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EXHIBIT 10.10
MASTER SECURITY AGREEMENT NO. 32567
LENDER: FLEET CAPITAL CORPORATION CUSTOMER: EAGLE GEOPHYSICAL ONSHORE, INC.
a Rhode Island corporation a Delaware Corporation
ADDRESS: 50 Xxxxxxx Plaza ADDRESS: 00 Xxxxx Xxxxxx Xxxx
Xxxxxxxxxx, Xxxxx Xxxxxx 00000-0000 0xx Xxxxx Xxxx
Xxxxxxx, XX 00000
1. GRANT OF SECURITY INTEREST; DEFINITIONS.
Subject to the terms and conditions set forth herein (the "MASTER
SECURITY AGREEMENT") and in any Equipment Security Agreement Schedule
incorporating the terms of this Master Security Agreement (each, an "EQUIPMENT
SCHEDULE"), Customer hereby grants to Fleet Capital Corporation ("LENDER") a
security interest in and to all Collateral (hereinafter defined) in order to
secure the payment and performance of all Obligations (hereinafter defined),
including but not limited to any Obligations evidenced by one or more promissory
or installment notes which specifically refer to an Equipment Schedule (the
"NOTE(S)"). The extent to which Lender's security interest in any item of
Collateral shall be entitled to purchase money priority shall be determined by
reference to the unpaid principal balance of any Note evidencing the financing
of the purchase price of such item of Equipment.
References to "THE SECURITY AGREEMENT," "THIS SECURITY AGREEMENT" or
"ANY SECURITY AGREEMENT" shall mean and refer to any Equipment Schedule which
incorporates the terms of this Master Security Agreement, together with all
exhibits, addenda, schedules, certificates, riders and other documents and
instruments executed and delivered in connection with such Equipment Schedule,
all as the same may be amended or modified from time to time. Each Equipment
Schedule shall constitute a separate, distinct and independent security
agreement and contractual obligation of Customer. "AFFILIATE" means, with
respect to any person, firm or entity, any other person, firm or entity
controlling, controlled by, or under common control with such person, firm or
entity, and for this purpose, "control" means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of any such person, firm or entity, whether through the legal or
beneficial ownership of voting securities, by contract or otherwise.
Notwithstanding anything to the contrary, Seitel, Inc. and its wholly-owned
subsidiaries shall not be an Affiliate of Customer for purposes of this Security
Agreement. "COLLATERAL" means the Equipment and all present or future additions,
attachments, accessions or accessories thereto and replacements thereof, all
tools, manuals, service records, software and similar information and materials
related to such Equipment, and the proceeds, from the sale, lease or other
disposition of the Equipment, in the form of goods, accounts, chattel paper,
documents, instruments and general intangibles, and insurance proceeds payable
in respect of loss or damage to such Collateral. "EQUIPMENT" means machinery and
equipment now owned or hereafter acquired by Customer, wherever the same may be
located, which is described in one or more Equipment Schedules entered into from
time to time by the parties hereto. The term "ITEM OF EQUIPMENT" shall mean each
functionally integrated and marketable group or unit of Equipment; and any
determination of the outstanding principal balance of the Note
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with respect to any item of Equipment shall include the unpaid total amount of
all vendor or seller invoices (including Customer invoices, if any) for such
group or unit of Equipment, together with all costs of delivery, installation,
testing and related services, accessories, supplies or attachments from vendors
or supplier's thereof (including Customer provided items) financed by Lender in
connection with such group or unit of Equipment, together with all acquisition
fees and costs of delivery, installation, testing and related services,
accessories, supplies or attachments procured or financed by Lender from vendors
or suppliers thereof (including items provided by Customer) relating to or
allocable to such item of Equipment ("RELATED EXPENSES"). "OBLIGATIONS" means
all indebtedness, obligations and liabilities of Customer or any Affiliate of
Customer owing to Lender of every kind and description, direct or indirect,
secured or unsecured, joint or several, absolute or contingent, due or to become
due, whether for payment or performance, now existing or hereafter arising,
regardless of how the same arise or by what instrument, agreement or book
account they may be evidenced, or whether evidenced by any instrument, agreement
or book account, including, without limitation, all loans (including any loan by
renewal or extension of existing indebtedness or liability), all indebtedness,
all obligations for the deferred purchase price or rental of any property or of
any of the Collateral, all undertakings to take or refrain from taking any
action, and all interest, taxes, fees, charges, expenses and attorneys fees
chargeable to Customer or incurred by Lender under this Security Agreement, or
any other document or instrument delivered in connection herewith. As used
herein with respect to any Obligation or Equipment or Collateral: (a) the
following terms shall have the meanings or values defined or assigned to them in
the applicable Equipment Schedule therefor: "ACCEPTANCE DATE," "ADVANCE
PAYMENT(S)," "EQUIPMENT LOCATION(S)," "SECURITY DEPOSIT"; and (b) the following
terms shall have the meanings or values assigned to them in the applicable Note
therefor: "PAYMENTS," "PAYMENT DATES," "MATURITY DATE," "INTEREST RATE." To the
extent not otherwise specifically defined in this Master Security Agreement,
unless the context otherwise requires, all other terms contained in this Master
Security Agreement shall have the meanings assigned or referred to them in the
Uniform Commercial Code in force in the State of Rhode Island (the "UCC") to the
extent the same are used or defined therein.
