Document:

exv10w15

 

EXHIBIT 10.15

PROMISSORY NOTE

	 	 	 	 	 	 	 
	Borrower:

	 	Mitcham Industries, Inc.
	 	Lender:
	 	First Victoria National Bank
	

	 	(TIN: 76-0210849
	 	 	 	Main Bank
	

	 	44000 Hwy. 75 S
	 	 	 	101 South Main Street
	

	 	Huntsville, TX 77340
	 	 	 	P.O. Box 1338
	

	 	 	 	 	 	Victoria, TX 77902-1338

	 	 	 	 	 
	Principal Amount: $8,518,919.00

	 	Initial Rate: 5.250%
	 	Date of Note: February 11, 2002

PROMISE TO PAY. MITCHAM INDUSTRIES, INC., (“Borrower”) promises to pay to
First Victoria Bank (“Lender”), or order, in lawful money of the United States
of America, the principal amount of Eight Million Five Hundred Eighteen
Thousand Nine Hundred Nineteen & 00/100 Dollars ($8,518,919.00), together with
interest on the unpaid principal balance from February 11, 2002, until
maturity. The interest rate will not increase above 18.000%.

PAYMENT. Subject to any payment changes resulting from changes in the Index,
Borrower will pay this loan in 48 payments of $197,125.14 each payment.
Borrower’s first payment is due March 11, 2002, and all subsequent payments are
due on the same day of each month after that. Borrower’s final payment will be
due on February 11, 2006, and will be for all principal and all accrued
interest not yet paid. Payments include principal and interest. Unless
otherwise agreed or required by applicable law, payments will be applied first
to accrued unpaid interest, then to principal, and any remaining amount to any
unpaid collection costs. Interest on this Note is computed on a 365/365 simple
interest basis; that is, by applying the ration of the annual interest rate
over the number of days in a year, multiplied by the outstanding principal
balance, multiplied by the actual number of days the principal balance is
outstanding. Borrower will pay Lender at Lender’s address shown above or at
such other place as Lender may designate in writing.

VARIABLE INTEREST RATE. The interest rate on this Note is subject to change
from time to time based on changes in an independent index which is the WALL
STREET JOURNAL PRIME AS ANNOUNCED IN THE WALL STREET JOURNAL (the “Index”).
The Index is not necessarily the lowest rate charged by Lender on its loans.
If the Index becomes unavailable during the term of this loan, Lender may
designate a substitute index after notice to Borrower. Lender will tell
Borrower the current Index rate upon Borrower’s request. The interest rate
change will not occur more often than each DAY. Borrower understands that
Lender may make loans based on other rates as well. The Index currently is
4.750% per annum. The interest rate to be applied prior to maturity to the
unpaid principal balance of this Note will be at a rate of 0.500 percentage
points over the Index, resulting in an initial rate of 5.250% per annum.
Notwithstanding the foregoing, the variable interest rate or rates provided for
in this Note will be subject to the following maximum rate. NOTICE: Under no
circumstances will the interest rate on this Note be more than (except for any
higher default rate or Post Maturity Rate shown below) the lesser of 18.000%
per annum or the maximum rate allowed by applicable law. For purposes of this
Note, the “maximum rate allowed by applicable law” means the greater of (A) the
maximum rate of interest permitted under federal or other law applicable to the
indebtedness evidenced by this note, or (B) the “Weekly Ceiling” as referred to
in Sections 303.002 and 303.003 of the Texas Finance Code. Whenever increases
occur in the interest rate, Lender, at its option, may do one of the following:
(A) increase Borrower’s payments to ensure Borrower’s loan will pay off by its
original final maturity date, (B) increase Borrower’s payments to cover
accruing interest, (C) increase the number of Borrower’s payments, and (D)
continue Borrower’s payments at the same amount and increase Borrower’s final
payment.

PREPAYMENT. Borrower may pay without penalty all or a portion of the amount
owed earlier than it is due. Any partial payment shall be in an amount equal
to one or more full installments. Prepayment in full shall consist of payment
of the remaining unpaid principal balance together with all accrued and unpaid
interest and all other amounts, costs and expenses for which Borrower is
responsible under this Note or any other agreement with Lender pertaining to
this loan, and in no event will Borrower ever be required to pay any unearned
interest. Early payments will not, unless agreed to by Lender in writing,
relieve Borrower of Borrower’s obligation to continue to make payments under
the payment schedule. Rather, early payments will reduce the principal balance
due and may result
in Borrower’s making fewer payments. Borrower agrees not to send Lender
payments marked “paid in full”, “without recourse”, or similar language.

