UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to to
--------- ---------
Commission File Number 0-14488
Seitel, Inc.
---------------
(Exact name of registrant as specified in charter)
Delaware 76-0025431
------------------------------- --------------------------------
(State or other jurisdiction of (IRS Employer
incorporation of organization) Identification Number)
50 Briar Hollow Lane
West Building, 7th Floor
Houston, Texas 77027
------------------------------- --------
(Address of principal executive (Zip Code)
offices)
(713) 627-1990
----------------------------------------------------
(Registrant's telephone number, including area code)
Not Applicable
----------------------------------------------------
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ---
As of August 9, 1995 there were 9,319,573 shares of the Company's common
stock, par value $.01 per share, outstanding.
Page 1 of 14
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets as of
June 30, 1995 and December 31, 1994 . . . . . . . . . . . . . . 3
Consolidated Statements of Operations
for the Three Months Ended June 30,
1995 and 1994. . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Operations
for the Six Months Ended June 30,
1995 and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . 5
Consolidated Statements of Stockholders'
Equity for the Six Months Ended
June 30, 1995 . . . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated Statements of Cash Flows
for the Six Months Ended June 30, 1995
and 1994 . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Notes to Consolidated Interim
Financial Statements . . . . . . . . . . . . . . . . . . . . . . 8
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations . . . . . . . . . . . . . . . . . . . . . 9
PART II. OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . 12
Page 2 of 14
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
(Unaudited)
June 30, December 31,
1995 1994
--------- ---------
<S> <C> <C>
ASSETS
Cash and equivalents $ 1,746 $ 1,541
Receivables
Trade 41,006 37,098
Notes and other 1,392 329
Net data bank 103,434 95,801
Net oil and gas properties 33,769 21,389
Net geophysical and other property and equipment 10,338 11,067
Prepaid expenses, deferred charges and other assets 2,993 1,546
--------- ---------
TOTAL ASSETS $ 194,678 $ 168,771
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 30,761 $ 32,649
Income taxes payable 202 933
Bank debt
Lines of Credit 23,555 5,085
Term Loan 2,833 3,231
Obligations under capital leases 4,347 5,088
Subordinated debentures 2,064 3,523
Deferred contractor payable 6,486 9,698
Contingent payables 2,932 3,152
Deferred income taxes 5,356 3,502
Deferred revenue 363 581
--------- ---------
TOTAL LIABILITIES 78,899 67,442
--------- ---------
CONTINGENCIES AND COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock, par value $.01 per share; authorized
5,000,000 shares; none issued -- --
Common stock, par value $.01 per share; authorized
20,000,000 shares; issued and outstanding 9,315,982 and
8,825,619 at June 30, 1995 and December 31, 1994,
respectively 93 88
Additional paid-in capital 83,741 75,611
Retained earnings 33,572 27,257
Treasury stock, 414 shares at cost at June 30, 1995 and
December 31, 1994 (4) (4)
Notes receivable from officers and employees (1,551) (1,551)
Cumulative translation adjustment (72) (72)
--------- ---------
TOTAL STOCKHOLDERS' EQUITY 115,779 101,329
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 194,678 $ 168,771
========= =========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
Page 3 of 14
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended June 30,
---------------------------
1995 1994
-------- --------
<S> <C> <C>
REVENUE $ 24,535 $ 16,153
EXPENSES:
Depreciation, depletion and amortization 7,202 7,503
Cost of sales 6,412 924
Selling, general and administrative expenses 4,709 3,511
Net interest expense 909 826
-------- --------
19,232 12,764
-------- --------
Income before provision for income taxes 5,303 3,389
Provision for income taxes 1,962 1,186
-------- --------
NET INCOME $ 3,341 $ 2,203
======== ========
Earnings per share:
Primary $ .34 $ .30
======== ========
Assuming full dilution $ .33 $ .27
======== ========
Weighted average number of common and common equivalent shares:
Primary 9,929 7,426
======== ========
Assuming full dilution 10,170 8,669
======== ========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
Page 4 of 14
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1995 1994
--------- ---------
<S> <C> <C>
REVENUE $ 45,693 $ 28,751
EXPENSES:
Depreciation, depletion and amortization 14,478 12,821
Cost of sales 10,680 2,253
Selling, general and administrative expenses 8,790 6,160
Net interest expense 1,721 1,594
--------- --------
35,669 22,828
--------- --------
Income before provision for income taxes 10,024 5,923
Provision for income taxes 3,709 2,073
--------- --------
NET INCOME $ 6,315 $ 3,850
========= ========
Earnings per share:
Primary $ .65 $ .55
========= ========
Assuming full dilution $ .63 $ .49
========= ========
Weighted average number of common and common equivalent shares:
Primary 9,784 7,015
========= ========
Assuming full dilution 10,091 8,388
========= ========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
Page 5 of 14
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(In thousands, except share amounts)
<TABLE>
<CAPTION>
Notes
Receivables
Common Stock Additional Treasury Stock from Cumulative
------------------ Paid-in Retained ----------------- Officers Translation
Shares Amount Capital Earnings Shares Amount & Employees Adjustment
--------- -------- ---------- ---------- -------- -------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE, DECEMBER 31, 1991 5,438,250 $ 55 $ 22,555 $ 8,741 - $ - $ - $ -
Proceeds from issuance of common stock 28,902 - 181 - - - - -
Sale of common stock through private offering 400,000 4 2,146 - - - (2,150) -
Cash dividends - - - (275) - - - -
Stock dividends 109,320 1 790 (791) - - - -
Foreign currency translation adjustment - - - - - - - (164)
Net income - - - 4,550 - - - -
--------- -------- ---------- ---------- -------- -------- ---------- ----------
BALANCE, DECEMBER 31, 1992 5,976,472 60 25,672 12,225 - - (2,150) (164)
Proceeds from issuance of common stock 10,916 - 37 - - - - -
Payments received on notes receivable from
officers and employees - - - - (414) (4) 111 -
Foreign currency translation adjustment - - - - - - - 79
Net income - - - 5,717 - - - -
--------- -------- ---------- ---------- -------- -------- ---------- ----------
BALANCE, DECEMBER 31, 1993 5,987,388 60 25,709 17,942 (414) (4) (2,039) (85)
Sale of Common stock through public offering 1,061,200 11 31,906 - - - - -
Proceeds from issuance of common stock 770,364 7 7,280 - - - - -
Tax reduction from exercise of stock options - - 1,879 - - - - -
Conversions and exchanges of subordinated
debentures 1,006,667 10 8,837 - - - - -
Payments received on notes receivable from
officers and employees - - - - - - 488 -
Foreign currency translation adjustment - - - - - - - 13
Net income - - - 9,315 - - - -
--------- -------- ---------- ---------- -------- -------- ---------- ----------
BALANCE, DECEMBER 31, 1994 8,825,619 88 75,611 27,257 (414) (4) (1,551) (72)
Proceeds from issuance of common stock 333,147 3 5,143 - - - - -
Tax reduction from exercise of stock options - - 1,641 - - - - -
Conversions and exchanges of subordinated
debentures 157,216 2 1,346 - - - - -
Net income - - - 6,315 - - - -
--------- -------- ---------- ---------- -------- -------- ---------- ----------
BALANCE JUNE 30, 1995 (Unaudited) 9,315,982 $ 93 $ 83,741 $ 33,572 (414)$ (4) $ (1,551) $ (72)
========= ======== ========== ========== ======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
Page 6 of 14
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 40,567 $ 24,476
Cash paid to suppliers and employees (18,329) (7,775)
Interest paid (503) (1,267)
Interest received 13 12
Income taxes paid (2,452) (220)
--------- ---------
Net cash provided by operating activities 19,296 15,226
--------- ---------
Cash flows from investing activities:
Cash invested in seismic data (27,376) (19,795)
Cash invested in oil and gas properties (12,261) (6,959)
Cash paid to acquire property and equipment (761) (359)
Advances made to oil and gas joint venture partner (1,142) -
--------- ---------
Net cash used in investing activities (41,540) (27,113)
--------- ---------
Cash flows from financing activities:
Borrowings under line of credit agreements 41,489 36,274
Principal payments under line of credit (23,019) (30,047)
Principal payments on term loan (398) (375)
Principal payments on capital lease obligations (751) (29)
Proceeds from issuance of common stock 5,173 6,205
Costs of debt and equity transactions (45) (56)
Payments on receivables from officers and employees - 318
--------- ---------
Net cash provided by financing activities 22,449 12,290
--------- ---------
Effect of exchange rate changes - 3
--------- ---------
Net increase in cash and equivalents 205 406
Cash and cash equivalents at beginning of period 1,541 1,759
--------- ---------
Cash and cash equivalents at end of period $ 1,746 $ 2,165
========= =========
Reconciliation of net income to net cash provided by operating activities:
Net income $ 6,315 $ 3,850
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization 14,708 12,951
Non-cash sales (1,000) (125)
Increase in receivables (3,908) (7,993)
Increase in other assets (1,578) (724)
Increase in other liabilities 4,759 7,267
--------- ---------
Total adjustments 12,981 11,376
--------- ---------
Net cash provided by operating activities $ 19,296 $ 15,226
========= =========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
Page 7 of 14
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
June 30, 1995
NOTE A-BASIS OF PRESENTATION
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions of Regulation S-X. Accordingly, they do
not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Certain reclassifications
have been made to the amounts in the prior year's financial statements to
conform to the current year's presentation. Operating results for the six months
ended June 30, 1995 are not necessarily indicative of the results that may be
expected for the year ending December 31, 1995. For further information, refer
to the financial statements and notes thereto for the year ended December 31,
1994.
NOTE B-EARNINGS PER SHARE
Earnings per share is based on the weighted average number of
outstanding shares of common stock during the respective periods, including
common equivalent shares applicable to assumed exercise of stock options and
warrants when such common stock equivalents are dilutive, and the Company's
other potentially dilutive securities.
Earnings per share was determined by dividing net income, as adjusted
below, by applicable shares outstanding (in thousands):
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
---------------------------- ---------------------------
1995 1994 1994 1994
-------- --------- -------- --------
<S> <C> <C> <C> <C>
Net income as reported $ 3,341 $ 2,203 $ 6,315 $ 3,850
Interest eliminated on
assumed conversion of 9%
convertible subordinated
debentures 25 149 50 278
-------- --------- -------- --------
Total income used for fully
diluted earnings per share $ 3,366 $ 2,352 $ 6,365 $ 4,128
======== ========= ======== ========
Weighted average number of
common and common
equivalent shares 9,929 7,426 9,784 7,015
======== ========= ======== ========
Weighted average number of
common shares-assuming
full dilution 10,170 8,669 10,091 8,388
======== ========= ======== ========
</TABLE>
NOTE C-DATA BANK
Costs incurred in the creation of proprietary seismic data are
capitalized. Seismic data costs are amortized for each seismic data program in
the proportion that the program's revenue for a period relates to management's
estimate of the program's ultimate revenue. Since inception, management has
established guidelines regarding its annual charge for amortization. Under these
guidelines, 90% of the cost incurred in the creation of proprietary seismic data
is amortized within five years of inception, and the final 10% is amortized on a
straight-line basis over fifteen years. Costs of existing seismic data libraries
purchased by the Company are fully amortized within ten years from date of
purchase. On a periodic basis, the carrying value of each seismic data program
is compared to its estimated future revenue and, if appropriate, is reduced to
its estimated net realizable value.
Page 8 of 14
<PAGE>
NOTE D-OIL AND GAS PROPERTIES
The Company accounts for its oil and gas exploration and production
activities using the full-cost method of accounting. Under this method, all
costs associated with acquisition, exploration and development of oil and gas
reserves are capitalized, including directly related overhead costs and interest
costs related to its unevaluated properties and certain properties under
development which are not currently being amortized. For the six months ended
June 30, 1995 and 1994, general and administrative costs of $401,000 and
$353,000, respectively, have been capitalized to oil and gas properties. For the
six months ended June 30, 1995, interest costs of $304,000 have been capitalized
to oil and gas properties.
NOTE E-SUPPLEMENTAL CASH FLOW INFORMATION
Significant non-cash investing and financing activities are as follows:
1. During the first six months of 1995 and 1994, the Company issued
157,216 and 143,420 shares, respectively, of its common stock upon
the conversion and exchange of $1,457,000 and $1,331,000,
respectively, of its 9% convertible subordinated debentures. In
connection with these conversions and exchanges, unamortized bond
issue costs totaling $93,000 during the first six months of 1995
have been charged to additional paid-in-capital.
2. During the first six months of 1995 and 1994, the Company licensed
seismic data valued at $1,000,000 and $125,000, respectively, in
exchange for the purchase of seismic data for its library.
3. During the first six months of 1995 and 1994, capital lease
obligations totaling $10,000 and $4,797,000, respectively, were
incurred when the Company entered into leases for property and
equipment.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
--------------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
Total revenue increased 52% and 59% during the second quarter and first
six months of 1995, respectively, as compared to the second quarter and first
six months of 1994. Revenue primarily consists of revenue generated from three
niche-energy businesses - seismic, exploration and production, and gas
marketing. The majority of revenue in the 1995 and 1994 periods relates to
seismic revenue, increasing from $15,714,000 during the second quarter of 1994
to $21,193,000 during the second quarter of 1995 and increasing from $28,044,000
during the first six months of 1994 to $36,990,000 during the first six months
of 1995. These increases are attributable to increases in sales from both
two-dimensional (2D) and three-dimensional (3D) seismic data. The balance of
revenue relates to oil and gas production, and gas marketing activities, which
increased from $439,000 in the second quarter of 1994 to $3,342,000 in the
second quarter of 1995 and increased from $707,000 in the first half of 1994 to
$8,703,000 in the first half of 1995 due to the increased volume of business in
these areas.
Depreciation, depletion and amortization consists primarily of data bank
amortization. Refer to Note C for a description of the Company's amortization
policy. Data bank amortization decreased from $7,134,000 during the second
quarter of 1994 to $6,637,000 during the second quarter of 1995 and increased
from $12,181,000 to $13,380,000 for the first six months of 1994 and 1995,
respectively. As a percentage of revenue from licensing seismic data, data bank
amortization was 44% and 49% for the second quarter of 1995 and 1994,
respectively, and 44% and 48% for the first six months of 1995 and 1994,
respectively. These changes are primarily due to the mix of sales of 2D and 3D
data amortized at varying percentages based on each data program's current and
expected future revenue stream.
Cost of sales consists of expenses associated with the acquisition of
seismic data for non-affiliated parties, seismic resale support services, oil
and gas production, and gas marketing activities. The increase in cost of sales
Page 9 of 14
<PAGE>
from $924,000 to $6,412,000 for the second quarter of 1994 and 1995,
respectively, and from $2,253,000 to $10,680,000 for the first six months of
1994 and 1995, respectively, is due to the Company's increasing volume of
business in these areas. Revenues from these areas increased from $1,308,000, to
$9,241,000 during the second quarter of 1994 and 1995, respectively, and
increased from $2,802,000 to $14,786,000 during the first six months of 1994 and
1995, respectively.
The Company's selling, general and administrative expenses increased
during the 1995 periods as compared to the 1994 periods primarily as a result of
the addition of new employees, marketing expenses and incentive compensation
directly related to the increased volume of business, as well as expenses
related to the Company's expansions in the 3D seismic data, gas marketing, and
oil and gas exploration and production areas. As a percentage of total revenue,
these expenses have decreased from 22% for the second quarter of 1994 to 19% for
the second quarter of 1995, and decreased from 21% for the first six months of
1994 to 19% for the first six months of 1995.
LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
The Company filed a registration statement on Form S-3 (the "Shelf
Registration Statement") in June 1994 to offer from time to time in one or more
series (i) unsecured debt securities, which may be senior or subordinated, (ii)
preferred stock, par value $0.01 per share, and (iii) common stock, par value
$.01 per share, or any combination of the foregoing, at an aggregate initial
offering price not to exceed $75,000,000. The Shelf Registration Statement was
declared effective by the Securities and Exchange Commission on June 30, 1994.
On August 4, 1994, and August 18, 1994, the Company completed a public offering
of 1,000,000 shares and 61,200 shares, respectively, of its common stock priced
at $32 per share pursuant to the Shelf Registration Statement. The net proceeds
from the offering (after underwriting commission and offering expenses) totaled
$31,917,000. After this sale of common stock at an initial aggregate offering
price of $33,958,400, the Company may offer additional securities in the future
for up to an aggregate initial offering price of $41,041,600 pursuant to the
Shelf Registration Statement.
On May 4, 1995, the Company increased its revolving line of credit to
$25,000,000, added a LIBOR interest rate option and extended the maturity. The
increased revolving line of credit bears interest at the prevailing prime rate
or LIBOR plus 2% (the "LIBOR rate"), is collateralized by both accounts
receivable and the seismic data library and is available for general corporate
purposes. The Company may borrow up to $10,000,000 on the revolving line of
credit based on seismic data library collateral and up to $25,000,000 based on
accounts receivable collateral, the total of which cannot exceed $25,000,000.
The banking facility was effective as of December 31, 1994, and matures June 1,
1997. The balance outstanding on the revolving line of credit amounted to
$18,979,000 at August 9, 1995, of which $11,000,000 is borrowed at the LIBOR
rate of 7.875%, $5,000,000 is borrowed at the LIBOR rate of $8.0625%, and
$2,979,000 is borrowed at the prime rate. The banking facility imposes certain
financial covenants upon the Company which include covenants relating to
leverage, net worth and working capital, as well as certain restrictions on
dividends, liens, additional debt or lease obligations and the acquisition or
disposition of major assets. Such covenants are not anticipated to restrict the
Company's ability to borrow funds under the facility.
On June 14, 1995, DDD Energy, Inc. ("DDD Energy"), a wholly-owned
subsidiary of the Company, received a loan facility from the Company's banks.
Under the terms of this facility, DDD Energy has a reducing revolving line of
credit, the amount of which is determined by the banks' semi-annual review of
DDD Energy's oil and gas reserves securing the facility. The master note amount
pursuant to the facility is $75,000,000, but amounts outstanding under the
facility are limited to the oil and gas reserve borrowing base, and are subject
to interest, at the Company's option, at either the prevailing prime rate or
LIBOR plus 2% (the "LIBOR rate"). The initial borrowing base, which was
determined before 1994 year-end oil and gas reserve information was available,
amounted to $5,350,000, reducing by $120,000 per month beginning July 1, 1995.
The balance outstanding on the reducing revolving line of credit amounted to
$5,110,000 at August 9, 1995, of which $4,630,000 is borrowed at the LIBOR rate
of 8.0625%, and $480,000 is borrowed at the LIBOR rate of 7.9375%. Upon
completion of the banks' pending review of DDD Energy's oil and gas reserves,
the Company expects additional funds to become available for use by the end of
August 1995. Funds available under the facility will be used to repay
Page 10 of 14
<PAGE>
advances from the Company and for reserve acquisitions and development drilling.
The facility matures on June 1, 1997 and is guaranteed by the Company.
On July 15, 1993, a wholly-owned subsidiary of the Company obtained a
$4,300,000, five year term loan bearing interest at the rate of 7.61% for the
purchase of a 3D seismic recording system. The debt is secured by such
equipment. Monthly principal and interest payments began on August 1, 1993. The
balance outstanding on the term loan at August 9, 1995, was $2,696,000.
From January 1, 1995 through August 9, 1995, the Company received
$5,213,000 from the exercise of common stock purchase warrants and options. In
connection with the exercises, the Company will also receive approximately
$1,641,000 in tax savings.
In October 1994, the Company called for redemption of its 12-1/2%
subordinated debentures, thereby eliminating future interest and sinking fund
payments. The Company's 9% convertible debentures, amounting to $2,044,000 at
August 9, 1995, require semi-annual interest payments (March 31 and September
30) and, beginning March 31, 1997, annual sinking fund payments equal to 10% of
the principal amount of the debentures then outstanding.
During 1994 and 1995, the Company entered into capital leases which
relate to the purchase of a second 3D seismic recording system and seismic data
processing center. These lease agreements are for terms of three to five years.
Monthly principal and interest payments total approximately $125,000. The
balance outstanding under these capital lease obligations was $4,146,000 at
August 9, 1995.
The Company has entered into payment arrangements with one of its
contractors for seismic acquisition services which require the Company to make
payments only when sales on the related seismic project are collected
(contingent payables), or allow the Company to make payments as sales of related
seismic projects are collected until July 1, 1996, at which time any outstanding
balance would be due (deferred contractor payable). In connection with these
arrangements, the Company had $1,684,000 in receivables at June 30, 1995, which
will be paid to the contractor upon collection. Accordingly, the same amount,
$1,684,000, was included in the Company's regular accounts payable. The Company
has a verbal payment arrangement with the contractor on certain other seismic
acquisition projects pursuant to which payments to the contractor are made only
when sales of the related seismic projects are collected. At June 30, 1995,
accounts receivable included $272,000 dedicated to payment pursuant to this
verbal arrangement, while regular accounts payable included the full balance due
the contractor of $8,251,000. Amounts owed to this contractor bear interest at
the prime rate or the prime rate plus 1%, except for contingent payables which
bear no interest. Management anticipates that sales from these projects will pay
in full the amounts owed to the contractor.
During the first six months of 1995, cash from operations, bank
borrowings and proceeds from the exercise of common stock purchase warrants and
options funded the third party seismic data creation costs borne by the Company
and oil and gas exploration, as well as taxes, interest expenses, cost of sales
and general and administrative expenses. The Company believes its revenues from
operating sources and proceeds from the exercise of warrants and options,
combined with its available lines of credit, should be sufficient to fund all of
its internal operations and related capital expenditures for 1995. To the extent
these sources are not sufficient to cover the Company's expenses, it would be
necessary for the Company to arrange for additional debt or equity financing.
There can be no assurance that the Company would be able to accomplish any such
debt or equity financing on terms satisfactory to it.
Page 11 of 14
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings.
--------------------------
On May 25, 1995, Seitel Geophysical, Inc. ("SGI"), a wholly-owned
subsidiary of the Company, filed suit in United States District Court for the
Eastern District of Louisiana against Greenhill Petroleum Corporation
("Greenhill") for breach of contract. SGI is seeking to recover approximately
$1.4 million owed by Greenhill to SGI for seismic data acquisition services
provided to Greenhill by SGI in 1994 in connection with a 3D seismic data shoot
in southern Louisiana. Greenhill has answered in this suit by generally denying
SGI's allegations and by asserting a counter-claim against SGI. Greenhill has
already paid SGI in excess of $7 million under the contract, and SGI has
provided the seismic data acquired pursuant to the contract to Greenhill. While
the outcome of this litigation cannot be predicted with certainty at this early
stage, the Company believes that it will prevail on its claims against Greenhill
and that Greenhill's counterclaims are without merit.
Items 2., 3., 4., and 5. Not applicable.
------------------------
Item 6. Exhibits and Reports on Form 8-K.
------------------------------------------
(a) 10.1 Credit Agreement dated June 14, 1995, between DDD Energy, Inc.
(Company's wholly-owned subsidiary) and Bank One, Texas,
National Association, as a Bank and the Agent and Compass Bank-
Houston, as a Bank
10.2 Promissory Note dated June 14, 1995, in the face amount of
$37,500,000, executed by DDD Energy, Inc. (Company's wholly-owned
subsidiary) and payable to the order of Bank One, Texas, National
Association
10.3 Promissory Note dated June 14, 1995, in the face amount of
$37,500,000, executed by DDD Energy, Inc. (Company's wholly-owned
subsidiary) and payable to the order of Compass Bank-Houston
10.4 Guaranty dated June 14, 1995, by Seitel, Inc. in favor of Bank
One, Texas, National Association, Individually and as Agent and
Compass Bank-Houston, as a Bank
10.5 Security Agreement (Stock Pledge) dated June 14, 1995, by Seitel,
Inc. in favor of Bank One, Texas, National Association, as Agent
10.6 Seitel, Inc. 1995 Shareholder Value Incentive Bonus Plan
10.7 Amendment No. 1 to the Seitel, Inc. 1993 Incentive Stock Option
Plan
10.8 Seitel, Inc. 1995 Warrant Reload Plan
(b) Not applicable
Page 12 of 14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SEITEL, INC.
Dated: August 11, 1995 /s/ Paul A. Frame
---------------------
Paul A. Frame
President and Chief Executive Officer
Dated: August 11, 1995 /s/ Debra D. Valice
---------------------
Debra D. Valice
Chief Financial Officer
Dated: August 11, 1995 /s/ Marcia H. Kendrick
----------------------
Marcia H. Kendrick
Chief Accounting Officer
Page 13 of 14
<PAGE>
EXHIBIT INDEX
10.1 Credit Agreement dated June 14, 1995, between DDD Energy, Inc.
(Company's wholly-owned subsidiary) and Bank One, Texas, National
Association, as a Bank and the Agent and Compass Bank- Houston, as a
Bank
10.2 Promissory Note dated June 14, 1995, in the face amount of
$37,500,000, executed by DDD Energy, Inc. (Company's wholly-owned
subsidiary) and payable to the order of Bank One, Texas, National
Association
10.3 Promissory Note dated June 14, 1995, in the face amount of
$37,500,000, executed by DDD Energy, Inc. (Company's wholly-owned
subsidiary) and payable to the order of Compass Bank- Houston
10.4 Guaranty dated June 14, 1995, by Seitel, Inc. in favor of Bank One,
Texas, National Association, Individually and as Agent and Compass
Bank-Houston, as a Bank
10.5 Security Agreement (Stock Pledge) dated June 14, 1995, by Seitel, Inc.
in favor of Bank One, Texas, National Association, as Agent
10.6 Seitel, Inc. 1995 Shareholder Value Incentive Bonus Plan
10.7 Amendment No. 1 to the Seitel, Inc. 1993 Incentive Stock Option Plan
10.8 Seitel, Inc. 1995 Warrant Reload Plan
Page 14 of 14
CREDIT AGREEMENT
BETWEEN
DDD ENERGY, INC.
AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION
as a Bank and the Agent
AND
COMPASS BANK - HOUSTON
as a Bank
June 14, 1995
REDUCING REVOLVING LINE OF CREDIT OF UP TO $75,000,000.00
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above.................................. 1
1.2 Additional Defined Terms............................. 1
1.3 Undefined Financial Accounting Terms.................. 16
1.4 References............................................ 16
1.5 Articles and Sections................................. 16
1.6 Number and Gender..................................... 16
1.7 Incorporation of Exhibits............................. 17
ARTICLE II TERMS OF FACILITY
2.1 Revolving Line of Credit.............................. 17
2.2 General Terms......................................... 17
2.3 Use of Loan Proceeds.................................. 18
2.4 Interest.............................................. 18
2.5 Repayment of Loans and Interest....................... 19
2.6 Outstanding Amounts................................... 19
2.7 Time, Place, and Method of Payments................... 20
2.8 Borrowing Base Determinations......................... 20
2.9 Mandatory Prepayments................................. 21
2.10 Voluntary Prepayments and Conversions of Loans........ 21
2.11 Commitment Fee........................................ 21
2.12 Facility Fee.......................................... 22
2.13 Engineering Fee....................................... 22
2.14 Loans to Satisfy Obligations of Borrower.............. 22
2.15 Security Interest in Accounts; Right of Offset........ 22
2.16 General Provisions Relating to Interest............... 23
2.17 Yield Protection...................................... 24
2.18 Limitation on Types of Loans.......................... 25
2.19 Illegality............................................ 25
2.20 Regulatory Change..................................... 25
2.21 Limitations on Interest Periods....................... 26
2.22 Letters in Lieu of Transfer Orders.................... 26
2.23 Power of Attorney..................................... 26
ARTICLE III CONDITIONS
3.1 Receipt of Loan Documents and Other Items............. 27
3.2 Each Loan............................................. 30
ARTICLE IV REPRESENTATIONS AND WARRANTIES
4.1 Due Authorization..................................... 32
4.2 Corporate Existence................................... 32
4.3 Valid and Binding Obligations......................... 32
4.4 Security Instruments.................................. 32
4.5 Title to Assets....................................... 33
4.6 Scope and Accuracy of Financial Statements............ 33
4.7 No Material Misstatements............................. 33
4.8 Liabilities, Litigation, and Restrictions............. 33
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4.9 Authorizations; Consents.............................. 33
4.10 Compliance with Laws.................................. 33
4.11 ERISA................................................. 34
4.12 Environmental Laws.................................... 34
4.13 Compliance with Federal Reserve Regulations........... 34
4.14 Investment Company Act Compliance..................... 34
4.15 Public Utility Holding Company Act Compliance......... 35
4.16 Proper Filing of Tax Returns; Payment of Taxes
Due................................................... 35
4.17 Refunds............................................... 35
4.18 Gas Contracts......................................... 35
4.19 Intellectual Property................................. 35
4.20 Casualties or Taking of Property...................... 36
4.21 Locations of Borrower................................. 36
ARTICLE V AFFIRMATIVE COVENANTS
5.1 Maintenance and Access to Records..................... 36
5.2 Quarterly Financial Statements of Borrower;
Compliance Certificates............................... 36
5.3 Annual Financial Statements of Borrower............... 37
5.4 Quarterly Financial Statements of Guarantor........... 37
5.5 Annual Financial Statements of Guarantor.............. 37
5.6 Quarterly Financial Statements of Redman-
Smackover Joint Venture............................... 37
5.7 Oil and Gas Reserve Reports........................... 37
5.8 Title Opinions; Title Defects......................... 38
5.9 Notices of Certain Events............................. 38
5.10 Letters in Lieu of Transfer Orders; Division
Orders................................................ 39
5.11 Additional Information................................ 40
5.12 Compliance with Laws.................................. 40
5.13 Payment of Assessments and Charges.................... 40
5.14 Maintenance of Corporate Existence and Good
Standing.............................................. 40
5.15 Payment of Bank One Note and the Compass Note;
Performance of Obligations............................ 41
5.16 Further Assurances.................................... 41
5.17 Initial Fees and Expenses of Counsel to Agent......... 41
5.18 Subsequent Fees and Expenses of Agent................. 41
5.19 Operation of Oil and Gas Properties................... 42
5.20 Maintenance and Inspection of Properties.............. 42
5.21 Maintenance of Insurance.............................. 42
5.22 INDEMNIFICATION....................................... 43
5.23 Accounts Payable and Accounts Receivable Aging
Report................................................ 44
5.24 Production Receipts................................... 44
ARTICLE VI NEGATIVE COVENANTS
6.1 Indebtedness.......................................... 44
6.2 Contingent Obligations................................ 44
6.3 Liens................................................. 44
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6.4 Sales of Collateral................................... 44
6.5 Loans or Advances..................................... 45
6.6 Loans or Advances from Guarantor and Affiliates....... 45
6.7 Investments........................................... 45
6.8 Dividends and Distributions........................... 45
6.9 Transactions with Affiliates.......................... 46
6.10 Lines of Business..................................... 46
6.11 Change in Ownership................................... 46
6.12 Issuance of Stock; Changes in Corporate
Structure............................................. 46
6.13 Amendment of Redman-Smackover Joint Venture........... 46
6.14 Tangible Net Worth.................................... 47
6.15 Cash Flow Coverage Ratio of Borrower.................. 47
ARTICLE VII EVENTS OF DEFAULT
7.1 Enumeration of Events of Default...................... 47
7.2 Remedies.............................................. 50
ARTICLE VIII THE AGENT
8.1 Appointment........................................... 51
8.2 Delegation of Duties.................................. 51
8.3 Exculpatory Provisions................................ 51
8.4 Reliance by Agent..................................... 52
8.5 Notice of Default..................................... 52
8.6 Non-Reliance on Agent and Other Banks................. 53
8.7 INDEMNIFICATION....................................... 53
8.8 Restitution........................................... 54
8.9 Agent in Its Individual Capacity...................... 55
8.10 Successor Agent....................................... 55
8.11 Applicable Parties.................................... 55
ARTICLE IX MISCELLANEOUS
9.1 Amendments and Waivers................................ 55
9.2 Security Interest in Deposits and Right of Offset
or Banker's Lien...................................... 56
9.3 Adjustments........................................... 57
9.4 Transfers and Participations.......................... 58
9.5 Survival of Representations, Warranties, and
Covenants............................................. 58
9.6 Notices and Other Communications...................... 58
9.7 Parties in Interest................................... 59
9.8 Rights of Third Parties............................... 60
9.9 Renewals; Extensions.................................. 60
9.10 No Waiver; Rights Cumulative.......................... 60
9.11 Survival Upon Unenforceability........................ 60
9.12 Amendments; Waivers................................... 61
9.13 Controlling Agreement................................. 61
9.14 Disposition of Collateral............................. 61
9.15 GOVERNING LAW......................................... 61
9.16 JURISDICTION AND VENUE................................ 61
9.17 WAIVER OF RIGHTS TO JURY TRIAL........................ 61
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<PAGE>
9.18 ENTIRE AGREEMENT...................................... 62
9.19 Counterparts.......................................... 62
LIST OF EXHIBITS
Exhibit I - Form of Bank One Note
Exhibit II - Form of Compass Bank Note
Exhibit III - Form of Borrowing Request
Exhibit IV - Form of Compliance Certificate
Exhibit V - Form of Opinion of Counsel
Exhibit VI - Disclosures
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<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is made and entered into this 14th day
of June, 1995, by and between DDD ENERGY, INC., a Delaware corporation (the
"Borrower"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking
association ("Bank One"), and COMPASS BANK-HOUSTON, a Texas state chartered
banking institution ("Compass"), with Bank One, Compass, and each financial
institution that becomes a party hereto or entitled to benefits and subject to
obligations hereunder subsequent to the date hereof (each a "Bank" and
collectively, the "Banks"), and Bank One, as agent for the Banks (in such
capacity and together with any successors designated pursuant hereto, the
"Agent").
W I T N E S S E T H:
In consideration of the mutual covenants and agreements herein
contained, the Borrower and the Banks hereby agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Credit Agreement, the
terms "Agent", "Bank", "Banks", "Borrower", "Bank One" and "Compass" shall have
the meaning assigned to them hereinabove.
1.2 Additional Defined Terms. As used in this Credit
Agreement, each of the following terms shall have the meaning assigned thereto
in this Section, unless the context otherwise requires:
"Adjusted LIBO Rate" shall mean, for any LIBO Rate Loan, an
interest rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Banks to be equal to the sum of the LIBO
Rate for such Loan plus the Applicable Margin, but in no event
exceeding the Highest Lawful Rate.
"Affiliate" shall mean any Person directly or indirectly
controlling, or under common control with, the Borrower and includes
any Subsidiary of the Borrower and any "affiliate" of the Borrower
within the meaning of Reg. ss.240.12b-2 ("Rule 12b-2") of the
Securities Exchange Act of 1934, as amended, with "control," as used in
this definition, having the meaning set forth in Rule 12b-2.
<PAGE>
"Agreement" shall mean this Credit Agreement, as it may be
amended, supplemented, or restated from time to time.
"Applicable Lending Office" shall mean, for each type of Loan,
the lending office of the Banks (or an affiliate of the Banks)
designated for such type of Loan on the signature pages hereof or such
other office of the Banks (or an affiliate of the Banks) as the Banks
may from time to time specify to the Borrower as the office by which
Loans of such type are to be made and maintained.
"Applicable Margin" shall mean as to each LIBO Rate Loan, two
percent (2.00%).
"Available Commitment" shall mean, at any time, an amount
equal to the remainder, if any, of the Borrowing Base in effect at such
time minus the Loan Balance at such time.
"Bank One Note" shall mean the promissory note of the Borrower
payable to the order of Bank One in the form attached as Exhibit I,
together with all renewals, extensions for any period, increases, and
rearrangements thereof.
"Base Rate" shall mean the interest rate announced or
published by Bank One from time to time as its general reference rate
of interest, which Base Rate shall change upon any change in such
reference interest rate and which Base Rate may not be the lowest
interest rate charged by Bank One.
"Borrowing Base" shall mean, at any time, the amount
determined by the Agent in accordance with Section and then in effect.
"Borrowing Request" shall mean each written request, in
substantially the form attached hereto as Exhibit III, by the Borrower
to the Agent confirmed by a telephone call from Borrower to Agent for a
borrowing, conversion, or prepayment pursuant to Sections or , each of
which shall:
(a) be signed by a Responsible Officer of the
Borrower;
(b) specify the amount and type of Loan requested,
and, as applicable, the Loan to be converted or prepaid
and the date of the
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<PAGE>
borrowing, conversion, or prepayment (which shall be a
Business Day);
(c) when requesting a Floating Rate Loan, be
delivered to the Agent no later than 10:00 a.m., Central
Standard or Daylight Savings Time, as the case may be, on
the Business Day of the requested borrowing, conversion,
or prepayment; and
(d) when requesting a LIBO Rate Loan, be delivered
to the Agent no later than 10:00 a.m., Central Standard
or Daylight Savings Time, as the case may be, one
Business Day preceding the requested borrowing,
conversion, or prepayment and designate the Interest
Period requested with respect to such Loan.
"Business Day" shall mean (a) for all purposes other than as
covered by clause (b) of this definition, a day other than a Saturday,
Sunday, legal holiday for commercial banks under the laws of the State
of Texas, or any other day when banking is suspended in the State of
Texas, and (b) with respect to all requests, notices, and
determinations in connection with, and payments of principal and
interest on, LIBO Rate Loans, a day which is a Business Day described
in clause (a) of this definition and which is a day for trading by and
between banks for Dollar deposits in the London interbank market.
"Cash Flow" shall mean, for any period, net income of the
Borrower for such period plus depreciation, amortization, depletion,
and other non-cash expenses of the Borrower, less non-cash income, for
such period.
"Closing Date" shall mean the effective date of this
Agreement.
"Collateral" shall mean the Mortgaged Properties and any other
Property including, but not limited to, Borrower's and 80% of Redman
Energy Corporation's interest in the Redman-Smackover Joint Venture,
now or at any time used or intended as security for the payment or
performance of all or any portion of the Obligations.
"Commitment" shall mean the obligation of each Bank, according
to their Commitment Percentage and, subject to applicable provisions of
this Agreement, to make Loans to or for the benefit of the Borrower
pursuant to Section .
3
<PAGE>
"Commitment Fee" shall mean each fee payable to the Banks by
the Borrower pursuant to Section .
"Commitment Period" shall mean the period from and including
the Closing Date to but not including the Commitment Termination Date.
"Commitment Percentage" shall mean as to Bank One, 50% and
Compass, 50%.
"Commitment Termination Date" shall mean June 1, 1997.
"Commonly Controlled Entity" shall mean any Person which is
under common control with the Borrower within the meaning of Section
4001 of ERISA.
"Compass Note" shall mean the promissory note of the Borrower
payable to the order of Compass in the form attached as Exhibit II,
together with all renewals, extensions for any period, increases, and
rearrangements thereof.
"Compliance Certificate" shall mean each certificate,
substantially in the form attached hereto as Exhibit IV, executed by a
Responsible Officer of the Borrower and furnished to the Agent from
time to time in accordance with Section .
"Contingent Obligation" shall mean, as to any Person, any
obligation of such Person guaranteeing or in effect guaranteeing any
Indebtedness, leases, dividends, or other obligations of any other
Person (for purposes of this definition, a "primary obligation") in any
manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, regardless of whether such obligation is
contingent, (a) to purchase any primary obligation or any Property
constituting direct or indirect security therefor, (b) to advance or
supply funds (i) for the purchase or payment of any primary obligation,
or (ii) to maintain working or equity capital of any other Person in
respect of any primary obligation, or otherwise to maintain the net
worth or solvency of any other Person, (c) to purchase Property,
securities or services primarily for the purpose of assuring the owner
of any primary obligation of the ability of the Person primarily liable
for such primary obligation to make payment thereof, or (d) otherwise
to assure or hold harmless the owner of any such primary obligation
against loss in respect thereof, with the amount of any Contingent
Obligation being deemed to be
4
<PAGE>
equal to the stated or determinable amount of the primary obligation in
respect of which such Contingent Obligation is made or, if not stated
or determinable, the maximum reasonably anticipated liability in
respect thereof as determined by such Person in good faith, unless the
amount of such Contingent Obligation is specifically limited, by
contract or otherwise, in which event the amount of such Contingent
Obligation shall be the amount to which it is limited.
"Debt Service" shall mean an amount equal to the greater of
(a) the required payments due on the Bank One Note and the Compass Note
or (b) 1/14th of the loan balance on such notes at the end of each
fiscal quarter plus (c) required payments on any other debt of Borrower
which shall exclude advances from Seitel, Inc. and affiliates of
Seitel, Inc. which are subordinated to the Banks.
"Default" shall mean any event or occurrence which with the
lapse of time or the giving of notice or both would become an Event of
Default.
"Dollars" and "$" shall mean dollars in lawful currency of the
United States of America.
"Environmental Complaint" shall mean any written or oral
complaint, order, directive, claim, citation, notice of environmental
report or investigation, or other notice by any Governmental Authority
or any written complaint, claim or notice of any other Person with
respect to (a) air emissions, (b) spills, releases, or discharges to
soils, any improvements located thereon, surface water, groundwater, or
the sewer, septic, waste treatment, storage, or disposal systems
servicing any Property of the Borrower, (c) solid or liquid waste
disposal, (d) the use, generation, storage, transportation, or disposal
of any Hazardous Substance, or (e) other environmental, health, or
safety matters affecting any Property of the Borrower or the business
conducted thereon.
"Environmental Laws" shall mean (a) the following federal laws
as they may be cited, referenced, and amended from time to time: the
Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the
Comprehensive Environmental Response, Compensation and Liability Act,
the Endangered Species Act, the Resource Conservation and Recovery Act,
the Occupational Safety and Health Act, the Hazardous Materials
Transportation Act, the Superfund Amendments and Reauthorization Act,
and the Toxic Substances Control Act; (b) any and all equivalent
5
<PAGE>
environmental statutes of any state in which Property of the Borrower
is situated, as they may be cited, referenced and amended from time to
time; (c) any rules or regulations promulgated under or adopted
pursuant to the above federal and state laws; and (d) any other
equivalent federal, state, or local statute or any requirement, rule,
regulation, code, ordinance, or order adopted pursuant thereto,
including, without limitation, those relating to the generation,
transportation, treatment, storage, recycling, disposal, handling, or
release of Hazardous Substances.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and the regulations thereunder
and interpretations thereof.
"Event of Default" shall mean any of the events
specified in Section .
"Facility Fee" shall mean the fee payable to the Banks by the
Borrower pursuant to Section .
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) equal
to the weighted average of the rates on overnight federal funds
transactions with members of the Federal Reserve System arranged by
federal funds brokers on such day, as published by the Federal Reserve
Bank of Dallas, Texas, on the Business Day next succeeding such day,
provided that (a) if the day for which such rate is to be determined is
not a Business Day, the Federal Funds Rate for such day shall be such
rate on such transactions on the next preceding Business Day as so
published on the next succeeding Business Day, and (b) if such rate is
not so published for any day, the Federal Funds Rate for such day shall
be the average rate charged to Banks on such day on such transactions
as determined by the Banks.
"Financial Statements" shall mean statements of the financial
condition of the Borrower, the Guarantor and Redman-Smackover Joint
Venture as at the point in time and for the period indicated and
consisting of at least a balance sheet and related statements of
operations, common stock and other stockholders' equity, and cash flows
for the Borrower alone or, where indicated, on a consolidated and
consolidating basis with the Guarantor and, when required by applicable
provisions of this Agreement to be audited, accompanied by the
unqualified certification of a nationally-recognized firm of
independent certified public accountants or other
6
<PAGE>
independent certified public accountants acceptable to the Banks and
footnotes to any of the foregoing, all of which shall be prepared in
accordance with GAAP consistently applied and in comparative form with
respect to the corresponding period of the preceding fiscal period.
"Fixed Rate Loan" shall mean any LIBO Rate Loan.
"Floating Rate" shall mean an interest rate per annum equal to
the Base Rate from time to time in effect, but in no event exceeding
the Highest Lawful Rate.
"Floating Rate Loan" shall mean any Loan and any portion of
the Loan Balance which the Borrower has requested, in the initial
Borrowing Request for such Loan or a subsequent Borrowing Request for
such portion of the Loan Balance, bear interest at the Floating Rate,
or which pursuant to the terms hereof is otherwise required to bear
interest at the Floating Rate.
"GAAP" shall mean generally accepted accounting principles
established by the Financial Accounting Standards Board or the American
Institute of Certified Public Accountants and in effect in the United
States
from time to time.
"Governmental Authority" shall mean any nation, country,
commonwealth, territory, government, state, county, parish,
municipality, or other political subdivision and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Guarantor" shall mean Seitel, Inc., a Delaware
corporation.
"Guaranty" shall mean the Guaranty dated the Closing Date
executed by the Guarantor in favor of the Banks, guaranteeing the
payment and performance of the Obligations, as it may be ratified,
amended, restated, or supplemented from time to time which Guaranty
shall terminate when the Redman-Smackover Joint Venture properties
constitute 10% or less of the Borrowing Base.
"Hazardous Substances" shall mean flammables, explosives,
radioactive materials, hazardous wastes, asbestos, or any material
containing asbestos, polychlorinated biphenyls (PCBs), toxic substances
or related materials, petroleum, petroleum products, associated oil or
natural gas exploration, production,
7
<PAGE>
and development wastes, or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes," or "toxic
substances" under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, the Superfund Amendments
and Reauthorization Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and Recovery
Act, as amended, the Toxic Substances Control Act, as amended, or any
other law or regulation now or hereafter enacted or promulgated by any
Governmental Authority.
"Highest Lawful Rate" shall mean the maximum nonusurious
interest rate, if any (or, if the context so requires, an amount
calculated at such rate), that at any time or from time to time may be
contracted for, taken, reserved, charged, or received under applicable
laws of the State of Texas or the United States of America, whichever
authorizes the greater rate, as such laws are presently in effect or,
to the extent allowed by applicable law, as such laws may hereafter be
in effect and which allow a higher maximum non-usurious interest rate
than such laws now allow.
"Indebtedness" shall mean, as to any Person, without
duplication, (a) all liabilities (excluding reserves for deferred
income taxes, deferred compensation liabilities, and other deferred
liabilities and credits) which under GAAP would be included in
determining total liabilities as shown on the liability side of a
balance sheet, (b) all obligations of such Person evidenced by bonds,
debentures, promissory notes, or similar evidences of indebtedness, (c)
all other indebtedness of such Person for borrowed money, and (d) all
obligations of others, to the extent any such obligation is secured by
a Lien on the assets of such Person (whether or not such Person has
assumed or become liable for the obligation secured by such Lien).
"Insolvency Proceeding" shall mean application (whether
voluntary or instituted by another Person) for or the consent to the
appointment of a receiver, trustee, conservator, custodian, or
liquidator of any Person or of all or a substantial part of the
Property of such Person, or the filing of a petition (whether voluntary
or instituted by another Person) commencing a case under Title 11 of
the United States Code, seeking liquidation, reorganization, or
rearrangement or taking advantage of any bankruptcy, insolvency,
debtor's relief, or other similar law of the United States, the State
of Texas, or any other jurisdiction.
8
<PAGE>
"Intellectual Property" shall mean patents, patent
applications, trademarks, tradenames, copyrights, technology, know-how,
and processes.
"Interest Period" shall mean, subject to the limitations set
forth in Section , with respect to any LIBO Rate Loan, a period
commencing on the date such Loan is made or converted from a Loan of
another type pursuant to this Agreement or the last day of the next
preceding Interest Period with respect to such Loan and ending on the
numerically corresponding day in the calendar month that is one, two,
three, or, subject to availability, six months thereafter, as the
Borrower may request in the Borrowing Request for such Loan.
"Investment" in any Person shall mean any stock, bond, note,
or other evidence of Indebtedness, or any other security (other than
current trade and customer accounts) of, investment or partnership
interest in or loan to, such Person.
"LIBO Rate" shall mean, with respect to any Interest Period
for any LIBO Rate Loan, the lesser of (a) the rate per annum (rounded
upwards, if necessary, to the nearest 1/16 of 1%) equal to the average
of the offered quotations appearing on Telerate Page 3750 (or if such
Telerate Page shall not be available, any successor or similar service
selected by the Banks and the Borrower) as of approximately 11:00 a.m.,
Central Standard or Daylight Savings Time, as the case may be, on the
day one Business Day prior to the first day of such Interest Period for
Dollar deposits in an amount comparable to the principal amount of such
LIBO Rate Loan and having a term comparable to the Interest Period for
such LIBO Rate Loan, or (b) the Highest Lawful Rate. If neither such
Telerate Page 3750 nor any successor or similar service is available,
the term "LIBO Rate" shall mean, with respect to any Interest Period
for any LIBO Rate Loan, the lesser of (a) the rate per annum (rounded
upwards if necessary, to the nearest 1/16 of 1%) quoted by the Banks at
approximately 11:00 a.m., London time (or as soon thereafter as
practicable) one Business Day prior to the first day of the Interest
Period for such LIBO Rate Loan for the offering by the Banks to leading
banks in the London interbank market of Dollar deposits in an amount
comparable to the principal amount of such LIBO Rate Loan and having a
term comparable to the Interest Period for such LIBO Rate Loan, or (b)
the Highest Lawful Rate.
"LIBO Rate Loan" shall mean any Loan and any portion
of the Loan Balance which the Borrower has requested, in
9
<PAGE>
the initial Borrowing Request for such Loan or a subsequent Borrowing
Request for such portion of the Loan Balance, bear interest at the
Adjusted LIBO Rate and which is permitted by the terms hereof to bear
interest at the Adjusted LIBO Rate.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of
such Property, whether such interest is based on common law, statute,
or contract, and including, but not limited to, the lien or security
interest arising from a mortgage, ship mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt, or a lease,
consignment, or bailment for security purposes (other than true leases
or true consignments), liens of mechanics, materialmen, and artisans,
maritime liens and reservations, exceptions, encroachments, easements,
rights of way, covenants, conditions, restrictions, leases, and other
title exceptions and encumbrances affecting Property which secure an
obligation owed to, or a claim by, a Person other than the owner of
such Property (for the purpose of this Agreement, the Borrower shall be
deemed to be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, financing lease, or other
arrangement pursuant to which title to the Property has been retained
by or vested in some other Person for security purposes), and the
filing or recording of any financing statement or other security
instrument in any public office.
"Limitation Period" shall mean any period while any amount
remains owing on the Bank One Note and Compass Note and interest on
such amount, calculated at the applicable interest rate, plus any fees
or other sums payable under any Loan Document and deemed to be interest
under applicable law, would exceed the amount of interest which would
accrue at the Highest Lawful Rate.
"Loan" shall mean any loan made by any of the Banks to or for
the benefit of the Borrower pursuant to this Agreement.
"Loan Balance" shall mean, at any time, the outstanding
principal balance of the Bank One Note and the Compass Note at such
time.
"Loan Documents" shall mean this Agreement, the Bank One Note,
the Compass Note, the Security Instruments, and all other documents and
instruments now or hereafter delivered pursuant to the terms of or in
connection with this Agreement, the Bank One Note, the Compass Note, or
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the Security Instruments, and all renewals and extensions of,
amendments and supplements to, and restatements of, any or all of the
foregoing from time to time in effect.
"Material Adverse Effect" shall mean (a) any material adverse
effect on the business, operations, properties, condition (financial or
otherwise), or prospects of the Borrower, (b) any adverse effect upon
the business operations, properties, condition (financial or
otherwise), or prospects of the Borrower or the Guarantor which
materially increases the risk that any of the Obligations will not be
repaid as and when due, or (c) any material adverse effect upon the
Collateral.
"Mortgaged Properties" shall mean all Oil and Gas Properties
of the Borrower subject to a perfected first-priority Lien in favor of
the Agent, subject only to Permitted Liens, as security for the
Obligations.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Net Income" shall mean, for any period, the net income of the
Borrower for such period determined in accordance with GAAP.
"Obligations" shall mean, without duplication, (a) all
Indebtedness evidenced by the Bank One Note and Compass Note, (b) the
obligation of the Borrower for the payment of Commitment Fees, Facility
Fees, and Engineering Fees, (c) the obligations of the Guarantor under
the Guaranty, and (d) all other obligations and liabilities of the
Borrower or the Guarantor to the Banks or the Agent, now existing or
hereafter incurred, under, arising out of or in connection with any
Loan Document, and to the extent that any of the foregoing includes or
refers to the payment of amounts deemed or constituting interest, only
so much thereof as shall have accrued, been earned and which remains
unpaid at each relevant time of determination.
"Oil and Gas Properties" shall mean fee, leasehold, or other
interests in or under mineral estates or oil, gas, and other liquid or
gaseous hydrocarbon leases with respect to Properties situated in the
United States or offshore from any State of the United States,
including, without limitation, overriding royalty and royalty
interests, leasehold estate interests, net profits interests,
production payment interests, and mineral fee interests, together with
contracts executed in connection
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therewith and all tenements, hereditaments, appurtenances and
Properties appertaining, belonging, affixed, or incidental thereto. The
parties acknowledge that Borrower acts as Managing Partner of the DDD
1994 Oil & Gas Partnership, which partnership made parallel investments
in Oil and Gas Properties during 1994 with Borrower whereby the
Borrower acquired 95% of the acquired interest in certain Oil and Gas
Properties and the partnership acquired the other 5%. The parties also
acknowledge that the Borrower acts as Managing Partner of the DDD 1995
Oil & Gas Partnership, which is a similar partnership with respect to
investments made and to be made during 1995 in Oil and Gas Properties,
and that Borrower may act as Managing Partner for similar general
partnerships with respect to investments in Oil and Gas Properties in
the future. The Banks and Agent acknowledge that Borrower in certain
instances has in the past procured and may in the future procure the
entire acquired interest in certain Oil and Gas Properties in its name,
95% of which is or will be held for itself and 5% of which is or will
be held for the benefit of the applicable partnership, and that in such
circumstances, the 5% interest of such partnership in such Oil and Gas
Properties will not be considered to be an Oil and Gas Property of
Borrower for the purposes of any of the Loan Documents.
"Permitted Indebtedness" shall mean the Subordinated Debt and
any other debt or accounts payable of the Borrower to the Guarantor and
Affiliates which are fully subordinated to the Banks and any other debt
not to exceed $500,000 in the aggregate.
"Permitted Liens" shall mean (a) Liens for taxes, assessments,
or other governmental charges or levies not yet due or which (if
foreclosure, distraint, sale, or other similar proceedings shall not
have been initiated) are being contested in good faith by appropriate
proceedings, and such reserve as may be required by GAAP shall have
been made therefor, (b) Liens in connection with workers' compensation,
unemployment insurance or other social security, old-age pension, or
public liability obligations which are not yet due or which are being
contested in good faith by appropriate proceedings, if such reserve as
may be required by GAAP, shall have been made therefor, (c) Liens in
favor of vendors, carriers, warehousemen, repairmen, mechanics,
workmen, materialmen, construction, or similar Liens arising by
operation of law in the ordinary course of business in respect of
obligations which are not yet due or which are being contested in good
faith by appropriate proceedings,
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if such reserve as may be required by GAAP shall have been made
therefor, (d) Liens in favor of operators and non-operators under joint
operating agreements or similar contractual arrangements arising in the
ordinary course of the business of the Borrower to secure amounts
owing, which amounts are not yet due or are being contested in good
faith by appropriate proceedings, if such reserve as may be required by
GAAP shall have been made therefor, (e) Liens under production sales
agreements, division orders, operating agreements, and other agreements
customary in the oil and gas business for processing, producing, and
selling hydrocarbons securing obligations not constituting Indebtedness
and provided that such Liens do not secure obligations to deliver
hydrocarbons at some future date without receiving full payment
therefor within 90 days of delivery, (f) easements, rights of way,
restrictions, and other similar encumbrances, and minor defects in the
chain of title which are customarily accepted in the oil and gas
financing industry, none of which interfere with the ordinary conduct
of the business of the Borrower or the Guarantor or materially detract
from the value or use of the Property to which they apply, (g) Liens in
favor of the Agent and other Liens expressly permitted under the
Security Instruments, and (h) any lien on property which secures
Permitted Indebtedness.
"Person" shall mean an individual, corporation, partnership,
trust, unincorporated organization, government, any agency or political
subdivision of any government, or any other form of entity.
"Plan" shall mean, at any time, any employee benefit plan
which is covered by ERISA and in respect of which the Borrower, the
Guarantor, or any Commonly Controlled Entity is (or, if such plan were
terminated at such time, would under Section 4069 of ERISA be deemed to
be) an "employer" as defined in Section 3(5) of ERISA.
"Pledged Stock" shall mean all of the issued and
outstanding capital stock of the Borrower.
"Principal Office" shall mean the principal office of the
Agent in Houston, Texas, presently located at 910 Travis Street,
Houston, Texas 77002.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, tangible or intangible.
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"Redman Energy Corporation Note" shall mean the note in the
original principal amount of $1,150,000 from Redman Energy Corporation
to the Borrower.
