Exhibit 10.2


 


COMMERCIAL SECURITY AGREEMENT


 


	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call / Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  	
   

  
	
  $

  	
  5,000,000.00

  	
   

  	
  09-16-2007

  	
   

  	
  09-16-2008

  	
   

  	
  17003864

  	
   

  	
  4A / 466

  	
   

  	
   

  	
   

  	
  SBV

  	
   

  	
   

  	
   

  
																	



 


References in the boxes above are for Lender’s use only and do not limit
the applicability of this document to any particular loan or item.  Any item above containing “***” has been
omitted due to text length limitations.


 


	
  Grantor:

  	
   

  	
  TGC
  Industries, Inc.

  	
   

  	
  Lender:

  	
   

  	
  Sovereign
  Bank

  
	
   

  	
   

  	
  101 E.
  Park Blvd. Ste955

  	
   

  	
   

  	
   

  	
  Preston
  Center

  
	
   

  	
   

  	
  Plano, TX 75074

  	
   

  	
   

  	
   

  	
  6060
  Sherry Lane 

  Dallas,
  TX  75225

  



 


THIS COMMERCIAL SECURITY AGREEMENT dated September 16, 2007, is made
and executed between TGC industries, Inc. (“Grantor”) and Sovereign Bank (“Lender”).


 


GRANT OF
SECURITY INTEREST.
For
valuable consideration,
Grantor grants to Lender
a security interest in the Collateral to secure the Indebtedness and agrees
that Lender shall have the rights stated in this Agreement with respect to the Collateral, in addition to all other rights which Lender
may have by
law.


 


COLLATERAL DESCRIPTION. The word “Collateral” as used in this
Agreement means the following described property, whether now owned or
hereafter acquired, whether now existing or hereafter arising, and wherever
located, in which Grantor is giving to Lender a security interest for the
payment of the Indebtedness and performance of all other obligations under the
Note and this Agreement:


 


All Accounts
and General Intangibles


 


In addition, the word “Collateral” also
includes all the following, whether now owned or hereafter acquired, whether
now existing or hereafter arising, and wherever located:


 


(A) All accessions,
attachments, accessories, replacements of and additions to any of the
collateral described herein, whether added now or later.


 


(B) All products and produce
of any of the property described in this Collateral section.


 


(C) All accounts, general
intangibles, instruments, rents, monies, payments, and all other rights,
arising out of a sale, lease, consignment or other disposition of any of the
property described in this Collateral section.


 


(D) All proceeds (.including
insurance proceeds) from the sale, destruction, loss, or other disposition of
any of the property described in this Collateral section, and sums due from a
third party who has damaged or destroyed the Collateral or from that party’s
insurer, whether due to judgment, settlement or other process.


 


(E) All records and data
relating to any of the property described in this Collateral section, whether
in the form of a writing, photograph, microfilm, microfiche, or electronic
media, together with all of Grantor’s right, title, and interest in and to all
computer software required to utilize, create, maintain, and process any such
records or data on electronic media.


 


RIGHT OF SETOFF. To the extent permitted by applicable law,
Lender reserves a right of setoff in all Grantor’s accounts with Lender
(whether checking, savings, or some other account). This includes all accounts
Grantor holds jointly with someone else and all accounts Grantor may open in
the future. However, this does not include any IRA or Keogh accounts, or any
trust accounts for which setoff would be prohibited by law. Grantor authorizes
Lender, to the extent permitted by applicable law, to charge or setoff all sums
owing on the Indebtedness against any and all such accounts.


 


GRANTOR’S
REPRESENTATIONS AND WARRANTIES WITH RESPECT TO THE COLLATERAL. With respect
to  the Collateral,
Grantor represents and promises to Lender that:


 


Perfection
of Security Interest.
Grantor agrees to take whatever actions are requested by Lender to perfect and
continue Lender’s security interest in the Collateral. Upon request of Lender,
Grantor will deliver to Lender any and all of the documents evidencing or
constituting the Collateral, and Grantor will note Lender’s interest upon any
and all chattel paper and instruments if not delivered to Lender for possession
by Lender. This is a
continuing Security Agreement and will continue in effect even though all or any part of the Indebtedness is
paid in full and even though for a period of time Grantor may
not be indebted to Lender.