 

 

If
Borrower sends such a payment, Lender may accept it without losing any of
Lender’s rights under this Note, and Borrower will remain obligated to pay any
further amount owed to lender. All written communications concerning disputed
amounts, including any check or other payment instrument that indicates that
the payment constitutes “payment in full” of the amount owed or that is
tendered with other conditions or limitations or as full satisfaction of a
disputed amount must be mailed or delivered to: First Victoria National Bank,
Loan Operations, P.O. Box 1338, Victoria, TX 77902.

POST MATURITY RATE. The Post Maturity Rate on this Note is the lesser of the
maximum rate allowed by applicable law or 18.000% per annum. Borrower will pay
interest on all sums due after final maturity, whether by acceleration or
otherwise, at that rate.

DEFAULT. Each of the following shall constitute an event of default (“Event of
Default”) under this Note:

Payment Default. Borrower fails to make any payment when due under this
Note.

Other Defaults. Borrower fails to comply with or to perform any other term,
obligation, covenant or condition contained in this Note or in any of the
related documents or to comply with or to perform any term, obligation,
covenant or condition contained in any other agreement between lender and
Borrower.

False Statements. Any warranty, representation or statement made or
furnished to Lender by Borrower or on Borrower’s behalf under this Note or
the related documents is false or misleading in any material respect, either
now or at the time made or furnished or becomes false or misleading at any
time thereafter.

Insolvency. The dissolution or termination of Borrower’s existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower’s property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.

Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower or by any
governmental agency against any collateral securing the loan. This includes
a garnishment of any of Borrower’s accounts, including deposit accounts,
with Lender. However, this Event of Default shall not apply if there is a
good faith dispute by Borrower as to the validity or reasonableness of the
claim which is the basis of the creditor or forfeiture proceeding and if
Borrower gives Lender written notice of the creditor or forfeiture
proceeding and deposits with Lender monies or a surety bond for the creditor
or forfeiture proceeding, in an amount determined by Lender, in its sole
discretion, as being an adequate reserve or bond for the dispute.

Events Affecting Guarantor. Any of the preceding events occurs with respect
to any guarantor, endorser, surety, or accommodation party of any of the
indebtedness or any guarantor, endorser, surety, or accommodation party dies
or becomes incompetent, or revokes or disputes the validity of, or liability
under, any guaranty of the indebtedness evidenced by this Note. In the
event of a death, Lender, at its option, may, but shall not be required to,
permit the guarantor’s estate to assume unconditionally the obligations
arising under the guaranty in a manner satisfactory to Lender, and, in doing
so, cure any Event of Default.

Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.

Adverse Change. A material adverse change occurs in Borrower’s financial
condition, or Lender believes the prospect of payment or performance of this
Note is impaired.

Insecurity. Lender in good faith believes itself insecure.

Cure Provisions. If any default, other than a default in payment is
curable, it may be cured (and no event of default will have occurred) if
Borrower, after receiving written notice from Lender demanding cure of such
default: (1) cures the default within fifteen (15) days; or (2) if the cure
requires more than fifteen (15) days, immediately

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initiates steps which
Lender deems in Lender’s sole discretion to be sufficient to cure the
default and thereafter continues and completes all reasonable and necessary
steps sufficient to produce compliance as soon as reasonably practical.

LENDER’S RIGHTS. Upon default, Lender may declare the entire indebtedness,
including the unpaid principal balance on this Note, all accrued unpaid
interest, and all other amounts, costs and expenses for which Borrower is
responsible under this Note or any other agreement with Lender pertaining to
this loan, immediately due, without notice, and then Borrower will pay that
amount.

ATTORNEYS’ FEES; EXPENSES. Lender may hire an attorney to help collect this
Note if Borrower does not pay, and Borrower will pay Lender’s reasonable
attorneys’ fees. Borrower also will pay Lender all other amounts Lender
actually incurs as court costs, lawful fees for filing, recording, releasing to
any public office any instrument securing this Note; the reasonable cost
actually expended for repossessing, storing, preparing for sale, and selling
any security; and fees for noting a lien on or transferring a certificate of
title to any motor vehicle offered as security for this Note, or premiums or
identifiable charges received in connection with the sale of authorized
insurance.

GOVERNING LAW. This Note will be governed by, construed and enforced in
accordance with federal law and the laws of the State of Texas. This Note has
been accepted by Lender in the State of Texas.

