Exhibit 10.1

 

Certificate of Occupancy

 

Commercial Lease

 

This lease is made and entered into by and between J. C. Ray Incorporated
Landlord and TGC Industries, Inc., Tenant. Landlord hereby leases to Tenant and
Tenant hereby leases from Landlord that certain property with the improvements
thereon, comprising a total of three buildings in close proximity; two buildings
containing approximately 10,000 square feet each, and the third building
containing approximately 5,000 square feet, for a total of approximately 25,000
square feet of building space, and  adjacent fenced, lighted and gated outside
storage yard of approximately 60,500 square feet, hereinafter called the “leased
premise”, known as address 3375 Juanita Drive, Denison, Texas 75020.

 

The primary term of this lease shall be 5 years, commencing on the 1st. day of
November 2008 and ending at 11:59 pm on the 31st day of October, 2013, upon the
following terms, conditions, and covenants.

 

1.               TAXES.  Each year during the term of this lease, Landlord shall
pay real estate taxes assessed against the leased premises in an amount equal to
the total real estate taxes assessed against the leased premise in the base
year. Each year during the term of this lease, Tenant shall pay as additional
rental, upon receipt of a statement from Landlord together with tax statements
or other verification from the proper taxing authority, his pro rata share of
any increase in real estate taxes over the base year on the property of which
the leased premises is a part. Any increase in real estate taxes for a
fractional year shall be prorated. The base year shall be 2009.

 

2.               UTILITIES.  Tenant shall pay all charges for utility services
to the leased premises.

 

3.               HOLDING OVER.  Failure of Tenant to surrender the leased
premise at the expiration of the lease constitutes a holding over which shall be
construed as a tenancy from month to month at a rental of one hundred twenty
five percent of the contracted monthly rate per month.

 

4.               RENT.  Tenant agrees to and shall pay Landlord at 3355 Juanita
Drive,Denison, Texas 75020, the total sum of $893,181.60, payable without demand
in equal monthly payments of $14, 886.36, each in advance on or before the 1st
day of each month, commencing on November 1, 2008, and continuing thereafter on
a month to month basis. The monthly payment is computed by adding the base
monthly rental amount of $9,500.00 to the monthly amortized cost of $5,386.36
which includes interest for Landlord Improvements of approximately $270,742.40
as discussed in Exhibit “B”.  Rent received after the tenth day of the month
shall be deemed delinquent. If rent is not received by Landlord by the 10th of
each month, Tenant shall pay a late charge of 5.00% of base rental for each
month rent is in default. Tenant shall pay thirty five dollars for each returned
check.

 

5.               USE.  Tenant shall use the leased premise for the following
purposes: Equipment

 

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repair, parking, storage of vehicles, trailers and goods, and for any other
purposes reasonably associated with or related to the seismic acquisition
business. Tenant is not to use the space within one foot of the outside wall.

 

6.               SECURITY DEPOSIT.  Security deposit of $14,886.36, representing
the final months’ rent during the initial rent term, is due and payable at lease
inception.

 

7.               INSURANCE.  Landlord shall pay for fire and extended coverage
on the Buildings, storage yard and other existing improvements on the leased
premises in an amount listed on existing policies. Tenant shall provide public
liability and property damage insurance for its business operations on the
leased premises in an amount of one million dollars, which policy shall cover
the Landlord as well as the Tenant. Said insurance policies required to be
provided by Tenant herein shall name Landlord as an insured and shall be issued
by an insurance company approved to do business in the state of Texas. Tenant
shall provide Landlord with certificates of insurance evidencing the coverage
required herein. Tenant shall be responsible for fire and casualty insurance on
Tenant’s property on or about leased premise. Tenant’s insurance shall be kept
current. Tenant’s failure to maintain aforementioned insurance shall constitute
a default of this contract and shall be dealt with as prescribed in section 14
of this contract.