 


Notices
to Lender. Grantor
will promptly notify Lender in writing at Lender’s address shown above (or such
other addresses as Lender may designate from time to time) prior to any (1)
change in Grantor’s name; (2) change in Grantor’s assumed business name(s); (3)
change in the management of the Corporation Grantor; (4) change in the
authorized signer(s); (5) change in Grantor’s principal office address; (6) change
in Grantor’s state of organization; (7) conversion of Grantor to a new or
different type of business entity; or (8) change in any other aspect of Grantor
that directly or indirectly relates to any agreements between Grantor and
Lender.  No change in Grantor’s name or
state of organization will take effect until after Lender has received notice.


 


No
Violation. The
execution and delivery of this Agreement will not violate any law or agreement
governing Grantor or to which Grantor is a party, and its certificate or
articles of incorporation and bylaws do not prohibit any term or condition of
this Agreement.


 


Enforceability of Collateral. To the
extent the Collateral consists of accounts, chattel paper, or general
intangibles, as defined by the Uniform Commercial Code, the Collateral is
enforceable in accordance with its terms, is genuine, and fully complies with
all applicable laws and regulations concerning form, content and manner of
preparation and execution, and all persons appearing to be obligated on the
Collateral have authority and capacity to contract and are in fact obligated as
they appear to be on the Collateral. At the time any account becomes subject to
a security interest in favor of Lender, the account shall be a good and valid
account representing an undisputed, bonafide indebtedness incurred by the
account debtor, for merchandise held subject to delivery instructions or
previously shipped or delivered pursuant to a contract of sale, or for services
previously performed by Grantor with or for the account debtor. So long as this
Agreement remains in effect, Grantor shall not, without Lender’s prior written
consent, compromise, settle, adjust, or extend payment under or with regard to
any such Accounts. There shall be no setoffs or counterclaims against any of
the Collateral, and no agreement shall have been made under which any
deductions or discounts may be claimed concerning the Collateral except those
disclosed to Lender in writing.


 


Location
of the Collateral.
Except in the ordinary course of Grantor’s business, Grantor agrees to keep the
Collateral (or to the extent the Collateral consists of intangible property
such as accounts or general intangibles, the records concerning the Collateral)
at Grantor’s address shown above or at such other locations as are acceptable
to Lender. Upon Lender’s request, Grantor will deliver to Lender in form
satisfactory to Lender a schedule of real properties and Collateral locations
relating to Grantor’s operations, including without limitation the following:
(1) all real property Grantor owns or is purchasing; (2) all real property
Grantor is renting or leasing; (3) all storage facilities


 

















 


Grantor owns, rents, leases,
or uses; and (4) all other properties where Collateral is or may be located.


 


Removal
of the Collateral. Except
in the ordinary course of Grantor’s business, Grantor shall not remove the
Collateral from its existing location without Lender’s prior written consent.
Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.


 


Transactions
Involving Collateral.
Except for inventory sold or accounts collected in the ordinary course of Grantor’s
business, or as otherwise provided for in this Agreement, Grantor shall not
sell, offer to sell, or otherwise transfer or dispose of the Collateral.
Grantor shall not pledge, mortgage, encumber or otherwise permit the Collateral
to be subject to any lien, security interest, encumbrance, or charge, other
than the security interest provided for in this Agreement, without the prior
written consent of Lender. This includes security interests even if junior in
right to the security interests granted under this Agreement. Unless waived by
Lender, all proceeds from any disposition of the Collateral (for whatever
reason) shall be held in trust for Lender and shall not be commingled with any
other funds; provided however, this requirement shall not constitute consent by
Lender to any sale or other disposition. Upon receipt, Grantor shall
immediately deliver any such proceeds to Lender.


 


Title. Grantor represents and warrants to Lender
that Grantor holds good and marketable title to the Collateral, free and clear
of all liens and encumbrances except for the lien of this Agreement. No
financing statement covering any of the Collateral is on file in any public
office other than those which reflect the security interest created by this
Agreement or to which Lender has specifically consented. Grantor shall defend
Lender’s rights in the Collateral against the claims and demands of all other
persons.


 


Repairs
and Maintenance.
Grantor agrees to keep and maintain, and to cause others to keep and maintain,
the Collateral in good order, repair and condition at all times while this
Agreement remains in effect. Grantor further agrees to pay when due all claims
for work done on, or services rendered or material furnished in connection with
the Collateral so that no lien or encumbrance may ever attach to or be filed
against the Collateral.


