SECURITY AGREEMENT
THIS SECURITY AGREEMENT dated as of May 29, 1996, is by and between
PARAGON GEOPHYSICAL, INC., a Delaware corporation (the "Debtor"), whose address
is set forth on its signature page hereto, and FIRST INTERSTATE BANK OF TEXAS,
N.A., a national banking association (the "Secured Party"), whose address is
1000 Louisiana, Houston, Texas 77002.
R E C I T A L S:
A. 3-D Geophysical, Inc., a Delaware corporation (the "Borrower"), and
the Secured Party have entered into that certain Loan Agreement of even date
herewith (such Loan Agreement, as the same may be amended or modified from time
to time, being hereinafter referred to as the "Loan Agreement") pursuant to
which Secured Party has agreed to make to Borrower (i) a revolving credit loan
in the aggregate principal amount not to exceed $3,000,000.00 and (ii) a term
loan in the aggregate principal amount not to exceed $15,000,000.00, subject to
the terms and conditions of the Loan Agreement. Terms defined in the Loan
Agreement and not otherwise defined herein being used as defined therein).
B. The Secured Party has conditioned its obligations under the Loan
Agreement upon the execution and delivery of this Agreement by the Debtor.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.1. Definitions. All terms used herein which are defined in
the Uniform Commercial Code as adopted and in effect from time to time in the
State of Texas ("UCC") shall have the same meanings herein as in the UCC unless
the context in which such terms are used herein indicates otherwise. All
capitalized terms used but not otherwise defined herein or which are defined in
the UCC that are defined in the Loan Agreement shall have the meanings ascribed
to such terms in the Loan Agreement, the applicable provisions of which Loan
Agreement are incorporated herein.
ARTICLE II
Security Interest
Section 2.1. Security Interest. To secure the prompt payment and
performance in full of the Obligations, Debtor hereby grants to Secured Party a
security interest in, and assigns and pledges, the following property, whether
now owned or existing or hereafter arising or acquired and wherever arising or
located (such property being hereinafter sometimes called the "Collateral"):
(a) all accounts, accounts receivable, documents, instruments,
chattel paper, general intangibles of Debtor, including, without
limitation, all income tax returns, copyrights, patents, patent rights,
trademarks, tradenames, tradestyles, goodwill, going concern value,
franchise and distributorship agreements, whether now owned or
hereafter acquired, and all products and proceeds thereof;
(b) all equipment, inventory, machinery, and fixtures of Debtor,
whether now owned or hereafter acquired, and all accessions thereto and
all products and proceeds thereof,
(c) all investment property of Debtor, whether now owned or
hereafter acquired, and all accessions thereto and all products and
proceeds thereof;
(d) the Lockbox Account, any other deposit accounts now or
hereafter maintained by Debtor at or with Secured Party and all cash,
checks, instruments, securities, funds and monies now or hereafter
deposited in the foregoing; and
(e) all books and records (including computer software, diskettes,
information stored in computers and the like) pertaining to the
property described in clauses (a) and (d) above.
Section 2.2. Debtor Remains Liable. Notwithstanding anything to the
contrary contained herein, (a) the Debtor shall remain liable under the
contracts and agreements included in the Collateral to the extent set forth
therein to perform all of its duties and obligations thereunder to the same
extent as if this Agreement had not been executed, (b) the exercise by the
Secured Party of any of its rights hereunder shall not release the Debtor from
any of its duties or obligations under the contracts and agreements included in
the Collateral, and (c) the Secured Party shall not have any obligation or
liability under any of the contracts and agreements included in the Collateral
by reason of this Agreement, nor shall the Secured Party be obligated to perform
any of the obligations or duties of the Debtor thereunder or to take any action
to collect or enforce any claim for payment assigned hereunder.
