Exhibit 10.3
SECURITY AGREEMENT
     THIS SECURITY AGREEMENT (the “Security Agreement”) is made and entered into
this 30th day of June 2011, by and between DAWSON GEOPHYSICAL COMPANY, a Texas
Corporation, whose address is 508 West Wall Street, Suite 800, Midland, Texas
79701 (the “Debtor”), and WESTERN NATIONAL BANK, a national banking association,
whose address is 508 West Wall Street, Suite 1100, Midland, Texas 79701 (the
“Secured Party”).
NOTICE IS TAKEN OF THE FOLLOWING:

A.   Reference is made to that certain Loan Agreement, dated as of June 30,
2011, by and between DAWSON GEOPHYSICAL COMPANY, as Borrower ( the “Borrower”),
and the Secured Party, as Lender (the “Loan Agreement”). Pursuant to the terms
of the Loan Agreement, the Secured Party has agreed to advance two loans to
Borrower, from time to time, with those loans to be evidenced by: (i) that
certain Revolving Line of Credit Note, dated as of June 2, 2011, in the original
principal amount of Twenty Million and No/100 Dollars ($20,000,000.00), executed
by the Borrower, as Maker, to the Secured Party, as Payee (the “Revolver Note”),
and (ii) that certain Term Note, dated as of June 30, 2011, in the original
principal amount of Sixteen Million Four Hundred Twenty-Six Thousand Six Hundred
Eighty and Six/100 Dollars ($16,426,680.06), executed by the Borrower, as Maker,
to the Secured Party, as Payee (the “Term Note”). The Revolver Note and the Term
Note are collectively referred to herein as the “Notes”. The Loan Agreement, the
Notes, and all documents executed by the parties simultaneously therewith, as
any of the same may be amended, extended or replaced from time to time are
collectively referred to herein as the “Credit Documents.” Capitalized terms not
otherwise defined herein are used with the same meanings as in the Credit
Documents.   B.   To induce Secured Party to extend such credit, and in support
of its performance under the Loan Agreement and the Notes, Debtor has agreed to
pledge and to grant to Secured Party a security interest in and lien upon
certain property of Debtor described more particularly herein.

     NOW, THEREFORE, for and in consideration of the above Recitals and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Debtor hereby agrees as follows:
AGREEMENT

1.   Grant of Security Interest       Debtor hereby pledges and grants to
Secured Party a security interest in the property described in paragraph 2
(collectively and severally, the “Collateral”) to secure payment and performance
of the obligations described in paragraph 3 (collectively and severally, the
“Obligations”).

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2.   Collateral       The Collateral shall consist of all of the Debtor’s
interest in the following:

  (i)   All of Debtor’s Accounts and Equipment, as those terms are defined under
the Uniform Commercial Code, as adopted by the State of Texas, in effect as of
the date of this Agreement; (ii) any related or additional property from time to
time delivered to or deposited with Secured Party by or for the account of
Debtor expressly securing the Obligations; (iii) all proceeds, products,
replacements, additions to, substitutions for, accessions of, and property
necessary for the operation of any of the foregoing, including, without
limitation, insurance payable as a result of loss or damage to the foregoing
property and any proceeds thereunder, refunds or unearned premiums of any such
insurance policy, and claims against third parties; (iv) all books and records
related to any of the foregoing, including without limitation any and all books
of account, customer lists and other records relating in any way to the accounts
receivable; and (v) any of the aforementioned collateral hereafter acquired by
Debtor as well as Collateral which Debtor now owns or in which Debtor otherwise
has rights related to any property referred to in this Section 2.

3.   Obligations       The Obligations secured by this Security Agreement shall
consist of any and all debts, obligations, and liabilities of Debtor to Secured
Party arising out of or related to the Credit Documents (whether principal,
interest, fees, or otherwise, whether now existing or thereafter arising,
whether voluntary or involuntary, whether or not jointly owed with others,
whether direct or indirect, absolute or contingent, contractual or tortious,
liquidated or unliquidated, arising by operation of law, or otherwise, whether
or not from time to time decreased or extinguished and later increased, created
or incurred, and whether or not extended, modified, rearranged, restructured,
refinanced, or replaced, including without limitation, modifications to interest
rates or other payment terms of such debts, obligations, or liabilities).   4.  
Representations and Warranties       In addition to any representations and
warranties of Debtor set forth in the Credit Documents, which are incorporated
herein by this reference, Debtor hereby represents and warrants that:

  a.   Authority. It has authority, and has completed all proceedings and
obtained all approvals and consents necessary, to execute, deliver, and perform
this Security Agreement and the transactions contemplated hereby.