"Redman-Smackover Joint Venture" shall mean the agreement
dated November 28, 1994, by and between Redman Energy Corporation, DDD
Energy, Inc. and Western Gas Resources, Inc.
"Regulation D" shall mean Regulation D of the Board of
Governors of the Federal Reserve System, as the same may be amended or
supplemented from time to time.
"Regulatory Change" shall mean the passage, adoption,
institution, or amendment of any federal, state, local, or foreign
Requirement of Law (including, without limitation, Regulation D), or
any interpretation, directive, or request (whether or not having the
force of law) of any Governmental Authority or monetary authority
charged with the enforcement, interpretation, or administration
thereof, occurring after the Closing Date and applying to a class of
banks including any of the Banks; provided, however, that a change in
the Law or any interpretation, directive or request with respect to
taxes assessed on the basis of income of the Banks shall not be a
Regulatory Change.
"Release of Hazardous Substances" shall mean any emission,
spill, release, disposal, or discharge, except in accordance with a
valid permit, license, certificate, or approval of the relevant
Governmental Authority, of any Hazardous Substance into or upon (a) the
air, (b) soils or any improvements located thereon, (c) surface water
or groundwater, or (d) the sewer or septic system, or the waste
treatment, storage, or disposal system servicing any Property of the
Borrower.
"Required Banks" shall mean the Bank serving as the Agent,
together with such other Banks as necessary to make the Commitment
Percentages for all such Banks total 100%.
"Requirement of Law" shall mean, as to any Person, the
certificate or articles of incorporation and by-laws or other
organizational or governing documents of such Person, and any
applicable law, treaty, ordinance, order, judgment, rule, decree,
regulation, or determination of an arbitrator, court, or other
Governmental Authority, including, without limitation, rules,
regulations, orders, and requirements for permits, licenses,
registrations, approvals, or authorizations, in each case
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as such now exist or may be hereafter amended and are applicable to or
binding upon such Person or any of its Property or to which such Person
or any of its Property is subject.
"Reserve Report" shall mean each report delivered to the Agent
pursuant to Section .
"Responsible Officer" shall mean, as to any Person, its
President, Chief Executive Officer or Secretary- Treasurer, or
Assistant Secretary.
"Security Instruments" shall mean the security instruments
executed and delivered in satisfaction of the condition set forth in
Section , and all other documents and instruments at any time executed
as security for all or any portion of the Obligations, as such
instruments may be amended, restated, or supplemented from time to
time.
"Single Employer Plan" shall mean any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Subordinated Debt" shall mean the debt owed by Borrower to
Seitel, Inc. and Seitel Geophysical, Inc.
"Subordination Agreement" shall mean the agreement dated as of
the Closing Date by and between the Banks, Borrower and Seitel, Inc.
and Seitel Geophysical, Inc.
"Subsidiary" shall mean, as to any Person, a corporation of
which shares of stock having ordinary voting power (other than stock
having such power only by reason of the happening of a contingency) to
elect a majority of the board of directors or other managers of such
corporation are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more
intermediaries, or both, by such Person.
"Superfund Site" shall mean those sites listed on the
Environmental Protection Agency National Priority List and eligible for
remedial action or any comparable state registries or list in any state
of the United
States.
"Tangible Net Worth" shall mean (a) total assets, as would be
reflected on a balance sheet of the Borrower prepared in accordance
with GAAP, exclusive of Intellectual Property, experimental or
organization
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expenses, franchises, licenses, permits, and other intangible assets,
treasury stock, unamortized underwriters' debt discount and expenses,
and goodwill minus (b) total liabilities, as would be reflected on a
balance sheet of the Borrower prepared in accordance with GAAP which
shall exclude debt specifically subordinated to the Banks.
"Transferee" shall mean any Person to which any Bank has sold,
assigned, transferred, or granted a participation in any of the
Obligations, as authorized pursuant to Section , and any Person
acquiring, by purchase, assignment, transfer, or participation, from
any such purchaser, assignee, transferee, or participant, any part of
such Obligations.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the State of Texas.
"Unmortgaged Properties" shall mean the interest of Borrower
and 80% of the interest of Redman Energy Corporation, so long as such
interest of Redman Energy Corporation is pledged to the Borrower and
collaterally assigned to the Banks, in the oil and gas properties of
the Redman-Smackover Joint Venture.
1.3 Undefined Financial Accounting Terms. Undefined financial
accounting terms used in this Agreement shall be defined according to GAAP at
the time in effect.
1.4 References. References in this Agreement to Exhibit,
Article, or Section numbers shall be to Exhibits, Articles, or Sections of this
Agreement, unless expressly stated to the contrary. References in this Agreement
to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof,"
"hereunder" and words of similar import shall be to this Agreement in its
entirety and not only to the particular Exhibit, Article, or Section in which
such reference appears.
1.5 Articles and Sections. This Agreement, for convenience
only, has been divided into Articles and Sections; and it is understood that the
rights and other legal relations of the parties hereto shall be determined from
this instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.6 Number and Gender. Whenever the context requires,
reference herein made to the single number shall be understood to include the
plural; and likewise, the plural shall be understood to include the singular.
Definitions of terms defined in the singular
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or plural shall be equally applicable to the plural or singular, as the case may
be, unless otherwise indicated. Words denoting sex shall be construed to include
the masculine, feminine and neuter, when such construction is appropriate; and
specific enumeration shall not exclude the general but shall be construed as
cumulative.
1.7 Incorporation of Exhibits. The Exhibits attached to this
Agreement are incorporated herein and shall be considered a part of this
Agreement for all purposes.
ARTICLE II
TERMS OF FACILITY
2.1 Revolving Line of Credit. (a) Upon the terms and
conditions (including, without limitation, the right of the Banks to decline to
make any Loan so long as any Default or Event of Default exists) and relying on
the representations and warranties contained in this Agreement, each Bank,
severally and not jointly agrees, during the Commitment Period, to make Loans,
in immediately available funds at the Principal Office, to or for the benefit of
the Borrower, from time to time on any Business Day designated by the Borrower
following receipt by the Agent of a Borrowing Request; provided, however, no
Loan shall exceed the then existing Available Commitment.
(b) Subject to the terms of this Agreement, during the
Commitment Period, the Borrower may borrow, repay, and reborrow and convert
Loans of one type or with one Interest Period into Loans of another type or with
a different Interest Period. Except for prepayments made pursuant to Section ,
each borrowing, conversion, and prepayment of principal of Loans shall be in an
amount at least equal to $50,000.00. Each borrowing, prepayment, or conversion
of or into a Loan of a different type or, in the case of a Fixed Rate Loan,
having a different Interest Period, shall be deemed a separate borrowing,
conversion, and prepayment for purposes of the foregoing, one for each type of
Loan or Interest Period. Anything in this Agreement to the contrary
notwithstanding, the aggregate principal amount of LIBO Rate Loans having the
same Interest Period shall be at least equal to $100,000.00; and if any LIBO
Rate Loan would otherwise be in a lesser principal amount for any period, such
Loan shall be a Floating Rate Loan during such period.
(c) The Loans shall be made and maintained at the Applicable
Lending Office or the Principal Office and shall be evidenced by the Bank One
Note and the Compass Bank Note.
2.2 General Terms. (a) Each Bank is hereby irrevocably
authorized by the Borrower to make notations on its records which
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form a part of the relevant Bank One Note and the Compass Note of such Bank
reflecting the date and the amount of each Loan by such Bank and each payment
and prepayment made by the Borrower; provided, however, the failure of such Bank
to do so shall not relieve the Borrower of its liability hereunder or under such
note or subject the Borrower to additional liability hereunder or under such
note. Furthermore, each Bank is hereby irrevocably authorized by the Borrower to
attach to and make a part of each note of such Bank a continuation of any such
schedule. The aggregate unpaid amount of Loans reflected by the notations by
each Bank on the records of such Bank shall be deemed rebuttably presumptive
evidence of the principal amount owing on such note.
(b) Unless the Agent shall have been notified by a Bank or the
Borrower prior to the date on which either of them is scheduled to make payment
to the Agent of (in the case of a Bank) the proceeds of a Loan to be made by
such Bank hereunder or (in the case of the Borrower) a payment to the Agent for
account of one or more of the Banks hereunder (such payment being herein called
the "Required Payment"), which notice shall be effective upon receipt, that it
does not intend to make the Required Payment to the Agent, the Agent may assume
that the Required Payment has been made and, in reliance upon such assumption,
may (but shall not be required to) make the amount thereof available to the
intended recipient on such date. If such Bank or the Borrower, as the case may
be, has not in fact made the Required Payment to the Agent, the recipient of
such payment shall, on demand, repay to the Agent for its account the amount so
made available together with interest thereon in respect of each day during the
period commencing on the date such amount was so made available by the Agent
until the date the Agent recovers such amount at a rate per annum equal to the
Federal Funds Rate.
2.3 Use of Loan Proceeds. Proceeds of all Loans shall be used
solely to refinance the debt existing as of the Closing Date and for oil and gas
reserve acquisitions, development drilling and general working capital.
2.4 Interest. Subject to the terms of this Agreement
(including, without limitation, Section ), interest on the Loans shall accrue
and be payable at a rate per annum equal to the Floating Rate for each Floating
Rate Loan and the Adjusted LIBO Rate for each LIBO Rate Loan. Interest on all
Floating Rate Loans shall be computed on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed (including the first day but
excluding the last day) during the period for which payable. Interest on all
LIBO Rate Loans shall be computed on the basis of a year of 360 days, and actual
days elapsed (including the first day but excluding the last day) during the
period for which payable. Notwithstanding the foregoing, interest on past-due
principal and, to the extent permitted by applicable law, past-due
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<PAGE>
interest, shall accrue at the Floating Rate, computed on the basis of a year of
365 or 366 days, as the case may be, and actual days elapsed (including the
first day but excluding the last day) during the period for which payable, and
shall be payable upon demand by the Banks at any time as to all or any portion
of such interest. In the event that the Borrower fails to select the duration of
any Interest Period for any Fixed Rate Loan within the time period and otherwise
as provided herein, such Loan (if outstanding as a Fixed Rate Loan) will be
automatically converted into a Floating Rate Loan on the last day of the then
current Interest Period for such Loan or (if outstanding as a Floating Rate
Loan) will remain as, or (if not then outstanding) will be made as, a Floating
Rate Loan. Interest provided for herein shall be calculated on unpaid sums
actually advanced and outstanding pursuant to the terms of this Agreement and
only for the period from the date or dates of such advances until repayment.
2.5 Repayment of Loans and Interest. Accrued and unpaid
interest on each outstanding Floating Rate Loan shall be due and payable monthly
commencing on the 1st day of July, 1995, and continuing on the 1st day of each
calendar month thereafter while any Floating Rate Loan remains outstanding, the
payment in each instance to be the amount of interest which has accrued and
remains unpaid in respect of the relevant Loan. Accrued and unpaid interest on
each outstanding Fixed Rate Loan shall be due and payable on the last day of the
Interest Period for such Fixed Rate Loan and, in the case of any Interest Period
in excess of three months, on the day of the third calendar month following the
commencement of such Interest Period corresponding to the day of the calendar
month on which such Interest Period commenced, the payment in each instance to
be the amount of interest which has accrued and remains unpaid in respect of the
relevant Loan. The Loan Balance, together with all accrued and unpaid interest
thereon, shall be due and payable at Final Maturity. At the time of making each
payment hereunder or under the Bank One Note and the Compass Note, the Borrower
shall specify to the Banks the Loans or other amounts payable by the Borrower
hereunder to which such payment is to be applied. In the event the Borrower
fails to so specify, or if an Event of Default has occurred and is continuing,
the Banks may apply such payment as they may elect in their sole discretion.
2.6 Outstanding Amounts. The outstanding principal balance of
the Bank One Note and the Compass Note reflected by the notations by the Banks
on their records shall be deemed rebuttably presumptive evidence of the
principal amount owing on the Bank One Note and the Compass Note. The liability
for payment of principal and interest evidenced by the Bank One Note and the
Compass Note shall be limited to principal amounts actually advanced and
outstanding pursuant to this Agreement and interest on such amounts calculated
in accordance with this Agreement.
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2.7 Time, Place, and Method of Payments. All payments required
pursuant to this Agreement or the Bank One Note and the Compass Note shall be
made in lawful money of the United States of America and in immediately
available funds, and shall be deemed received by the Agent on the next Business
Day following receipt if notice of the payment is not received by Agent by 1:30
p.m. (if via facsimile, it will be followed up with a phone call to Agent from
Borrower) and receipt of such payment is after the end of business on that day.
Payments shall be made at the Principal Office. Except as provided to the
contrary herein, if the due date of any payment hereunder or under the Bank One
Note and the Compass Note would otherwise fall on a day which is not a Business
Day, such date shall be extended to the next succeeding Business Day, and
interest shall be payable for any principal so extended for the period of such
extension.
2.8 Borrowing Base Determinations. (a) The Borrowing Base as
of June 1, 1995, is acknowledged by the Borrower, the Banks and the Agent to be
$5,350,000.00. Commencing on July 1, 1995, and continuing thereafter on the 1st
day of each calendar month through the Commitment Termination Date, the amount
of the Borrowing Base shall be reduced by $120,000.00.
(b) The Borrowing Base shall be redetermined semi-annually on
each May 15 and November 15 by the Agent on the basis of information supplied by
the Borrower in compliance with the provisions of this Agreement, including,
without limitation, Reserve Reports, and all other information available to the
Agent and provided to Banks. In addition, the Agent shall redetermine the
Borrowing Base, within 45 days following a request of the Borrower, accompanied
by all required engineering information necessary to redetermine the Borrowing
Base; provided, however, the Banks shall not be obligated to respond to more
than two such requests during any calendar year. Notwithstanding the foregoing,
the Agent may at its sole discretion redetermine the Borrowing Base and the
amount by which the Borrowing Base shall be reduced each calendar month as set
forth in Section (a) at any time and from time to time.
(c) Upon each determination of the Borrowing Base by the
Agent, the Agent shall notify the Borrower orally (confirming such notice
promptly in writing) of such determination, and the Borrowing Base and the
amount by which the Borrowing Base shall be reduced so communicated to the
Borrower shall become effective upon such oral notification and shall remain in
effect until the next subsequent determination of the Borrowing Base and the
amount by which the Borrowing Base shall be reduced.
(d) The Borrowing Base shall represent the determination by
the Agent in accordance with the applicable definitions and provisions herein
contained and its customary lending practices for
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loans of this nature, of the value, for loan purposes, of the Mortgaged
Properties and the Unmortgaged Properties, subject, in the case of any increase
in the Borrowing Base, to the credit approval process of the Banks. Furthermore,
the Borrower acknowledges that the determination of the Borrowing Base contains
an equity cushion (market value in excess of loan value), which is acknowledged
by the Borrower to be essential for the adequate protection of the Agent and the
Banks.
2.9 Mandatory Prepayments. If at any time the Loan Balance
exceeds the lesser of the Borrowing Base or the Borrowing Base then in effect,
the Borrower shall, within 30 days of notice from the Agent of such occurrence,
(a) prepay, or make arrangements acceptable to the Banks for the prepayment of,
the amount of such excess for application on the Loan Balance, (b) provide
additional collateral, of character and value satisfactory to the Banks in their
sole discretion, to secure the Obligations by the execution and delivery to the
Banks of security instruments in form and substance satisfactory to the Banks,
or (c) effect any combination of the alternatives described in clauses (a) and
(b) of this Section and acceptable to the Banks in their sole discretion.
2.10 Voluntary Prepayments and Conversions of Loans. Subject
to applicable provisions of this Agreement, the Borrower shall have the right at
any time or from time to time to prepay Loans and to convert Loans of one type
or with one Interest Period into Loans of another type or with a different
Interest Period; provided, however, that (a) the Borrower shall give the Agent
notice of each such prepayment or conversion of all or any portion of a Fixed
Rate Loan no less than one Business Day prior to prepayment or conversion, (b)
any Fixed Rate Loan may be prepaid or converted only on the last day of an
Interest Period for such Loan, (c) the Borrower shall pay all accrued and unpaid
interest on the amounts prepaid or converted, and (d) no such prepayment or
conversion shall serve to postpone the repayment when due of any Obligation.
2.11 Commitment Fee. In addition to interest on the Bank One
Note and the Compass Note as provided herein and the Facility Fees, and the
Engineering Fees payable hereunder and to compensate the Banks for maintaining
funds available, the Borrower shall pay to the Agent, for the benefit of the
Banks, in immediately available funds, on the 1st day of October, 1995, and on
the 1st day of each third calendar month thereafter and on the Commitment
Termination Date during the Commitment Period, a fee in the amount of one-half
percent (1/2%) per annum, calculated on the basis of a year of 365 or 366 days,
as the case may be, and actual days elapsed (including the first day but
excluding the last day), on the average daily amount of the Available Commitment
during the preceding quarterly period.
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2.12 Facility Fee. In addition to interest on the Bank One
Note and the Compass Note as provided herein and Commitment Fees and the
Engineering Fees payable hereunder and to compensate the Banks for the costs of
the extension of credit hereunder, the Borrower shall pay to the Agent for the
benefit of the Banks, in immediately available funds, a facility fee equal to
$26,750.00. The Borrower paid $20,000.00 of such fee upon acceptance of the
commitment of this credit facility to the Borrower by the Banks with $6,750.00
due on the Closing Date.
2.13 Engineering Fee. In addition to interest on the Note as
provided herein and the Commitment Fees and Facility Fees payable hereunder and
to compensate the Banks for the costs of evaluating the Mortgaged Properties and
the Unmortgaged Properties and reviewing the Reserve Reports, the Borrower shall
pay to the Agent for the benefit of the Banks, in immediately available funds,
on the date of each semi-annual redetermination of the Borrowing Base or other
redetermination of the Borrowing Base requested by Borrower, an engineering fee
in the amount of $7,500.00.
2.14 Loans to Satisfy Obligations of Borrower. The Banks may,
but shall not be obligated to, make Loans for the benefit of the Borrower and
apply proceeds thereof to the satisfaction of any condition, warranty,
representation, or covenant of the Borrower contained in this Agreement or any
other Loan Document, provided that the Agent shall give the Borrower at least
five (5) Business Days' advance written notice before either Bank makes such a
Loan to satisfy a condition, warranty, representation or covenant of Borrower.
Any such Loan shall be evidenced by the Bank One Note and the Compass Note and
shall be made as a Floating Rate Loan.
2.15 Security Interest in Accounts; Right of Offset. As
security for the payment and performance of the Obligations, the Borrower hereby
transfers, assigns, and pledges to the Banks and grants to the Banks a security
interest in all funds of the Borrower now or hereafter or from time to time on
deposit with the Banks, with such interest of the Banks to be retransferred,
reassigned, and/or released by the Banks, as the case may be, at the expense of
the Borrower upon payment in full and complete performance by the Borrower of
all Obligations. All remedies as secured party or assignee of such funds shall
be exercisable by the Banks upon the occurrence of any Event of Default,
regardless of whether the exercise of any such remedy would result in any
penalty or loss of interest or profit with respect to any withdrawal of funds
deposited in a time deposit account prior to the maturity thereof. Furthermore,
the Borrower hereby grants to the Banks the right, exercisable at such time as
any Obligation shall mature, whether by acceleration of maturity or otherwise,
of offset or banker's lien against all funds of the Borrower now or hereafter or
from time to time on deposit with the Banks, regardless of whether the exercise
of any such remedy would result in any penalty or loss
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of interest or profit with respect to any withdrawal of funds deposited in a
time deposit account prior to the maturity thereof.
2.16 General Provisions Relating to Interest. (a) It is the
intention of the parties hereto to comply strictly with the usury laws of the
State of Texas and the United States of America. In this connection, there shall
never be collected, charged, or received on the sums advanced hereunder interest
in excess of that which would accrue at the Highest Lawful Rate. For purposes of
Article 5069-1.04, Vernon's Texas Civil Statutes, as amended, the Borrower
agrees that the Highest Lawful Rate shall be the "indicated (weekly) rate
ceiling" as defined in such Article, provided that the Banks may also rely, to
the extent permitted by applicable laws of the State of Texas or the United
States of America, on alternative maximum rates of interest under other laws of
the State of Texas or the United States of America applicable to the Banks, if
greater.
(b) Notwithstanding anything herein or in the Bank One Note
and the Compass Note to the contrary, during any Limitation Period, the interest
rate to be charged on amounts evidenced by the Bank One Note and the Compass
Note shall be the Highest Lawful Rate, and the obligation, if any, of the
Borrower for the payment of fees or other charges deemed to be interest under
applicable law shall be suspended. During any period or periods of time
following a Limitation Period, to the extent permitted by applicable laws of the
State of Texas or the United States of America, the interest rate to be charged
hereunder shall remain at the Highest Lawful Rate until such time as there has
been paid to the Banks and the Agent, as appropriate (i) the amount of interest
in excess of that accruing at the Highest Lawful Rate that the Banks would have
received during the Limitation Period had the interest rate remained at the
otherwise applicable rate, and (ii) all interest and fees otherwise payable to
the Banks and the Agent, but for the effect of such Limitation Period.
(c) If, under any circumstances, the aggregate amounts paid on
the Bank One Note and the Compass Note or under this Agreement or any other Loan
Document include amounts which by law are deemed interest and which would exceed
the amount permitted if the Highest Lawful Rate were in effect, the Borrower
stipulates that such payment and collection will have been and will be deemed to
have been, to the extent permitted by applicable laws of the State of Texas or
the United States of America, the result of mathematical error on the part of
the Borrower and the Banks and the Agent; and the party receiving such payment
shall promptly refund the amount of such excess (to the extent only of such
interest payments in excess of that which would have accrued and been payable on
the basis of the Highest Lawful Rate) upon discovery of such error by such party
or notice thereof from the Borrower. In the event that the maturity of any
Obligation is
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accelerated, by reason of an election by the Agent, or the Required Banks or
otherwise, or in the event of any required or permitted prepayment, then the
consideration constituting interest under applicable laws may never exceed the
Highest Lawful Rate; and excess amounts paid which by law are deemed interest,
if any, shall be credited by the Agent and the Banks on the principal amount of
the Obligations, or if the principal amount of the Obligations shall have been
paid in full, refunded to the Borrower.
(d) All sums paid, or agreed to be paid, to the Banks and the
Agent for the use, forbearance and detention of the proceeds of any advance
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated, and spread throughout the full term hereof until paid in
full so that the actual rate of interest is uniform but does not exceed the
Highest Lawful Rate throughout the full term hereof.
2.17 Yield Protection. The Borrower shall pay to any Bank such
amounts as shall be sufficient in the reasonable opinion of any Bank to
compensate it for any loss, cost, or expense incurred by and as a result of:
(i) any payment, prepayment, or conversion
by the Borrower of a Fixed Rate Loan on a date
other than the last day of an Interest Period
for such Loan; or
(ii) any failure by the Borrower to borrow
a Fixed Rate Loan from the Bank on the date for
such borrowing specified in the relevant
Borrowing Request;
such compensation to include, without limitation, with respect to any LIBO Rate
Loan, an amount equal to the excess, if any, of (A) the amount of interest which
would have accrued on the principal amount so paid, prepaid, converted, or not
borrowed for the period from the date of such payment, prepayment, conversion,
or failure to borrow to the last day of the then current Interest Period for
such Loan (or, in the case of a failure to borrow, the Interest Period for such
Loan which would have commenced on the date of such failure to borrow) at the
applicable rate of interest for such Loan provided for herein over (B) (I) with
respect to any payment, prepayment, conversion to a Fixed Rate Loan of a
different Interest Period, or failure to borrow, the interest component (as
reasonably determined by the Bank) of the amount (as reasonably determined by
the Bank) the Bank would have bid in the London interbank market for Dollar
deposits of amounts comparable to such principal amount and maturities
comparable to such period and (II) with respect to conversions of a Fixed Rate
Loan to a Floating Rate Loan, the interest payable under the Floating Rate Loan
to the last day of the then current Interest Period.
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2.18 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, no more than three separate Loans shall be outstanding
at any one time, with, for purposes of this Section, all Floating Rate Loans
constituting one Loan, and all LIBO Rate Loans for the same Interest Period
constituting one Loan. Anything herein to the contrary notwithstanding, if, on
or prior to the determination of any interest rate for any LIBO Rate Loan for
any Interest Period therefor the Banks determine (which determination shall be
conclusive) that quotations of interest rates for the deposits referred to in
the definition of "LIBO Rate" in Section are not being provided in the relevant
amounts or for the relevant maturities for purposes of determining the rate of
interest for such Loan as provided in this Agreement, then the Agent shall give
the Borrower prompt notice thereof; and so long as such condition remains in
effect, the Banks shall be under no obligation to make LIBO Rate Loans or to
convert Loans of any other type into LIBO Rate Loans, and the Borrower shall, on
the last day of the then current Interest Period for each outstanding LIBO Rate
Loan, either prepay such LIBO Rate Loan or convert such Loan into another type
of Loan in accordance with Section . Before giving such notice pursuant to this
Section, the Banks will designate a different available Applicable Lending
Office for LIBO Rate Loans or take such other action as the Borrower may request
if such designation or action will avoid the need to suspend the obligation of
the Banks to make LIBO Rate Loans hereunder and will not, in the reasonable
opinion of the Banks, be disadvantageous to the Banks.
2.19 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for the Banks or their
Applicable Lending Office to (a) honor its obligation to make any type of Fixed
Rate Loans hereunder, or (b) maintain any type of Fixed Rate Loans hereunder,
then the Banks shall promptly notify the Borrower thereof; and the obligation of
the Banks hereunder to make such type of Fixed Rate Loans and to convert other
types of Loans into Fixed Rate Loans of such type shall be suspended until such
time as the Banks may again make and maintain Fixed Rate Loans of such type, and
the outstanding Fixed Rate Loans of such type shall be converted into Floating
Rate Loans in accordance with Section . Before giving such notice pursuant to
this Section, the Banks will designate a different available Applicable Lending
Office for Fixed Rate Loans or take such other action as the Borrower may
request if such designation or action will avoid the need to suspend the
obligation of the Banks to make Fixed Rate Loans and will not, in the reasonable
opinion of the Banks, be disadvantageous to the Banks.
2.20 Regulatory Change. In the event that by reason of any
Regulatory Change, the Banks (a) incur additional costs based on or measured by
the excess above a specified level of the amount of a category of deposits or
other liabilities of the Banks which
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includes deposits by reference to which the interest rate on any Fixed Rate Loan
is determined as provided in this Agreement or a category of extensions of
credit or other assets of such Banks which includes any Fixed Rate Loan, or (b)
become subject to restrictions on the amount of such a category of liabilities
or assets which it may hold, then, at the election of the Banks with notice to
the Borrower, the obligation of the Banks to make such Fixed Rate Loans and to
convert Floating Rate Loans into such Fixed Rate Loans shall be suspended until
such time as such Regulatory Change ceases to be in effect, and all such
outstanding Fixed Rate Loans shall be converted into Floating Rate Loans in
accordance with Section ; provided that the Borrower shall not be obligated to
pay any amounts to the Banks pursuant to Section 2.17 upon any such conversion.
2.21 Limitations on Interest Periods. Each Interest Period
selected by the Borrower (a) which commences on the last Business Day of a
calendar month (or, with respect to any LIBO Rate Loan, any day for which there
is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month, (b) which would otherwise end on a day which is not a Business Day shall
end on the next succeeding Business Day (or, if such next succeeding Business
Day falls in the next succeeding calendar month, on the next preceding Business
Day), (c) which would otherwise commence before and end after Final Maturity
shall end on Final Maturity, and (d) shall have a duration of not less than 30
days, or one month, as to any LIBO Rate Loan, and, if any Interest Period would
otherwise be a shorter period, the relevant Loan shall be a Floating Rate Loan
during such period.
2.22 Letters in Lieu of Transfer Orders. The Banks agree that
none of the letters in lieu of transfer or division orders provided by the
Borrower pursuant to Section or Section
will be sent to the addressees thereof prior to the occurrence of an Event of
Default, at which time the Banks may, at their option and in addition to the
exercise of any of their other rights and remedies, send any or all of such
letters.