2. CUSTOMER REPRESENTATIONS, WARRANTIES, COVENANTS.
Customer hereby represents and warrants to and covenants with Lender
that, as of the date hereof and for so long as any Obligations shall remain
outstanding: (a) Customer is duly organized and is existing in good standing
under the laws of its jurisdiction of organization and is duly qualified and in
good standing in those jurisdictions where the conduct of its business or the
ownership of its properties requires qualification, except where failure to be
so qualified does not have a material adverse effect on Customer; (b) Customer
has the power and authority to own the Collateral, to enter into and perform
this Security Agreement and any other document or instrument delivered in
connection herewith and to incur the Obligations; (c) Customer's chief executive
office is located at the address set forth above and Customer shall furnish
Lender with at least 30 days prior written notice of any change thereto; (d)
Customer utilizes no trade names in the conduct of its business; (e) Customer
has not changed its name, been the surviving entity in a merger, acquired any
business; or changed the location of its chief executive office within the
previous five years, except as may have been specifically disclosed to Lender in
writing prior to the date hereof and 30 days prior to such future event; (f) the
execution and performance of this Security Agreement, the Notes
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and any other document or instrument delivered in connection herewith will not
result in the creation or imposition of any lien or encumbrance upon any of the
Collateral, except in favor of Lender pursuant hereto; (g) this Security
Agreement, the Notes and any document or instrument delivered in connection
herewith and the transactions contemplated hereby or thereby are duly
authorized, executed and delivered, and this Security Agreement, the Notes and
such other documents and instruments constitute valid and legally binding
obligations of Customer and are enforceable against Customer in accordance with
their respective terms; (h) Customer has filed all federal, state and local tax
returns and other reports it is required to file and has paid or made adequate
provision for payment of all such taxes, assessments and other governmental
charges; (i) Except as disclosed in writing by Customer to Lender from time to
time promptly upon Customer's knowledge thereof, there are no pending or
threatened actions or proceedings before any court or administrative agency
which materially adversely affect Customer's financial condition or operations;
(j) no representation, warranty or statement by Customer contained herein or in
any certificate or other document furnished or to be furnished by Customer
pursuant hereto contains or at the time of delivery shall contain any untrue
statement of material fact, or omits, or shall omit at the time of delivery, to
state a material fact necessary to make it not misleading; (k) Customer shall
cause Eagle Geophysical, Inc. (hereinafter "GUARANTOR") to furnish Lender: (x)
within 120 days after the close of each fiscal year of Guarantor, a copy of its
consolidated financial statements, including a balance sheet, income statement,
statement of retained earnings and a statement of cash flows, prepared in
accordance with GAAP (as hereinafter defined) and signed by an independent
certified public accountant satisfactory to Lender in its reasonable discretion;
(y) within 45 days after the close of each of the first three (3) quarters of
each fiscal year of Guarantor, unaudited consolidated financial statements
similar to those described in the immediately preceding clause, prepared by
Guarantor in accordance with GAAP (as hereinafter defined) and certified by the
chief financial officer of Guarantor; and (z) promptly upon request of Lender,
in form satisfactory to Lender, such other and additional information as Lender
may reasonably request from time to time; (l), Customer shall permit Lender,
through its authorized attorneys, accountants and representatives, to inspect
and examine the Collateral and the books, accounts, records, ledgers and assets
of every kind and description of Customer with respect thereto at all reasonable
times, provided, however, for so long as no Event of Default (or event or
condition which, with the passage of time or giving of notice, or both, would
become such an Event of Default) has occurred and is continuing, Lender shall
provide prior written notice to Customer of such inspection and examination; (m)
Customer shall promptly inform Lender of any Defaults (defined below) or any
events or changes in the financial condition of Customer occurring since the
date of the last financial statements of Customer delivered to Lender which,
individually or cumulatively, when viewed in light of prior financial
statements, may result in a material adverse change in the financial condition
of Customer; (n) Customer shall pay or deposit promptly when due all sales, use,
excise, personal property, income, withholding, corporate, franchise and other
taxes, assessments and governmental charges upon or relating to its ownership or
use of any of the Collateral and submit to Lender upon request, proof
satisfactory to Lender that such payments and/or deposits have been made; (o) if
Customer shall now or hereafter maintain an employee benefit plan covered by
Section 4021(a) of the Employee Retirement Income Security Act of 1974
("ERISA")relating to plan termination insurance, Customer is not aware as of the
date hereof, and shall promptly notify Lender hereafter upon notice or knowledge
of: (x) the filing of notice with the Pension Benefit Guaranty
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Corporation (the "PBGC") pursuant to Section 4041 of ERISA that such plan is to
be terminated; and (y) the institution of proceedings by the PBGC under Section
4042 of ERISA; (p) Customer shall at any time and from time to time upon request
of Lender, execute and deliver to Lender, in form and substance satisfactory to
Lender, such documents as Lender shall deem necessary or desirable to perfect or
maintain perfected the security interest of Lender in the Collateral or which
may be necessary to comply with the provisions of the law of any jurisdiction in
of which Customer may then be conducting business or in which any of the
Collateral may be located and (q) throughout the term of this Security
Agreement, Guarantor shall comply, with all of the following financial
covenants:
(i) Current Ratio. Guarantor shall maintain a Current Ratio, of not less than
1.15 to 1, determined as of the end of Guarantor's fiscal year.