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  b.   No Default or Lien. Such execution, delivery, and performance will not
contravene, or constitute a default under or result in a lien upon any property
of Debtor pursuant to any applicable law or regulation or any contract,
agreement, judgment, order, decree, or other instrument binding upon or
affecting Debtor.     c.   Enforceability. This Security Agreement constitutes a
legal, valid, and binding obligation of Debtor, enforceable in accordance with
its terms (except as enforceability may be affected by bankruptcy, insolvency,
or other similar laws affecting the enforcement of creditor’s rights), and this
Security Agreement grants to Secured Party a valid, first-priority perfected and
enforceable lien on the Collateral.     d.   No Litigation. There is no action,
suit or proceeding pending or, to the best knowledge of Debtor after reasonable
investigation, threatened against Debtor that might adversely affect its
property or financial condition in any material respect.     e.   Ownership of
Collateral. Debtor is the sole owner of and has good and marketable title to the
Collateral (or, in the case of after-acquired Collateral, at the time the Debtor
acquires rights in the Collateral, will be the sole owner thereof) and is the
record and beneficial owner of any such Collateral.     f.   Priority. Except
for security interests in favor of Secured Party, no person has (or, in the case
of after-acquired Collateral, at the time Debtor acquires rights therein, will
have) any right, title, claim, or interest (by way of security interest or other
lien or charge) in, against or to the Collateral.     g.   Accuracy of
Information. All information heretofore, herein or hereafter supplied to Secured
Party by or on behalf of Debtor with respect to the Collateral is true and
correct.     h.   Delivery of Documents. Debtor has delivered to Secured Party
all instruments, documents, chattel paper, and other items of Collateral in
which a security interest is or may be perfected by possession, the certificate
of title with respect to each motor vehicle, if any, included in the Collateral,
and any certificated Pledged Shares together with such additional writings,
including, without limitation, assignments and stock powers, with respect
thereto as Secured Party shall request.     i.   Exclusion of Certain
Collateral. Unless otherwise agreed by Secured Party, the Collateral does not
include any aircraft, watercraft or vessels, railroad cars, railroad equipment,
locomotives or other rolling stock intended for a use related to interstate
commerce, trade names, trademarks, service marks, mask works, copyrights,
patents, fixtures or uncertificated securities.

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  j.   Enforceability Against Account Debtors. Each account, contract right,
item of chattel paper, instrument or any other right to the payment of money
constituting Collateral is genuine and enforceable in accordance with its terms
against the party obligated to pay the same (an Account Debtor), which terms
have not been modified or waived in any respect or to any extent.     k.  
Amount Due From Account Debtors. Any amount represented by Debtor to Secured
Party as owing by any Account Debtor is the correct amount actually and
unconditionally owing by such Account Debtor.     l.   No Account Debtor
Defense. No Account Debtor has any defense, set off, claim, or counterclaim
against Debtor that can be asserted against Secured Party, whether in any
proceeding to enforce Secured Party’s rights in the Collateral, or otherwise.

5.   Covenants and Agreements of Debtor       In addition to all covenants and
agreements of Debtor set forth in the Credit Documents, which are incorporated
herein by this reference, Debtor hereby agrees:

  a.   Preservation of Collateral. To do all acts that may be necessary to
maintain, preserve, and protect the Collateral.     b.   Use of Collateral. Not
to use or permit any Collateral to be used unlawfully or in violation of any
provision of this Security Agreement, any other agreement with Secured Party
related hereto or any applicable statute, regulation, or ordinance or any policy
of insurance covering the Collateral.     c.   Payment of Taxes. To pay promptly
when due all taxes, assessments, charges, encumbrances and liens now or
hereafter imposed upon or affecting any Collateral.     d.   Defense of
Litigation. To appear in and defend any action or proceeding that may affect its
title to or Secured Party’s interest in the Collateral.     e.   Possession of
Collateral. Not to surrender or lose possession of (other than to Secured
Party), sell, encumber, lease, rent, or otherwise dispose of or transfer any
Collateral or right or interest therein except as hereinafter provided, and to
keep the Collateral free of all levies and security interests or other liens or
charges except those approved in writing by Secured Party.     f.   Compliance
with Law. To comply with all laws, regulations, and ordinances relating to the
possession, operation, maintenance, and control of the Collateral.

