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 March 31, 1995
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period to to .
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Commission File Number 0-14488
Seitel, Inc.
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(Exact name of registrant as specified in charter)
Delaware 76-0025431
- ------------------------------- ----------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
50 Briar Hollow Lane
West Building, 7th Floor
Houston, Texas 77027
- ---------------------------------------- ----------
(Address of principal executive offices) (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 May 10, 1995 there were 9,164,979 shares of the Company's common
stock, par value $.01 per share, outstanding.
<PAGE>
INDEX
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 1995 and December 31, 1994.................... 3
Consolidated Statements of Operations
for the Three Months Ended March 31, 1995
and 1994................................................ 4
Consolidated Statements of Stockholders'
Equity for the Three Months Ended
March 31, 1995.......................................... 5
Consolidated Statements of Cash Flows
for the Three Months Ended March 31, 1995
and 1994................................................ 6
Notes to Consolidated Interim
Financial Statements.................................... 7
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations Operations........................ 8
PART II. OTHER INFORMATION....................................... 10
Page 2 of 12
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share amounts)
<TABLE>
<CAPTION>
(Unaudited)
March 31, December 31,
1995 1994
----------- -----------
<S> <C> <C>
ASSETS
Cash and equivalents $ 3,661 $ 1,541
Receivables
Trade 33,330 37,098
Notes and other 575 329
Net data bank 99,585 95,801
Net oil and gas properties 28,277 21,389
Net geophysical and other property and equipment 10,620 11,067
Prepaid expenses, deferred charges and other assets 1,592 1,546
---------- ----------
TOTAL ASSETS $ 177,640 $ 168,771
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable and accrued liabilities $ 36,098 $ 32,649
Income taxes payable 593 933
Bank debt
Line of Credit 9,871 5,085
Term Loan 3,033 3,231
Obligations under capital leases 4,696 5,088
Subordinated debentures 2,079 3,523
Deferred contractor payable 6,633 9,698
Contingent payables 3,152 3,152
Deferred income taxes 4,375 3,502
Deferred revenue 495 581
---------- ----------
TOTAL LIABILITIES 71,025 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 9,048,015 and
8,825,619 at March 31, 1995 and December 31, 1994
respectively 90 88
Additional paid-in capital 77,921 75,611
Retained earnings 30,231 27,257
Treasury stock, 414 shares at cost at March 31, 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 106,615 101,329
---------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 177,640 $ 168,771
========== ===========
</TABLE>
The accompanying notes are an integral
part of these consolidated financial
statements.
Page 3 of 12
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
---------- -----------
<S> <C> <C>
REVENUE $ 21,158 $ 12,598
EXPENSES
Depreciation, depletion and amortization 7,276 5,318
Cost of sales 4,268 1,329
Selling, general and administrative expenses 4,081 2,649
Net interest expense 812 768
---------- -----------
16,437 10,064
---------- -----------
Income before provision for income taxes 4,721 2,534
Provision for income taxes 1,747 887
---------- -----------
NET INCOME $ 2,974 $ 1,647
========== ===========
Earnings per share:
Primary $ .31 $ .25
========== ===========
Assuming full dilution $ .29 $ .22
========== ===========
Weighted average number of common and common equivalent shares:
Primary 9,748 6,637
========== ===========
Assuming full dilution 10,176 8,165
========== ===========
The accompanying notes are an integral
part of these consolidated financial
statements.
</TABLE>
Page 4 of 12
<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 66,795 1 766 - - - - -
Tax reduction from exercise of stock options - - 212 - - - - -
Conversions and exchanges of subordinated
debentures 155,601 1 1,332 - - - - -
Net income - - - 2,974 - - - -
--------- -------- ---------- ---------- -------- -------- ---------- ----------
BALANCE MARCH 31, 1995 (Unaudited) 9,048,015 $ 90 $ 77,921 $ 30,231 (414)$ (4) $ (1,551) $ (72)
========= ======== ========== ========== ======== ======== ========== ==========
</TABLE>
The accompanying notes are an integral part these consolidated
financial statements.
Page 5 of 12
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1994
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Cash received from customers $ 24,094 $ 15,240
Cash paid to suppliers and employees (9,810) (6,803)
Interest paid (308) (951)
Interest received 6 3
Income taxes paid (1,002) (220)
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Net cash provided by operating activities 12,980 7,269
---------- -----------
Cash flows from investing activities:
Cash invested in seismic data (12,931) (11,372)
Cash invested in oil and gas properties (2,586) (2,114)
Cash paid to acquire property and equipment (277) (299)
---------- -----------
Net cash used in investing activities (15,794) (13,785)
---------- -----------
Cash flows from financing activities:
Borrowings under line of credit agreements 14,841 20,250
Principal payments under line of credit (10,055) (17,975)
Principal payments on term loan (198) (186)
Principal payments under capital lease obligations (402) -
Proceeds from issuance of common stock 791 4,820
Costs of debt and equity transactions (43) (30)
Payments on receivables from officers and employees - 137
Other - (1)
---------- -----------
Net cash provided by financing activities 4,934 7,015
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Net increase in cash and equivalents 2,120 499
Cash and cash equivalents at beginning of period 1,541 1,759
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Cash and equivalents at end of period $ 3,661 $ 2,258
========== ===========
Reconciliation of net income to net cash provided by
operating activities:
Net income $ 2,974 $ 1,647
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 7,276 5,318
Non-cash sales (500) -
Decrease in receivables 3,522 2,811
Increase in other assets (197) (355)
Decrease in other liabilities (95) (2,152)
---------- -----------
Total adjustments 10,006 5,622
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Net cash provided by operating activities $ 12,980 $ 7,269
========== ===========
</TABLE>
The accompanying notes are an integral part
of these consolidated financial statements.
Page 6 of 12
<PAGE>
SEITEL, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS (Unaudited)
March 31, 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 three
months ended March 31, 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
March 31,
------------------------------
1995 1994
---------- -----------
<S> <C> <C>
Net income as reported $ 2,974 $ 1,647
Interest eliminated on assumed conversion of 9% convertible
subordinated debentures, net of tax 25 155
---------- -----------
Total income used for fully diluted earnings per share $ 2,999 $ 1,802
========== ===========
Weighted average number of common and common equivalent shares 9,748 6,637
========== ===========
Weighted average number of common shares assuming full dilution 10,176 8,165
========== ===========
</TABLE>
NOTE C-DATA BANK
Costs incurred in the creation of proprietary seismic data are
capitalized. Seismic data costs are amortized for each project in the proportion
that its revenue for a period relates to management's estimate of its 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 7 of 12
<PAGE>
NOTE D-SUPPLEMENTAL CASH FLOW INFORMATION
Significant non-cash investing and financing activities are as follows:
1. During the first three months of 1995, the Company issued
155,601 shares of its common stock upon the conversion and
exchange of $1,444,000 of its 9% convertible subordinated
debentures. In connection with these conversions and
exchanges, unamortized bond issue costs totaling $92,000
have been charged to additional paid-in capital.
2. During the first three months of 1995, the Company licensed
seismic data valued at $500,000 in exchange for the purchase
of seismic data for its library.
3. During the first three months of 1995, capital lease
obligations totaling $10,000 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 68% during the first quarter of 1995 as
compared to the first quarter 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 first quarter of
1995 and 1994 relates to seismic revenue, increasing from $12,330,000 during the
first quarter of 1994 to $15,797,000 during the first quarter of 1995. This
increase is attributable to an increase 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 $268,000
in the first quarter of 1994 to $5,361,000 in the first quarter 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 increased from $5,047,000 during the
first quarter of 1994 to $6,743,000 during the first quarter of 1995 due to the
corresponding increase in revenue from licensing seismic data during the same
period. As a percentage of revenue from licensing seismic data, data bank
amortization was 44% and 47% for the first quarter of 1995 and 1994,
respectively. The change in this percentage was 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
from $1,329,000 for the first quarter of 1994 to $4,268,000 for the first
quarter of 1995, is due to the Company's increasing volume of business in these
areas. Revenues from these areas increased from $1,494,000 during the first
quarter of 1994 to $5,545,000 during the first quarter of 1995.
The Company's selling, general and administrative expenses increased
during the 1995 period as compared to the 1994 period, 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 gas marketing and oil and gas
exploration and production areas. As a percentage of total revenue, these
expenses have decreased from 21% for the first quarter of 1994 to 19% for the
first quarter of 1995.
Page 8 of 12
<PAGE>
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%, 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 $11,071,000 at May 10,
1995, of which $7,000,000 is borrowed at the LIBOR rate of 8.13% and $4,071,000
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 February 21, 1995, DDD Energy, Inc., ("DDD Energy"), a wholly-owned
subsidiary of the Company, received a loan commitment from the Company's banks.
Under the terms of this facility, which is expected to close in May 1995, DDD
Energy will have 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 initial
borrowing base, which was determined before 1994 year-end oil and gas reserve
information was available, amounts to $8,000,000, reducing by $175,000 per month
beginning March 1, 1995. Funds available under the facility will be used to
repay 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 May 10, 1995, was $2,900,000.
From January 1, 1995 through May 10, 1995, the Company received
$2,140,000 from the exercise of common stock purchase warrants and options. In
connection with the exercises, the Company will also receive approximately
$957,000 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 $2,069,000 at
May 10, 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.
Page 9 of 12
<PAGE>
During 1994 and 1995, the Company entered into capital leases which
relate to the purchase of a 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 $4,565,000 at May
10, 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 $4,169,000 in receivables at March 31, 1995, which
will be paid to the contractor upon collection. Accordingly, the same amount,
$4,169,000, 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 March 31, 1995
accounts receivable included $852,000 dedicated to payment pursuant to this
verbal arrangement, while regular accounts payable included the full balance due
the contractor of $8,885,000. 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 three 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.
PART II - OTHER INFORMATION
Items 1., 2., 3., 4., and 5. Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) 10.1 Master Revolving Promissory Note effective December 31, 1994
between the Company, Seitel Data Corp. (Company's wholly-owned
subsidiary), Seitel Geophysical, Inc. (Company's wholly-owned
subsidiary), Seitel Offshore Corp. (Company's wholly-owned
subsidiary) and Exsol, Inc. (Company's wholly-owned
subsidiary) and Compass Bank-Houston
10.2 Master Revolving Promissory Note effective December 31, 1994
between the Company, Seitel Data Corp. (Company's wholly-owned
subsidiary), Seitel Geophysical, Inc. (Company's wholly-owned
subsidiary), Seitel Offshore Corp. (Company's wholly-owned
subsidiary) and Exsol, Inc. (Company's wholly-owned
subsidiary) and Bank One, Texas, N.A.
10.3 Restated Revolving Credit and Security Agreement effective as
of December 31, 1994 among the Company, Seitel Data Corp.
(Company's wholly-owned subsidiary), Seitel Geophysical, Inc.
(Company's wholly-owned subsidiary), Seitel Offshore Corp.
(Company's wholly-owned subsidiary) and Exsol, Inc. (Company's
wholly-owned subsidiary) and Bank One, Texas, N.A. and Compass
Bank-Houston
Page 10 of 12
<PAGE>
10.4 Amendment to Security Agreement (Joint Venture Interest)
effective as of December 31, 1994 among Seitel Offshore Corp.
(Company's wholly-owned subsidiary) and Bank One, Texas, N.A.
and Compass Bank-Houston
10.5 Amendment to Pledge Agreement effective as of December 31,
1994 among the Company, Seitel Geophysical, Inc. (Company's
wholly-owned subsidiary), Seitel Data Corp. (Company's
wholly-owned subsidiary) and Bank One, Texas, N.A. and Compass
Bank-Houston
27 Article 5 Financial Data Schedule for 1st Quarter 1995
(b) Not applicable.
Page 11 of 12
<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: May 12, 1995 /s/ Paul A. Frame
----------------------
Paul A. Frame
President
Dated: May 12, 1995 /s/ Debra D. Valice
---------------------
Debra D. Valice
Chief Financial Officer
Dated: May 12, 1995 /s/ Marcia H. Kendrick
----------------------
Marcia H. Kendrick
Chief Accounting Officer
Page 12 of 12
PROMISSORY NOTE
$12,500,000.00 Houston, Texas December 31, 1994
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned (collectively,
"Maker"), jointly and severally, promise to pay to the order of Compass
Bank-Houston ("Payee"), at its banking quarters in Houston, Harris County,
Texas, the sum of Twelve Million Five Hundred Thousand and No/100 Dollars
($12,500,000.00), or so much thereof as may be advanced against this Note
pursuant to the Restated Revolving Credit and Security Agreement dated of even
date herewith by and among 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. This Note is issued, in part, in
renewal, increase, and extension of the outstanding indebtedness evidenced by
that certain Master Revolving Promissory Note executed on or about March 18,
1994, in the maximum amount of $10,000,000.00, executed by certain of the
parties constituting the Maker, to the order of Compass Bank, an Alabama state
banking corporation. 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,
among other things, the collateral described in Section 5 of the Credit
Agreement.
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
--------------------
<PAGE>
(WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING TRIPARTY
ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
SEITEL, INC.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice, Vice President
of Finance, Chief Financial
Officer, Treasurer, and
Secretary
SEITEL DATA CORP.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice,
Secretary and Treasurer
SEITEL GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice,
Secretary and Treasurer
SEITEL OFFSHORE CORP.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice,
Secretary and Treasurer
EXSOL, INC.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice,
Secretary and Treasurer
PROMISSORY NOTE
$12,500,000.00 Houston, Texas December 31, 1994
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned
(collectively, "Maker"), jointly and severally, promise to pay to the order of
Bank One, Texas, National Association ("Payee"), at its banking quarters in
Houston, Harris County, Texas, the sum of Twelve Million Five Hundred Thousand
and No/100 Dollars ($12,500,000.00), or so much thereof as may be advanced
against this Note pursuant to the Restated Revolving Credit and Security
Agreement dated of even date herewith by and among 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. This Note is issued,
in part, in renewal, increase, and extension of the outstanding indebtedness
evidenced by that certain Master Revolving Promissory Note executed on or about
March 18, 1994, in the maximum amount of $10,000,000.00, executed by certain of
the parties constituting the Maker, to the order of Payee. 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, among other things, the collateral described in Section 5 of the
Credit Agreement.
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,
--------------------
<PAGE>
CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND REVOLVING
TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
SEITEL, INC.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice, Vice President
of Finance, Chief Financial
Officer, Treasurer, and
Secretary
SEITEL DATA CORP.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice,
Secretary and Treasurer
SEITEL GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice,
Secretary and Treasurer
SEITEL OFFSHORE CORP.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice,
Secretary and Treasurer
EXSOL, INC.
By: /s/ Debra D. Valice
--------------------------------
Debra D. Valice,
Secretary and Treasurer
RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT
among
COMPASS BANK-HOUSTON,
as a Bank and the Agent
and
BANK ONE, TEXAS, NATIONAL ASSOCIATION,
as a Bank
and
SEITEL, INC., SEITEL GEOPHYSICAL, INC., EXSOL, INC.,
SEITEL DATA CORP., AND SEITEL OFFSHORE CORP.,
as Borrowers
DATED EFFECTIVE AS OF DECEMBER 31, 1994
$25,000,000.00 REVOLVING LINE OF CREDIT
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C> <C>
SECTION 1 DEFINITIONS.................................................................................................. 2
1.1 Definitions.................................................................................................. 2
1.2 Accounting Terms............................................................................................. 26
1.3 Other Terms.................................................................................................. 27
1.4 References................................................................................................... 27
1.5 Sections..................................................................................................... 27
1.6 Number and Gender............................................................................................ 27
1.7 Incorporation of Exhibits.................................................................................... 27
1.8 Certain Other Matters of Construction........................................................................ 27
SECTION 2 CONDITIONS PRECEDENT......................................................................................... 27
2.1 Conditions Precedent to Initial Advance...................................................................... 27
2.2 Conditions Precedent to Each Loan............................................................................ 29
SECTION 3 BANKS' AGREEMENT TO MAKE ADVANCES............................................................................ 30
3.1 Revolving Line............................................................................................... 30
3.2 Borrowers' Loan Account...................................................................................... 31
3.3 Additional Payments.......................................................................................... 32
3.4 Post Maturity Advances....................................................................................... 32
3.5 Borrowing Base............................................................................................... 32
3.6 Borrowing Procedure for Notes................................................................................ 33
3.7 Purpose...................................................................................................... 34
3.8 Interest..................................................................................................... 34
3.9 Repayment of Loans and Interest.............................................................................. 34
3.10 Outstanding Amounts.......................................................................................... 35
3.11 Time, Place, and Method of Payments.......................................................................... 35
3.12 Voluntary Prepayments and Conversions of Loans............................................................... 35
3.13 Commitment Fee............................................................................................... 36
3.14 Facility Fee................................................................................................. 36
3.15 Loans to Satisfy Obligations of Borrowers.................................................................... 36
3.16 Security Interest in Accounts; Right of Offset............................................................... 36
3.17 General Provisions Relating to Interest...................................................................... 37
3.18 Yield Protection............................................................................................. 38
3.19 Limitation on Types of Loans................................................................................. 39
3.20 Illegality................................................................................................... 39
3.21 Regulatory Change............................................................................................ 40
3.22 Limitations on Interest Periods.............................................................................. 40
3.23 No Commitment to Extend...................................................................................... 40
SECTION 4 BORROWER'S REPRESENTATIONS AND WARRANTIES.................................................................... 41
4.1 Representations and Warranties............................................................................... 41
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<PAGE>
SECTION 5 SECURITY INTEREST OF BANKS IN COLLATERAL..................................................................... 48
5.1 Creation of Security Interest................................................................................ 48
5.2 Perfection of Security Interests............................................................................. 50
5.3 Other Laws; Power of Attorney................................................................................ 50
5.4 Obligations Secured.......................................................................................... 51
5.5 Miscellaneous Collateral Provisions.......................................................................... 51
5.6 Filing Reproductions......................................................................................... 51
5.7 Independent Grants of Security Interests..................................................................... 51
SECTION 6 COLLECTION OF ACCOUNTS....................................................................................... 51
6.1 Collection................................................................................................... 51
6.2 Collection Actions By Borrowers.............................................................................. 52
SECTION 7 AFFIRMATIVE COVENANTS........................................................................................ 52
7.1 Affirmative Covenants........................................................................................ 52
(a) Defend Collateral............................................................................... 53
(b) Pay Taxes and Assessments....................................................................... 53
(c) Maintain Valid Security Interest................................................................ 53
(d) Notice of Name Change........................................................................... 53
(e) Financial Reporting............................................................................. 53
(f) Federal Reporting............................................................................... 56
(g) Decrease in Value............................................................................... 56
(h) Movement of Inventory........................................................................... 56
(i) Location of Records............................................................................. 56
(j) Bankruptcy Code................................................................................. 57
(k) Inspection...................................................................................... 57
(l) Additional Notices.............................................................................. 57
(m) Legal Expenses of Banks......................................................................... 58
(n) Reimbursement of Certain Expenses............................................................... 59
(o) Insurance....................................................................................... 59
(p) INDEMNIFICATION................................................................................. 60
(q) Operating Account............................................................................... 61
(r) Comply With Law................................................................................. 61
(s) Qualify as Foreign Corporation.................................................................. 62
(t) Maintain Backup Data............................................................................ 62
(u) Further Assurances.............................................................................. 62
SECTION 8 NEGATIVE COVENANTS........................................................................................... 62
8.1 Negative Covenants of Borrowers.............................................................................. 62
(a) Change of Location.............................................................................. 62
(b) No Transfer of Collateral....................................................................... 63
(c) No Change in Accounting Practices............................................................... 63
(d) No Purchase of Stock............................................................................ 63
(e) No Change in Ownership.......................................................................... 63
(f) No Payment of Subordinated Debt................................................................. 63
(g) Current Ratio................................................................................... 64
- ii -
<PAGE>
(h) Debt to Tangible Net Worth Ratio................................................................ 64
(i) Cash Flow Coverage Ratio........................................................................ 64
(j) Transactions with Affiliates.................................................................... 65
(k) Consolidated Tangible Net Worth................................................................. 65
(l) No Additional Debt.............................................................................. 65
(m) No Transfer of Seismic Data..................................................................... 66
(n) No Acquisitions of Other Entities............................................................... 66
(o) No Loans or Advances............................................................................ 66
(p) No Dividends or Distributions................................................................... 67
(q) No Change in Basic Business..................................................................... 67
(r) Purpose......................................................................................... 67
(s) Permitted Transactions.......................................................................... 67
(t) No Purchase of Margin Security.................................................................. 67
SECTION 9 EVENTS OF DEFAULT; ACCELERATION.............................................................................. 67
9.1 Events of Default............................................................................................ 67
(a) Payment Defaults................................................................................ 67
(b) Non Performance of Covenants.................................................................... 68
(c) Failure to Pay Insurance Payments............................................................... 68
(d) Non Compliance With Inspections................................................................. 68
(e) Meeting of Creditors............................................................................ 68
(f) Changes in Ownership or Senior Management....................................................... 68
(g) Fraud........................................................................................... 68
(h) Termination of Credit Document 1................................................................ 68
(i) Breach of Warranty or Representation............................................................ 68
(j) Default in Other Obligations.................................................................... 69
(k) Failure to Satisfy Condition Precedent.......................................................... 69
(l) Insolvency...................................................................................... 69
(m) Insolvency Proceedings.......................................................................... 69
(n) Levy on Property................................................................................ 70
(o) Final Orders, Judgments, and Decrees............................................................ 70
(p) Governmental Charges............................................................................ 70
(q) Fraudulent Transfers............................................................................ 70
(r) Not a First Security Interest................................................................... 70
(s) Material Adverse Change......................................................................... 70
(t) Cessation of Business........................................................................... 71
(u) Contest by Borrower or Affiliate................................................................ 71
(v) Transfer of Stock............................................................................... 71
(w) Filing of Lawsuits.............................................................................. 71
SECTION 10 POWER TO SELL OR COLLECT COLLATERAL; RIGHTS AND REMEDIES..................................................... 71
10.1 Acceleration................................................................................................. 71
10.2 Rights and Remedies With Respect to Collateral............................................................... 72
10.3 Uniform Commercial Code Remedies............................................................................. 73
10.4 Proceeds..................................................................................................... 73
10.5 Deficiency................................................................................................... 73
10.6 Agent's Duties............................................................................................... 73
10.7 Non-Judicial Remedies........................................................................................ 74
10.8 Remedies Not Exclusive....................................................................................... 74
- iii -
<PAGE>
10.9 Successive Sales............................................................................................. 74
10.10 Enforcement Against Particular Collateral.................................................................... 75
10.11 Suit Against Borrowers....................................................................................... 75
SECTION 11 EXPENSES: PROCEEDS OF COLLATERAL............................................................................. 75
11.1 Collection Costs............................................................................................. 75
SECTION 12 THE AGENT.................................................................................................... 75
12.1 Appointment.................................................................................................. 75
12.2 Delegation of Duties......................................................................................... 76
12.3 Exculpatory Provisions....................................................................................... 76
12.4 Reliance by Agent............................................................................................ 76
12.5 Notice of Default............................................................................................ 77
12.7 INDEMNIFICATION.............................................................................................. 78
12.8 Primary and Secondary Collateral............................................................................. 79
12.9 Restitution.................................................................................................. 79
12.10 Agent in Its Individual Capacity............................................................................. 80
12.11 Successor Agent.............................................................................................. 80
12.12 Applicable Parties........................................................................................... 80
SECTION 13 GENERAL...................................................................................................... 81
13.1 Waivers...................................................................................................... 81
13.2 Replacement of Prior Loan Agreement.......................................................................... 81
13.3 Lien Continuation............................................................................................ 81
13.4 Notices...................................................................................................... 82
13.5 Transfers and Participations................................................................................. 82
13.6 GOVERNING LAW................................................................................................ 83
13.7 Entire Agreement............................................................................................. 83
13.8 Construction and Severability................................................................................ 83
13.9 Other Advances............................................................................................... 84
13.10 No Duty or Special Relationship.............................................................................. 84
13.11 NO CONTROL BY BANKS.......................................................................................... 84
13.12 No Partnership............................................................................................... 85
13.13 Calculation of Financial Covenants........................................................................... 85
13.14 No Restrictions on DDD Energy, Inc........................................................................... 85
13.15 Binding Effect............................................................................................... 85
13.16 Renewal of Indebtedness...................................................................................... 85
13.17 Banks' Discretion............................................................................................ 86
13.18 Counterparts................................................................................................. 86
13.19 Business Loans............................................................................................... 86
13.20 JURISDICTION AND VENUE....................................................................................... 86
13.21 DECEPTIVE TRADE PRACTICES.................................................................................... 86
</TABLE>
- iv -
<PAGE>
RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT
THIS RESTATED REVOLVING CREDIT AND SECURITY AGREEMENT is
entered into and executed this 4th day of May, 1995, but effective as of
December 31, 1994, by and among SEITEL, INC., a Delaware corporation ("Seitel"),
SEITEL DATA CORP., a Delaware corporation ("Data"), SEITEL GEOPHYSICAL, INC., a
Delaware corporation ("Geophysical"), SEITEL OFFSHORE CORP., a Delaware
corporation ("Offshore"), and EXSOL, INC., a Delaware corporation ("Exsol";
collectively with Seitel, Data, Geophysical, and Offshore, "Borrowers"), each
with their respective chief executive offices and principal places of business
at 50 Briar Hollow Lane, 7th Floor West, Houston, Texas 77027; BANK ONE, TEXAS,
NATIONAL ASSOCIATION, a national banking association ("Bank One"), with an
office at 910 Travis, Houston, Texas 77002; and COMPASS BANK-HOUSTON, a Texas
state chartered banking institution ("Compass"), with an office at 24 Greenway
Plaza, Houston, Texas 77046, and a mailing address of P.O. Box 4444, Houston,
Texas 77210-4444. Bank One, Compass, and each financial institution that becomes
a party hereto or entitled to the benefits and subject to the obligations
hereunder subsequent to the date hereof, is referred to herein as "Bank" and
collectively as "Banks". Compass is the agent for Banks in accordance with the
terms hereof and is referred to herein, in such capacity (together with any
successors designated pursuant hereto) as "Agent".
