stock Options granted from time to time under the
Plan. If Options are
1
<PAGE> 2
not designated as Incentive Stock Options or Non-Qualified Stock
Options at the time of grant, the number of Options granted which
qualify for treatment as Incentive Stock Options under the Code will
be Incentive Stock Options, and the remainder of such Options, if any,
will be Non-Qualified Stock Options.
(8) Participant shall mean an Eligible Employee who has
been designated by the Committee to participate in the Plan.
(9) Subsidiary shall mean any corporation to which the
Company is a "parent corporation" as defined in Section 424(e) of the
Code.
(10) Incentive Stock Option shall mean a stock option granted
under the Plan that is intended to be an incentive stock option within
the meaning of Section 422 of the Code.
(11) Non-Qualified Stock Option shall mean a stock option
granted under the Plan that is not an incentive stock option within
the meaning of Section 422 of the Code.
III. DURATION
The Plan will be effective upon consummation of the initial public
offering of the Company's Common Stock (the "Effective Date"), subject to
approval of the Plan by the Company's shareholders within twelve months after
the Effective Date. No Option shall be granted pursuant to the Plan more than
ten years after the Effective Date.
IV. ADMINISTRATION
The Plan will be administered as follows:
Committee
The Plan shall be administered by the Committee as it may be
constituted by the Board from time to time. The Committee shall consist solely
of two or more members of the Board who are outside directors within the
meaning of Section 162(m) of the Code.
Committee Powers
The Committee shall be deemed to have and to be exercising all of the
powers of the Board in the performance of any of the powers and duties
delegated to it under the Plan, including, without limitation, the selection of
Participants, the determination of the number of shares for which each
Participant shall be granted an Option, and all other terms and conditions of
each Option to the extent not inconsistent with the Plan. The Committee may
from time to time establish eligibility requirements for participation in the
Plan and rules for the administration of the Plan that are not inconsistent
with the provisions and purposes of the Plan. The
2
<PAGE> 3
Committee shall have the authority, exercisable in its sole discretion, to
grant various forms of Options containing such terms and conditions, consistent
with the provisions of this Plan, as the Committee shall determine.
Committee Action
A majority of the members of the Committee shall constitute a quorum.
All action taken by the Committee at a meeting shall be by the vote of a
majority of those present at such meeting, but any action may be taken by the
Committee without a meeting upon written consent signed by all of the members
of the Committee. Members of the Committee may participate in a meeting by
means of conference telephone or similar communications equipment by means of
which all persons participating in the meeting can hear each other. The
Committee shall appoint a secretary and shall keep minutes of its meetings,
including those conducted by telephone conference.
Committee Determination Conclusive
The determination of the Committee as to any disputed question arising
under the Plan, including questions of construction and interpretation, shall
be final, binding, and conclusive upon all persons. Without limiting the
generality of the foregoing, the determination of the Committee as to whether a
Participant has terminated his employment and the date thereof, or the cause to
which termination of employment is attributable, shall be final, binding, and
conclusive upon all persons.
Committee Liability
No member of the Committee or of the Board as a whole shall be liable
to any person for any action taken or omitted in connection with the
interpretation or administration of the Plan unless attributable to such
member's own willful misconduct or lack of good faith.
Expenses of Administration
All expenses of administration of the Plan shall be borne by the
Company, and no part thereof shall be directly charged against the
Participants.
V. SHARES SUBJECT TO THE PLAN
Subject to adjustment as provided in Section VIII hereof, a total of
One Million One Hundred Thousand (1,100,000) shares of Common Stock of the
Company (the "Shares") shall be subject to the Plan. The Shares shall consist
of unissued shares or previously issued shares reacquired and held by the
Company, and such number of shares shall be and is hereby reserved for sale for
such purpose. Any of the Shares which remain unsold and which are not subject
to outstanding Options at the termination of the Plan shall cease to be
reserved for the purpose of the Plan, but until termination of the Plan, the
Company shall at all times reserve a sufficient number of Shares to meet the
requirements of the Plan. Should any Option expire or be
3
<PAGE> 4
cancelled prior to its exercise, the Shares theretofore subject to such Option
may again by subjected to an Option under the Plan.
VI. PARTICIPATION
Participation in the Plan will be subject to the following:
Eligibility
Employees of the Company or a Subsidiary who are in a position to
materially contribute to the Company's or such Subsidiary's success shall be
eligible for participation under the Plan. Eligible Employees shall include,
but shall not necessarily be limited to, officers and directors of the Company
or a Subsidiary. Members of the Board of Directors or the board of directors
of a Subsidiary shall not be Eligible Employees solely by virtue of their being
directors of the Company or such Subsidiary, but directors otherwise qualified
shall be eligible to participate.
Participants
The Committee shall determine and designate from time to time those
management, professional and key employees of the Company and its Subsidiaries,
including officers and directors active in capacities other than as directors
only, to whom Options are to be granted and who thereby become Participants in
the Plan. A designation of an Eligible Employee to participate shall not
automatically entitle such Participant to participate with respect to future
Options.
VII. PLAN OPERATION
The Plan shall operate according to the following general guidelines:
Time of Granting Options
Neither anything contained in the Plan or in any resolution adopted or
to be adopted by the Board of Directors or the stockholders of the Company nor
any action taken by the Committee shall constitute the granting of any Option.
The granting of an Option shall take place only when a written option agreement
shall have been duly executed and delivered by or on behalf of the Company and
the Participant to whom such Option has been granted. No Option shall be
granted following the expiration of ten (10) years from the earlier of (i) the
Effective Date of this Plan as stated in Article III, or (ii) approval of this
Plan by the shareholders of the Company.
Option Price
The purchase price of each Share placed under an Incentive Stock
Option shall be determined by the Committee, but shall in no event be less than
one hundred percent (100%) of the Fair Market Value of such Share on the date
the Incentive Stock Option is granted. However,
4
<PAGE> 5
the purchase price of each Share placed under an Incentive Stock Option to a
Participant who owns stock possessing more than ten percent (10%) of the total
combined voting power of all classes of stock of the Company or any Subsidiary
at the time of the grant shall be a least one hundred and ten percent (110%) of
the Fair Market Value of such Share on the date the Option is granted. The
purchase price of each Share placed under a Non-Qualified Stock Option shall be
determined by the Committee, and may be less than, equal to, or greater than
the Fair Market Value of such Share on the date the Non-Qualified Stock Option
is granted.
Option Period and Terms
No Option shall be exercisable after the expiration of ten (10) years
from the date such Option is granted. However, if the Participant to whom an
Incentive Stock Option is granted owns stock possessing more than ten percent
(10%) of the total combined voting power of all classes of stock of the Company
or any Subsidiary at the time such Incentive Stock Option is granted, such
Incentive Stock Option shall not be exercisable after the expiration of five
(5) years from the date such Incentive Stock Option is granted. Subject to the
provisions of the Plan, the Committee shall determine the terms and conditions
of each Option granted under the Plan, including the number of Shares covered
by the Option, and the time or times of exercise of the Option (which may be
for a term of up to ten (10) years from the date the Option is granted, or, in
the discretion of the Committee, may be for a shorter term designated by the
Committee). The Committee may provide that an Option shall not be exercisable
for a designated period of time after grant. The Committee may provide that
failure to exercise an Option as to the exercisable portion of the Option
during a specific time shall constitute a forfeiture of the right to exercise
such Option after termination of that time period. So long as consistent with
the provisions of the Plan, the terms and conditions of any Option need not be
the same as the terms and conditions of any other Option.
Maximum Annual Amount Per Employee
The aggregate fair market value (determined as of the time the
Incentive Stock Option is granted) of the stock with respect to which Incentive
Stock Options are exercisable for the first time by any Participant during any
calendar year (under this and any other plans of the Company or any Subsidiary)
shall not exceed $100,000.
Exercise of Options
No Incentive Stock Option may be exercised unless the Participant
shall have been an employee of the Company or a Subsidiary at all times during
the period beginning on the date of grant of the Option and ending on the day
three (3) months before the date of such exercise. However, if a Participant
becomes disabled (within the meaning of Section 22(e)(3) of the Code) or dies,
no Incentive Stock Option may be exercised by such Participant after such
disability, or by the estate of such Participant or a person who acquired the
right to exercise such Option by bequest or inheritance or by reason of the
death of such Participant, unless the Participant shall have been an employee
of the Company or a Subsidiary at all times during the period beginning on the
date of grant of the Incentive Stock Option and ending on the date one (l) year
before the
5
<PAGE> 6
date of such exercise. Options may be exercised solely by the Participant
during his lifetime, or after his disability by his legal representative on his
behalf, or after his death by the personal representative of the Participant's
estate or the person or persons entitled thereto under his will or under the
laws of descent and distribution.
The purchase price of the Shares as to which an Option is exercised
shall be paid in full in cash and/or other property, including stock of the
Company, as deemed acceptable by the Committee, at the time of the exercise.
Without limiting the generality of the foregoing, the Committee shall have the
power to establish procedures from time to time for Participants: (1) to pay
the exercise price of an Option by withholding from the total number of Shares
to be acquired upon exercise of an Option that number of Shares having a Fair
Market Value equal to the aggregate exercise price; (2) to have withheld from
the total number of Shares to be acquired, in the same manner as (1) above, the
withholding obligation for federal and state income and other taxes; and (3) to
exercise a portion of the Option by delivering already-owned shares of Common
Stock of the Company in payment of the exercise price. A Participant shall not
be or have any of the rights or privileges of a shareholder of the Company in
respect of any Shares purchasable upon the exercise of any part of an Option
unless and until certificates representing such Shares shall have been issued
by the Company to such Participant.
Use of Proceeds
The proceeds received by the Company from the sale of stock pursuant
to this Plan will be used for general corporate purposes.
VIII. CAPITAL CHANGES OF THE COMPANY
In the event there is any change in the Common Stock of the Company
through the declaration of stock dividends, or through recapitalization
resulting in stock splits, or combinations or exchanges of shares, or any
similar transactions, the number of Shares subject to Options previously
granted and the number of Shares remaining available for Options and the price
per Share of such Shares shall be appropriately adjusted by the Committee.
In the event the Company shall be a party to any merger, consolidation
or corporate reorganization, as the result of which the Company shall be the
surviving corporation, the rights and duties of the Participants and the
Company shall not be affected in any manner. In the event the Company shall
sell all or substantially all of its assets or shall be a party to any merger,
consolidation or corporate reorganization, as the result of which the Company
shall not be the surviving organization, or in the event any other corporation
may make a tender or exchange offer for stock of the Company (the surviving
corporation, purchaser, or tendering corporation being hereinafter collectively
referred to as the "purchaser," and the transaction being hereinafter referred
to as the "purchase"), then the Board of Directors may, at its election, (i)
reach an agreement with the purchaser that the purchaser will assume the
obligations of the Company as to all outstanding Options; (ii) reach an
agreement with the purchaser that the purchaser will convert each outstanding
Option into an option of at least equal value as to stock of the purchaser; or
(iii) not later than thirty (30) days prior to the effective date of the
purchase, notify
6
<PAGE> 7
all Participants that their Options are accelerated and afford to each
Participant a right for ten (10) days after the date of such notice to exercise
any then unexercised portion of all Options held by him whether or not such
Options shall then be exercisable under the terms of the Plan or his option
agreement; and within such ten day period, each such Participant may exercise
any portion of any Option as he may desire.
IX. LIMITATION OF RIGHTS
Participation in this Plan is subject to certain limitations:
Limitations
Nothing in this Plan shall be construed to:
(1) give any employee of the Company or a Subsidiary any
right to be designated a Participant herein, other than in the sole
discretion of the Committee;
(2) give a Participant any rights whatsoever with respect
to Shares until Options are exercised and Shares are issued to the
Participant;
(3) give a Participant or any person any interest in any
fund or in any specific asset or assets of the Company;
(4) limit in any way the right of the Company or a
Subsidiary to terminate a Participant's employment with the Company or
a Subsidiary at any time; or
(5) be evidence of any agreement or understanding,
express or implied, that the Company or a Subsidiary will employ a
Participant in any particular position or at any particular rate of
remuneration.
Nonassignability of Options
Options shall not be transferable other than by will or by the laws of
descent and distribution, and during a Participant's lifetime shall be
exercisable only by him (unless he becomes disabled, in which event they may be
exercised by his legal representative).
Power of the Company
The existence of outstanding Options shall not affect in any way the
right or power of the Company or its subsidiaries or their stockholders to make
or authorize any or all adjustments, recapitalization, reorganization or other
changes in the capital structure of the Company or its Subsidiaries or their
businesses, or any merger or consolidation of the Company or its Subsidiaries
or any issue of bonds, debentures, preferred stock or the right to acquire any
thereof, or the dissolution or liquidation of the Company or its Subsidiaries,
or any sale or transfer of all
7
<PAGE> 8
or any part of their assets or business, or any other corporate act or
proceeding whether of a similar character or otherwise.
X. TERMINATION AND AMENDMENT OF THE PLAN
The Plan shall terminate upon the expiration of ten years after the
Effective Date and no Options shall be granted after that date. The Board of
Directors may amend, alter, or discontinue the Plan, but no amendment or
alteration shall be made which would impair the rights of any Participant under
any Option theretofore granted, without his consent, unless his Option
Agreement so provides. The Board of Directors may at any time and from time to
time modify or amend the Plan in such respects as it shall deem advisable in
order that the Options intended to be Incentive Stock Options satisfy the
applicable provisions of the Code.
XI. GOVERNMENT REGULATIONS
The Plan, and the granting and exercise of Options thereunder, and the
obligation of the Company to sell and deliver Shares under such Options, shall
be subject to all applicable laws, rules and regulations, and to such approvals
by any governmental agencies or national securities exchanges as may be
required.
Purchase for Investment
Whether or not the Options and Shares covered by the Plan have been
registered under the Securities Act of 1933, as amended, each Participant
exercising an Option may be required by the Company to give a representation in
writing that he is acquiring such Shares for his own account for investment and
not with a view to, or for sale in connection with, the distribution of any
part thereof.
Governing Law
The place of administration of the Plan shall be conclusively deemed
to be within the State of Texas; and the validity, construction, interpretation
and effect of the Plan and all rights of any of the persons having or claiming
to have any interest in the Plan shall be governed by the laws of the State of
Texas.
8
<PAGE> 1
EXHIBIT 10.32.1
FORM OF
PROMISSORY NOTE
U.S.$400,000.00 ____________, 1997
FOR VALUE RECEIVED, after date, without grace, in the manner, on the
dates and in the amounts so herein stipulated, the undersigned, JAY N.
SILVERMAN ("Borrower"), PROMISES TO PAY TO THE ORDER OF EAGLE GEOPHYSICAL,
INC., a Delaware corporation ("Lender"), 50 Briar Hollow Lane, 6th Floor West,
Houston, Harris County, Texas 77027, the sum of FOUR HUNDRED THOUSAND DOLLARS
AND NO/100'S ($400,000.00) in lawful money of the United States of America,
which shall be legal tender in payment of all debts and dues, public and
private, at the time of payment, and to pay interest on the unpaid principal
amount until maturity at a fixed rate of six percent (6%) per annum.
This Note is payable as follows:
Payments of accrued interest shall be payable monthly on the
last day of each month beginning on _____________, 1997 through and
including _______________, 2000;
Equal monthly payments of interest and principal, based on a
60 month amortization, shall be payable monthly on the last day of
each month beginning on __________, 2000 through and including
__________, 2005; and
On _____________, 2005, the entire balance of principal and
accrued interest shall be due and payable.
It is agreed that time is of the essence of this Note. In the event
of default in the payment of any installment of principal or interest when due
or in the event of any other default hereunder, Lender may accelerate and
declare this Note immediately due and payable without notice and opportunity to
cure. Any failure to exercise this option shall not constitute a waiver by
Lender of the right to exercise the same at any other time.
In the event of default in the making of any payment herein provided,
either of principal or interest, or in the event this Note is declared due,
interest shall accrue at the maximum non-usurious interest rate permitted by
applicable law from time to time in effect as such law may be interpreted,
amended, revised, supplemented or enacted (the "Maximum Rate").
Borrower hereby agrees to pay all expenses incurred, including
reasonable attorneys' fees, all of which shall become a part of the principal
hereof, if this Note is placed in the hands of an
_________
Initials
<PAGE> 2
attorney for collection or if collected by suit or through any probate,
bankruptcy or any other legal proceedings.
Interest charges will be calculated on amounts advanced hereunder on
the actual number of days these amounts are outstanding on the basis of a
365-day or 366-day year, as is applicable. It is the intention of the parties
hereto to comply with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provision to the contrary in this Note, or in any of the
documents securing payment hereof or otherwise relating hereto, no such
provision shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in this Note or in
any of the documents securing payment hereof or otherwise relating hereto, then
in such event (1) the provisions of this paragraph shall govern and control,
(2) neither Borrower, endorsers or guarantors, nor their heirs, legal
representatives, successors or assigns nor any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Maximum Rate, (3) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal amount hereof or refunded to Borrower, and (4) the provisions of this
Note and any documents securing payment of this Note shall be automatically
reformed so that the effective rate of interest shall be reduced to the Maximum
Rate. For the purpose of determining the Maximum Rate, all interest payments
with respect to this Note shall be amortized, prorated and spread throughout
the full term of the Note so that the effective rate of interest on account of
this Note is uniform throughout the term hereof.
Borrower agrees that the Maximum Rate to be charged or collected
pursuant to this Note shall be the applicable indicated rate ceiling as defined
in TEX. REV. CIV. STAT. ANN. Art. 5069-1.04, provided that Lender may rely on
other applicable laws, including without limitation laws of the United States,
for calculation of the Maximum Rate if the application thereof results in a
greater Maximum Rate. Except as provided above, the provisions of this Note
shall be governed by the laws of the State of Texas.
Each maker, surety, guarantor and endorser waives demand, grace,
notice, presentment for payment, notice of intention to accelerate the maturity
hereof, notice of acceleration of the maturity hereof and protest, and agrees
that this Note may be renewed, and the time of payment extended from time to
time, without notice and without releasing any of the foregoing.
Borrower may prepay this Note, in whole or in part, at any time prior
to maturity without penalty, and interest shall cease on any amount prepaid.
Any partial prepayment shall be applied toward the payment of the principal
installments last maturing on the Note, that is, in the inverse order of
maturity, without reducing the amount or time of payment of the remaining
installments.
Borrower agrees that all disputes in any way relating to, arising
under, connected with, or incident to this Note, and over which the United
States federal courts have subject matter jurisdiction, shall be litigated, if
at all, exclusively in the United States District Court for the Southern
District of Texas, Houston Division, and, if necessary, the corresponding
appellate courts. Borrower further agrees that all disputes in any way
relating to, arising under, connected
________
Initials
-2-
<PAGE> 3
with, or incident to this Agreement, and over which the United States federal
courts do not have subject matter jurisdiction, shall be litigated, if at all,
exclusively in the Courts of the State of Texas, in Harris County, and, if
necessary, the corresponding appellate courts. Borrower hereby submits itself
to the personal jurisdiction of, and consents to venue in, any such court, and
hereby waives any claim it may otherwise have that such court lacks personal
jurisdiction over it, or that such court is an inconvenient forum, with respect
to any matter or proceeding arising out of this Note. Borrower further agrees
to voluntarily appear and to enter a general appearance in any proceeding
arising out of this Note which is brought in any such court. Borrower agrees
that service of process in any matter or proceeding relating hereto may be
effected upon it by certified or registered mail to the address specified in
the first paragraph of this Note or such other address as Borrower may
designate in writing to Lender from time to time.
The proceeds from this Note will be used by Borrower to purchase
25,000 shares of common stock of Lender, $.01 par value (the "Stock"), pursuant
to that certain Subscription Agreement dated as of _______, 1997, by and
between Borrower and Lender, and this Note is secured by a pledge of the Stock
pursuant to that certain Security Agreement- Pledge of even date herewith.
----------------------------------------
Jay N. Silverman
-3-
<PAGE> 1
EXHIBIT 10.32.2
FORM OF
SUBSCRIPTION AGREEMENT
This Subscription Agreement (this "Agreement") is made and entered
into as of this _____ day of _________, 1997, by and between EAGLE GEOPHYSICAL,
INC., a Delaware corporation ("Eagle"), and JAY N. SILVERMAN ("Silverman"), and
relates to the subscription by Silverman for 25,000 shares of common stock of
Eagle.
NOW, THEREFORE, in consideration of the mutual promises contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties agree as follows:
1. ISSUANCE OF STOCK AND PAYMENT.
(a) Subscription. Eagle agrees to sell to Silverman, and
Silverman agrees to purchase from Eagle, 25,000 shares (the "Shares")
of common stock of Eagle (the "Stock"), at a per share price of $16,
for an aggregate purchase price of $400,000 (the "Purchase Price"),
subject to the provisions of Section 1(c) hereof.
(b) Payment of Purchase Price. Silverman shall deliver
the Purchase Price by executing a promissory note in the original
principal amount of $400,000 (the "Note") payable to Eagle
concurrently with the execution and delivery hereof.
(c) Purchase Price Adjustment. In the event the initial
public offering price of the Stock in connection with the Registration
Statement on Form S-1 (Registration No. 333-28303) filed with the
Securities and Exchange Commission by Eagle is determined to be less
than $16.00 per share of Stock, the Purchase Price shall be adjusted
downward accordingly, and the principal amount of the Note shall be
credited in an amount equal to the difference between the Purchase
Price as defined in Section 1(a) hereof and the adjusted Purchase
Price, which shall be based upon the actual initial public offering
price per share.
2. DELIVERY OF SHARE CERTIFICATE. Promptly upon receipt of the
Purchase Price, Eagle shall issue a share certificate or certificates
representing the Shares to Silverman and shall promptly deliver such
certificate or certificates to Silverman.
3. REPRESENTATIONS AND WARRANTIES OF EAGLE. In order to induce
Silverman to purchase the Shares and to otherwise consummate the transactions
contemplated by this Agreement, Eagle represents and warrants as follows:
(a) Status of Eagle. Eagle is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Delaware, and has full corporate
<PAGE> 2
power to carry on its business as the same is now conducted and to own
or lease its assets as the same are now being owned or leased.
(b) Silverman's Title upon Consummation. Upon
consummation of the transactions contemplated by this Agreement in
accordance with the terms hereof, Silverman shall be vested with good
and marketable title to the Shares, free and clear of any liens,
claims, charges or other encumbrances or restrictions whatsoever,
except as set forth in Eagle's Certificate of Incorporation, as
amended, or Eagle's Amended and Restated Bylaws or otherwise arising
by operation of law. The Shares, when issued and delivered pursuant
to this Agreement, will be validly issued, fully paid and
nonassessable.
(c) Authority for Agreement. Eagle has the full right,
power and authority to enter into this Agreement and to perform its
obligations hereunder. This Agreement has been duly and validly
executed and delivered by Eagle and constitutes a valid and binding
obligation of Eagle, enforceable against Eagle in accordance with its
terms, subject to the effect of bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar laws relating
to or affecting the rights of creditors generally or upon general
principles of equity and the availability of injunctive relief or
other equitable remedies, whether enforcement is considered at law or
in equity (hereinafter the "Bankruptcy and Equitable Exceptions").
(d) Litigation, Etc. There is no action, proceeding or
investigation pending or (to the knowledge of Eagle) threatened (or
any reasonable basis therefor known to Eagle) which (i) questions the
validity of this Agreement or any of the transactions contemplated
hereby or (ii) if adversely determined, could reasonably be expected
to result, either in any case or in the aggregate, in a material
adverse effect on the business of Eagle. Eagle has no material
contingent or undisclosed liabilities as of the date hereof.
4. REPRESENTATIONS AND WARRANTIES OF SILVERMAN. In order to
induce Eagle to issue and sell the Shares to Silverman and to otherwise
consummate the transactions contemplated by this Agreement, Silverman
represents and warrants as follows:
(a) Acquisition for Own Account. Silverman is acquiring
the Shares for his own account, for investment and not with a view to
the sale or distribution thereof or with any present intention of
distributing or selling the same, or dividing the Shares with other
persons.
(b) Securities Law Restrictions. Silverman will not
sell, assign, transfer, pledge or otherwise dispose of any of the
Shares except in accordance with the provisions of applicable state
and federal securities laws.
2
<PAGE> 3
(c) No Public Solicitation. Eagle has not offered the
Shares to Silverman by means of advertising or other form of public
solicitation.
(d) Investment Risk. Silverman has such knowledge and
experience in financial business matters as to be capable of
evaluating the merits and risks of investment in the Shares.
Silverman acknowledges that Eagle is a combination of Seitel
Geophysical, Inc. and Energy Research International and its operating
subsidiaries with no operating history and that his investment in the
Shares is highly speculative and involves a high degree of risk;
Silverman further acknowledges that he is capable of sustaining a loss
of the Purchase Price paid for the Shares. This representation does
not constitute a waiver by Silverman of any liability on the part of
Eagle for its breach of any representations, warranties, conditions or
covenants contained herein.
(e) Information Provided. Silverman has had the
opportunity to ask questions of, and receive satisfactory answers
from, the executive management of Eagle regarding Eagle and the
Shares, including the terms and conditions of this Agreement and the
proposed business plan of Eagle and related matters. Silverman has
had the opportunity to obtain the information necessary to satisfy
himself concerning the answers so obtained. Nothing contained herein
shall be interpreted to relieve the responsibility of Eagle to provide
adequate and accurate disclosure in the representations and warranties
contained in this Agreement.
(f) Accredited Investor. Silverman is an "accredited
investor" as said term is defined in Rule 501 of Regulation D under
the Securities Act of 1933, as amended (the "Securities Act"), in that
he is an executive officer of Eagle.
(g) Legend, Etc. Silverman acknowledges and agrees that
(i) the certificates representing the Shares will contain the legend
referred to in Section 5 hereof, (ii) the Shares are not registered
under the Securities Act or any other federal or state law, (iii)
Silverman will have no right to require such registration and must
bear the economic risks of their investment for an indefinite period
of time and are capable of bearing such risk, and (iv) the Shares are
a nonliquid investment and there is not now and there may never be any
public market for the Shares and Silverman cannot now and may never be
able to avail himself of the benefits of Rule 144 adopted by the
Securities and Exchange Commission with respect to the resale of the
Shares.
(h) Authority for Agreement. Silverman has the full
right, power and authority to enter into this Agreement and to perform
his obligations hereunder. This Agreement has been duly and validly
executed and delivered by Silverman and constitutes a valid and
binding obligation of Silverman, enforceable against Silverman in
accordance with its terms, subject to the Bankruptcy and Equitable
Exceptions.
(i) No Other Representations. Eagle and its directors,
officers and employees have made no representations, promises or
projections regarding the future financial
3
<PAGE> 4
status or competitive success of Eagle or its operations. Silverman
understands that except as set forth herein, Eagle makes no
representations or warranties whatsoever, and disclaims all liability
and responsibility for any representation, warranty, statement or
information made or communicated (orally or in writing) to Silverman
other than as specifically set forth herein.
5. STOCK LEGEND. Each stock certificate evidencing the Shares,
including any such stock certificates representing Shares issued to subsequent
transferees as permitted hereunder, shall be stamped or otherwise imprinted
with a legend in substantially the following form:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED
EXCEPT BY OPERATION OF LAW UNLESS (1) A REGISTRATION STATEMENT WITH
RESPECT TO SUCH SHARES SHALL BE EFFECTIVE UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR (2) THE CORPORATION SHALL HAVE RECEIVED AN
OPINION OF COUNSEL SATISFACTORY TO IT THAT NO VIOLATION OF SUCH ACT
WILL BE INVOLVED IN SUCH TRANSFER, OR (3) THE CORPORATION SHALL HAVE
RECEIVED A "NO ACTION" LETTER FROM THE SECURITIES AND EXCHANGE
COMMISSION COVERING SUCH TRANSFER."
6. MISCELLANEOUS.
(a) Notices. All notices, requests and other
communications hereunder shall be deemed to have been duly given if in
writing and either delivered personally, sent by facsimile
transmission or by air courier service, or mailed by postage prepaid
registered or certified U.S. mail, return receipt requested, to the
addresses designated below or such other addresses as may be
designated in writing by notice given hereunder, and shall be
effective upon personal delivery or facsimile transmission thereof or
72 hours following deposit in the U.S. mail or 24 hours following
deposit with an air courier service:
IF TO EAGLE: Eagle Geophysical, Inc.
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Attn: Richard W. McNairy
Telephone: (713) 627-1990
Facsimile: (713) 627-1027
4
<PAGE> 5
IF TO SILVERMAN: Jay N. Silverman
Eagle Geophysical, Inc.
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Telephone: (713) 627-1990
Facsimile: (713) 627-1020
(b) Governing Law. This Agreement shall be construed and
governed in accordance with the laws of the State of Texas, without
giving effect to any conflict of law rules or provisions.
(c) Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but
all of which together shall constitute one and the same Agreement.
(d) Entire Agreement. Except as otherwise specifically
provided herein, this Agreement constitutes the entire agreement
between the parties hereto with respect to the subject matter hereof.
No modification, amendment or waiver of any provision hereof shall be
binding upon any party hereto unless it is in writing and executed by
all of the parties hereto or, in the case of a waiver, by the party
waiving compliance.
(e) Waiver. The waiver by any party hereto of any
breach, default, misrepresentation or breach of warranty or covenant
hereunder, whether intentional or not, shall not be deemed to extend
to any prior or subsequent breach, default, misrepresentation or
breach of warranty or covenant hereunder and shall not affect in any
way any rights arising by virtue of any such prior or subsequent
occurrence.
(f) Severability. In the event any one or more of the
provisions contained in this Agreement or any application thereof
shall be finally determined by a court of competent jurisdiction to be
invalid, illegal or unenforceable in any respect, any other
application thereof and the validity, legality, or enforceability of
the remaining provisions of this Agreement shall not in any way be
affected or impaired thereby.
(g) Rule 405 Employee Benefit Plan. This Agreement is
intended to be an Employee Benefit Plan within the meaning of Rule 405
under the Securities Act.
(h) Expenses. Each party hereto shall pay all costs and
expenses incurred or to be incurred by it in negotiating and preparing
this Agreement and in closing and effectuating the transactions
contemplated hereby.
(i) Section Headings. The section headings contained
herein are for reference purposes only and shall not in any way affect
the meaning or interpretation of this Agreement.
5
<PAGE> 6
(j) Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the legal representatives,
successors and permissible assigns of the parties hereto, whether so
expressed or not, except as specifically otherwise provided.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement as of the date first above written, with the intention of being
legally bound hereby.
EAGLE GEOPHYSICAL, INC.
BY:
------------------------------------
RICHARD W. MCNAIRY,
VICE PRESIDENT-
CHIEF FINANCIAL OFFICER
----------------------------------------
JAY N. SILVERMAN
6
<PAGE> 1
10.32.3
SECURITY AGREEMENT - PLEDGE
BY AND BETWEEN
JAY N. SILVERMAN
("Debtor")
AND
EAGLE GEOPHYSICAL, INC.
("Secured Party")
DATED EFFECTIVE THE _____ DAY OF ____________, 1997
<PAGE> 2
SECURITY AGREEMENT - PLEDGE
Jay N. Silverman (the "Debtor"), and Eagle Geophysical, Inc., a Delaware
corporation (the "Secured Party"), agree as follows:
Section 1. General Terms
1.1 Secured Obligations. Debtor hereby grants to Secured Party a
security interest in the property described in Section 1.2 of this Agreement
(the "Collateral") to secure the performance and payment of all obligations and
indebtedness of Debtor to Secured Party arising under or in connection with (i)
that certain Promissory Note in the original principal amount of $400,000
executed by Debtor in favor of Secured Party of even date herewith (the "Note")
and, (ii) this Agreement (all of the foregoing described in this Section 1
being the "Secured Indebtedness").
1.2 The Collateral. The Collateral of this Agreement is 25,000
shares of Common Stock of Secured Party issued in the name of Debtor currently
in the possession of, and to be delivered in the future to, Secured Party
("Pledged Stock"). "Collateral" as used in this Agreement includes the
Pledged Stock and, without limitation, any stock rights, rights to subscribe,
liquidating dividends, stock dividends, property, cash distributions, dividends
paid in stock, new securities, cash dividends or other property which Debtor
may hereafter become entitled to receive on account of the Collateral. In the
event Debtor receives any such property, Debtor will immediately deliver same
to Secured Party to be held by Secured Party in the same manner as the property
originally deposited as Collateral. The Collateral of this Agreement also
includes the proceeds of any and all property described above including goods
and intangible personal property.
Section 2. Representations and Warranties
Debtor represents, warrants and agrees that:
2.1 Validity, Enforceability. This Agreement has been duly executed
and delivered by Debtor and constitutes a legal, valid and binding obligation
of Debtor, enforceable against Debtor in accordance with its terms, except as
the same may be limited by bankruptcy, insolvency or other similar laws
affecting creditors' rights generally and by general equity principles.
2.2 Ownership of Collateral. Debtor is the legal and equitable owner
of the Collateral free and clear of all other liens, security interests,
charges and encumbrances of every kind and nature. The Collateral is duly
authorized, validly issued, fully paid and non-assessable; Debtor has legal
title to the Collateral and good right and lawful authority to pledge, assign
and deliver the Collateral in the manner hereby done or contemplated; and no
consent or approval of any governmental body or regulatory authority, or any
securities exchange, is or will be necessary for the rights created under this
Agreement to be valid as to the Collateral.
2.3 Defending the Collateral. Debtor will defend the Collateral and
its proceeds against the claims and demands of all third persons.
2.4 Secured Party's Duty. Secured Party's duty with reference to the
Collateral shall be solely to use reasonable care in the custody and
preservation of Collateral in Secured Party's possession.
<PAGE> 3
2.5 Waiver. Demand, notice, protest and all demands and notices of
any action taken by Secured Party under this Agreement or in connection with
any indebtedness of Debtor to Secured Party, are hereby waived, and any
indulgence of Secured Party, substitution for, exchange of or release of
Collateral, in whole or in part, or addition or release of any person liable on
the Collateral is hereby assented and consented to by Debtor.
2.6 Non-liability of Secured Party. Secured Party shall not be
responsible in any way for any depreciation in the value of the Collateral, nor
shall any duty or responsibility whatsoever rest upon Secured Party to take
necessary steps to preserve rights against prior parties or to enforce
collection of the Collateral by legal proceedings or otherwise, the sole duty
of Secured Party being to receive collections, remittances and payments on such
Collateral as and when made and received by Secured Party, and at Secured
Party's option, applying the amount or amounts so received, after deduction of
any collection costs incurred, as payment upon the Secured Indebtedness, or
holding same for the account and order of Debtor.
2.7 Payment of Charges by Debtor. Debtor shall pay prior to
delinquency all taxes, charges, liens and assessments against the Collateral.
Upon Debtor's failure to pay, Secured Party at its option may pay any tax,
charge, lien or assessment and shall be the sole judge of the legality or
validity thereof and the amount necessary to discharge the same. Such payment
shall become part of the Secured Indebtedness and shall be paid to Secured
Party by Debtor immediately and without demand, with interest thereon from the
date of payment by Secured Party at the maximum non-usurious rate of interest
permitted by applicable law with respect to Debtor.
Section 3. Events of Default
Debtor shall be in default under this Agreement upon the happening of
any of the following events or conditions (herein called an "Event of
Default"):
(1) Debtor's failure to pay when due any of the Secured Indebtedness.
(2) Default by Debtor in the punctual performance of any of the
obligations, covenants, terms or provisions contained or referred to in this
Agreement or in any instrument evidencing the Secured Indebtedness, including
without limitation, the Note.
(3) Sale or encumbrance of any of the Collateral, or the making of
any levy, seizure or attachment thereof or thereon.
(4) Debtor's insolvency; the appointment of a receiver for all or any
part of the property of Debtor; an assignment for the benefit of creditors of
Debtor; the calling of a meeting of creditors of Debtor; or the commencement of
any proceeding under any bankruptcy or insolvency laws by or against Debtor or
any guarantor or surety for Debtor.
-3-
<PAGE> 4
Section 4. Rights Exclusive of Default
4.1 Assignment by Secured Party Permitted. This Agreement, Secured
Party's rights hereunder or the indebtedness hereby secured may be assigned
from time to time, and in any such case the Assignee shall be entitled to all
of the rights, privileges and remedies granted in this Agreement to Secured
Party. Debtor may not assign any of its rights or obligations hereunder
without the prior written consent of Secured Party.
4.2 Agents; Delivering to Secured Party. Secured Party shall have
the right to appoint one or more agents for the purpose of retaining physical
possession of the certificates or instruments representing or evidencing the
Collateral. For the better perfection of the Secured Party's rights in and to
the Collateral and to facilitate implementation of such rights, Debtor shall,
insofar as possible, cause all the certificates, documents and other
instruments evidencing, representing or otherwise comprising the Collateral, to
be delivered directly to the Secured Party, as the Secured Party shall from
time to time direct, immediately upon any of the same becoming part of the
Collateral. Secured Party is hereby authorized to execute, on behalf of the
Debtor, all documents reasonably necessary to effect the delivery of the
Collateral directly to Secured Party. Secured Party shall have the right at
any time and from time to time (whether before or after an Event of Default) to
retain as Collateral all payments, dividends and distributions regarding the
Collateral otherwise payable or distributable to Debtor.
4.3 Exercise of Voting and/or Consensual Rights; Cash Dividends. (a)
(i) The Debtor shall be entitled to exercise any and all voting and/or
consensual rights and powers relating or pertaining to the Collateral or any
part thereof for any purpose not inconsistent with the terms of this Agreement,
until (x) occurrence of an Event of Default or an event which, with the giving
of notice or lapse of time, or both, would become an Event of Default shall
have occurred and be continuing, and (y) written notification to Debtor by the
Secured Party that Secured Party intends to exercise the rights granted to
Debtor under this Section 4.3(a)(i).
(ii) Until an Event of Default or an event which,
with the giving of notice or lapse of time, or both, would become an Event of
Default shall have occurred and be continuing and written notification to
Debtor by the Secured Party that Secured Party intends to exercise the rights
granted to Debtor under this Section 4.3(a)(ii), the Debtor shall be entitled
to receive and retain any and all cash dividends or other cash payments paid on
the Collateral. However, any and all stock and/or liquidating dividends,
distributions in property, or cash returns of capital or other distributions
made on or in respect of the Collateral, whether resulting from a subdivision,
combination or reclassification of the capital stock or received in exchange
for Collateral or any part thereof or as a result of any merger,
reorganization, consolidation, acquisition or other exchange of assets, and any
and all cash and other property received in
-4-
<PAGE> 5
redemption of or in exchange for any Collateral (either at maturity, upon call
for redemption or otherwise), shall be and become a part of the Collateral and,
if received by the Debtor, shall be held in trust for the benefit of the
Secured Party and shall forthwith be delivered to the Secured Party or its
designated agent to be held subject to the terms of this Agreement. Debtor
agrees to execute any additional documents, including the proper instruments of
assignment or stock power, with respect to Collateral delivered to Secured
Party.
(b) (i) Upon the occurrence and during the continuance
of an Event of Default or an event which, with the giving of notice or the
lapse of time, or both, would become an Event of Default, and upon the giving
of the notice referred to in Section 4.3(a)(i), all rights of the Debtor to
exercise the voting and/or consensual rights and powers which it is entitled to
exercise pursuant to Section 4.3(a)(i) prior to such notice shall cease.
(ii) Upon the giving of the notice referred to in
Section 4.3(a)(ii), all rights of the Debtor to receive cash dividends or other
payments which it is authorized to receive and retain pursuant to Section
4.3(a)(ii) prior to such notice shall cease.
(iii) Upon the occurrence of an Event of Default
and the giving of notice referred to in Section 4.3(a)(i) or upon the giving of
notice referred to in Section 4.3(a)(ii), all such rights referred to in
Sections 4.3(a)(i) and 4.3(a)(ii), as the case may be, shall thereupon become
vested in the Secured Party, who shall have the sole and exclusive right and
authority to exercise such voting and/or consensual rights and powers and/or to
receive and retain the dividends. Any and all money and other property paid
over to or received by the Secured Party pursuant to the provisions of this
subsection (b) shall be retained by the Secured Party as part of the Collateral
and be applied in accordance with the provisions hereof.
(c) For the foregoing purposes in this Section 4.3 Debtor
hereby names, constitutes and appoints Secured Party as Debtor's proxy in the
Debtor's name, place and stead to vote any and all of the securities, as such
proxy may elect, for and in the name, place and stead of Debtor, as to all
matters coming before shareholders, such proxy to be irrevocable and being
coupled with an interest. The rights, powers and authority of said proxy shall
remain in full force and effect, and shall not be rescinded, revoked,
terminated, amended or otherwise modified until all the Secured Indebtedness
has been fully satisfied.
Section 5. Rights in the Event of Default
Upon the occurrence of an Event of Default and at any time thereafter,
and in addition to the rights granted pursuant to Section 4:
-5-
<PAGE> 6
(a) Secured Party may declare all obligations secured hereby
immediately due and payable.
(b) Secured Party shall have the rights and remedies provided in the
Texas Business and Commerce Code in force at the date of execution of this
Agreement and under other applicable laws of each state having jurisdiction
over the Collateral or any part thereof.
(c) In addition to the rights and remedies referred to above, Secured
Party may, in its discretion, sell, assign and deliver all or any part of the
Collateral at any broker's board or at public or private sale without notice or
advertisement, and bid and become purchaser at any public sale or at any
Broker's Board.
(d) Secured Party shall have the right to transfer legal and
beneficial title to such number of shares of the Pledged Stock to Secured Party
as may be necessary to satisfy the damages arising from such default. The
value of a share of Pledged Stock for the purposes of this paragraph (d) only
shall be equal to the average closing price for the Secured Party's Common
Stock on the preceding five business days as reported on the Nasdaq National
Market System.
(e) If notice to Debtor is required by the Texas Business and
Commerce Code or other applicable law of public or private sale of Collateral,
Secured Party may fulfill said notice requirement by giving written notice to
Debtor ten (10) days prior to the date of public sale of the Collateral or
prior to the date after which private sale of the Collateral will be made, by
mailing such notice to Debtor at the address designated in this Agreement.
Secured Party shall apply the proceeds of any disposition of Collateral
available for satisfaction of Secured Indebtedness first to costs of sale or
collection, then to the amount owed to Secured Party, with any balance to be
held as Collateral until termination of this Agreement.
(f) Secured Party may at any time demand, sue for, collect or make
any compromise or settlement with reference to the Collateral as Secured Party,
in its sole discretion, chooses. Secured Party may delay exercising or omit to
exercise any right or remedy under this Agreement without waiving that or any
other past, present or future right or remedy, except in writing signed by
Secured Party.
(g) Secured Party may remedy any default and may waive any default
without waiving the default remedied or without waiving any other prior or
subsequent default.
(h) The remedies of Secured Party hereunder are cumulative, and the
exercise of any one or more of the remedies provided for herein shall not be
construed as a waiver of any of the other remedies of Secured Party.
(i) SECURED PARTY MAY ENFORCE ITS RIGHTS UNDER THIS AGREEMENT WITHOUT
RESORT TO PRIOR JUDICIAL PROCESS OR JUDICIAL HEARING, AND DEBTOR EXPRESSLY
WAIVES, RENOUNCES AND KNOWINGLY RELINQUISHES ANY LEGAL RIGHT WHICH MIGHT
OTHERWISE REQUIRE SECURED PARTY TO ENFORCE
-6-
<PAGE> 7
ITS RIGHTS BY JUDICIAL PROCESS. IN SO PROVIDING FOR A NON-JUDICIAL REMEDY,
DEBTOR RECOGNIZES AND CONCEDES THAT SUCH A REMEDY IS CONSISTENT WITH THE USAGE
OF THE TRADE, IS RESPONSIVE TO COMMERCIAL NECESSITY AND IS THE RESULT OF
BARGAINING AT ARMS LENGTH. NOTHING IN THIS AGREEMENT IS INTENDED TO PREVENT
DEBTOR OR SECURED PARTY FROM RESORTING TO JUDICIAL PROCESS AT EITHER PARTY'S
OPTION.
(j) Debtor agrees that in performing any act under this Agreement
that time shall be of the essence and that Secured Party's acceptance of a
partial or delinquent payment or payments, or the failure of Secured Party to
exercise any right or remedy shall not be a waiver of any obligation of Debtor
or any right of Secured Party or constitute a waiver of any other similar
default subsequently occurring.
(k) Debtor hereby agrees to cooperate fully with Secured Party in
order to permit Secured Party to sell, whether at foreclosure or at other
private sale, the Collateral as permitted hereunder. Specifically, Debtor
agrees to comply fully with the securities laws of the United States of America
and applicable state securities laws and to take such action as may be
necessary to permit Secured Party to sell or otherwise transfer the securities
pledged hereunder in compliance with such laws. Without limiting the
foregoing, Debtor, at its own expense, upon request of Secured Party, agrees to
cause and/or obtain such registration, filings, statements, rulings, consents
and other matters as Secured Party may request.
(l) Debtor hereby appoints Secured Party as its attorney-in-fact to
complete, execute and file with the United States Securities and Exchange
Commission one or more notices of proposed sale of securities pursuant to Rule
144 under the Securities Act of 1933 and/or any similar filings or notices with
any applicable state agencies, and said attorney-in-fact shall have the full
power and authority to do, take and perform every act necessary to be done in
the exercise of that right as fully as Debtor might or could do if personally
present. This power shall be irrevocable during the term of this Agreement and
deemed coupled with an interest. The rights pursuant to said attorney-in-fact
herein granted shall commence and be in full force and effect from the date of
this agreement and shall remain in full force and effect and shall not be
rescinded, revoked, terminated, amended or otherwise modified until the
termination of this Agreement.
(m) Because of applicable securities laws, including without
limitation, the Securities Act of 1933, the Texas Securities Act and other
applicable state securities laws, there may be legal restrictions or
limitations affecting attempts of Secured Party to dispose of the Collateral in
enforcement of its rights and remedies hereunder. Secured Party is hereby
authorized by Debtor, but not obligated, upon an Event of Default, to sell all
or any part of the Collateral as permitted hereunder at private sale, subject
to investment letters or in any other manner which will not require the
Collateral or any part thereof, to be registered in accordance with the
Securities Act of 1933, as amended, or the rules and regulations promulgated
thereunder, or any other applicable
-7-
<PAGE> 8
securities law or regulation. Debtor specifically agrees that under these
circumstances such a sale is a commercially reasonable method of disposition of
the Collateral. Secured Party is also hereby authorized by Debtor, but not
obligated, to take such actions, give such notices, obtain such rulings and
consents, and do such other things as Secured Party may deem appropriate in the
event of a sale or disposition of any of the Collateral. Debtor acknowledges
that Secured Party may, in its reasonable discretion, approach a restricted
number of potential purchasers and that a sale under such circumstances may
yield a lower price for the Collateral or any part or parts thereof than would
otherwise be obtainable if the same were registered and sold in the open
market. Debtor agrees that such private sale shall constitute a commercially
reasonable method of disposing of the Collateral in view of the time, expense,
and potential liability to the parties of such transactions of registration of
the Collateral in accordance with applicable securities laws.
Section 6. Miscellaneous
6.1 Pronouns. The pronouns used in this instrument are in the
masculine gender but shall be construed as feminine or neuter as occasions may
require.
6.2 Parties. "Secured Party" and "Debtor" as used in this instrument
include the successors, representatives, receivers, and assigns of those
parties.
6.3 Section Headings. The section headings appearing in this
instrument have been inserted for convenience only and shall be given no
substantive meaning or significance whatever in construing the terms and
provisions of this instrument.
6.4 Defined Terms. Terms used in this instrument which are defined
in the Texas Business and Commerce Code are used with the meanings as therein
defined.
6.5 Applicable Law, Place of Payment. The law governing this secured
transaction shall be that of the State of Texas in force at the date of this
instrument, and all payments and obligations hereunder shall be made and
performed in Harris County, Texas.
6.6 Notices. All notices, requests, demands and other communications
which are required or may be given under this Agreement shall be in writing and
shall be deemed to have been duly given if delivered personally or by courier,
or mailed by first class mail, postage prepaid, return receipt requested, or
sent by facsimile, as follows:
(1) If to the Debtor:
Mr. Jay Silverman
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Facsimile: (713) 881-2801
-8-
<PAGE> 9
(2) If to Secured Party:
Eagle Geophysical, Inc.
50 Briar Hollow Lane, 6th Floor West
Houston, Texas 77027
Facsimile: (713) 881-2801
Attn: Mr. Richard W. McNairy
or to such other address as either party shall have specified by notice in
writing to the other party. All such notices, requests, demands and
communications shall be deemed to have been received on the earlier of the date
of delivery or on the fifth business day after the mailing thereof.
6.7 Severability. In the event any of the provisions contained in
this Agreement shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such provision shall not affect the validity,
legality or enforceability of any other terms or provisions of this Agreement
and, to the extent permitted by applicable law, a valid, legal and enforceable
provision substantially similar to the invalid, illegal or unenforceable
provision shall be substituted in lieu thereof.
6.8 Waiver of Rights. In the event that Debtor is not the Borrower
or Maker as defined in the Note, Debtor waives any right to require Secured
Party to file suit against the Borrower or Maker or take any other action
against Borrower or Maker or Borrower's or Maker's property as a prerequisite
to Secured Party's taking any action or bringing any suit against Debtor under
this Security Agreement.
EXECUTED effective the ____ day of __________, 1997.
DEBTOR:
----------------------------------------
JAY N. SILVERMAN
SECURED PARTY:
EAGLE GEOPHYSICAL, INC.
BY:
-------------------------------------
RICHARD W. MCNAIRY, Vice
President-Chief Financial Officer
-9-
<PAGE> 1
10.33.1
THE BANK OF N.T. BUTTERFIELD & SON LIMITED - LONDON BRANCH
OFFER OF TERM LOAN FACILITIES
The Schedule
================================================================================
Date: 27 February 1995
- --------------------------------------------------------------------------------
Borrower: Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent
TN13 1XR
- --------------------------------------------------------------------------------
Currency and Loan Amount: Up to a maximum sum of USD 2,000,000 (Two
Million United States Dollars).
- --------------------------------------------------------------------------------
Purpose: To finance the purchase of Marine Seismic Digital Streamer
Sections and Modules which are currently the subject of the
A.T. & T Lease.
- --------------------------------------------------------------------------------
Interest Rate the aggregate of: 2.00% p.a. (per centum per annum) above
LIBOR and Reserve Assets Costs.
- --------------------------------------------------------------------------------
Interest Periods: Three month LIBOR.
- --------------------------------------------------------------------------------
Loan Maturity Date: Subject to the terms of this Offer and no Event of Default
or Potential Event of Default having occurred, the final instalment of the Debt
shall be repayable on the date occurring, thirty months following the Drawdown
Date.
- --------------------------------------------------------------------------------
Security:
a) A Chattel Mortgage in a form acceptable to the Bank over the assets
financed under the A.T. & T. Lease.
The security to be given by the Borrower to the Bank under the General
Banking and Contract Finance Facility will also constitute security for the
Borrower's liabilities hereunder and for the avoidance of doubt includes
inter-alia the following;
a) A Debenture incorporating First Fixed and Floating charges over all
the Borrower's assets, undertakings and property; and
b) A Letter of Hypothecation and Pledge; and
c) A Set Off and Charge
d) The Guarantee of Seismic Exploration Limited supported by a Third
Party Charge over the Panamanian registered "M/V Caribbean Horizon".
e) The Guarantee of Exploration Holdings Limited.
f) The Assignments of the Life Policies on the lives of Mr G Harrison,
Mr N Campbell and Mr G Purdie with each life being insured for not
less than L.250,000.
g) Assignments of the proceeds payable under the Contracts.
h) The Letter of Comfort from the Majority Shareholder.
- --------------------------------------------------------------------------------
Arrangement Fee: 1% of the Facility.
- --------------------------------------------------------------------------------
1
<PAGE> 2
- --------------------------------------------------------------------------------
Repayment Arrangments:
i) The Loan Amount is to be repaid in quarterly instalments with the
first repayment falling due on the 30 June 1995 and thereafter each
instalment of principal is to be paid by the Borrower to the Bank on
the Bank's Quarter End Dates with the final repayment being thirty
months from the Drawdown Date.
ii) Interest Payments are to be made by the Borrower on the Bank's
Quarter End Dates with the first such interest payment date being
the 30 June 1995 and thereafter on each Quarter End Date with the
final interest payment date being thirty months from the Drawdown
Date.
- --------------------------------------------------------------------------------
* Special Conditions apply and are listed on the Continuation Sheet.
- --------------------------------------------------------------------------------
================================================================================
2
<PAGE> 3
================================================================================
THE SCHEDULE (Continued)
Special Conditions:
A) PRIOR TO DRAWDOWN UNDER THE FACILITY THE BANK IS TO RECEIVE THE FOLLOWING
IN A FORM AND SUBSTANCE WHICH IS ACCEPTABLE TO THE BANK AND ITS LEGAL
ADVISORS.
i) Your written acceptance of the Facility in accordance with the terms
of this offer; and
ii) Written confirmation from the relevant insurers that the Borrower
has in place adequate insurance cover for the business and its
assets with the Bank named as first loss payee; and
iii) A duly completed and signed Drawdown Notice in the form attached;
and
iv) A copy, certified as true and accurate by a Director or the
Borrower's Secretary of a resolution of the Borrower's Board of
Directors agreeing to accept the Facility on the terms of this offer
and authorizing an officer or officers of the Borrower to sign the
enclosed copy of this letter, any security documentation or
ancillary documentation related hereto and also execute any other
notices, advices and instructions whatsoever which from time to time
may be issued or provided under the Facility; and
v) Written confirmation signed by the Borrower and addressed to the
Bank confirming that;
a) The Borrowers Memorandum and Articles of Association, a
certified copy of which is held on the Bank's files, have
not been amended or altered in any manner whatsoever.
b) That the Bank may continue to rely on the Resolutions passed
by the Borrower on the 8 August 1994 and the signature
mandate executed by the Borrower.
c) The Borrower will continue to be bound by the General
Conditions signed by the Borrower on the 8 August 1994.
vi) A copy of this letter signed by Seismic Exploration Limited and
Exploration Holdings Limited as guarantors; and
vii) A deed (Deed of Subordination) in a form acceptable to the Bank
signed by the Majority Shareholder, postponing repayment of the
principal of the Majority Shareholders Loan until 30 September 1996
at the earliest; and
viii) A Copy, certified as true and accurate by a Director or the Company
Secretary of a resolution passed by the Company amending the
Articles of Association making the payment of dividends to the
shareholders subject to the terms of the Deed of Subordination.
================================================================================
3
<PAGE> 4
================================================================================
B) THE FOLLOWING SPECIAL CONDITIONS WILL CONTINUE TO APPLY THROUGHOUT
THE TERM OF THIS FACILITY:
i) The Security provided under the Facility will also constitute cross
collateralisation for the General Banking and Contract Finance
Facility; and
ii) No utilisation of the Facility may be requested by the Borrower if
an Event of Default or Potential Event of Default shall have
occurred which has not been expressly waived by the Bank in writing
or which has not been remedied to the Bank's satisfaction or would
result from such utilisation.
iii) Nothing contained in this offer letter shall restrict the operation
of any general lien, right of set off or any other rights or
remedies whatsoever which the Bank may have whether by law or
otherwise; and
iv) No payment of dividends or repayments of principal under the
Shareholders Loan by the Borrower is permitted without the Bank's
prior written consent.
v) The Borrower is to comply with the following financial covenants
which will be tested against the Borrower's accounts for financial
year ending 31 December 1995.
a) Gearing : Not greater than 0.80:1.
b) Leverage : Not greater than 2:1.
c) Interest Cover : Not less than 3.75 X.
d) Net Worth : Not less then L.3,600,000.
Financial Covenants for subsequent years will be notified to the
Borrower by way of an amendment to this letter. Note the following
definitions apply in respect of the financial covenants.
"Gearing" means all the Borrowers interest bearing debt net of cash balances
held to Net Worth.
"Leverage" means all balance sheet liabilities to Net Worth.
"Interest Cover" means operating profits before net interest payable.
"Net Worth" means paid-up share capital, the retained earnings plus the
Majority Shareholders Loan less intangible assets and non-quoted investments.
================================================================================
4
<PAGE> 5
TO: The Borrower named in the Schedule
FROM: THE BANK OF N.T. BUTTERFIELD & SON LIMITED - LONDON BRANCH 24
Chiswell Street London EC1Y 4TY
We, The Bank of N.T. Butterfield & Son Limited through our London Branch ("the
Bank"), hereby Offer to make available to you ("the Borrower") a banking
accommodation in the form of a term loan facility, as mentioned in the Schedule
attached hereto (the Schedule) in the Currency and up to the aggregate Loan
Amount specified in the Schedule, on the following terms and conditions.
It is a term of this Offer that, if you, the Borrower, are more than one person
or corporate body, the liability of each such person or corporate body in
connection with the Facility will be a joint and several liability.
1. DEFINITIONS
In this Offer and the Schedule hereto, unless the context otherwise requires,
the following words and expressions have the following meanings:
1.1 "The Advance" means an advance of the Facility made by the
Bank to the Borrower hereunder to repay AT &
T Capital Limited
1.2 "Banking Day" means a day (excluding Saturdays) on which
banks are open for normal business in the
City of London
1.3 "Conditions" means the Bank's General Conditions which
govern all transactions between the Bank and
the Borrower
1.4 "Currency" means the currency specified in the Schedule
in which the Loan Amount is to be made
available and in which all payments are to be
made by you pursuant to the terms of this
Offer
1.5 "Debts" means the total amount in the Currency from
time to time outstanding and owed by you to
us pursuant to the terms and conditions of
this Offer including without limitation all
Principal and accrued interest owing under
the Facility, costs and expenses payable in
respect thereof
1.6 "Drawdown Date" means the date upon which the Advance is made
by the Bank to the Borrower
1.7 "Drawdown Notice" means a notice in the form of Appendix I
attached hereto
1.8 "Facility" means the Loan Amount in the Currency
specified in the Schedule
5
<PAGE> 6
1.9 "Interest Payment Dates" means the Banking Day upon which you are
required to pay to us interest in respect of
the Facility in accordance with the Schedule.
1.10 "Interest Period" means each period of time specified for the
calculation of interest in accordance with
the terms of this Offer of which the first
such Interest Period will commence on the
Drawdown Date and will end on the 30 June
1995 and the last such Interest Period will
end on the Loan Maturity Date
1.11 "Interest Rate" means the rate of interest specified in the
Schedule
1.12 "LIBOR" means the rate of interest conclusively
determined by us at which the Bank is able in
accordance with the Bank's normal practice to
acquire the Currency in the London Inter-Bank
market from prime banks for an amount
comparable with the relevant instalment of
the Facility or the Debt (as the
circumstances require) for the Interest
Period in question in the case of Pounds
Sterling at or at about 11.00 a.m. London
time on the first day of that Interest Period
for value that day and in the case of United
States Dollars at or about 11.00am London
time on the second Banking Day prior to the
first day of that Interest Period for value
on the first day of that Interest Period
1.13 "Loan Maturity Date" means the date specified in the Schedule on
which the Facility will cease to be available
and on which you are required to repay the
Debt to us
1.14 "AT & T Lease" means the Lease facility made available by AT
& T Capital Limited of 66 Buckingham Gate,
London, SW1E 6AU to the Borrower
1.15 "Security" means the Security over assets and/or
commitments of the Borrower and/or any other
person mentioned in the Schedule under the
heading "Security to be Taken" together with
any additional security required by the Bank
from time to time
1.16 "Security Documents" mean those documents referred to in the
Schedule under the heading "Security to be
Taken" which are to effect or comprise the
Security together with any further Security
documents executed from time to time
1.17 "The General Banking and
Contract Finance
Facility" means the facility made available by the Bank
Contract Finance Facility" to the Borrower as
per the letter dated 23 August 1994
1.18 "Reserve Asset Costs" means the cost if any to the Bank of
complying with the Reserve Asset, Special
Deposit and other monetary control or similar
requirements of the Bank of England and/or
any other competent authority from time to
6
<PAGE> 7
time expressed as a percentage per annum and
(if not an integral multiple thereof),
rounded up to the nearest 1/16 of 1 per cent.
1.19 "Majority Shareholder" means Energy Research International Limited,
c/o Caledonian Bank and Trust Limited, PO Box
1045, Georgetown Grand Cayman, Cayman Islands
1.20 "Majority Shareholder's" means the loan granted to the Borrower by
Energy Research International Limited
1.21 "Quarter End Dates" means the last Banking Day of March, June,
September and December
1.22 "Events of Default" means the events specified in clause 13
1.23 "Deed of Subordination" means a Deed of Subordination in a form
acceptable to the Bank, to be entered into
between the Borrower, the Majority
Shareholder and the Bank
2. PURPOSE OF THE FACILITY AND DRAWDOWN
2.1 The Facility is to be provided for the purpose specified in the
Schedule to be drawn in one amount and thereafter the Borrower will be
obliged to supply such evidence as the Bank may from time to time
require to demonstrate the application of the Facility for this
purpose.
2.2 The availability of the Facility will depend upon the Borrower's
ability to satisfy the conditions precedent mentioned in clause 7.
3. INTEREST PERIODS
3.1 If any Interest Period ends on a day which is not a Banking Day, it
will be extended to end on the next succeeding Banking Day unless the
next succeeding Banking Day falls in the next quarterly Interest
Period in which event the Interest Period will be shortened so as to
end on the immediately preceding Banking Day.
3.2 If any Interest Period commences on the last Banking Day in a calendar
month or if there is no corresponding date in the calendar month in
which an Interest period is due to end, then such Interest Period
shall end on the last Banking Day in the relevant later month
4. FEES, INTEREST AND COSTS
4.1 The Borrower is required to pay the Bank the Arrangement Fee mentioned
in the Schedule upon the Borrowers acceptance of this Offer.
4.2 Interest on the Debt will be payable by the Borrower in arrears on the
Interest Payment Dates.
4.3 Interest will accrue from day to day and will be calculated on the
amount of the Debt outstanding on the basis of actual days elapsed.
The calculation will be based upon a year of 360 days.
7
<PAGE> 8
4.4 Where the Bank considers that the amount involved is a material sum,
the Borrower will also be required to pay to the Bank additional
interest on the Debt for each Interest Period so as to compensate the
Bank for any cost incurred or loss suffered by the Bank by reason of
any additions or changes to any applicable law, regulation,
requirement, directive or request (whether or not having the force of
law) from the Bank of England or any other relevant fiscal, monetary
or other competent authority or in the interpretation of any such
matters by any governmental or regulatory authority or any Court of
competent jurisdiction.
4.5 If on the first day of an Interest Period the Bank determines that
United States Dollar deposits of the relevant amount or period are not
available to the Bank or the Bank is unable to determine the Interest
Rate thereof, the rate of interest applicable to the Facility during
that Interest Period shall be 2.00% per cent above the rate per annum
determined by the Bank to be the cost of funds to the Bank for similar
amount and period from such source as the Bank may consider
appropriate.
4.6 Any certificate of termination by the Bank as to any rate of interest
payable in respect of the Facility shall (save for manifest error, be
conclusive).
4.7 The Borrower is required to pay to the Bank on demand the amount of
all legal (including all registration and other fees) and other costs
and expenses and Value Added Tax thereon incurred by the Bank in
Connection with the negotiation, preparation and completion of this
Offer and the Security Documents whether or not the Facility becomes
available together with all costs and expenses incurred in connection
with the enforcement of or preservation of any rights under this Offer
and/or of the Security Documents.
5. REPAYMENT
5.1 The Borrower will repay the Debt in accordance with the Schedule.
5.2 No part of the Facility repaid may be redrawn.
6. PREPAYMENT
6.1 No prepayment may be made within the first six months following the
Drawdown Date. Thereafter, providing that the Borrower shall have
given the Bank not less than five Banking Days prior notice (which
will be irrevocable and binding), prepayments of the Facility may be
made on Interest Payment Dates in amounts of not less than USD 200,000
(Two Hundred Thousand United States Dollars). Such prepayment shall
include all interest due and payable on the amount prepaid.
6.2 No amount of the Facility prepaid may be redrawn and the Borrower may
not make any prepayment other than in accordance with the terms of
this Offer.
7. CONDITIONS PRECEDENT AND SECURITY
7.1 As a condition precedent to the Facility becoming available and as
security for the repayment of all monies owed by the Borrower to the
Bank (including all monies outstanding under the General Banking and
Contract Finance Facility as well as all other liabilities or
obligations owed by the
8
<PAGE> 9
Borrower to the Bank, from time to time) and the performance by the
Borrower of all its obligations, the Borrower is required to deliver
to the Bank documents and items as specified in the Schedule.
8. PAYMENT
8.1 All payments received by the Bank from the Borrower will be applied
first, towards the reimbursement of the Bank's costs, charges and
expenses on a full indemnity basis secondly, in payment of interest
due up to the date of payment thirdly, in payment of the Debt and
fourthly in payment of any surplus to the Borrower's account with the
Bank.
8.2 All sums payable by the Borrower in connection with the Facility must
be paid to the Bank no later than midday on the due date in the
Currency in London and in cleared funds. Any such payment must be
free and clear of any present or future taxes, charges or withholdings
and without any set-off or counterclaim or any restriction, condition
or deduction.
8.3 If the Borrower is legally obliged to make any deduction or
withholding the Borrower must promptly pay to the Bank an additional
amount so as to ensure that the amount actually received by the Bank
is the full amount which would have been received if there had been no
deduction or withholding. Such an additional amount will be treated
as agreed compensation rather than as interest.
8.4 If the Borrower fails to make a payment in the proper manner when due,
the Borrower must indemnify the Bank against all losses and expenses
which the Bank incurs and, in the case of late payment, pay to the
Bank by way of agreed compensation interest on the sum due at the rate
of 4% per annum above LIBOR for such Interest Period or successive
Interest Periods as the Bank select (which for the purpose of this
clause means any period of time selected by the Bank for the
calculation of that interest including overnight deposit rate) and
with the interest being compounded at the end of each such period
until payment is made.
8.5 The Bank's Certificate as to the amount of any sum due from the
Borrower to the Bank will (in the absence of manifest error) be
binding upon you.
9. REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
In accepting this Offer the Borrower represents, warrants and
undertakes that now and so long as any amount remains outstanding or
any interest, fees, costs, expenses or any other liabilities actual or
contingent remain due or may become due to the Bank hereunder, that:
9.1 The Borrower is duly incorporated and validly existing under the laws
of England and has all the necessary powers to enter into and comply
with the terms and conditions of this Offer and the Security Documents
and furthermore the Borrower has complied with all material, statutory
and other requirements (legal or otherwise) relative to its business;
and
9.2 The Borrower's total borrowings and liabilities actual or contingent,
including any sums outstanding hereunder, are within its powers under
its Memorandum and Articles of Association; and
9
<PAGE> 10
9.3 All official consents and or approvals required to accept the Offer
have been obtained and are in full force and effect and the Borrower
is not by the acceptance of the Offer, contravening any existing
applicable law or regulation or any contractual or other restriction
or limitation binding on the Borrower; and
9.4 There are no actions, suits or proceedings pending against the
Borrower nor to the Borrower's knowledge after due enquiry, threatened
against the Borrower or any of its assets or revenues which could or
might have a material adverse effect on the financial condition or
otherwise of the Borrower; and
9.5 The Borrower will promptly advise and inform the Bank on becoming
aware of any Event of Default or Potential Event of Default as defined
in Clause 13; and
9.6 Since the date of the last audited accounts for the Borrower (copies
of which have been delivered to the Bank) to the best of the
Borrower's knowledge there have been no material or adverse changes in
the business, assets or financial condition; and
9.7 The Borrower's obligations hereunder will at all times, during the
term of the Facility, rank pari-passu with the existing indebtedness
under the General Banking and Contract Finance Facility but rank in
priority to any other existing and/or future indebtedness or
commitments other than those commitments which by law will
automatically rank in priority; and
9.8 All the information supplied to the Bank in connection with the
negotiation and preparation of the terms of the Facility is to the
best of the Borrower's knowledge true and correct and not misleading
and furthermore the Borrower has disclosed everything which the Bank
could reasonably expect the Borrower to consider to be material in
connection herewith.
The Representations, Warranties and Undertakings will be deemed to be repeated
by the Borrower on each Interest Payment Date as if made with references to the
facts and circumstances existing at such respective date.
10. COVENANTS
So long as amounts remain outstanding under the Facility the Borrower
shall:
10.1 Not create or permit to arise any mortgage, debenture, charge, pledge
lien or any other encumbrance or security whatsoever over any part of
the Borrower's present or future undertaking, assets or revenues
without the Bank's prior written consent, which shall not be
unreasonably withheld; and
10.2 Notify the Bank in writing of any material change in the nature of the
Borrower's business as carried on at the date hereof which may involve
acquisition, disposal or otherwise, of the whole or any substantial
part of the Borrower's undertaking, property or assets except for
stock in trade and in particular but without limitation, you will not
without the consent of the Bank grant or agree to grant any lease or
other interest in the Security Property or any part of it; and
10.3 Ensure that insurances on and in relation to the Borrower's business
and assets are maintained with reputable underwriters or Insurance
companies against such risks and to such extent as is
10
<PAGE> 11
usual for companies carrying on a business such as that carried on by
the Borrower and the Bank's interests noted thereon; and
10.4 Not, without prior written consent from the Bank, make any loan or
give any credit to any person other than normal trade credit;
10.5 Except under this Facility or the General Banking and Contract Finance
Facility borrow or raise any money or incur credit or give any
guarantees indemnities or other assurances against financial loss
other than, subject to in each case, the prior written approval of the
Bank which shall not be unreasonably withheld, lease agreements
entered into from time to time by the Borrower for the purchase of
capital equipment;
10.6 Sell, transfer, lend or otherwise dispose of all or any part of your
present or future undertaking, assets right or revenues (whether
transactions are related or not);
10.7 Enter into negotiations with the Bank in the event that the Bank's
legal advisors recommend that the existing security be amended and/or
that the Bank should seek additional security, to secure the
Borrower's liabilities hereunder and provide such additional security
as may be required; and
10.8 Agree to provide the Bank with such additional financial information
as it may reasonably request in connection with the Facility.
11. FINANCIAL REPORTING REQUIREMENTS
The Borrower is required to deliver to the Bank the following
financial information;
11.1 Within seven days of the end of each monthly trading period;
i) Management prepared profit and loss account together with aged
debtors and creditors analysis; and
11.2 Within twenty one days of the end of each three month accounting
period;
i) A comparison of Management prepared Balance Sheet and Profit
and Loss Account against financial projections and forecasts
for the same period; and
ii) Projected cash flow forecasts for the next six months trading;
and
11.3 Within Ninety days of each financial year end;
i) Two copies of the Borrower's Annual Audited Report and
Accounts together with a certificate of compliance signed by
the Borrower's Secretary or the Borrower's auditors; and
ii) Cash flow forecasts and budgets for the next twelve months
trading
11
<PAGE> 12
12. THE BANK'S RIGHT OF SET-OFF AND CONSOLIDATION
It is hereby agreed and declared that in addition to any right of
set-off or other similar right to which the Bank may be entitled by
law, the Bank may at any time and without notice to the Borrower
combine and consolidate all or any accounts between the Borrower and
the Bank and/or set-off any moneys whatsoever and whether on current
account or deposit account which the Bank may at any time hold for the
account of the Borrower against any liabilities whatsoever whether
such liabilities are actual or contingent and whether owed as
principal or surety.
13. EVENTS OF DEFAULT
Notwithstanding anything herein contained and without limitation to
the Bank's rights hereunder the Bank shall on the occurrence of any of
the following events of default be entitled to terminate the Facility
and demand from the Borrower either, immediate repayment of or full
cash cover for all the debt. At the same time the Bank will require a
payment from the Borrower for any losses and expenses (including loss
of profit) incurred or suffered by the Bank in consequence of an Event
of Default. The Bank's certificate as to the amount of such losses and
expenses shall be conclusive save for manifest error.
13.1 Each of the following shall be an Event of Default namely:
i) If the Borrower defaults in the payment of any monies which
may become due to the Bank or there shall be any breach by the
Borrower or any other party of the terms and conditions of the
Offer, the General Banking and Contract Finance Facility, the
Deed of Subordination, or any other facility letter,
guarantee, security agreement, document or other obligation
which the Borrower may, from time to time have with the Bank,
its associates or subsidiaries; or
ii) If any representation, warranty, undertaking or covenant from
time to time made or deemed to have been made by the Borrower
to the Bank, its associates or subsidiaries is incorrect or
misleading or if any of the terms and conditions of the Offer
(including for the avoidance of doubt the special conditions
listed in the Schedule) or any other obligation or liability
of the Borrower to the Bank, its associates or subsidiaries is
not fulfilled; or,
iii) If the Borrower defaults or receives notice of default under
any trust, deed, debenture, loan agreement, guarantee (which
expression shall include all contingent liabilities undertaken
in respect of the obligations or liabilities of any third
party including all guarantees, indemnities, bonds or
instruments of suretyship whether constituting primary or
secondary obligations or liabilities whatsoever their
designation) or if money payable thereunder becomes due and is
not paid on or before the due date or if any surety created by
the Borrower becomes enforceable; or
iv) If a petition is presented or any order made or a resolution
passed for the winding up of the Borrower, or if the Borrower
is dissolved or a notice is issued concerning a meeting for
the purpose of passing any such resolution or a resolution to
reduce or redeem all or any part of the Borrower's issued
share capital or of considering whether any and if so what
measures should be taken to deal with the situation referred
to in Section 142 of the
12
<PAGE> 13
Companies Act 1985 (or any mandatory or statutory re-enactment
thereof) or if the Borrower ceases or threatens to cease to
carry on its business or any substantial part thereof in the
normal course, save in any such case for the purpose of and
followed within six months by an amalgamation or
reconstruction not involving or arising out of insolvency on
terms previously approved by the Bank in writing; or
v) If any encumbrancer shall take possession or a receiver,
trustee, administrative receiver, administrator or similar
officer shall be appointed to the whole or any part of the
Borrower's undertaking, property or assets or if any judgement
or order made against the Borrower is not complied with within
seven days or if any execution, distress, or other process be
levied or enforced upon or sued out against any of the
Borrower's property, assets or revenues; or
vi) If the Borrower becomes or is deemed to be unable to pay debts
as and when they fall due whether within the meaning of
Section 123 of the Insolvency Act 1986 (or any mandatory or
statutory re-enactment thereof) or otherwise or if a notice is
issued convening a meeting of or the Borrower proposes to
enter into any composition or arrangement with its creditors
or agrees or declares a moratorium in respect of any of its
debts or stops payment or if notice is given to the nominee
referred to in Part 1 of the Insolvency Act 1986 (or mandatory
or statutory re-enactment thereof) of an intended proposal for
any such voluntary arrangement in that part of the Act or if a
substantial part of the Borrower's business property assets or
capital is nationalised, seized or appropriated; or
vii) If there is at any time a change in the voting control of the
Borrower which the Bank considers material or if without the
Bank's prior written consent control of the Borrower should
pass to any person or group of persons (as defined in Section
839 of the Income and Corporation Taxes Act 1988) (or any
mandatory or statutory re-enactment thereof) or institution or
group of institutions not having control at the date hereof;
or
viii) If any material provision of this Offer or any security given
in respect thereof ceases in any respect to be in full force
and effect or to be continuing or is purported to be
determined or becomes in jeopardy or is invalid or
unenforceable; or
ix) If any suspension of payments is filed by the Borrower under
any applicable bankruptcy law or similar statute; or
x) If any waiver of consent, (governmental or otherwise),
required for the validity enforceability or performance of the
Facility is for any reason is not provided or is withdrawn or
ceases to be in full force and effect; or
xi) If the Bank considers that the Borrower's financial position
is deteriorating or has deteriorated so as to place in
jeopardy the repayment of any amounts which will become due or
outstanding hereunder; or
xii) If, without the Banks prior written consent, which shall not
be unreasonably withheld, the Borrower makes any fundamental
changes to its Memorandum and Articles of Association.
13
<PAGE> 14
13.2 The Borrower will immediately notify the Bank in writing of the
occurrence of any Event of Default (with the exception of Clause 13.1
xi. above). No failure or delay on the Bank's part in exercising any
right hereunder shall operate as a waiver thereof nor shall any single
or partial exercise of any such right preclude its further exercise.
13.3 Any of the events described in clause 13.1 above which occur in
relation to any present or future holding Company, and/or subsidiaries
as defined in Section 736 of the Companies Act 1985 (or any mandatory
or statutory re-enactment thereof) and/or the Guarantors which has a
material and/or adverse effect (financial or otherwise) will also be
deemed to be an Event of Default.
13.4 For the purpose of this Offer, Potential Event of Default shall mean
any event which with the giving of notice and/or lapse of time and/or
making any determination by the Bank would constitute an Event of
Default.
14. NOTICES
14.1 In addition to (and not by way of limitation of) the provisions for
service specified in the Security Documents, all notices in connection
with this Offer may be sent by us by first class letter post, cable,
telex or facsimile transmission or delivered by hand to you at the
address set out in the Schedule and will be deemed to have been
served:
i) in the case of a letter - on the day upon which it could be
expected to arrive in the ordinary course of post and in any
event within five Banking Days;
ii) in the case of a cable - one Banking Day after the day of
dispatch;
iii) in the case of a telex or facsimile transmission or hand
delivery - on the day of transmission or delivery or, if that
day is not a Banking Day or the timing of the transmission or
delivery is such that it would reach the recipient after 5.00
p.m. (in the place of receipt) on that day, the following
Banking Day.
14.2 All notices under this Offer and all instructions in connection with
the Facility may be given by you (or by an authorised officer in the
case of a Borrower) by first class letter post, cable or telex or
facsimile transmission to us at our principal office for the time
being in London or at such other office as we may notify to you in
writing.
14.3 A complete copy of any notice or instruction in connection with this
Offer effected by telex or facsimile transmission must, in order for
that notice to have effect, be sent to the recipient by first class
post as soon as possible after the transmission has been completed. A
notice or instruction thus transmitted will be effective
notwithstanding any incomplete or distorted transmission and in
proving service it will be sufficient to prove that the notice or
instruction was transmitted to the correct number from which the
correct answerback or other appropriate acknowledgment of receipt was
obtained and that a complete copy was thereafter dispatched to the
recipient by first class letter post.
14
<PAGE> 15
15. CURRENCY AND FOREIGN EXCHANGE RISK
15.1 Notwithstanding your basic liability to make payment to us in the
Currency, where the terms of this Offer require you to pay or to
reimburse to us any costs, expense or loss incurred or suffered by us
in connection with the Facility and/or the Debt or otherwise as
contemplated by this Offer, your primary liability will be to pay or
to reimburse to us the amount in question in the currency in which the
cost, expense or loss has been incurred or suffered by us and such
amount will only be added to the Debt and (if necessary) converted
into the Currency the manner mentioned in clause 15.2 if you fail to
discharge that primary liability in due time in accordance with the
terms of this Offer.
15.2 This clause applies to all cases where the value of the Security or
any part of the Security by reason of its nature or location is most
readily determinable in a currency other than the Currency. In all
such cases you are required to bear the primary risk of all currency
fluctuations and we reserve the right to require you to repay a part
of the Debt or to provide additional security for the Debt if at any
time in our opinion the aggregate value of the Security (when
converted into the Currency at the spot rate of exchange conclusively
determined by the Bank in accordance with the Bank's normal practice)
as related to the amount of the Facility or the Debt (as the case may
be) is less favorable to the Bank by reason of currency fluctuations
than it is now at the date of this Offer. We may exercise this right
at any time and on more than one occasion if we so decide. If and
when we exercise our rights in this respect, you will bound
immediately to effect the required reduction in the Debt (which may
not be redrawn) or to provide additional security of a nature and
value acceptable to the Bank and to our satisfaction in all respects.
Any such additional security thus provided by you will become part of
the Security for the purpose of this Offer.
16. LAW AND JURISDICTION
This Offer and the Security Documents will be governed and construed in
accordance with the Law of England and Wales and will be subject to the
non-exclusive jurisdiction of the Courts in England and Wales to which you
agree to submit.
17. GENERAL
17.1 In the event of there being any conflict between the terms and
conditions of this Offer, the Conditions and the Security Documents
the terms and conditions of the Security Documents will prevail
overall and the terms and conditions of this Offer will prevail over
the Conditions.
17.2 We reserve the right to Offer, transfer or grant participations in the
Facility to other banks or financial institutions without your prior
approval but your contract is solely with us and it will be our
responsibility to account to transferees or participants. You will
execute (at our expense) any documents required by us to facilitate
any such transfer or participation and by your acceptance of this
Offer you authorise us to exchange information with potential
transferees or participants.
17.3 No failure or delay on our part to exercise any power, right or remedy
under this Offer or the Security Documents will operate as a waiver
thereof nor will any single, or any partial, exercise or waiver of any
such power, right or remedy preclude its further exercise or the
exercise of any
15
<PAGE> 16
other power, right or remedy. The powers, rights and remedies
provided by this Offer and the Security Documents are cumulative and
in addition to any powers, rights and remedies provided by law.
17.4 If any applicable law, regulation or requirement in any jurisdiction
or any change therein or in the interpretation thereof makes it (or
makes it apparent that it is) unlawful or impossible for you or any
third party to perform your obligations under this Offer or the
Security Documents or if it becomes impossible or unlawful for us to
perform our obligations under this Offer then:
i) we will be discharged from all obligations to grant, renew or
to continue the Facility; and
ii) you will on demand pay to us the Debt; and
iii) you will indemnify us on demand against all loss or expense
including all legal expenses we may incur or sustain in
consequence.
17.5 We shall not be liable for any failure to perform our obligations
under this Offer resulting directly or indirectly from the action or
inaction of any governmental or local authority or any strike,
boycott, blockade, act of God or civil disturbance.
17.6 This Offer and the Security Documents shall be binding upon and enure
for the benefit of our successors and assigns but you may not assign
your rights hereunder.
We reserve the right to withdraw this Offer at any time. Subject thereto, this
Offer will remain open for acceptance by you for a period of one month from the
date in the Schedule and will then lapse.
/s/ [illegible signature] /s/ [illegible signature]
Signed for and on behalf of
THE BANK OF N.T. BUTTERFIELD & SON LIMITED - LONDON BRANCH
16
<PAGE> 17
IMPORTANT NOTICE
THIS OFFER CREATES LEGAL OBLIGATIONS WHICH WALL BE BINDING UPON YOU AND UPON
WHICH YOU ARE ADVISED TO OBTAIN APPROPRIATE LEGAL ADVICE. IN YOUR ACCEPTANCE OF
THIS OFFER YOU CONFIRM THAT YOU HAVE BEEN ADVISED BY US TO TAKE INDEPENDENT
LEGS ADVICE REGARDING THE CONTENTS OF THIS OFFER AND, WHETHER OR NOT YOU HAVE
FOLLOWED THAT ADVICE, YOU ACCEPT THIS OFFER WITH FULL KNOWLEDGE AND
UNDERSTANDING OF ITS MEANING AND EFFECT.
Offer accepted on the terms and conditions set out above
for and on behalf of
HORIZON EXPLORATION LIMITED
Authorised Signatory /s/ Neil A.M. Campbell Date
/s/ G.M. Harrison
As Guarantor, we Exploration Holdings Limited acknowledge the terms and
conditions set out in this letter.
for and on behalf of
EXPLORATION HOLDINGS LIMITED
Authorised Signature /s/ Neil A.M. Campbell Date
/s/ G.M. Harrison
As Guarantor, we Seismic Exploration Limited acknowledge the terms and
conditions set out in this letter.
for and on behalf of
SEISMIC EXPLORATION LIMITED
Authorised Signature /s/ G.M. Harrison Date
17
<PAGE> 1
10.33.2
The Directors
Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent TN 13 I XR 23 August 1994
Dear Sirs,
Further to our discussions, the Bank of N T Butterfield and Son Ltd (the Bank)
is prepared to place at the disposal of Horizon Exploration Limited (the
Company) revolving banking facilities (the Facility) subject to the following
terms and conditions contained in this letter (the Facility Letter).
1. Amount and Purpose
The sum available under the Facility shall not exceed a gross maximum
aggregate amount of L.3,500,000 (Three Million Five Hundred Thousand
Pounds Sterling) outstanding at any one time or subject to availability,
the equivalent in any other major currency other than Pounds Sterling,
(the Alternative Currency) to provide the Company with:-
a) Within the Facility Amount, a sub-limit of up to L.2,750,000 (Two
Million Seven Hundred and Fifty Thousand Pounds Sterling) for:
i) Subject to clause 2. hereof, the Company to repay its
existing indebtedness, (the Indebtedness) to the National
Westminster Bank Plc, 67 High Street, Sevenoaks, Kent,
TN13 1LA (National Westminster Bank Plc); and
ii) Financing on a contract by contract basis, (the Contract
Finance) the costs and expenses (including the purchase
price of the Goods as hereinafter defined) incurred by the
Company in obtaining for the Buyer, (as hereinafter
defined) marine seismic data pursuant to the terms and
conditions of contracts (the Contracts) entered into
between the Company and buyers acceptable to the Bank (the
Buyers). Details of the Buyers are listed on Schedule I
attached hereto and as amended from time to time. The
services available for Contract Finance will be;
- sight/deferred payment (maximum 90 days) Irrevocable
Documentary Letters of Credit (ILC's) to secure the
purchase of equipment and/or accessories (the Goods) to be
installed by the Company on board chartered ships (the
Chartered Ships) used by the Company to carry our
marine seismic work; and/or - Short fixed term advances
(the Advances); and/or - acceptance credits (Acceptance
Credits) for periods of up to 90 days; and/or - the
revolving overdraft (the Contractual Overdraft)
The duration of the funding provided by the Bank for any
of the above is determined by inter-alia the term of the
Contract, the cash flow forecasts in
<PAGE> 2
respect of each Contract together with the anticipated
date of receipt by the Company of the proceeds payable by
the Buyer under the terms of the Contract.
b) Within the Facility Amount a sub-limit of up to L.500,000 (Five
Hundred Thousand Pounds Sterling) for;
i) Subject to clause 2. hereof, the Company to repay the
Indebtedness to National Westminster Bank Plc; and
ii) an overdraft (the General Overdraft) for financing the
general working capital expenditure of the Company. A
cheque book will be provided, for drawings made hereunder.
c) Within the Facility Amount a sub-limit of up to L.250,000 (Two
Hundred and Fifty Thousand Pounds Sterling) for issuing
contractual bonds and guarantees (the Contractual Guarantees)
required by the Buyers or potential Buyers in accordance with the
terms of a Contract.
2. First Drawdown/Repayment of the Company's Existing Facilities
a) The first drawdown under the terms and conditions of this
Facility Letter will be to repay the Indebtedness to National
Westminster Bank Plc. Drawdown may only take place once the Bank
has received an undertaking in writing addressed by National
Westminster Bank Plc to the Bank to the effect that upon receipt
by them, on an agreed date and time (the Settlement Date), of an
amount which will repay in full the Indebtedness then outstanding
in their books, they will immediately release all security held
by them. The Bank will have to approve the form of the release
(the Deed of Release) to be given by National Westminster Bank
Plc.
b) At the same time as National Westminster Bank Plc agree to
release the security the Directors of the Company will be
required to swear the appropriate Form 403A "Satisfaction of
Charges" in order that the charge may be removed from the
Company's charges register together with any other charges
outstanding on the register at that time.
c) The amount payable to National Westminster Bank Plc in settlement
of the Company's existing indebtedness (the Settlement Amount)
will be applied as follows once the Company has provided the Bank
with the relevant information pursuant to iii) hereof;
i) All amounts paid out by the Company in respect of current
contracts (the Existing Contracts) prior to the Settlement
Date, net of any monies received from the Buyer under the
Contract will be debited to the respective Contract
Account (as hereinafter defined in Schedule II).
ii) The balance of the indebtedness after deducting (i) above
will be debited to Account no. 2.
2
<PAGE> 3
iii) Once the Bank has been advised by National Westminster
Bank plc as to the Settlement Amount, the Bank will notify
the Company of the same and to enable the Bank to apply
the relevant amounts to the Contract Accounts the Company
is to provide the Bank with the following;
a) A copy of each Contract together with their
respective cash flow forecasts; and
b) The amount drawn under the terms of the facility
with National Westminster Bank Plc in respect of
each Contract together with details of any payments
that have been received from the Buyer which will
then provide a net debit balance outstanding in
each case; and
c) Details of any invoiced amount which is due from
the Buyer to the Company but not yet been received
and/or any amounts which have been invoiced by the
Company but not yet due for payment from the Buyer
and/or the amounts expected from a Buyer once the
Contract has been satisfactorily completed; and
d) For the Existing Contracts the Bank will require
the following;
i) the consent of the Buyer to the assignment
of the Contract proceeds; and
ii) assignment of the Contract proceeds in a
form acceptable to the Bank; and
iii) Notice of assignment executed by the Company
in a form acceptable to the Bank; and
iv) Acknowledgement from the Buyer of the Notice
of Assignment in a form acceptable to the
Bank.
Repayment of the amounts debited to the Contract Accounts
(as hereinafter defined in Schedule II) and Account No. 2
is to be in accordance with Schedule II, clause MO6.
3. Modus Operandi
The Company shall comply with the operational terms and conditions of
the Facility as issued by the Bank from time to time with the current
terms and conditions being set out in Schedule II attached hereto, the
contents of which form part of (and may be used in the interpretation
of) this Facility Letter.
3
<PAGE> 4
4. Fees and Commissions
The following fees and commissions will be levied by the Bank in respect
of the services provided under the Facility and will be debited to
Account No. 2. (as hereinafter defined in Schedule II).
a) ILC's (Import)
i) Opening Commission: For the first 90 days validity or part
thereof the rate will be 0.3125% calculated on the value
of the ILC with a minimum charge of L.100.00. Any
extension beyond the initial 90 days validity will be
charged at a rate of 0.125% per month or part thereof
calculated on the undrawn balance of the ILC.
ii) Amendments: For each amendment to an ILC a flat fee of
L.35.00 will be charged. If an amendment includes an
increase in the value of the ILC and/or an extension to
the then current validity, then either the opening
commission and/or monthly extension commission rates will
be applied.
iii) Negotiation/Payment Commission: This will be calculated on
the invoice value of the documents negotiated under an ILC
at a rate of 0.125% flat with a minimum charge of L.35.00.
iv) Acceptance Commission: This will be charged on the
unexpired period of the bills/documents accepted by the
Bank under a deferred payment ILC at a rate of 1.75% per
annum with a minimum charge of L.35.00.
b) Contractual Guarantees
i) For issuing Contractual Guarantees the Bank will charge
1.25% per annum on the value of the Contractual Guarantees
with a minimum charge of L.100.00.
c) Facility Fee
The Bank will charge an annual Facility Fee calculated on the
aggregate of the sub-limits referred to in clause 1 a), b) and
c), at a rate of 0.375% with the first such fee being payable by
the Company on acceptance of this Facility Letter.
d) Commitment Fee
On the first Banking Day of each calendar month the Bank will
charge for the preceding calendar month, a Commitment Fee at a
rate of 0.075% flat calculated on the aggregate from time to time
of the unutilised balance of each of the sub-limits referred to
in clause 1. a) b) and c) of this Facility Letter.
The charging period will commence thirty days after the date of
acceptance by the Company of the offer of the Facility and if the
initial charging period shall start on any
4
<PAGE> 5
day other than the first day of the calendar month, then the
first Commitment Fee will be calculated on a pro-rata basis for
such number of days pertaining thereto.
e) Administration Fee
An Administration Fee calculated at a rate of 0.25% with a
minimum of L.75.00 will be charged on any drawings made under the
Facility by way of Acceptance Credits or Advances.
f) Additional Fees
Fees and Commissions for other services available from the Bank
but not mentioned herein will be levied at the Bank's standard
tariff, details of which are available on request.
Any charges incurred directly or indirectly by the Bank on behalf
of the Company in relation to the Facility and the operation
thereof including but not limited to telex, facsimile, courier,
postage and all legal expenses including any legal costs incurred
in the preparation of this Facility Letter and Security
Documentation and registration of charge documents will be passed
to the Company at cost.