 


Inspection
of Collateral. Lender
and Lender’s designated representatives and
agents  shall have the right at  all
reasonable times to examine  and inspect the Collateral
wherever located.


 


Taxes, Assessments and Liens. Grantor will pay when due all taxes,
assessments and liens upon the Collateral, its use or operation, upon this
Agreement, upon any promissory note or notes evidencing the Indebtedness, or
upon any of the other Related Documents. Grantor may withhold any such payment
or may elect to contest any lien if Grantor is in good faith conducting an
appropriate proceeding to contest the obligation to pay and so long as Lender’s
interest in the Collateral is not jeopardized in Lender’s sole opinion. In any
contest Grantor shall defend itself and Lender and shall satisfy any final
adverse judgment before enforcement against the Collateral. Grantor shall name
Lender as an additional obligee under any surety bond furnished in the contest
proceedings. Grantor further agrees to furnish Lender with evidence that such
taxes, assessments, and governmental and other charges have been paid in full
and in a timely manner. Grantor may withhold any such payment or may elect to
contest any lien if Grantor is in good faith conducting an appropriate
proceeding to contest the obligation to pay and so long as Lender’s interest in
the Collateral is not jeopardized.


 


Compliance with Governmental Requirements. Grantor shall comply promptly with all laws,
ordinances, rules and regulations of all governmental authorities, now or
hereafter in effect, applicable to the ownership, production, disposition, or
use of the Collateral, including all laws or regulations relating to the undue
erosion of highly-erodible land or relating to the conversion of wetlands for
the production of an agricultural product or commodity. Grantor may contest in
good faith any such law, ordinance or regulation and withhold compliance during
any proceeding, including appropriate appeals, so long as Lender’s interest in
the Collateral, in Lender’s opinion, is not jeopardized.


 


Hazardous
Substances. Grantor
represents and warrants that the Collateral never has been, and never will be
so long as this Agreement remains a lien on the Collateral, used in violation
of any Environmental Laws or for the generation, manufacture, storage,
transportation, treatment, disposal, release or threatened release of any
Hazardous Substance. The representations and warranties contained herein are
based on Grantor’s due diligence in investigating the Collateral for Hazardous
Substances. Grantor hereby (1) releases and waives any future claims against
Lender for indemnity or contribution in the event Grantor becomes liable for
cleanup or other costs under any Environmental Laws, and (2) agrees to
indemnify, defend, and hold harmless Lender against any and all claims and losses
resulting from a breach of this provision of this Agreement. This obligation to
indemnify and defend shall survive the payment of the indebtedness and the
satisfaction of this Agreement.


 


Maintenance
of Casualty Insurance.
Grantor shall procure and maintain all risks insurance, including without
limitation fire, theft and liability coverage together with such other
insurance as Lender may require with respect to the Collateral, in form,
amounts, coverages and basis reasonably acceptable to Lender. Grantor, upon
request of Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at
least thirty (30) days’ prior written notice to Lender and not including any
disclaimer of the insurer’s liability for failure to give such a notice. Each
insurance policy also shall include an endorsement providing that coverage in
favor of Lender will not be impaired in any way by any act, omission or default
of Grantor or any other person. In connection with all policies covering assets
in which Lender holds or is offered a security interest, Grantor will provide
Lender with such loss payable or other endorsements as Lender may require. If
Grantor at any time fails to obtain or maintain any insurance as required under
this Agreement, Lender may (but shall not be obligated to) obtain such
insurance as Lender deems appropriate, including if Lender so chooses “single
interest insurance,” which will cover only Lender’s interest in the Collateral.


 


Application
of Insurance Proceeds. Grantor
shall promptly notify Lender of any loss or damage to the Collateral if the
estimated cost of repair or replacement exceeds 5,000.00, whether or not such
casualty or loss is covered by insurance. Lender may make proof of loss if
Grantor fails to do so within fifteen (15) days of the casualty. All proceeds
of any insurance on the Collateral, including accrued proceeds thereon, shall
be held by Lender as part of the Collateral. If Lender consents to repair or
replacement of the damaged or destroyed Collateral, Lender shall, upon
satisfactory proof of expenditure, pay or reimburse Grantor from the proceeds
for the reasonable cost of repair or restoration. If Lender does not consent to
repair or replacement of the Collateral, Lender shall retain a sufficient
amount of the proceeds to pay all of the Indebtedness, and shall pay the
balance to Grantor. Any proceeds which have not been disbursed within six (6)
months after their receipt and which Grantor has not committed to the repair or
restoration of the Collateral shall be used to prepay the Indebtedness.