Borrowers have, jointly and severally, applied to Banks for a
revolving line of credit (the "Revolving Line") not to exceed an aggregate
principal amount at any one time outstanding of TWENTY-FIVE MILLION AND NO/100
Dollars ($25,000,000.00), to be secured by, among other things, a security
interest in all of the Collateral (as such term is hereinafter defined and used)
now owned or hereafter acquired by any Borrower, on the terms hereinafter set
forth. Banks are willing to extend such a Revolving Line to Borrowers up to an
aggregate amount not in excess of the amount set forth above upon the security
of, among other things, such Collateral and on the terms and subject to the
conditions hereinafter set forth.
AGREEMENT:
NOW, THEREFORE, in consideration of the above premises, the
credit to be extended hereunder, the mutual agreements of the parties as set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound hereby, agree as follows:
1
<PAGE>
SECTION 1
DEFINITIONS
1.1 Definitions. In addition to the defined terms set forth
elsewhere herein, the following terms shall have the meanings set forth below:
"Accounts" and "Accounts Receivable" shall mean (a) all accounts,
accounts receivable, book debts, notes, notes receivable, contracts,
contract rights, retail installment sales contracts, drafts,
instruments, conditional sales contracts, chattel mortgages, chattel
paper, title retention and lien instruments, security agreements,
Participation Agreements, Licensing Agreements, distributions payable
or which will be payable to Offshore under or in connection with the
Digitel Agreement, documents, acceptances, and other forms of
obligations now owned or hereafter received or acquired by or belonging
or owing to any Borrower from whatever source arising, whether or not
earned yet by performance, including, without limitation, under any
trade names, styles, or divisions thereof, and whether arising from the
sale or lease of goods or the rendition of services or any other
transaction, including, without limitation, any such obligation which
might be characterized as an account, general intangible, other than
contract rights under contracts containing prohibitions against
assignment of or the granting of a security interest in the rights of a
party thereunder, or chattel paper under the Uniform Commercial Code in
effect in any jurisdiction; (b) all rights of any Borrower in, to, and
under all purchase orders now owned or hereafter received or acquired
by any Borrower for goods or services; (c) all rights of any Borrower
in and to any goods, services, and other property, the sale or lease of
which gave rise to any of the foregoing, including, without limitation,
returned or repossessed goods and rights of unpaid sellers; (d) all
moneys (or cash equivalents) and non-cash proceeds due or to become due
to any Borrower, or other rights of any Borrower, under all contracts
for the sale or lease of goods or the performance of services, whether
or not earned by performance, or in connection with any other
transaction, now in existence or hereafter arising; (e) all state and
federal tax refunds due to any Borrower; (f) all of the right, title,
and interest of any Borrower in and to the goods, services, and other
property which secures any of the foregoing, and the guarantees, and
collateral securing such guarantees, of any kind given by any Person
with respect to any of the foregoing; (g) all insurance policies and
proceeds relating thereto; (h) all of the rights of any Borrower as an
unpaid seller of goods or services, including, without limitation, the
rights of stoppage in transit, replevin, and resale; (i) all files,
2
<PAGE>
records, ledgers, invoices, and documents evidencing any of the
foregoing; and (j) all of the foregoing, whether now existing or
hereafter created or acquired.
"Account Debtor" shall mean the person who is obligated
on or under any Account.
"Additional Costs" shall mean costs which any Bank determines are
attributable to its obligation to make or its making or maintaining any
LIBO Rate Loan, or any reduction in any amount to be received by any
Bank in respect of any such obligation or any LIBO Rate Loan, resulting
from any Regulatory Change which (a) changes the basis of taxation of
any amounts payable to such Bank under this Agreement or the Notes in
respect of any LIBO Rate Loan (other than taxes imposed on the overall
net income of such Bank), (b) imposes or modifies any reserve, special
deposit, minimum capital, capital rates, or similar requirements
relating to any extensions of credit or other assets of, or any
deposits with or other liabilities of, any Bank (including LIBO Rate
Loans and dollar deposits in the London interbank market in connection
with LIBO Rate Loans), or any commitments of any Bank hereunder, or (c)
imposes any other condition affecting this Agreement or any of such
extensions of credit, liabilities, or commitments.
"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 Borrowers and includes any Subsidiary
of any of the Borrowers and any "affiliate" of any of the Borrowers
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.
"Agreement" shall mean this Restated Revolving Credit and Security
Agreement, as it may be amended, supplemented, or restated from time to
time.
"Applicable Lending Offices" shall mean the lending office of the Banks
(or an affiliate of the Banks) designated on the first page 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 Borrowers (or their
representatives) as the office by which Loans of such type are to be
made and maintained.
3
<PAGE>
"Applicable Margin" shall mean as to each LIBO Rate Loan, two percent
(2.00%).
"Bank One Note" shall mean the promissory note of the Borrowers payable
to the order of Bank One in the form attached as Exhibit "C", together
with all renewals, extensions for any period, increases, replacements,
modifications, substitutions, and rearrangements thereof.
"Borrowers' Loan Account" shall mean the account on the books of Agent
in which Agent will record loans and other advances made by Agent for
Banks to or for the benefit of one or more Borrowers pursuant to this
Agreement, payments received on such loans, and other appropriate
debits and credits as provided by Section 3.2.
"Borrowing Base" shall mean an amount equal to the sum of (a) 85% of
the amount of the Eligible Accounts, plus (b) the lesser of (i) 25% of
the amount of Eligible Inventory or (ii) $10,000,000.00.
"Borrowing Base Report" shall mean that certain Borrowing Base
calculation, substantially in the form of Exhibit "A" attached hereto.
"Borrowing Request" shall mean each written request, in substantially
the form attached hereto as Exhibit "E", by Seitel to the Agent
confirmed by a telephone call from Seitel to Agent for a borrowing,
conversion, or prepayment pursuant to Sections 3.6 or 3.12, or
otherwise, each of which shall:
(a) be signed by a Responsible Officer of
Seitel;
(b) specify the amount and type of Loan requested, and, as
applicable, the Loan to be converted or prepaid and the
date of the 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
4
<PAGE>
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.
"Closing Date" shall mean the execution date of this Agreement, as
reflected on the first page of this Agreement.
"Collateral" shall mean all of each Borrower's Accounts, Equipment
(excluding office equipment, furnishings and Exsol's, Offshore's, and
Geophysical's Equipment not constituting Seismic Data), General
Intangibles, Seismic Data and other Inventory, all outstanding stock of
each of Seitel's Subsidiaries (other than DDD Energy, Inc.), and any
and all other personal property of any Borrower or any other Person in
which Banks acquired, now have, or by this Agreement or any other
agreement acquires, or hereafter acquires, a security interest, lien,
or other rights or interests as security for any or all of Borrower's
Liabilities, including, without limitation, Borrower's obligations
under this Agreement.
"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 Borrowers
pursuant to Section 3.1.
"Commitment Amount" shall mean the lesser of (a) the
Borrowing Base, or (b) $25,000,000.00.
"Commitment Fee" shall mean each fee payable to the Banks by the
Borrowers pursuant to Section 3.13.
"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%.
5
<PAGE>
"Commitment Termination Date" shall mean the earlier to occur of (a)
June 1, 1997, or (b) the date on which an Event of Default shall occur.
"Commonly Controlled Entity" shall mean any Person which is under
common control with the Borrowers within the meaning of Section 4001 of
ERISA.
"Compass Alabama" shall mean Compass Bank, an Alabama
banking corporation.
"Compass Note" shall mean the promissory note of the Borrowers payable
to the order of Compass in the form attached as Exhibit "D", together
with all renewals, extensions for any period, increases, replacements,
modifications, substitutions, and rearrangements thereof.
"Compliance Certificate" shall mean that certain Certificate in the
form of Exhibit "B" attached hereto.
"Credit Documents" shall mean this Agreement, the Notes, the Prior
Security Agreements, the Notification and Acknowledgment of
Registration of Security Interest/Pledge dated as of May 19, 1994,
among Bank One, Compass Alabama, Offshore, and Digitel, and such other
instruments, documents, and agreements evidencing, securing, or
pertaining to the loans which have heretofore been or hereafter are
from time to time executed and delivered to Banks (or their
predecessors) by Borrowers (or any of them), or any other Person
pursuant to this Agreement or otherwise.
"Current Assets" shall mean all assets which would, in accordance with
GAAP, be included as current assets on a consolidated balance sheet of
Seitel as of the date of calculation (regardless of how assets are
actually classified on Seitel's consolidated balance sheet); provided
that, for purposes of this Agreement, Current Assets do not include any
of the Seismic Data (including, without limitation, any Seismic Data
which could be classified as a current asset on the consolidated
balance sheet of Seitel), but do include the unadvanced portion of the
Borrowing Base (not to exceed $25,000,000.00).
"Current Liabilities" shall mean all liabilities which would, in
accordance with GAAP, be included as current liabilities on a
consolidated balance sheet of Seitel as of the date of calculation
(regardless of how liabilities are actually classified on Seitel's
consolidated balance sheet).
"DDD Credit Agreement" shall mean the Credit Agreement, among Banks and
DDD Energy, Inc., as may be amended from time to time.
6
<PAGE>
"Default" shall mean any event or occurrence which with the lapse of
time or the giving of notice or both would become an Event of Default.
"Digitel" shall mean Digitel Data Joint Venture.
"Digitel Agreement" shall mean the Digitel Data Joint
Venture Agreement, between Offshore and Digicon Data,
Inc., as may be amended.
"Dollars" and "$" shall mean dollars in lawful currency of the United
States of America.
"Eligible Account" shall mean an Account of any one or more Borrowers
in which Banks and/or Agent maintain a first perfected security
interest and which meets each of the following requirements:
(a) (i) with respect to Accounts arising from the licensing
of Seismic Data only, it is a payment obligation of an
Account Debtor arising in connection with the non-
exclusive licensing of any Borrower's Seismic Data under
a Licensing Agreement substantially in the form of
Exhibit "F" or under a Participation Agreement in
substantially the form of Exhibit "G", such license
having been granted by the applicable Borrower and
accepted by the Account Debtor, and the applicable
Borrower's full right to payment for all sums due from
such Account Debtor with respect to such Account shall
have been earned and then be due and payable and, (ii)
with respect to all other types of Accounts, it arises
from the sale or lease of goods or from services
rendered, such goods have been shipped or delivered to
the Account Debtor under such Account and such services
have been fully performed and have been accepted by the
Account Debtor, and the applicable Borrower's full right
to payment for all sums due from such Account Debtor with
respect to such Account Receivable shall have been earned
and then be due and payable;
(b) it is a valid and legally enforceable obligation of the
Account Debtor thereunder according to its express terms,
and is not subject to any offset, counterclaim,
crossclaim, or other defense on the part of such Account
Debtor denying liability thereunder in whole or in part;
7
<PAGE>
(c) it is not subject to any mortgage, lien, security
interest, or similar adverse rights or interests
whatsoever other than security interests granted to Banks
and/or Agent for the benefit of Banks;
(d) it is evidenced by an invoice (or similar document),
dated not later than the date of shipment, performance,
or licensing, rendered to such Account Debtor, and if it
is evidenced by an instrument or note, if and to the
extent requested by the Required Banks, Borrowers shall
deliver to Agent the original of any and all notes held
by it (endorsed to the order of Agent), drafts, title
retention and lien instruments, security agreements,
acceptances, conditional sale contracts, chattel
mortgages or chattel paper, and the Banks may exclude
from Eligible Accounts any of such items which are not
delivered to Agent (upon and to the extent requested by
the Required Banks in accordance with this paragraph) and
in which the Banks do not have a perfected first security
interest;
(e) it is not owing by an Account Debtor whose obligations
with respect to which Agent, acting in its reasonable
discretion on behalf of the Banks, shall have notified
Seitel (on behalf of Borrowers) orally (confirming such
notice promptly in writing) that Accounts owing by such
Account Debtor do not constitute an Eligible Account;
(f) it is not due from (i) an Affiliate, or (ii) any
stockholder (other than a stockholder of Seitel),
officer, director, manager, or employee of one or more of
Borrowers or of any Affiliate, or (iii) any individual
who is a relative of any one or more of the foregoing by
blood or marriage;
(g) it does not constitute, require, or provide for progress
billings (except with respect to progress billings for
work and services which have been completed and accepted),
retainages, or deferred payments under a contract not
fully performed;
8
<PAGE>
(h) it does not constitute interest or finance charges on
outstanding balances nor any amount received as a down
payment or prepayment or other principal reduction or
similar payment;
(i) it is an Account with respect to which no return,
repossession, rejection, cancellation, or repudiation
shall have occurred or have been threatened;
(j) it is not subject to any trial terms, sales-or-return
terms, consignment terms, guaranteed sales performance
terms, C.O.D. terms, cash terms, or similar terms or
conditions;
(k) it is not owed by an Account Debtor that is not an
individual residing in the United States or Canada or a
corporation or partnership organized and validly existing
or qualified to do business under the laws of a state
within the United States or Canada (provided, however,
that Eligible Accounts owing from Account Debtors
residing, organized, or qualified in Canada shall not
exceed twenty percent (20%) of the aggregate value of
Borrowers' Eligible Accounts);
(l) it is not an Account subject, in whole or in part, to any
"bill and hold" or similar arrangement pursuant to which
the invoice (or similar document) is delivered prior to
the actual delivery of the sold or leased goods or the
performance of the services; without limiting the
foregoing, for purposes of clarification, an Account for
which an invoice or billing has been issued to an Account
Debtor and the Account Debtor is to select a particular
type of Seismic Data to purchase, such an Account shall
(subject to the other subsections of this definition)
constitute an Eligible Account provided that amounts are
actually then due and owing under and with respect to the
invoice or billing, regardless of whether the Account
Debtor has selected the particular Seismic Data to be
purchased;
(m) unless otherwise agreed by Banks, (i) if the Account is
evidenced by an invoice which requires payment in full
thereof
9
<PAGE>
within 30 days from the date thereof, it is not an Account
with respect to which one hundred twenty (120) days or
more shall have passed since the relevant invoice date;
(ii) if the Account is to be paid by the Account Debtor in
multiple installments, as a deferred payment, or on other
terms and such Account is due to be paid in full pursuant
to such installments or terms within 120 days from the
original invoice date, it is not an Account for which any
particular installment or other payment is 30 days or more
past due; and (iii) if the Account is to be paid by the
Account Debtor in multiple installments or on other terms
and such Account is due to be paid in full pursuant to
such installments or terms 120 days or more from the
original invoice date, it is not an Account for which any
particular installment or other payment is 5 days or more
past due; provided that the aggregate amount of any
installments or other payments due on and with respect to
such Account 12 months or more past the date of the most
recent monthly Borrowing Base Report submitted under
Section 7.1(e)(iv), shall be excluded from Eligible
Accounts in connection with such calculation of the
Borrowing Base;
(n) it is not owed by any Account Debtor who has account
balances with one or more of Borrowers equalling or
exceeding ten percent (10%) of its total Accounts which do
not constitute Eligible Accounts;
(o) if it is an Offshore Account (notwithstanding anything
herein to the contrary), then (i) it must be a
distribution then payable (or which is reasonably
expected to be payable within one hundred twenty (120)
days) to Offshore under and in connection with the
Digitel Agreement by virtue of an Underlying Digitel
Account, which meets the definition of an Eligible
Account as provided for herein, except that (x)
references to Borrowers in such definition (other than in
subsection (e)) will be deemed references to Digitel; (y)
no Person, including Banks, shall have any lien on or
security interest in such Underlying Digitel Account
(other than
10
<PAGE>
Permitted Liens); and (z) such Underlying Digitel Account
must not be evidenced by an instrument, note or chattel
paper (the "Acceptable Underlying Digitel Account"); (ii)
such Offshore Account shall be an Eligible Offshore
Account; and (iii) such Offshore Account shall be deemed
to have a value, for purposes of determining the Borrowing
Base, not in excess of the lesser of (x) $1,000,000.00, or
(y) fifty percent (50%) of the difference obtained by
subtracting (A) the outstanding value of the Acceptable
Underlying Digitel Account to which such Offshore Account
relates, less (B) all applicable sales commissions,
rebates, taxes, management fees, insurance costs, data
storage fees, copying fees and charges and any other
costs, expenses and amounts which may reasonably be
expected by Banks not to be available for distribution to
Offshore within one hundred twenty (120) days of the
creation of such Underlying Digitel Account;
(p) it is not an Account or a portion of an Account that,
when aggregated with all other Accounts owed by an
Account Debtor liable therefore (the "Concentrated
Account Debtor"), exceeds twenty-five percent (25%) of
the total value of one or more of Borrowers' total
Accounts (the "25% Collar") (provided, however, that this
provision shall not apply until Banks give oral notice to
Borrowers (confirming such notice promptly in writing) of
its intention to apply this provision to a specific
Account Debtor and, provided further, this provision
shall not be deemed to exclude from otherwise Eligible
Accounts the portion of Accounts owing by a Concentrated
Account Debtor as do not exceed the 25%
Collar); and
(q) it is not an Account in which any Borrower has failed to
perform all of its obligations with respect to the goods
or services, the sale or lease or rendition of which gave
rise to the Account, unless the failure to perform any
such obligation does not adversely impact the
collectability of all amounts due on such Account.
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<PAGE>
"Eligible Inventory" shall mean Seismic Data to which any one of the
Borrowers holds good title, which meets each of the following
requirements:
(a) it does not include Eligible Accounts or any other rights
to payment or receivables arising under any Licensing
Agreements, Participation Agreements or otherwise;
(b) it is not licensed under a proprietary agreement or
exclusive Licensing Agreement;
(c) it is Seismic Data that has generated licensing income of
at least ten (10) percent of its book value during the
previous four (4) full consecutive quarters;
(d) it is not Seismic Data acquired through any of Borrowers'
joint ventures or partnerships or under or in connection
with any Participation Agreement, unless such joint
ventures, partnerships or Participation Agreements are in
form and substance acceptable to Banks and, then, only to
the extent Borrowers directly own
such Seismic Data;
(e) it is subject to Banks' (and/or Agent's for the benefit
of Banks) first perfected security interest and is not
subject to any lien, security interest, mortgage, pledge
or other interest adverse to Banks, other than Permitted
Liens; and
(f) it is not patented, trademarked or copyrighted or subject
to any patent, trademark or copyright.
"Eligible Offshore Accounts" shall mean each Offshore Account which
meets each of the following requirements:
(a) such Offshore Account is or will within one hundred
twenty (120) days of the creation of the Underlying
Digitel Account be the valid and legally enforceable
obligation of Digitel to make payments of distributions
to Offshore which distributions have been or will within
such time period be validly authorized;
(b) such Offshore Account is not subject to any offset,
counterclaim, crossclaim or other
12
<PAGE>
defense on the part of Digitel or any other party denying
liability therefor or thereunder in whole or part;
(c) such Offshore Account is not subject to any mortgage,
lien, security interest, or similar adverse rights or
interests whatsoever other than the security interests
granted to Banks and/or Agent for the benefit of Banks;
(d) such Offshore Account is not past due and is not
evidenced by an instrument, note or chattel paper;
(e) such Offshore Account is not a payment of interest or a
repayment of loan principal or a repayment or other
return of capital;
(f) not more than one hundred twenty (120) days shall have
passed since such Offshore Account first constituted an
Eligible Account; and
(g) such Offshore Account which is otherwise an Eligible
Account shall only be considered an Eligible Account as
long as Offshore is in full conformity with its
obligations and agreements under the Digitel Agreement
and Digitel (i) is not in default under any of its
material agreements or obligations, (ii) has not caused,
allowed or suffered to occur any lien, claim, charge,
security interest, mortgage, secondary financing or
encumbrance to exist or be asserted in, against or upon
any of Digitel's property or assets except for (x) liens
of carriers, warehousemen, landlords, mechanics,
laborers, and materialmen arising by law for sums which
are (A) not yet due or (B) being diligently contested in
good faith and with respect to which Digitel has set
aside sufficient reserves and (y) liens for taxes which
are (A) not yet due or (B) being diligently contested in
good faith and with respect to which Digitel has set
aside sufficient reserves and (C) is not indebted to any
person or entity other than for trade payables incurred
in the ordinary course of business.
13
<PAGE>
"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 from 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 Borrowers, (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 Borrowers 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
environmental statutes of any state in which Property of any of the
Borrowers 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.
"Equipment" shall mean all machinery, apparatus, equipment, fittings,
furniture, fixtures, motor vehicles and other tangible personal
Property (other than Inventory) of every kind and description used in
any Borrower's operations or owned by any Borrower or in which any
Borrower has an interest, whether now owned or hereafter acquired and
wherever located, and all parts, accessories and special tools and all
increases and accessions thereto and substitutions and replacements
therefor.
"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 9
of this Agreement.
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<PAGE>
"Facility Fee" shall mean the fee payable to the Banks by the Borrowers
pursuant to Section 3.14.
"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, collectively, the financial
statements of Borrowers, which have been delivered to Banks in
connection with Borrowers' application to Banks for the loans to be
made by Banks pursuant to this Agreement, and which are to be delivered
in accordance with the terms and requirements of Section 7.1(e).
"Fixed Rate Loan" shall mean any LIBO Rate Loan.
"Floating Rate" shall mean an interest rate per annum equal to the
Index 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
outstanding balance of Borrowers' Loan Account which the Borrowers have
requested, in the initial Borrowing Request for such Loan or a
subsequent Borrowing Request for such portion of the outstanding
balance of Borrowers' Loan Account, 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, applied on a basis consistent with that of the preceding
fiscal year of Seitel, reflecting only such changes in accounting
principles or practice with which the independent public accountants of
Seitel concur.
15
<PAGE>
"General Intangibles" shall mean all general intangibles of each
Borrower, whether now owned or hereafter created or acquired by each
Borrower, including, without limitation, all choses in action, causes
of action, corporate or other business records, deposit accounts,
inventions, designs, patents, patent applications, trademarks, trade
names, trade secrets, goodwill, copyrights, registrations, licenses,
franchises, rights to royalties, blueprints, drawings, confidential
information, catalogs, sales literature, video tapes, consulting
agreements, employment agreements, customer lists, tax refund claims,
computer programs, insurance policies, deposits with insurers, all
claims under guaranties, security interests or other security held by
or granted to each Borrower to secure payment of any of the Accounts by
an Account Debtor, all rights to indemnification and all other
intangible property of every kind and nature (other than Accounts).
"Geophysical Agreement" shall mean the Term Credit and Security
Agreement dated July 15, 1993, between Geophysical and Compass Alabama,
as amended from time to time.
"Geophysical Documents" shall mean, collectively, the Seitel
Geophysical Guaranty, the Geophysical Note, and the Geophysical
Agreement, as each may be amended from time to time.
"Geophysical Loan" shall mean the $4,300,000.00 term loan by Compass
Alabama to Geophysical, as evidenced by the Geophysical Note.
"Geophysical Note" shall mean the Term Note dated July 15, 1993, in the
original principal amount of $4,300,000.00, executed by Geophysical and
made payable to the order of Compass Alabama, and as may be increased,
renewed, replaced, substituted, modified, extended, and rearranged from
time to time.
"Governmental Authority" shall mean any nation, country, commonwealth,
territory, government, state, county, parish, municipality, agency, or
other political subdivision and any entity exercising executive,
legislative, judicial, regulatory, or administrative functions of or
pertaining to government, including, without limitation, any state
agencies and Persons responsible in whole or in part for environmental
matters in the states in which any Borrower is located or otherwise
conducting its business activities and the United States Environmental
Protection Agency.
"Hazardous Substances" shall mean flammables, explosives, radioactive
materials, hazardous wastes, asbestos, or any
16
<PAGE>
material containing asbestos, polychlorinated biphenyls (PCBs), toxic
substances or related materials, petroleum, petroleum products,
associated oil or natural gas exploration, production, 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, on any day, the highest nonusurious
rate of interest, if any, permitted by applicable law on such day
(calculated on the basis of a 365 or 366 day year, as applicable). For
purposes of TEX. REV. CIV. STAT. ANN., Art. 5069-1.04, as it may from
time to time be amended, the Highest Lawful Rate shall be the
"indicated rate ceiling" referred to in and determined under Art.
5069-1.04(a)(1) from time to time in effect; provided, however, that to
the extent permitted by applicable law, Banks reserve the right to
change, from time to time by further notice and disclosure to Borrower,
the ceiling on which the Highest Lawful Rate is based under Art.