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ARTICLE III
Representations and Warranties
To induce the Secured Party to enter into this Agreement and the Loan
Agreement, the Debtor represents and warrants to the Secured Party that:
Section 3.1. Title. The Debtor is, and with respect to Collateral
acquired after the date hereof the Debtor will be, the legal and beneficial
owner of the Collateral free and clear of any Lien, security interest, or other
encumbrance.
Section 3.2. Accounts. Unless the Debtor has given the Secured Party
written notice to the contrary, whenever the security interest granted hereunder
attaches to an account, the Debtor shall be deemed to have represented and
warranted to the Secured Party as to each and all of its accounts that (a) each
account is genuine and in all respects what it purports to be, (b) each account
represents the legal, valid, and binding obligation of the account debtor
evidencing indebtedness unpaid and owed by such account debtor arising out of
the performance of labor or services by the Debtor or the sale or lease of goods
by the Debtor, (c) the amount of each account represented as owing is the
correct amount actually and unconditionally owing except for normal trade
discounts granted in the ordinary course of business, and (d) no account is
subject to any offset, counterclaim, or other defense.
Section 3.3. Financing Statements. No financing statement, security
agreement, or other Lien instrument covering all or any part of the Collateral
is on file in any public office, except as may have been filed in favor of the
Secured Party pursuant to this Agreement.
Section 3.4. Principal Place of Business. The principal place of
business and chief executive office of the Debtor, and the office where the
Debtor keeps its books and records, is located at the address of the Debtor
shown at the beginning of this Agreement.
Section 3.5. Location of Collateral; Markings. Debtor intends to place
all or part of the Collateral on certain vessels (collectively, "Vessel").
Debtor shall advise and notify Secured Party in writing from time to time, and
at any time upon Secured Party's request, the name, flag and name of owner of
the Vessels on which the Collateral is located; or, if not on a Vessel, the
other location of such Collateral. Debtor agrees to mark all equipment and
inventory Collateral now or hereafter located on a Vessel with a prominent
nameplate indicating that the Debtor owns such Collateral and Secured Party has
a Lien thereon.
Section 3.6. Perfection. Upon the filing of Uniform Commercial Code
financing statements in the jurisdictions listed on Schedule 2 attached hereto,
and upon the Secured Party's obtaining possession of all documents, instruments,
and chattel paper of the Debtor, the security interest in favor of the Secured
Party created herein will constitute a valid and perfected Lien upon and
security interest in the Collateral, subject to no equal or prior Lien.
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Section 3.7. Inventory. All inventory has been produced in compliance
with all requirements of the Fair Labor Standards Act.
Section 3.8. Independent Investigation. The Debtor has, independently
and without reliance upon the Secured Party and based upon such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. There are no conditions precedent to the
full effectiveness of this Agreement that have not been fully and permanently
satisfied.
Section 3.9. Intellectual Property. No patents, trademarks, copyrights,
rights of use or other intellectual property are necessary, advisable or useful
for the conduct of Debtor's business and Debtor has none of the same.
Section 3.10. Benefit to Debtor. The value of the consideration
received and to be received by the Debtor as a result of the Borrower and the
Secured Party entering into the Loan Agreement and the Debtor executing and
delivering this Agreement is reasonably worth at least as much as the liability
and obligation of the Debtor hereunder, and such liability and obligation and
the Borrower's entering into the Loan Agreement have benefited and may
reasonably be expected to benefit the Debtor directly and indirectly.
ARTICLE IV
Covenants
The Debtor covenants and agrees with the Secured Party that until the
Obligations are paid and performed in full and all commitments of the Secured
Party to the Borrower and the Debtor have terminated:
Section 4.1. Maintenance. Debtor shall maintain the Collateral in good
operating condition and repair and shall not permit any waste or destruction of
the Collateral or any part thereof. Debtor shall not use or permit the
Collateral to be used in violation of any law or inconsistently with the terms
of any policy of insurance. Debtor shall not use or permit the Collateral to be
used in any manner or for any purpose that would impair the value of the
Collateral or expose the Collateral to unusual risk.