(ii) Minimum Tangible Net Worth. Guarantor's minimum Tangible Net Worth shall
be not less than (a) $45,000,000.00 or (b) 95% of the equity raised by the
August 11, 1997, initial public offering of the common stock, plus 70% of
positive Net Income determined as of the end of Guarantor's most recent fiscal
quarter .
(iii) Minimum Quarterly Cash Flow. Guarantor's ratio of cash flow to Debt
Service shall not be less than 1.25 to 1.
(iv) Disparity between proforma and audited results for fiscal year 1997 .
Guarantor's audited figures for Guarantor's fiscal year 1997 shall not be
qualified or materially different from the proforma information, dated September
30, 1997 and December 31, 1997, and provided to Lender by Guarantor.
(v) Certification of Compliance. Customer shall cause Guarantor to furnish,
within 45 days of the end of each of Guarantor's fiscal quarters, and within 120
days of each of Guarantor's fiscal year ends, a Compliance Certificate,
substantially in the form of Exhibit A attached hereto, certified by Guarantor's
chief financial officer, as to the compliance with the above-referenced
covenants.
For purposes of calculating the foregoing covenants, the following definitions
shall apply:
"Cash Flow" shall be defined as the sum of net income plus depreciation and
other non-cash charges less non-cash income of Guarantor.
"Current Assets" shall mean at any time, all assets that should in accordance
with GAAP (as hereinafter defined), be classified as current assets.
"Current Liabilities" shall mean at any time, all liabilities that should in
accordance with GAAP (as hereinafter defined), be classified as current
liabilities.
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"Current Ratio" shall be defined as Current Assets divided by Current
Liabilities, excluding current maturities of long term debt.
"Debt Service" shall be defined for any fiscal quarter as the sum of (a)
principal amounts required to be paid during such quarter on indebtedness other
than in connection with Guarantor's revolving line of credit with Bank One,
Texas, N.A., plus (b) lease payments required to be paid during such quarter in
connection with capital leases, plus (c) the outstanding principal balance due
at the beginning of such quarter on Guarantor's revolving line of credit with
Bank One, Texas, N.A., divided by sixteen.
"GAAP" shall mean generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
observed in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Person" means an individual, company, corporation, partnership, limited
partnership, joint venture, trust, association, unincorporated organization or a
government or any agency or political subdivision thereof.
"Tangible Net Worth" means the total assets of Guarantor exclusive of (a) those
assets classified as intangible, including, without limitation, goodwill,
patents, trademarks, trade names, copyrights, franchises and deferred charges,
(b) treasury stock and minority interests in any Person, (c) cash set apart and
held in a sinking or other analogous fund established for the purpose of
redemption or other retirement of capital stock, (d) to the extent not already
deducted from total assets, allowances for depreciation, depletion, obsolescence
and/or amortization or properties, uncollectible accounts, and contingent but
probable liabilities as to which an amount can be established, (e) deferred
taxes and (f) all assets arising from advances to officers, former officers or
sales representatives of Guarantor made outside of the ordinary course of
business; less total liabilities of Guarantor.
All other financial terms contained herein that are not specifically defined
herein shall have meanings determined in accordance with GAAP. The foregoing
covenants shall be calculated based on Guarantor's consolidated financial
statements.
3. COLLATERAL REPRESENTATIONS, WARRANTIES, COVENANTS.
Customer hereby further represents and warrants to and covenants with
Lender that, as of the date hereof and for so long as any Obligations shall
remain outstanding: (a) Customer is the owner of the Collateral free and clear
of all rights, title, security interests, encumbrances or liens of any other
party other than Permitted Liens (as hereinafter defined), and Customer will
defend the Collateral against all claims and demands of all persons at any time
claiming any interest therein; (b) the Equipment is personal property even
though the Equipment may hereafter become attached
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or affixed to real property; (c) the location(s) where the Collateral is stored
when not being used by Customer on a project, if not owned by Customer, are
leased by Customer pursuant to valid leases or rental agreements which permit
the possession, use and operation of the Equipment at said locations; (d)
Customer shall provide Lender with disclaimers and waivers from landlords,
mortgagees and other persons holding any interest or claim in and to any such
location or any Collateral, reasonably acceptable in all respects to Lender,
which may be necessary or advisable in the sole discretion of Lender to confirm
that the first priority security interest and rights of Lender in the Collateral
are and will remain valid against all other parties; (e) Customer shall not,
without the prior written consent of Lender, sell, offer to sell, lease, rent,
hire or in any other manner dispose, transfer or surrender use and possession of
any Equipment; (f) Customer will not, directly or indirectly, create, incur or
permit to exist any lien, encumbrance, mortgage, pledge, attachment or security
interest on or with respect to the Equipment except in favor of Lender under the
terms of this Security Agreement; (g) Customer shall deliver to Lender any and
all evidence of ownership of, and certificates of title to, any and all of the