5069-1.04; and provided further, that the "highest nonusurious rate of
interest permitted by applicable law" for purposes of this Agreement
shall not be limited to the applicable rate ceiling under Art.
5069-1.04 if federal laws or other state laws now or hereafter in
effect and applicable to this Agreement (and the interest contracted
for, charged, and collected hereunder) shall permit a higher rate of
interest.
"Index Rate" shall mean, on any day, the prime rate as published in The
Wall Street Journal's "Money Rates" table for that day. If multiple
prime rates are quoted in such table, then the highest prime rate
quoted therein shall be the Index Rate. In the event that a prime rate
is not published in the Wall Street Journal's "Money Rates" table, then
Banks will choose a substitute Index Rate, for purposes of calculating
the Applicable Rate, which is based on comparable information, until
such time as a prime rate is published in the Wall Street Journal's
"Money Rates" tables.
"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,
17
<PAGE>
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.
"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 3.19, 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 Borrowers may
request in the Borrowing Request for such Loan.
"Inventory" shall mean all of each Borrower's (or other entity's, as
applicable) Seismic Data and other inventory (as defined in the Uniform
Commercial Code as enacted in the State of Texas, or in any other
applicable jurisdiction), wherever located, including, without
limitation, all merchandise and related merchandise and other personal
property now owned or hereafter acquired by any Borrower (or other
entities, as applicable) which are held for sale or lease, or are
furnished or to be furnished under a contract of service or are raw
materials, work in process, or materials or supplies used or to be
used, or consumed or to be consumed, in Borrower's (or other entity's,
as applicable) business, and all shipping and packaging materials
relating to any of the foregoing.
"Liabilities" shall mean any and all liabilities, obligations, and
indebtedness of Borrowers (individually and collectively) and their
respective Affiliates (other than DDD Energy, Inc., except as it
relates to the Seitel DDD Guaranty) to Banks (or either of them), or to
any affiliate of either Bank (including Compass Alabama), of every kind
and description, direct or indirect, absolute or contingent, matured or
unmatured, primary or secondary, liquidated or unliquidated, due or to
become due, now existing or hereafter arising, and whether arising
directly or acquired from others, regardless of how such Liabilities
arise or by what agreement or instrument they may be evidenced or
whether the foregoing Liabilities include obligations to perform acts
and refrain from taking actions as well as obligations to pay
18
<PAGE>
money. Without limiting the foregoing, Liabilities specifically include
(i) Borrowers' joint and several obligations evidenced by the Notes
and/or those described or referenced herein, including, without
limitation, the obligation to repay advances made by Banks pursuant to
the Revolving Line granted herein, (ii) the liabilities and obligations
of Geophysical and any other Person under the Geophysical Documents,
and (iii) the liabilities and obligations of Seitel arising under or in
connection with the Seitel Geophysical Guaranty and the Seitel DDD
Guaranty.
"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 Borrowers) 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 outstanding
balance of Borrowers' Loan Account which the Borrowers have requested,
in the initial Borrowing Request for such Loan or a subsequent
Borrowing Request for such portion of the outstanding balance of
Borrowers' Loan Account, bear interest at the Adjusted LIBO Rate and
which is permitted by the terms hereof to bear interest at the Adjusted
LIBO Rate.
"Licensing Agreement" shall mean a Master Seismic Data Licensing
Agreement, in substantially the form of Exhibit "F".
19
<PAGE>
"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 Borrowers 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 either of the Notes and interest on such amount, calculated at
the applicable interest rate, plus any fees or other sums payable under
any Credit 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 advance made by any of the Banks to or for the
benefit of the Borrowers pursuant to this Agreement.
"Lockbox" shall mean Post Office Box 4309, Houston, Texas 77210-4309,
established by Borrowers pursuant to Section 6.1, to which all Account
Debtors shall be directed to make remittance, either by mail or by wire
transfer.
"Lockbox Agreement" shall mean the lockbox agreement between Seitel and
Compass relating to the Lockbox, being in form and substance
satisfactory to Banks, as the same may be amended, restated, or
supplemented from time to time.
"Material Adverse Change" shall mean any act, circumstance, or event
(including, without limitation, any announcement of action) which (a)
causes an Event of Default, (b) otherwise could reasonably be expected
to be material and adverse to the financial condition or operations of
any Borrowers (individually and collectively), or (c) in any manner
could reasonably be
20
<PAGE>
expected to materially and adversely affect the validity
or enforceability of any Credit Document.
"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 Seitel, on a
consolidated basis, for such period determined in accordance with GAAP.
"Net Worth" shall be defined and calculated in accordance with GAAP.
"Notes" shall mean, collectively, the Bank One Note and the Compass
Note.
"Offshore Account" shall mean each Account that is due to Offshore.
"Participation Agreement" shall mean a Master Data and Licensing
Agreement, in substantially the form of Exhibit "G".
"Permitted Liens" shall mean any of the following (but only to the
extent the same do not or could not, in Banks' reasonable opinion,
jeopardize Banks' or Agent's, for the benefit of Banks, rights or
priority in or to any Collateral):
(a) Liens of carriers, warehousemen, landlords, mechanics,
laborers and materialmen arising by law for sums which
are (i) not yet due or (ii) being diligently contested in
good faith and with respect to which Borrowers have set
aside sufficient reserves;
(b) Liens for taxes which are (i) not yet due or (ii) being
diligently contested in good faith by appropriate
proceedings and with respect to which Borrowers have set
aside sufficient reserves;
(c) security interests in any Borrower's Equipment (other
than Equipment constituting collateral for the
Geophysical Loan or equipment constituting Seismic Data,
if any), provided that such security interests are
limited to those securing a portion of the purchase price
of said Equipment, and further provided that such
security interests secure indebtedness and other
21
<PAGE>
obligations permitted under Section 8.1(l);
(e) pledges or deposits in connection with or to secure
worker's compensation or unemployment insurance;
(f) security interests or lessor's interests in up to
$350,000.00 worth of computer work stations and related
equipment to be purchased or leased by Borrowers or their
Affiliates within six months after the Closing Date,
which security interests secure a portion of the purchase
price of such equipment or which leases are secured
solely by the lessor's interest in such equipment;
(g) Geo Seismic Services, Inc.'s security interest in the
Assets (as that term is defined in the letter from Seitel
to Compass Alabama dated October 14, 1992 (the "Letter"),
purchased from Geo Seismic Services, Inc. but only to the
extent described in and permitted by the Letter;
(h) security interest in favor of Compass in the Collateral
securing the Geophysical Loan;
(i) lessor's interests in up to $5,700,000.00 worth of (a)
Opseis Eagle seismic data gathering system and related
equipment leased by Geophysical (the "Opseis Eagle
------------
Lease"), and (b) trucks and related
-----
equipment, and computer and related equipment and software
leased by any Borrower prior to the Closing Date, which
leases are secured solely by the lessor's interest in such
equipment and software;
(j) security interests in favor of PGS Exploration (US), Inc.,
formerly known as Precision Seismic, Inc., under that
certain Security Agreement, a copy of which is attached
hereto as Exhibit "H" (the "Precision Agreement");
provided it -------------------
is expressly understood and agreed (i) any default or
event of default under the Precision Agreement or any
documents executed in connection therewith shall
constitute an Event of Default, and (ii) the Obligations
(as defined in the Precision Agreement) shall in no event
22
<PAGE>
exceed $2,500,000.00 at any time outstanding, and (iii)
the Inventory of Seismic covered by and described in the
Precision Agreement shall only constitute Eligible
Inventory if and to the extent the security interest
granted in the Precision Agreement is subordinated to
Banks' security interest therein, in a manner satisfactory
to the Banks; and
(k) security interests in real property and improvements
thereon granted by Polymer Dynamics, Inc. to secure up to
$350,000.00 of indebtedness incurred in connection with
the acquisition and improvements thereto of such real
property.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision
thereof, 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 Borrowers 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 all wholly-owned Subsidiaries of Seitel (other than DDD
Energy, Inc.).
"Principal Office" shall mean the principal office of the Agent in
Houston, Texas, presently located at 24 Greenway Plaza, Houston, Texas
77046.
"Prior Loan Agreement" shall mean the Master Revolving Credit and
Security Agreement dated effective February 28, 1994, among Bank One,
Compass Alabama, and certain of the Borrowers, as amended from time to
time, and any other heretofore entered into written or oral loan
agreement among Borrowers and Banks (or any predecessor), and any and
all amendments and modifications of any of the foregoing.
"Prior Security Agreements" shall mean, collectively, (a) the Pledge
Agreement dated effective as of February 28, 1994, from Seitel in favor
of Compass Alabama and Bank One, covering and granting a security
interest in, among other things, the Pledged Stock, as amended from
time to time, (b) the Geophysical Documents, (c) the Security Agreement
(Joint Venture Interest) dated as of May 19,
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1994, among Compass Alabama, Bank One, and Offshore, covering, among
other things, Offshore's joint venture interest in and to Digitel, and
(d) any and all other security agreements and other collateral
instruments heretofore entered into by and among Borrowers and Banks
and their respective predecessors in interest. Compass Alabama has
assigned its rights and obligations, in its capacity as agent and in
its capacity as a lender, under the Prior Security Agreements to
Compass, and as a result thereof, Compass is entitled to all of the
rights and privileges provided to Compass Alabama under each of the
Prior Security Agreements.
"Proceeds" shall mean all forms of payment received by or due to any
Borrower from the collection of Accounts or sale, exchange, collection,
or other disposition of Inventory or other property constituting
Collateral hereunder and any and all claims against any third party for
loss or damage to any Collateral, including insurance claims, and
further, without limiting the generality of the foregoing, Proceeds
shall include all Accounts, checks, cash, money orders, drafts, chattel
paper, instruments, notes, or other documents evidencing payment
obligations to any Borrower for sale or exchange of Collateral.
"Property" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, tangible or intangible.
"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 any Requirement of 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
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water or groundwater, or (d) the sewer or septic system, or the waste
treatment, storage, or disposal system servicing any Property of the
Borrowers.
"Remittances Account" shall mean account No. 30052795 of Seitel (or any
other account) established with Agent pursuant to Section 6.1 in
association with the Lockbox and to which Borrowers and Agent shall
have access by way of draft, check, wire transfer of funds, or
otherwise to the extent specified in Section 6.1.
"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, decrees, judgments, regulations, orders, and
requirements for permits, licenses, registrations, approvals, or
authorizations (and any authoritative interpretation of any of the
foregoing), in each case 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.
"Responsible Officer" shall mean, as to any Borrower, its
President, Chief Executive Officer, Chief Financial
Officer, and Chief Accounting Officer.
"Seismic Data" shall mean all seismic data, seismic data library and
related books, records, materials, information, files, correspondence,
contracts, rights and property; together with all associated
Intellectual Property, including, without limitation, computer,
magnetic, and microfiche hardware and software, and related maps,
charts, reports, tapes, discs, programs, information, compilations,
licenses, patents, trademarks, copyrights (in all seismic data, seismic
materials information, project files and other similar items), together
with all applications for the registration thereof and all
registrations obtained therefor, and all renewals and/or extensions of
any such copyrights, copyright registration applications and/or
copyright registrations and the right to sue for past, present and
future infringements thereof, all rights corresponding thereto
throughout the world, and all proceeds of the foregoing, including
licenses, royalties and proceeds of suit, and all further or other
property which to the
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extent that the same pertains or relates to or emanates or derives from
any copyright and/or the ownership, use, possession, transfer,
licensing (whether as licensor or licensee) and/or other disposition of
any such copyright and/or embodies or incorporates any copyright, and
all proceeds (whether cash or non-cash), products, rents, issues,
royalties, profits and returns of and from any of the foregoing, and
all related rights and property.
"Seitel DDD Guaranty" shall mean the Guaranty, executed by Seitel
guaranteeing the payment and performance of the Obligations of DDD
Energy, Inc. under and with respect to the DDD Credit Agreement, as
such Guaranty shall be amended, supplemented or restated from time to
time.
"Seitel Geophysical Guaranty" shall mean the Continuing (Unlimited)
Guaranty dated July 15, 1993, executed by Seitel, in connection with
the Geophysical Loan, as such Guaranty shall be amended, supplemented
or restated 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 aggregate outstanding balance of
Seitel's existing 9% convertible subordinated debentures due in 2002,
as heretofore disclosed to Banks in writing.
"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) Seitel's consolidated Net Worth,
plus (b) the Subordinated Debt, less (c) the sum of (i) any and all
unconsolidated loans and other advances to Affiliates, (ii)
unconsolidated notes, notes receivable, accounts, accounts receivable,
inter-company receivables, and other amounts owing from Affiliates,
(iii) treasury stock, goodwill, trademarks, trade names, franchise, or
license agreements, patents, and deferred charges, and (iv) any and all
other intangible assets. For purposes of this Agreement, the tangible
net worth of
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DDD Energy, Inc. and loans, advances, and investments by Borrowers
(individually and collectively) in and to DDD Energy, Inc. shall be
excluded from the calculation of Seitel's consolidated Tangible Net
Worth.
"UCC" shall mean the Uniform Commercial Code as from time to time in
effect in the State of Texas.
"Underlying Digitel Account" shall mean any and all accounts and
accounts receivable owing to Digitel.
1.2 Accounting Terms. All accounting terms not specifically
defined herein shall be construed in accordance with GAAP consistent with such
principles. In the event that changes in GAAP shall be mandated by the Financial
Accounting Standards Board and/or the American Institute of Certified Public
Accountants or any similar accounting body of comparable standing, or shall be
recommended by Borrower's certified public accountants, to the extent that such
changes would modify such accounting terms or the interpretation or computation
thereof as contemplated by this Agreement at the time of execution hereof, then
in such event, such changes shall be followed in defining such accounting terms
only after Banks and Borrowers amend this Agreement to reflect the original
intent of such terms in light of such changes, and such terms shall continue to
be applied and interpreted without such change until such agreement.
1.3 Other Terms. All other terms contained in this
Agreement shall have, when the context so indicates, the meanings
provided for in the UCC to the extent the same are used or defined
therein.
1.4 References. References in this Agreement to Section or Exhibit
numbers shall be to Sections and Exhibits of this Agreement, unless expressly
stated to the contrary. References in this Agreement to "hereby," "herein,"
"hereinabove," "hereinafter," "hereinbelow," "hereof," and "hereunder" shall be
to this Agreement in its entirety and not only to the particular Section or
Exhibit in which such reference appears.
1.5 Sections. This Agreement, for convenience only, has been
divided into 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 Sections and without
regard to headings prefixed to such 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 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,
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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.
1.8 Certain Other Matters of Construction. All references to
statutes and related regulations shall include any amendments of same and any
successor statutes and regulations. All references to any instruments or
agreements, including, without limitation, references to any of the Credit
Documents, shall include any and all modifications or amendments thereto and any
and all extensions or renewals thereof.
SECTION 2
CONDITIONS PRECEDENT
2.1 Conditions Precedent to Initial Advance. Subject to the terms
and provisions of Section 2.2, the obligation of Banks to make their initial
advance hereunder is subject to the Banks' receipt, review, and approval of each
of the following documents and other items, appropriately executed when
necessary and, where applicable, acknowledged by one or more authorized officers
of Borrowers, all in form and substance satisfactory to the Banks and dated,
where applicable, of even date herewith or a date prior thereto and acceptable
to the Banks:
(a) each of the Credit Documents, in properly executed
form, and in as many counterparts as required by Banks;
(b) the certificate of incorporation, articles of
incorporation, and bylaws of each Borrower, together with
any and all modifications thereof as of the date hereof;
(c) all Certificates of Authority, Certificates of Good Standing
(or such other evidence as is satisfactory to Banks) that each Borrower
is in good standing in the State of Texas and all other states required
by Banks, Certificates of Existence, borrowing resolutions (with
secretary's certificate), Secretary's Certificates of Incumbency, and
all other documents required by Banks to evidence Borrowers and their
respective representatives are empowered and duly authorized to enter
into the agreements evidenced by the Credit Documents;
(d) copies of all insurance policies required by this
Agreement;
(e) results of a search of the UCC records of the Texas Secretary
of State and such other states as are required by Banks, from a source
acceptable to each Bank, reflecting no security interests and liens
against any
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Collateral as to which perfection is accomplished by the
filing of a financing statement in favor of Banks;
(f) a Borrowing Base Report dated as of the date of
this Agreement;
(g) an opinion of counsel of Borrowers, in form and substance
satisfactory to each Bank, stating, among other things, that Borrowers
are each authorized to enter into this Agreement and the other Credit
Documents executed by each Borrower and this Agreement and the other
Credit Documents constitute legally binding and enforceable obligations
of Borrowers;
(h) if required by Banks, a copy of this Agreement shall have
been filed with an appropriate filing officer under the Federal
Copyright Act and/or the Federal Patent Act; and
(i) such certificates and documents reflecting the solvency of
each Borrower, after giving effect to the transactions contemplated by
this Agreement, as Banks shall require and find acceptable, showing
that each Borrower is solvent or not so undercapitalized as to be
unable to pay their respective debts as they become due.
2.2 Conditions Precedent to Each Loan. The obligations of Banks
under this Agreement to make any advances or payments under the Notes
(including, without limitation, the initial advance as provided in Section 2.1),
in accordance with the terms and provisions of Section 3 of this Agreement, are
subject to the full and complete satisfaction of each of the following
conditions precedent as of the date of such advance or payment:
(a) Seitel, on behalf of the Borrowers, 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; provided
that, unless required by Banks, no Borrowing Base Request will be
required in connection with Loans made pursuant to Section 3.6(a);
(b) if requested by either Bank, the Borrowers shall have
delivered evidence satisfactory to the requesting Bank substantiating
any of the matters contained in this Agreement which are necessary to
enable the Borrowers to qualify for such Loan;
(c) no event shall have occurred which, in the reasonable
opinion of either Bank, has or could reasonably be expected to cause a
Material Adverse Change;
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(d) the Banks shall have received, reviewed, and approved such
additional documents and items as may be requested by the Banks with
respect to such Loan;
(e) all of the Credit Documents shall be in full
force and effect and provide to the Banks the security
intended thereby;
(f) the consummation of the transactions
contemplated hereby shall not contravene, violate, or
conflict with any Requirement of Law;
(g) the Borrowers (individually or collectively) shall hold
full legal title to the Collateral and be the sole beneficial owner
thereof;
(h) The representations and warranties set forth in Section 4
of this Agreement shall be true and correct as of the date of the
making of such advance or payment with the effect as though the
representation or warranty had been made on this date;
(i) No Default or Event of Default shall have
occurred, or will result from, the making of such
advance;
(j) All requirements for making the first advance under the
Notes in accordance with the terms and provisions of Section 2.1 of
this Agreement shall then be fully and completely satisfied (including,
without limitation, any requirement set forth in Section 2.1 which was
waived in connection with the initial advance or any subsequent
advance);
(k) The Agent shall have received the payment of all Facility
Fees and other fees and reimbursements then due and payable to the
Agent and/or the Banks hereunder; and
(l) All of the foregoing and all matters incident to the
consummation of the transactions hereby contemplated shall be
satisfactory to the Agent and each of the Banks.
SECTION 3
BANKS' AGREEMENT TO MAKE ADVANCES
3.1 Revolving Line. (a) Subject to the terms and conditions of
this Agreement, relying on the representations of Borrowers hereinafter set
forth, during the Commitment Period, Banks, acting through the Agent, agree to
extend to Borrowers an open-end revolving credit line pursuant to which
Borrowers may borrow, repay, and reborrow under the terms of this Agreement
amounts not exceeding at any one time outstanding the aggregate
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principal amount equal to the Commitment Amount, which revolving loan shall, as
of the Closing Date, be evidenced by the issuance, execution, and delivery of
the Notes. If at any time, prior to the Commitment Termination Date, Borrowers
are not entitled to any advances or payments by the terms of this Agreement,
notwithstand-ing the terms elsewhere in this Agreement, Agent, with the approval
of the Required Banks, may make requested advances and payments; provided,
however, it is expressly acknowledged and agreed that, in such event, Agent and
Banks shall have the right, in their sole discretion, to decline to make any
such requested advance or payment and to demand any payment required under, and
otherwise to enforce, any applicable term of this Agreement and the other Credit
Documents without prior notice to any Borrower and the making of any such
advances and payments shall not be construed as a waiver of such right by Agent
and Banks.
(b) Subject to the terms of this Agreement, during the
Commitment Period, Borrowers 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 3.3,
each borrowing under Section 3.6(b), and prepayment of principal of Floating
Rate 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
Principal Office.
(d) Borrowers (individually and collectively) designate and
appoint Seitel as their representative for all purposes hereunder, and unless
otherwise notified in writing by all Borrowers, Seitel shall be the sole entity
authorized to request advances under and with respect to the Revolving Line
pursuant to Section 3.6(b) and to direct the Agent with respect to the
application of such advances. Advances of funds under the Revolving Line shall
be made by Agent to Seitel for and on behalf of all of the Borrowers (except for
advances to control disbursement accounts owned by Geophysical pursuant to
Section 3.6(a), which shall be made to Geophysical on behalf of all Borrowers).
(e) Notwithstanding anything to the contrary herein, from and
including the effective date of this Agreement through, but not including, the
Closing Date, advances shall be made under and in
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accordance with the terms and provisions of the Prior Loan
Agreement.
3.2 Borrowers' Loan Account. Each time an advance is made under
the Revolving Line against the Notes as provided for herein, each Bank (acting
through Agent) shall and is authorized to make an appropriate entry of such
advance as a debit to Borrowers' Loan Account. Agent also shall record in
Borrowers' Loan Account other charges, fees, expenses, and items properly
chargeable to Borrowers hereunder, all payments made by Borrowers (individually
and collectively) on account of indebtedness hereunder, and other appropriate
debits and credits. The debit balance of Borrowers' Loan Account shall reflect
the aggregate amount of Borrowers' indebtedness under the Revolving Line and
this Agreement from time to time existing hereunder. At least once each month,
Agent shall render a statement of account for Borrowers' Loan Account. Such
statement shall be considered correct and accepted by Borrowers and conclusively
binding upon Borrowers, except to the extent that Agent receives a written
notice of Borrowers' exceptions within one hundred twenty (120) days after such
statement has been mailed by ordinary mail to Seitel for and on behalf of
Borrowers. Notwithstanding the foregoing, no failure by Agent to properly
reflect any advance actually made or any such charge, expense, or item actually
incurred in Borrowers' Loan Account, or to otherwise discharge its obligation
under this Section, shall relieve or affect Borrowers from their joint and
several obligation to pay all amounts advanced by Banks under the Notes and
otherwise pursuant to this Agreement.
3.3 Additional Payments. If, at any time after the Closing
Date, the outstanding balance of Borrowers' Loan Account exceeds the Commitment
Amount, Borrowers shall (within 2 Business Days) remit to Agent good funds, in a
timely manner, sufficient to eliminate such excess. If Borrowers fail to remit
to Agent good funds, in a timely manner, sufficient to eliminate such excess,
Agent may, without notice to or demand on Borrowers, at Agent's option (in
addition to and without waiving any and all other rights and remedies of Banks
and Agent) apply against such excess (a) any collections on and Proceeds from
Accounts or other Collateral forwarded to Agent and/or in Agent's possession;
(b) any other Property of Borrowers and the Proceeds thereof now or hereafter
held by Agent (whether for safekeeping, custody, pledge, transmission,
collection or otherwise); and (c) any of Borrowers' deposit balances (general or
special) and credits with Agent. Borrowers shall pay to Agent on the Commitment
Termination Date the aggregate amount in Borrowers' Loan Account at the close of
business on the Commitment Termination Date.
3.4 Post Maturity Advances. Without limiting any other term or
provision of this Agreement, Agent, in its sole discretion and with the approval
of the Required Banks, may agree to make requested advances and payments after
the Commitment Termination Date (which advances and payments shall be treated,
for purposes of this Agreement, as advances made prior to the Commitment
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Termination Date); however, it is expressly acknowledged and agreed that, in
such event, Agent, with the approval of the Required Banks, shall thereafter
have the right, in its sole discretion, to decline to make any further requested
advance after the Commitment Termination Date and may require payment in full of
Borrowers' Loan Account without prior notice to Borrowers and the making of any
such advances after the Commitment Termination Date shall not be construed as a
waiver of such right by Agent.
3.5 Borrowing Base. The Borrowing Base shall be determined on
the basis of information supplied by Seitel, on behalf of Borrowers, in the
Borrowing Base Report in accordance with the terms of this Agreement.
Notwithstanding the foregoing, Agent shall have the right to request such
further information from Borrowers with respect to the determination of the
Borrowing Base as Agent may deem necessary. Within 15 days after its receipt of
(a) monthly Borrowing Base Report (or a revised Borrowing Base Report submitted
pursuant to the terms hereof), and (b) any additional information requested by
any Bank in connection with either such Bank's review of any such Borrowing Base
Report, Agent, at the request of any Bank, may notify Borrowers that the
Borrowing Base as calculated by Borrowers in the particular Borrowing Base
Report is incorrect in any way, and Agent shall so notify Borrowers to
recalculate the Borrowing Base in order that it is acceptable to Banks (a
revised Borrowing Base Report shall then be submitted by Borrower to Agent). If
Agent does not provide Borrowers with timely notice of an error in Borrowers'
calculation of the Borrowing Base in a Borrowing Base Report, the Borrowers'
calculation shall be deemed correct until and unless otherwise notified by the
Agent, and the Borrowing Base shall be the Borrowing Base reflected in such
Borrowing Base Report.
