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CREDIT AGREEMENT Exhibit 10.32
TO: VENTURE SEISMIC LTD. (the "LENDER")
0000 00xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
FROM: CONTINENTAL HOLDINGS LTD. (the "BORROWER")
210, 0000 0xx Xxxxxx X.X.
Xxxxxxx, Xxxxxxx X0X 0X0
RE: Line of credit to assist in outfitting the "Pacific Titan" (the "CREDIT")
CREDIT LIMIT - $4,000,000.00 (U.S.)
In consideration of the Lender authorizing the Credit subject to the conditions
contained herein, the Borrower acknowledges and agrees as follows:
1. The Lender shall, subject to the terms and conditions of the general
security agreement granted by the Borrower to the Lender as of the date
hereof (the "GSA"), advance the Credit Limit to the Borrower's account
number 0000000 with Royal Bank of Canada, transit no. 00000 (the
"ACCOUNT"). The Credit shall be utilized solely to assist in the
outfitting of the marine seismic vessel "Pacific Titan" (the "PROJECT").
The Borrower shall present to the Lender all invoices and bills regarding
the Project that the Borrower desires paid utilizing the Credit. All valid
invoices and bills regarding the Project shall be paid from the Credit,
provided however, that the Lender shall review and approve the validity of
such invoices and bills regarding the Project prior to authorizing any use
of the Credit. The Lender's authorization to utilize the Credit shall be
evidenced by the Lender's signature on all cheques issued from the
Account.
2. No interest on the Credit shall accrue or be payable by the Borrower to
the Lender prior to August 31, 1998 (the "CONVERSION DATE").
3. From and after the Conversion Date, the Borrower covenants to pay to the
Lender on August 31, 2002 (the "MATURITY DATE") all amounts outstanding
under the Credit, together with simple interest thereon at a variable rate
per annum equal to 1.0% above the prime lending rate in effect from time
to time for Royal Bank of Canada, which is the variable per annum rate of
interest published from time to time by the Royal Bank of Canada as its
prime lending rate on U.S. denominated commercial loans. Interest shall be
calculated on the outstanding balance of the Credit, shall accrue from day
to day from the Conversion Date and shall be payable quarterly in
accordance with this agreement. Payments of principal and accrued interest
on the outstanding balance of the Credit shall be made: (i) quarterly on
December 1, March 1, June 1
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and September 1 of each year prior to the Maturity Date, commencing on
December 1, 1999, the principal portion of each such quarterly payment to
equal 1/16 of the amount of the Credit on the Conversion Date, (ii) upon
maturity (whether at stated maturity, by acceleration or otherwise) and
(iii) upon any prepayment, subject to the other provisions hereof and
subject to the GSA. Interest calculated as aforesaid shall be payable at
such rate before and after maturity, default and judgement, until such
outstanding balance of the Credit, together with accrued interest, is paid
in full. All computations of interest shall be made on the basis of a year
of 365 days on the actual number of days elapsed (including the first but
excluding the last day during which any such amount of the Credit is
outstanding). The outstanding balance of the Credit together with interest
accrued and unpaid shall be payable on the Maturity Date unless the Credit
is converted in accordance with Section 6 hereof, whereupon the Lender
shall proceed to discharge all registrations regarding the GSA.
4. The Lender is authorized but not obliged to debit the Account as required
from time to time to pay interest, principal and other costs incurred in
respect of the Credit or otherwise payable by the Borrower to the Lender,
all of which fees and costs the Borrower agrees to pay on demand with
interest after demand at the rate hereinbefore set forth. Any interest
accrued on any such amounts which is not paid by the next date on which an
interest instalment is payable shall continue to accrue as simple interest
from such date and on all further instalment dates until paid and, as
overdue interest, bear interest at the same rate as on principal. All
monies received by the Lender, whether by way of debit as aforesaid or
otherwise, may be applied and allocated by the Lender to such parts of the
outstanding indebtedness as the Lender deems best.
5. Provided the Lender has not exercised any of its remedies under the terms
of GSA, the Borrower may, on two business days prior notice, pre-pay the
Credit, together with all accrued interest as of such date, without
penalty or prepayment bonus.
