Exhibit 10.2


 





 


MASTER SECURITY AGREEMENT


dated as of 10/22/04 (“Agreement”)


 


THIS
AGREEMENT is between
General Electric Capital Corporation (together with its successors and assigns,
if any, “Secured Party’”) and TGC Industries, Inc. (“Debtor”). Secured Party
has an office at 16479 Dallas Parkway #300, Addison, TX 75001-2512. Debtor is a
corporation organized and existing under the laws of the state of Texas (“the
State”). Debtor’s mailing address and chief place of business is 1304 Summit
Ave, Suite 2, Plano, TX 75074.


 


1.             CREATION OF SECURITY INTEREST.


 


Debtor
grants to Secured Party, its successors and assigns, a security interest in and
against all property listed on any collateral schedule now or in the future
annexed to or made a part of this Agreement (“Collateral Schedule”), and in and
against all additions, attachments, accessories and accessions to such
property, all substitutions, replacements or exchanges therefor, and all
insurance and/or other proceeds thereof (all such property is individually and
collectively called the “Collateral”). This security interest is given to
secure the payment and performance of all debts, obligations and liabilities of
any kind whatsoever of Debtor to Secured Party, now existing or arising in the
future, including but not limited to the payment and performance of certain
Promissory Notes from time to time identified on any Collateral Schedule (collectively
“Notes” and each a “Note”), and any renewals, extensions and modifications of
such debts, obligations and liabilities (such Notes, debts, obligations and
liabilities are called the “Indebtedness”).


 


2.             REPRESENTATIONS, WARRANTIES AND
COVENANTS OF DEBTOR.


 


Debtor
represents, warrants and covenants as of the date of this Agreement and as of
the date of each Collateral Schedule that:


 


(a)   Debtor’s exact legal name is as set forth in the preamble of this
Agreement and Debtor is, and will remain, duly organized, existing and in good
standing under the laws of the State set forth in the preamble of this
Agreement, has its chief executive offices at the location specified in the
preamble, and is, and will remain, duly qualified and licensed in every jurisdiction
wherever necessary to carry on its business and operations;


 


(b)   Debtor has adequate power and capacity to enter into, and to perform
its obligations under this Agreement, each Note and any other documents
evidencing, or given in connection with, any of the Indebtedness (all of the
foregoing are called the “Debt Documents”);


 


(c)   This Agreement and the other Debt Documents have been duly authorized,
executed and delivered by Debtor and constitute legal, valid and binding
agreements enforceable in accordance with their terms, except to the extent
that the enforcement of remedies may be limited under applicable bankruptcy and
insolvency laws;


 


(d)   No approval, consent or withholding of objections is required from any
governmental authority or instrumentality with respect to the entry into, or
performance by Debtor of any of the Debt Documents, except any already obtained;


 


(e)   The entry into, and performance by, Debtor of the Debt Documents will
not (i) violate any of the organizational documents of Debtor or any
judgment, order, law or regulation applicable to Debtor, or (ii) result in
any breach of or constitute a default under any contract to which Debtor is a
party, or result in the creation of any lien, claim or encumbrance on any of
Debtor’s property (except for liens in favor of Secured Party) pursuant to any
indenture, mortgage, deed of trust, bank loan, credit agreement, or other
agreement or instrument to which Debtor is a party;


 


(f)    There are no suits or proceedings pending in court or before any
commission, board or other administrative agency against or affecting Debtor
which could, in the aggregate, have a material adverse effect on Debtor, its
business or operations, or its ability to perform its obligations under the
Debt Documents, nor does Debtor have reason to believe that any such suits or
proceedings are threatened;


 


(g)   All financial statements delivered to Secured Party in connection with
the Indebtedness have been prepared in accordance with generally accepted
accounting principles, and since the date of the most recent financial
statement, there has been no material adverse change in Debtors financial
condition;


 


(h)   The Collateral is not, and will not be, used by Debtor for personal,
family or household purposes;