3.6 Borrowing Procedure for Notes. (a) Subject to the terms and
provisions of this Agreement, the Lockbox Agreement, and all other applicable
cash management agreements entered into by and among Borrowers and Agent (or any
affiliate or Agent), all checks and other items of Borrowers drawn on control
disbursement account numbers 701-8319-6 (Seitel Operating Account), 701-8323-4
(Geophysical), 701-8324-2 (Seitel), 701-8325-0 (Geophysical), and 701-8329-9
(Seitel), each located at Compass Bank, Pensacola, Florida, and presented to a
duly authorized representative of Agent shall be paid by Agent. Each payment by
Agent shall constitute an advance on the Notes. Agent shall have no duty or
obligation hereunder to pay any checks or other items presented pursuant to this
subsection which, as a result of such payment, would cause the balance of
Borrowers' Loan Account to exceed the Commitment Amount. Except for any
applicable Requirement of Law, Agent shall have no duty or obligation hereunder
to investigate the validity of any check or item presented, except as expressly
provided for in the Lockbox Agreement or in any other applicable cash management
agreement entered into by and between any or all of Borrowers and Banks or Agent
(or any affiliate of such Banks or Agent).
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(b) In addition to the terms and provisions of subsection (a),
but subject to the terms and provisions of this Agreement (including the full
and complete satisfaction of the conditions listed in Section 2), Seitel, on
behalf of Borrowers, may request advances under the Notes directly from Agent
pursuant to a Borrowing Request submitted and received in accordance with the
terms and provisions of this Agreement. Agent, at its option, and with the
consent of the Required Banks, may accept telephonic requests for advances,
provided that such acceptance shall not constitute a waiver of the Agent's right
to delivery of a Borrowing Request in connection with subsequent advances and
further provided that all such telephonic requests are immediately confirmed by
Seitel, on behalf of Borrowers, in writing by submitting a Borrowing Request,
whether by facsimile or otherwise. Not later than 2:00 p.m., Texas time, on the
date specified in the relevant Borrowing Request or by telephonic request made,
confirmed, and accepted by Agent as set forth in the preceding sentence for each
advance hereunder, subject to the terms and conditions of this Agreement
(including, without limitation, that no Default or Event of Default has occurred
and is then existing and that no representation or warranty set forth in this
Agreement is then false or untrue), Agent shall make such advances available to
Seitel, on behalf of Borrowers, by depositing the same, in immediately available
funds, in an account of Borrowers, or any of them (designated by Borrowers)
maintained with Agent, or by such other means as is acceptable to Agent and
Borrowers.
3.7 Purpose. All funds borrowed pursuant to this
Agreement shall be used for working capital and general corporate
purposes.
3.8 Interest. Subject to the terms of this Agreement
(including, without limitation, Section 3.17), interest on the Loans shall
accrue and be payable during the Commitment Period (and after the Commitment
Period to the extent there are any amounts outstanding on and with respect to
the Loans) 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 360 days, 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. In the
event that the Borrowers fail 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. Without limiting
any term or condition provided for herein, until prepaid or converted in
accordance with this Agreement, all advances under the Revolving Line, made
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pursuant to Section 3.6(a), shall accrue interest 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.
Notwithstanding any of the foregoing or anything else to the contrary herein,
prior to the Closing Date, interest on the Loans shall accrue as provided for
and in accordance with the terms of the Prior Loan Agreement.
3.9 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 May, 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 additionally, 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 outstanding balance of Borrowers'
Loan Account, together with all accrued and unpaid interest thereon, shall be
due and payable on the Commitment Termination Date. At the time of making each
payment hereunder or under the Notes (other than payments applied to the
outstanding balance of Borrowers' Loan Account in accordance with Section 6.1),
Seitel on behalf of Borrowers, shall specify to the Agent the Loans or other
amounts payable by Borrowers hereunder to which such payment is to be applied.
In the event Seitel, on behalf of Borrowers, fails to so specify, or if an Event
of Default has occurred and is continuing, the Agent may apply any such payments
as it elects (with the consent of the Required Banks) in its sole discretion.
3.10 Outstanding Amounts. The outstanding balance of Borrowers'
Loan Account reflected by the notations by the Banks (acting through the Agent)
on their records shall be deemed rebuttably presumptive evidence of the
principal amount owing on each of the Notes. The liability for payment of
principal and interest evidenced by the Notes 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.
3.11 Time, Place, and Method of Payments. All payments required
pursuant to this Agreement or the Notes shall be made in lawful money of the
United States of America and in immediately available funds, 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., Central Standard or Daylight
Savings Time, as the case may be (if via facsimile, it will be
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followed up with a phone call to Agent from Seitel, on behalf of Borrowers),
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 Notes 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.
3.12 Voluntary Prepayments and Conversions of Loans. Subject to
applicable provisions of this Agreement, Borrowers 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) Borrowers 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 (in a timely manner
as required by this Agreement), (b) any Fixed Rate Loan may be prepaid or
converted only on the last day of an Interest Period for such Loan, (c) the
Borrowers 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 Liability.
3.13 Commitment Fee. In addition to interest on the Notes as
provided herein and the Facility Fees payable hereunder and to compensate the
Banks for maintaining funds available from and after the Closing Date, Borrowers
shall pay to the Agent, for the benefit of the Banks, in immediately available
funds, on the 1st day of July, 1995, and on the 1st day of each third calendar
month thereafter during the Commitment Period, and on the Commitment Termination
Date, a fee (which shall begin to accrue on the Closing Date) in the amount of
one-half percent (1/2%) per annum, calculated on the basis of a year of 360
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 three calendar month period (or such period as has actually
elapsed as in the case of the first period which shall begin on the Closing Date
and last period, which shall end on the Commitment Termination Date).
Notwithstanding the foregoing, as an additional condition to Banks' obligations
hereunder, on the Closing Date of this Agreement, Borrower shall pay to Agent
all amounts due under Section 8.6 of the Prior Loan Agreement as if the Closing
Date constituted the Maturity Date under and as defined in the Prior Loan
Agreement. For purposes of this subsection, "Available Commitment" shall mean,
at any time, an amount equal to the remainder, if any, of (a) $25,000,000.00
minus (b) the balance of the Borrowers' Loan Account at such time.
3.14 Facility Fee. In addition to interest on the Notes as
provided herein and Commitment Fees payable hereunder and to compensate the
Banks for the costs of the increased extension of credit hereunder from the
amount available under and with respect to the Prior Loan Agreement, the
Borrowers shall pay to Agent for
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the benefit of the Banks, in immediately available funds, a facility fee equal
to $25,000.00. The Borrowers paid one-half of such fee upon acceptance of the
commitment of this credit facility to the Borrowers by the Banks with the
balance due on the Closing Date.
3.15 Loans to Satisfy Obligations of Borrowers. The Banks may,
but shall not be obligated to, make Loans for the benefit of Borrowers and apply
proceeds thereof to the satisfaction of any condition, warranty, representation,
or covenant of Borrowers contained in this Agreement or any other Credit
Document. Any such Loan shall be evidenced by the Notes and shall be made as a
Floating Rate Loan; provided that the Agent shall give the Borrowers 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 Borrowers
(or any of them).
3.16 Security Interest in Accounts; Right of Offset. As
security for the payment and performance of the Liabilities, Borrowers
(individually and collectively) hereby transfer, assign, and pledge to the Banks
(individually and collectively) and grant to the Banks (individually and
collectively) a security interest in all funds of Borrowers (held individually
by each Borrower and collectively by all Borrowers) now or hereafter or from
time to time on deposit with either of the Banks, with such interest of the
Banks to be retransferred, reassigned, and/or released by the Banks (or either
of them), as the case may be, at the expense of Borrowers upon payment in full
and complete performance by Borrowers of all Liabilities owing to each such
Bank, as the case may be. 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, Borrowers (individually and collectively) hereby grant to Agent and
the Banks (individually and collectively) the right, exercisable upon and during
the continuation of an Event of Default, of offset or banker's lien against all
funds of Borrowers (individually and collectively) now or hereafter or from time
to time on deposit with either of the Banks, 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.
3.17 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 Borrowers
agree that the Highest Lawful Rate shall be the
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"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 Notes to the
contrary, during any Limitation Period, the interest rate to be charged on
amounts evidenced by the Notes shall be the Highest Lawful Rate, and the
obligation, if any, of the Borrowers 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 Notes or under this Agreement or any other Credit Document include amounts
which by law are deemed interest and which would exceed the amount permitted if
the Highest Lawful Rate were in effect, Borrowers (individually and
collectively) stipulate 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 Borrowers 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 any Borrower. In the event that the maturity
of any Liability is 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 Liabilities, or if the principal amount of the
Liabilities shall have been paid in full, refunded to Borrowers.
(d) All sums paid, or agreed to be paid, to Banks and 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
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is uniform but does not exceed the Highest Lawful Rate throughout the full term
hereof.
3.18 Yield Protection. Borrowers shall pay to any Bank
such amounts as shall be sufficient in the reasonable opinion of
such Bank to compensate it for any loss, cost, or expense incurred
by and as a result of:
(a) any payment, prepayment, or conversion by any Borrower of
a Fixed Rate Loan on a date other than the last day of an Interest Period for
such Loan; or
(b) any failure by Borrowers to borrow a Fixed Rate Loan from
the Banks 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 (i) 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 (ii) (x) with
respect to any payment, prepayment, or conversion to a Fixed Rate Loan of a
different Interest Period, or failure to borrow, the interest component (as
reasonably determined by such Bank) of the amount (as reasonably determined by
such Bank) the Banks 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 conversion 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.
3.19 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 1 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 Borrowers 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 Borrowers
shall, on the last day of the then current Interest Period for each outstanding
LIBO Rate
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Loan, either prepay such LIBO Rate Loan or convert such Loan into another type
of Loan in accordance with Section 3.12. Before giving such notice pursuant to
this Section, Banks will designate a different available Applicable Lending
Office for LIBO Rate Loans or take such other action as the Borrowers 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.
3.20 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 Borrowers 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 3.12. 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
Borrowers 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.
3.21 Regulatory Change. In the event that by reason of any
Regulatory Change, 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 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 the 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 Borrowers, 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 3.12; provided that
Borrowers shall not be obligated to pay any amounts to Banks pursuant to Section
3.18 upon any such conversion.
3.22 Limitations on Interest Periods. Each Interest Period
selected by the Borrowers (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
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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.
3.23 No Commitment to Extend. Notwithstanding anything in this
Agreement to the contrary, the obligation of Banks (acting through the Agent) to
make advances under the Revolving Line shall terminate on the Commitment
Termination Date; provided however, Borrowers and Banks recognize that, in the
future, they may wish to extend the Commitment Termination Date by mutual
agreement. No modification or amendment of this Agreement or extension of the
Commitment Termination Date shall be effective unless placed in writing and duly
executed by Banks and Borrowers. The termination or expiration of the obligation
of Banks (acting through the Agent) to make advances under the Revolving Line
shall in no way affect any transactions entered into or rights created or
obligations incurred prior to such termination or expiration; rather, such
rights and obligations shall be fully operative until the same are fully
disposed of, concluded, and/or liquidated. Without limiting the generality of
the foregoing, such termination or expiration shall not release nor diminish any
of Borrowers' joint and several obligations and agreements hereunder until
payment in full of all of the Liabilities (including, without limitation,
payment of all Liabilities arising after the Commitment Termination Date as a
result of advances made by Banks at the request of Borrowers or on behalf of
Borrowers) and all other sums and amounts payable under or pursuant to this
Agreement. This Agreement and the other Credit Documents shall be a continuing
agreement in every respect.
SECTION 4
BORROWER'S REPRESENTATIONS AND WARRANTIES
4.1 Representations and Warranties. To induce Banks and Agent
to enter into this Agreement, Borrowers (individually and collectively)
represent and warrant to Banks and Agent (which representations and warranties
are made in addition to the representations and warranties now or hereafter made
in the other Credit Documents and will survive the delivery of this Agreement)
as follows:
(a) Organization of Seitel. Seitel (i) is a duly organized
Delaware corporation, validly existing, and in good standing under the
laws of the States of Delaware, Texas, Alabama and Louisiana; (ii) has
all necessary licenses and corporate power and authority to own its
assets and conduct its business as now conducted or presently proposed
to be conducted; (iii) has no Subsidiaries, except as shown on Exhibit
"I"; and (iv) is duly qualified and in good standing (and will remain
so
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qualified and in good standing) in every jurisdiction in which it is or
shall be doing business or in which the failure so to qualify and
remain in good standing would or could have a Material Adverse Change
on its business or Property, the Collateral, Banks, or Agent;
(b) Organization of Geophysical. Geophysical (i) is a duly
organized Delaware corporation, validly existing, and in good standing
under the laws of the States of Delaware, Texas and Louisiana; (ii) has
all necessary licenses and corporate power and authority to own its
assets and conduct its business as now conducted or presently proposed
to be conducted; (iii) has no Subsidiaries except as shown on Exhibit
"I"; and (iv) is duly qualified and in good standing (and will remain
so qualified and in good standing) in every jurisdiction in which it is
or shall be doing business or in which the failure so to qualify and
remain in good standing would or could have a Material Adverse Change
on its business or Property, the Collateral, Banks, or Agent;
(c) Organization of Offshore. Exsol (i) is a duly organized
Delaware corporation, validly existing, and in good standing under the
laws of the States of Delaware and Texas; (ii) has all necessary
licenses and corporate power and authority to own its assets and
conduct its business as now conducted or presently proposed to be
conducted; (iii) has no Subsidiaries; and (iv) is duly qualified and in
good standing (and will remain so qualified and in good standing) in
every jurisdiction in which it is or shall be doing business or in
which the failure so to qualify and remain in good standing would or
could have a Material Adverse Change on its business or Property, the
Collateral, Banks, or Agent;
(d) Organization of Exsol. Offshore (i) is a duly organized
Delaware corporation, validly existing, and in good standing under the
laws of the States of Delaware and Texas; (ii) has all necessary
licenses and corporate power and authority to own its assets and
conduct its business as now conducted or presently proposed to be
conducted; (iii) has no Subsidiaries; and (iv) is duly qualified and in
good standing (and will remain so qualified and in good standing) in
every jurisdiction in which it is or shall be doing business or in
which the failure so to qualify and remain in good standing would or
could have a Material Adverse Change on its business or Property, the
Collateral, Banks, or Agent;
(e) Organization of Data. Data (i) is a duly organized Delaware
corporation, validly existing, and in good standing under the laws of
the States of Delaware and Texas; (ii) has all necessary licenses and
corporate power and authority to own its assets and conduct its
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business as now conducted or presently proposed to be conducted; (iii)
has no Subsidiaries except as shown on Exhibit "I"; and (iv) is duly
qualified and in good standing (and will remain so qualified and in
good standing) in every jurisdiction in which it is or shall be doing
business or in which the failure so to qualify and remain in good
standing would or could have a Material Adverse Change on its business
or property, the Collateral, Banks or Agent;
(f) Due Authorization. The execution, delivery, and
performance hereof and of all other agreements or instruments
contemplated hereby are within each Borrower's corporate powers, have
been duly authorized, and are not in contravention of any Requirement
of Law or the terms of each Borrower's certificate of incorporation,
bylaws, or other organizational documents, or of any indenture,
agreement, or undertaking to which any Borrower is a party or by which
it or any of its respective properties are bound. This Agreement, the
Note, the other Credit Documents, and all other agreements and
instruments executed by Borrowers (individually or collectively) in
connection herewith have been validly executed and delivered by each
Borrower, as applicable, and constitute legal, valid, and binding
obligations of each Borrower enforceable against Borrowers in
accordance with their respective terms;
(g) Ownership. Except for the security interest granted herein
by Borrowers or by any other document executed in favor of Banks (and
either of their predecessors) or Agent and the Permitted Liens,
Borrowers are the sole owners of the Accounts, the Seismic Data, and
each and every other item of Collateral free from any lien, security
interest, or encumbrance;
(h) Status of Eligible Accounts. Each Eligible Account, used
for purposes of calculating the Borrowing Base, represents either (i)
an undisputed, bona fide indebtedness incurred by the Account Debtor
named therein, for merchandise held subject to delivery instructions or
theretofore shipped or delivered pursuant to a contract of sale, or for
services theretofore performed by Borrowers with or for said Account
Debtor, or (ii) a distribution payable (or which is reasonably expected
to be payable within 120 days) to Offshore under the Digitel Agreement;
there are no set-offs, counterclaims, or disputes against any such
Eligible Account except as indicated in some written list, statement,
or invoice furnished to Banks with reference thereto; and the
applicable Borrowers are duly authorized to subject the same to a
security interest in favor of Banks. If any Account shall be in
violation of any one or more of the warranties expressed in this
subsection,
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or otherwise does not meet the requirements of an Eligible Account as
defined herein, it shall not be deemed an Eligible Account for purposes
of this Agreement;
(i) Financial Statements. Subject to any limitations stated
therein or in connection therewith, the Financial Statements and all
other balance sheets, earnings statements, and other financial data
which have been furnished to Banks to induce them to enter into this
Agreement, or otherwise furnished in connection herewith, (i) do fairly
represent the financial condition and results of operations of each
Borrower (or other Person, as applicable), as of the dates and for the
periods for which the same are furnished, and (ii) have been prepared
in accordance with GAAP, subject to normal year end adjustments. No
Material Adverse Change has occurred in the condition, financial or
otherwise, of Borrowers (individually and collectively) since the date
of the Financial Statements. No Borrower has made investments in,
advances to, or guaranties of the obligations (other than guaranties of
obligations of its Affiliates which have been disclosed to Banks or
which are otherwise permitted hereunder) of any Person, except as
disclosed on the Financial Statements;
(j) Locations of Collateral. Set forth on Exhibit "J" is a
list of each location at which Seismic Data and other tangible
Collateral is kept, whether for storage, like purposes, or otherwise.
Also set forth on Exhibit "J" is a list of each office of Borrowers at
which records of Borrowers pertaining to Accounts are kept. The address
of each Borrower's chief executive office is as set forth on page 1 of
this Agreement;
(k) Litigation. Except as specifically disclosed in Exhibit
"K" attached hereto or hereafter from time to time to Banks pursuant to
Section 7.1(l)(iii) hereof, there are no actions, suits, or proceedings
pending or, to the knowledge of any Borrower as of the Closing Date,
threatened against Borrowers that Borrowers would be required to
disclose to Bank pursuant to Section 7.1(l)(iii) hereof;
(l) Compliance With Laws. Borrowers are each in compliance
with all Requirements of Law applicable to, governing, or affecting
Borrowers (individually or collectively), their respective operations
and Property, the Collateral, or any part of any of the foregoing,
which violation or noncompliance individually or collectively could
reasonably be expected to cause a Material Adverse Change;
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(m) No Misstatements. Neither this Agreement, nor any
document, certificate, exhibit, or statement furnished to either or
both Banks by or on behalf of any Borrower pursuant to or in connection
with this Agreement contains any untrue statement of a material fact or
omits to state a material fact necessary to make the statements
contained herein and therein not misleading. There is no fact known to
Borrowers that materially and adversely affects, or will materially and
adversely affect, the assets, business, operations, or condition of
Borrowers (individually or collectively) that has not been specifically
set forth in this Agreement or otherwise disclosed by Borrowers to
Banks in writing;
(n) Names. Borrowers' names always have been as set forth on
the first page of this Agreement, except that Data's name was
SGI-Nigeria, Inc. prior to March 9, 1994, and Seitel's name was
Seismic Enterprises, Inc. prior to August 4, 1987;
(o) No Default. Borrowers are not in default (i) in the
performance, observance, or fulfillment of any of the obligations,
covenants, or conditions contained in any agreement or instrument to
which any of them is a party, (ii) under any Requirement of Law, or
(iii) as a result of a demand of any Governmental Authority, which
default or violation might cause a Material Adverse Change;
(p) Tax Returns. Each Borrower has filed all tax returns
required to be filed and has paid all taxes shown thereon to be due,
including interest and penalties, or due pursuant to any assessment
received by Borrowers, except such taxes, if any, under contest in good
faith and for which adequate reserves have been provided. The charges,
accruals, and reserves on the books of Borrowers for any taxes or other
governmental charges are, in the opinion of each Borrower, adequate.
Each Borrower has paid all franchise and other taxes which are now due;
(q) No Margin Stock. No Borrower owns, and is engaged in the
business of extending credit for the purpose of carrying or purchasing,
"margin stock" within the meaning of Regulation U of the Board of
Governors of the Federal Reserve System (herein called "margin stock").
None of the proceeds of the Notes will be used for (i) the purpose of
purchasing or carrying any margin stock, (ii) the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase
or carry a margin stock, or (iii) any other purpose which might
constitute this transaction as a "purpose" credit within the meaning of
said Regulation U, as now in effect or as it may hereinafter be
amended. Neither Borrowers nor any agent acting on any of their behalf
has taken or
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will take any action which might cause this Agreement or the Notes to
violate Regulation U, Regulation T, or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the
Securities Exchange Act of 1934, in each case as now in effect or as
the same may hereafter be in effect on the date of any advance under
the Notes;
(r) No Investment Company. No Borrower is an
"investment company" within the meaning of the Investment
Company Act of 1940, as amended;
(s) No Collective Bargaining Agreement. No
Borrower is a party to any collective bargaining
agreement, and there are no material grievances,
disputes, or controversies with any union or any other
organization of any of their employees, or threats of
strikes, work stoppages, or any asserted pending demands
for collective bargaining by any union or organization;
(t) No Registration of Intellectual Property. None
----------------------------------------
of the Collateral is patented, copyrighted, licensed (except for
non-exclusive licenses granted pursuant to Licensing Agreements and/or
Participation Agreements), or trademarked or subject to any copyrights,
license (except for non-exclusive licenses granted pursuant to
Licensing Agreements and/or Participation Agreements), patent, or
trademark;
(u) Existing Plans. No Borrower maintains nor has
maintained any Plan other than Seitel's 401(k) Plan. No
Borrower currently contributes to or has any obligation
to contribute to or otherwise has any liability with
respect to any Plan other than Seitel's 401(k) Plan;
(v) Hazardous Substances. To the best knowledge
and belief of each Borrower, except as would not have a
Material Adverse Change:
(i) no Property of any 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;
(ii) no Hazardous Substances have been generated,
transported, and/or disposed of by any Borrower at a site
which was, at the time of such generation, transportation,
and/or disposal, or has since become, a Superfund Site;
(iii) except in accordance with applicable
Requirements of Law or the terms of a valid
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permit, license, certificate, or approval of the relevant
Governmental Authority, no Release of Hazardous Substances by
any Borrower or from, affecting, or related to any Property of
any Borrower or adjacent to any Property of any Borrower has
occurred; and
(iv) no Environmental Complaint has been
received by any Borrower;
(w) No Holding Company No Borrower is 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.
(x) Use of Intellectual Property. Borrowers own or are
licensed to use all Intellectual Property necessary to conduct all
business material to their financial condition, business, or operations
as such business is currently conducted. Except as disclosed on Exhibit
"K" hereto or hereafter from time to time to Banks pursuant to Section
7.1(l)(iii) hereof, 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 no Borrower knows of a valid basis for any
such claim. The use of such Intellectual Property by the Borrowers does
not infringe on the rights of any Person, except for such claims and
infringements as do not, in the aggregate, give rise to any material
liability on the part of any Borrower;
(y) No Acts of God. Neither the business nor any Property of
any 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;
(z) No Events of Default. No event has occurred and no
condition exists which would, upon the execution and delivery of this
Agreement or Borrower's performance hereunder, constitute a Default or
an Event of Default;
(aa) Existing Relationships. There exists no actual or
threatened termination, cancellation, or limitation of, or any
modification or change in, the business relationship between any
Borrower with any customer or any group of customers whose purchases
individually or in the aggregate are material to the business of any
Borrower, or with any material supplier, and there exists
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no present condition or state of facts or circumstances which would
materially adversely affect any such Borrower or prevent the particular
Borrower from conducting such business after the consummation of the
transaction contemplated by this Agreement in substantially the same
manner in which it has heretofore been conducted; and
(ab) Agreements Among Borrowers. Borrowers have entered into a
variety of agreements between and among Borrowers (the "Agreements
Among Borrowers"), all of which Agreements Among Borrowers are of
material economic benefit to each of Borrowers that are parties
thereto. Borrowings by each of Borrowers under the Revolving Line will
materially benefit (directly and indirectly) and are essential to all
of Borrowers (individually and collectively) in the continuing conduct
of their respective businesses by virtue of, among other reasons,
substantial inter-corporate business and financial relationships
between and among Borrowers, the ability of Borrowers to borrow at more
favorable interest rates and upon more favorable terms and conditions
together than could Borrowers if they borrowed individually rather than
as a group, and the need for each of Borrowers, directly or indirectly,
to have the financial capacity to perform under the terms of the
Agreements Among Borrowers. Borrowers shall not, solely as a result of
the representations and warranties set forth in this Section be deemed
to be engaged in a partnership or joint venture. Prior to the Closing
Date, each of Borrowers is solvent, and able to pay its debts as they
come due. Each of Borrowers has adequate capital to conduct the
business in which it is engaged. The acceptance by any of Borrowers of
advances hereunder shall be deemed to be a representation and warranty
to Banks that each of the Borrowers has benefitted (directly and
indirectly) from the advance, is solvent at the time of such advance,
and otherwise that the representations and warranties of Borrowers in
this Agreement are true and correct as if made again on the date of
such advance.