2.23 Power of Attorney. The Borrower hereby designates the
Agent as its agent and attorney-in-fact, to act in its name, place, and stead
for the purpose of completing and, upon the occurrence of an Event of Default,
delivering any and all of the letters in lieu of transfer orders delivered by
the Borrower to the Agent pursuant to Section or Section , including, without
limitation, completing any blanks contained in such letters and attaching
exhibits thereto describing the relevant Collateral. The Borrower hereby
ratifies and confirms all that the Agent shall lawfully do or cause to be done
by virtue of this power of attorney and the rights granted with respect to such
power of attorney. This power of attorney is coupled with the interests of the
Agent
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in the Collateral, shall commence and be in full force and effect as of the
Closing Date and shall remain in full force and effect and shall be irrevocable
so long as any Obligation remains outstanding or unpaid or any Commitment
exists. The powers conferred on the Agent by this appointment are solely to
protect the interests of the Banks under the Loan Documents and shall not impose
any duty upon the Agent to exercise any such powers. The Agent shall be
accountable only for amounts that it actually receives as a result of the
exercise of such powers and shall not be responsible to the Borrower or any
other Person for any act or failure to act with respect to such powers, except
for gross negligence or willful misconduct.
ARTICLE III
CONDITIONS
The obligations of the Banks to enter into this Agreement and
to make Loans are subject to the satisfaction of the following conditions
precedent:
3.1 Receipt of Loan Documents and Other Items. None of the
Banks nor the Agent shall have any obligation to fund under this Agreement
unless and until all matters incident to the consummation of the transactions
contemplated herein, including, without limitation, the review by the Agent or
its counsel of the title of the Borrower to its Oil and Gas Properties, and to
the Oil and Gas Properties owned by Redman-Smackover Joint Venture shall be
satisfactory to the Agent, and the Agent shall have received, reviewed, and
approved the following documents and other items, appropriately executed when
necessary and, where applicable, acknowledged by one or more authorized officers
of the Borrower, all in form and substance satisfactory to the Agent and dated,
where applicable, of even date herewith or a date prior thereto and acceptable
to the Agent:
(a) multiple counterparts of this Agreement, as requested by
the Agent;
(b) the Bank One Note;
(c) the Compass Note;
(d) the Guaranty;
(e) the Subordination Agreement;
(f) copies of the Articles of Incorporation and bylaws and all
amendments thereto of the Borrower, accompanied by a certificate issued
by the secretary or
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an assistant secretary of the Borrower, to the effect that each such
copy is correct and complete;
(g) certificates of incumbency and signatures of all officers
of the Borrower who are authorized to execute Loan Documents on behalf
of the Borrower, each such certificate being executed by the secretary
or an assistant secretary of the Borrower;
(h) copies of corporate resolutions approving the Loan
Documents and authorizing the transactions contemplated herein and
therein, duly adopted by the board of directors of the Borrower,
accompanied by certificates of the secretary or an assistant secretary
of the Borrower, to the effect that such copies are true and correct
copies of resolutions duly adopted at a meeting or by unanimous consent
of the board of directors of the Borrower and that such resolutions
constitute all the resolutions adopted with respect to such
transactions, have not been amended, modified, or revoked in any
respect, and are in full force and effect as of the date of such
certificate;
(i) multiple counterparts, as requested by the Agent, of the
following Security Instruments creating, evidencing, perfecting, and
otherwise establishing Liens in favor of the Agent in and to the
Collateral:
(i) Mortgage, Deed of Trust, Indenture, Security
Agreement, Assignment of Production, and Financing
Statement from the Borrower covering all Oil and Gas
Properties of the Borrower described on Exhibit A thereto
and all improvements, personal property, and fixtures
related thereto;
(ii) Financing Statements from the Borrower as
debtor, constituent to the instrument described in clause
(i) above;
(iii) Security Agreement from Seitel, Inc. covering
the Pledged Stock;
(iv) Security Agreement from the Borrower covering
its interest in the Redman-Smackover Joint Venture;
(v) Financing Statements from the Borrower as
debtor, constituent to the instrument described in clause
(iv) above;
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(vi) Collateral Assignment of the Redman Energy
Corporation Note from the Borrower to the Banks.
(vii) Security Agreement from Redman Energy
Corporation to the Borrower covering 80% of its interest
in the Redman-Smackover Joint Venture;
(viii) Financing Statement from Redman Energy
Corporation as debtor, constituent to the instrument
described in clause (vi) above;
(ix) UCC-3 Assignment from the Borrower to the Banks
of the instruments described in (vi) and (vii) above;
(x) undated letters, in form and substance
satisfactory to the Agent, from the Borrower to each
purchaser of production and disburser of the proceeds of
production from or attributable to the Mortgaged
Properties, together with additional letters with the
addressees left blank, authorizing and directing the
addressees to make future payments attributable to
production from the Mortgaged Properties directly to the
Agent;
(j) unaudited Financial Statements of the Borrower as of
September 30, 1994, and Financial Statements of the Guarantor as of
September 30, 1994.
(k) certificates dated as of a recent date from the Secretary
of State or other appropriate Governmental Authority evidencing the
existence or qualification and good standing of the Borrower in its
jurisdiction of incorporation and in any other jurisdictions where it
does business;
(l) results of searches of the UCC Records of the Secretary of
State of the State of Texas from a source acceptable to the Agent and
reflecting no Liens against any of the Collateral as to which
perfection of a Lien is accomplished by the filing of a financing
statement other than in favor of the Banks;
(m) confirmation, acceptable to the Agent, of the title of the
Borrower to the Mortgaged Properties and the title of the
Redman-Smackover Joint Venture in the Unmortgaged Properties, free and
clear of Liens other than Permitted Liens;
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(n) all operating, lease, sublease, royalty, sales, exchange,
processing, farmout, bidding, pooling, unitization, communitization,
and other agreements relating to the Mortgaged Properties requested by
the Agent;
(o) engineering reports covering the Mortgaged Properties and
the Oil and Gas Properties owned by the Redman-Smackover Joint Venture.
(p) the opinion of Sewell & Riggs, counsel to the Borrower, in
the form attached hereto as Exhibit V, with such changes thereto as may
be approved by the Agent;
(q) certificates evidencing the insurance coverage required
pursuant to Section ;
(r) consent to pledge the interest of Borrower and Redman
Energy Corporation in the Redman-Smackover Joint Venture executed by
all of the parties to such agreement; and
(s) such other agreements, documents, instruments, opinions,
certificates, waivers, consents, and evidence as the Agent may
reasonably request.
(t) The closing of the purchase of the Unmortgaged Properties
from Union Oil Company of California by the Redman-Smackover Joint
Venture.
3.2 Each Loan. In addition to the conditions precedent stated
elsewhere herein, the Banks shall not be obligated to make any Loan unless:
(a) the Borrower shall have delivered to the Agent a Borrowing
Request at least the requisite time prior to the requested date for the
relevant Loan, and each statement or certification made in such
Borrowing Request, shall be true and correct in all material respects
on the requested date for such Loan;
(b) no Event of Default or Default shall exist or will occur
as a result of the making of the requested Loan.
(c) if requested by the Agent, the Borrower shall have
delivered evidence satisfactory to the Agent substantiating any of the
matters contained in this Agreement which are necessary to enable the
Borrower to qualify for such Loan;
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(d) the Agent shall have received, reviewed, and approved such
additional documents and items as described in Section as may be
requested by the Agent with respect to such Loan;
(e) no event shall have occurred which, in the reasonable
opinion of the Agent and Banks, has had a Material Adverse Effect;
(f) each of the representations and warranties contained in
this Agreement shall be true and correct and shall be deemed to be
repeated by the Borrower as if made on the requested date for such
Loan;
(g) all of the Security Instruments shall be in full force and
effect and provide to the Banks the security intended thereby (except
that if the Guaranty has been released pursuant to its terms, the
Guaranty and the Security Agreement from Seitel, Inc. covering the
Pledged Stock shall no longer be in full force and effect);
(h) the consummation of the transactions contemplated hereby
shall not contravene, violate, or conflict with any Requirement of Law;
(i) the Borrower shall hold full legal title to the Collateral
and be the sole beneficial owner thereof;
(j) the Agent shall have received the payment of all Facility
Fees, Engineering Fees, and other fees payable to the Agent and/or the
Banks hereunder and reimbursement from the Borrower, or special legal
counsel for the Agent and Banks shall have received payment from the
Borrower, for (i) all reasonable fees and expenses of counsel incurred
within two days of closing to the Agent and Banks for which the
Borrower is responsible pursuant to applicable provisions of this
Agreement and for which invoices have been presented as of or prior to
the date of the relevant Loan, and (ii) estimated fees charged by
filing officers and other public officials incurred or to be incurred
in connection with the filing and recordation of any Security
Instruments, for which invoices have been presented as of or prior to
the date of the requested Loan; and
(k) all matters incident to the consummation of the
transactions hereby contemplated shall be satisfactory to the Agent and
Banks.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Banks and the Agent to enter into this Agreement
and to make the Loans, the Borrower represents and warrants to the Banks and the
Agent (which representations and warranties shall survive the delivery of the
Bank One Note and the Compass Note) that:
4.1 Due Authorization. The execution and delivery by the
Borrower of this Agreement and the borrowings hereunder, the execution and
delivery by the Borrower of the Bank One Note and the Compass Note, the
repayment of the Bank One Note and the Compass Note and interest and fees
provided for in the Bank One Note and the Compass Note and this Agreement, the
execution and delivery of the Security Instruments by the Borrower and the
performance of all obligations of the Borrower under the Loan Documents are
within the power of the Borrower, have been duly authorized by all necessary
corporate action by the Borrower, and do not and will not (a) require the
consent of any Governmental Authority, (b) contravene or conflict with any
Requirement of Law, (c) contravene or conflict with any indenture, instrument,
or other agreement to which the Borrower is a party or by which any Property of
the Borrower may be presently bound or encumbered, or (d) result in or require
the creation or imposition of any Lien in, upon or of any Property of the
Borrower under any such indenture, instrument, or other agreement, other than
the Loan Documents.
4.2 Corporate Existence. The Borrower is a corporation duly
organized, legally existing, and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and is in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business necessitates same, other than those jurisdictions wherein the
failure to so qualify will not have a Material Adverse Effect.
4.3 Valid and Binding Obligations. All Loan Documents, when
duly executed and delivered by the Borrower, will be the legal, valid, and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms.
4.4 Security Instruments. The provisions of each Security
Instrument are effective to create in favor of the Agent, a legal, valid, and
enforceable Lien in all right, title, and interest of the Borrower in the
Collateral described therein, which Liens, assuming the accomplishment of
recording and filing in accordance with applicable laws prior to the
intervention of rights of other Persons, shall constitute fully perfected
first-priority Liens on all right, title, and interest of the Borrower in the
Collateral described therein.
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4.5 Title to Assets. The Borrower has good and indefeasible
title to all of its Properties, free and clear of all Liens except Permitted
Liens.
4.6 Scope and Accuracy of Financial Statements. The Financial
Statements of the Borrower and Guarantor as of September 30, 1994, present
fairly the financial position and results of operations and cash flows of the
Borrower in accordance with GAAP as at the relevant point in time or for the
period indicated, as applicable. No event or circumstance has occurred since
September 30, 1994, which could reasonably be expected to have a Material
Adverse Effect.
4.7 No Material Misstatements. No information, exhibit,
statement, or report furnished to the Agent by or at the direction of the
Borrower in connection with this Agreement contains any material misstatement of
fact or omits to state a material fact or any fact necessary to make the
statements contained therein not materially misleading as of the date made or
deemed made.
4.8 Liabilities, Litigation, and Restrictions. Other than as
listed under the heading "Liabilities" on Exhibit attached hereto, the Borrower
has no liabilities, direct, or contingent, which may materially and adversely
affect its business or operations or its ownership of the Collateral. Except as
set forth under the heading "Litigation" on Exhibit hereto, no litigation or
other action of any nature affecting the Borrower is pending before any
Governmental Authority or, to the best knowledge of the Borrower, threatened
against or affecting the Borrower which might reasonably be expected to result
in any impairment of its ownership of any Collateral or have a Material Adverse
Effect. To the best knowledge of the Borrower, after due inquiry, no unusual or
unduly burdensome restriction, restraint or hazard exists by contract,
Requirement of Law, or otherwise relative to the business or operations of the
Borrower or the ownership and operation of the Collateral other than such as
relate generally to Persons engaged in business activities similar to those
conducted by the Borrower.
4.9 Authorizations; Consents. Except as expressly contemplated
by this Agreement, no authorization, consent, approval, exemption, franchise,
permit, or license of, or filing with, any Governmental Authority or any other
Person is required to authorize or is otherwise required in connection with the
valid execution and delivery by the Borrower of the Loan Documents or any
instrument contemplated hereby, the repayment by the Borrower of the Bank One
Note and the Compass Note and interest and fees provided in the Bank One Note
and the Compass Note and this Agreement, or the performance by the Borrower of
the Obligations.
4.10 Compliance with Laws. The Borrower and its Property,
including, without limitation, the Mortgaged Property and
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Unmortgaged Properties, are in compliance with all applicable Requirements of
Law, including, without limitation, Environmental Laws, the Natural Gas Policy
Act of 1978, as amended, and ERISA, except to the extent non-compliance with any
such Requirements of Law could not reasonably be expected to have a Material
Adverse Effect.
4.11 ERISA. The Borrower does not maintain nor has it
maintained any Plan. The Borrower does not currently contribute to or have any
obligation to contribute to or otherwise have any liability with respect to any
Plan.
4.12 Environmental Laws. To the best knowledge and belief of
the Borrower, except as would not have a Material Adverse Effect, or as
described on Exhibit under the heading "Environmental Matters:"
(a) no Property of the Borrower is currently on or
has ever been on, or is adjacent to any Property which is
on or has ever been on, any federal or state list of
Superfund Sites;
(b) no Hazardous Substances have been generated,
transported, and/or disposed of by the Borrower at a site
which was, at the time of such generation,
transportation, and/or disposal, or has since become, a
Superfund Site;
(c) except in accordance with applicable
Requirements of Law or the terms of a valid permit,
license, certificate, or approval of the relevant
Governmental Authority, no Release of Hazardous
Substances by the Borrower or from, affecting, or related
to any Property of the Borrower or adjacent to any
Property of the Borrower has occurred; and
(d) no Environmental Complaint has been received by
the Borrower.
4.13 Compliance with Federal Reserve Regulations. No
transaction contemplated by the Loan Documents is in violation of any
regulations promulgated by the Board of Governors of the Federal Reserve System,
including, without limitation, Regulations
G, T, U, or X.
4.14 Investment Company Act Compliance. The Borrower is not,
nor is the Borrower directly or indirectly controlled by or acting on behalf of
any Person which is, an "investment company" or an "affiliated person" of an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
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4.15 Public Utility Holding Company Act Compliance. The
Borrower is not a "holding company," or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended.
4.16 Proper Filing of Tax Returns; Payment of Taxes Due. The
Borrower and the Guarantor have duly and properly filed their United States
income tax return and all other tax returns which are required to be filed and
the Borrower and the Guarantor have paid all taxes due except such as are being
contested in good faith and as to which adequate provisions and disclosures have
been made. The respective charges and reserves on the books of the Borrower and
the Guarantor with respect to taxes and other governmental charges are adequate.
4.17 Refunds. Except as described on Exhibit under the heading
"Refunds," no orders of, proceedings pending before, or other requirements of,
the Federal Energy Regulatory Commission, the Texas Railroad Commission, or any
Governmental Authority exist which could result in the Borrower being required
to refund any material portion of the proceeds received or to be received from
the sale of hydrocarbons constituting part of the Mortgaged Property and/or the
Unmortgaged Properties.
4.18 Gas Contracts. Except as described on Exhibit under the
heading "Gas Contracts," the Borrower (a) is not obligated in any material
respect by virtue of any prepayment made under any contract containing a
"take-or-pay" or "prepayment" provision or under any similar agreement to
deliver hydrocarbons produced from or allocated to any of the Mortgaged Property
and Unmortgaged Properties at some future date without receiving full payment
therefor within 90 days of delivery, and (b) has not produced gas, in any
material amount, subject to, and neither the Borrower nor any of the Mortgaged
Properties and Unmortgaged Properties is subject to, balancing rights of third
parties or subject to balancing duties under governmental requirements, except
as to such matters for which the Borrower has established monetary reserves
adequate in amount to satisfy such obligations and has segregated such reserves
from other accounts.
4.19 Intellectual Property. The Borrower owns or is licensed
to use all Intellectual Property necessary to conduct all business material to
its condition (financial or otherwise), business, or operations as such business
is currently conducted. No claim has been asserted or is pending by any Person
with the respect to the use of any such Intellectual Property or challenging or
questioning the validity or effectiveness of any such Intellectual Property; and
the Borrower knows of no valid basis for any such claim. The use of such
Intellectual Property by the Borrower does not infringe on the rights of any
Person, except for
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such claims and infringements as do not, in the aggregate, give rise to any
material liability on the part of the Borrower.
4.20 Casualties or Taking of Property. Except as disclosed on
Exhibit under the heading "Casualties," since September 30, 1994, neither the
business nor any Property of the Borrower has been materially adversely affected
as a result of any fire, explosion, earthquake, flood, drought, windstorm,
accident, strike or other labor disturbance, embargo, requisition or taking of
Property, or cancellation of contracts, permits, or concessions by any
Governmental Authority, riot, activities of armed forces, or acts of God.
4.21 Locations of Borrower. The principal place of business
and chief executive office of the Borrower is located at the address of the
Borrower set forth in Section or at such other location as the Borrower may
have, by proper written notice hereunder, advised the Agent, provided that such
other location is within a state in which appropriate financing statements from
the Borrower in favor of the Agent have been filed.
ARTICLE V
AFFIRMATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower and Guarantor where applicable, shall:
5.1 Maintenance and Access to Records. Keep adequate records
in accordance with GAAP of all its transactions so that at any time, and from
time to time, its true and complete financial condition may be readily
determined, and make such records available for inspection by the Banks at any
time during normal business hours, and with at least three (3) Business Days'
prior notice prior to the occurrence of an Event of Default and without notice
if after the occurrence of an Event of Default, and, at the expense of the
Borrower if a Default or an Event of Default occurs and at the expense of Banks
otherwise, allow the Banks to make and take away copies thereof.
5.2 Quarterly Financial Statements of Borrower; Compliance
Certificates. Deliver to the Agent, (a) on or before the 45th day after the
close of each of the first three quarterly periods of each fiscal year of the
Borrower, a copy of the unaudited Financial Statements of the Borrower as at the
close of such quarterly period and from the beginning of such fiscal year to the
end of such period, such Financial Statements to be certified by a Responsible
Officer of the Borrower as having been prepared in accordance with GAAP
consistently applied and as a fair
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presentation of the condition of the Borrower, subject to changes resulting from
normal year-end audit adjustments, and (b) on or before the 45th day after the
close of each fiscal quarter and within 90 days of fiscal year end, a Compliance
Certificate.
5.3 Annual Financial Statements of Borrower. Deliver to the
Agent, on or before the 90th day after the close of each fiscal year of the
Borrower, a copy of the annual unaudited Financial Statements of the Borrower
certified by a Responsible Officer of the Borrower.
5.4 Quarterly Financial Statements of Guarantor. So long as
the Guarantee is in existence, Guarantor shall deliver to the Agent, on or
before the 45th day after the close of each of the first three quarterly periods
of each fiscal year of the Guarantor, a copy of the unaudited consolidated
Financial Statements of the Guarantor as at the close of such quarterly period
and from the beginning of such fiscal year to the end of such period, such
Financial Statements to be certified by a Responsible Officer of the Guarantor
as having been prepared in accordance with GAAP consistently applied and as a
fair presentation of the condition of the Guarantor, subject to changes
resulting from normal year-end audit adjustments.
5.5 Annual Financial Statements of Guarantor. So long as the
Guarantee is in existence, deliver to the Agent, on or before the 90th day after
the close of each fiscal year of the Guarantor, a copy of the annual audited
consolidated Financial Statements of the Guarantor.
5.6 Quarterly Financial Statements of Redman-Smackover Joint
Venture. Borrower shall deliver to the Agent, within 3 days of receipt from the
Managing Venturer, a copy of the unaudited Financial Statements of
Redman-Smackover Joint Venture as at the close of such quarterly period and from
the beginning of such fiscal year to the end of such period. In the event the
Borrower does not receive such Financial Statement from the Managing Venturer,
Borrower agrees to furnish the Agent with all information pertaining to the
Redman-Smackover Joint Venture available to the Borrower within 15 days from
Agent's request.
5.7 Oil and Gas Reserve Reports. (a) Deliver to the Agent no
later than April 1 of each year during the term of this Agreement, engineering
reports in form and substance satisfactory to the Banks, certified by Forrest A.
Garb & Associates, Inc. or any other nationally- or regionally-recognized
independent consulting petroleum engineers acceptable to the Agent as fairly and
accurately setting forth (i) the proven and producing, shut-in, behind-pipe, and
undeveloped oil and gas reserves (separately classified as such) attributable to
the Mortgaged Properties and the Oil and Gas Properties of the Redman-Smackover
Joint Venture as
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of January 1 of the year for which such reserve reports are furnished, (ii) the
aggregate present value of the future net income with respect to such Mortgaged
Properties and the Unmortgaged Properties discounted at a stated per annum
discount rate of proven and producing reserves, (iii) projections of the annual
rate of production, gross income, and net income with respect to such proven and
producing reserves, and (iv) information with respect to the "take-or-pay,"
"prepayment," and gas-balancing liabilities of the Borrower.
(b) Deliver to the Agent no later than October 1 of each year
during the term of this Agreement, engineering reports in form and substance
satisfactory to the Agent prepared by or under the supervision of the chief
petroleum engineer of the Borrower evaluating the Mortgaged Properties and the
Oil and Gas Properties of the Redman-Smackover Joint Venture as of July 1 of the
year for which such reserve reports are furnished and updating the information
provided in the reports pursuant to Section (a).
(c) Each of the reports provided pursuant to this Section
shall be submitted to the Agent together with additional data concerning
pricing, quantities of production from the Mortgaged Properties and the
Unmortgaged Properties, volumes of production sold, purchasers of production,
gross revenues, expenses, and such other information and engineering and
geological data with respect thereto as the Banks may reasonably request.
5.8 Title Opinions; Title Defects. Promptly upon the request
of the Agent furnish to the Agent title opinions, in form and substance and by
counsel satisfactory to the Agent, or other confirmation of title acceptable to
the Banks, covering Oil and Gas Properties constituting not less than 90% of the
value, determined by the Banks in their sole discretion, of the Mortgaged
Properties and the Unmortgaged Properties; and promptly, but in any event within
60 days after notice by the Agent of any defect, material in the opinion of the
Agent in value, in the title of the Borrower to any of its Oil and Gas
Properties and in title to the Unmortgaged Properties, cure such title defects,
and, in the event any such title defects are not cured in a timely manner, the
portion of the Oil and Gas Properties which are directly effected by such
uncured or uncurable title defect may, in the reasonable discretion of the
Agent, be excluded from the Borrowing Base determinations contemplated by
Section 2.8 of this Agreement.
5.9 Notices of Certain Events. Deliver to the Banks,
immediately upon having knowledge of the occurrence of any of the following
events or circumstances, a written statement with respect thereto, signed by a
Responsible Officer of the Borrower and setting forth the relevant event or
circumstance and the steps being taken by the Borrower with respect to such
event or circumstance:
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(a) any Default or Event of Default;
(b) any default or event of default under any contractual
obligation of the Borrower or Guarantor or any litigation,
investigation, or proceeding between the Borrower and any Governmental
Authority which, in either case, if not cured or if adversely
determined, as the case may be, could reasonably be expected to have a
Material Adverse Effect;
(c) any litigation or proceeding involving the Borrower or
Guarantor as a defendant or in which any Property of the Borrower is
subject to a claim and in which the amount involved is $250,000.00 for
Borrower and $1,000,000.00 for the Guarantor or more and which is not
covered by insurance or in which injunctive or similar relief is sought
which could reasonably be expected to have a Material Adverse Effect;
(d) the receipt by the Borrower of any Environmental
Complaint;
(e) any actual, proposed, or threatened testing or other
investigation by any Governmental Authority or other Person concerning
the environmental condition of, or relating to, any Property of the
Borrower which could result in a Material Adverse Effect, following any
allegation of a violation of any Requirement of Law;
(f) any Release of Hazardous Substances by the Borrower or
from, affecting, or related to any Property of the Borrower which could
result in a Material Adverse Effect except in accordance with
applicable Requirements of Law or the terms of a valid permit, license,
certificate, or approval of the relevant Governmental Authority, or the
violation of any Environmental Law, or the revocation, suspension, or
forfeiture of or failure to renew, any permit, license, registration,
approval, or authorization which could reasonably be expected to have a
Material Adverse Effect;
(g) the change in identity or address of any Person remitting
to the Borrower proceeds from the sale of hydrocarbon production from
or attributable to any Mortgaged Property;
(h) any other event or condition which could reasonably be
expected to have a Material Adverse Effect.
5.10 Letters in Lieu of Transfer Orders; Division Orders.
Promptly upon request by the Agent at any time and from
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time to time, and without limitation on the rights of the Agent or Banks
pursuant to Sections and , execute such letters in lieu of transfer orders, in
addition to the letters signed by the Borrower and delivered to the Agent in
satisfaction of the condition set forth in Section and/or division and/or
transfer orders as are necessary or appropriate to transfer and deliver to the
Agent proceeds from or attributable to any Mortgaged Property.
5.11 Additional Information. Furnish to the Banks, promptly
upon the request of the Banks, such additional financial or other information
concerning the assets, liabilities, operations, and transactions of the Borrower
as the Agent may from time to time request; and notify the Banks not less than
ten Business Days prior to the occurrence of any condition or event that may
change the proper location for the filing of any financing statement or other
public notice or recording for the purpose of perfecting a Lien in any
Collateral, including, without limitation, any change in its name or the
location of its principal place of business or chief executive office; and upon
the request of the Agent, execute such additional Security Instruments as may be
necessary or appropriate in connection therewith.
5.12 Compliance with Laws. Except to the extent the failure to
comply or cause compliance would not have a Material Adverse Effect, comply with
all applicable Requirements of Law, including, without limitation, (a) the
Natural Gas Policy Act of 1978, as amended, (b) ERISA, (c) Environmental Laws,
and (d) all permits, licenses, registrations, approvals, and authorizations (i)
related to any natural or environmental resource or media located on, above,
within, in the vicinity of, related to or affected by any Property of the
Borrower, (ii) required for the performance of the operations of the Borrower,
or (iii) applicable to the use, generation, handling, storage, treatment,
transport, or disposal of any Hazardous Substances; and cause all employees,
crew members, agents, contractors, subcontractors, and future lessees (pursuant
to appropriate lease provisions) of the Borrower, while such Persons are acting
within the scope of their relationship with the Borrower, to comply with all
such Requirements of Law as may be necessary or appropriate to enable the
Borrower to so comply.
5.13 Payment of Assessments and Charges. Pay all taxes,
assessments, governmental charges, rent, and other Indebtedness which, if
unpaid, might become a Lien against the Property of the Borrower, except any of
the foregoing being contested in good faith and as to which adequate reserve in
accordance with GAAP has been established or unless failure to pay would not
have a Material Adverse Effect.
5.14 Maintenance of Corporate Existence and Good Standing. The
Borrower shall maintain its corporate existence or
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qualification and good standing in its jurisdictions of incorporation and in all
jurisdictions wherein the Property now owned or hereafter acquired or business
now or hereafter conducted necessitates same, unless the failure to do so would
not have a Material Adverse Effect.
5.15 Payment of Bank One Note and the Compass Note;
Performance of Obligations. Pay the Bank One Note and the Compass Note according
to the reading, tenor, and effect thereof, as modified hereby, and do and
perform every act and discharge all of its other Obligations.
5.16 Further Assurances. Promptly cure any defects in the
execution and delivery of any of the Loan Documents and all agreements
contemplated thereby, and execute, acknowledge, and deliver such other
assurances and instruments as shall, in the opinion of the Required Banks, be
necessary to fulfill the terms of the Loan Documents.
5.17 Initial Fees and Expenses of Counsel to Agent. Upon
request by the Agent, promptly reimburse the Agent for all reasonable fees and
expenses of Jackson & Walker, L.L.P., special counsel to the Agent, in
connection with the preparation of this Agreement and all documentation
contemplated hereby, the satisfaction of the conditions precedent set forth
herein, the filing and recordation of Security Instruments, and the consummation
of the transactions contemplated in this Agreement.