 


Insurance
Reserves. Lender may
require Grantor to maintain with Lender reserves for payment of insurance
premiums, which reserves shall be created by monthly payments from Grantor of a
sum estimated by Lender to be sufficient to produce, at least fifteen (15) days
before the premium due date, amounts at least equal to the insurance premiums
to be paid. If fifteen (15) days before payment is due, the reserve funds are
insufficient, Grantor shall upon demand pay any deficiency to Lender. The
reserve funds shall be held by Lender as a general deposit and shall constitute
a non-interest-bearing account which Lender may satisfy by payment of the
insurance premiums required to be paid by Grantor as they become due. Lender
does not hold the reserve funds in trust for Grantor, and Lender is not the
agent of Grantor for payment of the insurance premiums required to be paid by
Grantor. The responsibility for the payment of premiums shall remain Grantor’s
sole responsibility.


 


Insurance
Reports. Grantor, upon
request of Lender, shall furnish to Lender reports on each existing policy of
insurance showing such


 


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information as Lender may
reasonably request including the following: (1) the name of the insurer; (2)
the risks insured; (3) the amount of the policy; (4) the property insured; (5)
the then current value on the basis of which insurance has been obtained and
the manner of determining that value; and (6) the expiration date of the
policy. In addition, Grantor shall upon request by Lender (however not more
often than annually) have an independent appraiser satisfactory to Lender
determine, as applicable, the cash value or replacement cost of the Collateral.


 


Financing Statements. Grantor authorizes Lender to file a UCC
financing statement, or alternatively, a copy of this Agreement to perfect
Lender’s security interest. At Lender’s request, Grantor additionally agrees to
sign all other documents that are necessary to perfect, protect, and continue
Lender’s security interest in the Property. Grantor will pay all filing fees,
title transfer fees, and other fees and costs involved unless prohibited by law
or unless Lender is required by law to pay such fees and costs. Grantor
irrevocably appoints Lender to execute documents necessary to transfer title if
there is a default. Lender may file a copy of this Agreement as a financing
statement. If Grantor changes Grantor’s name or address, or the name or address
of any person granting a security interest under this Agreement changes,
Grantor will promptly notify the Lender of such change.


 


GRANTOR’S
RIGHT TO  POSSESSION
AND TO COLLECT ACCOUNTS. Until default and except as otherwise
provided below with respect to accounts, Grantor may have possession of the
tangible personal property and beneficial use of all the Collateral and may use
it in any lawful manner not inconsistent with this Agreement or the Related Documents,
provided that Grantor’s right to possession and beneficial use shall not apply
to any Collateral where possession of the Collateral by Lender is required by
law to perfect Lender’s security interest in such Collateral. Until otherwise
notified by Lender, Grantor may collect any of the Collateral consisting of
accounts. At any time and even though no Event of Default exists, Lender may
exercise its rights to collect the accounts and to notify account debtors to
make payments directly to Lender for application to the Indebtedness. If Lender
at any time has possession of any Collateral, whether before or after an Event
of Default, Lender shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral if Lender takes such action for that
purpose as Grantor shall request or as Lender, in Lender’s sole discretion,
shall deem appropriate under the circumstances, but failure to honor
any request by Grantor shall not of itself be deemed to be a failure to
exercise reasonable care. Lender shall not be required to take any steps
necessary to preserve any rights in the Collateral against prior parties, nor
to protect, preserve or maintain any security interest given to secure the
Indebtedness.


 


LENDER’S
EXPENDITURES. If any
action or proceeding is commenced that would materially affect Lender’s
interest in the Collateral or if Grantor fails to comply with any provision of
this Agreement or any Related Documents, including but not limited to Grantor’s
failure to discharge or pay when due any amounts Grantor is required to
discharge or pay under this Agreement or any Related Documents, Lender on
Grantor’s behalf may (but shall not be obligated to) take any action that
Lender deems appropriate, including but not limited to discharging or paying
all taxes, liens, security interests, encumbrances and other claims, at any
time levied or placed on the Collateral and paying all costs for insuring,
maintaining and preserving the Collateral. All such expenditures paid by Lender
for such purposes will then bear interest at the Note rate from the date paid
by Lender to the date of repayment by Grantor. To the extent permitted by
applicable law, all such expenses will
become a part of the Indebtedness
and, at Lender’s option, will (A) be payable on demand; (B) be added to the
balance of the Note and be apportioned among and be payable with any
installment payments to become due during either (1) the term of any applicable
insurance policy; or (2) the remaining term of the Note; or (C) be treated as a
balloon payment which will be due and payable at the Note’s maturity. The
Agreement also will secure payment of these amounts. Such right shall be in
addition to all other rights and remedies to which Lender may be entitled upon
Default.