Fees and commissions incurred in an Alterative Currency will be
converted to Pounds Sterling at an Alterative Currency/Pounds
Sterling exchange rate exclusively determined by the Bank at the
time that such charges are calculated.
5. Interest Rates, Margins and Discount Charges
a) In respect of Contract Finance the interest rates and margins to
be levied by the Bank where applicable thereto will be as
follows;
i) Advances-: the rate will be the aggregate of the rate that
the Bank is offered in the interbank market deposits of a
similar amount in either Pounds Sterling or an Alternative
Currency for periods of one, two, or three months (LIBOR)
plus a margin of 2% per annum; and
ii) Contractual Overdraft-: the rate will be the aggregate of
the rate that the Bank is offered in the interbank market
deposits of up to L.50,000 (Fifty Thousand Pounds
Sterling) or the Alterative Currency equivalent for one
week plus a margin of 2% per annum.
iii) Acceptance Credits-: the rate will be the aggregate of
LIBOR plus a margin of 1.75% per annum.
iv) Discounting ILC Acceptances-: where the Bank is prepared
to discount the sum due to a supplier under a deferred
payment ILC, the discount charge will be based on a rate
which is equal to the rate that the Bank is offered in the
interbank market deposits of a similar amount and period
to that of the ILC Acceptance
5
<PAGE> 6
(as hereinafter defined in Schedule II) in either Pounds
Sterling or Alternative Currency plus a margin of 1.50%
per annum.
Interest accrued under a i) and ii) hereof will be debited to Account
No. 2 on the last Banking Day of the then current calendar month or the
first Banking Day of the succeeding calendar month.
The interest payable for the relevant period under a iii) and iv) hereof
will be debited to Account 2 on the Banking day on which the Company
draws on an Acceptance Credit or requests the discounting of an ILC
Acceptance.
b) On Account No. 2, ( as defined in Schedule II) interest will be
calculated on the daily debit balance outstanding at a rate
equivalent to 2.2596 per annum above LIBOR.
c) In the event that any amount payable by the Company to the Bank
under the terms and conditions of the Facility becomes past due,
then the Company will be charged additional interest on such past
due amount at a rate of 5% p.a. (five per cent per annum) above
LIBOR calculated from the date that such amount originally became
due until receipt by the Bank of cleared funds.
The Bank's certificate as to the amount of additional interest
shall be conclusive save for manifest error.
d) The calculation of interest or discount charges in Pounds
Sterling will be based on a 365 day year and in the case of
Alternative Currencies, on a 360 day year.
"A Banking Day" shall be a day (excluding Saturdays) when banks
in London are open for all banking business.
6. Conditions Precedent
The Facility will become available to the Company upon receipt by the
Bank of the following in a form and substance which is acceptable to the
Bank and its legal advisers:
a) The duplicate of this Facility Lender duly signed by authorised
officers accepting on behalf of the Company the terms and
conditions of the Facility; and
b) A copy, certified as true and accurate by a Director or the
Company Secretary of a resolution of the Company's Board of
Directors agreeing to accept the Facility and authorising an
officer or officers of the Company to sign the enclosed copy of
this Facility Letter, the Security Documentation, any ancillary
documentation related thereto and also execute any other notices,
advices and instructions whatsoever which from time to time may
be issued or provided under the Facility; and
c) A written undertaking addressed to the Bank from National
Westminster Bank Plc agreeing to release the security held by
them upon receipt of funds from the Bank the amount of which will
repay the Indebtedness; and
6
<PAGE> 7
d) A Deed of Release in the agreed form in respect of any of the
security held by National Westminster Bank Plc; and
e) A copy of Form 403A signed by the Directors re Satisfaction of
the Charges held by National Westminster Bank Plc; and
f) A copy certified as true and accurate by a Director or the
Company Secretary of all the current charter agreements entered
into by the Company for the Chartered Ships; and
g) Copies, certified as being true and accurate by a Director or the
Company Secretary, of the Existing Contracts together with
documentation referred to in clause 2. c) sub section iii) b) i)
ii) iii) and iv).
h) The Security Documentation pursuant to clause 7 sub paragraphs
a), b), c), g), h), i) j) and k); and
For the purpose of this Facility the Bank will rely upon the certified
copy of the Company's Memorandum and Articles of Association,
Certificate of Incorporation, Bank Services Agreement, Resolution,
General Conditions, Signature Mandate and Customer Information Sheet
currently held by the Bank.
No utilisation of the Facility may be requested by the Company if an
Event of Default or Potential Event of Default (as defined in clause 15)
shall have occurred which has not been expressly waived by the Bank in
writing or which has not been remedied to the Bank's satisfaction or
would result from such utilisation.
7. Security
As continuing security for all the Company's liabilities to the Bank,
the Bank will require the following (the Security Documentation):
a) The Fixed and Floating Charge in the form of Schedule III
attached; and
b) A Lever of Hypothecation and Pledge in the form of Schedule IV
attached; and
c) Set Off and Charge in the Form of Schedule V attached; and
d) A Counter Indemnity in the form of Schedule VI attached to be
given by the Company to the Bank on each occasion that a
Contractual Guarantee is to be issued; and
e) All title documents including but not limited to Bills of Lading
(the Title Documents) are to be in a form and substance which can
convey to the Bank in the first instance, good title to the
underlying Goods. In order that the Bank may perfect its
security, the Title Documents, a full set of which are to be
delivered to the Bank, must clearly state that the Goods are
consigned "to order" and endorsed by the shipper (or by their
appointed agent) to the order of "the Bank of N T Butterfield &
Son Ltd". Alternatively, the Title Documents can show the
consignee as "The Bank of N T Butterfield & Son Ltd"; and
7
<PAGE> 8
f) Where the Company has purchased the Goods and Title Documents are
provided, the Company will be required to deliver to the Bank
prior to release of the original documents including the Title
Documents, a Trust Receipt in the form of Schedule VII attached;
and
g) The guarantee of Exploration Holdings Limited (the Guarantor) in
the form of Schedule VIII attached together with the appropriate
resolution of the Guarantor's Board of Directors in a form
acceptable to the Bank; and
h) The guarantee of Seismic Exploration Limited (the IOM Guarantor)
in the form of Schedule IX attached supported by a Third Party
Charge in a form acceptable to the Bank over Panamanian
registered "M/V Caribbean Horizon" together with the appropriate
resolution of the IOM Guarantors Board of Directors in a form
acceptable to the Bank; and
i) A Legal opinion addressed to the Bank in a form acceptable to the
Bank confirming the validity and enforceability of the IOM
Guarantee and Third Party Charge; and.
j) The Company is to arrange for Key-Man assurance (the Key-Man
Assurance Policies) to be issued on terms satisfactory to the
Bank on the lives of Mr G Harrision, Mr N Campbell and Mr G
Purdie for not less than L.250,000 (Two Hundred and Fifty
Thousand Pounds Sterling) each and for a term of at least five
years and to execute in each case, an assignment in a form
acceptable to the Bank assigning to the Bank the respective
Key-Man Assurance Policies; and
k) Documentary evidence in respect of insurances referred to in
clause 9 c) and written notice or acknowledgement addressed by
the relevant insurance company to the Bank confirming that the
Bank is noted as 'first lost payee' in respect of any and all
claims payable under these policies; and
l) Prior to requesting a drawdown for each Contract, which shall
include a clause permitting assignment of the Contract proceeds,
the company is to deliver to the Bank a copy of the Contract,
certified as being a true copy by a Director of the Company or
the Company Secretary together with the cash flow forecasts for
the Contract plus the following;
i) An Assignment in a form acceptable to the Bank of the
amounts payable by the Buyer under the Contract; and
ii) A Notice of Assignment in a form acceptable to the Bank
signed by the Buyer; and
iii) An acknowledgement of the Assignment in a form acceptable
to the Bank signed by the Buyer; and
m) A Letter of Comfort in the form or substantially in the form of
Schedule X attached; and
n) A copy of this Facility Letter signed by the Guarantor and the
IOM Guarantor.
8
<PAGE> 9
The Security Documentation referred to in sub clause d), e), f) and l)
hereof is transactional related and as such will be required from time
to time with reference thereto included in the Modus Operandi.
8. Representations. Warranties and Undertakings
In accepting this Facility Letter the Company represents, warrants and
undertakes that now and so long as any amount remains to be drawn or
remains outstanding or any interest, fees, costs, expenses or any other
liabilities actual or contingent remain due or may become due to the
Bank hereunder, that:
a) The Company is duly incorporated and validly existing under the
laws of England and has all the necessary powers to enter into
and comply with the terms and conditions of this Facility Letter
and furthermore the Company has complied with all material,
statutory and other requirements (legal or otherwise) relative to
its business; and
b) The Company's total borrowings and liabilities actual or
contingent, including any sums outstanding hereunder, are within
its powers under its Memorandum and Articles of Association; and
c) All official consents and or approvals required to accept the
Facility have been obtained and are in full force and effect and
the Company is not by the acceptance of the Facility,
contravening any existing applicable law or regulation or any
contractual or other restriction or limitation binding on the
Company; and
d) There are no actions, suits or proceedings pending against the
Company nor to the Company's knowledge after due enquiry,
threatened against the Company or any of its assets or revenues
which could or might have a material adverse effect on the
financial condition or otherwise of the Company; and
e) The Company will promptly advise and inform the Bank on becoming
aware of any Event of Default or Potential Event of Default as
defined in Clause 16; and
f) Since the date of the last audited accounts for the Company
(copies of which have been delivered to the Bank) to the best of
the Company's knowledge there have been no material or adverse
changes in the business, assets or financial condition; and
g) The Company's obligations hereunder will at all times, during the
term of the Facility, rank in priority to all existing and/or
future indebtedness or commitments other than those commitments
which by law will automatically rank in priority; and
h) All the information supplied to the Bank in connection with the
negotiation and preparation of the terms of the Facility is to
the best of the Company's knowledge true and correct and not
misleading and furthermore the Company has disclosed everything
which the Bank could reasonably expect the Company to consider to
be material in connection herewith.
9
<PAGE> 10
The Representations, Warranties and Undertakings will be deemed to be
repeated by the Company on and as of each drawing under the Facility as
if made with references to the facts and circumstances existing at such
respective date.
9. Covenants
So long as amounts remain outstanding or remain to be drawn under the
Facility the Company shall:
a) Not create or permit to arise any mortgage, debenture, charge,
pledge lien or any other encumbrance or security whatsoever over
any part of the Company's present or future undertaking, assets
or revenues other than the charge dated 25 August 1993 in a
favour of Marley Water Proofing Limited without the Bank's prior
written consent, which shall not be unreasonably withheld; and
b) Notify the Bank in writing of any material change in the nature
of the Company's business as carried on at the date hereof which
may involve acquisition, disposal or otherwise, of the whole or
any substantial part of the Company's undertaking, property,
assets or except for stock in trade; and
c) Ensure that insurances on and in relation to the Company's
business and assets are maintained with reputable underwriters or
Insurance companies against such risks and to such extent as is
usual for companies carrying on a business such as that carried
on by the Company and the Bank's interests noted thereon; and
d) Not, without prior written consent from the Bank which shall not
be unreasonably withheld, make any fundamental changes whatsoever
to the Company's Memorandum and Articles of Association; and
e) Not without the prior written consent from the Bank make or grant
any loan or give any credit to any person other than normal trade
credit; and
f) Enter into negotiations with the Bank in the event that the
Bank's legal advisors recommend that the existing security be
amended and/or that the Bank should seek additional security, to
secure the Company's liabilities hereunder and provide such
additional security as may be required; and
g) Except under this Facility, borrow or raise any money or incur
any credit or give any guarantees, indemnities or other
assurances against financial loss other than lease or hire
purchase agreements entered into from time to time by the Company
for the purchase of capital equipment or office premises and/or
the chartering of Chartered Ships which are to be used the
Company in carrying out work pursuant to the terms of a Contract;
and
h) Sell transfer lend or otherwise dispose of all or any part of
your present or future undertaking assets, rights or revenues
(whether transactions are related or not) without the Bank's
prior written consent which shall not be unreasonably withheld;
and
10
<PAGE> 11
i) You will permit the Bank or its representatives and/or advisers
to have full access to the Chartered Ships; and
j) Agree to provide the Bank with such additional financial
information as it may reasonably request in connection with the
Facility.
10. Financial Reporting Requirements
The Company is required to deliver to or obtain for the Bank the
following financial information;
a) On a Monthly basis and within seven Banking Days of the last
Banking Day in the preceding calendar month;
i) Management Accounts plus up to date cash flow forecasts to
each Contract where applicable; and
ii) Aged debtors and creditors analysis.
b) Within twenty one days of the end of each quarterly trading
period;
i) Management prepared profit and loss account and balance
sheet; and
c) Within thirty days of the end of each six month accounting
period;
i) Projected cash flow forecasts for the next six months
trading; and
d) Within Ninety days of each financial year end;
i) two copies of the Company's Annual Audited Report and
Accounts together with a certificate of compliance signed
by the Company Secretary or the Company's auditors; and
ii) Cash flow forecasts and budgets for the next twelve months
trading; and
iii) Copies of the Audited Report and Accounts (where
applicable) for the Guarantor.
11. Indemnity
a) All costs, charges and expenses (including United Kingdom Value
Added Tax), incurred by the Bank in respect of the Facility or in
suing for or recovering any sum due to the Bank hereunder
including but not limited to, legal costs, shall be for the
Company's account in each case on a full indemnity basis, and
payable by the Company on receipt of the Bank's first written
demand, which shall be conclusive save for manifest error.
b) Without limitation to such rights as the Bank may have under the
Facility and without prejudice to any of the Bank's other rights
under any indemnities, guarantees or security, the Company hereby
unconditionally and irrevocably undertakes to indemnify the Bank
11
<PAGE> 12
against all liabilities, losses, claims, costs and expenses of
whatever nature (including the cost of any investment currency
the Bank may be required to buy and any exchange control premiums
or any penalties or other expenditure) which may result or which
the Bank may suffer, incur or sustain directly or indirectly
under or in respect of the Facility inter-alia by reason of the
failure by the Company to perform any of the obligations
hereunder, including without limitation any failure to procure
any other party to fulfill any obligations or satisfy any
liabilities directly or indirectly under or in connection with
the Facility.
c) This Indemnity shall be irrevocable and shall remain in full
force and effect until the Company's liabilities actual or
contingent in connection with the Facility have been discharged
or otherwise satisfied in full, and shall extend to all
extensions renewals, increases or replacements of the Facility
and is in addition to and shall not prejudice or affect any other
security or right or remedy available to the Bank and shall not
be prejudiced or affected thereby or by the Bank giving time or
compounding with or granting indulgence or other relief to any
other person or party or by the Bank failing to comply with any
formal or other legal requirements or the exercise of statutory
or other remedies relating to the same or any other matter or
thing which but for this provision might exonerate the Company.
12. Payments and Taxes
Any payments due to the Bank hereunder are to be made without
counter-claim and clear of and without deduction for, or on account of,
any present or future taxes, levies, imposts, duties, deductions,
withholdings or other charges of whatsoever nature imposed or levied in
or on behalf of any authorities (governmental or otherwise). In the
event that a payment is reduced the Bank will require a payment from the
Company covering such reduction which will then enable the Bank to
receive an amount equal to the full amount which the Bank would have
received had no such deduction been made.
No payment to the Bank under this Facility Letter pursuant to any
judgement or order of any court or otherwise shall operate to discharge
the obligations of the Company in respect of which it was made unless
and until payment shall have been received in Pounds Sterling or an
Alternative Currency: and to the extent that the amount of any such
payment shall on actual conversion into Pounds Sterling or an
Alternative Currency, the Bank shall have a further and separate course
of action against the Company for the recovery of such sum as shall
after conversion into Pounds Sterling or Alternative Currency be equal
to the amount of the shortfall.
13. Reserve Requirement
In the event of change in existing laws, regulations or directives to
which the Bank may be subjected or in the interpretation or application
thereof, or the introduction of any new law, regulation or directive to
which the Bank may be subjected, which has the effect of reducing the
return to the Bank in performing any of the services hereunder, the Bank
reserves the right to alter the basis on which interest, fees and
commissions are charged under the Facility so as to compensate for such
reduced return. The Bank will wherever possible notify the Company in
writing prior to any changes being implemented.
12
<PAGE> 13
14. The Bank's Right of Set-Off and Consolidation
It is hereby agreed and declared that in addition to any right of
set-off or other similar right to which the Bank may be entitled by law,
the Bank may at any time and without notice to the Company combine and
consolidate all or any accounts between the Company and the Bank and/or
set-off any moneys whatsoever and whether on current account or deposit
account and whether in Pounds Sterling or in an Alternative Currency
which the Bank may at any time hold for the account of the Company
against any liabilities whatsoever whether such liabilities are actual
or contingent and whether owed as principal or surety.
15. Events of Default
Notwithstanding anything herein contained and without limitation to the
Bank's rights hereunder the Bank shall on the occurrence of any of the
following events of default be entitled to terminate the Facility and
demand from the Company either, immediate repayment of or full cash
cover for all the Company's liabilities then outstanding (actual or
contingent) hereunder. At the same time the Bank will require a payment
from the Company for any losses and expenses (including loss of profit)
incurred or suffered by the Bank in consequence of an Event of Default.
The Bank's certificate as to the amount of such losses and expenses
shall be conclusive save for manifest error.
a) Each of the following shall be an Event of Default namely:
i) If the Company defaults in the payment of any monies which
may become due to the Bank or there shall be any breach by
the Company of the terms and conditions of the Facility or
any other facility letter, guarantee, security agreement,
document or other obligation which the Company may, from
time to time have with the Bank, its associates or
subsidiaries; or
ii) If any representation warranty undertaking or covenant
from time to time made or deemed to have been made by the
Company to the Bank, its associates or subsidiaries is
incorrect or misleading or if any of the terms and
conditions of the Facility or any other obligation or
liability of the Company to the Bank, its associates or
subsidiaries is not fulfilled; or,
iii) If the Company or the Guarantor or the IOM Guarantor
defaults or receives notice of default under any trust,
deed, debenture, loan agreement, guarantee (which
expression shall include all contingent liabilities
undertaken in respect of the obligations or liabilities of
any third party including all guarantees, indemnities,
bonds or instruments of suretyship whether constituting
primary or secondary obligations or liabilities whatsoever
their designation) or if money payable thereunder becomes
due and is not paid on or before the due date or if any
surety created by the Company becomes enforceable; or
iv) If a petition is presented or any order made or a
resolution passed for the winding up of the Company, or if
the Company is dissolved or a notice is issued concerning
a meeting for the purpose of passing any such resolution
or a
13
<PAGE> 14
resolution to reduce or redeem all or any part of the
Company's issued share capital or of considering whether
any and if so what measures should be taken to deal with
the situation referred to in Section 142 of the Companies
Act 1985 (or any mandatory or statutory re-enactment
thereof) or if the Company ceases or threatens to cease to
carry on its business or any substantial part thereof in
the normal course, save in any such case for the purpose
of and followed within six months by an amalgamation or
reconstruction not involving or arising out of insolvency
on terms previously approved by the Bank in writing; or
v) If any encumbrance shall take possession or a receiver,
trustee, administrative receiver, administrator or similar
officer shall be appointed to the whole or any part of the
Company's undertaking, property or assets or if any
judgement or order made against the Company is not
complied with within seven days or if any execution,
distress, or other process be levied or enforced upon or
sued out against any of the Company's property, assets or
revenues; or
vi) If the Company becomes or is deemed to be unable to pay
debts as and when they fall due whether within the meaning
of Section 518 of the Companies Act 1985 (or any mandatory
or statutory re-enactment thereof) or otherwise or if a
notice is issued convening a meeting of or the Company
proposes to enter into any composition or arrangement with
its creditors or agrees or declares a moratorium in
respect of any of its debts or stops payment or if notice
is given to the nominee referred to in Part I of the
Insolvency Act 1986 (or mandatory or statutory
re-enactment thereof) of an intended proposal for any such
voluntary arrangement in that part of the Act or if a
substantial part of the Company's business property assets
or capital is nationalised, seized or appropriated; or
vii) If there is at any time a change in the voting control of
the Company which the Bank considers material or if
without the Bank's prior written consent control of the
Company should pass to any person or group of persons (as
defined in Section 839 of the Income and Corporation Taxes
Act 1988) (or any mandatory or statutory re-enactment
thereof) or institution or group of institutions not
having control at the date hereof; or
viii) If any material provision of this Facility Letter or any
security given in respect thereof ceases in any respect to
be in full force and effect or to be continuing or is
purported to be determined or becomes in jeopardy or is
invalid or unenforceable; or
ix) If any suspension of payments is filed by the Company
under any applicable bankruptcy law or similar statute; or
x) If any waiver of consent, (governmental or otherwise),
required for the validity enforceability or performance of
the Facility is for any reason is not provided or is
withdrawn or ceases to be in full force and effect; or
14
<PAGE> 15
xi) If the Bank considers that the Company's financial
position is deteriorating or has deteriorated so as to
place in jeopardy the repayment of any amounts which will
become due or outstanding hereunder.
b) The Company will immediately notify the Bank in writing of the
occurrence of any Event of Default (with the exception of Clause
15 a) xi. above). No failure or delay on the Bank's part in
exercising any right hereunder shall operate as a waiver thereof
nor shall any single or partial exercise of any such right
preclude its further exercise.
c) Any of the events described in clause 15 a) above which occur in
relation to the Guarantor or the IOM Guarantor or to any present
or future holding company, and/or subsidiaries as defined in
Section 736 of the Companies Act 1985 (or any mandatory or
statutory re-enactment thereof) which has a material and/or
adverse effect (financial or otherwise) will also be deemed to be
an Event of Default.
d) For the purpose of this Facility Letter, Potential Event of
Default shall mean any event which with the giving of notice
and/or lapse of time and/or making any determination by the Bank
would constitute an Event of Default.
16. Notices
All notices, requests, demands or other communications to or upon the
respective parties to the Facility shall be in writing delivered
personally or by first class prepaid letter, telex or telefax and shall
be deemed to have been duly given or made when delivered personally or
by letter (or by telex or telefax) to the other party at its address set
out above or at such other address as the party concerned may hereafter
specify to the other in writing (or in the case of telex or telefax to
the published number of the addressee). Posted letters shall be deemed
to have been delivered twenty-four hours after posting (Saturdays,
Sundays and Public Holidays excepted) and telexes and telefaxes shall be
deemed to have been despatched during business hours and if they are not
so despatched, at the opening of business on the next following Banking
Day.
17. General
a) In this Facility Letter words importing the singular include the
plural and vice versa.
b) Nothing contained in this Facility Letter shall restrict the
operation of any general lien, right of set-off or any other
rights or remedies whatsoever which the Bank may have whether by
law or otherwise.
c) In the event that any provisions under this Facility Letter or
the Security Documentation should be or become ineffective in
whole or in part, the remaining provisions shall not be affected
in any way.
d) No failure to exercise and no delay in exercising by the Bank of
any right, power or privilege under this Facility Letter shall
operate as a waiver thereof nor shall any single or partial
exercise of any such right preclude in further exercise. The
rights and remedies
15
<PAGE> 16
herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
e) The headings to clauses are for convenience only and have no
legal effect.
18. Expiry/Review Date of the Facility
a) It is to be understood that whilst the Bank reserves the right to
terminate the Facility where an Event of Default or Potential
Event of Default occurs pursuant to Clause 15 hereof, it is the
Bank's present intention that the Facility will remain available
to the Company until 31st July 1995 (the Expiry Date).
b) In the event that the Company does not receive from the Bank, at
least one month prior to the Expiry Date, written notice
confirming inter-alia that the Facility has been extended for a
further period then the Facility shall be deemed to have been
cancelled. The then current obligations and liabilities
outstanding at the Expiry Date will unless the Company is in
default pursuant to clause 15 hereof, be repayable in accordance
with the terms and conditions of the Facility. After such date no
new ILC applications will be processed and/or new drawings
permitted.
c) The Bank's certificate as to the amount due pursuant to b) hereof
and repayment dates thereof will be sent to the Company and shall
be conclusive save for manifest error.
19. Assignment
The Bank shall be entitled to assign and/or transfer all or part of its
interest in the Facility and Security Documentation to any one or more
banks or financial institutions at any time at the Bank's sole
discretion and thereafter reference to the Bank throughout the Facility
shall be deemed to include such assignees.
The Company cannot assign its rights and obligations under the Facility
without the Bank's prior written consent.
20. Applicable Law
This Facility Letter shall be deemed to be made under and shall be
construed in accordance with and governed in all respects by English law
with jurisdiction in the courts of England and Wales but the Facility
may be enforced in any court of competent jurisdiction selected by the
Bank.
21. Acceptance
The offer of the Facility will remain open for a period of one month
from the date hereof and the Bank duly requests the Company to confirm
its acceptance in accordance with Clause 7. Conditions Precedent. In the
event that the Company's acceptance is not received by the Bank within
the time specified, then the offer will lapse.
16
<PAGE> 17
The Bank is pleased to have arranged the Facility and trusts it will operate to
our mutual satisfaction.
Yours faithfully,
for and on behalf of
Bank of N T Butterfield & Son Ltd
/s/ [illegible signatures] /s/ [illegible signatures]
Authorised Signature Authorised Signature
17
<PAGE> 18
IMPORTANT NOTICE
This offer creates legal obligations which will be binding upon the Company and
the Company is advised to obtain appropriate legal advice. By the Company's
acceptance of this offer the Company confirms that it has been advised by the
Bank to take independent legal advice regarding the contents of this offer and,
whether or not the Company has followed this advice, the Company accepts this
offer with full knowledge and understanding of its meaning and effect.
----------------
We, Horizon Exploration Limited, hereby accept and agree to abide by the terms
and conditions of the Facility as detailed herein.
/s/ G.M. Harrison
for and on behalf of /s/ Neil A.M. Campbell
HORIZON EXPLORATION LIMITED DATE:
(Signed pursuant to the Board Resolution dated 30th August 1994 a certified
copy of which is attached hereto.)
As Guarantor, we Exploration Holdings Limited hereby acknowledge the terms and
conditions of the Facility contained herein.
/s/ G.M. Harrison
for and on behalf of /s/ Neil A.M. Campbell
EXPLORATION MOLDINGS LIMITED DATE:
As Guarantor, we Seismic Exploration Limited hereby acknowledge the terms and
conditions of the Facility contained herein.
for and on behalf of /s/ G.M. Harrison
SEISMIC EXPLORATION LIMITED DATE:
18
<PAGE> 1
10.33.3
The Directors
Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent
TN13 1XR
Dear Sirs:
We refer to the Facility Letter dated 23 August 1994 between Horizon
Exploration Limited (the Company) and the Bank of NT Butterfield & Son Limited
(the Bank).
The Bank is pleased to confirm that the Facility is amended as follows and
except as otherwise specified in this letter (Amendment Letter No. 1), the
terms and expressions defined in the Facility Letter shall have the same
meaning and effect where used herein.
The amendments to the Facility are;
1. Clause 1 - Amount and Purpose - the opening paragraph is now to read:
"The maximum sum to be drawn under the Facility shall not exceed in
aggregate L.4,300,000 (Four Million Three Hundred Thousand Pounds
Sterling) (the Facility Amount) or subject to availability the
equivalent in any other major currency other than Pounds Sterling (the
Alternative Currency). The Facility Amount will remain available to
the Company until the 31 July 1995 after which date the amount
available for drawing will be reduced to L.3,400,000 (Three Million
Four Hundred Thousand Pounds Sterling).
2. Clause 1 - Amount and Purpose - paragraph a) is now to read:
a) "Within the Facility Amount a sub-limit of up to L.3,900,000 (Three
Million, Nine Hundred Thousand Pounds Sterling) which will remain
available until the 31 July 1995 after which date the sub-limit will
be reduced to L.3,000,000 (Three Million Pounds Sterling)".
Clause 1 - a) i) and ii) remain unchanged.
3. Clause 1 - Amount and Purpose - paragraph b) the sub-limit referred to
is now to read:
"L.350,000 (Three Hundred and fifty Thousand Pounds Sterling)"
<PAGE> 2
4. Clause 1 - Amount and Purpose - paragraph c) is now to read:
c) "Within the Facility Amount a sub-limit of up to L.50,000 (Fifty
Thousand Pounds Sterling) for the issuance of a guarantee in the
standard form in favour of HM Customs and Excise (the Duty Deferment
Guarantee) providing up to L.25,000 (Twenty Five Thousand Pounds
Sterling) per month for deferred payment terms on liabilities incurred
by the Company in respect of excise duties, levies, imposts and value
added tax due to HM Customs and Excise".
5. Clause 2 - Modus Operandi
A revised Modus Operandi in the form of Schedule II dated February
1995 is attached.
6. Clause 4 - Fees and Commissions - paragraph b) is now to read:
b) "Duty Deferment Guarantee
i) The fee for the Duty Deferment Guarantee will be 1.25% per annum on
the total liability thereunder (i.e. up to a maximum of L.50,000) with
a minimum charge of L.250.00".
7. Clause 6 - Security - the opening paragraph is now to read:
"As continuing security for an the Company's liabilities to the Bank
including those under the Term Loan Facility Letter dated 27 February
1995 between the Bank and the Company (the Term Loan Facility), the
Bank will require and/or continue to rely upon the following (the
Security Documentation)"
8. Clause 6 - Security - paragraph d) is now to read:
"d) A Counter Indemnity in the form of Schedule VI attached is to be
given by the Company to the Bank in respect of the Duty Deferment
Guarantee".
9. Clause 6 - Security - the final paragraph is now to read:
"The Security documentation referred to in sub-paragraphs e), f) and
l) hereof is transactional related and as such will be required from
time to time with reference thereto included in the Modus Operandi.
The Security provided by the Company to the Bank under the Term Loan
Agreement will also constitute security for the Facility provided
hereunder, which for the avoidance of doubt will include:
i) A Chattel Mortgage in a form acceptable to the Bank over
assets to be financed by the Bank under the Term Loan
Facility; and
2
<PAGE> 3
ii) A Deed of Subordination in a form acceptable to the bank in
respect of the Majority Shareholders Loan.
10. Clause 8 - Representations, Warranties and Undertakings - paragraph g)
is now to read:
g) "The Company's obligations hereunder will at all times during the
term of this Facility and the Term Loan Facility, rank in priority to
an existing and/or future indebtedness or commitments other than those
commitments which by law win automatically rank in priority; and"
11. Clause 9 - Covenants - the following paragraphs are to be added:
k) Not make any payments of dividends to the shareholders for so
long as the Company has any liability outstanding to the bank
under this Facility or the Term Loan Facility; and
l) The Company is to comply with the following financial
covenants which will be tested against the Company's audited
financial statements for the year ending 31 December 1995.
i) Gearing : Not greater than 0.80:1
ii) Leverage : Not greater than 2:1
iii) Interest Cover : Not less than 3.75 x
iv) Net Worth : Not less than L.3,600,000
Note the following definitions apply in respect of the financial covenants.
"Gearing" means the Company's interest bearing debt net of cash balances held
to Net Worth.
"Leverage" means all balance sheet liabilities to Net worth.
"Interest Cover" means operating profits before interest payable.
"Net Worth" means paid-up share capital, the retained earnings plus the
Majority Shareholders Loan less intangible assets and non-quoted investments.
"Majority Shareholders Loan" means the loan granted to the Company by Energy
Research International Limited c/o Caledonian Bank and Trust Limited, PO Box
1045, Georgetown, Grand Cayman, Cayman Islands. (The Majority Shareholder) in
the sum of USD 2,000,000 (Two Million United States Dollars) which for the
avoidance of doubt is subordinated to this Facility and the Term Loan Facility.
12. Clause 9 - Covenants - paragraph c) is now to read:
3
<PAGE> 4
c) "Ensure that insurances on and in relation to Company's business
and assets (including the assets referred to in the Term Loan Facility
are maintained with reputable underwriters or insurance companies
against such risks and to such extent as is usual for companies
carrying on a business such as that carried on by the Company and the
Bank's interests are to be noted thereon as `first loss payee'; and"
13. Clause 9 - Covenants - paragraph g) is now to read:
"Except under this Facility, the Term Loan Facility and the Majority
Shareholders Loan and not without the prior written notice to the
Bank, borrow or raise any money or incur any credit or give any
guarantees, indemnities or other assurances against financial loss
other than lease or hire purchase agreements entered into from time to
time by the Company for the purchase of capital equipment or the
office premises or the chartering of Chartered Ships which are to be
used by the Company to carry out work pursuant to the terms of a
Contract; and"
14. Clause 15 - Events of Default - paragraph a) i) to now read:
i) "If the Company defaults in the payment of any monies which may
become due to the Bank or there shall be any breach by the Company or
any other party of the terms and conditions of the Facility, the Term
Loan Facility, the Deed of Subordination or any other facility letter,
guarantee, security agreement, document or other obligation which the
Company may, from time to time have with the Bank, its associates or
subsidiaries; and"
15. Clause 15 - Events of Default - paragraph a) viii) to now read:
viii) "If any material provision of this Facility and/or the Term Loan
Facility and/or the Deed of Subordination and/or any security given in
respect thereof ceases in any respect to be in full force and effect
or to be continuing or is purported to be determined or becomes in
jeopardy or is invalid or unenforceable; or"
All other terms and conditions remain unchanged.
The amendments contained in Amendment No. 1 will become effective upon receipt
by the Bank of the following:
i) The duplicate copy of this letter signed by authorized offices
of the Company accepting and agreeing to abide by the amended
terms of the Facility; and
ii) The duplicate copy of this letter countersigned by the
Guarantor and the IOM Guarantor acknowledging the amendments
to the Facility; and
iii) The Company's acceptance of the Term Loan Facility.
4
<PAGE> 5
The Bank is pleased to have arranged the amendments and trusts that the
Facility will continue to operate to our mutual satisfaction.
Yours faithfully
for and on behalf of
The Bank of NT Butterfield and Son Limited
/s/ [illegible signature] /s/ [illegible signature]
Authorized Signature Authorized Signature
IMPORTANT NOTICE
This amendment creates legal obligations which will be binding upon the Company
and the Company is advised to obtain appropriate legal advice. By the Company's
acceptance of this amendment the Company confirms that it has been advised by
the Bank to take independent legal advice regarding the contents of this
amendment and whether or not the Company has followed this advice, the Company
accepts this amendmement with full knowledge and understanding of its meaning
and effect.
We, Horizon Exploration Limited hereby accept and agree to abide by the amended
terms and conditions contained in this letter, Amendment No. 1.
for and on behalf of
Horizon Exploration Limited
/s/ Neil A.M. Campbell
/s/ G.M. Harrison
Authorized Signature(s) Date:
As IOM Guarantor, we, Seismic Exploration Limited, acknowledge the amendments
to the terms and conditions of the Facility, contained in Amendment No. 1.
for and on behalf of
Seismic Exploration Limited
/s/ G.M. Harrison
/s/ George Purdie
5
<PAGE> 6
Authorized Signature(s) Date:
As Guarantor, we, Exploration Holdings Limited, acknowledge the amendments to
the terms and conditions of the Facility.
for and on behalf of
Exploration Holdings Limited
/s/ Neil A.M. Campbell
/s/ G.M. Harrison
Authorized Signature(s) Date:
6
<PAGE> 1
10.33.4
19 February 1996
The Directors
Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent
TNI IXR
Dear Sirs,
We refer to the Facility Letter dated the 23rd August 1994 and Amendment Letter
No. 1 between Horizon Exploration Limited (the Company) and the Bank of N.T.
Butterfield and Son Limited (the Bank).
The Bank is pleased to confirm that the Facility is amended as follows and
except as otherwise specified in this letter, the terms and expressions defined
in the Facility Letter and Amendment No. 1 shall have the same meaning and
effect where used herein.
The amendments to the Facility are:
1. Clause 1 Amount and Purpose - the opening paragraph is now to read:
The maximum sum to be drawn under the Facility shall not exceed
L.4,560,000 (Four Million Five Hundred and Sixty Thousand Pounds
Sterling) (the Facility Amount) or subject to availability the
equivalent in any other major currency other than Pounds Sterling (The
Alternative Currency) to provide the Company with:"
2. Clause 1. Amount and Purpose, paragraph a). The sub-limit referred to
herein is now to read:
"L.4,160,000 (Four Million One Hundred and Sixty Thousand Pounds
Sterling)".
3. Clause 18 Expiry/Review Date of the Facility. The Expiry Date is now
to read:
"31st March 1996".
All other terms and conditions remain unchanged.
Kindly acknowledge receipt and acceptance by signing and returning to the Bank
with fourteen days of the date hereof, the duplicate copy of this letter
(Amendment No. 2) which must also be countersigned by the Guarantor and the IOM
Guarantor.
<PAGE> 2
Yours faithfully
for and on behalf of
The Bank of N.T. Butterfield & Son Limited
/s/ [illegible signature] /s/ [illegible signature]
------------------------------
Authorized Signature Authorized Signature
We, Horizon Exploration Limited hereby acknowledge receipt and acceptance of
the amended terms and conditions contained in this letter.
for and on behalf of
Horizon Exploration Limited
/s/ Neil A.M. Campbell
/s/ G.M. Harrison
Authorized Signature(s) Date: 1st March 1996
As Guarantor, we Exploration Holdings Limited hereby acknowledge the amended
terms and conditions of the Facility and confirm that our guarantee shall not
be affected in any way by the amendments made to the Facility and detailed in
this letter.
for and on behalf of
Horizon Holdings Limited
/s/ G.M. Harrison
/s/ Neil A.M. Campbell
Authorized Signature(s) Date: 1st March 1996
As IOM Guarantor, we Seismic Exploration Limited hereby acknowledge the amended
terms and conditions of the Facility and confirm that our guarantee shall not
be affected in any way by the amendments made to the Facility and detailed in
this letter.
for and on behalf of
Seismic Exploration Limited
/s/ G.M. Harrison
/s/ Neil A.M. Campbell
Authorized Signature(s) Date: 1st March 1996
2
<PAGE> 1
10.33.5
10 May 1996
The Directors
Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent
TNI IXR
Dear Sirs,
We refer to the Facility Letter dated the 24th August 1994 and the Amendment
Letters No. 1 and No. 2 dated the 3rd February 1995 and 19th February 1996
respectively (together the Amendment Letters) between Horizon Exploration
Limited (the Company) and the Bank of N.T. Butterfield & Son Limited (the
Bank).
The Bank is pleased to confirm that the Facility is amended as follows and
except as otherwise specified in this letter, the terms and expressions defined
in the Facility Letter and Amendment Letters shall have the same meaning and
effect where used herein.
The amendments to the Facility are:
1. Clause 1. Amount and Purpose - the opening paragraph is now to read.
"The maximum aggregate sum to be drawn under the facility shall be
temporarily increased by L.840,000 (Eight Hundred and Forty Thousand
Pounds Sterling) (the Temporary Increase) to a new limit which is not
to exceed L.5,400,000 (Five Million Four Hundred Thousand Pounds
Sterling) (the Facility Amount) or subject to availability the
equivalent in any other major currency other than Pounds Sterling (the
Alternative Currency)."
Subject to the Company continuing to comply with the terms and
conditions of the Facility and providing that an Event of Default or
Potential Event of Default (as defined in clause 15. d) shall not have
occurred which has not been expressly waived by the Bank in writing or
which has not been remedied to the Bank's satisfaction or would result
from such utilization, the Facility Amount will remain available to
the Company until the 30th September 1996 after which date the
Facility Amount will be reduced by L.840,000 (Eight Hundred and Forty
Thousand Pounds Sterling) to L.4,560,000 (Four Million Five Hundred
and Sixty Thousand Pounds Sterling).
<PAGE> 2
2. Clause 2. Amount and Purpose paragraph a) is now to read.
"Within the Facility Amount, a sub-limit of up to L.5,000,000 (Five
Million Pounds Sterling) which will remain available to the Company
until 30th September 1996 after which date this sub-limit will be
reduced to L.4,160,000 (Four Million One Hundred and Sixty Thousand
Pounds Sterling)."
3. Clause 4. Fees and Commissions paragraph c) Facility Fee is now to
read:
i) The Bank will charge an annual Facility Fee calculated on the
aggregate of the sub-limits referred to in clause 1 a), b) and
c) at a rate of 0.75% per annum.
ii) Where a Temporary Increase is made available to the Company,
the Bank will charge a flat fee of 0.5% calculated on the
amount of such Temporary Increase.
4. Clause 9 Covenants, paragraph 1) is now to read.
a) The Company is to comply with the following financial
covenants which will be measured against the Company's audited
Report and Accounts for the year ending 31st December 1996.
i) Gearing: Not greater than 0.75:1
ii) Leverage: Not more than 1.75:1
iii) Interest Cover: Not less than 3.25 times the sum paid
iv) Net Worth: Not less than L.5,500,000 (Five Minion
Five Hundred Thousand Pounds Sterling)
b) The following definitions shall apply in respect of the
Financial Covenants.
"Gearing" means an interest bearing debt net
of cash balances to Net Worth.
"Leverage" means the aggregate total of the
balance sheet liabilities to Net
Worth.
"Interest Cover" means the total of the operating
profits before interest and tax.
"Net Worth" means the paid up share capital plus
retained earnings and the
Subordinated Loan, less intangible
assets and all quoted and non quoted
investments.
"Subordinated Loan" means the loan granted to the
Company by Energy Research
International Limited, c/o
Caledonian Bank and Trust
2
<PAGE> 3
Limited, P.O. Box 1045, Georgetown,
Grand Cayman, Cayman Islands
(E.R.I.L.) in the sum of USD
2,000,000 and is shown as part
equity and part loan in the Balance
Sheet. For the avoidance of doubt
the Subordinated Loan is
subordinated to this Facility and
the Term Loan Facility as per the
Deed of Subordination between the
Bank and E.R.I.L. dated 21st March
1995."
5. Clause 18, Expiry/Review Date of the Facility
The Expiry Date is now to read "31st March 1997"
All other terms and conditions remain unchanged.
The amendments contained in this letter (Amendment No. 3) will become effective
upon receipt by the Bank of the following:
i) The duplicate copy of this letter signed by authorized officers of the
Company; and
ii) A Copy certified as true and accurate by a Director or the Company
Secretary of a resolution of the Company's Board of Directors agreeing
to accept the amended terms and conditions of the Facility; and
iii) The duplicate copy of this letter countersigned by the Guarantor and
the IOM Guarantor acknowledging the amendments to the Facility.
The Bank is pleased to have arranged the amendments and trusts that the
Facility will continue to operate to our mutual satisfaction.
Yours faithfully
for and on behalf of
The Bank of NT Butterfield & Son Limited
/s/ [illegible signature] /s/ [illegible signature]
Authorized signature Authorized Signature
/s/ G.M. Harrison
3
<PAGE> 4
We, Horizon Exploration Limited hereby confirm our acceptance of the
amended terms and conditions to the Facility.
For and on behalf of
Horizon Exploration Limited
Authorized Signature(s) Date:
Signed pursuant to the Board Resolution dated 20 May, 1996, a copy of which is
attached hereto.
/s/ G.M. Harrison
/s/ Neil A.M. Campbell
As IOM Guarantor, we Seismic Horizon Limited acknowledge the amendments to the
terms and conditions of the Facility Letter and confirm that our Guarantee
shall not be affected in any way by the amendments made to the Facility Letter.
For and on behalf of
Seismic Horizon Limited
/s/ George Purdie
/s/ G.M. Harrison
Authorized Signature(s) Date:
As Guarantor, we Exploration Holdings Limited acknowledge the amendments to the
terms and conditions of the Facility Letter and confirm that our Guarantee
shall not be effected in any way by the amendments made to the Facility Letter.
For and on behalf of
Exploration Holdings Limited
Authorized Signature(s) Date:
/s/ G.M. Harrison
/s/ George Purdie
4
<PAGE> 1
EXHIBIT 10.33.6
The Directors, 19th May 1997
Horizon Exploration Limited
6 Pembroke Road,
Sevenoaks, Kent,
TN13 1XR
Dear Sirs,
RE:STG 4,460.000 ON DEMAND CREDIT FACILITY AND USD TERM LOAN (CURRENT BALANCE
OUTSTANDING USD 400,000) (TOGETHER 'FACILITIES') MADE AVAILABLE BY THE BANK OF
N.T. BUTTERFIELD & SONS LIMITED (THE 'BANK') TO HORIZON EXPLORATION LIMITED
('THE COMPANY')
You have advised the Bank that the Company is in violation of the financial
covenants relating to the Company's gearing (interest bearing debt/net worth),
leverage (total liabilities/net worth), interest cover ratio and net worth
requirements the details of which are set forth in the documentation relating
to the above Facilities.
Subject to the Company agreeing to fully comply with the remaining terms,
conditions and provisions of the Facilities (confirmation of which will be
evidenced by the Company signing and returning to the Bank the duplicate copy
of this letter within seven days of the date hereof) the Bank hereby waives the
default arising from the Company's failure to satisfy the financial covenant
requirements for a period which shall terminate on the either of, the
floatation of the Company, written notification from the Company to the Bank
that the floatation has been postponed and/or cancelled or the 30th September
1997.
Notwithstanding the foregoing the Company is reminded that the Facilities
remain repayable on demand and the waiver contained herein shall not prejudice
the Banks right to demand repayment of the Facilities at anytime.
Yours Faithfully,
for and on behalf of
The Bank of N.T. Butterfield & Sons Limited
/s/ [illegible signature] /s/ [illegible signature]
Authorized Signature Authorised Signature
<PAGE> 2
As a condition of the waiver given by the Bank to the Company, we Horizon
Exploration Limited hereby agree to comply with the remaining terms, conditions
and provisions of the Facilities.
for and on behalf of
Horizon Exploration Limited
/s/ Neil A.M. Campbell
Authorised Signature(s) Date: 23 May 1997
<PAGE> 1
EXHIBIT 10.34.2
Tidewater Marine
February 12, 1996
Horizon Seismic Inc.
11200 Westheimer St., Suite 410
Houston, TX 77042
Attention: Mr. David Burns
Vice President
RE: Time Charter of M/V ABSHIRE TIDE, Official Number 663944
Gentlemen:
Pursuant to the terms and conditions of that certain Blanket Time
Charter dated February 9, 1996, entered into by and between Tidewater Marine,
Inc. ("OWNER") and Horizon Seismic Inc. ("CHARTERER'), this letter sets forth
our understanding and agreement that the above captioned vessel ("the Vessel"),
has been chartered by Owner to Charterer subject to the following:
1. Date of delivery: Delivery is to be on or about March 2, 1996.
2. Location of delivery: Quality Shipyards, Inc., Houma, Louisiana.
3. Location of redelivery: Quality Shipyards, Inc., Houma, Louisiana.
4. Area of Operations/Navigation Limits: Gulf of Mexico.
5. Minimum term of Charter: Six (6) months. Thereafter, unless cancelled
or extended for a specific term, the term hereof shall continue on an
indefinite basis.
6. Termination: After the aforesaid minimum term, unless this Short Form
Charter Agreement be extended for a specific term, OWNER may terminate
this Agreement at any time and for any reason by giving CHARTERER not
less than sixty (60) days' written notice of termination; and
CHARTERER may terminate this Agreement at any time and for any reason
by giving OWNER not less than fifteen (15) days' written notice of
termination. In the event this Short Form Charter Agreement is
terminated at any time prior to the end of the minimum term for any
reason other due to the fault or breach of contract of OWNER,
CHARTERER shall pay to OWNER an early termination fee consisting of
the remaining unamortized balance of the actual cost incurred by OWNER
at the outset of this Short Form Charter Agreement for the
modifications described hereinbelow.
7. Daily charter rate: The Vessel's daily charter rate payable to OWNER
by CHARTERER for its use of the Vessel shall be as follows:
a. Base Rate $3,700/day
b. Extra Crew
i. Cook- $ 150/day
ii. Messman- $ 100/day
iii. Mate- $ 200/day
c. Modification Fee- $1,094/day
---------
Total daily charter rate- $5,244/day
<PAGE> 2
Note, the aforesaid Modification Fee consists of fifty (50%) percent
of the estimated modification cost specified hereinbelow amortized
over the minimum term hereof. Although OWNER and CHARTERER agree to
work closely with each other in order to minimize, as much as
possible, the modification cost, it is understood and agreed that the
estimate is not binding on either party hereto; and OWNER's actual
out-of-pocket expenses incurred in carrying out the modifications
shall be controlling. Therefore, after the actual modification cost
has been fully incurred and calculated, the aforesaid Modification Fee
shall be adjusted to ensure that OWNER's out-of-pocket expenses
incurred in carrying out the modifications are fully reimbursed to
OWNER. OWNER shall provide CHARTERER with reasonable supporting
documentation to verify the final calculation of OWNER's total
out-of-pocket expenses incurred in carrying out the modifications; and
once such costs have been fully amortized, CHARTERER's obligation to
pay the Modification Fee shall lapse.
8. Insured value of vessel: U.S.D. $2,420,000,00.
9. Special Provisions:
A. Special Seismic Modifications: At the outset of this Short
Form Agreement, OWNER shall carry out (or cause to be carried
out) certain modifications to the Vessel in order to permit
CHARTERER to operate the Vessel as a dual streamer seismic
vessel. Those modifications, which are for CHARTERER's
account and are described in more detail in Exhibit "M"
hereto, are estimated to cost $380,552.00. Of that amount, it
is estimated that OWNER will have an out-of-pocket expense of
$215,000 and the components stipulated in Exhibit M as being
provided by Horizon are estimated to cost $165,552.00. Prior
to the modifications being completed and the Vessel going into
service, CHARTERER shall pay to OWNER an "up-front"
modification he of $24,724.00, which consists of fifty (50%)
percent of the total estimated modification cost ($190,276.00)
less the said estimated cost of the Horizon-provided
components ($165,552.00). The said up-front modification fee
also represents the difference between OWNER's aforesaid
estimated out-of-pocket expenses ($215,000.OO) and fifty (50%)
percent of the total estimated modification cost
($190,276.00). As provided for in the note to Clause 7 above,
the remaining balance of OWNER's out-of-pocket modification
cost shall be repaid by CHARTERER to OWNER over the aforesaid
six (6) month minimum charter term, with imputed interest
built in at the rate of one (1%) percent per month on the
unpaid principal. At the conclusion of this Short Form
Agreement, the modifications shall be removed at CHARTERER's
expense; and, in accordance with Article VIII of the
referenced Blanket Time Charter, the Vessel must be restored
to the same condition as it was prior to the installation of
equipment or structural change, normal wear and tear excepted,
all at CHARTERER's expense. All of the equipment and
structural material provided or fully paid for by CHARTERER as
part of the modification costs shall, at the time of removal
from the Vessel at the end of this Short Form Agreement in
accordance with this paragraph, be or become the property of
CHARTERER.
Notwithstanding anything to the contrary contained herein, all
additional modifications and/or equipment installations
requested by CHARTERER that are not specified in Exhibit "M"
for inclusion in the aforesaid cost estimate shall be
considered as separate items and shall be provided and/or
carried out by CHARTERER at its full cost and expense.
B. Meals, Victuals and Lodging: Notwithstanding anything to the
3
<PAGE> 3
contrary contained in Article VI of the reference Blanket Time
Charter, CHARTERER agrees that it will provide all victuals
for the Vessel. OWNER will provide a cook and a messman to
prepare and serve the meals aboard the Vessel; and,
notwithstanding anything to the contrary confined in Article
XVIII. there will be no charge to CHARTERER for meals and
lodging provided by OWNER to Charterer's personnel aboard the
Vessel.
C. Standby Rate: For the time that modifications and/or
additions are being removed from the Vessel for CHARTERER's
account and for the time that modifications and/or additions
are being added to the Vessel for CHARTERER's account at the
beginning of this charter (except during such time as the
Vessel is also undergoing routine, periodic drydocking of the
Vessel for OWNER's own account), CHARTERER shall pay to OWNER
a standby rate of hire in the amount of $3,500 per day plus
the aforesaid Modification Fee, unless the modification cost
has been completely amortized and the obligation to pay the
Modification Fee has lapsed.
D. Crew Size: OWNER agrees that the crew complement required for
the operation of the Vessel, and which shall be furnished by
OWNER and is included in the Vessel's daily charter rate,
shall be a total of eight (8) persons, consisting of: a
master, two (2) mates, a chief engineer, a cook/able seaman, a
messman/ordinary seaman, an oiler, and another able seaman.
E. Except as otherwise provided in this Short Form Agreement,
OWNER, for a period of 180 days, warrants that all work and
installations carried out as part of the above-described
special seismic modifications to the Vessel will be free of
defects in material and workmanship, and all equipment
incorporated into the said special seismic modifications,
except that supplied, chosen or specified by CHARTERER, shall
be of good marine quality. However, OWNER does not warrant
that any material or equipment purchased by it for
installation on the Vessel is free from manufacturer's
defects; and OWNER hereby specifically disclaims any
warranties, expressed or implied, with respect to such
material or equipment. OWNER does hereby extend the
manufacturers warranty or guarantee, if any, to CHARTERER; and
OWNER agrees to use its best efforts and will cooperate with
CHARTERER in order to enforce any claims against the
manufacturers for defects that may occur.
The sole and exclusive remedy of CHARTERER for any warranty
claims under the Short Form Agreement shall be the obligation
of OWNER, during the aforesaid 180 day warrant period, to
repair and/or replace, or cause to be repaired or replaced,
any such defective workmanship or installation of materials
and equipment, provided such defects have not been caused by
the negligence of CHARTERER. In no event shall OWNER be
responsible for any sum in excess of the cost of the repairs
or replacement as specified herein, it being specifically
understood that OWNER is not responsible for delay, demurrage,
loss of profits, loss of use or any other consequential
damages arising in connection with the aforesaid special
seismic modifications to the Vessel.
Some of the equipment to be installed on the Vessel as part of
the above-described special seismic modifications will be
supplied, chosen or specified by CHARTERER and some of it will
be used equipment, perhaps requiring refurbishment or repair
in order to make it operational. It is hereby understood and
agreed that any costs incurred by OWNER in repairing or
refurbishing equipment supplied, chosen or specified by
CHARTERER will be for CHARTERER's
4
<PAGE> 4
account as part of the total modification cost. OWNER makes
no representations or warranties, express or implied,
regarding the condition, suitability for the purpose intended
or seaworthiness of the equipment supplied, chosen or
specified by CHARTERER, it being understood and agreed that
OWNER shall employ due diligence to repair, refurbish and
incorporate into the modifications any such equipment
supplied, chosen or specified by CHARTERER. Furthermore, the
repair and/or replacement of any equipment supplied, chosen or
specified by CHARTERER occasioned by latent defects shall be
for CHARTERER's account and any delay of loss of time caused
thereby shall be at CHARTERER's expense and risk.
All other terms and conditions of the referenced Blanket Time Charter
not inconsistent herewith, shall remain as originally written. If the
foregoing meets with your approval, please sign both original counterparts
hereof and return one (1) of them to us for our files.
Yours very truly,
TIDEWATER MARINE, INC.
/s/ Marinus Quint
Vice President
MQ/ss
Enclosure
Agreed and Accepted
Horizon Seismic, Inc.
By: /s/ D. Burns (D. Burns)
Its: Vice President
PARENT COMPANY GUARANTEE
Exploration Holdings Limited, a U.K. corporation, hereby guarantees
to OWNER (Tidewater Marine, Inc.) the due performance of all of the obligations
of CHARTERER (Horizon Seismic Inc.) under the foregoing short form letter
agreement relating to the time charter of the M/V ABSHIRE TIDE, including,
without limitation, the obligation to make timely charter hire payments.
GUARANTOR:
Exploration Holdings Limited
By: /s/ G.M. Harrison
Managing Director
Attest:
/s/ Neil A.M. Campbell
Corporate Secretary
(Corporate Seal)
5
<PAGE> 1
EXHIBIT 10.34.3
September 19, 1996
Horizon Seismic Inc.
11200 Westheimer St., Suite 410
Houston, Texas 77042
Attn: Mr. Dave Burns
Vice President
RE: TIME CHARTER OF M/V ABSHIRE TIDE
OFFICIAL NUMBER 663944
Gentlemen:
Reference is made to that certain letter agreement dated February 12,
1996 governing the time charter of the captioned vessel between Tidewater
Marine, Inc. ("OWNER") and Horizon Seismic Inc. ("CHARTERER") pursuant to the
terms and conditions of that certain Blanket Time Charter dated February 9,
1996, between OWNER and CHARTERER. The purpose of this letter agreement is to
revise and extend the term of the reference letter agreement as follows:
1. Minimum Term - The minimum term specified in Clause 5 of the
referenced letter agreement is hereby extended through
September 19, 1997.
2. Daily Charter Rate - The text of Clause 7 of the referenced
letter agreement is hereby deleted and replaced with the
following: "Effective at 0001 hours on September 20, 1996,
The Vessel's daily charter rate payable to OWNER by CHARTERER
for its use of the Vessel shall be Five Thousand Seven
Hundred and no/100 ($5,700.00) U.S. Dollars. In addition
CHARTERER shall pay OWNER One Hundred, Fifty and no/100
($150.00) U.S. Dollars per day for a cook and One Hundred and
no/100 ($100.00) U.S. Dollars per day for a messman.
3. Crew Size - The text of Clause 9D of the referenced letter
agreement is hereby deleted and replaced with the following:
"OWNER" agrees that the crew complement required for the
operation of the Vessel, and which shall be furnished by OWNER
and is included in the Vessel's daily charter rate, shall be a
total of six (6) persons consisting of two (2) masters, one
(1) mate, one (1) engineer, one (1) oiler, and one (1)
able-bodied seamen.
<PAGE> 2
Horizon Seismic Inc.
September 19, 1996
Page 2
All other terms and conditions in the referenced letter agreement and
in the Blanket Time Charter not inconsistent herewith shall remain as
originally written. If the foregoing meets with your approval, please so
indicate by signing both counterparts hereof and returning one to them to us
for our files.
Very truly yours,
TIDEWATER MARINE, INC.
/s/ Marinus Quist
Marinus Quist
Vice President
Agreed and Accepted
Horizon Seismic, Inc.
By: /s/ David Burns
Its: Vice President
<PAGE> 1
EXHIBIT 10.34.4
TIDEWATER MARINE
March 25, 1996
Horizon Seismic Inc.
11200 Westheimer St., Suite 410
Houston, Texas 77042
Attention: Mr. Dave Burns
Vice President
Re: Time Charter of M/V ABSHIRE TIDE, Official Number
663944
Gentlemen:
Reference is made to that certain letter agreement dated February 12,
1996 governing the time charter of the captioned vessel between Tidewater
Marine, Inc. ("OWNER") and Horizon Seismic Inc. ("CHARTERER") pursuant to the
terms and conditions of that certain Blanket Time Charter dated February 9,
1996 between OWNER and CHARTERER. The purpose of this letter agreement is to
add a new Special Provision 9F to the referenced letter agreement as follows:
"Notwithstanding the provisions of Article XI (ii) of the referenced
Master Time Charter, for purposes of this letter agreement relating to the
Vessel, the level of Protection and Indemnity Insurance carried by OWNER shall
be U.S.D. $20,000,000."
All other terms and conditions in the referenced letter agreement and
Blanket Time Charter not inconsistent herewith shall remain as originally
written. If the foregoing meets with your approval, please so indicate by
signing both counterparts hereof and returning one of them to us for our files.
Very truly yours,
TIDEWATER MARINE, INC.
Marinus Quist
Vice President
Agreed and Accepted
Horizon Seismic Inc.
By:________________________
Its:
<PAGE> 2
MQ/ss
TIDEWATER MARINE, INC.
1440 Canal Street
New Orleans, Louisiana 70112-2780
Telephone: (504) 568-1010
Telex: 460050 or 460051
Telecopy: (504) 566-4582
A Tidewater Company
<PAGE> 1
EXHIBIT 10.35.1
SUPPLEMENTAL SECURITY AGREEMENT NO. ONE
LOAN #20040096-001
This Supplemental Security Agreement is executed by SEITEL GEOPHYSICAL, INC.
("Borrower") pursuant to the terms of a Loan and Security Agreement dated
February 22, 1996 between Borrower and MetLife Capital Corporation ("Lender").
All capitalized terms used herein that are not otherwise defined herein shall
have the respective meanings given to such terms in the Loan and Security
Agreement.
In order to provide security for the payment and performance of
Borrower's obligations under the Loan Documents, Borrower has granted to Lender
a first priority security interest in the Collateral. In addition to said
grant, Borrower intends by this Supplemental Security Agreement to grant to
Lender a first priority security interest in the items of Equipment identified
herein.
1. To further secure the payment and performance of all of
Borrower's obligations to lender under the Loan Documents, Borrower hereby
grants to Lender a first priority security interest in the items of Collateral
described below, including all present and future additions, attachments and
accessories thereto, all substitutions therefor and replacements thereof and
all proceeds thereof, including all proceeds of insurance.
<TABLE>
<CAPTION>
QTY. MODEL/MFR. DESCRIPTION SERIAL NO. COST OR APPRAISED VALUE
<S> <C> <C> <C> <C>
50 CONFIGURABLE SAR 830 THRU 879 $443,000.00
</TABLE>
2. Borrower hereby (a) affirms that the representations and
warranties set forth in Section 5 of the Loan and Security Agreement are true
and correct as of the date hereof; (b) represents and warrants that Lender has
a first priority interest in the Collateral; and (c) represents and warrants
that the above-described equipment will be maintained at the following
location(s):
59 HIGHWAY SOUTH
ROSENBERG, TEXAS 77471
3. The Loan Amount for loans to be made pursuant to this Supplemental
Security Agreement is $433,000.00.
4. The Commitment Expiration Date of loans to be made pursuant to this
Supplemental Security Agreement is MARCH 31, 1996.
5. The amount of liability insurance required to be maintained by
Borrower pursuant to Section 6(d) of the Loan and Security Agreement is
$300,000.00.
6. All of the terms and provisions of the Loan and Security Agreement are
hereby incorporated in and made a part of this Supplemental Security Agreement
to the same extent as if fully set forth herein.
In witness whereof, Borrower has executed and delivered this
Supplemental Security Agreement this 22nd day of February, 1996.
Borrower: SEITEL GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
Name: Debra D. Valice
Title: Secretary/Treasurer
<PAGE> 1
EXHIBIT 10.35.2
No. 2004076-001 TERM PROMISSORY NOTE
$ 433,000.00 March 14, 1996
FOR VALUE RECEIVED, the undersigned, SEITEL GEOPHYSICAL, INC.,
("Maker"), promises to pay to the order of MetLife Capital Corporation
("Payee"), at its office at P.O. Box C-97550, Bellevue, Washington 98009, the
principal sum of FOUR HUNDRED THIRTY THREE THOUSAND AND NO/100TH ($433,000.00)
DOLLARS together with interest on unpaid principal from the date of
disbursement of such principal amount until payment in full at a rate of 7.52
percent (7.52%) per annum ("Rate") computed on the basis of a 360 day year of
twelve consecutive thirty day months. Interest hereunder shall be paid on the
unpaid principal, together with principal, in THIRTY SIX (36) installments of
THIRTEEN THOUSAND FOUR HUNDRED SEVENTY TWO DOLLARS AND 97/100THS ($13,472.97)
commencing on April 14, 1996 and monthly thereafter until March 14, 1999, on
which date the entire balance of principal and interest unpaid shall be due and
payable. It is agreed that each installment, when paid, shall be applied by
the holder hereof, first so much as shall be required to the payment of
interest accrued as specified hereto, and the balance thereof to the repayment
of the principal sum.
Except as may be otherwise expressly provided herein, this Note may
not be prepaid in whole or in part, except with the prior written consent of
Payee, Maker shall have the privilege of prepaying all (but not part) of the
then outstanding balance under this Note on March 14, 1998 or on any
installment due date thereafter, subject to giving thirty (30) days prior
written notice to Payee specifying the date of prepayment and further subject
to payment of a prepayment premium equal to the amount, if any, required to
offset the adverse impact to Payee of any decline in interest rates. The
prepayment premium is determined by (i) calculating the decrease, expressed in
basis points (but not less than zero) in the current weekly average yield for
Two (2)-year U.S. Treasury Constant Maturities as published in Federal Reserve
Statistical Release H.15(519) (the "Index" from the weekly average yield of
5.040 as of January 23, 1996 to the Friday (or, if Friday is not a business
day, the last business day) of the week immediately preceding the prepayment
date (ii) dividing the difference by 100, (iii) multiplying the result by the
applicable "Premium Factor" set forth below, and (iv) multiplying the product
by the principal to be prepaid. Any prepayment shall be applied first to the
prepayment premium, if any, next to accrued interest and late charges (if any),
and thereafter to the principal then outstanding. The Premium Factor shall be
the amount shown on the following chart for the month in which prepayment
occurs.
[ ] METLIFE CAPITAL
<PAGE> 2
<TABLE>
<CAPTION>
NUMBER OF MONTHS REMAINING (YEARS) PREMIUM FACTOR
<S> <C> <C>
12 - 1 (1) .005
</TABLE>
In the event the Federal Reserve Board ceases to publish Statistical Release
H.15(519), then the decrease in Two-Year U.S. Treasury Constant Maturities will
be determined from another source designated by Payee.
If Maker shall have given to Payee notice of Maker's intention to so
prepay, Maker shall not then be entitled to withdraw such notice, and the
indebtedness proposed to be prepaid in such notice together with the aforesaid
prepayment fee, if applicable, shall be due and payable upon the date specified
for such prepayment in such notice. Upon the occurrence of an Event of Default
and acceleration of payment of indebtedness evidenced hereby during a period
open to prepayment, Maker shall pay to Payee, in addition to any and all other
sums due and payable hereunder, as liquidated damages for the loss of Payee's
investment and not as a penalty, an amount equal to the prepayment fee which
would have been payable hereunder on such date of acceleration in the event of
a voluntary prepayment. Maker and Payee agree that the foregoing amounts do
not constitute penalties but rather constitute reasonable calculations of the
investment loss that would be sustained by Payee in the event of such
prepayment.
It is specifically understood and agreed by Maker that, in the event
of a default under this Note or under any instrument securing the Note, a
tender of payment of the unpaid principal and accrued interest then outstanding
shall be deemed a prepayment, and, accordingly, said tender must include the
premium herein above required, or if said tender is made prior to the time this
privilege is operative, then said tender must include a premium equal to six
(6) months' interest at the Rate computed on the principal amount so tendered.
It is further understood and agreed by Maker that Payee shall not be obligated
to accept said tender, and said tender shall for all purposes be deemed
ineffectual and deficient, unless said tender shall include the premium herein
above-required.
In the event that Payee does not receive any payment on the date due,
Maker will pay Payee a late charge of five percent (5%) of the payment
outstanding together with the payment and, provided said sum is received within
ten (10) days of the date due, Payee agrees not to demand immediate payment of
the whole sum of principal and interest as otherwise permitted herein.
If, from any circumstances whatsoever, payment of any obligation due
under this Note at the time such performance shall be due shall involve
exceeding the maximum amount currently prescribed by any applicable usury
statue or any other applicable law, then such obligation shall be reduced to
such maximum amount,
[ ] METLIFE CAPITAL
<PAGE> 3
so that in no event shall any payment be possible under this Note, or under any
other instrument evidencing or securing the indebtedness evidenced hereby, that
is in excess of such maximum amount.
In the event that an Event of Default shall occur under the Loan and
Security Agreement (as hereinafter defined) or any other instrument now or
hereafter securing repayment hereof, following any required notice and/or the
expiration of any applicable period of grace, then, and in such event, the
principal indebtedness evidenced hereby, and any other sums advance hereunder,
together with all unpaid interest accrued thereon, shall, at the option of
payee, at once become due and payable and may be collected forthwith,
regardless of the stipulated date of maturity. TIME IS OF THE ESSENCE WITH
RESPECT TO THIS NOTE. Interest shall accrue on the outstanding principal for
so long as such default continues, regardless of whether or not there has been
an acceleration of the indebtedness evidenced hereby as set forth herein, at
the rate equal to the less or fifteen percent (15%) per annum or the maximum
rate allowable under law. All such interest shall be paid at the time of and
as a condition precedent to the curing of any such default should Payee, at its
sole option, allow such default to be cured. In the event this Note, or any
part thereof, is collected by or through an attorney-at-law, Maker agrees to
pay all costs of collection including, but not limited to, reasonable
attorneys' fees, whether or not suit is filed.
This Note is one of the notes referred to in and is secured by the
Loan and Security Agreement dated February 22, 1996 between Maker and Payee.
The terms of the Loan and Security Agreement are incorporated herein by
reference.
This Note consolidates the following Interim Notes executed by Maker in favor
of Payee
<TABLE>
<CAPTION>
INTERIM NOTE NUMBER DATE PRINCIPAL AMOUNT
<S> <C> <C>
Request for Loan Proceeds One March 14, 1996 $433,000.00
</TABLE>
Maker waives any right of exemption and waives presentment, protest
and demand and notice of protest, demand and of dishonor and nonpayment of this
Note, and consents that any holder hereof shall have the right, without notice,
to grant any extension or extensions of time for payment of this Note or any
part thereof or any other indulgences or forbearances whatsoever, or may
release any of the security for this Note without in any way affecting the
liability of any other party for the payment of this Note.
The due payment and performance of Maker's obligations hereunder shall
be without regard to any counterclaim, right of offset, or any other
counterclaim whatsoever which Maker may have against Payee and without regard
to any other obligations of any
[ ] METLIFE CAPITAL
<PAGE> 4
nature whatsoever which Payee may have to Maker, and no such counterclaim or
offset shall be asserted by Maker in any action, suit or proceeding instituted
by Payee for payment of Maker's obligations hereunder.
This Note and the Loan and Security Agreement shall be governed by and
construed in accordance with the laws of the State of Washington.
Maker acknowledges that there is no presumption that the value of the
property securing this Note is equal to the face amount of the Note, and that a
deficiency judgment may be necessary in proceedings taken for enforcement
hereof.
No amendment to this Note shall be binding upon Payee unless it is in
writing and duly signed by Payee.
IN WITNESS WHEREOF, the Maker has caused these presents to be duly
signed the date first above written.
Borrower: SEITEL GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
Witness: /s/ Karen S. Duxbury (Print Name) Debra D. Valice
Title: Vice President
[ ] METLIFE CAPITAL
<PAGE> 1
EXHIBIT 10.36
SERVICE AGREEMENT
between
HORIZON SEISMIC INC.
and
SHANGHAI BUREAU
of
MARINE GEOLOGICAL SURVEY
MV DISCOVERER/FA XIAN
<PAGE> 2
SERVICE AGREEMENT
for
MV DISCOVERER
This Service Agreement, hereinafter referred to as the "Agreement"
made effective the 12th day of April, 1994, is by and between the Shanghai
Bureau of Marine Geological Survey whose address is 526 Yan An Road West,
Shanghai, P.R. China, hereinafter referred to as "Owner", as the Owner of the
Vessel Discoverer, and Horizon Seismic Inc. whose address is 11200 Westheimer,
Suite 200, Houston, Texas 77042, USA, hereinafter referred to as "Company", as
the Charterer.
1. NATURE OF SERVICE
1.1 Owner agrees to let and Company agrees to hire the Seismic Vessel, her
engines, tackle, gear, appurtenances and related Seismic equipment,
material and supplies, as specified in Schedule A, collectively the
"Seismic Vessel" for a period of one year from the time of its arrival
at Galveston, USA.
1.2 Company shall have the option to extend the initial period by up to
two additional periods each of six months. Each option shall be
exercised by Company giving sixty days notice to Owner prior to the
expiry of the initial or first additional period.
Company shall pay Owner for the initial period at the Rates defined in
Clause 9 herein. Rates for any additional period or periods shall be
defined in a separate agreement.
1.3 Company shall employ the Seismic Vessel throughout the world in lawful
activities for marine geophysical and/or oceanographic and/or
associated or related duties as required by Company.
2. COMMENCEMENT
2.1 Charter of the Seismic Vessel by Company shall commence on or about
the 1st day of May, 1994, and more precisely when the Seismic Vessel
departs Shanghai.
2.2 A joint survey of the Seismic Vessel shall be undertaken by Company
and Owners to determine the precise condition of the Seismic Vessel
and its equipment, before its departure from Shanghai.
<PAGE> 3
3. OWNERS TO PROVIDE
3.1 In consideration of the payment by Company of the Charter Fees in
accordance with Clause 9 of this Agreement, Owners shall provide
(except as otherwise specified) the following services, spares,
replacement parts (excluding same for seismic equipment but including
the seismic compressor sets) and other items referred to herein
entirely at the cost of Owners without any right of reimbursement from
Company. For the avoidance of doubt Owners shall not be responsible
for the provision of filters, oil or other consumeables for the
seismic compressor sets.
3.2 The Owners shall provide and pay for all wages for Officers and Crew,
travel expenses of the People's Republic of China personnel including
Officers and Crew, insurance of the Vessel (including hull and
machinery and protection and indemnity insurance) and for all deck and
engine room store, and the expenses of maintaining the hull and
machinery (excluding seismic equipment, but including the seismic
compressor sets) in a thoroughly efficient state during the duration
of this agreement including (but not limited to) the expenses of
providing replacement parts, equipment or spares, dry docking and
other external services provided in relation to the maintenance of the
hull and machinery as aforesaid.
3.3 The Owners shall also provide and pay for all bedding and galley
equipment, including the necessary renewal of same, for officers, Crew
and Company's personnel and their representatives, but not cleaning
materials for cabins, common areas and work areas.
4. COMPANY TO PROVIDE AND COMPANY TO PAY
4.1. Company shall be responsible for bunkers lubricating oils and fresh
water, it being understood that the acceptance of each supply
(including bunkers) is the responsibility of the Chief Engineer.
4.2. Company shall be responsible for reimbursing Owners for any
extraordinary or special taxes, other than those of the Nation of the
Vessel's Registry or the People's Republic of China levied on the
Owners and/or the Vessel and/or the Crew.
5. EXCLUDED PORTS
5.1. The Seismic Vessel shall not be ordered to nor bound to enter any
place where fever or epidemics are prevalent or to which the Master,
Officers and Crew are by Law not bound to follow the Seismic Vessel.
5.2. The Seismic Vessel shall not be ordered to nor bound to enter any ice
bound place where lights, lightships, marks and buoys are or are
likely to be withdrawn by reason of ice on the Seismic Vessel's
arrival or where there is risk that ordinarily the Seismic Vessel will
not be able on account of ice to reach her destination or get out.
If, on account of ice,
- 3 -
<PAGE> 4
the Master considers it dangerous to remain in any area or place for
fear of the Seismic Vessel being frozen in and/or damaged, he has
liberty to sail to a convenient open place and await the Company's
fresh instructions.
5.3. The Seismic Vessel shall not be obliged to force ice.
5.4. Save the above, the Company shall be entitled to require Owners to
sail the Seismic Vessel to any port or ports around the world subject
to Clause 18 and 21 but otherwise without exclusion.
6. THE SEISMIC VESSEL
6.1. From the time the Charter of the Seismic Vessel commences under this
Agreement, Owners warrant that the Seismic Vessel shall fully conform
to the specifications stated in Schedule A herein and shall in every
way be fitted and ready for service throughout the world (unless
otherwise stated in Schedule A).
6.2. During the period of the Agreement, the Seismic Vessel shall at all
times sail with a minimum crew of fifteen and minimum seismic
personnel numbering nine namely:
Master
Chief Officer
Second Officer
Chief Engineer
Second Engineer
Third Engineer
Electrician
Radio Officer/Steward
Two Able Seamen
Two Oilers (Motormen)
Two Cooks
Steward
1 project manager
2 seismic observers
2 seismic navigators
4 seismic mechanics
See also Clause 9.5 herein.
6.3. Throughout the duration of this agreement, the Owners warrant the
Seismic Vessel will be fully certificated and shall conform in every
respect with the Bahamas Flag and that all national and international
trading certificates, loadline, fire fighting, life saving and other
relevant regulations are fully complied with and remain in full force
and effect.
- 4 -
<PAGE> 5
6.4. The Owners warrant and agree to, at their sole expense: (1) keep the
Seismic Vessel in a thoroughly efficient state in hull, machinery and
equipment in good running order and in every respect seaworthy (2) pay
all wages, salaries, taxes and other benefits prescribed for all
Owners personnel operate and maintain the Seismic Vessel, excluding
seismic equipment, in accordance with all applicable State and Federal
Laws, rules and regulations of jurisdictions in which the Seismic
Vessel is working and carry on board required documents.
6.5. Owners shall comply with the requirements of Company in ensuring the
whole reach and burden and lawful decks of the Seismic Vessel shall be
available for Company's marine activities. Such availability shall be
limited to those activities and operations that do not exceed the
design specification of the vessel and in particular the load
specification of the decks.
7. PERIOD OF CHARTER
7.1. Subject to Clause 1.2 and Clause 8 and Clause 9, this Charter
Agreement shall run for a period of twelve months, from the date of
arrival at the Port of Galveston.
8. EARLY TERMINATION OF CHARTER AGREEMENT
8.1. The Company shall have the sole right to terminate this Charter
Agreement upon 35 days notice to Owners at any time and upon the
expiry of such notice the company shall pay a lump sum cancellation
fee of US$85,000 (Eighty Five Thousand United States Dollars) to the
Owners. However, should the Company terminate this agreement in
accordance with Clause 17 of this agreement no cancellation fee shall
then apply.
8.2. In the event of a termination of this Agreement in accordance with
Clause 8.1 above the liability of Company to pay the Charter Fees to
Owners shall cease forthwith without prejudice to the rights of the
parties in respect of any amounts due from one to the other at the
time of termination and without prejudice to any claims which have
arisen between the parties prior to the date of termination.
8.3. In the event of a termination of the Agreement for any reason
whatsoever, Company and Owners shall undertake a joint survey of the
Seismic Vessel to determine the condition of the Seismic Vessel and
its equipment at such time, and Company hereby warrants that the
Seismic Vessel shall at the time of termination of this Agreement be
in the same condition as at the time Charter of the Vessel commenced
under Clause 2.1 and Clause 2.2 above, fair wear and tear excepted,
and Company shall indemnify Owner in respect of any breach of this
warranty.
- 5 -
<PAGE> 6
9. CHARTER
9.1. For the mobilisation period between departure of the Seismic Vessel
from the Port of Shanghai until arrival at the Sea Buoy off the Port
of Galveston or later time if the Seismic Vessel does not in every
respect meet the terms of this Agreement, Company shall pay to Owner a
lump sum fee of US$280,000 (Two Hundred and Eighty Thousand United
States Dollars), and shall not be liable to pay any other Charter Fee
or daily rate in respect of this period. Company shall pay Owners for
fuel, lube oil, water, canal fees, pilotage and towing during the
mobilization unless such fuel, canal fees, pilotage and towing are
related to a break-down or other failure of the Seismic Vessel,
Equipment or Crew.
9.2. Commencing from the time of arrival of the Seismic Vessel at the sea
buoy off the Port of Galveston until the time such Charter terminates
in accordance with the provisions hereof and subject to Clauses 15, 19
and Schedule B, and the other relevant provisions of this Agreement
Company shall pay to Owners the following fixed daily Charter Fees (or
pro rata for part thereof): US$7,000 (Seven Thousand United States
Dollars).
9.3. During the demobilizing period from the time of departure from the
last port of operations until the time of arrival of the Seismic
Vessel off the Port of Shanghai and subject to the Seismic Vessel
continuing to meet the performance specifications described elsewhere
in this Agreement, Company shall continue to pay the Charter Fee as
defined in Clause 9.2 above and shall additionally pay or reimburse
Owner for fuel, lube oil, water, canal fees, pilotage, towing and
victualling. Company shall not be liable to pay the Charter Fee or
reimburse Owner in respect of time lost or fuel, canal fees, pilotage;
towing victualling or any other expense during or as a result of break
down or deficiency of the Seismic Vessel Equipment or Crew.
In the event, on expiry or termination of this Agreement, Owners elect
not to return the Seismic Vessel immediately to Shanghai but undertake
additional work independently or with another charter or joint venture
company, Company shall be relieved of its obligation to pay the
Charter Fee or other expenses which would have arisen during the
period of demobilisation.
9.4. The Owners and Company shall meet approximately five months after the
commencement of the Charter to review the anticipated operation of the
Seismic Vessel for the remaining part of the Charter. Subject to
mutual agreement Owners and Company may elect to change the Charter to
a profit and risk-sharing joint venture for a remaining part of the 12
month charter period, and/or its extension.
9.5. Should the Company require Owners to increase the manning level, as
stated in Clause 6 herein, Owners shall immediately increase the
manning levels whereupon Company shall pay Owners daily increases in
total costs, including all travelling expenses.
- 6 -
<PAGE> 7
9.6. If due to special local legislation in any areas where the Seismic
Vessel may operate during the period of the Agreement, where the
Owners are required to change part of or all of the Crew or increase
the manning levels of the Seismic Vessel to comply with such special
legislation, Company shall reimburse Owners for any proven increase in
crewing costs.
This Clause shall not be construed to relieve Owners from their
responsibility to provide at all times a fully qualified and
certificated Crew onboard the Seismic Vessel for worldwide trading.
10. VICTUALLING
10.1. The Company shall pay for all victualling costs.
10.2. Owners shall maintain a qualified catering team consisting of three
persons onboard the Seismic Vessel and meals shall be of high standard
and menus will be varied. The cook will provide the Company's party
manager onboard with a weekly menu in advance and Company reserves the
right to amend proposed menus, to ensure an acceptable level of
victualling is always maintained.
10.3. Company's personnel on night duty shall be allowed access to the
galley or other suitably designated area, where they can obtain cold
salads or light snacks, it always being understood that the Seismic
Vessel's catering personnel will not be on duty and that Company's own
personnel shall not interfere with galley equipment.
10.4. Company and Owners agree that any personnel in their employment found
to be under the influence of alcohol or drugs whilst onboard the
Seismic Vessel, shall be subject to instant dismissal.
11. PAYMENT
11.1. Owners shall invoice Charter Fees or other amounts due from time to
time hereunder per calendar month, whereby Owners shall invoice
company on the last day of each month worked and Company shall pay
Owners so that the funds are received by Owners within thirty days of
their invoice date.
11.2. Owners invoices for other costs due from Company shall be accompanied
by supporting documentation and shall be submitted to Company
"hereafter company shall make payment to Owner within thirty days from
the invoice date.
11.3. Where Company has provided goods, services or equipment or incurred
expense at the request of and with the approval of Owners, Company
shall be entitled to deduct such costs and or expense from any Charter
Fees due to Owners.
- 7 -
<PAGE> 8
12. MODIFICATIONS AND ADDITIONS TO VESSEL
12.1. Upon commencement of the Charter of the Seismic Vessel under Clause
2.1 herein, Owners shall always ensure Company, their agents and
servants have full access at all times to the Seismic Vessel to
undertake modifications to the Seismic Vessel and embark and install
their equipment.
12.2. All structural modifications and alterations undertaken by the Company
their agents or servants to the Seismic Vessel shall be at the
Company's own cost, subject to prior approval by Owner and shall be at
the approval of the Seismic Vessel's Classification Society and/or
other relevant safety authorities.
12.3. At the termination or expiry of this Agreement, Company agrees at its
option to either reinstate or pay Owner to reinstate the Seismic
Vessel and Equipment back to its condition at the time the Charter
commenced, fair wear and tear excepted.
13. RESPONSIBILITY & EXEMPTION
13.1. Company shall not be responsible for loss or damage to any property of
Owners nor any personal injury or death of Owners personnel howsoever
or by whomsoever caused, even if caused by act, neglect, default of
Company, and arising from and in connection with such loss or damage
or personal injury or death of Owners' personnel.
13.2. Provided Owners shall have complied with the insurance requirement
Clause 14 hereof Owners shall not be responsible for damage to
property of Company nor for personal injury or death of company's
personnel howsoever or by whomsoever caused, even if caused by act,
neglect or default of Owners and Company agrees to indemnify Owners
against all consequences and liabilities arising from or in connection
with such loss or damages or personal injury or death of Company's
personnel.
13.3. The Owners hereby agree to indemnify and hold harmless Company from
and against any loss or liability (including legal expenses) arising
out of any claim or cause of action for or loss of damage to property
or third parties of for injury to or loss of life of third person,
caused by or as a result of Owners operation of the Seismic Vessel.
13.4. The Company hereby agrees to indemnify and hold harmless Owners from
and against any loss or liability (including legal expenses) arising
out of any claim or cause of action for or loss of damage to property
of third parties or for injury to or loss of life of third person,
caused by or as a result of Company's Seismic operations.
14. INSURANCE
14.1. The Owners agree to maintain at their expense, for the duration of the
Charter:
- 8 -
<PAGE> 9
"Hull and Machinery" (All Risks) including Collision Liability
- sum insured up to full value of the Seismic Vessel being US
Dollars $7,000,000 (Seven million United States Dollars).
"Protection & Indemnity" - sum insured up to full value of the
Seismic Vessel including Wreck Removal with unlimited, as per
rules of P&I Club and including Oil Pollution liability
indemnity up to maximum of US$ 500,000,000 (Five Hundred
Million United States Dollars).
"Employers Liability" insurance relative to Owners employees.
The above insurances will be subject to review prior to the
Seismic Vessel coming on Charter.
14.2. At Company option, Company shall be named as additional assured in
Owners placed insurance policies for the Protection & Indemnity.
14.3. Whenever called for under any contracts with Company's clients Owners
shall produce to Company a certificate or a certified copy of the
insurance policies effected in accordance with the provisions of this
Agreement or such other confirmation as may be acceptable to the
Company.
If Owners fail to or refuse to obtain, or maintain, or demonstrate any
of the above insurances required by the clients under Company's
contracts with them, then Company shall have the right to cease paying
the Charter Fees.
14.4. Neither party to this agreement shall be liable to the other for any
consequential or special damage.
15. DAMAGE OR BREAKDOWN OF SEISMIC VESSEL
15.1. Subject to Clause 19. during any event of whatsoever nature which
hinders or prevents the full working of the Vessel including (but not
limited to the generality of the foregoing) drydocking or other
necessary measures to maintain the efficient operation of the Seismic
Vessel, deficiency of men or stores, strike of Master, officers or
crew, breakdown of machinery or equipment, damage to hull or other
accident (whether or not required by Company and whether or not due to
negligence of Owners), and during any period in which the Seismic
Vessel and her equipment is not fully operational (whether or not
required for service), no Charter Fees shall be payable by Company.
15.2. The provisions of Clause 15.1 herein shall include the specific events
stipulated in Schedule B whereby Company shall be released from any
liability to pay Charter Fees for the duration of such events as
further specified in Schedule B herein.
- 9 -
<PAGE> 10
16. LOSS OF SEISMIC VESSEL
16.1. Should the Seismic Vessel be lost or missing, this Agreement shall be
deemed to have been terminated and Charter Fees to cease from the date
when the Seismic Vessel was lost. If the date cannot be ascertained,
fifty percent of the daily Charter Fee shall be paid from the date the
Seismic Vessel was last reported until the calculated date of arrival
at her destination, or 30 days whichever shall be appropriate.
17. CANCELLATION
17.1. In the event of Company being released from its liability to pay to
Owners the Charter Fees in accordance with the terms of this Charter
Agreement for thirty consecutive days or in the event of a material
breach by Owners of the provisions of this Agreement, Company shall
have the option of cancelling this Agreement, Company, if required by
Owners, to declare within forty-eight hours after receiving notice
whether they cancel this Agreement or not. In default of any written
notice from Owners, Company shall have the right of automatically
cancelling this Agreement at any time after the said period of 30 days
or breach, without noting any protest and without interference by any
court, any formality whatsoever and without prejudice to any claim the
Company may otherwise have on the Owners.
18. MASTERS AND CREW
18.1. The Master shall prosecute all voyages and operations with the utmost
diligence and despatch, and, so comply fully and accurately with the
operating schedules laid down by the Company and their party manager,
without compromising the safety of the ship and/or of the Crew. The
Master shall be under the orders of Company as regards employment or
agency.
The Company shall advise the Master as to general location of
the Seismic Vessel's operational area and the Master shall be
solely responsible for the selection of the route from and to
such area. If the Master shall reasonably consider that the
instructions given by the Company or their party manager
endanger the safety of the Seismic Vessel and\or of the Crew,
he must advise the party manager accordingly and the Master is
entitled not to follow such instructions. The Master,
Officers and Owners' Crew will fully co-operate with the
Company, their party manager and crew, with a view to the full
and satisfactory performance of the service.
18.2. If the Company has good reason to be dissatisfied with the conduct of
the Master, Officers or ratings of Owners crew, the Owner shall as
soon as possible replace the person or persons in question.
Immediately after such replacement or replacements a joint
investigation by Company and Owners shall be conducted in order to
ascertain that such complaint or replacement was reasonable to ensure
a continuous smooth operation.
- 10 -
<PAGE> 11
Notwithstanding the foregoing, any member of the Seismic Vessel's crew
found to be under the influence of alcohol or drugs, shall be, as far
as practically possible, immediately removed from the Seismic Vessel.
18.3. The Seismic Vessel shall work day and night, if required, without any
extra payment by the Company.
18.4. The Master and Engineer shall keep full and correct logs accessible to
the Company or their agents at all times.
18.5. Decisions concerning the safety of the Seismic Vessel and/or the
personnel onboard shall be the responsibility of the Seismic Vessel's
Master. The safety of the Companies' seismic equipment, whether on
board or deployed from the Seismic Vessel is, however, the sole
responsibility of the Company, through the auspices of the Party
Chief.
18.6. Should the Company have reason to be dissatisfied with anything for
which the Owners are responsible, Company shall promptly inform Owners
in writing whereafter Owners will promptly look into the matter.
19. MAINTENANCE OF SEISMIC VESSEL
19.1. Notwithstanding the provisions of Clause 15 herein, Company shall
allow Owners one day of 24 hours per calendar month or pro rata for
part thereof for maintenance and/or overhaul and/or repairs at times
to be mutually agreed between both parties and during such period
Company shall continue to be liable to pay to Owners the Charter Fees.
Days can be accumulated up to a maximum of twelve days but days not
taken by Owners will not be compensated by Company at the end of this
Agreement. Any planned drydocking and/or overhauls and/or repairs are
to be co-ordinated with Company but should be scheduled between 1st
December and 1st March each year. Company shall, however, have the
right to request Owners to bring forward repairs or, subject to
Classification approval, delay same to be co-ordinated with Company's
own planned maintenance, repairs and renewal.
19.2. Notwithstanding the provisions of Clause 15 herein, Company shall
allow Owners to carry out maintenance or overhaul of the Seismic
Vessel when Company's own equipment is being maintained, repaired or
overhauled provided that the services of the Seismic Vessel are not
immediately required by Company and during such period Company shall
continue to pay to Owners the Charter Fees. Should, however, the
Seismic Vessel not be ready to sail as required by Company the Charter
Fees for such period shall cease to be payable by Company to the
Owners, backdated to the time Owners originally commenced any
maintenance or overhaul of the Seismic Vessel (other than days allowed
in accordance with Clause 19.1 above).
- 11 -
<PAGE> 12
20. SALVAGE
20.1. All salvage and all proceeds from derelicts other than Company's
property shall be divided equally between the Company and Owners after
deducting the Master's, Officers', Crew's and Company's personnel's
share, hire of Seismic Vessel for time lost and cost of the fuel
consumed and all other expenses (including Crew and Company's
personnel costs) incurred. Apportionment of all loss of time and all
expenses paid, excluding damage to or loss of the Seismic Vessel
incurred in salvage shall be mutually agreed between Company and
Owners prior to any salvage attempts. No attempt to undertake salvage
shall be made by the Seismic Vessel unless such has been mutually
agreed between the parties or unless there is a legal obligation upon
the Master or Owners to carry out salvage.