 


(i)    The Collateral is, and will remain, in good condition and repair and
Debtor will not be negligent in its care and use;


 


(j)    Debtor is, and will
remain, the sole and lawful owner, and in possession of, the Collateral, and
has the sole right and lawful authority to grant the security interest
described in this Agreement;


 


(k)   The Collateral is, and will remain, free and clear of all liens, claims
and encumbrances of any kind whatsoever, except for (i) liens in favor of
Secured Party, (ii) liens for taxes not yet due or for taxes being
contested in good faith and which do not involve, in the judgment of Secured
Party, any risk of the sale forfeiture or loss of any of the Collateral, and (iii) inchoate
materialmen’s, mechanic’s, repairmen’s and similar liens arising by operation
of law in the normal course of business for amounts which are not delinquent
(all of such liens are called “Permitted Liens”); and


 


(l)    Debtor is and will remain in full compliance with all laws and
regulations applicable to it including, without limitation, (i) ensuring
that no person who owns a controlling interest in or otherwise controls Debtor
is or shall be (Y) listed on the Specially Designated Nationals and Blocked
Person List maintained by the Office of Foreign Assets Control (“OFAC”),
Department of the Treasury, and/or any other similar lists maintained by OFAC
pursuant to any authorizing statute, Executive Order or regulation or (Z) a
person designated under Section l (b), (c) or (d) of Executive
Order No. 13224 (September 23, 2001), any related enabling
legislation or any other similar Executive Orders, and (ii) compliance
with all applicable Bank Secrecy Act (“BSA”) laws, regulations and government
guidance on BSA compliance and on the prevention and detection of money
laundering violations.


 





















 


3.             COLLATERAL.


 


(a)   Until the declaration of any default, Debtor
shall remain in possession of the Collateral; except that Secured Party shall
have the right to possess (i) any chattel paper or instrument that
constitutes a part of the Collateral, and (ii) any other Collateral in
which Secured Party’s security interest may be perfected only by possession.
Secured Party may inspect any of the Collateral during normal business hours
after giving Debtor reasonable prior notice. If Secured Party asks, Debtor will
promptly notify Secured Party in writing of the location of any Collateral.


 


(b)   Debtor shall (i) use the Collateral only
in its trade or business, (ii) maintain all of the Collateral in good
operating order and repair, normal wear and tear excepted, (iii) use and
maintain the Collateral only in compliance with manufacturers recommendations
and all applicable laws, and (iv) keep all of the Collateral free and
clear of all liens, claims and encumbrances (except for Permitted Liens).


 


(c)   Secured Party does not authorize and Debtor
agrees it shall not (i) part with possession of any of the Collateral
(except to Secured Party or for maintenance and repair), (ii) remove any
of the Collateral from the continental United States, or (iii) sell, rent,
lease, mortgage, license, grant a security interest in or otherwise transfer or
encumber (except for Permitted Liens) any of the Collateral.


 


(d)   Debtor shall pay promptly when due all taxes,
license fees, assessments and public and private charges levied or assessed on
any of the Collateral, on its use, or on this Agreement or any of the other
Debt Documents.  At its option, Secured
Party may discharge taxes, liens, security interests or other encumbrances at
any time levied or placed on the Collateral and may pay for the maintenance,
insurance and preservation of the Collateral and effect compliance with the
terms of this Agreement or any of the other Debt Documents. Debtor agrees to
reimburse Secured Party, on demand, all costs and expenses incurred by Secured
Party in connection with such payment or performance and agrees that such
reimbursement obligation shall constitute Indebtedness.


 


(e)   Debtor shall, at all times, keep accurate and
complete records of the Collateral, and Secured Party shall have the right to
inspect and make copies of all of Debtor’s books and records relating to the
Collateral during normal business hours, after giving Debtor reasonable prior
notice.