 


DEFAULT. Each of the following shall constitute an Event of Default under this
Agreement: 


 


Payment
Default. Grantor fails
to make any payment when due under the Indebtedness.


 


Other
Defaults. Grantor
fails to comply with or to perform any other term, obligation, covenant or
condition contained in this Agreement or in any of the Related Documents or to
comply with or to perform any term, obligation, covenant or condition contained
in any other agreement between Lender and Grantor.


 


Default
in Favor
of Third Parties. Should Borrower or any Grantor default under
any loan, extension of credit, security agreement, purchase or sales agreement,
or any other agreement, in favor of any other creditor or person that may
materially affect any of Grantor’s property or Grantor’s or any Grantor’s
ability to repay the Indebtedness or perform their respective obligations under
this Agreement or any of the Related Documents.


 


False
Statements. Any
warranty, representation or statement made or furnished to Lender by Grantor or
on Grantor’s behalf under this Agreement or the Related Documents is false or
misleading in any material respect, either now or at the time made or furnished
or becomes false or misleading at any time thereafter.


 


Defective
Collateralization.
This Agreement or any of the Related Documents ceases to be in full force and
effect (including failure of any collateral document to create a valid and
perfected security interest or lien) at any time and for any reason.


 


Insolvency. The dissolution or termination of Grantor’s
existence as a going business, the insolvency of Grantor, the appointment of a
receiver for any part of Grantor’s property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any proceeding
under any bankruptcy or insolvency laws by or against Grantor.


 


Creditor
or Forfeiture Proceedings. Commencement of foreclosure or forfeiture proceedings, whether by
judicial proceeding, self-help, repossession or any other method, by any
creditor of Grantor or by any governmental agency against any collateral
securing the Indebtedness. This includes a garnishment of any of Grantor’s
accounts, including deposit accounts, with Lender. However, this Event of
Default shall not apply if there is a good faith dispute by Grantor as to the
validity or reasonableness of the claim which is the basis of the creditor or
forfeiture proceeding and if Grantor gives Lender written notice of the
creditor or forfeiture proceeding and deposits with Lender monies or a surety
bond for the creditor or forfeiture proceeding, in an amount determined by
Lender, in its sole discretion, as being an adequate reserve or bond for the
dispute.


 


Events
Affecting Guarantor.
Any of the preceding events occurs with respect to any guarantor, endorser,
surety, or accommodation party of any of the Indebtedness or guarantor,
endorser, surety, or accommodation party dies or becomes incompetent or revokes
or disputes the validity of, or liability under, any Guaranty of the
Indebtedness.


 


Adverse Change. A material adverse
change occurs in Grantor’s financial condition, or Lender believes the prospect
of payment or performance of the indebtedness is impaired


 


Insecurity. Lender in good faith believes itself
insecure.


 


RIGHTS AND REMEDIES ON DEFAULT. If an Event of Default occurs under this
Agreement, at any time thereafter, Lender shall have all the rights of a
secured party under the Texas Uniform Commercial Code. In addition and without
limitation, Lender may exercise any one or more of the following rights and remedies:


 


Accelerate
Indebtedness. Lender
may declare the entire Indebtedness immediately due and payable, without notice
of any kind to Grantor.


 


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Assemble
Collateral. Lender may
require Grantor to deliver to Lender all or any portion of the Collateral and
any and all certificates of title and other documents relating to the
Collateral. Lender may require Grantor to assemble the Collateral and make it
available to Lender at a place to be designated by Lender. Lender also shall
have full power to enter, provided Lender does so without a breach of the peace
or a trespass, upon the property of Grantor to take possession of and remove
the Collateral. If the Collateral contains other goods not covered by this
Agreement at the time of repossession, Grantor agrees Lender may take such
other goods, provided that Lender makes reasonable efforts to return them to
Grantor after repossession.