Equipment; (h) Customer shall permit each item of Equipment to be used only
within the continental United States by qualified personnel solely for business
purposes and the purpose for which it was designed and, at its sole expense,
shall service, repair, overhaul and maintain each item of Equipment in the same
condition as when received, ordinary wear and tear excepted, in good operating
order, consistent with prudent industry practice (but, in no event less than the
same extent to which Customer maintains other similar equipment in the prudent
management of its assets and propertie(s) and in compliance with all applicable
laws, ordinances, regulations, and conditions of all insurance policies required
to be maintained by Customer under the Security Agreement and all manuals,
orders, recommendations, instructions and other written requirements as to the
repair and maintenance of such item of Equipment issued at any time by the
vendor and/or manufacturer thereof (i) Customer shall furnish to Lender such
information concerning the condition, location, use and operation of the
Equipment as Lender may request; (j) Customer shall permit any person designated
by Lender to visit and inspect any item of Equipment and any records maintained
in connection therewith, provided, however, that the failure of Lender to
inspect the Equipment or to inform Customer of any noncompliance shall not
relieve Customer of any of its Obligations hereunder, and further provided, that
for so long as no Event of Default (or event or condition which, with the
passage of time or giving of notice, or both, would become such an Event of
Default) has occurred and is continuing, Lender shall provide prior written
notice to Customer of such inspection; (k) if any item of Equipment does not
comply with the requirements of this Security Agreement, Customer shall, within
30 days of written notice from Lender, bring such Equipment into compliance with
the provisions hereof; (l) Customer shall not use any Equipment, nor allow the
same to be used, for any unlawful purpose, nor in connection with any property
or material that would subject the Lender to any liability under any state or
federal statute or regulation pertaining to the production, transport, storage,
disposal or discharge of hazardous or toxic waste or materials and (m) from time
to time promptly upon the written request of Lender, Customer shall provide
Lender with a certificate executed by a duly authorized officer of Customer
certifying the location of the Equipment and, a description of the vehicle which
the Equipment is attached and the identity of any owner of such vehicle and/or
of any third party which claims a security interest in such vehicle. Promptly
upon the attaching of the Equipment to a vehicle, Customer shall either certify
to Lender that the owner of such vehicle and any third party security
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interest holder in such vehicle do not claim any interest in the vehicle or, to
the extent that Customer has not already provided a release of any such interest
to Lender, provide Lender with releases of any interest in the Equipment from
any third party owner of the Equipment to which the Equipment becomes affixed
and/or from any third party which claims a security interest in the Equipment to
which the Equipment becomes attached. Such release shall be satisfactory in form
and substance to the Lender.
As used herein, Permitted Liens means (a) claims or liens for taxes,
assessments, or similar charges, incurred in the ordinary course of business
that are not yet due and payable or (b) claims or liens for taxes, assessments,
or similar charges, that are due and remain unpaid, if the validity or amount
thereof is being contested in good faith by appropriate and lawful proceedings,
so long as levy and execution thereon have been stayed and continue to be
stayed, and in Lender's sole judgment said proceedings do not, separately or in
the aggregate involve any danger of the sale, forfeiture or loss of, or the loss
of the use of, an item of Equipment or any interest therein.
4. SELECTION AND USE OF EQUIPMENT; DISCLAIMER OF WARRANTIES.
Customer has selected each item of Equipment and the manufacturer
and/or supplier thereof based on its own judgment, and expressly disclaims any
reliance upon any statements or representations made by Lender. If the Equipment
is not delivered, is not properly installed, does not operate as warranted by
the manufacturer or supplier thereof, becomes obsolete, or is unsatisfactory for
any reason whatsoever, Customer shall make all claims on account thereof solely
against the manufacturer or supplier thereof and not against Lender. Customer
acknowledges that neither the manufacturer or supplier of the Equipment, nor any
sales representative or agent thereof, is an agent of Lender, and no agreement
or representation as to the Equipment or any other matter by any such sales
representative or agent of the manufacturer or supplier shall in any way affect
any of the Notes or the Obligations.
LENDER IS NOT THE MANUFACTURER OR SUPPLIER OF THE EQUIPMENT, NOR THE AGENT
THEREOF, AND MAKES NO EXPRESS OR IMPLIED REPRESENTATIONS OR WARRANTIES AS TO ANY
MATTER WHATSOEVER, INCLUDING WITHOUT LIMITATION, THE MERCHANTABILITY OF THE
EQUIPMENT, ITS FITNESS FOR A PARTICULAR PURPOSE, ITS DESIGN OR CONDITION, ITS
CAPACITY OR DURABILITY, THE QUALITY OF THE MATERIAL OR WORKMANSHIP IN THE
MANUFACTURE OR ASSEMBLY OF THE EQUIPMENT, OR THE CONFORMITY OF THE EQUIPMENT TO
THE PROVISIONS AND SPECIFICATIONS OF ANY PURCHASE ORDER RELATING THERETO, OR
PATENT INFRINGEMENTS, AND LENDER HEREBY DISCLAIMS ANY SUCH WARRANTY. LENDER IS
NOT RESPONSIBLE FOR ANY REPAIRS OR SERVICE TO THE EQUIPMENT, DEFECTS THEREIN OR
FAILURES IN THE OPERATION THEREOF.