RIGHT OF SETOFF. To the extent permitted by applicable law, Lender reserves a
right of setoff in all Borrower’s accounts with Lender (whether checking,
savings, or some other account). This includes all accounts Borrower holds
jointly with someone else and all accounts Borrower may open in the future.
However, this does not include any IRA or Keogh accounts, or any trust accounts
for which setoff would be prohibited by law. Borrower authorized Lender, to
the extent permitted by applicable law, to charge or setoff all sums owing on
the indebtedness against any and all such accounts.

THIS NOTE IS BASED ON FINANCIAL STATEMENT DATED, 10-31-2001.

COLLATERAL. Borrower acknowledges this Note is secured by SECURITY AGREEMENT
DATED 02-11-2002 COVERING PURCHASE MONEY SECURITY INTEREST ON ALL EQUIPMENT AND
INVENTORY PURCHASED FROM SERCEL, LTD., GEOSPACE CORP., AND MARK PRODUCTS, INPUT
OUTPUT; AND ASSIGNMENT OF ALL LEASES AND REVENUES GENERATED FROM SAID EQUIPMENT
AND INVENTORY.

SUCCESSOR INTERESTS. The terms of this Note shall be binding upon Borrower,
and upon Borrower’s heirs, personal representatives, successors and assigns,
and shall inure to the benefit of Lender and its successors and assigns.

GENERAL PROVISIONS. If any part of this Note cannot be enforced, this fact
will not affect the rest of the Note. Borrower does not agree or intend to
pay, and Lender does not agree or intend to contract for, charge, collect,
take, reserve or receive (collectively referred to herein as “charge or
collect”), any amount in the nature of interest or in the nature of a fee for
this loan, which would in any way or event (including demand, prepayment, or
acceleration) cause Lender to charge or collect more for this loan than the
maximum Lender would be permitted to charge or collect by federal law or the
law of the State of Texas (as applicable). Any such excess interest or
unauthorized fee shall, instead of anything stated to the contrary, be applied
first to reduce the principal balance of this loan, and when the principal has
been paid in full, be refunded to Borrower. The right to accelerate maturity
of sums due under this Note does not include the right to accelerate any
interest which has not otherwise accrued on the date of such acceleration, and
Lender does not intend to charge or collect any unearned interest in the event
of acceleration. All sums paid or agreed to be paid to Lender for the use,
forbearance or detention of sums due hereunder shall, to the extent permitted
by applicable law, be amortized, prorated, allocated and spread throughout the
full term of the loan evidenced by this Note until payment in full so that the
rate or amount of interest on account of the loan evidenced hereby does not
exceed the applicable usury ceiling. Lender may delay or forgo enforcing any
of its rights or remedies under this Note without losing them. Borrower and
any other person who signs, guarantees or endorses this Note, to the extent
allowed by law, waive presentment, demand for payment, notice of dishonor,
notice of intent to accelerate the maturity of this Note, and notice of
acceleration of the maturity of this Note. Upon
any change in the terms of this Note, and unless otherwise expressly stated in
writing, no party who signs this Note, whether as maker, guarantor,
accommodation maker or endorser, shall be released from liability. All such
parties agree that Lender may renew or extend (repeatedly and for any length of
time)

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this loan or release any party or guarantor or collateral; or impair,
fail to realize upon or perfect Lender’s security interest in the collateral
without the consent of or notice to anyone. All such parties also agree that
Lender may modify this loan without the consent of or notice to anyone other
than the party with whom the modification is made. The obligations under this
Note are joint and several.

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE PROVISIONS OF
THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS. BORROWER AGREES TO
THE TERMS OF THE NOTE.

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY NOTE.

BORROWER:

MITCHAM INDUSTRIES, INC.

	 	 	 
	By:

	 	/s/ Billy F. Mitcham, Jr.
	

	 	

	

	 	BILLY F. MITCHAM, JR., President of
	

	 	MITCHAM INDUSTRIES, INC.

4exv10w16

 

EXHIBIT 10.16

LOAN AGREEMENT

     THIS AGREEMENT made and entered into on this 30 day of March, 2004, by and
between MITCHAM INDUSTRIES, INC. a Texas corporation, with principal offices at
Huntsville, in Walker County, Texas (herein referred to as “Borrower”), and
First Victoria National Bank, a national banking corporation, with its offices
and domicile in Victoria, Victoria County, Texas, (herein referred to as
“Lender”) to induce Lender to extend credit to Borrower in the amounts
evidenced by the promissory notes described in Paragraphs II of this agreement
(herein referred to as the “Loan”) and evidencing the line of credit described
herein.