 


Sell the
Collateral. Lender
shall have full power to sell, lease, transfer, or otherwise deal with the
Collateral or proceeds thereof in Lender’s own name or that of Grantor. Lender
may sell the Collateral at public auction or private sale. Unless the
Collateral threatens to decline speedily in value or is of a type customarily
sold on a recognized market, Lender will give Grantor, and other persons as
required by law, reasonable notice of the time and place of any public sale, or
the time after which any private sale or any other disposition of the
Collateral is to be made. However, no notice need be provided to any person
who, after Event of Default occurs, enters into and authenticates an agreement
waiving that person’s right to notification of sale. The requirements of
reasonable notice shall be met if such notice is given at least ten (10) days
before the time of the sale or disposition. All expenses relating to the
disposition of the Collateral, including without limitation the expenses of
retaking, holding, insuring, preparing for sale and selling the Collateral,
shall become a part of the Indebtedness secured by this Agreement and shall be
payable on demand, with interest at the Note rate from date of expenditure
until repaid.


 


Appoint
Receiver. Lender shall
have the right to have a receiver appointed to take possession of all or any
part of the Collateral, with the power to protect and preserve the Collateral,
to operate the Collateral preceding foreclosure or sale, and to collect the
Rents from the Collateral and apply the proceeds, over and above the cost of
the receivership, against the Indebtedness. The receiver may serve without bond
if permitted by law. Lender’s right to the appointment of a receiver shall
exist whether or not the apparent value of the Collateral exceeds the
Indebtedness by a substantial amount. Employment by Lender shall not disqualify
a person from serving as a receiver.


 


Collect
Revenues, Apply Accounts. Lender, either itself or through a receiver, may collect the payments,
rents, income, and revenues from the Collateral. Lender may at any time in
Lender’s discretion transfer any Collateral into Lender’s own name or that of
Lender’s nominee and receive the payments, rents, income, and revenues
therefrom and hold the same as security for the Indebtedness or apply it to
payment of the Indebtedness in such order of preference as Lender may
determine. Insofar as the Collateral consists of accounts, general intangibles,
insurance policies, instruments, chattel paper, choses in action, or similar
property, Lender may demand, collect, receipt for, settle, compromise, adjust,
sue for, foreclose, or realize on the Collateral as Lender may determine,
whether or not Indebtedness or Collateral is then due. For these purposes,
Lender may, on behalf of and in the name of Grantor, receive, open and dispose
of mail addressed to Grantor; change any address to which mail and payments are
to be sent; and endorse notes, checks, drafts, money orders, documents of
title, instruments and items pertaining to payment, shipment, or storage of any
Collateral. To facilitate collection, Lender
may notify account debtors and obligors on any Collateral to make
payments directly to Lender.


 


Obtain
Deficiency. If Lender
chooses to sell any or all of the Collateral, Lender may obtain a judgment
against Grantor for any deficiency remaining on the Indebtedness due to Lender
after application of all amounts received from the exercise of the rights
provided in this Agreement. Grantor shall be liable for a deficiency even if
the transaction described in this subsection is a sale of accounts or chattel paper.


 


Other
Rights and Remedies.
Lender shall have all the rights and remedies of a secured creditor under the
provisions of the Uniform Commercial Code, as may be amended from time to time.
In addition, Lender shall have and may exercise any or all other rights and
remedies it may have available at law, in equity, or otherwise.


 


Election
of Remedies. Except as
may be prohibited by applicable law, all of Lender’s rights and remedies,
whether evidenced by this Agreement, the Related Documents, or by any other
writing, shall be cumulative and may be exercised singularly or concurrently.
Election by Lender to pursue any remedy shall not exclude pursuit of any other
remedy, and an election to make expenditures or to take action to perform an
obligation of Grantor under this Agreement, after Grantor’s failure to perform,
shall not affect Lender’s right to declare a default and exercise its remedies.


 


MISCELLANEOUS
PROVISIONS. The
following miscellaneous provisions are a part of this Agreement:


 


Amendments. This Agreement, together with any Related
Documents, constitutes the entire understanding and agreement of the parties as
to the matters set forth in this Agreement. No alteration of or amendment to
this Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or amendment.