Section 4.2. Liens and Encumbrances. (a) Neither Debtor, owner,
charterer, agent, master, nor any member of the crew of any Vessel has, nor
shall have, any right, power or authority to create, incur or permit to be
placed or imposed on any Collateral, or any part thereof, any lien whatsoever
other than to Secured Party. Debtor shall defend the Collateral against, any
lien, security interest, or other encumbrance on the Collateral except the
security interest of Secured Party hereunder, and shall defend Debtor's rights
in the Collateral and Secured Party's security interest in the Collateral
against the claims of all persons and entities. Debtor shall further obtain
consent from the owner of each of the Vessel, each mortgagee of real property
owned by Debtor, and each landlord of real property leased by Debtor upon which
any
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Collateral is located not to create, permit, or suffer to exist any lien,
security interest, or other encumbrances on the Collateral.
(b) Debtor shall promptly pay and discharge, or caused to be paid,
discharged and released, any and all taxes, assessments, governmental charges,
fines, penalties, or Liens that may attach to or be imposed upon the Collateral
by virtue that the Collateral is located on the Vessel. If any Vessel shall be
detained seized, levied upon or taken into custody under process or under color
of any authority, Debtor shall promptly notify Secured Party in writing and
shall promptly cause the Vessel to be discharged or released therefrom.
Section 4.3. Modification of Accounts. Debtor shall do nothing to
impair the rights of Secured Party in the Collateral. The Debtor shall, in
accordance with prudent business practices, endeavor to collect or cause to be
collected from each account debtor under its accounts, as and when due, any and
all amounts owing under such accounts. Without the prior written consent of the
Secured Party, the Debtor shall not (a) grant any extension of time for any
payment with respect to any of the accounts, (b) compromise, compound, or settle
any of the accounts for less than the full amount thereof, (c) release, in whole
or in part, any Person liable for payment thereof, (d) allow any credit or
discount for payment with respect to any account other than (i) normal trade
discounts granted in the ordinary course of business or (ii) discounts not to
exceed (without Secured Party's consent) $_______ individually or $_______ in
the aggregate that are given to avoid a greater loss or maximize recovery of
monies due to Debtor, or (e) release any Lien, security interest, or guaranty
securing any account.
Section 4.4. Disposition of Collateral. The Debtor shall not sell,
lease, assign (by operation of law or otherwise), or otherwise dispose of, or
grant any option with respect to, the Collateral or any part thereof without the
prior written consent of the Secured Party, except the Debtor may sell Inventory
in the ordinary course of business.
Section 4.5. Further Assurances. At any time and from time to time,
upon the request of the Secured Party, and at the sole expense of the Debtor,
the Debtor shall promptly execute and deliver all such further instruments,
agreements, and documents and take such further action as the Secured Party may
deem necessary or desirable to preserve and perfect its security interest in the
Collateral and carry out the provisions and purposes of this Agreement,
including, without limitation, the execution and filing of such financing
statements as the Secured Party may require. A carbon, photographic, or other
reproduction of this Agreement or of any financing statement covering the
Collateral or any part thereof shall be sufficient as a financing statement and
may be filed as a financing statement.
Section 4.6. Risk of Loss; Insurance. Debtor shall be responsible for
any loss of or damage to the Collateral. Debtor shall maintain, with financially
sound and reputable companies, insurance policies (i) insuring the Collateral
against all marine risks, loss by fire, explosion, theft, and such other risks
and casualties as are customarily insured against by companies engaged in the
same or a similar business, and (ii) insuring Debtor and Secured Party against
liability for personal injury and property damage relating to the Collateral,
such policies
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to be in such amounts and covering such risks as are customarily insured against
by companies engaged in the same or a similar business, with losses payable to
Debtor and Secured Party as their respective interests may appear and with the
Secured Party being named as an additional assured thereunder. All insurance
with respect to the Collateral shall provide that no cancellation, reduction in
amount, or change in coverage thereof shall be effective unless Secured Party
has received 30 days prior written notice thereof. Debtor shall deliver to
Secured Party copies of all insurance policies covering the Collateral or any
part thereof.
