Document:

Exhibit 10.1

 

CORPORATE RESOLUTION TO BORROW / GRANT
COLLATERAL

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call / Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  	
   

  
	
  $

  	
  3,500,000.00

  	
   

  	
  09-16-2005

  	
   

  	
  09-16-2006

  	
   

  	
  17003864

  	
   

  	
  4A / 466

  	
   

  	
   

  	
   

  	
  SBV

  	
   

  	
   

  	
   

  
																	

 

References in the shaded area 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.

 

	
  

  Corporation:

  	
  

  TGC Industries, Inc.

  1304 Summit Avenue, Ste. 2

  Plano, TX 75074

  	
   

  	
   

  	
  Lender:

  	
  Sovereign Bank, N.A.

  Preston Center

  6060 Sherry Lane

  Dallas, TX 75225

  	
   

  	
   

  

 

I, THE UNDERSIGNED, DO HEREBY CERTIFY THAT:

 

THE CORPORATION’S EXISTENCE.  The
complete and correct name of the Corporation is TGC Industries, Inc. (“Corporation”).
The Corporation is a corporation for profit which is, and at all times shall
be, duly organized, validly existing, and in good standing under and by virtue
of the laws of the State of Texas. The Corporation is duly authorized to
transact business in all other states in which the Corporation is doing
business, having obtained all necessary filings, governmental licenses and
approvals for each state in which the Corporation is doing business.
Specifically, the Corporation is, and at all times shall be, duly qualified as
a foreign corporation in all states in which the failure to so qualify would
have a material adverse effect on its business or financial condition. The
Corporation has the full power and authority to own its properties and to
transact the business in which it is presently engaged or presently proposes to
engage. The Corporation maintains an office at 1304 Summit Avenue, Ste. 2, Plano,
TX 75074. Unless the Corporation has designated otherwise in writing, the
principal office is the office at which the Corporation keeps its books and
records. The Corporation will notify Lender prior to any change in the location
of The Corporation’s state of organization or any change in The Corporation’s
name. The Corporation shall do all things necessary to preserve and to keep in
full force and effect its existence, rights and privileges, and shall comply
with all regulations, rules, ordinances, statutes, orders and decrees of any
governmental or quasi-governmental authority or court applicable to the Corporation
and The Corporation’s business activities.

 

RESOLUTIONS ADOPTED.  At a
meeting of the Directors of the Corporation, or if the Corporation is a close
corporation having no Board of Directors then at a meeting of the Corporation’s
shareholders, duly called and held on                               ,
at which a quorum was present and voting, or by other duly authorized action in
lieu of a meeting, the resolutions set forth in this Resolution were adopted.

 

OFFICER.  The
following named person is an officer of TGC Industries, Inc.:

 

	
   

  	
  NAMES

  	
   

  	
  TITLES

  	
   

  	
  AUTHORIZED

  	
   

  	
  ACTUAL SIGNATURES

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Wayne Whitener

  	
   

  	
  President & CEO

  	
   

  	
  Y

  	
   

  	
   

  	
   /s/ Wayne Whitener

  	
   

  
										

 

ACTIONS AUTHORIZED.  The
authorized person listed above may enter into any agreements of any nature with
Lender, and those agreements will bind the Corporation. Specifically, but
without limitation, the authorized person is authorized, empowered, and
directed to do the following for and on behalf of the Corporation:

 

Borrow Money.  To
borrow, as a cosigner or otherwise, from time to time from Lender, on such
terms as may be agreed upon between the Corporation and Lender, such sum or
sums of money as in his or her judgment should be borrowed, without limitation.

 

Execute Notes.  To
execute and deliver to Lender the promissory note or notes, or other evidence
of the Corporation’s credit accommodations, on Lender’s forms, at such rates of
interest and on such terms as may be agreed upon, evidencing the sums of money
so borrowed or any of the Corporation’s indebtedness to Lender, and also to
execute and deliver to Lender one or more renewals, extensions, modifications,
refinancings, consolidations, or substitutions for one or more of the notes,
any portion of the notes, or any other evidence of credit accommodations.

 

Grant Security.  To
mortgage, pledge, transfer, endorse, hypothecate, or otherwise encumber and
deliver to Lender any property now or hereafter belonging to the Corporation or
in which the Corporation now or hereafter may have an interest, including
without limitation all of the Corporation’s real property and all of the
Corporation’s personal property (tangible or intangible), as security for the
payment of any loans or credit accommodations so obtained, any promissory notes
so executed (including any amendments to or modifications, renewals, and
extensions of such promissory notes), or any other or further indebtedness of
the Corporation to Lender at any time owing, however the same may be evidenced.
Such property may be mortgaged, pledged, transferred, endorsed, hypothecated or
encumbered at the time such loans are obtained or such indebtedness is
incurred, or at any other time or times, and may be either in addition to or in
lieu of any property theretofore mortgaged, pledged, transferred, endorsed,
hypothecated or encumbered.

 

Execute Security Documents.  To
execute and deliver to Lender the forms of mortgage, deed of trust, pledge
agreement, hypothecation agreement, and other security agreements and financing
statements which Lender may require and which shall evidence the terms and
conditions under and pursuant to which such liens and encumbrances, or any of
them, are given; and also to execute and deliver to Lender any other written
instruments, any chattel paper, or any other collateral, of any kind or nature,
which Lender may deem necessary or proper in connection with or pertaining to
the giving of the liens and encumbrances.

 

Negotiate Items.  To
draw, endorse, and discount with Lender all drafts, trade acceptances,
promissory notes, or other evidences of indebtedness payable to or belonging to
the Corporation or in which the Corporation may have an interest, and either to
receive cash for the same or to cause such proceeds to be credited to the
Corporation’s account with Lender, or to cause such other disposition of the
proceeds derived therefrom as he or she may deem advisable.

 

Further Acts.  In the
case of lines of credit, to designate additional or alternate individuals as
being authorized to request advances under such lines, and in all cases, to do
and perform such other acts and things, to pay any and all fees and costs, and
to execute and deliver such other documents and agreements as the officer may
in his or her discretion deem reasonably necessary or proper in order to carry
into effect the provisions of this Resolution.

 

ASSUMED BUSINESS NAMES.  The
Corporation has filed or recorded all documents or filings required by law
relating to all assumed business names used by the Corporation. Excluding the
name of the Corporation, the following is a complete list of all assumed
business names under which the Corporation does business: None.