5.18 Subsequent Fees and Expenses of Agent. Upon request by
the Agent, promptly reimburse the Agent (to the fullest extent permitted by law)
for all amounts reasonably expended, advanced, or incurred by or on behalf of
the Agent to satisfy any obligation of the Borrower under any of the Loan
Documents; to collect the Obligations; to ratify, amend, restate, or prepare
additional Loan Documents, as the case may be; for the filing and recordation of
Security Instruments; to enforce the rights of the Agent under any of the Loan
Documents; and to protect the Properties or business of the Borrower including,
without limitation, the Collateral, which amounts shall be deemed compensatory
in nature and liquidated as to amount upon notice to the Borrower by the Agent
and which amounts shall include, but not be limited to (a) all court costs, (b)
reasonable attorneys' fees, (c) reasonable fees and expenses of auditors and
accountants incurred to protect the interests of the Agent, (d) fees and
expenses incurred in connection with the participation by the Agent as a member
of the creditors' committee in a case commenced under any Insolvency Proceeding,
(e) fees and expenses incurred in connection with lifting the automatic stay
prescribed in ss.362 Title 11 of the United States Code, and (f) fees and
expenses incurred in connection with any action pursuant to ss.1129 Title 11 of
the United States Code all reasonably incurred by the Agent in connection with
the collection of any sums due under
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the Loan Documents, together with interest at the per annum interest rate equal
to the Floating Rate, calculated on a basis of a calendar year of 365 or 366
days, as the case may be, counting the actual number of days elapsed, on each
such amount from the date of notification that the same was expended, advanced,
or incurred by the Agent until the date it is repaid to the Agent, with the
obligations under this Section surviving the non-assumption of this Agreement in
a case commenced under any Insolvency Proceeding and being binding upon the
Borrower and/or a trustee, receiver, custodian, or liquidator of the Borrower
appointed in any such case.
5.19 Operation of Oil and Gas Properties. Use its reasonable
efforts to cause the operators of its Oil and Gas Properties to develop,
maintain, and operate such properties in a prudent and workmanlike manner in
accordance with industry standards.
5.20 Maintenance and Inspection of Properties. Use its
reasonable efforts to cause the operators of its Oil and Gas Properties to
maintain such properties in good repair and condition, ordinary wear and tear
excepted, and to make all necessary replacements thereof and operate such
Properties in a good and workmanlike manner; and permit any authorized
representative of the Agent to visit and inspect, at the expense of the Borrower
if a Default or an Event of Default exists or otherwise at the expense of the
Banks, any tangible Property of the Borrower.
5.21 Maintenance of Insurance. Maintain insurance with respect
to its Properties and businesses against such liabilities, casualties, risks,
and contingencies as is customary in the relevant industry and sufficient to
prevent a Material Adverse Effect, all such insurance to be in amounts and from
insurers reasonably acceptable to the Agent and, within 30 days of the Closing
Date for property damage insurance covering Collateral and business interruption
insurance, if any, maintained by Borrower, naming the Agent as loss payee, and,
upon any renewal of any such insurance and at other times upon request by the
Agent, furnish to the Agent evidence, satisfactory to the Agent, of the
maintenance of such insurance. The Agent shall have the right to collect, and
the Borrower hereby assigns to the Agent, any and all monies that may become
payable under any policies of insurance relating to business interruption or by
reason of damage, loss, or destruction of any of the Collateral. In the event of
any damage, loss, or destruction for which insurance proceeds relating to
business interruption or Collateral exceed $250,000.00, the Agent may, at its
option, apply all such sums or any part thereof received by it toward the
payment of the Obligations, whether matured or unmatured, application to be made
first to interest and then to principal, and shall deliver to the Borrower the
balance, if any,
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after such application has been made. In the event of any such damage, loss, or
destruction for which insurance proceeds are $250,000.00 or less, provided that
no Default or Event of Default has occurred and is continuing, the Agent shall
deliver any such proceeds received by it to the Borrower. In the event the Agent
receives insurance proceeds not attributable to Collateral or business
interruption, the Agent shall deliver any such proceeds to the Borrower.
5.22 INDEMNIFICATION. INDEMNIFY AND HOLD THE AGENT AND BANKS
AND THEIR SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, AND AFFILIATES AND EACH TRUSTEE FOR THE BENEFIT OF THE AGENT
AND BANKS UNDER ANY SECURITY INSTRUMENT HARMLESS FROM AND AGAINST ANY AND ALL
CLAIMS, LOSSES, DAMAGES, LIABILITIES, FINES, PENALTIES, CHARGES, ADMINISTRATIVE
AND JUDICIAL PROCEEDINGS AND ORDERS, JUDGMENTS, REMEDIAL ACTIONS, REQUIREMENTS
AND ENFORCEMENT ACTIONS OF ANY KIND, AND ALL COSTS AND EXPENSES INCURRED IN
CONNECTION THEREWITH (INCLUDING, WITHOUT LIMITATION, ATTORNEYS' FEES AND
EXPENSES), ARISING DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, FROM (A) THE
PRESENCE OF ANY HAZARDOUS SUBSTANCES ON, UNDER, OR FROM ANY PROPERTY OF THE
BORROWER, WHETHER PRIOR TO OR DURING THE TERM HEREOF, (B) ANY ACTIVITY CARRIED
ON OR UNDERTAKEN ON OR OFF ANY PROPERTY OF THE BORROWER, WHETHER PRIOR TO OR
DURING THE TERM HEREOF, AND WHETHER BY THE BORROWER OR ANY PREDECESSOR IN TITLE,
EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER OR ANY OTHER
PERSON AT ANY TIME OCCUPYING OR PRESENT ON SUCH PROPERTY, IN CONNECTION WITH THE
HANDLING, TREATMENT, REMOVAL, STORAGE, DECONTAMINATION, CLEANUP, TRANSPORTATION,
OR DISPOSAL OF ANY HAZARDOUS SUBSTANCES AT ANY TIME LOCATED OR PRESENT ON OR
UNDER SUCH PROPERTY, (C) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY PROPERTY OF
THE BORROWER, (D) ANY CONTAMINATION OF ANY PROPERTY OR NATURAL RESOURCES ARISING
IN CONNECTION WITH THE GENERATION, USE, HANDLING, STORAGE, TRANSPORTATION OR
DISPOSAL OF ANY HAZARDOUS SUBSTANCES BY THE BORROWER OR ANY EMPLOYEE, AGENT,
CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWER WHILE SUCH PERSONS ARE ACTING
WITHIN THE SCOPE OF THEIR RELATIONSHIP WITH THE BORROWER, IRRESPECTIVE OF
WHETHER ANY OF SUCH ACTIVITIES WERE OR WILL BE UNDERTAKEN IN ACCORDANCE WITH
APPLICABLE REQUIREMENTS OF LAW, OR (E) THE PERFORMANCE AND ENFORCEMENT OF ANY
LOAN DOCUMENT, OR ANY OTHER GOOD FAITH ACT OR OMISSION IN CONNECTION WITH OR
RELATED TO ANY LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED THEREBY,
INCLUDING, WITHOUT LIMITATION, ANY OF THE FOREGOING IN THIS SECTION ARISING FROM
NEGLIGENCE, WHETHER SOLE OR CONCURRENT, ON THE PART OF THE AGENT AND BANKS OR
ANY OF THEIR SHAREHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES, AGENTS,
ATTORNEYS-IN-FACT, OR AFFILIATES OR ANY TRUSTEE FOR THE BENEFIT OF THE AGENT AND
BANKS UNDER ANY SECURITY INSTRUMENT; WITH THE FOREGOING INDEMNITY SURVIVING
SATISFACTION OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT, UNLESS
ALL SUCH OBLIGATIONS HAVE BEEN SATISFIED WHOLLY IN CASH FROM THE BORROWER AND
NOT BY WAY OF REALIZATION AGAINST ANY COLLATERAL OR THE CONVEYANCE OF ANY
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PROPERTY IN LIEU THEREOF, PROVIDED THAT SUCH INDEMNITY SHALL NOT EXTEND TO ANY
ACT OR OMISSION BY THE AGENT AND BANKS WITH RESPECT TO ANY PROPERTY SUBSEQUENT
TO THE AGENT AND BANKS BECOMING THE OWNER OF SUCH PROPERTY AND WITH RESPECT TO
WHICH PROPERTY SUCH CLAIM, LOSS, DAMAGE, LIABILITY, FINE, PENALTY, CHARGE,
PROCEEDING, ORDER, JUDGMENT, ACTION, OR REQUIREMENT ARISES SUBSEQUENT TO THE
ACQUISITION OF TITLE THERETO BY THE AGENT AND BANKS.
5.23 Accounts Payable and Accounts Receivable Aging Report.
Borrower shall deliver to the Banks on or before the 45th day after the close of
each quarterly period of each fiscal year of the Borrower an accounts payable
and an accounts receivable report reflecting the amount and age of each item.
5.24 Production Receipts. Deposit all receipts from the
production from the Mortgaged Property as well as all of Borrower's
distributions from the Redman-Smackover Joint Venture in Account No.
188-488-2141 at Bank One.
ARTICLE VI
NEGATIVE COVENANTS
So long as any Obligation remains outstanding or unpaid or any
Commitment exists, the Borrower will not:
6.1 Indebtedness. Create, incur, assume, or suffer to exist
any Indebtedness, whether by way of loan or otherwise; provided, however, the
foregoing restriction shall not apply to (a) the Obligations, (b) unsecured
accounts payable incurred in the ordinary course of business, which are not
unpaid in excess of 45 days beyond due date or are being contested in good faith
and as to which such reserve has been made, or (c) Permitted Indebtedness.
6.2 Contingent Obligations. Create, incur, assume, or suffer
to exist any Contingent Obligation; provided, however, the foregoing restriction
shall not apply to (a) performance guarantees and performance surety or other
bonds provided in the ordinary course of business, or (b) trade credit incurred
or operating leases entered into in the ordinary course of business.
6.3 Liens. Create, incur, assume, or suffer to exist any Lien
on any of its Oil and Gas Properties or any other Property, whether now owned or
hereafter acquired; provided, however, the foregoing restrictions shall not
apply to Permitted Liens.
6.4 Sales of Collateral. Without the prior written consent of
the Agent, sell, transfer, or otherwise dispose of, in one or any series of
transactions, Collateral, whether now owned or hereafter acquired, or enter into
any agreement to do so; provided,
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however, the foregoing restriction shall not apply to (a) the sale of
hydrocarbons or inventory in the ordinary course of business provided that no
contract for the sale of hydrocarbons shall obligate the Borrower to deliver
hydrocarbons produced from any of the Mortgaged Property at some future date
without receiving full payment therefor within 90 days of delivery, (b) the sale
or other disposition of Property destroyed, lost, worn out, damaged, or having
only salvage value or no longer used or useful in the business of the Borrower.
6.5 Loans or Advances. Make or agree to make or allow to
remain outstanding any loans or advances in excess of $100,000 in the aggregate
to any Person; provided, however, the foregoing restrictions shall not apply to
(a) advances or extensions of credit in the form of accounts receivable incurred
in the ordinary course of business and upon terms common in the industry for
such accounts receivable, or (b) advances to employees of the Borrower for the
payment of expenses in the ordinary course of business, or (c) the loan to
Redman Energy Corporation in the amount of $1,600,000 corresponding to the
purchase of Redman Energy Corporation's interest in the Redman-Smackover Joint
Venture.
6.6 Loans or Advances from Guarantor and Affiliates. All loans
or advances from the Guarantor and any affiliate shall be fully subordinated to
the Banks.
6.7 Investments. Acquire Investments in, or purchase or
otherwise acquire all or substantially all of the assets of, any Person;
provided, however, the foregoing restriction shall not apply to the purchase or
acquisition of (a) Oil and Gas Properties, (b) Investments in the form of (i)
debt securities issued or directly and fully guaranteed or insured by the United
States Government or any agency or instrumentality thereof, with maturities of
no more than one year, (ii) commercial paper of a domestic issuer rated at the
date of acquisition at least P-2 by Moody's Investor Service, Inc. or A-2 by
Standard & Poor's Corporation and with maturities of no more than one year from
the date of acquisition, or (iii) repurchase agreements covering debt securities
or commercial paper of the type permitted in this Section, certificates of
deposit, demand deposits, eurodollar time deposits, overnight bank deposits and
bankers' acceptances, with maturities of no more than one year from the date of
acquisition, issued by or acquired from or through the Banks or any bank or
trust company organized under the laws of the United States or any state thereof
and having capital surplus and undivided profits aggregating at least
$100,000,000, (c) other short-term Investments similar in nature and degree of
risk to those described in clause (b) of this Section, or (d) money-market
funds.
6.8 Dividends and Distributions. Declare, pay, or make,
whether in cash or Property of the Borrower, any dividend or
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distribution on, or purchase, redeem, or otherwise acquire for value, any share
of any class of its capital stock at any time that a Default or Event of Default
exists or would exist upon such payment.
6.9 Transactions with Affiliates. Directly or indirectly,
enter into any transaction (including the sale, lease, or exchange of Property
or the rendering of service) with any of its Affiliates, other than upon fair
and reasonable terms no less favorable than could be obtained in an arm's length
transaction with a Person which was not an Affiliate, with the exception of
services provided by Affiliates at cost to the Borrower.
6.10 Lines of Business. Expand into any line of business other
than those in which the Borrower is engaged as of the date hereof.
6.11 Change in Ownership. Change in any manner the ownership
of Borrower (other than as permitted pursuant to Section 6.12) without the prior
written approval of Banks, which approval will not be unreasonably withheld.
6.12 Issuance of Stock; Changes in Corporate Structure. Issue
or agree to issue additional shares of capital stock, in one or any series of
transactions with the exception of obtaining cash for such stock unless such
issuance would result in Guarantor owning less than 51% of the capital stock of
Borrower; enter into any transaction of consolidation, merger, or amalgamation;
liquidate, wind up, or dissolve (or suffer any liquidation or dissolution).
6.13 Amendment of Redman-Smackover Joint Venture. Vote on the
following matters in connection with the Redman-Smackover Joint Venture without
the prior written consent of the Banks;
(a) Sell, lease, exchange, abandon, encumber, or
convey title to or grant options for sale of all or any
portion of the Redman-Smackover Joint Venture property;
(b) Borrow money, or incur any indebtedness or other
obligation, or execute any contract therefor on behalf of
the Redman-Smackover Joint Venture;
(c) Assign, transfer, or pledge any debts owed to
the Redman-Smackover Joint Venture, or release any debts
due except (i) on payment in full or (ii) on less than
payment in full if in the ordinary course of business;
(d) Compromise any claims due in excess of Twenty
Five Thousand Dollars ($25,000.00) to the Redman-
Smackover Joint Venture or submit to arbitration any
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dispute or controversy involving the
Redman-Smackover Joint Venture except any dispute or
controversy covering the Joint Venture Agreement;
(e) Modify the current structure of the
RedmanSmackover Joint Venture through the addition and/or
deletion of Venturers except as may be provided in the
Redman-Smackover Joint Venture Agreement;
(f) Change the scope of the business activities of
the Redman-Smackover Joint Venture;
(g) Change the distribution of available cash.
Notwithstanding the above, the Borrower may vote to sell up to
10% of the properties of the Redman-Smackover Joint Venture.
6.14 Tangible Net Worth. Permit Tangible Net Worth to be less
than $17,500,000.00, plus 50% of positive Net Income for all calendar quarterly
periods subsequent to September 30, 1994, and 100% of increases in advances from
the Guarantor and affiliates and decreased by 100% of permitted payments made on
advances from Guarantor and affiliates after September 30, 1994, but never to
reduce below $17,500,000.00 plus 50% of positive Net Income for all calendar
quarterly periods subsequent to September 30, 1994.
6.15 Cash Flow Coverage Ratio of Borrower. Permit, as of the
close of any fiscal quarter, beginning with the quarter ending June 30, 1995 the
ratio of Cash Flow to Debt Service to be less than 1.25 to 1.00.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Enumeration of Events of Default. Any of the following
events shall constitute an Event of Default:
(a) default shall be made in the payment when due of any
installment of principal or interest under this Agreement or the Bank
One Note and/or the Compass Note or in the payment when due of any fee
or other sum payable under any Loan Document and the default as to
interest or fees shall remain uncured for a period in excess of three
Business Days;
(b) default shall be made by the Borrower or the Guarantor in
the due observance or performance of any of its obligations under the
Loan Documents, and such default shall continue for 30 days after the
earlier of
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notice thereof to the Borrower by the Agent or knowledge
thereof by the Borrower;
(c) any representation or warranty made by the Borrower or the
Guarantor in any of the Loan Documents proves to have been untrue in
any material respect or any representation, statement (including
Financial Statements), certificate, or data furnished or made to the
Agent in connection herewith proves to have been untrue in any material
respect as of the date the facts therein set forth were stated or
certified;
(d) default shall be made by the Borrower or the Guarantor (as
principal or other surety) in the payment or performance of any bond,
debenture, note, or other Indebtedness or under any credit agreement,
loan agreement, indenture, promissory note, or similar agreement or
instrument executed in connection with any of the foregoing the
aggregate amount of indebtedness related to such default shall exceed
$250,000.00, and such defaults shall remain unremedied for in excess of
the period of grace, if any, with respect thereto (or, if past the
grace period, Borrower is not contesting such defaults in good faith
and has not made adequate reserves therefore);
(e) the Borrower shall be unable to satisfy any condition or
cure any circumstance specified in Article , the satisfaction or curing
of which is precedent to the right of the Borrower to obtain a Loan and
such inability shall continue for a period in excess of 30 days;
(f) either the Borrower or the Guarantor shall (i) apply for
or consent to the appointment of a receiver, trustee, or liquidator of
it or all or a substantial part of its assets, (ii) file a voluntary
petition commencing an Insolvency Proceeding, (iii) make a general
assignment for the benefit of creditors, (iv) be unable, or admit in
writing its inability, to pay its debts generally as they become due,
or (v) file an answer admitting the material allegations of a petition
filed against it in any Insolvency Proceeding;
(g) an order, judgment, or decree shall be entered against
either the Borrower or the Guarantor by any court of competent
jurisdiction or by any other duly authorized authority, on the petition
of a creditor or otherwise, granting relief in any Insolvency
Proceeding or approving a petition seeking reorganization or an
arrangement of its debts or appointing a receiver, trustee,
conservator,
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custodian, or liquidator of it or all or any substantial part of its
assets, and such order, judgment, or decree shall not be dismissed or
stayed within 90 days;
(h) the levy against any significant portion of the Property
of the Borrower or the Guarantor or any execution, garnishment,
attachment, sequestration, or other writ or similar proceeding which is
not permanently dismissed or discharged within 90 days after the levy;
(i) a final and non-appealable order, judgment, or decree
shall be entered against the Borrower or the Guarantor for money
damages and/or Indebtedness due in an amount in excess of $250,000.00,
and such order, judgment, or decree shall not be dismissed or stayed
within 90 days;
(j) any charges are filed or any other action or proceeding is
instituted by any Governmental Authority against the Borrower or the
Guarantor under the Racketeering Influence and Corrupt Organizations
Statute (18 U.S.C. ss.1961 et seq.), the result of which could be the
forfeiture or transfer of any material Property of the Borrower or the
Guarantor subject to a Lien in favor of the Banks without (i)
satisfaction or provision for satisfaction of such Lien, or (ii) such
forfeiture or transfer of such Property being expressly made subject to
such Lien;
(k) either the Borrower or the Guarantor shall have (i)
concealed, removed, or diverted, or permitted to be concealed, removed,
or diverted, any part of its Property, with intent to hinder, delay, or
defraud its creditors or any of them, (ii) made or suffered a transfer
of any of its Property which is fraudulent under any bankruptcy,
fraudulent conveyance, or similar law, (iii) made any transfer of its
Property to or for the benefit of a creditor at a time when other
creditors similarly situated have not been paid, or (iv) shall have
suffered or permitted, while insolvent, any creditor to obtain a Lien
upon any of its Property through legal proceedings or distraint which
is not vacated within 90 days from the date thereof;
(l) any Security Instrument affecting more than 5% of the
Borrowing Base shall for any reason not, or cease to, create valid and
perfected first-priority Liens against the Collateral purportedly
covered thereby and not cured within 90 days after knowledge by the
Borrower;
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(m) the Guarantor shall cease to own more than 51%
of the outstanding capital stock of any class issued by
the Borrower; or
(n) the occurrence of a Material Adverse Effect and
the same shall remain unremedied for in excess of 30 days
after notice given to the Agent.
7.2 Remedies. (a) Upon the occurrence of an Event of Default
specified in Sections or , immediately and without notice, (i) all Obligations
shall automatically become immediately due and payable, without presentment,
demand, protest, notice of protest, default, or dishonor, notice of intent to
accelerate maturity, notice of acceleration of maturity, or other notice of any
kind, except as may be provided to the contrary elsewhere herein, all of which
are hereby expressly waived by the Borrower; (ii) the Commitment shall
immediately cease and terminate unless and until reinstated by the Agent with
the written approval of the Required Banks; and (iii) the Banks are hereby
authorized at any time and from time to time, without notice to the Borrower
(any such notice being expressly waived by the Borrower), to set-off and apply
any and all deposits (general or special, time or demand, provisional or final)
held by the Banks and any and all other indebtedness at any time owing by the
Banks to or for the credit or account of the Borrower against any and all of the
Obligations.
(b) Upon the occurrence of any Event of Default other than
those specified in Sections or , (i) the Agent, with the written approval of the
Required Banks, may by notice to the Borrower, declare all Obligations
immediately due and payable, without presentment, demand, protest, notice of
protest, default, or dishonor, notice of intent to accelerate maturity, notice
of acceleration of maturity, or other notice of any kind, except as may be
provided to the contrary elsewhere herein, all of which are hereby expressly
waived by the Borrower; (ii) the Commitment shall immediately cease and
terminate unless and until reinstated by the Required Banks and the Agent in
writing; and (iii) the Banks are hereby authorized at any time and from time to
time, without notice to the Borrower (any such notice being expressly waived by
the Borrower), to set-off and apply any and all deposits (general or special,
time or demand, provisional or final) held by the Banks and any and all other
indebtedness at any time owing by the Banks to or for the credit or account of
the Borrower against any and all of the Obligations although such Obligations
may be unmatured.
(c) Upon the occurrence of any Event of Default, each Bank and
the Agent may, in addition to the foregoing in this Section, exercise any or all
of its rights and remedies provided by law or pursuant to the Loan Documents.
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ARTICLE VIII
THE AGENT
8.1 Appointment. Each Bank hereby designates and appoints the
Agent as the agent of such Bank under this Agreement and the other Loan
Documents, and each Bank authorizes the Agent, as the agent for such Bank, to
take such action on behalf of such Bank under the provisions of this Agreement
and the other Loan Documents and to exercise such powers and perform such duties
as are expressly delegated to the Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement or in any other Loan Document, the Agent shall not have any
duties or responsibilities except those expressly set forth herein or in any
other Loan Document or any fiduciary relationship with any Bank; and no implied
covenants, functions, responsibilities, duties, obligations or liabilities on
the part of the Agent shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent.
8.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions. Neither the Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates shall be
(a) required to initiate or conduct any litigation or collection proceedings
hereunder, except with the concurrence of the Required Banks and contribution by
each Bank of its Commitment Percentage of costs reasonably expected by the Agent
to be incurred in connection therewith, (b) liable for any action lawfully taken
or omitted to be taken by it or such Person under or in connection with this
Agreement or any other Loan Document (except for gross negligence or willful
misconduct of the Agent or such Person), or (c) responsible in any manner to any
Bank for any recitals, statements, representations or warranties made by the
Borrower or any officer of any of them contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Loan Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document or for any failure of the Borrower to perform its
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Bank to ascertain or to inquire as to
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the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower.
8.4 Reliance by Agent. The Agent shall be entitled to rely,
and shall be fully protected in relying, upon the Bank One Note and the Compass
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower), independent accountants and other experts selected by the Agent. The
Agent may deem and treat the payee of the Bank One Note and the Compass Note as
the owner thereof for all purposes unless and until a written notice of
assignment, negotiation or transfer thereof shall have been received by the
Agent. The Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Banks as it deems appropriate
and contribution by each Bank of its Commitment Percentage of costs reasonably
expected by the Agent to be incurred in connection therewith. The Agent shall in
all cases be fully protected in acting, or in refraining from acting, under this
Agreement and the other Loan Documents in accordance with a request of the
Required Banks. Such request and any action taken or failure to act pursuant
thereto shall be binding upon the Banks and all future holders of the Bank One
Note and the Compass Note.
8.5 Notice of Default. The Agent shall not be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default unless
the Agent has received notice from a Bank or the Borrower, referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Agent receives such a
notice, the Agent shall give notice thereof to the Banks. The Agent shall take
such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Banks; provided that unless and until the
Agent shall have received such directions, subject to the provisions of Section
, the Agent may (but shall not be obligated to) take such action, or refrain
from taking such action, with respect to such Default or Event of Default as it
shall deem advisable in the best interests of the Banks. In the event that the
officer of the Agent primarily responsible for the lending relationship with the
Borrower or the officer of any Bank primarily responsible for the lending
relationship with the Borrower becomes aware that a Default or Event of Default
has occurred and is continuing, the Agent or such Bank, as the case may be,
shall use its good faith efforts to inform the other Banks and/or the Agent, as
the case may be, of such occurrence.
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Notwithstanding the preceding sentence, failure to comply with the preceding
sentence shall not result in any liability to the Agent or any Bank.
8.6 Non-Reliance on Agent and Other Banks. Each Bank expressly
acknowledges that neither the Agent nor any other Bank nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates has made any representation or warranty to such Bank and that no act
by the Agent or any other Bank hereafter taken, including any review of the
affairs of the Borrower shall be deemed to constitute any representation or
warranty by the Agent or any Bank to any other Bank. Each Bank represents to the
Agent that it has, independently and without reliance upon the Agent or any
other Bank, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, condition (financial and otherwise) and creditworthiness
of the Borrower and the value of the Collateral and other Properties of the
Borrower and has made its own decision to enter into this Agreement. Each Bank
also represents that it will, independently and without reliance upon the Agent
or any other Bank and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit analysis, appraisals
and decisions in taking or not taking action under this Agreement and the other
Loan Documents, and to make such investigation as it deems necessary to inform
itself as to the business, operations, property, condition (financial and
otherwise) and credit-worthiness of the Borrower and the value of the Collateral
and other Properties of the Borrower. Except for notices, reports and other
documents expressly required to be furnished to the Agent by the Borrower
hereunder, the Agent shall not have any duty or responsibility to provide any
Bank with any credit or other information concerning the business, operations,
property, condition (financial and otherwise) or creditworthiness of the
Borrower or the value of the Collateral or other Properties of the Borrower
which may come into the possession of the Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or affiliates. Agent will
provide Banks with any information required to be furnished by Borrower under
this Agreement if not furnished to the Banks by the Borrower.
8.7 INDEMNIFICATION. EACH BANK AGREES TO INDEMNIFY THE AGENT
AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-INFACT AND AFFILIATES
(TO THE EXTENT NOT REIMBURSED BY THE BORROWER AND WITHOUT LIMITING THE
OBLIGATION OF THE BORROWER TO DO SO), RATABLY ACCORDING TO THE COMMITMENT
PERCENTAGE OF SUCH BANK, FROM AND AGAINST ANY AND ALL LIABILITIES, CLAIMS,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES AND DISBURSEMENTS OF ANY KIND WHATSOEVER WHICH MAY AT ANY TIME
(INCLUDING, WITHOUT LIMITATION, ANY TIME FOLLOWING THE PAYMENT AND PERFORMANCE
OF ALL OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT) BE
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IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE AGENT OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
OTHER DOCUMENT CONTEMPLATED OR REFERRED TO HEREIN OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR ANY ACTION TAKEN OR OMITTED BY THE AGENT OR ANY OF ITS
OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES UNDER OR
IN CONNECTION WITH ANY OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, ANY
LIABILITIES, CLAIMS, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS IMPOSED, INCURRED OR
ASSERTED AS A RESULT OF THE NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF THE AGENT
OR ANY OF ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR
AFFILIATES; PROVIDED THAT NO BANK SHALL BE LIABLE FOR THE PAYMENT OF ANY PORTION
OF SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS RESULTING SOLELY FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE AGENT OR ANY OF ITS OFFICERS,
DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT OR AFFILIATES. THE AGREEMENTS IN
THIS SECTION SHALL SURVIVE THE PAYMENT AND PERFORMANCE OF ALL OBLIGATIONS AND
THE TERMINATION OF THIS AGREEMENT.
8.8 Restitution. Should the right of the Agent or any Bank to
realize funds with respect to the Obligations be challenged and any application
of such funds to the Obligations be reversed, whether by Governmental Authority
or otherwise, or should the Borrower otherwise be entitled to a refund or return
of funds distributed to the Banks in connection with the Obligations, the Agent
or such Bank, as the case may be, shall promptly notify the Banks of such fact.