Section 4.7. Inspection Rights. Debtor shall permit and obtain consent
from the Vessel Owner to permit Secured Party and its representatives to examine
or inspect the Collateral wherever located and to examine, inspect, and copy
Debtor's books and records at any reasonable time and as often as Secured Party
may desire.
Section 4.8. Vessel Owner, Mortgagee and Landlord Waivers, Etc. Debtor
shall cause each owner of a Vessel on which the Collateral is located to execute
and deliver instruments satisfactory in form and substance to Secured Party
pursuant to which such Vessel owner (i) waives its rights, if any, in the
Collateral, (ii) confirms that it will not create, incur or place upon any
Collateral located on its Vessel any Lien, security interest, or other
encumbrance, (iii) covenants not to remove the Vessel from the territorial
waters of the United States, Canada or Mexico in the Gulf of Mexico without
prior written notification to Secured Party, (iv) confirms that there is no Lien
upon the Vessel or that it has notified the holder of the Lien that the Debtor's
Property located thereon is not the owner's nor the Vessel's, and (v) covenants
not to abandon a Vessel in any port. Debtor shall cause each mortgagee of real
property owned by Debtor and each landlord of real property leased by the Debtor
upon which any of the Collateral is located to execute and deliver instruments
satisfactory in form and substance to Secured Party pursuant to which such
mortgagee or landlord (i) waives its rights, if any, in the Collateral, and (ii)
confirms that it will not create, incur or place upon any Collateral located on
its property any Lien, security interest, or other encumbrance.
Section 4.9. Corporate Changes. The Debtor shall not change its name,
identity, or corporate structure in any manner that might make any financing
statement filed in connection with this Agreement seriously misleading unless
the Debtor shall have given the Secured Party 30 days prior written notice
thereof and shall have taken all action deemed necessary or desirable by the
Secured Party to make each financing statement not seriously misleading. The
Debtor shall not change its principal place of business, chief executive office,
or the place where it keeps its books and records unless it shall have given the
Secured Party 30 days prior written notice thereof and shall have taken all
action deemed necessary or desirable by the Secured Party to cause its security
interest in the Collateral to be perfected with the priority required by this
Agreement.
Section 4.10. Books and Records; Information. The Debtor shall keep
accurate and complete books and records of the Collateral and the Debtor's
business and financial condition in accordance with GAAP. The Debtor shall from
time to time at the request of the Secured Party deliver to the Secured Party
such information regarding the Collateral and the Debtor as
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the Secured Party may request, including, without limitation, lists and
descriptions of the Collateral and evidence of the identity and existence of the
Collateral. The Debtor shall mark its books and records to reflect the security
interest of the Secured Party under this Agreement.
Section 4.11. Equipment and Inventory. The Debtor shall keep the
equipment and inventory at the locations specified on Schedule 1 hereto or, upon
30 days prior written notice to the Secured Party, at such other places within
the United States of America where all action required to perfect the Secured
Party's security interest in the equipment and inventory with the priority
required by this Agreement shall have been taken.
Section 4.12. Warehouse Receipts Non-Negotiable. The Debtor agrees that
if any warehouse receipt or receipt in the nature of a warehouse receipt is
issued in respect of any of the Collateral, such warehouse receipt or receipt in
the nature thereof shall not be "negotiable" (as such term is used in Section
7.104 of the Uniform Commercial Code as in effect in any relevant jurisdiction
or under relevant law).
Section 4.13. Taxes. The Debtor shall pay and discharge, before the
same become delinquent, all taxes, assessments, and governmental charges imposed
upon it or upon any of its property, except Debtor shall not be required to pay
or discharge any such tax, assessment, or governmental charge if (i) the amount
or validity thereof is being contested in good faith by proper proceedings being
diligently pursued, (ii) such proceedings do not involve any risk of sale,
forfeiture, or loss of the Collateral or any interest therein; or (iii) adequate
reserves therefor have been established in accordance with GAAP.