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  g.   Standard of Care by Secured Party. That such care as Secured Party gives
to the safekeeping of its own property of like kind shall constitute reasonable
care of the Collateral when in Secured Party’s possession.     h.   Maintenance
of Records. To keep separate, accurate, and complete records of the Collateral
and to provide Secured Party with such records and such other reports and
information relating to the Collateral as Secured Party may request from time to
time.     i.   Further Assurances. To procure, execute, and deliver from time to
time any endorsements, notifications, registrations, assignments, financing
statements, certificates of title, ship mortgages, aircraft mortgages, copyright
mortgages assignments or mortgages of patents, mortgages of mask works,
mortgages for filing pursuant to the Interstate Commerce Act, and other writings
deemed necessary or appropriate by Secured Party to perfect, maintain, and
protect its security interest in the Collateral hereunder and the priority
thereof; and to take such other actions as Secured Party may request to protect
the value of the collateral and of Secured Party’s security interest in the
Collateral, including, without limitation, provision of assurances from third
parties regarding Secured Party’s access to, right to foreclose on or sell,
Collateral and right to realize the practical benefits of such foreclosure or
sale.     j.   Payment of Secured Party’s Costs and Expenses. To reimburse
Secured Party upon demand for any costs and expenses, including, without
limitation, attorney fees and disbursements, Secured Party may incur in
preparing the Credit Documents and while exercising any right, power, or remedy
provided by this Security Agreement or by law, all of which costs and expenses
are included in the Obligations.     k.   Notification Regarding Certain Types
of Collateral. To promptly notify Secured Party of inclusion in the Collateral
after the date hereof of any aircraft, watercraft or vessels, railroad cars,
railroad equipment, locomotives or other rolling stock intended for a use
related to interstate commerce, trade names, trademarks, service marks, mask
works, copyrights, patents, fixtures, or uncertificated securities.     l.  
Notice of Changes. To give Secured Party thirty (30) days prior written notice
of any change in Debtor’s residence or chief place of business or legal name or
tradename(s) or style(s) set forth in the penultimate paragraph of this Security
Agreement.     m.   Location of Records. To keep the records concerning the
collateral at the location(s) set forth in the penultimate paragraph of this
Security Agreement and not to remove such records from such location(s) without
the prior written consent of the Secured Party.

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  n.   Purchase Money Agreement. If Secured Party gives value to enable Debtor
to acquire rights in or the use of any Collateral, to use such value for such
purpose.

6.   Authorized Action by Secured Party       Debtor hereby agrees that from
time to time, without presentment, notice or demand, and without affecting or
impairing in any way the rights of Secured Party with respect to the Collateral,
the obligations of the Debtor hereunder or the Obligations, Secured Party may,
but shall not be obligated to and shall incur no liability to Debtor or any
third party for failure to take any action which Debtor is obligated by this
Security Agreement to do and to exercise such rights and powers as Debtor might
exercise with respect to the Collateral, and Debtor hereby irrevocably appoints
Secured Party as its attorney-in-fact to exercise such rights and powers,
including without limitation, to (a) file a financing statement describing the
Collateral, without the signature of either the Debtor or the Secured Party;
(b) collect by legal proceedings or otherwise and indorse, receive and receipt
for all dividends, interest, payments, proceeds, and other sums and property now
or hereafter payable on or on account of the Collateral; (c) enter into any
extension, reorganization, deposit, merger, consolidation, or other agreement
pertaining to, or deposit, surrender, accept, hold, or apply other property in
exchange for the Collateral; (d) insure, process, and preserve the Collateral;
(e) transfer the Collateral to its own or its nominee’s name; (f) make any
compromise or settlement, and take any action it deems advisable, with respect
to the Collateral; and (g) notify any Account Debtor on any Collateral to make
payment directly to Secured Party.   7.   Default       A default under this
Security Agreement shall be deemed to exist upon the occurrence of any of the
following (an Event of Default):

  a.   Default in Payment. Any of the Obligations shall not be paid in
accordance with the terms of the Credit Documents.     b.   Default under Credit
Documents. Debtor shall fail to observe any other term or condition of the
Credit Documents or there shall otherwise occur any event which would permit
Secured Party to accelerate amounts outstanding thereunder or the Borrower shall
fail to make any payment or there shall otherwise occur any event which would
permit Secured Party to accelerate amounts outstanding to Borrower which are
guaranteed by Debtor pursuant to the Credit Documents.