21. WAR
21.1. The Seismic Vessel, unless the consent of the Owners be first
obtained, shall not be ordered to any place or on any voyage nor be
used on any service which will bring her within a zone which is
dangerous as a result of any actual or threatened act of war, war
hostilities, warlike operations, acts of piracy or of hostility or
malicious damage against this or any other Vessel or its cargo by any
person, body or state whatsoever, revolution, civil war, civil
commotion or the operation of international law, nor be exposed in any
way to any risks or penalties whatsoever consequent upon the
imposition of sanctions nor carry any goods that may in any way expose
her to any risks of seizure, capture, penalties or any other
interference of any kind whatsoever by the belligerent or fighting
powers or parties or by any Government or Ruler.
21.2. Should the Seismic Vessel approach or be brought or ordered within
such zone, or be exposed in any way to the said risks, (1) Owners to
be entitled from time to time to insure their interests against any of
the risks likely to be involved thereby on such terms as they shall
think fit, Company to make a refund to the Owners of the premium on
demand and (2) notwithstanding the provisions of Clause 15 Charter
Fees to be paid by Company to Owners for all time lost, including any
time lost owing to loss or injury to the Master, officers or crew or
to the action of the crew in refusing to proceed to such zone or to be
exposed to such risks.
21.3. Any action of Owners in accordance with the provisions of this Clause
21 shall not be deemed contrary to the instructions of Company.
22. SECRECY
22.1. All information regarding Company's and their clients' operation,
investigations and findings, together with the nature and
specification of Company's equipment installed on board the Seismic
Vessel shall be regarded as confidential to Company and under no
- 12 -
<PAGE> 13
circumstances shall any such information be divulged to unauthorised
persons or the Press without the prior written permission of Company.
23. ASSIGNMENT
23.1. The Owner's rights and obligations under this Agreement are not
assignable or transferable in whole or in part without Company's prior
written approval which it shall have the right to withhold.
23.2 The Company shall be entitled to assign its rights and obligations
under this Agreement and the Side Letters, to Horizon Exploration
Limited, any subsidiary company, associate company or sister company.
24. TRAVEL EXPENSES
24.1. Owner shall pay, in respect of Owner's Personnel, for the following
travel expenses:
all PRC travel costs, visa expenses and subsistence, all air
travel to and from Houston or equivalent cost destination.
24.2. Company shall be responsible for reasonable and agreed travel and
subsistence costs whilst in the USA or other country of operations.
25. OWNER'S PERSONNEL CHANGES
25.1. Owner's Personnel shall rotate approximately every fifteen week with
approximately fifty per cent of the personnel changing on each
occasion, and in such a way as to minimise discontinuity of Company's
operations.
25.2. Company shall notify Owners 45 to 60 days in advance of the schedule
for each crew change.
26. COMMUNICATION COSTS
Owner and Company shall each be responsible for their own
communication costs. In the event Company requests Owner to make
communications to or on behalf of Company, these shall be at Company
cost.
- 13 -
<PAGE> 14
27. OFFENSES BY OWNERS OR COMPANY PERSONNEL
If any personnel on or attached to the Seismic Vessel are subjected to
fines or imprisonment in any country of operations for offenses such
as but not limited to smuggling or drug possession/abuse then each
Party shall be responsible for the associated expense and or fine, for
its own personnel.
28. SEISMIC VESSEL'S NAME/COLOURS/MARKINGS
28.1. During this Agreement Owners shall not change the name, markings or
colours of the Seismic Vessel without Company's permission or unless
Company instructs Owners to do so.
29. FORCE MAJEURE
Any delay or failure to carry out the duties imposed upon either party
under this Agreement shall not be deemed to be a breach thereof if
such delay or failure results from a force majeure event beyond the
control of the party affected. In the event that a force majeure
situation occurs, both parties shall promptly consult and agree a
course of action.
30. ARBITRATION
Any dispute arising under this Agreement shall be referred to
arbitration in London. One Arbitrator to be nominated by Company and
the other by the Owners and in case the Arbitrators shall not agree
then to the decision of an Umpire to be appointed by them, the award
of the Arbitrators or the Umpire to be final and binding upon both
parties.
31. NOTICES
31.1. All notices due under this agreement shall be given in writing to:-
<TABLE>
<CAPTION>
COMPANY OWNERS
-------- ------
<S> <C>
Horizon Seismic Inc. Shanghai Bureau of Marine Geological Survey
11200 Westheimer, Suite 200 526, Yan An Road West
Houston Shanghai, 200050
Texas 77042 P.R. China
USA
Fax No: 1-713-977-3408 Fax No: 3294414
Telex No: 33285 MAGEO CN
Attn: Vice President, Operations Attn: Luo Bu Xu
</TABLE>
All notices, requests, demands or other communications under this
Agreement shall be in writing and be delivered personally or by
facsimile transmission or by telex. Such notices
- 14 -
<PAGE> 15
shall be deemed to have been received in the case of a facsimile
transmission, at the time of dispatch with confirmation that the
communication was well received and in the case of telex, at the time
of dispatch with confirmed answer back, provided that in the case of
facsimile of telex transmission, if the date of dispatch is not a
business day in the country of the addressee, it shall be deemed to
have been received at the opening of business on the next business
day.
Agreed between the Parties
For Company For Owner
Signed: /s/ G.M. Harrison Signed: /s/ Luo Bu Xu
Name: G.M Harrison Name:
Position: President Position:
Witness: /s/ Witness: /s/
- 15 -
<PAGE> 16
SCHEDULE A
1. MAIN DESCRIPTION
Vessel "DISCOVERER"
Flag Bahamas
Built 1980
Converted 1988
Design MARYSTOWN
Classification DNV 1A1 ICE-C
Call Sign C6CZ2
2. MEASUREMENTS
DIMENSIONS
Length o.a. 72.07m (236ft)
Breadth 16.0m (52ft)
Depth moulded 6.5m (16.51ft)
Draft 4.7m to 5.2m
Gross Registered Tons 1599T
Cruising Speed 10 knots
3. CAPACITIES
Fuel oil 700 Tonnes.
Fresh water 350 Tonnes.
Lube oil 10,000 Litres
4. LUBE OIL CONSUMPTION
Lube Oil Consumption 150 litres per day
5. MACHINERY
Main Engines MLW-ALCO 251 VIZ*2, 2740 HP EACH
Bow thrusters BRUNVOLL*2 600 HP EACH
Stern thruster BRUNVOLL*1 600 HP
- 16 -
<PAGE> 17
Main Generators BBC 485 KVA*3 440/220V, 60 HZ
6. HELICOPTER DECK
Helideck installed aft designed for BELL 212 helicopters according to
United States regulations and in compliance with Helicopter service's
recommendation.
7. STABILIZATION
Active stabilization for roll reduction.
8. NAVIGATION AND ELECTRICAL INSTRUMENTATION
Radar Sperry MK 740, Decca 10cm, Decca 3cm
Gyro Robertson SKR 80(AP), SKR 82
Autopilot
Radio direction finder Furuno FDK 1
Echosounder Furuno F851
Magnetic Compass
Two SSB radios JRC JSS 201, MARCONI 3120
10. SEISMIC EQUIPMENT
The Owners shall supply installed and insured and in good repair and operation:
2 streamer winches each 6000 metre capacity
2 paravane winches
6 umbilical winches
3 compressors & diesel/generators/motors sets
6 gun rails with hanging brackets
2 streamer diverters
1 15 KVA UPS
1 INSTRUMENT ROOM AIR CONDITIONED TO 20 degrees centigrade when
seismic and navigation equipment is working
1 Schwartz laser track system
1 sea chest, gate valve and transducer pole
51 sleeve airguns in fully serviced and in working condition
1 diesel driven 1100 CFM LMF Compressor
2 electric driven 1040 CFM LMF Compressors
1 Echosounder type Simrad EA 200 or similar
- 17 -
<PAGE> 18
1 Satellite Fax/Voice communication system type Sperry
3 Hydraulic power-packs
The equipment shall be available for unsupervised use by Company's
personnel. Maintenance, repair and consumeables for the equipment
shall be for Company's account.
/s/ Luo Bu Xu /s/ G.M. Harrison
For Owner For Company
One Telex
A platform above obstructions for mounting of navigation antennae.
9. ACCOMMODATION
Cabin capacity: 58 Berths
All Company accommodation fully air conditioned, to provide
temperatures of 19 - 23 degrees centigrade during Gulf of Mexico
Operations.
Company accommodation comprises minimum:
<TABLE>
<CAPTION>
No Type Toilet/Shower Facilities Nominal Designation
-- ---- ------------------------ -------------------
<S> <C> <C> <C> <C>
1 Suite Yes Party Manager
1 Single Yes Assistant P.M.
1 Double Yes Client
1 Single Yes U.S."CAPT"
1 Single No Obs/Mech/Nav
4 Double No Obs/Mech/Nav
1 Quad No Obs/Mech/Nav
1 Double Yes Obs/Mech/Nav
----- ------------
11 20
</TABLE>
- 18 -
<PAGE> 19
SCHEDULE B
SPECIAL CONDITIONS
If any of the undermentioned events shall occur Company's liability to
pay the Charter Fees shall be suspended in full for the duration of
such event or events when and as often as the same shall from time to
time occur.
The right of Company to suspend payment of the Charter Fees during the
occurrence of such event may be waived temporarily by the Party Chief
on behalf of Company but cannot be permanently waived unless expressly
agreed in writing between Company and Owners. A temporary waiver may
be withdrawn at any time by notice from the Party Chief to the Master.
During the period of any such waiver the full daily Charter Fees shall
continue to be paid.
1. ACCOMMODATION
Failure to provide accommodation as follows:-
A. Company accommodation to be maintained at temperatures between 19 and
23 degrees centigrade, for a minimum of ninety per cent of each
calendar month.
B. Seismic Instrument Room to be maintained at 20 degrees Centigrade
2. PROPULSION
Failure to meet the minimum technical requirements set out below:-
A. The Seismic Vessel shall have one of the two bow thrusters fully
operational at all times.
3. SPECIFIC EQUIPMENT
Failure of any of the following specific equipment to operate as
reasonably expected by Company or to manufacturer's specifications:-
A. Bridge radar (both radars to be working when the Seismic Vessel leaves
port).
B. Auto pilot.
C. Gyro compass.
- 19 -
<PAGE> 20
D. Aft deck crane.
E. Ship's intercom
F. VHF/M radios.
4. GENERAL EQUIPMENT, SERVICES, CREW
A. Any failure to meet the requirements of the appropriate Classification
Society, flagging authority or insurance requirements.
5. ENDURANCE
Failure to maintain the following:-
The Seismic Vessel shall have a potential endurance of 60 days and in
particular shall have the following usable tank capacities:
A. Fuel oil tank capacity 700 tonnes.
B. Lube oil tank capacity 10,000 litres.
C. Fresh water tanker capacity 350 tonnes.
6. ADDITIONAL
A. Fuel, port calls and other charges accruing during the period where
Company is not liable to pay the Charter Fees in accordance with the
terms of this Agreement shall be charged to Owners' Account.
B. No Charter Fees shall be payable by Company to Owners should the
Seismic Vessel fail to maintain course/speed to Company's requirements
due to Seismic Vessel malfunctions or operator error/deficiency.
C. Company shall not pay to Owners the Charter Fees in respect of delays
to the Seismic Vessel in leaving port due to the Seismic
Vessel/personnel not being ready and any consequential delays (eg
tides etc) provided reasonable notice shall have been given to Owners
by Company for departure.
D. In relation to any event where Company is relieved from its obligation
to pay Charter Fees in accordance with this Agreement Company shall
only be obliged to recommence payment of the Charter Fees upon
reasonable evidence from Owners to Company that the
- 20 -
<PAGE> 21
relevant event has ceased and the Seismic Vessel is returned to an
equally favourable position after the occurrence of such event.
/s/ G. M. Harrison /s/ Luo Bu Xu
For Company For the Owners
- 21 -
<PAGE> 22
SCHEDULE C
The following services or functions are considered essential for the smooth
running of the Seismic Operation and failure to provide any of them is
considered a material deficiency of the Seismic Vessel, its Crew or Equipment.
The Owners therefore undertake to provide:
1. ACCOMMODATION
A. Owners and Company anticipate the redesignation of the lounge (rest
area) for short periods, even if this curtails its use by the Crew.
B. The Party Chief shall be allocated a suite in the Bridge
accommodation.
2. CATERING
A. A minimum of three, varied, cooked meals per day.
B. Access between 1900 and 0500 hours to cold and dry shores to provide
light refreshments and meals for themselves.
C. A steward to routinely maintain Company accommodation, showers,
toilets and public areas in a clean and tidy condition. All Officers
and Crew quarters shall be kept tidy and to a similar high standard of
cleanliness.
3. PROPULSION
A. The Seismic Vessel should have three working diesel generators sets at
all times. Any one diesel generator set may be shut down for up to
twelve continuous hours for minor repairs and maintenance, after prior
notice (if possible) to Company by Master.
B. The Seismic Vessel shall have one fully operational shaft generator at
all times.
4. ELECTRICAL SUPPLY
A. A domestic power supply suitable for domestic appliances and
instrument room and work shop lighting is required, on 24 hour/day
basis.
- 22 -
<PAGE> 23
5. PERFORMANCE
A. The Seismic Vessel shall be capable of an average cruising speed of 10
knots at an average fuel consumption of 11.5 tonnes, or less, per
twenty-four hours.
B. The Seismic Vessel shall be capable of anchoring in water depths of up
to 100 metres.
/s/ G.M. Harrison /s/ Luo Bu Xu
For the Company For the Owners
- 23 -
<PAGE> 24
FROM: HORIZON SEISMIC INC.
11,200 WESTHEIMER, Suite 200
HOUSTON
TEXAS 77042
April 12, 1994
To:
SHANGHAI BUREAU OF MARINE
GEOLOGICAL SURVEY
526 YAN AN ROAD WEST
SHANGHAI, 200050
Attn Mr. Luo Bu Xu
Dear Sir
SERVICE AGREEMENT-DISCOVERER
This letter, to be known as Side Letter No. 1, concerns the Service
Agreement, dated April 12th, 1994, between our two Companies.
Clause 1.2. of the above mentioned Agreement provides Horizon Seismic
Inc. with the option to extend the initial period of charter (as defined in
Clause 1.1.) for additional periods.
In signing this Side Letter No. 1, Horizon Seismic Inc. and Shanghai
Bureau of Marine Geological Survey agree that the Charter Fees, subject to all
other conditions of the Agreement, and the exercising by Horizon Seismic of its
option to extend the initial period shall be increased after the initial twelve
months by a percentage equivalent to:
the average of the preceding annual published retail price inflation
in the USA and the PRC subject to any increase being limited, in any event, to
a maximum of ten percent.
Yours Faithfully
G.M. Harrison
President
Horizon Seismic Inc.
Agreed on behalf of
Shanghai Bureau of Marine
Geological Survey
Luo Bu Xu
Date: April 12, 1994
<PAGE> 25
FROM: HORIZON SEISMIC INC.
11,200 WESTHEIMER, Suite 200
HOUSTON
TEXAS 77042
April 12, 1994
To:
SHANGHAI BUREAU OF MARINE
GEOLOGICAL SURVEY
526 YAN AN ROAD WEST
SHANGHAI, 200050
Attn Mr. Luo Bu Xu
Dear Sir
SERVICE AGREEMENT- DISCOVERER
This letter, to be known as Side Letter No. 2, concerns the Service
Agreement, dated April 12th, 1994, between our two companies.
Schedule B, Clause 1.A. of the above Agreement specifies that failure
by Owners to maintain Company accommodation at temperatures between 19 and 23
degrees Centigrade, for a minimum of ninety percent of each calendar month
represents an "off-hire" condition during which Company would not be obliged to
pay the Charter Fees.
At this date, it is understood the Owners may have difficulty in
meeting this requirement and are actively seeking to remedy the situation by
the application of additional equipment and or modification of existing
equipment.
In signing this Side Letter No. 2, Horizon Seismic Inc. and Shanghai
Bureau of Marine Geological Survey agree; the Bureau will continue, at its
expense, to take all reasonable steps to meet the requirements of Schedule B
Clause 1A, during the period up to mobilisation and or immediately on, or after
arrival of the vessel at a US port. Such steps shall include, if necessary,
the purchase and installation of additional equipment.
Subject to the foregoing, Horizon agrees to temporarily waive its
right to declare the Seismic Vessel off-hire in respect of non-compliance of
this Schedule B Clause 1.A.
No other terms of conditions of the Service Agreement are affected in
any way by this Side Letter No. 2.
Yours Faithfully
G.M. HARRISON /s/ G.M. Harrison
PRESIDENT
HORIZON SEISMIC INC.
Agreed on behalf of
Shanghai Bureau of Marine
Geological Survey
Luo Bu Xu /s/ Luo Bu Xu
Date: April 12, 1994
<PAGE> 26
FROM: HORIZON SEISMIC INC.
11,200 WESTHEIMER, Suite 200
HOUSTON
TEXAS 77042
April 12, 1994
To:
SHANGHAI BUREAU OF MARINE
GEOLOGICAL SURVEY
526 YAN AN ROAD WEST
SHANGHAI, 200050
Attn Mr. Luo Bu Xu
Dear Sir
SERVICE AGREEMENT-DISCOVERER
This letter, to be known as Side Letter No. 3, concerns the Service
Agreement, dated April 12th, 1994, between our two Companies.
Clause 13 and Clause 14 of the above Agreement specify certain
liabilities, indemnities and insurances.
In signing this Side Letter No. 3, Horizon Seismic Inc. acknowledges
and agrees that the Shanghai Bureau of Marine Geological Survey's liability to
any person on board the Seismic Vessel during the term of the Agreement, in
respect of injury of death, is limited to between thirty thousand and fifty
thousand United States Dollars.
Yours Faithfully
G.M. HARRISON /s/ G.M. Harrison
PRESIDENT, HORIZON SEISMIC INC.
Agreed on behalf of
Shanghai Bureau of Marine
Geological Survey:
LUO BU XU /s/ Luo Bu Xu
Date: April 12, 1994
<PAGE> 27
FROM: HORIZON SEISMIC INC.
11,200 WESTHEIMER, Suite 200
HOUSTON
TEXAS 77042
April 12, 1994
To:
SHANGHAI BUREAU OF MARINE
GEOLOGICAL SURVEY
526 YAN AN ROAD WEST
SHANGHAI, 200050
Attn Mr. Luo Bu Xu
Dear Sir
SERVICE AGREEMENT-DISCOVERER
This letter, to be known as Side Letter No. 4, concerns the Service
Agreement, dated April 12th, 1994, between
our two Companies.
Clause 14 of the above Agreement specifies insurances which Owners are
required to provide for the duration of the Agreement.
In signing this Side Letter No. 4 Horizon Seismic Inc. and Shanghai
Bureau of Marine Geological Survey acknowledge that certain Clients of Horizon
request to be named as additional or joint assured on Owners insurance
policies. At this date Owners are unable to agree to such requests through a
policy decision of the Peoples Insurance Company of China. The Owners and
Company agree to cooperate to resolve, if possible, the requests of Company's
Clients in this respect.
Yours Faithfully
G.M. Harrison /s/ G. M. Harrison
President
Horizon Seismic Inc.
Agreed on behalf of Shanghai Bureau of Marine Geological Survey,
Luo Bu Xu
/s/ Luo Bu Xu
Date April 12, 1994
<PAGE> 28
FROM: Horizon Seismic Inc.
11,200 Westheimer
Houston
Texas 77042
USA
AND: Horizon Exploration Ltd
6 Pembroke Road
Sevenoaks
Kent
UK
25th October 1995
To: SHANGHAI BUREAU OF MARINE GEOLOGICAL SURVEY
526 Yan An Road West
Shanghai 200050
PRC
Attn: Mr Luo BuXu
Dear Sir,
SERVICE AGREEMENT - DISCOVERER
This letter, to be known as Side Letter No. 5, concerns the Service
Agreement dated April 1994 and the Protocol dated May 1995 between our
Companies.
The Agreement and Protocol shall remain binding on Company and Owner
with this Side Letter forming an integral part thereof. Where ambiguity arises
between this Side Letter and the Protocol or Agreement then priority in the
resolution of the ambiguity shall firstly be given to this Side Letter and
secondly to the Protocol and lastly to the Agreement.
Company hereby gives notice to exercise Company's option to extend the
Charter period until at least 22nd March 1996, and by signing the attached
duplicate of this Side Letter, Owner acknowledges such notice.
<PAGE> 29
Company confirms it shall advise Owner on or before January 22nd 1996
if it intends to exercise the remaining option to extend the Charter until
scheduled completion at June 22nd 1996, or if it intends to return the vessel
to Owners at 22nd March 1996.
Company acknowledges that advance notice of Company's intentions for
the vessel are of the utmost importance to Owner for the purpose of forward
planning. In view of this fact and the successful relationship of the parties,
Company shall endeavour to secure sufficient forward orders for the vessel such
that on or before 22nd January 1996 Company can enter negotiations with Owner
to extend the Charter beyond the expiry date for a period of 6-12 months.
Yours Faithfully,
/s/ G. M. Harrison
G.M. HARRISON President, Horizon Seismic Inc.
Managing Director, Horizon Exploration Ltd.
Agreed on behalf of Shanghai Bureau of Marine Geological Survey.
/s/ Luo Bu Xu
Luo BuXu
<PAGE> 30
23rd January 1996
HEL Ref. GH/SS/L/868
From: Horizon Seismic Inc. From: Horizon Exploration Ltd.
11,200 Westheimer Suite 410 6 Pembroke Road
Houston Sevenoaks
Texas 77042 Kent
USA UK
TO: SHANGHAI BUREAU OF MARINE GEOLOGICAL SURVEY
526 Yan An Road West
Shanghai 200050
PRC
Attn: Mr Luo BuXu
Dear Sir
RE: SERVICE AGREEMENT DISCOVERER
This letter, to be known as Side Letter No. 6, concerns the Service Agreement
dated April 1994 and the Protocol dated May 1995 between our Companies and the
Side Letter No. 5 dated 25th October 1995.
The Agreement and Protocol shall remain binding on Company and Owner with this
Side Letter forming at integral part thereof. Where ambiguity arises between
this Side Letter and the Protocol or Agreement then priority in the resolution
of the ambiguity shall firstly be given to this Side Letter and secondly to the
Protocol and lastly to the Agreement.
Company hereby gives notice to exercise Company's option to extend the Charter
period until 22nd June 1996, and by signing the attached duplicate of this Side
Letter, Owner acknowledges such notice.
Yours faithfully
/s/ G.M. Harrison
G.M. HARRISON President, Horizon Seismic Inc.
Managing Director, Horizon Exploration Ltd.
Agreed on behalf of Shanghai Bureau of Marine Geological Survey.
/s/ Luo Bu Xu
Luo BuXu
<PAGE> 31
24th January 1996
HEL Ref. GH/SS/L/868
From: Horizon Seismic Inc. From: Horizon Exploration Ltd.
11,200 Westheimer Suite 410 6 Pembroke Road
Houston Sevenoaks
Texas 77042 Kent
USA UK
TO: SHANGHAI BUREAU OF MARINE GEOLOGICAL SURVEY
526 Yan An Road West
Shanghai 200050
PRC
Attn: Mr Luo BuXu
Dear Sir
RE: SERVICE AGREEMENT DISCOVERER
This letter, to be known as Side Letter No. 7, concerns the Service Agreement
dated April 1994 and the Protocol dated May 1995 between our Companies and the
Side Letter No. 5 dated 25th October 1995, and the Side Letter No. 6 dated 23rd
January 1996.
The Agreement and Protocol shall remain binding on Company and Owner with this
Side Letter forming at integral part thereof. Where ambiguity arises between
this Side Letter and the Protocol or Agreement then priority in the resolution
of the ambiguity shall firstly be given to this Side Letter and secondly to the
Protocol and lastly to the Agreement.
When Company intends, in accordance with Clause 11.3 of the Agreement to reduce
Charter Payments by deduction of costs or expenses incurred by Company at the
request of and with approval or Owner. Company shall use its best endeavours to
provide original invoices supporting the deductions at the time of invoice
payment. Yours faithfully
G.M. HARRISON President, Horizon Seismic Inc.
Managing Director, Horizon Exploration Ltd.
Agreed on behalf of Shanghai Bureau of Marine Geological Survey.
Luo BuXu
<PAGE> 32
SERVICE AGREEMENT
BETWEEN
HORIZON SEISMIC INC
AND
SHANGHAI BUREAU
OF
MARINE GEOLOGICAL SURVEY
CONCERNING
MV DISCOVERED/FA XIAN
<PAGE> 33
SERVICE AGREEMENT
FOR
MV DISCOVERER
This Service Agreement. hereinafter referred to as the "Additional Agreement"
made effective the 24th day of January, 1996, is by and between Shanghai
Bureau of Marine Geological Survey whose address is 526 Yan An Road West,
Shanghai, Peoples Republic of China, hereinafter referred to as "Owner" as
owner of the vessel Discoverer, and Horizon Seismic Inc. whose address is 11200
Westheimer, Suite 410, Houston, Texas 77042, USA, hereinafter referred to as
"Company", as the Charterer of the vessel Discoverer.
Whereas Owner and Company entered into an Agreement dated April 12th, 1994,
together with four side letters of the same date and an Assignment to Horizon
Exploration Ltd dated 27th April, 1995 and whereas Owner and Company agreed to
exercise certain options and confirm an increase in the Charter Rate and
confirm other options in a Protocol dated May 1995 and Side Letter dated 25th
October 1995, and whereas those options were confirmed in a Side Letter dated
January 23rd 1996, all of which documents shall hereinafter be referred to as
the "Original Documents", now Owner and Company agree the following conditions:
1. Owner and Company hereby agree a new Service Agreement - the
Additional Agreement - in accordance with the Original Documents as
modified below.
2. The Original Documents shall form an integral part of the Additional
Agreement. Where ambiguity arises between the Additional Agreement
and the Original Documents, then the Additional Agreement shall take
priority in the resolution of the ambiguity.
3. Where no modifications are made to the Original Documents they shall
remain valid in their original form.
4. Modifications to the Service Agreement shall be as follows:
1.1 Owner agrees to let and Company agrees to hire the Seismic
Vessel, her engines, tackle, gear appurtenances and related
Seismic equipment, material and supplies, as specified in
Schedule A, collectively the "Seismic Vessel" for a period of
up to one year from June 22nd, 1996, in the United States Gulf
of Mexico Waters or other locations.
1.2 Company shall have the option to terminate the initial period
early without penalty by up to three months. The option shall
be exercised by Company giving sixty days notice to Owner.
Company shall pay Owner for the initial period at the Rates
defined in Clause 9 herein. Rates for any additional period
of periods shall be defined in a separate agreement.
<PAGE> 34
2.1 Charter of the Seismic Vessel by Company shall commence on
22nd June 1996.
2.2 The joint survey of the Seismic Vessel undertaken by Company
and Owners to determine the precise condition of the Seismic
Vessel and its equipment, before its departure from Shanghai,
remains valid.
4.3 NEW CLAUSE
Company shall be responsible for maintenance repair and
consumables for Owner supplied seismic equipment as specified
in Schedule A Section 10 except for expense caused through
Owner's negligence.
9.1 There shall be no mobilisation fee.
9.2 The Charter fee shall apply from June 22nd 1996 until the
Charter terminates in accordance with the provisions hereof
and subject to Clauses 15, 19 and Schedule B and other
relevant provisions of this Agreement and shall be at the
fixed daily rate of US $ 8316 - 00
11.4 NEW CLAUSE
In the event Company is late in paying Owner's invoices and subject to
those invoices not being reasonably disputed, Owner shall be entitled
to charge Company interest on any overdue and undisputed amounts at
the rate of one percent per month.
19.1 Notwithstanding the provisions of Clause 15 herein, Company
shall allow Owners one day of 24 hours per calendar month or
pro rata for part thereof for maintenance and/or overhaul and
or repairs. During such period Company shall continue to be
liable to pay to Owners the Charter Fees, provided always
Owner has used best endeavours to minimise disruption to
Company operations and Owner's Master liaises fully with the
Party Chief. Days can be accumulated up to a maximum of
twelve days but days not taken by Owners will not be
compensated by Company at the end of this Agreement. Any
planned dry-docking and/or overhauls and/or repairs are to be
co-ordinated with Company but should be scheduled between 1st
December and 1st March each year. Company shall, however,
have the right to request Owners to bring forward repairs or,
subject to Classification approval, delay same to be
co-ordinated with Company's own planned maintenance, repairs
and renewal.
25.1 Owner's personnel shall rotate approximately every fifteen
weeks with approximately fifty per cent of the personnel
changing on each occasion or such alternative schedule as may
be mutually agreed between Owner and Company.
<PAGE> 35
26 Communication Costs
Owner and Company shall each be responsible for their own
communication costs. In the event Company requests Owner to
make communications on or behalf of Company, these shall be at
Company cost.
Company shall promptly pay its share of communications charges
to Shanghai Long Distance Tel Communications Office, including
any re-connection charges due to Company's late payment.
SCHEDULE A
7. The vessel does not have active stabilisation for roll
reduction.
Agreed between the Parties, this 24th day of January 1996:
FOR COMPANY FOR OWNER
Signed /s/ G.M. Harrison Signed /s/ Luo Bu Xu
Name G.M. Harrison Name Luo Bu Xu
Position Managing Director Position Division Chief
Witness /s/ Witness /s/
Confirmed by Shanghai Corporation For Foreign Economic & Technological
Cooperation.
Signed /s/
Name
---------------------
Position
-----------------
<PAGE> 36
(x) copies of the Bills of Sale;
(xi) certificates of insurance evidencing the
coverages required hereunder;
(xii) Uniform Commercial Code filings as deemed
appropriate by Secured Party's counsel duly executed by Debtor
and necessary third parties;
(xiii) good standing certificates from the Secretary
of State of Debtor's state of incorporation and the state of
Debtor's chief executive office; and
(xiv) good standing certificates from the Secretary
of State of Guarantor's state of incorporation and Guarantor's
chief executive office.
(xv) UCC, tax and judgment lien searches as deemed
necessary or advisable by Secured Party;
(xvi) the absence on the date hereof of any Liens
on the Collateral, other than any Permitted Encumbrance in
favor of Secured Party; and
(xvii) Secured Party shall have received such other
documents, certificates, financing statements and other
items, in form and substance satisfactory to Secured Party, as
Secured Party may request.
(b) Term Loan B Advances. The obligation of the Secured
Party to make Term Loan B advances after the Closing Date is subject
to satisfaction of the following conditions:
(i) delivery to the Secured Party of a Notice of
Borrowing;
(ii) no material adverse change in the condition
of the Debtor (financial or otherwise) shall have occurred
since the Closing Date;
(iii) the absence on the date of such advance of
any Default or Event of Default; and
(iv) no Lien or other interest shall have been
permitted to attach to the Collateral superior or subordinate
to the interest of the Secured Party under this Agreement,
except for Permitted Encumbrances.
10
<PAGE> 37
ARTICLE II
SECURITY INTEREST
SECTION 2.1 Grant of Security Interest. Debtor hereby Grants to
Secured Party a first priority security interest in the following
(collectively, the items described in subsections (a)-(d) may be referred to
herein as the "Collateral"):
(a) All right, title and interest of the Debtor in and
to the Equipment as the same is now and will hereafter be constituted,
whether now owned by the Debtor or hereafter acquired, together with
all accessories, equipment, parts and appurtenances appertaining or
attached to the Equipment whether now owned or hereafter acquired, and
all substitutions, renewals and replacements of and additions,
improvements, accessions and accumulations to the Equipment together
with all the rents, issues, income, profits and avails thereof.
(b) All right, title, interest, claims and demands of
Debtor in, to and under the following (collectively the "Assigned
Agreements"):
(i) the Bills of Sale;
(ii) the Permitted Leases; and
(iii) any and all other contracts and agreements
(excluding this Agreement and any supplement or modification
thereto and the Notes) relating to the Equipment or any rights
or interests therein to which Debtor is now or may hereafter
be a party, together with all rights, powers, privileges,
licenses, easements, options and other benefits of Debtor
under each thereof, including without limitation the right to
make all waivers and agreements, to give and receive all
notices and other instruments or communications, to take such
action upon the occurrence of a default thereunder, including
the commencement, conduct and consummation of legal,
administrative or other Proceedings, as shall be permitted
thereby or by law, and to do any and all other things which
Debtor is or may be entitled to do thereunder.
(c) The proceeds from a sale or transfer of any right,
title or interest of Debtor in the Equipment or any portion thereof.
(d) All proceeds of any and all of the foregoing
Collateral, whether now owned or hereafter acquired by Debtor and
wherever located, including without limitation:
(i) cash, accounts receivable, instruments,
contract rights, chattel paper, documents of title and any
other obligation due to Debtor with respect to or in
connection with the foregoing Collateral; and
11
<PAGE> 38
(ii) to the extent not otherwise included, all
payments under any casualty insurance (whether or not Secured
Party is the loss payee thereof), condemnation award,
indemnity, warranty or guaranty, payable by reason of loss or
damage to or otherwise with respect to any of the foregoing
Collateral.
The Collateral shall mean and include all personal property
and the proceeds of such personal property described in any and all
amendments to this Agreement hereafter executed by Debtor and Secured
Party in connection with the Loan.
SECTION 2.2 Security for Secured Obligations. This Agreement
secures the payment of all indebtedness and other obligations of Debtor to
Secured Party with respect to: the Loans, whether now or hereafter existing,
including without limitation Debtor's obligations to Secured Party under the
Notes or any other instrument and all amendments thereto and renewals and
extensions thereof, whether for principal, interest, fees, expenses or
otherwise; all of Debtor's obligations of payment and performance now or
hereafter existing under this Agreement, including, without limitation, all
amendments hereto and renewals and extensions hereof (all such obligations of
Debtor described in this Section 2.2 being, collectively, the "Secured
Obligations").
SECTION 2.3 Security Interest Absolute. All rights of Secured
Party and security interests hereunder and all Secured Obligations shall be
absolute and unconditional, irrespective of:
(i) any lack of validity or enforceability of the Notes,
this Agreement or any other Security Instrument or any other agreement
or instrument relating thereto;
(ii) any change in the time, manner, or place or payment
of, or in any other term of, all or any of the Secured Obligations or
any other amendment or waiver of or any consent to any departure from
the Notes, this Agreement or any other Security Instrument; or
(iii) any exchange, release or non-perfection of any other
collateral, or any release, amendment or waiver of or consent to
departure from any guaranty, for all or any of the Secured
Obligations.
ARTICLE III
REPRESENTATIONS, WARRANTIES AND COVENANTS
SECTION 3.1 Debtor's Representations and Warranties. Debtor
hereby represents and warrants to Secured Party that:
(a) Debtor is a corporation duly organized and
validly existing under the laws of the State of its incorporation and
has all requisite corporate power, authority and legal right to own
its properties, including without limitation the Collateral, to
12
<PAGE> 39
conduct its business as is now being conducted and to execute, deliver
and perform its obligations under the Notes, this Agreement, each
other Security Instrument to which it is a party and each other
document or agreement related to the Collateral to which it is a
party. Debtor is fully qualified to do business and is in good
standing in each jurisdiction in which the failure to be in good
standing would have a material adverse effect on the business or
operations of Debtor.
(b) The execution, delivery and performance by Debtor of
the Notes, this Agreement and each other Security Instrument to which
it is a party are within Debtor's corporate powers, have been duly
authorized by all requisite corporate action, do not contravene
Debtor's charter or by-laws or any law, governmental rule or
regulation, or any order, writ, injunction, decree, determination or
award currently in effect applicable to, or any contractual
restriction binding on or affecting, Debtor or any of its properties,
including without limitation the Collateral, and do not result in or
require the creation of any Lien, security interest, right of
acceleration, charge or encumbrance (other than pursuant to this
Agreement) upon or with respect to any of its properties.
(c) No authorization or approval or other action by, and
no notice to or filing (other than the filings referred to in
subparagraph (f) below) with, any governmental authority or regulatory
body, shareholders or any other Person is required for the due
execution, delivery and performance by Debtor of this Agreement or any
other Security Instrument to which it is a party.
(d) The Notes, this Agreement and each other Security
Instrument to which Debtor is a party are the legal, valid and binding
obligations of Debtor, enforceable against Debtor in accordance with
their respective terms, subject, in the case of enforceability, to
applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of affecting creditors' rights generally and to the
application of general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law).
(e) The proceeds of the Loans will he used only to
finance the purchase by Debtor of the Equipment; Debtor owns good and
marketable title to the Equipment; the Collateral is free and clear of
all Liens (except for Permitted Encumbrances in favor of Secured
Party); and the Equipment is in good condition and ready for
operation. The Equipment is and will retain its character as personal
property, and neither Debtor, Guarantor, or any Affiliate or
Subsidiary of either Debtor or Guarantor shall affix or attach any
item of Equipment in any manner so as to alter the character of the
Equipment as personal property subject to the UCC.
(f) The filing of Uniform Commercial Code financing
statements in the office of the Secretary of State of the State of
Texas will create a valid perfected first priority security interest
in the Collateral, securing the payment of the Secured Obligations,
and all filings and other actions necessary or desirable to perfect
and protect such security
13
<PAGE> 40
interests will have been taken. No Person other than Secured Party
holds any security interest affecting the Collateral. No effective
Security Instrument or other instrument similar in effect covering all
or any part of the Collateral is on file in any recording office,
except such as may have been filed in favor of Secured Party relating
to this Agreement.
(g) Debtor's chief executive office is located in Harris
County, Houston, Texas. The Debtor has not used any trade names or
other names, except for "Eagle Geophysical."
(h) Contemporaneously with the execution and delivery of
this Agreement, Debtor is delivering to Secured Party evidence of
insurance satisfying the requirements of Section 4.1 hereof.
(i) Debtor is not currently insolvent, as defined in 11
U.S.C. 101(32) nor will it be rendered insolvent by virtue of entering
into the Notes, this Agreement or any other Security Instrument to
which it is a party or carrying out any of the transactions
contemplated hereby or thereby.
(j) Each financial statement of Guarantor which has been
furnished to Secured Party fairly presents the financial condition of
Guarantor as of the date of such financial statement. There has been
no material adverse change in Guarantor's financial condition since
the date of the most current financial statement delivered to Secured
Party.
(k) There is no pending, or to the Debtor's knowledge,
threatened, action or Proceeding affecting Debtor, Guarantor or any of
their properties before any court, governmental agency or arbitrator
which may materially and adversely affect the condition (financial or
otherwise) or operations of Debtor, Guarantor or any of their
properties or which purports to affect the validity or enforceability
of the Notes, this Agreement or any other Security Instrument to which
Debtor is a party.
(l) No Default or Event of Default has occurred and is
continuing.
(m) All sales, transfer, use, documentation or similar
taxes, fees or other charges due and payable prior to or as of the
date hereof have been paid to the extent such are in connection with
the sale to and purchase by Debtor of the Equipment.
(n) Debtor is not a party to, nor bound by, any contract,
agreement or instrument that would conflict with this Agreement, the
Notes or any other contracts, agreements or instruments executed in
connection with the transactions contemplated by this Agreement.
(o) Debtor has agreed, and hereby acknowledges, to accept
service of process at its address set forth in Section 8.1 hereof in
person or by registered or certified mail
14
<PAGE> 41
return receipt requested, postage prepaid, in connection with any
Proceeding initiated by Secured Party in any of the courts referenced
in Section 8.11 hereof.
(p) The Debtor has no Subsidiaries, except for African
Geophysical, Inc., a corporation organized and existing under the laws
of the Cayman Islands.
(q) Debtor has not incurred any accumulated unfunded
deficiency within the meaning of the Employee Retirement Income
Security Act of 1974, as amended from time to time ("ERISA") nor has
Debtor incurred any material liability to the Pension Benefit Guaranty
Corporation ("PBGC") established under such Act (or any successor
thereto under such Act) in connection with any Plan. Debtor and its
Affiliates are in compliance in all material respects with those
provisions of ERISA and the regulations and public interpretations
thereunder which are applicable to Debtor and its Affiliates, except
for such noncompliance as would not have a material adverse effect on
the financial condition of Debtor and its Affiliates, taken as a
whole.
(r) Debtor has filed all income tax returns required to
be filed prior to the date hereof with the various governmental
entities having taxing authority with respect to Debtor.
(s) Debtor (i) is not an "investment company" as such
term is defined in, or otherwise subject to regulations under, the
Investment Company Act of 1940 and (ii) is not a "holding company" as
that term is defined in, and is not otherwise subject to regulations
under, the Public Utility Holding Company Act of 1935.
(t) Debtor has not sold, extended any offer to sell nor
accepted any offer to purchase regarding any of Debtor's interest in
the Collateral or with respect to the transactions described in the
Security Instruments or the Notes.
(u) Debtor has delivered true and accurate copies of the
Bills of Sale executed by Seller with respect to the transfer of the
Equipment to Debtor.
SECTION 3.2 Affirmative Covenants. Until all the Secured
Obligations shall have been fully paid and satisfied, Debtor covenants and
agrees that it shall, unless Secured Party shall have otherwise consented in
writing:
(a) promptly pay the principal of, interest on, and any
other amounts due under the Notes as and when the same become due,
whether at maturity, by acceleration or otherwise;
(b) (i) duly, punctually and faithfully perform its
obligations under the Notes, this Agreement and each other Security
Instrument to which it is a party; (ii) maintain the Liens and
security interests created by this Agreement and each other Security
Instrument to which it is a party as valid and perfected Liens on and
security interests in all of the
15
<PAGE> 42
Collateral, prior in right to any other Lien, security interest, claim
or other encumbrance; (iii) warrant and defend its interest in and to
the Collateral against the claims and demands of all Persons; and (iv)
defend, at Debtor's cost, any action, claim or Proceeding affecting
the Collateral;
(c) use the proceeds of the Loans only to finance the
purchase by Debtor of the Equipment and maintain good and marketable
title to the Equipment, free and clear of any Liens, security
interests, charges or encumbrances except for the security interest
created by this Agreement and Permitted Encumbrances;
(d) notify Secured Party at least thirty (30) days prior
to the changing of the chief executive office of the Debtor from the
location specified in Section 3.1(g);
(e) at no expense to Secured Party, cause each item of
Equipment to be serviced, maintained and preserved in the same
condition, repair and working order as when new, ordinary wear and
tear excepted, and in accordance with any manufacturer's suggested or
approved maintenance program and warranty requirements, and shall, in
the case of any loss or damage to any item of Equipment, promptly
furnish to Secured Party a statement respecting any such loss or
damage and (unless an Event of Loss shall have occurred with respect
to an item of Equipment) as quickly as practicable after the
occurrence thereof make or cause to be made all repairs, replacements
and other improvements in connection therewith which are necessary or
desirable to keep each item of Equipment in proper working order;
(f) permit Secured Party to inspect the Equipment during
normal business hours upon reasonable prior notice to Debtor;
(g) from time to time execute and deliver all such
supplements and amendments hereto and to any other Security
Instrument, and all such financing statements, continuation
statements, instruments of further assurance and other instruments,
and take such other action, as the Secured Party requests and
reasonably deems necessary or advisable to: (i) further Grant,
maintain or preserve the Lien and security interest contemplated by
this Agreement or carry out more effectively the purposes hereof; (ii)
perfect or protect the validity of any Security Instrument or of any
Grant made or to be made by this Agreement; or (iii) enforce any
Security Instrument or preserve and defend title to the Collateral and
the rights of the Secured Party therein against the claims of all
Persons and parties;
(h) comply with all of its representations, warranties
and covenants set forth in this Agreement, in the Notes and each
Security Instrument to which it is a party; and punctually perform and
observe all of its obligations and agreements contained in this
Agreement, in the Notes and each Security Instrument to which it is a
party;
16
<PAGE> 43
(i) promptly notify the Secured Party of any default by
any Person under any Security Instrument;
(j) remain a duly organized and validly existing
corporation under the laws of the state of its incorporation and
remain duly qualified to do business and in good standing in each
jurisdiction in which the failure to be in good standing would have a
material adverse effect on the business or operations of Debtor;
(k) comply in all material respects with all applicable
laws, rules, regulations and orders; and preserve and maintain all
federal, state and local licenses, privileges, franchises,
certificates and other permits necessary for the operation of its
business and the operation of each item of Equipment;
(l) pay or cause to be paid promptly when due (i)
(subject to the right of Debtor, in accordance with the provisions of
this Agreement to obtain extensions of the date on which such taxes
are due) all property and other taxes (including without limitation
income, sales, use, franchise and gross receipts taxes) and
governmental charges or levies which are at any time or from time to
time levied upon or assessed against it or any item of Equipment or
are otherwise associated with the ownership, use or operation of any
item of Equipment (except such taxes levied on the net income of
Secured Party) and (ii) all claims (including without limitation
claims for labor, materials and supplies) against any item of
Equipment; provided, that Debtor may contest any such tax or claim by
appropriate Proceedings so long as such Proceedings shall suspend the
collection thereof, no part of the Collateral would be subject to
sale, forfeiture or diminution during the pendency of such
Proceedings, Debtor shall have furnished such security as may be
required in the Proceedings or reasonably requested by Secured Party,
Debtor conducts such contests in good faith and with due diligence,
and promptly after the final determination of each such contest,
Debtor pays all amounts which shall be determined to be payable in
respect thereof;
(m) within 120 days after the end of each fiscal year
furnish to the Secured Party unaudited year end financial reports of
the Debtor including without limitation (i) a balance sheet and (ii)
statements of income and retained earnings, all prepared in accordance
with generally accepted accounting principles consistently applied and
certified by the president, chief financial officer or any vice
president of Debtor who prepared such financial statements as being
true and accurate and fairly representing the financial condition of
Debtor;
(n) promptly report to Secured Party the commencement of
any Proceeding against Debtor if such litigation reasonably would be
expected to, in the event of an unfavorable outcome, cause an Event of
Default, have a material adverse effect on Debtor's financial
condition or operations, affect the validity or enforceability of the
Notes, this Agreement or any of the Security Instruments or affect
priority or enforceability of Secured Party's security interest in any
of the Collateral;
17
<PAGE> 1
EXHIBIT 10.37
DATED 21 April 1997
PAYLESS PROPERTIES LIMITED (1)
HORIZON EXPLORATION LIMITED (2)
---------------------------------
U N D E R L E A S E
O F P A R T
- of -
Ground Floor Suffolk House
154 High Street Sevenoaks Kent
---------------------------------
Term commences : 21 April 1997
Term expires : 20 December 2011
Initial Rent : L.62,100 p.a.
MANCHES & CO
Aldwych House
81 Aldwych
London WC2B 4RP
Tel : 0171 404 4433
Ref : S627/MEJ
<PAGE> 2
INDEX
1. DEFINITIONS
2. DEMISE
3. TENANT'S COVENANTS
3.1 To pay rents
3.2 To pay rates and taxes
3.3 To pay interest
3.4 To pay Value Added Tax
3.5 To pay for all electricity water and other services
3.6 To pay Landlord's costs of abating a nuisance
3.7 To pay costs
3.8 To pay service charge
3.9 To repair interior
3.10 To clean windows
3.11 To paint interior
3.12 To comply with all statutes
3.13 To deliver up
3.14 To permit entry to view state of repair
3.15 To permit entry for repairs or to carry out works
3.16 To permit Landlord to obstruct lights and easements
3.17 To permit works on adjoining premises
3.18 Not to make alterations and additions
3.19 Not to set up engines or machinery
3.20 Not to exhibit any sign without approval
3.21 Not to hang goods
3.22 Prohibited activities
3.23 User
3.24 Not to obstruct windows or permit encroachments
3.25 Not to obstruct sewers drains or watercourses
3.26 Refuse
3.27 Weights
3.28 Electrical supplies
3.29 The Planning Acts
3.30 Alienation
3.31 Notice of Dealings
3.32 To permit persons to view
3.33 Notice to Landlords
3.34 Indemnity
3.35 Insurance
3.36 Death of Surety
<PAGE> 3
3.37 Defective Premises Act 1972
3.38 Regulations
3.39 Information
3.40 Superior Lease
3.41 Documents in Part III of Second Schedule
3.42 Keyholders
4. LANDLORD'S COVENANTS
4.1 Quiet Enjoyment
4.2 In surance
4.3 Repair and Maintenance
4.4 Superior Lease Rents
4.5 Superior Lease Covenants
5. PROVISOS
5.1 Proviso for re-entry
5.2 Suspension of rent
5.3 Notices
5.4 Compensation
5.5 Neighbouring development
5.6 Exclusion of implied easements
5.7 Continuation of obligations
5.8 Damages
5.9 Waiver and Interest
5.10 User Warranty
5.11 Right to distrain
5.12 Disputes
5.13 Value Added Tax
5.14 Commission
5.15 Landlord's liability
5.16 Tenant's goods
5.17 Party Structures
5.18 Exclusion of representations
5.19 Jurisdiction
5.20 Headings
5.21 Break Clause
5.22 Court Order
5.23 Superior Lease
5.24 New Lease
<PAGE> 4
THE FIRST SCHEDULE - the Demised Premises
THE SECOND SCHEDULE - rights, exceptions and reservations
THE THIRD SCHEDULE - rent review
THE FOURTH SCHEDULE - Service Charge
<PAGE> 5
T H I S U N D E R L E A S E made the 21 day of April One thousand nine
hundred and ninety-seven
B E T W E E N PAYLESS PROPERTIES LIMITED (Company Number 543407) whose
registered office is at 1 Thane Road West Nottingham NG2 3AA (hereinafter
called "the Landlord") of the one part and HORIZON EXPLORATION LIMITED (Company
Number 2804983) whose registered office is at 6 Pembroke Road Sevenoaks Kent
(hereinafter called "the Tenant") of the other part
W I T N E S S E T H as follows:
1. DEFINITIONS
1.1 IN this Deed unless there be something in the subject or
context inconsistent therewith the following expressions shall
have the following meanings
1.1.1 "the Landlord" shall include its successors in title
and the reversioners for the time being immediately
expectant on the determination of the Term
1.1.2 "the Tenant" shall include its successors in title
1.1.3 "these Presents" shall mean this Deed and the
Schedules hereto any license granted pursuant hereto
any Deed of Variation of the provisions hereof and
any instrument made supplemental hereto
1.1.4 "the Demised Premises" shall mean the whole and every
part of the premises described in the First Schedule
hereto and any alterations or additions to the said
premises together with all fixtures and fittings in
the nature of landlord's fixtures and fittings and
plant and machinery and electrical and other service
installations which are now or at any time hereafter
may be affixed to or upon the said premises
1.1.5 "the Building" means the building situate at and
known as Suffolk House 154 High Street Sevenoaks Kent
1.1.6 "the Term" shall mean the term hereby granted
1.1.7 "the Insured Risks" shall mean fire and such other
insurable risks (including if the Landlord or the
Superior Landlord so requires property owners and
third party liability insurance) as the Landlord or
the Superior Landlord in their absolute discretion
may from time to time insure against subject to such
exclusions and limitations as may be imposed by the
s1
<PAGE> 6
Insurers or agreed between the Landlord or the Superior Landlord and the
Insurers pursuant to the provisions of the Superior Lease
1.1.8 "the Planning Acts" shall mean the Town and Country
Planning Act 1990 the Planning (Listed Buildings and
Conservation Areas) Act 1990 the Planning (Hazardous
Substances) Act 1990 the Planning (Consequential
Provisions) Act 1990 and the Planning and
Compensation Act 1991 and all other legislation for
the time being relating to Town and Country Planning
or to development control and any regulations rules
orders instruments plans permissions or directions
made under any of the foregoing
1.1.9 "the Superior Lease means the lease dated 26 February
1987 made between M & G Life Assurance Company
Limited (1) Payless D.I.Y. Limited (2) and Ward White
Retail (U.K.) Limited (3) under which the Landlord
holds the Building
1.1.10 "the Superior Landlord" means the person or persons
for the time being entitled to the reversion
mediately or immediately expectant on the
determination of the Superior Lease
1.2 This lease shall unless the context otherwise requires be
construed on the basis that:
1.2.1 where two or more persons are respectively included
in the expressions "the Landlord" "the Tenant" and
"the Surety" the covenants expressed to be made by
the Landlord the Tenant and the Surety respectively
shall be deemed to be made by such persons jointly
and severally
1.2.2 covenants and obligations made or assumed by any
party shall be binding on and enforceable against his
personal representatives
1.2.3 words importing the singular shall include the plural
and vice versa and words importing the masculine
shall include the feminine and vice versa and where a
party hereto is a corporate body any personal pronoun
or possessive adjective used in these Presents shall
be construed as an inanimate one
1.2.4 any reference to the doing or permitting of any act
or thing by the Landlord shall be deemed to include
the doing or permitting of that act or thing by the
agents workmen servants or other employees or agents
of or any contractor engaged by the Landlord and/or
any Superior Landlord and/or any mortgagee
2
<PAGE> 7
1.2.5 any covenant by the Tenant not to do any act or thing
shall be deemed to include a covenant not to suffer
or permit the doing of that act or thing and to use
its best endeavours to prevent such act or thing done
by a third party and any positive covenant by the
Tenant shall be deemed to include a covenant to
procure that the act or thing in question be done
1.2.6 all rights reservations permissions and indemnities
in favour of the Landlord shall also be for the
benefit of any Superior Landlords and any mortgagee
to the intent that any Superior Landlords and/or
mortgagees shall be entitled to exercise or have the
benefit of the same in addition to the Landlord
1.2.7 where the consent permission approval or the like of
the Landlord is required under any covenant or
condition herein contained the same covenant or
condition shall be subject to the consent of any
Superior Landlords or Mortgagees (if so required) to
the intent that the consent of any Superior Landlords
and/or Mortgagees shall be a condition precedent to
the grant by the Landlord of any consent permission
approval or the like (but nothing herein implies that
any obligation is imposed upon any Superior Landlords
and/or Mortgagees not unreasonably to withhold any
such consent) and that the Landlord may require the
Tenant to discharge the costs charges and expenses of
any Superior Landlords or Mortgagees in respect
thereof whether or not the same be proceeded with or
acted upon
1.2.8 any reference to any statute or any section of any
statute shall be deemed to include any amendment
modification consolidation or re-enactment thereof
and any statutory instrument regulation rules orders
or directions made thereunder for the time being in
force and any general reference to statute or
statutes includes any statutory instrument
regulations rules orders or directions made
thereunder and any directives or other legislation of
the European Community that is directly applicable to
England and Wales
1.2.9 Any provisions in these Presents conferring an
indemnity in favour of the Landlord or imposing an
obligation to repay to the Landlord any payment made
or expense incurred shall be construed as conferring
such indemnity or extending such obligation to repay
to any Superior Landlords and/or Mortgagees
1.2.10 References to the last year of the Term include the
last year of the Term if it determines otherwise than
by effluxion of time and references to the end of the
Term include any sooner determination of the Term
3
<PAGE> 8
2. DEMISE
2.1 IN consideration of the rents hereby reserved and of the
covenants by the Tenant hereinafter contained the Landlord
HEREBY DEMISES unto the Tenant ALL THOSE the Demised Premises
TOGETHER WITH the rights and benefits (if any) specified in
Part I of the Second Schedule hereto BUT SUBJECT TO (and where
appropriate with the benefit of) the exceptions reservations
and other matters (if any) specified in Parts II and III of
the Second Schedule hereto which are hereby excepted out of
this demise and reserved unto the Landlord and all others
authorised by the Landlord and the owners and occupiers of any
adjoining or neighbouring premises and/or to which the Demised
Premises is or may be subject TO HOLD the same (except and
reserved and subject as aforesaid) UNTO the Tenant for a term
commencing on the 21st day of April, 1997 and expiring on the
20 day of December 2011 YIELDING AND PAYING therefor yearly
(and so in proportion for any part of a year) during the Term
the rents as set forth in the Third Schedule hereto (exclusive
of any Value Added Tax (or similar tax whether in substitution
for or in addition to it) charged pursuant to Clause 5.13
hereof or otherwise) by equal quarterly payments in advance on
the usual quarter days in each year (namely on the 25th March
24th June 29th September and 25th December) without any
deduction or set off whatsoever the first of such payments to
be made on the 21st day of April 1997 for the period from the
21st day of April 1997 to the 23rd day of June 1997 AND ALSO
YIELDING AND PAYING by way of additional rent from time to
time such sum or sums as shall be equal to:
2.1.1 the amounts which the Landlord may expend (by payment
to the Superior Landlord pursuant to the provisions
of the Superior Lease or otherwise) in effecting or
maintaining or procuring an insurance of the Demised
Premises (including any increased premium payable by
reason of any act or omission by the Tenant any
sub-tenant or their respective servants agents
licensees or invitees) for the full reinstatement
value thereof (together with professional fees
demolition and site clearance fees) against the
Insured Risks and in the event that such insurance is
attributable to other premises in addition to the
Demised Premises to pay such proportion of such sum
or sums as are attributable to the Demised Premises
as shall be determined by the Landlord whose decision
shall be binding on the Tenant and
2.1.2 the amounts which the Landlord may expend in
effecting or maintaining insurance against four
years' loss of rent hereunder in respect of the
Demised Premises (including any likely increase in
rent following a review of rent in accordance with
the Third Schedule hereto)
4
<PAGE> 9
2.1.3 any Value Added Tax payable by the Tenant pursuant to
the terms of these Presents
such additional rent to be paid on demand therefor by the Landlord
3. TENANT'S COVENANTS
THE Tenant HEREBY COVENANTS with the Landlord as follows
To pay rents
3.1 To pay (by bankers standing order if the Landlord so requires)
the said rents at the times and in the manner at and in which
the same are hereinbefore reserved and made payable without
any deduction counterclaim or set off whatsoever
To pay rates and taxes
3.2.1 To pay and discharge all rates taxes duties charges
assessments impositions and outgoings whatsoever
(whether parliamentary parochial local or of any
other description and whether or not of a capital or
non-recurring nature) which are now or may at any
time hereafter be taxed assessed charged or imposed
upon or payable in respect of the Demised Premises or
any part thereof or on the owners or occupiers
thereof (save for such payment as shall be occasioned
by any disposition of or dealing with any estate or
interest expectant in reversion on the Term) and in
the event that such rates taxes duties charges
assessments impositions and outgoings are
attributable to other premises of the Landlord in
addition to the Demised Premises to pay to the
Landlord on demand by way of additional rent such
proportion of such rates taxes duties charges
assessments impositions and outgoings as are
attributable to the Demised Premises as shall be
determined by the Landlord whose decision shall be
binding on the Tenant
3.2.2 If the Landlord shall suffer any loss of rating
relief which may be applicable to empty premises
following the expiration of the Term by reason of
such relief being allowed to the Tenant or any
permitted sub-tenant in respect of any period prior
to the expiration of the Term to make good such loss
to the Landlord forthwith on demand being made
therefor
3.2.3 Not to agree or by default to allow to be fixed the
rateable value of the Demised Premises or any part
thereof without the prior written consent of the
Landlord and to co-operate with the Landlord in any
negotiations with the District Valuer or in respect
of any appeal to the Court or to the Lands Tribunal
regarding the rateable value of the Demised Premises
5
<PAGE> 10
Interest
3.3 To pay to the Landlord interest (as well before as after any
judgement) at the rate of four per cent per annum above either
Lloyds Bank PLC Base Rate for the time being or such other
designated rate of interest as shall be substituted therefor
by Lloyds Bank PLC and in force at the date of commencement of
the period in respect of which any payment of interest accrues
due under these Presents on any rents and other sums due
hereunder in arrear and unpaid after the same shall become
properly due from the date such rents or other sums become due
to the date of payment thereof PROVIDED THAT this covenant
shall be without prejudice to the Landlord's right of re-entry
under the provisions of Clause 5.1 hereof
To Pay Value Added Tax
3.4.1 To pay to the Landlord and to indemnify the Landlord
against all Value Added Tax (or any tax of a similar
nature that may be substituted for it or levied in
addition to it) on all taxable supplies received by
the Tenant under or in connection with these Presents
or in respect of any payment made by the Landlord
where the Tenant agrees in these Presents to
reimburse the Landlord for such payment
3.4.2 In every case where the Tenant covenants to pay an
amount of money under these Presents such amount
shall be regarded as being exclusive of all Value
Added Tax (or similar tax as aforesaid) which may
from time to time be legally payable thereon
3.4.3 For the avoidance of doubt the Landlord is under no
duty to make or not to make any election or exercise
or not exercise any right conferred on it by the
statutes relating to Value Added Tax (or similar tax
as aforesaid) so as to reduce or avoid any liability
thereto referred to above and the Tenant hereby
irrevocably consents to the Landlord freely
exercising such election or right to the extent from
time to time permitted by law
3.4.4 The Tenant hereby warrants that it will after
completion of this Lease use the Demised Premises in
the course of a business carried on by it solely for
making supplies which would entitle the Tenant to a
credit in full for input tax attributable to those
supplies and that it will satisfy any similar or
additional test introduced in the Finance Act 1997 or
elsewhere in order to enable each supply occurring on
every rent payment date to be standard rated for VAT
purposes and any sale of the reversion to the Demised
Premises by the Landlord to be standard rated for VAT
purposes and that it will indemnify the Landlord
against all losses, costs and expenses arising from a
breach of this warranty including without prejudice
to the generality
6
<PAGE> 11
of the foregoing any input tax relating to the
Demised Premises for which it fails to obtain credit
as a result of the breach
To pay for all electricity water and other services
3.5 To pay and discharge and indemnify the Landlord against all
charges for electricity water gas telecommunications and other
services supplied to or consumed in the Demised Premises and
the meter rents in connection therewith and to observe and
perform all regulations and requirements of the suppliers and
supply authorities in respect of the Demised Premises
To pay Landlord's costs of abating a nuisance
3.6 From time to time to pay all costs charges and expenses
properly incurred by the Landlord in abating any nuisance at
or arising from the Demised Premises and executing all such
works as may be necessary for abating such a nuisance whether
or not in obedience to a notice served by a local or other
competent authority
To pay costs
3.7 To pay to the Landlord on demand on a full indemnity basis all
costs charges fees disbursements and expenses (including legal
costs surveyors fees other professional fees and disbursements
and commission payable to a bailiff) which may be properly
incurred by the Landlord:
3.7.1 in or in contemplation of any proceedings under
Sections 146 and/or 147 of the Law of Property Act
1925 notwithstanding forfeiture is avoided otherwise
than by relief granted by the Court
3.7.2 in contemplation of or incidental to the preparation
and service of a Schedule of Dilapidations during the
Term or following the determination thereof
3.7.3 in connection with or in contemplation of the
preparation and service on the Tenant of any notice
(whether statutory or otherwise) and including the
preparation of any schedule to accompany such notice
in relation to any breach of any covenant by the
Tenant
3.7.4 in the supervision or superintendence of any works to
be carried out pursuant to any Notice and/or Schedule
of Dilapidations whether or not such works shall be
carried out during or after the determination of the
Term
7
<PAGE> 12
3.7.5 incidental to the recovery of rent or other monies
due and payable hereunder or to the remedying of any
breach of covenant on the part of the Tenant herein
contained
3.7.6 in valuations of the Demised Premises for insurance
purposes
3.7.7 in the assessment of the rateable value of the
Demised Premises or any part thereof including any
negotiations with the District Valuer and any appeal
to the Court or to the Lands Tribunal
3.7.8 resulting from all applications by the Tenant for any
consent of the Landlord and/or any Superior Landlord
together with those of any Superior Landlord and any
stamp duty on licenses and counterparts including
legal charges and Architects and Surveyors fees
actually incurred in cases where consent is refused
or the application is withdrawn and in relation to
any of the above matters the Landlord is entitled to
charge a reasonable fee for any work done by the
Landlord itself by any associated or subsidiary
company of the Landlord or by their employees
PROVIDED THAT the Tenant shall be under no
obligations to indemnify the Landlord against any
such costs and/or expenses if as a result of
litigation or arbitration no order for costs in
favour of the Landlord is made
To pay service charge
3.8 To pay to the Landlord without any deduction by way of
additional rent a proper proportion of the expenses and
outgoings incurred by the Landlord under the heads of
expenditure and in the provision of services set out in the
Fourth Schedule hereto such additional rent (hereinafter
called "the service charge") being subject to the following
terms and provisions:
3.8.1 the proper proportion before mentioned shall be
determined by the Landlord and may be varied from
time to time and may be a different proportion of
different items of such expenses and outgoings
dependent upon the situation area and use of the
Demised Premises and the said services
3.8.2 the amount of the service charge shall be ascertained
and certified annually by a Certificate (hereinafter
called "the Certificate") signed by or on behalf of
the Landlord so soon after the end of the Landlord's
Financial Year as may be practicable and shall relate
to such year in manner hereinafter mentioned
3.8.3 the expression "the Landlord's Financial Year" shall
mean the period from the 1 day of March every year to
the 28 day of February of the year
8
<PAGE> 13
following or such other annual period as the Landlord
may in its discretion from time to time determine as
being that in which the accounts of the Landlord
either generally or relating to the service charge
shall be made up
3.8.4 A copy of the Certificate for such Landlord's
Financial Year shall be supplied by the Landlord to
the Tenant on written request without charge to the
Tenant
3.8.5 the Certificate shall contain a fair summary of the
Landlord's said expenses and outgoings incurred by
the Landlord during the Landlord's Financial Year to
which it relates and the Certificate (or a copy
thereof duly certified by the person by whom the same
was given) shall be conclusive evidence for the
purposes hereof of the matters of fact which it
purports to certify
3.8.6 the expression the expenses and outgoings incurred by
the Landlord as hereinbefore used shall be deemed to
include not only those expenses and outgoings
hereinbefore described which have been actually
disbursed or incurred by the Landlord during the
Landlord's Financial Year in question but also such
reasonable part of all such expenses and outgoings
hereinbefore described which are of a periodically
recurring nature (whether recurring by regular period
or not) whenever disbursed or incurred and whether
prior to the commencement of the Term or otherwise as
the Landlord may in its discretion allocate to the
year in question as being fair and reasonable in the
circumstances (including a sum or sums of money by
way of provision for anticipated expenditure in
respect thereof)
3.8.7 on each of the usual quarter days in every year
during the Term (namely on 25th March, 24th June,
29th September and 25th December) the Tenant shall
pay to the Landlord in advance one quarter of such
sum (hereinafter referred to as "the advance
payment") in advance and on account of the service
charge for the Landlord's Financial Year current at
such date as the Landlord shall from time to time
specify at its discretion to be fair and reasonable
3.8.8 As soon as practicable after the end of each
Landlord's Financial Year the Landlord shall furnish
to the Tenant an account of the service charge
payable by the Tenant for the Landlord's Financial
Year due credit being given therein for the advance
payment made by the Tenant in respect of the
Landlord's Financial Year and upon the furnishing of
such account there shall be paid by the Tenant to the
Landlord the service charge or any balance found
payable or there shall be allowed by the Landlord to
the Tenant against any future payments of the service
charge any amount
9
<PAGE> 14
which may have been overpaid by the Tenant by way of
advance payments as the case may require PROVIDED
ALWAYS that the provisions of this sub-clause shall
continue to apply notwithstanding the expiration or
sooner determination of the Term but only in respect
of the period down to such expiration or sooner
determination as aforesaid
To repair interior
3.9 To repair renew replace and throughout the Term (whether or
not the Landlord has served notice requiring the Tenant so to
do) to keep the whole of the Demised Premises and every part
thereof including (without prejudice to the generality of the
foregoing) all drains soil and other pipes sewers sanitary and
water apparatus plate glass plant machinery heating and air
conditioning apparatus and appurtenances of whatsoever nature
belonging to the Demised Premises in good and substantial
repair and condition in every respect (damage by any of the
Insured Risks excepted unless the policy or policies of
insurance shall be vitiated or payment of the policy monies
shall be refused in whole or in part in consequence of any act
neglect default or omission of the Tenant or any sub-tenant or
their respective servants agents licensees or invitees) and
forthwith to notify the Landlord in writing with full
particulars of any defect or want of repair in respect of
which the Landlord may have a liability or a duty of care
under these Presents the Defective Premises Act 1972 or
otherwise
To clean windows
3.10 To clean all windows in the Demised Premises both inside and
out at least once in every month during the Term
To paint interior
3.11.1 As often as may be necessary and in any event not
less than once in every five years calculated from 25
December 1986 and also in the last six months of the
Term (howsoever terminating) to prepare and paint in
a proper and workmanlike manner all the inside wood
and iron and other work usually painted of the
Demised Premises with two coats at least of good
quality and suitable paint and to wash down all
washable surfaces and to prepare and treat suitably
having regard to its nature (whether by varnishing
french polishing or otherwise) all internal woodwork
of the Demised Premises AND ALSO with every such
internal painting to whitewash colourwash grain
varnish paper and otherwise decorate or treat in a
proper and workmanlike manner all such internal parts
of the Demised Premises as have been or ought
properly to be so treated
10
<PAGE> 15
3.11.2 In the last six months of the Term the tints colours
and patterns of all such works of decoration shall be
such as shall be approved by the Landlord
3.11.3 To carry out all work required to be carried out
under the terms of these Presents using good quality
and suitable materials and in accordance with good
modern practice from time to time
To comply with all statutes
3.12.1 At all times during the Term to observe and comply in
all respects with the provisions and requirements of
any and every enactment (which expression in this
covenant includes any and every Act of Parliament
already or hereafter to be passed and any and every
order regulation and bye-law already or hereafter to
be made under or in pursuance of any such Act) so far
as they relate to or affect the Demised Premises or
any part thereof or the user thereof or the
employment therein of any person or any fixtures
machinery plant or chattels for the time being
affixed thereto or which are therein or used for the
purposes thereof and whether required to be observed
or complied with by the landlord or tenant or owner
or occupier thereof and to indemnify the Landlord at
all times against all claims costs charges and
expenses in respect thereof and not at any time
during the Term to do or omit in on or about the
Demised Premises any act or thing by reason of which
the Landlord may under any enactment incur or have
imposed upon it or become liable to pay any penalty
damages compensation costs charges or expenses
3.12.2 To keep the Demised Premises and all parts of it in
such state and condition that it may satisfactorily
be used and continue in the immediate future to be
used for its intended purpose with an appropriate
degree of convenience and comfort for the occupants.
3.12.3 To comply with all requirements and recommendations
from time to time of the insurers of the Demised
Premises and of the appropriate authority in relation
to fire precautions affecting the Demised Premises
3.12.4 Not to obstruct the access to or means of working of
any fire alarm smoke detection fire fighting and
extinguishing appliances and equipment or the means
of escape from the Demised Premises in case of fire
or other emergency
3.12.5 Not to store or use any dangerous explosive or
inflammable oils or substances on or in the Demised
Premises
To deliver up
11
<PAGE> 16
3.13 At the expiration or sooner determination of the Term quietly
to yield up unto the Landlord the Demised Premises in such
state and condition as shall in all respects be consistent
with a full and due performance by the Tenant of the covenants
on the Tenant's part herein contained (except the Tenant's
trade or other fixtures and signs which the Tenant shall
remove the Tenant forthwith making good all damage caused to
the Demised Premises by such removal) and to give up all keys
of the Demised Premises to the Landlord AND IF at the end of
the Term the Demised Premises are not in such state and
condition as aforesaid then (unless the Landlord has exercised
its option under Clause 5.8 hereof) the Landlord shall be
entitled to require the Tenant to pay to the Landlord on
demand by way of liquidated damages (which the Tenant hereby
covenants forthwith to do) the sum certified by the Landlord's
surveyor as being equal to the cost of putting the Demised
Premises into such state and condition (including without
limitation all professional fees properly incurred) and the
rent firstly hereby reserved that would have been payable if
the Term had been extended for such period as would be
reasonably necessary to put the Demised Premises into that
state and condition
To permit entry to view state of repair
3.14 To permit the Landlord at all reasonable times and as often as
may be necessary in every year at reasonable times on giving
prior notice to enter into and upon the Demised Premises and
examine the state of repair and condition of the same and/or
to take schedules or inventories of the Landlord's fixtures
fittings plant machinery and equipment thereon and to ensure
that nothing has been done or omitted to be done therein or
thereon which constitutes or may in the reasonable opinion of
the Landlord tend to constitute a breach of any of the
covenants or other matters contained in these Presents and
within two calendar months or sooner if requisite after notice
in writing to the Tenant shall have been given or left at the
Demised Premises of all defects and wants of repair found on
such examination to repair and make good the same according to
such notice and the covenants in that behalf hereinbefore
contained and in case the Tenant shall make default in so
doing it shall be lawful for the Landlord (without prejudice
to the right of re-entry hereinafter referred to) to enter
upon the Demised Premises with all necessary workmen tools
materials equipment and appliances and repair and restore the
same and all expenses properly incurred thereby shall on
demand be paid by the Tenant to the Landlord and if not so
paid shall be recoverable by the Landlord as rent in arrear
AND the Tenant hereby irrevocably appoints the Landlord to be
the agent of the Tenant throughout the Term for the purpose of
entering on inspecting and viewing the condition of any parts
of the Demised Premises not at the time of such inspection in
the occupation of the Tenant
To permit entry for repairs or to carry out works
12
<PAGE> 17
3.15 To permit the Landlord and the tenants and occupiers of any
adjoining or neighbouring premises now or at any time
hereafter belonging to the Landlord or any Superior Landlords
with tools and apparatus at any reasonable time or times
during the Term upon giving reasonable notice (except in the
case of emergency) to enter upon the Demised Premises
3.15.1 for the purpose of executing repairs alterations or
other works to or upon such adjoining or neighbouring
premises and
3.15.2 for the purpose of constructing laying down altering
repairing cleansing emptying or maintaining any
conduits pipes drains channels watercourses sewers
wires and cables in connection with or for the
accommodation of any such adjoining or neighbouring
premises and
3.15.3 for any other necessary or reasonable purpose
whatsoever including (in the case of the Landlord)
any purpose that the Landlord deems necessary in
order to enable the Landlord to comply with its
covenants under the Superior Lease notwithstanding
that the obligation to perform or comply with such
covenant may be imposed on the Tenant by this Lease
the person or persons exercising such right of entry making
good to the Tenant all damage thereby occasioned to the
Demised Premises
To permit Landlord to obstruct lights and easements
3.16 To permit the Landlord at any time during the Term to erect or
rebuild or alter any buildings or erections facing adjoining
or near to the Demised Premises to any extent and in any
manner the Landlord may think fit notwithstanding that the
building so erected rebuilt or altered may obstruct or
interfere with the access of light or air for the time being
to or enjoyed with the Demised Premises or any part thereof or
any buildings for the time being thereon
To permit works on adjoining premises
3.17 Not to make any objection to or claim in respect of any works
of construction building alteration addition or repair carried
out upon any land or property adjoining or near any part of
the Demised Premises by the Landlord or any Superior Landlords
or any persons authorised by either of them or by the tenants
and occupiers of such land or property
Not to make alterations and additions
3.18.1 Not to erect any new buildings on or make any
additions or alterations to the Demised Premises or
to cut maim remove or damage any of the walls
13
<PAGE> 18
timbers floors or ceilings of the Demised Premises or
make any communication into or with any adjacent
building or property PROVIDED THAT:
3.18.1.1 the Tenant may with the prior
written consent of the Landlord make
any internal non-structural
additions or alterations to the
Demised Premises in accordance with
plans and specifications approved by
the Landlord (such consent and
approval not to be unreasonably
withheld or delayed in the case of a
proposed internal non-structural
alteration which in the reasonable
opinion of the Landlord does not
reduce the value of the Landlord's
reversionary interest in the Demised
Premises) and
3.18.1.2 in the event of the Landlord giving
consent to the carrying out of any
additions or alterations whatsoever
to the Demised Premises the Tenant
will at the end or sooner
determination of the Term if so
required by the Landlord reinstate
the Demised Premises to their former
state and condition before the
carrying out of such alterations or
additions and to the reasonable
satisfaction in all respects of the
Landlord
3.18.2 Without prejudice to the generality of the foregoing
not to make or permit or suffer to be made any
alteration or addition to any electrical installation
in or on the Demised Premises except in accordance
with the terms and conditions laid down by the
Institution of Electrical Engineers and the
regulations of the relevant electricity supply
company
Not to set up engines or machinery
3.19 Not without the prior written consent of the Landlord to set
up any fire or stove steam or other engine or any machinery in
or upon the Demised Premises
Not to exhibit any sign without approval
3.20 Not to exhibit on any part of the exterior of the Demised
Premises or upon or in any part of the interior of the Demised
Premises so as to be visible from the exterior any sign notice
signboard poster advertisement or other structure or equipment
except such as shall have been previously approved in writing
by the Landlord such approval not to be unreasonably withheld
or delayed in addition to any permission required by statute
regulation or bye-law and thereafter maintained to the
satisfaction of the Landlord
14
<PAGE> 19
Not to hang goods
3.21 Not to hang exhibit or deposit any goods outside the Demised
Premises or over any footpath or roadway
Prohibited activities
3.22 Not to allow any auction or any meeting for political
religious or other similar purpose to be held in the Demised
Premises nor to use the Demised Premises or any part thereof
for any illegal or immoral purpose or for any offensive
disreputable or noisy trade business pursuit or occupation nor
for any theatrical or cinema performances or for gaming as
defined by the Gaming Act 1968 nor as a staff or other
employment agency a hairdresser a betting shop turf
accountants' or bookmakers' office an undertaker or travel
ticket or estate agency a bank office or building society
office a restaurant or take away food shop or as premises for
the hiring out of domestic or personal goods or articles or
for the reception of goods to be washed cleaned or repaired
nor for the sale for consumption on or off the Demised
Premises of wine spirits beer or other intoxicating liquor for
the cooking of food or for the sale of food or drink for
consumption on or off the Demised Premises as a place of
entertainment or as a fun fair or amusement arcade as a
brothel or disorderly house or as a sex establishment within
the meaning of the Local Government (Miscellaneous Provisions)
Act 1982 for the sale or keeping of live animals (including
birds fish or reptiles) or pet food for the sale hire
distribution viewing or display of any books magazines films
video or other recordings or other material which in the
opinion of the Landlord acting reasonably are offensive as
premises of any public or local authority to which the public
have access as a market fair or bazaar or for sleeping or
residential purposes nor to do nor permit to remain anything
in or upon the Demised Premises or any part thereof which may
in the opinion of the Landlord be or become a nuisance damage
disturbance danger or annoyance to the Landlord or the owners
or lessees or occupiers of any adjoining or neighbouring
property or which may prejudicially affect the Demised
Premises or any adjoining or neighbouring property nor leave
the Demised Premises untenanted or uncared for
User
3.23 Not to use the Demised Premises or any part thereof otherwise
than as offices
Not to obstruct windows or permit encroachments
3.24 Not to obstruct any of the windows or lights belonging to the
Demised Premises or any adjoining or neighbouring property nor
to give to any third party any acknowledgement that the access
of light or air to any of the windows or openings in the
Demised Premises is enjoyed by the consent of such third party
nor to pay
15
<PAGE> 20
to such third party any sum of money nor to enter into any
agreement with any third party for the purpose of inducing or
binding such third party to abstain from obstructing the
access of light to any of such windows or lights nor to permit
any new window light passage drainage or other encroachment or
easement to be made into against upon or over the Demised
Premises or any part thereof and in case any encroachment or
easement whatsoever shall be attempted to be made or acquired
by any person or persons whomsoever to give notice thereof in
writing to the Landlord immediately the same shall come to the
notice of the Tenant and at the cost of the Tenant to do all
such things as may be proper or required by the Landlord for
preventing any new encroachment or easement being made or
acquired
Not to obstruct sewers drains or watercourses
3.25 Not to discharge pass or deposit into the sewers drains or
watercourses serving the Demised Premises any noxious or
deleterious effluent or other substance which shall cause an
obstruction or deposit in or injure the said sewers drains or
watercourses and in the event of any such obstruction deposit
or injury to make good such damage caused to the reasonable
satisfaction of the Landlord
Refuse
3.26.1 Not to form any refuse dump or rubbish or scrap heap
on the Demised Premises or any part thereof and
generally keep the same clean and tidy
3.26.2 Not to allow rubbish of any description to accumulate
on the Demised Premises and to keep all rubbish and
refuse within the Demised Premises in properly
covered receptacles to the reasonable satisfaction of
the Landlord
Weights
3.27.1 Not to suspend any excessive weight from the main
structure or roof of the Demised Premises
3.27.2 Not to overload the floors roofs or structures of the
Demised Premises or use the same in any manner which
will cause undue strain or interference therewith nor
to use the Demised Premises or any part thereof in
such manner as to subject the same to any strain
beyond that which they are designed to bear with due
margin for safety
Electrical Supplies
16
<PAGE> 21
3.28 Not to overload the electrical wiring installations and
apparatus in or serving the Demised Premises and at all times
during the Term to ensure that the same comply with the
standard terms and conditions laid down from time to time by
the Institution of Electrical Engineers and the regulations of
the Electrical Supply Authority or any body of similar
standing
The Planning Acts
3.29.1 Not at any time during the Term to do or omit
anything on or in connection with the Demised
Premises the doing or omission of which shall be a
contravention of the Planning Acts or of any licenses
consents permissions approvals and conditions (if
any) granted or imposed thereunder or under any
enactment repealed subsequently and to indemnify the
Landlord against all actions proceedings damages
penalties costs charges claims and demands in respect
of such acts and omissions
3.29.2 Not without the prior written consent of the Landlord
to submit an application for planning permission
relating to the Demised Premises to the appropriate
national or local or other public authority
(hereinafter referred to as "the planning authority")
and forthwith to give notice with two copies thereof
to the Landlord of all determinations made pursuant
to such application and in the event of the planning
authority indicating its willingness to grant the
desired license consent permission or approval only
with modifications or subject to conditions not to
accept such modifications or conditions without the
consent in writing of the Landlord such consent not
to be unreasonably withheld or delayed and to give
the Landlord forthwith full particulars of such
modifications or conditions
3.29.3 Not to implement or otherwise put into effect any
licence consent permission or approval relating to
the Demised Premises or any part thereof or otherwise
affecting the same obtained by the Tenant under or in
pursuance of the Planning Acts without first
obtaining the licence in writing of the Landlord such
Licence not to be unreasonably withheld or delayed
and in any such licence as may be granted the
Landlord may impose such conditions and requirements
as the Landlord shall reasonably think fit
3.29.4 If and when the Landlord's licence is obtained
pursuant to clause 3.29.3 of this sub-clause to carry
out the works and other things authorised by the said
licence and the planning permission therein referred
to in a good and workmanlike manner and at the cost
in all respects of the Tenant and to observe and
perform all conditions attached to such licence and
planning permission respectively and to keep the
Landlord and any Superior Landlords effectually
indemnified against all actions proceedings damages
17
<PAGE> 22
penalties costs charges claims and demands whatsoever
in respect of the costs of the said application and
works and things done in pursuance of the said
planning permission and in respect of all breaches
(if any) of the said conditions and every part
thereof respectively
3.29.5 To give notice forthwith to the Landlord of any
notice order or proposal for a notice or order under
the Planning Acts served on received by or coming to
the notice of the Tenant and if so required by the
Landlord to produce the same and at the request of
the Landlord but at the cost of the Tenant to make or
join in making such objections or representation in
respect of any proposal as the Landlord may require
3.29.6 Not without the consent of the Landlord to serve any
notice under the Planning Acts nor to enter into any
agreement under Section 106 of the Town and Country
Planning Act 1990
3.29.7 If and when called upon so to do to produce to the
Landlord all such plans documents and other evidence
as the Landlord may require in order to satisfy
itself that the provisions of this sub-clause have
been complied with in all respects
3.29.8 If the Tenant shall receive any compensation with
respect to the Tenant's interest hereunder because of
revocation or modification of a planning permission
or of any restriction placed upon the user of the
Demised Premises under or by virtue of the Planning
Acts then if and when the Tenant's interest hereunder
shall be determined whether by surrender or under the
power of re-entry herein contained or otherwise the
Tenant shall forthwith make such provision as is just
and equitable for the Landlord to receive a due
proportion of such compensation
3.29.9 Unless the Landlord shall otherwise direct to carry
out before the expiration or sooner determination of
the Term any works stipulated or required to be
carried out to the Demised Premises by a date
subsequent to such expiration or sooner determination
as a condition of any planning permission which may
have been granted during the Term
Alienation
3.30.1 Not at any time to assign transfer charge share or
part with possession or occupation of part only of
the Demised Premises or underlet the whole or part of
the Demised Premises or execute any declaration of
trust with regard to the whole or part of the Demised
Premises nor hold or occupy
18
<PAGE> 23
the whole or part of the Demised Premises as agent
for or otherwise for the benefit of another
3.30.2 Not to transfer part with or share possession or
occupation of the whole of the Demised Premises save
by way of an assignment of the whole of the Demised
Premises as hereinafter permitted
3.30.3 Not to charge the whole of the Demised Premises
without the previous consent in writing of the
Landlord such consent not to be unreasonably withheld
or delayed
3.30.4 Not to assign the whole of the Demised Premises
without the previous consent in writing of the
Landlord which (for the purposes of section 19(1A) of
the Landlord and Tenant Act 1927) the Landlord shall
be entitled to withhold in any one or more of the
following circumstances:
3.30.4.1 if the Tenant is unable to provide
references (confirming that the
proposed assignee is responsible and
respectable and will be able to pay
the rent and meet the other
outgoings and liabilities arising
from this Lease) from each of the
following categories namely:
(i) a bank
(ii) a trade creditor
(iii) a solicitor or an accountant
(iv) (if the proposed assignee is
or has been a tenant of other
premises) a present or former
landlord
(except in cases where the financial
status of the proposed assignee is
such that it would be unreasonable
for the Landlord to require such
references)
3.30.4.2 if notwithstanding sub-clause
3.30.4.1 the Tenant fails to
demonstrate to the satisfaction of
the Landlord (acting reasonably)
that the proposed assignee is
responsible and respectable and will
be able to pay the rent and meet the
other outgoings and liabilities
arising under this Lease
3.30.4.3 if at the date of request for
consent to assignment the Tenant has
not paid any of the rents due
hereunder or has not substantially
observed and performed the covenants
on the part of the Tenant in this
Lease
19
<PAGE> 24
3.30.4.4 if in the Landlord's reasonable
opinion the use to which the
proposed assignee intends to put the
Demised Premises would be in breach
of clause 3.22 or 3.23 hereof
3.30.4.5 (unless it is unreasonable so to
require in all the circumstances) if
the ability of the proposed assignee
to meet its obligations under the
Lease might reasonably be considered
to be substantially less than that
of the then current tenant)
3.30.5 The Landlord shall be entitled (for the purposes of
it Section 19(1A) of the Landlord and Tenant Act
1927) to give consent subject to the following
conditions being satisfied before this Lease is
assigned by the Tenant:
3.30.5.1 that the Landlord's proper costs
disbursements and VAT for the
licence to assign and any associated
licence for alterations change of
use or otherwise are paid
3.30.5.2 that the Tenant enters into an
authorised guarantee agreement (as
defined in Section 16 of the
Landlord and Tenant (Covenants) Act
1995 ("the Act") in such form as the
Landlord may reasonably require
under which:
3.30.5.2.1 the Tenant agrees to be
liable to the Landlord as
principal debtor in respect
of each of the tenant
covenants (as defined in the
Act) to the extent that and
for so long as the proposed
assignee has any liability
therefor and is not to be
released even if the Landlord
gives the proposed assignee
extra time to comply with any
obligations or does not
insist on its strict terms
3.30.5.2.2 the Tenant guarantees the
proposed assignee's
performance of those
covenants
3.30.5.2.3 the Tenant agrees that in
the event of this Lease being
disclaimed it will enter into
a new lease whose term
expires no later than the end
of the Term and whose tenant
covenants are no more onerous
than those under this lease
except that the Tenant will
not be required to enter into
any further Additional
Guarantee Agreement and will
not be liable for any
subsequent assignees
20
<PAGE> 25
3.30.5.3 that any assignee of the
Demised Premises covenants by
deed with the Landlord to pay
the rents reserved by this
Lease and to observe and
perform all the covenants on
the part of the Tenant and
conditions contained in this
Lease during the Term until
released by virtue of the Act
3.30.5.4 that (where it is reasonable
so to require) in addition to
the guarantee provided under
sub-clause 3.30.5.2 at least
two sureties of a financial
status acceptable to the
Landlord (who shall act
reasonably in judging whether
their financial status is
acceptable) shall covenant
jointly and severally with
the Landlord that the
proposed assignee will pay
the rents reserved by this
Lease and will perform and
observe the covenants on the
part of the Tenant and the
conditions contained in this
Lease in such form as the
Landlord may reasonably
require under which:
3.30.5.4.1 the sureties referred to in
3.30.5.4 agree to be liable
to the Landlord as principal
debtor in respect of each of
the tenant covenants (as
defined in the Act) to the
extent that and for so long
as the proposed assignee has
any liability therefor and
not to be released even if
the Landlord gives the
proposed assignee extra time
to comply with any
obligations or does not
insist on its strict terms
3.30.5.4.2 the sureties referred to in
3.30.5.4 guarantee the
proposed assignee's
performance of those
covenants
3.30.5.4.3 the sureties referred to in
3.30.5.4 agree that in the
event of this Lease being
disclaimed they will enter
into a new lease whose term
expires no later than the end
of the Term and whose tenant
covenants are no more onerous
than those under this Lease
3.30.6 Any dispute arising under clauses 3.30.4 or
3.30.5 shall be determined by a Surveyor to
be agreed upon in writing by the Landlord and
the Tenant and in default of such agreement a
Chartered Surveyor with previous experience
of lettings of properties of this nature and
in the same locality as the Demised Premises
to be nominated by the President for the time
being or other senior officer of the Royal
Institution of Chartered Surveyors
21
<PAGE> 26
upon the application of the Landlord or the
Tenant who shall act as an arbitrator in
accordance with the Arbitration Acts 1950 and
1979
Notice of Dealings
3.31 Within twenty-eight days next after the making thereof without
any demand by the Landlord to produce to the Landlord or the
Solicitors for the time being of the Landlord for registration
all assignments underletting mortgages charges and other
dispositions and devolutions of title (together with three
certified copies thereof) which shall at any time during the
Term relate to the Demised Premises or any part thereof and to
pay to the Landlord's Solicitors for the registration of every
such document the sum of Twenty pounds (L.20.00) and any
further sum which is payable by the Landlord to any Superior
Landlords in respect of the registration thereof
To permit persons to view
3.32 To permit the Landlord:
3.32.1 at any time during the Term to enter the Demised
Premises to fix and retain without interference upon
any suitable part or parts thereof a notice board
stating that the reversion of these Presents or any
superior lease is for sale and
3.32.2 at any time within twelve calendar months immediately
prior to the expiration or sooner determination of
the Term and at any time thereafter (or sooner if the
rents or any part of them shall be in arrear and
unpaid for more than 28 days) to enter the Demised
Premises and to fix and retain without interference
upon any suitable part or parts thereof a notice
board for re-letting the Demised Premises
and to permit all persons authorised in writing by the
Landlord to view the Demised Premises and to take measurements
thereof at reasonable hours in the daytime without
interruption
Notice to Landlords
3.33 To give immediate notice to the Landlord of any notice or
order or proposal for a notice or order or claim of whatsoever
nature affecting the Demised Premises or any part thereof
served upon or otherwise coming to the notice of the Tenant
and if so required by the Landlord to produce the same and at
the request of the Landlord but at the cost of the Tenant to
make or join in making such objection
22
<PAGE> 27
or representations in respect of any such notice order or
proposal as the Landlord may reasonably require
Indemnity
3.34 To keep the Landlord fully and effectually indemnified from
and against all expenses costs claims demands damages and any
other liability whatsoever arising directly or indirectly out
of the state of repair and condition of the Demised Premises
or any alteration or addition thereto or the electrical
installation therein or the user thereof or works carried out
or in the course of being carried out to the Demised Premises
or otherwise out of any act omission or negligence of the
Tenant or of any other person at the Demised Premises with the
express or implied authority of the Tenant or anyone deriving
title through the Tenant or any breach of any covenant or
other provision of these Presents to be observed or performed
by the Tenant
Insurance
3.35.1 Not to do or omit any act or thing which may make
void or voidable any policy for the insurance of the
Demised Premises or of the Building or which may
cause an increased premium to be payable for such
insurance and (without prejudice to the Landlord's
rights of action in respect of a breach of this
sub-clause) to repay to the Landlord all sums paid by
way of increased premiums and all expenses properly
incurred by it in consequence of a breach of the
provisions of this sub-clause and all such payments
shall be added to the rents hereby reserved and shall
be recoverable as rent in arrear
3.35.2 In the event of the Demised Premises or any part
thereof being destroyed or damaged by any of the
Insured Risks or otherwise or if any other event or
thing happens against which the Landlord has insured
under the terms of these Presents forthwith to give
notice thereof to the Landlord
3.35.3 to give written notice to the Landlord forthwith of
any circumstances or events which may affect any
insurance relating to the Demised Premises or affect
the decision of any insurer to grant or continue the
insurance which the Landlord covenants to effect
3.35.4 In the event of the Demised Premises or any part
thereof being destroyed or damaged by any of the
Insured Risks and the insurance moneys under any
insurance against the same effected thereon being
wholly or partly irrecoverable by reason of any act
or default on the part of the Tenant or any
sub-tenant or their respective servants agents
licensees or invitees then and in every such case the
Tenant will forthwith pay to the Landlord the
23
<PAGE> 28
whole or (as the case may require) a fair proportion
of the cost (including professional and other fees)
of rebuilding or reinstating the Demised Premises
3.35.5 To maintain in force throughout the Term an insurance
policy in respect of the plate glass windows and
glass lights of the Demised Premises against the
usual risks of destruction and damage by impact
accident or otherwise (including third party risks)
in the full reinstatement value thereof with an
insurer of repute and the Tenant will punctually pay
all premiums for effecting and maintaining such
insurance and will produce such policy and the last
premium receipt for inspection by the Landlord
whenever the Landlord shall reasonably require and
the Tenant will apply all money received under such
policy in reinstatement of such plate glass and
lights and make good any deficiency out of the
Tenant's own moneys and if the Tenant shall make
default in effecting or maintaining such insurance
then the Landlord shall be entitled to effect and
maintain such policy and the Tenant shall forthwith
on demand reimburse the Landlord all sums paid by the
Landlord for such purposes
3.35.6 Not (save as required by Clause 3.35.5 hereof) to
effect any policy of insurance against any of the
Insured Risks in respect of or relating to the
Demised Premises in duplication to the cover effected
by the Landlord PROVIDED that if any such policy is
effected in breach of this clause the Tenant shall
pay to the Landlord all monies received under such
policy.