Section 4.14. Compliance with Laws. The Debtor shall comply in all
material respects with all applicable laws, rules, regulations, orders, and
decrees of any Governmental Authority or arbitrator.
Section 4.15. Compliance with Agreements. The Debtor shall comply in
all material respects with all agreements, contracts, and instruments binding on
it or affecting its properties or businesses.
Section 4.16. Notification. The Debtor shall promptly notify the
Secured Party of (a) any Lien made or asserted against any of the Collateral,
(b) any material change in any of the Collateral, including, without limitation,
any material damage to or loss of any of the Collateral, (c) the occurrence of
any other event that, with the giving of notice or lapse of time or both, would
be an Event of Default.
Section 4.17. Collection of Accounts. Accounts shall be collected
through the Lockbox (Secured Party, recognizing that some Accounts arising in
the first several months of this Agreement cannot effectively be directed to the
Lockbox). In connection with such collections, the Debtor may take (and, at the
Secured Party's direction, shall take) such actions as the Debtor or the Secured
Party may deem necessary or advisable to enforce collection of the accounts. In
addition to the foregoing, the Debtor agrees that if any Proceeds of any
Collateral (including
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payments made in respect of accounts) shall be received by the Debtor rather
than through the Lockbox, the Debtor shall promptly deliver such Proceeds to the
Secured Party with any necessary endorsements. Until such Proceeds are delivered
to the Secured Party, such Proceeds shall be held in trust by the Debtor for the
benefit of the Secured Party and shall not be commingled with any other funds or
property of the Debtor. All Proceeds of Collateral received by the Secured Party
pursuant to this Section may be applied by the Secured Party to the Obligations
in such order and manner as the Secured Party may elect in its sole discretion.
Section 4.18. Location of Collateral. Debtor shall not move any of the
Collateral from the Vessel or Vessels identified hereunder without the prior
written consent of Secured Party.
Section 4.19. Lockbox Account. The Debtor agrees to notify each account
debtor and other obligers to deliver all payments and amounts owed to the Debtor
directly to the Lockbox and to renotify, from time to time and in any event
promptly upon request of the Secured Party, those account debtors and obligers
who do not deliver all payments due to the Debtor directly to the Lockbox that
the same must be delivered to the Lockbox (the Secured Party being granted such
renotification right if the Debtor fails or refuses so to do). The Lockbox shall
be under the sole control of the Secured Party. The Debtor shall have no right
to effect withdrawals from the Lockbox Account and the Lockbox Account shall be
maintained in the name and under the domain and control of the Secured Party.
After Default and upon instructions from 1/O, funds to be disbursed to the
Borrower may be restricted or applied to the Obligations, or both.