 

NOTICES TO LENDER.  The
Corporation 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 (A) change in the Corporation’s name; (B) change in the
Corporation’s assumed business name(s); (C) change in the management of
the Corporation; (D) change in the authorized signer(s); (E) change
in the Corporation’s principal office address; (F) change in the Corporation’s
state of organization; (G) conversion of the Corporation to a new or
different type of business entity; or (H) change in any other aspect of
the Corporation that directly or indirectly relates to any agreements between
the Corporation and Lender. No change in the Corporation’s name or state of
organization will take effect until after Lender has received notice.

 

 

CERTIFICATION CONCERNING OFFICERS
AND RESOLUTIONS.  The officer named above is duly elected, appointed,
or employed by or for the Corporation, as the case may be, and occupies the
position set opposite his or her respective name. This Resolution now stands of
record on the books of the Corporation, is in full force and effect, and has
not been modified or revoked in any manner whatsoever.

 

NO CORPORATE SEAL.  The
Corporation has no corporate seal, and therefore, no seal is affixed to this
Resolution.

 

CONTINUING VALIDITY.  Any
and all acts authorized pursuant to this Resolution and performed prior to the
passage of this Resolution are hereby ratified and approved. This Resolution
shall be continuing, shall remain in full force and effect and Lender may rely
on it until written notice of its revocation shall have been delivered to
Lender and receipt acknowledged by Lender in writing at Lender’s address shown
above (or such addresses as Lender may designate from time to time). Any such
notice shall not affect any of the Corporation’s agreements or commitments in
effect at the time notice is given.

 

IN TESTIMONY WHEREOF, I have
hereunto set my hand and attest that the signature set opposite the name listed
above is his or her genuine signature.

 

I have read all the provisions of
this Resolution, and I personally and on behalf of the Corporation certify that
all statements and representations made in this Resolution are true and correct. This Corporate
Resolution to Borrow / Grant Collateral is dated                                      .

 

	
   

  	
  CERTIFIED TO AND ATTESTED BY:

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
   /s/ Wayne Whitener

  	
   

  
	
   

  	
   

  	
  Wayne Whitener,
  President & CEO of TGC Industries,

  Inc.

  

 

 

NOTE: If the
officer signing this Resolution is designated by the foregoing document as one
of the officers authorized to act on the Corporation’s behalf, it is advisable
to have this Resolution signed by at least one non-authorized officer of the
Corporation.

 

2

 

PROMISSORY NOTE

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call / Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  	
   

  
	
  $

  	
  3,500,000.00

  	
   

  	
  09-16-2005

  	
   

  	
  09-16-2006

  	
   

  	
  17003864

  	
   

  	
  4A / 466

  	
   

  	
   

  	
   

  	
  SBV

  	
   

  	
   

  	
   

  
																	

 

References
in the shaded area 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.

 

	
  Borrower:

  	
  TGC Industries, Inc.

  1304 Summit Avenue, Ste. 2

  Plano, TX 75074

  	
   

  	
   

  	
  Lender:

  	
  Sovereign
  Bank, N.A.

  Preston Center

  6060 Sherry Lane

  Dallas, TX 75225

  	
   

  	
   

  

 

	
  Principal Amount: $3,500,000.00

  	
   

  	
  Initial Rate: 7.500%

  	
   

  	
  Date of Note: September 16,
  2005

  

 

PROMISE TO PAY.  TGC
Industries, Inc. (“Borrower”) promises to pay to Sovereign Bank, N.A. (“Lender”),
or order, in lawful money of the United States of America, the principal amount
of Three Million Five Hundred Thousand & 00/100 Dollars ($3,500,000.00)
or so much as may be outstanding, together with interest on the unpaid
outstanding principal balance of each advance. Interest shall be calculated
from the date of each advance until repayment of each advance or maturity,
whichever occurs first.

 

CHOICE OF USURY CEILING AND
INTEREST RATE.  The interest rate on this Note has been
implemented under the “Quarterly Ceiling” as referred to in Section 303.006
of the Texas Finance Code. The terms, including the rate, or index, formula, or
provision of law used to compute the rate on the Note, will be subject to
revision as to current and future balances, from time to time by notice from
Lender in compliance with Section 303.103 of the Texas Finance Code.

 

PAYMENT.  Borrower will pay this loan in one payment of
all outstanding principal plus all accrued unpaid interest on September 16,
2006. In addition, Borrower will pay regular monthly payments of all accrued
unpaid interest due as of each payment date, beginning October 16, 2005,
with all subsequent interest payments to be due on the same day of each month
after that. Unless otherwise agreed or required by applicable law, payments
will be applied first to any accrued unpaid interest; and then to principal.
The annual interest rate for this Note is computed on a 365/360 basis; that is,
by applying the ratio of the annual interest rate over a year of 360 days,
multiplied by the outstanding principal balance, multiplied by the actual
number of days the principal balance is outstanding, unless such calculation
would result in a usurious rate, in which case interest shall be calculated on
a per diem basis of a year of 365 or 366 days, as the case may be. Borrower
will pay Lender at Lender’s address shown above or at such other place as
Lender may designate in writing. Notwithstanding any other provision of this
Note, Lender will not charge interest on any undisbursed loan proceeds. No
scheduled payment, whether of principal or interest or both, will be due unless
sufficient loan funds have been disbursed by the scheduled payment date to
justify the payment.

 

VARIABLE INTEREST RATE.  The
interest rate on this Note is subject to change from time to time based on
changes in an independent index which is the Sovereign Bank, N.A. Prime Rate as
determined, currently equal to Wall Street Journal Prime Rate as quoted in the
Southwestern Addition of the Wall Street Journal (the “Index”). The index is
not necessarily the lowest rate charged by Lender on its loans. If the index
becomes unavailable during the term of this loan, Lender may designate a
substitute index after notice to Borrower. Lender will tell Borrower the
current index rate upon Borrower’s request. The interest rate change will not
occur more often than each Day. Borrower understands that Lender may make loans
based on other rates as well. The index currently is 6.500% per annum. The
interest rate to be applied prior to maturity to the unpaid principal balance
of this Note will be at a rate of 1.000 percentage point over the index,
resulting in an initial rate of 7.500% per annum. NOTICE: Under no
circumstances will the interest rate on this Note be more than the maximum rate
allowed by applicable law. For purposes of this Note, the “maximum rate allowed
by applicable law” means the greater of (A) the maximum rate of interest
permitted under federal or other law applicable to the indebtedness evidenced
by this Note, or (B) the “Quarterly Ceiling” as referred to in Section 303.006
of the Texas Finance Code.