 


(f)    Debtor agrees and acknowledges that any third
person who may at any time possess all or any portion of the Collateral shall
be deemed to hold, and shall hold, the Collateral as the agent of, and as
pledge holder for, Secured Party, Secured party may at any time give notice to
any third person described in the preceding sentence that such third person is
holding the Collateral as the agent of, and as pledge holder for, the Secured
Party,


 


4.             INSURANCE.


 


(a)   Debtor shall at all times bear the entire
risk of any loss, theft, damage to, or destruction of, any of the Collateral
from any cause whatsoever.


 


(b)   Debtor agrees to keep the Collateral insured
against loss or damage by fire and extended coverage perils, theft, burglary,
and for any or all Collateral which are vehicles, for risk of loss by
collision, and if requested by Secured Party, against such other risks as
Secured Party may reasonably require. The insurance coverage shall be in an
amount no less than the full replacement value of the Collateral, and
deductible amounts, insurers and policies shall be acceptable to Secured
Party.  Debtor shall deliver to Secured
Party policies or certificates of insurance evidencing such coverage.  Each policy shall name Secured party as a
loss payee, shall provide for coverage to Secured Party regardless of the
breach by Debtor of any warranty or representation made therein, shall not be
subject to co-insurance, and shall provide that coverage may not be canceled or
altered by the insurer except upon thirty (30) days prior written notice to
Secured Party.  Debtor appoints Secured
Party as its attorney-in-fact to make proof of loss, claim for insurance and
adjustments with insurers, and to receive payment of and execute or endorse all
documents, checks or drafts in connection with insurance payments. Secured
party shall not act as Debtor’s attorney-in-fact unless Debtor is in default.
Proceeds of insurance shall be applied, at the option of Secured Party, to
repair or replace the Collateral or to reduce any of the Indebtedness.


 


5.             REPORTS.


 


(a)   Debtor shall promptly notify Secured Party of
(i) any change in the name of Debtor, (ii) any change in the state of
its incorporation, organization or registration, (iii) any relocation of
its chief executive offices, (iv) any relocation of any of the Collateral,
(v) any of the Collateral being lost, stolen, missing, destroyed,
materially damaged or worn out, or (vi) any lien, claim or encumbrance
other than Permitted Liens attaching to or being made against any of the Collateral.


 


(b)   Debtor will deliver to Secured Party Debtor’s
complete financial statements, certified by a recognized firm of certified
public accountants, within ninety (90) days of the close of each fiscal year of
Debtor. If Secured Party requests, Debtor will deliver to Secured Party copies
of Debtor’s quarterly financial reports certified by Debtor’s chief financial
officer, within ninety (90) days after the close of each of Debtor’s fiscal
quarter. Debtor will deliver to Secured Party copies of ail Forms 10-K and 10-Q,
if any, within 30 days after the dates on which they are filed with the
Securities and Exchange Commission.


 


6.             FURTHER ASSURANCES.


 


(a)   Debtor shall, upon request of Secured Party,
furnish to Secured Party such further information, execute and deliver to
Secured Party such documents and instruments (including, without limitation,
Uniform Commercial Code financing statements) and shall do such other acts and
things as Secured Party may at any time reasonably request relating to the
perfection or protection of the security interest created by this Agreement or
for the purpose of carrying out the intent of this Agreement. Without limiting the foregoing. Debtor shall cooperate and
do all acts deemed necessary or advisable by Secured Party to continue in Secured
Party a perfected first security interest in the Collateral, and shall obtain
and furnish to Secured party any subordinations, releases, landlord waivers, lessor
waivers, mortgagee waivers, or control agreements, and similar documents as may
be from time to time requested by, and in form and substance satisfactory to,
Secured Party.