ARTICLE V
Rights of Secured Party
Section 5.1. Power of Attorney. Debtor hereby irrevocably constitutes
and appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of Debtor or in its own name, to take any and
all action and to execute any and all documents and instruments which Secured
Party at any time and from time to time deems necessary or desirable to
accomplish the purposes of this Agreement and, without limiting the generality
of the foregoing, Debtor hereby gives Secured Party the power and right on
behalf of Debtor and in its own name to do any of the following, without notice
to or the consent of Debtor:
(i) to demand, sue for, collect, or receive in the name of Debtor
or in its own name, any money or property at any time payable or
receivable on account of or in exchange for any of the Collateral and,
in connection therewith, endorse checks, notes, drafts, acceptances,
money orders, documents of title, or any other instruments for the
payment of money under the Collateral or any policy of insurance;
(ii) to pay or discharge taxes, liens, security interests, or
other encumbrances levied or placed on or threatened against the
Collateral;
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(iii) to send requests for verification to account debtors and
other obligers;
(iv) to notify post office authorities to change the address for
delivery of mail of Debtor to an address designated by Secured Party
and to receive, open, and dispose of mail addressed to Debtor;
(v) (A) to direct account debtors and any other parties liable for
any payment under any of the Collateral to make payment of any and all
monies due and to become due thereunder directly to Secured Party or as
Secured Party shall direct; (B) to receive payment of and receipt for
any and all monies, claims, and other amounts due and to become due at
any time in respect of or arising out of any Collateral; (C) to sign
and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
proxies, stock powers, verifications, and notices in connection with
accounts and other documents relating to the Collateral; (D) to
commence and prosecute any suit, action, or proceeding at law or in
equity in any court of competent jurisdiction to collect the Collateral
or any part thereof and to enforce any other right in respect of any
Collateral; (E) to defend any suit, action, or proceeding brought
against Debtor with respect to any Collateral; (F) to settle,
compromise, or adjust any suit, action, or proceeding described above
and, in connection therewith, to give such discharges or releases as
Secured Party may deem appropriate; (G) to exchange any of the
Collateral for other property upon any merger, consolidation,
reorganization, recapitalization, or other readjustment of the issuer
thereof and, in connection therewith, deposit any of the Collateral
with any committee, depositary, transfer agent, registrar, or other
designated agency upon such terms as Secured Party may determine; (H)
to add or release any guarantor, endorser, surety, or other party to
any of the Collateral or the Obligations; (I) to renew, extend, or
otherwise change the terms and conditions of any of the Collateral or
Obligations; (J) to insure, and to make, settle, compromise, or adjust
claims under any insurance policy covering, any of the Collateral; and
(K) to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes,
and to do, at Secured Party's option and Debtor's expense, at any time,
or from time to time, all acts and things which Secured Party deems
necessary to protect, preserve, or realize upon the Collateral and
Secured Party's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. SECURED PARTY SHALL NOT BE
LIABLE FOR ANY ACT OR OMISSION OR FOR ANY ERROR OF JUDGMENT OR ANY MISTAKE OF
FACT OR LAW IN ITS INDIVIDUAL CAPACITY OR IN ITS CAPACITY AS ATTORNEY-IN-FACT
EXCEPT ACTS OR OMISSIONS RESULTING FROM ITS GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. This power of attorney is conferred on Secured Party solely to
protect,
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preserve, and realize upon its security interest in the Collateral. Secured
Party shall not be responsible for any decline in the value of the Collateral
and shall not be required to take any steps to preserve rights against prior
parties or to protect, preserve, or maintain any security interest or lien given
to secure the Collateral.
Section 5.2. Performance by Secured Party. If Debtor fails to perform
or comply with any of its agreements contained herein, Secured Party itself may,
at its sole discretion, cause or attempt to cause performance or compliance with
such agreement and the expenses of Secured Party, together with interest thereon
at the maximum nonusurious per annum rate permitted by applicable law, shall be
payable by Debtor to Secured Party on demand and shall constitute Obligations
secured by this Agreement. Notwithstanding the foregoing, it is expressly agreed
that Secured Party shall not have any liability or responsibility for the
performance of any obligation of Debtor under this Agreement.
Section 5.3. Setoff; Property Held by Secured Party. Secured Party
shall have the right to set off and apply against the Obligations, at any time
and without notice to Debtor, and is hereby granted a contractual Lien and right
to setoff, any and all deposits (general or special, time or demand, provisional
or final) or other sums at any time credited by or owing from Secured Party to
Debtor whether or not the Obligations are then due. As additional security for
the Obligations, Debtor hereby grants Secured Party a security interest in all
money, instruments, and other property of Debtor now or hereafter held by
Secured Party, including, without limitation, property held in safekeeping. In
addition to Secured Party's right of setoff and as further security for the
Obligations, Debtor hereby grants Secured Party a security interest in all
deposits (general or special, time or demand, provisional or final) and other
accounts of Debtor now or hereafter deposited with or held by Secured Party and
all other sums at any time credited by or owing from Secured Party to Debtor.