8.   Remedies       Upon the occurrence of any such Event of Default, Secured
Party may, at its option, and without notice to or demand on Debtor and in
addition to all rights and remedies

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    available to Secured Party under the Credit Documents, at law, in equity, or
otherwise, do any one or more of the following:

  a.   General Enforcement. Foreclose or otherwise enforce Secured Party’s
security interest in any manner permitted by law, or provided for in this
Security Agreement.     b.   Sale, etc. Sell, lease, or otherwise dispose of any
Collateral at one or more public or private sales at Secured Party’s place of
business or any other place or places, including, without limitation, any
broker’s board or securities exchange, whether or not such Collateral is present
at the place of sale, for cash or credit or future delivery, on such terms and
in such manner as Secured Party may determine.     c.   Costs of Remedies.
Recover from Debtor all costs and expenses, including, without limitation,
reasonable attorney fees, incurred or paid by Secured Party in exercising any
right, power, or remedy provided by this Security Agreement.     d.   Manner of
Sale of Collateral. Debtor shall be given ten (10) business days prior notice of
the time and place of any public sale or of the time after which any private
sale or other intended disposition of Collateral is to be made, which notice
Debtor hereby agrees shall be deemed reasonable notice thereof.     e.  
Delivery to and Rights of Purchaser. Upon any sale or other disposition pursuant
to this Security Agreement, Secured Party shall have the right to deliver,
assign, and transfer to the purchaser thereof the Collateral or portion thereof
so sold or disposed of. Each purchaser at any such sale or other disposition
(including Secured Party) shall hold the Collateral free from any claim or right
of whatever kind, including any equity or right of redemption of Debtor and
Debtor specifically waives (to the extent permitted by law) all rights of
redemption, stay or appraisal which it has or may have under any rule of law or
statute now existing or hereafter adopted.

9.   Cumulative Rights       The rights, powers, and remedies of Secured Party
under this Security Agreement shall be in addition to all rights, powers, and
remedies given to Secured Party by virtue of any statute or rule of law, the
Credit Documents or any other agreement, all of which rights, powers, and
remedies shall be cumulative and may be exercised successively or concurrently
without impairing Secured Party’s security interest in the Collateral.   10.  
Waiver       Any waiver, forbearance or failure or delay by Secured Party in
exercising any right, power, or remedy shall not preclude the further exercise
thereof, and every right, power, or remedy of Secured Party shall continue in
full force and effect until such right, power

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    or remedy is specifically waived in a writing executed by Secured Party.
Debtor waives any right to require Secured Party to proceed against any person
or to exhaust any Collateral or to pursue any remedy in Secured Party’s power.  
11.   Setoff       Debtor agrees that Secured Party may exercise its rights of
setoff with respect to the Obligations in the same manner as if the Obligations
were unsecured.   12.   Binding Upon Successors       All rights of Secured
Party under this Security Agreement shall inure to the benefit of its successors
and assigns, and all obligations of Debtor shall bind its heirs, executors,
administrators, successors, and assigns.   13.   Entire Agreement; Severability
      This Security Agreement contains the entire security agreement between
Secured Party and Debtor. If any of the provisions of this Security Agreement
shall be held invalid or unenforceable, this Security Agreement shall be
construed as if not containing those provisions and the rights and obligations
of the parties hereto shall be construed and enforced accordingly.   14.  
Choice of Law       This Security Agreement shall be construed in accordance
with and governed by the laws of Texas, without giving effect to choice of law
rules, and, where applicable and except as otherwise defined herein, terms used
herein shall have the meanings given them in the Uniform Commercial Code of such
state.   15.   Amendment       This Security Agreement may not be amended or
modified except by a writing signed by each of the parties hereto.   16.  
Residence; Collateral Location Records       Debtor represents that its
residence or chief place of business is set forth below its signature hereto;
and that, except as otherwise disclosed to Secured Party in writing prior to the
date hereof, the Collateral and Debtor’s records concerning the Collateral are
located at that address.

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17.   Addresses for Notices       All demands, notices, and other communications
to Debtor or Secured Party provided for hereunder shall be in writing or by
telephone, promptly confirmed in writing, mailed, delivered, or sent by
telefacsimile, addressed or sent to it to the address or telefacsimile number,
as the case may be, of Debtor or Secured Party set forth beneath such party’s
signature below, or to such other address as shall be designated by a party in a
written notice to the other party. All such demands, notices, and other
communications shall, when mailed or sent by telefacsimile, be effective when
deposited in the mails, delivered or so sent, as the case may be, addressed as
aforesaid.       EXECUTED this 30th day of June 2011.

                  DEBTOR:    
 
            Address:
508 West Wall Street, Suite 800
Midland, Texas 79701   DAWSON GEOPHYSICAL COMPANY    
 
  By:   /s/ Stephen C. Jumper    
 
     
 
Stephen C. Jumper
President    
 
           
 
  By:   /s/ Christina W. Hagan    
 
     
 
Christina W. Hagan
Secretary    
 
                SECURED PARTY:    
 
                WESTERN NATIONAL BANK    
508 West Wall Street, Suite 1100
Midland, Texas 79701
           
 
  By:   /s/ Wesley D. Bownds    
 
     
 
Wesley D. Bownds
President    

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