SECTION 5
SECURITY INTEREST OF BANKS IN COLLATERAL
5.1 Creation of Security Interest. As security for the payment
and performance of all Liabilities, Banks and Agent for the benefit of Banks
shall have and Borrowers (individually and collectively) subject to the terms of
Section 5.7, hereby grant to each Bank and Agent for the benefit of Banks a
continuing lien on, security interest in and right of setoff against the
following Collateral:
All of each of Borrowers' now or hereafter owned, existing,
created, arising or acquired:
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(a) Accounts;
(b) Inventory;
(c) General Intangibles;
(d) Equipment (excluding office equipment,
furnishings and Exsol's, Offshore's, and Geophysical's Equipment not
constituting Seismic Data);
(e) Seismic Data;
(f) instruments, notes, notes receivable, documents, documents
of title, policies and certificates of insurance, securities, chattel
paper, deposits, cash and other similar property now or hereafter owned
by one or more of Borrowers or in which one or more of Borrowers now or
hereafter has an interest, including, without limitation, any and all
such property as may now or hereafter be in the possession of or
deposited with Agent or one or more of Banks, or otherwise assigned to
Agent or one or more of Banks, or as to which Agent or one or more of
Banks may now or hereafter control possession by documents of title or
otherwise;
(g) all books and records now owned and hereafter acquired
relating to any other Collateral and all files, correspondence,
computer programs, tapes, disks, and related data processing software
owned by any Borrower or in which any Borrower has an interest that
contains information concerning or relating to any of the other
Collateral or any item thereof;
(h) all of the Pledged Stock, and all right, title, and
interest of Offshore as a joint venturer of Digitel; and
(i) substitutions, accessions, additions, parts, accessories,
replacements, Proceeds and products of, for and to any and all of the
foregoing, including, without limitation, insurance and tort proceeds,
and any and all income and other proceeds and payments from the sale,
lease, collection, licensing, transfer, exchange, disposition or use of
any and all of the foregoing, and any and all such substitutions,
accessions, additions, parts, accessories, replacements, Proceeds and
products in the form of any of the property described or referenced in
(a) through (h) above.
No submission by Borrowers to Banks or Agent of any schedule
or other particular identification of Collateral shall be necessary to vest in
Banks and Agent for the benefit of Banks a security interest in each and every
item of Collateral now existing or hereafter created or acquired, but rather,
such security
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interest shall vest in Banks and Agent for the benefit of Banks immediately upon
the creation or acquisition of any item of Collateral, without the necessity for
any other or further action by Borrowers or Banks and Agent for the benefit of
Banks; provided, however, that Borrowers shall execute such other and additional
documents, instruments and agreements as reasonably may be required by Banks or
Agent for the benefit of Banks to evidence the security interests contemplated
hereby. In addition to and without limitation of the rights and remedies of
Banks or Agent for the benefit of Banks with respect to any copyright,
trademark, patent or service mark and other Collateral under this Agreement or
otherwise, Borrowers (individually and collectively) hereby each grant, assign
and transfer to Banks and Agent for the benefit of Banks, a fully-paid,
royalty-free, perpetual, non-exclusive, unrestricted license to use, modify,
reproduce, distribute and sublicense any copyright, trademark, patent or service
mark; provided, however, that the foregoing license shall not be effective
unless and until an Event of Default shall have occurred, at which time, the
aforementioned license shall commence and be effective automatically without
further action, consent or approval of Borrowers, but shall terminate upon full
payment and performance of the Liabilities.
5.2 Perfection of Security Interests. To the extent allowable
under applicable law, the UCC shall govern the security interests provided for
herein. In connection therewith, Borrowers (at Borrowers' expense) shall take
such steps and execute, deliver and file (as applicable) (or cause the
execution, delivery and filing (as applicable of) such financing statements,
continuation statements, agreements (including, without limitation, security
agreements and landlord, creditor and mortgagee subordination agreements),
documents, and papers (all in form and substance acceptable to Agent and Banks)
as Agent and Banks may from time to time request to perfect or preserve the
perfection and priority of Banks' and/or Agent's for the benefit of Banks'
security interests granted hereby or by any of the other Credit Documents.
Borrowers hereby appoint and empower Agent, or any employee of Agent which Agent
may designate for the purpose, as its attorney-in-fact, to execute and/or
endorse (and file, as appropriate) on its behalf any documents, agreements,
papers, checks and financing statements which, in Agent's sole judgment (but
with the approval of the Required Banks), are necessary to be executed and/or
filed in order to (a) perfect or preserve the perfection and priority of Banks'
and/or Agent's for the benefit of Banks' security interests granted hereby or by
any of the other Credit Documents; and (b) collect or realize upon the
Collateral or otherwise exercise all rights and remedies under any of the Credit
Documents or applicable law.
5.3 Other Laws; Power of Attorney. If, by reason of location of
one or more of Borrowers, the Collateral or otherwise, the creation, validity,
or perfection of security interests provided for herein are or may be governed,
in whole or in part, by law other than the Uniform Commercial Code of Texas,
Borrowers shall take such steps and execute and deliver such documents,
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agreements, papers and financing statements as Agent may from time to time
request to comply with the Uniform Commercial Code, the Uniform Trust Receipts
Act, the Factors Lien Act, or other laws of Texas or other states or
jurisdictions, or to comply with the Ship Mortgage Act, the Federal Aviation
Act, the Copyright Act, the Patent Act, the Lanham Trademark Act, or any other
federal law or regulation. Borrowers hereby appoint and empower Agent, or any
employee of Agent which Agent may designate for the purpose, as its
attorney-in-fact, to execute and/or endorse (and file, as appropriate) on its
behalf any documents, agreements, papers, checks and financing statements which,
in Agent's sole judgment (but with the approval of the Required Banks), are
necessary to be executed and/or filed in order to (a) perfect (under all
applicable laws) or preserve the perfection and priority of Banks' and Agent's
for the benefit of Banks' security interests granted hereby or by any of the
other Credit Documents; and (b) collect or realize upon the Collateral or
otherwise exercise all rights and remedies under any of the Credit Documents or
applicable law.
5.4 Obligations Secured. The security interest in, general lien
upon, and right of set-off against the Collateral provided for in Section 5.1 is
granted to secure the payment and other performance of all Liabilities whether
now existing or hereafter arising, under or in connection with this Agreement,
the Notes, or the other Credit Documents, and any amendments, modifications,
restatements, or substitutions thereof.
5.5 Miscellaneous Collateral Provisions. The security interest
and other rights of Banks and Agent on behalf of Banks hereunder shall not be
impaired by any indulgence, moratorium, or release granted by Banks, including,
but not limited to: (a) any renewal, extension, or modification which Banks may
grant with respect to the Notes; (b) any surrender, compromise, release,
renewal, extension, exchange, or substitution which Banks may grant in respect
of any item of the Collateral, or any part thereof or any interest therein; or
(c) any release or indulgence granted to any endorser, guarantor, or surety of
the Notes.
5.6 Filing Reproductions. At the option of Banks and Agent on
behalf of Banks, a photocopy or other reproduction of this Agreement or of a
financing statement covering the Collateral shall be sufficient and may be filed
as a financing statement.
5.7 Independent Grants of Security Interests. Notwithstanding
anything in Section 5.1 or elsewhere in this Agreement to the contrary, except
to the extent any Collateral is owned jointly among two or more of the Borrowers
(in which case the security interest in such Collateral is created jointly by
all Borrowers owning the particular Collateral), each Borrower has and does
hereby severally (and not jointly or conditionally) create a security interest
in and to the Collateral owned by the respective Borrower. The validity of any
grant and creation of security or other pledge or right of offset in and to any
of the Collateral by any of the Borrowers shall not be affected in any way by a
holding
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of a court, pursuant to the Bankruptcy Code or otherwise, that the security
interest granted herein by any other particular Borrower is void and ineffective
for any reason.
SECTION 6
COLLECTION OF ACCOUNTS
6.1 Collection. Borrowers shall direct all Account Debtors to
remit payments on Accounts directly to the Lockbox. If Borrowers (or any of
them) receive any payments on Accounts, Borrowers shall notify Agent of such as
received and shall hold the same in trust for Banks and Agent for the benefit of
Banks without commingling the same with other funds of Borrowers and shall turn
the same over to Agent immediately upon receipt in the identical form received.
All Account payments and other Proceeds transmitted to Agent via the Lockbox, by
Account Debtors, Borrowers, or otherwise, shall be transferred daily by Agent
from the Lockbox and deposited into the Remittances Account; the maintenance of
any such account shall be solely for the convenience of Banks and Agent for the
benefit of Banks, and Borrowers shall not have any right, title, or interest in
or to any such account or in the amounts at any time appearing to the credit
thereof. Agent may apply and credit Account payments and other Proceeds
transmitted to Agent via the Lockbox, by Account Debtors, Borrowers, or
otherwise, against the outstanding balance in Borrowers' Loan Account, however,
Agent shall not be required to credit Borrowers' Loan Account with the amount of
any check or other instrument constituting provisional payment until Agent has
received final payment thereof at its office in cash or solvent credits accepted
by Agent. Thereafter, unless an Event of Default shall have occurred and be
continuing, any amounts remaining in the Remittances Account shall be made
available to Borrowers by deposit into Seitel's operating account or in such
other manner acceptable to Banks and Borrowers. In addition, Borrowers shall, at
the request of Agent, notify their Account Debtors of the security interest of
Banks and Agent for the benefit of Banks in any Account and shall instruct
Account Debtors to remit payments directly to Agent (or as Agent shall otherwise
request), and Agent may itself at any time so notify Account Debtors. For the
purposes hereof, any Proceeds transmitted to or otherwise received by Agent
shall be deemed held by Agent for the prorated benefit of Banks. Nothing herein
shall be deemed to diminish or limit any of Banks' or Agent's for the benefit of
Banks' rights or remedies arising under applicable law, this Agreement, or
otherwise.
6.2 Collection Actions By Borrowers. Borrowers (a) shall (i)
upon any Bank's request deliver any instrument or chattel paper evidencing or
constituting an Account to Agent for the benefit of Banks, and (ii) use their
best efforts to collect all of their respective Accounts in a commercially
reasonable manner; and (b) agree that no court action or other legal proceeding
or garnishment, attachment, repossession of property, detinue, sequestration or
any other repossession covered by an Account shall
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be attempted by one or more of Borrowers except by or under the direction of
competent legal counsel. BORROWERS, JOINTLY AND SEVERALLY, HEREBY AGREE TO
INDEMNIFY AND HOLD AGENT AND BANKS HARMLESS FOR ANY LOSS OR LIABILITY OF ANY
KIND OR CHARACTER WHICH MAY BE ASSERTED AGAINST AGENT AND/OR BANKS BY VIRTUE OF
ANY SUIT FILED, PROCESS ISSUED, OR ANY REPOSSESSION OR ATTEMPTED REPOSSESSION
DONE OR ATTEMPTED BY ONE OR MORE OF BORROWERS OR BY VIRTUE OF ANY OTHER ACTIONS
OR ENDEAVORS WHICH ONE OR MORE OF BORROWERS MAY MAKE TO COLLECT ANY COLLATERAL.
SECTION 7
AFFIRMATIVE COVENANTS
7.1 Affirmative Covenants. In addition to the covenants and
agreements of Borrowers made elsewhere in this Agreement, unless Banks shall
otherwise consent in writing, until all of the Liabilities have been paid and
satisfied, Borrowers (individually and collectively) shall:
(a) Defend Collateral. Defend the Accounts, the Seismic Data,
and each and every other item of Collateral and all Proceeds and
products thereof against all claims and demands of all Persons at any
time claiming the same or any interest therein adverse to Banks;
(b) Pay Taxes and Assessments. Pay all taxes or charges levied
on or with respect to the Collateral, and will at all times keep the
Accounts, the Seismic Data, and each and every other item of Collateral
free and clear of all liens, claims, charges, security interests, and
encumbrances whatsoever, except as otherwise expressly provided herein.
If any lien, charge, claim, security interest, or encumbrance shall
arise, or be claimed or asserted with respect to the Accounts, the
Seismic Data, or any other item of Collateral, Banks may, without
notice to Borrowers (notwithstanding Section 3.15 hereof), pay such
taxes, assessments, charges, or claims, and take any and all other
actions (including the payment of money) deemed desirable by Banks to
remove any such lien, charge, claim, security interest, or encumbrance,
and Borrowers agree that the amounts thereof shall be charged to
Borrowers' Loan Account created hereby and shall bear interest at the
rate of interest then borne by Borrowers' obligations under the Notes;
(c) Maintain Valid Security Interest. Take all actions that
Banks may reasonably request to establish and maintain a valid security
interest in the Accounts, the Seismic Data, and each and every other
item of Collateral, free and clear of all other liens, claims, charges,
security interests, and encumbrances whatsoever, except for Permitted
Liens or as otherwise expressly provided herein;
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(d) Notice of Name Change. Give Banks thirty (30) days prior
written notice of any change in any Borrower's name or location of its
chief office, and execute and deliver to Banks all financing statement
amendments and other documents requested by Banks prior to such name
change becoming effective;
(e) Financial Reporting. Deliver to Banks such information
regarding the business affairs, financial condition, assets,
liabilities, operations, and transactions of Borrowers as Banks may
reasonably request, and, without limiting the foregoing, furnish to
Banks the following:
As soon as available, and in any event within 90 days from the
end of Seitel's fiscal year, an audited financial statement
for Seitel, prepared by its independent certified public
accountant, showing the financial condition of Seitel, on a
consolidating and consolidated basis, at the close of such
fiscal year and the results of its operations during such
fiscal year, which financial statements shall be materially
complete and correct, prepared in accordance with GAAP, and
shall include, but shall not be limited to, an operating
statement, an income statement, a balance sheet, a
reconciliation of equity amounts, a source and application of
funds report, and such other matters as Banks may request. A
Compliance Certificate, dated as of Seitel's fiscal year end,
signed by a Responsible Officer of Seitel shall be submitted
contemporaneously with the foregoing financial statements;
As soon as available, and in any event within 45 days from the
end of each fiscal quarter of Seitel, internally prepared
financial statements for Seitel, on a consolidating and
consolidated basis, signed by a Responsible Officer, and
showing the results of its operations during such fiscal
quarter, which statements shall include, but shall not be
limited to, an operating statement, an income statement, a
balance sheet,
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profit and loss statement, and such other matters as Banks may
reasonably request;
As soon as available, and in any event within 45 days from the
end of each fiscal quarter of Seitel which is not also
Seitel's fiscal year end, a Compliance Certificate dated as of
the end of such fiscal quarter, signed and certified by a duly
authorized officer of Seitel;
On or before the 15th day of each calendar month or more often
as requested by Banks, a Borrowing Base Report supported by
the following, each on a form satisfactory to Banks: (A)
account receivable agings for Data, Seitel, Exsol,
Geophysical, and Digitel; (B) listing of Seitel's term
receivables (including a listing of related payment terms and
a listing of all payments received with respect thereto since
the last listing); (C) account payable aging for each
Borrower; (D) rebate listing for each Borrower; (E) detailed
calculation of all Accounts which do not constitute an
Eligible Accounts; and (F) any other information relating to
the foregoing, as may be required by Banks;
On or before the forty-fifth (45th) day of each calendar
quarter, Borrowers' Benchmark Analysis Report and Summary of
Data Banks Report, in form reasonably acceptable to Banks,
detailing Seismic Data and Eligible Inventory as of the last
day of the immediately preceding calendar quarter;
Within 10 days after the execution thereof, copies of all
contracts, letter agreements, notes, and other instruments
providing for the time and manner of the payment of term
receivables (i.e., payable in multiple installments, as a
deferred payment, or on terms other than 30 days);
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As and when requested by any Bank, copies of all Participation
Agreements, joint venture and partnership agreements, and
Licensing Agreements; and
Such other documents, instruments, data, or information of any
type requested by any Bank with respect to Accounts, Seismic
Data, and any other Collateral, including, without limitation,
information regarding Offshore, Digitel, the Digitel
Agreement, and any and all cash distributions and other
payments now or hereafter due in connection with any of the
foregoing.
Any information or documents delivered Banks hereunder, whether
addressed to either or both Banks, may be relied upon by each Bank to
the same extent as if the information or documents, or any
certification by Borrowers with respect thereto, were addressed to both
Banks.
(f) Federal Reporting. Concurrently with the submission of the
quarterly financial statements submitted pursuant to Section
7.1(e)(ii), provide Banks with a true and correct copy of the 10-Q
report filed by Seitel for such fiscal quarter, and concurrently with
the submission of the annual Financial Statement submitted pursuant to
Section 7.1(e)(i), provide Banks with a true and correct copy of the
10-K Report filed by Seitel for such fiscal year. Within 30 days after
the filing thereof, Seitel shall provide to Banks copies of its 8-K
Report or any other documents filed by (or on behalf of) Seitel or any
other Borrower with the Securities and Exchange Commission or any
similar state agency. Further, Seitel shall deliver to Banks within
five days after any material report (other than financial statements)
or other communication is sent by Seitel or any of its Subsidiaries to
their respective stockholders or any other report, request, or notice
is filed by Seitel or any of its Subsidiaries with the Securities and
Exchange Commission or any successor or analogous Governmental
Authority, copies of such report or communication;
(g) Decrease in Value. Promptly upon any reduction or
diminution in the face value of any Account, Borrowers shall advise
Banks thereof and, if requested by either Bank, submit a signed writing
to the Banks explaining the circumstances resulting in such reduction;
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(h) Movement of Inventory. Prior to moving any Inventory, for
any purpose other than the sale thereof, into any location, other than
a location in which any Borrower has heretofore disclosed in writing to
Banks, any Borrower shall (i) promptly inform Banks of such move, (ii)
execute and deliver appropriate financing statements necessary to
perfect the security interest granted in the Security Agreement in the
particular state in which the Inventory is to be located, and (iii)
cause the landlord, tenant, and/or subtenant at the particular location
to execute and deliver to Banks a lien waiver, in form and substance
satisfactory to Banks;
(i) Location of Records. Give Banks written notice of each
office of Borrowers at which Seismic Data and records of Borrowers
pertaining to Accounts, Seismic Data, General Intangibles and contract
rights are kept. Except as such notice is given, all Seismic Data and
records of Borrowers pertaining to Seismic Data, Accounts Receivable,
General Intangibles and contract rights are and shall be kept at
Borrowers' respective chief executive offices as noted on the first
page of this Agreement (which Borrowers have represented and warranted
are Borrowers' respective chief executive offices);
(j) Bankruptcy Code. Notify Banks of any filing under the
Bankruptcy Code by, for or against any of Borrowers within two (2)
business days of having knowledge of such filing;
(k) Inspection. Up to one time a calendar year if prior to the
occurrence of an Event of Default, and at all times and from time to
time after the occurrence of an Event of Default, allow Banks, by or
through any of their respective officers, agents, employees,
independent contractors, attorneys, or accountants, and at the sole
cost and expense of Borrowers, (i) to examine, inspect, audit, or make
extracts from any Borrower's books and records; (ii) to analyze
financial statements; (iii) to arrange for verification of Accounts
under reasonable procedures, directly with Account Debtors or by other
methods; and (iv) to inspect and audit Inventory and other tangible
property constituting Collateral at any time during normal business
hours, with at least three Business Days prior notice prior to the
occurrence of an Event of Default, or after the occurrence of an Event
of Default without prior notice to any Borrower; provided that Banks,
while performing any of the foregoing, does not unreasonably interrupt
Borrowers' normal business operations;
(l) Additional Notices. Deliver to the Banks, immediately upon
having knowledge of the occurrence of any of the following events or
circumstances, a written
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statement with respect thereto, signed by a Responsible Officer of the
notifying Borrower and setting forth the relevant event or circumstance
and the steps being taken by the applicable Borrower with respect to
such event or circumstance:
a Default or any Event of Default;
any default or event of default under any contractual
obligation of any Borrower or any litigation, investigation,
or proceeding between any 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 Change;
any litigation or proceeding involving any or all of the
Borrowers as a defendant or in which any Property of any or
all of the Borrowers is subject to a claim and in which the
amount involved is $500,000.00 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 Change;
the receipt by any Borrower of any
Environmental Complaint;
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 any Borrower or adjacent to any Property of any
Borrower which could result in a Material Adverse Change,
following any allegation of a violation of any Requirement of
Law;
any Release of Hazardous Substances by such Borrower or from,
affecting, or related to any Property of such Borrower or
adjacent to any Property of such Borrower which could result
in a Material Adverse Change, except in accordance with
applicable
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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
Change; and
any other event or condition which could reasonably be
expected to have a Material Adverse Change.
(m) Legal Expenses of Banks. 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 Banks, 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 any Credit Documents, and
the consummation of the transactions contemplated in this Agreement.
(n) Reimbursement of Certain Expenses. 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 Borrowers under
any of the Credit Documents; to collect the Liabilities; to ratify,
amend, restate, or prepare additional Credit Documents, as the case may
be; for the filing and recordation of any Credit Documents; to enforce
the rights of the Agent under any of the Credit Documents; and to
protect the Properties or business of any Borrower including, without
limitation, the Collateral, which amounts shall be deemed compensatory
in nature and liquidated as to amount upon notice to the Borrowers by
the Agent and which amounts shall include, but not be limited to (i)
all court costs, (ii) reasonable attorneys' fees, (iii) reasonable fees
and expenses of auditors and accountants incurred to protect the
interests of the Agent, (iv) 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, (v) fees
and expenses incurred in connection with lifting the automatic stay
prescribed in ss.362 Title 11 of the United States Code, and (vi) 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
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Agent in connection with the collection of any sums due under the
Credit 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 Borrowers
and/or a trustee, receiver, custodian, or liquidator of the Borrower
appointed in any such case;
(o) Insurance. Maintain insurance with respect to their
Properties and businesses against such liabilities, casualties, risks,
and contingencies as is customary in the relevant industry and
sufficient to prevent a Material Adverse Change, 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 Borrowers, 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 Borrowers (individually and collectively) hereby
assign 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 $500,000.00, the
Agent may, at its option, apply all such sums or any part thereof
received by it toward the payment of the Liabilities, whether matured
or unmatured, application to be made first to interest and then to
principal, and shall deliver to the Borrowers the balance, if any,
after such application has been made. In the event of any such damage,
loss, or destruction for which insurance proceeds are $500,000.00 or
less, provided that no Event of Default has occurred and is continuing,
the Agent shall deliver any such proceeds received by it to the
Borrowers. In the event the Agent receives insurance proceeds not
attributable to Collateral or business interruption, the Agent shall
deliver any such proceeds to the Borrowers.
(p) 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
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ANY CREDIT DOCUMENT 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 (i) THE PRESENCE OF ANY HAZARDOUS
SUBSTANCES ON, UNDER, OR FROM ANY PROPERTY OF THE BORROWERS, WHETHER
PRIOR TO OR DURING THE TERM HEREOF, (ii) ANY ACTIVITY CARRIED ON OR
UNDERTAKEN ON OR OFF ANY PROPERTY OF THE BORROWERS, WHETHER PRIOR TO OR
DURING THE TERM HEREOF, AND WHETHER BY THE BORROWERS OR ANY PREDECESSOR
IN TITLE, EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE
BORROWERS 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,
(iii) ANY RESIDUAL CONTAMINATION ON OR UNDER ANY PROPERTY OF THE
BORROWERS, (iv) 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 BORROWERS
OR ANY EMPLOYEE, AGENT, CONTRACTOR, OR SUBCONTRACTOR OF THE BORROWERS
WHILE SUCH PERSONS ARE ACTING WITHIN THE SCOPE OF THEIR RELATIONSHIP
WITH THE BORROWERS, IRRESPECTIVE OF WHETHER ANY OF SUCH ACTIVITIES WERE
OR WILL BE UNDERTAKEN IN ACCORDANCE WITH APPLICABLE REQUIREMENTS OF
LAW, OR (v) THE PERFORMANCE AND ENFORCEMENT OF ANY CREDIT DOCUMENT, ANY
ALLEGATION BY ANY BENEFICIARY OF A WRONGFUL DISHONOR BY THE AGENT AND
BANKS OF A CLAIM OR DRAFT PRESENTED THEREUNDER (TO THE EXTENT RESULTING
FROM A GOOD FAITH DISPUTE OF THE AMOUNT OF THE BORROWING BASE), OR ANY
OTHER GOOD FAITH ACT OR OMISSION IN CONNECTION WITH OR RELATED TO ANY
CREDIT 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 BORROWERS AND NOT BY WAY OF
REALIZATION AGAINST ANY COLLATERAL OR THE CONVEYANCE OF ANY 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,
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PENALTY, CHARGE, PROCEEDING, ORDER, JUDGMENT, ACTION, OR REQUIREMENT
ARISES SUBSEQUENT TO THE ACQUISITION OF TITLE THERETO BY THE AGENT AND
BANKS.