Death of Surety
3.36 Within fourteen days of the death during the Term of any
person who has or shall have guaranteed to the Landlord the
payment of the rents and the observance and performance of the
covenants on the part of the Tenant herein contained or of
such person becoming bankrupt or having a receiving order made
against him or making any assignment for the benefit of or
entering into any arrangement with his creditors (whether by
composition or otherwise) or having a receiver appointed under
the Mental Health Act 1953 or (being a company) passing a
resolution to wind up or entering into liquidation or having
an administrative receiver or an administrator or a receiver
and manager appointed or being for any reason removed from the
Register of Companies to give notice thereof in writing to the
Landlord and if so required by the Landlord at the Tenant's
expense in all respects to procure some other person or
persons acceptable to the Landlord to execute a guarantee in
such form as the Landlord shall reasonably require PROVIDED
ALWAYS that if the Tenant shall be a company of which such
guarantor was a director the Landlord may require some other
director or directors of such company (including such person
(if any) as may be appointed to fill the place of such
Director) to execute such guarantee as aforesaid
24
<PAGE> 29
Defective Premises Act 1972
3.37 In connection with the Defective Premises Act 1972 ("the said
Act"):
3.37.1 to notify the Landlord in writing immediately of any
defect in the Demised Premises
3.37.2 to erect and maintain within the Demised Premises
prominent notices or warnings of relevant defects
within the meaning of Section 4 of the said Act in
such form as the Landlord may from time to time
reasonably require
3.37.3 to indemnify the Landlord against any damages
liabilities losses actions claims proceedings demands
costs and expenses arising from any defect in the
state of the Demised Premises and/or incurred under
Section 4 of the said Act by reason of the Tenant's
failure to erect and display such notice
3.37.4 to permit the Landlord at any time on reasonable
notice to enter upon the Demised Premises for any or
all of the following purposes namely erecting and
exhibiting notices thereon and giving warning of
relevant defects within the meaning of Section 4 of
the said Act in the Demised Premises and installing
lighting or any other reasonable means of warning or
protection against such defects
Regulations
3.38 To perform and observe and procure compliance in all respects
with such reasonable regulations as may from time to time
hereafter be made by the Landlord or the Superior Landlord
Information
3.39 To produce to the Landlord upon request all plans documents
and other evidence which the Landlord may reasonably require
and which is not otherwise readily available to the Landlord
to enable the Landlord to satisfy itself that the provisions
of these Presents have been complied with
Superior Lease
3.40 To perform and observe the lessees covenants (other than the
covenant to pay rent) and the restrictions referred to in the
Superior Lease in so far as they relate to the Demised
Premises notwithstanding any inconsistency between this Lease
and the said covenants and restrictions contained in the said
Superior Lease and to indemnify and keep the Landlord
indemnified against all damages actions
25
<PAGE> 30
proceedings costs claims and demands in any way arising out of
a breach of this covenant and not to do omit or suffer
anything to be done whereby the Superior Lease may be voided
or forfeited
Documents in Part III of Second Schedule
3.41 To perform and observe and procure compliance in all respects
with the provisions of the Documents referred to in Part III
of the Second Schedule hereto and to indemnify the Landlord at
all times against all claims costs charges and expenses in
respect thereof
Keyholders
3.42 To provide the Landlord and any managing agents of the
Landlord with written notice of the names and addresses and
telephone numbers of at least two keyholders of the Demised
Premises and to notify the Landlord of any change in either or
both of such keyholders previously so notified
4. LANDLORD'S COVENANTS
THE Landlord HEREBY COVENANTS with the Tenant (but not to bind itself
after it shall have parted with the reversion immediately expectant
hereon nor to incur further liability thereafter) as follows
Quiet enjoyment
4.1 That the Tenant duly paying the rents hereby reserved and made
payable and observing and performing the covenants and
conditions herein contained and on the Tenant's part to be
observed and performed shall and may peaceably and quietly
possess and enjoy the Demised Premises during the Term without
any disturbance by the Landlord or any persons rightfully
claiming under or in trust for the Landlord
Insurance
4.2 That the Landlord will effect and maintain or (in the event
that any Superior Landlords insure the Demised Premises) that
the Landlord will use all reasonable endeavours to procure
that the Superior Landlords will (subject to such cover being
obtainable at a reasonable rate of premium in the UK insurance
market and save to the extent that such insurance is rendered
void or voidable by reason of any act or default of the Tenant
or any sub-tenant or their respective servants agents invitees
or licensees) effect and maintain to the full reinstatement
value thereof an insurance of the Demised Premises against the
Insured Risks and at least four years' loss of rent in respect
of the Demised Premises and will or (in the
26
<PAGE> 31
event that any Superior Landlords insure the Demised Premises)
will use all reasonable endeavours to procure that the
Superior Landlords will apply all moneys received by virtue of
any such insurance (other than in respect of loss of rent)
towards reinstating the Demised Premises after the destruction
thereof or damage thereto unless any moneys payable under such
insurance shall be refused in whole or in part by reason of
any act or default of the Tenant or any sub-tenant or their
respective servants agents licensees or invitees
Repair and Maintenance
4.3 That subject to the Tenant paying the rent reserved by
sub-clause 3.8 hereof the Landlord will keep in good repair
and condition the exterior structure roof foundations
entrances passages halls stairways WC's lifts (if any) and
landings of the Building and the car park provided that
notwithstanding anything herein contained the Landlord shall
not be liable to the Tenant for nor shall the Tenant have any
claim against the Landlord in respect of:
4.3.1 act or default of any other tenant in the Building
(unless the Landlord was aware of the impending
breach by such tenant and had failed to take
reasonable steps to prevent such act or default) or
any explosion or the defective working stoppage or
breakdown of any appliances apparatus or machinery
(including the lifts (if any)) in or connected with
or used for the purposes of the Demised Premises or
of the Building
4.3.2 any interruption in or failure to carry out such
repairs by reason of mechanical or other breakdown or
frost or other inclement condition or shortage of
materials or labour or by reason of any cause beyond
the Landlord's control
4.3.3 any defect or want of repair unless the Landlord has
had notice thereof and has failed to remedy the same
within a reasonable period thereafter
4.4 To pay the rent reserved by the Superior Lease and observe and
perform the covenants on its part therein contained so far as
the same are not the responsibility of the Tenant by reason of
the covenants on its part contained in these Presents
4.5 At the request and cost of the Tenant to use all reasonable
endeavours to enforce the covenants on the part of the
Superior Landlord contained in the Superior Lease
5. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED as follows:
Proviso for re-entry
27
<PAGE> 32
5.1 This Deed is made upon the express condition that if and
whenever the said rents sums or other payments or any parts
thereof shall be unpaid for fourteen days after any of the
days hereinbefore appointed for payment thereof (whether the
same shall have been lawfully demanded or not) or if the
covenants on the part of the Tenant herein contained shall not
be performed or observed or if the Tenant or any surety or
guarantor under these Presents shall compound or make any
arrangements with its creditors or shall suffer any of the
effects of the Tenant to be taken in execution or if the
Tenant or any surety or guarantor under these Presents (being
a corporation) has a winding-up petition or petition for an
administration order presented against it or passes a
winding-up resolution (other than for the purposes of an
amalgamation or reconstruction resulting in a solvent
corporation) or resolves to present its own winding-up
petition or is wound-up (whether in England or elsewhere) or
is for any reason removed from the Register of Companies or
the directors of the Tenant resolve to present a petition for
an administration order in respect of the Tenant or if the
Tenant or any Surety or guarantor under these Presents is
unable to pay or has no reasonable prospect of being able to
pay its debts within the meaning of Sections 122 and 123 of
the Insolvency Act 1986 or an Administrative Receiver or a
Receiver or a Receiver and Manager is appointed in respect of
the property or any part thereof of the Tenant or any surety
or guarantor under these Presents or if the Tenant or any
surety or guarantor under these Presents (being a body
corporate) effects a return or reduction of capital or calls a
meeting of its creditors or any of them or makes an
application to the Court under Section 129 of the Insolvency
Act 1986 or submits to its creditors or any of them a proposal
pursuant to Section 1 of the Insolvency Act 1986 or enters
into any arrangement scheme compromise moratorium or
composition with its creditors or any of them or if an
unlimited company shall apply to become a limited company or
if the Tenant or any surety or guarantor under these Presents
(being an individual or if more than one individual then any
one of them) notifies the Official Receiver or makes an
application to the Court pursuant to Section 253 of the
Insolvency Act 1986 or convenes a meeting of his creditors or
any of them or enters into any arrangement scheme compromise
moratorium or composition with his creditors or any of them
(whether pursuant to Part VIII of the Insolvency Act 1986 or
otherwise) or is unable to pay or has no reasonable prospect
of being able to pay his debts within the meaning of Sections
267 and 268 of the Insolvency Act 1986 or has a bankruptcy
petition presented against him or is adjudged bankrupt or dies
then and in any of the said cases and henceforth the Landlord
may re-enter upon the Demised Premises and re-possess the same
and immediately thereupon the Term shall cease absolutely and
determine but without prejudice to any right of action or
remedy of the Landlord in respect of any antecedent breach of
any of the covenants by the Tenant herein contained
Suspension of rent
28
<PAGE> 33
5.2.1 If the Demised Premises or any part thereof shall at
any time be destroyed or so damaged by any of the
Insured Risks so as to be unfit for occupation and
use and the policy or policies of insurance in
respect thereof shall not have been vitiated or
payment of the policy moneys refused in whole or in
part in consequence of any act or default on the part
of or suffered by the Tenant or any sub-tenant or
their respective servants agents licensees or
invitees then the rent hereby firstly reserved or a
fair and just proportion thereof according to the
nature and extent of the damage sustained shall be
suspended and cease to be payable until the Demised
Premises shall again be rendered fit for occupation
and use or until the loss of rent insurance effected
by the Landlord shall be exhausted (whichever is the
shorter) and in case of dispute as to the proportion
or period of such abatement the same shall be
referred to arbitration in accordance with the
Arbitration Act 1950 and 1979
5.2.2 If the Landlord (whether as a result of being unable
to obtain all planning permissions or other requisite
consents or otherwise) is unable to procure the
reinstatement of the Demised Premises referred to in
Clause 4.2 hereof or if these Presents shall be
frustrated or if such reinstatement cannot be
effected for any other reason beyond the control of
the Landlord then the Landlord shall become the
absolute owner of all of the insurance moneys
received under the policy or policies of insurance
effected under Clause 4.2 hereof
Notices
5.3 In addition to any other mode of service any notices requiring
to be served hereunder shall be validly served if served in
accordance with Section 196 of the Law of Property Act 1925 as
amended by the Recorded Delivery Service Act 1962 or in the
case of a company if served in accordance with those
provisions at its registered office for the time being
Compensation
5.4 If the tenancy hereby granted is within Part II of the
Landlord and Tenant Act 1954 then subject to the provisions of
sub-section (2) of Section 38 of that Act neither the Tenant
nor any assignee or underlessee of the Term or of the Demised
Premises shall be entitled on quitting the Demised Premises to
any compensation under Section 37 of the said Act
Neighbourinq development
5.5 Nothing herein contained or implied shall impose or be deemed
to impose any restriction on the use of any land or buildings
of the Landlord and/or any Superior
29
<PAGE> 34
Landlords not comprised in these Presents or give the Tenant
the benefit of or the right to enforce or to have enforced or
to prevent the release or modification of any covenant
condition or stipulation entered into by any lessee or tenant
of the Landlord or any Superior Landlords in respect of any
property not comprised in these Presents or shall operate to
prevent or restrict in any way the development of any land not
comprised in these Presents
Exclusion of implied easements
5.6 The operation of Section 62 of the Law of Property Act 1925
shall be excluded from this Lease and the only rights granted
to the Tenant with the Demised Premises are those expressly
set out in these Presents and the Tenant shall not by virtue
of these Presents be deemed to have acquired or be entitled to
and the Tenant shall not during the Term acquire or become
entitled by any means whatsoever to any easement from or over
or affecting any other land or premises now or at any time
hereafter belonging to the Landlord or to any Superior
Landlord and not comprised in this Lease
Continuation of obligations
5.7 Each of the covenants herein contained on the part of the
Tenant shall remain in full force both at law and in equity
notwithstanding that the Landlord or any Superior Landlord may
have waived or temporarily released any such covenant or
waived or released temporarily or permanently revocably or
irrevocably any similar covenant or similar covenants
affecting any land or buildings of the Landlord and/or any
Superior Landlords not comprised in these Presents
Damages
5.8 The Landlord shall on giving notice in writing to the Tenant
have the option (in lieu of requiring works to be done by the
Tenant during the last year of the Term howsoever determined)
of requiring the Tenant to pay to the Landlord (which the
Tenant hereby covenants forthwith to do) the sum certified by
the Landlord's surveyor as being equal to the cost of carrying
out such work plus the surveyors fees of and in connection
with such certificate and such sums shall be paid by the
Tenant to the Landlord within fourteen days of the issue of
such certificate
Waiver and Interest
5.9.1 No acceptance of or demand or receipt for rent or the
grant of any licence or approval or the registration
of any document by the Landlord after knowledge or
notice received by the Landlord or its agents of any
breach of the Tenants covenants and conditions herein
contained shall be or
30
<PAGE> 35
operate as a waiver wholly or partially of any such
breach but any such breach shall for all purposes be
a continuing breach of covenant so long as such
breach shall be subsisting and no person taking any
estate or interest under these Presents shall be
entitled to set up any such acceptance of or demand
or receipt for rent by the Landlord or its agents as
a defence in any action or proceedings by the
Landlord
5.9.2 If the Landlord shall refrain from accepting or
demanding rents or other monies due under these
Presents where the Landlord reasonably considers that
the Tenant is in breach of any of the provisions
hereof or might acquire against the Landlord any
rights or entitlements then notwithstanding such
refusal interest shall be payable as referred to in
Clause 3.37 hereof from the due date until the
Landlord shall accept payment from the Tenant
User Warranty
5.10 Nothing herein contained or implied nor any consent hereafter
given by the Landlord shall be taken to be a covenant warranty
or representation by the Landlord that the Demised Premises
can lawfully be used for any particular purpose and the Term
and the rents hereby reserved shall not determine by reason
only of any changes modifications or restrictions on user of
the Demised Premises or obligations or requirements (if any)
hereafter to be made or imposed under or by virtue of the
Planning Acts
Right to distrain
5.11 If the Tenant shall make default in paying any sum reserved or
made payable by Clause 3 of these Presents (other than the
rents reserved) such sum shall be recoverable whether formally
demanded or not as though it was rent in arrear
Disputes
5.12 Any dispute arising between the Tenant and any owner or
occupier of adjacent premises (other than the Landlord) as to
any right benefit or privilege or any party or other wall or
structure or otherwise shall be determined on behalf of the
Tenant by the Landlord whose decision shall bind the Tenant
and whose fees shall be payable as the Landlord may direct
Value Added Tax
5.13 The Landlord shall have from time to time full and free right
to exercise any statutory option to have or cease to have any
rents or other sums treated as liable to Value Added Tax (or
similar tax as aforesaid)
31
<PAGE> 36
Commission
5.14 Any commission or allowances paid or made to the Landlord in
respect of any insurance effected by the Landlord hereunder
may be retained by the Landlord for its own account
Landlord's liability
5.15 The Landlord is not responsible to the Tenant or to anyone in
the Demised Premises with the Tenant's express or implied
authority for any accident injury damage or loss
Tenant's goods
5.16 The Tenant irrevocably appoints the Landlord to be the
Tenant's agent to store or dispose of any effects left by the
Tenant on the Demised Premises for more than ten working days
after the end of the Term on any terms that the Landlord
thinks fit and the Landlord shall not be liable to the Tenant
save to account for the net proceeds of sale less the
reasonable costs of storage and of the sale and any other
expenses incurred by the Landlord and the Tenant will
indemnify the Landlord against any liability incurred by the
Landlord to any third party whose property shall have been
sold by the Landlord in the mistaken belief held in good faith
(which shall be presumed unless the contrary is proved) that
such property belonged to the Tenant and against any damage
occasioned to the Demised Premises and any actions claims
proceedings costs expenses and demands made against the
Landlord caused by or related to the presence of such effects
in or on the Demised Premises following the end of the Term
Party Structures
5.17 Such of the division walls fences or structures as divide the
Demised Premises from other premises shall be deemed to be
party structures subject to the provisions of Section 38 of
the Law of Property Act 1925 and shall be maintained and
repaired accordingly
Exclusion of representations
5.18 The Tenant acknowledges that it has not entered into these
Presents in reliance wholly or partly on any representation or
warranty made by or on behalf of the Landlord
Jurisdiction
32
<PAGE> 37
5.19 These Presents shall be governed by and are to be construed in
all respects in accordance with the laws of England and Wales
and each of the parties hereby submits to the exclusive
jurisdiction of the Courts of England and Wales
Headings
5.20 The headings hereto and the headings to the Schedules hereof
shall not affect the construction of these Presents
Break Clause
5.21.1 If the Tenant shall wish to terminate this Lease on
the 25 day of December 2001 and shall have given the
Landlord not less than six months prior notice of
such desire and shall up to date of service of such
notice and up to the date of its expiry have paid the
rents reserved by and performed and observed the
covenants on the part of the Tenant contained in this
Lease then upon the expiry of such notice the term
granted by this Lease shall determine but without
prejudice to the rights of the Landlord in respect of
any antecedent breach of covenant by the Tenant
5.21.2 If the Tenant shall wish to terminate this Lease on
the 25 day of December 2006 and shall have given the
Landlord not less than twelve months prior notice of
such desire and shall up to date of service of such
notice and up to the date of its expiry have paid the
rents reserved by and performed and observed the
covenants on the part of the Tenant contained in this
Lease then upon the expiry of such notice the term
granted by the Lease shall determine but without
prejudice to the rights of the Landlord in respect of
any antecedent breach of covenant by the Tenant
Court Order
5.22 Having been authorised so to do by an Order of the Central
London County Court made on the 8th day of April 1997 the
parties hereto agree that the provisions of sections 24 to 28
of the Landlord and Tenant Act 1954 (as amended) shall not
apply to the tenancy created by these Presents
Superior Lease
5.23 If there shall be any conflict between the terms of the
Superior Lease and the terms of this Lease then the terms of
the Superior Lease shall prevail
1.4 the ceilings of the Demised Premises up to the
underside of the structural slab or joists as the
case may be
New Lease
5.24 The parties hereto agree and declare that this Lease is a new
lease within the meaning of the Landlord and Tenant
(Covenants) Act 1995
I N W I T N E S S whereof this Deed has been executed by the parties hereto
and is intended to be and is hereby delivered the day and year first before
written
THE FIRST SCHEDULE above referred to
(The Demised Premises)
ALL THOSE premises on the Ground Floor of the Building shown for the purposes of
identification only edged red on Plan number 1 annexed hereto and there shall
be INCLUDED in the demise:-
1.1 all floors of the Demised Premises excluding the structural
slab or joists as the case may be but including floor screeds
and other finishes
1.2 the internal surface and plaster of all external walls and
columns down to the structure
1.3 all internal non-structural walls and staircases
33
<PAGE> 38
1.5 the windows window frames and the glass therein and
all doors serving the Demised Premises
1.6 all service media and conducting media situate within
and serving the Demised Premises
AND there shall be EXCLUDED from the demise:
2.1 the main structure of the Building
2.2 save as mentioned in 1.2 and 1.3 above the external
walls and columns of the Building
2.3 any service media and conducting media within the
Demised Premises which do not serve the Demised
Premises in any way
2.4 the letterbox the approximate position of which
marked by a letter X on the Plan number 1 annexed
hereto
THE SECOND SCHEDULE above referred to
PART I
(Rights Granted)
(a) The full free and uninterrupted passage and running of water soil gas
and electricity mains water and all other services to and from the
Demised Premises through and along all conduits pipes drains channels
watercourses sewers wires and cables which are or may hereafter during
the Term be in or over or under any adjoining or neighbouring property
of the Landlord
(b) The right to park 19 private motor vehicles in such spaces as the
Landlord shall locate within the area shown edged blue on Plan number
2 annexed hereto
(c) The right to use the common parts of the Building for all proper
purposes in connection with the use and enjoyment of the Demised
Premises
(d) The right of support and protection for the Demised Premises that is
now enjoyed from the Building
(e) The right on prior notice at a time convenient to the party whose
premises are to be entered (save in case of emergency) to enter any
parts of the Building as may be reasonably necessary to enable the
Tenant to comply with its obligations under the Lease the Tenant in
all cases causing as little damage as possible and forthwith making
good all
34
<PAGE> 39
damage caused by such entry to the satisfaction of the Landlord or
such party referred to above
PART II
(Exceptions and Reservations)
(a) The full free and uninterrupted passage and running of water soil gas
and electricity mains water and all other services from and to the
neighbouring adjoining or adjacent land and premises of the Landlord
through and along all conduits pipes drains channels watercourses
sewers wires and cables which are or may hereafter during the Term be
in or over or under the Demised Premises with power for the Landlord
to enter the Demised Premises in accordance with the provisions of
this Lease
(b) The right to enter upon the Demised Premises for all or any of the
purposes mentioned in these Presents
(c) The right at any time to build on rebuild or alter any adjoining or
neighbouring premises according to such plans (whether as to height
extent or otherwise) and in such manner as the Landlord decides even
though this may interfere with the access of light or air to the
Demised Premises
(d) The right to use any adjoining or neighbouring premises for any
purpose whatsoever and without imposing upon any adjoining or
neighbouring premises any restrictions or conditions similar to those
imposed upon the Tenant
(e) All liberties privileges easements quasi-easements rights benefits and
advantages over the Demised Premises now or from time to time enjoyed
or intended to be enjoyed by any premises now or at any time belonging
to the Landlord
(f) A right of access to the BT telephone box situated within the Demised
Premises
PART III
(Documents relating to the Demised Premises)
1. The entries contained in the registers of title numbers K626325 and
K544206
2. Transfer dated 2 August 1982 made between the District Council of
Sevenoaks (1) D M Maynard and T G Maynard (2)
3. Deed dated 6 March 1987 made between Let Offices Limited (1) M & G
Life Assurance Company Limited (2) Landlink Two Limited (3) Payless
DIY Limited (4) Ward White Retail (UK) Limited (5)
35
<PAGE> 40
THE THIRD SCHEDULE above referred to
1. In this Schedule the following expressions shall have the following
meanings:
1.1 "the first rent period"
shall mean the period commencing on the 21st day of April 1997
and ending on the 24 day of December 2001
1.2 "subsequent rent periods"
shall mean the successive periods commencing on each
appropriate date and expiring on the next appropriate date
1.3 "appropriate date"
shall mean the day following the expiry of the first rent
period and each subsequent fifth anniversary thereof and the
day preceding the expiry of the term hereby granted
1.4 "open market rental value"
shall mean the best yearly rent for which the Demised Premises
might reasonably be expected to be let with vacant possession
in the open market by a willing landlord to a willing tenant
or tenants in whole or in parts (whichever produces the higher
rent) for a term of equal length to the Term (commencing on
and computed from the appropriate date) upon the terms and
conditions of these Presents (save as to the rent hereby
reserved but including these provisions for review and save as
to any restrictions on the use of the Demised Premises) and
upon the supposition (if not a fact)
1.4.1 that the Landlord and the Tenant have complied with
all the covenants and conditions on their respective
parts herein contained
1.4.2 that the Demised Premises are fully fitted out and
equipped and are fit ready and available for
immediate occupation and use
1.4.3 that no reduction is to be made to take account of
any rental concession or of any monetary or other
inducement which on a new letting with vacant
possession might be granted to the incoming tenant
1.4.4 that no work has been carried out thereon by the
Tenant or any undertenant or their predecessors in
title which has diminished the letting value of the
Demised Premises
1.4.5 that the Landlord would grant consent to assignment
or underletting in accordance with (but without
prejudice to) the provisions of these Presents
36
<PAGE> 41
1.4.6 that any Value Added Tax charged can be recovered in
full by the incoming tenant
1.4.7 that if the Demised Premises have been destroyed or
damaged they have been fully restored there being
disregarded any effect on rent of
1.4.8 the fact that the Tenant or the Tenant's predecessors
in title have been in occupation of the Demised
Premises or any part thereof
1.4.9 goodwill attaching to the Demised Premises by reason
of the carrying on there at of the particular trade
or business of the Tenant
1.4.10 any improvement carried out during the Term by the
Tenant to the Demised Premises to which the Landlord
has given its written consent (where required) at the
Tenant's own expense in accordance with the terms of
these Presents otherwise than in pursuance of an
obligation to the Landlord
1.4.11 any possibility that the Demised Premises may be
demolished redeveloped or substantially altered or
may be occupied by the Landlord for purpose of its
business at the end of the Term
1.4.12 any effect on rent of any restrictions imposed by any
statute which operate to impose any limitation in
relation to the review of rent or the collection of
any increase in rent
1.4.13 the taxable status of any party for the purpose of
Value Added Tax or any other tax
1.4.14 any estimate of future rent calculated in relation to
any loss of rent provision in any insurance policy
relating to the Demised Premises
1.4.15 any obligation on the Tenant arising under these
Presents to rebuild reinstate or replace the Demised
Premises or any part or parts thereof
1.4.16 the fact that any part of the Demised Premises may be
or become available for letting but be underlet
2. The yearly rent payable under these Presents for the Demised Premises
shall be:
2.1 For the first rent period the sum of SIXTY TWO THOUSAND ONE
HUNDRED POUNDS ( L.62,100)
37
<PAGE> 42
2.2 In the subsequent rent periods a sum equal to the yearly rent
payable immediately before the appropriate date or (if
greater) to the open market rental value of the Demised
Premises on the appropriate date
3. If the Landlord and the Tenant shall not have agreed the open market
rental value before the appropriate date (or by such later date as may
be agreed in writing by the Landlord and the Tenant) the open market
rental value shall be determined by a Surveyor (hereinafter called
"the appointed Surveyor") to be agreed upon in writing by the Landlord
and the Tenant and in default of such agreement a Chartered Surveyor
(who shall so far as practicable be a Chartered Surveyor with previous
experience of lettings of properties of this nature and in the same
locality as the Demised Premises) to be nominated by the President for
the time being or other senior officer of the Royal Institution of
Chartered Surveyors upon the application of the Landlord at any time
after the appropriate date
4. The determination of the open market rental value by the appointed
Surveyor (which shall at the option of the Landlord be made by him as
an expert or as an arbitrator in accordance with the Arbitration Act
1950 and 1979) shall be final and binding on the Landlord and the
Tenant
5. In the case of reference to an expert:
5.1 the appointed Surveyor shall afford to each of the parties an
opportunity to submit representations valuations and reasons
to him which the appointed Surveyor shall consider but by
which he shall not be bound and shall give to the parties
written notice of the amount of the open market rental value
as determined by him
5.2 the costs of any reference to the appointed Surveyor shall be
in his award and failing such award the costs shall be payable
by the parties in equal shares
5.3 if the appointed Surveyor shall fail to give notice of his
determination within a reasonable period or if he shall die or
shall be unwilling to act or become incapable of acting or if
for any other reason he is unable to act then either the
Landlord or the Tenant may request the President for the time
being or other senior officer of the Royal Institution of
Chartered Surveyors to discharge the appointed Surveyor and
appoint another Surveyor in his place which procedure may be
repeated as many times as necessary
6. In the case of an arbitration the parties shall be entitled to submit
evidence of the decision of any Court as to level of rent pursuant to
the Landlord and Tenant Act 1954 and of the decision of any arbitrator
and the appointed Surveyor shall be entitled to have regard to such
evidence
7. If on the appropriate date the open market rental value shall not have
been agreed or determined as aforesaid the yearly rent reserved
hereunder immediately before the
38
<PAGE> 43
appropriate date shall continue to be payable until the agreement or
determination of the open market rental value but so that immediately
on demand after such agreement or determination the excess (if any) of
the amount which would have been payable had the agreement or
determination been made before the appropriate date over the amount
actually paid by the Tenant shall be paid by the Tenant to the
Landlord together with interest at the rate of two per cent per annum
above Lloyds Bank PLC Base Rate for the time being or such other
designated rate as shall be substituted therefor by Lloyds Bank PLC
and in force at the date of commencement of the period in respect of
which any payment of interest accrues due under this paragraph on the
excess (if any) from the appropriate date to the date of payment
thereof and if not paid shall be recoverable as rent in arrear
8. If on the appropriate date there shall be in force any enactment
(which expression includes any Act of Parliament now or hereafter in
force as well as any instrument regulation or order made thereunder or
deriving validity therefrom) which shall relate to the control of
rents and which shall restrict interfere with or affect the Landlord's
right to revise the rent hereby reserved in accordance with the terms
hereof or to recover the whole or any part of such revised rent then
the Landlord shall be entitled
8.1 once following each removal or modification of such enactment
to serve notice (hereinafter called an "Interim Notice") upon
the Tenant and from and after the date of service of such
Interim Notice until the next appropriate date or the service
of the next Interim Notice or the expiration of the Term
(whichever shall first occur) the rent shall be increased to
whichever is the higher of the open market rental value at the
date of service of the Interim Notice or the rent payable
immediately prior thereto and the provisions of this Schedule
shall apply accordingly with the substitution of the said date
of service for the relevant appropriate date
8.2 to recover any increase in rent with effect from the earliest
date permitted by law
9. If and when the open market rental value has been agreed or
determined as aforesaid the Landlord and the Tenant shall forthwith at
the cost of the Tenant execute memoranda recording such agreement or
determination
THE FOURTH SCHEDULE
Service Charge
1.1 the repair (including rebuilding where necessary or desirable)
renewal replacement maintenance amendment cleansing and
redecoration and other works to put and keep in good and
substantial repair and condition and (where applicable) in
good working order:
39
<PAGE> 44
1.1.1 the exterior structure roof and foundations of the
Building but excluding nevertheless such parts
thereof as are included in the Demised Premises and
also the corresponding parts of all other tenanted
premises in the Building
1.1.2 the entrances passages halls stairways WC's lifts (if
any) and landings and all other parts of the Building
(all of which are hereinafter called "the said common
parts")
1.1.3 all conduits pipes drains channels watercourses wires
and cables in under or upon the Building which shall
serve the same (excluding nevertheless any which are
included in the Demised Premises or other tenanted
premises in the Building
1.1.4 all apparatus plant equipment and machinery serving
the lifts heating hot water systems security systems
entry phones and the electric lighting appliances in
the Building
1.1.5 the boundary walls and fences of and in the curtilage
of the Building
1.1.6 the forecourts yards pathways approach roads and car
parks within the curtilage of the Building
1.1.7 all parts of the Building not hereinbefore mentioned
including all parts thereof used for or in connection
with the provision of services
1.2 the cleaning and lighting of the said common parts
1.3 the provision of heating to such temperature as the Landlord
may deem adequate between the first day of October and the
first day of April inclusive in each year or during such
shorter period or periods as the Landlord may deem adequate
having regard to weather conditions at the time prevailing and
between the hours of 8 a.m. and 6 p.m. on weekdays (excluding
Saturdays Sundays Bank Public and other general holidays) and
constant hot water between such times and on such days as
aforesaid throughout the year
1.4 the supply provision purchase maintenance repair and renewal
as need be of such fire fighting equipment or apparatus in the
said common parts and such fire escapes for the Building as
the Landlord may deem desirable or necessary or as may be
required to be supplied and maintained by it by statute or by
the fire authority for the district
1.5 the cleaning of the windows in the said common parts
40
<PAGE> 45
1.6 the supply provision purchase maintenance renewal replacement
and repair of all appurtenances fixtures and fittings bins
receptacles tools appliances materials and other things
(including but without limiting the generality of the
foregoing telephone or telephones) which the Landlord may deem
desirable or necessary for the maintenance upkeep or
cleanliness of the Building or for the better performance and
supply of the duties and services referred to in this Schedule
2. The costs of supply of electricity gas oil and other fuel and all
materials and commodities for all purposes referred to in this
Schedule
3. The costs of employing staff for the performance of the duties and
services referred to in this Schedule and for the general conduct
management and security of the Building and all parts thereof and all
other incidental expenditure in relation to such employment (including
but without limiting the generality of such provision) the payment of
statutory and such other insurance health pension welfare and other
payments contributions and premiums that the Landlord may in its
absolute discretion deem desirable or necessary and the provision of
uniforms working clothes tools appliances cleaning and other materials
bins receptacles and other equipment for the proper performance of
their duties
4. The costs of the supply of water to the Building
5. All rates taxes duties charges assessments impositions and outgoings
whatsoever (whether parliamentary parochial local or of any other
description and whether or not of a capital or non-recurring nature)
which are now or may at any time hereafter be taxed assessed charged
or imposed upon or payable in respect of all parts of the Building not
exclusively occupied by a tenant
6. The cost of insuring and keeping insured the Building pursuant to
sub-clause 4.2 hereof
7. The establishment and maintenance of a sinking fund to provide for
depreciation and replacement of any boilers apparatus equipment plant
and machinery used in and about the Building
8. The fees of the Landlord and/or the Landlord's Agent for the general
management of the Building including fees for collection of rents
provided that such fees shall at no time exceed the maximum therefor
allowed by the scales authorised for the time being of the Royal
Institution of Chartered Surveyors
9. The proper cost of preparing and auditing service charge accounts and
the Certificate (whether carried out by the Landlord or by its agents
or accountants)
10. The proper and reasonable cost of obtaining such professional advice
as may from time to time be required in relation to the management of
the Building and the provision of the duties and services referred to
in this Schedule
41
<PAGE> 46
11. The amount which the Landlord may be called upon to pay towards the
expense of making rebuilding renewing repairing maintaining lighting
and cleansing all party walls fences and structures and all service
areas access ways and roads and all pipes sewers drains watercourses
wires cables and other things used or to be used for the Building in
common with other premises near or adjoining thereto
12. The cost of taking all steps deemed desirable or expedient by the
Landlord for complying with and making representations against or
otherwise contesting the incidence of the provisions of any
legislation or orders or statutory requirements thereunder concerning
fire escapes Town and Country Planning public health highways streets
drainage or other matters relating or alleged to relate to the
Building and for which the Tenant or the tenants of other tenanted
premises in the Building are not directly liable
13. Commitment fees interest and any other cost of borrowing money when
necessary to finance the duties and services referred to in this
Schedule
14. All other things done and services provided for the benefit of the
occupiers of the Building or in the interests of good estate
management
PROVIDED ALWAYS that the Landlord may at its absolute discretion withhold add
to extend vary or make any alterations to the rendering of the said duties and
services or any of them from time to time if the Landlord at its like
discretion deems it desirable so to do for the more efficient conduct and
management of the Building
THE COMMON SEAL of PAYLESS )
PROPERTIES LIMITED was ) [SEAL]
hereunto affixed in the )
presence of: )
Director /s/ [illegible signature]
Secretary /s/ [illegible signature]
42
<PAGE> 1
EXHIBIT 10.38
HORIZON SEISMIC INC
(US) OFFICE, WESTHEIMER,
HOUSTON, USA
<PAGE> 2
STANDARD OFFICE LEASE FORM
(WITH BASE YEAR)
LEASE AGREEMENT
THIS LEASE AGREEMENT ("Lease") is entered as of the ____ day of
_______________ 1994 between PINCAY OAKS, INC. ("Landlord"), and HORIZON
EXPLORATION, LIMITED ("Tenant" ).
ARTICLE 1 LEASE PREMISES, TERM, AND USE
1.01. Leased Premises.
(a) Upon the terms, provisions and conditions hereof, Landlord
hereby leases to Tenant and Tenant hereby leases from Landlord the premises
reflected on the floor plans set forth in Exhibit "A" hereto in the building
known as WESTHEIMER CENTRAL PLAZA ("Building") and located at 11200 WESTHEIMER,
Houston, Harris County, Texas. References in this Lease to the "Complex" shall
mean the Building, the parking garage ("Garage") adjacent to and servicing the
Building and all other facilities, parking areas, improvements, structures, and
landscaping areas relating to or servicing the Building and Garage and located
on or installed in or to be located on or installed in the land ("Land")
described in Exhibit "B" hereto. Such premises, together with any other space
in the Complex leased by Tenant pursuant hereto, are herein called the "Leased
Premises."
(b) The "Rentable Area" of the Leased Premises is hereby
stipulated and agreed for all purposes to be 2,874 square feet.
1.02. Term. Subject to the terms, provisions and conditions hereof,
this Lease shall continue in force for a term ("Term") of SIXTY-THREE (63)
calendar months, beginning on the 1ST day of SEPTEMBER, 1994 (such commencement
date being subject to adjustment as provided in Sections 3.03(b) and (c), and
being hereinafter called the "Commencement Date") and ending on the 30TH day of
NOVEMBER, 1999.
1.03. Use. Tenant (and its permitted assignees and sublessees, if
any) will occupy and use the Leased Premises solely for general business office
purposes of a lawful nature and for no other purpose.
ARTICLE 2 RENTAL
2.01. Base Rental. Tenant shall pay an annual base rental ("Base
Rental") in the sum of $ * and No/100 Dollars ($ * ) per year payable in
equal monthly installments of * and * /100 Dollars ($ * ). The Base
Rental includes the Tenant's proportionate share of the Base Year (hereinafter
defined) Basic Operating Costs.
<PAGE> 3
<TABLE>
<CAPTION>
MONTHS MONTHLY ANNUALLY
------ ------- --------
<S> <C> <C>
*09/1/94 - 11/30/94 Abated Abated
12/01/94 - 11/30/95 2,395.00 28,740.00
12/01/95 - 11/30/99 2,514.75 30,177.00
</TABLE>
2.02. Tenant's Share of Basic Operating Costs.
(a) Tenant shall also pay Tenant's Share (hereinafter defined) of
any increases in the Basic Operating Costs (hereinafter defined) for the
Complex in excess of the Basic Operating Expenses for the "Base Year." The
Base Year is hereby stipulated and agreed for all purposes to be 1994. Prior
to the commencement of each calendar year during the Term, Landlord shall
provide a then current estimate of annual Basic Operating Costs, and thereafter
Tenant shall pay, as additional rental, in monthly installments in accordance
with Section 2.04, Tenant's Share of the difference between estimated annual
Basic Operating Costs and the Base Year Basic Operating Costs for the calendar
year in question.
(b) As soon as possible after the conclusion of each calendar year
of the Term, Landlord shall furnish to Tenant a statement of actual Basic
Operating Coats for such year, and within thirty (30) days thereafter an
appropriate cash adjustment shall be made between Landlord and Tenant to
reflect any overpayment or underpayment of Rent (hereinafter defined) because
of any difference between Landlord's estimate of, and the actual, Basic
Operating Costs. In the event of the termination of the Term at a time other
than the end of a calendar year, Landlord may provide to Tenant after such
termination a statement specifying any changes in the then current estimate of
Basic Operating Costs, and within thirty (30) days thereafter an appropriate
cash adjustment shall be made between Landlord and Tenant to reflect any
underpayment or overpayment of Rent for the portion of such calendar year
preceding the termination of the Term. As soon as possible after the
conclusion of the calendar year in which the Term is terminated, Landlord shall
provide Tenant with the statement of the actual Basic Operating Costs, and a
cash settlement shall be made between Landlord and Tenant in accordance with
the first sentence of this Section 2.02(b).
(c) "Tenant's Share" shall mean the amount by which the Basic
Operating Costs exceed the Base Year Basic Operating Costs for any year or
partial year during the Term which is based upon the proportion which the
Rentable Area of the Leased Premises bears to ninety-five percent (95%) of the
Rentable Area of the Building or to the total Rentable Area leased in the
Building if such total is greater than 95% of the Building Rentable Area.
(d) "Basic Operating Costs" shall mean the operating expenses of
the Complex and all expenditures by Landlord to own, maintain and operate the
Complex. All operating expenses shall be determined on an accrual basis in
accordance with generally accepted accounting principles which shall be
consistently applied. Such operating expenses shall include all expenses,
costs and disbursements of every kind and nature which Landlord shall pay or
become obligated to pay because of or in connection with the ownership,
operation, and maintenance of the Complex, including, but not limited to, the
following:
2
<PAGE> 4
(1) Wages and salaries of all employees engaged in direct
operation and maintenance of the Complex, employer's social security taxes,
unemployment taxes or insurance and any other taxes which may be levied on such
wages and salaries, and the cost of disability and hospitalization insurance
and pension or retirement benefits for such employees;
(2) Cost of leasing or purchasing all supplies, tools,
equipment and materials used in the operation, maintenance and ownership of the
Complex;
(3) Cost of all utilities for the Complex, including the
cost of water and power, sewage, heating, lighting, air-conditioning and
ventilating for the Complex;
(4) Cost of all maintenance and service agreements for
the Complex and surrounding grounds, including but not limited to janitorial
service, security service, equipment leasing, energy management system leasing,
landscape maintenance, alarm service, window cleaning and elevator maintenance;
(5) Cost of all insurance relating to the Complex,
including, but not limited to, casualty insurance, rental insurance and
liability insurance applicable to the Complex and Landlord's personal property
used in connection therewith as well as any deductible sum required by any such
policies;
(6) All taxes and assessments and governmental charges
(including but not limited to mortgage taxes and other taxes and assessments
passed on to Landlord by a mortgagee holding a lien on the Complex), whether
federal, state, county or municipal and whether they be by taxing districts or
authorities presently taxing the Leased Premises or by others, subsequently
created or otherwise and any other taxes, association dues and assessments
attributable to the Complex or its operation excluding, however, income taxes,
estate and inheritance taxes, excess profit taxes, franchise taxes, taxes
imposed on or measured by the income of Landlord from operation of Complex,
sales and other taxes imposed on amounts paid by Tenant hereunder (including,
without limitation, sales taxes imposed on the Parking Charge, as hereinafter
defined), and taxes imposed on account of a transfer of ownership of the
Complex or the Land;
(7) Cost of repairs and general maintenance (excluding
such repairs and general maintenance paid by insurance proceeds or by Tenant or
other third parties and alterations attributable solely to tenants of the
Building other than Tenant);
(8) Legal expenses and accounting expenses incurred with
respect to the Complex;
(9) Fees for management services, whether provided by an
independent management company, by Landlord or by any affiliate of Landlord;
(10) Costs in order to comply with new or revised federal
or state laws or municipal ordinances or codes or regulations promulgated under
any of the same; and;
3
<PAGE> 5
(11) Amortization of the cost of installation of capital
investment items which are primarily for the purpose of reducing (or avoiding
increases in) operating costs or which may be required by governmental
authority. The costs of such capital investment items under this Section
2.2(d)(11) shall include costs incurred in financing the purchase of such
items, including loan fees and interest. All costs of such capital investment
items shall be amortized over the reasonable life of such items with the
reasonable life and amortization schedule being determined in accordance with
generally accepted accounting principles and in no event to extend beyond the
reasonable life of the Complex.
Basic Operating Costs shall not include (i) expenditures classified as capital
expenditures for Federal income tax purposes (except as set forth in Section
2.02(d)(11), (ii) costs for which Landlord is entitled to specific
reimbursement by Tenant, any other tenant of the Building, or any other third
party, (iii) allowances specified in the Work Letter (hereinafter defined) for
expenses to be incurred by Landlord for improvements to Leased Premises, (iv)
leasing commissions, and all noncash expenses (including depreciation), and (v)
debt service on any indebtedness secured by the Complex (except debt service on
indebtedness to purchase or pay for items specified as permissible Basic
Operating Costs under Section 2.02(d)(1) through (11)).
(12) Notwithstanding any other provision herein to the
contrary, it is agreed that in the event the Building is not fully occupied
during any year or any portion of any year of the Term, an adjustment shall be
made in computing the Basic Operating Costs for that year so that the Basic
Operating Costs shall be increased for that year to the amount that, in
Landlord's judgment, would have been incurred had the total Rentable Area of
the entire Building been fully occupied during the entirety of that year. It
is the intent of this Section that Landlord shall not be required to bear any
portion of the Basic Operating Costs which exceed the Base Year Basic Operating
Costs for any year or partial year of the Term.
(e) Tenant, at its expense, shall have the right, upon giving
reasonable notice, to audit Landlord's books and records relating to any
increased or additional rental payable hereunder for any periods within two (2)
years prior to such audit; or at Landlord's sole discretion, Landlord will
provide an audit or report prepared by a certified public accountant, which
audit or report for purposes of this Lease shall be conclusive.
2.03. Parking. Landlord hereby agrees to make available to Tenant
and Tenant hereby agrees to pay for and take, during the full term of this
Lease, TWO (2) contract assigned parking permits and SEVEN (7) contract
unassigned parking permits (hereinafter collectively called the "Initial
Parking Permits") in the Complex parking garage (hereinafter called the
"Garage"), upon the following terms and conditions:
(1) Tenant shall pay as rental ("Parking Rentals") for
the Initial Parking Permits the rates charged from time to time by the operator
of the Garage, plus all taxes applicable thereto. The initial monthly rate for
each of the Initial Parking Permits for assigned parking shall be $ N/A plus
taxes, and for unassigned parking shall be $ N/A plus taxes. Said rentals
shall be
4
<PAGE> 6
due and payable to Landlord as additional Rent on the first day of each
calendar month during the term of this Lease.
2.04. Payment of Rent. The term "Rent" as used herein shall mean
the Base Rental, the Tenant's Share of any increases in the Basic Operating
Costs over the Base Year Basic Operating Costs, the Parking Rentals and all
other amounts provided for in this Lease to be paid by Tenant, all of which
shall constitute rental in consideration for this Lease and the leasing of the
Leased Premises. The Rent shall be due and payable in advance in monthly
installments on the first day of each calendar month during the Term hereof, in
legal tender of the United States of America to Landlord at the address shown
in Section 5.16 or to such other person or at such other address as Landlord
may from time to time designate in writing. The Rent shall be paid without
notice, demand, abatement, deduction or offset except as otherwise expressly
provided for in Sections 5.01 and 5.02. In no event shall the Landlord accept
or be bound by any payment of Rent more than thirty (30) days in advance. If
the Term commences or ends on any day other than the first or last day of a
calendar month, then the installment of Base Rental and the Parking Rentals for
such partial month shall be appropriately prorated. If the Term commences or
ends at any time other than the first day of a calendar year, the Tenant's
Share of any increases in the Basic Operating Costs over the Base Year Basic
Operating Costs shall be prorated for such year according to the number of days
of the Term during such year. In no event shall Base Rental or monthly
installments thereof be less than the amounts specified in Section 2.01.
2.05. Security Deposit. Landlord hereby acknowledges receipt of
$2.395.00 representing December 1994, the first month's rental paid in advance,
and an amount of $2,395.00 representing Tenant's deposit ("Security Deposit")
as security for the full and faithful performance by Tenant of the terms,
conditions, and covenants of this Lease which are to be performed and kept by
Tenant. Landlord may apply any portion of the Security Deposit as may be
necessary to cure an Event of Default (hereinafter defined) by Tenant
hereunder, including (but not limited to) the failure of Tenant to pay Rent or
any other charges which accrue in favor of Landlord hereunder. In the event
Tenant fails to repair damages caused or occasioned by Tenant, including
damages caused by the removal of fixtures allowed to be removed under Section
4.07, Landlord may apply any portion of the Security Deposit as may be
necessary to make such repairs. Any remaining balance of the Security Deposit
shall not be considered as an advance payment of Rent or a measure of
Landlord's damages in case of default by Tenant. Landlord's deduction of the
amounts owed by Tenant to Landlord from the Security Deposit shall in no event
release Tenant from being in default under the terms of the Lease. Tenant
agrees to hold harmless any Landlord's Mortgagee (as defined in Section 4.10)
for the failure to return Tenant's Security Deposit.
5
<PAGE> 7
ARTICLE 3 LANDLORD'S SERVICES
3.01. Services to be Furnished by Landlord.
(a) Landlord shall use all reasonable efforts to furnish, subject
to the Building Rules and Regulations (hereinafter defined) and Tenant's
performance of its obligations hereunder, the following services:
(1) Air-conditioning and heating in season, during Normal
Building Operating Hours (hereafter defined), at such temperatures and in such
amounts as are considered by Landlord to be standard;
(2) Hot and cold water at those points of supply provided
for lavatory and drinking purposes only;
(3) Janitor service in and about the Building and the
Leased Premises five (5) days per week, and periodic window washing; however,
Tenant shall pay, as additional Rent upon presentation of a statement therefor
by Landlord, the additional costs attributable to the cleaning of improvements
within the Leased Premises other than Building Standard (hereinafter defined)
improvements;
(4) Elevators for access to and egress from the Leased
Premises;
(5) Electricity and proper facilities to furnish
sufficient electrical power during Normal Building Operating Hours for normal
office machines and other machines of low electrical consumption, but not
including electricity or air conditioning required for electronic data
processing equipment, special lighting in excess of Building Standard, or any
other item of electrical equipment which singly consumes more than 0.5
kilowatts per hour at rated capacity or requires a voltage other than 120 volts
single phase; and
(6) Replacement of fluorescent lamps in Building Standard
light fixtures installed by Landlord and incandescent bulb or fluorescent lamp
replacement in public toilet and restroom areas and stairwells.
(b) Equipment and personnel to limit access to the Building after
normal business hours; provided, however, Landlord shall have no responsibility
to prevent, and shall not be liable to Tenant for, and shall be indemnified by
Tenant against, liability or loss to Tenant, its agents, employees and visitors
arising out of losses due to theft, burglary, or damage or injury to persons or
property caused by persons gaining access to the Building or the Leased
Premises, and Tenant hereby releases Landlord from all liability relating
thereto. Landlord shall furnish one (1) cardkey for each six hundred fifty
(650) square feet of Rentable Area of the Leased Premises, any additional
cardkeys will be furnished at a charge by Landlord on an order signed by Tenant
or Tenant's authorized representative. All such cardkeys shall remain the
property of Landlord. No additional locks shall be allowed on any door of the
Leased Premises without Landlord's
6
<PAGE> 8
permission, and Tenant shall not make or permit to be made any duplicates of
such cardkeys, except those furnished by Landlord. Upon termination of this
Lease, Tenant shall surrender to Landlord all the cardkeys for the Leased
Premises, and give to Landlord the explanation of the combination of all locks
for safes, safe cabinets, and vault doors, if any, in the Leased Premises.
(c) "Normal Building Operating Hours" shall be from 7:00 a.m. to
6:00 p.m. Monday through Friday, and 8:00 a.m. to 1:00 p.m. Saturday, exclusive
of Sundays and "holidays." "Holidays" shall refer, without limitation, to New
Year's Day, Good Friday, Memorial Day, Independence Day, Labor Day,
Thanksgiving Day, Friday following Thanksgiving Day, Christmas Day, and other
holidays commonly observed by a majority of the tenants of the Building. If
the holiday occurs on Saturday or Sunday, the Friday preceding or the Monday
following may, at Landlord's discretion, be observed as a holiday.
(d) Failure by Landlord to any extent to furnish services
hereunder or any cessation thereof shall not render Landlord liable in any
respect for damages to either person or property, nor be construed as an
eviction of Tenant, nor work an abatement of Rent, nor relieve Tenant from
fulfillment of any covenant or agreement hereof. Should any of such services
be interrupted, Landlord shall use reasonable diligence to restore the same
promptly, but Tenant shall have no claim for rebate of Rent, damages, or
eviction on account thereof.
(e) Tenant shall pay to Landlord, monthly as billed, as Additional
Rent hereunder, such charges as may be separately metered or as Landlord may
compute for (i) any utility services utilized by Tenant for computers, data
processing equipment or other similar electrical equipment; (ii) extra
lighting; (iii) air-conditioning, heating and other services in excess of that
stated in Sections 3.01 (a)(1) and (5) hereof; or (iv) other air-conditioning,
heating and services not standard for the Building or provided at times other
than Normal Building Operating Hours. Landlord may elect to estimate the
charges specified to be paid by Tenant under this Section 3.01(e) and bill such
charges to Tenant monthly in advance, in which event Tenant shall pay such
estimated charges and when the actual amounts of such charges are determined by
Landlord an appropriate cash adjustment shall be made between Landlord and
Tenant to reflect any underpayment or overpayment of such charges because of
any difference between Landlord's estimate of, and the actual amount of such
charges. Tenant shall pay all costs associated with providing separate utility
meters to the Leased Premises. In the event separate utility meters are
provided to the Leased Premises, Landlord may elect to have all charges for the
utilities separately metered to the Leased Premises billed directly to the
Tenant.
3.02. Access by Tenant Prior to Commencement of Term. Landlord, at
its discretion, may permit Tenant and its employees, agents and suppliers to
enter the Leased Premises prior to the Commencement Date to enable Tenant to do
such things as may be required by Tenant to make the Leased Premises ready for
Tenant's occupancy. If such permission is granted, such parties will not
interfere with or delay the performance of any activities by Landlord or other
occupants of the Building. Landlord may withdraw such permission upon
twenty-four (24) hours notice to Tenant if Landlord determines that any such
interference or delay has been or may be caused. Any such entry into the
Leased Premises shall be at Tenant's risk and Landlord shall not
7
<PAGE> 9
be liable in any way for personal injury, death, or property damage which may
be suffered in or about the Leased Premises or the Building by Tenant or its
employees, agents, contractors, suppliers or workmen, and Tenant hereby
indemnifies Landlord therefrom.
3.03. Construction of Improvements to be made by Landlord.
(a) The Leased Premises shall be delivered to Tenant at the
Commencement Date in its current condition with only the additional leasehold
Improvements and tenant finish, if any, set forth and described on Exhibit "C"
attached hereto. The cost of installation of improvements to the Leased
Premises requested by Tenant (calculated at Landlord's actual cost plus an
additional charge of 15% to cover overhead) shall be for Tenant's account and
at Tenant's cost (and Tenant shall pay ad valorem taxes thereon), which cost
shall be payable by Tenant to Landlord as a part of the Rent hereunder promptly
upon being invoiced therefor, and failure by Tenant to pay such cost in full
within thirty (30) days after the date of billing shall constitute failure to
pay Rent when due and an Event of Default by Tenant hereunder giving rise to
all remedies available to Landlord under this Lease.
(b) Subject to Section 3.03(c), if on the Commencement Date
specified in Section 1.02 any of the work described in Exhibit "C" that is
required to be performed by Landlord at Landlord's expense has not been
substantially completed as reasonably determined by Landlord, or if Landlord is
unable to tender possession of the Leased Premises to Tenant on the
Commencement Date, then the Commencement Date (and commencement of installments
of Rent) shall be postponed until such work to be performed in the Leased
Premises at Landlord's expense is substantially completed as reasonably
determined by Landlord or until Landlord is able to tender possession of the
Leased Premises to Tenant, as the case may be, and such postponement shall
operate to extend the expiration date specified in Section 1.02 hereof in order
to give full effect to the stated duration of the Term. The deferment of
installments of Rent and postponement of the Commencement Date pursuant to this
Section 3.03(b) shall be Tenant's exclusive remedy for Landlord's delay of
completion of improvements to the Leased Premises or failure to tender
possession of the Leased Premises to Tenant, and Tenant shall have no claim
against Landlord because of any such delay in completion of Improvements or
failure to deliver the Leased Premises.
(c) No delay in the completion of the Leased Premises resulting
from (i) delay or failure on the part of Tenant in furnishing information or
other matters required in Exhibit "C", (ii) changes ordered by Tenant in the
Tenant's Plans (hereinafter defined), (iii) improvements to the Leased Premises
constructed by Landlord at Tenant's request and expense pursuant to Section
4.05 and Exhibit "C", and/or (iv) delay or failure on the part of Tenant to pay
any amounts required to be paid by Tenant for construction or improvements to
the Leased Premises, shall delay the Commencement Date, expiration date, or
commencement of payment of Rent. If prior to the Commencement Date Tenant
shall enter into possession of all or any part of the Leased Premises, (other
than an entry with Landlord's consent pursuant to Section 3.02) then the Term,
the payment of monthly installments of Rent and all other obligations of Tenant
to be performed during the Term shall commence on, and the Commencement Date
shall be deemed for all
8
<PAGE> 10
purposes to be, the date of such entry, and the total amount of Rent shall be
increased accordingly, provided that no such early entry shall operate to
change the expiration date provided herein.
(d) Tenant shall not make or allow to be made (except as otherwise
provided in this Lease) any alterations or physical additions (including
fixtures) in or to the Leased Premises, or place safes, vaults or other heavy
furniture or equipment within the Leased Premises, without first obtaining the
written consent of Landlord. Tenant shall deliver to Landlord a copy of the
"as-built" plans and specifications for all alterations or physical additions
so made in or to the Leased Premises, and shall reimburse Landlord for the cost
incurred by Landlord to update its current architectural plans for the
Building. Tenant agrees specifically that no food, soft drink or other vending
machine will be installed within the Leased Premises without the prior written
consent of Landlord.
(e) All alterations, physical additions, or improvements in or to
the Leased Premises (including fixtures) shall, when made, become the property
of Landlord and shall be surrendered to Landlord upon termination of this
Lease, whether by lapse of time or otherwise; provided, however, this clause
shall not apply to moveable equipment or furniture owned by Tenant.
(f) Tenant shall indemnify and hold harmless Landlord from and
against all costs (including attorneys' fees and costs of suit), losses,
liabilities, or causes of action arising out of or relating to any alterations,
additions or improvements made by Tenant to the Leased Premises, including but
not limited to any mechanics' or materialmen's liens asserted in connection
therewith.
(g) Tenant shall not be deemed to be the agent or representative
of Landlord in making any such alterations, physical additions or improvements
to the Leased Premises, and shall have no right, power or authority to encumber
any interest in the Complex in connection therewith other than Tenant's
leasehold estate under this Lease. However, should any mechanics' or other
liens be filed against any portion of the Complex or any interest therein
(other than Tenant's leasehold estate hereunder) by reason of Tenant's acts or
omissions or because of a claim against Tenant or its contractors, Tenant shall
cause the same to be cancelled or discharged by record of bond or otherwise
within ten (10) days after notice by Landlord. If Tenant shall fail to cancel
or discharge said lien or liens, within said ten (10) day period, which failure
shall be deemed to be a default hereunder, Landlord may, at its sole option and
in addition to any other remedy of Landlord hereunder, cancel or discharge the
same and upon Landlord's demand, Tenant shall promptly reimburse Landlord for
all costs incurred in cancelling or discharging such lien or liens.
(h) NOTWITHSTANDING THE FOREGOING OR ANY OTHER PROVISION HEREIN TO
THE CONTRARY, TENANT WAIVES THE IMPLIED WARRANTY OF SUITABILITY.
3.04. Repair and Maintenance by Landlord. Landlord shall not be
required to make any improvements or repairs of any kind or character to the
Leased Premises or the Complex, except
9
<PAGE> 11
such repairs as may be required to the Building corridors and lobbies and
structural members of the Building, and such repairs as may be deemed necessary
solely by Landlord for normal maintenance operations for the Complex (see
Article 3 Landlord's Services). This Section 3.04 shall not apply in the case
of damage or destruction by fire or other casualty (as to which Section 5.02
shall apply), or damage resulting from an eminent domain taking (as to which
Section 5.01 shall apply).
ARTICLE 4 TENANT'S COVENANTS
4.01. Payments by Tenant. Tenant agrees to timely pay the Rent and
all rents and sums provided to be paid to Landlord hereunder at the times and
in the manner herein provided and to at all times occupy and conduct business
in the Leased Premises.
4.02. Certain Taxes. Tenant shall pay all ad valorem taxes on all
improvements installed in the Leased Premises that are in excess of those
installed by Landlord from time to time as Building Standard or in excess of
the items to be installed by Landlord at Landlord's cost under Exhibit "C" or
specified in the Section 3.03(a) hereof.
4.03. Repairs by Tenant. Tenant shall, at its cost, repair or
replace any damage to the Building, or any part thereof, caused by Tenant or
Tenant's agents, employees, invitees or visitors; provided if Tenant fails to
make such repairs or replacements promptly, Landlord may, at its option, make
such repairs or replacements and the cost thereof shall be payable by Tenant on
demand as a part of The Rent hereunder, and failure of Tenant to pay such costs
within ten (10) days shall constitute a failure to pay Rent when due and an
Event of Default by Tenant hereunder.
4.04. Care of the Leased Premises. Tenant shall maintain the Leased
Premises in a clean, attractive condition, and not commit or allow any waste or
damage to be committed on or to any portion of the Leased Premises, and at the
expiration or termination of this Lease shall deliver up the Leased Premises to
Landlord in as good condition as at date of possession by Tenant, ordinary wear
and tear excepted.
4.05. Tenant Floor Plans. Tenant shall cooperate with Landlord in
the preparation of space plans and working drawings ("Space Plans") for the
Leased Premises as specified in Exhibit "C." Within fifteen (15) days after
Landlord delivers the Space Plans to Tenant, Tenant shall deliver to Landlord
Tenant's written approval of the Space Plans together with any and all changes
to the Space Plans requested by Tenant. Additionally, within said fifteen (15)
day period, Tenant shall deliver to Landlord any and all plans and
specifications of additional work for the Leased Premises requested by Tenant
(Tenant's Plans), as further specified in Exhibit "C." Should Tenant fail to
deliver Tenant's approval of the Space Plans and the Tenant's Plans for
additional improvements within said fifteen (15) day period, Tenant shall pay
to Landlord one day's Base Rental for each day's delay in such delivery. Upon
receipt of Tenant's approval of the Space Plans and receipt of the Tenant's
Plans, Landlord will partition and prepare the Leased Premises in accordance
therewith. However, Landlord shall not be required to install any
10
<PAGE> 12
partitions or improvements to the Leased Premises which exceed the tenant
finish items and work specified in Exhibit "C" or which are not otherwise
approved by Landlord. Tenant may, at Tenant's expense, order changes in the
Tenant's Plans prior to or during construction with the prior consent of
Landlord. However, any delay in completion of the Leased Premises caused by
changes in the Tenant's Plans ordered by Tenant shall not delay the
Commencement Date as further provided in Section 3.03(c) hereof.
4.06 Assignment or Sublease.
(a) Tenant shall not assign this Lease or Sublease the Leased
Premises or any part thereof or mortgage, pledge or hypothecate its leasehold
interest or grant any concession or license within the Leased Premises (any
such assignment, Sublease, mortgage, pledge, hypothecation, or grant of a
concession or license being hereinafter referred to in this Section 4.06 as a
"Transfer") without the prior express written permission of Landlord, and any
attempt to effect a transfer without such permission of Landlord shall be void
and of no effect. Tenant acknowledges that any assignment or sublease is also
subject to the prior written consent of any Landlord's Mortgagee (as defined in
Section 4.10). In order for Tenant to make a Transfer, Tenant must request in
writing Landlord's permission within at least sixty (60) days in advance of the
date on which Tenant desires to make a Transfer, after which Landlord shall
then have a period of thirty (30) days following receipt of such notice within
which to notify Tenant in writing that Landlord elects (i) to terminate this
Lease as to the space so affected as of the date so specified by Tenant in
which event Tenant will be relieved of all further obligations hereunder as to
such space, (ii) to permit Tenant to assign or sublet such space, subject,
however, to prior written approval of the proposed assignee or Sublessee by
Landlord, or (iii) to refuse consent to Tenant's requested transfer and to
continue this Lease in full force and effect as to the entire Leased Premises.
If Landlord shall fail to notify Tenant in writing of such election within said
thirty (30) day period, Landlord shall be deemed to have elected option (iii)
above. If Landlord elects to exercise option (ii) above, Tenant agrees to
provide at its expense, direct access from any sublet space or concession area
to a public corridor of the Building. The prohibition against a Transfer
contained herein shall be construed to include a prohibition against any
Transfer by operation of law.
(b) Notwithstanding that the prior express written permission of
Landlord to a Transfer may have been obtained under the provisions of Section
4.06(a), the following shall apply:
(1) In the event of an assignment or Sublease, Tenant
shall (i) cause the assignee or Sublessee to expressly assume in writing and to
agree to perform all of the covenants, duties and obligations of Tenant
hereunder, and such assignee or Sublessee shall be jointly and severally liable
therefor along with Tenant; (ii) cause such assignee or Sublessee to grant
Landlord an express first and prior contract lien and security interest in the
same manner as the lien granted by Tenant to Landlord under Section 5.03
hereof; (iii) subordinate to Landlord's statutory lien and the aforesaid
contract lien and security interest any liens or other rights which Tenant may
claim with respect to any fixtures, equipment, goods, merchandise or other
property owned by or leased to the proposed assignee or Sublessee or other
party intending to occupy the
11
<PAGE> 13
Leased Premises; and (iv) agree with Landlord that in the event that the rent
or other consideration due and payable by a Sublessee or assignee under any
such permitted Sublease or assignment exceeds the Rent for the portion of the
Leased Premises so transferred, then Tenant shall pay Landlord as additional
rental hereunder all such excess rental and other consideration immediately
upon receipt thereof by Tenant from such transferee.
(2) A signed counterpart of all instruments relative to a
Transfer (executed by all parties to such transaction with the exception of
Landlord) shall be submitted by Tenant to Landlord prior to or
contemporaneously with the request for Landlord's written consent thereto (it
being understood that no such instrument shall be effective without the written
consent of Landlord);
(3) No usage of the Leased Premises different from the
usage herein provided to be made by Tenant shall be permitted, and all of the
terms and provisions of this Lease shall continue to apply after a Transfer;
and
(4) In any case where Landlord consents to a Transfer,
Tenant will nevertheless remain directly and primarily liable for the
performance of all the covenants, duties and obligations of Tenant hereunder
(including, without limitation, the obligation to pay all Rent herein provided
to be paid), and Landlord shall be permitted to enforce the provisions of this
Lease against the undersigned Tenant or any transferee, or both, without demand
upon or proceeding in any way against any other persons.
(c) If Tenant is a corporation then any transfer of this Lease by
merger, consolidation or dissolution or any change in ownership or power to
vote a majority of the voting stock in Tenant outstanding at the time of
execution of this Lease shall constitute a Transfer for the purposes of this
Lease; provided, however, that acquisition of all stock of a corporate Tenant
by any corporation, the stock of which is registered pursuant to the Securities
Act of 1933 or the merger of a corporate Tenant into such a corporation, the
stock of which is so registered, shall not be deemed to be a violation of
Section 4.06(a). For purposes of this Section 4.06(c), the term "voting stock"
shall refer to shares of stock regularly entitled to vote for the election of
directors of the corporation involved.
(d) If Tenant is a general partnership having one or more
corporations as partners or if Tenant is a limited partnership having one or
more corporations as general partners, the provisions of Section 4.06(c) shall
apply to each of such corporations as if such corporations alone had been the
Tenant hereunder. If Tenant is a general or limited partnership, joint
venture, or other form of association, the transfer of a majority of the
ownership interests therein shall constitute a Transfer for the purposes of
this Lease.
(e) The consent by Landlord to a particular Transfer shall not be
deemed a consent to any other subsequent Transfer. If this Lease, the Leased
Premises or the Tenant's leasehold interest therein, or if any portion of the
foregoing is transferred, or if the Leased Premises are occupied in whole or in
part by anyone other than Tenant without the prior consent of Landlord
12
<PAGE> 14
as provided herein, Landlord may nevertheless collect rent from the transferee
or other occupant and apply the net amount collected to the Rent payable
hereunder, but no such transaction or collection of rent or application thereof
by Landlord shall be deemed a waiver of the provisions hereof or a release of
Tenant from the further performance by Tenant of its covenants, duties and
obligations hereunder.
4.07. Alterations, Additions, Improvements. Tenant will make no
alteration, change, improvement, repair, replacement or addition to the Leased
Premises without the prior written consent of Landlord. Tenant may remove its
trade fixtures, office supplies and movable office furniture and equipment not
attached to the Building provided (i) such removal is made prior to the
termination or expiration of the Term; (ii) Tenant is not then in default in
the timely performance of any obligation or covenant under this Lease; and
(iii) Tenant promptly repairs all damage caused by such removal. All other
property and the Leased Premises and any alteration or addition to the Leased
Premises and any other articles attached or affixed to the floor, wall, or
ceiling of the Leased Premises is a part of the property of Landlord and shall
be surrendered with the Leased Premises as part thereof at the termination or
expiration of this Lease, without payment or compensation therefor. If,
however, Landlord so requests in writing, Tenant will, prior to termination or
expiration of this Lease, remove any and all alterations, additions, fixtures,
equipment and property placed or installed by Tenant or installed by Landlord
at Tenant's expense in the Leased Premises and will repair any damage caused by
such removal.
4.08. Compliance with Laws and Usage; Liens. Tenant, at its cost,
shall comply with all federal, state, municipal and other laws and ordinances
applicable to the Leased Premises and the business conducted therein by Tenant,
and with the Building Rules and Regulations; will not engage in any activity
which would cause landlord's fire and extended coverage insurance to be
cancelled or the rate thereof to be increased (or, at Landlord's option, will
pay any such increase); and will not commit any act which is a nuisance or
annoyance to Landlord or to other tenants in the Building or which might, in
the exclusive judgment of Landlord, appreciably damage Landlord's goodwill or
reputation, or tend to injure or depreciate the value of the Complex. Tenant
has no authority to encumber the Complex or Leased Premises with any lien, and
Tenant shall not suffer or permit any such lien to exist. Should any such lien
hereafter be filed, Tenant shall promptly discharge the same at its sole cost.
4.09. Access by Landlord. Tenant shall permit Landlord or its
agents or representatives to enter into and upon any part of the Leased
Premises at all reasonable hours to inspect same; to clean; to make repairs,
alterations or additions thereto, as Landlord may deem necessary or desirable;
to show the Leased Premises to prospective purchasers or tenants; or for any
other purpose deemed reasonable by Landlord; and Tenant shall not be entitled
to any abatement or reduction or Rent by reason thereof.
4.10. Landlord's Mortgagee. Tenant agrees with Landlord and with
the Mortgagee of any mortgage or the beneficiary of any Deed of Trust now or
hereafter constituting a lien on the Complex or the Leased Premises
("Landlord's Mortgagee") that any Landlord's Mortgagee shall have the right at
any time to elect, by notice in writing given to Tenant, to make this Lease
13
<PAGE> 15
superior to the lien of such mortgage or Deed of Trust and upon the giving of
such notice to Tenant, this Lease shall be deemed prior and superior to the
mortgage or Deed of Trust in respect to which such notice is given; and at
Landlord's Mortgagee's request Tenant shall execute a recordable instrument
establishing this Lease as superior to such lien; or Landlord's Mortgagee may,
by like notice, make this Lease subordinate to such mortgage or Deed of Trust.
If Landlord's Mortgagee shall elect to make this Lease subordinate to such
mortgage or Deed of Trust, the same shall be self-operative and no further
certificate or instrument of subordination need be required by any Mortgagee.
In confirmation of such subordination, however, Tenant shall execute promptly
any reasonable certificate or instrument that Landlord may request. Tenant
further agrees that any Landlord's Mortgagee, without notice Tenant, may demand
the payment of Rent and performance of this Lease at any time. Tenant hereby
constitutes Landlord as Tenant's attorney-in-fact to execute such certificate
or instrument for and on behalf of Tenant. In the event of the enforcement by
Landlord's Mortgagee of the remedies provided for by law or by such mortgage or
Deed of Trust, Tenant will, upon request of any person or party succeeding to
the interest of Landlord as a result of such enforcement, automatically become
the Tenant of such successor in interest without change in terms or other
provisions of such Lease provided, however, that such successor in interest
shall not be (i) bound by any payment of Rent for more than one month in
advance except payments in the nature of security for the performance by Tenant
of its obligations under this Lease; (ii) subject to any offset, defense or
damages arising out of a default or any obligations any preceding Landlord; or
(iii) bound by any amendment or modification of this Lease made without the
written consent of such Trustee or such beneficiary or such successor in
interest. Upon request by such successor in interest, Tenant shall execute and
deliver reasonable instruments confirming the attornment provided for herein.
4.11. Estoppel Certificate. At Landlord's request from time to
time, Tenant will promptly, without further consideration, execute an Estoppel
Certificate addressed to Landlord's Mortgagee or to such party as Landlord may
designate certifying to such notice provisions and other matters as Landlord's
Mortgagee or as the other party designated by Landlord may reasonably request.
At Landlord's request from time to time, Tenant will promptly execute, without
further consideration, a certificate stating the commencement and expiration
dates of the Term, the rental then payable hereunder, that there are no
defaults on the part of Landlord or claims against Landlord hereunder (or if
there are any, stating the same with particularity), and such other information
pertaining to this Lease as Landlord may reasonably request, addressed to such
party as Landlord may designate.
ARTICLE 5 MUTUAL COVENANTS
5.01 Condemnation, Loss or Damage. If the Leased Premises,
Building, or any part thereof shall be taken or condemned for any public
purpose (or conveyed in lieu or in settlement thereof) to such an extent as to
render the remainder of the Building or Leased Premises, in the opinion of
Landlord, not reasonably suitable for occupancy, this Lease shall, at the
option of either party, forthwith cease and terminate, and all proceeds from
any taking or condemnation of the Building and the Leased Premises shall belong
to and be paid to Landlord. If this Lease is not so terminated, Landlord shall
repair any damage resulting from such taking, to the extent
14
<PAGE> 16
and in the manner provided in Section 5.02, and Base Rental hereunder shall be
abated to the extent the Leased Premises are rendered untenantable during the
period of repair and thereafter be adjusted on an equitable basis considering
the areas of the leased Premises taken and remaining.
5.02 Fire or Other Casualty; Certain Repairs.
(a) In the event of a fire or other casualty in the Leased
Premises, Tenant shall immediately give notice thereof to Landlord. If the
Leased Premises shall be partially destroyed by fire or other casualty so as to
render the Leased Premises untenantable in whole or in part in the opinion of
Landlord, the Base Rental provided for herein shall abate as to the portion of
the Leased Premises rendered untenantable until such time as the Leased
Premises are made tenantable as determined by Landlord and Landlord agrees to
commence and prosecute such repair work promptly and with reasonable diligence,
or if such destruction results in the Leased Premises being untenantable in
substantial part for a period reasonably estimated by Landlord to be six (6)
months or longer after Landlord's insurance settlement, or in the event of
total or substantial damage or destruction of the Building where Landlord
decides not to rebuild, then all Rent owed up to the date of such damage or
destruction shall be paid by Tenant and this Lease shall terminate upon notice
thereof to Tenant. Landlord shall give Tenant written notice of its decisions,
estimates or elections under this Section 5.02 within sixty (60) days after any
such damage or destruction.
(b) Should Landlord elect to effect any repairs under Sections
5.01 or 5.02(a), Landlord shall only be obligated to restore or rebuild the
Leased Premises to a Building Standard condition, and then only to the extent
that insurance proceeds are actually available to Landlord therefor. In the
event the Base Rental or any portion of the Base Rental is abated under
Sections 5.01 or 5.02(a), the expiration date of the Term specified in Section
1.02 shall be extended for the period of such abatement.
5.03. Security Interest. In consideration for the mutual benefits
arising under this Lease, and as security for Tenant's performance of all its
obligations under this Lease, Tenant hereby grants to Landlord a lien and
security interest in and on all property of Tenant now or hereafter placed in
or upon the Leased Premises, and such property shall be and remain subject to
such lien and security interest of Landlord for payment of all Rent and other
sums agreed to be paid by Tenant herein. The provisions of this Section 5.03
shall constitute a security agreement under the Texas Uniform Commercial Code
so that Landlord shall have and may enforce a security interest on all property
of Tenant now or hereafter placed in or on the Leased Premises, including but
not limited to all fixtures, machinery, equipment, furnishings and other
articles of personal property now or hereafter placed in or upon the Leased
Premises by Tenant. Landlord may at its election at any time file a copy of
this Lease as a financing statement. Landlord, as secured party, shall be
entitled to all of the rights and remedies afforded to a secured party under
the Texas Uniform Commercial Code, which rights and remedies shall be in
addition to and cumulative to the Landlord's liens and rights provided by law
or by the other terms and provisions of this Lease. Promptly upon request, and
without further consideration, Tenant agrees
15
<PAGE> 17
to execute as debtor such additional financing statement or statements as
Landlord may now or hereafter reasonably request in order that Landlord's
security interests may be protected pursuant to the Texas Uniform Commercial
Code. Unless otherwise provided by law and for the purpose of exercising any
right pursuant to this Section, Landlord and Tenant agree that reasonable
notice shall be met if such notice is given by ten (10) days' written notice,
certified mail, return receipt requested, to Landlord or Tenant at the
addresses for notice specified herein.
5.04. Holding Over. If Tenant should remain in possession of the
Leased Premises after the termination or expiration of the Term without the
execution by Landlord and Tenant of a new lease, then Tenant shall be deemed to
be occupying the Leased Premises as a tenant-at-sufferance, subject to all the
covenants and obligations of this Lease, except that the daily Rent shall be
twice the per day Rent in effect immediately prior to such expiration or
termination, but such holding over shall not extend the Term.
5.05. Assignment by Landlord. Landlord shall have the right to
transfer and assign, in whole or in part, all its rights and obligations
hereunder and in the Building and property referred to herein, and upon any
such transfer of assignment, no further liability or obligation shall
thereafter accrue against Landlord hereunder.
5.06. Recourse Limitation. Tenant specifically agrees to look
solely to Landlord's interest in the Building for the recovery of any judgment
from Landlord, it being agreed that Landlord shall never be personally liable
for any such judgment. The provision contained in the foregoing sentence shall
not limit any right that Tenant might otherwise have to obtain injunctive
relief against Landlord, or any other action not involving the liability of
Landlord to respond in monetary damages from assets other than Landlord's
interest in the Building.
5.07. Control of Common Areas and Parking Facilities by Landlord.
All automobile parking areas including (without limitation), the Garage,
driveways, entrances and exits thereto, and other facilities furnished by
Landlord, including all parking areas, truck way or ways, loading areas,
pedestrian walkways, ramps, landscaped areas, stairways and other areas and
improvements provided by Landlord for the general use, in common, of tenants,
their officers, agents, employees, invitees, licensees, visitors and customers
shall be at all times subject to the exclusive control and management of
Landlord, and Landlord shall have the right from time to time to establish,
modify and enforce reasonable rules and regulations (herein called the
"Building Rules and Regulations") with respect to all facilities and areas
mentioned in this Section; the initial Building Rules and Regulations are set
out in Exhibit "D" hereto and are of equal dignity herewith.
5.08. Default by Tenant.
(a) Each of the following occurrences relative to Tenant shall
constitute an "Event of Default:"
16
<PAGE> 18
(1) Failure or refusal of Tenant to make the timely
payment of any Rent payable under this Lease when and as the same shall become
due and payable;
(2) Failure of Tenant to occupy and conduct business in,
or the abandonment or vacating of the Leased Premises or any significant
portion thereof;
(3) The filing or execution or occurrence of a petition
in bankruptcy or other insolvency proceeding by or against Tenant or any
guarantor of Tenant's obligations hereunder; or petition or answer seeking
relief under any provision of the Bankruptcy Act; or as assignment for the
benefit of creditors or composition; or a petition or other proceeding by or
against the Tenant for the appointment of a trustee, receiver or liquidator of
Tenant or any of Tenant's property; or a proceeding by any governmental
authority for the dissolution or liquidation of Tenant or any guarantor of
Tenant;
(4) Failure by Tenant in the performance or compliance
with any of the agreements, terms, covenants or conditions provided in this
Lease, other than those referred to in (1), (2) or (3) above, for a period of
ten (10) days after notice from Landlord to Tenant specifying the items in
default; or
(5) The occurrence of any other event herein provided to
be an Event of Default.
(b) This Lease and the Term and estate hereby made are subject to
the limitation that if and whenever any Event of Default shall occur, Landlord
may, at its option and without further written notice to Tenant, in addition to
all other remedies given hereunder or by law or equity, do any one or more of
the following:
(1) Terminate this Lease, in which event Tenant shall
immediately surrender possession of the Leased Premises to Landlord;
(2) Enter upon and take possession of the Leased Premises
and expel or remove Tenant and any other occupant therefrom with or without
having terminated the Lease; and
(3) Apply all or any portion of the Security Deposit to
cure such Event of Default; and
(4) Without any prior notice to Tenant, alter locks and
other security devices at the Leased Premises so that Tenant will not have
access to the Leased Premises. Landlord may take these actions without
incurring any liability and without relinquishing Landlord's right to Rent or
any other right given to Landlord hereunder or by operation of law; Tenant
hereby waiving any right to claim damage for such re-entry expulsion.
17
<PAGE> 19
(c) Any right to receive notice of Landlord's intent to exercise
any of the remedies for an Event of Default is hereby waived. Any right to
cure before Landlord may exercise any of the remedies for an Event of Default
is hereby waived.
(d) Exercise by Landlord of any one or more remedies shall not
constitute an acceptance of surrender of the Leased Premises by Tenant, it
being understood that such surrender can be effected only by the written
agreement of the Landlord and Tenant, with the prior written consent of any
Landlord's Mortgagee (as defined in Section 4.10).
(e) If Landlord terminates this Lease by reason of an Event of
Default, Tenant shall pay to Landlord the sum of all Rent and other
indebtedness accrued hereunder to the date of such termination, the amounts
stated in Section 5.08(g) hereof, plus, as liquidated damages, an amount equal
to the then present value of the Rent and all other indebtedness as would
otherwise have been required to be paid by Tenant to Landlord during the period
following the termination of the Term measured from the date of such
termination to the date of expiration stated in section 1.02, less the then
present fair market rental value of the Leased Premises for such period;
because of the difficulty of ascertaining the fair market rental value of the
Leased Premises and the costs and time associated with reletting the Leased
Premises, the Landlord and Tenant stipulate that such fair market rental value
shall in no event be deemed to exceed seventy-five percent (75%) of the then
present value of the Rent reserved for such period.
(f) If Landlord repossesses the Leased Premises without
terminating the Lease, then Tenant shall pay to Landlord all Rent and other
indebtedness accrued to the date of such repossession, plus Rent and other sums
required to be paid by Tenant during the remainder of the Term, diminished by
any net sums thereafter received by Landlord through reletting the Leased
Premises during said period (after deducting expenses incurred by Landlord as
provided below); reentry by Landlord will not affect the obligations of Tenant
for the unexpired Term. Tenant shall not be entitled to any excess of any Rent
obtained by reletting over the Rent herein reserved. Actions to collect
amounts due by Tenant may be brought on one or more occasions, without the
necessity of Landlord's waiting until expiration of the Term.
(g) In case of an Event of Default, to the extent the same were
not paid or deducted, as appropriate, under Section 5.08(e) or (f), Tenant
shall also pay to Landlord: (i) broker's fees incurred by Landlord in
connection with reletting the whole or any part of the Leased Premises; (ii)
the cost of removing and storing Tenant's or any other occupant's property;
(iii) and the cost of repairing, altering, remodeling or otherwise putting the
Leased Premises into condition acceptable to a new tenant or tenants; and (iv)
all reasonable expenses incurred by Landlord in enforcing Landlord's remedies,
including reasonable attorney's fees and court costs.
(h) Upon termination or repossession of the Leased Premises for an
Event of Default, Landlord shall not be obligated to relet or attempt to relet
the Leased Premises, or any portion thereof, or to collect rental after
reletting, but Landlord shall have the option to relet or attempt to relet. In
the event of reletting, Landlord may relet the whole or any portion of the
Leased Premises for any period, to any tenant, and for any use and purpose.
18
<PAGE> 20
(i) If Tenant should fail to make any payment, perform any
obligation, or cure any default hereunder, Landlord, without obligation to do
so and without thereby waiving such failure or default, may make such payment,
perform such obligation, and/or remedy such other default for the account of
Tenant (and enter the Lease Premises for such purpose), and Tenant shall pay
upon demand all costs, expenses and disbursements (including reasonable
attorneys' fees) incurred by Landlord in taking such remedial action, plus
interest thereon at the highest rate of interest permitted by law.
5.09. Right to Relocate. Notwithstanding anything herein to the
contrary, Landlord shall in all cases retain the right and power to relocate
Tenant within the Building in space which is comparable in size and location
and suited to Tenant's use, such right and power to be exercised reasonably and
such relocation to be made at Landlord's sole cost and expense. Landlord shall
not be liable or responsible for any claims, damages, or liabilities in
connection with or occasioned by such relocation. Landlord's reasonable
exercise of such right and power shall include, but shall in no way be limited
to, a relocation to consolidate the rentable area occupied in order to provide
Landlord services more efficiently, or a relocation to provide contiguous
vacant space for a prospective tenant.
5.10. Non-Waiver. Neither acceptance of rent by Landlord nor
failure by Landlord to complain of any action, non-action or default of Tenant
shall constitute a waiver of any of Landlord's rights hereunder. Waiver by
Landlord of any right for any default of Tenant shall not constitute a waiver
of any right for either a subsequent default of the same obligation or any
other default.
5.11. Independent Obligations. The obligation of Tenant to pay all
Rent and other sums hereunder provided to be paid by Tenant and the obligation
of Tenant to perform Tenant's other covenants and duties hereunder constitute
independent unconditional obligations to be performed at all times provided for
hereunder, save and except only when an abatement thereof or reduction therein
is hereinabove expressly provided for and not otherwise. Tenant waives and
relinquishes all rights which Tenant might have to claim any nature of lien
against or withhold, or deduct from or offset against any Rent and other sums
provided hereunder to be paid Landlord by Tenant.
5.12 Time of Essence. In all instances where any act is required
at a particular indicated time or within an indicated period, it is understood
and stipulated that time is of the essence.
5.13. Remedies Cumulative. Landlord may restrain or enjoin any
breach or threatened breach of any covenant, duty or obligation of Tenant
herein contained without the necessity of proving the inadequacy of any legal
remedy or irreparable harm. The remedies of Landlord hereunder shall be deemed
cumulative and no remedy of Landlord, whether exercised by Landlord or not,
shall be deemed to be in exclusion of any other.
19
<PAGE> 21
5.14. Insurance, Subrogation, Liability, Indemnity, and Waiver.
(a) Tenant shall maintain at its sole expense fire and extended
coverage insurance with vandalism and malicious mischief endorsements and a
sprinkler leakage endorsement (where applicable), on all of its personal
property, including removable trade fixtures, located in the Leased Premises
and on non-Building Standard leasehold improvement and all additions and
improvements made by Tenant.
(b) Tenant shall, at its sole expense, maintain in effect at all
times comprehensive general liability insurance, including contractual
liability coverage, naming Landlord as an additional insured, issued by and
binding upon some solvent insurance company authorized to do business in Texas
and satisfactory to Landlord, with bodily injury limits of not less than
$100,000 for each occurrence and $300,000 in the aggregate and property damage
liability limits of not less than $100,000 for each occurrence and $300,000 in
the aggregate. Tenant shall provide to Landlord (i) copies of such insurance
policies prior to the Commencement Date of the Term, (ii) certificates of
renewal at least thirty (30) days prior to the expiration date of any such
policies, and (iii) copies of new policies at least thirty (30) days prior to
terminating, or changing insurance companies for, any such policies.
(c) Anything herein to the contrary notwithstanding each party
hereto hereby releases and waives all claims, rights of recovery and causes of
action that either party or any party claiming by, through or under such party
by subrogation or otherwise may now or hereafter have against the other party
or any of the other party's partners, directors, officers, employees or agents
for any loss or damage that may occur to the Complex, Leased Premises, Tenant
improvements or any of the contents of any of the foregoing by reason of fire
or other casualty, or any other cause except gross negligence or willful
misconduct (but including negligence of the parties hereto or their partners,
directors, officers, employees, or agents) that could have been insured against
under the terms of (i) any standard fire and extended coverage insurance
policies required under the terms of this Lease, or (ii) any other loss covered
by insurance required to be maintained under the terms of this Lease; provided,
however, that this waiver shall be ineffective against any insurer of Landlord
or Tenant to the extent that such waiver (i) is prohibited by the laws and
insurance regulations of the State of Texas or (ii) would invalidate any
insurance coverage of Landlord or Tenant. The waiver set forth in this Section
5.14(c) shall not apply to any deductibles on policies carried by Landlord nor
to any coinsurance penalty which Landlord might sustain.
(d) Except for any of the claims, rights of recovery and causes of
action that Landlord has released and waived pursuant to Section 5.14(c),
Tenant hereby releases, indemnifies, defends, and holds harmless Landlord and
Landlord's partners, agents, directors, officers, employees, invitees and
contractors, from all claims, losses, costs, damages or expenses (including,
but not limited to, attorneys' fees) resulting or arising from any and all
injuries or death of any person or damage to any property occurring during the
Term caused or alleged to have been caused by any act, omission, or neglect of
Tenant or Tenant's directors, officers, employees, agents, invitees or guests,
or any parties contracting with Tenant relating to the Leased Premises.
20
<PAGE> 22
(e) Tenant and Landlord agree that each shall not be responsible
or liable to the other or to their agents, customers or invitees, for bodily
injury (fatal or non-fatal) or property damage occasioned by the acts or
omissions of any other tenant or such tenant's employees, agents, contractors,
customers or invitees within the Complex, or for any loss or damage to any
property or persons occasioned by theft, fire act of God, public enemy,
injunction, riot, strike, insurrection, war, court order, requisition or order
of governmental body or authority, or any other cause beyond the control of
either party, or for any inconvenience or loss to either party in connection
with any of the repair, maintenance, damage, destruction, restoration or
replacement referred to in this Lease.
5.15. Venue; Governing Law. This Lease shall be governed by the
laws of the State of Texas. All monetary and other obligations of Landlord and
Tenant are performable exclusively in Houston, Harris County, Texas.
5.16. Notice. Any notice which may or shall be given under the
terms of this Lease shall be in writing and shall be either delivered by hand
or sent by United States Registered or Certified Mail, postage prepaid, if for
Landlord to 11200 WESTHEIMER, SUITE #507, HOUSTON, TEXAS 77042; or if for
Tenant (i) prior to the Commencement Date to 11200 WESTHEIMER, SUITE #410,
HOUSTON, TEXAS 77042 or (ii) subsequent to the Commencement Date to the Leased
Premises. Such addresses may be changed from time to time by either party by
giving notice as provided above. Notice shall be deemed given when delivered
(if delivered by hand) or when postmarked (if sent by mail).