 

PREPAYMENT.  Borrower may pay without penalty all or a
portion of the amount owed earlier than it is due. Prepayment in full shall
consist of payment of the remaining unpaid principal balance together with all
accrued and unpaid interest and all other amounts, costs and expenses for which
Borrower is responsible under this Note or any other agreement with Lender
pertaining to this loan, and in no event will Borrower ever be required to pay
any unearned interest. Early payments will not, unless agreed to by Lender in
writing, relieve Borrower of Borrower’s obligation to continue to make payments
of accrued unpaid interest. Rather, early payments will reduce the principal
balance due. Borrower agrees not to send Lender payments marked “paid in full”,
“without recourse”, or similar language. If Borrower sends such a payment,
Lender may accept it without losing any of Lender’s rights under this Note, and
Borrower will remain obligated to pay any further amount owed to Lender. All
written communications concerning disputed amounts, including any check or
other payment instrument that indicates that the payment constitutes “payment
in full” of the amount owed or that is tendered with other conditions or
limitations or as full satisfaction of a disputed amount must be mailed or
delivered to: Sovereign Bank, N.A., 7301 North State Highway 161 Irving, TX
75039.

 

POST MATURITY RATE.  The
Post Maturity Rate on this Note is the lesser of the maximum rate allowed by
law or the variable interest rate in effect at the time of final maturity.
Borrower will pay interest on all sums due after final maturity, whether by
acceleration or otherwise, at that rate.

 

DEFAULT.  Each
of the following shall constitute an event of default (“Event of Default”)
under this Note:

 

Payment Default.  Borrower
fails to make any payment when due under this Note.

 

Other Defaults.  Borrower fails to comply with or to perform
any other term, obligation, covenant or condition contained in this Note 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 Borrower.

 

Default in Favor of Third
Parties.  Borrower or any Grantor defaults 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 Borrower’s property or Borrower’s ability to repay
this Note or perform Borrower’s obligations under this Note or any of the
related documents.

 

False Statements.  Any
warranty, representation or statement made or furnished to Lender by Borrower
or on Borrower’s behalf under this Note 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.

 

Insolvency.  The dissolution
or termination of Borrower’s existence as a going business, the insolvency of
Borrower, the appointment of a receiver for any part of Borrower’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 Borrower.

 

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 Borrower or by any governmental agency against
any collateral securing the loan. This includes a garnishment of any of
Borrower’s accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower
as to the validity or reasonableness of the claim which is the basis of the
creditor or

 

 

forfeiture
proceeding and if Borrower 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 any 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 evidenced by this Note.

 

Change
In Ownership.  Any change in ownership of twenty-five percent
(25%) or more of the common stock of Borrower.

 

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

 

Insecurity.  Lender
in good faith believes itself insecure.

 

LENDER’S RIGHTS.  Upon
default, Lender may declare the entire indebtedness, including the unpaid
principal balance on this Note, all accrued unpaid interest, and all other
amounts, costs and expenses for which Borrower is responsible under this Note
or any other agreement with Lender pertaining to this loan, immediately due,
without notice, and then Borrower will pay that amount.

 

ATTORNEYS’ FEES; EXPENSES.  Lender
may hire an attorney to help collect this Note if Borrower does not pay, and
Borrower will pay Lender’s reasonable attorneys’ fees. Borrower also will pay
Lender all other amounts Lender actually incurs as court costs, lawful fees for
filing, recording, releasing to any public office any instrument securing this
Note; the reasonable cost actually expended for repossessing, storing,
preparing for sale, and selling any security; and fees for noting a lien on or
transferring a certificate of title to any motor vehicle offered as security
for this Note, or premiums or identifiable charges received in connection with
the sale of authorized insurance.

 

GOVERNING LAW.  This Note 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
Note 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 Note occurred in
Dallas County, Borrower agrees upon Lender’s request to submit to the
jurisdiction of the courts of Dallas County, State of Texas.

 

DISHONORED CHECK CHARGE.  Borrower will pay a processing fee of $30.00
if any check given by Borrower to Lender as a payment on this loan is
dishonored.

 

RIGHT OF SETOFF.  To the
extent permitted by applicable law, Lender reserves a right of setoff in all
Borrower’s accounts with Lender (whether checking, savings, or some other account).
This includes all accounts Borrower holds jointly with someone else and all
accounts Borrower 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. Borrower 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.

 

COLLATERAL.  Borrower acknowledges this Note is secured by
Assignment of Accounts Receivables and General Intangibles.

 

LINE OF CREDIT.  This Note evidences a revolving line of
credit. Advances under this Note, as well as directions for payment from
Borrower’s accounts, may be requested orally or in writing by Borrower or by an
authorized person. Lender may, but need not, require that all oral requests be
confirmed in writing. Borrower agrees to be liable for all sums either: (A) advanced
in accordance with the instructions of an authorized person or (B) credited
to any of Borrower’s accounts with Lender. The unpaid principal balance owing
on this Note at any time may be evidenced by endorsements on this Note or by
Lender’s internal records, including daily computer print-outs. Lender will
have no obligation to advance funds under this Note if: (A) Borrower or
any guarantor is in default under the terms of this Note or any agreement that
Borrower or any guarantor has with Lender, including any agreement made in
connection with the signing of this Note; (B) Borrower or any guarantor ceases
doing business or is insolvent; (C) any guarantor seeks, claims or
otherwise attempts to limit, modify or revoke such guarantor’s guarantee of
this Note or any other loan with Lender; (D) Borrower has applied funds
provided pursuant to this Note for purposes other than those authorized by
Lender; or (E) Lender in good faith believes itself insecure.  This revolving line of
credit shall not be subject to Ch. 346 of the Texas Finance Code.

 

RENEWAL AND EXTENSION.  This Note is given in renewal and extension
and not in novation of the following described indebtedness:  The Promissory Note dated April 26, 2005 in
the amount of Five Hundred Thousand & 00/100 ($500,000.00), from Borrower
to Lender.

 

SUCCESSOR INTERESTS.  The terms of this Note shall be
binding upon Borrower, and upon Borrower’s heirs, personal representatives,
successors and assigns, and shall inure to the benefit of Lender and its
successors and assigns.

