SECURITY AGREEMENT OF 3-D GEOPHYSICAL, INC.
This Security Agreement is entered into as November 17, 1997 by and
between 3-D Geophysical, Inc., a Delaware corporation ("Debtor"), located at
0000 Xxxx Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, and SANWA BUSINESS CREDIT
CORPORATION, a corporation ("Secured Party"), located at 000 X. Xxxxx Xxxxxxxxx,
Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000.
1. Grant of Security Interest. Debtor hereby grants to Secured Party a
continuing lien on and security interest in the property described or referred
to in Paragraph 2 below (collectively, the "Collateral") to secure prompt
payment and full performance of the liabilities described in Paragraph 3 below
(collectively, the "Liabilities").
2. Collateral. The Collateral consists of all of Debtor's now owned and
hereafter acquired accounts, inventory, equipment, fixtures, contract rights,
general intangibles, chattel paper, instruments, investment property, documents,
and other property; including without limitation, the property described below
and the proceeds and products thereof:
(a) all goods of Debtor, including without limitation, machinery,
equipment, furniture, furnishings, fixtures, tools, parts, supplies and motor
vehicles of every kind and description and all improvements thereto which the
Debtor now owns or in which Debtor may have or may hereafter acquire any
interest, together with all customer lists and records of Debtor's business;
(b) all inventory of Debtor, including, but not limited to, all
merchandise, raw materials, parts, supplies, work in process, and finished
products intended for sale, of every kind and description now or at any time
hereafter owned by and in the custody or possession actual or constructive, of
Debtor, including such inventory as is temporarily out of Debtor's custody or
possession and including insurance proceeds, resulting from the sale and
disposition of any of the foregoing, including, among other things, but not
limited to, raw materials and merchandise, materials, parts, supplies, work in
process, inventories and finished products intended for sale by Debtor including
inventory temporarily removed from said premises and items in transit;
(c) all contract rights and general intangibles of Debtor,
including without limitation, goodwill, trademarks, trade styles, trade names,
patents, patent applications, copyrights, bank deposits, deposit accounts,
income tax refunds and property in the possession, deposited with or under the
control of Secured Party or any of its affiliates;
(d) all present and future accounts, accounts receivable and other
receivables and all books and records relating thereto;
(e) all documents, instruments, investment property, pledged
assets
and chattel paper; and
(f) all the products and proceeds of the foregoing, and any
replacements, additions, accessions, or substitutions thereof, all after
acquired property, all accounts or proceeds arising from the sale or disposition
of any inventory of Debtor including any returns thereof and including, where
applicable, the proceeds of insurance covering said Collateral or tort claims in
connection with the Collateral;
whether such Collateral shall be presently in existence or whether it shall be
acquired or created by Debtor at any time hereafter, wherever located, to remain
in force so long as Debtor is, in any manner, obligated to Secured Party.
3. Liabilities. The liabilities ("Liabilities") secured under this
Security Agreement are all liabilities of Debtor to Secured Party from time to
time, including, without limitation, the "Liabilities" under and as defined in
that certain Secured Continuing Corporate Guaranty dated the date hereof
("Guaranty") made by Debtor in favor of Secured Party with respect to the
obligations of Northern Geophysical of America, Inc., a Delaware corporation
("Borrower"), Debtor's affiliate, to Secured Party, arising under or related to
that certain Loan and Security Agreement dated the date hereof between Borrower
and Secured Party ("Loan Agreement").
4. Covenants of Debtor. Until the Liabilities are paid in full, Debtor
agrees that it shall, except to the extent otherwise specifically provided to
the contrary in the Loan Agreement:
(a) not sell or otherwise dispose of the Collateral except for the
sale of inventory in the ordinary course of business;
(b) not create, incur, assume or permit to exist any liens,
encumbrances, security interests, levies, assessments or charges on or in any of
the Collateral, without Secured Party's consent;
(c) appear in and defend, at Debtor's own expense, any action or
proceeding which may affect Debtor's title to or Secured Party's interest in the
Collateral;
(d) procure or execute and deliver, from time to time, in form and
substance satisfactory to Secured Party, any endorsements, assignments,
financing statements or other writings deemed necessary or appropriate by
Secured Party to perfect, maintain or protect Secured Party's security interest
in the Collateral and the priority thereof, and take such other action and
deliver such other documents, instruments and agreements pertaining to the
Collateral as Secured Party may request to effectuate the intent of this
Security Agreement;
(e) notify Secured Party in writing at least thirty (30) days
prior to
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any change in Debtor's name, identity or corporate structure, or any addition or
change to the address of Debtor specified in the introductory paragraph hereof;
(f) keep separate, accurate and complete records of the Collateral
and provide Secured Party during normal business hours with access thereto and
to Debtor's financial records, in each case with the right to make extracts
therefrom;
(g) provide Secured Party during normal business hours with access
to the Collateral, and with such other information as Secured Party may
reasonably request from time to time;
(h) maintain and preserve its corporate existence, and all rights,
privileges, franchises and other authority necessary for the conduct of its
business;
(i) continue operations in the same form and structure of business
as currently conducted, and not merge or consolidate with or acquire or be
acquired by any other corporation, partnership, entity or person, without
Secured Party's prior written consent; and
(j) comply with each of the covenants and agreements set forth in
Sections 5, 6, 7, 8 and 10 of the Loan Agreement as if such covenants were
applicable to Debtor and fully set forth herein.