     In consideration of their mutual warranties, covenants and agreements
contained herein and Lender’s extension of credit to Borrower in the amount
aforesaid, Borrower and Lender hereby warrant, covenant and agree as follows:

I. WARRANTIES OF BORROWER

     A. That Borrower is a Texas corporation currently authorized to do
business in the State of Texas, and that all franchise taxes, employment taxes,
withholding taxes, income taxes, sales taxes, use taxes and all other taxes
have been paid current to the date of this agreement.

     B. That the execution by Borrower of this agreement and the other
documents described herein has been duly authorized by its corporate board and
that all of the agreements, indentures, or conveyances described herein to be
made or undertaken by Borrower are within its corporate powers and not
prohibited by law or its governing documents.

     C. That this Loan Agreement and all promissory notes and security
documents referenced herein are legal, valid and binding obligations of
Borrower which are enforceable against Borrower in accordance with the
respective terms thereof.

     D. That all audits and financial information submitted to Lender may be
relied upon by Lender as fairly representing the financial condition of the
companies or individuals to which the same relate, and that there has been no
adverse change in the financial condition of Borrower subsequent to the
presentment of the financial information now held by Lender.

     E. That there is no litigation, arbitration or governmental or regulatory
proceedings pending or threatened against Borrower which, if adversely
determined, could have a material adverse effect on Borrower’s financial
condition or affect the legality, validity or enforceability of this Loan
Agreement or any promissory notes or security documents referenced herein and
that Borrower has no material contingent liabilities or material forward
commitments which are not disclosed in the financial information now held by
Lender.

     F. That there are no other liens or encumbrances against the property
given as security for the payment of the hereinafter described loan, except as
stated herein.

II. INDEBTEDNESS

     A. Lender shall advance to Borrower, according to the terms thereof and
subject to the limitations expressed therein and in this agreement, the
principal sums of such promissory notes as are executed by Borrower and
delivered to Lender from time to time to evidence advances to Borrower for the
purposes and on the terms and subject to the limitations set forth in Paragraph
V.A.2 of this Agreement, pursuant to a line of credit established therein for
the purchase of seismic survey equipment for the purposes of sale to others.
Each such promissory note shall bear interest at the prime rate published in
the Wall Street Journal (Southwest Edition) as the base rate on corporate loans
established by a selected number of the largest banks in the United States,
plus one-half of one percent (0.50%) per annum, as such rate is determined
daily by Lender on the outstanding principal balance of such note, and shall
provide for monthly installments of interest, as it accrues, and for payments
of principal as follows:

 

 

	1.	 	Two equal principal payments in the amount of twenty-five
percent (25.00%) of the entire principal balance of the note on the
date of the first of such principal payments. The first of such
payments shall be due on the date six months after the date of the
note and the second of such payments shall be due on the date nine
months after the date of the note.
	 
	2.	 	One final principal payment in the amount of the entire
remaining principal balance of the note (together with any accrued
and unpaid interest). The final principal payment shall be due,
together with any unpaid interest, on the date one year after the
date of the note.

     B. Borrower agrees to execute and deliver to Lender such promissory notes
in the form prescribed by Lender and on terms described herein, evidencing the
indebtedness created by such advances.

     C. Borrower hereby acknowledges and agrees that Lender has and shall have
the right, at any time, without the consent of or notice to Borrower, to grant
participations in all or part of the obligations of Borrower evidenced by this
note, together with any liens or collateral securing the payment hereof. In
the event Lender elects to participate any Overline Portion (as hereinafter
defined) of the obligations evidenced by this note and if Lender is unable to
procure a participant or a participant fails or refuses to advance to Borrower
any Overline Portion through no fault of Lender, it is agreed that Lender shall
have no liability to Borrower to fund such Overline Portion, nor shall Lender
have any obligation to procure funds from other sources or fund any amounts
that would cause Lender to be in violation of any state or federal law with
respect to Borrower being liable to Lender in an amount in excess of that
permitted by such applicable law. The term “Overline Portion” shall mean the
amount of loan proceeds in excess of the amount that Lender is permitted by
applicable law or Lender’s loan policy limitations to loan to Borrower.