 

GENERAL PROVISIONS.  If any part of this Note cannot
be enforced, this fact will not affect the rest of the Note. Borrower does not
agree or intend to pay, and Lender does not agree or intend to contract for,
charge, collect, take, reserve or receive (collectively referred to herein as “charge or collect”), any amount
in the nature of interest or in the nature of a fee for this loan, which would
in any way or event (including demand, prepayment, or acceleration) cause
Lender to charge or collect more for this loan than the maximum Lender would be
permitted to charge or collect by federal law or the law of the State of Texas
(as applicable). Any such excess interest or unauthorized fee shall, instead of
anything stated to the contrary, be applied first to reduce the principal
balance of this loan, and when the principal has been paid in full, be refunded
to Borrower. The right to accelerate maturity of sums due under this Note does
not include the right to accelerate any interest which has not otherwise
accrued on the date of such acceleration, and Lender does not intend to charge
or collect any unearned interest in the event of acceleration. All sums paid or
agreed to be paid to Lender for the use, forbearance or detention of sums due
hereunder shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread throughout the full term of the loan evidenced
by this Note until payment in full so that the rate or amount of interest on
account of the loan evidenced hereby does not exceed the applicable usury
ceiling. Lender may delay or forgo enforcing any of its rights or remedies
under this Note without losing them. Borrower and any other person who signs,
guarantees or endorses this Note, to the extent allowed by law, waive
presentment, demand for payment, notice of dishonor, notice of intent to
accelerate the maturity of this Note, and notice of acceleration of the
maturity of this Note. Upon any change in the terms of this Note, and unless
otherwise expressly stated in writing, no party who signs this Note, whether as
maker, guarantor, accommodation maker or endorser, shall be released from liability.
All such parties agree that Lender may renew or extend (repeatedly and for any
length of time) this loan or release any party or guarantor or collateral; or
impair, fail to realize upon or perfect Lender’s security interest in the
collateral without the consent of or notice to anyone. All such parties also
agree that Lender may modify this loan without the consent of or notice to
anyone other than the party with whom the modification is made. The obligations
under this Note are joint and several.

 

2

 

PRIOR TO SIGNING THIS NOTE, BORROWER READ AND UNDERSTOOD ALL THE
PROVISIONS OF THIS NOTE, INCLUDING THE VARIABLE INTEREST RATE PROVISIONS.
BORROWER AGREES TO THE TERMS OF THE NOTE.

 

BORROWER ACKNOWLEDGES RECEIPT OF A COMPLETED COPY OF THIS PROMISSORY
NOTE.

 

BORROWER:

 

 

TGC INDUSTRIES, INC.

 

	
  By:

  	
   /s/ Wayne Whitener

  	
   

  	
   

  
	
   

  	
  Wayne
  Whitener, President & CEO of TGC

  Industries, Inc.

  	
   

  

 

 

LENDER:

 

 

SOVEREIGN BANK, N.A.

 

 

	
  X

  	
  /s/
  Stephanie Baird Velasquez

  	
   

  	
   

  
	
   

  	
  Stephanie
  Baird Velasquez, Senior Vice President

  	
   

  	
   

  

 

3

 

NOTICE OF FINAL AGREEMENT

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call / Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  	
   

  
	
  $

  	
  3,500,000.00

  	
   

  	
  09-16-2005

  	
   

  	
  09-16-2006

  	
   

  	
  17003864

  	
   

  	
  4A / 466

  	
   

  	
   

  	
   

  	
  SBV

  	
   

  	
   

  	
   

  
																	

 

References in the shaded area 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.

 

	
  Borrower:

  	
  TGC Industries, Inc.

  1304 Summit Avenue, Ste. 2

  Plano, TX 75074

  	
   

  	
   

  	
  Lender:

  	
  Sovereign Bank, N.A.

  Preston Center

  6060 Sherry Lane

  Dallas, TX 75225

  	
   

  	
   

  

 

THE WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS,
OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

As
used in this Notice, the following terms have the following meanings:

 

Loan. The term “Loan” means the following
described loan: B non-precomputed Variable Rate Nondisclosable Revolving Line
of Credit Loan to a Corporation for $3,500,000.00 due on September 16,
2006. The reference rate (Sovereign Bank, N.A. Prime Rate as determined,
currently equal to Wall Street Journal Prime Rate as quoted in the Southwestern
Addition of the Wall Street Journal, currently 6,500%) is added to the margin
of 1.000%, resulting in an initial rate of 7,500. This is a secured renewal of
the following described indebtedness: The Promissory Note dated April 26,
2005 in the amount of Five Hundred Thousand & 00/100 ($500,000.00),
from Borrower to Lender .

 

Loan Agreement. The term “Loan Agreement”
means one or more promises, promissory notes, agreements, undertakings,
security agreements, deeds of trust or other documents, or commitments, or any combination
of those actions or documents, relating to the Loan, including without
limitation the following:

 

LOAN DOCUMENTS

 

	
  Corporate Resolution: TGC Industries, Inc.

  	
  Business
  Loan Agreement

  
	
  Promissory Note

  	
  TX
  Commercial Security Agreement: All Accounts and General

  
	
  TX National UCC Financing Statement (Rev.
  05/22/02): All

  	
  Intangibles;
  owned by TGC Industries, Inc.

  
	
  Accounts and General Intangibles; whether

  	
  Disbursement
  Request and Authorization

  
	
  Notice of Final Agreement

  	
  W-9
  Request for Taxpayer ID Number and Certification: TGC Industries, Inc.

  

 

Parties.  The term “Parties” means Sovereign Bank, N.A.
and any and all entities or Individuals who are obligated to repay the loan or
have pledged property as security for the Loan, including without limitation
the following:

 

	
  Borrower:

  	
   

  	
  TGC
  Industries, Inc.

  
	
  Grantor(s):

  	
   

  	
  TGC
  Industries, Inc.

  

 

This Notice of Final Agreement
is given by Sovereign Bank, N.A. pursuant to Section 26.02 of the Texas
Business and Commerce Code. Each Party who signs below, other than Sovereign
Bank, N.A., acknowledges, represents, and warrants to Sovereign Bank, N.A. that
it has received, read and understood this Notice of Final Agreement. This
Notice is dated September 16, 2005.

 

 

BORROWER:

 

 

TGC INDUSTRIES, INC.

 

	
  By:

  	
   /s/ Wayne Whitener

  	
   

  	
   

  
	
   

  	
  Wayne
  Whitener, President & CEO of TGC

  Industries, Inc.

  	
   

  

 

 

LENDER:

 

 

SOVEREIGN BANK, N.A.