5.17. Entire Agreement, Binding Effect, Severability. This Lease
and any written addenda and all exhibits hereto (which are expressly
incorporated herein by this reference) shall constitute the entire agreement
between Landlord and Tenant; no prior written or prior or contemporaneous oral
promises or representations shall be binding. This Lease shall not be amended,
changed or extended except by written instrument signed by both parties hereto.
The provisions of this Lease shall be binding upon and inure to the benefit of
the heirs, executors, administrators, successors and assigns of the parties,
but this provision shall in no way alter the restrictions on assignment and
subletting applicable to Tenant hereunder. If any provision of this Lease or
the application thereof to any person or circumstance shall at any time or to
any extent be held invalid or unenforceable, and the basis of the bargain
between the parties hereto is not destroyed or rendered ineffective thereby,
the remainder of the Lease or the application of such provision to person or
circumstances other than those as to which it is held invalid or unenforceable
shall not be affected thereby.
5.18. Right of Reentry. Upon the expiration or termination of the
Term for whatever cause, Landlord shall have the right to immediately reenter
and reassume possession of the Leased Premises and remove Tenant's property
therefrom, and Tenant expressly acknowledges such right.
5.19. Number and Gender; Captions; References. Pronouns, where used
herein, of whatever gender, shall include natural persons, corporations, and
associations of every kind and
21
<PAGE> 23
character, and the singular shall include the plural and vice versa where and
as often as may be appropriate. Article and section headings under this Lease
are for convenience of reference and shall not affect the construction or
interpretation of this Lease. Whenever the terms "hereof," "hereby," "herein,"
or words of similar import are used in this Lease, they shall be construed as
referring to this Lease in its entirety rather than to a particular section or
provision, unless the context specifically indicates to the contrary. Any
reference to a particular "Article" or "Section" shall be construed as
referring to the indicated article or section of this Lease.
5.20 Delinquent Payments; Handling Charge. Any payments required
of Tenant hereunder, whether as Rent or otherwise, shall bear interest from the
time due until paid at the maximum rate of interest permitted by law.
Furthermore, should Tenant fail to timely pay any installment of Rent
hereunder, Landlord shall have the option to charge Tenant, as additional Rent
hereunder, a fee equal to five percent (5%) of the delinquent installment to
reimburse Landlord for its cost and inconvenience incurred in dealing with
Tenant's delinquent payment. In no event, however, shall the charges imposed
under this Section 5.20 and elsewhere in this Lease, to the extent the same are
considered to be interest under applicable law, exceed the maximum rate of
interest allowable under applicable law.
5.21. Quiet Enjoyment. Tenant, on paying all sums herein called for
and performing and observing all of its covenants and agreements hereunder,
shall and may peaceably and quietly have, hold, occupy, use, and enjoy the
Leased Premises during the Term subject to the provisions of this Lease and
applicable governmental laws, rules, and regulations; and Landlord agrees to
warrant and forever defend Tenant's right to such occupancy against the claims
of any and all persons whomsoever lawfully claiming the same or any part
thereof, by, through, or under Landlord, but not otherwise, subject only to the
provisions of this Lease and all applicable governmental laws, rules, and
regulations.
5.22. Signs. No signs, symbols or identifying marks shall be placed
in or upon the Complex, in the halls, elevators, staircases, entrances, or
exterior of the Building or Garage, or upon the doors or walls of the Leased
Premises without prior written approval of Landlord. Landlord agrees to
provide and install, at Tenant's cost, all letters or numerals on doors in the
Leased Premises. All such letters and numerals shall be in the Building
Standard graphics, and no others shall be used or permitted on the Leased
Premises without written permission from Landlord.
5.23. Cancellation Option. Subject to the condition that Tenant
shall not at such time be in Default of the Terms or provisions of the Lease,
then Tenant (but not any assignee of Tenant or subtenant) shall have a one-time
right to cancel said Lease effective at the end of the thirty-ninth (39th)
month of the initial term, upon the fulfillment of the following conditions:
(1) the Tenant has given Landlord written notice not
later than expiration of month thirty-three (33) of
the Lease Term;
22
<PAGE> 24
(2) that Tenant shall pay as stipulated damages all
unamortized contributions by Landlord proposed
herein, including but not limited to leasehold
improvement allowances, commissions,
architectural/MEP allowances, to the extent such
allowances are utilized by Tenant, and unamortized
value of three (3) months of rental. Payment of said
penalty and stipulated damages shall be due
simultaneous with Tenant's notice to cancel the
Lease. For purposes of calculating such stipulated
damages, the exact amount of Landlord's expenditures
shall be treated as if such is a loan, fully
amortized over the Lease Term at ten percent (10%)
annual interest computed monthly.
EXECUTED in multiple counterparts, each of which shall have the force
and effect of an original on the date first above written.
PINCAY OAKS, INC.
By: /s/ KEN L. HATFIELD
------------------------------------
Name: KEN L. HATFIELD
----------------------------------
Title: VICE-PRESIDENT
---------------------------------
"LANDLORD"
HORIZON EXPLORATION, LIMITED
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
"TENANT"
[Signature page to Lease Agreement dated , 1994 between PINCAY
OAKS, INC., as Landlord and HORIZON EXPLORATION, LIMITED, as Tenant.]
23
<PAGE> 25
EXHIBIT "A"
[MAP NOT SHOWN]
<PAGE> 26
EXHIBIT "B"
LEGAL DESCRIPTION
11200 WESTHEIMER ROAD
A tract of land containing 126,290 Square Feet, 2.8992 Acres which is part of a
55.2187 Acre tract conveyed to Casa Blanca Corporation of America from
Westheimer-Hayes Co., Ltd., a Limited Partnership, by Deed recorded in Volume
8267, Page 294 of the Harris County Deed Record and being out of the Fort Smith
Survey, Abstract No. 1307 in the City of Houston, Harris County, Texas, said
2.8992 Acre tract being more particularly described by Metes and Bounds as
follows: (All bearings refer to the plat of AEGEAN GARDENS as recorded in
Volume 290, Page 73, Harris County Map Records).
COMMENCING at a 3/4 inch iron pipe found at the point of intersection of the
North Line of Westheimer Road, (120 feet wide), with the East line of Hayes
Road (60 feet wide), said point also marks the Southwest corner of said 55.2187
Acre tract;
THENCE, N 89 57 min., 00 sec. E; along the North line of said Westheimer Road
and South line of said 55.2187 Acre tract, for a distance of 562.85 feet to a
5/8 inch iron rod set for the POINT OF BEGINNING and the Southwest corner of
this tract;
THENCE, N 00 08 min. 11 sec. E; for 570.41 feet on an "X" set in concrete for
the Northwest corner of this tract and lying on the South line of said Aegean
Gardens as a recorded in Volume 290, Page 73 of the Map Records of Harris
County;
THENCE, East, along the South line of said Aegean Gardens for 218.00 feet to a
5/8 inch iron rod set for the Northeast corner of this tract;
THENCE, S 00 08 min. 11 sec. W; along the East line of said 55.2187 Acre tract
for 579.22 feet to a 5/8 inch iron rod set for the Southeast corner of this
tract and lying on the North right-of-way line of said Westheimer Road;
THENCE, S 89 57 min. 00 sec. W; along the North right-of-way line of said
Westheimer Road and the South line of said 55.2187 Acre tract for 218.00 feet
to the POINT OF BEGINNING; and being the same property particularly described
in Deed dated September 11, 1981, from Monzer Hourani, Trustee to the insured
herein.
<PAGE> 27
EXHIBIT "C"
The Leased Premises shall be tendered to Tenant on an "as-is"
condition, however, Landlord will extend to Tenant an allowance, not to exceed,
Four and 50/100 Dollars ($4.50) per rentable square foot to be used for the
remodel, refurbishment, permitting, architectural services, filing of required
engineering drawings, and management supervision fee, (not to exceed five
percent (5%) of actual construction/refurbishment costs).
<PAGE> 28
EXHIBIT "D"
BUILDING RULES AND REGULATIONS
1. Sidewalks, doorways, vestibules, halls, stairways and other similar
areas shall not be used for the disposal of trash, be obscured by
tenants or to used by tenants for any purpose other than entrance to
and exit from the Leased Premises and for going from one part of the
Building to another part of the Building.
2. Plumbing fixtures shall be used only for the purposes for which they
are designed, and no sweepings, rubbish, rags or other unsuitable
materials shall be disposed into them. Damage resulting to any such
fixtures from misuse by a tenant shall be the liability of said
tenant.
3. Signs, advertisements or notices visible in or from public corridors
or from outside the Building shall be subject to Landlord's prior
written approval.
4. Movement in or out of the Building of furniture, office equipment or
any other bulky or heavy materials shall be restricted to such hours
as Landlord designates. Landlord will determine the method and
routing of said items so as to ensure the safety of all persons and
property concerned. Advanced written notice of intent to move such
items must be made to the Building management office.
5. All deliveries of furniture, office equipment or bulk freight shall be
coordinated in advance with Landlord, shall be performed subject to
Landlord's supervision and direction by use only of an elevator
designated by Landlord.
6. Building management shall have the authority to prescribe the weight
and manner that heavy furniture and equipment are positioned.
7. Corridor doors, when not in use, shall be kept closed.
8. Tenant space that is visible from public areas must be kept neat and
clean.
9. The disposal of trash or storage of materials in the hallways,
elevator lobbies, stairways and other common area of the Building is
prohibited.
10. No animals shall be brought into or kept in, on or about the Building.
11. Tenant shall not tamper with or attempt to adjust temperature control
thermostats in the Leased Premises. Landlord shall adjust thermostats
as required to maintain the Building standard temperature.
PAGE 1 OF 2
<PAGE> 29
12. Tenant will comply with any and all security procedures established by
Landlord from time to time.
13. Tenants shall lock all office doors leading to corridors and turn out
all lights at the close of their working day.
14. All requests for overtime air conditioning or heating must be
submitted in writing to the Building management office by 2:00 p.m. on
the day desired for weekday requests, by 2:00 p.m. Friday for weekend
requests and by 2:00 p.m. on the preceding business day for holiday
requests.
15. No flammable or explosive fluids or materials shall be kept or used
within the Building except in areas approved by Landlord, and Tenant
shall comply with all applicable building and fire codes relating
thereto.
Landlord reserves the right to rescind any of these rules and
regulations and to make such other and further rules and regulations as in its
reasonable judgement shall, from time to time, be required for the safety,
protection, care and cleanliness of the Building, and the operation thereof,
the preservation of good order therein and the protection and comfort of the
tenants and their agent, employees and invitees. Such rules and regulations,
when made and written notice thereof is given to a tenant, shall be binding
upon it in like manner as if originally herein prescribed.
PAGE 2 OF 2
<PAGE> 1
EXHIBIT 10.39
PARTICULARS
<TABLE>
____________________________________________________________________________________
<S> <C> <C>
1. DATE : 199
____________________________________________________________________________________
2. PARTIES:
A. LANDLORD : TUSCAN PROPERTY DEVELOPMENTS
LIMITED whose registered office is at 736
London Road, Larkfield Kent
B. TENANT : HORIZON EXPLORATION LIMITED
of 6 Pembroke Road, Sevenoaks, Kent
TN13 1XR
- ------------------------------------------------------------------------------------
3. SHORT DESCRIPTION OF Part of Unit 8 New Business Estate,
Ditton, Kent
PREMISES :
- ------------------------------------------------------------------------------------
4. TERM : A term of 4 years commencing on 1st
February 1997 and expiring on 31st
January 2001
- ------------------------------------------------------------------------------------
5. RENT : L.20,000 per annum
- ------------------------------------------------------------------------------------
6. RENT COMMENCEMENT
DATE : 1st February 1997
- ------------------------------------------------------------------------------------
7. PERMITTED USE : [ ] or such other use within Class [
] of the Schedule to the Town and Country
Planning (Use Classes) Order 1987 as the
Landlord shall approve in writing (such
approval not to be unreasonably withheld)
- ------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
T H I S L E A S E made B E T W E E N the Parties named in the Particulars
W I T N E S S E S as follows:
DEFINITIONS:
1 The terms defined in this clause and in the Particulars shall for the
purposes of this Lease (unless the context otherwise requires) have
the following meanings:
1.1 "THE BUILDING" the building of which the Premises form part
known as Unit 8 New Business Estate, Ditton,
Kent together with any approach roads
forecourt grounds parking areas and all
boundary walls and fences
1.2 "THE COMMON PARTS" those parts of the Building which are not
included in this Lease and which are not
demised to any other tenant the use and
benefit of which is common to the occupants
of the Building
1.3 "INSURED RISKS" fire storm tempest explosion and such other
risks (subject to excesses exclusions and
limitations as the insurers may require) as
the Landlord may in the Landlord's absolute
discretion determine
1.4 "INTEREST" interest during the period from the date on
which the payment is due to the date of
payment both before and after any judgment at
the rate of 4% per annum above the base rate
for the time being of National Westminster
Bank plc or in the event of them ceasing to
publish a base rate such other rate of
interest as is in the reasonable opinion of
the Landlord an equivalent rate
1.5 "THIS LEASE" this deed and any deed or document
supplemental to this deed or in variation of
this deed
1.6 "PLANNING ACTS" the Town and Country Planning Act 1990 the
Planning (Listed Buildings and Conservation
Areas) Act 1990 the Planning (Hazardous
Substances) Act 1990 the Planning
Page 1
<PAGE> 3
(Consequential Provisions) Act 1990 the
Environmental Protection Act 1990 the
Planning and Compensation Act 1991 and any
future or amending legislation of a similar
nature
1.7 "THE PREMISES" the property shortly described in paragraph 3
of the Particulars and more particularly
defined in the First Schedule which shall
include all additions alterations and
improvements and all landlord's fixtures and
fittings at any time in or on the Premises
1.8 "RENT" the Rent but the term "rents" includes the
rents reserved in clause 3
1.9 "SERVICE MEDIA" all pipes drains sewers gutters watercourse
wires cables ducts flues aerials cisterns
tanks and all other conducting media and
ancillary apparatus
1.10 "1995 ACT" the Landlord & Tenant (Covenants) Act 1995
INTERPRETATION:
2 Where in this Lease the context so admits:
2.1.1 "THE LANDLORD" includes the reversioner for the time being
immediately expectant on the determination of the Term
2.1.2 "ANY SUPERIOR LANDLORD" includes any person now or after the date of
this Lease having a title to the Premises in reversion mediately or
immediately expectant on the termination of the Landlord's title
2.1.3 "THE TENANT" includes the Tenant's successors in title
2.1.4 "THE TERM" includes not only the term granted by this Lease but also
the period of any holding over or of any extension of the Term
whether by statute or at common law
2.1.5 Any reference to statutes statutory instruments rules orders and
regulations or the like include (unless otherwise stated) any future
re-enactments or modifications thereof and those made in
substitution or replacement of any which are repealed
Page 2
<PAGE> 4
and also include all instruments orders plans regulations
permissions and directions for the time being made issued or given
thereunder or deriving validity therefrom
2.3 Words importing one gender include the other genders
2.4 Words importing the singular include the plural and vice versa and
where the Tenant and/or the Surety consists of two or more persons
all covenants by the Tenant and/or the Surety (as the case may be)
are deemed to be made by those persons jointly and severally
2.5 Words importing persons include firms companies and corporations and
vice versa
2.6 Any provisions in this Lease referring to the consent permission or
approval of the Landlord shall be construed as also requiring the
consent approval or permission of any Superior Landlord and any
mortgagee of the Landlord and any Superior Landlord
2.7 (a) All rights of entry or other rights or easements exercisable
by the Landlord shall extend to include any Superior Landlord
or persons authorized by them and their respective surveyors
servants contractors licensees and work people with or without
plant and appliances and materials
(b) All rights exercisable by the Tenant shall extend to include
all persons authorized by the Tenant and their respective
surveyors servants contractors licensees and work people with
or without plant and appliances and materials
2.8 References to "the last year of the Term" include the last year of
the Term if the Term shall determine otherwise than by affluxion of
time and references to "the expiration/expiry of the Term" include
such other determination of the Term
2.9 Reference to any clause or Schedule shall mean a clause or Schedule
of this Lease
2.10 The details and descriptions appearing in the Particulars shall be
included in this Lease and form part of this Lease and in the event
of any discrepancy between the Particulars and any other part of
this Lease such other part of this Lease shall prevail
2.11 The clause paragraph and Schedule headings to this Lease are deemed
not to form any part of this Lease and shall not affect the
interpretation of this Lease in any way
Page 3
<PAGE> 5
2.12 References to the Landlord's election or to the Landlord having
elected or similar references are references to an election by the
Landlord under paragraph 2 of the Schedule 10 to the Value Added Tax
Act 1994 (or previous legislation having similar effect) to waive
the exemption from VAT in relation to the Premises.
DEMISE AND RENTS:
3 In consideration of the rents reserved by this Lease and of the
covenants on the part of the Tenant contained in this Lease THE
LANDLORD DEMISES to the Tenant the Premises TOGETHER WITH the rights
(if any) specified in Part I of the Second Schedule EXCEPT AND
RESERVED unto the Landlord the rights (if any) specified in Part II
of the Second Schedule and all rights powers and privileges
expressed to be conferred on or reserved to the Landlord under the
provisions of this Lease TO HOLD the Premises unto the Tenant for
the Term SUBJECT TO all covenants restrictions and stipulations of
whatever kind or nature which may affect or relate to the Premises
3.1 YIELDING AND PAYING during the Term
3.1.1 First the Rent specified in paragraph 5 of the Particulars such rent
to be paid by equal quarterly payments in advance on the usual
quarter days the first of the payments being a proportion from the
Rent Commencement Date to the next quarter day and to be on the
signing of this Lease
3.1.2 Secondly by way of further rent the sum equal to the amount which
the Landlord shall from time to time pay by way of premium
(including any premium whether in respect of the Premises or any
other premises of the Landlord payable by reason of any act or
omission of the Tenant or by the use whether authorized or not to
which the Tenant puts the Premises) and by way of fees for periodic
valuation for keeping the Premises insured such further rent to be
paid forthwith on written demand by the Landlord
3.1.3 Thirdly as additional rent Interest payable on demand on any sum of
whatsoever nature:
3.1.3.1 due from the Tenant to the Landlord (whether
on rent or otherwise) which shall not be
received by the Landlord within fourteen days
after the sum due.
3.1.3.2 properly or reasonably incurred by the
Landlord in connection with and following
some default under this Lease.
Page 4
<PAGE> 6
TENANT COVENANTS:
4 THE TENANT COVENANTS with the Landlord:
RENTS
4.1.1 To pay the rents at the times and in the manner as provided without
any deduction abatement or set-off whatsoever
4.1.2 If so requested by the Landlord to pay the rent by banker's order or
other means of automatic transmission of funds to a bank or other
financial institution and account nominated by the Landlord from
time to time
OUTGOINGS AND SERVICES CONSUMED
4.2.1 To pay (or in the absence of a direct assessment on the Tenant to
repay forthwith on demand to the Landlord a fair proportion of) all
existing and future rates taxes assessments impositions and
outgoings payable by law in respect of the Premises either by the
owner or occupier
4.2.2 To pay (or in the absence of a direct assessment on the Tenant to
repay forthwith on demand to the Landlord a fair proportion of) to
the suppliers and indemnify the Landlord against all charges for
electricity water and gas (if any) consumed in the Premises
including any connection hiring charges and meter rents
REPAIRS
4.3.1 To repair and make good and damage caused to the Premises by the
Tenant their employees, agents or servants under the Tenant's
control
PLATE GLASS
4.4 To insure all plate glass at the Premises in its full reinstatement
value against usual risks of damage or destruction and in the event
of damage to or destruction of the plate glass to repair or replace
the same
PERMIT ENTRY FOR REPAIR OF ADJOINING PREMISES
4.5 To permit the Landlord at reasonable times (except in emergency) to
enter upon the Premises to execute repairs or alterations on any
adjoining premises the Landlord making good all caused to the
Premises
COSTS OF LANDLORD
4.6 To pay all expenses charges costs expenses and disbursement incurred
by the Landlord or any Superior Landlord including but not limited
to those payable to solicitors Counsel architects surveyors and
bailiffs out of or in connection with or incidental to:
Page 5
<PAGE> 7
4.6.1 any steps taken in contemplation of or in connection with the
preparation and service of a notice under the Law of Property Act
1925 Section 146 proceedings under Sections 146 or 147 of that Act
(notwithstanding in any such case forfeiture is avoided otherwise
than by relief granted by the Court) and in connection with every
application for any consent made under this Lease whether or not
consent is granted
4.6.2 the service of all notices and schedules relating to wants of repair
of the premises whether served during or after the expiration of the
Term
4.6.3 the collection and recovery of the rents and other money payable
under this Lease which shall be in arrear (including the costs of
any collection agency) or any action reasonably taken by or on
behalf of the Landlord in order to prevent or procure the remedying
of any breach of any covenant by the Tenant
PROHIBITIONS RELATING TO USER
4.7 Not to do or permit or suffer to be done anything in or upon the
Premises or any part which may be or become a nuisance or annoyance
or cause damage to the Landlord or the owners or occupiers of the
other property in the neighborhood
4.7.1 Not to use the Premises for a sale by auction or for any noxious
dangerous offensive or noisy trade or business or for any illegal or
immoral act or purpose
4.7.2 Not to suspend any heavy loads from the ceilings or main structure
of the Premises nor to overload the floors or structure of the
Premises
4.7.3 Not to permit any oil grease poisonous or noxious substance to be
discharged into any Service Media serving the Premises
4.7.4 Not to damage or obstruct any areas of which the Tenant may have
rights of access
PLANNING ETC.
4.8.1 Not without the prior written consent of the Landlord (which consent
shall not be unreasonably withheld only in so far as the application
relates to the carrying out of alterations permitted under this
Lease and relating to the use of the Premises specified by this
Lease but not further or otherwise) to apply for any planning
permission in respect of the Premises or any part and if the
Landlord attaches any conditions to the consent the Tenant will not
apply for any planning permission except in accordance with those
conditions
4.8.2 At all times during the Term to comply in all respects with the
provisions and requirements of the Planning Acts and of all
consents permissions conditions and obligations (if any) granted
Page 6
<PAGE> 8
or imposed or having effect under the Planning Acts so far as they
respectively relate to or affect the Premises or any part or any
operations works acts or things already or after the date of this
Lease to be carried out executed or done or omitted on the Premises
or the use of the Premises for any purpose
4.8.3 Not to enter into any agreement or obligation with a local planning
authority as a result of which the Premises or any neighboring
property of the Landlord or any Superior Landlord shall become
subject to any restriction of user or otherwise
4.8.4 Not to object or obstruct any planning application made by the
Landlord or on the Landlord's behalf that may affect or relate to
the Premises or any neighboring property
ADVERTISEMENTS AND DISPLAYS
4.9 Not without the Landlord's previous consent in writing to display
any external sign or advertisement on the Premises or any part
USER
4.10 To use the Premises only for the Permitted Use stated in paragraph 8
of the Particulars and not to permit any person to sleep or reside
there
ALTERATIONS OR ADDITIONS
4.11.1 Not to commit any waste make any addition to the Premises or erect
any new building on the Premises or make any other alteration to the
Premises or to the Service Media serving the Premises except as
permitted by the Next sub-clause
4.11.2 Not to make internal non-structural alterations to the Premises or
connections to the Service Media serving the Premises without the
previous written consent of the Landlord such consent not to be
unreasonably withheld and if the Tenant under the provisions of any
consent given by the Landlord makes any alteration to the Premises
the Tenant shall at the expiration of the Term (if the Landlord
shall so require but not otherwise) at the Tenant's own expense
restore the Premises to their former state and condition in all
respects to the satisfaction of the Landlord
ALIENATION
4.12 Not to assign demise underlet charge or otherwise part with
possession of any part of the Premises (here meaning a portion only
and not the whole thereof) or to charge or share occupation of the
whole or any part thereof for all or any part of the Term
4.12.1 Not to assign the whole of the Premises without first:-
4.12.1.1 obtaining the written license of the Lessor which shall not be
unreasonably withheld;
Page 7
<PAGE> 9
4.12.1.2 satisfying the circumstances specified for the purposes of Section
19(1A) of the Landlord & Tenant Act 1927 and set out in clause
4.12.2.1 below; and
4.12.1.3 complying the conditions specified for the purposes of Section
19(1A) of the Landlord & Tenant Act 1927 and set out in clause
4.12.2.2 below.
4.12.1.4 The circumstances referred to in clause 4.12.1.2 are that:-
4.12.1.4.1 all sums due from the Lessee under this Lease have
been paid at the date of the application for the
license to assign;
4.12.1.4.2 in the Lessor's reasonable opinion there are at the
date of the application for the license to assign no
material outstanding breaches of any tenant covenant
under this Lease or any personal covenants undertaken
by the Lessee
4.12.1.4.3 in the Lessor's reasonable opinion the assignee is a
person who is at the date of the application for
license to assign no less likely than the Lessee was
at the date on which this Lease was assigned or
granted to the Lessee to be able to comply with the
tenant covenants of this Lease and is likely to
continue to be such a person following the
assignment;
4.12.1.5 The Conditions referred to in clause 4.12.1.3 are that:-
4.12.1.5.1 upon or before any assignment and before giving
occupation to the assignee the Lessee shall covenant
by way of indemnity and guarantee with the Landlord
in the terms of an authorized guarantee agreement
under the provisions of the Act
4.12.1.5.2 if so reasonably required by the Lessor the assignee
shall upon or before the assignment and before taking
occupation obtain guarantors reasonably acceptable to
the Lessor who shall covenant by way of indemnity and
guarantee (if more than one jointly and severally)
with the Lessor to guarantee the performance and
observance of the covenants and conditions during the
residue of the Term or until the expiry of the term
of the underlease (as the case may be) as well after
as before any disclaimer of this Lease or underlease
by a liquidator or trustee in bankruptcy of the
proposed assignee or underlessee and to indemnity the
Landlord in respect thereof the covenant to be in a
form prepared by the Landlord's solicitor at the cost
of the Tenant
Page 8
<PAGE> 10
4.12.1.5.3 the written license to assign contains a condition
that if at any time prior to the assignment the
circumstances (or any of them) specified in clause
4.12.2.1 cease to exist the Lessor may revoke the
license by written notice to the Lessee
4.12.2 Not to underlet the whole of the Premises save by way of an
underlease complying with clauses 4.12.4 and 4.12.5 hereof and which
has the prior written approval of the Lessor (such consent not to be
unreasonably withheld in the circumstances set out in clause 4.12.3
hereof and granted upon such reasonable conditions as the Lessor
shall require) which underletting is hereafter referred to as a
"Permitted Underlease"
4.12.3 Any Permitted Underlease shall be in terms approved by the Lessor's
solicitors acting reasonably and which shall include the following
covenants on the part of the underlessee of which the Lessee will
thereafter enforce the performance:
4.12.3.1 An absolute covenant not to assign demise underlet or otherwise part
with possession of the sub-demised premises (here meaning a portion
only and not the whole thereof) or to share occupation of the whole
or any part thereof for all or any part of the sub-term
4.12.3.2 A qualified covenant not to assign demise underlet or otherwise part
with possession of the whole of the sub- demised premises without
the license in writing of the Lessor (the grant of which shall be
subject to the same provisos as hereinbefore set forth in this
clause)
4.12.3.3 A covenant that the underlessee will cause to be inserted in every
sub-underlease whether immediate or derivative covenants on the part
of the relevant subunderlessee corresponding to the covenants number
4.12.4.1 and 4.12.4.2 above and that the underlessee will at all
times thereafter enforce the same
4.12.3.4 Provisions for rent reviews to be made on the same days as in this
Lease
4.12.3.5 Notwithstanding anything herein contained the Lessee shall not
create of permit the creation of any interest derived out of the
Term however remote or inferior upon the payment of a fine or premium
or at a less rent than the full market rent obtainable (without
taking a fine or premium) of the Premises and shall not create or
permit the creation of any derivative interest as aforesaid save by
instrument in writing containing such absolute prohibition as
aforesaid on the part of the underlessee and those that may derive
title under such underlessee
LETTING AND SELLING BOARDS
4.13 At any time during the last six months of the Term to permit a
notice board to be exhibited on a conspicuous part of the Premises
intimating that the same are to be let or sold and during such
Page 9
<PAGE> 11
period to permit an inspection at any reasonable time in the day by
or on behalf of any prospective tenant or purchaser of the Premises
upon an appointment being made for that purpose
INSPECTION BY PURCHASERS OF REVERSION
4.14 At all times throughout the Term to permit any prospective purchaser
of the reversion expectant on the termination of this Lease and his
advisers to inspect the Premises at reasonable times (PROVIDED THAT
such person shall bear a letter of authority signed by or on behalf
of the Landlord) and to permit a notice board to be exhibited on a
conspicuous part of the Premises intimating that the same are to be
sold
INSURANCE
4.15 Not to do or permit or suffer to be done on the Premises anything
which may render an increased or extra premium payable for the
insurance of the Premises or any other premises of the Landlord or
which may make void or voidable any policy of insurance effected in
respect of the Premises
4.15.1 In the event of the Premises or any part being damaged or destroyed
by any of the Insured Risks to give immediate notice to the Landlord
4.15.2 In the event of the Premises or any part being damaged or destroyed
by any of the Insured Risks and the insurance money under any policy
of insurance effected by the Landlord pursuant to the Landlord's
obligations in this Lease being wholly or partly irrecoverable by
reason solely or in part of any act or default of the Tenant then
and in every case forthwith (in addition to the rents reserved by
this Lease) to pay to the Landlord the whole or (as the case may be)
the irrecoverable proportion of the amount of the insurance money so
irrecoverable with Interest
NOT TO INSURE AGAINST LANDLORD'S RISKS
4.16 Not to insure in respect of any risks against which the Landlord has
insured under the provisions contained in this Lease
NOT TO CAUSE OR ALLOW ANYTHING WHICH COULD EXPOSE THE LANDLORD TO PENALTIES
4.17 Not to do or omit to do or permit or suffer to be done or omitted to
be done anything in or about the Premises or any premises used for
the purposes of but not comprised in the Premises whereby the
Landlord may become exposed to the liability to pay any penalty
damages compensation costs charges or expenses
Page 10
<PAGE> 12
REGULATIONS
4.18 To comply with all reasonable regulations made by the Landlord from
time to time for the management of the Building
PAYMENT OF MONEY OWING
4.19 If the Tenant fails to pay to the Landlord any of the rents and/or
other sums becoming payable by the Tenant to the Landlord pursuant
to this Lease on the date or dates upon which the same fall due for
payment then in addition to any rents and/or other sums to pay to
the Landlord Interest calculated from the date or dates upon which
the payment fell due until the date or dates of actual payment
VAT
4.20 Wherever in this Lease provision is made for the Tenant to pay any
sum (including without prejudice to the generality of the foregoing
the rents reserved by this Lease legal costs registration fees
surveyors' and other professional fees charges and expenses) on
which VAT is payable then to pay in addition to that sum VAT on that
sum at the rate appropriate at the time of the supply
DEFECTIVE PREMISES
4.21 Forthwith upon becoming aware of the same to give notice in writing
to the Landlord of any defect in the state of the Premises which
might give rise to an obligation on the Landlord to do or refrain
from doing any act or thing in order to comply with the provisions
of this Lease or the duty of care imposed on the Landlord under the
Defective Premises Act 1972 and at all times to display and maintain
all necessary notices which the Landlord may from time to time
require to be displayed at the Premises
TO YIELD UP
4.22 To yield up the Premises with all fixtures and additions at the
expiration of the Term with vacant possession and in repair and
decorative order and condition in accordance with the Tenant's
covenants contained in this Lease
LANDLORD'S COVENANT
5 THE LANDLORD COVENANTS with the Tenant:
QUIET ENJOYMENT
5.1 That the Tenant paying the rents and performing and observing the
covenants on the part of the Tenant to be performed and observed may
peaceably enjoy the Premises during the Term
Page 11
<PAGE> 13
without any lawful interruption by the Landlord or any person or
persons rightfully claiming under or in trust for the Landlord
INSURANCE
5.2.1 To keep the Premises other than any plate glass insured (unless the
insurance is rendered void by an act or omission of the Tenant or
persons claiming under the Tenant) against loss or damage by the
Insured Risks so far as such insurance may ordinarily be effected
for such amount as the Landlord shall think expedient to include
professional fees debris removal and site clearance and the cost of
any work which might be required by or by virtue of any Act or
Parliament and three years' loss of rent
5.2.2 To produce to the Tenant on 14 days notice a copy of the policy of
insurance maintained by the Landlord and the receipt for the last
premium payable for it
5.2.3 In the event of the Premises being destroyed or damaged by any of
the Insured Risks subject to having obtained all appropriate
consents under the Planning Acts or otherwise to lay out money
received by the Landlord under the policy of insurance (except money
received in respect of loss of rent) in rebuilding or reinstating
the Premises PROVIDED THAT the Landlord shall not be under an
obligation to rebuild or reinstate the Premises in the form which
existed before the date of the destruction or damage
LANDLORD'S COVENANT RELATING TO REPAIR
6 Subject to the rents being paid by the Tenant and to compliance by
the Tenant with all the covenants and conditions in this Lease THE
LANDLORD COVENANTS with the Tenant as follows:
REPAIR AND MAINTENANCE OF BUILDING
6.1 To maintain repair amend renew clean repaint and redecorate to a
standard which the Landlord reasonably considers adequate: the
structure of the Building and in particular the roof void and main
structural walls but excluding:
6.1.1 all non-structural walls that are situated wholly
within the Premises
6.1.2 the internal faces of boundary walls that enclose
the Premises
6.1.3 the windows and window frames and doors and door
frames of the Premises
6.1.4 the glass in the windows and doors of and in the
Premises
6.1.5 the floors of the Premises (but not the floor joists)
Page 12
<PAGE> 14
6.1.6 the ceilings of the Premises (but not the ceilings
joists)
6.1.7 any parts of the Building which are part of the
Premises and are the responsibility of the Tenant
under the provisions of this Lease
6.1.8 all portions corresponding to the foregoing in or
appurtenant to other tenanted parts of the Building
6.1.9 the Common Parts
MAINTAIN SERVICES
6.2 To maintain in reasonable working order and repair:
6.2.1 all water heating system and the electric lighting appliances in the
common parts
6.2.2 all Service Media in under or upon the Building which shall serve
the Building (excluding nevertheless any which lie within the
Premises or exclusively serve the Premises or which are in or
appurtenant to other tenanted parts of the Building)
PROVISOS AGREEMENTS AND DECLARATIONS:
PROVIDED ALWAYS and it is expressly agreed and declared as follows:
7.1 RE-ENTRY
If the rents or any part are at any time in arrear and unpaid for 14
days after becoming due (whether formal or legal demand has been
made or not) or if the covenants on the part of the Tenant shall not
be performed or observed or if the Tenant or any other person in
whom the Term shall be vested or any other person who may at any
time covenant with the Landlord as a surety under this Lease shall
become bankrupt or have a receiving order made against the Tenant or
any such other person or being a company enter into liquidation
whether compulsory or voluntary (other than for the purpose of
amalgamation or reconstruction of a solvent company) or has a
receiver appointed or if the goods of the Tenant or any such other
person on the Premises shall be taken in execution then and in any
such case it will be lawful for the Landlord to re-enter the
Premises (or any part of the Premises in the name of the whole)
whereupon the Term shall absolutely cease but without prejudice to
any rights or remedies of the Landlord in respect of an antecedent
breach of the Tenant's covenants contained in this Lease
7.2 RENT TO BE SUSPENDED IF PREMISES DAMAGED
If the Premises or any part are at any time during the Term damaged
or destroyed by any one or more of the Insured Risks so as to be
unfit for occupation or use and the policy or policies
Page 13
<PAGE> 15
of insurance effected by the Landlord shall not have been vitiated
or payment of the policy moneys refused in whole or in part in
consequence of any act or default of the Tenant to the extent that
it is insured in accordance with the provisions of this Lease the
rent or a fair portion according to the nature and extent of the
damage sustained shall be suspended until the Premises have been
rendered fit for habitation and use or until the expiration of three
years from the damage or destruction whichever is the shorter and
any dispute regarding the cesser of rent shall be referred to the
award of a single arbitrator to be appointed in default of agreement
upon the application of either party by the President for the time
being of the Royal Institution of Chartered Surveyors in accordance
with the Arbitrations Act of 1950 to 1979
7.3 TERMINATION ON DESTRUCTION
If the Premises are at any time during the Term destroyed or
substantially damaged by any of the Insured Risks so as to be unfit
for occupation and use and the Premises have not been rebuilt or
reinstated or made fit for occupation and use within two years nine
months after the date of destruction or damage either the Landlord
or the Tenant (unless the insurance of the Premises shall have
become vitiated or the payment of policy money refused in whole or
part by any neglect default or omission of the Tenant or the
Tenant's agents employees licensees or visitors) may serve not less
than three months' notice in writing to determine this Lease such
notice to expire not earlier than three years after the date of the
destruction or damage and if upon the expiration of such notice the
Premises remain unfit for occupation and use then this Lease shall
absolutely determine (or if the rebuilding or reinstatement of the
Premises shall be prevented or frustrated by any cause whatsoever)
the Landlord shall not be liable to rebuild or reinstate the
Premises and the insurance money received by the Landlord in respect
of the Premises and the loss of rent shall belong to the Landlord
absolutely
7.4 SERVICE OF NOTICES
A demand for payment notice or other document required or authorized
to be served or given under this Lease shall be in writing and shall
only be deemed to be sufficiently served:
7.4.1 in the case of service on the Tenant if posted in an
envelope addressed to the Tenant by first class
registered or recorded delivery post at the Premises
or (if the Tenant is a company) at the Tenant's
registered office as appears in this Lease or as last
notified in writing to the Landlord (the Tenant to
give notification to the Landlord as soon as
practicable after change of address of the Tenant's
Page 14
<PAGE> 16
registered office) or as revealed as being the
Tenant's current registered office by a company
search (whether or not notified to the Landlord) or
(whether or not the Tenant is a company) if left upon
or attached to the Premises or some part and
7.4.2 in the case of service on the Landlord if posted by
first class registered or recorded delivery post in
an envelope addressed to the Landlord at the
Landlord's registered office (if any) or at any other
address which the Tenant may have previously been
notified in writing by the Landlord as the address at
which the Landlord will accept service of notices
PROVIDED THAT in the case of service by post service shall be deemed
to have been effected 24 hours after posting (excluding any
intervening Saturdays Sundays or bank or other public holiday)
COMPENSATION
7.5 Subject to the provisions of the Landlord and Tenant Act 1954
Section 38(2) neither the Tenant nor any assignee or transferee or
underlessee shall be entitled on quitting the Premises to any
compensation under the Landlord and Tenant Act 1954 Section 37
DISPUTES
7.6 Any dispute between the Tenant and any owner or occupier of adjacent
or neighboring property (other than the Landlord) as to any right or
privilege or any party or other walls or as to the amount of any
contribution towards the expenses of services used in common shall
be decided by the Landlord or in such manner as the Landlord shall
direct and such decision shall be binding on the parties to the
dispute
AGREEMENT FOR LEASE
8 It is hereby certified that there is no Agreement giving effect to
this Lease
THE FIRST SCHEDULE
DESCRIPTION OF THE PREMISES
ALL THOSE premises comprising Part of Unit 8 New Business Estate, Ditton, Kent
edged red on the plan annexed and being part of the Building including: 1.1
all walls situated wholly within the Premises but not external load bearing or
structural walls or supports 1.2 the internal plaster decorative or
other finishes of all external walls
Page 15
<PAGE> 17
1.3 the floors and floor finishes but not any joists or beams supporting
the floors
1.4 the ceilings and the decorative finishes applied to the ceilings but
not the beams or joists or other structural parts of the Building to
which the ceilings are affixed PROVIDED ALWAYS that where there are
suspended ceilings the Premises include not only the whole of the
suspended ceiling and their supporting grids but also the permanent
ceilings above the void between
1.5 the inner halves severed medially of all internal non-structural
walls dividing the Premises from any adjoining part of the Building
1.6 the windows and window frames and the doors and door frames
(including external doors) in and to the Premises and all glass in
those windows and doors
THE SECOND SCHEDULE
PART 1
RIGHTS GRANTED TO THE TENANT (IN COMMON WITH THE LANDLORD AND THOSE
AUTHORIZED BY THE LANDLORD)
1 the right to pass on foot over and along any common or shared
entrance halls passages corridors stairs landings and lifts in the
Building
2 The right to use the Common Parts for all proper purposes in
connection with the use and enjoyment of the Premises
3 The right to the free passage and running of water soil gas
electricity telecommunications and any other usual services to and
from the Premises through the Service Media serving the Building
4 Such rights of support and protection (whether lateral subjacent or
otherwise) for the Premises as are now enjoyed from other parts of
the Building
5 The right to have the Tenant's name displayed in a manner to be
determined from time to time by the Landlord on any notice board in
the entrance hall of the Building or on any signs which may be
maintained from time to time at any point adjacent to the approaches
of the Building giving the names and locations of occupants of the
Building
Page 16
<PAGE> 18
PART II
EXCEPTIONS AND RESERVATIONS (IN FAVOR OF THE LANDLORD AND THE TENANTS AND
OCCUPIERS OF OTHER PARTS OF THE BUILDING)
1 The right at any time during the Term at all reasonable times upon
prior notice (except in the case of emergency) to enter the
Premises:
1.1 To enable the Landlord to carry out work or otherwise comply with
the Landlord's obligations under this Lease (whether or not the
Tenant is liable to make a contribution)
1.2 to exercise any of the rights granted to the Landlord by this Lease
1.3 to inspect the state and condition of the Premises or to take
schedules or inventories of fixtures and other items to be yielded
up on on the expiry of the Term
1.4 to view the state and condition of and repair and maintain the
Building or any adjoining or adjacent property of the Landlord
2 The right to the free passage and running of water soil gas
electricity telecommunications and any other usual services to and
from any other parts of the Building through the Service Media now
or at any time during the Term in through or under the Premises
3 The right to build rebuild or execute any other works upon any
adjoining or adjacent property of the Landlord in such manner as the
Landlord may think fit notwithstanding any interference or
obstruction with the amenity of access to the Premises or the
passage of light and air to the Premises
4 The right to erect scaffolding for the purpose of repairing or
cleaning the exterior of the Building notwithstanding that the
scaffolding may temporarily interfere with the access to or
enjoyment and use the Premises
5 All necessary rights of support and protection (whether lateral
subjacent or otherwise) by or from the Premises for the remainder of
the Building
Signed as a Deed by HORIZON EXPLORATION )
LIMITED acting by its Director and Secretary )
Director
Secretary
Page 17
<PAGE> 1
EXHIBIT 10.40
THIS SET-OFF AND CHARGE is made on the date set out on the Schedule BETWEEN THE
CUSTOMER of the one part and THE BANK of the other part
NOW IT IS WITNESSED:
1. Definitions
The Customer: The Customer described in the Schedule and so that
where the Customer includes more than one person
or corporate body the term "the Customer" shall be
construed as referring to all or any one or more
of those persons or corporate bodies and the
obligations of the Customer shall be joint and
several
The Bank: The Bank of N.T. Butterfield & Son Limited,
incorporated in Bermuda with limited liability and
having its London Branch Office at 24 Chiswell
Street London EC1Y 4TY and where the context
admits the term "the Bank" includes its successors
and assigns whether immediate or derivative
The Account: The Account described in the Schedule and so that
where the Account includes more than one account
the term "the Account" shall be construed as
referring to all or any one of those accounts and
so as to include all monies in whatever currency
now and from time to time and at any time standing
to the credit of the Customer in the Account
Interest Rate: Save where otherwise agreed in writing by the
parties hereto the usual rate of interest of the
Bank in dealing with current accounts payable on
such days as the Bank may from time to time
determine and compounded in the event of it not
being punctually paid with monthly, quarterly or
other periodic rests as the Bank shall deem fit
(but without prejudice to the right of the Bank to
require payment of such interest) and in the
absence of manifest error the certificate of an
authorized officer of the Bank shall be conclusive
as to the rate from time to time applicable
The Liabilities: All monies and liabilities now and from time to
time and at any time due, owing or incurred to the
Bank by the Customer as mentioned in clause 5.1 be
they present, future, actual, contingent, primary,
collateral, several or joint
2. Consideration
In consideration of the Bank's making or continuing advances or
otherwise giving time or credit or affording banking facilities or
accommodation to the Customer for so long as it may think fit at the request of
the Customer (which request is now repeated and confirmed) the Customer has
agreed to enter into this Set-Off and Charge and to provide the charge and
other assurances to the Bank which are set out in detail in the following
clauses.
<PAGE> 2
3. The Set-Off
3.1 The Customer irrevocably authorizes the Bank from time to time and at
any time without prior notice to or any consent from the Customer:
3.1.1 to set-off and apply all or any part of the monies in
whatever currency standing to the credit of the
Account to or towards the discharge of the whole or
any part of the Liabilities and/or
3.1.2 to combine and consolidate all or any of the accounts
within the definition of "the Account" among
themselves and/or with any other account or accounts
maintained by the Bank in the name of the Customer
wherever they are situated and in whatever currency
3.2 The authority granted by the Customer to the Bank under clause 3.1
applies at all times whether or not a demand has been made by the
Bank to the Customer for the discharge of all or any part of the
Liabilities
3.3 Where any monies held to the credit of the Account are held on
deposit for an unexpired period the authority granted by the Customer
to the Bank under clause 3.1 entitles the Bank:
3.3.1 to withdraw and terminate that deposit prior to the
agreed maturity date and
3.3.2 to charge to the Customer all costs related to that
early termination together with any early withdrawal
charge made by the Bank
3.4 Where the expression "the Customer" includes more than one person or
corporate body any combination or transfer of monies contemplated by
clause 3.1 may be made from any account in the name of one or more of
such persons or corporate bodies to any account in the name of the
Customer and where such combination or transfer requires the
conversion of one currency into another such conversion shall be
calculated at the then prevailing spot rate of exchange of the Bank
(as conclusively determined by the Bank) for purchasing the currency
for which the Customer is liable with the existing currency so
converted
3.5 For the purposes of this clause the Liabilities and each and every
part of them shall become immediately due and payable without the
need for any demand notice or action of any kind on the part of the
Bank if any of the following events occur:
3.5.1 Upon the occurrence of any event of default as
specified in any other agreement between the parties
whether or not a demand pursuant to clause 5.1 or
otherwise has been made by the Bank or upon lawful
demand being made by the Bank for payment of any money
or the performance of any obligation or discharge of
any liability hereby secured whether or not the
Customer shall have been accorded sufficient time or
any time in which to satisfy the demand made or
3.5.2 If any other security granted by the Customer whether
to the Bank or to any other person or corporate body
shall become enforceable or
2
<PAGE> 3
3.5.3 Upon the Customer's inability to pay debts within the
meaning of sections 123 and/or 268 of the Insolvency
Act 1986 or any statutory modification or re-enactment
thereof or
3.5.4 If the Customer enters or proposes to enter into a
composition or arrangement with creditors or
3.5.5 If a petition is presented for the making of an order
for (or a resolution is passed proposing) the winding
up of the Customer (if a corporate body) or the
bankruptcy of the Customer (if an individual) or
3.5.6 If an encumbrancer takes possession of any asset of
the Customer or
3.5.7 If a petition is presented for the making of an
administration order pursuant to section 8 of the
Insolvency Act 1986 (if the Customer is a corporate
body) or
3.5.8 If an application is made for garnishee order nisi in
respect of any moneys standing to the credit of the
Account or
3.5.9 If there is any breach by the Customer of any of the
terms of this Set-Off and Charge
3.5.10 If any judgment is taken against or enforced against
the Customer
3.5.11 If any occurrence analogous to the foregoing occurs in
any jurisdiction
3.6 When the Liabilities have become due and payable in accordance with
the provisions of clause 3.5 then (without prejudice to the Bank's
rights under clause 3.1) the Bank may exercise all rights of set-off
under clause 3.1 and if the Bank does not do so then (unless the Bank
gives express notice to the contrary to the Customer) it shall
nevertheless be treated as if it had done so at the time when the
Liabilities became due and payable (event if the Bank was then
unaware of that fact) and as from that time the balance in the
Account shall be deemed to be nil or such larger sum (if any) as
shall then equal the difference between the amount then standing to
the credit of the Customer in the Account and the aggregate of all
the Liabilities
4. The Charge
The Customer as beneficial owner HEREBY CHARGES by way of first fixed charge
and releases to the Bank as a continuing security for the discharge of all the
Liabilities the Account and all the right, title, benefit and interest of the
Customer whatsoever present and future therein together with any certificates
of deposit, deposit receipts or other instruments or securities relating
thereto to the intent that such charge shall operate as a release of the
Account to the Bank until all the Liabilities have been discharged
3
<PAGE> 4
5. Customer's Covenants
The Customer COVENANTS with the Bank:
5.1 ON DEMAND (save where otherwise agreed in writing between the parties
hereto) to pay to the Bank all money and discharge all obligations
and liabilities which now are or at any time hereafter may be due,
owing or incurred from or by the Customer to the Bank or for which
the Customer may be or become liable to it in whatever currency
denominated on any current or other account or in any manner whatever
(whether alone or jointly with any other person or corporate body and
in whatever style or form and whether as principal or surety)
including (without prejudice to the generality of the above) all
liabilities in connection with foreign exchange transactions and for
accepting endorsing or discounting any notes or bills and/or under
bonds, guarantees, indemnities, documentary or other credits or any
instruments whatsoever from time to time entered into by the Bank for
or at the request of the Customer or for any other matter or thing
whatsoever including interest to the date of repayment (calculated at
the Interest Rate and payable as well after as before judgment or the
death, insanity, insolvency or other incapacity of the Customer)
commission, fees and other charges and all legal and other costs,
charges and expenses on a full indemnity basis together with any
Value Added Tax at the applicable rate which may be or become due in
respect of all or any such matters
5.2 Not to deal with the Account or any part thereof (whether by way of
assignment or the creation of a charge or other security interest or
otherwise) nor attempt so to do nor without the prior written consent
of the Bank to make or attempt to make any withdrawal from the
Account until:
5.2.1 all the Liabilities have been discharged
5.2.2 the Bank is no longer obliged to extend and no longer
extends any financial accommodation to the Customer
5.2.3 any agreed notice of withdrawal has been given
5.3 If so required by the Bank at any time and from time to time (save
where otherwise agreed in writing between the parties hereto) to add
to the Account such other monies standing to the credit of any other
account or accounts as the Bank shall designate
5.4 At any time if and when required by the Bank to provide such
instructions and authorities in favor of the Bank or otherwise in
such form as the Bank shall require and to execute such further
charges, assignments or agreements in favor of the Bank as the Bank
shall from time to time require over the Account to secure the
Liabilities such further charges, assignments or agreements to be
prepared by or on behalf of the Bank at the cost of the Customer and
to contain such clauses for the benefit of the Bank as the Bank may
reasonably require
6. The Bank's Rights
The Bank may at all times without prejudice to this Set-Off and Charge and
without discharging or in any way affecting the Liabilities:
6.1 determine vary or increase any credit or facilities to the Customer
in any manner whatsoever
4
<PAGE> 5
6.2 grant to the Customer or to any other person or corporate body any
time indulgence or other concession
6.3 renew determine vary or increase any bills, notes or other negotiable
securities
6.4 deal with exchange release modify renew vary or abstain from taking,
perfecting or enforcing any securities or other guarantees or rights
available or which the Bank may now or hereafter have from or against
the Customer or any other person or corporate body
6.5 compound with discharge or release the Customer or any other person
or corporate body and concur in accepting or varying any compromise,
arrangement or settlement
6.6 agree with the Customer at any time as to the application of any
advance made or to be made to the Customer
6.7 release compound with discharge or modify the liability of any person
or corporate body included in the expression "the Customer" or make
any other arrangements with such person or corporate body as the Bank
may decide
6.8 assign any or all of the Bank's rights and powers under this Set-Off
and Charge to any other person or corporate body
6.9 effect any change in the constitution of the Bank or be party to or
the subject of any transaction involving its absorption in or
amalgamation with any other corporate body or the acquisition of all
or part of its undertaking by any other corporate body
7. Consents and Notices
7.1 Any consent to be given by the Bank hereunder may be given by writing
under the hand of an authorized officer of the Bank
7.2 A demand for payment or any other demand or notice under this Set-Off
and Charge shall be effective notwithstanding the death insanity
insolvency or other incapacity of the Customer and shall be made or
given in writing by any agent or solicitor or authorized officer of
the Bank and (in the case of an individual) served upon the Customer
or his personal representatives personally or delivered or sent by
first class letter, post, cable, telex or facsimile transmission to
the Customer or his personal representatives at his or their usual
place of abode or place of business last known to the Bank (in the
case of telex or facsimile transmission to the last number known to
the Bank) or (in the case of a corporate body) served on any one of
its directors or the company secretary or delivered or sent as
aforesaid to its registered office or the address or place of
business of the Customer last known to the Bank or (in either case)
delivered or sent as aforesaid to the address of the Customer stated
in the Schedule and a demand or notice so addressed and posted shall
be deemed to be delivered forty-eight hours after posting and shall
be effective notwithstanding that it be returned undelivered and in
proving such service it shall be sufficient to prove that the notice
or demand was properly addressed and posted and any notice or demand
sent by cable, telex or facsimile transmission shall be deemed to
have been served at the time of dispatch and shall be effective
notwithstanding any incomplete or distorted transmission and in
proving such service it shall be sufficient to provide that the
notice or
5
<PAGE> 6
demand (if by cable) was properly addressed and dispatched or (if by
telex or facsimile transmission) was transmitted to the correct
number from which the correct answerback or other appropriate
acknowledgement of receipt was obtained
7.3 In the case of the death of any person a party hereto and until
receipt by the Bank of notice in writing of the grant of
representation to the estate of the deceased any notice or demand by
the Bank sent by first class letter post cable telex or facsimile
transmission as aforesaid addressed to the deceased or to his
personal representatives at the usual place of abode or place of
business of the deceased last known to the Bank shall for all
purposes be deemed a sufficient service of a notice or demand by the
Bank on the deceased and his personal representatives and shall be as
effectual as if the deceased were still living.
7.4 Any such notice or demand or (in the absence of manifest error) any
certificate as to the amount at any time secured hereby shall be
conclusive and binding upon the Customer if signed by any agent or
solicitor or authorized officer of the Bank
8. Continuing Security and Banking Powers
8.1 This Set-Off and Charge shall be a continuing security to the Bank
notwithstanding the death, insanity, insolvency or other incapacity
of the Customer and shall not be prejudiced by repayment or partial
repayment of sums from time to time owing by the Customer to the Bank
or by the settlement of any account and is in addition to and shall
not merge with or otherwise prejudice or affect any contractual or
other right or remedy or any collateral or other securities now or
hereafter held or available for any of the moneys hereby secured
(even if the same shall be taken without the consent or against the
prohibition of the Customer in respect of moneys for which the
Customer is or shall be liable as surety only) and this Set-Off and
Charge shall not be in any way prejudiced or affected thereby or by
the invalidity thereof or by the Bank now or hereafter dealing with
exchanging, releasing, varying or abstaining from perfecting or
enforcing any of the same or any rights which it may now or hereafter
have or giving time for payment or indulgence or compounding with any
other person liable
8.2 The Bank may from time to time give time for payment of any bill or
bills of exchange or any promissory note or notes or any other
security or securities which may have been discounted for or received
in account from the Customer by the Bank or on which the Customer
shall or may be liable as drawer or endorser or otherwise liable
thereon as the Bank shall in its discretion think fit without in any
manner releasing the Customer or affecting the security hereby
created and nothing herein contained shall operate so as to merge or
otherwise prejudice or affect any bill, note, guarantee, mortgage or
other security which the Bank may for the time being have for any
money or liabilities due or incurred by the Customer to the Bank or
any right or remedy of the Bank thereunder
8.3 None of the persons or corporate bodies included in the expression
"the Customer" shall as against the Bank be entitled to any of the
rights or remedies legal or equitable of a surety as regards the
indebtedness or liabilities of any of the other persons or corporate
bodies included in the expression "the Customer"
8.4 The execution of this Set-Off and Charge by the Customer shall
constitute an authority on the part of the Customer to the Bank to
disclose to any bank or financial institution to whom the
6
<PAGE> 7
Bank is proposing to assign all or any of its rights hereunder or to
offer or grant a participation in any loan secured by this Set-Off
and Charge such information concerning the affairs of the Customer
insofar as they relate to the Account in such manner and to such
extent as the Bank shall from time to time deem fit
9. Currency Clauses
9.1 All moneys received or held by the Bank under this Set-Off and Charge
may from time to time be converted into such other currency as the
Bank considers necessary or desirable to cover the obligations and
liabilities, actual or contingent, of the Customer in that currency
at the then prevailing spot rate of exchange of the Bank (as
conclusively determined by the Bank) for purchasing the currency to
be acquired with the existing currency
9.2 If and to the extent that the Customer fails to pay on demand any
amount due the Bank may in its absolute discretion and without notice
to the Customer purchase at any time thereafter so much of a currency
as the Bank considers necessary or desirable to cover the obligations
and liabilities of the Customer in such currency hereby secured at
the then prevailing spot rate of exchange of the Bank (as
conclusively determined by the Bank) for purchasing such currency
with sterling and the Customer hereby agrees to indemnify the Bank
against the full sterling price (including all costs, charges and
expenses) paid by the Bank
9.3 No payment to the Bank (whether under any judgment or court order or
otherwise) shall discharge the obligation or liability of the
Customer in respect of which it was made unless and until the Bank
shall have received payment in full in the currency in which such
obligation or liability was incurred and to the extent that the
amount of any such payment shall on actual conversion into such
currency fall short of such obligation or liability expressed in that
currency the Bank shall have a further separate cause of action
against the Customer and shall be entitled to enforce the security
hereby created to recover the amount of the shortfall
10. Power of Attorney
10.1 As security for the covenants hereinbefore contained and in
consideration of the Bank making available or continuing to make
available banking facilities to the Customer the Customer, hereby
irrevocably during the continuance in force of this security appoints
the Bank and the persons deriving title under the Bank, any person
nominated in writing under the hand of an officer of the Bank or any
successor in title severally to be the attorney of the Customer, for
the Customer and in the Customer's name and on the Customer's behalf
to execute, seal and deliver or otherwise perfect any deed or other
instrument or act which may be required or deemed proper for any of
the purposes of this security (including any authority or other
charge assignment or agreement referred to in clause 5.4) or to
protect the interest of the Bank hereunder and this appointment shall
operate as general power of attorney under section 10 of the Powers
of Attorney Act 1971
10.2 The Customer hereby covenants with the Bank and its successors in
title that on request the Customer will ratify and confirm all
security agreements, documents, acts and things and all transactions
entered into by the Bank or by the Customer at the instance of the
Bank in the exercise or purported exercise of its powers and the
Customer irrevocably acknowledges and
7
<PAGE> 8
agrees that such power of attorney be inter alia given to secure the
performance of the obligations owed to the Bank by the Customer
11. Miscellaneous
11.1 No failure or delay by the Bank in exercising any right or remedy
shall operate as a waiver thereof nor shall any single or any partial
exercise or waiver of any right or remedy preclude its further
exercise or the exercise of any other right or remedy
11.2 The security given to the Bank pursuant to this Set-Off and Charge
shall extend to all the Liabilities whether or not the Bank was an
original party to the relevant transaction or transactions by virtue
of which the Liabilities or any part may from time to time arise
11.3 Each of the provisions of this Set-Off and Charge is severable and
distinct from the others and if at any time one or more of such
provisions is or becomes invalid, illegal or unenforceable the
validity, legality and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby
11.4 Each person and corporate body included in the expression "the
Customer" agrees to be bound by this Set-Off and Charge
notwithstanding that any other such person or corporate body intended
to execute or be bound may not do so or be effectually bound and
notwithstanding that this Set-Off and Charge may be determined or
become invalid or unenforceable against any one or more such persons
or corporate bodies whether or not the deficiency is known to the
Bank
12. Warranty and Undertaking
12.1 The Customer hereby represents and warrants that the Customer has
full power, authority and legal right to give and to observe the
terms and conditions of this Set-Off and Charge and that there is no
provision in the memorandum or articles of association or any other
constitutional document of any corporate body included in the
expression "the Customer" or in any other corporate document,
mortgage, indenture, trust, deed or any other agreement binding upon
the Customer or affecting the Customer which would inhibit or prevent
the Customer from entering into the obligations set out in this
Set-Off and Charge or prevent conflict with or affect the Customer's
performance or observance of any of the terms of this Set-Off and
Charge
12.2 The Customer hereby undertakes to the Bank that the Customer will
obtain and maintain in full force and effect all governmental and
other approvals and consents and do or cause to be done all other
acts and things necessary or desirable in connection herewith or for
the performance of the Customer's obligations hereunder.
13. Proper Law and Jurisdiction
13.1 This Set-Off and Charge shall be governed by and construed in
accordance with the Law of England and Wales and the Customer hereby
irrevocably submits to the non-exclusive jurisdiction of the Courts
in England and Wales
13.2 Without prejudice to the generality of the provisions of sections 695
and 725 of the Companies Act 1985 and the Rules of the Supreme Court
for the time being the Customer hereby
8
<PAGE> 9
irrevocably authorizes and appoints the solicitors named in the
Schedule (or such other person being a firm of solicitors resident in
England or Wales as the Customer may by notice to the Bank
substitute) to accept service of all legal process arising out of or
connected with this Set-Off and Charge and service on those
solicitors (or such substitute) shall be deemed to be service on the
Customer
14. Headings and Interpretation
14.1 The subject headings are for information only and shall not affect
the construction or effect of this Set-Off and Charge
14.2 Words importing the masculine gender only include the feminine gender
and words importing the singular number may include the plural number
and vice versa
14.3 Words denoting or referring to a natural person shall include a body
corporate and vice versa
14.4 Any reference to a statute includes any amendment or reenactment of
it for the time being in force
IN WITNESS whereof the Customer has executed this Set-Off and Charge as a deed
on the date shown in the Schedule
The Common Seal of
Horizon Exploration Ltd
was hereunto affixed in the
presence of:
Director: /s/ G.M. Harrison
Directors: /s/ George Purdie
Signed, Sealed and Delivered
by the Said
in the presence of:
Witness Name: /s/ [illegible signature]
Address:
Occupation: Secretary
9
<PAGE> 1
10.41
DATED 25th August 1993
MARLEY WATERPROOFING LIMITED
and
HORIZON EXPLORATION LIMITED
DEED
relating to
6 Pembroke Road Sevenoaks Kent
Thomson Nell & Passmore
3 Lonsdale Gardens
TUNBRIDGE WELLS
Kent TN1 1NX
259/0054/mb
<PAGE> 2
THIS DEED is made 25th August 1993
BETWEEN:
(1) The Landlord : MARLEY WATERPROOFING LIMITED whose
registered office is at London Road
Riverhead Sevenoaks Kent TN13 2DS
(2) The Tenant : HORIZON EXPLORATION LIMITED whose
registered office is at Napier House
14-16 Mount Ephraim Road Tunbridge
Wells Kent
N O W THIS DEED W I T N E S S E T H as follows:
1. DEFINITIONS AND INTERPRETATION
1.1 Definitions:
In this Deed the following expressions have the following
meanings:
(a) "THE LEASE" means the Lease short particulars of
which are set out in the Schedule
(b) "THE TERM" and "RENT" shall carry the meanings
ascribed to them by the Lease
(c) "THE LANDLORD'S SOLICITORS" means Thomson Snell &
Passmore of 3 Lonsdale Gardens Tunbridge Wells Kent
TN1 1NX (Ref. 59)
(d) "THE BANK" means Midland Bank plc of 86 High Street
Tunbridge Wells Kent
(e) "THE SECURITY DEPOSIT" means the sum of L.48,420
(f) "THE DEPOSIT ACCOUNT" means the interest earning
deposit account opened by the Landlord's Solicitors
at the Bank on or before the date of this Deed and in
which the Landlord's Solicitors placed the Security
Deposit
(g) "THE BANK MANDATE" means the landlord's Solicitors'
letter to the Bank referring to the arrangements
pursuant to this Deed an agreed draft of which is
annexed
2
<PAGE> 3
1.2 Interpretation
Where in this Deed the context so admits:
(a) words importing one gender include all other genders
and words importing the singular include the plural
and vice versa
(b) the expressions "the Landlord" and "the Tenant" shall
include their respective successors in title and
assigns
(c) where for the time being there are two or more
persons within the meaning of the expressions "the
Landlord" or "the Tenant" obligations expressed or
implied and made or to be made by or with that party
shall be made by or with those persons jointly and
severally
(d) the clause headings to this Deed are for reference
purposes only and shall not affect the interpretation
of this Deed in any way.
2. RECITALS
2.1 This Deed is supplemental to the Lease
2.2 The reversion immediately expectant on the term of years
granted by the Lease is vested in the Landlord
2.3 The Landlord agreed to enter into the Lease on the condition
that the Tenant would deposit with the Landlord's Solicitors
the Security Deposit and enter into this Deed
3. PAYMENT OF SECURITY DEPOSIT
The Tenant has on or before the date of this Deed deposited with the
landlord's Solicitors the Security Deposit as security for payment of
rents reserved by and other sums due to the Landlord pursuant to the
Lease and the Landlord and the Tenant irrevocably instruct the
Landlord's Solicitors in the operation of the Deposit Account in
accordance with this Deed and in particular:
(a) the making of payments into the Deposit Account
3
<PAGE> 4
(b) the withdrawal of sums from the Deposit Account and
(c) accounting to the Landlord and the Tenant for money
due to either of them from the Deposit Account
4. DEPOSIT ARRANGEMENTS
The following provisions shall apply to the Security Deposit:
4.1 the Landlord's Solicitors shall place the Security Deposit in
the Deposit Account and all interest on the Security Deposit
shall belong to the Tenant and shall be mandated direct to the
Tenant after payment of any bank charges payable in respect of
the Deposit Account
4.2 if at any time during the term the Tenant:
(a) shall have failed to have paid to the Landlord within
21 days of the due date for payment any part of the
rents and other moneys made payable by the Tenant to
the Landlord in accordance with the provisions of the
Lease then the Landlord shall be entitled to require
the Landlord's Solicitors to draw on so much of the
Security Deposit as shall be required in payment or
(if the Security Deposit shall be insufficient) in
part payment of the sums due to the Landlord under
the Lease or
(b) if the Tenant enters into liquidation or has a
receiver appointed of the Tenant's assets then the
Landlord shall be entitled to require the Landlord's
Solicitors to draw such part of the Security Deposit
in payment of any sums due or which may become due to
the Landlord under the Lease
and shall in each case notify the Tenant in writing that it
has done so PROVIDED THAT the appropriation shall not be
deemed to e a payment of rent so as to prejudice the
Landlord's rights of re-entry contained in the Lease
4
<PAGE> 5
4.3 upon receipt of the written notification mentioned in the
preceding sub-clause the Tenant shall within seven days pay to
the Landlord's Solicitors such sum as shall when added to the
moneys remaining to the credit of the Deposit Account
exclusive of any interest earned on those moneys equal the
Security Deposit and such sum together with any remaining
balance in the Deposit Account shall be treated as if it were
the Security Deposit
5. CHARGE OF THE DEPOSIT ACCOUNT
5.1 THE TENANT WARRANTS to the Landlord that the Security Deposit
is free from any charge or incumbrance save as mentioned in
clause 5.2
5.2 The Tenant as beneficial owner CHARGES in favour of the
Landlord as security for the obligations on the part of the
Tenant contained in the lease and for the payment of all
moneys which are now or at any time may become due and payable
by the Tenant to the Landlord pursuant to the terms of the
Lease and for the due performance of all obligations and
liabilities (whether absolute or contingent present or future)
of the Tenant under the terms of the Lease the Tenant's
interest in the Security Deposit and all other sums from time
to time constituting the Security Deposit (but not including
any interest earned or to be earned upon the Deposit Account)
and any additional sum paid into the Deposit Account pursuant
to the provisions of sub-clause 4.3
5.3 The security created by this Deed shall constitute and be a
continuing security to the Landlord and shall be in addition
to and shall not operate so as in any way to prejudice or
affect the obligations of the Tenant or the rights of the
[page 4 illegible]
5
<PAGE> 6
THE SCHEDULE
Short particulars of the Lease
Lease dated 25th August 1993 relating to 6 Pembroke Road Sevenoaks Kent made
between the Landlord and the Tenant
THE COMMON SEAL of MARLEY )
WATERPROOFING LIMITED was )
affixed to this deed in the )
the presence of: )
Director /s/ [illegible signature]
Secretary /s/ [illegible signature]
6
<PAGE> 1
EXHIBIT 10.42
THE BANK OF N.T. BUTTERFIELD & SON LIMITED
DEBENTURE
(Fixed and Floating Charges)
The Schedule
================================================================================
Date: 30th August 199____
- --------------------------------------------------------------------------------
Company:
Horizon Exploration Ltd
6 Pembroke Road
Sevenoaks
Kent
TN13 1XR
- --------------------------------------------------------------------------------
Specifically Charged
Property:
- --------------------------------------------------------------------------------
Loan Agreement
Dated 12 August 1994
- --------------------------------------------------------------------------------
Company's
Solicitors:
================================================================================
<PAGE> 2
THIS DEBENTURE is made on the date set out in the Schedule BETWEEN:
THE COMPANY of the one part and THE BANK of the other part
NOW IT IS WITNESSED:
1. Definitions
The Company The Company described in the Schedule
The Bank The Bank of N.T. Butterfield & Son
Limited incorporated in Bermuda with limited
liability and having its London Branch Office
at 24 Chiswell Street London EC1Y 4TY and
where the context admits the term "the Bank"
includes its successors and assigns whether
immediate or derivative
The Specifically The freehold and/or leasehold
Charged Property property described in the Schedule which is
specifically charged by this Debenture and
where the context so admits or requires the
term "the Specifically Charged Property"
includes all or any part or parts thereof
The Charged Assets The goodwill undertaking property
(including the Property defined below) assets
revenues and rights of the Company charged to
the Bank by this Debenture and more
particularly described in clause 2.2 and
where the context so admits or requires the
term "Charged Assets" includes all or any
part or parts thereof
The Property That part of the Charged Assets
(including the Specifically Charged Property)
which is FIRST described in clause 2.2 and
where the context so admits or requires the
term "the Property" includes all or any part
or parts thereof
The Securities That part of the Charged Assets
which is THIRDLY described in clause 2.2
The Loan Agreement The Loan Agreement or Facility
Letter (if any) of which brief details are
specified in the Schedule
Interest Rate The rate of Interest specified in
the Loan Agreement or where there is no Loan
Agreement or the rate specified therein
cannot be ascertained the usual rate of
interest of the Bank in dealing with current
accounts payable on such days as the Bank may
from time to time determine and compounded in
the event of it not being punctually paid
with monthly quarterly or other periodic
rests as the Bank shall deem fit (but without
prejudice to the right of the Bank to require
payment of such interest) and in the absence
of manifest error the certificate of an
authorised owner of the Bank shall be
conclusive as to the rate from time to time
applicable
Receiver A receiver and/or manager appointed
pursuant to this Debenture and/or as defined
in section 29 of the Insolvency Act
1
<PAGE> 3
1986 and the expression "Receiver" used in
this Debenture includes (where the context
admits) an administrative receiver as defined
in that section
2. Fixed and Floating Charges
2.1 This Debenture is expressly made for securing present and further
advances and as a continuing security for:-
2.1.1 all present and/or future indebtedness of the Company to the Bank on
any account whatsoever as mentioned In clause 3.1 hereof
2.1.2 all other liabilities whatsoever of the Company to the Bank present
future actual or contingent
2.1.3 all costs and mortgagees' or chargees' expenses arising hereunder as
hereinafter provided together in each case with interest thereon from
day to day from demand until full discharge (as well after as before
judgement or the insolvency of the Company) at the Interest Rate
2.2 The Company as beneficial owner HEREBY CHARGES with the payment or
discharge of the money obligations and liabilities specified in clause
2.1:-
FIRST the freehold and leasehold property of the Company wherever situate both
present and future including but not limited to the Specifically Charged
Property and all buildings erections and fixtures (including trade fixtures)
and fittings from time to time on or in any such property and all rents and
other income derived from any such property or to which the Company may be or
become entitled therefrom together with the right to recover the same (by
action or otherwise) in the name of and for the account of the Company SECONDLY
all plant machinery vehicles computers and office and other equipment of the
Company both present and future (excluding stock in trade of the Company)
THIRDLY all stocks shares bonds and securities of any kind whatsoever whether
marketable or otherwise and all other interests (including but not limited to
loan capital) of the Company both present and future in any company firm
consortium or entity wheresoever situate including all allotments accretions
offers rights benefits and advantages whatsoever at any time accruing offered
or arising in respect of or incidental to the same and all stocks shares rights
money or property accruing thereto or offered at any time by way of conversion
redemption bonus preference option or otherwise in respect thereof FOURTHLY all
book and other debts revenues and claims both present and future (including
things in action which may give rise to a debt revenue or claim) due or owing
or which may become due or owing to or purchased or otherwise acquired by the
Company and the full benefit of all rights and remedies relating thereto
including but not limited to any negotiable or non-negotiable instruments
guarantees indemnities debentures legal and equitable charges and other
security and any reservation of proprietary rights rights of set-off rights of
tracing liens the benefit of any insurance proceeds and all other rights and
remedies of whatsoever nature in respect of the same FIFTHLY the uncalled
capital goodwill and connection and all patents patent applications trade marks
trade names registered designs design rights and copyrights all trade secrets
and know-how and all licenses and ancillary and connected rights relating to
the intangible property both present and future of the Company
2
<PAGE> 4
SIXTHLY the undertaking and all other property assets and rights of the Company
whatsoever and wheresoever both present and future (including but not limited
to the stock in trade of the Company wheresoever) and the premises First
Secondly Thirdly Fourthly and Fifthly described (if and in so far only as the
charges thereon herein contained shall for any reason be ineffective as fixed
charges)
2.3 The charges hereby created shall as regards the Charged Assets FIRST
SECONDLY THIRDLY FOURTHLY AND FIFTHLY described in clause 2.2 rank as
and be FIRST FIXED CHARGES and:-
2.3.1 as regards all the Property in respect of which a legal estate is now
vested in the Company shall constitute a charge by way of legal
mortgage thereon and
2.3.2 as regards all the Property in respect of which a legal estate is
vested in the Company at any future time during the continuance of
this security shall constitute a charge by way of legal mortgage
thereon immediately the documents of title in relation to the same are
deposited with the Bank (without any further assurance by the Company
or intervention by the Bank) and as to the premises SIXTHLY described
shall be a FIRST FLOATING CHARGE (subject to clause 2.4)
2.4 Notwithstanding anything herein contained if the Company charges
pledges or otherwise encumbers (whether by way of fixed or floating
security) any of the Charged Assets SIXTHLY described in clause 2.2 or
attempts so to do without the prior consent in writing of the Bank or
if any creditor or other person attempts to levy any distress
execution sequestration or other process against any of the Charged
Assets SIXTHLY described in such clause the charge hereby created over
the assets the subject thereof shall automatically without notice
operate as a fixed charge instantly such event occurs
3. The Company's General Covenants
The Company COVENANTS with the Bank:-
3.1 ON DEMAND (save where otherwise specified in the Loan Agreement or
agreed in writing between the parties hereto) to pay to the Bank all
money and discharge all obligations and liabilities which now are or
at any time hereafter may be due owing or incurred from or by the
Company to the Bank or for which the Company may be or become liable
to it in whatever currency denominated on any current or other account
or in any manner whatever (whether alone or jointly with any other
person or corporate body and in whatever style or form and whether as
principal or surety) including (without prejudice to the generality of
the above) all liabilities in connection with foreign exchange
transactions and for accepting endorsing or discounting any notes or
bills and/or under bonds guarantees indemnities documentary or other
credits or any instruments whatsoever from time to time entered into
by the Bank for or at the request of the Company or for any other
matter or thing whatsoever including interest to the date of repayment
(calculated at the Interest Rate and payable as well after as before
judgement or the insolvency of the Company) commission fees and other
charges and all legal and other costs charges and expenses on a full
indemnity basis together with any Value Added Tax at the applicable
rate which may be or become due in respect of all or any such matters
3
<PAGE> 5
3.2 That the Company will not without the prior consent in writing of the
Bank:-
3.2.1 sell assign discount factor pledge charge or otherwise dispose of the
premises Fourthly described or any part thereof or deal with the same
otherwise than in accordance with clause 6.2 or
3.2.2 create or attempt to create or permit to subsist any other mortgage
debenture charge or pledge upon or permit any lien or other
encumbrance (save a lien arising by operation of law in the ordinary
course of trading) to arise on or affect the Charged Assets ranking in
priority to or pari passu with this Debenture or
3.2.3 part with possession of assign transfer sell lease or otherwise
dispose of the interest of the Company in the Charged Assets or any
part thereof or attempt or agree so to do (except in the case of stock
in trade charged by way of floating charge only which may be sold at
market value in the usual course of trading as now conducted and for
the purpose of carrying on the normal business of the Company)
3.2.4 create or permit to exist any mortgage charge debenture or pledge upon
any of the Charged Assets which will rank after the charges contained
in this Debenture (provided that the consent of the Bank shall not be
unreasonably withheld)
3.3 Without prejudice to and in addition to every other remedy of the Bank
to pay on a full indemnity basis to the Bank on demand or (as the case
may be) to any Receiver on demand the amount of all expenses properly
incurred by the Bank or any Receiver in relation to this Debenture
with interest thereon at the Interest Rate from the respective time or
times at which such money shall have been expended until the date of
repayment and until repayment such sums and interest shall be charged
upon the Charged Assets and for the avoidance of doubt IT IS HEREBY
AGREED that the expression "expenses" includes all costs moneys
charges and expenses properly paid and all liabilities properly
incurred by the Bank or any Receiver (including legal costs charges
and expenses ascertained as between solicitor and own client) on or in
connection with or incidental to the Charged Assets and this Debenture
and all expenses herein covenanted by the Company to be paid and in
particular in connection with
3.3.1 Inspecting surveying or obtaining any report of any nature or of any
kind whatsoever in connection with the Charged Assets or repairing or
maintaining all or any of the Charged Assets or rebuilding or
reinstating any part of the Property or any works thereon where the
Bank or any Receiver reasonably considers such to be necessary for the
benefit or preservation of the Bank's security
3.3.2 investigating any matter in relation to the Charged Assets and/or any
specific aspect of the Company's affairs (or more than one) and/or
considering enforcing or attempting to enforce the rights and powers
of the Bank or any Receiver hereunder or under the general law
3.3.3 doing or considering any other matter or thing whatsoever which the
Bank or any Receiver reasonably considers to be for the benefit of or
preservation of or the more advantageous realisation of the Bank's
security
4
<PAGE> 6
4. Covenants Regarding the Property
The Company COVENANTS with the Bank as follows in relation to the Property:-
4.1 To permit the Bank and its duly authorised agents and representatives
at any time upon reasonable prior notice with or without others to
enter upon the Property or any part or parts thereof and examine the
condition thereof without thereby becoming liable as mortgagee or
chargee in possession
4.2 To keep the Property in good and substantial repair and good working
order and condition and as and when necessary to rebuild renew or
replace the same and not to pull down or remove or sell or otherwise
dispose of any part of the same without the prior consent in writing
of the Bank except in the ordinary course of use repair maintenance or
improvement and if the Company shall fail to do so the Bank and its
duly authorised agents and representatives shall be entitled (but not
bound) at any time to enter upon the Property or any part or parts
thereof and execute such works of repair and maintenance as in the
opinion of the Bank may be necessary or proper without thereby
becoming liable as mortgagee or chargee in possession
4.3.1 At all times during the continuance of this security to keep the
Property insured against loss or damage by fire civil commotion
explosion aircraft and articles dropped from aircraft and against
storm tempest lightning flooding burst pipes and malicious damage
together with cover against all relevant liabilities to third parties
and in respect of environmental impairment liabilities of any nature
and such other risks and contingencies as the Bank may from time to
time require to the extent of the full reinstatement value or the
amount of the potential liability with full provision for estimated
inflation in respect of such value or liability and in respect of the
construction and other costs involved and including a sum to cover the
cost of demolition debris removal and architects' engineers'
surveyors' and other professional fees (including any Value Added Tax
payable on or included in such costs and fees or otherwise) and if the
Property is wholly or partly let for three years' loss of rent with
insurers previously approved by the Bank in writing in the joint names
of the Company and the Bank or at the option of the Bank in the name
of the Company with the interest of the Bank in the Property being
noted on the insurance policy and with the policy containing such
provisions for the protection of the Bank as the Bank may reasonably
require to avoid the interest of the Bank being prejudiced by any act
of the Company or of any occupier
4.3.2 To deposit with the Bank the original of (or at the option of the Bank
a certified copy or copies of) the insurance policy or policies
relating to the Property and punctually to pay all premiums necessary
for the purpose of such insurance (on demand producing to the Bank the
receipt for every payment of premium thereunder) and likewise to
notify the Bank in a timely manner (confirming such notification in
writing) if any event occurs or circumstances arises which may give
rise to a claim under any such policy or policies or which may affect
the continuance or validity of any such policy or policies and
thereafter comply with the reasonable requirements of the Bank in
relation thereto
4.3.3 To hold all monies which may be received by the Company by virtue of
any policy relating to the Property in trust for the Bank and to apply
the same (at the option of the Bank but without prejudice to any
obligation in the policy of insurance or any other
5
<PAGE> 7
obligation having priority to the obligations imposed by this
Debenture) either in making good the loss or damage in respect of
which the same may have been received with any deficiency being made
good by the Company or in discharge or reduction of the monies hereby
secured
4.3.4 PROVIDED THAT if the Company shall at any time refuse or neglect to
keep the said insurances on foot or to comply in any material respect
with the covenants hereinbefore contained the Bank shall have power to
insure against the covers and risks mentioned in clause 4.3.1 and the
Company will on demand pay to the Bank every sum expended by the Bank
in so doing
4.3.5 AND PROVIDED THAT if the Company has a leasehold interest in the
Property and at all times the interest of the Bank is noted on the
relative policy of insurance and it gives cover against such risks as
the Bank shall require and contains in favour of the Bank such
provisions for the protection of the Bank as the Bank may reasonably
require and insurance is to the full reinstatement value of the
Property the Bank will accept in compliance with the terms of this
clause the insurance maintained in accordance with the lease under
which the Company holds the Property
4.3.6 AND PROVIDED FURTHER that every insurance of the Property effected by
the Company whether or not pursuant to the covenant in that behalf
hereinbefore contained shall be deemed to be an insurance for the
maintenance of which the Company is liable under this Debenture
4.4 To pay when due all outgoings (whether of a capital or revenue nature
and even if the wholly novel) payable to the landlord of the Property
(if the same is leasehold land) and/or to the local or any other
authority or to a statutory undertaker in respect of the Property or
the supply of services to the Property and to reimburse to the Bank on
demand any such sum paid by the Bank
4.5 To comply with and (where appropriate) enforce each and every covenant
and provision contained in any document affecting the Property and
comply with all bye-laws and planning local authority and statutory
requirements affecting the Property its use and occupation and the
employment of persons at the Property
4.6.1 If the Property or any part thereof is let to take such action
(including legal proceedings) as may be reasonably necessary to
procure the payment of rent by and to enforce the observance and
performance of terms conditions and covenants on the part of every
tenant of the Property or such part and to observe and perform the
terms conditions and covenants on the part of the Company in respect
of such letting
4.6.2 To pay into such account with the Bank in the name of the Company or
to such other account as the Bank shall from time to time direct all
monies which the Company may receive by way of rent licence fee or
other like payment in respect of the Property or any part thereof and
pending such payment to hold such moneys in trust for the Bank
4.6.3. If so required by the Bank to instruct all or any tenants licensees
and/or other occupiers of any part of the Property to pay all sums due
by way of rent licence fee or other like payment in respect of the
Property or any part thereof to such account with the Bank in the name
of the Company or such other account as the Bank shall from time to
time direct
6
<PAGE> 8
4.6.4 Not (without the prior consent in writing of the Bank) to charge or
otherwise dispose of or release exchange compound set-off or grant
time or indulgence in respect of or otherwise deal with all or any
part of any rent licence fee or other like payment in respect of the
Property or any part thereof nor (without the like consent) to
withdraw charge or otherwise dispose of any part of the moneys
standing to the credit of any such account as is mentioned in clauses
4.6.2 and 4.6.3
4.6.5 If the Property or any part is leasehold to take such action as
aforesaid to enforce the observance and performance of terms
conditions and covenants on the part of the landlord of the Property
or such part and to pay the rents reserved by and generally observe
and perform the terms conditions and covenants on the part of the
Company contained in the lease under which the Company holds the
Property or such part
4.7 Not without the written consent of the Bank to part with possession of
the Property or any part or grant a tenancy or lease or accept a
surrender of any tenancy or lease relating to the Property or any part
thereof nor to release or vary any of the terms of nor grant any
consent licence or permission under any such tenancy or lease nor
agree any rent review nor exercise any power to determine or extend
the same to the intent that the statutory and other powers otherwise
available to the Company in respect of all or any of such matters
shall not be exerciseable during the continuance of this security
without the Bank's consent
4.8 Save as permitted under clause 4.7 hereof not to part with or share
possession or occupation of the Property or part thereof nor to grant
to any person any licence right or interest to occupy the Property or
any part thereof nor create or permit to arise any overriding interest
(as defined in the Land Registration Acts 1925 to 1988)
4.9 Not without the written consent of the Bank to:-
4.9.1 grant or suffer to be created or acquired any option proprietary right
or interest or any easement right licence privilege or profit a
prendre which shall affect or in any way relate to the Property or any
part nor do or cause or permit to be done anything which may in any
way depreciate jeopardise or otherwise prejudice the value of the
Property to the Bank as security
4.9.2 exercise any option which in any way relates to the Property or any
part of it (including any option regarding the application of Value
Added Tax to any disposal of any interest in the Property or any part
of it or to any rental in respect of the Property or any part of it)
4.10.1 Not to bring onto the Property any hazardous substance in a quantity
notifiable under the Notification of Installations Handling Hazardous
Substances Regulations 1982 and/or any regulations made under the
Planning (Hazardous Substances) Act 1990 without the prior written
consent of the Bank and (without prejudice to the Bank's power to
refuse its consent) any such consent may be subject to conditions the
nature and scope of which are to be at the Bank's entire and
unfettered discretion
4.10.2 Not to use any part of the Property for a contaminative use and/or the
deposit of waste material of any nature or any operation which might
involve the deposit of waste material within the scope of any
regulation issued by any competent authority without the prior written
consent of the Bank as mentioned in clause 4.10.1
7
<PAGE> 9
4.10.3 To comply at the expense of the Company in a timely and effective
manner with the requirements of any competent authority in respect of
any matter falling within the scope of the Companys obligations under
clauses 4.10.1 or 4.10.2 including (without in any way limiting the
scope of the Companys obligations under this clause) any requirement
on the part of the National Rivers Authority any waste regulation
authority and any health and safety executive.