     D. Notwithstanding any other provision in this agreement or the provisions
of any promissory note or other loan document to the contrary, Lender shall not
charge or collect and Lender does not intend to contract for interest in excess
of that permitted by law for loans of this kind and to prevent such occurrence,
Lender will, at maturity, or an earlier final payment of any promissory note
described above, determine the total amount of interest that can be lawfully
charged or collected by applying the highest lawful rate of interest to the
full periodic balances of principal for the period each is outstanding and
unpaid and compare such amount with the total interest that has accrued under
the terms of such note, and, if necessary to prevent usury, reduce the total
amount of interest payable by Borrower to the lesser amount. If the amount of
interest that has been collected exceeds the lawful amount, Lender shall either
make direct refund of such excess to Borrower or credit it against other sums
owed by Borrower to Lender, whichever Lender deems appropriate. If at any time
the rate of interest provided for in any note shall exceed the highest lawful
rate, the annual rate which interest shall accrue on such note shall be limited
to such highest lawful rate. The highest lawful rate shall thereafter be the
rate at which interest is accrued on such note until the total amount of
interest accrued equals the amount of interest that would have accrued if the
interest rate provided in such note had at all times been in effect, after
which the interest rate provided in such note, if it does not exceed the
highest lawful rate, shall apply. As used herein, the term “highest lawful
rate” means the highest rate of interest permitted to be charged or collected
under the applicable state or federal law for this type of loan applied to the
full periodic balances of principal advances for the period each is outstanding
and unpaid.

III. SECURITY

     A. As security for the loan, Borrower shall execute and deliver to,
procure for, deposit with, and pay to Lender the following:

	1.	 	Security agreements, financing statements, and title
documents in form and content acceptable to Lender, executed by
Borrower and covering all equipment purchased by Borrower with the
proceeds of each promissory note delivered by Borrower from time to
time pursuant to Paragraph II.A hereof, together with all
accessions, repairs, replacements and substitutions thereto and
therefor and all instruments, chattel paper, general intangibles,
proceeds and cash proceeds arising therefrom, securing payment of
the note and all other and future indebtedness of Borrower to Lender
and evidencing a first lien and prior security interest in such
collateral, whether now owned or hereinafter acquired by Borrower.

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	2.	 	Collateral Assignment to Lender, in form and content
acceptable to Lender, of Borrower’s rights under any leases of
equipment purchased with proceeds of any note delivered by Borrower
hereunder which has not been paid in full.
	 
	3.	 	Such other documents and instruments as Lender may require
for the perfection of liens and their registration under the laws of
the State of Texas or of the United States.
	 
	4.	 	Hazard insurance policy or policies in form and content and
issued by a company or companies with loss payable endorsements
acceptable to Lender, insuring all collateral given as security
against loss or damage and against vandalism and malicious mischief
and insuring said collateral against the usual and customary risks
and hazards as Lender may request, all of such policy or policies to
be for a total amount acceptable to Lender.
	 
	5.	 	Such security agreements and pledges as are required by
Lender to provide that all collateral for Borrower’s other and
future indebtedness to Lender secures the indebtedness of Borrower
arising from the Loan governed by this Agreement.

     B. Borrower shall execute and deliver to Lender such other documents and
instruments as Lender may require to evidence the status or authority of
Borrower and to evidence, govern or secure the payment of the Loan or any
portion thereof.

IV. COVENANTS OF BORROWER

     A. For so long any portion of the Loan remains unpaid, Borrower covenants
and agrees as follows:

POSITIVE COVENANTS

	1.	 	That Borrower agrees to pay Lender, upon demand, all expenses
of every nature incurred by Lender in connection with the
consummation of the transaction contemplated by this agreement, or
the enforcement or preservation of Lender’s rights hereunder,
including attorney’s fees and expenses of Lender’s counsel, hazard
insurance premiums, filing and recording fees, court costs, and
other fees and reasonable expenses incurred by Lender.
	 
	2.	 	That Borrower shall furnish or cause to be furnished at its
expense to Lender statements or reports in form and content
acceptable to Lender on the forty-fifth (45th) day after the end of
each quarter of Borrower’s fiscal year which shall set forth an
operating statement and balance sheet for Borrower herein named as
Borrower an ageing of notes, contract rights, accounts receivable
and accounts payable of Borrower for the preceding calendar quarter.
Lender shall be allowed to make reasonable inspections of all
assets securing said loan and shall further have the right to
inspect the books of Borrower or other records relating to the
affairs of Borrower. The reasonable costs of any such inspection
are to be borne by Borrower.
	 