5. RISK OF LOSS AND DAMAGE; INSURANCE.
Customer assumes all risk of loss, damage or destruction to the
Equipment from whatever cause and for whatever reason. If all or a portion of an
item of Equipment shall become lost, stolen, destroyed, damaged beyond repair or
rendered permanently unfit for use for any reason, or in the
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event of any condemnation, confiscation, theft or seizure or requisition of
title to or use of such item ("EVENT OF LOSS"), Customer shall promptly either:
(i) pay to Lender an amount equal to the outstanding principal balance of the
applicable Note with respect to such item of Equipment as of the next following
Payment Date, plus all accrued interest and other charges then due and owing
hereunder and under the Note or (ii) upon delivery of at least fifteen (15) days
prior written notice to Lender, Customer may substitute any item of Equipment
with other equipment of like kind and having the same or greater value, utility
and useful life ("REPLACEMENT EQUIPMENT"). Notwithstanding any such Event of
Loss, in the event of any such substitution the Customer's obligation to pay
hereunder and under the applicable Note shall continue. In the event of any
substitution of Equipment with Replacement Equipment, immediately upon
effectiveness of such substitution and without further act: (i) Lender shall be
named as lienholder as to the Replacement Equipment, (ii) title to the replaced
Equipment shall thereupon be free and clear of all the Lender's liens and shall
no longer be deemed Equipment hereunder; and (iii) such Replacement Equipment
shall become Equipment for all purposes under this Security Agreement. Upon the
substitution of Replacement Equipment, the following documents shall be duly
authorized, executed and delivered by the respective party or parties thereto
and shall be in full force and effect delivered to the Lender at no cost or
expense to the Lender; (a) a substitution agreement in form and substance
acceptable to Lender; (b) evidence satisfactory to Lender that the Replacement
Equipment is of like kind and has equal or greater value, useful life and
utility than the Equipment it replaces; (c) all documentation reasonably
requested by Lender to effectuate a first-in-priority lien and security interest
in the Replacement Equipment being substituted; and (d) all other documents
Lender reasonably deems necessary. For so long as any Obligations shall remain
outstanding, Customer shall procure and maintain insurance in such amounts and
with such coverages, and upon such terms and with such companies, as Lender may
approve, at Customer's expense, provided, however, that in no event shall such
insurance be less than the following coverages and amounts: (a) Worker's
Compensation and Employer's Liability Insurance, in the full statutory amounts
provided by law; (b) Comprehensive General Liability Insurance including
product/completed operations and contractual liability coverage, with minimum
limits of the greater of: (i) $ 1,000,000 each occurrence, and Combined Single
Limit Bodily Injury and Property Damage, $ 1,000,000 aggregate, where
applicable, or (ii) as otherwise specified in any Equipment Schedule hereto; and
(c) All Risk Physical Damage Insurance, including earthquake and flood, on each
item of Equipment, in an amount not less than the greater of (i) the outstanding
principal balance owing under any Note with respect to the Equipment; or (ii)
its full replacement value. On each such policy Lender will be included as an
additional insured and loss payee as its interest may appear. Such policies
shall be endorsed to provide that the coverage afforded to Lender shall not be
rescinded, impaired or invalidated by any act or neglect of Customer. Customer
agrees to waive Customer's rights and its insurance carrier's rights of
subrogation against Lender for any and all loss or damage. All policies shall be
endorsed or contain a clause requiring the insurer to furnish Lender with at
least 30 days' prior written notice of any material change, cancellation or
non-renewal of coverage. Upon execution of this Security Agreement, Customer
shall furnish Lender with a certificate of insurance or other evidence
satisfactory to Lender that such insurance coverages are in effect, provided,
however, that Lender shall be under no duty either to ascertain the existence of
or to examine such insurance coverage or to advise Customer in the event such
insurance coverage should not comply with the requirements
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hereof. If Customer shall at any time or times hereafter fail to obtain and/or
maintain any of the policies of insurance required herein, or fail to pay any
premium in whole or in part relating to any such policies, Lender may, but shall
not be obligated to, obtain and/or cause to be maintained insurance coverage
with respect to the Collateral, including, at Lender's option, the coverage
provided by all or any of the policies of Customer and pay all or any part of
the premium therefor, without waiving any Event of Default by Customer, and any
sums so disbursed by Lender shall be additional Obligations of Customer to
Lender payable on demand. Lender shall have the right to settle and compromise
any and all claims under any of the policies required to be maintained by
Customer hereunder and Customer hereby appoints Lender as its attorney-in-fact,
with power to demand, receive and receipt for all monies payable thereunder, to
execute in the name of Customer or Lender or both any proof of loss, notice,
draft or other instruments in connection with such policies or any loss
thereunder and generally to do and perform any and all acts as Customer, but for
this appointment, might or could perform.