4.10.4 If so required by the Bank at any time and from time to time to
procure at the expense of the Company and for the benefit of the
Company and the Bank any environmental audit assessment or
investigation which the Bank may deem necessary in order to determine
the extent of (or any deficiencies in) the Companys compliance with
its obligations under this clause 4.10 or to satisfy the Bank or any
other person (including any competent authority) as to the extent of
any environmental liability or risk applicable at any time in respect
of any part of the Property
4.11 Not without the written consent of the Bank to make any application
under the Town and Country Planning Acts 1971 to 1990 to change the
authorised use of or to carry out development upon the Property nor to
apply for an established use certificate
4.12 To notify the Bank forthwith of any notice order proposal or
information received by the Company in respect of proposals for the
compulsory acquisition of or otherwise relating to or affecting the
Property or any part thereof or any application by a person other than
the Company for planning permission affecting the Property or any part
thereof and at the request of the Bank to make or join with the Bank
in making such objections or representations against or in respect of
any such proposal as the Bank shall consider expedient and any
compensation received by the Company as a result of any such notice
order or proposal shall be held in trust for and paid to the Bank in
reduction of the monies obligations and liabilities secured by this
Debenture
4.13 To inform the Bank forthwith if the Company acquires or agrees to
acquire any interest in freehold or leasehold property and to deposit
with the Bank and to permit the Bank during the continuance of this
security to hold and retain all deeds and documents of title relating
to the Property or any part thereof and such other documents relating
to the Property as the Bank may from time to time require
4.14 At any time it and when required by the Bank to provide such
instructions and authorities addressed to or in favour of the Bank or
otherwise and in such form as the Bank shall require (including any
such as are required for or relate to the due performance of the
Companys obligations under any other covenant in this Debenture) and
to execute such further legal or other mortgages charges or
assignments in favour of the Bank as the Bank shall from time to time
require over all or any part of the Property and all rights and
remedies relating thereto both present and future (including any
vendor's lien) to secure all moneys obligations and liabilities hereby
covenanted to be paid or otherwise hereby secured such further
mortgages charges or assignments to be prepared by or on behalf of the
Bank at the cost of the Company and to contain an immediate power of
sale without notice a clause excluding section 93 and the restrictions
contained in section 103 of the Law of Property Act 1925 and such
other clauses for the benefit of the Bank as the Bank may reasonably
require
8
<PAGE> 10
5. Covenants Regarding the Charged Assets Generally
The Company COVENANTS with the Bank as follows in relation to the Charged
Assets (including the Property where relevant):-
5.1 To observe and perform all covenants and stipulations from time to
time affecting its patents patent applications trade marks trade names
registered designs and copyrights and all other industrial or
intangible property or any licence or ancillary or connected rights
from time to time relating to industrial or intangible property and to
preserve maintain and renew when necessary or desirable all such
licences and rights
5.2 To keep all plant machinery vehicles computers and office and other
equipment and every part thereof in good and substantial repair and in
good working order and condition and not to remove or sell or
otherwise dispose of any of the same without the prior consent in
writing of the Bank except in the ordinary course of use repair
maintenance or improvement and if the Company is at any time in
default in complying with this covenant the Bank shall be entitled but
not bound to repair and maintain the same with power for the Bank its
agents and their respective employees to enter any of the Company's
property for that purpose or to inspect the same and all expenses thus
incurred by the Bank shall be properly incurred for the purposes of
this Debenture
5.3.1 At its own expense to insure and keep insured all Charged Assets of an
insurable nature with insurers previously approved by the Bank in
writing against all prudent risks (having regard to the nature of the
Charged Assets in question) and such other risks and contingencies as
the Bank shall from time to time request to the full replacement value
thereof from time to time in the joint names of the Company and the
Bank or at the option of the Bank in the name of the Company with the
interest of the Bank noted on the policy or policies and with the
policy or policies containing such provisions for the protection of
the Bank as the Bank may reasonably require
5.3.2 To maintain such other insurance policies (with the interest of the
Bank noted thereon) containing like provisions for the protection of
the Bank as are normally maintained by prudent companies carrying on
similar businesses and duly pay within one week of the same becoming
due all premiums and other moneys necessary for effecting and keeping
up such insurances and on demand produce to the Bank the policies of
such insurance and proof of such payments failing which the Bank may
take out or renew such insurances in any sum which the Bank may think
expedient and all money expended by the Bank under this provision
shall be reimbursed by the Company on demand
5.3.3 All moneys to be received by virtue of any insurance maintained or
effected by the Company (whether or not in pursuance of the
obligations hereunder) shall be paid to the Bank (or if not paid by
the insurers directly to the Bank held on trust for the Bank) and
shall at the option of the Bank be applied in replacing restoring or
reinstating the Charged Assets destroyed damaged or lost (any
deficiency being made good by the Company) or in reduction of the
moneys obligations and liabilities hereby secured
5.4 To pay punctually and indemnify the Bank and any Receiver against all
existing and future rental charges licence fees royalties and all
other duties charges assessments impositions and outgoings whatsoever
(whether imposed by agreement statute or otherwise and whether in the
nature of capital or revenue and even if wholly novel) now or at any
9
<PAGE> 11
time during the continuance of this security payable in respect of the
Charged Assets or any part thereof or by the owner or user thereof
(including all calls instalments and other payments that may be made
or become due in respect of the Securities) and any such sums paid by
the Bank or any Receiver shall be reimbursed by the Company on demand
5.5 Not (without the prior consent in writing of the Bank) to vary
surrender cancel assign charge or otherwise dispose of or permit to be
forfeit its interest in any credit sale hire purchase leasing rental
licence or like agreement for any material equipment used in its
business but generally to fulfill its obligations under every such
agreement and when required produce to the Bank proof of all payments
from time to time due from the Company thereunder
5.6 Not (without the prior consent in writing of the Bank) to form or
acquire any subsidiary or transfer sell lease or otherwise dispose of
any Charged Assets to any subsidiary save on terms previously approved
in writing by the Bank
5.7 Not (without the prior consent in writing of the Bank) to permit any
person to become entitled to any proprietary right or interest which
might affect the value of any of the Charged Assets nor to do or cause
or permit to be done anything which may in any way depreciate
jeopardise or otherwise prejudice the value to the Bank of any
security hereby created
5.8 To inform the Bank forthwith if the Company acquires or agrees to
acquire any share or security falling within the Securities and to
deposit with the Bank and permit the Bank during the continuance of
this security to hold and retain the following:-
5.8.1 all insurance policies relating to the Charged Assets
5.8.2 all stock and share certificates and documents of title relating to
the Securities and such deeds of transfer in blank and other documents
as the Bank may from time to time require for perfecting its title to
the Securities (duly executed by or signed on behalf of the registered
holder) or for vesting or enabling it to vest the same in itself or
its nominee or trustee or in any purchaser
5.8.3 all assurance policies from time to time effected by the Company on
the lives of key employees and
5.8.4 all such other documents relating to the Charged Assets as the Bank
may from time to time require
5.9 To procure that all votes which may be cast by or on behalf of the
Company as a shareholder in any other corporate body to which any of
the Securities relate and all votes which may be cast by or on behalf
of any nominee of the Company as a director of any such corporate body
shall be so cast as to procure the due and timely registration by any
such corporate body of any transfer of that part of the Securities to
the Bank or to any trustee for or nominee of the Bank or any purchaser
(subject only to the due stamping of the relevant transfer or
transfers) and so as to prevent any variation in the share capital of
(including the issue of unissued shares) or the rights of shareholders
in any such corporate body
5.10 At any time if and when required by the Bank to provide such
instructions and authorities in favour of the Bank or otherwise and in
such form as the Bank shall require and to execute such further fixed
or floating charges or assignments in favour of the Bank as the Bank
shall from time to time require over all or any of the Charged Assets
both present
10
<PAGE> 12
and future including but not limited to the Securities and the book
and other debts revenues and claims of the Company and all rights and
remedies relating thereto both present and future (including any
vendor's lien) to secure all moneys obligations and liabilities hereby
covenanted to be paid or otherwise hereby secured such further charges
or assignments to be prepared by or on behalf of the Bank at the cost
of the Company and to contain an immediate power of sale without
notice a clause excluding section 93 and the restrictions contained in
section 103 of the Law of Property Act 1925 and such other clauses for
the benefit of the Bank as the Bank may reasonably require
6. Covenants Regarding the Company's Business
The Company FURTHER COVENANTS with the Bank as follows:-
6.1 To conduct and carry on its business in a proper and efficient manner
and not to make any substantial alternation in the nature of or mode
of conduct of that business and to keep or cause to be kept proper
books of account relating to such business
6.2 To get in and realise all book and other debts and claims hereby
charged in the ordinary course of its business and to pay into the
Company's account with the Bank or to such other account as the Bank
shall from time to time direct all moneys which it may receive in
respect of the same forthwith on receipt and pending such payment to
hold such moneys on trust for the Bank and not (without the prior
consent in writing of the Bank) charge or otherwise dispose of or
release exchange compound set off or grant time or indulgence or
otherwise deal with all or any of the same or purport so to do
6.3 To furnish to the Bank copies of the profit and loss account balance
sheet and directors' report in respect of each financial year of the
Company its holding company or companies and such of the subsidiaries
of the Company or its holding company or companies as the Bank may
from time to time require all such reports balance sheets and accounts
to be prepared in accordance with generally accepted accounting
principles and showing a true and fair view of their respective
affairs the relevant profit or loss and the source and application of
funds certified by duly qualified auditors approved by the Bank and to
be furnished forthwith upon the same becoming available and not in any
event later than the expiration of four months from the end of such
financial year and also at the time of issue copies of all statements
and circulars to shareholders or to any class of creditors and from
time to time such other information statements forecasts and
projections of the Company its holding company or companies and the
subsidiaries of the Company or it holding company or companies as the
Bank may require
6.4 Not (without the prior consent in writing of the Bank) to call or
receive in advance of calls all or any part of the uncalled capital of
the Company nor to redeem or purchase its own shares nor pay an
abnormal amount by way of dividend
6.5 If required by the Bank to procure that each subsidiary of the company
shall guarantee to the Bank payment of all moneys obligations and
liabilities hereby covenanted to be paid and charge all its
undertaking property and assets to secure the same in such manner as
the bank shall from time to time require
11
<PAGE> 13
6.6 To keep the bank fully informed with regard to all aspects of the
trading general affairs and prospects of the Company and from time to
time and at any time if so required by the Bank:-
6.6.1 To provide such further information financial statements and copy
documents as the Bank shall require and
6.6.2 To afford to the Bank and its officers and agents full and
unrestricted access to the accounting and other records of the Company
with all necessary facilities for taking copies thereof and/or
extracts therefrom
7. Power of Sale and Power to Appoint a Receiver
7.1 Section 103 of the Law of Property Act 1925 shall not apply hereto and
the statutory power of sale and other powers (whether given by statute
or expressed herein) shall be exerciseable without further notice at
or at any time after demand for payment of any money or the
performance of any obligation or discharge or any liability hereby
secured whether or not the Company shall have been accorded sufficient
time or any time in which to satisfy the demand made and the date of
such demand shall (without prejudice to the equitable right of
redemption) be the redemption date
7.2 No purchaser or other person shall be bound or concerned to see or
enquire whether the right of the Bank or any Receiver appointed by it
to exercise any of the powers hereby conferred has arisen or not or be
concerned with notice to the contrary or with the propriety of the
exercise or purported exercise of such powers
7.3 At or at any time after demand as aforesaid the Bank may appoint any
person to be a Receiver of the Charged Assets or any part thereof
(with power to authorise any joint Receiver to exercise any power
independently of any other joint Receiver) and may remove any Receiver
so appointed and appoint another in his place as to the whole or any
part of the Charged Assets and such Receiver so appointed shall have
all the powers conferred from time to time on receivers by statute (as
varied and extended by this Debenture) and in addition (so far as
requisite and/or applicable to the Charged Assets) the powers
conferred on an administrator and an administrative receiver by
sections 14(1) and 42(1) of the Insolvency Act 1986 and power on
behalf of the Company (notwithstanding the insolvency of the Company)
to do or omit to do anything which the Company could do or omit to do
in relation to the Charged Assets or any part thereof
7.4 Without prejudice to any other remedy of the Bank and notwithstanding
that the statutory power of sale and other powers may not then be
exerciseable as provided in clause 7.1 the Bank shall be entitled upon
the Companys default in the payment of interest or any other sum
without demand or notice to the Company to appropriate all or any part
of the moneys standing to the credit of any account mentioned in
clause 4.6.2 and/or clause 4.6.3 in or towards the payment of any
interest or other sum then due from the Company to the Bank
12
<PAGE> 14
8. Powers of the Bank and of a Receiver
At or at any time after demand as aforesaid the Bank and any Receiver appointed
hereunder may (without thereby becoming liable as mortgagee in possession
and/or to account for any sums other than actual receipts) exercise the
following powers without the need to observe any of the provisions of sections
99 and 100 of the Law of Property Act 1925:-
8.1 To sell exchange convert into money or otherwise dispose of or deal
with the whole or any part of the Charged Assets alone or in parcels
either by public auction or private contract for such consideration
and generally on such terms and conditions as the Bank or the Receiver
(as the case may be) deems fit and either for a lump sum or for a sum
payable in instalments or for a sum on account and a mortgage or
charge for the balance or for debentures or other obligations or
shares stock securities or other valuable consideration and with power
to buy rescind or vary any contract for sale and to resell the whole
or any part of the Charged Assets without being responsible for any
loss which may be occasioned to the Company thereby and so that
covenants and contractual obligations may be granted and assumed in
the name of and so as to bind the Company (or other the estate owner
in the case of land) if the Bank or the Receiver (as the case may be)
shall consider it necessary or expedient so to do
8.2 To make agreements for leases and to grant leases of the whole or any
part of the Charged Assets and surrender and accept surrenders of
leases and grant vary or terminate any options and/or licences upon
such terms (including the length of the term of any lease or licence
and payment of any premium) and at such rents commissions or fees as
the Bank shall think fit and in the case of land without any further
consent by or notice to the Company to exercise on behalf of the
Company all the powers and provisions conferred on a landlord or a
tenant by the Landlord and Tenant Acts 1927 to 1988 the Rent Acts 1974
to 1985 the Housing Act 1988 the Agricultural Holdings Acts 1948 to
1986 the Agriculture Act 1986 and any other legislation from time to
time in force relating to the rights of landlords and tenants rents
housing and agriculture in respect of any part of the Property but
without any obligation to exercise any of such powers and without any
liability in respect of powers so exercised or omitted to be exercised
8.3 As agents for the Company to remove store sell or otherwise deal with
any furniture equipment or goods of the Company (including motor
vehicles) and the Bank and the Receiver shall not be liable for any
loss or damage occasioned to the Company and the Company shall
indemnify the Bank or the Receiver (as the case may be) against all
expenses incurred by them in relation to such furniture equipment or
goods and such expenses shall be deemed to have been property incurred
for the purposes of this Debenture
8.4 Upon any sale made or lease granted in exercise of the powers
conferred in that behalf by this Debenture or by statute the Bank or
the Receiver (as the case may be) may sever and sell any fixtures upon
the Property and in the case of a sale or lease of part only of the
Property may make such arrangements as the Bank or the Receiver (as
the case may be) shall think fit for the apportionment of any rent
effecting the part sold or for charging the rent wholly upon part only
of the Property and for the indemnification of any purchaser or
purchasers against the whole or any part of the rent or the
performance or
13
<PAGE> 15
observance of any of the covenants or agreements affecting the
Property either by the limitation of a new rent or by powers of entry
and distress and entry and taking the income thereof or otherwise
8.5 To obtain all necessary planning permissions building regulation
approvals and any other permissions consents or licences as may be
necessary to develop the Property as the Bank or the Receiver (as the
case may be) shall think fit
8.6 To deal generally with and manage and to carry on all such development
upon the Property as the Bank or the Receiver (as the case may be) may
deem proper to carry on and to complete with or without modification
any building or other works thereon which may be unfinished (with
power to use any machinery and incorporate in any building any unfixed
materials) and in particular to take over vary cancel or complete any
contract relating thereto without being responsible for loss or damage
and the cost thereof (including payment upon architects' and other
professional certificates) shall be reimbursed by the Company and
shall be charged upon the Charged Assets
8.7 To acquire any property asset or right (including the securing of
vacant possession of any property) which the Bank or the Receiver may
deem necessary or desirable for the more advantageous realisation of
all or any part of the Charged Assets and to combine with and/or to
sell or otherwise dispose of or deal with any such property asset or
right with or without the Charged Assets or any part of them in such
manner as the Bank or the Receiver may deem fit and all costs thus
incurred shall be deemed to have been properly incurred for the
purposes of this Debenture and until reimbursed by the Company shall
be charged upon the Charged Assets
8.8.1 To pursue settle adjust or compromise any claim of against or arising
out of any of the Charged Assets on such terms as the Bank or the
Receiver shall think fit and to bring prosecute enforce or defend any
such claim
8.8.2 To enter into any lawful agreement which the Bank deems fit to vary
the priority of all or any claims against the Company as between the
Bank and any other secured creditor of the Company and to execute any
such agreement in the name of the Company
8.9 To take all such steps as the Bank or the Receiver (as the case may
be) shall from time to time and at any time deem appropriate in order
to contain reduce neutralize or eliminate any apparent potential or
consequential damage or injurious effect to the Property its
surroundings and/or the environment as a result of the escape or
spillage of any hazardous substance or the presence of any waste
material of any nature and in so doing to undertake any measures
necessary to comply with the requirements of any competent authority
8.10 To appropriate the whole or any part of the moneys standing to the
credit of any account mentioned in clause 4.6.2 or 4.6.3 in or towards
the satisfaction of the Companys indebtedness to the Bank and if the
Bank does not do so then (unless the Bank gives express notice to the
contrary to the Company) it shall nevertheless be treated as if it had
done so at the time of demand as aforesaid
14
<PAGE> 16
9. Receiver's Powers
9.1 Any Receiver appointed hereunder shall have in addition to the powers
referred to in clause 8 hereof and to powers conferred by statute the
following powers:
9.1.1 to take possession of collect and get in the Charged Assets or any
part thereof and all rents and other income thereof accrued before or
after the date of his appointment and for that purpose to take defend
or discontinue any proceedings or submit to arbitration in the name of
the Company or otherwise as he shall think fit
9.1.2 to exercise in respect of the Securities all voting or other powers or
rights available to a registered holder thereof in such manner as he
may think fit
9.1.3 to carry on manage develop reconstruct amalgamate or diversify the
business of the Company or any part thereof or concur in so doing and
to make any arrangement or compromise or enter into or cancel any
contract as he may think fit
9.1.4 to make allowance to and re-arrangements with any lessees tenants or
other persons from whom any rents licence fees profits commissions or
other payments may be receivable
9.1.5 to institute carry on and conduct services of lighting heating
cleansing and maintenance and all other services which may be deemed
proper for the efficient use or management of the Charged Assets or
any part thereof
9.1.6 to effect maintain renew and vary all requisite insurances in respect
of the Charged Assets including insurances against occupiers' and
third party liability in respect of the Property
9.1.7 to effect repairs renewals and improvements to and generally to manage
the Charged Assets and to do all such other acts and things as may be
considered to be incidental or conducive to any matters or powers
aforesaid and which a Receiver may or can do as agent for the Company
9.1.8 to borrow money on the security of the Charged Assets or any part of
them from the Bank or from any other lender either in priority to this
security or not (as the Bank may determine) for any of the purposes
mentioned in this clause or in clause 8 hereof
9.1.9 to employ upon such terms as he shall deem fit for the protection of
the Property and for all or any of the purposes aforesaid solicitors
architects surveyors quantity surveyors estate agents contractors
builders managers and workmen and others and purchase all proper
materials and equipment as he shall deem necessary
9.1.10 to promote the formation of companies with a view to the same
purchasing leasing licensing or otherwise acquiring interests in all
or any of the Charged Assets or otherwise to arrange for such
companies to trade or cease to trade and to purchase lease licence or
otherwise acquire all or any of the Charged Assets on such terms and
conditions whether or not including payment by instalments secured or
unsecured as he may think fit
9.1.11 to make calls conditionally or unconditionally on the members of the
Company in respect of uncalled capital
9.1.12 to sign any document execute any deed and do all such other acts and
things as may be considered by him to be incidental or conducive to
any of the matters or powers aforesaid or to the realisation of the
Bank's security and use the name of the Company for all the above
purposes
9.2 All money expended by the Receiver (including interest paid by him on
the borrowings) shall on demand be repaid by the company with interest
thereon at the Interest Rate from
15
<PAGE> 17
the respective times at which such money shall have been expended
until the date of repayment and until repayment such sums and interest
shall be charged on the Charged Assets
9.3 All money or other consideration of whatsoever nature received by the
Bank or by any Receiver appointed by the Bank in the exercise of any
powers conferred by this Debenture shall forthwith become charged with
the payment of all monies obligations and liabilities secured hereby
and shall be applied after the discharge of the remuneration and
expenses of the Receiver and all liabilities (if any) having priority
thereto in or towards satisfaction of such of the moneys obligations
and liabilities hereby secured and in such order as the Bank in its
absolute discretion may from time to time conclusively determine (save
that the Bank may credit the same to a suspense account for so long
and in such manner as the Bank may from time to time determine and the
Receiver may retain the same for such period as he and the Bank
consider expedient)
9.4 Any Receiver appointed hereunder shall so far as the law allows be
deemed to be the agent of the Company for all purposes and the Company
shall be solely responsible for his acts defaults and remuneration and
the Bank shall not be under any liability for his remuneration or
otherwise and where (on account of the liquidation of the Company or
otherwise) the law does not allow such interpretation any Receiver
appointed hereunder shall be deemed to act as principal and not as
agent of the Bank
9.5 The remuneration of the Receiver shall be appropriate to the work and
responsibilities involved and charged at such rates as may be agreed
between him and the Bank at or at any time after his appointment
9.6 The Company hereby agrees on demand to indemnify both the Bank and any
Receiver against all losses actions claims expenses demands and
liabilities whether in contract tort or otherwise now or hereafter
incurred by it or him or by any manager agent officer or employee for
whose liability act or omission it or he may be answerable for
anything done or omitted in the exercise or purported exercise of the
powers herein contained or occasioned by any breach by the Company of
any of its covenants or other obligations to the Bank
10. Appointments Consents and Notices
10.1 The Bank may appoint remove and replace a Receiver hereunder by
writing under the hand of an authorised officer of the Bank
10.2 Any consent to be given by the Bank hereunder may be given by writing
under the hand of an authorised officer of the Bank
10.3 A demand for payment or any other demand or notice under this
Debenture shall be effective notwithstanding the insolvency or other
incapacity of the Company and shall be made or given in writing by any
agent or solicitor or authorised officer of the Bank and served on any
one of the Companys directors or the Company Secretary personally or
delivered or sent by first class letter post cable telex or facsimile
transmission to its registered office or the address or place of
business of the Company last known to the Bank or delivered or sent as
aforesaid to the address of the Company stated in the Schedule and a
demand or notice so addressed and posted shall be deemed to be
delivered
16
<PAGE> 18
forty eight hours after posting and shall be effective notwithstanding
that it be returned undelivered and notwithstanding the insolvency of
the Company and in proving such service it shall be sufficient to
prove that the notice or demand was properly addressed and posted and
any notice or demand sent by cable telex or facsimile transmission
shall be deemed to have been served at the time of despatch and shall
be effective notwithstanding any incomplete or distorted transmission
and in proving such service it shall be sufficient that the notice or
demand (if by cable) was property addressed and dispatched or (if by
telex or facsimile transmission) was transmitted to the number last
known to the Bank from which the correct answerback or other
appropriate acknowledgement of receipt was obtained
10.4 Any such notice or demand or (in the absence of manifest error) any
certificate as to the amount at any time secured hereby shall be
conclusive and binding upon the Company if signed by an authorised
officer of the Bank
11. Continuing Security and Banking Powers
11.1 This Debenture shall be a continuing security to the Bank
notwithstanding the insolvency of the company and shall not be
prejudiced by repayment or partial repayment of sums from time to time
owing by the Company to the Bank or by the settlement of any account
and is in addition to and shall not merge with or otherwise prejudice
or affect any contractual or other right or remedy or any collateral
or other securities now or hereafter held or available for any of the
moneys hereby secured (even if the same shall be taken without the
consent or against the prohibition of the Company in respect of moneys
for which the Company is or shall be liable as surety only) and this
Debenture shall not be in any way prejudiced or affected thereby or by
the invalidity thereof or by the Bank now or hereafter dealing with
exchanging releasing varying or abstaining from perfecting or
enforcing any of the same or any rights which it may now or hereafter
have or giving time for payment or indulgence or compounding with any
other person liable
11.2 The Bank may from time to time give time for payment of any bill or
bills of exchange or any promissory note or notes or any other
security or securities which may have been discounted for or received
in account from the Company by the Bank or on which the Company shall
or may be liable as drawer or endorser or otherwise liable thereon as
the Bank shall in its discretion think fit without in any manner
releasing the Company or affecting the security hereby created and
nothing herein contained shall operate so as to merge or otherwise
prejudice or affect any bill note guarantee mortgage or other security
which the Bank may for the time being have for any money or
liabilities due or incurred by the Company to the Bank or any right or
remedy of the Bank thereunder
11.3 The Bank may upon receiving notice of any charge or other interest
affecting the Property or any part thereof (whether or not the Bank
has consented hereunder to such charge or the creation of such other
interest) close the then current account and open a new account with
the Company and if the Bank does not open a new account then (unless
the Bank gives express notice to the contrary to the Company) it shall
nevertheless be treated as if it had done so at the time when it
received such notice and as from that time no money paid in or carried
to the credit of the Company in such new account shall be appropriated
17
<PAGE> 19
towards or have the effect of discharging any part of the amount due
to the Bank on the said closed account at the time when it received
such notice as aforesaid
11.4 If the Company shall have more than one account with the Bank (whether
in the name of the Bank for the account of the Company or of the
Company jointly with others and whether current deposit loan or of any
other nature whatsoever whether subject to notice or not and whether
in sterling or in any other currency and wheresoever situate) the Bank
may at any time and without any prior notice in that behalf forthwith
transfer all or any part of any balance standing to the credit of any
such account to any other such account which may be in debit or in
respect of which there are outstanding obligations or liabilities (be
they present future actual contingent primary collateral several or
joint) where such combination or transfer requires the conversion of
one currency into another such conversion shall be calculated at the
then prevailing spot rate of exchange of the Bank (as conclusively
determined by the Bank) for purchasing the currency for which the
Company is liable with the existing currency so converted
11.5 The Bank may at any time seek from any person having dealings with the
Company (including any other mortgagee or chargee) such information
about the Company's affairs as the Bank may think fit and the
execution of this Debenture by the Company shall constitute an
authority and request on the part of the Company to any such person to
supply the requested information to the Bank without the need for any
further authority other than a copy of this Debenture certified by an
authorised officer of the Bank or by the Bank's solicitors
11.6 The execution of this Debenture by the Company shall constitute an
authority on the part of the Company to the Bank to disclose to any
bank or financial institution to whom the Bank is proposing to assign
all or any of its rights hereunder or to offer or grant a
participation in any loan secured by this Debenture such information
concerning the affairs of the Company insofar as they relate to the
Charged Assets in such manner and to such extent as the Bank shall
from time to time deem fit
12. Currency Clauses
12.1 All moneys received or held by the Bank or by a Receiver under this
Debenture may from time to time be converted into such other currency
as the Bank considers necessary or desirable to cover the obligations
and liabilities of the Company in that currency at the then prevailing
spot rate of exchange of the Bank (as conclusively determined by the
Bank) for purchasing the currency to be acquired with the existing
currency
12.2 If and to the extent that the Company fails to pay on demand any
amount due the Bank may in its absolute discretion and without notice
to the Company purchase at any time thereafter so much of a currency
as the Bank considers necessary or desirable to cover the obligations
and liabilities of the Company in such currency hereby secured at the
then prevailing spot rate of exchange of the Bank (as conclusively
determined by the Bank) for purchasing such currency with sterling and
the Company hereby agrees to indemnify the Bank against the full
sterling price (including all costs charges and expenses) paid by the
Bank
18
<PAGE> 20
12.3 No payment to the Bank (whether under any judgment or court order or
otherwise) shall discharge the obligation or liability of the Company
in respect of which it was made unless and until the Bank shall have
received payment in full in the currency in which such obligation or
liability was incurred and to the extent that the amount of any such
payment shall on actual conversion into such currency fall short of
such obligation or liability expressed in that currency the Bank shall
have a further separate cause of action against the Company and shall
be entitled to enforce the security hereby created to recover the
amount of the shortfall
13. Power of Attorney
13.1 As security for the covenants hereinbefore contained and in
consideration of the Bank making available or continuing to make
available banking facilities to the Company the Company hereby
irrevocably during the continuance in force of this security appoints
the Bank and the persons and corporate bodies deriving title under the
Bank any person nominated in writing under the hand of an officer of
the Bank or any successor in title and any Receiver appointed
hereunder severally to be the attorney of the Company for the Company
and in the Company's name and on the Company's behalf to execute seal
and deliver or otherwise perfect any deed or other instrument or act
which may be required or deemed proper for any of the purposes of this
security (including any instruction or authority or any legal or other
mortgage or any fixed or floating charge or assignment referred to in
clauses 4.13 and 5.10) or to protect by registration or otherwise the
interest of the Bank hereunder and this appointment shall operate as a
general power of attorney under section 10 of the Powers of Attorney
Act 1971
13.2 The Company hereby covenants with the Bank and its successors in title
and separately with any such Receiver that on request the Company will
ratify and confirm all security agreements documents acts and things
and all transactions entered into by the Bank or such Receiver or by
the Company at the instance of the Bank or such Receiver in the
exercise or purported exercise of its or his powers and the Company
irrevocably acknowledges and agrees that such power of attorney is
inter alia given to secure the performance of the obligations owed to
the Bank and any such Receiver by the Company
14. Consolidation and Miscellaneous
14.1 The restriction of the right of consolidating mortgage securities
contained in section 93 of the Law of Property Act 1925 shall not
apply to this Debenture or to any security given to the Bank pursuant
hereto
14.2 No failure or delay by the Bank in exercising any right or remedy
shall operate as a waiver thereof nor shall any single or any partial
exercise or waiver of any right or remedy preclude its further
exercise or the exercise of any other right or remedy
14.3 The security given to the Bank pursuant to this Debenture shall extend
to all indebtedness of the Company to the Bank as mentioned in clause
3.1 whether or not the Bank was an original party to the relevant
transaction by virtue of which such indebtedness or any part of it may
from time to time arise
19
<PAGE> 21
14.4 Each of the provisions of this Debenture is severable and distinct
from the others and if at any time one or more of such provisions is
or becomes invalid illegal or unenforceable the validity legality and
enforceability of the remaining provisions hereof shall not in any way
be affected or impaired thereby
14.5 To the extent that this Debenture constitutes a contract for the
disposition of an interest in land within the terms of section 2 of
the Law of Property (Miscellaneous Provisions) Act 1989 the parties
hereto declare that all the terms which have been expressly agreed
between them are contained or referred to in this Debenture
15. Warranty and Undertaking
15.1 The Company hereby represents and warrants that the Company has full
power authority and legal right to give and to observe the terms and
conditions of this Debenture and that there is no provision in the
memorandum or articles of association or any other constitutional
document of the Company or in any other corporate document mortgage
indenture trust deed or any other agreement binding upon the Company
or affecting the Company which would inhibit or prevent the Company
from entering into the obligations set out in this Debenture or
prevent conflict with or affect the Company's performance or
observance of any of the terms of this Debenture
15.2 The Company hereby undertakes to the Bank that the Company will obtain
and maintain in full force and effect all governmental and other
approvals and consents and do or cause to be done all other acts and
things necessary or desirable in connection herewith or for the
performance of the Company's obligations hereunder
16. Proper Law and Jurisdiction
16.1 This Debenture shall be governed by and construed in accordance with
the Law of England and Wales and the Company hereby irrevocably
submits to the non-exclusive jurisdiction of the Courts in England and
Wales
16.2 Without prejudice to the generality of the provisions of sections 695
and 725 of the Companies Act 1985 and the Rules of the Supreme Court
for the time being the Company hereby irrevocably authorises and
appoints the solicitors named in the Schedule (or such other person
being a firm of solicitors resident in England or Wales as the Company
may by notice to the Bank substitute) to accept service of all legal
process arising out of or connected with this Debenture and service on
those solicitors (or such substitute) shall be deemed to be service on
the Company
17. Headings and Interpretation
17.1 The subject headings are for information only and do not affect the
construction or effect of this Debenture
17.2 Words importing the masculine gender only include the feminine gender
and words importing the singular number may include the plural number
and vice versa
20
<PAGE> 22
17.3 Words denoting or referring to a natural person shall include a body
corporate and vice versa
17.4 Any reference to a statute includes any amendment or re-enactment of
it for the time being in force and (where the context so admits or
requires) any antecedent statute amended or re-enacted by that statute
and any statutory instrument regulation or order deriving authority or
validity therefrom
18. Application for Restriction
The Company hereby applies to the Chief Land Registrar for the registration of
a restriction upon all registered titles comprised in this Debenture that no
dealing shall be registered without the written consent of the proprietor of
this Debenture
IN WITNESS whereof the parties have executed this Debenture as a deed on the
date shown in the Schedule
The Common Seal of )
Horizon Exploration Ltd )
was hereunto affixed in )
the presence of:- )
Director /s/ [illegible signature]
Director /s/ [illegible signature]
21
<PAGE> 1
EXHIBIT 10.43
Dated [Do Not Date] 1995
HORIZON EXPLORATION LIMITED (1)
AND
THE BANK OF N.T. BUTTERFIELD
& SONS LIMITED (2)
CHATTEL MORTGAGE
ALSOP WILKINSON
6 Dungate Hill
London EC4R 255
<PAGE> 2
INDEX
(for reference purposes only)
<TABLE>
<CAPTION>
Clause Heading Page Number
- ------ ------- -----------
<S> <C>
1 COVENANT TO PAY
2 MORTGAGE
3 COVENANTS OF THE MORTGAGOR
4 DEFAULT AND BANK'S POWERS OF SALE
5 RECEIVER
6 PROTECTION OF THIRD PARTIES
7 CONTINUING SECURITY
8 SUSPENSE ACCOUNT
9 NEW ACCOUNTS
10 SET-OFF
11 COSTS AND INDEMNITY
12 TIME AND INDULGENCES
13 AVOIDANCE OF PAYMENTS
14 MISCELLANEOUS
15 NOTICES
</TABLE>
<PAGE> 3
THIS DEED made
1995
BETWEEN
(1) HORIZON EXPLORATION LIMITED a company registered in England under
company number 2804983 whose registered office is at 6 Pembroke Road
Sevenoaks Kent TN1J 1XR ("the Mortgagor") and
(2) THE BANK OF N.T. BUTTERFIELD & SON LIMITED acting through its London
Branch of 24 Chiswell Street London EC1Y 4TY ("the Bank")
NOW THIS DEED WITNESSETH as follows:
WHEREAS:
(A) The Bank has made general banking and contract finance facilities
available to the Mortgagor;
(B) The Mortgagor has now requested the Bank to make available to the
Mortgagor a Term Loan Facility up to maximum amount of US $2,000,000
("the Term Loan Facility");
(C) As a condition precedent to the Bank making available the Term Loan
Facility the Bank requires the Mortgagor to enter into this Deed as
security for all its obligations from time to time to the Bank;
1 COVENANT TO PAY
---------------
The Mortgagor covenants on demand to pay and discharge to the Bank all
monies obligations and liabilities whether principal interest or
otherwise which may now or at any time in the future be due owing or
incurred by the Mortgagor to the Bank whether actual or contingent and
whether alone severally or jointly as principal guarantor surety or
otherwise and in whatever name or style and whether on any current or
other account or in any other manner together with interest charges
and other expenses so that interest shall be calculated and compounded
as may be agreed from time to time between the parties or, if not
agreed, at the usual rate of interest of the Bank on such accounts as
well after as before any demand made or judgment obtained hereunder
(together hereinafter referred to as (the Secured Obligations).
2 MORTGAGE
--------
2.1 As security for the payment or discharge of the Secured
Obligations the Mortgagor as beneficial Owner HEREBY ASSIGNS
to the Bank by way of first ranking fixed legal mortgage ALL
the Chattels listed in the Schedule hereto ("the Chattels")
together with the benefit of all and any warranties guarantees
or indemnities or other rights relating to the Chattels and
the benefit of all maintenance agreements between the
Mortgagor and any third party insofar as the same are
assignable TO HOLD the same unto the Bank absolutely subject
only to the proviso for redemption hereinafter contained
PROVIDED that on payment and discharge of the Secured
Obligations the Bank shall at the request and cost of the
Mortgagor discharge this security.
2.2 The Mortgagor shall at any time execute such deeds and do all
such things as the Bank may from time to time require to vest
in the Bank (subject to the proviso for redemption
hereinbefore contained) full right and title in and to the
Chattels.
3 COVENANTS OF THE MORTGAGOR
--------------------------
3.1 The Mortgagor covenants with the Bank during the terms of this
Deed as follows:
<PAGE> 4
3.1.1 not without the prior written consent of the Bank to
sell transfer or dispose of or part with possession
or control of or attempt to sell lease transfer or
dispose of the Chattels (or any interest therein) nor
directly or indirectly create or permit to exist any
mortgage lien pledge charge security interest
assignment or other encumbrance of any kind
whatsoever in relation to the Chattels;
3.1.2 to use the Chattels in a careful and proper manner
and to keep tines in good working order including by
way of repair of and adjustment to the Chattels;
3.1.3 not without the prior written consent of the Bank to
make changes or alterations to the Chattels;
3.1.4 not to lease hire out or otherwise part with
possession of the Chattels or permit or procure the
Chattels to be used other than in the business of the
Mortgagor without the prior written consent of the
Bank and then only subject to such further tends as
the Bank may require;
3.1.5 to pay punctually all taxes and duties however
designated insurance premiums maintenance or
servicing charges and other outgoings in respect of
the Chattels or their use;
3.1.6 to insure and keep insured the Chattels in the joint
names of the Bank and the Mortgagor or (at the
discretion of the Bank) with the interest of the Bank
noted against such policy to the full replacement
value thereof and against accident third party and
other risks normally covered by insurance and upon
such terms and with such insurers as shall be
approved in writing by the Bank and to produce to the
Bank on demand evidence of the policy of such
insurance and the receipt for the current premium in
respect thereof. If the Mortgagor shall fall to
insure the Chattels in accordance with this clause
the Bank may do all such things as it may consider
necessary to insure the Chattels and shall be
entitled to reimbursement from the Mortgagor upon
demand of all costs involved in securing such
Insurance;
3.1.7 to procure at its own expense that the Chattels can
at all times be used Without contravening any
legislation governing or affecting the same and the
use thereof
3.1.8 not to annex the Chattels to any property and/or land
to the intent that the equipment is not and shall not
become a fixture or fitting of such property and/or
land
3.2 If the Mortgagor shall fail to satisfy the Bank that it has
performed any of its obligations under clause 3.1 then the
Bank may take such steps as it considers appropriate to
procure the performance of such obligation and shall not
thereby be deemed to be a mortgagee in possession and the
monies expended by the Bank shall be reimbursed by the
Mortgagor on demand and until so reimbursed shall carry
interest as mentioned in clause 1 from the cost of payment to
the date of reimbursement.
3.3 The Mortgagor will indemnify and keep the Bank indemnified
from and against all and any costs claims damages and any
other expenses whatsoever that the Bank may suffer sustain or
incur or be called upon to pay by reason of or consequent upon
(whether directly or indirectly) it having entered into this
Deed or as a result of the Mortgagor failing to perform any
express or implied obligations on its part herein contained or
otherwise and without prejudice to the generality of the
foregoing from and against all rates taxes duties charges
imposition assessments and outgoings whatsoever payable
charged or imposed upon or in respect of the Chattels.
<PAGE> 5
4 DEFAULT AND BANK'S POWERS OF SALE
4.1 This Deed shall become enforceable:
4.1.1 if any of the Secured Obligations shall not be paid
or discharged by the Mortgagor in accordance with
clause 1; or
4.1.2 if the Mortgagor shall be in breach of any provision
of this Deed or of any agreement containing any terms
and conditions of or applicable to the monies
obligations and liabilities secured by this Deed; or
4.1.3 upon the presentation of a petition for the
winding-up of the Mortgagor or the making of an order
for the winding up of the Mortgagor or the passing by
the Mortgagor of a resolution for voluntary
winding-up; or
4.1.4 if an encumbrancer shall take possession of or a
receiver shall be appointed over or any secures
creditor of the Mortgagor shall seek to enforce his
security in respect of all or any of the property or
assets charged by this Deed; or
4.1.5 if a petition shall be presented for an
administration order in relation to the Mortgagor; or
4.1.6 if the Mortgagor shall enter into any composition or
arrangement for the benefit of its creditors; or
4.1.7 any other event shall take place which in the opinion
of the Bank puts in jeopardy all or any part of the
security created by this Deed.
4.2 The Secured Obligations shall be deemed to have become due
within the meaning of Section 101 of the Law of Property Act
1925 ("the Act") and the security created by the Mortgagor by
or pursuant to this Deed shall immediately become enforceable
and the power of sale and other powers conferred by the said
Section and/or by Schedule 1 to the Insolvency Act 1986, in
each case as varied or extended by this Deed, and all other
powers conferred on the Bank by this Deed shall be immediately
exercisable at any time, in relation to the whole or any part
of the Chattels, after the Bank shall have validly and
effectively demented the payment or discharge by the Mortgagor
of all or any of the Secured Obligations, any demand for
payment shall be valid ant effective for the purposes of this
sub-clause 4.2 notwithstanding that the demand may contain an
inaccurate or incomplete statement of the Secured Obligations.
5 RECEIVER
--------
5.1 The provisions of Clause 4 above notwithstanding, at any time
after the security constituted by this Deed shall have become
enforceable the Bank may by writing appoint any person or
persons to be a receiver or receivers of the Chattels or any
of them and remove any receiver or receivers so appointed and
appoint another or others in his or their place and a receiver
or receivers so appointed shall have powers:
5.1.1 to take possession of the Chattels or any part
thereof and for that purpose to take any proceedings
in the name of the Mortgagor or otherwise as may seem
expedient;
5.1.2 to carry on manage or concur in carrying on or
managing the business of the Mortgagor in relation to
the Chattels and for any of those purposes to raise
or borrow any monies;
<PAGE> 6
that may be required upon the security of the
Chattel;
5.1.3 forthwith and without the restrictions imposed by
Section 103 of the Act to sell or concur in selling
(but where necessary with the leave of the Court) and
to lease the Chattels;
5.1.4 to make any arrangements in relation to the Chatter
which he or they shall think expedient;
5.1.5 to make and effect all repairs renewals and any
Improvements to the Chattels and to maintain or renew
all insurances;
5.1.6 to appoint managers, agents, officers, servants and
workmen for any of the aforesaid purposes at such
salaries and for such periods as he or they may
determine;
5.1.7 to do all such other acts and things as may be
considered to be incidental or conducive to any of
the matters or powers aforesaid and which he or they
lawfully ray or can do as agent for the Mortgagor
All moneys received by such receiver or receivers shall be
applied first in payment of his or their remuneration as may
be agreed between him or them and the appointor and the costs
of realization secondly in providing for the matters specified
in the first three paragraphs of Section 103(8) of the Act and
for the purposes aforesaid and thirdly in or towards
satisfaction of the Secured Obligations and all the foregoing
provisions in this Dead shall take effect as and by way of
variation and extension of the provisions of Section 99 to 109
inclusive of the Act which provisions so varied and extended
shall be regarded as incorporated herein. Any receiver or
receivers so appointed shall be deemed to be the agent or
agents of the Mortgagor and the Mortgagor shall be solely
responsible for his or their acts or defaults and for his or
their remuneration
5.2 The Mortgagor irrevocably appoints the Bank any receiver and
any person nominated by the Bank jointly and also severally to
be the attorney of the Mortgagor with the power of
substitution and in its name and otherwise on its behalf and
as its act and deed to sign or execute all deeds, instruments
and documents which the Bank or any receiver may require or
teem proper for any of the purposes of or which the Mortgagor
ought to do under this Deed.
The Mortgagor agrees to ratify and confirm anything such
attorney shall lawfully and properly do.
6 PROTECTION OF THIRD PARTIES
---------------------------
No person dealing with the Bank or with any receiver of the Chattels
or any part thereof appointed by the Bank or with any delegate or
sub-delegate of the Bank shall be concerned to enquire whether any
event has happened upon which any of the posers, authorities and
discretions conferred by or pursuant to this Deed in relation to the
Chattels or any part thereof are or may be exercisable by the Bank or
by any such receiver, delegate or sub-delegate or otherwise as to the
propriety or regularity of acts purporting or intended to be in
exercise of any such powers and 611 the protection to purchasers
contained in Sections 104 and 107 of the Act and Section 42(3) of the
Insolvency Act 1986 shall apply to any person purchasing from or
dealing tenth the Bank or any such receiver, delegate or sub-delegate
in like manner as if the statutory powers of sale end of appointing
receiver in relation to the Chattels had not been varied or extended
by this Deed.
7 CONTINUING SECURITY
-------------------
The security created by this Deed is a continuing security for the
payment discharge and performance in
<PAGE> 7
full of all the Secured Obligations and the security so created shall
not be satisfied or otherwise prejudiced or effected by any
intermediate payment or satisfaction of any part of the said amounts
and the security so created shall be in addition to and shall not in
any way be prejudiced or effected by any collateral guarantees or
other security now or hereafter held by the Bank for any part of the
said amounts Section 93 of the Act shall not apply to this Deed. Upon
repayment in full of the Secured Obligations this security shall cease
and determine
8 SUSPENSE ACCOUNT
All monies received, recovered or realized by the Bank under this Deed
may in the discretion of the Bank be credited to any suspense or
impersonal account and may be held In such account for so long as the
Bank thinks fit (with interest accruing thereon at such rate, if any,
as the Bank may deem fit for the account of the Mortgagor) pending
their application from ff me to time (as the Bank shall be entitled to
do in its discretion) in or towards the discharge of any of the
Secured Obligations.
9 NEW ACCOUNTS
9.1 If the Bank shall at any time receive actual or constructive
notice of any charge or other interest affecting any part of
the property hereby charged then the Bank may open a new
account or accounts for the Mortgagor and if the Bank does not
do so then the Bank shall be treated as if it had in fact done
so at the time when it received or was deemed to receive
notice and as from that time all payments made by the
Mortgagor to the Bank shall be credited or treated as having
been credited to the new account and shall not operate to
reduce the amount secured by this Dead at the time when the
Bank received or was deemed to have received such notice.
10 SET-OFF
10.1 The Bank may at any time and without notice to the Mortgagor
combine or consolidate all or any of the Mortgagor's then
existing accounts with and liabilities to the Bank and set off
or transfer any sum or sums standing to the credit of any one
or more of such accounts in or towards satisfaction of any of
the liabilities of the Mortgagor to the Bank on any other
account or in any other respects. The Bank shall notify the
Mortgagor that such a transfer has been made.
11 COSTS AND INDEMNITY
11.1 All costs charges and expenses incurred by the Bank in
relation to this Deed or the monies and liabilities hereby
secured shall be reimbursed by the Mortgagor to the Bank on
demand on a full indemnity basis and until so reimbursed shell
carry interest as mentioned in clause 1 from the date of
payment to the date of reimbursement and be secured on the
property charged by this Deed.
11.2 The Bank and every receiver attorney or other person appointed
by the Bank under this Deed and their respective employees
shall be entitled to be indemnified on a full indemnity basis
out of the property charged by this Deed in respect of all
liabilities and expenses incurred by any of them in or
directly or indirectly as a result of the exercise or
purported exercise of any of the powers authorities or
discretions vested in them under this Deed and against all
actions, proceedings, losses, costs, claims and demands in
respect of any matter or thing done or omitted in any way
relating to the property charged by this Deed and the Bank and
any such receiver may retain and pay all sums in respect of
the same out of the monies received under the powers conferred
by this Deed.
<PAGE> 8
12 TIME AND INDULGENCE
12.1 The Bank may at any time or times without discharging or in
any way affecting the security created by or pursuant to this
Deed or any remedy in respect of such security, grant to the
Mortgagor time or indulgence or abstain from asserting,
calling, exercising or enforcing any remedies, securities,
guarantees or other rights which it may now or hereafter have
from or against the Mortgagor.
12.2 The Bank may in its discretion grant time or other indulgence,
or make any other arrangement, variation or release with, any
person or persons not party hereto (whether or not such person
or persons are jointly liable with the Mortgagor) in respect
of any of the Secured Obligations or of any other security
therefor or guarantee in respect thereof without prejudice
either to the security constituted by or pursuant to this Deed
or to the liability of the Mortgagor for the Secured
Obligations or the exercise by the Bank of any rights,
remedies and privileges conferred upon it by this Deed.
13 AVOIDANCE OF PAYMENTS
No assurance, security or payment which may be avoided under any law
relating to bankruptcy, insolvency or winding-up (including Sections
238, 239, 244 or 245 of the Insolvency Act 1986), and no settlement or
discharge given or made by the Bank on the faith of any such
assurance, security or payment, shall prejudice or affect the right of
the Bank to enforce the security created by or pursuant to this Deed
to the full extent of the Secured Obligations. Except in respect of
the refinancing of the Secured Obligations by a third party financier
as a result of which the Secured Obligations are repaid in full (but
not in part only) to the Bank, the Bank may in its absolute discretion
retain the security so created for the period of two Business Days
plus such statutory period within which any security or payment given
or made pursuant to this Deed can be avoided or invalidated after all
facilities from time to time made available to the Mortgagor by the
Bank shall have ceased to be available and the Secured Obligations
shall have been paid in full, notwithstanding any release, settlement,
discharge or arrangement given or made by the Bank on, or as a
consequence of, such termination of liability. If at any time within
such period after such termination a petition shall be presented to a
competent court for an order for the bankruptcy, insolvency or
winding-up of the Mortgagor shall commence to be wound up voluntarily,
or an application for an administration order shall be made to a
competent court in respect of the Mortgagor, the Bank may,
notwithstanding as aforementioned, continue to retain such security or
any part thereof far and during such further period as the Bank in its
absolute discretion shall determine. The Mortgagor agrees that such
security shall be deemed to have been and to have remained held by the
Bank as and by way of security.
14 MISCELLANEOUS
14.1 The Bank shall have a full and unfettered right to assign the
whole or any part of the benefit t of this Deed and the
expression 'the Bank' shall include its successors and assigns
and the Bank shall be entitled to disclose any informant on to
any actual or prospective assignee successor or participant.
14.2 The provisions of this Deed shall be severable and if at any
time any one or more such provisions is or becomes invalid
illegal or unenforceable the validity, legality and
enforceability of the remaining provisions shall not in any
way be impaired.
14.3 The rights and remedies of the Bank provided by this Deed are
cumulative ant are not exclusive of any rights powers or
remedies provided by law and may be exercised from time to
time and as often as the Bank may deem expedient.
<PAGE> 9
14.4 Any reference in this Deed to any statute or any section of
any statute shall be deemed to include reference to any
statutory modification or re-enactment thereof for the time
being in force.
15 NOTICES
15.1 Any demand or notice under this Deed shall be in writing
signed by any officer of the Bank and may be served personally
on any director or the secretary of the Mortgagor or may be
sent by post telex or facsimile or may be delivered to the
registered office of the Mortgagor or its last known place of
business. If such demand or notice is sent by post it shall be
deemed to have been received on the day following the day on
which it was posted and shall be effective notwithstanding
that it was not in fact delivered or was returned undelivered.
If sent by telex or facsimile it shall be deemed to have been
received (whether or not actually received) at the tine of
dispatch.
16 LAW AND JURISDICTION
This Deed shall be governed by and construed in accordance with
English law and the parties hereto irrevocably submit to the
non-exclusive jurisdiction of the English Courts.
<PAGE> 1
EXHIBIT 10.44
FORM OF
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (this "Agreement"), is entered into as of
___________, 1997 (the "Effective Date"), by and between EAGLE GEOPHYSICAL
OFFSHORE, INC., a Texas corporation (the "Company"), and DAVID BURNS (the
"Executive").
The Company desires to employ the Executive and the Executive desires
to accept employment with the Company, on the terms and conditions of this
Agreement.
Accordingly, the parties agree as follows:
1. Employment Duties and Acceptance.
1.1 Employment by the Company; Duties. The Company
hereby agrees to employ the Executive for a term commencing on the Effective
Date, and expiring at the end of the day twenty-four (24) months from the
Effective Date (such date, or later date to which this Agreement is extended in
accordance with the terms hereof, the "Termination Date"), unless earlier
terminated as provided in Section 4 or unless extended as provided herein (the
"Term"). The Term shall be automatically extended commencing on the second
anniversary of the Effective Date and on each anniversary of the Effective Date
thereafter (such date and each anniversary of such date being a "Renewal
Date"), so as to terminate twelve (12) months from such Renewal Date, unless
and until at least six (6) months prior to a Renewal Date either party hereto
gives written notice to the other that the Term should not be extended beyond
the next Renewal Date, in which event the Termination Date shall be the Renewal
Date following such notice. During the Term, the Executive shall serve in the
capacity of Vice President - U.S. Offshore Operations of the Company and shall
also serve in those offices and directorships of subsidiary and parent
corporations or entities of the Company to which he may from time to time be
appointed or elected. During the Term, the Executive shall devote all
reasonable efforts and all of his business time and services to the Company,
subject to the direction of the Board of Directors of the Company (the
"Board"). The Executive shall not engage in any other business activities
except for passive investments in corporations or partnerships not engaged in
the Company Business (as hereinafter defined) pursuant to Section 3 hereof.
1.2 Acceptance of Employment by the Executive. The
Executive hereby accepts such employment and shall render the services and
perform the duties described above.
2. Compensation and Other Benefits.
2.1 Annual Salary. The Company shall pay to the
Executive an annual salary at a rate of not less than one hundred forty
thousand dollars ($140,000) per year (the "Annual Salary"), subject to increase
at the sole discretion of the Board. The Annual Salary shall be
<PAGE> 2
payable in accordance with the payroll policies of the Company as from time to
time in effect, but in no event less frequently than once each month, less such
deductions as shall be required to be withheld by applicable law and
regulations.
2.2 Incentive Bonus.
Executive Incentive Scheme. The Executive shall be
entitled to participate in a Company Executive Incentive Scheme (the "Incentive
Scheme") which, subject to the conditions below, shall give the Executive the
potential to receive additional remuneration of up to 50% of salary each year.
2.2.1 The Company shall define the Incentive Scheme
annually on or before February 28th in each year for the Calendar year to which
it relates.
2.2.2 The Incentive Scheme may take the form of a
single Company goal, for example profit performance or several individual
targets such as productivity, etc., and may be varied each year.
2.2.3 Any remuneration earned under the Incentive
Scheme for a particular year shall be paid on or before 1st June of the
following calendar year.
2.2.4 The Executive shall receive remuneration
under the Incentive Scheme for 1997 equal to 50% of his Annual Salary if and
only if the Operating Profit Margin (as defined in Section 2.3 of this
Agreement) of the Marine Business (as defined in Section 2.3 of this Agreement)
for such year equals or exceeds 24% of revenues from the Marine Business.
2.3 Additional Incentive Bonus.
2.3.1 Grant of Additional Incentive Bonus. The
Executive shall receive an additional incentive bonus, if earned, with respect
to the fiscal years ending during the Term (the "Additional Incentive Bonus");
provided, however, that an Additional Incentive Bonus for a fiscal year shall
only be payable if the Net After-Tax Profits (as hereinafter defined) for such
fiscal year exceed Base Profits (as hereinafter defined).
2.3.2 Definitions.
"Base Profits" shall mean 5% of gross revenues from
the Marine Business.
"Chief Financial Officer" means the chief financial
officer of Eagle.
"Eagle" shall mean Eagle Geophysical, Inc., a
Delaware corporation.
2
<PAGE> 3
"Marine Business" means the marine seismic data
acquisition business of the Company and its wholly owned subsidiaries and of
any other company that is a direct or indirect wholly owned subsidiary of
Eagle.
"Net After-Tax Profits" means the amount of net
profits of the Marine Business calculated by the Chief Financial Officer
applying U.S. generally accepted accounting principles and such other
accounting principles and assumptions as may be reasonable and taking into
account expenses attributable to allocable overhead (based on revenues) from
all other companies controlled by or under common control with the Company
engaged in the Marine Business and of such companies' parent corporation(s),
and subtracting therefrom all income tax liabilities attributable to the Marine
Business.
"Operating Profit Margin" means the amount of revenue
less cost of sales of the Marine Business calculated by the Chief Financial
Officer applying U.S. generally accepted accounting principles and such other
accounting principles and assumptions as may be reasonable.
2.3.3 Calculation of Bonus. If Net After-Tax
Profits for a fiscal year exceed Base Profits for such fiscal year, the
Executive shall receive an Additional Incentive Bonus equal to the Applicable
Percentage set forth in the table below multiplied by the difference between
actual Net After-Tax Profits and Base Profits.
Net After-Tax Profits
(percent of gross revenues) Applicable Percentage
--------------------------- ---------------------
greater than 5%, but less than 1.0%
or equal to 6%
greater than 6%, but less than 1.5%
or equal to 7%
greater than 7% 2.0%
2.3.4 Applicable Percentage if Significant Increase
in Revenues. Notwithstanding the determination of Applicable Percentage in the
table set forth in Subsection 2.3.3 above, if gross revenues for a fiscal year
of the Marine Business increase by an amount of 20% or more as compared to
gross revenues for the previous fiscal year of the Marine Business, then the
Applicable Percentage for such fiscal year will be 2.0% so long as Net After
Tax Profits for such fiscal year exceed Base Profits for such fiscal year.
3
<PAGE> 4
2.3.5 Payment of Additional Incentive Bonus. The
Chief Financial Officer shall calculate the Net After-Tax Profits, and any
Additional Incentive Bonus payable to the Executive in connection therewith,
shall certify such calculations and shall deliver such calculations to the
Executive as soon as reasonably practicable after the end of each fiscal year,
but in any event within seventy-five (75) days following the end of such fiscal
year. Any Additional Incentive Bonus payable hereunder shall be paid by the
Company to the Executive within seven (7) days of delivery of such calculations
by the Chief Financial Officer and in any event within eighty-two (82) days
following the end of the applicable fiscal year. The additional remuneration
payable pursuant to Section 2.2 hereof and the Additional Incentive Bonus
payable pursuant to this Section 2.3 are hereinafter collectively referred as
the "Bonuses."
2.4 Grant of Option. The Company agrees to grant the
Executive, pursuant to the terms of Eagle's Option Plan created in connection
with the initial public offering (the "IPO") of Eagle's common stock, options
to acquire seventy-five thousand (75,000) shares of Eagle's common stock, at an
exercise price equal to the IPO issue price. Such stock options shall vest
over a period of three years, with stock options to acquire 25,000 shares
vesting on each of the first three anniversaries of the Effective Date, subject
to the terms of the Company's Option Plan. The Company agrees to use all
reasonable efforts, consistent with the foregoing, to ensure that such stock
options meet all requirements for treatment as Incentive Stock Options under
the Internal Revenue Code of 1986, as amended, and that such stock option plan
meets the requirements of Rule 16b-3, promulgated under Section 16 of the
Securities Exchange Act of 1934, as amended (the "Act").
2.5 Vacation Policy. The Executive shall be entitled to
a paid vacation of five weeks during each year of the Term.
2.6 Participation in Employee Benefit Plans. The Company
agrees to permit the Executive during the Term, if and to the extent eligible,
to participate in any group life, hospitalization or disability insurance plan,
health program, pension plan, similar benefit plan or other so-called "fringe
benefits" of the Company (collectively, "Benefits") which may be available to
other executives of the Company on terms no less favorable to the Executive
than the terms offered to such other executives. The Company agrees to use its
best efforts to obtain immediate coverage for the Executive upon the
commencement of the Term under its existing or newly adopted medical expense
and hospitalization plan for employees without premium surcharge and without
exclusions for disclosed preexisting conditions. The Executive shall cooperate
with the Company in applying for such coverage, including submitting to a
physical exam and providing all relevant health and personal data.
2.7 General Business Expenses. The Company shall pay or
reimburse the Executive for all expenses reasonably and necessarily incurred by
the Executive during the Term in the performance of the Executive's services
under this Agreement. Such payment shall be made upon presentation of such
documentation as the Company customarily requires of its senior executive
employees prior to making such payments or reimbursements.
4
<PAGE> 5
2.8 Company Car and Cellular Telephone. The Company
shall pay the Executive a car allowance of five hundred and no/100 dollars
($500.00) per month, which the Executive may apply, in his discretion, to the
cost associated with purchasing or leasing, insuring, operating and maintaining
an automobile of the Executive's choice. The Executive may use the automobile
for personal as well as business purposes. The Company shall also furnish the
Executive with a cellular telephone of his choice and the Company shall pay all
charges in connection with the use thereof, other than charges for calls not
related to the Executive's duties hereunder.
3. Non-Competition, Confidentiality and Company Property.
3.1 Covenants Against Competition. The Executive
acknowledges that (i) the Company is currently engaged in the business of
owning, managing and operating seismic data acquisition equipment and hiring
and managing crews to operate such equipment, which equipment and crews are
contracted or hired for the purpose of performing geological surveys onshore
and offshore (the "Company Business"); (ii) his work for the Company will give
him access to trade secrets of and confidential information concerning the
Company; and (iii) the agreements and covenants contained in this Agreement are
essential to protect the business and goodwill of the Company. Accordingly,
the Executive covenants and agrees as follows:
3.1.1 Non-Compete. As an independent covenant, and
in order to enforce the provisions of Sections 3.1.3 and 3.1.5 hereof and the
other provisions of this Agreement, the Executive agrees that he shall not
during the Restricted Period (as hereinafter defined) within a one hundred
(100) mile radius of any office of the Company or any of its affiliates,
including, without limitation, the locations specified from time to time
pursuant to Section 7.2 hereof and any field offices, directly or indirectly
(except in the Executive's capacity as an officer of the Company), (i) engage
or participate in the Company Business; (ii) enter the employ of, or render any
other services to, any person engaged in the Company Business except as
permitted hereunder; or (iii) become interested in any such person in any
capacity, including, without limitation, as an individual, partner,
shareholder, lender, officer, director, principal, agent or trustee except as
permitted hereunder; provided, however, that the Executive may own, directly or
indirectly, solely as an investment, securities of any person traded on any
national securities exchange or listed on the National Association of
Securities Dealers Automated Quotation System if the Executive is not a
controlling person of, or a member of a group which controls, such person and
the Executive does not, directly or indirectly, own 5% or more of any class of
equity securities, or securities convertible into or exercisable or
exchangeable for 5% or more of any class of equity securities, of such person.
As used herein, the "Restricted Period" shall mean a period commencing on the
date hereof and terminating upon the first to occur of (a) the date on which
the Company terminates or is deemed to terminate the Executive's employment
without Cause (as hereinafter defined), (b) the date the Executive terminates
or is deemed to terminate his employment pursuant to Section 4.6 hereof or (c)
the date of termination of this Agreement; provided, however, that if the
Company shall have terminated the Executive's employment for Cause and such
Cause in fact exists or if the Executive shall have terminated his employment
5
<PAGE> 6
with the Company in breach of the terms of this Agreement, the Restricted
Period shall end one (1) year following the termination of the Executive's
employment hereunder.
3.1.2 Customers. As an independent covenant, the
Executive also agrees to refrain during the Restricted Period, without written
permission from the Company, from diverting, taking, soliciting and/or
accepting on his own behalf or on the behalf of another person, firm, or
company, the business of any past or present customer of the Company, its
divisions, subsidiaries and/or other affiliated entities, or any identified
prospective or potential customer of the Company, its divisions, subsidiaries
and/or affiliated entities, whose identity became known to the Executive
through his employment by the Company.
3.1.3 Confidential Information.
3.1.3.1 The Executive acknowledges that the
Company has a legitimate and continuing proprietary interest in the protection
of its confidential information and that it has invested substantial sums and
will continue to invest substantial sums to develop, maintain and protect
confidential information. The Company agrees to provide the Executive access
to confidential information in conjunction with the Executive's duties,
including, without limitation, information of a technical and business nature
regarding the Company's past, current or anticipated business that may
encompass financial information, financial figures, trade secrets, customer
lists, details of client or consultant contracts, pricing policies, operational
methods, marketing plans or strategies, product development techniques or
plans, business acquisition plans, Company employee information, organizational
charts, new personnel acquisition plans, technical processes, designs and
design projects, inventions and research projects, ideas, discoveries,
inventions, improvements, trade secrets, design specifications, writings and
other works of authorship. In exchange, as an independent covenant, the
Executive agrees not to make any unauthorized use, publication, or disclosure,
during or subsequent to his employment by the Company, of any Intellectual
Property of a confidential or trade secret nature, generated or acquired by him
during the course of his employment, except to the extent that the disclosure
of Intellectual Property Information is necessary to fulfill his
responsibilities as an employee of the Company. The Executive understands that
confidential matters and trade secrets include information not generally known
by or available to the public about or belonging to the Company, its divisions,
subsidiaries, and related affiliates, or belonging to other companies to whom
the Company, its divisions, subsidiaries, and related affiliates, may have an
obligation to maintain information in confidence, and that authorization for
public disclosure may only be obtained through the Company's written consent.
3.1.3.2 The Executive further agrees not to
disclose to the Company, or induce any personnel of the Company to use, any
confidential information, trade secret, or confidential material belonging to
others.
3.1.3.3 The Executive agrees that the
covenants set forth in Sections 3.1.3.1 and 3.1.3.2 are independent covenants
and indefinite obligations binding upon the Executive both during and after the
termination of the Executive's relationship with the Company.
6
<PAGE> 7
3.1.4 Property of the Company. All memoranda,
notes, lists, records, engineering drawings, technical specifications and
related documents and other documents or papers (and all copies thereof)
relating to the Company, including such items stored in computer memories,
microfiche or by any other means, made or compiled by or on behalf of the
Executive after the date hereof, or made available to the Executive after the
date hereof relating to the Company, its affiliates or any entity which may
hereafter become an affiliate thereof, shall be the property of the Company,
and shall be delivered to the Company promptly upon the termination of the
Executive's employment with the Company or at any other time upon request;
provided, however, that the Executive's address books, diaries, chronological
correspondence files and rolodex files shall be deemed to be property of the
Executive.
3.1.5 Original Material. The Executive agrees that
any inventions, discoveries, improvements, ideas, concepts or original works of
authorship relating directly to the Company Business, including without
limitation information of a technical or business nature such as ideas,
discoveries, designs, inventions, improvements, trade secrets, know-how,
manufacturing processes, product formulae, design specifications, writings and
other works of authorship, computer programs, financial figures, marketing
plans, customer lists and data, business plans or methods and the like, which
relate in any manner to the actual or anticipated business or the actual or
anticipated areas of research and development of the Company and its divisions,
subsidiaries, affiliates, or related entities, whether or not protectable by
patent or copyright, that have been originated, developed or reduced to
practice by the Executive alone or jointly with others during the Executive's
employment with the Company shall be the property of and belong exclusively to
the Company. The Executive shall promptly and fully disclose to the Company
the origination or development by the Executive of any such material and shall
provide the Company with any information that it may reasonably request about
such material. Either during the subsequent to the Executive's employment,
upon the request and at the expense of the Company or its nominee, and for no
remuneration in addition to that due the Executive pursuant to his employment
by the Company, but at no expense to him, the Executive agrees to execute,
acknowledge, and deliver to the Company or its attorneys any and all
instruments which, in the judgment of the Company or its attorneys, may be
necessary or desirable to secure or maintain for the benefit of the Company
adequate patent, copyright, and other property rights in the United States and
foreign countries with respect to any such inventions, improvements, ideas,
concepts, or original works of authorship embraced within this Agreement.
3.1.6 Employees of the Company and its Affiliates.
As an independent covenant, the Executive agrees to refrain during his
employment by the Company, and in the event of the termination of his
employment for any reason for a period of one year thereafter, from inducing or
attempting to influence any employee of the Company, its divisions,
subsidiaries and/or affiliated entities to terminate his employment.
3.1.7 Company's Interest. The Executive further
agrees that these covenants are made to protect the legitimate business
interests of the Company, including interests in the Company's property
described in and pursuant to Section 3.1.4 and Section 3.1.5, and not to
restrict his mobility or to prevent him from utilizing his general technical
skills. The
7
<PAGE> 8
Executive understands as a part of these covenants that the Company intends to
exercise whatever legal recourse against him for any breach of this Agreement
and, in particular, for any breach of these covenants.
3.2 Rights and Remedies Upon Breach. If the Executive
breaches, or threatens to commit a breach of, any of the provisions contained
in Section 3.1 of this Agreement (the "Restrictive Covenants"), the Company
shall have the following rights and remedies, each of which rights and remedies
shall be independent of the others and severally enforceable, and each of which
is in addition to, and not in lieu of, any other rights and remedies available
to the Company under law or in equity:
3.2.1 Specific Performance. The right and remedy
to have the Restrictive Covenants specifically enforced by any court of
competent jurisdiction, it being agreed that any breach or threatened breach of
the Restrictive Covenants would cause irreparable injury to the Company and
that money damages would not provide an adequate remedy to the Company.
3.2.2 Accounting. The right and remedy to require
the Executive to account for and pay over to the Company all compensation,
profits, monies, accruals, increments or other benefits derived or received by
the Executive as the result of any action constituting a breach of the
Restrictive Covenants.
3.3 Severability of Covenants. The Executive
acknowledges and agrees that the Restrictive Covenants are reasonable and valid
in duration and geographical scope and in all other respects. If any court
determines that any of the Restrictive Covenants, or any part thereof, is
invalid or unenforceable, the remainder of the Restrictive Covenants shall not
thereby be affected and shall be given full effect without regard to the
invalid portions.
3.4 Court Review. If any court determines that any of
the Restrictive Covenants, or any part thereof, is unenforceable because of the
duration or geographical scope of, or scope of activities restrained by, such
provision, such court shall have the power to reduce the duration or scope of
such provision, as the case may be, and, in its reduced form, such provision
shall then be enforceable.
3.5 Enforceability in Jurisdictions. The Company and the
Executive intend to and hereby confer jurisdiction to enforce the Restrictive
Covenants upon the courts of any jurisdiction within the geographical scope of
such Restrictive Covenants. If the courts of any one or more of such
jurisdictions hold the Restrictive Covenants unenforceable by reason of the
breadth of such scope or otherwise, it is the intention of the Company that
such determination not bar or in any way affect the right of the Company to the
relief provided above in the courts of any other jurisdiction within the
geographical scope of such Restrictive Covenants, as to breaches of such
Restrictive Covenants in such other respective jurisdictions, such Restrictive
Covenants as they relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
8
<PAGE> 9
4. Termination.
4.1 Termination Upon Death. If the Executive dies during
the Term, this Agreement shall terminate, provided, however, that in any such
event, the Company shall pay to the Executive, or to his estate, any portion of
the Annual Salary that shall have been earned by the Executive prior to the
termination but not yet paid, any Benefits that have vested in the Executive at
the time of such termination as a result of his participation in any of the
Company's benefit plans shall be paid to the Executive, or to his estate or
designated beneficiary, in accordance with the provisions of such plan; and the
Company shall reimburse the Executive, or his estate, for any expenses with
respect to which the Executive is entitled to reimbursement pursuant to Section
2.7 of this Agreement, and the Executive's right to indemnification, payment or
reimbursement pursuant to Section 6 of this Agreement shall not be affected by
such termination and shall continue in full force and effect, both with respect
to proceedings that are threatened, pending or completed at the date of such
termination and with respect to proceedings that are threatened, pending or
completed after that date.
4.2 Termination With Cause. The Company has the right,
at any time during the Term, subject to all of the provisions hereof,
exercisable by serving notice, effective on or after the date of service of
such notice as specified therein, to terminate the Executive's employment under
this Agreement and discharge the Executive with Cause. If such right is
exercised, the Company's obligation to the Executive shall be limited solely to
the payment of unpaid Annual Salary accrued, together with unpaid Bonuses, if
any, and Benefits vested up to the effective date specified in the Company's
notice of termination. As used in this Agreement, the term "Cause" shall mean
and include (i) chronic alcoholism or controlled substance abuse as determined
by a doctor reasonably selected by the Company, (ii) an act of proven fraud or
dishonesty on the part of the Executive with respect to the Company or its
subsidiaries; (iii) knowing and material failure by the Executive to comply
with material applicable laws and regulations relating to the business of the
Company or its affiliates; (iv) the Executive's continuing failure to
satisfactorily perform his duties hereunder (as reasonably determined by the
Board) or a material breach by the Executive of this Agreement except, in each
case, where such failure or breach is caused by the illness or other similar
incapacity or disability of the Executive; or (v) conviction of a crime
involving moral turpitude or a felony. Prior to the effectiveness of
termination for Cause under subclause (i), (ii), (iii) or (iv) above, the
Executive shall be given 30 days' prior notice from the Board specifically
identifying the reasons which are alleged to constitute Cause for any
termination hereunder and an opportunity to be heard by the Board in the event
the Executive disputes such allegations.
4.3 Termination Without Cause. The Company has the
right, at any time during the Term, subject to all of the provisions hereof,
exercisable by serving notice, effective on or after the date of service of
such notice as specified therein, to terminate the Executive's employment under
this Agreement and discharge the Executive without Cause. If the Executive is
terminated during the Term without Cause (including any termination which is
deemed to be a constructive termination without Cause under Section 4.6
hereof), the Company's obligation to the Executive shall be limited solely to
(i) the payment, at the times and upon the terms
9
<PAGE> 10
provided for herein, of (A) the Executive's Annual Salary and car allowance (as
set forth in Section 2.8 hereof) for the months remaining in the Term at the
time of such termination, based on the Annual Salary of the Executive in effect
on the date of termination (or, if the Company has reduced the Executive's
Annual Salary in breach of this Agreement, the Executive's Annual Salary before
such reduction), and (B) all unpaid bonuses and Benefits awarded or accrued up
to the date of termination, and (ii) the vesting of any unvested stock options
granted by the Company pursuant to Section 2.4 hereof. In the event of a
termination by the Company without Cause within 180 days after Change of
Control (as hereinafter defined), including a constructive termination without
Cause pursuant to Section 4.6, the amounts due to the Executive pursuant to
this Section 4.3 shall be due and payable in one lump-sum payment within 60
days after such termination. In all other cases, any amounts due to the
Executive pursuant to this Section 4.3 shall be due and payable as and when
they would have become due and payable absent such termination.
4.4 Termination by the Executive. Any termination of
this Agreement by the Executive during the Term, except such termination as is
deemed to be a constructive termination without Cause by the Company under
Section 4.6 of this Agreement, shall be deemed to be a breach of the terms of
this Agreement for the purposes of Section 3.1.1 hereof and shall entitle the
Company to discontinue payment of all Annual Salary, Bonuses and Benefits
accruing from and after the date of such termination.
4.5 Termination upon Disability. If during the Term the
Executive becomes physically or mentally disabled, whether totally or
partially, as determined by a physician reasonably selected by the Company, so
that the Executive is unable substantially to perform his services hereunder
for (i) a period of four consecutive months, or (ii) for shorter periods
aggregating six months during any twelve-month period, the Company may at any
time after the last day of the four consecutive months of disability or the day
on which the shorter periods of disability equal an aggregate of six months, by
written notice to the Executive, terminate the Executive's employment hereunder
and discontinue payments of the Annual Salary, Bonuses and Benefits accruing
from and after the date of such termination. The Executive shall be entitled
to the full compensation payable to him hereunder for periods of disability
shorter than the periods specified in clauses (i) and (ii) of the previous
sentence.
4.6 Constructive Termination Without Cause.
Notwithstanding any other provision of this Agreement, the Executive's
employment under this Agreement may be terminated during the Term by the
Executive, which shall be deemed to be constructive termination by the Company
without Cause, if one of the following events shall occur without the consent
of the Executive: (i) a failure to elect or reelect or to appoint or reappoint
the Executive to the office of Vice President - U.S. Offshore Operations of the
Company or other material change by the Company of the Executive's functions,
duties or responsibilities which change would reduce the ranking or level,
dignity, responsibility, importance or scope of the Executive's position with
the Company from the position and attributes thereof described in Section 1
above; (ii) the liquidation, dissolution, consolidation or merger of the
Company, or transfer of all or substantially all of its assets, other than a
transaction in which a successor
10
<PAGE> 11
corporation with a net worth at least equal to that of the Company assumes this
Agreement and all obligations and undertakings of the Company hereunder; (iii)
a reduction in the Executive's fixed salary; (iv) the failure of the Company to
continue to provide the Executive with office space, related facilities and
secretarial assistance that are commensurate with the Executive's
responsibilities to and position with the Company; (v) the notification by the
Company of the Company's intention not to observe or perform one or more of the
obligations of the Company under this Agreement; (vi) the failure by the
Company to indemnify, pay or reimburse the Executive at the time and under the
circumstances required by Section 6 of this Agreement; or (vii) the occurrence
of any other material breach of this Agreement by the Company or any of its
subsidiaries. Any such termination shall be made by written notice to the
President of the Company, specifying the event relied upon for such termination
and given within 60 days after such event. Any constructive termination shall
be effective 60 days after the date the President of the Company has been given
such written notice setting forth the grounds for such termination with
specificity; provided, however, that the Executive shall not be entitled to
terminate this Agreement in respect of any of the grounds set forth above if
within 60 days after such notice the action constituting such ground for
termination is no longer continuing. A constructive termination by the Company
without Cause shall terminate the Restrictive Period hereunder.
4.7 For the purposes hereof, a "Change of Control of the
Company" shall be deemed to have occurred if after the effective date and the
IPO (i) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Act) is or becomes the "beneficial owner" (as defined in Rule 13d-3 under the
Act), directly or indirectly, of securities of the Company representing 50% or
more of the combined voting power of the Company's then outstanding securities
without the prior approval of at least a majority of the members of the Board
in office immediately prior to such person attaining such percentage interest;
(ii) there occurs a proxy contest or a consent solicitation, or the Company is
a party to a merger, consolidation, sale of assets, plan of liquidation or
other reorganization not approved by at least a majority of the members of the
Board in office, as a consequence of which members of the Board in office
immediately prior to such transaction or event constitute less than a majority
of the Board thereafter; or (iii) during any period of two consecutive years,
other than as a result of an event described in clause (ii) of this Section
4.7, individuals who at the beginning of such period constituted the Board
(including for this purpose any new director whose election or nomination for
election by the Company's stockholders was approved by a vote of at least a
majority of the directors then still in office who were directors at the
beginning of such period) cease for any reason to constitute at least a
majority of the Board.
5. Insurance. The Company may, from time to time, apply for and
take out, in its own name and at its own expense, naming itself or one or more
of its affiliates as the designated beneficiary (which it may change from time
to time), policies for life, health, accident, disability or other insurance
upon the Executive in any amount or amounts that it may deem necessary or
appropriate to protect its interest. The Executive agrees to aid the Company
in procuring such insurance by submitting to medical examinations and by
filling out, executing and delivering such applications and other instruments
in writing as may reasonably be required by an insurance
11
<PAGE> 12
company or companies to which any application or applications for insurance may
be made by or for the Company.
6. Indemnification.
6.1 The Company shall, to the maximum extent not
prohibited by law, indemnify the Executive if he is made, or threatened to be
made, a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, including
an action by or in the right of the Company to procure a judgment in its favor
(collectively, a "Proceeding"), by reason of the fact that the Executive is or
was a director or officer of the Company, or is or was serving in any capacity
at the request of the Company for any other corporation, partnership, joint
venture, trust, employee benefit plan or other enterprise, against judgments,
fines, penalties, excise taxes, amounts paid in settlement and costs, charges
and expenses (including attorneys' fees and disbursements) paid or incurred in
connection with any such Proceeding.
6.2 The Company shall, from time to time, reimburse or
advance to the Executive the funds necessary for payment of expenses, including
attorneys' fees and disbursements, incurred in connection with any Proceeding
in advance of the final disposition of such Proceeding; provided, however,
that, if required by the Texas Business Corporation Act, such expenses incurred
by or on behalf of the Executive may be paid in advance of the final
disposition of a Proceeding only upon receipt by the Company of an undertaking,
by or on behalf of the Executive, to repay any such amount so advanced if it
shall ultimately be determined by final judicial decision from which there is
no further right of appeal that the Executive is not entitled to be indemnified
for such expenses.
6.3 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall not be deemed exclusive of any other rights which the Executive may now
or hereafter have under any law, by-law, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
6.4 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall continue as to the Executive after he has ceased to be a director or
officer and shall inure to the benefit of the heirs, executors and
administrators of the Executive.
6.5 The Company shall purchase and maintain director and
officer liability insurance on such terms and providing such coverage as the
Board determines is appropriate, and the Executive shall be covered by such
insurance on the same basis as the other directors and executive officers of
the Company.
6.6 The right to indemnification and reimbursement or
advancement of expenses provided by, or granted pursuant to, this Section 6
shall be enforceable by the Executive
12
<PAGE> 13
in any court of competent jurisdiction. The burden of proving that such
indemnification or reimbursement or advancement of expenses is not appropriate
shall be on the Company. Neither the failure of the Company (including its
board of directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that such
indemnification or reimbursement or advancement of expenses is proper in the
circumstances nor an actual determination by the Company (including its board
of directors, independent legal counsel, or its stockholders) that the
Executive is not entitled to such indemnification or reimbursement or
advancement of expenses shall constitute a defense to the action or create a
presumption that the Executive is not so entitled. The Executive shall also be
indemnified for any expenses incurred in connection with successfully
establishing his right to such indemnification or reimbursement or advancement
of expenses, in whole or in part, in any such proceeding.
6.7 If the Executive serves (i) another corporation of
which a majority of the shares entitled to vote in the election of its
directors is held by the Company, (ii) another corporation which owns a
majority of the shares entitled to vote in the election of the directors of the
Company (a "Parent Corporation") or of which a majority of the shares entitled
to vote in the election of its directors is held by the Parent Corporation or
(iii) any employee benefit plan of the Company or any corporation referred to
in clause (i) or (ii), in any capacity, then he shall be deemed to be doing so
at the request of the Company.
6.8 The right to indemnification or reimbursement or
advancement of expenses shall be interpreted on the basis of the applicable law
in effect at the time of the occurrence of the event or events giving rise to
the applicable Proceeding.
7. Other Provisions.
7.1 Certain Definitions. As used in this Agreement, the
following terms have the following meanings unless the context otherwise
requires:
(i) "affiliate" with respect to the Company means any
other person controlled by or under common control with the Company
but shall not include any stockholder or director of the Company, as
such.
(ii) "person" means any individual, corporation,
partnership, firm, joint Company, association, joint-stock company,
trust, unincorporated organization, governmental or regulatory body or
other entity.
(iii) "subsidiary" means any corporation 50% or more
of the voting securities of which are owned directly or indirectly by
the Company.
7.2 Notices. Any notice or other communication required
or permitted hereunder shall be in writing and shall be delivered personally,
telegraphed, telexed, sent by facsimile transmission or sent by certified,
registered or express mail, postage prepaid. Any such
13
<PAGE> 14
notice shall be deemed given when so delivered personally, telegraphed, telexed
or sent by facsimile transmission or, if mailed, on the date of actual receipt
thereof, as follows:
(i) if to the Company, to:
Eagle Geophysical Offshore, Inc.
50 Briar Hollow Lane
West Building, 6th Floor
Houston, Texas 77027
Attention: President
with a copy to:
Gardere Wynne Sewell & Riggs, L.L.P.
333 Clay Avenue, Suite 800
Houston, Texas 77002
Attention: N. L. Stevens III
(ii) if to the Executive, to:
David Burns
2203 Crystal Hills Drive
Houston, Texas 77077
Any party may change its address for notice hereunder by notice to the other
party hereto.
7.3 Entire Agreement. This Agreement contains the entire
agreement between the parties with respect to the subject matter hereof and
supersedes all prior agreements, written or oral, with respect thereto.
7.4 Waivers and Amendments. This Agreement may be
amended, superseded, canceled, renewed or extended, and the terms and
conditions hereof may be waived, only by a written instrument signed by the
parties or, in the case of a waiver, by the party waiving compliance. No delay
on the part of any party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof. Nor shall any waiver on the part of any
party of any such right, power or privilege hereunder, nor any single or
partial exercise of any right, power or privilege hereunder, preclude any other
or further exercise thereof or the exercise of any other right, power or
privilege hereunder.
7.5 Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of Texas (without giving
effect to the choice of law provisions thereof) where the employment of the
Executive shall be deemed, in part, to be performed and enforcement of this
Agreement or any action taken or held with respect to this Agreement shall be
taken in the courts of appropriate jurisdiction in Houston, Texas.
14
<PAGE> 15
7.6 Assignment. This Agreement, and any rights and
obligations hereunder, may not be assigned by the Executive and may be assigned
by the Company (subject to Section 4.6 (iii) hereof) only to a successor by
merger or purchasers of substantially all of the assets of the Company.
7.7 Counterparts. This Agreement may be executed in
separate counterparts, each of which when so executed and delivered shall be
deemed an original, but all of which together shall constitute one and the same
instrument.
7.8 Headings. The headings in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
7.9 Validity Contest. The Company shall promptly pay any
and all legal fees and expenses incurred by the Executive from time to time as
a direct result of the Company's contesting the due execution, authorization,
validity or enforceability of this Agreement.
7.10 Binding Agreement. This Agreement shall inure to the
benefit of and bit binding upon the Company and its respective successors and
assigns and the Executive and his legal representatives.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
EAGLE GEOPHYSICAL OFFSHORE, INC.
By:____________________________
Name:____________________
Title:___________________
EXECUTIVE
_______________________________
David Burns
15
<PAGE> 1
EXHIBIT 10.45
OPERATING LEASE OF MARINE SEISMIC EQUIPMENT
This lease (the "Lease") dated as of July 1, 1996, is between SEITEL
GEOPHYSICAL, INC., a Delaware corporation (the "Lessor") and HORIZON
EXPLORATION LIMITED, a United Kingdom corporation (the "Lessee").
WHEREAS, the Lessor is the owner of the marine seismic equipment more
fully described in the purchase orders attached hereto as Exhibit A (the
"Equipment"); and
WHEREAS, the Lessee is the charterer under a time charter with The
Shanghai Bureau of Marine Geological Survey, dated April 12, 1994 of the
Bahamas flag seismic data recording vessel DISCOVERER, Official No. 711122 (the
"DISCOVERER"); and
WHEREAS, the Lessee is the charterer under a time charter with
Tidewater Marine, Inc., dated February 9, 1996 of the U.S. flag seismic data
recording vessel ABSHIRE TIDE, Official No. 663944 (the "ABSHIRE TIDE"); and
WHEREAS, the Lessee is the charterer under a time charter with Morr
Vessel Management Ltd., dated February 4, 1981 of the UK flag seismic data
recording vessel PACIFIC HORIZON, Official No. 6413807 (the "PACIFIC HORIZON");
and
WHEREAS, the Lessee is the charterer under a time charter with
Simon-Horizon Limited, dated July 15, 1994 of the Bahamas flag seismic data
recording vessel SIMON LABRADOR, Official No. 715224 (the "SIMON LABRADOR," and
collectively with the DISCOVERER, the ABSHIRE TIDE, and the PACIFIC HORIZON,
the "Vessels"); and
WHEREAS, the Lessee wishes to lease the Equipment from the Lessor in
order to improve the seismic data acquisition capabilities of the Vessels;
NOW THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. LEASE. (a) Subject to the provisions hereof, the Lessor
hereby leases to the Lessee and the Lessee hereby leases from the Lessor the
Equipment for a fixed term of five (5) years beginning on the date hereof.
(b) The term of this Lease may be extended for successive periods
of one (1) year each upon written agreement of the parties hereto no later than
thirty (30) days prior to termination.
2. RENT. The Equipment shall be leased at the monthly rental of
U.S.$138,000.00 for the initial term specified in Section 1(a) above ("Rent").
The Rent for any extension terms shall be agreed to by the parties hereto. The
Lessee agrees to pay the Lessor, or to its order,
<PAGE> 2
Rent beginning on July 31, 1996 and thereafter on the last day of each
successive month during the term of this Lease.
3. DELIVERY AND DISCLAIMER OF WARRANTIES. (a) As of the date
hereof, Lessee confirms that the Equipment is in good and satisfactory
operating condition, and has accepted delivery of the Equipment in such
condition. The Lessor hereby warrants that as of the date hereof it has good
and marketable title to the Equipment free and clear of claims by any third
party (other than the security interest granted in favor of NationsBank in
connection with the acquisition of the Equipment by Lessor, referred to herein
as the "Bank Lien") and that it has the right to lease the Equipment. The
Lessor further warrants that during the term of this Lease, so long as the
Lessee is not in default of any other provisions thereof, the Lessee shall
enjoy use of the Equipment free and clear of any person claiming title to or an
interest in the Equipment by reason of the acts or omissions of the Lessor.
(b) THE LESSOR MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED AS TO THE EQUIPMENT INCLUDING AS TO ITS VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR ANY PARTICULAR PURPOSE, AS TO
THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED; PROVIDED, HOWEVER,
THAT DURING THE TERM OF THIS LEASE THE LESSOR HEREBY TRANSFERS AND ASSIGNS TO
THE LESSEE ALL MANUFACTURERS' WARRANTIES CONCERNING THE EQUIPMENT AND WILL
ASSIST THE LESSEE WITH ANY CLAIMS AGAINST THE MANUFACTURER OF THE EQUIPMENT FOR
DEFECTIVE OR NON-PERFORMING PRODUCT OR DESIGN.
4. USE AND OPERATION. So long as no Event of Default shall occur
and be continuing, the Lessee shall have the full use of the Equipment and may
employ the Equipment in any lawful trade or commerce; provided, however, that
the Lessee covenants and agrees that it will not permit the Equipment to be
incorporated or installed in or attached to the Vessels or any other vessel,
building or real property in such manner as to become part of or subject to any
liens, security interest or encumbrances on the Vessels, any other vessel or
any building or real property or so as to preclude the removal of the Equipment
from the Vessels or any other location without material injury to the Equipment
(it being the intention of the parties that the Equipment is, and shall remain,
personal property throughout the term of this Lease); and provided, further,
that the Equipment shall not be used or operated in any manner contrary to any
applicable law, treaty or convention, or any rule or regulation issued
thereunder. The Lessee, at its sole cost and expense, shall perform all
routine maintenance and repairs on the Equipment and all major repairs or
overhauls of the Equipment required to keep the Equipment in good operating
condition.
5. OWNERSHIP. This agreement is a lease, and no title, equity or
right in or to the Equipment shall pass to the Lessee except the rights herein
expressly granted, nor shall the Lessee have any lien or charge on the
Equipment.
2
<PAGE> 3
6. ALTERATIONS. With the prior written consent of the Lessor,
the Lessee shall have the right, at its sole expense, to make alterations,
modifications, additions or attachments to the Equipment so long as the value
or usefulness of the Equipment is not reduced thereby. Except as otherwise
agreed by the Lessor, all alterations, modifications, additions and attachments
of whatsoever kind or nature made to the Equipment shall immediately become the
property of the Lessor and shall be subject to all terms of this Lease.
7. LOSS AND DAMAGE. (a) The Lessee shall assume and bear the
risk of loss and damage to the Equipment and all component parts thereof from
any cause whatsoever whether or not covered by insurance. No loss or damage to
the Equipment or any component part thereof shall impair any obligations of the
Lessee under this Lease which shall continue in full force and effect as
hereinafter expressly provided. The Lessee shall repair or cause to be
repaired all damage to the Equipment.
(b) In the event that all or part of the Equipment shall, as a result
of any cause, other than an act or omission of the Lessor, become lost, stolen,
destroyed or rendered irreparably unusable or damaged, as determined by the
Lessee, then the Lessee shall, within ten (10) days after it shall have made
such determination, fully inform the Lessor of such loss or damage and shall
pay the Lessor the then casualty value of the equipment, together with all Rent
and any other sums past due or becoming due to and including the date of such
payment. Upon payment of said amounts this Lease shall terminate.
(c) If the Vessels or the Equipment is taken by requisition or
governmental action as a result of the Lessee's operation of the Vessels or by
virtue of any actions arising by, through or under the Lessee or its agents or
contractors, the Lessee shall be responsible for obtaining the release of the
Equipment, and Rent shall continue until the Lessor receives any insurance
proceeds for such requisition.
(d) NOTWITHSTANDING ANY PROVISIONS TO THE CONTRARY CONTAINED IN
THIS SECTION 7 OR ELSEWHERE IN THIS LEASE, IF THERE IS ANY PARTIAL OR TOTAL OR
CONSTRUCTIVE OR COMPROMISED TOTAL LOSS OF ANY OF THE VESSELS OR THE EQUIPMENT
DURING THE PERIOD OF THIS LEASE, THE LESSEE HEREBY AGREES TO INDEMNIFY AND HOLD
HARMLESS THE LESSOR FOR AND AGAINST ANY INSURANCE DEDUCTIBLES AND UNINSURED
LOSSES INCURRED BY THE LESSEE. ALL SUCH INSURANCE SHORTFALLS SHALL BE PAID BY
LESSEE TO LESSOR ON DEMAND.
(e) If, at the time of scheduled redelivery of the Equipment under
this Lease, the Equipment is damaged or otherwise in need of repair or other
work to restore it to pre-hire condition as set forth herein the Lessee shall
continue to pay Rent during such repairs and other work and the Equipment shall
not be considered redelivered until it has been restored to said pre-hire
condition.
8. INSURANCE. Commencing on the date hereof and continuing until
the Lessee has redelivered possession of the Equipment to the Lessor or as
otherwise herein provided, whether or not this Lease has terminated as to the
Equipment, the Lessee, at its expense, agrees to obtain and maintain all risk
public liability and property damage insurance for the Equipment
3
<PAGE> 4
in an amount and with insurers satisfactory to the Lessor; provided, however,
that property damage insurance on the Equipment shall always be in an amount
equal to the casualty value of the Equipment as determined by the Lessor; which
casualty value shall be U.S.$5,902,374.00 on the date hereof. The insurance
obtained pursuant to this Section 8 shall not be excess over other coverage but
shall be primary insurance up to and including the stated policy limits and
shall cover the interests of both the Lessor and the Lessee in the Equipment,
or as the case may be, shall protect both the Lessor and the Lessee in respect
to all risks arising out of the condition, delivery, installation, maintenance,
use or operation of the Equipment. All such insurance shall provide for ten
(10) days prior written notice to the Lessor of cancellation, restriction or
reduction of coverage. The Lessee hereby irrevocably appoints the Lessor as
the Lessee's attorney-in-fact to make claim for, receive payment of and execute
and indorse all documents, checks or drafts for loss or damage under any
insurance policy issued on the Equipment. In the event the Equipment shall
sustain a casualty which does not render the Equipment irreparable or unusable
for its intended use, the Lessee shall have the right to the insurance proceeds
upon presentation to the Lessor of a repair estimate or survey showing the
extent of damage and the cost of repair thereof. Upon receipt of such
insurance proceeds, the Lessee is obligated to apply the proceeds to repair of
the Equipment. In the event of a casualty which renders the Equipment
irreparable or unusable for its intended use, the Lessor shall have the right
to the insurance proceeds with respect to the Equipment.
9. TAXES. The Lessee shall be responsible for the payment and
discharge of all license or registration fees, assessments, sales and use
taxes, rental taxes, personal property taxes and other taxes (except taxes on
the Lessor's income or profits), now or hereafter imposed by any federal, state
or local government upon the Equipment or upon the leasing, renting, possession
or use thereof (whether the same be assessed on the Lessor or the Lessee). The
Lessor shall pay any and all such taxes billed or assessed to it, however, if
any such tax is by law to be assessed or billed to the Lessor, the Lessee
agrees to reimburse the Lessor therefor. The Lessee shall directly pay any
such taxes billed or assessed to it. The Lessee shall pay to the Lessor the
amount of any taxes remitted by the Lessor within ten (10) days of notice
thereof. The Lessee upon notice to the Lessor may in the Lessee's own name,
contest or protest any such taxes. The Lessee shall, in addition, be
responsible to the Lessor for the payment and discharge of any penalties or
interest.
10. LIENS AND ENCUMBRANCES. (a) The Lessee will at all times
protect and defend, at its own cost and expense, the title of the Lessor to the
Equipment and keep the Equipment free and clear from all claims, liens and
other encumbrances, except (i) the rights of the Lessor hereunder, (ii) liens
for taxes either not yet due or being contested in good faith by appropriate
proceedings so long as such proceedings do not involve any danger of the sale,
forfeiture or loss of the Equipment, (iii) inchoate materialmen's, mechanics',
workman's, repairman's, employees' or other like liens arising in the ordinary
course of business and not delinquent, and (iv) the Bank Lien. Notwithstanding
the foregoing, nothing contained in this Lease shall require the Lessee to take
any action to protect and defend the Equipment from any liens, claims or other
encumbrances arising out of the acts or omissions of the Lessor or any
shareholder, affiliate, employee, agent or representatives of the Lessor.