	3.	 	That Borrower shall furnish at its expense to Lender
annually, within ninety (90) days after the end of Borrower’s income
tax reporting year, a report prepared and audited by a Certified
Public Accountant for Borrower, including a balance sheet, income
statement, sources and uses of funds statement, and a reconciliation
of net worth.
	 
	4.	 	That while Borrower is indebted to Lender hereunder Borrower
will:

	a.	 	Perform all of its obligations to appropriate
regulatory agencies;
	 
	b.	 	Punctually pay all indebtedness from time to time
owing hereunder when due;
	 
	c.	 	Perform all of its obligations under the Security
Instruments described herein;

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	d.	 	Promptly pay and discharge any and all
indebtedness or obligations when due and owing, including all
taxes of every kind and character, all assessments, and other
claims which might give rise to a lien on the property given
as security for this loan or impair Borrower’s obligation to
conduct its business, except as it may in good faith contest
or as to which a bona fide dispute may arise, provided
provision is made to the satisfaction of Lender for eventual
payment thereof in the event that it is found that such
indebtedness or obligation or tax or claim is an obligation of
Borrower, and when such dispute or contest is settled or
determined, it will promptly pay the amount then due.
	 
	e.	 	Maintain and keep in force insurance of the types
and in the amounts customarily carried by companies in similar
lines of business, including adequate amounts of fire,
windstorm, explosion, public liability, property damage, and
workman’s compensation insurance; all insurance is to be
carried in company or companies satisfactory to Lender, and
Borrower will deliver to Lender from time to time, at the
request of Lender, a schedule setting forth all insurance in
effect;
	 
	f.	 	Maintain a standard and modern accounting system
in accordance with generally accepted principles of accounting
permit Lender to inspect its books of account and records at
all reasonable times, furnish to Lender such information
respecting the business affairs and financial condition of
Borrower as Lender may reasonably request.
	 
	g.	 	Preserve all rights, privileges, franchises,
licenses, and permits connected with its business and to the
extent of its ability will conduct its business in an orderly,
efficient manner without voluntary interruptions, and comply
with all applicable laws and regulations of government
agencies;
	 
	h.	 	Maintain preserve and keep all properties and
equipment in good repair, working order and condition, and
from time to time make all necessary and proper repairs,
renewals, replacements, and improvements thereto so that at
all times the efficiency and value thereof shall be fully
preserved and maintained, and maintain leases, licenses and
permits, but nothing herein contained shall prevent Borrower
from in good faith contesting or seeking legal construction of
any dispute, terms or conditions of a contract, lease or other
obligation, Lender may, at reasonable times, visit and inspect
any of the properties of Borrower;
	 
	i.	 	Maintain Borrower’s financial condition in
compliance with the following ratio, as determined by Lender
based on generally accepted accounting principals and
computation methods adopted by Lender in Lender’s sole and
exclusive discretion:

	a.	 	A ratio of total debt to shareholders’ equity of not more
than 0.6:1.0.

	j.	 	To give notice in writing to Lender within 30
days of any proceedings by any public or private body, agency,
or authority, pending or threatened, which may have a
substantial adverse effect on Borrower, and of any litigation
involving the possibility of judgments or liabilities in
excess of an aggregate of $1,000,000.00 not covered by
insurance.

	5.	 	That Borrower will pay to Lender, at the time of each advance
by Lender of the amount of one of the promissory notes described in
Paragraph II.A hereof, a fee in the amount of one-quarter of one
percent (0.25%) of the amount of such advance, such fee being in
addition to all other charges and interest due to Lender under the
terms of this Agreement and such note.

NEGATIVE COVENANTS

	6.	 	Borrower will not, except with the prior written consent of
Lender:

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	a.	 	Permit any lien (other than for taxes not
delinquent and for taxes and other items being contested in
good faith) to exist on property given as security for this
loan or on the income or profits thereof, excepting liens
existing as of the date hereof and as otherwise provided
herein.
	 
	b.	 	Assign any leases or the proceeds thereof to
anyone except Lender;

	7.	 	Borrower will take no action which would result in any change
in the form of the corporate entity of Borrower or result in any
reorganization, merger or consolidation of Borrower with any other
entity during the term of this agreement without prior written
consent of Lender.
	 
	8.	 	That Borrower may not assign or otherwise transfer this
Agreement or any rights hereunder, and that this Agreement shall be
binding upon Borrower an the representatives, heirs, executors,
legal representatives and successors of Borrower.
	 