6. (a) Notwithstanding anything herein contained, the Lender may, at any
time after the Conversion Date up to and including December 1, 1999,
provide written notice to the Borrower of the Lender's intention to
convert the entire Credit, with all accrued interest, to a
fully-diluted 26.2% equity participation in all of the issued and
outstanding share capital, irrespective of class or series, of the
Borrower as of such date (the "EQUITY CONVERSION"), whereupon the
Credit, with all accrued interest, shall be deemed paid in full. The
Borrower shall, upon receipt of notice of the Equity Conversion,
take all necessary actions to implement the Equity Conversion within
30 days of receipt of notice of the Equity Conversion. In the event
the Equity Conversion is not completed to the satisfaction of the
Lender within such time and is not caused by matters beyond
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the control of the Borrower or its shareholders, this shall
constitute a Default (as such term is utilized in the GSA).
(b) If the Lender desires to exercise its option to convert the Credit
pursuant to Section 6(a) hereof, the Lender shall deliver to the
Borrower, at its address appearing on the first page hereof, a
written notice of its intention to exercise such option (the
"CONVERSION NOTICE"), and together therewith, the Lender shall
surrender this credit agreement for cancellation, provide to the
Borrower a general release with respect to all amounts owed by the
Borrower under this agreement, with all costs regarding the
preparation, authorization, execution and delivery of such general
release on behalf of the Lender to be borne by solely by the
Borrower on a solicitor-client basis, and provide written
instructions regarding the registration and delivery of certificates
for the shares representing the Equity Conversion (the "CONVERSION
SHARES"). The Borrower shall, as soon as reasonably practicable
thereafter (but not later than 30 days after receipt of the
Conversion Notice) issue and forward certificates representing the
Conversion Shares to the Lender at its address appearing on the
first page hereof. The Lender shall be deemed to have become the
holder of record of such shares at the close of business on the date
on which the Conversion Notice is sent to the Borrower (the
"CONVERSION DATE") and shall be regarded for all corporate purposes
after the Conversion Date as the record holder of the number of
Conversion Shares to which it is entitled upon the conversion. The
Borrower may rely on record ownership of this credit agreement for
all corporate purposes, notwithstanding any contrary notice.
Immediately upon receipt of the Conversion Shares, the Lender shall
proceed to discharge all registrations regarding the GSA.
(c) No fractional shares (or scrip representing fractional shares) of
capital stock shall be issued upon conversion of this Credit. In the
event that the Credit to be converted pursuant to the Conversion
Notice would result in the issuance of a fractional share of capital
stock, the Borrower shall pay a cash adjustment in lieu of such
fractional share to the Lender based upon the conversion price
determined in accordance with Section 6(a).
(d) The Borrower shall pay all documentary, stamp or other transactional
taxes attributable to the issuance or delivery of shares of capital
stock upon conversion of the Credit. The Lender shall pay all
corporate income taxes, if any, which the Lender may incur in
connection with this agreement or the Equity Conversion.
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(e) All shares of capital stock which may be issued upon conversion of
the Credit will, upon issuance by the Borrower in accordance with
the terms of this credit agreement, be validly issued, free from all
taxes and liens with respect to the issuance thereof, free from all
pre-emptive or similar rights and fully paid and non-assessable.
7. This agreement and any other agreements in relation to the Credit are in
addition to and not in substitution for any other agreements between the
Borrower and the Lender, including but not limited to the March 27, 1998
securities purchase agreement among the Lender, the Borrower, Xxx X.
Xxxxx, Xxx X. Self, Xxxxxx Xxxxx, Xxxxxx XxXxxxxx and Xxxx Xxxxx and the
GSA, each as amended, modified, supplemented, replaced or restated, from
time to time.
IN WITNESS WHEREOF the undersigned has executed this agreement this 27th day of
March, 1998.
CONTINENTAL HOLDINGS LTD.
Per: /s/ X.X. XXXXX
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Name: Xxx X. Xxxxx (c/s)
Title: President
Per: /s/ R.D. SELF
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Name: Xxx X. Self
Title: Vice-President, Geophysical Operations
VENTURE SEISMIC LTD.
Per: /s/ XXXXX XXXXX
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Name: Xxxxx Xxxxx (c/s)
Title: President