(q) Operating Account. Cause Seitel to maintain with Agent or
its affiliate designated by Agent an operating account, which may be a
controlled disbursement account, and Agent, at Agent's option, may make
all advances hereunder into such operating account, and each Borrower
expressly agrees that Agent may, at Agent's option, and with the
authorization of the Required Banks, debit against such operating
account any and all sums, amounts, charges, and payments due under or
in connection with this Agreement and the Notes;
(r) Comply With Law. At all times comply with all present and
future Requirements of Law applicable to, governing or affecting
Borrowers, their operations, their Property, the Collateral, or any
part of any of the foregoing, which violation or noncompliance
individually or collectively might cause a Material Adverse Change, and
shall immediately notify Banks of any and all alleged or asserted
violations of any such law, ordinance, or regulation, which
individually or collectively might cause a Material Adverse Change;
(s) Qualify as Foreign Corporation. Qualify as a foreign
corporation in all other jurisdictions wherein the business now or
hereafter transacted by any Borrower makes such qualifications
necessary, and the failure to so qualify might cause a Material
Adverse Change;
(t) Maintain Backup Data. Maintain any system reasonably
requested by Banks for creating backup data on computer hardware,
software, or firmware, such as lists of Account Debtors and Accounts;
and pledge, and, after any Default hereunder, deliver to Banks such
tapes or discs with respect thereto as may be required by Banks;
(u) Further Assurances. (i) Promptly correct, or cause to be
promptly corrected, any defect, error, or omission which may be
discovered in the contents of this Agreement or in any other instrument
executed in connection herewith or in the execution or acknowledgment
thereof; and (ii) execute, acknowledge, deliver, and record or file, or
cause to be executed, acknowledged, delivered, and recorded or filed,
such further instruments, and do such further acts as may be necessary,
desirable, or proper to carry out more effectively the purposes of this
Agreement and such other instruments; and
(v) Landlord's Waivers. Within 120 days from the execution date
of this Agreement, provide Banks with
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landlord's waivers (in a form acceptable to Banks) from each landlord
of a location of any Borrower at which any Collateral is or will be
stored and for which Banks (or their predecessors in interest) have not
previously obtained a landlord's waiver (it being agreed that
Borrower's lease of its main headquarters in Houston, Texas, which is
at the address listed on page 1 hereof may contain a landlord's waiver
for purposes of satisfying this subsection).
SECTION 8
NEGATIVE COVENANTS
8.1 Negative Covenants of Borrowers. So long as Borrowers may
borrow additional advances hereunder and in accordance with the terms and
provisions of this Agreement and until payment in full of the Notes and the
payment and performance of all other Liabilities of Borrowers hereunder,
Borrowers (individually and collectively) covenant and agree, unless Banks shall
otherwise consent in writing, that no Borrower shall, either directly or
indirectly (for purposes hereof, actions of DDD Energy, Inc. shall not be deemed
to be direct or indirect actions of Seitel or any other Borrower:
(a) Change of Location. Change any office or location without
(i) at least thirty (30) days prior written notice to Banks, and (ii)
prior to making any such change, executing and delivering to Banks any
additional financing statements or other documents that Banks may
request;
(b) No Transfer of Collateral. Sell, transfer, lease,
otherwise dispose of, or suffer to exist any lien, charge, claim,
security interest, or encumbrance (except for Permitted Liens and as
otherwise expressly provided herein) with respect to, any of the
Collateral or any interest therein (or any of the Proceeds thereof,
whether money, checks, money orders, drafts, notes, instruments,
documents, chattel paper, Accounts, returns, or repossessions);
(c) No Change in Accounting Practices. Materially change
accounting practices, methods, or standards or the reporting format for
any information furnished Banks under the terms and provisions of this
Agreement (unless required by GAAP), which accounting practices shall
conform with GAAP throughout the term of this Agreement;
(d) No Purchase of Stock. Purchase or acquire, directly or
indirectly, any shares of stock, evidences of indebtedness, or other
securities of any person, corporation, or other entity, other than
acquisitions of
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stock or securities of entities as a means of acquiring Seismic Data
in accordance with Section 8.1(n)(ii) below;
(e) No Change in Ownership. Permit Seitel, or any of its
Subsidiaries (other than DDD Energy, Inc.), to (i) liquidate, or
discontinue or materially reduce their normal operations with intention
to liquidate, (ii) merge or consolidate with or into any corporation,
partnership, or other entity, or (iii) sell, lease, transfer, or
otherwise dispose of (other than in the ordinary course of business),
in any single instance (or in any group of related transactions),
assets greater than the amount of $500,000.00, in the aggregate.
Borrowers shall not cause, allow, or suffer to occur a change in the
ownership or nature of any Borrower (other than Seitel). No Borrower
shall change its name or identity without notifying Banks of such
change in writing at least thirty (30) days prior to the effective date
of such change and such Borrower shall take all steps necessary prior
to any such change to maintain at all times the validity, perfection,
and priority of all liens and security interests contemplated by and
created in this Agreement;
(f) No Payment of Subordinated Debt. Make any payment upon any
outstanding Subordinated Debt, except as expressly permitted by Banks
in writing, other than the approximately $208,000.00 payment required
to be made into the sinking fund for the Subordinated Debt on or about
March 31, 1997, which may be made so long as no Default or Event of
Default shall have occurred and be continuing at the time of such
payment or be caused by such payment;
(g) Current Ratio. Permit Seitel to cause, allow, or suffer to
occur its Current Ratio to be less than 1.0 to 1. The Current Ratio
shall be tested quarterly as of the end of each fiscal quarter of
Seitel. For purposes of this subsection, "Current Ratio" shall mean the
ratio of Current Assets to Current Liabilities, calculated in
accordance with GAAP; provided that, for purposes of this Agreement,
the consolidated Current Assets and Current Liabilities of Seitel shall
not include current assets and current liabilities of DDD Energy, Inc.;
(h) Debt to Tangible Net Worth Ratio. Permit Seitel to cause,
allow, or suffer to occur its consolidated Debt to Tangible Net Worth
Ratio to exceed 1.0 to 1. The Debt to Tangible Net Worth Ratio shall be
tested quarterly as of the end of each fiscal quarter of Seitel. For
purposes of this subsection, "Debt to Tangible Net Worth Ratio" shall
mean the ratio of Seitel's Consolidated Total Debt to the consolidated
Tangible Net Worth of Seitel. For purposes of this subsection,
"Seitel's Consolidated Total Debt" shall mean
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all of Seitel's consolidated indebtedness and liabilities owing to
Banks (or either of them), or any other Person, whether now or
hereafter existing, created or arising, absolute or contingent, direct
or indirect, joint or several, but excluding, for purposes of this
Agreement, the Subordinated Debt. For purposes of this Agreement,
indebtedness and liabilities and tangible net worth of DDD Energy, Inc.
(including retained earnings of DDD Energy, Inc. and advances to and
investments in DDD Energy, Inc. by Seitel and its Affiliates) shall not
be included in the calculation of the foregoing ratio;
(i) Cash Flow Coverage Ratio. Permit Seitel to cause, allow,
or suffer to occur its consolidated Cash Flow Coverage Ratio to be less
than 2.5 to 1. The Cash Flow Coverage Ratio shall be calculated
quarterly as of the end of each fiscal quarter of Seitel. For purposes
of this subsection, "Cash Flow Coverage Ratio" shall mean the ratio of
(i) Cash Flow for the 12 month period preceding the date of
calculation, to (ii) Current Maturities for such period. For purposes
of this subsection, "Cash Flow" shall mean, for any period, the sum of
Seitel's Net Income for such period, plus depreciation, amortization,
and other non-cash expenses for such period deducted in the
determination of Seitel's Net Income for such period, less Seitel's
non-cash income for such period. For purposes of this subsection,
"Current Maturities" shall mean the sum of 1/5 of the lowest
outstanding principal balance of the Revolving Line during the 12-month
period preceding the date of calculation, plus scheduled principal
payments made by any Borrower during the 12-month period preceding the
date of calculation. The cash flow and scheduled principal payments of
DDD Energy, Inc. shall not be included in the calculation of the Cash
Flow Coverage Ratio;
(j) 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 Affiliate, 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 transactions among Seitel and its
Subsidiaries at cost, which shall not be subject to the terms of this
subsection;
(k) Consolidated Tangible Net Worth. Permit Seitel's
Consolidated Tangible Net Worth to be less than the sum of
$80,000,000.00, plus 50% of positive Net Income for all calendar
quarterly periods subsequent to September 30, 1994, plus 100% of all
equity raised by Seitel after September 30, 1994, plus the net asset
value
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of Polymer Dynamics, Inc. as of the closing of the acquisition thereof
as described in Section 8.1(n);
(l) No Additional Debt. Permit Seitel or any of its
Subsidiaries (other than to DDD Energy, Inc.) to borrow any money, or
otherwise incur any additional indebtedness of any kind, except for:
trade credit on open account in the
ordinary course of business;
obligations relating to Seitel's
Guaranty of DDD Energy, Inc.'s
obligations under the DDD Credit
Agreement;
intercompany loans to the extent
permitted in accordance with the
terms and provisions of Section
8.1(o);
indebtedness not to exceed
$1,000,000.00, in the aggregate
annually;
obligations relating to Seitel's
guaranty of obligations incurred by
DDD Energy, Inc. in the acquisition
of up to $350,000 worth of computer
work stations and related equipment
to be purchased or leased by DDD
Energy, Inc. within six months after
the Closing Date; and
up to $350,000.00 in indebtedness to
be incurred within six months after
the Closing Date for the acquisition
and improvements thereto of real
property by Polymer Dynamics, Inc.
for a warehouse and manufacturing
facility in Harris County, Texas, to
be used by Polymer Dynamics, Inc. in
its business.
Without limiting the foregoing, none of Borrowers (individually or
collectively) will obtain any loans in addition to the Revolving Line
and the Geophysical Loan (as each may be amended or refinanced) from
either Bank without the express written consent of the other Bank.
Except pursuant to the terms of the Seitel Geophysical Guaranty and the
Seitel DDD Guaranty, and except for the limited guaranty entered into
by Seitel in connection with the Opseis Eagle Lease (as such term is
defined in
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subsection (g) of the definition of Permitted Liens) and other
guaranties entered into by Seitel in the ordinary course of business in
favor of unrelated third parties to guarantee the contractual
obligations (excluding the obligations to pay or repay borrowed funds
or capital lease obligations) of its Subsidiaries, none of Borrowers
(individually or collectively) shall guarantee any indebtedness of any
other Person;
(m) No Transfer of Seismic Data. Permit Seitel or Data to
sell, assign, or transfer any Seismic Data to any Person other than
Banks (other than non-exclusive licenses of Seismic Data in the
ordinary course of business) or to in any way encumber the Seismic
Data, except to Banks; provided that Seitel may transfer its data bank
to Data effective December 31, 1994;
(n) No Acquisitions of Other Entities. Acquire any
corporation, partnership, or other entity (or any interest therein),
except for (i) the equity investments by Seitel in wholly owned
Subsidiaries of the net cash proceeds received by Seitel from the sale
of Seitel equity securities on or after June 1, 1994, (ii) the
acquisitions by Seitel and its Subsidiaries of Seismic Data in the
ordinary course of business not exceeding a cost to Seitel and its
Subsidiaries of more than $5,000,000.00 annually in the aggregate,
whether by stock or asset purchase or acquisition or otherwise, and
(iii) the acquisition by Polymer Dynamics, Inc., a Delaware
corporation, of substantially all of the assets of Polymer Dynamics,
Inc., a Texas corporation, in exchange for Seitel common stock;
(o) No Loans or Advances. Make, extend, or allow to remain
outstanding any loans or advances to or investments in (i) any Persons
which are not an Affiliate (except in the ordinary course of business)
(ii) DDD Energy, Inc. after December 31, 1994, in excess of
$25,000,000.00, in the aggregate; provided that during any period when
the loans from the Banks set forth in the DDD Credit Agreement are not
outstanding (including if such transaction fails to close for any
reason), Borrower shall, within five Business Days after obtaining
knowledge thereof, notify Banks in writing of the occurrence of any
default by DDD Energy, Inc. in its timely payment of any indebtedness,
and from and after the date on which they obtain knowledge thereof
(until such default is waived or fully cured), advances and loans to
DDD Energy, Inc. shall be limited to an additional $3,000,000.00 (but
in no event shall aggregate loans and advances to DDD Energy, Inc. be
in excess of $25,000,000.00), and (iii) any parent, non-wholly owned
subsidiaries, shareholders, owners, directors, employees, officers,
management, or other related persons or
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entities exceeding $3,000,000.00 in the aggregate at any one time
outstanding;
(p) No Dividends or Distributions. Declare, pay, or make,
whether in cash or Property of the Borrower, any dividend or
distribution on, or purchase, redeem, or otherwise acquire for value,
any share of any class of its capital stock at any time that an Event
of Default exists or would exist upon such payment;
(q) No Change in Basic Business. Expand into any line of
business other than those in which a particular Borrower is engaged as
of the date hereof (other than as specifically permitted herein);
(r) Purpose. Permit the proceeds of the Notes to be used for
any purpose other than the purposes set forth in Section 3.7 of this
Agreement;
(s) Permitted Transactions. Enter into any transaction which
materially and adversely affects or may materially and adversely affect
any of the Collateral or Borrower's ability to pay the Liabilities or
permit or agree to any material extension, compromise, or settlement or
make any material change or modification of any kind or nature with
respect to any Account, including any of the terms relating thereto,
other than extensions, discounts, and allowances in the ordinary course
of business; and
(t) No Purchase of Margin Security. Own, purchase, or acquire,
(or enter into any contract to purchase or acquire), any "margin
security" as defined by any regulation of the Federal Reserve Board as
now in effect or as the same may hereafter be in effect unless, prior
to any such purchase or acquisition or entering into any such contract,
Banks shall have received an opinion of counsel satisfactory to the
effect that such purchase or acquisition will not cause this Agreement
to violate Regulations G, T, U or X or any other regulation of the
Federal Reserve Board then in effect.
SECTION 9
EVENTS OF DEFAULT; ACCELERATION
9.1 Events of Default. Each of the following shall and do
constitute an event of default (the "Events of Default") under and for purposes
of this Agreement:
(a) Payment Defaults. Default shall be made in the payment when
due of any installments of principal or interest or other payments due
under this Agreement or the Notes, or in the payment when due of any
fee or other
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sum payable under any Credit Document and the default as to interest or
fees shall remain uncured for a period in excess of three Business
Days;
(b) Non Performance of Covenants. Default shall be made by any
Borrower in the due observance or performance of any of its obligations
under the Credit Documents, and such default shall continue for 30 days
after the earlier of notice thereof to the Borrowers by the Agent, at
the request of the Required Banks, or knowledge thereof by the
Borrowers; provided that such 30 day notice shall not be required with
respect to any payment default described in Section 9.1(a) or any other
Event of Default specifically enumerated in any other subsection of
this Section 9.1;
(c) Failure to Pay Insurance Payments. Failure of Borrowers to
pay when any premium on (i) any insurance policy assigned to Agent or
the Banks, or (ii) any insurance covering any Collateral, within any
applicable grace period;
(d) Non Compliance With Inspections. Failure of any Borrower to
fully comply with the terms and provisions of Section 7.1(k);
(e) Meeting of Creditors. Calling of a meeting of creditors of
any Borrower by any Borrower (or attended by any Borrower) for the
purpose of seeking the appointment of a state court receiver with
respect to any Borrower or its assets, the filing of an involuntary
bankruptcy case against any Borrower, or for any other purpose which
materially impairs the Banks' Collateral or the likelihood of the
Borrowers' fully paying and performing the Liabilities in a timely
manner;
(f) Changes in Ownership or Senior Management. Any change in
the nature of the business of any Borrower or in the senior management
of Seitel (which shall be defined herein as Paul Frame, Horace
Calvert, and Debra Valice) or acquisition by any Person or group of
Persons acting together of more than 50% of the outstanding voting
stock of any Borrower without the prior written consent of Banks;
(g) Fraud. Fraud or misrepresentation by or on behalf of any
Borrower in its transactions with any Bank;
(h) Termination of Credit Document. A bankruptcy trustee
attempts to terminate, or any other Person terminates, any Credit
Document or other agreements between Borrowers (or any of them) and
Banks;
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(i) Breach of Warranty or Representation. Any representation
or warranty made by any Borrower in any of the Credit Documents proves
to have been untrue in any material respect or any representation,
statement (including Financial Statements), certificate, or data
furnished or made to Banks as an inducement for Banks agreeing to enter
in to this Agreement, or in accordance with the terms of this
Agreement, proves to have been untrue in any material respect as of the
date the facts therein set forth were stated or certified;
(j) Default in Other Obligations. Failure by any Borrower,
whether as principal or guarantor or other surety, to pay or perform
under any bond, capital lease, debenture, note, or other evidence of
indebtedness, or under any credit agreement, loan agreement, indenture,
joint venture agreement, promissory note, or similar agreement or
instrument executed in connection with any of the foregoing, and the
aggregate amount of indebtedness related to such default or defaults
shall exceed $500,000.00, and such defaults shall remain unremedied for
in excess of the period of grace, if any, with respect thereto. The
foregoing sentence shall not apply to any default to which the
existence thereof is being diligently disputed or contested in good
faith, but only to the extent the applicable Borrower has made adequate
reserves therefor. Notwithstanding the foregoing, the failure (i) of
Geophysical to fully perform under and in accordance with the terms of
the Geophysical Loan Documents, (ii) of Seitel to fully perform under
and in accordance with the terms of the Seitel Geophysical Guaranty and
the Seitel DDD Guaranty, or (iii) of Offshore to fully perform under
and in accordance with the terms and provisions of the Digitel
Agreement, shall constitute an Event of Default hereunder;
(k) Failure to Satisfy Condition Precedent. Borrowers shall be
unable to fully, completely, and timely satisfy any condition to a
requested advance as specified in Section 2, and such inability shall
continue for a period of 30 consecutive days;
(l) Insolvency. Any Borrower 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 a bankruptcy or other insolvency proceeding, (iii) make a
general assignment for the benefit of creditors, (iv) be unable, or
admit in writing its inability, to pay their respective debts generally
as they become due, or (v) file an answer admitting the material
allegations of a petition filed against it in a bankruptcy or other
Insolvency Proceeding;
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(m) Insolvency Proceedings. An order, judgment, or decree
shall be entered against any Borrower 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, 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 60 days;
(n) Levy on Property. The levy against any significant portion
of the Property of any Borrower or any execution, garnishment,
attachment, sequestration, or other writ or similar proceeding which is
not permanently dismissed or discharged within 60 days after the levy;
(o) Final Orders, Judgments, and Decrees. A final and
non-appealable order, judgment, or decree shall be entered against
Borrowers (individually or collectively) for money damages and/or
indebtedness due in an amount in excess of $1,250,000.00, in the
aggregate and such order, judgment, or decree shall not be dismissed or
stayed within 60 days;
(p) Governmental Charges. Any charges are filed or any other
action or proceeding is instituted by any Governmental Authority
against any Borrower 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 such
Borrower 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;
(q) Fraudulent Transfers. Any Borrower 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 60 days from the date thereof;
(r) Not a First Security Interest. Any security interest
granted herein or in any other Credit Document
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against any Collateral, which in the aggregate may reasonably be valued
by Banks to be in excess of $1,000,000.00, shall for any reason not, or
cease to, create valid and perfected first-priority Liens against any
Collateral (except for and exclusive of Permitted Liens and Accounts
evidenced by instruments possession of which Banks have not requested
hereunder);
(s) Material Adverse Change. The occurrence of a Material
Adverse Change and the same shall remain unremedied for in excess of
30 days after notice given by the Agent, at the request of the
Required Banks;
(t) Cessation of Business. Cessation of a substantial part of
the business of any Borrower (other than Exsol) for a period which
significantly affects such Borrower's capacity to continue its
particular business, on a profitable basis; or any Borrower shall
suffer the loss or revocation of any license or permit now held or
hereafter acquired by such Borrower which is necessary to the continued
lawful operation of all or any material part of its particular
business; or any Borrower shall be enjoined, restrained, or in any way
prevented by court, governmental, or administrative order from
conducting all or any material part of its business affairs; or any
Borrower shall be required by a Governmental Authority to dissolve,
liquidate, or wind-up its business affairs; or any lease or agreement,
which is material to any Borrower's business, pursuant to which any
Borrower now or hereafter leases, uses, or occupies any property shall
be cancelled or terminated prior to the expiration of its stated term
and after such cancellation or termination, such Borrower is not
otherwise entitled to use such property;
(u) Contest by Borrower or Affiliate. Any Borrower or any
Affiliate of any Borrower shall challenge or contest in any action,
suit, or proceeding the validity or enforceability of this Agreement or
any of the other Credit Documents, the legality or enforceability of
any of the Liabilities, or the perfection or priority of any lien
granted to Banks and Agent; and
(v) Transfer of Stock. Title to any of the stock or other
interest in any Borrower (other than Seitel) (including the Pledged
Stock) directly or indirectly shall be transferred, pledged, or
otherwise encumbered (except to Banks).
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SECTION 10
POWER TO SELL OR COLLECT COLLATERAL;
RIGHTS AND REMEDIES
10.1 Acceleration. Upon the occurrence of an Event of Default,
Agent, with the approval of the Required Banks, immediately and without notice,
may, at its option, declare that (a) all liabilities 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 Borrowers; and (b) the Commitment shall immediately cease and
terminate unless and until reinstated by the Agent, with the written approval of
the Required Banks.
10.2 Rights and Remedies With Respect to Collateral.
Notwithstanding anything herein to the contrary, upon the happening of any Event
of Default, Agent, with the approval of the Required Banks, is thereafter fully
authorized and empowered (without the necessity of any consent or authorization)
and the right is expressly granted to Agent, with the approval of the Required
Banks, and Borrowers (individually and collectively) hereby appoint and make
Agent (on behalf of Banks) as each Borrower's true and lawful attorney-in-fact
and agent for each Borrower and in each Borrower's name, place, and stead with
full power of substitution, in Agent's name or any Borrower's name or otherwise,
for Agent's use and benefit (for and on behalf of the Banks), but at Borrowers'
cost and expense, to exercise, without notice, all or any of the following
powers at any time with respect to all or any of the Collateral: (a) notify
Account Debtors to make and deliver payment and/or provide performance directly
to Agent (on behalf of Banks); (b) demand, sue for, collect, receive, and give
acquittance for any and all moneys due or to become due by virtue of the
Collateral, and otherwise deal with Proceeds; (c) receive, take, endorse, assign
and deliver any and all checks, notes, drafts, documents and other negotiable
and non-negotiable instruments and chattel paper taken or received by Agent (on
behalf of Banks) in connection therewith; (d) settle, compromise, compound,
prosecute, or defend any action or proceeding with respect thereto; (e) deal in
or with the Collateral as fully and effectively as if Agent (on behalf of Banks)
were the absolute owner thereof; and (f) extend or alter the time or manner of
payment or performance of any or all thereof, grant waivers and make any
allowance or other adjustment with reference thereto; provided, however, Agent
(on behalf of Banks) shall be under no obligation or duty to exercise any of the
powers hereby conferred upon it and shall be without liability for any act or
failure to act in connection with the collection of, or the preservation of any
rights under or the depreciation in value of, any Collateral. Agent, with the
approval of the Required Banks, may receive, open, and dispose of mail addressed
to any Borrower. Borrowers (individually and collectively) hereby irrevocably
authorize and direct each Account Debtor, upon receipt of written
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notice from Agent, with the approval of the Required Banks, to pay or otherwise
perform or accept performance of the obligations under the Accounts to, with, or
for Agent, with the approval of the Required Banks, directly, and to continue to
do so until otherwise notified by Agent, with the approval of the Required
Banks. Each such Account Debtor shall have no duty to inquire or investigate as
to whether an Event of Default shall have actually occurred or whether this
Agreement shall have terminated, and no such person or entity shall be liable to
any Borrower, its successors, or assigns for acting in reliance on Agent's
notification as provided in this Section.
10.3 Uniform Commercial Code Remedies. Upon the occurrence of
any Event of Default, Agent, with the authorization of the Required Banks, shall
have, in addition to and without limiting all other rights and remedies provided
for herein and at law, the remedies of a secured party under the UCC (regardless
of whether the UCC has been enacted in the jurisdiction where rights or remedies
are asserted), including, without limitation, the right to take possession of
the Collateral, and for that purpose Agent, with the approval of the Required
Banks, may, so far as Borrowers (individually and collectively) can give
authority therefor, enter upon any premises on which the Collateral may be
situated and remove the same therefrom or take possession of same and store same
on such premises pending disposition under the terms of this Agreement or
applicable law. Agent, with the approval of the Required Banks, may require
Borrowers (individually and collectively) to assemble the Collateral and make it
available to Agent at a place designated by Agent which is reasonably convenient
to both parties (and for purposes hereof, Banks and Agent acknowledge that the
locations where the Seismic Data is currently stored, and which have been
disclosed to Banks, shall satisfy such assembly and availability requirements
except for Seismic Data located in Canada, which must be moved to Houston,
Texas). Unless the Collateral is perishable or threatens to decline speedily in
value or is of a type customarily sold on a recognized market, Agent, at the
request of the Required Banks, shall give to Borrowers at least five (5) days'
written notice of the time and place of any public sale of Collateral or of the
time after which any private sale or any other intended disposition is to be
made. Agent, with the approval of the Required Banks, may, at any time in its
sole discretion, transfer any securities or other property constituting
Collateral into its own name or that of its nominee, and receive the income
thereon and hold the same as security for the Liabilities or apply it on
principal or interest due on the Liabilities.