 

 

	
  X

  	
   

  	
   

  	
   

  
	
   

  	
  Stephanie
  Baird Velasquez, Senior Vice President

  	
   

  	
   

  

 

[ILLEGIBLE]Exhibit 10.2

 

BUSINESS
LOAN AGREEMENT

 

	
  Principal

  	
   

  	
  Loan Date

  	
   

  	
  Maturity

  	
   

  	
  Loan No

  	
   

  	
  Call / Coll

  	
   

  	
  Account

  	
   

  	
  Officer

  	
   

  	
  Initials

  	
   

  
	
  $

  	
  3,500,000.00

  	
   

  	
  09-16-2005

  	
   

  	
  09-16-2006

  	
   

  	
  17003864

  	
   

  	
  4A / 466

  	
   

  	
   

  	
   

  	
  SBV

  	
   

  	
   

  	
   

  
																	

 

References
in the shaded area 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.

 

	
  Borrower:

  	
  TGC Industries, Inc.

  1304 Summit Avenue, Ste. 2

  Plano, TX 75074

  	
   

  	
   

  	
  Lender:

  	
  Sovereign
  Bank, N.A.

  Preston Center

  6060 Sherry Lane

  Dallas, TX 75225

  	
   

  	
   

  

 

THIS BUSINESS LOAN AGREEMENT dated September 16, 2005, is made
and executed between TGC Industries, Inc. (“Borrower”) and Sovereign
Bank, N.A. (“Lender”) on the following terms and conditions. Borrower has
received prior commercial loans from Lender or has applied to Lender for a commercial loan or loans or other
financial accommodations, including those which may be described on any exhibit
or schedule attached to this Agreement (“Loan”). Borrower understands and
agrees that: (A) in granting, renewing, or extending any Loan, Lender is relying upon Borrower’s
representations, warranties, and agreements as set forth in this Agreement; (B) the
granting, renewing, or extending of any Loan by Lender at all times shall be
subject to Lender’s sole judgment and discretion; and (C) all such Loans
shall be and remain subject to the terms and conditions of this Agreement.

 

TERM.  This Agreement shall be effective as of September 16,
2005, and shall continue in
full force and effect until such time as all of Borrower’s Loans in favor of
Lender have been paid in full, including principal, interest, costs, expenses,
attorneys’ fees, and other fees and charges, or until September 16, 2006.

 

CONDITIONS PRECEDENT TO EACH ADVANCE.  Lender’s
obligation to make the Initial Advance and each subsequent Advance under this
Agreement shall be subject to the fulfillment to Lender’s satisfaction of all of the conditions set forth in
this Agreement and in the Related Documents.

 

Loan Documents.  Borrower shall provide to Lender the following
documents for the Loan: (1) the Note; (2) Security Agreements granting to
Lender security interests in the Collateral; (3) financing statements and
all other documents perfecting Lender’s Security Interests; (4) evidence
of insurance as required below; (5) together with all such Related
Documents as Lender may require for the Loan; all in form and substance
satisfactory to Lender and Lender’s counsel.

 

Borrower’s Authorization.  Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents. In addition, Borrower shall have provided such other
resolutions, authorizations, documents and instruments as Lender or its
counsel, may require.

 

Payment of Fees and Expenses.  Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in this
Agreement or any Related Document.

 

Representations and Warranties.  The
representations and warranties set forth in this Agreement, in the Related
Documents, and in any document or certificate delivered to Lender under this
Agreement are true and correct.

 

No Event of Default.  There
shall not exist at the time of any Advance a condition which would constitute
an Event of Default under this Agreement or under any Related Document.

 

REPRESENTATIONS AND WARRANTIES.  Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any Indebtedness, exists:

 

Organization.  Borrower is a corporation for profit which is,
and at all times shall be, duly organized, validly existing, and in good
standing under and by virtue of the laws of the State of Texas. Borrower is
duly authorized to transact business in all other states in which Borrower is
doing business, having obtained all necessary filings, governmental licenses
and approvals for each state in which Borrower is doing business. Specifically,
Borrower is, and at all times shall be, duly qualified as a foreign corporation
in all states in which the failure to so qualify would have a material adverse
effect on its business or financial condition. Borrower has the full power and
authority to own its properties and to transact the business in which it is
presently engaged or presently proposes to engage. Borrower maintains an office
at 1304 Summit Avenue, Ste. 2, Plano, TX 75074. Unless Borrower has designated
otherwise in writing, the principal office is the office at which Borrower
keeps its books and records including its records concerning the Collateral.
Borrower will notify Lender prior to any change in the location of Borrower’s
state of organization or any change in Borrower’s name. Borrower shall do all
things necessary to preserve and to keep in full force and effect its
existence, rights and privileges, and shall comply with all regulations, rules, ordinances,
statutes, orders and decrees of any governmental or quasi-governmental authority
or court applicable to Borrower and Borrower’s business activities.

 

Assumed Business Names.  Borrower has filed or recorded all documents
or filings required by law relating to all assumed business names used by
Borrower. Excluding the name of Borrower, the following is a complete list of
all assumed business names under which Borrower does business: None.

 

Authorization.  Borrower’s execution, delivery, and
performance of this Agreement and all the Related Documents have been duly
authorized by all necessary action by Borrower and do not conflict with, result
in a violation of, or constitute a default under (1) any provision of (a) Borrower’s
articles of incorporation or organization, or bylaws, or (b) any agreement
or other instrument binding upon Borrower or (2) any law, governmental
regulation, court decree, or order applicable to Borrower or to Borrower’s
properties.

 

Financial Information.  Each
of Borrower’s financial statements supplied to Lender truly and completely
disclosed Borrower’s financial condition as of the date of the statement, and
there has been no material adverse change in Borrower’s financial condition
subsequent to the date of the most recent financial statement supplied to
Lender. Borrower has no material contingent obligations except as disclosed in
such financial statements.

 

Legal Effect.  This
Agreement constitutes, and any instrument or agreement Borrower is required to
give under this Agreement when delivered will constitute legal, valid, and
binding obligations of Borrower enforceable against Borrower in accordance with
their respective terms.

 

Properties.  Except
as contemplated by this Agreement or as previously disclosed in Borrower’s
financial statements or in writing to Lender and as accepted by Lender, and
except for property tax liens for taxes not presently due and payable, Borrower
owns and has good title to all of Borrower’s properties free and clear of all
Security Interests, and has not executed any security documents or financing
statements relating to such properties. All of Borrower’s properties are titled
in Borrower’s legal name, and Borrower has not used or filed a financing
statement under any other name for at least the last five (5) years.