(b) Neither the Lessee nor the masters of the Vessels nor any other
person shall have the right, power or authority to create, incur or permit to
exist upon the Equipment any lien,
4
<PAGE> 5
charge or encumbrance. As of the date hereof, the Lessee has placed, and all
at times during the term of this Lease shall keep prominently displayed on the
Equipment a legible notice on a metal plate not less than six inches wide by
nine inches high reading as follows:
"This seismic equipment is owned by SEITEL GEOPHYSICAL, INC., is not a
part of this vessel and cannot be encumbered by any liens arising
against this vessel."
11. INDEMNITY. THE LESSEE ASSUMES ALL RISK OF LIABILITY FOR ANY
DAMAGE OR LOSS TO THE EQUIPMENT, INCLUDING, BUT NOT LIMITED TO, ANY ARISING
FROM LIENS IMPOSED ON THE EQUIPMENT IN VIOLATION OF SECTION 10 ABOVE OR ARISING
FROM THE INCORPORATION OF THE EQUIPMENT INTO THE VESSELS, ANY OTHER VESSEL OR
ANY REAL PROPERTY IN VIOLATION OF SECTION 4 ABOVE, AND FOR INJURIES TO OR
DEATHS OF PERSONS AND/OR LOSS OF OR DAMAGE TO PROPERTY (INCLUDING, WITHOUT
LIMITATION, DAMAGE TO THE ENVIRONMENT AND PROPERTY, DUE TO POLLUTION OR THE
RELEASE OF HAZARDOUS WASTES OF ANY KIND) ARISING FROM OR INCIDENT TO THE
EQUIPMENT'S USE OR OPERATION, WHETHER SUCH INJURIES OR DEATHS INVOLVE THE
LESSEE'S EMPLOYEES OR OTHER PERSONS, AND WHETHER SUCH LOSS OR DAMAGE INVOLVES
PROPERTY OF THE LESSEE AND ITS EMPLOYEES AND CONTRACTORS OR OF OTHERS. THE
LESSEE WILL INDEMNIFY AND HOLD HARMLESS THE LESSOR (AND ANY FIRM OR CORPORATION
SUBSIDIARY TO, AFFILIATED WITH OR UNDER THE SAME MANAGEMENT AS THE LESSOR)
AGAINST AND FROM ALL LOSS, DAMAGE, LIABILITY AND EXPENSE, INCLUDING ATTORNEYS'
FEES, ARISING FROM OR IN CONNECTION WITH SUCH INJURY, DEATH, LOSS OR DAMAGE TO
PROPERTY OR THE ENVIRONMENT, HOWSOEVER CAUSED AND WHETHER RESULTING IN WHOLE OR
IN PART FROM THE NEGLIGENCE OR OTHER FAULT OF EITHER PARTY, BUT ONLY INSOFAR AS
SAID LOSS, DAMAGE, LIABILITY OR EXPENSE ARISES IN CONNECTION WITH THE LESSEE'S
ACCEPTANCE, USE, POSSESSION, OPERATION, OR RETURN OF THE EQUIPMENT UNDER THIS
LEASE.
12. LESSOR MAY PERFORM. Should the Lessee fail to make any
payment or do any act as provided by this Lease, then the Lessor shall have the
right (but not the obligation), without notice to the Lessee and without
releasing the Lessee from any obligations hereunder, to make or do the same or
to make advances to preserve the Equipment or the Lessor's title thereto and to
pay, purchase, contest or compromise any insurance premium, encumbrance,
charge, tax, lien or other sum which in the judgment of the Lessor appears to
affect the Equipment, and in exercising such rights, the Lessor may incur any
reasonable liability and expend reasonable amounts necessary therefor. All
sums so incurred or expended by the Lessor shall be due and payable by the
Lessee within ten (10) days of notice thereof.
13. ASSIGNMENT AND SUBLEASE. Any transfer, assignment, sublease,
conveyance or pledge of the Lessee's interest in and to this Lease or the
Equipment, whether by operation of law or otherwise, without the prior written
consent of the Lessor, shall be void. The Lessor, its successors or assigns,
may assign this Lease or grant a security interest therein or in the Equipment
in whole or in part. However, unless the Lessee receives written notice of
5
<PAGE> 6
such assignment, the Lessee shall have no obligation to pay Rent due pursuant
to this Lease to any party other than the Lessor.
14. SURRENDER OF THE EQUIPMENT. At the Lessor's request upon
expiration or earlier termination of this Lease or any renewal or extension
thereof, the Lessee shall return the Equipment to the Lessor in good condition
and working order, ordinary wear and tear resulting from use thereof excepted,
by delivery of the Equipment at the Lessee's cost and expense to a mutually
agreed upon place on the Gulf Coast of the United States.
15. EVENTS OF DEFAULT. The occurrence of any of the following
events, shall constitute an Event of Default under this Lease:
(a) the nonpayment by the Lessee of any Rent when due, or the
nonpayment by the Lessee of any other sum required hereunder
to be paid by the Lessee which nonpayment continues for a
period of five (5) days following written notice thereof from
the Lessor;
(b) the failure of the Lessee to perform any other term, covenant
or condition of this Lease which is not cured within ten (10)
days after written notice thereof from the Lessor;
(c) the Lessee ceases doing business as a going concern, is
insolvent, makes an assignment for the benefit of creditors,
admits in writing its inability to pay its debts as they
become due, files a voluntary petition in bankruptcy, is
subjected to an involuntary petition in bankruptcy which is
not released or dismissed within thirty (30) days after
filing, is adjudicated bankrupt or insolvent, files or has
filed against it a petition seeking any reorganization,
arrangement or composition, under any present or future
statute, law or regulation;
(d) any of the Lessee's representations or warranties made in this
Lease or in any statement or certificate at any time given in
writing pursuant to this Lease or in connection herewith shall
be false or misleading in any material respect; or
(e) the Lessee defaults under or otherwise has accelerated any
material obligation, credit agreement, loan agreement,
conditional sales contract, lease, indenture or debenture or
the Lessee defaults under any other agreement with the Lessor.
16. REMEDIES. (a) Should any Event of Default occur and be
continuing, the Lessor may, without notice to or demand upon the Lessee,
without retaking possession of the Equipment, accelerate and cause to become
immediately due and payable all Rent and other sums payable under the terms
hereof; or may retake (by the Lessor, independent contractors, or by requiring
the Lessee to assemble the Equipment for the Lessor at a location designated by
the Lessor) possession of the Equipment (without liability to the Lessee
therefor which is hereby expressly waived) and either:
(i) retain possession of the Equipment until the Lessor shall
terminate the Lessee's interest in the Equipment by giving the
Lessee written notice to that effect, in
6
<PAGE> 7
which event the Lessee shall be liable for all rents and other sums
accrued and unpaid prior to such termination;
(ii) lease the Equipment to a third party for the account of the
Lessee and recover from the Lessee any deficiency between the
rents provided for herein and those received from such third
party;
(iii) sell the Equipment at public or private sale, in which event
the Lessee shall pay to the Lessor upon demand the amount, if
any, by which the net proceeds of such sale shall be less than
the casualty value of the Equipment; or
(iv) recover from the Lessee the excess of the rents and charges
provided for in this Lease for the balance of the term over
the then reasonable rental value of the Equipment for the same
period.
(b) The Lessor may enforce any one or more of the remedies
hereunder successively or concurrently, and any such action shall not prevent
the Lessor from pursuing any further remedy the Lessor may have hereunder or at
law or in equity. Time and exactitude of each of the terms and conditions
hereof are hereby declared to be of the essence of this Lease. The Lessor may
accept past due payments without modifying the terms of this Lease and without
waiving any further rights. The Lessor shall not be obligated to sell or
release the Equipment. Nevertheless, in the event of a public sale the Lessor
may bid upon and purchase the Equipment.
17. INSPECTION BY LESSOR. The Lessor, its agents, representatives
or employees, shall at any and all reasonable times during regular working
hours have the right to board the Vessels for the purpose of inspecting the
Equipment and observing its use.
18. COSTS AND ATTORNEYS' FEES. In the event of any action at law
or a suit in equity by reason of the Lessee's breach of this Lease or any
governmental examination or investigation of the Lessee, which requires the
Lessor's participation and which participation would not be required but for
this Lease, or pursuant to the Lessor exercising any of its rights provided for
in this Lease or by applicable law, the Lessee, in addition to all other sums
which the Lessee may be called upon to pay under the provisions of this Lease,
will pay to the Lessor its reasonable costs of collection or other reasonable
out-of-pocket costs and expenses and attorneys' fees.
19. INTEREST AND SERVICE CHARGES. Any amounts required to be paid
by the Lessee pursuant to this Lease, and not paid when due (except payments of
taxes being properly contested) shall bear interest at the rate of 1.25% per
month until payment.
20. OFFSETS. The Rent and all other sums payable hereunder shall
be paid without notice, demand, counterclaim, setoff, deduction or defense and
without abatement, suspension, deferment, diminution or revocation, and the
obligations and liabilities of the Lessee under this Lease shall not be
affected for any reason. This Lease shall not be terminable by the Lessee in
whole or in part except as specifically provided in Sections 7 and 16 of this
Lease.
7
<PAGE> 8
21. HEADINGS. Section headings herein are used for convenience
only and shall not otherwise affect the provisions of this Lease.
22. EFFECT OF WAIVER. No failure or delay on the part of the
Lessor in the exercise of any remedy, power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such remedy, power, right or privilege preclude other or further exercise
thereof or any other remedy, right, power or privilege. All rights and
remedies existing under this Lease are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
23. SURVIVAL OF WARRANTIES. All agreements, representations and
warranties of the Lessee and the Lessor made herein shall survive the execution
of this Lease.
24. APPLICABLE LAW AND ARBITRATION. (a) This Lease and all
documents issued or executed pursuant hereto shall be governed by, and
construed under, the internal laws of the State of Texas. If any provision of
this Lease or any remedy provided herein shall be held to be invalid under any
applicable law, such provision shall be inapplicable and deemed omitted, but
the remaining provisions of this Lease shall be and remain effective in
accordance with their terms. This Lease may only be amended or modified by an
instrument in writing signed by a duly authorized representative of the party
to be charged thereby.
(b) Any controversy or claim arising out of or relating to this
Lease, or the alleged breach thereof, which cannot be resolved between the
Lessor and the Lessee shall be referred to arbitration before the Society of
Marine Arbitrators, Inc. before three (3) persons, one to be appointed by the
Lessor, one by the Lessee and the third by the two so chosen; their decision or
that of any two of them shall be final. The proceedings shall be conducted in
accordance with the Rules of such Society then in effect; provided, however,
that such arbitration proceedings shall take place in Houston, Texas. Any
award of the arbitration panel shall be final and binding on both parties and
may be enforced in the U.S. District Court for the Southern District of Texas,
or any other court having jurisdiction over the parties. The Lessor and the
Lessee agree that neither party shall have any right to commence or maintain
any suit or legal proceeding concerning any dispute hereunder, other than a
suit for enforcement of the arbitration provisions contained in this Section
24(b), until the dispute has been determined in accordance with the arbitration
procedure provided for herein and then only for enforcement of the award
rendered under such arbitration.
25. COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
26. NOTICES. (a) All notices, requests, consents, demands and
other communications provided for or permitted hereunder shall be effective
three (3) days after being duly deposited in the mails, certified, return
receipt requested, or upon receipt if delivered to Federal Express or similar
courier company or transmitted by telefax, addressed to the respective party at
the address set forth below:
8
<PAGE> 9
Lessor: Seitel Geophysical, Inc.
50 Briar Hollow Lane, 7th Floor West
Houston, Texas 77027
Fax No. (713) 627-2319
Lessee: Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent TN13 1XR
England
Fax No. 011-441-732-742-977
(b) Either of the parties hereto may change its address by notice
in writing given to the other party to this Lease.
SEITEL GEOPHYSICAL, INC.
By: /s/ JAY N. SILVERMAN
-------------------------------------
Name: Jay N. Silverman
------------------------------
Title: President
------------------------------
HORIZON EXPLORATION LIMITED
By: /s/ GERRY HARRISON
-------------------------------------
Name: Gerry Harrison
------------------------------
Title: Director
------------------------------
9
<PAGE> 1
EXHIBIT 10.46
HORIZON EXPLORATION LTD (1)
AND
THE BANK OF N T BUTTERFIELD
& SON LIMITED (2)
ASSIGNMENT
<PAGE> 2
THIS ASSIGNMENT is made the 1996
BETWEEN:
(1) HORIZON EXPLORATION LIMITED a company registered in England under
Company Number 02804983 of 6 Pembroke Road, Sevenoaks, Kent TN13 1XR
("the Assignor"); and
(2) THE BANK OF N T BUTTERFIELD & SON LIMITED (London Branch) of 24
Chiswell Street, London EC1Y 4TY ("the Bank")
WHEREAS:
In consideration of the Bank making revolving trade finance facilities
("the Facilities") to the Assignor the Assignor has agreed to enter
into this Deed of Assignment.
1. DEFINITIONS AND INTERPRETATION
1.1 In this Assignment including the Recitals hereto the following
words and expressions shall unless the context otherwise
requires bear the following meanings:
"THE CONTRACT PROCEEDS" all sums to be paid by (the Client) to
the Assignor from time to time in accordance with the terms of
the Agreement;
"THE AGREEMENT" means the seismic research survey agreement
entered into between the Assignor and (the Client) dated
___________ 1996;
"(THE CLIENT)" means (the Client) ______________
2. COVENANT TO PAY
The Assignor covenants on demand to pay and discharge to the Bank all
monies obligations and liabilities whether principal interest or
otherwise which may now or at any time in the future be due, owing or
incurred by the Assignor to the Bank.
3. ASSIGNMENT
3.1 The Assignor as beneficial owner and as a continuing security
hereby assigns absolutely to the Bank the Contract Proceeds
together with all rights of action and interest associated
therewith;
3.2 The bank agrees that all payments received in respect of the
Contract Proceeds under the terms of this Assignment shall be
set against all monies due from the Assignor to the Bank from
time to time;
3.3 If the Assignor shall unconditionally and irrevocably pay or
discharge to the Bank all monies and the obligations and
liabilities covenanted to be paid by the Assignor to the Bank
in accordance with Clause 2 hereof, then the Bank will at the
request and cost of the Assignor reassign the Contract
Proceeds to the Assignor or as the Assignor shall direct.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS BY THE ASSIGNOR
The Assignor represents and warrants to the Bank and undertakes that:
4.1 The Agreement is valid and in force free of any charge or
encumbrance of any kind and nothing has been or shall be done,
permitted or suffered whereby the Bank may be prevented from
receiving all or any of the monies payable to the Assignor in
terms thereof;
4.2 The Assignor shall forthwith give notice of this Assignment to
the Bank in the form of the Schedule hereto and deliver the
receipted notice to the Bank;
2
<PAGE> 3
4.3 The Assignor shall duly and punctually perform all the
obligations on the part of the Assignor under the Agreement
and to procure so far as possible the due performance of all
obligations of (the Client) under the Agreement;
4.4 The Assignor shall take all action promptly and expeditiously
(at its own expense in all respects) required to ensure the
proper payment of the Contract Proceeds and to ensure that the
Contract Proceeds are paid direct to such account as the Bank
shall from time to time direct.
4.5 The Assignor shall not do or cause to or permit to be done
anything which may depreciate, jeopardize or otherwise
prejudice the value of the Contract Proceeds assigned
hereunder.
4.6 The Assignor shall not make any other assignment or transfer
or agree to make any such transfer in respect of the Contract
Proceeds and shall not permit or allow any rights to arise in
favor of or exercisable by any third parties (other than the
Bank) over the Contract Proceeds.
4.7 If the Assignor shall fail to satisfy the Bank that it has
performed any of its obligations under this Clause 4 then the
Bank may take such steps as it considers appropriate to
procure the performance of such obligation and shall not
thereby be deemed to be a mortgagee in possession and the
monies expended by the Bank shall be reimbursed by the
Assignor on demand and until so reimbursed shall carry
interest at 4% above the Bank's base rate from time to time.
5. PERFORMANCE OF OBLIGATIONS UNDER THE AGREEMENT
For the avoidance of doubt the Assignor will remain liable and
responsible to perform all its obligations under the Agreement and any
variations thereto.
6. FURTHER ASSURANCE
The Assignor shall, whenever requested by the Bank, immediately
execute and sign all such deeds and documents and do all such things
as the Bank may require at the Assignor's cost over the Agreement for
the purpose of perfecting or more effectively providing security to
the Bank for the payment and discharge of the monies, obligations and
liabilities secured by this Agreement.
7. COSTS
All costs, charges and expenses incurred by the Bank in relation to
this Assignment or the monies, obligations and liabilities hereby
secured shall be reimbursed by the Assignor to the Bank on demand on a
full indemnity basis and until so reimbursed shall carry interest as
mentioned in Clause 4 from the date of payment to the date of
reimbursement.
8. MISCELLANEOUS
8.1 The security constituted by this Assignment shall be in
addition to and shall not be prejudiced, determined or
affected nor operate so as in anyway to determine prejudice or
affect any other security which the Bank may now or at any
time in the future hold for or in respect of all or any part
of the monies, obligations and liabilities secured by this
Assignment nor shall any prior security held by the Bank over
the Agreement merge in the security constituted by this
Assignment which shall remain in force and effect
notwithstanding any intermediate settlement of account as a
continuing security until discharged by the Bank.
8.2 The Bank may, without discharging or in anyway affecting the
security created by this Assignment or any remedy of the Bank
grant time or other indulgence or abstain from exercising or
enforcing any remedies, securities, guarantees or other rights
which it may now or in the future have from or against the
Assignor and may make any other arrangement, variation or
release with any person or persons without prejudice either to
this Assignment or liability of the Assignor for the monies,
obligations and liabilities secured by this Assignment.
8.3 The Bank shall have a full and unfettered right to assign the
whole or any part of the benefit of this Assignment and the
expression "the Bank" shall include its successors and assigns
and the Bank shall be
3
<PAGE> 4
entitled to disclose any information to any actual or
prospective assignee, successor or participant.
8.4 The provisions of this Assignment shall be severable and if at
any time any one or more such provisions is or becomes
invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in anyway
be impaired.
8.5 The rights and remedies of the Bank provided by this
Assignment are cumulative and are not exclusive of any rights,
powers or remedies provided by law and may be exercised from
time to time and as often as the Bank may deem expedient.
8.6 Any reference in this Assignment to any statute or any section
of any statute shall be deemed to include reference to any
statutory modification or re-enactment thereof for the time
being in force.
9. NOTICES
Any demand or notice under this Assignment may be served personally or
may be sent by post to the Assignor's last known address or place of
business. If such demand or notice is sent by post it shall be deemed
to have been received on the day following the day on which it was
posted and shall be effective notwithstanding that it was not in fact
delivered or was returned undelivered.
10. GOVERNING LAW AND JURISDICTION
This Assignment shall be governed and construed in accordance with the
laws of England and the Assignor hereby irrevocably submits to the
non-exclusive jurisdiction of the English Courts.
IN WITNESS whereof the Assignor has executed and delivered this
Assignment as a deed the day and year first above written.
4
<PAGE> 5
EXECUTED but not delivered until )
the date hereof) as a Deed by )
HORIZON EXPLORATION LIMITED )
acting by: )
Director
Director/Secretary
EXECUTED but not delivered until )
the date hereof) as a Deed by )
THE BANK OF N. T. BUTTERFIELD & SON )
LIMITED (London Branch) acting by: )
Authorized Officer
Authorized Officer
5
<PAGE> 6
THE SCHEDULE
NOTICE OF ASSIGNMENT
To: Date:
Dear Sirs:
NOTICE OF ASSIGNMENT OF CONTRACT PROCEEDS
We hereby give you notice that all sums to be paid or advanced to us by you
under the terms of the Seismic Research Survey Agreement ("the Agreement")
between us have been assigned by us to The Bank of N T Butterfield & Son
Limited of 24 Chiswell Street, London EC1Y 4TY ("the Bank") to secure all
monies obligations and liabilities due, owing or incurred to the Bank.
Further, we irrevocably authorize and require you to make all future payments
in respect of the Contract Proceeds to the Bank, quoting the following
reference:
Remit to: Bank of Butterfield
Sort Code: 40-51-91
Account Name: Horizon Exploration Ltd.
Account Number:
This authority is to take immediate effect.
Please acknowledge by signing and returning one copy of this notice.
Yours faithfully,
HORIZON EXPLORATION LIMITED
We acknowledge receipt of a copy of the above notice.
- ---------------------------------
for and on behalf of
Date: 1994
6
<PAGE> 1
EXHIBIT 10.47
DATED 30th August 1994
- --------------------------------------------------------------------------------
HORIZON EXPLORATION LTD.
-AND-
THE BANK OF N. BUTTERFIELD & SON LTD
LETTER OF HYPOTHECATION AND PLEDGE
- --------------------------------------------------------------------------------
<PAGE> 2
LETTER OF HYPOTHECATION AND PLEDGE
TO: THE BANK OF N.T. BUTTERFIELD & SON LTD
24 CHISWELL STREET
LONDON ECY 4TY
1. CONSIDERATION
In consideration of you making/continuing advances to us or
incurring liability on our behalf by way of acceptance or
discount bills of exchange or in respect of documentary
creditors or collection or otherwise in any way whatsoever or
otherwise making credit/banking facilities available to us, we
agree with you as follows to the intent that the provisions
set out below shall apply on a continuing basis to all such
transactions.
2. REPRESENTATIONS AND WARRANTY
We represent and warrant to you that we have a good right to
pledge with you the Goods and to execute or sign any transfers
delivery orders or other requisite documents and the Documents
(as herein defined) are valid and that we have good title to
them and that the Goods are within our own disposition and
control free from any other hypothecation, pledge, charge or
encumbrance of any kind.
3. TERMS OF AGREEMENT
It is understood and agreed that the terms upon which the
above credit/banking facilities will be made/given are as
follows:
3.1 All bills of exchange, promissory notes and negotiable
instruments of any description, all bills of lading, shipping
documents, dock warrants, delivery orders wharfingers and
other warehouse warrants and receipts, policies and
certificates of insurance, invoices and all other documents of
title or documents relating to produce and goods (the
"Documents") and all produce and goods represented by such
documents or to which such documents relate (the "Goods")
which shall be negotiated with you or handed to you for
collection or otherwise or against which you may from time to
time make available banking facilities or accommodation with
or without collateral security, are hereby held; and
All Documents and/or Goods which are now or may at any time
after the date of this letter be in your possession or
deposited with you or your agents or representatives or lodged
with you or transferred to you or your nominees by us
2
<PAGE> 3
or by others in our name or for our account (whether deposited
for safe custody, collection, security or for any specific
purpose or generally and whether in England or elsewhere), are
hereby pledged and
As a continuing security for the payment or discharge or
demand of all moneys obligations and liabilities whether
actual or contingent now or hereafter due or to become due
owing or incurred to you by us in whatever currency
denominated whether on any current or other account or
otherwise in any manner whatsoever (whether alone or jointly
and in whatever style name or form and whether as principal or
surety) including all liabilities in connection with foreign
exchange transactions, accepting or endorsing or discounting
any notes or bills or under bonds guarantees indemnities
documentary or other credits or any instruments whatsoever
from time to time entered into by you or at the request of us
together with interest to date of payment at such rates and
upon such terms as may from time to time be agreed and all
commissions fees and other charges and all legal and other
costs and expenses incurred by you (including those of your
nominees and agents) in relation to us or the goods and a full
indemnity basis.
3.2 Negative Covenants. We will not [and will procure that none
of our subsidiaries for the time being will] without your
prior written consent.
3.2.1 give any guarantees or indemnities otherwise than to you or
any of your subsidiaries or in the ordinary course of trading
(which expression shall not include guarantees or indemnities
in respect of monies borrowed, credit incurred or financial
obligations assumed by any third party);
3.2.2 part with, convey, lease or otherwise dispose of or enter into
any agreement for parting with conveying or leasing or
otherwise disposing of any of the freehold or leasehold
properties now or hereafter belonging to us or our
subsidiaries at below the then current market value;
3.2.3 create or permit to subsist any mortgage, debenture,
hypothecation, charge, assignment by way of security, pledge
or lien or any other encumbrance or security whatsoever (other
than any such disclosed to you in writing prior to the date
hereof) over all or any part of our or their respective
present or future undertakings, properties, assets, revenues
or uncalled capital except liens arising solely by operation
of law in the ordinary course of trading which are discharged
within sixty days of arising (unless being contested in good
faith and by appropriate proceedings);
3.2.4 permit to increase the amount secured by any mortgage,
debenture, hypothecation, charge, assignment by way of
security, pledge or lien or any other encumbrance or security
existing at the date hereof over all or any part of our or
3
<PAGE> 4
their respective present or future undertakings, properties,
assets, revenues or uncalled capital except as aforesaid.
4. UNDERTAKINGS
4.1 We hereby undertake to provide you with funds;
4.1.1 to meet on demand all bills negotiated, endorsed or advanced
against or purchased by you for us which may be dishonored on
presentation for acceptance or which may not be paid at the
due date thereof according to the original tenor and all
liability in respect thereof however arising and non-payment
of a bill shall be deemed to have taken place if at that date
funds have not been placed at your free disposal for the whole
sum due;
4.1.2 to reimburse you for all advances made against documents of
title which may not have been duly taken up on presentation;
4.1.3 to meet re-exchange expenses and all interest commission,
discount and other bankers charges, legal, notarial and other
costs, disbursements and expenses on a full indemnity basis;
4.1.4 to meet all freight, warehouse, dock, transit and other
charges the cost of insurance, rent and all other costs of and
incidental to such goods.
4.2 We hereby undertake to indemnify you and your correspondents
and agents on demand against all losses claims expenses
demands and liabilities of whatever nature now or hereafter
incurred by (or by any agent officer or employee of) you or
any of them for anything done or omitted in the exercise or
purported exercise of the powers herein contained or
occasioned by any breach by any of us our obligations
hereunder.
5. BANK'S AUTHORITIES
If, after due inquiry with us, you are not satisfied at the
responses provided, you are authorised at your absolute
discretion without further notice to us or further consent of
any person interested;
5.1 to insure all the Goods against all insurance risks whether by
land, sea or air for their full value and to recover the full
amount from the insurers;
5.2 to land and store or arrange for the storage of the goods
and/or re-ship the same to any other port;
4
<PAGE> 5
5.3 to pay all freight, warehouse, dock, transit and other
charges, the cost of insurance, rent and all other costs of
and incidental to the Goods as you may from time to time think
fit;
5.4 to pay or retain and charge us with such charges for
commission as are usual between merchant and correspondent and
such interest re-exchange notarial and banking charges as are
usually payable in these circumstances;
5.5 to take conditional acceptance of bills of exchange (including
acceptances for honor) and/or to extend the due date for
payment thereof upon such conditions as you think fit;
5.6 to accept payment from drawees or acceptors (whether or not
the acceptance is conditional) before maturity under rebate or
discount on payment to deliver up the relative Documents to or
to the order of the drawees or acceptors;
5.7 to accept part payment before maturity and to deliver such
proportionate part of the goods held against the same as you
in your absolute discretion think fit;
5.8 to convert into Sterling by telegraphic reminance or otherwise
at your discretion any monies received by you under or by
virtue of this letter of hypothecation and to debit our
account with all costs, charges and loss on exchange thereby
incurred;
5.9 to debit our account with all payments of freight, warehouse,
dock, transit and other charges the cost of insurance, rent,
interest and all other expenses incurred hereunder and with
all money chargeable to us under this letter of hypothecation
and pledge and with the amount of unaccepted or unpaid bills
of exchange or of advances against other documents of title
for which we are liable to you or any deficiency arising after
realization;
but so that you are under no obligation to do any of the
foregoing and are not liable for any loss we may sustain as a
result of your delay or failure so to do.
6. DISPOSAL OF SECURITY
6.1 You are authorised without demand for payment or notice or
further consent of any person to sell or otherwise dispose of
all or any of the goods at such times or times in such manner
and for such consideration (whether payable or deliverable
immediately or by installments) as you may in your absolute
discretion think fit without being under any responsibility to
us for the price obtained thereby in any of the following
events.
5
<PAGE> 6
6.1.1 on default of acceptance on presentation or in payment at
maturity of any bill of exchange or of any of the sums due
hereunder;
6.1.2 on any drawee or acceptor of any bill (whether conditionally
or absolutely accepted) suspending payment, becoming bankrupt
or insolvent or taking any steps composition or arrangement
with creditors;
6.1.3 on our failure to repay on demand any money obligation or
liability due, owing or incurred to you by us with all
interest, commission, discount and other bankers charges,
legal and other costs, disbursements and expenses due or
incurred in respect thereof;
6.1.4 on any payment being made by you which you are authorised to
make hereunder;
6.1.5 if and whenever you consider it desirable (having regard to
the then market value of the Goods) that the Goods should be
sold whether or not any contingent or other liability of ours
shall have actually matured to you:
but so that you are under no obligation so to sell or
otherwise dispose and you are not liable for any loss we may
sustain as a result of your delay of failure so to do:
6.2 We will from time to time execute and sign all transfers,
delivery order and other documents which you may require for
perfecting your title or for vesting or enabling you to vest
any of the Goods in you or for facilitating delivery of the
same to you or your nominee(s) or transferee(s) or to effect
delivery of the same as you may require and to do all such
acts and things as may from time to time be necessary or
expedient for effecting any sale or other disposition you may
make. You and your agent(s) and nominee(s) are hereby
severally and irrevocably authorised to execute and deliver
any such document as our agent and to do any such act or thing
on our behalf;
6.3 After deduction of all expenses, charges and commissions the
net proceeds of such sale or disposal of the Goods shall be
applied at your absolute discretion in discharge or reduction
of any actual or contingent debt, obligation or liability to
you of us and any surplus shall (subject to the provisions of
this letter of hypothecation and pledge) be at our disposal.
If such proceeds are insufficient for such purpose we
undertake to make good such deficiency. Section 93 and the
provisions contained in S. 103 of the Law of Property Act
1925 shall not apply. Any statement of account rendered to us
by you shall be sufficient proof of the sale or other disposal
of any of the Goods hereunder and of our deficiency resulting
therefrom and shall for all purposes be conclusive between us
and you.
6
<PAGE> 7
7. INSURANCE
We undertake that the Goods will be kept insured in their full
value or for such other value as you may specify against all
insurable risks including fire and flood and a note of your
interest has been endorsed on the relevant policies and all
policies whether effected by you or not are to be treated as
part of your security. Should any claim arise under any
insurance you are hereby irrevocably authorised to recover the
full amount thereof from the insurers and to give a valid
receipt on our behalf to charge the same commission on the
proceeds as on a sale of the produce of goods and to apply
such proceeds as if the same represented proceeds of any sale
or disposal of any such goods hereunder. We hereby undertake
to assign to you the policies of insurance for that purpose
and to deliver them to you on demand and in the case of loss
or damage to such goods howsoever caused to pay over to you
all sums received by us in respect of such insurance and make
up any deficiency which may result in the amount of any monies
due to you and pending payment we shall hold all such sums in
trust for you.
8. MAINTENANCE OF SECURITY
We undertake to maintain such margin of security over
liabilities as you shall from time to time stipulate, either
by payment to you of cash or, if so agreed by you, by the
deposit of additional collateral approved by you.
9. ADDITIONAL GUARANTEES
Your holding additional guarantees or securities is not to
prejudice your rights on any bills of exchange in case of
dishonor nor shall any recourse or proceedings taken thereon
or your giving time or granting any indulgence or making any
arrangement of composition affecting your title to any
security or our liability.
10. RESTRICTION OF LIABILITY
We hereby irrevocably acknowledge that you are not to be
liable to account as mortgage in possession or otherwise in
any circumstances for;
10.1 any default by any insurer, warehouse keeper, broker,
auctioneer, agent, carrier, captain or other officer of any
ship or craft or other person employed in the insurance, sale,
disposal, storage, shipment or carriage of any of the Goods or
for any other purpose connected therewith nor;
10.2 any deterioration or deficiency in the quantity, quality,
condition, delivery insurance or value of any of the Goods
nor;
7
<PAGE> 8
10.3 the stoppage or detention thereof by the shipper or any other
person whomsoever nor;
10.4 the correctness, validity, sufficiency or genuineness of any
of the Documents relating to the Goods from time to time
deposited with you or your agents representatives or for any
delay or omission which may occur in connection with the
acceptance or payment of any drafts drawn on the buyers of any
of the Goods nor;
10.5 loss on exchange rates or any other loss, damage or delay
howsoever caused relating directly or indirectly to any of the
Goods or the sale or disposal thereof.
11. RIGHT OF SET-OFF
11.1 If any bill of exchange hypothecated to you by us is not paid
in full at maturity then all advances made by you and all
credits given by you to us against any other bill at any time
drawn upon or accepted by the same drawee or acceptor and all
other such sums shall forthwith become due and repayable to
you without further demand and you shall be entitled without
notice to set-off all or any of such advances credits or other
such sums against any monies standing to our credit alone or
jointly with others on any current or other account and shall
have a lien on and be entitled to retain as security for the
foregoing all or any cheques, drafts, bills, notes and
negotiable instruments of us.
11.2 All monies received by you from us or from any other person
may be applied to such account or liability of us or any one
or more of us as you in your absolute discretion may from time
to time conclusively determine.
12. OFFICER'S AUTHORITY ETC
All the powers and authorities hereby given to you are powers
and authorities equally given to or in favour of any Director,
Manager of Offices of your Bank and your Correspondents or
other Agents and the holders for the time being of any bill as
if such persons were in each case specifically named and such
powers and authorities may be exercised accordingly.
13. NOTICES
Any notice or copy of protest for non-acceptance or non-payment
or any other communication having reference to any transaction
under this letter of hypothecation and pledge shall without
prejudice to any other effective mode of making the same be
deemed to have been sufficiently made on us if served on any
one of the Directors or on the Secretary personally or if left
for or sent by post to our registered office and shall be
assumed to have reached the addressee within 24 hours of
posting and in proving such service it shall be sufficient to
prove that the notice or communication was properly addressed,
stamped and posted by first class post.
14. INTERPRETATION
14.1 Reference to you in this letter of hypothecation and pledge
shall, where the context admits, include your successors and
assigns whether immediate or derivative and if this letter is
signed by two or more persons all agreements, obligations,
warranties, powers, authorities, liabilities and charges herein
contained or implied on their part are joint and several and
shall be entitled to any of the rights or remedies legal or
equitable of a surety as regards the indebtedness obligations
or liabilities of any others of the undersigned:
14.2 You shall be at liberty to release compound with or otherwise
vary or agree to vary the liability of or to grant time or
indulgence to or make other arrangements with or any other
person without prejudicing or affecting your rights and
remedies against any others of the undersigned.
15. CONTINUING SECURITY ETC.
The security created by this letter of hypothecation and pledge
shall apply to all current and future transactions
(nothwithstanding that any current transaction may have been
entered into prior to the date hereof) and shall remain in
force notwithstanding the liquidation, incapacity or any change
in our constitution or any intermediate settlement of account
or other matter whatsoever until the expiration of one month
after receipt by you of notice to determine the same PROVIDED
ALWAYS that such notice shall not have effect to terminate the
security created by this letter of hypothecation in respect of
amounts owing to you as at the date of receipt of such notice
or in respect of obligations or liabilities present or future,
actual or contingent occurred by us with you or arising out of
any transaction effected prior to receipt of such notice and is
in addition to and shall not merge with or otherwise prejudice
or effect any guarantee, lien, bill, note, mortgage or other
security right or remedy now or hereafter held by or available
to you and neither this letter of hypothecation and pledge to
your lien as bankers nor your rights or remedies on any bill or
otherwise shall be in any way prejudiced or affected thereby or
by the invalidity thereof by you now or hereafter dealing with
exchanging, releasing, modifying or abstaining from perfecting
or enforcing any of the same or any rights or remedies which
you may now or hereafter have no giving time for performance or
indulgence or compounding with any other person liable.
16. CURRENCY
16.1 Moneys received or held by you pursuant to this pledge and
hypothecation may from time to time after demand has been made
be converted into such currency as you consider necessary or
desirable to cover the obligations and liabilities actual or
contingent of us that currency at your then prevailing spot
rate of exchange (as conclusively determined by you) for
purchasing the currency to be acquired with the existing
currency.
16.2 If and to the extent that we fail to pay the amount when due
on demand, you may in your absolute discretion without notice
to us purchase at any time thereafter so much of a currency as
you consider necessary or desirable to cover obligations and
liabilities actual or contingent in such currency hereby
secured at your then prevailing spot rate of exchange (as
conclusively determined by you) for purchasing such currency
with sterling and we hereby agree to indemnify you against the
full sterling cost incurred by you for such purchase.
16.3 No payment to you (whether under any judgment or court order
or otherwise) shall discharge the obligation or liability in
respect of which it was made unless and until you shall have
received payment in full in the currency in which such
obligation was incurred as to the extent the amount of any
such payment shall on actual conversion into such currency
fall short of such obligation or liability expressed in that
currency you shall have a further separate cause of action
8
<PAGE> 9
against and shall be entitled to enforce this pledge and
hypothecation to recover the amount of the shortfall.
17. GOVERNING LAW AND JURISDICTION
This letter of hypothecation and pledge shall be governed and
interpreted in accordance with English law and we irrevocably
submit to the non-exclusive jurisdiction of the High Court of
Justice in England and/or Wales but it shall be open to you to
enforce this letter of hypothecation and pledge in the courts
of any other competent jurisdiction.
Dated 30th August 1994
SIGNED by /s/ G.M. Harrison
for and on behalf of HORIZON EXPLORATION LTD
in the presence of
Signature:George Purdie
Address:
----------------------------------------------
------------------------------------------------------
------------------------------------------------------
Occupation: Director
9
<PAGE> 1
EX. 10.48
REF: 627-96
CLIENT: HORIZON
DATE: 7TH JAN 97
LEASE AGREEMENT
This AGREEMENT is made this 7th day of January 1997 between DigiCOURSE
INC., a corporation organized and existing under the laws of the State of
Louisiana, United States of America, with its principal place of business at
5200 Toler Street, Harahan, Louisiana, U.S.A. (hereinafter "DigiCOURSE") and
Horizon Exploration Limited ("LESSEE") with its principal place of business at
6 Pembroke Road, Sevenoaks, Kent TN13 1XR.
This AGREEMENT replaces the previous lease agreement dated 21st October
1996 in respect of a daily lease of $1130.60.
IN CONSIDERATION OF the mutual covenants and undertakings herein, the parties
agree as follows:
1. LEASE EQUIPMENT
1.1 DigiCOURSE hereby leases to LESSEE the following equipment
(hereinafter "Equipment"), under the terms and conditions set
forth below:
<TABLE>
<CAPTION>
============================================================================================================
LEASE EQUIPMENT - DATED 21ST OCTOBER 1996 - PACIFIC HORIZON
- ------------------------------------------------------------------------------------------------------------
QTY SPARES DESCRIPTION PART NO. UNIT PRICE DAILY TOTAL
LEASE DAILY
LEASE
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------
25 Streamer Mount CMX 9000-4012/11 $ 8,825.00 $28.00 $ 700.00
- ------------------------------------------------------------------------------------------------------------
12 Model 5011 Compass bird 9000-5011 $ 9,900.00 $28.00 $ 336.00
- ------------------------------------------------------------------------------------------------------------
1 Sys.3 S/W Upgrade 9000-508/06-210 $35,000.00 $95.60 $ 95.60
- ------------------------------------------------------------------------------------------------------------
DAILY LEASE $1,131.60
- ------------------------------------------------------------------------------------------------------------
LEASE EQUIPMENT - EFFECTIVE 1ST JANUARY 1997 - PACIFIC HORIZON
- ------------------------------------------------------------------------------------------------------------
1 1 System 3 Line Power Unit 9000-503/01 $ 2,500.00 $ 8.00 $ 16.00
- ------------------------------------------------------------------------------------------------------------
6 4 CTX Pinger Flanged 9000-4112/01 $ 4,430.00 $15.00 $ 150.00
- ------------------------------------------------------------------------------------------------------------
5 3 CTX Electronics Module - 9000-4022/11 $ 4,595.00 $14.00 $ 112.00
FSK
- ------------------------------------------------------------------------------------------------------------
DAILY LEASE $ 278.00
- ------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 2
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------------
LEASE EQUIPMENT - EFFECTIVE 1ST JANUARY 1997 - SIMON LABRADOR
- --------------------------------------------------------------------------------------------------------------
1 1 System 3 Line Power Unit 9000-503/01 $2,500.00 $ 8.00 $ 16.00
- --------------------------------------------------------------------------------------------------------------
6 8 CTX Pinger Flanged 9000-4112/01 $4,430.00 $15.00 $ 210.00
- --------------------------------------------------------------------------------------------------------------
5 7 CTX Electronics Module - 9000-4022/11 $4,595.00 $14.00 $ 168.00
FSK
- --------------------------------------------------------------------------------------------------------------
1 Model 5011 Compass bird 9000-5011 $9,900.00 $28.00 $ 28.00
- --------------------------------------------------------------------------------------------------------------
DAILY LEASE $ 422.00
- --------------------------------------------------------------------------------------------------------------
LEASE EQUIPMENT - EFFECTIVE 1ST JANUARY 1997 - DISCOVERER
- --------------------------------------------------------------------------------------------------------------
4 Streamer Mount CMX 9000-4012/11 $8,825.00 $28.00 $ 112.00
- --------------------------------------------------------------------------------------------------------------
DAILY LEASE $ 112.00
- --------------------------------------------------------------------------------------------------------------
TOTAL DAILY LEASE $1,943.60
==============================================================================================================
</TABLE>
2. LEASE PAYMENTS
2.1 LESSEE shall pay to DigiCOURSE for lease of the Equipment the
sum of $1,943.60 per day for a minimum of 60 days. Lease
payments shall be made monthly and shall be due and payable
within thirty days (30) days of receipt of LESSEE of LESSOR'S
statement. Lease shall begin to accrue upon delivery of
Equipment of LESSEE at DigiCOURSE's facility in Harahan,
Louisiana.
2.2 Freight or shipping charges incurred in delivery and/or
redelivery of Equipment, at cost plus 12% handling charge,
shall be paid by LESSEE.
2.3 Payments made pursuant hereto shall be calculated and made
based upon United States dollars. Sales computed in other
currencies shall be converted into United States dollars at
the exchange rate for bank transfers from such currency to
United States dollars as quoted by the head office of
Citybank, N.A. on the date said payments become due.
3. TERM AND TERMINATION:
3.1 If LESSEE is in default on any payments due to DigiCOURSE for
a period of thirty (30) days after written notice thereof; or
defaults in performing any other term or condition of this
Agreement and remains in default for a period of thirty (30)
days after notice, or is adjudicated a bankrupt, or goes into
liquidation or receivership, or if a majority of LESSEE's
equitable ownership is transferred, DigiCOURSE shall have the
right to terminate this Agreement upon written notice to
LESSEE.
<PAGE> 3
3.3 Termination of this Agreement for any reason shall not, unless
otherwise provided, affect (a) obligations accruing prior to
the effective date of termination, or (b) any obligations
which, from the context hereof, are intended to survive
termination.
4. PERFORMANCE BY DigiCOURSE
4.1 DigiCOURSE shall deliver the Equipment leased to LESSEE in
good condition, and free from any repairs or defects.
4.2 DigiCOURSE shall cause LESSEE to be in peaceable possession
and enjoyment of the Equipment during the continuance of the
lease.
4.3 DigiCOURSE shall use its best faith efforts to make available
to LESSEE, on as timely a basis as possible, parts required to
effect necessary repairs on the leased Equipment during the
term of the lease.
4.4 DigiCOURSE agrees to preserve in strict confidence and not
disclose to third parties any information of a proprietary
nature received from LESSEE and designated as confidential.
5. PERFORMANCE BY LESSEE.
5.1 LESSEE shall make itself familiar with, and shall at all times
abide by, all literature or communications supplied by
DigiCOURSE and pertaining to the assembly, installation, use,
and/or safety aspects of the leased Equipment.
5.2 Upon termination of this Agreement for any reason, LESSEE
shall discontinue use of the Equipment and return same to
DigiCOURSE at DigiCOURSE 's facility in Harahan, Louisiana, in
good condition and running order, ordinary wear and tear
excepted.
5.3 Title to the Equipment shall at all times remain in
DigiCOURSE, and LESSEE has no right to, and agrees not to
attempt to, encumber or alienate same.
5.4 LESSEE agrees to prepare and submit to DigiCOURSE, prior to
the last day of every month during the term of this Lease, a
complete written list of all leases Equipment (including
serial numbers) in LESSEE'S possession.
5.5 LESSEE agrees to preserve in strict confidence and not
disclose to third parties any information of a proprietary
nature received from DigiCOURSE and designated as
confidential.
<PAGE> 4
6. LOSS/DAMAGE/REPAIR OF EQUIPMENT
6.1 DigiCOURSE agrees to preform all normal and necessary repairs
arising out of the ordinary and intended use of the equipment.
DigiCOURSE also agrees to assume the warranty set forth in
section 8 below, with respect to any inherent defects of the
Equipment.
6.2 LESSEE shall at its own expense make any repairs as may be
required due to its negligent use or misuse of the Equipment,
and shall permit DigiCOURSE to inspect the Equipment at
reasonable times to ascertain the condition and operation
thereof.
6.3 Only parts supplied by DigiCOURSE shall be used to repair the
Equipment. If LESSEE is responsible for such repairs,
DigiCOURSE will provide the necessary parts for LESSEE'S
account at DigiCOURSES'S list price. In the event that
DigiCOURSE is unable to provide LESSEE with repair parts
within a reasonable time, DigiCOURSE shall use its best faith
efforts to locate the necessary parts elsewhere and shall
either secure such parts itself or authorize LESSEE to do so.
7. INDEMNITY BY DIGICOURSE
7.1 DigiCOURSE shall indemnify and hold LESSEE harmless from any
and all costs or damages resulting from any patent
infringement suit brought against LESSEE as a result of
LESSEE'S use of the Equipment.
7.2 LESSEE agrees to notify DigiCOURSE promptly of any charge of
infringement made, or any such action commenced in reference
thereto, an to forward to DigiCOURSE copies of all
correspondence received by LESSEE, or papers served upon
LESSEE, in connection with such charge of infringement.
LESSEE agrees that DigiCOURSE shall have the option of
defending any such action with counsel of DigiCOURSE'S own
choosing or of paying for LESSEE'S counsel, and LESSEE further
agrees to cooperate with DigiCOURSE in defending any such
action.
8. WARRANTY
8.1 DigiCOURSE warrants to LESSEE that the Equipment leased
hereunder is free from defects in workmanship or materials for
one year from date of lease.
8.2 In the event of a defect, malfunction or other failure of the
Equipment not caused by misuse or damage to the Equipment
while in the possession of LESSEE, DigiCOURSE will repair or
replace said Equipment or DigiCOURSE's sole option.
<PAGE> 5
8.3 This warranty is in lieu of all other warranties, express or
implied, including any implied warranty of merchantability or
fitness for a particular purpose. Under no circumstances
shall DigiCOURSE be liable to LESSEE or any other person for
any special damages, including incidental or consequential
damages, whether arising out of breach of warranty, breach of
contract or otherwise.
9. PURCHASE OPTION
9.1 DigiCOURSE grants LESSEE the option to purchase the Equipment
as of the last day of any calendar month during the term of
this lease. Up to 100% of the listed sales price of the
Equipment will be discounted by eighty-five percent (85%) of
the total lease rental payments paid by LESSEE as of that
date.
10. ASSIGNABILITY AND AMENDMENT
10.1 If LESSEE attempts to assign this Agreement or subject to the
Equipment to anyone other than LESSEE'S affiliate company
without DigiCOURSE'S written consent, DigiCOURSE may terminate
this Agreement and retake possession of the Equipment.
10.2 This Agreement may be amended only by written instrument
signed by authorized representative of both parties and
contains the entire understanding between the parties.
11. CONSTRUCTION AND APPLICABLE LAW
This Agreement shall be construed and governed in accordance with the
laws of the State of Louisiana, U.S.A.
12. NOTICES
12.1 Notices and payments shall be addressed:
DigiCOURSE, INC.
5200 Toler Street
Harahan, LA 70123
Horizon Exploration Limited
6 Pembroke Road,
Sevenoaks,
Kent
TN13 1XR
<PAGE> 6
IN WITNESS WHEREOF, this Agreement has been executed by authorized
representatives of each party of the day and year first above written.
DigiCOURSE, Inc.
By /s/ [illegible signature]
------------------------------
Date: 7th January 1997
------------------------------
Horizon Exploration Limited:
By: /s/ George Purdie
------------------------------
Date: 7th January 1997
------------------------------
<PAGE> 1
Ref: 635-97
Client: Horizon
Date: 27th March 97
EXHIBIT 10.49
LEASE AGREEMENT
This AGREEMENT is made this 27th day of March 1997 between DigiCOURSE
INC., a corporation organized and existing under the laws of the State of
Louisiana, United States of America, with its principal place of business at
5200 Toler Street, Harahan, Louisiana, U.S.A. (hereinafter "DigiCOURSE") and
Horizon Exploration Limited ("LESSEE") with its principal place of business at
6 Pembroke Road, Sevenoaks, Kent TN13 1XR.
IN CONSIDERATION OF the mutual covenants and undertakings herein, the
parties agree as follows:
1. LEASE EQUIPMENT
1.1 DigiCOURSE hereby leases to LESSEE the following equipment
(hereinafter "Equipment"), under the terms and conditions set
forth below:
<TABLE>
<CAPTION>
=========================================================================================================
QTY DESCRIPTION PART NO. UNIT PRICE DAILY TOTAL
LEASE DAILY LEASE
- ---------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
6 Streamer Mount CMX 9000-4012/22 $8,825.00 $28.00 $168.00
- ---------------------------------------------------------------------------------------------------------
3 CTX Electronics FSK 9000-4022/11 $4,595.00 $14.00 $42.00
- ---------------------------------------------------------------------------------------------------------
TOTAL DAILY LEASE $210.00
=========================================================================================================
</TABLE>
2. LEASE PAYMENTS
2.1 LESSEE shall pay to DigiCOURSE for lease of the Equipment the
sum of $210.00 per day for a minimum of 60 days. Lease
payments shall be made monthly and shall be due and payable
within thirty days (30) of receipt of LESSEE of LESSOR's
statement. Lease shall begin to accrue upon delivery of
Equipment of LESSEE at DigiCOURSE's facility in Harahan,
Louisiana.
2.2 Freight or shipping charges incurred in delivery and/or
redelivery of Equipment, at cost plus 12% handling charge,
shall be paid by LESSEE.
2.3 Payments made pursuant hereto shall be calculated and made
based upon United States dollars. Sales computed in other
currencies shall be converted into United States dollars at
the exchange rate for bank transfers from such currency to
United States dollars as quoted by the head office of
Citybank, N.A. on the date said payments become due.
<PAGE> 2
Ref: 635-97
Client: Horizon
Date: 27th March 97
3. TERM AND TERMINATION:
3.1 If LESSEE is in default on any payments due to DigiCOURSE for
a period of thirty (30) days after written notice thereof; or
defaults in performing any other term or condition of this
Agreement and remains in default for a period of thirty (30)
days after notice, or is adjudicated a bankrupt, or goes into
liquidation or receivership, or if a majority of LESSEE's
equitable ownership is transferred, DigiCOURSE shall have the
right to terminate this Agreement upon written notice to
LESSEE.
3.3 Termination of this Agreement for any reason shall not, unless
otherwise provided, affect (a) obligations accruing prior to
the effective date of termination, or (b) any obligations
which, from the context hereof, are intended to survive
termination.
4. PERFORMANCE BY DigiCOURSE
4.1 DigiCOURSE shall deliver the Equipment leased to LESSEE in
good condition, and free from any repairs or defects.
4.2 DigiCOURSE shall cause LESSEE to be in peaceable possession
and enjoyment of the Equipment during the continuance of the
lease.
4.3 DigiCOURSE shall use its best faith efforts to make available
to LESSEE, on as timely a basis as possible, parts required to
effect necessary repairs on the leased Equipment during the
term of the lease.
4.4 DigiCOURSE agrees to preserve in strict confidence and not
disclose to third parties any information of a proprietary
nature received from LESSEE and designated as confidential.
5. PERFORMANCE BY LESSEE.
5.1 LESSEE shall make itself familiar with, and shall at all times
abide by, all literature or communications supplied by
DigiCOURSE and pertaining to the assembly, installation, use,
and/or safety aspects of the leased Equipment.
5.2 Upon termination of this Agreement for any reason, LESSEE
Shall discontinue use of the Equipment and return same to
DigiCOURSE at DigiCOURSE's facility in Harahan, Louisiana, in
good condition and running order, ordinary wear and tear
excepted.
5.3 Title to the Equipment shall at all times remain in
DigiCOURSE, and LESSEE has no right to, and agrees not to
attempt to, encumber or alienate same.
5.4 LESSEE agrees to prepare and submit to DigiCOURSE, prior to
the last day of every month during the term of this Lease, A
complete written list of all leases Equipment (including
serial numbers) In LESSEE's possession.
5.5 LESSEE agrees to preserve in strict confidence and not
disclose to third parties any information of a proprietary
nature received from DigiCOURSE and designated as
confidential.
<PAGE> 3
Ref: 635-97
Client: Horizon
Date: 27th March 97
6. LOSS/DAMAGE/REPAIR OF EQUIPMENT
6.1 DigiCOURSE agrees to preform all normal and necessary repairs
arising out of the ordinary and intended use of the equipment.
DigiCOURSE also agrees to assume the warranty set forth in
section 8 below, with respect to any inherent defects of the
Equipment.
6.2 LESSEE shall at its own expense make any repairs as may be
required due to its negligent use or misuse of the Equipment,
and shall permit DigiCOURSE to inspect the Equipment at
reasonable times to ascertain the condition and operation
thereof.
6.3 Only parts supplied by DigiCOURSE shall be used to repair the
Equipment. If LESSEE is responsible for such repairs,
DigiCOURSE will provide the necessary parts for LESSEE's
account at DigiCOURSE's list price. In the event that
DigiCOURSE is unable to provide LESSEE with repair parts
within a reasonable time, DigiCOURSE shall use its best faith
efforts to locate the necessary parts elsewhere and shall
either secure such parts itself or authorize LESSEE to do so.
7. INDEMNITY BY DIGICOURSE
7.1 DigiCOURSE shall indemnify and hold LESSEE harmless from any
and all costs or damages resulting from any patent
infringement suit brought against LESSEE as a result of
LESSEE's use of the Equipment.
7.2 LESSEE agrees to notify DigiCOURSE promptly of any charge of
infringement made, or any such action commenced in reference
thereto, and to forward to DigiCOURSE copies of all
correspondence received by LESSEE, or papers served upon
LESSEE, in connection with such charge of infringement.
LESSEE agrees that DigiCOURSE shall have the option of
defending any such action with counsel of DigiCOURSE's own
choosing or of paying for LESSEE's counsel, and LESSEE further
agrees to cooperate with DigiCOURSE in defending any such
action.
8. WARRANTY
8.1 DigiCOURSE warrants to LESSEE that the Equipment leased
hereunder is free from defects in workmanship or materials for
one year from date of lease.
8.2 In the event of a defect, malfunction or other failure of the
Equipment not caused by misuse or damage to the Equipment
while in the possession of LESSEE, DigiCOURSE will repair or
replace said Equipment or DigiCOURSE's sole option.
8.3 This warranty is in lieu of all other warranties, express or
implied, including any implied warranty of merchantability or
fitness for a particular purpose. Under no circumstances
shall DigiCOURSE be liable to LESSEE or any other person for
any special damages, including incidental or consequential
damages, whether arising out of breach of warranty, breach of
contract or otherwise.
9. PURCHASE OPTION
9.1 DigiCOURSE grants LESSEE the option to purchase the Equipment
as of the last day of
<PAGE> 4
Ref: 635-97
Client: Horizon
Date: 27th March 97
any calendar month during the term of this lease. Up to 100%
of the listed sales price of the Equipment will be discounted
by eighty-five percent (85%) of the total lease rental payments
paid by LESSEE as of that date.
10. ASSIGNABILITY AND AMENDMENT
10.1 If LESSEE attempts to assign this Agreement or subject to the
Equipment to anyone other than LESSEE's affiliate company
without DigiCOURSE's written consent, DigiCOURSE may terminate
this Agreement and retake possession of the Equipment.
10.2 This Agreement may be amended only by written instrument
signed by authorized representative of both parties and
contains the entire understanding between the parties.
11. CONSTRUCTION AND APPLICABLE LAW
This Agreement shall be construed and governed in accordance with the
laws of the State of Louisiana, U.S.A.
12. NOTICES
12.1 Notices and payments shall be addressed:
DigiCOURSE, INC.
5200 Toler Street
Harahan, LA 70123
Horizon Exploration Limited
6 Pembroke Road,
Sevenoaks,
Kent
TN13 1XR
IN WITNESS WHEREOF, this Agreement has been executed by authorized
representatives of each party of the day and year first above written.
DigiCOURSE, Inc.
By /s/ [illegible signature]
Date: 2nd April 97
Horizon Exploration Limited:
By: /s/ George Purdie
Date: 10/4/97
<PAGE> 1
EXHIBIT 10.51
OPERATING LEASE OF MARINE SEISMIC EQUIPMENT
This lease (the "Lease") dated as of February 3, 1997, is between
EAGLE GEOPHYSICAL, INC., a Delaware corporation (the "Lessor") and HORIZON
EXPLORATION LIMITED, a United Kingdom corporation (the "Lessee").
WHEREAS, the Lessor is the owner of the marine seismic equipment more
fully described in the purchase orders attached hereto as Exhibit A (the
"Equipment"); and
WHEREAS, the Lessee is the charterer under a time charter with The
Shanghai Bureau of Marine Geological Survey, dated April 12, 1994 of the
Bahamas flag seismic data recording vessel DISCOVERER, Official No. 711122 (the
"DISCOVERER"); and
WHEREAS, the Lessee is the charterer under a time charter with
Tidewater Marine, Inc., dated February 9, 1996 of the U.S. flag seismic data
recording vessel ABSHIRE TIDE, Official No. 663944 (the "ABSHIRE TIDE"); and
WHEREAS, the Lessee is the charterer under a time charter with Morr
Vessel Management Ltd., dated February 4, 1981 of the UK flag seismic data
recording vessel PACIFIC HORIZON, Official No. 6413807 (the "PACIFIC HORIZON");
and
WHEREAS, the Lessee is the charterer under a time charter with
Simon-Horizon Limited, dated July 15, 1994 of the Bahamas flag seismic data
recording vessel SIMON LABRADOR, Official No. 715224 (the "SIMON LABRADOR," and
collectively with the DISCOVERER, the ABSHIRE TIDE, and the PACIFIC HORIZON,
the "Vessels"); and
WHEREAS, the Lessee wishes to lease the Equipment from the Lessor in
order to improve the seismic data acquisition capabilities of the Vessels;
NOW THEREFORE, in consideration of the above recitals and for other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties agree as follows:
1. LEASE. (a) Subject to the provisions hereof, the Lessor
hereby leases to the Lessee and the Lessee hereby leases from the Lessor the
Equipment for a fixed term of three (3) years beginning on the date hereof.
(b) The term of this Lease may be extended for successive periods
of one (1) year each upon written agreement of the parties hereto no later than
thirty (30) days prior to termination.
2. RENT. The Equipment shall be leased at a monthly rental,
payable in U.S. Dollars, equal to Lessor's monthly debt payments relating to
the purchase of the Equipment plus 15%, as notified to Lessee from time to time
by Lessor, for the initial term specified in Section 1(a) above ("Rent"). The
Rent for any extension terms shall be agreed to by the parties hereto.
<PAGE> 2
The Lessee agrees to pay the Lessor, or to its order, Rent beginning on
February 28, 1997 and thereafter on the last day of each successive month
during the term of this Lease.
3. DELIVERY AND DISCLAIMER OF WARRANTIES. (a) As of the date
hereof, Lessee confirms that the Equipment is in good and satisfactory
operating condition, and has accepted delivery of the Equipment in such
condition. The Lessor hereby warrants that as of the date hereof it has good
and marketable title to the Equipment free and clear of claims by any third
party (other than the security interest granted in favor of NationsBanc Leasing
of North Carolina in connection with the acquisition of the Equipment by
Lessor, referred to herein as the "Bank Lien") and that it has the right to
lease the Equipment. The Lessor further warrants that during the term of this
Lease, so long as the Lessee is not in default of any other provisions thereof,
the Lessee shall enjoy use of the Equipment free and clear of any person
claiming title to or an interest in the Equipment by reason of the acts or
omissions of the Lessor.
(b) THE LESSOR MAKES NO OTHER REPRESENTATIONS OR WARRANTIES, EXPRESS
OR IMPLIED AS TO THE EQUIPMENT INCLUDING AS TO ITS VALUE, CONDITION, DESIGN,
OPERATION, MERCHANTABILITY OR FITNESS FOR USE FOR ANY PARTICULAR PURPOSE, AS TO
THE ABSENCE OF LATENT OR OTHER DEFECTS, WHETHER OR NOT DISCOVERABLE, AS TO THE
ABSENCE OF ANY INFRINGEMENT OF ANY PATENT, TRADEMARK OR COPYRIGHT OR ANY OTHER
REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED; PROVIDED, HOWEVER,
THAT DURING THE TERM OF THIS LEASE THE LESSOR HEREBY TRANSFERS AND ASSIGNS TO
THE LESSEE ALL MANUFACTURERS' WARRANTIES CONCERNING THE EQUIPMENT AND WILL
ASSIST THE LESSEE WITH ANY CLAIMS AGAINST THE MANUFACTURER OF THE EQUIPMENT FOR
DEFECTIVE OR NON-PERFORMING PRODUCT OR DESIGN.
4. USE AND OPERATION. So long as no Event of Default shall occur
and be continuing, the Lessee shall have the full use of the Equipment and may
employ the Equipment in any lawful trade or commerce; provided, however, that
the Lessee covenants and agrees that it will not permit the Equipment to be
incorporated or installed in or attached to the Vessels or any other vessel,
building or real property in such manner as to become part of or subject to any
liens, security interest or encumbrances on the Vessels, any other vessel or
any building or real property or so as to preclude the removal of the Equipment
from the Vessels or any other location without material injury to the Equipment
(it being the intention of the parties that the Equipment is, and shall remain,
personal property throughout the term of this Lease); and provided, further,
that the Equipment shall not be used or operated in any manner contrary to any
applicable law, treaty or convention, or any rule or regulation issued
thereunder. The Lessee, at its sole cost and expense, shall perform all
routine maintenance and repairs on the Equipment and all major repairs or
overhauls of the Equipment required to keep the Equipment in good operating
condition.
5. OWNERSHIP. This agreement is a lease, and no title, equity or
right in or to the Equipment shall pass to the Lessee except the rights herein
expressly granted, nor shall the Lessee have any lien or charge on the
Equipment.
2
<PAGE> 3
6. ALTERATIONS. With the prior written consent of the Lessor,
the Lessee shall have the right, at its sole expense, to make alterations,
modifications, additions or attachments to the Equipment so long as the value
or usefulness of the Equipment is not reduced thereby. Except as otherwise
agreed by the Lessor, all alterations, modifications, additions and attachments
of whatsoever kind or nature made to the Equipment shall immediately become the
property of the Lessor and shall be subject to all terms of this Lease.
7. LOSS AND DAMAGE. (a) The Lessee shall assume and bear the
risk of loss and damage to the Equipment and all component parts thereof from
any cause whatsoever whether or not covered by insurance. No loss or damage to
the Equipment or any component part thereof shall impair any obligations of the
Lessee under this Lease which shall continue in full force and effect as
hereinafter expressly provided. The Lessee shall repair or cause to be
repaired all damage to the Equipment.
(b) In the event that all or part of the Equipment shall, as a result
of any cause, other than an act or omission of the Lessor, become lost, stolen,
destroyed or rendered irreparably unusable or damaged, as determined by the
Lessee, then the Lessee shall, within ten (10) days after it shall have made
such determination, fully inform the Lessor of such loss or damage and shall
pay the Lessor the then casualty value of the equipment, together with all Rent
and any other sums past due or becoming due to and including the date of such
payment. Upon payment of said amounts this Lease shall terminate.
(c) If the Vessels or the Equipment is taken by requisition or
governmental action as a result of the Lessee's operation of the Vessels or by
virtue of any actions arising by, through or under the Lessee or its agents or
contractors, the Lessee shall be responsible for obtaining the release of the
Equipment, and Rent shall continue until the Lessor receives any insurance
proceeds for such requisition.
(d) NOTWITHSTANDING ANY PROVISIONS TO THE CONTRARY CONTAINED IN
THIS SECTION 7 OR ELSEWHERE IN THIS LEASE, IF THERE IS ANY PARTIAL OR TOTAL OR
CONSTRUCTIVE OR COMPROMISED TOTAL LOSS OF ANY OF THE VESSELS OR THE EQUIPMENT
DURING THE PERIOD OF THIS LEASE, THE LESSEE HEREBY AGREES TO INDEMNIFY AND HOLD
HARMLESS THE LESSOR FOR AND AGAINST ANY INSURANCE DEDUCTIBLES AND UNINSURED
LOSSES INCURRED BY THE LESSEE. ALL SUCH INSURANCE SHORTFALLS SHALL BE PAID BY
LESSEE TO LESSOR ON DEMAND.
(e) If, at the time of scheduled redelivery of the Equipment under
this Lease, the Equipment is damaged or otherwise in need of repair or other
work to restore it to pre-hire condition as set forth herein the Lessee shall
continue to pay Rent during such repairs and other work and the Equipment shall
not be considered redelivered until it has been restored to said pre-hire
condition.
8. INSURANCE. Commencing on the date hereof and continuing until
the Lessee has redelivered possession of the Equipment to the Lessor or as
otherwise herein provided, whether or not this Lease has terminated as to the
Equipment, the Lessee, at its expense, agrees to obtain and maintain all risk
public liability and property damage insurance for the Equipment
3
<PAGE> 4
in an amount and with insurers satisfactory to the Lessor; provided, however,
that property damage insurance on the Equipment shall always be in an amount
equal to the casualty value of the Equipment as determined by the Lessor; which
casualty value shall be U.S.$313,925.00 on the date hereof. The insurance
obtained pursuant to this Section 8 shall not be excess over other coverage but
shall be primary insurance up to and including the stated policy limits and
shall cover the interests of both the Lessor and the Lessee in the Equipment,
or as the case may be, shall protect both the Lessor and the Lessee in respect
to all risks arising out of the condition, delivery, installation, maintenance,
use or operation of the Equipment. All such insurance shall provide for ten
(10) days prior written notice to the Lessor of cancellation, restriction or
reduction of coverage. The Lessee hereby irrevocably appoints the Lessor as
the Lessee's attorney-in-fact to make claim for, receive payment of and execute
and indorse all documents, checks or drafts for loss or damage under any
insurance policy issued on the Equipment. In the event the Equipment shall
sustain a casualty which does not render the Equipment irreparable or unusable
for its intended use, the Lessee shall have the right to the insurance proceeds
upon presentation to the Lessor of a repair estimate or survey showing the
extent of damage and the cost of repair thereof. Upon receipt of such
insurance proceeds, the Lessee is obligated to apply the proceeds to repair of
the Equipment. In the event of a casualty which renders the Equipment
irreparable or unusable for its intended use, the Lessor shall have the right
to the insurance proceeds with respect to the Equipment.
9. TAXES. The Lessee shall be responsible for the payment and
discharge of all license or registration fees, assessments, sales and use
taxes, rental taxes, personal property taxes and other taxes (except taxes on
the Lessor's income or profits), now or hereafter imposed by any federal, state
or local government upon the Equipment or upon the leasing, renting, possession
or use thereof (whether the same be assessed on the Lessor or the Lessee). The
Lessor shall pay any and all such taxes billed or assessed to it, however, if
any such tax is by law to be assessed or billed to the Lessor, the Lessee
agrees to reimburse the Lessor therefor. The Lessee shall directly pay any
such taxes billed or assessed to it. The Lessee shall pay to the Lessor the
amount of any taxes remitted by the Lessor within ten (10) days of notice
thereof. The Lessee upon notice to the Lessor may in the Lessee's own name,
contest or protest any such taxes. The Lessee shall, in addition, be
responsible to the Lessor for the payment and discharge of any penalties or
interest.
10. LIENS AND ENCUMBRANCES. (a) The Lessee will at all times
protect and defend, at its own cost and expense, the title of the Lessor to the
Equipment and keep the Equipment free and clear from all claims, liens and
other encumbrances, except (i) the rights of the Lessor hereunder, (ii) liens
for taxes either not yet due or being contested in good faith by appropriate
proceedings so long as such proceedings do not involve any danger of the sale,
forfeiture or loss of the Equipment, (iii) inchoate materialmen's, mechanics',
workman's, repairman's, employees' or other like liens arising in the ordinary
course of business and not delinquent, and (iv) the Bank Lien. Notwithstanding
the foregoing, nothing contained in this Lease shall require the Lessee to take
any action to protect and defend the Equipment from any liens, claims or other
encumbrances arising out of the acts or omissions of the Lessor or any
shareholder, affiliate, employee, agent or representatives of the Lessor.
(b) Neither the Lessee nor the masters of the Vessels nor any other
person shall have the right, power or authority to create, incur or permit to
exist upon the Equipment any lien,
4
<PAGE> 5
charge or encumbrance. As of the date hereof, the Lessee has placed, and all
at times during the term of this Lease shall keep prominently displayed on the
Equipment a legible notice on a metal plate not less than six inches wide by
nine inches high reading as follows:
"This seismic equipment is owned by EAGLE GEOPHYSICAL, INC., is not a
part of this vessel and cannot be encumbered by any liens arising
against this vessel."
11. INDEMNITY. THE LESSEE ASSUMES ALL RISK OF LIABILITY FOR ANY
DAMAGE OR LOSS TO THE EQUIPMENT, INCLUDING, BUT NOT LIMITED TO, ANY ARISING
FROM LIENS IMPOSED ON THE EQUIPMENT IN VIOLATION OF SECTION 10 ABOVE OR ARISING
FROM THE INCORPORATION OF THE EQUIPMENT INTO THE VESSELS, ANY OTHER VESSEL OR
ANY REAL PROPERTY IN VIOLATION OF SECTION 4 ABOVE, AND FOR INJURIES TO OR
DEATHS OF PERSONS AND/OR LOSS OF OR DAMAGE TO PROPERTY (INCLUDING, WITHOUT
LIMITATION, DAMAGE TO THE ENVIRONMENT AND PROPERTY, DUE TO POLLUTION OR THE
RELEASE OF HAZARDOUS WASTES OF ANY KIND) ARISING FROM OR INCIDENT TO THE
EQUIPMENT'S USE OR OPERATION, WHETHER SUCH INJURIES OR DEATHS INVOLVE THE
LESSEE'S EMPLOYEES OR OTHER PERSONS, AND WHETHER SUCH LOSS OR DAMAGE INVOLVES
PROPERTY OF THE LESSEE AND ITS EMPLOYEES AND CONTRACTORS OR OF OTHERS. THE
LESSEE WILL INDEMNIFY AND HOLD HARMLESS THE LESSOR (AND ANY FIRM OR CORPORATION
SUBSIDIARY TO, AFFILIATED WITH OR UNDER THE SAME MANAGEMENT AS THE LESSOR)
AGAINST AND FROM ALL LOSS, DAMAGE, LIABILITY AND EXPENSE, INCLUDING ATTORNEYS'
FEES, ARISING FROM OR IN CONNECTION WITH SUCH INJURY, DEATH, LOSS OR DAMAGE TO
PROPERTY OR THE ENVIRONMENT, HOWSOEVER CAUSED AND WHETHER RESULTING IN WHOLE OR
IN PART FROM THE NEGLIGENCE OR OTHER FAULT OF EITHER PARTY, BUT ONLY INSOFAR AS
SAID LOSS, DAMAGE, LIABILITY OR EXPENSE ARISES IN CONNECTION WITH THE LESSEE'S
ACCEPTANCE, USE, POSSESSION, OPERATION, OR RETURN OF THE EQUIPMENT UNDER THIS
LEASE.
12. LESSOR MAY PERFORM. Should the Lessee fail to make any
payment or do any act as provided by this Lease, then the Lessor shall have the
right (but not the obligation), without notice to the Lessee and without
releasing the Lessee from any obligations hereunder, to make or do the same or
to make advances to preserve the Equipment or the Lessor's title thereto and to
pay, purchase, contest or compromise any insurance premium, encumbrance,
charge, tax, lien or other sum which in the judgment of the Lessor appears to
affect the Equipment, and in exercising such rights, the Lessor may incur any
reasonable liability and expend reasonable amounts necessary therefor. All
sums so incurred or expended by the Lessor shall be due and payable by the
Lessee within ten (10) days of notice thereof.
13. ASSIGNMENT AND SUBLEASE. Any transfer, assignment, sublease,
conveyance or pledge of the Lessee's interest in and to this Lease or the
Equipment, whether by operation of law or otherwise, without the prior written
consent of the Lessor, shall be void. The Lessor, its successors or assigns,
may assign this Lease or grant a security interest therein or in the Equipment
in whole or in part. However, unless the Lessee receives written notice of
5
<PAGE> 6
such assignment, the Lessee shall have no obligation to pay Rent due pursuant
to this Lease to any party other than the Lessor.
14. SURRENDER OF THE EQUIPMENT. At the Lessor's request upon
expiration or earlier termination of this Lease or any renewal or extension
thereof, the Lessee shall return the Equipment to the Lessor in good condition
and working order, ordinary wear and tear resulting from use thereof excepted,
by delivery of the Equipment at the Lessee's cost and expense to a mutually
agreed upon place on the Gulf Coast of the United States.
15. EVENTS OF DEFAULT. The occurrence of any of the following
events, shall constitute an Event of Default under this Lease:
(a) the nonpayment by the Lessee of any Rent when due, or the
nonpayment by the Lessee of any other sum required hereunder
to be paid by the Lessee which nonpayment continues for a
period of five (5) days following written notice thereof from
the Lessor;
(b) the failure of the Lessee to perform any other term, covenant
or condition of this Lease which is not cured within ten (10)
days after written notice thereof from the Lessor;
(c) the Lessee ceases doing business as a going concern, is
insolvent, makes an assignment for the benefit of creditors,
admits in writing its inability to pay its debts as they
become due, files a voluntary petition in bankruptcy, is
subjected to an involuntary petition in bankruptcy which is
not released or dismissed within thirty (30) days after
filing, is adjudicated bankrupt or insolvent, files or has
filed against it a petition seeking any reorganization,
arrangement or composition, under any present or future
statute, law or regulation;
(d) any of the Lessee's representations or warranties made in this
Lease or in any statement or certificate at any time given in
writing pursuant to this Lease or in connection herewith shall
be false or misleading in any material respect; or
(e) the Lessee defaults under or otherwise has accelerated any
material obligation, credit agreement, loan agreement,
conditional sales contract, lease, indenture or debenture or
the Lessee defaults under any other agreement with the Lessor.
16. REMEDIES. (a) Should any Event of Default occur and be
continuing, the Lessor may, without notice to or demand upon the Lessee,
without retaking possession of the Equipment, accelerate and cause to become
immediately due and payable all Rent and other sums payable under the terms
hereof; or may retake (by the Lessor, independent contractors, or by requiring
the Lessee to assemble the Equipment for the Lessor at a location designated by
the Lessor) possession of the Equipment (without liability to the Lessee
therefor which is hereby expressly waived) and either:
(i) retain possession of the Equipment until the Lessor shall
terminate the Lessee's interest in the Equipment by giving the
Lessee written notice to that effect, in
6
<PAGE> 7
which event the Lessee shall be liable for all rents and other sums
accrued and unpaid prior to such termination;
(ii) lease the Equipment to a third party for the account of the
Lessee and recover from the Lessee any deficiency between the
rents provided for herein and those received from such third
party;
(iii) sell the Equipment at public or private sale, in which event
the Lessee shall pay to the Lessor upon demand the amount, if
any, by which the net proceeds of such sale shall be less than
the casualty value of the Equipment; or
(iv) recover from the Lessee the excess of the rents and charges
provided for in this Lease for the balance of the term over
the then reasonable rental value of the Equipment for the same
period.
(b) The Lessor may enforce any one or more of the remedies
hereunder successively or concurrently, and any such action shall not prevent
the Lessor from pursuing any further remedy the Lessor may have hereunder or at
law or in equity. Time and exactitude of each of the terms and conditions
hereof are hereby declared to be of the essence of this Lease. The Lessor may
accept past due payments without modifying the terms of this Lease and without
waiving any further rights. The Lessor shall not be obligated to sell or
release the Equipment. Nevertheless, in the event of a public sale the Lessor
may bid upon and purchase the Equipment.
17. INSPECTION BY LESSOR. The Lessor, its agents, representatives
or employees, shall at any and all reasonable times during regular working
hours have the right to board the Vessels for the purpose of inspecting the
Equipment and observing its use.
18. COSTS AND ATTORNEYS' FEES. In the event of any action at law
or a suit in equity by reason of the Lessee's breach of this Lease or any
governmental examination or investigation of the Lessee, which requires the
Lessor's participation and which participation would not be required but for
this Lease, or pursuant to the Lessor exercising any of its rights provided for
in this Lease or by applicable law, the Lessee, in addition to all other sums
which the Lessee may be called upon to pay under the provisions of this Lease,
will pay to the Lessor its reasonable costs of collection or other reasonable
out-of-pocket costs and expenses and attorneys' fees.
19. INTEREST AND SERVICE CHARGES. Any amounts required to be paid
by the Lessee pursuant to this Lease, and not paid when due (except payments of
taxes being properly contested) shall bear interest at the rate of 1.25% per
month until payment.
20. OFFSETS. The Rent and all other sums payable hereunder shall
be paid without notice, demand, counterclaim, setoff, deduction or defense and
without abatement, suspension, deferment, diminution or revocation, and the
obligations and liabilities of the Lessee under this Lease shall not be
affected for any reason. This Lease shall not be terminable by the Lessee in
whole or in part except as specifically provided in Sections 7 and 16 of this
Lease.
7
<PAGE> 8
21. HEADINGS. Section headings herein are used for convenience
only and shall not otherwise affect the provisions of this Lease.
22. EFFECT OF WAIVER. No failure or delay on the part of the
Lessor in the exercise of any remedy, power, right or privilege hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such remedy, power, right or privilege preclude other or further exercise
thereof or any other remedy, right, power or privilege. All rights and
remedies existing under this Lease are cumulative to, and not exclusive of, any
rights or remedies otherwise available.
23. SURVIVAL OF WARRANTIES. All agreements, representations and
warranties of the Lessee and the Lessor made herein shall survive the execution
of this Lease.
24. APPLICABLE LAW AND ARBITRATION. (a) This Lease and all
documents issued or executed pursuant hereto shall be governed by, and
construed under, the internal laws of the State of Texas. If any provision of
this Lease or any remedy provided herein shall be held to be invalid under any
applicable law, such provision shall be inapplicable and deemed omitted, but
the remaining provisions of this Lease shall be and remain effective in
accordance with their terms. This Lease may only be amended or modified by an
instrument in writing signed by a duly authorized representative of the party
to be charged thereby.
(b) Any controversy or claim arising out of or relating to this
Lease, or the alleged breach thereof, which cannot be resolved between the
Lessor and the Lessee shall be referred to arbitration before the Society of
Marine Arbitrators, Inc. before three (3) persons, one to be appointed by the
Lessor, one by the Lessee and the third by the two so chosen; their decision or
that of any two of them shall be final. The proceedings shall be conducted in
accordance with the Rules of such Society then in effect; provided, however,
that such arbitration proceedings shall take place in Houston, Texas. Any
award of the arbitration panel shall be final and binding on both parties and
may be enforced in the U.S. District Court for the Southern District of Texas,
or any other court having jurisdiction over the parties. The Lessor and the
Lessee agree that neither party shall have any right to commence or maintain
any suit or legal proceeding concerning any dispute hereunder, other than a
suit for enforcement of the arbitration provisions contained in this Section
24(b), until the dispute has been determined in accordance with the arbitration
procedure provided for herein and then only for enforcement of the award
rendered under such arbitration.
25. COUNTERPARTS. This Lease may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
26. NOTICES. (a) All notices, requests, consents, demands and
other communications provided for or permitted hereunder shall be effective
three (3) days after being duly deposited in the mails, certified, return
receipt requested, or upon receipt if delivered to Federal Express or similar
courier company or transmitted by telefax, addressed to the respective party at
the address set forth below:
8
<PAGE> 9
Lessor: Eagle Geophysical, Inc.
50 Briar Hollow Lane, 7th Floor West
Houston, Texas 77027
Fax No. (713) 627-2319
Lessee: Horizon Exploration Limited
6 Pembroke Road
Sevenoaks
Kent TN13 1XR
England
Fax No. 011-441-732-742-977
(b) Either of the parties hereto may change its address by notice
in writing given to the other party to this Lease.
27. TERMINATION UPON DEFAULT UNDER NATIONSBANK LOAN. The parties
hereto acknowledge that Lessor has financed the acquisition of the Equipment
with the proceeds of a loan from NationsBanc Leasing Corporation of North
Carolina ("NationsBanc"). Notwithstanding the lease of the Equipment by Lessor
to Lessee hereunder, Lessor shall remain fully obligated and in compliance with
the terms and conditions of the agreement governing the loan from NationsBanc
(the "Loan Agreement"). Upon NationsBanc's delivery to Lessee of notice that
an Event of Default (as such term is defined in the Loan Agreement) has
occurred and is continuing under the Loan Agreement and that NationsBanc has
commenced the exercise of remedies with respect to the Equipment under the Loan
Agreement, this Lease will automatically terminate and be of no further force
or effect, and Lessee will cause the Equipment to be delivered to NationsBanc
at a place to be designated by NationsBanc. Any termination of this Lease
pursuant to this Paragraph 27 shall be without prejudice to any claims of the
parties hereto against each other with respect to this Lease arising prior to
or as a result of such termination.
EAGLE GEOPHYSICAL, INC.
By: /s/ JAY SILVERMAN
--------------------------------------
Jay Silverman, President
HORIZON EXPLORATION LIMITED
By: /s/ GERRY HARRISON
-------------------------------------
Name: Gerry Harrison
--------------------------------
Title: Director
-------------------------------
9
<PAGE> 1
EXHIBIT 10.52
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "Agreement") is effective the 30th
day of May, 1997, by and between Seitel, Inc., a Delaware corporation
("Seitel"), and Eagle Geophysical, Inc., a Delaware corporation and
wholly-owned indirect subsidiary of Seitel ("Eagle").
WHEREAS, Seitel owns eleven thousand seven hundred twenty-eight
(11,728) shares of the issued and outstanding ordinary shares of U.S. $0.001
(the "Shares") of Energy Research International, a Cayman Islands corporation
("ERI"), which shares constitute nineteen percent (19%) of the issued and
outstanding capital stock of ERI; and
WHEREAS, Seitel desires to contribute the Shares to Eagle as a capital
contribution;
NOW, THEREFORE, the parties hereto agree as follows:
1. Seitel hereby contributes, as of the effective date of this
Agreement, the Shares to Eagle as a capital contribution (the "Capital
Contribution").
2. Eagle, by its execution of this Agreement, acknowledges
receipt of the Capital Contribution.
3. Seitel hereby assigns to Eagle all of its rights under that
certain Stock Purchase Agreement dated July 3, 1996 among Seitel, ERI and
others (the "Stock Purchase Agreement") and that certain Repurchase and Credit
Agreement dated November 15, 1996, between Seitel and ERI (the "Repurchase
Agreement"), excluding any rights relating to, including but not limited to the
right to receive payment under, that certain promissory note made by ERI and
payable to Seitel in the original principal amount of $2,679,040.00 dated
November 15, 1996 executed in connection with the Repurchase Agreement.
4. Eagle hereby assumes all of Seitel's obligations under the
Stock Purchase Agreement and the Repurchase Agreement, except for the
obligations of Seitel under the Registration Rights Agreement (as such term is
defined in the Stock Purchase Agreement).
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the day and year first above written.
SEITEL, INC.
By: /s/ Paul A. Frame
Paul A. Frame, President
<PAGE> 2
EAGLE GEOPHYSICAL, INC.
By: /s/ Jay N. Silverman
Jay N. Silverman, President
<PAGE> 1
EXHIBIT 10.53
THE BANK OF N.T. BUTTERFIELD & SON LIMITED
ASSIGNMENT OF LIFE POLICY
The Schedule
<TABLE>
<S> <C> <C> <C> <C>
====================================================================================================
Date:
- ----------------------------------------------------------------------------------------------------
Policy Owner:
Horizon Exploration Ltd
6 Pembroke Road
Sevenoaks
Kent, TN13 1XR
Policy Details:
- ----------------------------------------------------------------------------------------------------
Date & Number Insurer's Name Life Assured Sum Assured Maturity Date
9 Dec, 1993 National Gerald Martin L.250,000 9 Dec, 1998
D137343F Westminster Harrison
Life Assurance
- ----------------------------------------------------------------------------------------------------
Loan Agreement:
Dated 23 August 1994
- ----------------------------------------------------------------------------------------------------
Policy Owner's
Solicitors:
====================================================================================================
</TABLE>
<PAGE> 2
THIS ASSIGNMENT is made on the date set out in the Schedule BETWEEN THE
POLICY OWNER of the one part and THE BANK of the other part
NOW IT IS WITNESSED
1. Definitions
The Policy Owner The Policy Owner described in the Schedule and so
that where the Policy Owner includes more than one
person or corporate body the term "the Policy Owner"
shall be construed as referring to all or any one or
more of those persons or corporate bodies and the
obligations of the Policy Owner shall be joint and
several
The Bank The Bank of N.T. Butterfield & Son Limited
incorporated in Bermuda with limited liability and
having its London Branch Office at 24 Chiswell Street
London EC1Y 4TY and where the context admits the term
"the Bank" includes its successors and assigns
whether immediate or derivative
The Policy The policy or policies of assurance brief details of
which are set out in the Schedule and so that where
the Policy includes more than one such policy of
assurance the term "the Policy" shall be construed as
referring to all or any one or more of those policies
as the context admits or requires and likewise to any
substituted policy or policies of assurance as are
referred to herein
The Loan Agreement The Loan Agreement or Facility Letter (if any) of
which brief details are specified in the Schedule
Interest Rate The rate of interest specified in the Loan Agreement
or where there is no Loan Agreement or the rate
specified therein cannot be ascertained the usual
rate of interest of the Bank in dealing with current
accounts payable on such days as the Bank may from
time to time determine and compounded in the event of
it not being punctually paid with monthly quarterly
or other periodic rests as the Bank shall deem fit
(but without prejudice to the right of the Bank to
require payment of such interest) and in the absence
of
1
<PAGE> 3
manifest error the certificate of an authorised
officer of the Bank shall be conclusive as to the
rate from time to time applicable
2. Assignment
2.1 This Assignment is expressly made for securing present and further
advances
2.2 The Policy Owner as beneficial owner HEREBY ASSIGNS unto the Bank
(subject only to the proviso for re-assignment in Clause 2.3) the Policy and
all money (including bonuses) that may at any time become payable thereunder
and the benefit of all powers and remedies for enforcing the same and all
options rights and monies devolving upon the Policy Owner therefrom or under or
from any policy or policies that may be substituted therefor with power to give
an effectual discharge for all or any of the monies assured or to become
payable thereunder as a continuing security for:-
2.2.1 All present and/or future indebtedness of the Policy Owner to the Bank
on any account whatsoever as mentioned in clause 3.1 hereof
2.2.2 All other liabilities whatsoever of the Policy Owner to the Bank
present future actual or contingent
2.2.3 All costs and expenses arising hereunder as hereinafter provided
together in each case with interest thereon from day to day from demand until
full discharge (as well after as before judgment or the death insanity
insolvency or other incapacity of the Policy Owner) at the Interest Rate TO
HOLD the same unto the Bank absolutely
2.3 Provided that if the Policy Owner or the successors in title of the
Policy Owner shall pay to the Bank all moneys and discharge all obligations and
liabilities hereby secured the Bank shall at the request and cost of the Policy
Owner or such successors in title reassign the same to the Policy Owner or such
successors in title or as they shall direct
3. Policy Owner's Covenants
The Policy Owner COVENANTS with the Bank
3.1 ON DEMAND (save where otherwise specified in the Loan Agreement or
agreed in writing between the parties hereto) to pay to the Bank all money and
discharge all obligations liabilities as now are or at any time hereafter may
be due owing or incurred from or by the Policy Owner to the Bank or for
2
<PAGE> 4
which the Policy Owner may be or become liable to it in whatever currency
denominated on any current or other account or in any manner whatever (whether
alone or joint with any other person or corporate body and in whatever style or
form and whether as principal or surety) including (without prejudice to the
generality of the above) all liabilities in connection with foreign exchange
transactions and for accepting endorsing or discounting any notes or bills
and/or under bonds guarantees documentary or other credits or any instruments
whatsoever from time to time entered into by the Bank for or at the request of
the Policy Owner or for any other matter or thing whatsoever including interest
to the date of repayment (calculated at the Interest Rate and payable as well
after as before judgment or the death insanity insolvency or other incapability
of the Policy Owner) commission fees and other charges and all legal and other
costs charges and expenses on a full indemnity basis together with any Value
Added Tax at the applicable rate which may be or become due in respect of all
or any such matters.
