PLEDGE AGREEMENT
This Pledge Agreement is entered into as of November 17, 1997,
by and between:
PLEDGOR: 3-D GEOPHYSICAL, INC.
8226 Park Meadows Drive
Littleton, Colorado 80124
AND
PLEDGEE: SANWA BUSINESS CREDIT CORPORATION
550 North Brand Boulevard
Glendale, California 91203
WHEREAS, 3-D Geophysical, Inc., a Delaware corporation ("Pledgor") owns
ninety-nine percent (99%) of the issued and outstanding shares of capital stock
of (i) Geoevaluaciones, S.A. de C.V., and (ii) Procesos Interactivos Avanzados,
S.A. de C.V. (collectively, the "Companies");
WHEREAS, Northern Geophysical of America, Inc., a Delaware corporation
("Borrower") has received or will receive loans and other financial
accommodations made by Sanwa Business Credit Corporation ("Pledgee") pursuant to
a Loan and Security Agreement dated as of the date hereof between Borrower and
Pledgee (the "Loan Agreement");
WHEREAS, in consideration for such financial accommodations, Pledgor
has guarantied the obligations of Borrower to Pledgee pursuant to a Secured
Continuing Corporate Guaranty dated as of the date hereof (the "Guaranty"),
which Guaranty is secured by, among other things, this Pledge Agreement.
NOW THEREFORE, for value received, and in consideration of the
foregoing recitals, Pledgor and Pledgee hereby agree as follows:
1. Pledge of Collateral and Delivery of Pledged Collateral.
1.1 Pledgor hereby pledges and assigns to Pledgee and grants
to Pledgee a security interest in all of the Collateral described in Section 2
below, whether now owned or hereafter acquired, now or at any time hereafter in
the possession, custody or control of Pledgee or its agents, whether held for
safekeeping, in a safe deposit box, or otherwise ("Collateral") to secure prompt
payment and full performance of the obligations described in Section 3 below
(collectively, "Obligations").
1.2 Pledgor hereby delivers to Pledgee all certificates or
instruments representing or evidencing the Collateral duly endorsed "en
garantia," together with a certified copy of the stock registry book of each of
the Companies evidencing the registration of this pledge therein. Pledgee shall
have the right, at any time, after an Event of Default (as defined herein), in
its reasonable discretion and without notice to Pledgor, to transfer to or to
register in the name of Pledgee or any of its nominees any or all of the
Collateral. In
addition, Pledgee shall have the right at any time to exchange certificates or
instruments representing or evidencing Collateral for certificates or
instruments of smaller or larger denominations.
2. Collateral. The Collateral consists of the following:
2.1 Sixty-five percent (65%) in the aggregate of the shares of
common stock of the Companies, all such stock owned beneficially and of record
by Pledgor and listed on Schedule I attached hereto and made a part hereof, and
all cash, dividends, other securities, instruments, rights and other property at
any time and from time to time received or receivable in respect thereof or in
exchange for all or any part thereof, including without limitation, stock
dividends, warrants, rights to subscribe, conversion rights, liquidating
dividends and other stock rights, and in the event Pledgor receives any of the
foregoing, Pledgor acknowledges that the same shall be received IN TRUST for
Pledgee and agrees immediately to deliver the same to Pledgee in original form
of receipt, together with any stock or bond powers, assignments, endorsements or
other documents or instruments as Pledgee may reasonably request to establish,
protect or perfect Pledgee's interest in respect of such Collateral; and
2.2 Subject to the terms of Section 7.1.2 hereof, all other
property hereafter delivered to Pledgee (or any agent or bailee holding on
behalf of Pledgee) by Pledgor in substitution for or in addition to any of the
foregoing, all certificates and instruments representing or evidencing such
other property and all cash, dividends, other securities, instruments, rights
and other property at any time and from time to time received or receivable in
respect thereof or in exchange for all or any part thereof, including without
limitation, stock dividends, warrants, rights to subscribe, conversion rights,
liquidating dividends and other stock rights, and in the event Pledgor receives
any of the foregoing, Pledgor acknowledges that the same shall be received IN
TRUST for Pledgee and agrees immediately to deliver the same to Pledgee in
original form of receipt, together with any stock or bond powers, assignments,
endorsements or other documents or instruments as Pledgee may request to
establish, protect or perfect Pledgee's interest in respect of such Collateral;
and
2.3 All proceeds of all of the foregoing.
3. Obligations. The Obligations secured under this Pledge Agreement are
the obligations of Pledgor under the Guaranty and under this Pledge Agreement,
and all extensions, amendments, modifications and renewals of any of the
foregoing.