 

Hazardous Substances.  Except
as disclosed to and acknowledged by Lender in writing, Borrower represents and
warrants that: (1) During the period of Borrower’s ownership of the
Collateral, there has been no use, generation, manufacture, storage, treatment,
disposal, release or threatened release of any Hazardous Substance by any
person on, under, about or from any of the Collateral. (2) Borrower has no
knowledge of, or reason to believe that there has been (a) any breach or
violation of any Environmental Laws; (b) any use, generation, manufacture,
storage, treatment, disposal, release or threatened release of any Hazardous
Substance on, under, about or from the Collateral by any prior owners or
occupants of any of the Collateral; or (c) any actual or threatened
litigation or claims of any kind by any person relating to such matters. (3) Neither
Borrower nor any tenant, contractor, agent or other authorized user of any of
the Collateral shall use, generate, manufacture, store, treat, dispose of or
release any Hazardous Substance on, under, about or from any of the Collateral;
and any such activity shall be conducted in compliance with all applicable
federal, state, and local laws, regulations, and ordinances, including without
limitation all Environmental Laws. Borrower authorizes Lender and its agents to
enter upon the Collateral to make such inspections and tests as Lender may deem
appropriate to determine compliance of the Collateral with this section of
the Agreement. Any inspections or tests made by Lender shall be at Borrower’s
expense and for Lender’s purposes only and shall not be construed to create any
responsibility or liability on the part of Lender to Borrower or to any other
person. The representations and warranties contained herein are based on
Borrower’s due diligence in investigating the Collateral for hazardous waste
and Hazardous Substances. Borrower hereby (1) releases and waives any
future claims against Lender for indemnity or contribution in the event
Borrower becomes liable for cleanup or other costs under any such laws, and (2) agrees to indemnify and hold
harmless Lender against any and all claims, losses, liabilities, damages,
penalties, and expenses which Lender may directly or indirectly sustain or
suffer resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal, release or
threatened release of a hazardous waste or substance on the Collateral. The
provisions of this section of the Agreement, including the obligation to
indemnify, shall survive the payment of the indebtedness and the termination,
expiration or satisfaction of this Agreement and shall not be affected by
Lender’s acquisition of any interest in any of the Collateral, whether by
foreclosure or otherwise.

 

Litigation and Claims.  No
litigation, claim, investigation, administrative proceeding or similar action
(including those for unpaid taxes) against Borrower is pending or threatened,
and no other event has occurred which may materially adversely affect
Borrower's financial condition or properties, other than litigation, claims, or
other events, if any, that have been disclosed to and acknowledged by Lender in
writing.

 

 

Taxes.  To the
best of Borrower’s knowledge, all of Borrower’s tax returns and reports that are or were required to be filed,
have been filed, and all taxes, assessments and other governmental charges have
been paid in full, except those
presently being or to be contested by Borrower in good faith in the ordinary course of business and
for which adequate reserves have been provided.

 

Lien Priority.  Unless
otherwise previously disclosed to Lender in writing, Borrower has not entered
into or granted any Security Agreements, or permitted the filing or attachment
of any Security Interests on or affecting any of the Collateral directly or
indirectly securing repayment of Borrower’s Loan and Note, that would be prior
or that may in any way be superior to Lender’s Security Interests and rights in
and to such Collateral.

 

Binding Effect.  This
Agreement, the Note, all Security Agreements (if any), and all Related
Documents are binding upon the signers thereof, as well as upon their
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.

 

AFFIRMATIVE COVENANTS.  Borrower covenants and agrees
with Lender that, so long as this Agreement remains in effect, Borrower will:

 

Notices of Claims and Litigation.  Promptly inform Lender in writing of (1) all
material adverse changes in Borrower’s financial condition, and (2) all
existing and all threatened litigation, claims, investigations, administrative
proceedings or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.

 

Financial Records.  Maintain its books and records in accordance
with GAAP, applied on a consistent basis, and permit Lender to examine and
audit Borrower’s books and records at all reasonable times.

 

Financial Statements.  Furnish Lender with the following:

 

Interim Statements.  As soon as available, but in no
event later than 45 days after the end of each fiscal quarter, Borrower’s
balance sheet and profit and loss statement for the period ended, prepared by
Borrower.

 

Tax Returns.  As soon as available, but in no event later
than ninety (90) days after the applicable filing date for the tax reporting
period ended, Federal and other governmental tax returns, prepared by Borrower.

 

All financial reports required to be provided under
this Agreement shall be prepared in accordance with GAAP, applied on a
consistent basis, and certified by Borrower as being true and correct.

 

Additional Information.  Furnish such additional information and
statements, as Lender may request from time to time.

 

Financial Covenants and Ratios.  Comply
with the following covenants and ratios:

 

Other Requirements.  Monthly Accounts Receivables
aging due within 10 days of month end. 

 

Monthly borrowing base certificate due within 30 days of month end.

 

Eligible Accounts Receivable: Accounts less than 90 days past due; entire Accounts Receivables with
any portion over 90 days is excluded from eligible Accounts Receivables.

 

Revolving Line of Credit shall be rested for a minimum of 30 consecutive
days every 12 months.

 

Borrower shall maintain minimum liquidity of $500,000.00.

 

Borrower shall have a maximum debt/worth ratio of 1.50X.

 

Except as provided above, all computations made to determine compliance
with the requirements contained in this paragraph shall be made in accordance
with generally accepted accounting principles, applied on a consistent basis,
and certified by Borrower as being true and correct.

 

Insurance.  Maintain fire and other risk insurance, public
liability insurance, and such other insurance as Lender may require with
respect to Borrower’s properties and operations, in form, amounts, and
coverages reasonably acceptable to Lender and by insurance companies authorized
to transact business in Texas. BORROWER MAY FURNISH
THE INSURANCE REQUIRED BY THIS AGREEMENT WHETHER THROUGH EXISTING POLICIES
OWNED OR CONTROLLED BY BORROWER OR THROUGH EQUIVALENT COVERAGE FROM ANY
INSURANCE COMPANY AUTHORIZED TO TRANSACT BUSINESS IN TEXAS.
Borrower, 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. 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 Borrower or any other person. In
connection with all policies covering assets in which Lender holds or is
offered a security interest for the Loans, Borrower will provide Lender with
such lender’s loss payable or other endorsements as Lender may require.