 

8.               CONDITION OF PREMISES.  As of the date of signing of this lease
agreement,   Landlord is in the process of constructing the buildings, leasehold
improvements, and storage yard referred to herein.  Landlord and Tenant expect
that leased premises,leasehold improvements and storage yard referred to in
Exhibit B will be suitable for the purposes for which the same are leased.

 

9.               MAINTENANCE AND REPAIRS.  Landlord shall keep the foundation,
the exterior walls (except glass, windows, doors, door closure devices, window
and door frames, molding, locks, hardware, and interior painting or other
treatment of exterior walls), the reinforced concrete driveways referred to in
Exhibit B, and the roof of the leased premises in good repair except that
Landlord shall not be required to make any repairs occasioned by the act or
negligence of Tenant, its employees, subtenants, licensees and concessionaires.
Tenant is responsible for maintenance of the common area, except for the
reinforced concrete driveways, and common area equipment. Tenant shall keep the
leased premises in good, clean condition and shall at its sole cost and expense,
make all needed repairs and replacements, including replacement of cracked or
broken glass, except for repairs and replacements required to be made by the
Landlord under this section. If any repairs required to be made by Tenant are
not made within ten days after written notice delivered to Tenant by Landlord,
landlord may at its option make such repairs without liability to Tenant for any
loss or damage which may result by reason of such repairs, and Tenant shall pay
to Landlord upon demand as additional rent hereunder the cost of such repairs
plus actual interest incurred by Landlord.  At the termination of this lease,
Tenant shall deliver the leased premises in good order and condition, normal
wear and tear excepted. Normal wear and tear means deterioration which occurs
without negligence, carelessness, accident or abuse.

 

10.        ALTERATIONS.  All alterations, additions and improvements, except
trade fixtures, installed at expense of Tenant shall become the property of the
Landlord and

 

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shall remain upon and be surrendered with the leased premises as part thereof on
the termination of this lease. Such alterations, additions, and improvements may
only be made with the prior written consent of Landlord, which consent shall not
be unreasonably withheld. If consent is granted for the making of the
improvements or alterations to the leased premises, such improvements and
alterations shall not commence until Tenant has furnished Landlord a certificate
of insurance showing coverage in an amount satisfactory to the Landlord from
liability for injury to any person and damage to any personal property, on or
off the leased premises, in connection with the making of such improvements or
alterations. No cooling tower, equipment, or structure of any kind shall be
placed on the roof or elsewhere on the leased premises by Tenant without prior
written permission of Landlord. If such permission is granted, such work or
installation shall be done at Tenant’s expense and in such a manner that the
roof shall not be damaged thereby. If it becomes necessary to remove such
cooling tower, equipment or structure temporarily, so that repairs to the roof
can be made, Tenant shall promptly remove and reinstall the equipment at
Tenant’s expense, so that the repairs can be made. Upon termination of this
lease Tenant will remove or cause to be removed such equipment if directed by
Landlord. At the termination of this lease Tenant will deliver the leased
premises in good order and condition, natural deterioration only accepted. Any
damages whatsoever caused by Tenant shall be repaired at Tenants expense. All
alterations, improvements, additions and repairs made by Tenant shall be made in
good and workman like manner.

 

11.             COMPLIANCE WITH LAWS AND REGULATIONS.  Tenant shall, at its own
expense, comply with all laws, orders, and requirements of all governmental
entities with reference to the use and occupancy of the leased premises. Tenant
and Tenants agents, employees and invitees shall fully comply with any rules and
regulations governing the use of the buildings or other improvements to the
leased premises as required by Landlord. Landlord may make reasonable changes in
such rules and regulations from time to time as deemed advisable for safety,
care and cleanliness of the leased premises, provided same are in writing and
are not in conflict with this lease.

 

12.             ASSIGNMENT AND SUBLETTING.  Tenant shall not assign this lease
nor sublet the leased premises or any interest therein without first obtaining
the written consent of the Landlord. An Assignment or subletting without the
written consent of Landlord shall be void and shall, at the option of Landlord,
terminate this lease.