 


(b)   Debtor authorizes Secured Party to file a
financing statement and amendments thereto describing the Collateral and
containing any other information required by the applicable Uniform Commercial
Code.  Debtor irrevocably grants to
Secured Party the power to sign Debtor’s name and generally to act on behalf of
Debtor to execute and file applications for title, transfers of title,
financing statements, notices of lien and other documents pertaining to any or
all of the Collateral; this power is coupled with Secured Party’s interest in
the Collateral. Debtor shall, if any certificate of title be required or
permitted by law for any of the Collateral, obtain and promptly deliver to
Secured Party such certificate showing the lien of this Agreement with respect
to the Collateral. Debtor ratifies its prior authorization for Secured party to
file financing statements and amendments thereto describing the Collateral and
containing any other information required by the Uniform Commercial Code if
filed prior to the date hereof.


 


(c)   Debtor shall indemnify and defend the Secured
Party, its successors and assigns, and their respective directors, officers and
employees, from and against all claims, actions and suits (including, without
limitation, related attorneys’ fees) of any kind whatsoever arising, directly
or indirectly, in connection


 





















 


with any
of the Collateral.


 


7.             DEFAULT AND REMEDIES.


 


(a)   Debtor shall be in default under this
Agreement and each of the other Debt Documents if:


 


(i)    Debtor breaches its obligation to pay when
due any installment or other amount due or coming due under any of the Debt
Documents;


 


(ii)   Debtor, without the prior written consent of
Secured Party, attempts to or does sell, rent, lease, license, mortgage, grant
a security interest in, or otherwise transfer or encumber (except for Permitted
Liens) any of the Collateral;


 


(iii)  Debtor breaches any of its insurance
obligations under Section 4;


 


(iv)  Debtor breaches any of its other obligations under any of the Debt Documents
and fails to cure that breach within thirty (30) days after written notice from
Secured Party;


 


(v)   Any warranty, representation or statement
made by Debtor in any of the Debt Documents or otherwise in connection with any
of the Indebtedness shall be false or misleading in any material respect;


 


(vi)  Any of the Collateral is subjected to
attachment, execution, levy, seizure or confiscation in any legal proceeding or
otherwise, or if any legal or administrative proceeding is commenced against
Debtor or any of the Collateral, which in the good faith judgment of Secured Party
subjects any of the Collateral to a material risk of attachment, execution,
levy, seizure or confiscation and no bond is posted or protective order
obtained to negate such risk;


 


(vii) Debtor breaches or is in default under any
other agreement between Debtor and Secured Party;


 


(viii) Debtor or any
guarantor or other obligor for any of the Indebtedness (collectively “Guarantor”)
dissolves, terminates its existence, becomes insolvent or ceases to do business
as a going concern;


 


(ix)   If Debtor or any Guarantor is a natural
person, Debtor or any such Guarantor dies or becomes incompetent;


 


(x)    A receiver is appointed for all or of any part
of the property of Debtor or any Guarantor, or Debtor or any Guarantor makes
any assignment for the benefit of creditors;


 


(xi)   Debtor or any Guarantor files a petition
under any bankruptcy, insolvency or similar law, or any such petition is filed
against Debtor or any Guarantor and is not dismissed within forty-five (45)
days;


 


(xii)  Debtor’s improper filing of an amendment or
termination statement relating to a filed financing statement describing the
Collateral;


 


(xiii) Any Guarantor revokes
or attempts to revoke its guaranty of any of the Indebtedness or fails to
observe or perform any covenant, condition or agreement to be performed under
any guaranty or other related document to which it is a party; or


 


(xiv) Debtor defaults under
any other material obligation for (A) borrowed money, (B) the
deferred purchase price of property or (C) payments due under any lease
agreement.


 


(b)   If Debtor is in default, the Secured Party,
at its option, may declare any or all of the Indebtedness to be immediately due
and payable, without demand or notice to Debtor or any Guarantor. The
accelerated obligations and liabilities shall bear interest (both before and
after any judgment) until paid in full at the lower of eighteen percent (18%)
per annum or the maximum rate not prohibited by applicable law.