 

Insurance Reports.  Furnish
to Lender, upon request of Lender, reports on each existing insurance policy
showing such information as Lender may reasonably request, including without
limitation the following: (1) the name of the insurer; (2) the risks
insured; (3) the amount of the policy; (4) the properties insured; (5) the
then current property values on the basis of which insurance has been obtained, and the manner of determining
those values; and (6) the expiration date of the policy. In addition, upon
request of Lender (however not more often than annually), Borrower will have an
independent appraiser satisfactory to Lender determine, as applicable, the
actual cash value or replacement cost of any Collateral. The cost of such
appraisal shall be paid by Borrower.

 

Other Agreements.  Comply
with all terms and conditions of all other agreements, whether now or hereafter
existing, between Borrower and any other party and notify Lender immediately in
writing of any default in connection with any other such agreements.

 

Loan Proceeds.  Use
all Loan proceeds solely for Borrower’s business operations, unless
specifically consented to the contrary by Lender in writing.

 

Taxes, Charges and Liens.  Pay
and discharge when due all of its indebtedness and obligations, including
without limitation all assessments, taxes, governmental charges, levies and
liens, of every kind and nature, imposed upon Borrower or its properties,
income, or profits, prior to the date on which penalties would attach, and all
lawful claims that, if unpaid, might become a lien or charge upon any of
Borrower’s properties, income, or profits.

 

Performance.  Perform
and comply, in a timely manner, with all terms, conditions, and provisions set
forth in this Agreement, in the Related Documents, and in all other instruments
and agreements between Borrower and Lender. Borrower shall notify Lender
immediately in writing of any default in connection with any agreement.

 

Operations.  Maintain executive and management personnel
with substantially the same qualifications and experience as the present
executive and management personnel; provide written notice to Lender of any
change in executive and management personnel; conduct its business affairs in a
reasonable and prudent manner.

 

Environmental Studies.  Promptly conduct and complete, at Borrower’s
expense, all such investigations,
studies, samplings and testings as may be requested by Lender of any
governmental authority relative to any substance, or any waste or by-product of
any substance defined as toxic or a hazardous substance under applicable
federal, state, or local law, rule, regulation, order or directive, at or
affecting any property or any facility owned, leased or used by Borrower.

 

Compliance with Governmental
Requirements.  Comply with all laws, ordinances, and
regulations, now or hereafter in effect, of all governmental authorities
applicable to the conduct of Borrower’s properties, businesses and operations,
and to the use or occupancy of the Collateral, including without limitation,
the Americans With Disabilities Act. Borrower may contest in good faith any
such law, ordinance, or regulation and withhold compliance during any
proceeding, including appropriate appeals, so long as Borrower has notified
Lender in writing prior to doing so and so long as, in Lender’s sole opinion,
Lender’s interests in the Collateral are not jeopardized. Lender may require Borrower to post adequate
security or a surety bond, reasonably satisfactory to Lender, to protect Lender’s
interest.

 

Inspection.  Permit
employees or agents of Lender at any reasonable time to inspect any and all Collateral
for the Loan or Loans and Borrower’s other properties and to examine or audit
Borrower’s books, accounts, and records and to make copies and memoranda of
Borrower’s books, accounts, and records. If Borrower now or at any time
hereafter maintains any records (including without limitation computer
generated records and computer software programs for the generation of such
records) in the possession of a third party, Borrower, upon request of Lender,
shall notify such party to permit Lender free access to such records at all
reasonable times and to provide Lender with copies of any records it may
request, all at Borrower’s expense.

 

Environmental Compliance and
Reports.  Borrower shall comply in all respects with any
and all Environmental Laws; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on Borrower’s part or on the
part of any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless such
environmental activity is pursuant to and in compliance with the conditions of
a permit issued by the appropriate federal; state or local governmental
authorities; shall furnish to Lender promptly and in any event within thirty
(30) days after receipt thereof a copy of any notice, summons, lien, citation,
directive, latter or other communication from any governmental agency or
instrumentality concerning any intentional or unintentional action or omission
on Borrower’s part in connection with any environmental activity whether or not
there is damage to the

 

2

 

environment and/or other natural resources.

 

Additional Assurances.  Make,
execute and deliver to Lender such promissory notes, mortgages, deeds of trust,
security agreements, assignments, financing statements, instruments, documents
and other agreements as Lender or its attorneys may reasonably request to
evidence and secure the Loans and to perfect
all Security Interests.

 

LENDER’S EXPENDITURES.  If any action or proceeding is
commenced that would materially affect Lender’s Interest in the Collateral or if
Borrower fails to comply with any provision of this Agreement or any Related
Documents, including but not limited to Borrower’s failure to discharge or pay
when due any amounts Borrower is required to discharge or pay under this
Agreement or any Related Documents, Lender on Borrower’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 any Collateral and paying all costs for insuring, maintaining and
preserving any 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 Borrower. 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.

 

NEGATIVE COVENANTS.  Borrower covenants and agrees
with Lender that while this Agreement is in effect. Borrower shall not, without
the prior written consent of Lender:

 

Indebtedness and Liens.  Sell
with recourse any of Borrower’s accounts, except to Lender.

 

Continuity of Operations.  (1) Engage
in any business activities substantially different than those in which Borrower
is presently engaged, (2) cease
operations, liquidate, merge, transfer, acquire or consolidate with any other
entity, change its name, dissolve or transfer or sell Collateral out of the
ordinary course of business, or (3) pay any dividends on Borrower’s stock
(other than dividends payable in its stock), provided, however that
notwithstanding the foregoing, but only so long as no Event of Default has
occurred and is continuing or would result from the payment of dividends, if
Borrower is a “Subchapter S Corporation” (as defined in the Internal Revenue
Code of 1986, as amended). Borrower may pay cash dividends on its stock to its
shareholders from time to time in amounts necessary to enable the shareholders
to pay income taxes and make estimated income tax payments to satisfy their
liabilities under federal and state law which arise solely from their status as
Shareholders of a Subchapter S Corporation because of their ownership of shares
of Borrower’s stock, or purchase or retire any of Borrower’s outstanding shares
or alter or amend Borrower’s capital structure.

 

Agreements.  Borrower will not enter into any agreement
containing any provisions which would be violated or breached by the
performance of Borrower’s obligations under this Agreement or in connection
herewith.