 

13.             DESTRUCTION.  In the event the leased premises is partially
damaged or destroyed or rendered partially unfit for occupancy by fire or other
casualty, Tenant shall give immediate notice to Landlord. Landlord may repair
the damage and restore the leased premises to substantially the same condition
as immediately prior to the occurrence of the casualty. If the leased premises
are totally destroyed or deemed by the Landlord to be rendered unfit for
occupancy by fire or other casualty, or if the Landlord shall decide not to
repair or rebuild, this lease shall terminate and rent shall be paid to the time
of such casualty.

 

14.             TENANT DEFAULT AND REMOVAL OF ABANDONED PROPERTY.  If Tenant
abandons the premises or otherwise defaults in the performance of any
obligations or covenants herein, Landlord may enforce the performance of this
lease in any manner provided by law. This lease may be terminated at Landlord’s
discretion if such

 

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abandonment or default continues for a period of 10 days after Landlord notifies
Tenant of such abandonment or default and or Landlord’s intention to declare
this lease terminated. Such notice shall be sent by Landlord to Tenant at
Tenants last known address by certified mail. If Tenant has not completely
removed or cured default within the 10-day period, this lease shall terminate.
Thereafter, Landlord or its agents have the right without further notice or
demand, to enter the leased premises and remove all property without being
deemed guilty of trespass and without waiving any other remedies for arrears of
rent or breach of covenant. Upon abandonment or default by the Tenant, the
remaining unpaid portion of the rental from paragraph 4 herein, shall become due
and payable. For purposes of this section, Tenant is presumed to have abandoned
the premises if goods, equipment, or other property, in an amount substantial
enough to indicate a probable intent to abandon the premises, is being or has
been removed from the premises and the removal is not within the normal course
of Tenant’s business. Landlord shall have the right to store any property of
Tenant that remains on premises that are abandoned; and in addition to
Landlord’s other rights, Landlord may dispose of the stored property if Tenant
does not claim the property within 60 days after the date the property is
stored, provided Landlord delivers by certified mail to Tenant at Tenant’s last
known address a notice stating that Landlord may dispose of Tenant’s property if
Tenant does not claim the property within 60 days after the date the property is
stored.

 

15.             INTERRUPTION OF UTILITIES, Landlord or Landlord’s agent may not
interrupt or cause the interruption of utility service paid directly to the
utility company by Tenant unless interruption results from bona fide repairs,
construction, or an emergency. If any utility service furnished by Landlord are
interrupted and continue to be interrupted despite the good faith efforts of
Landlord to remedy same, Landlord shall not be liable in any respect for damages
to the person or property of Tenant or Tenant’s employees, agents, or guests,
and same shall not be construed as grounds for constructive eviction or
abatement of rent. Landlord shall use reasonable diligence to repair and remedy
such interruption promptly.

 

16.             EXCLUSION OF TENANT.  Landlord may not intentionally prevent
Tenant from entering the leased premises except by judicial process unless the
exclusion results from (a) bona fide repairs, construction, or an emergency;
(b) removing the contents or premises abandoned by Tenant; or (c) changing the
door locks of Tenant in the event Tenant is delinquent in paying at least part
of the rent. If Landlord or Landlord’s agent changes the door lock of Tenant, in
the event the Tenant is delinquent in paying rent, Landlord or Landlords agent
must place a written notice on Tenant’s front door stating the name and the
address or telephone number of the individual or company from which the new key
may be obtained. The new key is required to be provided only during Tenant’s
regular business hours.

 

17.             LIEN.  Landlord is granted an expressed contractual lien, in
addition to any lien provided by law, and a security interest in all property of
Tenant found on the leased premises to secure the compliance by tenant with all
terms of this lease.