4. Representations and Warranties. Pledgor represents and warrants on
the date hereof, and shall be deemed to represent and warrant on the date of
each loan or advance made by Pledgee to Borrower, that:
4.1 Pledgor is the sole legal, beneficial and, if applicable,
record owner of the Collateral (or, in the case of after-acquired Collateral,
will be the sole such owner thereof), having good and marketable title thereto,
free of all liens, security interests, encumbrances or claims of any kind;
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4.2 All information heretofore, herein or hereafter given to
Pledgee by or on behalf of Pledgor is complete, true and correct.
4.3 All shares of stock constituting Collateral (a) have been
duly and validly issued in compliance with all applicable laws, (b) are fully
paid, nonassessable (liberadas) and free of preemptive rights, (c) are not
subject to any restrictions upon the voting rights or upon the transfer thereof
other than as may appear on the face of the certificates evidencing such
Collateral, and (d) include not less than 65% of the issued and outstanding
shares of each class of voting stock of each of the Companies;
4.4 Pledgor has the right and power and is duly authorized and
empowered to enter into, execute, deliver and perform this Pledge Agreement;
4.5 This Pledge Agreement has been duly executed and delivered
by Pledgor and constitutes a legal, valid and binding obligation of Pledgor,
enforceable against Pledgor in accordance with its terms;
4.6 Upon delivery to Pledgee of the certificates evidencing
the Collateral, endorsed "en garantia" and the registration of this pledge in
the registry books of the Companies, the security interest created herein will
constitute a valid, perfected first priority security interest in the Collateral
enforceable in accordance with its terms against all creditors of Pledgor and
any person purporting to purchase any Collateral from Pledgor.
4.7 The execution, delivery and performance of this Pledge
Agreement do not (i) violate any provisions of law or any order of any court or
other agency of government, or (ii) contravene any provision of any material
contract or agreement to which Pledgor is a party or by which Pledgor or
Pledgor's assets are bound; and
4.8 Each of the representations and warranties set forth in
Paragraph 16 of the Guaranty is accurate and complete as of the date hereof.
5. Covenants of Pledgor. Until the Obligations are paid in full,
Pledgor agrees to:
5.1 Preserve and protect the Collateral as a first priority,
perfected security interest;
5.2 Not create, incur, assume or permit to exist any liens,
encumbrances, security interests, levies, assessments or charges on or in any of
the Collateral, except those approved in advance in writing by Pledgee;
5.3 Promptly pay and discharge before the same become
delinquent all taxes, assessments and governmental charges or levies imposed on
Pledgor or any of the Collateral;
5.4 Not sell, encumber, or otherwise dispose of or transfer
any Collateral, or any right or interest therein and agrees that it will (i)
cause the Companies not to issue any other voting stock in addition to or in
substitution for the Collateral, except to Pledgor, or in connection with
outstanding stock options or with the prior written consent of Pledgee and (ii)
pledge hereunder, immediately upon Pledgor's acquisition (directly or
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indirectly) thereof, any and all additional shares of stock or other securities
of the Companies;
5.5 Appear in and defend, at Pledgor's own expense, any action
or proceeding which may affect Pledgor's title to or Pledgee's interest in the
Collateral;
5.6 Procure or execute and deliver, from time to time, in form
and substance satisfactory to Pledgee, any stock powers, bond powers,
endorsements, assignments, financing statements, estoppel certificates or other
writings deemed necessary or appropriate by Pledgee to perfect, maintain or
protect Pledgee's security interest in the Collateral and the priority thereof,
and take such other action and deliver such other documents, instruments and
agreements pertaining to the Collateral as Pledgee may request to effectuate the
intent of this Pledge Agreement;
5.7 If Pledgee gives value to enable Pledgor to acquire rights
in or use of any Collateral, use such value only for such purpose;
5.8 Keep separate, accurate and complete records of the
Collateral and provide Pledgee with access thereto and to Pledgor's financial
records, in each case with the right to make extracts therefrom;
5.9 Provide Pledgee with copies of all reports filed by the
Companies or Pledgor with the Securities and Exchange Commission within ten (10)
business days after the last date such report is required to be filed;
5.10 Provide Pledgee with such other information pertaining to
the Collateral as Pledgee may reasonably request from time to time;
5.11 Maintain and preserve its corporate or other legal
existence and that of its majority-owned subsidiaries, including, without
limitation, the Companies, and all rights, privileges, franchises and other
authority necessary for the conduct of their respective businesses; and
5.12 Continue its operations in the same form and structure of
business (i.e., corporate, partnership, individual) as currently conducted, and
not merge or consolidate with or acquire or be acquired by any other
corporation, partnership, entity or person, without Pledgee's prior written
consent; and
5.13 At all times comply with the covenants and agreements set
forth in the Guaranty.