 


Attorneys’
Fees; Expenses.
Grantor agrees to pay upon demand all of Lender’s costs and expenses, including
Lender’s reasonable attorneys’ fees and Lender’s legal expenses, incurred in
connection with the enforcement of this Agreement. Lender may hire or pay
someone else to help enforce this Agreement, and Grantor shall pay the costs
and expenses of such enforcement. Costs and expenses include Lender’s
reasonable attorneys’ fees and legal expenses whether or not there is a
lawsuit, including Lender’s reasonable attorneys’ fees and legal expenses for
bankruptcy proceedings (including efforts to modify or vacate any automatic
stay or injunction), appeals, and any anticipated post-judgment collection
services. Grantor also shall pay  all court costs and such
additional fees as may be directed by the court.


 


Caption
Headings. Caption
headings in this Agreement are for convenience purposes only and are not to be
used to interpret or define the provisions of this Agreement.


 


Governing
Law.  This Agreement will be governed by federal law applicable to Lender
and, to the extent not preempted by
federal law, the laws of the State
of Texas without regard to its conflicts of law provisions. This
Agreement has been accepted by Lender in the State of Texas.


 


Choice of Venue. If there is a
lawsuit, and if the transaction evidenced by this Agreement occurred in Dallas
County, Grantor agrees upon Lender’s request to submit to the jurisdiction of
the courts of Dallas County, State of Texas.


 


No
Waiver by Lender.
Lender shall not be deemed to have waived any rights under this Agreement
unless such waiver is given in writing and signed by Lender. No delay or
omission on the part of Lender in exercising any right shall operate as a
waiver of such right or any other right. A waiver by Lender of a provision of
this Agreement shall not prejudice or constitute a waiver of Lender’s right
otherwise to demand strict compliance with that provision or any other
provision of this Agreement. No prior waiver by Lender, nor any course of
dealing between Lender and Grantor, shall constitute a waiver of any of Lender’s
rights or of any of Grantor’s obligations as to any future transactions.
Whenever the consent of Lender is required under this Agreement, the granting
of such consent by Lender in any instance shall not constitute continuing
consent to subsequent instances where such consent is required and in all cases
such consent may be granted or withheld in the sole discretion of Lender,


 


Notices. Any notice required to be given under this
Agreement shall be given in writing, and shall be effective when actually
delivered, when actually received by telefacsimile (unless otherwise required
by law), when deposited with a nationally recognized overnight courier, or,  if
mailed, when deposited in the United States mail, as first class, certified or
registered mail postage prepaid, directed to the addresses


 


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shown near the beginning of
this Agreement. Any party may change its address for notices under this
Agreement by giving formal written notice to the other parties, specifying that
the purpose of the notice is to change the party’s address. For notice
purposes, Grantor agrees to keep Lender informed at all times of Grantor’s
current address. Unless otherwise provided or required by law, if there is more
than one Grantor, any notice given by Lender to any Grantor is deemed to be
notice given to all Grantors.


 


Power of
Attorney. Grantor
hereby appoints Lender as Grantor’s irrevocable attorney-in-fact for the
purpose of executing any documents necessary to perfect, amend, or to continue
the security interest granted in this Agreement or to demand termination of
filings of other secured parties. Lender may at any time, and without further
authorization from Grantor, file a carbon, photographic or other reproduction of any financing
statement or of this Agreement for use as a financing statement. Grantor will
reimburse Lender for all expenses for the perfection and the continuation of
the perfection of Lender’s security interest in the Collateral.


 


Severability. If a court of competent jurisdiction finds
any provision of this Agreement to be illegal, invalid, or unenforceable as to
any circumstance, that finding shall not make the offending provision illegal,
invalid, or unenforceable as to any other circumstance. If feasible, the
offending provision shall be considered modified so that it becomes legal,
valid and enforceable. If the offending provision cannot be so modified, it
shall be considered deleted from this Agreement. Unless otherwise required by
law, the illegality, invalidity, or unenforceability of any provision of this
Agreement shall not affect the legality, validity or enforceability of any
other provision of this Agreement.


 


Successors
and Assigns. Subject
to any limitations stated in this Agreement on transfer of Grantor’s interest,
this Agreement shall be binding upon and inure to the benefit of the parties,
their successors and assigns. If ownership of the Collateral becomes vested in
a person other than Grantor, Lender, without notice to Grantor, may deal with
Grantor’s successors with reference to this Agreement and the Indebtedness by way
of  forbearance or extension without releasing
Grantor from the obligations of this Agreement or liability under the
Indebtedness.