 

18.             SUBORDINATION.  Landlord is hereby irrevocably vested with full
power and authority to subordinate this lease to any mortgage, deed of trust, or
other lien hereafter placed on the demised premises and Tenant agrees on demand
to execute such

 

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further instruments subordinating this lease as Landlord may request, provided
such subordination shall be on the express condition that this lease shall be
recognized by mortgagee, and the rights of Tenant shall remain in full force and
effect during the term of this lease so long as Tenant shall continue to perform
all of the covenants and conditions of this lease.

 

19.             INDEMNITY.  Landlord and its employees and agents shall not be
liable to Tenant or Tenant’s employees, patrons, visitors, invitees, or any
other persons for any such injury to any such persons or for damage to personal
property caused by any omission, or neglect of Tenant or Tenant’s agents or of
any other Tenant of the premises of which the leased premises is a part. Tenant
agrees to indemnify and hold Landlord and its employees and agents harmless from
any and all claims for such injury and damages, whether the injury occurs on or
off the leased premises.

 

20.             SIGNS.  Tenant shall not post or paint any signs at, or, about
the leased premises or paint the exterior walls of the building except with the
prior written consent of the Landlord. Landlord shall have the right to remove
any sign or signs in order to maintain the leased premises or to make any
repairs or alterations thereto.

 

21.             TENANT BANKRUPTCY.  If Tenant becomes bankrupt, makes voluntary
assignment for the benefit of creditors, or if a receiver is appointed for
Tenant, Landlord may terminate this lease by giving (45) days written notice to
Tenant of Landlord’s intention to do so.

 

22.             CONDEMNATION.  If the whole or any substantial part of the
leased premises is taken for any public or quasi-public use under any
governmental law, ordinance or regulation or by right of eminent domain or
should the leased premises be sold to a condemning authority under threat of
condemnation, this lease shall terminate and rent shall be abated during the
unexpired portion of the lease effective from the date of the physical taking of
the leased premises.

 

23.             HAZARDOUS MATERIALS.  Landlord warrants and represents that the
Property does not contain “Hazardous Materials”, as that phrase is defined
herein. For purposes of this provision, the phrase “Hazardous Materials” shall
mean and include any toxic contaminated or other hazardous materials including,
without limitation, asbestos. PCB, Transformers, underground storage containers,
materials containing any radioactive substances, petroleum base products, paint,
solvents, lead, cyanide, DDT, acids, pesticides, ammonium compounds, and any
other substance forming a component part of the improvements which has
heretofore or may in the future be determined to contain toxic wastes, hazardous
materials, or undesirable substances injurious to the health of occupants living
or working in or around the subject property. Landlord acknowledges that current
and future federal, state, and local laws and regulations may require the clean
up of any such Hazardous Materials at the expense of those persons who in the
past, present or future may have had or continue to have any interest in the
property including, but not limited to, current, past, and future owners and
users, including tenants of the property. The cost and expense of such clean up
may be substantial. Landlord further acknowledges that the real estate brokers
and their agents involved in the negotiations of this transaction have no
expertise with respect to any such Hazardous Materials. Landlord acknowledges
and agrees that Landlord shall look solely to experts and professionals

 

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selected by Landlord to advise Landlord with respect to the condition of the
property and shall not hold the real-estate brokers or their agents responsible
for any Hazardous Material condition or problem relating to the property.
Landlord hereby agrees to indemnify, defend and hold the real estate brokers and
their agents participating in this transaction harmless of and from any and all
liability, claim, debt, damage, cost, or expense, including reasonable
attorney’s fees, related to or arising out of or in any way connected to
Hazardous Materials and or toxic wastes and or any other undesirable substances
affecting the property.

 

Tenant shall, at Tenant’s sole cost and expense, comply with all laws,
ordinances, orders, rules and regulations promulgated by all federal, state,
county, municipal bodies and agencies having jurisdiction, which laws,
ordinances, orders, rules and regulations relate to the business of Tenant and
the effect of that business on the use, condition, structure or occupancy of the
property.