10.4 Proceeds. Subject to the terms hereof, after the happening
of any Event of Default, the proceeds of any sale of the Collateral and all sums
received or collected by Agent (on behalf of Banks) from or on account of the
Collateral shall be applied by Banks in the manner set forth in ss.9.504 of the
UCC.
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10.5 Deficiency. Subject to the terms hereof, Borrowers shall
remain, jointly and severally, liable to Banks for any unpaid Liabilities (to
the extent owing by each such Borrower), advances, costs, charges, and expenses
incurred by Banks in connection herewith, together with interest thereon, and
shall pay the same immediately to Agent (on behalf of Banks) at the Principal
Office.
10.6 Agent's Duties. The powers conferred upon Agent by this
Agreement are solely to protect Banks' interest in the Collateral, and shall not
impose any duty upon Agent to exercise any such powers. 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, notice of
intent to accelerate, notice of acceleration, or other notice or demand in
connection with any Collateral or the Liabilities, except as specifically
provided in this Agreement, or to take any steps necessary to preserve any
rights against prior parties. Neither Banks nor Agent shall be liable for
failure to collect or realize upon any or all of the Accounts or the Collateral,
or for any delay in so doing, nor shall Banks or Agent be under any duty to take
any action whatsoever with regard thereto. Agent shall use reasonable care in
the custody and preservation of any Collateral in its possession but need not
take any steps to keep the Collateral identifiable. Neither Banks nor Agent
shall have any duty to comply with any recording, filing, or other legal
requirements necessary to establish or maintain the validity, priority or
enforceability of, or Banks' rights in, any of the Collateral.
10.7 Non-Judicial Remedies. To the fullest extent permitted by
law, Agent, with the approval of the Required Banks, may enforce its rights and
the rights of Banks hereunder without prior judicial process or judicial
hearing, and Borrowers (individually and collectively) expressly waive,
renounce, and knowingly relinquish any and all legal rights which might
otherwise require Agent, with the approval of the Required Banks, to enforce its
rights by judicial process. In so providing for non-judicial remedies, Borrowers
(individually and collectively) recognize 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 Agent
or Banks from resorting to judicial process at its or their option.
10.8 Remedies Not Exclusive. No right, power, or remedy
conferred in this Agreement, the Notes, any other Credit Document or any other
agreement executed in connection herewith or any other document or agreement to
which Borrowers and Banks are parties, or now or hereafter existing at law, in
equity, or admiralty, by statute or otherwise, shall be exclusive, and each such
right, power, or remedy, shall, to the full extent permitted by law, be
cumulative and in addition to every other such right, power, or remedy.
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10.9 Successive Sales. The sale by Agent, with the approval of
the Required Banks, of less than the whole of the Collateral (including, without
limitation, the collection of certain Accounts) shall not exhaust the rights of
Agent and Banks hereunder, and Agent, with the approval of the Required Banks,
is specifically empowered to make successive sales and notices to Account
Debtors hereunder until the whole of the Collateral shall be sold and collected.
If the proceeds of any sale of less than the whole of the Collateral shall be
less than the aggregate of Borrowers' Liabilities, this Agreement and the
security interests created hereby shall remain in full force and effect as to
the unsold portion of the Collateral just as though no sale had been made,
provided, however, that no Borrower shall have any right to require sale of less
than the whole of the Collateral, but Agent, with the approval of the Required
Banks, shall have the right, at its sole election, to sell less than the whole
of the Collateral.
10.10 Enforcement Against Particular Collateral. Agent, with
the approval of the Required Banks, may resort to any security given by this
Agreement or to any other security now existing or hereafter given to secure the
payment of Borrowers' Liabilities, in whole or in part, and in such portions and
in such order as may seem best to Banks in their sole discretion, and any such
action shall not in any way be considered as a waiver of any of the rights,
benefits, or security interests evidenced by this Agreement.
10.11 Suit Against Borrowers. Agent, with the approval of the
Required Banks, may, at all times, proceed directly against Borrowers (or any of
them) to enforce payment of Borrowers' Liabilities (to the extent owing by each
Borrower) and shall not be required first to enforce its rights in the
Collateral or any other security granted to it. Banks and Agent shall not be
required to take any action of any kind to preserve, collect, or protect any of
their or Borrowers' rights in the Collateral or any other security granted to
it.
SECTION 11
EXPENSES: PROCEEDS OF COLLATERAL
11.1 Collection Costs. Without limiting any other provision of
this Agreement, Borrowers, jointly and severally, shall pay to Banks and Agent
on demand any and all expenses and costs of collection, including, without
limitation, counsel fees, incurred or paid by Banks and Agent in protecting or
enforcing its right upon or with respect to any of the Liabilities (to the
extent such Borrower is obligated therefor) or the Collateral. After deducting
all of said expenses, the residue of any proceeds of collection or sale of
Liabilities or Collateral shall be applied to the payment of principal or
interest on Liabilities in such order or preference as Banks may determine, but
subject to the terms of Section , proper allowance for interest on all affected
Liabilities not then due being made, and any excess shall be
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returned to Borrowers and Borrowers (jointly and severally) shall remain liable
for any deficiency.
SECTION 12
THE AGENT
12.1 Appointment. Each Bank hereby designates and appoints the
Agent as the agent of such Bank under this Agreement and the other Credit
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 Credit 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 Credit 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 Credit Document, the Agent shall not
have any duties or responsibilities except those expressly set forth herein or
in any other Credit 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 Credit Document or otherwise exist against the Agent.
12.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement and the other Credit 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.
12.3 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 litiga- tion 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 Credit 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
Borrowers or any officer of any of them contained in this Agreement or any other
Credit 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 Credit Document, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement or
any other Credit Document or for any failure of the Borrowers to perform their
obligations hereunder or thereunder. The Agent shall not be under any obligation
to any Bank to
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ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement or any other Credit
Document, or to inspect the properties, books or records of any Borrower.
12.4 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
Borrowers), 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 Credit 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 Credit 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.
12.5 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 any 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
12.3, 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
Borrowers or the officer of any Bank primarily responsible for the lending
relationship with Borrowers becomes aware that a Default or an 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. Notwithstanding the preceding sentence,
failure to
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comply with the preceding sentence shall not result in any liability to the
Agent or any Bank.
12.6 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 Borrowers 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 docu- ments 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 Borrowers and the value of the Collateral and other Properties of the
Borrowers and has made its own decision to enter into this Agreement. Each Bank
also represents that it will, inde- pendently and without reliance upon the
Agent or any other Bank and based on such documents and information as it shall
deem appropri-ate at the time, continue to make its own credit analysis,
apprais-als and decisions in taking or not taking action under this Agree-ment
and the other Credit Documents, and to make such investigation as it deems
necessary to inform itself as to the business, opera-tions, property, condition
(financial and otherwise) and credit-worthiness of the Borrowers and the value
of the Collateral and other Properties of the Borrowers. Except for notices,
reports and other documents expressly required to be furnished to the Banks by
the Agent 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, condi-tion (financial and otherwise) or creditworthiness
of the Borrowers or the value of the Collateral or other Properties of the
Borrowers which may come into the possession of the Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or affiliates.
12.7 INDEMNIFICATION. EACH BANK AGREES TO INDEMNIFY THE AGENT
AND ITS OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, ATTORNEYS-IN-FACT AND AFFILIATES
(TO THE EXTENT NOT REIMBURSED BY THE BORROWERS AND WITHOUT LIMITING THE
OBLIGATION OF THE BORROWERS 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 LIABILITIES AND THE TERMINATION OF THIS AGREEMENT) BE 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 CREDIT 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,
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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 LIABILITIES AND
THE TERMINATION OF THIS AGREEMENT.
12.8 Primary and Secondary Collateral. It is expressly
understood and agreed that notwithstanding any past, existing, or future
agreements between Compass Bank (or any of its affiliates, including Compass
Alabama) and one or more of Borrowers and/or between Bank One and one or more of
Borrowers, (a) the "Primary Collateral" (meaning all Collateral other than the
Secondary Collateral, as defined below and herein used, but specifically
including all deposits and other accounts of Borrowers, individually and
collectively, now or hereafter located at any Bank), shall secure first the
payment and performance of the Revolving Line (including all principal,
interest, related costs and expenses) and the Proceeds of all such Primary
Collateral and any realization thereupon shall be applied (i) first to the
Revolving Line (including all principal, interest, and related costs and
expenses) on a pro rata basis until the same is paid in full, (ii) then to the
Geophysical Loan whether in satisfaction of Geophysical's obligation under the
Geophysical Note or in satisfaction of Seitel's obligation under the Seitel
Geophysical Guaranty (including all principal, interest, and related costs and
expenses) until paid in full, and (iii) then to any and all other Liabilities on
a pro rata basis, and (b) the "Secondary Collateral" (meaning Geophysical's
Equipment in which Compass Alabama has a security interest under the Geophysical
Documents, other than Equipment constituting Seismic Data, if any) shall secure
first the payment and performance of the Geophysical Loan by Compass Alabama,
and accordingly, such Secondary Collateral and any collection and/or realization
thereupon shall be applied first to the Geophysical Loan (including, all
principal, interest, fees, related costs, and expenses) until paid in full, next
to the Liabilities owing to each Bank under the Revolving Line (including all
principal, interest, and related costs and expenses) on a pro rata basis until
paid in full, and then to any of the other Liabilities owing to either or both
Banks until paid in full.
12.9 Restitution. Should the right of the Agent or any Bank to
realize funds with respect to the Liabilities be challenged and any application
of such funds to the Liabilities be reversed, whether by Governmental Authority
or otherwise, or should the
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Borrowers otherwise be entitled to a refund or return of funds distributed to
the Banks in connection with the Liabilities, 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
Borrowers or to the Banks 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 Borrowers is made by the Agent (or the Bank
required to return funds to the Borrowers, as the case may be) to but not
including the date on which such Bank failing to timely forward its share of
funds required to be returned to the Borrowers shall have made its ratable share
of such funds available.
12.10 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 Borrowers 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.
12.11 Successor Agent. The Agent may resign as Agent upon ten
days' notice to the Banks and the Borrowers. If the Agent shall resign as Agent
under this Agreement and the other Credit 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 12 and Sections 7.1(m), (n), (o), and (p) 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 Credit Documents.
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12.12 Applicable Parties. The provisions of this Article are
solely for the benefit of the Agent and the Banks, and no Borrower shall have
any rights as a third party beneficiary or otherwise under any of the provisions
of this Article . In per- forming functions and duties hereunder and under the
other Credit Documents, Agent shall act solely as the agent of the Banks and
does not assume, nor shall it be deemed to have assumed, any obli- gation or
relationship of trust or agency with or for any Borrower or any legal
representative, successor and assign of any Borrower.
SECTION 13
GENERAL
13.1 Waivers. Without limiting any other term or provision of
this Agreement, Borrowers (individually and collectively), accommodation party,
surety, endorser, or other person or entity liable for the payment or collection
of the Liabilities expressly waive demand, presentment for payment, notice of
protest, notice of intent to accelerate, notice of acceleration, notice of
acceptance of this Agreement, and notice of loans made, credit extended,
Collateral received or delivered, or other action taken in reliance hereon and
all other demands and notices of any description. With respect both to the
Liabilities and Collateral, Borrowers (individually and collectively) assent to
any extension or postponement of the time of payment or any other indulgence, to
any substitution, exchange, or release of any or all of the Collateral, to the
addition or release of any party or person primarily or secondarily liable, to
the acceptance of partial payments thereon and the settlement, compromising, or
adjusting of any thereof, all in such manner and at such time or times as Banks
may deem advisable. Banks shall not be deemed to have waived any of their rights
upon or under any of the Liabilities or Collateral unless such waiver be in
writing and signed by Banks and Agent. No course of dealing and no delay or
omission on the part of Banks in exercising any right shall operate as a waiver
of such right or any other right. A waiver on any one occasion by Banks of any
of their rights hereunder shall not be construed as a bar to or waiver of any
right on any further occasion.
13.2 Replacement of Prior Loan Agreement. Borrowers and Banks
agree and acknowledge that this Agreement shall restate, modify, and fully
replace the Prior Loan Agreement and that, as of the Closing Date, the terms and
provisions of this Agreement shall govern and control the relationship among
Agent, Borrowers and Banks (notwithstanding anything to the contrary herein,
prior to, but not including, the Closing Date, the terms and provisions of the
Prior Loan Agreement shall govern, except that any facts or circumstances that
would have constituted a breach of any of the covenants or conditions under the
Prior Loan Agreement from and after the Effective Date and up to the Closing
Date, but that would not constitute a breach of any of the covenants and
conditions under this Agreement, shall be deemed waived by Banks), except that
Borrowers agree that the representations and warranties made by
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certain of the Borrowers in the Prior Loan Agreement were true and correct as of
the date of the Prior Loan Agreement. Further, Borrowers agree and acknowledge
that Compass Alabama has sold its right, title, and interest in and to the loans
described in the Prior Loan Agreement to Compass, and that in connection
therewith, as of the Closing Date, Compass has, among other things, succeeded
Compass Alabama as Agent.
13.3 Lien Continuation. The liens and security interests granted
in the Prior Security Agreements and the Prior Loan Agreement are hereby
renewed, extended, ratified, and confirmed as continuing to secure the payment
of the indebtedness currently evidenced by the Notes, together with all of the
other Liabilities. Without limiting the foregoing, each of the Prior Security
Agreements is hereby amended to (a) replace all references herein to Compass
Alabama with a reference to Compass (Compass having inured to all of the rights
and obligations of Compass Alabama under each of the Prior Security Agreements),
(b) provide that each of the Prior Security Agreements is and shall be governed
by the laws of the State of Texas, (c) to specifically secure the payments and
performance of the Notes and other Liabilities, and (d) to otherwise be
consistent with the terms and provisions of this Agreement. Nothing herein shall
in any manner diminish, impair, or extinguish any of the indebtedness evidenced
by the Notes or any of the liens and security interests heretofore or hereafter
securing such indebtedness. There are no defenses, offsets, or other claims
available to any Borrower with respect to the Notes, and the indebtedness
evidenced thereby, and the other Liabilities.
13.4 Notices. Any demand upon or notice to Borrowers that Banks
or Agent may elect to give shall be effective upon delivery if such notice is
given personally, or upon dispatch if deposited in the mails addressed to
Seitel, on behalf of all Borrowers, at the mailing address shown at the
beginning of this Agreement or, if any Borrower has notified Banks in writing of
a change of address, to such Borrower's last address so notified. Demands or
notices addressed to Seitel's address at which Agent customarily communicates
with Seitel also shall be effective. Without limiting the foregoing, all notices
or other communications required or permitted under this Agreement also shall be
deemed to have been given (a) on the date of service if served personally on the
party to whom notice is to be given, (b) on the day of transmission if sent by
confirmed facsimile transmission, (c) on the day after delivery to Federal
Express or similar overnight courier, properly addressed for prepaid delivery
the next day, or (d) on the day after mailing, if mailed to the party to whom
notice is to be given, by first class mail, registered or certified, postage
prepaid, and properly addressed, return receipt requested, to such party.
13.5 Transfers and Participations. Any Bank may, at any time,
sell, transfer or assign the Liabilities or any portion thereof to one or more
commercial banks who is reasonably acceptable to Borrowers (to the extent such
Borrower is obligated
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on the applicable Liability). Such Bank and the Agent may forward to each
transferee and prospective transferee of all or any portion of or interest in
the Liabilities, all documents and information relating to the Liabilities,
whether furnished by any Borrower or otherwise obtained, as such Bank or the
Agent determines necessary or desirable. Each 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 Liabilities 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 any Borrower hereunder (and
Banks specifically acknowledge that no Borrower shall 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 any Borrower),
and Borrowers 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.
13.6 GOVERNING LAW. THIS AGREEMENT AND THE CREDIT DOCUMENTS AND
ALL RIGHTS AND OBLIGATIONS HEREUNDER AND THEREUNDER, INCLUDING MATTERS OF
CONSTRUCTION, VALIDITY, AND PERFORMANCE, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS, EXCEPT THAT TEX. REV. CIV. STAT. ANN. ART. 5069-1.04, AS
AMENDED, CH. 15, WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND
REVOLVING TRI-PARTY ACCOUNTS, SHALL NOT APPLY TO THIS AGREEMENT, THE NOTES, THE
REVOLVING LINE, OR ANY TRANSACTION CONTEMPLATED HEREBY.
13.7 Entire Agreement. This Agreement, the other Credit
Documents, and the documents delivered hereunder or in connection herewith
contain the entire agreement between the parties with respect to the subject
matter hereof and thereof and, without limiting any other terms hereof,
supersede all prior agreements relating to the subject matter hereof and
thereof. In the event of actual conflict in the terms and provisions of this
Agreement and any other Credit Document (including any Prior Security Agreement)
or any of such other documents or any other instrument or agreement executed in
connection with this Agreement or described or referred to in this Agreement,
the terms and provisions of this Agreement shall control. No modification,
consent, amendment, or waiver of any provision of this Agreement or any other
Credit Document, nor consent to any departure by any Borrower therefrom, shall
be effective unless the same shall be in writing and signed by Banks, and then
shall be effective only in the specific instance and for the purpose for which
given. This Agreement is binding upon Borrowers, their successors and assigns,
and inures to the benefit of Banks, their successors and assigns. All
representations and warranties of Borrowers herein or in any other Credit
Document, and all covenants and agreements herein, in any other Credit Document
or in any document delivered hereunder or in connection herewith
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that are not fully performed before the effective date of this Agreement shall
survive such date. THIS AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN
THE PARTIES.
13.8 Construction and Severability. This Agreement and the other
Credit Documents shall be liberally construed in favor of Banks and Agent. In
the event any one or more of the terms or provisions contained in this
Agreement, in any other Credit Document or in any other instrument or agreement
referred to herein or executed in connection with or as security for the
Liabilities, or any application thereof to any person or circumstances, shall be
declared prohibited, illegal, invalid or unenforceable to any extent in any
jurisdiction, as determined by a court of competent jurisdiction, such term or
provision, in that jurisdiction, shall be ineffective only to the extent of such
prohibition, illegality, invalidity or unenforceability, or as applied to such
persons or circumstances, without invalidating or rendering unenforceable the
remaining terms or provisions hereof or thereof or affecting the validity or
enforceability of such term or provision in any other jurisdiction or as to
other persons or circumstances in such jurisdiction, unless such would effect a
substantial deviation from the general intent and purpose of the parties, make a
significant change in the economic effect of the transactions contemplated
herein on any Bank, or impair the validity, perfection or priority of Banks'
security interest in any Collateral or the validity of any guaranty or other
security for the Liabilities, in which event a substitute provision shall be
supplied by the court in order to provide Banks with the benefits intended by
such invalid term or provision.
13.9 Other Advances. Subject to Section 8.1(m) and all other
relevant provisions of this Agreement, Borrowers and Banks acknowledge and agree
that in the future, Borrowers (or any of them) may apply for and Banks may agree
to fund additional loans to Borrowers (or any of them). Borrowers and Banks
agree that all existing and hereafter created loans and other advances from
Banks, or any of its predecessors or successors in interest, to Borrowers (or
any of them), whether or not such loans are particularly described in this
Agreement, as may be amended from time to time, shall constitute Liabilities for
purposes of this Agreement and shall be subject to the terms, provisions,
covenants, and agreements set forth in this Agreement.
13.10 No Duty or Special Relationship. Borrowers (individually
and collectively) acknowledge that Banks and Agent have no duty to Borrowers
with respect to the loan transactions set forth in this Agreement except as
expressly provided for in this Agreement and the other Credit Documents, and
acknowledge that no fiduciary, trust, or other special relationship exists among
Banks, Agent, and Borrowers.
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13.11 NO CONTROL BY BANKS. BORROWERS (INDIVIDUALLY AND
COLLECTIVELY) AGREE AND ACKNOWLEDGE THAT ALL OF THE COVENANTS AND AGREEMENTS
PROVIDED FOR AND MADE BY BORROWERS IN THIS AGREEMENT AND IN THE OTHER CREDIT
DOCUMENTS ARE THE RESULT OF EXTENSIVE AND ARMS- LENGTH NEGOTIATIONS BETWEEN
BORROWERS AND BANKS. BANKS' RIGHTS AND REMEDIES PROVIDED FOR IN THIS AGREEMENT
AND IN THE OTHER CREDIT DOCUMENTS ARE INTENDED TO PROVIDE BANKS WITH A RIGHT TO
OVERSEE EACH BORROWER'S ACTIVITIES AS THEY RELATE TO THE LOAN TRANSACTIONS
PROVIDED FOR IN THIS AGREEMENT, WHICH RIGHT IS BASED ON BANKS' VESTED INTEREST
IN BORROWERS' ABILITY TO PAY THE NOTES AND PERFORM THE OTHER LIABILITIES. NONE
OF THE COVENANTS OR OTHER PROVISIONS CONTAINED IN THIS AGREEMENT SHALL, OR SHALL
BE DEEMED TO, GIVE BANKS THE RIGHT OR POWER TO EXERCISE CONTROL OVER, OR
OTHERWISE IMPAIR, THE DAY-TO-DAY AFFAIRS, OPERATIONS, AND MANAGEMENT OF ANY
BORROWER; PROVIDED THAT IF ANY BANK BECOMES THE OWNER OF ANY STOCK OF ANY
ENTITY, WHICH ENTITY OWNS AN INTEREST IN ANY BORROWER, WHETHER THROUGH
FORECLOSURE OR OTHERWISE, SUCH BANK THEREAFTER SHALL BE ENTITLED TO EXERCISE
SUCH LEGAL RIGHTS AS IT MAY HAVE BY BEING A SHAREHOLDER OF SUCH ENTITY.
13.12 No Partnership. Nothing herein is intended, nor shall it
be deemed or construed as, to create a partnership, joint venture, or common
interest in profits or income among Borrowers and Banks, or to make Banks in any
way responsible for the debts or losses of Borrowers or with respect to the
Collateral. Borrowers and Banks disclaim any sharing of liabilities, losses,
costs or expenses. Borrowers agree and acknowledge that all covenants,
agreements, representations, and warranties made in this Agreement are made and
agreed to by Borrowers, individually and collectively, on a joint and several
basis.
13.13 Calculation of Financial Covenants. Notwithstanding
anything herein to the contrary, all financial covenants in this Agreement shall
be calculated by Seitel on a consolidated basis; provided, that for purposes of
this Agreement, DDD Energy, Inc. shall not be included in the calculation of any
such financial covenants. Further, without limiting any other term or provision
of this Agreement, to the extent Seitel or any of its Affiliates have made
advances to or investments in DDD Energy, Inc., all such advances shall be
excluded from Seitel's Consolidated Tangible Net Worth for purposes of this
Agreement.
13.14 No Restrictions on DDD Energy, Inc. The Parties
acknowledge that one of Seitel's subsidiaries, DDD Energy, Inc., is currently
negotiating with Banks for a loan to be secured primarily by oil and gas
reserves and to be evidenced by the DDD Credit Agreement. The DDD Credit
Agreement is anticipated to contain certain covenants and conditions, generally
similar to those contained herein, with which DDD Energy, Inc. will be required
to comply. Because DDD Energy, Inc.'s activities are expected to be governed by
the DDD Credit Agreement, the parties acknowledge that the activities of DDD
Energy, Inc. will not be governed by the terms of this Agreement unless
otherwise specifically set forth herein.
86
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13.15 Binding Effect. All covenants and agreements of Borrowers
under this Agreement shall bind the respective successors and assigns of
Borrowers and shall inure to the benefit of Banks, Agent, and their successors
and assigns. The rights of Borrowers under this Agreement are not assignable.
13.16 Renewal of Indebtedness. All provisions of this Agreement
relating to the Notes shall apply with equal force and effect to each and all
promissory notes hereafter executed which in whole or in part represent a
renewal, extension or rearrangement of any part of the indebtedness originally
represented by the Notes, or either of them, provided that nothing herein shall
constitute a commitment or offer by Banks to such a renewal, extension or
rearrangement.
13.17 Banks' Discretion. In all matters hereunder that require
Banks' discretion, (including, without limitation, whether Borrowers have
satisfied any condition precedent), Banks shall use their sole and reasonable
discretion, except as otherwise provided for herein. Further, Banks may, in
their sole discretion, waive any of their rights with respect to a particular
Event of Default.
13.18 Counterparts. This Agreement may be executed in two or
more counterparts, and it shall not be necessary that any one counterpart be
executed by all of the parties hereto. Each fully or partially executed
counterpart shall be deemed an original, but all such counterparts taken
together shall constitute but one and the same instrument.