The rights and remedies of Secured Party hereunder are in addition to other
rights and remedies (including, without limitation, other rights of setoff)
which Secured Party may have.
Section 5.4. Assignment by Secured Party. Secured Party may from time
to time assign the Obligations and any portion thereof and/or the Collateral and
any portion thereof, and the assignee shall be entitled to all of the rights and
remedies of Secured Party under this Agreement in relation thereto.
ARTICLE VI
Default
Section 6.1. Upon the occurrence of an Event of Default, Secured Party
shall have the following rights and remedies and may do any one or more of the
following:
(i) Secured Party may declare the Obligations or any part thereof
immediately due and payable, without notice, demand, presentment,
notice of dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, protest, or other
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formalities of any kind, all of which are hereby expressly waived by
Debtor; provided, however, that upon the occurrence of an Event of
Default under Section 9.1(d) or Section 9.1(e) of the Loan Agreement,
the Obligations shall become immediately due and payable without
notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to
demand, protest, or other formalities of any kind, all of which are
hereby expressly waived by Debtor.
(ii) In addition to all other rights and remedies granted to
Secured Party in this Agreement and in any other instrument or
agreement securing, evidencing, or relating to the Obligations or any
part thereof, Secured Party shall have all of the rights and remedies
of a secured party under the UCC as adopted by the State of Texas.
Without limiting the generality of the foregoing, Secured Party may (A)
without demand or notice to Debtor, collect, receive, or take
possession of the Collateral or any part thereof and for that purpose
Secured Party may enter upon any premises on which the Collateral is
located and remove the Collateral therefrom or render it inoperable,
and/or (B) sell, lease, or otherwise dispose of the Collateral, or any
part thereof, in one or more parcels at public or private sale or
sales, at Secured Party's offices or elsewhere, for cash, on credit, or
for future delivery. Upon the request of Secured Party, Debtor shall
assemble the Collateral and make it available to Secured Party at any
place designated by Secured Party that is reasonably convenient to
Debtor and Secured Party. Debtor agrees that Secured Party shall not be
obligated to give more than five days written notice of the time and
place of any public sale or of the time after which any private sale
may take place and that such notice shall constitute reasonable notice
of such matters. Debtor shall be liable for all expenses of retaking,
holding, preparing for sale, or the like, and all attorneys' fees,
legal expenses, and all other costs and expenses incurred by Secured
Party in connection with the collection of the Obligations and the
enforcement of Secured Party's rights under this Agreement. Secured
Party may apply the Collateral against the Obligations in such order
and manner as Secured Party may elect in its sole discretion. Debtor
shall remain liable for any deficiency if the proceeds of any sale or
disposition of the Collateral are insufficient to pay the Obligations
in full. Debtor waives all rights of marshalling in respect of the
Collateral.
(iii) Secured Party may cause any or all of the Collateral held by
it to be transferred into the name of Secured Party or the name or
names of Secured Party's nominee or nominees.
(iv) Secured Party may exercise or cause to be exercised all
voting rights and corporate powers in respect of the Collateral.
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ARTICLE VII
Miscellaneous
Section 7.1. Expenses; Indemnification. Debtor agrees to pay on demand
all costs and expenses incurred by Secured Party in connection with the
preparation, negotiation, and execution of the Agreement and any and all
amendments, modifications, and supplements hereto. Debtor agrees to pay and to
hold Secured Party harmless from and against all fees and all excise, sales,
stamp, and other taxes payable in connection with this Agreement or the
transactions contemplated hereby. Debtor hereby indemnifies Secured Party and
each affiliate thereof and their respective officers, directors, employees,
attorneys, and agents from, and holds each of them harmless against, any and all
losses, liabilities, claims, damages, penalties, judgments, costs, and expenses
(including attorneys' fees) to which any of them may become subject which
directly or indirectly arise from or relate to (i) the negotiation, execution,
delivery, performance, administration, or enforcement of this Agreement or any
other instrument or agreement securing, evidencing, or relating to the
Obligations or any part thereof, (ii) any of the transactions contemplated by
this Agreement or any other instrument or agreement securing, evidencing, or
relating to the Obligations or any part thereof, (iii) any breach by Debtor of
any representation, warranty, covenant, or other agreement contained in this
Agreement or any other instrument or agreement securing, evidencing, or relating
to the Obligations or any part thereof, or (iv) any investigation, litigation,
or other proceeding, including, without limitation, any threatened
investigation, litigation, or other proceeding relating to any of the foregoing.
WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR ANY OTHER INSTRUMENT, OR
AGREEMENT SECURING, EVIDENCING, OR RELATING TO THE OBLIGATIONS OR ANY PART
THEREOF, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON OR
ENTITY TO BE INDEMNIFIED UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD
HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE PERSON OR ENTITY TO BE
INDEMNIFIED, but no such indemnitee shall be indemnified for its own gross
negligence or willful misconduct.
Section 7.2. No Waiver; Cumulative Remedies. No failure on the part of
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 7.3. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Debtor and Secured Party and their respective
heirs, successors, and assigns,
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except that Debtor may not assign any of its rights or obligations under this
Agreement without the prior written consent of Secured Party.
Section 7.4. AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT EMBODIES THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDES ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS
AMONG THE PARTIES HERETO. The provisions of this Agreement may be amended or
waived only by an instrument in writing signed by the parties hereto.
Section 7.5. Notices. All notices and other communications provided for
in this Agreement shall be given or made in accordance with the terms of the
Loan Agreement.
Section 7.6. APPLICABLE LAW; VENUE; SERVICE OF PROCESS. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT
HAS BEEN ENTERED INTO IN HARRIS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR
ALL PURPOSES IN HARRIS COUNTY, TEXAS.
Section 7.7. Headings. The headings, captions, and arrangements used in
this Agree- ment are for convenience only and shall not affect the
interpretation of this Agreement.
Section 7.8. Survival of Representations and Warranties. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by Secured Party shall affect the
representations and warranties or the right of Secured Party to rely upon them.
Section 7.9. Counterparts. This Agreement may be executed in any number
of counter- parts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 7.10. Waiver of Bond. In the event Secured Party seeks to take
possession of any or all of the Collateral by judicial process, Debtor hereby
irrevocably waives any bonds and any surety or security relating thereto that
may be required by applicable law as an incident to such possession, and waives
any demand for possession prior to the commencement of any such suit or action.
Section 7.11. Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agree-
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ment, and any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 7.12. Construction. Debtor and Secured Party acknowledge that
each of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Debtor and Secured
Party.
Section 7.13. Obligations Absolute. The obligations of Debtor under
this Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced, or in any way impaired by any circumstance whatsoever,
including, without limitation, any amendment, modification, extension, or
renewal of this Agreement, the Obligations, or any document or instrument
evidencing, securing, or otherwise relating to the Obligations, or any release
or subordination of collateral, or any waiver, consent, extension, indulgence,
compromise, settlement, or other action or inaction in respect of this
Agreement, the Obligations, or any document or instrument evidencing, securing,
or otherwise relating to the Obligations, or any exercise or failure to exercise
any right, remedy, power, or privilege in respect of the Obligations.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
DEBTOR SECURED PARTY:
PARAGON GEOPHYSICAL, INC. FIRST INTERSTATE BANK OF TEXAS, N.A.
By:______________________ By:_________________________________
J.D. White Randy Wade
Treasurer Banking Officer
Address for Notices: Address for Notices:
7076 S. Alton Way 1000 Louisiana
Englewood, Colorado 80112 Houston, Texas 77002
Fax No.: (303) 290-0447 Fax No.: (713) 250-7031
Telephone No.: (303) 744-3700 Telephone No.: (713) 250-7240
Attention: President Attention: Mr. Marc A. Dunmire
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