Not later than Noon, Central Standard or Daylight Savings Time, as the case may
be, of the Business Day following such notice, each Bank shall pay to the Agent
an amount equal to the ratable share of such Bank of the funds required to be
returned to the Borrower. The ratable share of each Bank shall be determined on
the basis of the percentage of the payment all or a portion of which is required
to be refunded which was originally distributed to such Bank, if such percentage
can be determined, or, if such percentage cannot be determined, on the basis of
the Commitment Percentage of such Bank. The Agent shall forward such funds to
the Borrower or to the Bank required to return such funds. If any such amount
due to the Agent is made available by any Bank after Noon, Central Standard or
Daylight Savings Time, as the case may be, of the Business Day following such
notice, such Bank shall pay to the Agent (or the Bank required to return funds
to the Borrower, as the case may be) for its own account interest on such amount
at a rate equal to the Federal Funds Rate for the period from and including the
date on which restitution to the Borrower is made by the Agent (or the Bank
required to return funds to the Borrower, as the case may be) to but not
including the date on which such Bank failing to timely forward its share of
funds
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required to be returned to the Borrower shall have made its ratable share of
such funds available.
8.9 Agent in Its Individual Capacity. The Agent and its
affiliates may make loans to, accept deposits from and generally engage in any
kind of business with the Borrower as though the Agent were not the agent
hereunder. With respect to any note issued to the Bank serving as the Agent, the
Agent shall have the same rights and powers under this Agreement as a Bank and
may exercise such rights and powers as though it were not the Agent. The terms
"Bank" and "Banks" shall include the Agent in its individual capacity.
8.10 Successor Agent. The Agent may resign as Agent upon ten
days' notice to the Banks and the Borrower. If the Agent shall resign as Agent
under this Agreement and the other Loan Documents, Banks for which the
Commitment Percentages aggregate at least 100% shall appoint from among the
Banks a successor agent for the Banks, whereupon such successor agent shall
succeed to the rights, powers and duties of the Agent. The term "Agent" shall
mean such successor agent effective upon its appointment. The rights, powers and
duties of the former Agent as Agent shall be terminated, without any other or
further act or deed on the part of such former Agent or any of the parties to
this Agreement or any holders of the Bank One Note and the Compass Note. After
the removal or resignation of any Agent hereunder as Agent, the provisions of
this Article VIII and Sections , , and shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and the other Loan Documents.
8.11 Applicable Parties. The provisions of this Article
are solely for the benefit of the Agent and the Banks, and the
Borrower shall not have any rights as a third party beneficiary or otherwise
under any of the provisions of this Article . In performing functions and duties
hereunder and under the other Loan Documents, the Agent shall act solely as the
agent of the Banks and does not assume, nor shall it be deemed to have assumed,
any obligation or relationship of trust or agency with or for the Borrower or
any legal representative, successor and assign of the Borrower.
ARTICLE IX
MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement nor any of
the other Loan Documents nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section. The Agent and the Borrower may, with the written consent of the
Required Banks, from time to time, enter
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into written amendments, supplements or modifications to the Loan Documents for
the purpose of adding any provisions to this Agreement or the other Loan
Documents or changing in any manner the rights of the Banks and the Borrower
hereunder or thereunder or waiving, on such terms and conditions as the Agent
may specify in such instrument, any of the requirements of this Agreement or the
other Loan Documents or any Default or Event of Default and its consequences;
provided, however, that no such amendment, supplement, modification or waiver
shall (a) extend the time of payment of any note or any installment thereof,
reduce the rate or extend the time of payment of interest thereon, extend the
Commitment Termination Date, reduce any fee payable to the Banks hereunder,
release any Collateral (other than pursuant to Section 6.4 above), reduce the
principal amount of the Obligations, change the Commitment Percentage of any
Bank or the definition of the Borrowing Base, amend, modify, or waive any
provision of this Section or Section , 3.2, 5.8, 5.18, or or any other provision
applicable to the determination or redetermination of the Borrowing Base, change
the percentage specified in the definition of Required Banks, or consent to the
assignment or transfer by the Borrower of any of its rights or obligations under
this Agreement or the other Loan Documents, in any such case without the written
consent of all Banks (except in the case of a merger or consolidation permitted
under Section above), or (b) amend, modify or waive any provision of Article or
the rights or obligations of the Agent without the written consent of the Agent.
Any such amendment, supplement, modification or waiver shall apply equally to
each of the Banks and shall be binding upon the Borrower, the Banks and the
Agent, and all future holders of the notes. In the event of any waiver, the
Borrower, the Banks, and the Agent shall be restored to their respective former
positions and rights hereunder and under the other Loan Documents, and any
Default or Event of Default waived shall be deemed to be cured and not
continuing; but no such waiver shall extend to any subsequent or other Default
or Event of Default or impair any right with respect thereto. Neither this
Agreement nor any provision hereof may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver, discharge, or termination is
sought. Anything in this Agreement to the contrary notwithstanding, the Required
Banks must agree to any change in the Borrowing Base and approve title to the
Oil and Gas Properties.
9.2 Security Interest in Deposits and Right of Offset or
Banker's Lien. The Borrower hereby transfers, assigns and pledges to each Bank
and the Agent and grants to each Bank and the Agent, a security interest in, and
the right, exercisable at such time as any Obligation shall mature, of offset or
banker's lien against, all funds or other Property of the Borrower now or
hereafter or from time to time on deposit with or in the possession of such Bank
or the Agent, including, without limitation, all certificates of
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deposit and other depository accounts, as security for the payment and
performance of the Obligations. At any time following the occurrence and during
the continuance of an Event of Default, in addition to any rights and remedies
of the Banks and the Agent provided in any Loan Document or existing at law or
in equity, but without in any manner limiting the cumulative nature of such
remedies, each Bank and the Agent shall have the right, with the oral consent of
the Required Banks (confirmed promptly in writing) and without prior notice to
the Borrower, any such notice being expressly waived by the Borrower to the
extent permitted by applicable law, to set-off and apply against any Obligation,
whether matured or unmatured, any amount owing from such Bank or the Agent, to
the Borrower, any funds or the property of the Borrower now or hereafter or from
time to time on deposit with or in the possession of such Bank or the Agent,
including, without limitation, funds attributable to the Borrower in any
certificates of deposit and other depository accounts, whether such have matured
or the exercise of such right by such Bank or the Agent, results in loss of
interest or profit or other penalty on such deposits. Such right of set-off may
be exercised by each Bank and the Agent against the Borrower and against any
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor of the
Borrower, or anyone else claiming through or against the Borrower, or such
trustee in bankruptcy, debtor in possession, assignee for the benefit of
creditors, receiver, or execution, judgment or attachment creditor. Each of the
Banks and the Agent agrees promptly to notify the Borrower and the Agent after
any such set-off by such Bank or the Agent, provided that the failure to give
such notice shall not affect the validity of such set-off and application.
9.3 Adjustments. If any Bank (for purposes of this Section, a
"benefitted Bank") shall at any time receive any payment of all or part of its
portion of the Obligations, or receive any Collateral in respect thereof
(whether voluntarily or involuntarily, by set-off, pursuant to events or
proceedings of the nature referred to in Sections (f) or (g), or otherwise) in
an amount greater than such Bank was entitled to receive pursuant to the terms
hereof, such benefitted Bank shall purchase for cash from the other Banks such
portion of the Obligations of such other Banks or shall provide such other Banks
with the benefits of any such Collateral or the proceeds thereof as shall be
necessary to cause such benefitted Bank to share the excess payment or benefits
of such Collateral or proceeds with each of the Banks according to the terms
hereof; provided, however, that if all or any portion of such excess payment or
benefits is thereafter recovered from such benefitted Bank, such purchase shall
be rescinded and the purchase price and benefits returned by such Bank, to the
extent of such recovery, but without interest. The Borrower agrees that each
such Bank so purchasing a portion of the Obligations of another Bank may
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exercise all rights of payment (including, without limitation, rights of
set-off) with respect to such portion as fully as if such Bank were the direct
holder of such portion. If any Bank ever receives, by voluntary payment,
exercise of rights of set-off or banker's lien, counterclaim, cross-action or
otherwise, any funds of the Borrower to be applied to the Obligations, or
receives any proceeds by realization on or with respect to any Collateral, all
such funds and proceeds shall be immediately forwarded to the Agent for
distribution in accordance with the terms of this Agreement.
9.4 Transfers and Participations. Any Bank may, at any time,
sell, transfer or assign the Obligations or any portion thereof to one or more
commercial banks who is reasonably acceptable to Borrower. Such Bank and the
Agent may forward to each transferee and prospective transferee of all or any
portion of or interest in the Obligations, all documents and information
relating to the Obligations, whether furnished by the Borrower or otherwise
obtained, as such Bank or the Agent determines necessary or desirable. The
Borrower agrees that each such permitted assignee shall be a "Bank" under this
Agreement and may exercise all rights (including, without limitation, rights of
set-off) with respect to the portion of the Obligations held by it, subject to
any agreements between such transferee and the transferor to such transferee.
Notwithstanding the foregoing, no such participation or assignment shall
increase or expand the liability (other than increases in the Borrowing Base) of
the Borrower hereunder (and Banks specifically acknowledge that Borrower shall
not be liable for any of the fees and expenses incurred by the Banks or the
Agent in connection with such transfers and participations unless the transfer
is requested by the Borrower), and Borrower may deal solely with the Agent for
purposes of providing notices, reports and payments hereunder. Notwithstanding
anything in this Agreement to the contrary, no Bank other than Bank One or
Compass shall be the Agent hereunder without the prior written consent of the
Borrower.
9.5 Survival of Representations, Warranties, and Covenants.
All representations and warranties of the Borrower and the Guarantor and all
covenants and agreements herein made shall survive the execution and delivery of
the Bank One Note and the Compass Note and the Security Instruments and shall
remain in force and effect so long as any Obligation is outstanding or any
Commitment exists.
9.6 Notices and Other Communications. Except as to oral
notices expressly authorized herein, which oral notices shall be confirmed in
writing, all notices, requests, and communications hereunder shall be in writing
(including by telecopy). Unless otherwise expressly provided herein, any such
notice, request, demand, or other communication shall be deemed to have been
duly given or made when delivered by hand, or, in the case of delivery
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by mail, when deposited in the mail, certified mail, return receipt requested,
postage prepaid, or, in the case of telecopy notice, when receipt thereof is
acknowledged orally or by written confirmation report, addressed as follows:
(a) if to the Agent and Bank One, to:
Bank One, Texas, National Association
910 Travis, 6th Floor
Houston, Texas 77002-5860
Attention: Energy Group
(or for notice by mail, to:
P.O. Box 2629
Houston, Texas 77252-2629
Attention: Energy Group, 6th Floor
Telecopy: (713) 751-3544
(b) if to Compass, to:
Compass Bank - Houston
24 Greenway Plaza, Suite 1401
Houston, Texas 77046
Attention: Energy Lending
Telecopy: (713) 968-8222
(c) if to the Borrower, to:
DDD Energy, Inc.
50 Briar Hollow Lane West
7th Floor
Houston, Texas 77027
Attention: Ms. Debra D. Valice
Secretary-Treasurer
Telecopy: (713) 627-2319
(d) if to the Guarantor to:
Seitel, Inc.
50 Briar Hollow Lane West
7th Floor
Houston, Texas 77027
Attention: Ms. Debra D. Valice
Chief Financial Officer
Telecopy: (713) 627-2319
Any party may, by proper written notice hereunder to the
others, change the individuals or addresses to which such notices to it shall
thereafter be sent.
9.7 Parties in Interest. Subject to the restrictions on
changes in corporate structure set forth in Section and other
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applicable restrictions contained herein, all covenants and agreements herein
contained by or on behalf of the Borrower, the Guarantor, the Banks or the
Agent, shall be binding upon and inure to the benefit of the Borrower, the Banks
or the Agent, as the case may be, and their respective legal representatives,
successors, and assigns.
9.8 Rights of Third Parties. All provisions herein are imposed
solely and exclusively for the benefit of the Banks, the Agent, the Borrower,
and the Guarantor; and no other Person shall have standing to require
satisfaction of such provisions in accordance with their terms or be entitled to
assume that the Banks will refuse to make Loans in the absence of strict
compliance with any or all of such provisions; and any or all of such provisions
may, subject to the provisions of Section as to the rights of the Banks, be
freely waived in whole or in part by the Agent at any time if in its sole
discretion it deems it advisable to do so.
9.9 Renewals; Extensions. All provisions of this Agreement
relating to the Bank One Note and the Compass Note shall apply with equal force
and effect to each promissory note hereafter executed which in whole or in part
represents a renewal or extension of any part of the Indebtedness of the
Borrower under this Agreement, the Bank One Note and the Compass Note, or any
other Loan Document.
9.10 No Waiver; Rights Cumulative. No course of dealing on the
part of any Bank or the Agent, or the officers or employees of any Bank or the
Agent, nor any failure or delay by any Bank or the Agent, with respect to
exercising any of their rights, powers, or privileges under this Agreement or
any other Loan Document shall operate as a waiver thereof. The rights and
remedies of the Banks and the Agent under this Agreement and the other Loan
Documents shall be cumulative, and the exercise or partial exercise of any such
right or remedy shall not preclude the exercise of any other right or remedy. No
making of a Loan shall constitute a waiver of any of the covenants or warranties
of the Borrower or Guarantor contained herein or of any of the conditions to the
obligation of the Banks to make other Loans hereunder. In the event the Borrower
is unable to satisfy any such covenant, warranty or condition, no such Loan
shall have the effect of precluding the Agent from thereafter declaring such
inability to be an Event of Default as hereinabove provided.
9.11 Survival Upon Unenforceability. In the event any one or
more of the provisions contained in any of the Loan Documents or in any other
instrument referred to herein or executed in connection with the Obligations
shall, for any reason, be held to be invalid, illegal, or unenforceable in any
respect, such invalidity, illegality, or unenforceability shall not affect any
60
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other provision of any Loan Document or of any other instrument referred to
herein or executed in connection with such Obligations.
9.12 Amendments; Waivers. Neither this Agreement nor any
provision hereof may be amended, waived, discharged, or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the amendment, waiver, discharge, or termination is sought.
9.13 Controlling Agreement. In the event of a conflict between
the provisions of this Agreement and those of any other Loan Document, the
provisions of this Agreement shall control.
9.14 Disposition of Collateral. Notwithstanding any term or
provision, express or implied, in any of the Security Instruments, the
realization, liquidation, foreclosure, or any other disposition on or of any or
all of the Collateral shall be in the order and manner and determined in the
sole discretion of the Banks, provided, however, that in no event shall the
Banks violate applicable law or exercise rights and remedies other than those
provided in such Security Instruments or otherwise existing at law or in equity.
9.15 GOVERNING LAW. THIS AGREEMENT AND THE BANK ONE NOTE AND
THE COMPASS NOTE SHALL BE DEEMED TO BE CONTRACTS MADE UNDER AND SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW;
PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE 5069, CHAPTER 15
(WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY
ACCOUNTS) SHALL NOT APPLY.
9.16 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED
TO, OR FROM THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT SHALL BE LITIGATED IN
COURTS HAVING SITUS IN HOUSTON, HARRIS COUNTY, TEXAS. EACH OF THE AGENT, EACH
BANK AND THE BORROWER AND THE GUARANTOR HEREBY SUBMITS TO THE JURISDICTION OF
ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON, HARRIS COUNTY, TEXAS, AND
HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR
VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE AGENT, ANY OF THE BANKS, OR
THE BORROWER AND THE GUARANTOR IN ACCORDANCE WITH THIS SECTION.
9.17 WAIVER OF RIGHTS TO JURY TRIAL. EACH OF THE BORROWER, THE
GUARANTOR, THE BANKS AND THE AGENT HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
IRREVOCABLY, AND UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR
ARISES OUT OF ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR
OMISSIONS OF THE AGENT OR ANY OF THE BANKS, IN THE ENFORCEMENT OF
61
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ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION
ARE A MATERIAL INDUCEMENT FOR THE AGENT AND THE BANKS ENTERING INTO THIS
AGREEMENT.
9.18 ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND
SHALL SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN
OR ORAL, RELATING TO THE SUBJECT HEREOF, INCLUDING, WITHOUT LIMITATION, THE
CORRESPONDENCE DATED FEBRUARY 21, 1995, FROM BANK ONE TO THE BORROWER.
FURTHERMORE, IN THIS REGARD, THIS AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS
REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH
PARTIES.
9.19 Counterparts. For the convenience of the parties, this
Agreement may be executed in multiple counterparts, each of which for all
purposes shall be deemed to be an original, and all such counterparts shall
together constitute but one and the same Agreement.
IN WITNESS WHEREOF, this Agreement is deemed executed
effective as of the date first above written.
BORROWER:
DDD ENERGY, INC.
By: /s/ Debra D. Valice
----------------------
Debra D. Valice
Secretary-Treasurer
AGENT AND A BANK:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ Damien G. Meiburger
-----------------------
Damien G. Meiburger
Senior Vice-President
62
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A BANK:
COMPASS BANK - HOUSTON
By: /s/Kathleen J. Bowen
---------------------
Kathleen J. Bowen
Vice-President
63
PROMISSORY NOTE
$37,500,000.00 Houston, Texas June 14, 1995
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("Maker")
promises to pay to the order of Bank One, Texas, National Association ("Payee"),
at its banking quarters in Houston, Harris County, Texas, the sum of
THIRTY-SEVEN MILLION, FIVE HUNDRED THOUSAND DOLLARS ($37,500,000.00), or so much
thereof as may be advanced against this Note pursuant to the Credit Agreement
dated of even date herewith by and between Maker and Payee (as amended,
restated, or supplemented from time to time, the "Credit Agreement"), together
with interest at the rates and calculated as provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters governed
thereby, including, without limitation, certain events which will entitle the
holder hereof to accelerate the maturity of all amounts due hereunder.
Capitalized terms used but not defined in this Note shall have the meanings
assigned to such terms in the Credit Agreement.
This note is issued pursuant to, is the "Bank One Note" under, and is
payable as provided in the Credit Agreement. Subject to compliance with
applicable provisions of the Credit Agreement, Maker may at any time pay the
full amount or any part of this note without the payment of any premium or fee,
but such payment shall not, until this note is fully paid and satisfied, excuse
the payment as it becomes due of any payment on this note provided for in the
Credit Agreement.
Without being limited thereto or thereby, this note is secured by the
Security Instruments.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF
TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW;
PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE 5069, CHAPTER 15
(WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY
ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
DDD ENERGY, INC.
By: /s/ Debra D. Valice
----------------------------
Debra D. Valice
Secretary-Treasurer
PROMISSORY NOTE
$37,500,000.00 Houston, Texas June 14, 1995
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned ("Maker")
promises to pay to the order of Compass Bank-Houston, ("Payee"), at its banking
quarters in Houston, Harris County, Texas, the sum of THIRTY-SEVEN MILLION FIVE
HUNDRED THOUSAND DOLLARS ($37,500,000.00), or so much thereof as may be advanced
against this Note pursuant to the Credit Agreement dated of even date herewith
by and between Maker and Payee (as amended, restated, or supplemented from time
to time, the "Credit Agreement"), together with interest at the rates and
calculated as provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters governed
thereby, including, without limitation, certain events which will entitle the
holder hereof to accelerate the maturity of all amounts due hereunder.
Capitalized terms used but not defined in this Note shall have the meanings
assigned to such terms in the Credit Agreement.
This note is issued pursuant to, is the "Compass Note" under, and is
payable as provided in the Credit Agreement. Subject to compliance with
applicable provisions of the Credit Agreement, Maker may at any time pay the
full amount or any part of this note without the payment of any premium or fee,
but such payment shall not, until this note is fully paid and satisfied, excuse
the payment as it becomes due of any payment on this note provided for in the
Credit Agreement.
Without being limited thereto or thereby, this note is secured by the
Security Instruments.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE STATE OF
TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW;
PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE 5069, CHAPTER 15
(WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY
ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
DDD ENERGY, INC.
By: /s/ Debra D. Valice
----------------------------
Debra D. Valice
Secretary-Treasurer
GUARANTY
BY
SEITEL, INC.
IN FAVOR OF
BANK ONE, TEXAS, NATIONAL ASSOCIATION,
INDIVIDUALLY AND
AS AGENT
AND
COMPASS BANK-HOUSTON,
AS A BANK
June 14, 1995
CREDIT FACILITY
TO
DDD ENERGY, INC.
<PAGE>
TABLE OF CONTENTS
ARTICLE I DEFINITIONS AND INTERPRETATION.................................. 1
1.01 Terms Defined Above...................................... 1
1.02 Terms Defined in Credit Agreement........................ 1
1.03 Additional Defined Term.................................. 2
1.04 Other Definitional Provisions............................ 2
ARTICLE II GUARANTY........................................................ 2
2.01 Guaranty................................................. 2
2.02 Absolute, Complete and Continuing Guaranty............... 2
2.03 Liability Not Impaired................................... 3
2.04 Primary Liability........................................ 3
2.05 Security; Additional Guarantees.......................... 3
2.06 Waivers.................................................. 3
2.07 Pursuit of Remedies; Subrogation......................... 4
2.08 Status of Borrower....................................... 4
2.09 Independent Review; Solvency............................. 5
2.10 Enforcement Costs........................................ 5
2.11 Termination of Guaranty.................................. 5
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................. 6
3.01 Due Authorization........................................ 6
3.02 Corporate Existence...................................... 6
3.03 Valid and Binding Obligations............................ 6
ARTICLE IV AFFIRMATIVE COVENANTS........................................... 6
4.01 Maintenance and Access to Records........................ 6
4.02 Additional Information................................... 7
4.03 Maintenance of Corporate Existence and Good Standing..... 7
4.04 Compliance with Laws and Payment of Taxes................ 7
4.05 Further Assurances....................................... 7
ARTICLE V MISCELLANEOUS................................................... 7
5.01 Notices and Other Communications......................... 7
5.02 Parties in Interest...................................... 8
5.03 Rights of Third Parties.................................. 8
5.04 No Waiver; Rights Cumulative............................. 8
5.05 Survival Upon Unenforceability........................... 8
5.06 Amendments; Waivers...................................... 9
5.07 Review of Guaranty....................................... 9
5.08 Payments................................................. 9
5.09 GOVERNING LAW............................................ 9
5.10 JURISDICTION AND VENUE................................... 9
5.11 WAIVER OF RIGHTS TO JURY TRIAL........................... 9
5.12 ENTIRE AGREEMENT......................................... 10
<PAGE>
GUARANTY
This GUARANTY dated as of June 14, 1995, is by SEITEL, INC., a
Delaware corporation (the "Guarantor") in favor of BANK ONE, TEXAS, NATIONAL
ASSOCIATION, a national banking association ("Bank One"), Individually and as
Agent for the Banks signatory to the Credit Agreement (as such term is defined
below) which is as of this date COMPASS BANK-HOUSTON, a banking association
("Compass"), from time to time (together with their respective successors and
assigns, the "Banks"), and Bank One, as agent for the Banks pursuant to the
Credit Agreement (in such capacity, together with its successors in such
capacity pursuant to the terms of the Credit Agreement, the "Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the terms and conditions of the Credit Agreement
dated of even date herewith, by and between DDD Energy, Inc., a Delaware
corporation (the "Borrower"), the Agent, and the Banks (as such agreement may be
amended, restated, or supplemented from time to time, the "Credit Agreement"),
the Banks have agreed to extend credit to or for the benefit of the Borrower;
WHEREAS, the Guarantor, as the sole shareholder of the Borrower, will
derive substantial direct and indirect benefits from the extension of credit to
the Borrower pursuant to the Credit Agreement; and
WHEREAS, pursuant to the Credit Agreement and as an inducement to the
Banks to extend credit to the account of the Borrower pursuant to the Credit
Agreement, the Guarantor has agreed to execute this Guaranty in favor of the
Agent and the Banks;
NOW, THEREFORE, for and in consideration of the premises and the
extension of credit by the Banks to the Borrower pursuant to the Credit
Agreement and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.01 Terms Defined Above. As used in this Guaranty, each of the terms
"Agent," "Banks", "Bank One," "Borrower," "Compass", "Credit Agreement," and
"Guarantor," shall have the meaning indicated above.
1.02 Terms Defined in Credit Agreement. Each term defined in the
Credit Agreement and used herein without definition shall have the meaning
assigned to such term in the Credit Agreement.
<PAGE>
1.03 Additional Defined Term. As used in this Guaranty, the term
"Guaranteed Indebtedness" shall mean the indebtedness and other obligations as
to which payment is guaranteed by the Guarantor hereunder pursuant to Section
2.01.
1.04 Other Definitional Provisions. (a) The words "hereby," "herein,"
"hereinafter," "hereinabove," "hereinbelow," "hereof," "hereunder," and words of
similar import when used in this Guaranty shall refer to this Guaranty as a
whole and not to any particular Article, Section or provision of this Guaranty.
(b) Section and subsection references are to such Sections and
subsections to this Guaranty unless otherwise specified.
(c) As used herein and in any certificate or other document made or
delivered pursuant hereto, accounting and financial terms not otherwise defined
shall be defined according to GAAP.
ARTICLE II
GUARANTY
2.01 Guaranty. The Guarantor unconditionally guarantees to the Agent
and the Banks the prompt payment and performance when due (whether at stated
maturity, by acceleration or otherwise) of the Obligations.
2.02 Absolute, Complete and Continuing Guaranty. This is an absolute,
complete and continuing Guaranty, and no notice of the Obligations, the making
of any Loans or any extension of credit now or hereafter contracted by or
extended to the Borrower need be given to the Guarantor. The grant of any Liens
by the Guarantor shall not in anyway limit or be construed as limiting the Agent
and Banks to collect payment of any liability of the Guarantor incurred hereby
from the Collateral, but it is expressly understood and provided that the
liability of the Guarantor hereunder shall constitute the absolute and
unconditional obligation of the Guarantor. The Borrower and the Banks may, in
accordance with the terms of the Credit Agreement, rearrange, extend and/or
renew all or any portion of the Obligations without notice to the Guarantor; and
in such event, the Guarantor shall remain fully bound hereunder for payment of
the Guaranteed Indebtedness. The obligations of the Guarantor hereunder shall
not be released, impaired or diminished by any amendment, modification or
alteration of any Loan Document, except as may be expressly provided in any such
amendment, modification or alteration. The Guarantor shall remain liable
under this Guaranty regardless of whether the Borrower or any other
<PAGE>
guarantor be found not liable on all or any part of the Obligations for any
reason, including,without limitation, insanity, minority, disability,
bankruptcy, insolvency, death or corporate dissolution, even though rendering
all or any part of the Obligations void, unenforceable or uncollectible as
against the Borrower or any other guarantor. This Guaranty shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
of any of the Guaranteed Indebtedness made during the term of this Guaranty is
rescinded or must otherwise be returned by the Agent or the Banks upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise, all as
though such payment had not been made and will, thereupon, guarantee payment of
such amount as to which refund or restitution has been made, together with
interest accruing thereon subsequent to the date of refund or restitution at the
applicable rate under the Credit Agreement and collection costs and fees
(including, without limitation, reasonable attorneys' fees) applicable thereto.
2.03 Liability Not Impaired. The liabilities and obligations of the
Guarantor hereunder shall not be affected or impaired by (a) the failure of the
Agent, the Banks, or any other Person to exercise diligence or other than
reasonable care in the preservation, protection or other handling or treatment
of all or any part of the Collateral, (b) the failure of any Lien intended to be
granted or created to secure all or any part of the Obligations to be properly
perfected or created or the unenforceability of any Lien for any other reason,
or (c) the subordination of any such Lien to any other Lien.
2.04 Primary Liability. The liability of the Guarantor for the payment
of the Guaranteed Indebtedness shall be primary and not secondary.
2.05 Security; Additional Guarantees. The Guarantor authorizes the
Agent and the Banks, without notice to or demand upon the Guarantor and without
affecting the liability of the Guarantor hereunder, (a) to take and hold
security voluntarily provided by any Person as security for the payment of all
or any portion of the Guaranteed Indebtedness and the other Obligations, and to
exchange, enforce, waive and/or release any such security; (b) to apply such
security and direct the order or manner of sale thereof as the Agent and/or the
Banks in their discretion may determine; and (c) to obtain a guaranty of all or
any portion of the Guaranteed Indebtedness and the other Obligations from any
one or more other Persons and to enforce, waive, rearrange, modify, limit or
release at any time or times such other Persons from their obligations under
such guaranties, whether with or without consideration.