 

a) Without limiting the foregoing, the term “Hazardous Waste Law” shall mean any
provision of Federal, State, County or regulatory or common law, in effect on
the date hereof (and as hereafter amended from time to time) or hereafter
enacted or imposed, pertaining to health, safety or environmental protection,
including, without limitation, the comprehensive environmental response,
compensation and liability act of 1980, as amended by Superfund Amendments and
Reauthorization Act of 1986, the resource conservation and recovery act of 1976
and the Texas Water Code and the Texas solid waste disposal act. The term
“environmental” means any surface or subsurface strata, or the ambient air. The
term “release” means any spilling, leaking, escaping, leaching, dumping or
disposing into the environment.

 

b) Tenant represents and warrants to Landlord that Tenant will not be involved
in operations at or near the property, which operations could lead to (A) the
imposition of liability under hazardous Waste Law on Landlord, or on any
subsequent owner of the Property, or (B) the creation of a lien on the Property
under any Hazardous Waste Law or under any similar laws or regulations.

 

Tenant agrees to indemnify Landlord against and agrees to defend and to hold
Landlord harmless from any claim, obligation, liability, loss damage, or expense
(including, without limitation, attorneys fees and court costs), or whatever
kind or nature, contingent or otherwise, known or unknown, accruing after the
execution date of this lease, that is incurred or imposed based upon any
Hazardous Waste Law and that arises out of any act or omission of Tenant, its
employees, agents or representatives that causes the release of any substance in
to the environment, or that otherwise arises relating to the use, storage, or
disposal of hazardous materials.

 

d) Tenant agrees to comply with all City of Denison Ordinances and Requirements.

 

24.             SPECIAL PROVISIONS.  Attached as Exhibits “A” and “B”.

 

25.             NOTICES.  Notices to Tenant shall be by certified mail or other
delivery to TGC Industries, Inc., 101 E. Park Blvd., Suite 955, Plano, TX 
75074, and Attn: Wayne Whitener. Notices to the Landlord shall be by certified
mail to the address where rent is paid.

 

26.             DEFAULT BY LANDLORD.  In the event of breach by Landlord of any
covenant, term or obligation of this lease, then Landlord’s failure to cure same
or commence a good

 

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faith effort to cure same within 10 days after written notice thereof by Tenant
shall be considered a default and shall entitle Tenant either to terminate this
lease or cure the default and make the necessary repairs and any expense
incurred by Tenant shall be reimbursed by Landlord after reasonable notice of
the repairs and expenses incurred. If any utility services furnished by Landlord
are interrupted and continue to be interrupted despite the good faith efforts of
Landlord to remedy same, Landlord shall not be liable in any respect for damages
to the person or property of Tenant or Tenant’s employees, agents, or guests,
and same shall not be construed as grounds for constructive evasive or abatement
of rent. Landlord shall use reasonable diligence to repair and remedy such
interruptions promptly.

 

27.             SIGNS.  During this lease a “For Sale and/or For Rent/Lease”
sign may be displayed on the leased premises and the leased premises may be
shown at reasonable times to prospective purchasers or tenants.

 

28.             RIGHT OF ENTRY.  Landlord shall have the right during normal
business hours to enter the premises, a) To inspect the general condition and
state of repair thereof, b) to make repairs required or permitted under this
lease, or, c) for any other reasonable purpose.

 

29.             WAIVER OF BREACH.  The waiver by Landlord of any breach of any
provision of this lease shall not constitute a continuing waiver or a waiver of
any subsequent breach of the same or a different provision of this lease.

 

30.             TIME OF ESSENCE.  Time is expressly declared to be of the
essence in this lease.

 

31.             Deleted.

 

32.             RIGHTS AND REMEDIES CUMULATIVE.  The rights and remedies by this
lease agreement are cumulative and the use of any one right or remedy by either
party shall not preclude or waive its right to use any or all other remedies.
Said rights and remedies are given in addition to any other rights the parties
may have by law, statue, ordinance, or otherwise.