	9.	 	That Borrower shall not (i) borrow from any source in any
amount; (ii) incur any obligations other than in the usual and
normal course of Borrower’s operation; or (iii) guarantee the debt
or obligation of others without the prior written approval of
Lender.
	 
	10.	 	That, except after written notice to Beneficiary and where
such use and the activities relating thereto are in strict
compliance with all applicable laws and regulations, Borrower shall
not hereafter permit any property which is (a) given as security for
this Loan, (b) used by Borrower for any business or other activities
financed by Lender, or (c) the source of repayment of this Loan, to
be used in any way for the generation, transportation, treatment,
disbursal, storage, discharge or disposal of any pollutants,
hazardous or toxic substances, or hazardous wastes as defined or
regulated by any of the following federal statutes: (a) The
Comprehensive Environmental Response, Compensation and Liability Act
(“CERCLA”), as amended by the Superfund Amendments and
Re-Authorization Act of 1986 (“SARA”), (b) the Resource Conservation
and Recovery Act (“RCRA”), (c) the Toxic Substance Control Act
(“TSCA”), (d) any amendments to or regulations promulgated by any
agency under any of the above statutes, and (e) any other state or
federal statute or regulation for the control of hazardous or toxic
substances.

V. COVENANTS OF LENDER

     A. Subject to the terms of this agreement and of the notes and security
instruments described herein, Lender covenants and agrees as follows:

	1.	 	Lender shall, from time to time, advance to Borrower sums
requested by Borrower for the purchase of seismic survey equipment
by Borrower, with such advances to be evidenced by Borrower’s
promissory notes executed pursuant to Paragraph II.A. of this
Agreement. Each such advance shall be evidenced by a separate note
in the form prescribed by Lender and payable to the order of the
Borrower in the amount of such advance, as provided in Paragraph
II.A. Such sums shall not in any case exceed eighty percent
(80.00%) of the actual net cost to Borrower of the purchased
equipment. In no event shall the total unpaid principal balance of
all advances to Borrower under this Paragraph V.A.2 and Paragraph
II.A.2 at any one time exceed Four Million Dollars ($4,000,000.00)
in the aggregate and Lender shall have no obligation to Advance any
sums in any amount which would cause the total of such advances in
the aggregate to exceed such sum. Borrower’s right to request and
Lender’s obligation to make the advances provided in this paragraph
shall expire on the 30 day of June, 2005.
	 
	2.	 	Lender’s obligation to make any of the advances described in
this Agreement will be subject to performance and fulfillment of the
following conditions as well as those of the Security agreements
described in Paragraph II.A.

5

 

	a.	 	Presentation by Borrower of a request for advance
in the amount of eighty-percent (80%) of the net cost to
Borrower of the equipment to be purchased, together with an
executed contract for the sale of the same equipment by
Borrower to a bona fide third party.
	 
	b.	 	Compliance by Borrower with all terms and
conditions of this Loan Agreement, with respect to said Loan
and the absence of any default by Borrower hereunder.
	 
	c.	 	Payment of all fees and expenses contemplated by
this Agreement.
	 
	d.	 	Execution of all notes, security agreements and
other documents required by Lender.
	 
	e.	 	Furnishing of financial statements evidencing
sound and satisfactory financial condition of each Borrower.

VI. DEFAULT AND REMEDIES

     A. The occurrence of any one of the following events of default shall, at
the option of Lender and without notice or demand, except as described
hereunder, make all or such parts of the sums owing from Borrower to Lender
hereunder, as Lender in its discretion shall determine, immediately due and
payable:

	1.	 	Failure of Borrower to pay within 10 days after demand any
sum past due hereunder;
	 
	2.	 	Failure of Borrower to pay upon demand any debt hereunder,
the maturity of which has been accelerated;
	 
	3.	 	The breach of any warranties of Borrower herein contained in
any material respect;
	 
	4.	 	Insolvency;
	 
	5.	 	The making by Borrower of an assignment for the benefit of
creditors;
	 
	6.	 	The levy of any attachment, execution, or other like process
against any of Borrower’s property;
	 
	7.	 	The voluntary suspension of business by Borrower;
	 
	8.	 	The entry of any decree or order of a court having
jurisdiction in the premises appointing a receiver of all or any
substantial part of Borrower’s property;
	 
	9.	 	The breach by Borrower of any of the provisions of this
Agreement, or of any of the promissory notes or security instruments
described herein, if the same is not remedied within 10 days after
written notice from Lender.
	 