6. EVENTS OF DEFAULT.
An "EVENT OF DEFAULT" under any Security Agreement shall be deemed to
have occurred upon the occurrence or existence of any one or more of the
following events or conditions (each a "DEFAULT") and after the giving of any
required notice or the passage of any required period of time (or both)
specified below with respect to such Default: (a) Customer shall fail to make
any Payment due under any Note within 10 days of its due date; or (b) Customer
shall fail to obtain or maintain any of the insurance required under any
Security Agreement; or (c) Customer shall fail to perform or observe any
covenant, condition or agreement under any Security Agreement, and such failure
continues for 10 days after notice thereof to Customer; or (d) Customer or any
Affiliate of Customer shall default in the payment or performance of any
Obligation owing to Lender, or any indebtedness or obligation owing to any
Affiliate of Lender, under any note, security agreement, equipment lease, title
retention or conditional sales agreement or any instrument or agreement
evidencing such indebtedness with Lender or any such Affiliate of Lender; or (e)
any representation or warranty made by Customer herein or in any certificate,
agreement, statement or document hereto or hereafter furnished Lender, including
without limitation any financial information disclosed to Lender, shall prove to
be false or incorrect in any material respect; or (f) the commencement of any
bankruptcy (which, in the case of any such involuntary proceeding is not
dismissed, terminated or stayed within ninety (90) days of such filing),
insolvency, arrangement, reorganization, receivership, liquidation or other
similar proceeding by or against Customer or any of its properties or
businesses, or the appointment of a trustee, receiver, liquidator or custodian
for Customer or any of its properties or businesses, or if Customer suffers the
entry of an order for relief under Title 11 of the United States Code; or (g)
the making by Customer of a general assignment or deed of trust for the benefit
of creditors; or (h) Customer shall default in any payment or other obligation,
with respect to any indebtedness, conditional sale, time sale, lease or other
financing obligation of which the then outstanding balance exceeds One Million
($1,000,000.00) Dollars, to any third party and any applicable grace or cure
period with respect thereto has expired; or (i) Customer shall terminate its
existence by merger, consolidation, sale of substantially all of its assets or
otherwise; or (j) if Customer is a privately held corporation, more than the 50%
of Customer's voting capital stock, or effective control of Customer's voting
capital stock, issued and outstanding from time to time, is not
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retained by the holders of such stock on the date of this Security Agreement; or
(k) if Customer is a publicly held corporation, there shall be a change in the
ownership of Customer's stock such that Customer is no longer subject to the
reporting requirements of the Securities Exchange Act of 1934 or no longer has a
class of equity securities registered under Section 12 of the Securities Act of
1933; or (l) Guarantor shall fail to perform or observe any covenant contained
in Section 2(q) of this Master Security Agreement; or (m) any event or condition
set forth in subsections (b) through (k) of this Section 6 shall occur with
respect to any guarantor or other person liable or responsible, in whole or in
part, for payment or performance of any Obligations; or (n) any event or
condition set forth in subsections (e) through (k) shall occur with respect to
any Affiliate of Customer. Customer shall promptly notify Lender of the
occurrence of any Event of Default or the occurrence or existence of any event
or condition which, upon the giving of notice of lapse of time, or both, would
constitute an Event of Default.
7. RIGHTS AND REMEDIES; MANDATORY PREPAYMENT.
Upon the occurrence of an Event of Default, Lender shall have all of
the rights and remedies enumerated herein (all of which are cumulative and not
exclusive of any other right or remedy available to Lender): (a) Lender may
declare, at its option, all or any part of the Obligations immediately due and
payable, without demand, notice of intention to accelerate, notice of
acceleration, notice of nonpayment, presentment, protest, notice of dishonor, or
any other notice whatsoever, all of which are hereby waived by Customer and any
endorser, guarantor, surety or other party liable in any capacity for any of the
Obligations; (b) Lender shall have the right to enter and/or remain upon the
Equipment location(s) without any obligation to pay rent to Customer or others,
or any other place or places where any of the Collateral is located and kept
and: (i) remove Collateral therefrom to the premises of Lender or any agent of
Lender, for such time as Lender may desire, in order to maintain, collect, sell
and/or liquidate the Collateral; (ii) use such premises, together with
materials, supplies, books and records of Customer, to maintain possession
and/or the condition of the Collateral, and to prepare the Collateral for
selling, liquidating or collecting; or (iii) without removing the Collateral
from such premises, render the Collateral unusable by the Customer or by any
other party in possession thereof or with an interest therein; (c) Lender may
require Customer to assemble the Collateral and make it available to Lender at a
place to be designated by Lender; (d) Lender shall have the right to set-off,
without notice to Customer, any and all deposits or other sums at any time or
times credited by or due from Lender, to Customer, whether in a special account
or other account or represented by a certificate of deposit (whether or not
matured) which deposits and other sums may be set-off against all or any part of
the Obligations; and (e) Lender shall have, in addition to any other rights and
remedies contained in this Security Agreement and any other agreements,
guarantees, notes, instruments and documents heretofore, now or at any time or
times hereafter executed by Customer and delivered to Lender, all of the rights
and remedies of a secured party under the UCC. If Lender seeks to take
possession of any or all of the Collateral by court process, Customer hereby
irrevocably waives any bonds and any surety or security relating thereto
required by any statute, court rule or otherwise as an incident to such
possession, and waives any demand for possession prior to the commencement of
any suit or action to recover with respect thereto. Any notice required to be
given by Lender of a sale or other disposition or other intended action by
Lender with respect to any of the Collateral or otherwise which is made in
accordance with
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the terms of this Security Agreement at least five (5) days prior to such
proposed action, shall constitute fair and reasonable notice to Customer of any
such action. Lender shall be liable to Customer only for its gross negligence or
willful misconduct in failing to comply with any applicable law imposing duties
upon Lender; Lender's liability for any such failure shall be limited to the
actual loss suffered by Customer directly resulting from such failure; and in no
event shall Lender have any liability to Customer for incidental, consequential,
punitive or exemplary damages. All expenses of retaking, holding, preparing for
sale, selling or the like and any other expenses incurred by Lender in
connection with the exercise of any of its rights and remedies hereunder shall
constitute additional Obligations secured by the Collateral hereunder. If Lender
shall employ counsel to commence, defend or intervene, file a petition,
complaint, answer, motion or other pleadings, or to take any other action in or
with respect to any suit or proceeding (bankruptcy or otherwise) relating to
this Security Agreement, the Collateral or any other agreement, guaranty, note,
instrument or document heretofore, now or at any time or times hereafter
executed by Customer and delivered to Lender, or to protect, collect, lease,
sell, take possession of or liquidate any of the Collateral, or to attempt to
enforce or to enforce any security interest in any of the Collateral, or to
enforce any rights of Lender hereunder, whether before or after the occurrence
of any Event of Default, or to collect any of the Obligations, then in any of
such events, all of the reasonable attorneys' fees arising from such services,
and any expenses, costs and charges relating thereto, shall be part of the
Obligations, payable on demand and secured by the Collateral. The net proceeds
realized by Lender upon any sale or other disposition of Collateral hereunder
shall be applied toward satisfaction of all Obligations until all such
Obligations are satisfied and paid in full. Lender shall account to Customer for
any surplus realized upon such sale or other disposition, and Customer shall
remain liable for any deficiency. The commencement of any action, legal or
equitable, shall not affect the security interest of Lender in the Collateral
until all of the Obligations or any judgment with respect thereto have been
fully paid.