2.06 Waivers. The Guarantor waives any right to require the Agent or
the Banks to (a) proceed against the Borrower or make any effort at the
collection of the Guaranteed Indebtedness or any other Obligations from the
Borrower or any other guarantor or
<PAGE>
Person liable for all or any part of the Guaranteed Indebtedness or other
Obligations, (b) proceed against or exhaust any collateral securing the
Guaranteed Indebtedness or other Obligations, or (c) pursue any other remedy in
the power of the Agent or the Banks. The Guarantor further waives any and all
rights and remedies of suretyship, including, without limitation, those it may
have or be able to assert by reason of the provisions of Chapter 34 of the Texas
Business and Commerce Code (other than Section 34.04). The Guarantor waives any
defense arising by reason of any disability, lack of corporate authority or
power or other defense of the Borrower or any other guarantor of all or any part
of the Obligations. Except as otherwise provided in the Credit Agreement, the
Guarantor expressly waives all notices of any kind, presentment for payment,
demand for payment, protest, notice of protest, notice of intent to accelerate
maturity, notice of acceleration of maturity, dishonor, diligence, notice of any
amendment of any Loan Document, notice of any adverse change in the financial
condition of the Borrower, notice of any adjustment, indulgence, forbearance or
compromise that might be granted or given by the Agent or the Banks to the
Borrower, and notice of acceptance of this Guaranty, acceptance on the part of
the Agent or the Banks being conclusively presumed by its request for this
Guaranty and the delivery of this Guaranty to the Agent and the Banks. The
liability and obligations of the Guarantor hereunder shall not be affected or
impaired by any action or inaction by the Agent or the Banks in regard to any
matter waived or notice of which is waived by the Guarantor in this paragraph or
in any other paragraph of this Guaranty.
2.07 Pursuit of Remedies; Subrogation. The Agent may pursue any remedy
without altering the obligations of the Guarantor hereunder and without
liability to the Guarantor, even though the pursuit of such remedy may result in
the loss by the Guarantor of rights of subrogation or to proceed against others
for reimbursement or contribution or any other right. In no event shall any
payment by the Guarantor entitle it, by subrogation or otherwise, to any rights
against the Borrower or to participate in any security now or hereafter held by
the Agent or the Banks prior to the payment in full of all Obligations and, in
any event, not until 367 days after the making of any payment and/or the
granting of any Lien to secure all or any part of the Obligations by the
Borrower or any other guarantor of all or any part of the Obligations.
2.08 Status of Borrower. Should the status of the Borrower change in
any way, as a result of reorganization or dissolution, any sale, lease or
transfer of any or all of the assets of the Borrower, any change in the
shareholders, partners or members of any Borrower or otherwise, this Guaranty
shall continue and shall cover the Guaranteed Indebtedness under the new status.
This Section shall not, however, be construed to authorize any action by the
Borrower otherwise prohibited under the Credit Agreement or any other Loan
Document.
<PAGE>
2.09 Independent Review; Solvency. The Guarantor is familiar with and
has independently reviewed the books and records regarding the financial
condition of the Borrower and is familiar with the value of any and all property
intended as Collateral; however, the Guarantor is not relying on such financial
condition or such Collateral as an inducement to enter into this Guaranty. The
Guarantor acknowledges that it is not relying on any representations (oral or
otherwise) of the Agent, the Banks or any other Person except as may be
expressly described in this Guaranty. As of the date hereof, and after giving
effect to this Guaranty and the contingent obligations evidenced hereby, the
Guarantor is and will be solvent, and has and will have assets and property
which, valued fairly, exceed the obligations, debts and liabilities of the
Guarantor, and has and will have assets and property in the State of Texas
sufficient to satisfy, repay and discharge the same. In the event of the
insolvency of the Guarantor, the Agent and the Banks shall have the option to
declare the Guaranteed Indebtedness immediately due and payable from the
Guarantor.
2.10 Enforcement Costs. If the Guaranteed Indebtedness is not paid by
the Guarantor when due, as required herein, and this Guaranty is placed in the
hands of an attorney for collection or is enforced by suit or through probate or
bankruptcy court or through any other judicial proceedings, the Guarantor shall
pay to the Agent for the benefit of the Banks an amount equal to the reasonable
attorneys' fees and collection costs incurred by the Agent or the Banks in the
collection of the Guaranteed Indebtedness.
2.11 Termination of Guaranty. This Guaranty shall terminate when the
RedmanSmackover Joint Venture properties constitute 10% or less of the Borrowing
Base.
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into the Credit Agreement
and to make Loans to or for the benefit of the Borrower, the Guarantor
represents and warrants to the Agent and the Banks (which representations and
warranties shall survive the delivery of this Guaranty and the other Loan
Documents) that:
3.01 Due Authorization. The execution and delivery by the Guarantor of
this Guaranty and the performance of all obligations of the Guarantor hereunder
are within the power of the Guarantor, have been duly authorized by all
necessary corporate action, do not and will not require the consent of any
Governmental Authority and do not and will not (a) contravene or conflict with
any provision of law or the charter or bylaws of the Guarantor, (b) contravene
or conflict with any indenture, instrument or other agreement to which the
Guarantor is a party or by which any Property of the Guarantor may be presently
bound or encumbered, or (c) result in or require the creation or imposition of
any Lien in, upon or of any Property of the Guarantor under any such indenture,
instrument or other agreement, other than the Loan Documents.
3.02 Corporate Existence. The Guarantor is a corporation duly
organized, legally existing and in good standing under the laws of its state of
incorporation and is duly qualified as a foreign corporation and is in good
standing in all jurisdictions wherein the ownership of Property or the operation
of its business necessitates same, other than those jurisdictions wherein the
failure to so qualify will not have a Material Adverse Effect.
3.03 Valid and Binding Obligations. This Guaranty, when duly executed
and delivered by the Guarantor, will be the legal, valid and binding obligation
of the Guarantor, enforceable against the Guarantor in accordance with its
terms.
ARTICLE IV
AFFIRMATIVE COVENANTS
Unless agreed in writing by the Agent and the Banks to the contrary,
the Guarantor covenants, so long as any Obligation remains outstanding or unpaid
or any Commitment exists and until this Guaranty has been terminated pursuant to
the terms hereof, to:
4.01 Maintenance and Access to Records. Keep adequate records, in
accordance with GAAP, of all its transactions so that at any time, and from time
to time, its true and complete financial condition may be readily determined,
and upon 3 Business Days' prior written request of the Agent or the Banks, prior
to the
<PAGE>
occurrence of an Event of Default and without notice, if after the occurrence of
an Event of Default, make such records available for inspection by the Agent or
the Banks during normal business hours and, at the expense of the Guarantor,
allow the Agent or the Banks to make and take away copies thereof.
4.02 Additional Information. Furnish to the Agent and each Bank,
promptly upon the request of the Agent or the Banks, such additional financial
or other information concerning the assets, liabilities, operations and
transactions of the Guarantor as the Agent or the Banks may from time to time
request.
4.03 Maintenance of Corporate Existence and Good Standing. Maintain
its corporate existence or qualification and good standing in its jurisdiction
of incorporation and in all jurisdictions wherein the Property now owned or
hereafter acquired or business now or hereafter conducted necessitates same,
unless the failure to do so would not have a Material Adverse Effect.
4.04 Compliance with Laws and Payment of Taxes. Comply with all Laws,
and pay all Taxes and other claims, which, if unpaid, might become a Lien
against its Property, except any of the foregoing being Contested in Good Faith.
4.05 Further Assurances. Promptly cure any defects in the execution
and delivery of any of the Loan Documents executed by the Guarantor and execute,
acknowledge and deliver such other assurances and instruments as shall, in the
opinion of the Agent or the Banks, be necessary to fulfill the terms of the Loan
Documents executed by the Guarantor.
ARTICLE V
MISCELLANEOUS
5.01 Notices and Other Communications. Except as to verbal notices
expressly authorized herein, which verbal notices shall be confirmed in writing,
all notices, requests and communications hereunder shall be in writing
(including by telecopy). Unless otherwise expressly provided herein, any such
notice, request, demand or other communication shall be deemed to have been duly
given or made when delivered by hand, or, in the case of delivery by mail,
deposited in the mail, certified mail, return receipt requested, postage
prepaid, or, in the case of telecopy notice, when receipt thereof is
acknowledged orally, addressed as follows:
(a) if to the Agent, to:
BANK ONE, TEXAS, NATIONAL ASSOCIATION
910 Travis
Houston, Texas 77002
<PAGE>
Attention: Damien G. Meiburger
Telecopy: (713) 751-3544
with a copy to:
COMPASS BANK-HOUSTON
24 Greenway Plaza, Suite 1401
Houston, Texas 77046
Attention: Energy Lending
Telecopy: (713) 968-8222
(b) if to the Guarantor, to:
SEITEL, INC.
50 Briar Hollow Lane West
7th Floor
Houston, Texas 77027
Attention: Ms. Debra D. Valice
Vice President-Finance
Telecopy: (713) 627-2319
Any party may, by proper written notice hereunder to the others,
change the individuals or addresses to which such notices to it shall thereafter
be sent.
5.02 Parties in Interest. This Guaranty shall be binding upon and
inure to the benefit of the Guarantor, the Agent and the Banks, as the case may
be, and their respective legal representatives, successors, and assigns.
5.03 Rights of Third Parties. Except as expressly provided in this
Section, all provisions herein are imposed solely and exclusively for the
benefit of the Agent and the Banks. No other Person shall have any right,
benefit, priority or interest hereunder or as a result hereof or have standing
to require satisfaction of provisions hereof in accordance with their terms, and
any or all of such provisions may be freely waived in whole or in part by the
Agent and the Banks at any time if in their sole discretion they deem it
advisable to do so.
5.04 No Waiver; Rights Cumulative. No course of dealing on the part of
the Agent or the Banks, their officers or employees, nor any failure or delay by
the Agent or the Banks with respect to exercising any of its rights under any
Loan Document shall operate as a waiver thereof. The rights of the Agent and the
Banks under the Loan Documents shall be cumulative and the exercise or partial
exercise of any such right shall not preclude the exercise of any other right.
5.05 Survival Upon Unenforceability. In the event any one or more of
the provisions contained in any of the Loan Documents or in any other instrument
referred to herein or executed in connection with the Guaranteed Indebtedness or
the Obligations
<PAGE>
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 of any Loan Document or of any other instrument referred to
herein or executed in connection with such Guaranteed Indebtedness or the
Obligations.
5.06 Amendments; Waivers. Neither this Guaranty nor any provision
hereof may be amended, waived, discharged, or terminated orally, but only by an
instrument in writing signed by the party against whom enforcement of the
amendment, waiver, discharge, or termination is sought.
5.07 Review of Guaranty. This Guaranty was reviewed by the Guarantor,
and the Guarantor acknowledges and agrees that it understands fully all of the
terms of this Guaranty and the consequences and implications of its execution of
this Guaranty and has been afforded an opportunity to have this Guaranty
reviewed by an attorney and such other Persons as desired and to discuss the
terms, consequences, and implications of this Guaranty with such attorney and
other Persons.
5.08 Payments. All amounts becoming payable by the Guarantor under
this Guaranty shall be payable to the Agent for the benefit of the Banks at the
address of the Agent set forth hereinabove.
5.09 GOVERNING LAW. THIS GUARANTY SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW, PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE
5069, CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND
REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY.
5.10 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT
TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR
FROM THIS GUARANTY OR ANY OTHER LOAN DOCUMENT TO WHICH THE GUARANTOR IS A PARTY
MAY BE LITIGATED, AT THE SOLE DISCRETION AND ELECTION OF THE BANKS, IN COURTS
HAVING SITUS IN HOUSTON, HARRIS COUNTY, TEXAS. THE GUARANTOR HEREBY SUBMITS TO
THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON,
HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR
CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE
AGENT OR THE BANKS IN ACCORDANCE WITH THIS SECTION.
5.11 WAIVER OF RIGHTS TO JURY TRIAL. THE GUARANTOR, THE AGENT, AND THE
BANKS HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND
UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT,
PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION
<PAGE>
THAT RELATES TO OR ARISES OUT OF ANY OF THIS GUARANTY OR ANY OTHER LOAN DOCUMENT
OR THE ACTS OR OMISSIONS OF THE AGENT OR THE BANKS IN THE ENFORCEMENT OF ANY OF
THE TERMS OR PROVISIONS OF THIS GUARANTY OR ANY OTHER LOAN DOCUMENT OR OTHERWISE
WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT
FOR THE AGENT AND THE BANKS ENTERING INTO THE CREDIT AGREEMENT.
5.12 ENTIRE AGREEMENT. THIS GUARANTY CONSTITUTES THE ENTIRE AGREEMENT
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL
SUPERSEDE ANY PRIOR AGREEMENTS, WHETHER WRITTEN OR ORAL, BETWEEN THE PARTIES
HERETO RELATING TO THE SUBJECT HEREOF. FURTHERMORE, IN THIS REGARD, THIS
GUARANTY AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL
AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES. THERE ARE
NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
IN WITNESS WHEREOF, this Guaranty is executed as of the date first
above written.
SEITEL, INC.
By: /s/ Debra D. Valice
----------------------------
Debra D. Valice
Vice President-Finance
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, AS AGENT AND AS A BANK
By: /s/ Damien G. Meiburger
----------------------------
Damien G. Meiburger
Senior Vice President
COMPASS BANK-HOUSTON,
AS A BANK
By: /s/ Kathleen J. Bowen
----------------------------
Kathleen J. Bowen
Vice President
SECURITY AGREEMENT
(Stock Pledge)
BY
SEITEL, INC.
IN FAVOR OF
BANK ONE, TEXAS, NATIONAL ASSOCIATION, AS AGENT
June 14, 1995
CREDIT FACILITY
TO DDD ENERGY, INC.
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE 1 DEFINITIONS AND INTERPRETATION................................... 2
1.1 Terms Defined Above.............................................. 2
1.2 Terms Defined in Credit Agreement................................ 2
1.3 Additional Defined Terms......................................... 2
1.4 Undefined Financial Accounting Terms............................. 2
1.5 Terms Defined in Texas Business and Commerce Code................ 2
1.6 References....................................................... 2
1.7 Articles and Sections............................................ 3
1.8 Number and Gender................................................ 3
ARTICLE 2 SECURITY INTEREST................................................ 3
2.1 Grant of Security Interest in Collateral......................... 3
2.2 Delivery of Securities........................................... 3
2.3 Power of Attorney................................................ 3
ARTICLE 3 REPRESENTATIONS AND WARRANTIES................................... 5
3.1 Status of Securities............................................. 5
3.2 No Material Misstatements........................................ 5
3.3 Ownership and Liens.............................................. 5
ARTICLE 4 COVENANTS AND AGREEMENTS......................................... 6
4.1 Payment of Assessments and Charges............................... 6
4.2 Delivery of Collateral........................................... 6
4.3 Further Assurances............................................... 6
4.4 Prohibited Liens and Filings..................................... 6
ARTICLE 5 RIGHTS AND REMEDIES.............................................. 7
5.1 Remedies Upon Default............................................ 7
5.2 Voting Rights, Dividends, Etc. Prior to Default.................. 8
5.3 Voting Rights, Dividends, Etc. After Default..................... 8
5.4 Proceeds......................................................... 9
5.5 Agent Duties..................................................... 9
5.6 The Agent's Actions.............................................. 9
ARTICLE 6 MISCELLANEOUS.................................................... 10
6.1 Transfer of Obligations and Collateral........................... 10
6.2 Cumulative Security.............................................. 10
6.3 Continuing Agreement............................................. 10
6.4 Cumulative Rights................................................ 11
6.5 Exercise of Rights............................................... 11
6.6 Remedy and Waiver................................................ 11
6.7 Non-Judicial Remedies............................................ 11
6.8 Preservation of Liability........................................ 11
6.9 Notices and Other Communications................................. 11
6.10 Parties in Interest.............................................. 12
6.11 Amendment and Waiver............................................. 12
6.12 Invalidity....................................................... 12
6.13 GOVERNING LAW.................................................... 13
6.14 JURISDICTION AND VENUE........................................... 13
6.15 WAIVER OF RIGHTS TO JURY TRIAL................................... 13
6.16 ENTIRE AGREEMENT................................................. 13
<PAGE>
SECURITY AGREEMENT
(Stock Pledge)
THIS SECURITY AGREEMENT (Stock Pledge) (this "Security Agreement")
dated as of June 14, 1995, is entered into by and between SEITEL, INC., a
Delaware corporation (the "Pledgor"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION,
a national banking association ("Bank One"), Individually and as Agent for the
lenders signatory to the Credit Agreement (as such term is defined below) which
at this time is COMPASS BANK-HOUSTON, a banking association ("Compass") from
time to time (together with their respective successors and assigns, the
"Banks"), and Bank One, as agent for the Banks pursuant to the Credit Agreement
(in such capacity, together with its successors in such capacity pursuant to the
terms of the Credit Agreement, the "Agent").
W I T N E S S E T H :
WHEREAS, pursuant to the terms and conditions of the Credit Agreement
dated of even date herewith, by and between DDD Energy, Inc., a Delaware
corporation (the "Corporation"), the Agent, and the Banks (as such agreement may
be amended, restated, or supplemented from time to time, the "Credit
Agreement"), the Banks have agreed to extend credit to or for the benefit of the
Corporation;
WHEREAS, the Pledgor is the owner of the shares of issued and
outstanding common stock described in Schedule I hereof (the "Securities")
issued by the Corporation;
WHEREAS, the Pledgor, as the sole shareholder of the Corporation, will
derive substantial direct and indirect benefits from the extension of credit to
or for the benefit of the Corporation, and has therefore agreed to guaranty
certain obligations of the Corporation pursuant to the terms of a Guaranty in
favor of the Agent and the Banks of even date herewith (the "Guaranty"); and
WHEREAS, pursuant to the terms of the Credit Agreement and as an
inducement to the Banks to extend credit to or for the benefit of the
Corporation pursuant to the Credit Agreement, the Pledgor has agreed to execute
this Security Agreement in favor of the Agent for the benefit of the Banks to
secure its obligations under the Guaranty;
NOW, THEREFORE, in consideration of the premises and for other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE 1
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Security Agreement, the terms
"Agent," "Bank One," "Banks", "Compass", "Corporation," "Credit Agreement,"
"Pledgor," Stock Pledge," "Securities," and "Security Agreement" will have the
meanings indicated above.
1.2 Terms Defined in Credit Agreement. Each capitalized term used but
not defined herein shall have the meaning assigned to such term in the Credit
Agreement.
1.3 Additional Defined Terms. As used in this Security Agreement, the
following terms will have the meanings indicated:
(a) "Collateral" will mean the Securities and the certificates
representing the Securities; all dividends, cash, instruments and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any or all of the Securities, including,
without limitation, all additional shares of stock of the Corporation from
time to time acquired by the Pledgor by way of stock dividend or stock split;
the certificates representing such additional shares; all dividends, cash,
instruments or other property from time to time received, receivable or
otherwise distributed in respect of or in exchange for any or all of such
additional shares; and all proceeds of any of the foregoing in this
definition.
(b) "Event of Default" shall mean any Event of Default, as defined in
the Credit Agreement, or the failure of the Pledgor to comply with
Regulations G, T, U or X of the Board of Governors of the Federal Reserve
System, as amended.
1.4 Undefined Financial Accounting Terms. Undefined financial
accounting terms used in this Security Agreement shall have the meanings
assigned to such terms according to GAAP.
1.5 Terms Defined in Texas Business and Commerce Code. Any term used
herein that is defined in the Texas Business and Commerce Code shall have the
meaning assigned to such term therein, unless the context otherwise requires or
such term is otherwise defined herein.
1.6 References. The words "hereby," "herein," "hereinabove,"
"hereinafter," "hereinbelow," "hereof," "hereunder," and words of similar import
when used in this Security Agreement shall refer to this Security Agreement as a
whole and not to any particular Article, Section, or provision of this Security
Agreement. References in this Security Agreement to Article or Section numbers
are to such Articles or Sections of this Security Agreement unless otherwise
specified.
2
<PAGE>
1.7 Articles and Sections. This Security Agreement, for convenience
only, has been divided into Articles and Sections; and it is understood that the
rights and other legal relations of the parties hereto shall be determined from
this instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.8 Number and Gender. Whenever the context requires, reference herein
made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Words denoting
sex shall be construed to include the masculine, feminine and neuter, when such
construction is appropriate; and specific enumeration shall not exclude the
general but shall be construed as cumulative. Definitions of terms defined in
the singular or plural shall be equally applicable to the plural or singular, as
the case may be, unless otherwise indicated.
ARTICLE 2
SECURITY INTEREST
2.1 Grant of Security Interest in Collateral. The Pledgor, for value
received, the receipt and sufficiency of which are hereby acknowledged, and to
induce the Banks to extend credit to or for the benefit of the Corporation,
hereby pledges to the Agent on behalf of the Banks and hereby grants to the
Agent on behalf of the Banks a first lien on and a security interest in the
Collateral to secure its guaranty of the Obligations as such term is defined in
the Credit Agreement of even date herewith, by and among the Corporation, the
Agent and the Banks, as it may be amended, restated, or supplemented from time
to time, pursuant to the Guaranty.
2.2 Delivery of Securities. All certificates or instruments
representing or evidencing the Securities shall be delivered to and held by the
Agent for the benefit of the Banks, for the sole purpose of possession of the
Collateral or any portion thereof pursuant to this Security Agreement, and shall
be in suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment in blank, all in form and
substance satisfactory to the Agent. The Agent shall at all times have actual
possession of the Securities and shall be deemed to have possession of any of
the Collateral in transit to it or set apart for it.
2.3 Power of Attorney. The Pledgor hereby irrevocably constitutes and
appoints the Agent and any authorized officer or agent thereof, with full power
of substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority
3
<PAGE>
in the place and stead of the Pledgor and in the name of the Pledgor or in its
own name, from time to time in the Agent's discretion, for the purpose of
carrying out the terms of this Security Agreement, and without notice to the
Pledgor, to take any and all appropriate action and to execute any and all
documents and instruments which may be necessary or desirable to accomplish the
purposes of this Security Agreement, including, without limitation, the
following:
(a) upon the occurrence and during the continuance of any Event of
Default, to transfer to or register any or all of the Collateral in the name
of the Agent or any of its nominees;
(b) to exchange the certificates or instruments representing or
evidencing the Collateral for certificates or instruments of smaller or
larger denominations;
(c) upon the occurrence and during the continuance of any Event of
Default, (i) to receive payment of and receipt for any and all moneys, claims
and other amounts due and to become due at any time in respect of or arising
out of any Collateral, (ii) to commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction to
collect the Collateral or any part thereof and to enforce any other right in
respect of any Collateral, (iii) to defend any suit, action or proceeding
brought against the Pledgor by any third party with respect to any
Collateral, (iv) to settle, compromise or adjust any suit, action or
proceeding described above and, in connection therewith, to give such
discharges or releases as the Agent may deem appropriate, and (v) to complete
any blanks contained in any instruments of transfer or assignment appended to
or delivered with the certificates representing the Securities; and
(d) to exchange any of the Collateral for other property upon
reorganization, recapitalization or other readjustment of the Corporation,
and in connection therewith to deposit any of the Collateral with any
committee or depository upon such terms as the Agent may determine; and,
subsequent to any Event of Default, to exercise, at the option of the Agent,
voting rights as to any of the Collateral;
all without notice and without liability except to account for property actually
received by the Agent.
The Pledgor hereby ratifies all that said attorney shall lawfully do
or cause to be done within the scope of the power of attorney granted hereunder.
This power of attorney is a power coupled with an interest and shall be
irrevocable so long as the Guaranty remains outstanding. The powers conferred on
the Agent hereunder are solely to protect the interests of the Agent and the
Banks in the Collateral and shall not impose any duty upon it to exercise any
such powers. The Agent shall be accountable only for amounts that it actually
receives as a result of the exercise of
4
<PAGE>
such powers and neither it nor any of its officers, directors, employees or
agents shall be responsible to the Pledgor for any act or failure to act, except
for gross negligence.
2.4 Release of Security Interest. The security interest granted
hereunder secures Pledgor's obligations under the Guaranty, and shall be
released by Agent and Banks upon termination of the Guaranty pursuant to its
terms.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
To induce the Agent and the Banks to enter into the Credit Agreement
and to make Loans to or for the benefit of the Corporation, the Pledgor
represents and warrants to the Agent and the Banks (which representations and
warranties shall survive the delivery of this Security Agreement and the other
Loan Documents) that:
3.1 Status of Securities. All signatures on the Securities are genuine
or authorized; the transfer of the Securities by the Pledgor to the Agent for
the benefit of the Banks is effective; the Pledgor knows of no fact that might
impair the validity of the Securities; and the Securities (a) have been duly
authorized, validly issued, drawn, made, and/or accepted, (b) are genuine,
validly outstanding, fully paid, and nonassessable, (c) were not issued in
violation of the preemptive rights of any Person or any agreement by which the
Pledgor or any issuer of such Collateral is bound, and (d) have not been
materially altered.
3.2 No Material Misstatements. No information, exhibit, or report
furnished by the Pledgor to the Agent or the Banks in connection with the
negotiation of any Loan Document contained or contains any material misstatement
of fact or omitted to state a material fact or any fact necessary to make the
statements contained therein, in light of the circumstances in which they were
made, not misleading.
3.3 Ownership and Liens. Except for the security interest in favor of
the Agent for the benefit of the Banks, the Pledgor owns (and at the time of
transfer or delivery of the Collateral to the Agent owned or will own) good and
indefeasible title to the Collateral free and clear of any other security
interests, liens, adverse claims, or options; the Pledgor has (and at the time
of transfer or delivery of the Collateral to the Agent had or will have) full
right, power, and authority to convey, assign, transfer, and deliver the
Collateral to the Agent and to grant a security interest in the Collateral to
the Agent in the manner provided herein.
5
<PAGE>
ARTICLE 4
COVENANTS AND AGREEMENTS
Unless agreed in writing by the Agent and the Banks to the contrary,
the Pledgor agrees, so long as the Guaranty remains outstanding.
4.1 Payment of Assessments and Charges. To pay all taxes, charges,
liens and assessments against the Collateral; and upon the failure of the
Pledgor to do so, the Agent at its option may, but will not be obligated to, pay
any of them.
4.2 Delivery of Collateral. That any and all
(i) dividends paid or payable other than in cash and all instruments
and other property received, receivable or otherwise distributed in respect
of or in exchange for any Collateral,
(ii) dividends and other distributions paid or payable in cash in
respect of any Collateral in connection with a partial or total liquidation
or dissolution or in connection with a reduction of capital, capital surplus
or paid-in surplus, and
(iii) cash paid, payable or otherwise distributed in respect of
principal of, in redemption of or in exchange for any Collateral,
shall be forthwith delivered to the Agent to hold as Collateral for the benefit
of the Banks and shall, if received by the Pledgor, be received in trust for the
benefit of the Agent and the Banks, be segregated from the other property or
funds of the Pledgor, and be forthwith delivered to the Agent as Collateral in
the same form as so received (with any necessary endorsement).
4.3 Further Assurances. To promptly cure any defects in the execution
and delivery of any of the Loan Documents executed by the Pledgor and execute,
acknowledge, and deliver such other assurances and instruments and take such
other action as shall, in the reasonable opinion of the Agent, be necessary to
fulfill the terms of the Loan Documents executed by the Pledgor and to confirm,
perfect, and preserve the security interest created and intended to be created
hereby and to vest more completely in and assure to the Agent and the Banks
their rights under this Security Agreement.
4.4 Prohibited Liens and Filings. That it will not pledge, mortgage,
or otherwise encumber, create, or suffer a security interest to exist in any of
the Collateral (other than in favor of the Agent) or sell, assign, or otherwise
transfer any of the Collateral to anyone other than the Agent or file or permit
to be filed any financing statement or other security instrument with respect to
the Collateral other than in favor of the Agent.
6
<PAGE>
ARTICLE 5
RIGHTS AND REMEDIES
5.1 Remedies Upon Default. (a) Upon the occurrence and during the
continuance of an Event of Default, the Agent may, at its option, declare all
Obligations immediately due and payable, without presentment, demand, protest,
notice of protest, default or dishonor, notice of intent to accelerate maturity,
notice of acceleration of maturity or other notice of any kind, all of which are
hereby expressly waived by the Pledgor, and may exercise any and all other
remedies provided by law or pursuant to the Loan Documents.
(b) If all or any part of the Obligations shall become due and
payable, the Agent may then, or at any time thereafter, apply, set-off, collect,
sell in one or more sales, or otherwise dispose of, any or all of the
Collateral, in its then condition or following any commercially reasonable
preparation or processing, in such order as the Agent may elect. Any such sale
may be made either at public or private sale at the place of business of the
Agent, any brokers' board or securities exchange or elsewhere, either for cash
or upon credit or for future delivery, at such price as the Agent may deem fair.