 


Survival
of Representations and Warranties. All representations, warranties, and agreements made by Grantor in this
Agreement shall survive the execution and delivery of this Agreement, shall be
continuing in nature, and shall remain in full force and effect until such time
as Grantor’s Indebtedness shall be paid in full.


 


Time is
of the Essence. Time
is of the essence in the performance of this Agreement.


 


DEFINITIONS.
The following
capitalized words and terms shall have the following meanings when used in this
Agreement. Unless specifically stated to the contrary, all references to dollar
amounts shall mean amounts in lawful money of the United States of America.
Words and terms used in the singular shall include the plural, and the plural
shall include the singular, as the context may require. Words and terms not
otherwise defined in this Agreement shall have the meanings attributed to such
terms in the Uniform Commercial Code:


 


Agreement. The word “Agreement” means this Commercial
Security Agreement, as this Commercial Security Agreement may be amended or
modified from time to time, together with all exhibits and schedules attached
to this Commercial Security Agreement from time to time.


 


Borrower. The word “Borrower” means TGC Industries,
Inc. and includes all co-signers and co-makers signing the Note and all their
successors and assigns.


 


Collateral. The word “Collateral” means all of Grantor’s right, title and interest
in and to all the Collateral as described in the Collateral Description section
of this Agreement.


 


Default. The word “Default” means the Default set
forth in this Agreement in the section titled “Default”.


 


Environmental Laws. The words “Environmental Laws” mean any and all state, federal and local
statutes, regulations and ordinances relating to the protection of human health or the environment,
including without limitation the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Section 9601, et
seq. (“CERCLA”), the Superfund Amendments and Reauthorization Act of 1986, Pub.
L. No. 99-499 (“SARA”), the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq., the Resource Conservation and Recovery Act, 42 U.S.C.
Section 6901, et seq., or other applicable state or federal laws, rules, or
regulations adopted pursuant thereto.


 


Event of
Default. The words “Event
of Default” mean any of the events of default set forth in this Agreement in
the default section of this Agreement.


 


Grantor. The word “Grantor” means TGC Industries,
Inc..


 


Guaranty. The word “Guaranty” means the guaranty from guarantor, endorser, surety,
or accommodation party to Lender, including without limitation a guaranty of
all or part of the Note.


 


Hazardous
Substances. The words “Hazardous
Substances” mean materials that, because of their quantity, concentration or
physical, chemical or infectious characteristics, may cause or pose a present
or potential hazard to human health or the environment when improperly used,
treated, stored, disposed of, generated, manufactured, transported or otherwise
handled. The words “Hazardous Substances” are used in their very broadest sense
and include without limitation any and all hazardous or toxic substances,
materials or waste as defined by or listed under the Environmental Laws. The
term “Hazardous Substances” also includes, without limitation, petroleum and
petroleum by-products or any fraction thereof and asbestos.


 


Indebtedness. The word “Indebtedness” means the
indebtedness evidenced by the Note or Related Documents, including all
principal and interest together with all other indebtedness and costs and
expenses for which Grantor is responsible under this Agreement or under any of
the Related Documents.


 


Lender. The word “Lender” means Sovereign Bank, its
successors and assigns.


 


Note. The word “Note” means the Note executed by
TGC Industries, Inc. in the principal amount of $5,000,000.00 dated September
16, 2007, together with all renewals of, extensions of, modifications of,
refinancings of, consolidations of, and substitutions for the note or credit
agreement.


 


Property.
The word “Property”
means all of Grantor’s right, title and interest in and to all the Property as
described in the “Collateral Description” section of this Agreement.


 


Related
Documents. The words “Related
Documents” mean all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds of
trust, security deeds, collateral mortgages, and all other instruments,
agreements and documents, whether now or hereafter existing, executed in
connection with the Indebtedness.


 


GRANTOR HAS READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY
AGREEMENT AND
AGREES TO ITS TERMS. THIS AGREEMENT IS DATED SEPTEMBER 16, 2007.


 


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  GRANTOR:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  TGC INDUSTRIES, INC.

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  By: 

  	
   

  	
   

  	
   

  
	
   

  	
  Wayne Whitener, President &
  CEO of TGC

  	
   

  
	
   

  	
  Industries, Inc.

  	
   

  
				



 


 


LASER PRO Lending. Ver. 5.30.10.001 Copr. Harland Financial Solutions,
Inc. 1997, 2007.


All Rights Reserved. TX LACFI\PL\D2G FC TR-1443


 


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