Customer is or may become indebted under or in respect of one or more
leases, loans, notes, credit agreements, reimbursement agreements, security
agreements, title retention or conditional sales agreements, or other documents,
instruments or agreements, whether now existing or hereafter arising, evidencing
Customer's obligations for the payment of borrowed money or other financial
accommodations owing to one or more affiliated persons, firms or entities
controlling, controlled by or under common control with Lender ("AFFILIATED
OBLIGATIONS"). If Customer pays or prepays all or substantially all of its
Affiliated Obligations, whether or not such payment or prepayment is voluntarily
or involuntarily made by Customer before or after any default or acceleration of
such Affiliated Obligations, then Customer shall pay, at Lender's option and
immediately upon notice from Lender, all or any part of Customer's Obligations
owing to Lender, including but not limited to payment of the accelerated balance
of one or more Notes as set forth in such notice from Lender.
8. ASSIGNMENT.
The provisions of this Agreement shall be binding upon and shall inure
to the benefit of the heirs, administrators, successors and assigns of Lender
and Customer, provided, however, Customer may not assign any of its rights or
delegate any of its obligations hereunder without the prior written consent of
Lender. Lender may, from time to time, without notice to the Customer, sell,
assign,
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transfer, participate, pledge or otherwise dispose of all or any part of the
Obligations and/or the Collateral therefor. In such event, each and every
immediate and successive purchaser, assignee, transferee, participant, pledgee,
or holder of all or any part of the Obligations and/or the Collateral (each, a
"HOLDER") shall have the right to enforce this Agreement, by legal action or
otherwise, for its own benefit as fully as if such Holder were herein by name
specifically given such rights. Customer agrees that the rights of any such
Holder hereunder or with respect to the related Obligations, shall not be
subject to any defense, set off or counterclaim that Customer may assert or
claim against Lender, and that any such Holder shall have all of the Lender's
rights hereunder but none of the Lender's obligations. Lender shall have an
unimpaired right to enforce this Agreement for its benefit with respect to that
portion of the Obligations Lender has not sold, assigned, transferred,
participated, pledged or otherwise disposed of.
9. GOVERNING LAW.
THIS SECURITY AGREEMENT AND THE LEGAL RELATIONS OF THE PARTIES HERETO
SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF RHODE ISLAND, WITHOUT REGARD TO PRINCIPLES REGARDING THE CHOICE
OF LAW. CUSTOMER HEREBY CONSENTS AND SUBMITS TO THE JURISDICTION OF THE COURTS
OF THE STATE OF RHODE ISLAND AND THE FEDERAL DISTRICT COURT FOR THE DISTRICT OF
RHODE ISLAND FOR THE PURPOSES OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING
OUT OF ITS OBLIGATIONS HEREUNDER, AND EXPRESSLY WAIVES ANY OBJECTIONS THAT IT
MAY HAVE TO THE VENUE OF SUCH COURTS. CUSTOMER HEREBY EXPRESSLY WAIVES ANY RIGHT
TO TRIAL BY JURY IN ANY ACTION BROUGHT ON OR WITH RESPECT TO THIS SECURITY
AGREEMENT. Any action by Customer against
Lender for any cause of action under this Security Agreement shall be brought
within two years after any such cause of action first arises.
10. MISCELLANEOUS, GENERAL PROVISIONS.
Customer agrees to pay on demand all costs and expenses of Lender
(including reasonable attorneys' fees) hereafter incurred in connection with the
amendment or modification of any Security Agreement, or any other or additional
documentation or transactions concerning the Obligations, or the care, custody,
administration, perfection or protection of any of the Collateral or any of
Lender's rights or interests therein, including, without limitation, any and all
fees and charges for searches of lien records or other public records, and any
filing, stamp and other taxes or fees payable or determined to be payable in
connection with the execution, delivery, filing, and recording of any UCC
financing statements or other recorded instrument. Customer shall execute and
deliver to Lender upon Lender's request any and all schedules, forms and other
reports and information as Lender may deem necessary or appropriate to respond
to requirements or regulations imposed by any governmental authorities. Customer
shall execute and deliver to Lender upon Lender's request such further and
additional documents, instruments and assurances as Lender deems necessary (a)
to acknowledge and confirm for the benefit of Lender or any Holder, all of the
terms and conditions of all or any part of the Obligations, this Security
Agreement and Lender's or Holder's rights with respect thereto and Customer's
compliance with all of the terms and provisions of any Obligations,
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and (b) to preserve, protect and perfect Lender's or Holder's right, title or
interest in any Obligation or Collateral, including, without limitation, such
UCC financing statements or amendments, corporate resolutions, opinions of
counsel, certificates of compliance, notices of assignment or transfers of
interests, and restatements and reaffirmation of all Obligations and Customer's
representations and warranties with respect thereto as of the dates requested by
Lender from time to time. Lender may file or record this Security Agreement or a
memorandum or a photocopy thereof (which for the purposes hereof shall be
effective as a financing statement) so as to give notice to third parties, and
Customer hereby appoints Lender as its attorney-in-fact to execute, sign, file
and record UCC financing statements and other lien recordation documents with
respect to the Equipment, and Customer agrees to pay or reimburse Lender for any
and all filing, recording or stamp fees or taxes arising from any such filings.