6. Authorized Action by Pledgee.
6.1 Pledgor hereby irrevocably appoints Pledgee as its
attorney-in- fact to do (but Pledgee shall not be obligated to and shall not
incur any liability to Pledgor or any third party for failure so to do) any act
which Pledgor is obligated by this Pledge Agreement to do, and to exercise such
rights and powers as Pledgor might exercise with respect to the Collateral,
including, without limitation, the right to:
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6.1.1 collect by legal proceedings or otherwise and
endorse, receive and receipt for all payments, proceeds and other sums and
property now or hereafter payable on or in respect of proceeds and other sums
and property now or hereafter payable on or in respect of the Collateral,
including dividends and interest payments;
6.1.2 enter into any extension, reorganization,
deposit, merger or consolidation agreement or other agreement pertaining to the
Collateral, and in connection therewith may deposit or surrender control of the
Collateral thereunder, accept other property in exchange therefor, and do and
perform such acts and things as it may deem proper, and any money or property
secured in exchange therefor shall be applied to the Obligations or held by
Pledgee pursuant to the provisions of this Pledge Agreement;
6.1.3 protect and preserve the Collateral;
6.1.4 transfer the Collateral to its own or its
nominee's name; and
6.1.5 make any compromise, settlement or adjustment,
and take any action it deems advisable, with respect to the Collateral;
provided, however, that Pledgee shall only exercise such rights after the
occurrence and during the continuation of an Event of Default (as defined
herein), except that upon the cure of any Event of Default, Pledgee shall have
the right to complete any action commenced by it during such Event of Default.
6.2 Pledgor agrees to reimburse Pledgee upon demand for any
costs and expenses, including attorneys' fees, Pledgee may incur while acting as
Pledgor's attorney-in-fact hereunder, all of which costs and expenses are
included in the Obligations secured hereby and are payable upon demand. It is
further agreed and understood between the parties hereto that such care as
Pledgee gives to the safekeeping of its own property of like kind shall
constitute reasonable care of the Collateral when in Pledgee's possession;
provided, however, that Pledgee shall not be required to make any presentment,
demand or protest, or give any notice and need not take any action to preserve
any rights against any prior party or any other person in connection with the
Obligations or with respect to the Collateral.
6.3 If Pledgor's records are prepared or retained by a
computer service company or any accountant or accounting service, so long as any
Obligations are outstanding, Pledgor grants Pledgee the absolute and irrevocable
right to inspect such records, receive duplicate copies of all information
furnished to Pledgor and prepared by such company, accountant or accounting
service, and agrees to furnish such consents as may be necessary to effectuate
the same. Pledgor further agrees to promptly notify Pledgee of the name and
address of such company, accountant or accounting service and of any change in
respect thereof.
6.4 All the foregoing powers authorized herein, being coupled
with an interest, are irrevocable so long as any Obligations are outstanding.
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7. Transfer, Voting, Dividends, Etc.