	10.	 	Any default by Borrower in the payment or performance of any
other obligation of Borrower to Lender, including but not limited to
any event of default under any other loan agreement between Borrower
and Lender or any failure of Borrower to timely pay any sum when due
on any indebtedness owing by Borrower to Lender, regardless of how
arising, or any breach by Borrower of any covenant in any security
agreement relating to any indebtedness of Borrower to Lender.

     B. That no waiver of any default on the part of Borrower shall be
considered waiver of any other or subsequent default and no forbearance, delay,
or omission in exercising or enforcing the rights and powers of Lender shall be
construed as a waiver of such rights and powers, and likewise no exercise or
partial exercise of any rights or powers hereunder by Lender shall be held to
preclude further exercise of such rights and powers, and every such right and
power may be exercised from time to time.

6

 

     C. The rights, powers and remedies given to Lender hereunder shall be in
addition to all rights, powers and remedies given to Lender by law against
Borrower and any other person.

     D. No action shall be commenced by Borrower for any claim against Lender
under the terms of this Loan Agreement or arising from the subject loan
relationship unless a notice in writing specifically setting forth the claim of
Borrower shall have been given to Lender within six (6) months after the
occurrence of the event which Borrower alleges gave rise to such claim.
Failure to give such notice shall constitute a waiver of any such claim.

VII. GENERAL PROVISIONS

     A. Any notice or demand required or permitted to be given hereunder by
Lender may be given in writing by depositing such notice in the United States
Mail, postage prepaid, addressed to Borrower at P. O. Box 1175, Huntsville,
Texas 77342-1175, Attn: Blake Dupuis, or such other place as Borrower shall
have designated in writing. Notice shall be deemed to have been given 48 hours
after being so deposited in the United States Mail.

     B. This agreement shall be construed under and in accordance with the laws
of the State of Texas, and all obligations of the parties created hereunder are
performable in Victoria County, Texas. Notwithstanding the provisions of this
paragraph, Chapter 346 of the Texas Finance Code shall not apply to the loan
governed by this agreement or any part thereof

     C. In any case, if any one or more of the provisions contained in this
Agreement shall for any reason be held to be invalid, illegal, or unenforceable
in any respect, such invalidity, illegality, or unenforceability shall not
affect any other provision hereof and this Agreement shall be construed as if
such invalid, illegal, or unenforceable provision had never been contained
herein.

     D. This Agreement constitutes the sole and only agreement of the parties
hereto and supersedes any prior understandings or written or oral agreements
between the parties respecting the within subject matter.

     E. This agreement shall apply to and govern the herein described
extensions of credit and all renewals, extensions and rearrangements of such
indebtedness of Borrower to Lender.

     EXECUTED on the date first hereinabove mentioned in Victoria, Victoria
County, Texas.

	 	 	 	 	 
	 	 	MITCHAM INDUSTRIES, INC.
	 
	 	 	 	 
	

	 	By:
	 	/s/ P. Blake Dupuis
	

	 	 	 	

	

	 	 	 	P. Blake Dupuis
	

	 	 	 	Its Vice President
	

	 	 	 	                                   BORROWER
	 
	 	 	 	 
	 	 	FIRST VICTORIA NATIONAL BANK
	 
	 	 	 	 
	

	 	By:
	 	/s/ John Howard
	

	 	 	 	

	

	 	 	 	John Howard
	

	 	 	 	Its Senior Vice President
	

	 	 	 	                                   LENDER

	 	 	 
	THE STATE OF TEXAS

	 	§
	

	 	§
	COUNTY OF WALKER

	 	§

     This instrument was acknowledged before me on March 20, 2004, by P. Blake
Dupuis, as Vice President of MITCHAM INDUSTRIES, INC., on behalf of said
corporation.

7

 

	 	 	 
	

	 	/s/ Susan Annette Lester
	

	 	
 
	

	 	Notary Public, State of Texas
	 
	 	 
	

	 	[SEAL AFFIXED]

	 	 	 
	THE STATE OF TEXAS

	 	§
	

	 	§
	COUNTY OF VICTORIA

	 	§

     This instrument was acknowledged before me on March 17, 2004, by John
Howard, as Senior Vice President, as of FIRST VICTORIA NATIONAL BANK, on behalf
of said corporation.

	 	 	 
	

	 	/s/ Christine M. Diaz
	

	 	
 
	

	 	Notary Public, State of Texas
	 
	 	 
	

	 	[SEAL AFFIXED]

8

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