The Agent or the Banks may be the purchaser of any or all Collateral so sold and
may hold the same thereafter in its own right free from any claim of the Pledgor
or right of redemption. No such purchase or holding by the Agent or the Banks
shall be deemed a retention by the Agent or the Banks in satisfaction of the
Obligations. All demands, notices, and advertisements, and the presentment of
property at sale are hereby waived. If, notwithstanding the foregoing
provisions, any applicable provision of the Uniform Commercial Code or other law
requires the Agent to give reasonable notice of any such sale or disposition or
other action, ten days' prior written notice shall constitute reasonable notice.
The Agent may require the Pledgor to assemble the Collateral and make it
available to the Agent at a place designated by the Agent that is reasonably
convenient to the Agent and the Pledgor. Any sale hereunder may be conducted by
an auctioneer or any officer or agent of the Agent.
(c) In connection with the sale of Collateral which is stock or other
investment securities, the Agent must limit prospective purchasers to the extent
deemed necessary or advisable by the Agent to render such sale exempt from the
registration requirements of the Securities Act of 1933, as amended (the "Act"),
and any applicable state securities laws. No sale so made in good faith by the
Agent shall be deemed not to be "commercially reasonable" because so made;
provided, however, that nothing in this Security Agreement shall be deemed to
impose any obligation whatsoever to file a registration statement under the Act
or any state securities law with respect to any sale of Collateral by the Agent.
7
<PAGE>
5.2 Voting Rights, Dividends, Etc. Prior to Default.
So long as no Event of Default shall have occurred and be continuing:
(a) the Pledgor will be entitled to exercise any and all voting and
other consensual rights pertaining to the Collateral or any part thereof for
any purpose not inconsistent with the terms of this Security Agreement;
(b) subject to the further provisions of this Security Agreement, the
Pledgor shall be entitled to receive and retain any and all dividends paid in
respect of the Collateral; provided, however, that any and all
(i) dividends paid or payable other than in cash
and all instruments and other Property received,
receivable, or otherwise distributed in respect of or in
exchange for any Collateral,
(ii) dividends and other distributions paid or
payable in cash in respect of any Collateral in
connection with a partial or total liquidation or
dissolution or in connection with a reduction of
capital, capital surplus or paid-in surplus, and
(iii) cash paid, payable or otherwise distributed
in respect of principal of, in redemption of or in
exchange for any Collateral,
shall be forthwith delivered to the Agent to hold as Collateral for the
benefit of the Banks and shall, if received by the Pledgor, be received in
trust for the benefit of the Banks, be segregated from the other property or
funds of the Pledgor, and be forthwith delivered to the Agent as Collateral
in the same form as so received (with any necessary endorsement); and
(c) the Agent shall execute and deliver (or cause to be executed and
delivered) to the Pledgor all such proxies and other instruments as the
Pledgor may reasonably request for the purpose of enabling the Pledgor to
exercise the voting and other rights which it is entitled to exercise
pursuant to Section 5.2(a) above and to receive the dividends which it is
authorized to receive and retain.
5.3 Voting Rights, Dividends, Etc. After Default. Upon the occurrence
and during the continuance of an Event of Default:
(a) at the option of the Agent with notice to the Pledgor, all rights
of the Pledgor to exercise the voting and other consensual rights which it
would otherwise be entitled to exercise pursuant to Section 5.2(a) above and
to receive the dividends and interest payments which it would otherwise be
8
<PAGE>
authorized to receive and retain pursuant to Section 5.2(b) above shall cease
and shall thereupon become vested in the Agent, who shall thereupon have the
sole right to exercise such voting and other consensual rights and to receive
and hold as Collateral such dividends; and
(b) all dividends which are received by the Pledgor contrary to the
provisions of Section 5.3(a) above shall be received in trust for the benefit
of the Agent, shall be segregated from other funds of the Pledgor and shall
be forthwith paid over to the Agent as Collateral in the same form as so
received (with any necessary endorsement).
5.4 Proceeds. Prior to all or any part of the Obligations becoming due
and payable as specified in Section 5.1, all cash sums or other property
received by the Agent or the Banks on account of the Collateral shall be held as
Collateral. After all or any part of the Obligations shall become due and
payable as specified in Section 5.1, the proceeds of any sale or other
disposition of the Collateral and all sums received or collected by the Agent
from or on account of the Collateral shall be applied by the Agent in the manner
set forth in ss.9.504 of the UCC.
5.5 Agent Duties. The Agent shall be under no duty whatsoever to make
or give any presentment, demand for performance, notice of nonperformance,
protest, notice of protest, notice of dishonor, or other notice or demand in
connection with any Collateral or the Obligations, or to take any steps
necessary to preserve any rights against prior parties. The Agent shall not be
liable for failure to collect or realize upon any or all of the Obligations or
Collateral, or for any delay in so doing, nor shall the Agent be under any duty
to take any action whatsoever with regard thereto. The Agent shall use
reasonable care in the custody and preservation of any Collateral in its
possession. The Agent shall have no duty to comply with any recording, filing,
or other legal requirements necessary to establish or maintain the validity,
priority, or enforceability of, or the Agent's rights in or to, any of the
Collateral.
5.6 The Agent's Actions. The Pledgor waives any right to require the
Agent or the Banks to proceed against any person, exhaust any collateral or
pursue any other remedy in the Agent's power; waives any and all notice of
acceptance of this Security Agreement or of creation, modification, renewal, or
extension for any period of any Obligations; and waives any defense arising by
reason of any disability or other defense of the Corporation or any other
guarantor or Person primarily or secondarily liable with respect to all or any
portion of the Obligations ("Other Liable Party"), or by reason of the cessation
from any cause whatsoever of the liability of the Corporation or any Other
Liable Party. All dealings between the Corporation or the Pledgor and the Agent
and the Banks shall conclusively be presumed to have been had or consummated in
reliance upon this Security Agreement. Until all
9
<PAGE>
Obligations shall have been paid and/or performed in full and the Commitment
shall have terminated, or the Guaranty has been released, the Pledgor (i) shall
have no right to subrogation, (ii) waives any right to enforce any remedy that
the Agent or the Banks now has or may hereafter have against the Corporation or
any Other Liable Party, and (iii) except as otherwise expressly provided in this
Security Agreement, waives any benefit of and right to participate in any
collateral or security whatsoever now or hereafter held by the Agent or the
Banks.
ARTICLE 6
MISCELLANEOUS
6.1 Transfer of Obligations and Collateral. Subject to the terms of
the Credit Agreement, the Pledgor hereby agrees that the Banks may transfer any
or all of its portion of the Obligations. Upon any such transfer, such Bank may
transfer any or all of its rights in the Collateral and shall be fully
discharged thereafter from all liability with respect to the Collateral so
transferred, and the transferee shall be vested with all rights, powers, and
remedies of such Bank hereunder with respect to Collateral so transferred and
shall assume any of such transferring Bank's liabilities. With respect to any
Collateral not so transferred, the Agent and the remaining Banks shall retain
all rights, powers, and remedies hereby given. The Agent may at any time deliver
any or all of the Collateral to the Pledgor, whose receipt shall be a complete
and full acquittance for the Collateral so delivered, and the Agent and the
Banks shall thereafter be discharged from any liability therefor.
6.2 Cumulative Security. The execution and delivery of this Security
Agreement in no manner shall impair or affect any other security (by endorsement
or otherwise) for the payment of the Obligations. No security taken hereafter as
security for payment of all or any portion of the Obligations shall impair in
any manner or affect this Security Agreement. All such present and future
additional security is to be considered as cumulative security.
6.3 Continuing Agreement. This is a continuing agreement and the
conveyance hereunder shall remain in full force and effect and all the rights,
powers, and remedies of the Agent and the Banks hereunder shall continue to
exist until the Obligations shall be paid in full as the same become due and
payable and the Commitment has terminated, or the Guaranty has been released and
the Agent, upon request of the Pledgor, has executed a written termination
statement, reassigned to the Pledgor, without recourse, the Collateral and all
rights and liens conveyed hereby and returned possession of the Collateral to
the Pledgor. Furthermore, it is contemplated by the parties hereto that there
may be times when no Obligations shall be owing. Notwithstanding such
occurrences, this Security Agreement shall remain valid and shall be in full
force
10
<PAGE>
and effect as to subsequent Obligations provided that the Agent has not executed
a written termination statement and returned possession of the Collateral to the
Pledgor. Otherwise, this Security Agreement shall continue irrespective of the
fact that the liability of the Corporation or any Other Liable Party may have
ceased and notwithstanding the death or incapacity of the Pledgor or any Other
Liable Party or any other event or proceeding affecting the Corporation, the
Pledgor, and/or any Other Liable Party.
6.4 Cumulative Rights. The rights, powers, and remedies of the Agent
and the Banks hereunder shall be in addition to all rights, powers, and remedies
given by statute or rule of law and are cumulative. The exercise of any one or
more of the rights, powers, and remedies provided herein shall not be construed
as a waiver of any other rights, powers, and remedies. The Agent and the Banks
shall have the rights, powers, and remedies of a secured party under the Texas
Business and Commerce Code, as amended.
6.5 Exercise of Rights. Time shall be of the essence for the
performance of any act under this Security Agreement by the Pledgor, but neither
the Agent's or the Banks's acceptance of partial or delinquent payments nor any
forbearance, failure, or delay by the Agent in exercising any right, power or
remedy shall be deemed a waiver of any obligation of the Pledgor, the
Corporation, or any Other Liable Party or of any right, power, or remedy of the
Agent or the Banks or preclude any other or further exercise thereof; and no
single or partial exercise of any right, power, or remedy shall preclude any
other or further exercise thereof or the exercise of any other right, power, or
remedy.
6.6 Remedy and Waiver. The Agent may remedy or waive any default
without waiving the default remedied or waiving any prior or subsequent default.
6.7 Non-Judicial Remedies. The Agent may enforce its rights hereunder
without prior judicial process or judicial hearing. The Pledgor expressly
waives, renounces, and knowingly relinquishes any and all legal rights which
might otherwise require the Agent to enforce its rights by judicial process. In
so providing for non-judicial remedies, the Pledgor recognizes and concedes that
such remedies are consistent with the usage of the trade, are responsive to
commercial necessity and are the result of bargain at arm's length. Nothing
herein is intended to prevent the Agent or the Pledgor from resorting to
judicial process at such party's option.
6.8 Preservation of Liability. Neither this Security Agreement nor the
exercise by the Agent or the Banks of (or the failure to so exercise) any right,
power, or remedy conferred herein or by law shall be construed as relieving the
Pledgor or any Other Liable Party from full liability thereon and for any
deficiency thereon.
11
<PAGE>
6.9 Notices and Other Communications. Except as to verbal notices
expressly authorized herein, which verbal notices shall be confirmed in writing,
all notices, requests, and communications hereunder shall be in writing
(including by telecopy). Unless otherwise expressly provided herein, any such
notice, request, demand, or other communication shall be deemed to have been
duly given or made when delivered by hand, or, in the case of delivery by mail,
when deposited in the mail, certified mail, return receipt requested, postage
prepaid, or, in the case of telecopy notice, when receipt thereof is
acknowledged orally or by written confirmation report, addressed as follows:
(a) if to the Agent, to:
Bank One, Texas, National Association
910 Travis
Houston, Texas 77002
Attention: Energy Group
(or for notice by mail, to:
P. O. Box 2629
Houston, Texas 77252-2629
Attention: Energy Group)
Telecopy: (713) 751-3544
(b) if to the Pledgor, to:
DDD Energy, Inc.
50 Briar Hollow Lane, 7th Floor
Houston, Texas 77027
Attention: Ms. Debra D. Valice
Telecopy: (713) 627-2319
Any party may, by proper written notice hereunder to the others,
change the individuals or addresses to which such notices to it shall thereafter
be sent.
6.10 Parties in Interest. All covenants and agreements herein
contained by or on behalf of the Pledgor or the Agent shall be binding upon and
inure to the benefit of the Pledgor, the Agent, or the Banks, as the case may
be, and their respective legal representatives, successors, and assigns.
6.11 Amendment and Waiver. This Security Agreement may not be amended
nor may any of its terms be waived except in writing duly signed by the party
against whom enforcement of the amendment or waiver is sought.
6.12 Invalidity. If any provision of this Security Agreement is
rendered or declared illegal, invalid, or unenforceable by reason of any
existing or subsequently enacted legislation or by a judicial decision that has
become final, the Pledgor and the Agent shall promptly meet and negotiate
substitute provisions for those
12
<PAGE>
rendered illegal, invalid, or unenforceable, but all of the remaining provisions
shall remain in full force and effect.
6.13 GOVERNING LAW. THIS SECURITY AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW, PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL
STATUTES, ARTICLE 5069, CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT
LOAN ACCOUNTS AND REVOLVING TRI-PARTY ACCOUNTS) SHALL NOT APPLY.
6.14 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT
TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR
FROM THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT TO WHICH THE PLEDGOR IS
A PARTY MAY BE LITIGATED, AT THE SOLE DISCRETION AND ELECTION OF THE AGENT, IN
COURTS HAVING SITUS IN HOUSTON, HARRIS COUNTY, TEXAS. THE PLEDGOR HEREBY SUBMITS
TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON,
HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR
CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE
AGENT OR THE BANKS IN ACCORDANCE WITH THIS SECTION.
6.15 WAIVER OF RIGHTS TO JURY TRIAL. THE PLEDGOR AND THE AGENT HEREBY
KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY, AND UNCONDITIONALLY WAIVE
ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR
OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF ANY OF THIS SECURITY AGREEMENT
OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE AGENT OR ANY BANK IN
THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS SECURITY AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF
THIS SECTION ARE A MATERIAL INDUCEMENT FOR THE AGENT AND THE BANKS ENTERING INTO
THE CREDIT AGREEMENT.
6.16 ENTIRE AGREEMENT. THIS SECURITY AGREEMENT CONSTITUTES THE ENTIRE
AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND
SHALL SUPERSEDE ANY PRIOR AGREEMENTS, WHETHER WRITTEN OR ORAL, BETWEEN THE
PARTIES HERETO RELATING TO THE SUBJECT HEREOF. FURTHERMORE, IN THIS REGARD, THIS
SECURITY AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY,
THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
13
<PAGE>
IN WITNESS WHEREOF, this Security Agreement is executed as of the date
first above written.
SEITEL, INC.
By: /s/ Debra D. Valice
----------------------------
Debra D. Valice
Vice President-Finance
BANK ONE, TEXAS, NATIONAL
ASSOCIATION, AS AGENT
By: /s/ Damian G. Meiburger
----------------------------
Damien G. Meiburger
Senior Vice President
14
<PAGE>
SCHEDULE I
Stock Number
Stock Class Par of
Issuer Stock No. Value Shares
DDD Energy, Inc . Common 1 $0.01 1,000
i
1995 SHAREHOLDER VALUE INCENTIVE BONUS PLAN
Seitel, Inc., a Delaware corporation (the "Company"), hereby adopts the
following 1995 Shareholder Value Incentive Bonus Plan (the "Plan") effective as
of February 1, 1995 (the "Effective Date"), subject to shareholder approval as
set forth herein.
I. PURPOSE
The Plan is intended as an employment incentive, to retain in the
employment of the Company and its majority owned subsidiaries ("Subsidiaries")
persons of training, experience, and ability, to attract new employees whose
services are considered valuable to the Company, and to stimulate the active
interest of such persons in the development and financial success of the
Company, as evidenced by the market price of the Company's common stock.
II. BONUS AMOUNT AND CONDITIONS
The Company shall pay an aggregate bonus in the sum of $4,000,000 (the
"Bonus") to participants under the Plan ("Participants") if the closing price of
the Company's common stock, par value $0.01 per share, as traded on the New York
Stock Exchange (or, should the Company's common stock cease to be listed
thereon, on any other nationally recognized stock exchange) equals or exceeds
$60.00 per share (the "Target Price") on or before April 30, 1998, and
thereafter equals or exceeds the Target Price for a period of ninety (90)
consecutive days (the "Target Date"). If the closing price of the Company's
common stock does not reach the Target Price on or before April 30, 1998, or
does not remain above the Target Price for such 90 consecutive day period, no
Bonus shall be payable hereunder. The Board of Directors of the Company shall
make appropriate adjustments to the Target Price in the event of 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.
III. PARTICIPATION
Only those persons who are salaried employees of the Company or its
Subsidiaries on the Target Date will be qualified as Participants under the Plan
and entitled to receive any bonus hereunder. Each Participant shall be entitled
to receive a bonus, subject to vesting as specified herein, equal to the
aggregate Bonus ($4,000,000) multiplied by a fraction, the numerator of which
shall be the total compensation paid to the Participant by the Company (or
applicable Subsidiary) during the period beginning on the Effective Date and
ending on the Target Date (the "Calculation Period"), and the denominator of
which shall be the sum of all compensation paid to all Participants by the
Company and its Subsidiaries during the Calculation Period (a "Participant's
Bonus"). Notwithstanding anything herein to the contrary, compensation received
by a Participant from a Subsidiary that is not wholly-owned by the Company shall
be multiplied by the percentage of the outstanding voting stock of the
Subsidiary owned by the Company at the time of receipt of such compensation for
the purposes of calculating Participants' Bonuses hereunder. Compensation, as
used to determine a Participant's Bonus hereunder, shall include salary,
commissions, bonuses based on revenues, profits, earnings, sales, or similar
financial performance levels, and car allowances, but shall not include other
fringe benefits, employer contributions to the 1988 Incentive Compensation
Program, retirement or 401(k) plans, bonuses based on stock performance,
compensation deemed to be received upon exercise of stock options,
reimbursements, or living allowances.
<PAGE>
IV. VESTING
Each Participant shall vest in his or her Participant's Bonus in twelve
(12) portions, the first portion of which will vest on the Target Date, the
second portion of which will vest on the first day of the third month following
the month in which the Target Date occurs, and the remaining portions of which
shall vest on the first day of each third month thereafter (each a "Vesting
Date"). Participants shall vest as to 6.25% of their Participant's Bonus on each
of the first four Vesting Dates, as to 8.75% of their Participant's Bonus on the
next four Vesting Dates, and as to 10% of their Participant's Bonus on each of
the last four Vesting Dates. No Participant shall vest in and be entitled to
payment of any quarterly payment of the Participant's Bonus (as provided in
Section V hereof) unless on such Vesting Date such Participant is and has been
at all times since the Target Date a salaried employee of the Company or a
Subsidiary. Should any Participant cease to be a salaried employee of the
Company or a Subsidiary, the unvested portion of the Participant's Bonus shall
be forfeited, and the Participant shall no longer be entitled to receive any
unvested portions of the Participant's Bonus. Notwithstanding the foregoing, any
Participant terminated without cause after the Target Date shall upon such
termination without cause become immediately vested in one-half of any then
unvested portion of the Participant's Bonus (and shall forfeit the other
one-half of the then unvested portion), and the Company shall pay the portion of
such Bonus vesting upon such termination without cause to such Participant in
full within 30 days of such termination. In the event of termination with cause
of a Participant or a death or permanent disability of any Participant occurring
while such Participant is a salaried employee of the Company or a Subsidiary,
all of the unvested portion of the Participant's Bonus shall be forfeited. Any
amount of any Participant's Bonus that is forfeited shall be redistributed to
the other Participants proportionally based on the Participants' Bonuses of such
remaining Participants.
As used herein, "termination without cause" shall mean a termination
not justified by poor job performance, employee misconduct or misbehavior, or
any other justifiable reason. Nothing herein shall be construed as placing any
restrictions on the ability of the Company or any Subsidiary to terminate any
employee at any time.
V. BONUS PAYMENTS
The Company shall pay each Participant his or her respective
Participant's Bonus in twelve (12) quarterly payments, the amount of which shall
be equal to the portion of the Participant's Bonus having vested on the
immediately preceding Vesting Date. The first such payment shall be made on the
first day of the month following the month in which the Target Date occurs, and
subsequent payments shall be made on the first day of each third month
thereafter (each a "Bonus Payment Date") until the Participants' Bonuses have
been paid in full.
VI. CERTAIN EVENTS
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 makes a successful
tender or exchange offer for more than 50% of the 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"), and the Board of Directors obtains
the agreement of the purchaser to assume the obligations of the Company to pay
the remaining payments of Participants' Bonuses pursuant to the terms hereof,
then the rights and duties of the Participants and the Company (as assumed by
the purchaser) shall not be affected in any manner. If the Company is purchased
and the Board of Directors does not obtain such agreement of the purchaser to
assume such obligations on or before the date of such purchase, all unvested
portions of all Participants' Bonuses that have not been forfeited as of the
date of such purchase shall be accelerated and shall be immediately paid to all
such Participants by the Company.
<PAGE>
VII. SHAREHOLDER APPROVAL
In adopting this Plan, the Board of Directors of the Company has
directed that the Plan be submitted for approval by the shareholders at their
next annual meeting. If the Plan is not approved by the affirmative vote of the
majority of shares of the Company's common stock present and voting at such
meeting at which a quorum is present, the Board of Directors reserves the right
to amend or revoke the Plan in its sole discretion.
VIII. COMPENSATION COMMITTEE
The performance goals under this Plan (including the Target Price and
the time period in which it must be attained) were determined by the
Compensation Committee of the Board of Directors of the Company. Before the
Company shall be obligated to make any payments of Bonus under this Plan, the
Compensation Committee shall certify to the Board that the material terms and
performance goals hereunder have been met, which determination shall be made by
the Compensation Committee in its sole discretion.
IX. GOVERNING LAW
The Plan shall be governed by and construed in accordance with the laws
of the State of Texas.
SEITEL, INC. 1993 INCENTIVE STOCK OPTION PLAN
Statement of Amendments Effective May 12, 1995
1. Section II(5) is hereby amended to read as follows:
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.
2. The first sentence of Section V is hereby amended to read as follows:
Subject to adjustment as provided in Section VIII hereof, a total of
Seven Hundred Thousand (700,000) shares of Common Stock of the Company
(the "Shares") shall be subject to the Plan.
3. The first sentence of the section headed "Eligibility" under Section
VI is hereby amended to read as follows:
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.
4. The section headed "Maximum Annual Amount Per Employee" under Section
VII is hereby amended by adding the following sentence at the end of
such section:
In no event will any Participant be granted under the Plan in any
calendar year Options to purchase more than 100,000 Shares, subject to
adjustment as provided in Section VIII hereof.
SEITEL, INC.
1995 WARRANT RELOAD PLAN
The Board of Directors of Seitel, Inc. (the "Company") has adopted this
1995 Warrant Reload Plan (the "Plan"), effective as of January 1, 1995. The Plan
applies only to the 61 warrantholders (the "Warrantholders") and the warrants to
purchase common stock of the Company held by the Warrantholders as of the
effective date hereof (the "Warrants"), which Warrantholders and Warrants are
listed on Exhibit A hereto.
1. The Company shall, on exercise of any Warrant by a Warrantholder
according to the terms thereof at any time prior to expiration thereof, grant
replacement warrants ("Replacement Warrants") to the exercising Warrantholder.
Such Replacement Warrants shall be granted effective on the later of (i) the
exercise of the applicable Warrant or (ii) either confirmation from the New York
Stock Exchange that stockholder approval of this Plan is not required, or, in
the event that the Exchange advises the Company that stockholder approval is
required, upon such approval by the stockholders of the Company.
2. Warrantholders who are not a director or employee of the Company or a
majority-owned subsidiary as of the date of exercise of a Warrant shall not be
entitled to be granted Replacement Warrants under this Plan with respect to such
exercise. Warrantholders will not be entitled to any grant of Replacement
Warrants under this Plan upon exercise of Replacement Warrants.
3. The Replacement Warrants shall expire on the same date that the
exercised Warrant would have expired, and shall entitle the Warrantholder to
purchase the same number of shares of Company common stock as the Warrantholder
purchased upon exercise of such Warrant. The Replacement Warrants shall have an
exercise price equal to either (i) the closing price of Company common stock as
reported on the New York Stock Exchange on the effective date of grant of the
Replacement Warrant, or (ii) at the request of the Warrantholder, such greater
exercise price as may be required to avoid the imposition of short-swing profits
liability under Section 16 of the Securities Exchange Act of 1934, and the
regulations thereunder.
4. No Replacement Warrant shall be exercisable until the Company has
received notice from the New York Stock Exchange that the shares issuable upon
exercise of the Replacement Warrants have been approved for listing on the
Exchange subject to issuance. The Company may place other restrictions on the
exercisability of the Replacement Warrants as may be required to comply with
applicable laws, including but not limited to restrictions limiting or
prohibiting exercise prior to registration pursuant to applicable securities
laws of the shares issuable upon exercise.
5. The Replacement Warrants shall not be sold, transferred, pledged,
assigned, hypothecated or otherwise disposed of in any manner by any
Warrantholder except by will or by the laws of descent and distribution, and
shall not be assignable by operation of law or subject to execution, attachment
or similar process.
6. Except as set forth in this Plan, the Replacement Warrants will
contain substantially the same terms and conditions as the Warrants.
7. The Board of Directors reserves the right to terminate this Plan at
any time upon notice to the Warrantholders, and no Warrantholder shall have any
rights or claims against the Company upon such termination, it being the
intention of this Plan that the right to any grant of Replacement Warrants shall
not vest in any Warrantholder until exercise of a Warrant, and shall then vest
only as to the grant of a Replacement Warrant with respect to such exercise of
such Warrant.
<PAGE>
Exhibit A
SEITEL, INC.
1995 Warrant Reload Plan
Listing of Warrant Holders and
Warrants Outstanding as of
January 1, 1995
Warrants
Employee Outstanding
Brian Adsit 4,569
Linda Diane Allison 418
Debra Bartholowmew 85
Richard Boespflug 302
James Bowers 270
Peter Bryant 340
William Burke 1,443
Horace Calvert 345,399
Margaret Carpenter 532
Robert Choate 2,585
John Cox 405
Walter Craig 30,652
Angela Cunningham 133
Twana Dryer 559
Karen Duxbury 8,882
Otis Elmore 510
Juan Falcon 253
Allan Filipov 2,419
Paul Frame 345,399
Arthur Freeman 4,513
Jay Green 24,271
James Harley 6,461
Cheryl Heath 944
Mary Hopping 99
Wanda Jones 281
Tammy Holbrook 455
Marcia Kendrick 952
Philip Koine 460
David Lawi 202,863
David Scott Lemke 537
Doreen Lorenzo 4,846
Jesse Marion 10,577
Allana Ruby 20,963
Kathy McCarty 523
James McGinnis 1,752
Joe Morgan 26,324
Juan Nieto 26
Thomas Norton 375
Michael Oline 457
<PAGE>
Exhibit A
SEITEL, INC.
1995 Warrant Reload Plan
Listing of Warrant Holders and
Warrants Outstanding as of
January 1, 1995
Warrants
Employee Outstanding
Charles Patterson 1,418
Herbert Pearlman 245,291
Cathryn Penn 196
Charles Puckett 352
Paul Richard 4,908
Jay Rives 123,463
Steven Sahinen 2,583
Charles Scalf 155
Rick Schmid 2,623
Lori Segeth 2,458
Jay Silverman 3,282
Robert Simon 34,229
Samuel Sloan 625
Christopher Talbot 6,080
Kyle Tillman 3,794
Karen Underwood 791
Debra Valice 78,666
Richard Veazy 349
Ysidro Villarreal 834
David Wegner 80,627
James Cortis Wilson 69
Phillip Worsham 495
1,646,122
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 1,746
<SECURITIES> 0
<RECEIVABLES> 42,498
<ALLOWANCES> 100
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 50,468<F2>
<DEPRECIATION> 6,361
<TOTAL-ASSETS> 194,678
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 32,799
<COMMON> 93
0
0
<OTHER-SE> 115,686
<TOTAL-LIABILITY-AND-EQUITY> 194,678
<SALES> 45,693
<TOTAL-REVENUES> 45,693
<CGS> 10,680
<TOTAL-COSTS> 10,680
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,721
<INCOME-PRETAX> 10,024
<INCOME-TAX> 3,709
<INCOME-CONTINUING> 6,315
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,315
<EPS-PRIMARY> 0.650
<EPS-DILUTED> 0.630
<FN>
<F1>The Company does not present a classified balance sheet; therefore, current
assets and current liabilities is not reflected in the Company's financial
statements.
<F2>PP&E does not include seismic data bank assets with a cost of
$220,300,000 and related accumulated amortization of $116,866,000.
</FN>
</TABLE>