7.1 Notwithstanding any other provision hereof, so long as no
Event of Default (as defined herein) shall have occurred and be continuing:
7.1.1 Pledgor shall be entitled to exercise all
voting powers pertaining to all shares of stock and other securities
constituting Collateral for all purposes not inconsistent with the terms of the
Loan Agreement and this Pledge Agreement;
7.1.2 To the extent permitted in the Loan Agreement,
Pledgor shall be entitled to receive and retain all dividends (other than stock
or liquidating dividends) and all interest payments payable in respect of the
Collateral; provided, however, that all stock or property representing stock or
liquidating dividends or a distribution or return of capital upon or in respect
of the shares of stock constituting Collateral or resulting from a split-up,
revision or reclassification of such Collateral or received in exchange
therefor, as a result of a merger, consolidation or otherwise, shall be paid or
transferred directly to Pledgee immediately upon receipt thereof by Pledgor, and
shall be retained by Pledgee as Collateral hereunder; and
7.1.3 in order to permit Pledgor to exercise such
voting powers and to receive such dividends Pledgee shall, if necessary, upon
the written request of the Pledgor, from time to time, execute and deliver to
Pledgor appropriate proxies.
7.2 If any Event of Default (as defined herein) shall have
occurred and while the same is continuing:
7.2.1 Pledgee, or its nominee or nominees, shall, at
its option (after notice to Pledgor of Pledgee's intent to exercise such
rights), have the sole and exclusive right to exercise all voting powers
pertaining to the shares of stock constituting Collateral, and shall exercise
such powers in such manner as Pledgee may elect, and Pledgor hereby grants
Pledgee an irrevocable proxy, coupled with an interest to vote such shares of
stock; provided, however, that such proxy shall terminate upon termination of
Pledgee's security interest therein; and
7.2.2 All dividends and other distributions made upon
or in respect of shares of stock constituting Collateral and all interest
payments shall be paid directly to and shall be retained by Pledgee as
Collateral hereunder.
8. Default and Remedies.
8.1 The occurrence of any of the following events or
conditions (herein "Events of Default") shall, at the option of Pledgee and
without notice to or demand on Pledgor, constitute an Event of Default
hereunder:
8.1.1 any Default, under and as defined in the Loan
Agreement, shall have occurred and be continuing;
8.1.2 breach, violation or non-performance of any
warranty, covenant or undertaking on Pledgor's part hereunder; or
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8.1.3 breach, violation or non-performance of any
warranty, covenant or undertaking on Pledgor's part under any other agreement
with Pledgee (including, without limitation, the Guaranty).
8.2 Upon the occurrence of any Event of Default, Pledgee may,
at its option, without notice to or demand on Pledgor, declare all Obligations
immediately due and payable, and Pledgee shall have all the default rights and
remedies of a secured party under Chapter 5 of Division 9 of the California
Uniform Commercial Code and other applicable law as well as the following rights
and remedies, all of which may be exercised with or without further notice to
Pledgor, at Pledgee's sole option and as Pledgee in its sole discretion may deem
advisable:
8.2.1 to settle, compromise or release, on terms
acceptable to Pledgee, in whole or in part, any amounts owing on the Collateral,
and to extend the time of payment, in Pledgee's name or in the name of Pledgor,
in respect thereof;
8.2.2 to apply to the payment of the Obligations, or
set-off or collect the Collateral, notwithstanding any forfeiture of interest or
loss of other rights of Pledgor against any obligor on the Collateral resulting
from such action; and
8.2.3 to sell or otherwise dispose of the Collateral,
or any part thereof, either at public or private sale, on any broker's board or
securities exchange, in lots or in bulk, for cash, on credit or otherwise, with
or without representations or warranties, and upon such terms as shall be
acceptable to Pledgee.
8.3 The net cash proceeds resulting from the collection,
liquidation, sale, or other disposition of the Collateral shall be applied
first, to the expenses (including all attorneys' fees) of holding, storing,
preparing for sale, selling, collecting, liquidating and the like, including any
brokerage commissions and stamp or transfer taxes, and then to the satisfaction
of all Obligations secured hereby, application as to any particular obligation
or indebtedness or against principal or interest to be in Pledgee's absolute
discretion.