13.19 Business Loans. Borrowers (individually and collectively)
warrant and represent to Banks, and to all other holders of any debt evidenced
by the Notes, that the loans evidenced by the Notes are and shall be for
business, commercial, investment or other similar purpose and not primarily for
personal, family, household or agricultural use, as such terms are used in
Chapter One of the Texas Credit Code.
13.20 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 AND THE OTHER CREDIT DOCUMENTS MAY BE LITIGATED, AT
THE SOLE DISCRETION AND ELECTION OF BANKS, IN COURTS HAVING SITUS IN HOUSTON,
HARRIS COUNTY, TEXAS. BORROWERS (INDIVIDUALLY AND COLLECTIVELY) SUBMIT TO THE
JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN HOUSTON, HARRIS
COUNTY, TEXAS, AND WAIVE ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE
JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST THEM BY BANKS IN
ACCORDANCE WITH THIS SECTION.
13.21 DECEPTIVE TRADE PRACTICES. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, BORROWERS (INDIVIDUALLY AND COLLECTIVELY) HEREBY EXPRESSLY WAIVE
EACH AND EVERY OF THEIR RIGHTS AND REMEDIES ARISING UNDER OR PURSUANT TO THE
PROVISIONS OF SUBCHAPTER E, CHAPTER 17, TITLE 2 OF THE TEXAS BUSINESS AND
COMMERCE CODE (OTHER THAN THE PROVISIONS OF SECTION 17.555 THEREOF), WHICH
SUBCHAPTER IS KNOWN AS
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THE "DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT". BORROWERS
(INDIVIDUALLY AND COLLECTIVELY) REPRESENT AND WARRANT THAT THEY HAVE KNOWLEDGE
AND EXPERIENCE IN FINANCIAL AND BUSINESS MATTERS THAT ENABLE THEM TO EVALUATE
THE MERITS AND RISKS OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT AND THAT
THEY ARE NOT IN A SIGNIFICANT DISPARATE BARGAINING POSITION VIS A VIS ANY BANK
AT THE TIME OF ENTERING INTO THIS AGREEMENT AND THE OTHER CREDIT DOCUMENTS.
13.22 WAIVER OF RIGHTS TO JURY TRIAL. EACH OF THE BORROWERS, 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 CREDIT DOCUMENT OR THE ACTS OR OMISSIONS OF
THE AGENT OR ANY OF THE BANKS, IN THE ENFORCEMENT OF ANY OF THE TERMS OR
PROVISIONS OF THIS AGREEMENT OR ANY OTHER CREDIT 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.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the date first above written.
BORROWERS:
SEITEL, INC.
By: /s/ Debra D. Valice
-------------------------------
Debra D. Valice, Vice President
of Finance, Chief Financial
Officer, Treasurer, and
Secretary
SEITEL DATA CORP.
By: /s/ Debra D. Valice
-------------------------------
Debra D. Valice, Secretary and
Treasurer
SEITEL GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
-------------------------------
Debra D. Valice, Secretary and
Treasurer
88
<PAGE>
SEITEL OFFSHORE CORP.
By: /s/ Debra D. Valice
-------------------------------
Debra D. Valice, Secretary and
Treasurer
EXSOL, INC.
By: /s/ Debra D. Valice
-------------------------------
Debra D. Valice, Secretary and
Treasurer
A BANK:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ Damien Meiburger
-------------------------------
Damien Meiburger,
Senior Vice-President
AGENT AND A BANK:
COMPASS BANK - HOUSTON
By: /s/ Dorothy Marchand Wilson
-------------------------------
Dorothy Marchand Wilson,
Vice-President
89
AMENDMENT TO SECURITY AGREEMENT
(JOINT VENTURE INTEREST)
This Amendment to Security Agreement (Joint Venture Interest)
(this "Amendment") is made and entered into effective as of the 31st day of
December, 1994, by and among SEITEL OFFSHORE CORP., a Delaware corporation
("Venturer"); and BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking
association ("Bank One"); and COMPASS BANK-HOUSTON, a Texas state banking
association (col- lectively with Bank One, "Lenders").
W I T N E S S E T H:
WHEREAS, Venturer has executed a Security Agreement (Joint
Venture Interest) (the "Joint Venture Pledge Agreement") dated effective May 19,
1994, granting to Lenders a continuing security interest in and to, among other
things, all of Venturer's rights, titles, and interests in, to, and under the
Joint Venture Agreement dated March 1, 1990, of Digitel Data Joint Venture, as
more fully described in the Joint Venture Pledge Agreement; and
WHEREAS, Venturer and Lenders desire to amend and modify
certain terms and provisions of the Joint Venture Pledge Agreement.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, Venturer and Lenders
agree as follows:
1. Amendments to Joint Venture Pledge Agreement. The Joint
Venture Pledge Agreement is modified and amended as follows:
1.1 The first grammatical paragraph on Page 1 of the Joint
Venture Pledge Agreement is deleted in its entirety and the following is
substituted in place thereof:
THIS SECURITY AGREEMENT (JOINT VENTURE INTEREST), executed
effective as of the 19th day of May, 1994 ("Agreement") is by and
among SEITEL OFFSHORE CORP., a Delaware corporation (the "Venturer"),
and COMPASS BANKHOUSTON, a Texas banking association ("Compass"), BANK
ONE, TEXAS, NATIONAL ASSOCIATION, a national banking association
("Bank One", collectively with Compass, the "Lenders"), and Compass,
in its additional capacity as agent for the benefit of Lenders
("Agent").
1.2 The first grammatical paragraph of the Preamble on Page 1
of the Joint Venture Pledge Agreement is deleted in its entirety and the
following is substituted in place thereof:
DIGITEL DATA JOINT VENTURE (the "Joint Venture")
is a Texas joint venture which was organized and exists
pursuant to its Joint Venture Agreement effective March 1,
1990 (the "Joint Venture Agreement"). Venturer
<PAGE>
is a joint venturer of the Joint Venture. Venturer, Seitel
Geophysical, Inc., Seitel Data Corp., Exsol, Inc., and Seitel, Inc.
(jointly and severally, the "Borrowers"), are or are becoming indebted
to Lenders on and in connection with a revolving line of credit (the
"Loan") as evidenced by those certain Master Revolving Promissory
Notes dated May 4, 1995, payable to Lenders (as may be amended,
modified, renewed, rearranged, replaced, and substituted from time to
time, the "Notes"). The Loan is being made available by Lenders to
Venturer and the other Borrowers, pursuant to a certain Restated
Revolving Credit and Security Agreement dated effective as of December
31, 1994 (as may be amended and modified from time to time, the "Loan
Agreement"), the terms of which are hereby made a part of this
Agreement. The Loan is secured by, among other things, the Loan
Documents (which are defined for purposes of this Agreement as being
the Credit Documents under and as defined in the Loan Agreement) and
all collateral and security referred to therein. In connection
therewith, Lenders have required as additional collateral for the Loan
a security interest in the Collateral (as defined and described in
Section 2 below).
1.3 Section 5(a) on Page 4 of the Joint Venture Pledge
Agreement is deleted in its entirety and the following substituted in place
thereof:
Agent and each of Lenders may immediately and without notice
or demand to Venturer or any other person or entity exercise any and
all of the rights and the remedies of a secured party under the
Uniform Commercial Code as enacted in the State of Texas, together
with the rights set forth in the Notes, this Agreement, and the other
Loan Documents and such other rights and remedies as are available at
law or equity or otherwise, all of which shall be cumulative;
1.4 Section 10 on Page 8 of the Joint Venture Pledge Agreement
is deleted in its entirety and the following is substituted in place thereof:
Any notice required or permitted hereunder shall be
conclusively deemed to have been received by either party hereto and
be effective on the earlier of the day on which delivered to such
party at the address set forth below or such other address as such
party shall specify to the other party in writing, or on the third
business day after the day on which mailed (or sent) addressed to such
party at said address:
2
<PAGE>
If to Venturer: Seitel Offshore Corp.
50 Briar Hollow Lane
7th Floor West
Houston, Texas 77027
If to Compass/Agent: Compass Bank-Houston
24 Greenway Plaza
P.O. Box 4444
Houston, Texas 77210-4444
Attn: Ms. Dorothy M. Wilson
If to Bank One: Bank One, Texas, N.A.
910 Travis
Houston, Texas 77002
Attn: Mr. Damien Meiburger
1.5 Section 12 on Pages 8, 9, and 10 of the Joint Venture
Pledge Agreement is deleted in its entirety and the following is substituted in
place thereof:
THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER,
AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND BE CONSTRUED IN
ACCORDANCE WITH, THE LAWS AND JUDICIAL DECISIONS OF THE STATE OF
TEXAS. THIS AGREEMENT IS BEING EXECUTED UNDER THE SEAL OF THE PARTIES
HERETO, AND IT IS INTENDED THAT THIS AGREEMENT IS, AND SHALL HAVE THE
EFFECT OF, A SEALED INSTRUMENT UNDER LAW. VENTURER ACKNOWLEDGED THAT
THE NEGOTIATION OF THE PROVISIONS OF THIS AGREEMENT TOOK PLACE IN THE
STATE OF TEXAS AND THAT THIS AGREEMENT IS BEING EXECUTED AND DELIVERED
IN THE STATE OF TEXAS, OR, IF EXECUTED ELSEWHERE, SHALL BECOME
EFFECTIVE UPON AGENT'S RECEIPT AND ACCEPTANCE OF THE EXECUTED ORIGINAL
OF THIS AGREEMENT IN THE STATE OF TEXAS. VENTURER ACKNOWLEDGES THAT
ANY CAUSE OF ACTION ARISING UNDER THIS AGREEMENT WILL BE A CAUSE OF
ACTION ARISING FROM A TEXAS TRANSACTION. TO THE FULL EXTENT PERMITTED
BY APPLICABLE LAW, VENTURER HEREBY SUBMITS ITSELF TO JURISDICTION IN
THE STATE OF TEXAS FOR ANY ACTION OR CAUSE OF ACTION ARISING OUT OF OR
IN CONNECTION WITH THIS AGREEMENT, AGREES THAT VENUE FOR ANY SUCH
ACTION SHALL BE IN HARRIS COUNTY, TEXAS, AND WAIVES ANY AND ALL RIGHTS
UNDER THE LAWS OF ANY STATE TO OBJECT TO JURISDICTION OR VENUE WITHIN
HARRIS COUNTY, TEXAS. NOTWITHSTANDING THE FOREGOING, NOTHING CONTAINED
IN THIS SECTION SHALL PREVENT LENDERS FROM BRINGING ANY ACTION OR
EXERCISING ANY RIGHTS AGAINST VENTURER, ANY SECURITY FOR THE LOAN, OR
ANY VENTURER'S PROPERTIES IN ANY OTHER COUNTY, STATE OR JURISDICTION.
INITIATING SUCH ACTION OR PROCEEDING OR TAKING ANY ACTION IN ANY OTHER
COUNTY, STATE OR JURISDICTION SHALL IN NO EVENT CONSTITUTE A WAIVER BY
AGENT OR LENDERS OF ANY OF THE FOREGOING. This Agreement shall be
binding upon the respective heirs, estates, administrators, executors,
successors, successors-in-title, legal representatives and assigns of
3
<PAGE>
Venturer and shall inure to the benefit of Agent and Lenders and their
respective successors and assigns. Notwithstanding the foregoing,
Venturer shall not be entitled to assign any of its right, titles and
interests hereunder, or to delegate any of its obligations,
liabilities, duties or responsibilities hereunder, and will not permit
any such assignment or delegation to occur (voluntarily or
involuntarily, or directly or indirectly), without the prior written
consent of Lenders. Titles or captions of articles or sections
contained in this Agreement are provided for convenience of reference
only and in way defined, limit, extend or describe the scope of this
Agreement or the intent of any provision hereof. The words "hereof,"
"herein," and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. In the event that any
provisions this Agreement is held to be invalid or unenforceable, such
invalidity or unenforceability shall not affect the validity or
enforceability of any other provision hereof.
2. NO CONTROL BY LENDERS. VENTURER AGREES AND ACKNOWLEDGES THAT ALL OF
THE COVENANTS AND AGREEMENTS PROVIDED FOR AND MADE BY VENTURER IN THE JOINT
VENTURE PLEDGE AGREEMENT (AS AMENDED HEREBY) AND OTHERWISE, ARE THE RESULT OF
EXTENSIVE AND ARMS-LENGTH NEGOTIATIONS BETWEEN VENTURER AND LENDERS. VENTURER
HAS AGREED TO EXECUTE AND DELIVER THIS AMENDMENT AS CONSIDERATION FOR LENDERS'
AGREEMENT TO PROVIDE CERTAIN FINANCING TO BORROWERS. VENTURER HAS BENEFITTED,
DIRECTLY AND INDIRECTLY BY ITS DELIVERY OF THIS AMENDMENT.
3. Defined Terms. Words and terms used herein which are defined in the
Joint Venture Pledge Agreement are used herein as defined in the Joint Venture
Pledge Agreement, except as specifically modified by the terms of this
Amendment. Further, all references to the term "Pledgor," herein and in the
Joint Venture Pledge Agreement (as hereby amended), shall mean and refer to
Venturer (individually and collectively).
4. Representations and Warranties. The representations, warranties,
covenants, and agreements made by Venturer in the Joint Venture Pledge Agreement
(as amended hereby) are made again by Venturer as of the date of this Amendment.
5. Miscellaneous.
5.1 Governing Law. THE TERMS AND CONDITIONS OF THIS AMENDMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND OF THE UNITED STATES OF AMERICA APPLICABLE TO TRANSACTIONS WITHIN THE
STATE OF TEXAS.
5.2 Counterparts. This Amendment may be executed in two or
more counterparts, and it shall not be necessary that the signa- tures of all
parties hereto be contained on any one counterpart
4
<PAGE>
hereof. Each counterpart shall be deemed an original, but all such counterparts
taken together shall constitute one and the same instrument.
5.3 Notice of Final Agreement. THE JOINT VENTURE PLEDGE
AGREEMENT, AS AMENDED BY THIS AMENDMENT, REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS
BETWEEN THE PARTIES.
5.4 Preservation of the Joint Venture Pledge Agreement. Except
as specifically modified by the terms of this Amendment, all of the terms,
provisions, covenants, warranties and agreements contained, and all liens and
security interests granted, in the Joint Venture Pledge Agreement remain in full
force and effect, and the liens and security interests granted therein are
acknowledged to be valid and subsisting liens and security interests against the
Collateral. Except as otherwise expressly provided herein, by execution of this
Amendment, Venturer and Lenders do not intend to in any manner impair the
indebtedness described in and secured by the Joint Venture Pledge Agreement (as
amended by this Amendment), or to in any way impair, waive or release the liens
and security interests granted in the Joint Venture Pledge Agreement.
5.5 Reaffirmation of Joint Venture Pledge Agreement. To secure
the Liabilities (as defined in the Loan Agreement), Venturer has granted a
security interest and by these presents does grant to Lenders and Agent a
security interest, in and to all of its rights, titles, and interests in and to
the Collateral.
IN WITNESS WHEREOF, the parties have executed this First
Amendment as of the date first above written.
VENTURER:
WITNESS: SEITEL OFFSHORE CORP.
By: /s/ Debra D. Valice
--------------------------
Debra D. Valice,
Secretary and Treasurer
LENDERS/AGENT:
WITNESS: COMPASS BANK-HOUSTON, for itself
and as Agent
By: /s/ Dorothy M. Wilson
--------------------------
Dorothy M. Wilson,
Vice President
5
<PAGE>
WITNESS: BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ Damien Meiburger
--------------------------
Damien Meiburger,
Senior Vice President
6
AMENDMENT TO PLEDGE AGREEMENT
This Amendment to Pledge Agreement (this "Amendment") is made and
entered into effective as of the 31st day of December, 1994, by and among
SEITEL, INC., a Delaware corporation, SEITEL GEOPHYSICAL, INC., a Delaware
corporation, and SEITEL DATA CORP., a Delaware corporation (collectively,
"Pledgor"); and BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking
association ("Bank One"); and COMPASS BANK-HOUSTON, a Texas state banking
association (collectively with Bank One, "Lenders").
W I T N E S S E T H:
WHEREAS, Seitel, Inc. has executed a Pledge Agreement (the
"Pledge Agreement") dated effective February 28, 1994, granting to Lenders a
continuing security interest in and to, among other things, all of Seitel,
Inc.'s shares of capital stock in and to its wholly-owned subsidiaries, as
security for, among other things, the payment and performance of certain
indebtedness and obligations owing by Pledgor and certain other parties to
Lenders, as more fully described in the Pledge Agreement; and
WHEREAS, Seitel, Inc., each of the other Pledgors, and Lenders
desire to amend and modify certain terms and provisions of the Pledge Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Seitel, Inc., each of the
other Pledgors, and Lenders agree as follows:
1. Amendments to Pledge Agreement. The Pledge Agreement is modified
and amended as follows:
1.1 The first grammatical paragraph on Page 1 of the Pledge
Agreement is deleted in its entirety and the following is substituted in place
thereof:
PLEDGE AGREEMENT entered into on March 18, 1994, but which shall
be effective as of February 28, 1994, from SEITEL, INC., a Delaware
corporation ("Seitel"), SEITEL GEOPHYSICAL, INC., a Delaware
corporation ("Geophysical") and SEITEL DATA CORP., a Delaware
corporation (collectively with Seitel and Geophysical, "Pledgor"), in
favor of COMPASS BANK-HOUSTON, a Texas state banking association
("Bank"), and of BANK ONE, TEXAS, N.A. ("Bank One;" together with
Bank, the "Lenders"), and COMPASS BANK-HOUSTON, as agent (the "Agent")
for the Lenders; each of whom are signatories to the Restated
Revolving Credit and Pledge Agreement dated as of December 31, 1994,
among each Pledgor, Exsol, Inc. ("Exsol"), Seitel Offshore Corp.
("Offshore"), and the Lenders (the "Credit Agreement").
<PAGE>
1.2 Each of the premises on Page 1 of the Pledge Agreement are
deleted in their entirety and the following are substituted in place thereof:
WHEREAS, each Pledgor is a party to the Credit
Agreement;
WHEREAS, Geophysical, Exsol, Geo-Bank, Inc., Seitel Data Corp.,
Alternative Communication Enterprises, Inc., Matrix Geophysical, Inc.,
and Seitel Gas & Energy Corp. (collectively, the "Seitel
Subsidiaries") are each direct, wholly owned subsidiaries of Seitel;
WHEREAS, African Geophysical, Inc. (the "Geophysical
Subsidiary") is the direct, wholly owned subsidiary of
Geophysical;
WHEREAS, Datatel, Inc., Offshore, and Seitel
International, Inc. (collectively with the Seitel
Subsidiaries and the Geophysical Subsidiary, the
"Subsidiaries") are directly, wholly owned subsidiaries of
Seitel Data Corp.;
WHEREAS, each Pledgor desires that the Lenders make available the
Revolving Line (as defined in the Credit Agreement) to them and Exsol
in accordance with the terms of the Credit Agreement; and
WHEREAS, it is a condition precedent to the extending of the
Revolving Line that each Pledgor shall have granted the security
interest contemplated by this Agreement to secure the Liabilities (as
such term is defined in the Credit Agreement and is hereafter used);
1.3 Section 7(b) on Page 8 of the Pledge Agreement is deleted in
its entirety and the following is substituted in place thereof:
Without limiting the foregoing, the Lenders and the Agent shall
have the rights and remedies of a secured party under Texas Uniform
Commercial Code in addition to the rights and remedies provided
herein.
1.4 Section 21 on Page 17 of the Pledge Agreement is deleted in its
entirety and the following is substituted in place thereof:
THIS AGREEMENT SHALL BE PERFORMED IN AND CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING
EFFECT TO THE CHOICE OF LAW PROVISIONS THEREOF.
1.5 All references in the Pledge Agreement to the Loan Documents
shall refer to the Credit Documents under and as defined
2
<PAGE>
in the Credit Agreement, as each may be amended and modified from time to time.
2. Release of DDD Energy, Inc. Stock. Pledgor and Lenders agree and
acknowledge that the pledge by Seitel, Inc. of the capi- tal stock of DDD
Energy, Inc. under and pursuant to the Pledge Agreement is hereby discharged and
released in order that the capi- tal stock of DDD Energy, Inc. may be pledged by
Seitel, Inc. as security for the payment of a certain credit facility to DDD
Energy, Inc. from Lenders.
3. NO CONTROL BY LENDERS. PLEDGOR AGREES AND ACKNOWLEDGES THAT ALL OF
THE COVENANTS AND AGREEMENTS PROVIDED FOR AND MADE BY PLEDGOR IN THE PLEDGE
AGREEMENT (AS AMENDED HEREBY) AND OTHERWISE, ARE THE RESULT OF EXTENSIVE AND
ARMS-LENGTH NEGOTIATIONS BETWEEN PLEDGOR AND LENDERS. PLEDGOR HAS AGREED TO
EXECUTE AND DELIVER THIS AMENDMENT AS CONSIDERATION FOR LENDERS' AGREEMENT TO
PROVIDE CERTAIN FINANCING TO BORROWERS. EACH PLEDGOR HAS BENEFITTED, DIRECTLY
AND INDIRECTLY BY ITS DELIVERY OF THIS AMENDMENT.
4. Defined Terms. Words and terms used herein which are defined in the
Pledge Agreement are used herein as defined in the Pledge Agreement, except as
specifically modified by the terms of this Amendment. Further, all references to
the term "Pledgor," herein and in the Pledge Agreement (as hereby amended),
shall mean and refer to each Pledgor (individually and collectively).
5. Representations and Warranties. The representations, warranties,
covenants, and agreements made by Pledgor in the Pledge Agreement (as amended
hereby) are made again by each Pledgor (indi- vidually and collectively) as of
the date of this Amendment.
6. Miscellaneous.
6.1 Governing Law. THE TERMS AND CONDITIONS OF THIS AMENDMENT SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
AND OF THE UNITED STATES OF AMERICA APPLICABLE TO TRANSACTIONS WITHIN THE STATE
OF TEXAS.
6.2 Counterparts. This Amendment may be executed in two or more
counterparts, and it shall not be necessary that the signatures of all parties
hereto be contained on any one counterpart hereof. Each counterpart shall be
deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
6.3 Notice of Final Agreement. THE PLEDGE AGREEMENT, AS AMENDED BY
THIS AMENDMENT, REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CON- TEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO ORAL AGREEMENTS BETWEEN THE PARTIES.
6.4 Preservation of the Pledge Agreement. Except as specifically
modified by the terms of this Amendment, all of the
3
<PAGE>
terms, provisions, covenants, warranties and agreements contained, and all liens
and security interests granted, in the Pledge Agreement remain in full force and
effect, and the liens and security interests granted therein are acknowledged to
be valid and subsisting liens and security interests against the Collateral.
Except as otherwise expressly provided herein, by execution of this Amendment,
each Pledgor and Lenders do not intend to in any manner impair the indebtedness
described in and secured by the Pledge Agreement (as amended by this Amendment),
or to in any way impair, waive or release the liens and security interests
granted in the Pledge Agreement.
6.5 Reaffirmation of Pledge Agreement. To secure the
Liabilities (as defined in the Credit Agreement), each Pledgor has granted a
security interest and by these presents does grant to Lenders and Agent a
security interest, in and to all of their respective rights, titles, and
interests in and to the Collateral.
IN WITNESS WHEREOF, the parties have executed this First Amendment as
of the date first above written.
PLEDGOR:
WITNESS: SEITEL, INC.
By: /s/ Debra D. Valice
--------------------------
Debra D. Valice, Vice President
of Finance, Chief Financial
Officer, Treasurer, and
Secretary
WITNESS: SEITEL GEOPHYSICAL, INC.
By: /s/ Debra D. Valice
--------------------------
Debra D. Valice,
Secretary and Treasurer
WITNESS: SEITEL DATA CORP.
By: /s/ Debra D. Valice
--------------------------
Debra D. Valice,
Secretary and Treasurer
(Signatures Continued on Next Page)
4
<PAGE>
AGENT/LENDERS:
WITNESS: COMPASS BANK-HOUSTON, as a Lender
and as Agent
By: /s/ Dorothy M. Wilson
--------------------------
Dorothy M. Wilson,
Vice President
WITNESS: BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ Damien Meiburger
--------------------------
Damien Meiburger,
Senior Vice President
5
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> MAR-31-1995
<CASH> 3,661
<SECURITIES> 0
<RECEIVABLES> 34,005
<ALLOWANCES> (100)
<INVENTORY> 0
<CURRENT-ASSETS> 0<F1>
<PP&E> 44,234<F2>
<DEPRECIATION> 5,337
<TOTAL-ASSETS> 177,640
<CURRENT-LIABILITIES> 0<F1>
<BONDS> 19,679
<COMMON> 90
0
0
<OTHER-SE> 106,525
<TOTAL-LIABILITY-AND-EQUITY> 177,640
<SALES> 21,158
<TOTAL-REVENUES> 21,158
<CGS> 4,268
<TOTAL-COSTS> 4,268
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 834
<INCOME-PRETAX> 4,721
<INCOME-TAX> 1,747
<INCOME-CONTINUING> 2,974
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,974
<EPS-PRIMARY> 0.310
<EPS-DILUTED> 0.290
<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
$209,814,000 and related accumulated amortization of $110,229,000.
</FN>
</TABLE>