3.2 Punctually to pay all premiums and money payable for keeping up the
Policy and any substituted policy or policies and on demand to deliver to the
Bank the receipt for any such premium and money and if the Policy Owner shall
at any time make default in payment of any such sum or sums it shall be lawful
for the Bank to pay the same on its own account or as agent for the Policy
Owner as it deems fit and the Policy Holder will pay to the Bank on demand any
amount thus expended
3.3 That the Policy is valid and that the Policy Owner will not do any act
or commit any default whereby the Policy or any substituted policy or policies
may become void or voidable or any increased premium thereon become payable or
whereby the Bank may be hindered or prevented from receiving any money thereby
assured and if the Policy shall at any time become voidable the Policy Owner
will forthwith at the sole cost of the Policy Owner do all such things as shall
be requisite to procure that the same remains valid and of full force and
effect
3.4 That in case the Policy shall by any means become void the Policy
Owner will forthwith at the sole cost of the Policy Owner effect a new policy
or policies in lieu thereof or do all such things as may be necessary to enable
the Bank so to do (as it is hereby authorised to do) in such manner as the Bank
may require in some assurance company or society or other office to be approved
by the Bank in a sum not less than (and having a surrender value not less than)
the sum which was assured by the Policy which shall have become void including
any bonus or bonuses which may have been declared thereon and every such new or
substituted policy or policies shall
3
<PAGE> 5
be subject in all respects to this security and all the covenants and
provisions contained herein and implied by statute shall apply thereto
3.5 That the Policy Owner will forthwith at the sole cost of the Policy
Owner and at the request of the Bank execute any deed or document and do all
such other things as shall be considered necessary or desirable by the Bank in
its unfettered discretion in order to procure that this Assignment takes effect
as a legal assignment of the Policy or to perfect or improve this Assignment in
any other manner whatsoever or to assign any substituted policy or policies as
aforesaid all such further assignments deeds and documents to be prepared by or
on behalf of the Bank at the cost of the Policy Owner and to contain such
clauses for the benefit of the Bank and otherwise as the Bank may reasonably
require
3.6 That the Policy Owner has not borrowed and will not borrow or attempt
to borrow any sum from the assurance company or society or other office which
has issued the Policy whether such borrowing be pursuant to the terms of the
Policy or otherwise
3.7 That the Policy Owner will at all times observe and comply with the
proper requirements of the assurance company or society or other office which
has issued the Policy and will notify the Bank of any notice or information
received or issued by or on behalf of the Policy Owner in respect of the Policy
and further will supply to the Bank on demand such other information (including
a copy of any document) in relation to the Policy as the Bank shall from time
to time require
3.8 That the Policy Owner will not save as provided in this Assignment or
authorised by the Bank in writing assign sell part with transfer charge pledge
create any lien or security interest in or over waive surrender release vary or
otherwise deal or purport to deal or attempt to deal with the Policy
3.9 That the Policy Owner will deposit with the Bank and permit the Bank
during the continuance of this security to hold and retain the Policy and all
other deeds and documents relating to the Policy as the Bank may from time to
time require
3.10.1 That the Policy Owner will pay on a full indemnity basis to the Bank
on demand the amount of all expenses properly incurred by the Bank in
relation to the Policy and this Assignment with interest thereon at
the
4
<PAGE> 6
Interest Rate from the respective time and times at which such money
shall have been expended until the date of repayment and until
repayment such sums and interest shall be charged on the Policy
3.10.2 For the avoidance of doubt IT IS HEREBY AGREED that the expression
"expenses" includes all costs moneys charges and expenses properly
paid and all liability properly incurred by the Bank (including legal
costs charges and expenses ascertained as between solicitor and own
client) on or in connection with or incidental to the Policy and this
Assignment and all expenses herein covenanted by the Policy Owner to
be paid and in particular in connection with
3.10.2.1 obtaining any report of any nature or of any kind
whatsoever in connection with the Policy
3.10.2.2 investigating any matter in relation to the Policy
and/or considering enforcing or attempting to enforce the rights and
powers of the Bank hereunder or under the general law
3.10.2.3 doing or considering any other matter or thing
whatsoever which the Bank reasonably considers to be for the benefit
of or preservation of or the more advantageous realisation of the
Policy
3.11 To pay into such account with the Bank in the name of the Policy Owner
or to such other account as the Bank shall direct all monies received by the
Policy Owner under or by virtue of the Policy and pending such payment to hold
such moneys in trust for the Bank
4. Default
In case of default by the Policy Owner in the performance of any covenant in
relation to the Policy it shall be lawful for but not obligatory upon the Bank
to do whatever may be necessary to make good such default and any expenses
incurred by the Bank in that behalf with interest thereon at the Interest Rate
from the respective time or times at which such money shall have been expended
until the date of repayment shall be deemed to be properly incurred for the
purposes of this Assignment and shall be charged on the Policy
5. Power of Sale
5.1 Section 103 of the Law of Property Act 1925 shall not apply hereto and
the statutory power of sale and other powers of the Bank (whether given by
statute or expressed herein) shall be exercisable without further notice at any
time after demand for payment of any money or the performance of any
5
<PAGE> 7
obligation or discharge of any liability hereby secured whether or not the
Policy Owner shall have been accorded sufficient time or any time in which to
satisfy the demand made and the date of such demand shall (without prejudice to
the equitable right of redemption) be the redemption date
5.2 No assurance company or society or other office which has issued the
Policy nor any purchaser or other person shall be bound or concerned to see or
enquire whether the right of the Bank to exercise any of the powers hereby
conferred has arisen or not or be concerned with notice to the contrary or with
the propriety of the exercise of or purported exercise of such powers
6. Powers of Bank
6.1 At any time after demand as aforesaid the Bank may without further
demand or notice at its discretion
6.1.1 Surrender the Policy to the assurance company or society or other
office liable thereon or exchange the Policy for a paid up policy in
either case for such consideration and upon such terms and
conditions as the Bank deems fit
6.1.2 Exercise the statutory power of sale and sell the Policy by public
auction or private contract or otherwise for such consideration and
generally on such terms and conditions as the Bank deems fit and with
power to buy rescind or vary any contract for sale and to resell the
same without being liable for any loss or diminution in the price
obtained
6.1.3 Exercise all or any of the Policy Owner's rights and powers in
relation to the Policy or decline to do so
6.1.4 Borrow (for the purpose of applying the same as provided in
Clause 6.4) from the assurance company society or other office which
has issued the Policy such sum or sums as the Bank deems fit and upon
such terms as the Bank shall agree including terms whereby the Policy
Owner shall be liable for all sums thus borrowed including interest
thereon and other charges
6.1.5 Surrender release vary extend or otherwise deal with all or any of the
Policy Owner's rights and powers in relation to the Policy
6.1.6 Appropriate the whole or any part of the monies standing to the credit
of any account mentioned in clause 3.11 in or towards the satisfaction
of the Policy Owner's indebtedness to the Bank and if the Bank does
6
<PAGE> 8
not do so then (unless the Bank gives express notice to the contrary
to the Policy Owner) it shall nevertheless be treated as if it had
done so at the time of demand as aforesaid
6.2 The receipt of an authorised officer of the Bank for any money which
may be or become payable or for any policy which may be or become deliverable
for or in respect of or in exchange for the Policy (whether on a sale or
surrender or otherwise) shall effectually discharge the person or persons
paying or delivering the same therefrom and from being concerned to see to the
application or being answerable for the misapplication thereof and such person
or persons shall not be bound or concerned to see or enquire whether at the
time of such payment or delivery any money remains owing upon this security
6.3 All money expended by the Bank shall on demand be repaid by the Policy
Owner with interest thereon at the Interest Rate from the respective time or
times at which such money shall have been expended until the date of repayment
6.4 All money received by the Bank in the exercise of any powers conferred
by this Assignment shall be applied after the discharge of all liabilities (if
any) having priority thereto in or towards satisfaction of such of the moneys
obligations and liabilities hereby secured and in such order as the Bank in its
absolute discretion may from time to time conclusively determine (save that the
Bank may credit the same to a suspense account for so long and in such manner
as the Bank may from time to time determine)
7. Consents and Notices
7.1 Any consent to be given by the Bank hereunder may be given by writing
under the hand of an authorised officer of the Bank
7.2 A demand for payment or any other demand or notice under this
Assignment shall be effective notwithstanding the death insanity insolvency or
other incapacity of the Policy Owner and shall be made or given in writing by
any agent or solicitor or authorised officer of the Bank and (in the case of an
individual) served upon the Policy Owner or his personal representatives
personally or delivered or sent by first class letter post cable telex or
facsimile transmission to the Policy Owner or his personal representatives at
his or their usual place of abode or place of business last known to the Bank
or (in the case of a corporate body) served on any one of its directors or the
company secretary or delivered or sent as aforesaid to its registered office or
the address or place of business
7
<PAGE> 9
of the Policy Owner last known the Bank or (in either case) delivered or sent
as aforesaid to the address of the Policy Owner stated in the Schedule and a
demand or notice so addressed and posted shall be deemed to be delivered forty
eight hours after posting and shall be effective notwithstanding that it be
returned undelivered and in proving such service it shall be sufficient to
prove that the notice or demand was properly addressed and posted and any
notice or demand sent by cable telex or facsimile transmission shall be deemed
to have been served at the time of despatch and shall be effective
notwithstanding any incomplete or distorted transmission and in proving such
service it shall be sufficient to prove that the notice or demand (if by cable)
was properly addressed and dispatched or (if by telex or facsimile
transmission) was transmitted to the correct number from which the correct
answerback or other appropriate acknowledgement of receipt was obtained
7.3 In the case of the death of any person a party hereto and until
receipt by the Bank of notice in writing of the grant of representation to the
estate of the deceased any notice or demand by the Bank sent by first class
letter post cable telex or facsimile transmission as aforesaid addressed to the
deceased or to his personal representatives at the usual place of abode or
place of business of the deceased last known to the Bank shall for all purposes
be deemed a sufficient service of a notice or demand by the Bank on the
deceased and his personal representatives and shall be as effectual as if the
deceased were still living
7.4 Any such notice or demand or any certificate as to the amount at any
time secured hereby shall (in the absence of manifest error) be conclusive and
binding upon the Policy Owner if signed by any agent or solicitor or authorised
officer of the Bank
8. Continuing Security and Banking Powers
8.1 This Assignment shall be a continuing security to the Bank
notwithstanding the death insanity insolvency or other incapacity of the Policy
Owner and shall not be prejudiced by repayment or partial repayment of sums
from time to time owing by the Policy Owner to the Bank or by the settlement of
any account and is in addition to and shall not merge with or otherwise
prejudice or affect any contractual or other right or remedy or any collateral
or other securities now or hereafter held or available for any of the moneys
hereby secured (even if the same shall be taken without the consent or against
the prohibition of the Policy Owner in respect of moneys for which the Policy
8
<PAGE> 10
Owner is or shall be liable as surety only) and this Assignment shall not be in
any way prejudiced or affected thereby or by the invalidity thereof or by the
Bank now or hereafter dealing with exchanging releasing varying or abstaining
from perfecting or enforcing any of the same or any rights which it may now or
hereafter have or giving time for payment or other indulgence or compounding
with any other person liable
8.2 The Bank may from time to time give time for payment of any bill or
bills of exchange promissory note or notes or other security or securities
which may have been discounted for or received in account from the Policy Owner
by the Bank or on which the Policy Owner shall or may be liable as drawer or
endorser or otherwise liable thereon as the Bank shall in its discretion think
fit without in any manner releasing the Policy Owner or affecting the security
hereby created and nothing herein contained shall operate so as to merge or
otherwise prejudice or affect any bill note guarantee mortgage or other
security which the Bank may for the time being have for any money or
liabilities due or incurred by the Policy Owner to the Bank or any right or
remedy of the Bank thereunder
8.3 The Bank may upon receiving notice of any charge or other interest
affecting the Policy (whether or not the Bank has consented hereunder to such
charge or the creation of such other interest) close the then current account
and open a new account with the Policy Owner and if the Bank does not open a
new account then (unless the Bank gives express notice to the contrary to the
Policy Owner) it shall nevertheless be treated as if it had done so at the time
when it received such notice and as from that time no money paid in or carried
to the credit of the Policy Owner in such new account shall be appropriated
towards or have the effect of discharging any part of the amount due to the
Bank on the said closed account at the time when it received such notice as
aforesaid
8.4 If the Policy Owner shall have more than one account with the Bank
(whether in the name of the Bank for the account of the Policy Owner or of the
Policy Owner jointly with others and whether current deposit loan or of any
other nature whatsoever whether subject to notice or not and whether in
Sterling or in any other currency and wheresoever situate) the Bank may at any
time and without any prior notice in that behalf forthwith transfer all or any
part of any balance standing to the credit of any such account to any other
such account which may be in debit or in respect of which there are outstanding
obligations or liabilities (be they present future actual contingent primary
collateral several or joint) and so that where the expression "the Policy
Owner" includes more than one person or corporate body such transfer may be
made from any account in the name of one or more such persons or corporate
9
<PAGE> 11
bodies to any account in the name of the Policy Owner and where such
combination or transfer requires the conversion of one currency into another
such conversion shall be calculated at the then prevailing spot rate of
exchange of the Bank (as conclusively determined by the Bank) for purchasing
the currency for which the Policy Owner is liable with the existing currency so
converted
8.5 None of the persons or corporate bodies included in the expression
"the Policy Owner" shall as against the Bank be entitled to any of the rights
or remedies legal or equitable of a surety as regards the indebtedness or
liabilities of any of the other persons or corporate bodies included in the
expression "the Policy Owner"
8.6 The execution of this Assignment by the Policy Owner shall constitute
an authority on the part of the Policy Owner to the Bank to disclose to any
bank or financial institution to whom the Bank is proposed to assign all or any
of its rights hereunder or to offer or grant a participation in any loan
secured by this Assignment such information concerning the affairs of the
Policy Owner insofar as they relate to the Policy in such manner and to such
extent as the Bank shall from time to time deem fit
9. Currency Clauses
9.1 All moneys received or held by the Bank under this Assignment may from
time to time be converted into such other currency as the Bank considers
necessary or desirable to cover the obligations and liabilities of the Policy
Owner in that currency at the then prevailing spot rate of exchange of the bank
(as conclusively determined by the Bank) for purchasing the currency to be
acquired with the existing currency
9.2 If and to the extent that the Policy Owner fails to pay the amount due
on demand the Bank may in its absolute discretion without notice to the Policy
Owner purchase at any time thereafter so much of a currency as the Bank
considers necessary or desirable to cover the obligations and liabilities of
the Policy Owner in such currency hereby secured at the then prevailing spot
rate of exchange of the Bank (as conclusively determined by the Bank) for
purchasing such currency with sterling and the Policy Owner hereby agrees to
indemnify the Bank against the full sterling price (including all costs charges
and expenses) paid by the Bank
9.3 No payment to the Bank (whether under any judgment or court order or
otherwise) shall discharge the obligation or liability of the Policy Owner in
respect of which it was made unless and until the Bank shall have
10
<PAGE> 12
received payment in full in the currency in which such obligation or liability
was incurred and to the extent that the amount of any such payment shall on
actual conversion into such currency fall short of such obligation or liability
expressed in that currency the Bank shall have a further separate cause of
action against the Policy Owner and shall be entitled to exercise all or any of
its rights under this Assignment to recover the amount of the shortfall
10. Power of Attorney
10.1 As security for the covenants hereinbefore contained and in
consideration of the Bank making available or continuing to make available
banking facilities to the Policy Owner the Policy Owner hereby irrevocably
during the continuance in force of this security appoints the Bank and any
person or corporate body deriving title under the Bank any person nominated in
writing under the hand of an officer of the Bank or any successor in title
severally to be the Attorney of the Policy Owner for the Policy Owner and in
the Policy Owner's name and on the Policy Owner's behalf to execute seal and
deliver or otherwise perfect any deed or other instrument or act which may be
required or deemed proper for any of the purposes of this security (including
any other deed or document referred to in Clause 3.5) or to protect by
registration or otherwise the interest of the Bank hereunder and this
appointment shall operate as a general power of attorney under section 10 of
the Powers of Attorney Act 1971
10.2 The Policy Owner hereby covenants with the Bank and its successors in
title that on request the Policy Owner will ratify and confirm all security
agreements documents acts and things and all transactions entered into by the
Bank or by the Policy Owner at the instance of the Bank in the exercise or
purported exercise of its or their powers and the Policy Owner irrevocably
acknowledges and agrees that such power of attorney is inter alia given to
secure the performance of the obligations owed to the Bank by the Policy Owner
11. Consolidation
11.1 The restriction of the right of consolidating mortgage securities
contained in section 93 of the Law of Property Act 1925 shall not apply to this
Assignment or to any security given to the Bank pursuant hereto
11
<PAGE> 13
11.2 No failure or delay by the Bank in exercising any right or remedy
shall operate as a waiver thereof nor shall any single or any partial exercise
or waiver of any right or remedy preclude its further exercise or the exercise
of any other right or remedy
11.3 The security given to the Bank pursuant to this Assignment shall
extend to all indebtedness of the Policy Owner to the Bank as mentioned in
clause 3.1 whether or not the Bank was an original party to the relevant
transaction or transactions by virtue of which such indebtedness or any part of
it may from time to time arise
11.4 Each of the provisions of this Assignment is severable and distinct
from the others and if at any time one or more of such provisions is or becomes
invalid illegal or unenforceable the validity legality and enforceability of
the remaining provisions hereof shall not in any way be affected or impaired
thereby
11.5 Each person and corporate body included in the expression "the Policy
Owner" agrees to be bound by this Assignment notwithstanding that any other
such persons or corporate body intended to execute or be bound may not do so or
be effectually bound and notwithstanding that this Assignment may be determined
or become invalid or unenforceable against any one or more persons or corporate
bodies whether or not the deficiency is known to the Bank
12. Certificate of non-contravention
12.1 The Policy Owner hereby represents and warrants that the Policy Owner
has full power authority and legal right to give and to observe the terms and
conditions of this Assignment and that there is no provision in the memorandum
or articles of association or any other constitutional document of any
corporate body included in the expression "the Policy Owner" or in any other
corporate document mortgage indenture trust deed or any other agreement binding
upon the Policy Owner or affecting the Policy Owner which would inhibit or
prevent the Policy Owner from entering into the obligations set out in this
Assignment or prevent conflict with or affect the Policy Owner's performance or
observance of any of the terms of this Assignment
12.2 The Policy Owner hereby undertakes to the Bank that the Policy Owner
will obtain and maintain in full force and effect all governmental and other
approvals and consents and do or cause to be done all other acts and things
necessary or desirable in connection herewith or for the performance of the
Policy Owner's obligations hereunder
12
<PAGE> 14
13. Proper Law and Jurisdiction
13.1 This Assignment shall be governed by and construed in accordance with
the Law of England and Wales and the Policy Owner hereby irrevocably submits to
the non-exclusive jurisdiction of the Courts in England and Wales
13.2 Without prejudice to the generality of the provisions of sections 695
and 725 of the Companies Act 1985 and the Rules of the Supreme Court for the
time being the Policy Owner hereby irrevocably authorises and appoints the
Solicitors named in the Schedule (or such other person being a firm of
solicitors resident in England or Wales as the Policy Owner may by notice to
the Bank substitute) to accept service of all legal process arising out of or
connected with this Assignment and service on those Solicitors (or such
substitute) shall be deemed to be service on the Policy Owner
14. Headings and Interpretation
14.1 The subject headings are for information only and do not affect the
construction or effect of this Assignment
14.2 Words importing the masculine gender only include the feminine gender
and words importing the singular number may include the plural number and vice
versa
14.3 Words denoting or referring to a natural person shall include a
corporate body and vice versa
14.4 Any reference to a statute includes any amendment or re-enactment of
it for the time being in force and (where the context so admits or requires)
any antecedent statute amended or re-enacted by that statute and any statutory
instrument regulation or order deriving authority or validity therefrom
13
<PAGE> 15
IN WITNESS whereof the Policy Owner has executed this Assignment as a deed on
the date shown in the Schedule
Signed and Delivered )
by the said Horizon )
Exploration Limited )
in the presence of:- )
Witness Name:
Address:
Occupation:
Signed and Delivered )
by the said )
)
in the presence of:- )
Witness Name:
Address:
Occupation:
14
<PAGE> 1
EXHIBIT 10.54
HORIZON EXPLORATION LIMITED
WAREHOUSE, KENT, UK
<PAGE> 2
DATED 12TH DECEMBER 1995
NEWINGTON BRICKS LIMITED
- and -
HORIZON EXPLORATION LIMITED
L E A S E
of
Units G5/6
off London Road
Newington
Sittingbourne
Kent
Coole & Haddock
14 Carfax
Horsham
West Sussex
RH12 1DZ
<PAGE> 3
THIS LEASE made the 12th day of December One thousand nine hundred and
ninety-five BETWEEN NEWINGTON BRICKS LIMITED whose registered office is at
London Road Newington Kent ME9 7NU (hereinafter called "the Landlord") which
expression shall where the context so admits include the person and/or Company
for the time being entitled to the reversion immediately expectant on the
determination of the term hereby created of the first part and HORIZON
EXPLORATION LIMITED whose registered office is at 6 Pembroke Road Sevenoaks in
the County of Kent TN13 1XR (hereinafter called "the Tenant" which expression
shall where the context so admits include its successors in title) of the other
part WITNESSETH as follows:-
1. IN consideration of the rent hereinafter reserved and of the covenants
on the part of the Tenant hereinafter contained the Landlord hereby demises
unto the Tenant ALL THAT land and buildings situate and known as Units G5/6
(hereinafter called "the Demised Premises") on part of the Landlord's estate
(hereinafter called "the Estate") situate off London Road Newington
Sittingbourne in the County of Kent such land and buildings for the purpose of
identification only shown on the plan attached hereto and thereon coloured red
TOGETHER WITH
(a) (subject to the proviso hereinafter contained) a right of way (in
common with all others entitled to the like right) and at all times
(subject as hereinafter provided) and for all purposes with or without
motor vehicles to pass and repass over and along the roadway which is
coloured blue on the said plan and giving access to and egress from
the Demised Premises to the point where such roadway joins with the
public highway PROVIDED THAT and it is hereby declared that access to
the Demised Premises outside normal working hours of 6 a.m. to 6 p.m.
Monday to Friday and at 6 a.m. to 1 p.m. Saturdays excluding Bank and
Public Holidays shall only be permitted by entry to the site via the
<PAGE> 4
Landlord's security barrier in accordance with such instructions to
operate the security barrier as may be issued from time to time by the
Landlord or their duly authorised Agents Individual security code
numbers shall be issued when the Landlord considers apposite giving
unto the Tenant not less than 24 hours notice of any change of its
security number unless in cases of emergency when no notice shall be
given such number to be kept private and confidential by the Tenant
who shall not communicate it without the Landlord's consent AND ALSO
PROVIDED THAT the Tenant's employees and accredited agents shall not
leave any vehicles on the site access road particularly (but not
exclusively) in the vicinity of the security barrier and the A2 trunk
road
(b) a right to the free and uninterrupted passage and running (subject to
temporary interruption for repair alteration or replacement) of water
soil gas electricity telephone and other services by and through the
sewers drains septic tanks pipes cables apparatus and wires serving
the Demised Premises now or hereafter to be constructed within eighty
years from the date hereof (and which shall be the perpetuity period
for the purpose of this demise) in under or belonging to the land
included in the Estate together with full liberty and power at all
times (but on reasonable notice except in the case of emergency) for
the Tenant with or without workmen or others together where necessary
with appliances to enter upon the Estate to inspect construct maintain
repair amend or renew the same doing no unnecessary damage by the
exercise of this right and forthwith making good any damage thereby
occasioned
(c) subject to the proviso hereinafter contained pedestrian access to the
Demised Premises at all times provided that the Tenant its employees
and accredited agents with its licence
2
<PAGE> 5
shall conduct himself/themselves in a quiet and peaceful manner at all
times so that no disturbance or nuisance is caused
(d) the right of support and protection for the benefit of the Demised
Premises as is now enjoyed from all other parts of the building of
which the Demised Premises form part (hereinafter called "the
Building")
(e) a right of way on foot only for the Tenant its employees and
accredited agents over the land coloured orange on the plan annexed
hereto for access to and egress from the Landlord's toilet block (and
the reasonable use thereof) coloured green on the said plan
(f) The right to park three motor cars in the car parking area within the
Estate to be designated by the Landlord from time to time
EXCEPTING AND RESERVING unto the Landlord:-
(A) The free and uninterrupted passage and running of water soil gas
electricity telephone and other services to and from the other parts
of the Estate and the Adjoining Property (which shall mean any
neighbouring or adjoining land or premises in which the Landlord or a
group Company has a freehold or leasehold interest or in which during
the Term the Landlord or a group Company shall have acquired a
freehold or leasehold interest) over through and along the sewers
drains pipes wires cables which now are or may hereafter during the
term hereby granted be in under or upon the Demised Premises with a
right for the Landlord to enter upon the Demised Premises at any time
upon reasonable notice (except in the case of emergency) for the
purpose of repairing cleansing maintaining and renewing the said
sewers drains pipes wires and cables subject to the Landlord making
3
<PAGE> 6
good all damage caused by such entry as soon as reasonably practicable
except in so far as such entry may be necessitated by any act or
default of the Tenant
(B) The right to erect scaffolding for the purpose of inspecting repairing
or cleaning the Building or any other Buildings now or after the date
of this Lease during the Term on the Estate and the Adjoining Property
(hereinafter called "the Other Buildings") Provided that there shall
not be erected any scaffolding or other structures in such a position
so as to prevent access to the Demised Premises and that any
disruption to use and enjoyment is kept to a minimum
(C) The right to construct and to maintain in or under or over the Demised
Premises at any time during the Term any pipes (meaning any pipes
sewers drains mains ducts conduits gutters water courses wires cables
channels flues and all other conducting media and including any
fixings louvres cowls and any other ancillary apparatus)
(D) The right at any time during the term or at reasonable times and upon
reasonable notice except in cases of emergency to enter (or in case of
emergency to break and enter) the Demised Premises
(a) to inspect the condition and state of repair of the Demised
Premises
(b) to inspect cleanse connect to repair remove replace with
others alter and execute any works whatever to or in
connection with the pipes easements or services referred to
(c) to view the state and condition of and repair and maintain the
building of which the Demised Premises forms part ("the
Building") and the Other Buildings (being
4
<PAGE> 7
any other buildings on the Estate) where such viewing or work
would not otherwise be practicable
(d) to carry out work or do anything whatever comprised within the
Landlord's obligations of this Lease
(e) to take schedules of inventories fixtures and the items to be
yielded up on the expiry of the Term
(f) to exercise any of the rights granted to the Landlord by this
Lease
(E) The right with the Landlord's Surveyor and anyone else authorised by
the Landlord for all purposes in connection with the rent review
provisions hereinafter contained or the Landlord and Tenant Act 1954
including any statutory extension or modification or amendment or
restraint of such statute and any regulations and orders made under
such statute at any time to enter and inspect the Demised Premises
(F) The rights of light and support shelter protection and all other
easements and rights now or after the date of this Lease belonging to
or enjoyed by other parts of the Building the Other Buildings and the
Adjoining Property (being any land owned by the Landlord adjacent to
the Estate)
(G) Full right and liberty at any time after the date of this Lease
(a) to either raise the height of or rebuild the other parts of
the Building any of the Other Buildings or any building on the
Adjoining Property
(b) to erect any new buildings of any height on the Estate or on
the Adjoining Property in such manner as it shall think fit
notwithstanding the fact that the same may obstruct affect or
interfere with the amenity of or access to the Demised
5
<PAGE> 8
Premises or the passage of light and air to the Demised Premises
but not so as to restrict access
TO HOLD the same unto the Tenant for the term of four years from the 12th day
of December 1995 (hereinbefore and hereinafter called the Term) PAYING THEREFOR
unto the Landlord:-
(1) During the Term the yearly rent of SEVEN THOUSAND TWO HUNDRED POUNDS
(L.7,200.00) and Value Added Tax to be payable by the Tenant by equal
quarterly payments in advance on the first day of the months of
January April July and October in every year without deduction the
first payment to be made on the signing hereof
(2) By way of further additional rent on the dates as set out in (1) above
following demand the cost incurred by the Landlord in insuring the
Demised Premises in the full reinstatement value thereof together with
professional fees and loss of rent for at least two years against fire
storm damage impact with vehicles site and debris clearance and other
such risks as may be determined at the Landlord's absolute discretion
including third party liability of the Landlord ("the Insured Risks")
PROVIDED ALWAYS that the Tenant shall not be entitled to any right of access of
light or air to the Demised Premises which would restrict or interfere with the
free user of the other land on the Estate or the Adjoining Property for
building or any other purpose
2. THE Tenant hereby covenants with the Landlord as follows:-
(1) To pay the said rents hereinbefore reserved to the Landlord at the
time and in manner aforesaid clear of all deductions
(2) To pay all rates taxes charges assessments outgoings and impositions
whatsoever which now are or shall at any time hereafter during the
Term be charged assessed or imposed
6
<PAGE> 9
upon or in respect of the Demised Premises or any part thereof or on
the Landlord or Tenant in respect thereof and all payments for water
supplied to the Demised Premises by the Landlord in accordance with
the provisions of Clause 4(3) hereof
(3) To pay in addition to the rents and other sums hereby reserved and
otherwise made payable under this Lease to the Landlord Value Added
Tax at the standard or other appropriate rate (if applicable) in
respect of all supplies made or deemed to be made by the Landlord to
the Tenant pursuant to this Lease or in respect of the Demised
Premises whether such supply is taxable because of an election made by
the Landlord (whether under Paragraph 2 of Schedule 6 (A) to the Value
Added Tax Act 1983) or otherwise or for any other reason
"Value Added Tax" means Value Added Tax as provided for in the Value Added Tax
Act 1983 and legislation (delegated or otherwise) supplemental thereto and any
similar tax replacing or introduced in addition to the same
(4) (a) At all times to keep the exterior and interior of the Demised
Premises and all additions thereto and the appurtenances thereof
including the roof and walls and the passages doors plate glass and
other windows fixtures fittings fastenings wires waste water drain and
other pipes and sanitary and water apparatus therein and the painting
papering and decoration thereof in good and substantial repair and
condition throughout the Term (damage by Insured Risks and such other
risk against which the Landlord shall have insured save where the
insurance moneys shall be irrecoverable in consequence of any act or
default of the Tenant only excepted) and to renew and replace from
time to time all Landlord's fixtures and fittings as set out in the
First Schedule hereto and appurtenances
7
<PAGE> 10
in the Demised Premises which may become or be beyond repair at any
time during or at the expiration or sooner determination of the Term
And without prejudice to the generality of the foregoing covenants (i)
to clean the interior and exterior of all plate glass and other
windows in the Demised Premises at least once in every month (ii)
generally to keep any forecourt yard or other open areas in a clean
and tidy condition (iii) at the Tenant's sole expense to clear and
unblock the drains and sanitary apparatus exclusively serving the
Demised Premises unless (but only in the case where the same are used
in common by neighbouring tenants of the Landlord) stoppage thereof
has not been occasioned by any act or default on his part or on the
part of his servants invitees or licensees PROVIDED THAT nothing
herein contained shall require the Tenant to put the Demised Premises
into any better condition than that in which they are at the date
hereof (as evidenced by the Schedule of Condition annexed hereto) save
for where repairs or renewals are undertaken and the proviso shall not
relate to decoration
(b) In the last year of the Term (howsoever determined) to paint
in a proper and workmanlike manner all inside wood and iron
work and other parts heretofore or usually painted of the
Demised Premises with two coats at least of good and suitable
quality paint (as shall first be approved by the Landlord as
to both quality and colour (such approval not to be
unreasonably withheld or delayed)) and also with every such
internal painting to wash stop whiten emulsion grain varnish
colour paper and otherwise decorate in manner aforesaid all
such internal parts of the Demised Premises that have been or
ought properly to be so treated (the colours and patterns of
all such works first to be approved by the Landlord (such
8
<PAGE> 11
approval not to be unreasonably withheld or delayed)) And also
in the last year of the Term (howsoever determined) to paint
with three coats at least of good and suitable quality paint
(as shall first be approved by the Landlord as to both quality
and colour (such approval not to be unreasonably withheld or
delayed)) in a proper and workmanlike manner all outside parts
of the Demised Premises heretofore or usually painted and any
additions thereto and with every such external painting to
point grain varnish creosote and restore all outside brick
cement wood iron and rough-cast work
(c) To pay a fair proportion to be determined by the Surveyor for
the time being of the Landlord whose determination shall be
binding upon the Tenant of the expenses payable in respect of
constructing repairing rebuilding maintaining and cleansing
all party walls party fences party staircases and all such
other appurtenances whatsoever the use of which is common to
the Demised Premises and to the Building or to any other
premises
(5) To permit the Landlord or the Landlord's duly authorised agents at all
reasonable times during the Term with or without workmen or others
upon giving one week's previous notice to enter upon the Demised
Premises or any part thereof to view the state of repair and condition
thereof and to give or leave on the Demised Premises notice in writing
addressed to the Tenant of all defects and wants of reparation then
and there found and the Tenant shall within a period of three calendar
months after such notice or sooner if requisite repair and make good
the same according to such notice and the covenant in that behalf
hereinbefore contained and if the Tenant shall fail so to do the
Tenant shall permit
9
<PAGE> 12
the Landlord to enter upon the Demised Premises for the purpose of
carrying out such repairs and the cost thereof shall be repaid by the
Tenant to the Landlord
(6) To permit the Landlord or the Landlord's duly authorised agents with
or without workmen or others at all reasonable times during the Term
to enter upon the Demised Premises or any part thereof for the
purposes of carrying out repairs to the other parts of the Estate and
the Adjoining Property making good all damage to the Demised Premises
caused thereby PROVIDED that except in case of emergency the Landlord
shall give not less than forty eight hours notice of his intention to
exercise this right
(7) Not at any time during the Term without the consent in writing of the
Landlord such consent not to be unreasonably withheld to make any
alterations or additions to the Demised Premises or any part thereof
and in any event not to affix any machinery or addition to the walls
or roof thereof
(8) Not to use or permit to be used that part of the Demised Premises
coloured red on the said plan for the purpose other than storage or
workshop together with ancillary offices but excluding any trade
associated directly or indirectly with motor vehicles or recovery of
waste products or scrap metal
(9) Not to do or permit or suffer to be done anything whereby the policy
or policies of insurance on the Demised Premises or on any building or
part of a building or the contents thereof adjoining or near the
Demised Premises against the risks included in such policy or policies
of insurance may become void or voidable or whereby the rate of
premium quoted by a tariff insurance company in London may be
increased to a rate higher than usually charged in respect of the
trade carried on in such adjoining or
10
<PAGE> 13
neighbouring buildings and to repay to the Landlord all sums paid by
way of increased premium and all expenses incurred by it in or about
the renewal of any such policy or policies rendered necessary by a
breach of this covenant and all such payments shall be added to the
rents hereinbefore reserved and be recoverable as rent
(10) In the event of the Demised Premises or the Estate or the Adjoining
Property or any part thereof being damaged or destroyed by fire or any
other of the insured risks at any time during the Term and the
insurance moneys under any policy of insurance effected thereon by the
Landlord being wholly or partially irrecoverable by reason solely or
in part of any act or default of the Tenant the Tenant will forthwith
(in addition to the said rents) pay to the Landlord the whole or (as
the case may be) a fair proportion of the cost of rebuilding and
reinstating the same any dispute as to the proportion to be so
contributed by the Tenant to be referred to arbitration in accordance
with the provisions of the Arbitration Act 1950 or any statutory
modification or re-enactment thereof for the time being in force
(11) To comply at all times during the Term with all statutory and other
requirements for ensuring the health and safety and welfare of the
persons using or employed in or about the Demised Premises or any part
thereof
(12) Not to use or permit or suffer to be used the Demised Premises or any
part thereof for any illegal or immoral purpose and not to do or cause
or permit or suffer to be done on the Demised Premises or any part
thereof anything which may be or become a nuisance or annoyance or
which may cause damage to the Landlord or to the occupiers for the
time
11
<PAGE> 14
being of any other part of the Estate and in particular not to use any
fireplace or furnace for burning any refuse or to emit any smoke or
noxious fumes
(13) Throughout the Term so far as in him lies to preserve unobstructed and
undefeated all rights of light and other easements appertaining to the
Demised Premises in any way and at all times to afford to the Landlord
such facilities and assistance as may enable the Landlord to prevent
the acquisition by anyone of any right of light or other easement over
the Demised Premises or any part thereof
(14) Not to erect or display or permit to be erected or displayed without
the consent in writing of the Landlord (such consent not to be
unreasonably withheld and delayed) any advertisements hoardings or
notices (whether illuminated or otherwise) upon the exterior of the
Demised Premises or any part thereof or upon any interior part of the
Demised Premises which shall be visible from the exterior thereof
(15) Not to underlet or otherwise part with the possession of the Demised
Premises or any part thereof except by way of assignment in accordance
with the next succeeding sub-clause
(16) (a) Not to assign the Demised Premises during the Term other than
in their entirety and in any event not to assign the same
without the consent in writing of the Landlord and the Local
Planning Authority first had and obtained (such consent not to
be unreasonably withheld or delayed by the Landlord) and
within one calendar month after any assignment whatsoever
(otherwise than by way of mortgage) to give to the Landlord
notice thereof in writing containing the name and address of
the assignee or assignees and to produce to the Landlord the
12
<PAGE> 15
instrument of assignment and pay a registration fee of not
less than Ten pounds plus value added tax
(b) The Landlord shall not be required to consent to an assignment
to a private limited company unless the director or directors
of such company being respectable and responsible persons
proved to be such by the Tenant join in the licence to assign
or the assignment as sureties for such a company and jointly
and severally covenant with the Landlord to pay the rent
hereby reserved and any damages and costs properly accruing to
the Landlord by reason of the failure of such company to
observe and perform the covenants on the part of the Tenant
and conditions herein contained and such further covenants as
the Landlord may reasonably require
(17) During the last six months of the Term to permit the Landlord to affix
to any part of the Demised Premises and thereto retain without
interference to the Tenant's business or use of the Demised Premises a
notice that the same are to let and to permit all persons bearing
written authority from the Landlord to enter upon the Demised Premises
to inspect the same at all reasonable times of the day and by
appointment
(18) Not in any way to obscure or permit to be obscured the windows of the
Demised Premises
(19) Not at any time during the Term to cause any damage to or obstruction
in such parts of the Estate as are used by the Tenant in common with
the Landlord or any other persons similarly entitled and in particular
but without prejudice to the generality of the foregoing
13
<PAGE> 16
provision to make adequate arrangements for the frequent removal from
the Estate of all trade refuse
(20) At all times during the Term to comply with the rules and regulations
for the efficient running of the Estate as are specified in the Third
Schedule hereto PROVIDED ALWAYS that the Landlord shall have the right
to revise and extend such rules and regulations from time to time as
may reasonably be required on giving to the Tenant four weeks prior
written notice of its intention to do so
(21) To pay all proper and reasonable expenses (including Solicitors' costs
and Surveyors' fees) incurred by the Landlord incidental to the
preparation and service of a notice under Section 146 of the Law of
Property Act 1925 notwithstanding forfeiture is avoided otherwise than
by relief granted by the Court
(22) To keep the Demised Premises sufficiently supplied and equipped with
fire fighting and extinguishing appliances as reasonably required from
time to time by the authorities concerned which shall be open to
inspection and maintained to the reasonable satisfaction of the
Landlord and also not to obstruct or permit or suffer to be obstructed
the access to or means of working such apparatus and appliances or the
means of escape from the Demised Premises or the Estate
(23) To pay the proper and reasonable legal costs incurred by the Landlord
and of any renewal or extension hereof and of any licence or consent
required hereunder and to pay the Stamp duty thereon
14
<PAGE> 17
(24) At the end or sooner determination of the Term to yield up the Demised
Premises to the Landlord in the state of repair in which they ought to
be having regard to the provisions hereinbefore contained
(25) Not without the previous written consent of the Landlord (such consent
not to be unreasonably withheld or delayed) to make any application
under the Town and Country Planning Acts for any permission or
consents thereunder in respect of the Demised Premises
(26) Within seven days of receipt of notice of the same to give full
particulars to the Landlord of any permission notice order or proposal
for a notice or order made or given or issued to the Tenant by any
Government Department Local or Public Authority under or by virtue of
any statutory powers and if so required by the Landlord to produce
such permission notice order or proposal for a notice or order to the
Landlord and also without delay to take all reasonable or necessary
steps to comply with any such notice or order and also at the request
of the Landlord to make or join with the Landlord and any other
persons for the time being interested in the Demised Premises in
making such objections or representations against or in respect of any
such notice order or proposal as aforesaid as the Landlord shall deem
expedient
(27) In case any dispute shall arise between the Tenant and the tenants or
occupiers or owners of any neighbouring premises the Landlord if it
shall think fit shall determine any such dispute on the part of the
Tenant in such manner as the Landlord shall think reasonable and shall
by writing under its hand order and the Tenant will submit to and
abide by every such determination
15
<PAGE> 18
(28) Not to keep or permit to be kept or deposit for sale or otherwise in
or upon the Demised Premises any goods of a dangerous hazardous or
especially combustible nature nor any materials of any nature the
keeping of which may contravene any statute or local regulation or
bye-law or constitute a nuisance or annoyance to the owners or
occupiers of adjoining or neighbouring property nor without prejudice
to the generality of the foregoing to erect any stove fire engine flue
or chimney whatever without the written consent of the Landlord and in
the event of the Demised Premises or any adjoining premises of the
Landlord being wholly or partly destroyed or injured by any act or
default of the Tenant whereby the Landlord's policy or policies of
insurance thereon shall be vitiated the Tenant shall pay to the
Landlord the cost of rebuilding or reinstating the same and the amount
of such costs may be distrained for as if the same were rent in arrear
(29) To indemnify and keep indemnified the Landlord from and against all
and every claim either from tenants of other parts of the Estate or of
the Adjoining Property or from any other person arising in connection
with the use and occupation of the Demised Premises by the Tenant and
against all damage caused to any other part of the Estate or to the
Adjoining Property by negligence or default of the Tenant or the
Tenant's servants or agents
(30) Without prejudice to any other rights or remedies of the Landlord to
pay interest on any rent or rents hereinbefore reserved or any other
payments due from the Tenant to the Landlord under the terms hereof at
the rate of Four per cent above base rate of Midland Bank Plc for the
time being which shall be in arrears for the period of twenty one days
16
<PAGE> 19
or more such interest to run from the date upon which the said rents
or other payments become due or payable as aforesaid
(31) At all times to display and maintain a suitable sign showing the
Tenant's trading name and business of a size and kind first approved
by the Landlord at a point to be specified by the Landlord (such
approval not to be unreasonably withheld or delayed)
(32) Not to cease carrying on in business in the Demised Premises (or leave
the Demised Premises continuously unoccupied for more than one month)
without:
(a) notifying the Landlord and
(b) providing such caretaking or security arrangements as the Landlord
shall reasonably require and the insurers shall require in order to
protect the Demised Premises from vandalism theft damage or unlawful
occupation and provided the Tenant pays any additional insurance
premium
(33) Not to unload any goods or materials from vehicles and convey them
into the Demised Premises except through the approved entrances
provided for the purpose and not to cause congestion of adjoining
parking areas or inconvenience to any other user of them
(34) Not to permit any vehicles belonging to the Tenant or any persons
calling on the Demised Premises expressly or by implication with the
authority of the Tenant to stand on the Estate roads or the pavements
of them and to use its best endeavours to ensure that such persons
shall not permit any vehicle to stand on any such road or pavement
(35) Not to place on the Estate or any part thereof or expose on the same
for sale any goods or things whatsoever
17
<PAGE> 20
(36) Not to commit any breach of planning control (such term to be
construed as it is used in the Planning Acts) and to comply with the
provisions and requirements of the Planning Acts that affect the
Demised Premises whether as to the permitted user or otherwise and to
indemnify both during or following the expiration of the Term and keep
the Landlord indemnified against all liability whatsoever including
the reasonable costs and expenses in respect of any contravention
(37) Not to allow dogs to roam the Estate and any dogs on the Estate must
be kept on a lead
(38) Not to allow children upon the Estate unless under constant
supervision of a responsible adult
3. THE Landlord hereby covenants with the Tenant as follows:-
(1) Throughout the Term to keep the Demised Premises insured against loss
or damage by fire and the Insured Risks in the full reinstatement
value thereof together with two years loss of rent subject to such
limitations that may from time to time be imposed by the Insurers and
produce to the Tenant a copy of such policy within 14 days of a
request
(2) That the Tenant paying the rents hereinbefore reserved and performing
and observing the several covenants conditions and agreements herein
contained and on its part to be performed and observed may peaceably
hold and enjoy the Demised Premises during the Term without any
interruption or disturbance from the Landlord or any person or persons
lawfully claiming under or in trust for the Landlord
4. PROVIDED ALWAYS and it is hereby agreed and declared as follows:-
(1) That if the rents hereinbefore reserved or any part thereof shall at
any time be in arrear and unpaid for twenty one days after the same
shall have become due (whether legally
18
<PAGE> 21
demanded or not) or if the Tenant shall at any time fail or neglect to
perform or observe any of the covenants or agreements herein contained
and on the Tenant's part to be performed and observed or if the Tenant
for the time being shall become bankrupt or being a company shall
enter into liquidation whether compulsory or voluntary (other than for
the purpose of reconstruction or amalgamation) or if the Tenant for
the time being shall enter into any arrangement or composition for the
benefit of the Tenant's creditors or shall suffer any distress or
execution to be levied on the Tenant's goods then and in any such case
it shall be lawful for the Landlord or any person or persons duly
authorised by the Landlord in that behalf to re-enter into and upon
the Demised Premises or any part thereof in the name of the whole and
thereupon this demise shall absolutely determine but without prejudice
to any right of action or remedy of the Landlord in respect of any
antecedent breach by the Tenant of any of the covenants or agreements
herein contained
(2) That if and so often as the Demised Premises shall be destroyed or
damaged by fire or an Insured Risk (not caused by the wilful act or
default of the Tenant) so as to become unfit for occupation or use for
the purpose aforesaid the said rents or a just and proportionate part
thereof according to the nature and extent of the damage sustained
shall abate from the time of the destruction or damage until such time
as the Demised Premises shall be rebuilt and reinstated or until the
date of expiry of a notice of election by the Landlord under the
proviso hereinafter contained PROVIDED FURTHER and it is a condition
of this Lease that if through any cause whatsoever the Demised
Premises shall be destroyed or so damaged as to become unfit for
occupation or use for the purpose aforesaid without substantial
rebuilding the Landlord may at the Landlord's discretion in
19
<PAGE> 22
lieu of rebuilding or reinstating the same elect to treat this Lease
as at an end and re-enter upon the Demised Premises upon giving to the
Tenant not less than one month's notice in writing of such election by
the Landlord
(3) The Landlord has at the request of the Tenant made available a supply
of water to a point within the Demised Premises such supply being made
under the same terms and conditions as those then currently issued by
the Water Authority or any such subsequent Authority that may be
appointed such water supply shall be metered by the Landlord at the
point of supply the Tenant paying unto the Landlord within fourteen
days of notification the then current rate as charged by the Water
Authority for a water supply and water consumed as registered on the
Landlord's water meter
(4) The demise hereby made shall not be deemed to include and shall not
operate to convey or demise any ways watercourses sewers drains lights
liberties privileges easements rights or advantages whatsoever in
through over or upon the other Land on the Estate or on the Adjoining
Property other than the rights hereinbefore specifically demised AND
the Landlord shall have power at all times without obtaining any
consent from or making any compensation to the Tenant to deal as the
Landlord may think fit with the other land on the Estate or on the
Adjoining Property and to erect or suffer to be erected on the other
land on the Estate or on the Adjoining Property any buildings
whatsoever whether such buildings shall or shall not affect or
diminish the light or air which may now or at any time or times during
the Term be enjoyed by the Landlord or the other tenants or occupiers
of the Demised Premises or any part thereof
20
<PAGE> 23
(5) Nothing in this lease or in any consent granted by the Landlord under
this lease shall imply or warrant that the Demised Premises may
lawfully be used under the Planning Acts for the purpose authorised in
this lease (or any purpose subsequently authorised)
(6) This lease embodies the entire understanding of the parties relating
to the Demised Premises and to all the matters dealt with by any of
the provisions of this lease
(7) The Tenant acknowledges that this lease has not been entered into in
reliance wholly or part on any statement or representation made by or
on behalf of the Landlord except any such statement or representation
that is expressly set out in this lease
(8) Whilst the Landlord is a limited company or other corporation all
licences consents approvals and notices required to be given by the
Landlord shall be sufficiently given if given under the hand of a
director the secretary or other duly authorised officer of the
Landlord
(9) If after the Tenant has vacated the Demised Premises on the expiry of
the Term any property of the Tenant remains in or on the Premises and
the Tenant fails to remove it within 7 days after being requested in
writing by the Landlord to do so or if after using its best endeavours
the Landlord is unable to make such a request to the Tenant within 14
days from the first attempt so made by the Landlord:
(a) the Landlord may as the agent of the Tenant sell such property
and the Tenant will indemnify the Landlord against any
liability incurred by it to any third party whose property
shall have been sold by the Landlord in the mistaken belief
held in good faith (which shall be presumed unless the
contrary be proved) that such property belonged to the Tenant
21
<PAGE> 24
(b) if the Landlord having made reasonable efforts is unable to
locate the Tenant the Landlord shall be entitled to retain
such proceeds of sale absolutely unless the Tenant shall claim
them within 3 months of the date upon which the Tenant vacated
the Premises and
(c) the Tenant shall indemnify the Landlord against any damage
occasioned to the Premises and any actions claims proceedings
costs expenses and demands made against the Landlord caused by
or related to the presence of the property in or on the
Premises
(10) Any statutory right of the Tenant to claim compensation from the
Landlord on vacating the Premises shall be excluded to the extent that
the law allows
(11) The provisions of the Law of Property Act 1925 Section 196 as amended
by the Recorded Delivery Service Act 1962 shall apply to the giving
and service of all notices and documents under or in connection with
this lease except that Section 196 shall be deemed to be amended as
follows:-
(a) the final words of Section 196(4) "and that service be
delivered" shall be deleted and there shall be substituted
"and that service shall be deemed to be made on the third
Working Day after the registered letter has been posted"
"Working Day" meaning any day from Monday to Friday
(inclusive) other than Christmas Day Good Friday and any
statutory bank or public holiday
(b) any notice or document shall also be sufficiently served if
sent by telex telephone facsimile transmission or any other
means of electronic transmission to the party to be served and
that service shall be deemed to be made on the day of
22
<PAGE> 25
transmission if transmitted before 4 p.m. on a Working Day but
otherwise on the next following Working Day (as defined above)
5. THE Tenant hereby warrants that prior to the execution of this Lease
it has disclosed to the Landlord in writing any conviction judgment or finding
of any Court or Tribunal relating to the Tenant (or any Director other Officer
or major shareholder of the Tenant) of such nature as to be likely to affect
the decision of any insurer to grant or to continue insurance of the Estate
against loss or damage by any of the insured risks
6. We certify that there is no Agreement for Lease to which this lease
gives effect
IN WITNESS whereof the parties hereto have executed this Deed the
day and year first before written
THE FIRST SCHEDULE before referred to
Landlord's Fixtures
1 no mains isolator
1 no fuse board
2 no junction boxes
7 no switch fuse boxes
12 no power sockets 13 amp
3 no 8' double fluorescent
8 no 4' double fluorescent
1 no trip box
1 no standpipe - water
Floor size 30' x 30' mezzanine floor
23
<PAGE> 26
THE SECOND SCHEDULE before referred to
Regulations
1. The Tenant shall be held liable for any proven misuse or negligence of
the foul sewers (usage restricted to normal domestic effluent) with such costs
incurred by the Landlord through the Tenant's misuse or negligence being
recoverable from the Tenant
2. In no event shall the Tenant the Tenant's servants employees agents or
invitees park vehicles within the curtilage of the Estate other than on
allotted parking bays as specified by the Landlord 3. The Tenant shall
confine all its activities and the storage of waste and materials to within the
confines of the Demised Premises
4. There shall be a maximum speed limit of twenty miles per hour on the
whole of the Estate which must be observed by all users of motor vehicles
5. The Tenant shall comply with vehicles direction requirements in
respect of the access road
THE THIRD SCHEDULE before referred to
Alterations and Additions
1. If the Tenant shall desire to make any alteration or addition to the
Demised Premises it shall deliver to the Landlord plans and specifications of
such proposed alterations or addition for approval by the Landlord's surveyor
(such approval not to be unreasonably withheld or delayed) in respect of
buildings or equipment reasonably required for the carrying out of the use
permitted by this Lease (hereinafter called "the Works")
2. In the event that such approval shall be given in writing by the
Landlord or its Surveyor and before commencing the Works the Tenant will:-
24
<PAGE> 27
(a) at the expense of the Tenant obtain all necessary permissions and any
other consents required for the carrying out of the Works from the
relevant planning and other competent authorities under the Planning
Acts and any other applicable statute and from the insurers and any
other persons interested in the Premises and to deliver copies of the
same to the Landlord
(b) obtain the approval in writing of the Landlord to any planning
permission granted in respect of the Works such approvals not to be
unreasonably withheld Provided That the Landlord may refuse to approve
such planning permission on the grounds that any condition contained
in it or anything omitted from it or the period referred to in it
would in the reasonable opinion of the Landlord be or be likely to be
prejudicial to the interest of the Landlord in the Premises or in any
adjoining property whether during or following the expiration of the
respective terms granted by the Lease
3. The Tenant shall thereafter:-
(a) give written notice to the Landlord of the commencement of the Works
and immediately they have been completed
(b) give written notice to the insurers of the Demised Premises of the
commencement of the Works and to deliver a copy of such notice to the
Landlord and to pay any increased or extra premium payable in
consequence of the Works or the execution thereof and to comply with
the requirements of such insurers
(c) comply with the terms and conditions laid down by the Institution of
Electrical Engineers and with the regulations of the electricity
supply authority insofar as any of the Works relate to alterations or
additions to the electrical installation in the Demised Premises
25
<PAGE> 28
(d) procure that the Works are undertaken by reputable contractors and in
accordance with current codes of building practice
(e) carry out and complete the Works:-
(i) in a good and workmanlike manner with the best quality
materials of their several kinds
(ii) in compliance with all permissions consents licences and
approvals required to be obtained for the Works and in
accordance with the Planning Acts and any other applicable
statute
(iii) in accordance with the plan and specification
(iv) to the satisfaction of the Landlord and its surveyor or
architect who shall have all necessary facilities for
inspecting the progress of the Works and the quality of the
materials and workmanship used therein
(f) take all necessary steps to prevent the execution of the Works from
causing any annoyance inconvenience nuisance or disturbance to the
Landlord and the owners or occupiers of any adjoining or neighbouring
premises
(g) forthwith make good or procure the making good of all damage to any
Adjoining Premises arising out of or incidental to the Works to the
complete satisfaction of the Landlord
(h) at the end or sooner determination of the Term (including the period
of any holding over or any extension or continuance whether by statute
or common law) and if required to do so by the Landlord reinstate the
Demised Premises and restore them to the same state and condition as
they were prior to the execution of the Works such reinstatement and
26
<PAGE> 29
restoration to be carried out at the sole cost of the Tenant in a good
and workmanlike manner with the best quality materials of their
several kinds to the entire satisfaction of the Landlord and its
surveyor or architect
(i) indemnify and keep indemnified the Landlord against all actions claims
demands charges costs fees and expenses and liability whatsoever
arising directly or indirectly out of the execution and completion of
the Works and the reinstatement of the Demised Premises or by reason
of any act or default of the Tenant or any person under its control
(j) pay all reasonable and proper costs charges fees and expenses and any
value added tax thereon of the Landlord and its solicitor surveyor and
architect arising out of or incidental to the approval of the plans
specification and planning consent and inspection of the Works and the
reinstatement and restoration of the Demised Premises
ORIGINAL
EXECUTED as a Deed by affixing the )
Company Seal of NEWINGTON BRICKS )
LIMITED in the presence of:- )
Director /s/ [illegible signature]
Secretary /s/ [illegible signature]
27
<PAGE> 30
SCHEDULE OF CONDITION
UNITS G5/G6 NEWINGTON INDUSTRIAL ESTATE
Background
The units measure approximately 30ft wide x 60ft deep with an eaves height of
around 15ft, and are two intermediate units out of a total of seven units.
The building was constructed about 50 years or so ago being part of a
brickmaking plant which ceased to operate in the late 1970s.
Between 1980 and 1985 the building was sub-divided into individual units by the
construction of 215m thick party walls party walls and the provision of
galvanised roller shutter doors to each unit with plywood infill panels above
the door.
Conditions
The metal corrugated barrel roof is in good condition having been renewed in
the early 1980s. The roof sheets have been painted with bituminous paint from
time to time, which is now showing signs of requiring repainting. No rust is
evident.
The brick party walls appear sound but the pointing is rough.
The rear wall comprises brickwork to about 2m height with an emergency exit
built within, and metal PVC coated cladding above to eaves height, all in good
condition.
The roller shutter door to front elevation has a wicket door and is in good
working order and condition. There is an infill panel of brick about 15" wide
with a metal personnel door housed within, the door being of average condition.
The door and fascia/window frame and joinery are in need of repainting although
there is no evidence of paint peeling.
The internal concrete floor has been parched from time to time and is sound but
only of average condition.
The mezzanine floor covers approximately half the ground floor area and is of a
light construction with limited loading capabilities and is not suitable for
use as a working area because of inadequate fire escape facility.
The electric circuits were overhauled in February 1994.
In general terms the building is in fair condition being mindful of its
history.
<PAGE> 1
EXHIBIT 10.55
HORIZON EXPLORATION LIMITED
HEADOFFICE, SEVENOAKS, UK
<PAGE> 2
DATED 25th AUGUST 1993
- --------------------------------------------------------------------------------
MARLEY WATERPROOFING LIMITED
- to -
HORIZON EXPLORATION LIMITED
U N D E R L E A S E
relating to
6 Pembroke Road Sevenoaks Kent
Thomson Snell & Passmore
3 Lonsdale Gardens
TUNBRIDGE WELLS
Kent TN1 1NX
259/0051/mb
<PAGE> 3
PARTICULARS
- --------------------------------------------------------------------------------
1. DATE : 25th August 1993
- --------------------------------------------------------------------------------
2. THE PARTIES:
A. THE LANDLORD : MARLEY WATERPROOFING LIMITED
whose registered office is at
London Road Riverhead
Sevenoaks Kent
TN13 2DS
- --------------------------------------------------------------------------------
B. THE TENANT : HORIZON EXPLORATION LIMITED
whose registered office is at
14-16 Mount Ephraim Road
Tunbridge Wells Kent TN1 1EE
- --------------------------------------------------------------------------------
3. SHORT DESCRIPTION OF
THE PREMISES : 6 Pembroke Road Sevenoaks
Kent
- --------------------------------------------------------------------------------
4. THE TERM : A term of seven years commencing
on 25th AUGUST 1993 and expiring
on 24th AUGUST 2000
- 1 -
<PAGE> 4
5. RENT : L.120,000 per annum subject to
review
- --------------------------------------------------------------------------------
6. RENT COMMENCEMENT DATE : 25th AUGUST 1993
- --------------------------------------------------------------------------------
7. PERMITTED USE : Offices
- --------------------------------------------------------------------------------
8. SUPERIOR LEASE : The superior lease under which
the Landlord holds the Premises
dated 20th December 1985 and made
between Strathclyde Regional
Council (1) ("the Superior
Landlord") the Landlord (2) and
The Marley Tile Company Limited
(3) for a term of 25 years
from 29th September 1985
- 2 -
<PAGE> 5
T H I S L E A S E made between the Parties named in the Particulars
W I T N E S S E S as follows:
1. UNLESS the context otherwise requires the following expressions bear
the meanings ascribed to them as follows:
1.1 "THE LANDLORD" includes the reversioner for the time being
immediately expectant upon the Term
1.2 "THE SUPERIOR LANDLORD" includes any person now or after the
date of this Lease having title to the Premises mediately or
immediately expectant on the termination of the Landlord's
title
1.3 "THE TENANT" includes the Tenant's successor in title
1.4 "THE TERM" includes not only the term granted by this Lease
but also the period of any holding over
1.5 "PLANNING ACTS" means the Town and Country Planning Act 1990
the Planning (Listed Buildings and Conservation Areas) Act
1990 the Planning (Hazardous Substances) act 1990 the Planning
(Consequential Provisions) Act 1990 and any similar or
amending legislation in force at any time during the Term
1.6 All references in this Lease to statutes statutory instruments
rules orders and regulations or the like include (unless
otherwise stated) any future re-enactments or modifications
thereof and those made in substitution or replacement of any
which are repealed and also include all instruments orders
plans regulations permissions and directions for the time
being made issued or given thereunder or deriving validity
therefrom
- 3 -
<PAGE> 6
1.7 Words importing one gender include all other genders and words
importing the singular include the plural and vice versa
1.8 Where the Tenant consists of two or more persons all covenants
by the Tenant are deemed to be made by those persons jointly
and severally
1.9 Words importing persons include firms companies and
corporations and vice versa
1.10 Any provisions in this Lease referring to the consent
permission or approval of the Landlord shall be construed as
also requiring the consent approval or permission of any
Superior Landlord and any mortgagee of the Landlord and any
Superior Landlord if so required under the Superior Lease
1.11 (a) All rights of entry or other rights or easements
exercisable by the Landlord shall extend to include
any Superior Landlord or persons authorised by them
and their respective surveyors servants contractors
licensees and work people with or without plant and
appliances and materials
(b) All rights exercisable by the Tenant shall extend to
include all persons authorised by the Tenant and
their respective surveyors servants contractors
licensees and work people with or without plant and
appliances and materials
1.12 Any covenants by the Tenant not to do any act or thing are
deemed to include a covenant not to permit or suffer the doing
of that act or thing
2. IN consideration of the rent and covenants hereinafter respectively
reserved and contained and on the part of the Tenant to be
respectively paid and performed the Landlord HEREBY DEMISES unto the
Tenant ALL THAT
- 4 -
<PAGE> 7
premises shortly described in paragraph 3 of the Particulars and more
particulary defined in the Schedule to the Superior Lease together
with all additions and alterations thereto (hereinafter called "the
Demised Premises") SUBJECT TO all covenants restrictions and
stipulations of whatever kind which may affect or relate to the
Demised Premises TO HOLD the same unto the Tenant from 25th AUGUST
1993 for the term of seven years YIELDING AND PAYING therefor during
the said term without any deduction:
2.1 firstly for the period from 25th AUGUST 1993 to
24th NOVEMBER 1993 the rent of a
peppercorn and as from 25th NOVEMBER 1993
the yearly rent of L.120,000 or such substituted rent as may
become payable under the rent review provisions in clause 6 of
this Lease payable in advance on the usual quarter days (such
payments if required by the Landlord to be made direct to the
Landlord's bankers by periodical order drawn by the Tenant on
the Tenant's bank or other account to reach the Landlord's
bankers on the due date for rent hereunder)
2.2 secondly by way of further or additional rent from time to
time sums equal to the amounts paid by the Landlord to the
Superior Landlord pursuant to clause 3(2) of the Superior
Lease in respect of the insurance of the Demised Premises such
further rent to be paid on demand
3. THE Tenant HEREBY COVENANTS with the Landlord to the intent that the
obligations may continue throughout the Term as follows:
- 5 -
<PAGE> 8
3.1 to pay during the Term the rents hereby reserved at the times
and in the manner aforesaid without any deduction
3.2 to bear pay and discharge all existing and future rates taxes
duties charges assessments impositions and outgoings and
obligations whatsoever (whether parliamentary parochial local
or of any other description and whether or not of a capital or
non-recurring nature which now are or may at any time
hereafter during the Term be charged levied rated assessed or
imposed upon or payable in respect of the Demised Premises or
any part thereof or upon the owner or occupier in respect
thereof and also to pay and discharge and indemnify the
Landlord against any empty rate rating surcharge or similar
imposition which may whether during or after the expiration or
sooner determination of the Term be imposed in respect of the
Demised Premises or any part thereof if and in so far as the
same arises by reason of any failure to occupy the Demised
Premises or any part thereof during the Term PROVIDED THAT
this sub-clause shall under no circumstances be construed as
making the Tenant liable in any way for any taxes or charges
(of whatever nature) imposed or assessed as a result of any
disposal of the Landlord's interest in the Demised Premises or
any dealing by the Landlord therewith
3.3 to pay to the suppliers thereof all charges for gas and
electricity (including meter rents if any) consumed in the
Demised Premises during the Term
3.4 notwithstanding anything else contained in this Lease not to
alter or add to the Demised Premises or change the use thereof
or dispose of
- 6 -
<PAGE> 9
or deal in the Tenant's interest therein in such manner as
thereby to involve the Landlord in any fiscal liability
3.5 to deliver to the Landlord free of charge a copy of every
notice order requisition direction or proposal given made or
issued by a competent authority affecting the Demised Premises
or the user of the Demised Premises as soon as the Tenant
becomes aware thereof and at the request and joint cost of the
Landlord and Tenant to make or join in making such objections
or representations against or in respect of any such notice
order requisition direction or proposal as the Landlord shall
reasonably deem expedient
3.6 to repay on demand to the landlord all sums incurred by the
Landlord in connection with the cost of making repairing and
cleansing all party and other walls gutters sewers drains
pipes conduits wires and cables belonging to or used with the
Demised Premises in common with adjoining or neighbouring
premises all amounts due from the Tenant under this sub-clause
being recoverable as rent arrears
3.7 in the years ending 28th September 1994 (but only if
decoration for that year is required by the Superior Landlord)
and 28th September 1997 and in the last six months of the Term
(however determined) but not in two successive years to paint
or otherwise treat as the case may require the whole of the
outside woodwork ironwork metal work cement or stucco work (if
any) and other external parts of the Demised Premises usually
or requiring to be painted or otherwise treated with two good
coats of good quality paint or other suitable material of the
good quality in a proper and workmanlike manner and at the
same
- 7 -
<PAGE> 10
times with every such painting to clean restore point and make
good the external brickwork stucco and stonework of the
Demised Premises to the extent that may be necessary all such
works to be carried out to the reasonable satisfaction of the
Landlord and the colours and patterns of all such works of
painting and decorating on the final occasion during the Term
to be previously approved in writing by the Landlord
3.8 in the year ending 29th September 1995 (but only if decoration
for that year is required by the Superior Landlord) and in the
last six months of the Term (however determined) but not in
two successive years to paint paper plaster or otherwise treat
as the case may require all interior parts of the Demised
Premises usually or requiring to be painted papered plastered
or otherwise treated with not less than two coats of good
quality paint or other suitable material of good quality in a
proper and workmanlike manner the colour and quality of the
paint and other finishes in the last six months of the Term to
be first approved by the Landlord and also at the same times
with every such painting to the extent necessary to wash down
all tiles glazed bricks and similar washable surfaces and make
good all ornamental works
3.9 (a) to keep in good and substantial repair order and
condition the whole of the Demised Premises
(including the exterior the structure the walls the
roofs and foundations thereof and any alterations
additions or improvements to the Demised Premises)
and the water ventilation sanitary and heating
apparatus and the sewers drains and appurtenances
thereof and the boundary walls and fences of the
Demised Premises and to carry out from time
- 8 -
<PAGE> 11
to time whenever requisite all necessary reparations
and rebuilding works and amendments whatsoever
(b) to keep the Demised Premises clean tidy and properly
cleansed and in particular to clean the windows
therein as often as occasion shall require
(c) to keep the open areas of the Demised Premises clean
and tidy and to maintain the trees and shrubs thereon
3.10 not at any time during the said term to make or permit or
suffer to be made any alteration or addition whatsoever to the
Demised Premises other than (and subject to the prior approval
of the Landlord to the plans and specifications thereof) the
erection and dismantling of non-structural partitioning
3.11 not to make or permit or suffer to be made any alteration or
addition to any electrical installation in or on the Demised
Premises except in accordance with the terms and conditions
laid down by the Institution of Electrical Engineers and the
regulations of the relevant electricity supply authority
3.12 to permit the Landlord and its agents with or without workmen
and others at any reasonable time or times and upon reasonable
notice in writing (save in emergency) to enter and examine the
Demised Premises to ensure that nothing has been done therein
which constitutes a breach of any of the covenants contained
in these presents and to examine the state and condition of
the Demised Premises
3.13 duly and immediately to remedy repair and make good all
breaches of covenant and defects of which notice in writing
shall be given by the
- 9 -
<PAGE> 12
Landlord to the Tenant and which the Tenant shall be liable to
remedy repair or make good under the covenants contained in
this Lease and in case the Tenant shall make default in
commencing and thereafter diligently proceeding with so doing
within two months after the date of any such notice it shall
be lawful (but not obligatory) for the Landlord without
prejudice to the right of re-entry hereinafter contained to
enter upon the Demised Premises and to remedy repair and make
good the same at the cost of the Tenant which cost together
with the proper expenses of the Landlord (including surveyors'
and other professional fees) thereby incurred shall be a debt
due from the Tenant to the Landlord and be forthwith
recoverable by action
3.14 to permit the Landlord and its agents at any reasonable time
or times upon reasonable notice in writing (save in emergency)
to enter the Demised Premises and to take schedules or
inventories of the fixtures and things to be yielded up at the
expiration or sooner determination of the Term
3.15 to permit the Superior Landlord and all persons authorised by
it and their agents and workmen and the owners and occupiers
of any adjoining or neighbouring premises or their respective
agents and workmen at any reasonable time or times upon
reasonable notice in writing (save in emergency) to enter upon
the Demised Premises where necessary for executing repairs
additions or alterations to or upon any adjoining or
neighbouring premises or for building on land adjoining the
Demised Premises or for laying constructing repairing
maintaining renewing making connections with or cleansing or
keeping in good
- 10 -
<PAGE> 13
order and condition all pipes drains channels watercourses
sewers wires cables gutters ditches culverts fences or other
conveniences which shall belong to or serve the Demised
Premises in common with other premises or be in or upon the
Demised Premises and also for the purpose of laying down
maintaining repairing renewing and testing drainage gas and
water pipes and electric wires or cables or for other similar
purposes the persons entering making good all damage thereby
occasioned to the Demised Premises
3.16 (a) at all convenient hours in the daytime to permit all
prospective purchasers of or dealers in the
Landlord's reversionary interest by order in writing
of the Landlord or its agents to view the Demised
Premises without interruption
(b) to permit the Landlord or its agents at any time
within six calendar months next before the expiration
of the Term to enter upon the Demised Premises and to
fix and retain without interference upon any suitable
part or parts thereof but not so as to obstruct any
doors or windows a notice board for re- letting the
same and to permit all persons by order in writing of
the Landlord or its agents to view the Demised
Premises at all convenient hours in the daytime
without interruption
3.17 to occupy the Demised Premises forthwith and not to use or
permit or suffer the same to be used for any noisy noisome
offensive or dangerous trade activity manufacture business or
occupation or for any illegal or immoral purpose nor to do or
permit or suffer to be done on the Demised Premises any act
matter or thing whatsoever which may
- 11 -
<PAGE> 14
be or in the reasonable opinion of the Landlord tend to become
an annoyance nuisance damage disturbance inconvenience or to
the prejudice of the Landlord or the owners or occupiers of
any adjoining or neighbouring premises or the neighbourhood
and without prejudice to the generality of the foregoing not
to use or permit the Demised Premises to be used otherwise
than as offices PROVIDED THAT no representation or warranty is
or has prior to the date hereof been given or made by or on
behalf of the Landlord that any such use is or will be or will
remain a permitted use under the Planning Acts or that the
Demised Premises are or will remain otherwise fit for any such
use
3.18 (a) not to make or permit or suffer to be made any
application for planning permission in respect of the
Demised Premises without the consent of the Landlord
such consent not to be unreasonably withheld
(b) not to do or omit or permit or suffer to be done or
omitted any act or thing on or in relation to the
Demised Premises or the user of the Demised Premises
the doling or omission of which shall constitute a
contravention of the Planning Acts
(c) promptly to execute at the Tenant's own expense all
such works as are or may under or in pursuance of the
Planning Acts or any other Act or Acts of Parliament
already or hereafter to be passed be directed or
required by any local public or other competent
authority to be executed at any time upon or in
respect of the Demised Premises or the user thereof
whether by the Landlord or Tenant thereof (including
without prejudice to
- 12 -
<PAGE> 15
the generality of the foregoing the provision and
maintenance of fire escapes and toilet facilities and
elimination of smoke effluvia vapour and grit)
3.19 (a) not to carry on or suffer upon the Demised Premises
any trade business or occupation in any manner or do
or suffer any other thing which may make void or
voidable any policy for the insurance of the Demised
Premises or render any increased or extra premium
payable for such insurance and to comply at its own
expense with all reasonable directions and
recommendations of the insurers of the Demised
Premises
(b) to make up out of its own moneys any deduction in any
insurance moneys paid by the Superior Landlord's
insurers made as a result of repair or maintenance of
the Demised Premises not in compliance with the
covenants in this Lease
(c) to insure and keep insured in the name of the
Landlord (and if so required the Superior Landlord)
and of the Tenant all the plate glass windows and
doors in the Demised Premises against breakage in an
insurance office to be nominated by the Landlord from
time to time to the full value thereof and to pay all
premiums necessary for that purpose and whenever
required to produce to the Landlord or its agent the
policy or policies of insurance and the receipt for
the current year's premium and to cause all moneys
received by virtue of such insurance to be forthwith
laid out in reinstating the said plate glass windows
- 13 -
<PAGE> 16
and doors with plate glass of the same quality and
thickness and to make up any deficiency out of the
Tenant's own moneys
3.20 not to hold or permit or suffer to be held upon the Demised
Premises any sale by auction public exhibition political
meeting show spectacle or gambling
3.21 not to keep or permit or suffer to be kept on the Demised
Premises any material of a dangerous combustible explosive
radio-active or other similar nature except in accordance with
the provisions of any relevant Act or Acts of Parliament for
the time being in force and after due notice to the insurers
of the Demised Premises and payment of every increased or
extra insurance premium which ought to be paid
3.22 not to fix to or place upon or permit or suffer to be fixed to
or placed upon the Demised Premises any machinery article or
substance which in the reasonable opinion of the landlord may
be liable to damage or overload the structural parts or roofs
or floors of the buildings included in the Demised Premises
3.23 not without the consent in writing of the Landlord first
obtained (such consent not to be unreasonably withheld or
delayed) to affix or display or permit or suffer to be affixed
or displayed to or on the Demised Premises any sign fascia
hoarding poster placard skysign flagpole mast lettering or
advertisement whatsoever which shall be visible from outside
the Demised Premises and in default of obtaining such consent
the Landlord may enter and remove the same at the cost of the
Tenant
3.24 to take all steps necessary to prevent any encroachment upon
the Demised Premises or the acquisition of any new right to
light passage
- 14 -
<PAGE> 17
drainage or other encroachment over upon or under the Demised
Premises and to give notice to the Landlord of any threatened
encroachment or attempt to acquire any such easement
3.25 not to underlet the whole or any part of the Demised Premises
nor to assign charge or part with or share possession or
occupation of or permit any person to occupy the Demised
Premises or any part or parts (as opposed to the whole)
thereof:
(a) except by an assignment or charge of the whole of the
Demised Premises
(b) without the Landlord's previous written consent
(which shall not be unreasonably withheld or delayed)
PROVIDED THAT the Landlord may on any assignment of this Lease
require that the Tenant shall:
(i) procure that the assignee covenants with the
Landlord to pay the rents reserved (including
substituted rents) and perform and observe
the covenants on the part of the Tenant
contained in this Lease and
(ii) if the assignee is a private limited company
or if the Landlord shall otherwise require
procure that a surety of sufficient financial
status having regard to the obligations
contained in this Lease shall covenant with
the Landlord that the assignee will pay the
said rents (including substituted rents) and
perform and observe the said covenants and to
indemnify and save harmless the Landlord
against all losses damages costs and
- 15 -
<PAGE> 18
expenses arising by reason of any default of
the said assignee and such covenant shall
further provide in the usual form that any
neglect or forbearance of the Landlord shall
not release or exonerate such persons and
shall further provide for such persons to
accept a new lease of the Demised Premises
upon disclaimer of these presents by the said
assignee or on its behalf if so required by
the Landlord within six months of such
disclaimer (such new lease to be for the
residue then unexpired of the Term and at the
rents payable and subject to the same
tenant's covenants and to the same provisos
and conditions as those in force immediately
before such disclaimer and to be granted at
the cost of such persons in exchange for a
counterpart duly executed by them)
3.26 within 14 days of every assignment or charge of this Lease to
give notice thereof in writing with particulars thereof to the
Landlord's solicitors and produce such instrument for
registration by them and supply a true copy thereof and to pay
to the Landlord's solicitors a reasonable registration fee in
respect of each such instrument such fee to be determined by
the Landlord's solicitors
3.27 to take such measures as may be necessary to ensure that any
effluent discharged into the drains or sewers which belong to
or serve the Demised Premises will not be corrosive or in any
way harmful to the said drains or sewers or cause any
obstruction or deposit therein
- 16 -
<PAGE> 19
3.28 not to discharge or allow to be discharge any solid matters
from the Demised Premises into the drains or sewers which
belong to or serve the Demised Premises nor to discharge or
allow to be discharged therein any fluid of a poisonous or
noxious nature
3.29 not to install or keep or permit or suffer to be installed or
kept on the Demised Premises any machinery which causes undue
noise fumes or vibrations liable to result in nuisance injury
or damage to persons or to the Demised Premises or to
adjoining or neighbouring premises
3.30 to keep the Demised Premises supplied and equipped with all
fire fighting and extinguishing appliances as may from time to
time be required by law or by the insurers of the Demised
Premises and also to keep in force regular maintenance
contracts as necessary for such fire fighting and
extinguishing appliances
3.31 to give notice forthwith to the Landlord of any "relevant
defect" within the meaning of Section 4 of the Defective
Premises Act 1972 or any statutory modification or
re-enactment thereof in the state of the Demised Premises and
at all times to display and maintain all notices relating
thereto (including the wording thereof) which the Landlord may
from time to time reasonably require to be displayed or
erected at or in the Demised Premises
3.32 to observe and perform the covenants rights exceptions
reservations and other matters contained mentioned or referred
to in the Charges Register (except for Charge Number 4) of
Title Number K601332 at H.M. Land Registry and to keep the
Landlord fully and effectually indemnified at all times and
the Tenant hereby indemnifies the
- 17 -
<PAGE> 20
Landlord accordingly against all costs claims liabilities
actions and expenses arising from any breach non-observance or
non-performance of or non-compliance with any of the aforesaid
covenants rights exceptions reservations and other matters
3.33 to pay to the Landlord all proper costs charges and expenses
incurred by the Landlord including but without prejudice to
the generality of the foregoing legal and surveyors' costs:
(a) incidental to or in contemplation of the preparation
and service of a notice under Section 146 of the Law
of Property Act 1925 or in contemplation of any
proceedings under Sections 146 or 147 of the said Act
(whether or not any right of re-entry or forfeiture
has been waived by the Landlord or a notice served
under the said Section 146 is complied with by the
Tenant or the Tenant has been relieved under the
provisions of the said Act and notwithstanding
forfeiture is avoided otherwise than by relief granted
by the Court) and to indemnify and keep indemnified
the Landlord against all costs charges expenses claims
and demands whatsoever in respect of the said
proceedings and the preparation and service of the
said notice
(b) incidental to or in contemplation of the preparation
and service of a Schedule of Dilapidations at any
time during or after the expiration of the Term
(c) in connection with or in procuring the remedying of
any breach of covenant on the part of the Tenant
contained in this Lease
- 18 -
<PAGE> 21
(d) in connection with any application for consent
required by this Lease whether or not such
application is withdrawn by the Tenant or consent be
granted
3.34 at all times during the Term at the Tenant's own expense to
execute all works and provide and maintain all arrangements
required by and to observe and comply in all respects with the
provisions and requirements of any and every enactment (which
expression in this covenant includes as well any and every Act
of Parliament already or hereafter to be passed as any and
every notice direction order regulation or bye-law already or
hereafter to be made under or in pursuance of or deriving
effect from any such Act) or required by any government
department public local or other authority or duly authorised
officer or Court of competent jurisdiction acting under or in
pursuance of any enactment as are or may be directed or
required to be executed or provided or maintained at any time
during the said term upon or in respect of the Demised
Premises or any additions or improvements thereto or the user
thereof for any purposes or the employment therein of any
person or any fixtures machinery plant or chattels for the
time being affixed hereto or being thereupon or used for the
purposes thereof whether by the owner or the occupier thereof
AND to indemnify and keep indemnified the Landlord at all
times against all costs charges and expenses of or incidental
to the execution of any works or the provision or maintenance
of any arrangements so directed or required as aforesaid AND
not at any time during the said term to do or omit or suffer
to be done or omitted on or about the
- 19 -
<PAGE> 22
Demised Premises any act or thing by reason of which the
Landlord may under any enactment incur or have imposed upon it
or become liable to pay any penalty damages compensation costs
charges or expenses
3.35 to indemnify and keep indemnified the Landlord from and
against legal liability in respect of all actions proceedings
claims demands losses costs expenses damages and liability in
respect of any injury to any person or damage to any property
movable or immovable by reason of or arising in any way
directly or indirectly out of the non-compliance by the Tenant
with its obligations under this Lease and whether as to the
repair and the condition of the Demised Premises or any
alteration to or the user of the Demised Premises or otherwise
and from all proceedings costs claims and demands of
whatsoever nature in respect of any such liability or alleged
liability
3.36 to be responsible for and to indemnify the Landlord against
all damage occasioned to the Demised Premises or any adjacent
or neighbouring premises or to any person caused by any act
default or negligence of the Tenant or the servants agents
licensees or invitees of the Tenant
3.37 to yield up unto the Landlord at the expiration or sooner
determination of the Term so painted treated repaired cleansed
maintained amended and kept as aforesaid the Demised Premises
and the keys and all additions and improvements made thereto
in the meantime and all fixtures of every kind in or upon the
Demised Premises or which during the Term may be affixed or
fastened to or upon the same except tenant's or trade fixtures
and prior to the expiration or sooner
- 20 -
<PAGE> 23
determination of the Term in case any of the Landlord's or
Superior Landlord's fixtures and fittings shall be missing
broken damaged or destroyed forthwith to replace them with
others of a similar character and of equal quality and at such
time to replace to the extent reasonably necessary all carpets
with carpets of at least equal quality and of a colour and
design approved by the Landlord (such approval not to be
unreasonably withheld) and in the event of any alterations
having been made during the Term to the Demised Premises to
reinstate the Demised Premises (if so required by the
Landlord) to the condition in which they were prior to the
making of such alterations and in any event to remove any
moulding sign writing or painting of the name or business of
the Tenant and other persons from the Demised Premises and
make good any damage caused by such removal or removal of the
Tenant's fixtures fittings furniture and effects
3.38 immediately prior to the expiration or sooner determination of
the said term at the cost of the Tenant if so requested by the
Landlord to remove and make good all alterations or additions
made to the Demised Premises by the Tenant at any time during
the Term
3.39 wherever in this Lease provision is made for the Tenant to pay
any sum (including without prejudice to the generality of the
foregoing the rents reserved by this Lease legal costs
registration fees surveyors' and other professional fees
charges and expenses) on which value added tax is payable then
to pay in addition to that sum value added tax on that sum at
the rate appropriate at the time of the supply
- 21 -
<PAGE> 24
3.40 to observe and perform the covenants and conditions on the
part of the lessee contained in the Superior Lease so far as
they are consistent herewith and to indemnify the Landlord
from and against any actions proceedings claims damages costs
expenses or losses arising from any breach non-observance or
non-performance of such covenants and conditions
4. THE Landlord HEREBY COVENANTS with the Tenant as follows:
4.1 that the Tenant paying the rents hereinbefore reserved and
observing and keeping the several covenants by the Tenant
herein contained may peaceably hold and enjoy the Demised
Premises during the term without any interruption by the
Landlord or by any person lawfully claiming through under or
in trust for it
4.2 on the request and at the expense of the Tenant to take
reasonable steps to enforce the covenants on the part of the
Superior Landlord contained in the Superior Lease
4.3 to pay the rents reserved by the Superior Lease
5. PROVIDED ALWAYS AND IT IS HEREBY AGREED as follows:
5.1 that if the said yearly rents and payments hereby reserved or
any part thereof shall at any time be in arrear and unpaid for
14 days after the same shall have become due (whether any
formal or legal demand therefor shall have been made or not)
or if the Tenant shall at any time fail or neglect to perform
or observe any of the covenants conditions or agreements
herein contained and on the Tenant's part to be performed and
observed or if the Tenant:
- 22 -
<PAGE> 25
(a) being a company shall enter into liquidation whether
compulsory or voluntary (not being a voluntary
liquidation for the purpose of amalgamation or
reconstruction) or have a winding up Order made
against it or if a Receiver shall be appointed of its
undertaking or permit any execution to be levied on
the Demised Premises or
(b) being a natural person shall have a bankruptcy order
made against him or permit any execution to be levied
on the Demised Premises or enter into any arrangement
or composition for the benefit of his creditors
then and in any such case it shall be lawful for the Landlord
or any person or persons duly authorised by it into or upon
the Demised Premises or any part thereof in the name of the
whole to re-enter and the Demised Premises peaceably to hold
and enjoy thenceforth as if these presents had not been made
without prejudice to any right of action or remedy of the
Landlord in respect of any antecedent breach of any of the
covenants by the Landlord hereinbefore contained
5.2 if the rents hereby reserved or any part thereof shall be
unpaid after becoming payable (whether legally demanded or
not) or if any sum due from the Tenant shall remain unpaid
after becoming due then the Tenant shall pay by way of further
rent interest on the sum outstanding from the date it became
due until payment at the rate of 4% per annum over Midland
Bank plc base rate for the time being
- 23 -
<PAGE> 26
5.3 all sums due to the Landlord under this Lease shall be payable
as rent and the Landlord shall have the same remedies for the
recovery thereof as the Landlord would or might have for rent
in arrear
5.4 if the Demised Premises or any part thereof shall be destroyed
or damaged by fire or other risk against which the Superior
Landlord shall have insured so as to be unfit for occupation
and use then (unless the insurance money shall be wholly or
partially irrecoverable by reason of any act or default of the
Tenant) payment of the rent or of a fair and just proportion
thereof according to the nature and extent of such destruction
or damage shall be suspended until the Demised Premises or the
part so destroyed or damaged shall be again rendered fit for
occupation and use PROVIDED THAT if no building contract has
been entered into to reinstate the Demised Premises or repair
such damage within three years from the date of destruction or
damage either party shall be entitled to determine the term
hereby granted by giving to the other party written notice at
any time before such building contract has been entered into
to expire at any time whereupon the present demise and
everything herein contained shall cease and be void but
without prejudice to the rights and remedies of either party
against the other in respect of any antecedent claim or breach
of covenant PROVIDED FURTHER THAT the Tenant's right to
determine the term pursuant to this clause shall only apply to
the extent that insurance money shall not be partly or wholly
irrecoverable by reason solely or in part of any act or
default of the Tenant and any dispute
- 24 -
<PAGE> 27
concerning this clause shall be referred to arbitration in
accordance with the Arbitration Act 1950
5.5 the regulations as to service of notices contained in Section
196 of the Law of Property Act 1925 as amended by the Recorded
Delivery Service Act 1962 shall be deemed to be incorporated
herein for the purpose of service of all notices
5.6 having been authorised to do so by an Order of the Tunbridge
Wells County Court made on the 29th day of July 1993
under the provisions of Section 38(4) of the Landlord and
Tenant Act 1954 as amended by Section 5 of the Law of Property
Act 1969 the parties hereto agree that the provisions of
Sections 24 to 28 inclusive of that Act should be excluded in
relation to the demise hereby created
5.7 that if at any time hereafter any dispute doubt or question
shall arise between the Landlord and the Tenant touching the
construction meaning or effect of these presents or any clause
or thing herein contained or their respective rights or
liabilities under these presents or otherwise in relation to
the said premises or in case any valuation shall require to be
made under the provisions hereinbefore contained (for which no
provision is made elsewhere in this Lease) then every such
dispute shall be referred to an arbitrator to be appointed
either by agreement between the parties or in default of
agreement by the President for the time being of the Royal
Institution of Chartered Surveyors in accordance with the
Arbitration Act 1950 or any statutory modification or
enactment in that behalf for the time being in force
- 25 -
<PAGE> 28
5.8 notwithstanding the acceptance of or demand for rent by the
Landlord or its agents with knowledge of a breach of any of
the covenants on the part of the Tenant herein contained the
Landlord's right to forfeit this Lease on the ground of such
breach shall remain in force and the Tenant shall not in any
proceedings for forfeiture be entitled to rely upon any such
acceptance or demand as aforesaid as a defence
5.9 the Tenant shall not be or become entitled to any compensation
on quitting the Demised Premises under the provisions of
Section 37 of the Landlord and Tenant Act 1954 or any
statutory modification or re- enactment thereof
6. PROVIDED ALWAYS AND IT IS HEREBY AGREED AND DECLARED
as follows:
6.1 In this clause:
"REVIEW DATE" shall mean 29th September 1995
"REVIEW PERIOD" shall mean the period between the Review Date
and the end of the Term
"CURRENT RENTAL VALUE" shall mean such rent as would be
obtainable on the Review Date for the Demised Premises in good
and substantial repair and condition and fit for immediate
occupation and use let as a whole without premium upon the open
market by a willing landlord to a willing tenant on the
assumption of a letting with vacant possession for a term equal
to the original length of the term of the Superior Lease on the
basis that all covenants and conditions of this Lease have been
fully complied with and that no work has been carried out
thereon by the Tenant its sub-tenants or their predecessors
in title during the Term
- 26 -
<PAGE> 29
which has diminished the rental value of the Demised Premises
and that if the Demised Premises have been destroyed or
damaged they have been fully restored and upon a lease in the
same terms in all respects as these presents (other than that
as to the amount of the original rent but including this
present clause) as varied from time to time and with the
benefit of any licences granted by the Landlord and any waiver
or variation beneficial to the Tenant of any of the covenants
and conditions contained herein and on the assumption that the
whole of the area of the ground and first floors of the
Demised Premises shown within the red lines on drawing numbers
1530/16 and 1530/17 respectively annexed to the Superior Lease
is net usable space available for unrestricted office use
notwithstanding that all of such space may not be so usable
but disregarding:
(a) any effect on rent of the fact that the Tenant has
been in occupation of the Demised Premises or of any
goodwill attaching to the Demised Premises by reason
of the Tenant having carried on business on the
Demised Premises and
(b) any effect on rent of any improvement to the Demised
Premises carried out by the Tenant otherwise than in
pursuance of an obligation arising under this Lease
(c) any effect on rent of any condition or conditions
attaching to any planning permission or permissions
from time to time relating to the Demised Premises
6.2 The rent payable in respect of the Review Period shall be
ascertained in the following manner:
- 27 -
<PAGE> 30
(a) the parties shall endeavour to agree in writing not
later than three months before the Review Date upon
the substituted rent payable throughout the Review
Period
(b) if the parties fail to agree the substituted rent by
a date three months before the Review Date either
party may require the substituted rent to be
determined under the following clauses 6.3 to 6.7
(inclusive) and the sum so determined shall be the
substituted rent payable through the Review Period
6.3 The determination of a substituted rent consequent upon the
failure by the parties to agree the same shall be effected by
a referee agreed on by the parties or if not agreed on by them
within one month from the nomination in writing of a referee
by one party to the other appointed on the application of
either party by the President (or some other officer if the
President is unable to act) for the time being of the Royal
Institution of Chartered Surveyors (or any successor to that
Institution)
6.4 The referee agreed upon or appointed under clause 6.3 shall
act as an arbitrator pursuant to the Arbitration Act for the
time being in force (save as modified by the provisions of
this clause)
6.5 (a) The referee shall notify in writing to the parties
such sum as he shall determine to be the current
rental value of the Demised Premises at the Review
Date and (subject to the provisions of clause 6.6
hereof) such sum shall be the substituted rent
payable throughout the Review Period
(b) The award of the referee shall also provide for the
manner in which the costs of the determination shall
be borne and may
- 28 -
<PAGE> 31
also provide for the payment of costs by one party to
the other and in settling upon such matters the
referee may have regard to any offers made by either
party to the other and the nature and content of any
representations made to him by or on behalf of the
parties
6.6 Under no circumstances shall the substituted rent for the
Review Period be less than the rent reserved by this Lease for
the period prior to the commencement of the Review Period or
the rent payable by the Landlord to the Superior Landlord
pursuant to the provisions for review of rent contained in the
Superior Lease whichever shall be higher
6.7 During any period that any substituted rent payable under the
preceding clauses has not been ascertained the Tenant shall
continue to pay rent of the amount previously payable but
within 14 days of such ascertainment the Tenant shall pay to
the Landlord any difference between the amounts actually paid
and the amounts payable as a result of such ascertainment
together with interest at the base rate of Midland Bank plc
for the time being in force on a day to day basis
6.8 During any period that any substituted rent ascertained under
this clause shall not be recoverable in whole or part by
virtue of any statute regulation instrument or order the
Tenant shall pay rent at the highest level from time to time
recoverable under the restrictions and shall pay the full
amount of the substituted rent as soon as the restrictions
shall cease to be effective
- 29 -
<PAGE> 32
6.9 If at or following the Review Date any statute regulation
instrument or order shall prevent the exercise of the process
of ascertainment of a substituted rent provided for in this
clause such exercise shall be postponed until such prohibition
be repealed or so released or modified as to permit such step
to be taken and the Review Date shall be a date three months
after such repeal release or modification as the case may be
6.10 After the ascertainment of any substituted rent under this
clause a memorandum recording the amount the same signed by or
on behalf of the parties shall at the joint expense of the
parties forthwith be endorsed on this Lease and the
counterpart thereof
THE COMMON SEAL of MARLEY )
WATERPROOFING LIMITED was )
affixed to this deed in the )
presence of: )
[SEAL]
Director
/s/ [illegible signature]
Secretary /s/ [illegible signature]
- 30 -