5. Authorized Action By Secured Party. (a) After the occurrence of any
"Event of Default" (as defined below) and while it is continuing, Debtor hereby
irrevocably appoints Secured Party as its attorney-in-fact to do (but Secured
Party shall not be obligated to and shall not incur any liability to Debtor or
any third party for failure so to do) any act which Debtor is obligated by this
Security Agreement to do, and to exercise such rights and powers as Debtor might
exercise with respect to the Collateral, including, without limitation, the
right to:
(i) collect by legal proceedings or otherwise and endorse,
receive and receipt for all payments, proceeds and other sums and
property now or hereafter payable on or on account of the Collateral;
(ii) enter into any extension, deposit or other agreement
pertaining to, or deposit, surrender, accept, hold or apply other
property in exchange for, the Collateral;
(iii) process and preserve the Collateral; and
(iv) make any compromise, settlement or adjustment, and take
any action it deems advisable, with respect to the Collateral.
(b) Debtor agrees to reimburse Secured Party upon demand for any
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costs and expenses, including attorneys' fees, Secured Party may incur while
acting as Debtor's attorney-in-fact hereunder, all of which costs and expenses
are included in the Liabilities secured hereby and are payable upon demand, with
interest thereon at the interest rate then applicable to revolving loans under
the Loan Agreement.
(c) It is further agreed and understood between the parties hereto
that such care as Secured Party gives to the safekeeping of its own property of
like kind shall constitute reasonable care of the Collateral when in Secured
Party's possession; provided, however, that Secured Party shall not be required
to make any presentment, demand or protest, or give any notice and need not take
any action to preserve any rights against any prior party or any other person in
connection with the Liabilities or with respect to the Collateral.
(d) Whether or not Debtor is in default, Debtor agrees that
Secured Party may at any time send verification requests, and so long as an
Event of Default has not occurred, such requests will not identify Secured Party
to any account debtor on any Collateral.
(e) If Debtor's records are prepared or retained by a computer
service company or any accountant or accounting service, so long as any
Liabilities are outstanding, Debtor grants Secured Party the absolute and
irrevocable right, with reasonable notice to Debtor, to inspect such records
(including Debtor's internal work papers), receive duplicate copies of all
information furnished to Debtor and prepared by such company, accountant or
accounting service, and agrees to furnish such consents as may be necessary to
effectuate the same. Debtor further agrees to promptly notify Secured Party of
the name and address of such company, accountant or accounting service and of
any change in respect thereof.
(f) All the foregoing powers authorized herein, being coupled with
an interest, are irrevocable so long as any Liabilities are outstanding.
6. Default. The occurrence of any of the following events or conditions
(herein "Events of Default") shall constitute an Event of Default hereunder:
(a) breach, violation or nonperformance of any covenant on
Debtor's part hereunder or under the Guaranty;
(b) non-payment of any of the Liabilities as and when due and
payable to Secured Party; or
(c) any Event of Default under and as defined in the Loan
Agreement.
7. Remedies. Upon the occurrence and during the continuation of any
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Event of Default, Secured Party may, at its option, without notice to or demand
on Debtor, declare all Liabilities immediately due and payable, and Secured
Party shall have all the default rights and remedies of a secured party under
the Uniform Commercial Code as in effect in the State of California and other
applicable law as well as the following rights and remedies, all of which may be
exercised with or without further notice to Debtor:
(a) to the extent permitted by law, to notify any and all obligors
and account debtors on the Collateral that the same has been assigned to Secured
Party and that all payments thereon are to be made directly to Secured Party;
(b) to settle, compromise or release, on terms acceptable to
Secured Party, in whole or in part, any amounts owing on the Collateral, and to
extend the time of payment, make allowances and adjustments and to issue credits
in Secured Party's name or in the name of Debtor in respect thereof;
(c) to enter any premises where any Collateral may be located and
to take possession of and remove the Collateral, with or without judicial
process;
(d) to sell or otherwise dispose of the Collateral or any part
thereof, for cash, on credit or otherwise, with or without representations or
warranties, and upon such terms as shall be acceptable to Secured Party;
(e) to remove from any premises where the same may be located, any
and all documents, instruments, files and records relating to the collateral,
and Secured Party may, at Debtor's expense, use the supplies and space of Debtor
at its places of business as may be necessary to properly administer and control
the Collateral or the handling of collections and realizations thereon;
(f) receive, open and dispose of all mail addressed to Debtor and
notify postal authorities to change the address for delivery thereof to such
address as Secured Party may designate; and
(g) take or bring, in Secured Party's name or in the name of
Debtor, all steps, actions, suits or proceedings deemed by Secured Party
necessary or desirable to effect collection of or to realize upon the
Collateral,
all at Secured Party's sole option and as Secured Party in its sole discretion
may deem advisable.