8.4 If by reason of any prohibition contained in the
Securities Act of 1933, as now or hereafter in effect, or in applicable
California or other state securities laws, as now or hereafter in effect, or in
any rules or regulations pertaining to any of the foregoing laws, Pledgee
believes it is compelled to resort to one or more private sales of shares of
stock constituting Collateral to a single purchaser or a restricted group of
purchasers who will be obliged to agree, among other things, to acquire such
securities for their own account, for investment and not with a view to the
distribution or resale thereof, Pledgor acknowledges and agrees that private
sales of such Collateral may be held notwithstanding that such sales may be at
prices and on other terms less favorable to Pledgor than if such Collateral were
sold at public sale. Pledgor further agrees that Pledgee has no obligation to
delay the sale of any such Collateral for the period of time necessary to permit
registration of the Collateral, even if the issuer thereof would, or should,
agree to register such Collateral for public sale under applicable securities
laws. Pledgor specifically agrees that private sales made under the foregoing
circumstances shall be deemed to have been made in a "commercially reasonable"
manner.
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8.5 Pledgor further acknowledges and recognizes that Pledgee
may be unable to effect a public sale of all or a part of the Collateral and may
be compelled to resort to one or more private sales of shares of stock
constituting Collateral to a single purchaser or a restricted group of
purchasers who will be obligated to agree, among other things, to acquire the
Collateral for their own account, for investment and not with a view to the
distribution or resale thereof. Pledgor acknowledges that any such private sales
may be at prices and on terms less favorable to Pledgee than those of public
sales, and agrees that such private sales shall be deemed to have been made in a
commercially reasonable manner and that Pledgee has no obligation to delay the
sale of any Collateral to permit the issuer thereof to register it for public
sale under the Securities Act.
9. Duty of Pledgee. Pledgee shall not be under any duty or obligation
whatsoever to collect any dividends, interest or other payments due or accruing
in respect of the Collateral or to take any action to preserve rights in
connection with any Collateral, including, without limitation, making or giving
any presentment, demands for performance, notices of non-performance, protests,
notices of protest or notices of dishonor in connection with any Collateral.
10. Cumulative Rights. The rights, powers and remedies of Pledgee under
this Pledge Agreement shall be in addition to all rights, powers and remedies
given to Pledgee under any statute or rule of law, this Pledge Agreement or any
other agreement, all of which rights, powers and remedies shall be cumulative
and may be exercised successively or concurrently.
11. Waiver. Any forbearance, failure or delay by Pledgee in exercising
any right, power or remedy shall not preclude the further exercise thereof, and
every right, power or remedy of Pledgee shall continue in full force and effect
until such right, power or remedy is specifically waived in a writing executed
by Pledgee. Pledgor waives any right to require Pledgee to proceed against any
person or to exhaust any Collateral or to pursue any remedy in Pledgee's power
prior to pursuing Pledgor in respect of the Obligations.
12. Setoff. Pledgor agrees that Pledgee may exercise its rights of
setoff with respect to the Obligations in the same manner as if the Obligations
were unsecured.
13. Binding Upon Successors. All rights of Pledgee under this Pledge
Agreement shall inure to the benefit of its successors and assigns, and all
obligations of Pledgor shall bind the representatives, and successors and
assigns of the Pledgor.
14. Waiver of Suretyship Defenses. Pledgor hereby reaffirms each of the
waivers given in the Guaranty as if each such waiver was fully set forth herein.
