THIS SECURITY
AGREEMENT (the “ Security Agreement ”) is
made and entered into this 2 nd day of June 2009, by and between DAWSON
GEOPHYSICAL COMPANY, a Texas Corporation, whose address is 508
West Wall Street, Suite 800, Midland, Texas 79701 (the “
Debtor ”), and WESTERN NATIONAL BANK , a
national banking association, whose address is 508 West Wall
Street, Suite 1100, Midland, Texas 79701 (the “
Secured Party ”).
NOTICE IS
TAKEN OF THE FOLLOWING:
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A.
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Reference is made to that certain
Loan Agreement, dated as of June 2, 2009, by and between
DAWSON GEOPHYSICAL COMPANY , as Borrower ( the “
Borrower ”), and the Secured Party, as Lender (the
“Loan Agreement” ). Pursuant to the terms of the
Loan Agreement, the Secured Party has agreed to extend a loan to
Borrower, from time to time, said indebtedness being evidenced by a
Revolving Line of Credit Note, dated as of June 2, 2009, in
the original principal amount of Twenty Million and No/100 Dollars
($20,000,000.00), executed by the Borrower, as Maker, to the
Secured Party, as Payee (the “ Note ”). The Loan
Agreement and the Note, and all documents executed by the parties
simultaneously therewith, as any of the same may be amended,
extended or replaced from time to time are collectively referred to
herein as the “ Credit Documents. ” Capitalized
terms not otherwise defined herein are used with the same meanings
as in the Credit Documents.
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B.
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To
induce Secured Party to extend such credit, and in support of its
performance under the Loan Agreement and the Notes, Debtor has
agreed to pledge and to grant to Secured Party a security interest
in and lien upon certain property of Debtor described more
particularly herein.
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NOW,
THEREFORE, for and in consideration of the above Recitals and
for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, Debtor hereby agrees as
follows:
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1.
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Grant of Security
Interest
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Debtor hereby pledges and grants to
Secured Party a security interest in the property described in
paragraph 2 (collectively and severally, the “
Collateral ”) to secure payment and performance of the
obligations described in paragraph 3 (collectively and severally,
the “ Obligations ”).
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2.
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Collateral
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The
Collateral shall consist of all of the Debtor’s interest in
the following:
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(i)
All of Debtor’s accounts and equipment, as those terms are
defined under the Uniform Commercial Code, as adopted by the State
of Texas, in effect as of the date of this Agreement ;
(ii) any related or additional property from time to time
delivered to or deposited with Secured Party by or for the account
of Debtor expressly securing the Obligations; (iii) all
proceeds, products, replacements, additions to, substitutions for,
accessions of, and property necessary for the operation of any of
the foregoing, including, without limitation, insurance payable as
a result of loss or damage to the foregoing property and any
proceeds thereunder, refunds or unearned premiums of any such
insurance policy, and claims against third parties; (iv) all
books and records related to any of the foregoing, including
without limitation any and all books of account, customer lists and
other records relating in any way to the accounts receivable; and
(v) any of the aforementioned collateral hereafter acquired by
Debtor as well as Collateral which Debtor now owns or in which
Debtor otherwise has rights related to any property referred to in
this Section 2.
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3.
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Obligations
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The
Obligations secured by this Security Agreement shall consist of any
and all debts, obligations, and liabilities of Debtor to Secured
Party arising out of or related to the Credit Documents (whether
principal, interest, fees, or otherwise, whether now existing or
thereafter arising, whether voluntary or involuntary, whether or
not jointly owed with others, whether direct or indirect, absolute
or contingent, contractual or tortious, liquidated or unliquidated,
arising by operation of law, or otherwise, whether or not from time
to time decreased or extinguished and later increased, created or
incurred, and whether or not extended, modified, rearranged,
restructured, refinanced, or replaced, including without
limitation, modifications to interest rates or other payment terms
of such debts, obligations, or liabilities).
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4.
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Representations and
Warranties
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In
addition to any representations and warranties of Debtor set forth
in the Credit Documents, which are incorporated herein by this
reference, Debtor hereby represents and warrants that:
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a.
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Authority. It has authority, and has completed
all proceedings and obtained all approvals and consents necessary,
to execute, deliver, and perform this Security Agreement and the
transactions contemplated hereby.
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b.
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No Default or Lien.
Such execution,
delivery, and performance will not contravene, or constitute a
default under or result in a lien upon any property of
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Debtor pursuant to any applicable
law or regulation or any contract, agreement, judgment, order,
decree, or other instrument binding upon or affecting
Debtor.
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c.
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Enforceability.
This Security Agreement
constitutes a legal, valid, and binding obligation of Debtor,
enforceable in accordance with its terms (except as enforceability
may be affected by bankruptcy, insolvency, or other similar laws
affecting the enforcement of creditor’s rights), and this
Security Agreement grants to Secured Party a valid, first-priority
perfected and enforceable lien on the Collateral.
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d.
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No Litigation.
There is no action, suit
or proceeding pending or, to the best knowledge of Debtor after
reasonable investigation, threatened against Debtor that might
adversely affect its property or financial condition in any
material respect.
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e.
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Ownership of Collateral.
Debtor is the sole owner
of and has good and marketable title to the Collateral (or, in the
case of after-acquired Collateral, at the time the Debtor acquires
rights in the Collateral, will be the sole owner thereof) and is
the record and beneficial owner of any such Collateral.
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f.
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Priority. Except for security interests in
favor of Secured Party, no person has (or, in the case of
after-acquired Collateral, at the time Debtor acquires rights
therein, will have) any right, title, claim, or interest (by way of
security interest or other lien or charge) in, against or to the
Collateral.
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g.
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Accuracy of Information.
All information
heretofore, herein or hereafter supplied to Secured Party by or on
behalf of Debtor with respect to the Collateral is true and
correct.
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h.
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Delivery of Documents.
Debtor has delivered to
Secured Party all instruments, documents, chattel paper, and other
items of Collateral in which a security interest is or may be
perfected by possession, the certificate of title with respect to
each motor vehicle, if any, included in the Collateral, and any
certificated Pledged Shares together with such additional writings,
including, without limitation, assignments and stock powers, with
respect thereto as Secured Party shall request.
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i.
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Exclusion of Certain
Collateral. Unless otherwise agreed by Secured
Party, the Collateral does not include any aircraft, watercraft or
vessels, railroad cars, railroad equipment, locomotives or other
rolling stock intended for a use related to interstate commerce,
trade names, trademarks, service marks, mask works, copyrights,
patents, fixtures or uncertificated securities.
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j.
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Enforceability Against Account
Debtors. Each
account, contract right, item of chattel paper, instrument or any
other right to the payment of money constituting Collateral is
genuine and enforceable in accordance with its terms against
the
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party obligated to pay the same (an
Account Debtor), which terms have not been modified or waived in
any respect or to any extent.
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k.
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Amount Due From Account
Debtors. Any
amount represented by Debtor to Secured Party as owing by any
Account Debtor is the correct amount actually and unconditionally
owing by such Account Debtor.
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l.
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No Account Debtor
Defense. No
Account Debtor has any defense, set off, claim, or counterclaim
against Debtor that can be asserted against Secured Party, whether
in any proceeding to enforce Secured Party’s rights in the
Collateral, or otherwise.
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5.
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Covenants and Agreements of
Debtor
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In
addition to all covenants and agreements of Debtor set forth in the
Credit Documents, which are incorporated herein by this reference,
Debtor hereby agrees:
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a.
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Preservation of
Collateral. To do all acts that may be necessary
to maintain,
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