8. Application of Proceeds of Collateral. The net cash proceeds
resulting from the collection, liquidation, sale or other disposition of the
Collateral shall be applied first to the expenses (including all attorneys'
fees) of retaking, holding, processing and preparing for sale, selling,
collecting, liquidating and the like, and then to the satisfaction of all
Liabilities secured hereby, application as to any particular obligation or
indebtedness or
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against principal or interest to be in Secured Party's discretion. Debtor shall
be liable to Secured Party and shall pay to Secured Party on demand any
deficiency which may remain after such sale, disposition, collection or
liquidation of Collateral.
9. Cumulative Rights. The rights, powers and remedies of Secured Party
under this Security Agreement shall be in addition to all rights, powers and
remedies given to Secured Party under any statute or rule of law or any other
document, instrument or agreement, all of which rights, powers and remedies
shall be cumulative and may be exercised successively or concurrently.
10. Waiver. Any forbearance, failure or delay by Secured Party in
exercising any right, power or remedy shall not preclude the further exercise
thereof, and every right, power or remedy of Secured Party shall continue in
full force and effect until such right, power or remedy is specifically waived
in a writing executed by Secured Party. Debtor waives any right to require
Secured Party to proceed against any person or to exhaust any Collateral or to
pursue any remedy in Secured Party's power prior to pursuing Debtor in respect
of the Liabilities.
11. Setoff. Debtor agrees that Secured Party may exercise its rights of
setoff with respect to the Liabilities in the same manner as if the Liabilities
were unsecured.
12. Binding Upon Successors. All rights of Secured Party under this
Security Agreement shall inure to the benefit of its successors and assigns, and
all obligations of Debtor shall bind the representatives, executors,
administrators, heirs, successors and assigns of the Debtor.
13. Entire Agreement; Severability. This Security Agreement contains
the entire security agreement between Secured Party and Debtor with respect to
the Collateral. If any of the provisions of this Security Agreement shall be
held invalid or unenforceable, this Security Agreement shall be construed as if
not containing those provisions and the rights and obligations of the parties
hereto shall be construed and enforced accordingly.
14. References. The captions or titles of the paragraphs of this
Security Agreement are for convenience of reference only and shall not define or
limit the provisions hereof.
15. Governing Law; Waivers. This Agreement shall be interpreted in
accordance with the internal laws (and not the conflict of laws rules) of the
State of California governing contracts to be performed entirely within such
state. Debtor hereby consents to the exclusive jurisdiction of any state or
federal court located within the County of Los Angeles in the State of
California or, at the sole option of Secured Party, in any other court in which
Secured Party shall initiate legal or equitable proceedings and which has
subject matter jurisdiction over the matter in controversy. Debtor waives any
objection of forum non conveniens and venue. Debtor further waives personal
service of any and all
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process upon it, and consents that all such service of process be made in the
manner set forth in Section 17 hereof for the giving of notice. BOTH DEBTOR AND
SECURED PARTY WAIVE ANY RIGHT TO TRIAL BY JURY TO THE EXTENT PERMITTED BY LAW.
16. Attorneys' Fees. If any legal action or proceeding shall be
commenced at any time by any party to this Agreement in connection with the
interpretation of this Agreement or the enforcement of any rights or remedies
hereunder, the prevailing party or parties in such action or proceeding shall be
entitled to reimbursement of its reasonable attorneys' fees and costs in
connection therewith, in addition to all other relief to which the prevailing
party or parties may be entitled.
17. Notice. Any written notice, consent or other communication provided
for in this Security Agreement shall be delivered personally (effective upon
delivery), via overnight courier (effective the next day after dispatch) or via
U.S. Mail (effective 3 days after mailing, postage prepaid, first class) to each
party at its address set forth above, or to such other address as either party
shall specify to the other; provided, that all notices to Secured Party shall be
copied to any assignee of Secured Party's rights hereunder.
18. Counterparts. This Security Agreement may be executed in any number
of counterparts, and by the parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.
SECURED PARTY: DEBTOR:
SANWA BUSINESS CREDIT 3-D GEOPHYSICAL, INC.
CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxxx X. Xxxxx
--------------------- -------------------
Its: First Vice President Its: Vice President
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