15. Substituted Collateral; Additional Collateral. Pledgor may
substitute Collateral under this Pledge Agreement provided that any Collateral
proposed for substitution is satisfactory to Pledgee in Pledgee's sole
discretion. As of the date of delivery of any Collateral approved for
substitution by Pledgee pursuant to this Section 15 or otherwise approved as
additional security pursuant to this Pledge Agreement, Pledgor represents and
warrants to Pledgee that (1) Pledgor will own such shares, certificates and
instruments free and clear of any right of any other person or entity, and (2)
Pledgor will have good and marketable title to the shares, certificates and
instruments and have the right to pledge such
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shares, certificates or instruments pursuant to this Pledge Agreement. By
delivery of such substituted or additional Collateral, Pledgor shall have
represented and warranted that Pledgee has a valid, perfected, first priority
security interest in such shares, certificates and instruments and the proceeds
thereof free and clear of all liens, claims and rights of third parties
whatsoever. All documentary, stamp or other taxes or fees owing in connection
with the issuance, transfer and/or pledge of the Collateral or any substituted
or additional Collateral have been paid and will hereafter be paid by Pledgor as
such become due and payable.
16. Entire Agreement; Severability. This Pledge Agreement contains the
entire pledge agreement between Pledgee and Pledgor with respect to the
Collateral. If any of the provisions of this Pledge Agreement shall be held
invalid or unenforceable, this Pledge 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.
17. Return; Acquittance. Pledgee may at any time deliver any Collateral
to Pledgor and the receipt thereof by Pledgor shall be a complete and full
acquittance in respect of the Collateral so delivered, and Pledgee shall
thereafter be discharged from any liability or responsibility therefor.
18. References. As used herein, terms in the singular include the
plural. The captions or titles of the sections of this Pledge Agreement are for
convenience of reference only and shall not define or limit the provisions
hereof.
19. Choice of Law. This Pledge Agreement shall be construed in
accordance with and governed by the laws of the State of California, and, where
applicable and except as otherwise defined herein, terms used herein shall have
the meanings given them in the California Uniform Commercial Code. Pledgor and
Pledgee each irrevocably and unconditionally submits to the jurisdiction of the
Superior Court of the State of California for the County of Los Angeles or the
United States District Court of the Central District of California, or if
required, the Municipal Court of the State of California for the County of Los
Angeles, in connection with any legal action or proceeding arising out of or
relating to this Pledge Agreement, and Pledgor waives any objection relating to
the basis for personal or in rem jurisdiction or to venue which it may now or
hereafter have in any such suit, action or proceeding.
20. Jury Trial. PLEDGOR AND PLEDGEE WAIVE THE RIGHT TO TRIAL BY JURY IN
ANY ACTION, SUIT, PROCEEDING OR COUNTERCLAIM OF ANY KIND ARISING OUT OF OR
RELATED TO ANY OF THE OBLIGATIONS HEREIN.
21. Notice. Any written notice, consent or other communication provided
for in this Pledge Agreement shall be delivered or sent by first-class mail,
with postage prepaid, to the party to be notified, to the mailing address
specified in the introductory section hereof. Such addresses may be changed by
written notice as provided herein.
22. Expenses. Pledgor will reimburse Pledgee for all out-of-pocket
expenses incurred by Pledgee arising out of the enforcement of this Agreement,
including without limitation, attorneys' fees and costs whether or not suit is
filed.
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23. Indemnification. Pledgor agrees to pay, and on demand to indemnify
and hold harmless, Pledgee, its successors, assigns and agents, from and against
any and all claims, damages, losses, liabilities, demands, suits, judgments,
causes of action and all legal proceedings, whether civil or criminal,
penalties, fines and other sanctions, and any costs and expenses incurred in
connection therewith, including attorneys' fees, which may result from, relate
to or arise out of this Pledge Agreement or any Collateral, including the
ownership, purchase, delivery, acceptance or rejection, use, possession or
disposition of any item of Collateral, but not including any claims arising out
of the gross negligence or willful misconduct of Pledgee or its agents.
EXECUTED as of November 17, 1997.
PLEDGEE: PLEDGOR:
SANWA BUSINESS CREDIT 3-D GEOPHYSICAL, INC.
CORPORATION
By: /s/ Timothy K. Turner By: /s/ Ronald L. Koons
-------------------------- -----------------------
Its: First Vice President Its: Vice President
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SCHEDULE I
Class of Stock No. of Shares
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1. Common Stock of Geoevaluaciones, S.A. ________
de C.V. registered in the name of
3-D Geophysical, Inc.
2. Common Stock of Procesos Interactivos ________
Avanzados, S.A. de C.V.