 

33.             TEXAS LAW TO APPLY.  This agreement shall be construed under and
in accordance with the laws of the state of Texas. Any disagreements involving
legal issues will be settled by arbitration rather than due process.

 

34.             LEGAL CONSTRUCTION.  In case any one or more of the provisions
contained in this agreement shall for any reason be held to be invalid, illegal,
or unenforceable in any respect, such invalidity, or unenforceability shall not
affect any other provision hereof and this agreement shall be construed as if
such invalid, illegal, or unenforceable provision had never been herein.

 

35.             PRIOR AGREEMENTS SUPERSEDED.  This agreement constitutes the
sole and only agreement of the parties to this lease and supersedes any prior
understandings or written or oral agreements between the parties respecting the
subject of this lease.

 

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36.             SALE OF LEASED PREMISES.  In the event that Landlord sells or
conveys leased premises, the rights of Tenant and terms of this lease agreement
shall remain in full force and effect during the term of this lease, including
rights contained in Exhibit “A” Renewal Option, so long as Tenant shall continue
to perform all of the covenants and conditions of this lease.

 

EXHIBITS:

 

Exhibit “A” – Renewal Option

Exhibit “B” – Landlord Improvements

 

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This is a legal document, read it carefully; if you do not understand the effect
of any part of this agreement, seek competent legal advice.

 

Executed this 4th day of August,    2008

 

Tenant

Landlord

 

 

TGC Industries, Inc

J.C. Ray Incorporated

101 E. Park Blvd., Suite 955

3355 Juanita Drive

Plano, Texas 75074

Denison, Texas 75020

 

 

 

 

/s/ Wayne A. Whitener

 

/s/ Jimmy C. Ray

 

Wayne A. Whitener

Jimmy C. Ray, President

President and CEO

Landlord

 

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EXHIBIT “A”

RENEWAL OPTION

 

Provided that at the end of the primary term of this lease Tenant is not in
default of any term or condition contained in this lease, Tenant shall have the
right and option to renew this lease by written notice delivered to Landlord no
later than 90 days prior to the expiration of the primary term, for the
additional term of five years under the same terms and conditions contained
herein, except:

 

A.  The rental for the renewal term shall be based on the base rent of $9,500.00
per month and adjusted annually using the Consumer Price Index (CPI-U US City
Average, All Items) published by the U.S. Department of Labor, Bureau of Labor
Statistics.

 

B.  Upon notification from Tenant of the exercise of this renewal option.
Landlord shall within 15 days thereafter notify Tenant is writing of the
proposed rental, as computed in preceding paragraph A, for the renewal term; 
Tenant shall within 15 days following receipt of same notify Landlord in writing
of the acceptance or rejection of the proposed rent.

 

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EXHIBIT “B”

LANDLORD IMPROVEMENTS

 

Landlord agrees to build out and install, at Landlord’s expense, and in good and
workmanlike manner:

 

A.           Certain walls, doors, flooring, ceilings, offices, storage rooms,
and related improvements including applicable electrical wiring, three phase
wiring in building 2,  air conditioning and related ductwork, lighting including
outside lighting for the above mentioned storage yard, as shown on architectural
plans previously delivered to Landlord, having the approximate cost of
$270,742.40 and included in the monthly rent amount as stated in section 4
above, and,

 

B.             Reinforced concrete driveways capable of withstanding the weight
of large trucks, and trailers, including vibroseis trucks.

 

Landlord will complete the Landlord Improvements by November 1, 2008.  Upon
termination of the Lease, Landlord Improvements shall remain in the Leased
Premises and shall be deemed Landlord’s property.  Tenant may, at its option and
at any time during the lease agreement, and without penalty, make payment or
payments to Landlord to be applied to Landlord Improvements to reduce monthly
rent by a corresponding amount plus interest.

 

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