exv10w2






EXHIBIT 10.2




SECURITY AGREEMENT




     THIS SECURITY AGREEMENT (the “Security Agreement”) is made and entered into this
2nd day of June 2008, 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 2, 2008, by and between
DAWSON GEOPHYSICAL COMPANY, as Borrower ( the “Borrower”), and the Secured Party, as Lender
(the “Loan Agreement”). Pursuant to the terms of the Loan Agreement, the Secured Party has
agreed to extend a loan to Borrower, from time to time, said indebtedness being evidenced by a
Revolving Line of Credit Note, dated as of June 2, 2008, in the original principal amount of
Forty Million and No/100 Dollars ($40,000,000.00), executed by the Borrower, as Maker, to the
Secured Party, as Payee (the “Note”). The Loan Agreement and the Note, and all documents
executed by the parties simultaneously therewith, as any of the same may be amended, extended
or replaced from time to time are collectively referred to herein as the “Credit Documents.”
Capitalized terms not otherwise defined herein are used with the same meanings as in the
Credit Documents.






	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”).





	2.	 	Collateral




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	 	 	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.
	 
	 	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.





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	 	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.
	 
	 	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




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	 	 	 	party obligated to pay the same (an Account Debtor), which terms have not been
modified or waived in any respect or to any extent.
	 
	 	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.
	 
	 	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.




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	 	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.
	 
	 	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




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	 	 	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 guarantied 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 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.




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	 	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 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




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	 	 	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.
	 
	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,




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	 	 	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 2nd day of June 2008.





	 	 	 	 	 	 	 
	 	 	DEBTOR:	 	 
	 
	 	 	 	 	 	 
	 	 	DAWSON GEOPHYSICAL COMPANY	 	
	Address:
	 	 	 	 	 	 
	508 West Wall Street, Suite 800
	 	 	 	 	 	 
	Midland, Texas 79701
	 	 	 	 	 	 
	 

	 	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/ James R. Kreuz	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	James R. Kreuz	 	 
	 

	 	 	 	President	 	 







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