 


(c)   After default, Secured Party shall have all
of the rights and remedies of a Secured Party under the Uniform Commercial
Code, and under any other applicable law. Without limiting the foregoing,
Secured Party shall have the right to (i) notify any account debtor of
Debtor or any obligor on any instrument which constitutes part of the
Collateral to make payment to the Secured Party, (ii) with or without legal
process, enter any premises where the Collateral may be and take possession of
and remove the Collateral from the premises or store it on the premises, (iii) sell
the Collateral at public or private sale, in whole or in part, and have the
right to bid and purchase at said sale, or (iv) lease or otherwise dispose
of all or part of the Collateral, applying proceeds from such disposition to
the obligations then in default.  If
requested by Secured Party, Debtor shall promptly assemble the Collateral and make
it available to Secured Party at a place to be designated by Secured Party
which is reasonably convenient to both parties. 
Secured Party may also render any or all of the Collateral unusable at
the Debtor’s premises and may dispose of such Collateral on such premises
without liability for rent or costs.  Any
notice that Secured Party is required to give to Debtor under the Uniform
Commercial Code of the time and place of any public sale or the time after
which any private sale or other intended disposition of the Collateral is to be
made shall be deemed to constitute reasonable notice if such notice is given to
the last known address of Debtor at least five (5) days prior to such
action.


 


(d)   Proceeds from any sale or lease or other
disposition shall be applied: first, to all costs of repossession, storage, and
disposition including without limitation attorneys’, appraisers’, and
auctioneers’ fees; second, to discharge the obligations then in default; third,
to discharge any other Indebtedness of Debtor to Secured Party, whether as
obligor, endorser, guarantor, surety or indemnitor; fourth, to expenses
incurred in paying or settling liens and claims against the Collateral; and
lastly, to Debtor, if there exists any surplus. Debtor shall remain fully liable
for any deficiency.


 


(e)   Debtor agrees to pay all reasonable attorneys’
fees and other costs incurred by Secured Party in connection with the
enforcement, assertion, defense or preservation of Secured Party’s rights and
remedies under this Agreement, or if prohibited by law, such lesser sum as may
be permitted. Debtor further agrees that such fees and costs shall constitute
Indebtedness.


 


(f)    Secured Party’s rights and remedies under
this Agreement or otherwise arising are cumulative and may be exercised singularly
or concurrently. Neither the failure nor any delay on the part of the Secured Party
to exercise any right, power or privilege under this Agreement shall operate as
a waiver, nor shall any single or partial exercise of any right, power or
privilege preclude any other or further exercise of that or any other right,
power or privilege. SECURED PARTY SHALL NOT BE DEEMED TO HAVE WAIVED ANY OF ITS
RIGHTS UNDER THIS AGREEMENT OR UNDER ANY OTHER AGREEMENT, INSTRUMENT OR PAPER
SIGNED BY DEBTOR UNLESS SUCH WAIVER IS EXPRESSED IN WRITING AND SIGNED BY
SECURED PARTY. A waiver on any one occasion shall not be construed as a bar to
or waiver of any right or remedy on any future occasion.


 





















 


(g)   DEBTOR AND SECURED PARTY UNCONDITIONALLY
WAIVE THEIR RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
OR ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER DEBT DOCUMENTS, ANY OF THE
INDEBTEDNESS SECURED HEREBY, ANY DEALINGS BETWEEN DEBTOR AND SECURED PARTY
RELATING TO THE SUBJECT MATTER OF THIS TRANSACTION OR ANY RELATED TRANSACTIONS,
AND/OR THE RELATIONSHIP THAT IS BEING ESTABLISHED BETWEEN DEBTOR AND SECURED
PARTY. THE SCOPE OF THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND
ALL DISPUTES THAT MAY BE FILED IN ANY COURT. THIS WAIVER IS IRREVOCABLE.
THIS WAIVER MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING. THE WAIVER
ALSO SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT, ANY OTHER DEBT DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THIS TRANSACTION OR ANY RELATED
TRANSACTION. THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.