THIS SECURITY AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES
CONCERNING LENDER'S RIGHTS AND SECURITY INTERESTS IN THE COLLATERAL AND MAY NOT
BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. CUSTOMER ACKNOWLEDGES AND CERTIFIES THAT NO SUCH
ORAL AGREEMENTS EXIST. THIS SECURITY AGREEMENT MAY NOT BE AMENDED, NOR MAY ANY
RIGHTS UNDER THE SECURITY AGREEMENT BE WAIVED, EXCEPT BY AN INSTRUMENT IN
WRITING SIGNED BY THE PARTY AGAINST WHOM SUCH AMENDMENT OR WAIVER
IS ASSERTED. The failure of Lender at any time or times hereafter to require
strict performance by Customer of any of the provisions, warranties, terms and
conditions contained in this Security Agreement or in any other agreement,
guaranty, note, instrument or document now or at any time or times hereafter
executed by Customer and delivered to Lender shall not waive, affect or diminish
any right of Lender at any time or times hereafter to demand strict performance
thereof. No rights of Lender hereunder shall be deemed to have been waived by
any act or knowledge of Lender, its agents, officers or employees, unless such
waiver is contained in an instrument in writing signed by an officer of Lender
and directed to Customer specifying such waiver. No waiver by Lender of any of
its rights on one occasion shall operate as a waiver of any other of its rights
or any of its rights on a future occasion. This Master Security Agreement will
not be binding on Lender until accepted and executed by Lender, notice of which
is hereby waived by Customer. Any demand or notice required or permitted to be
given hereunder shall be deemed effective three business days after being
deposited in the United States mail, and sent by certified mail, return receipt
requested, postage prepaid, addressed to Lender or to Customer at the addresses
set forth herein, or to such other address as may be hereafter provided by the
party to be notified by written notice complying with the provisions hereof.
Wherever possible, each provision of this Security Agreement shall be
interpreted in such manner as to be effective and valid under applicable law.
Should any portion of this Security Agreement be declared invalid for any reason
in any jurisdiction, such declaration shall have no effect upon the remaining
portions of this Agreement; furthermore, the entirety of this Security Agreement
shall continue in full force and effect in all other jurisdictions and said
remaining portions of this Security Agreement shall continue in full force and
effect in the subject jurisdiction as if this Security Agreement had been
executed with the invalid portions thereof deleted. This Security Agreement may
be executed in any number of counterparts, each of which
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shall be deemed to be an original, but all of which together shall constitute
but one and the same instrument. Time is of the essence in the payment and
performance of all of the Obligations. The section headings herein are included
for convenience only and shall not be deemed to be a part of this Security
Agreement. Each reference herein to "LENDER" shall be deemed to include its
successors and assigns, and each reference to "CUSTOMER" and any pronouns
referring thereto as used herein shall be construed in the masculine, feminine,
neuter, singular or plural, as the context may require, and shall be deemed to
include the legal representatives, successors and assigns of Customer, all of
whom shall be bound by the provisions hereof. EACH REFERENCE HEREIN TO
"CUSTOMER" SHALL MEAN AND INCLUDE ANY AND ALL CUSTOMERS WHO SIGN BELOW, EACH OF
WHOM SHALL BE JOINTLY AND SEVERALLY LIABLE UNDER THE SECURITY AGREEMENT.
Executed and delivered by duly authorized representatives of the parties hereto
as of the date set forth below.
[Signatures on next page]
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Dated as of: January 28, 1998
----------------------
FLEET CAPITAL CORPORATION EAGLE GEOPHYSICAL ONSHORE, INC.
By: /s/ Xxxxx X. Xxxxxxxx By: /s/ X.X. XxXxxxx
Name: Xxxxx X. Xxxxxxxx Name: X.X. XxXxxxx
Title: Vice President/Senior Lender Title: Vice President, Secretary and
----------------------------- Treasurer
--------------------------------
AGREED TO AND ACKNOWLEDGED TO THE
EXTENT THIS SECURITY AGREEMENT RELATES
TO THE UNDERSIGNED GUARANTOR:
By: /s/ Xxx X. Xxxxxxxxx
------------------------------------
Name: Xxx X. Xxxxxxxxx
----------------------------------
Title: President and CEO
--------------------------------
(GUARANTOR)
EAGLE GEOPHYSICAL, INC.
By: /s/ Xxx X. Xxxxxxxxx
---------------------------------------------
Name: Xxx X. Xxxxxxxxx
-------------------------------------------
Title: President
------------------------------------------
By: /s/ X.X. XxXxxxx
---------------------------------------------
Name: X.X. XxXxxxx
-------------------------------------------
Title: Vice President, Secretary and Treasurer
------------------------------------------
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