 


8.             MISCELLANEOUS.


 


(a)   This Agreement, any Note and/or any of the
other Debt Documents may be assigned, in whole or in part, by Secured Party
without notice to Debtor, and Debtor agrees not to assert against any such
assignee, or assignee’s assigns, any defense, set-off, recoupment claim or
counterclaim which Debtor has or may at any time have against Secured Party for
any reason whatsoever.  Debtor agrees
that if Debtor receives written notice of an assignment from Secured Party,
Debtor will pay all amounts payable under any assigned Debt Documents to such
assignee or as instructed by Secured Party. 
Debtor also agrees to confirm in writing receipt of the notice of
assignment as may be reasonably requested by Secured Party or assignee.


 


(b)   All notices to be given in connection with
this Agreement shall be in writing, shall be addressed to the parties at their
respective addresses set forth in this Agreement (unless and until a different
address may be specified in a written notice to the other party), and shall be
deemed given (i) on the date of receipt if delivered in hand or by
facsimile transmission, (ii) on the next business day after being sent by
express mail, and (iii) on the fourth business day after being sent by
regular, registered or certified mail. 
As used herein, the term “business day” shall mean and include any day
other than Saturdays, Sundays, or other days on which commercial banks in New
York, New York are required or authorized to be closed.


 


(c)   Secured Party may correct patent errors and
fill in all blanks in this Agreement or in any Collateral Schedule consistent
with the agreement of the parties.


 


(d)   Time is of the essence of this Agreement.
This Agreement shall be binding, jointly and severally, upon all parties
described as the “Debtor” and their respective heirs, executors,
representatives, successors and assigns, and shall inure to the benefit of
Secured Party, its successors and assigns.


 


(e)   This Agreement and its Collateral Schedules
constitute the entire agreement between the parties with respect to the subject
matter of this Agreement and supersede all prior understandings (whether
written, verbal or implied) with respect to such subject matter. THIS AGREEMENT
AND ITS COLLATERAL SCHEDULES SHALL NOT BE CHANGED OR TERMINATED ORALLY OR BY
COURSE OF CONDUCT, BUT ONLY BY A WRITING SIGNED BY BOTH PARTIES. Section headings
contained in this Agreement have been included for convenience only, and shall
not affect the construction or interpretation of this Agreement.


 


(f)    This Agreement shall continue in full force
and effect until all of the Indebtedness has been indefeasibly paid in full to
Secured Party or its assignee. The surrender, upon payment or otherwise, of any
Note or any of the other documents evidencing any of the Indebtedness shall not
affect the right of Secured Party to retain the Collateral for such other
Indebtedness as may then exist or as it may be reasonably contemplated will
exist in the future. This Agreement shall automatically be reinstated if
Secured Party is ever required to return or restore the payment of all or any
portion of the Indebtedness (all as though such payment had never been made).


 


(g)   THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES HEREUNDER SHALL IN ALL RESPECTS BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CONNECTICUT (WITHOUT REGARD
TO THE CONFLICT OF LAWS PRINCIPLES OF SUCH STATE), INCLUDING ALL MATTERS OF
CONSTRUCTION, VALIDITY AND PERFORMANCE, REGARDLESS OF THE LOCATION OF THE
COLLATERAL.


 


IN WITNESS WHEREOF, Debtor and Secured Party, intending to be
legally bound hereby, have duly executed this Agreement in one or more counterparts,
each of which shall be deemed to be an original, as of the day and year first aforesaid.


 


	
  SECURED PARTY:

  	
  DEBTOR:

  
	
   

  	
   

  
	
  General Electric Capital Corporation

  	
  TGC Industries, Inc.

  
	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
  By:

  	
  /s/ Wayne Whitener

  	
   

  
	
   

  	
   

  
	
  Name:

  	
   

  	
   

  	
  Name:

  	
  Wayne Whitener

  	
   

  
	
   

  	
   

  
	
  Title:

  	
   

  	
   

  	
  Title:

  	
  President/CEO