 

CESSATION OF ADVANCES.  If Lender has made any
commitment to make any Loan to Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(A) Borrower or any Guarantor is in default under the terms of this
Agreement or any of the Related Documents or any other agreement that Borrower
or any Guarantor has with Lender; (B) Borrower or any Guarantor dies,
becomes incompetent or becomes insolvent, files a petition in bankruptcy or
similar proceedings, or is adjudged a bankrupt; (C) there occurs a material adverse change in Borrower’s
financial condition, in the financial condition of any Guarantor, or in the
value of any Collateral securing any Loan; or (D) any Guarantor seeks,
claims or otherwise attempts to limit, modify or revoke such Guarantor’s
guaranty of the Loan or any other loan with Lender; or (E) Lender in good
faith deems itself insecure, even though no Event of Default shall have
occurred.

 

RIGHT OF SETOFF.  To the extent permitted by applicable
law, Lender reserves a right of setoff in all Borrower’s accounts with Lender
(whether checking, savings, or some other account). This includes all accounts
Borrower holds jointly with someone else and all accounts Borrower 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. Borrower 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.

 

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

 

Payment Default.  Borrower fails to make any payment when due
under the Loan.

 

Other Defaults.  Borrower 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 Borrower.

 

Default in Favor of Third
Parties.  Borrower or any Grantor defaults 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 Borrower’s or any Grantor’s property or Borrower’s or
any Grantor’s ability to repay the Loans 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 Borrower
or on Borrower’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.

 

Insolvency.  The
dissolution or termination of Borrower’s existence as a going business, the
insolvency of Borrower, the appointment of a receiver for any part of Borrower’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 Borrower.

 

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.

 

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 Borrower or by any governmental agency against
any collateral securing the Loan. This includes a garnishment of any of
Borrower’s accounts, including deposit accounts, with Lender. However, this
Event of Default shall not apply if there is a good faith dispute by Borrower on
to the validity or reasonableness of the claim which in the basis of the
creditor or forfeiture proceeding and if Borrower 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 of any of the
Indebtedness or any Guarantor dies or becomes incompetent, or revokes or
disputes the validity of, or
liability under, any Guaranty of the
Indebtedness.

 

Change in Ownership.  Any
change in ownership of twenty-five percent (25%) or more of the common stock of
Borrower.

 

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

 

Insecurity.  Lender
in good faith believes itself insecure.

 

EFFECT OF AN EVENT OF DEFAULT.  If any Event of Default shall
occur, except where otherwise provided in this Agreement or the Related
Documents, all commitments and obligations of Lender under this Agreement or
the Related Documents or any other agreement immediately will terminate (including
any obligation to make further Loan Advances or disbursements), and, at Lender’s
option, all Indebtedness immediately will become due and payable, all without
notice of any kind to Borrower, except that in the case of an Event of Default
of the type described in the “Insolvency” subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall
have all the rights and remedies provided in the Related Documents or available
at law, in equity, or otherwise. Except as may be prohibited by applicable law,
all of Lender’s rights and remedies 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 Borrower or of any Grantor shall not
affect Lender’s right to declare a default and to exercise its rights and
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.

 

3

 

Attorneys’ Fees; Expenses.  Borrower 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 Borrower 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. Borrower 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.

 

Consent to Loan Participation.  Borrower
agrees and consents to Lender’s sale or transfer, whether now or later, of one
or more participation interests in the Loan to one or more purchasers, whether
related or unrelated to Lender. Lender may provide, without any limitation
whatsoever, to any one or more purchasers, or potential purchasers, any
information or knowledge Lender may have about Borrower or about any other
matter relating to the Loan, and Borrower hereby waives any rights to privacy
Borrower may have with respect to such matters. Borrower additionally waives
any and all notices of sale of participation interests, as well as all notices
of any repurchase of such participation interests. Borrower also agrees that
the purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loan and will have all the rights
granted under the participation agreement or agreements governing the sale of
such participation interests. Borrower further waives all rights of offset or
counterclaim that it may have now or later against Lender or against any
purchaser of such a participation interest and unconditionally agrees that
either Lender or such purchaser may enforce Borrower’s obligation under the
Loan irrespective of the failure or insolvency of any holder of any interest in the Loan. Borrower further
agrees that the purchaser of any such participation interests may enforce its
interests irrespective of any personal claims or defenses that Borrower may
have against Lender.

 

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, Borrower 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 Borrower, or between Lender and any Grantor, shall
constitute a waiver of any of Lender’s
rights or of any of Borrower’s or any 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 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, Borrower agrees to keep Lender informed at all
times of Borrower’s current address. Unless otherwise provided or required by
law, if there is more than one Borrower, any notice given by Lender to any
Borrower is deemed to be notice given to all Borrowers.

 

Payment of Interest and Fees.  Notwithstanding any other provision of this
Agreement or any provision of any Related Document. Borrower does not agree or
intend to pay, and Lender does not agree or intend to charge, collect, take,
reserve or receive (collectively referred to herein as “charge or collect”),
any amount in the nature of interest or in the nature of a fee for the Loan
which would in any way or event (including demand, prepayment, or acceleration)
cause Lender to contract for, charge or collect more for the Loan than the
maximum Lender would be permitted to charge or collect by any applicable
federal or Texas state law. Any such excess interest or unauthorised fee will,
instead of anything stated to the
contrary, be applied first to reduce the unpaid principal balance of the Loan,
and when the principal has bean paid in full, be refunded to Borrower.

 

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.

 

Subsidiaries and Affiliates of
Borrower.  To the extent the context of any provisions of
this Agreement makes it appropriate, including without limitation any
representation, warranty or covenant, the word “Borrower” as used in this
Agreement shall include all of Borrower’s subsidiaries and affiliates.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other financial
accommodation to any of Borrower’s subsidiaries or affiliates.

 

Successors and Assigns.  All
covenants and agreements by or on behalf of Borrower contained in this
Agreement or any Related Documents shall bind Borrower’s successors and assigns
and shall inure to the benefit of Lender and its successors and assigns.
Borrower shall not, however, have the right to assign Borrower’s rights under this
Agreement or any interest therein, without the prior written consent of Lender.

 

Survival of Representations and
Warranties.  Borrower understands and agrees that in
extending Loan Advances, Lender is relying on all representations, warranties,
and covenants made by Borrower in this Agreement or in any certificate or other
instrument delivered by Borrower to Lender under this Agreement or the Related
Documents. Borrower further agrees that regardless of any investigation made by
Lender, all such representations, warranties and covenants will survive the
extension of Loan Advances and delivery to Lender of the Related Documents,
shall be continuing in nature, shall be deemed made and redated by Borrower at
the time each Loan Advance is made, and shall remain in full force and effect
until such time as Borrower’s Indebtedness shall be paid in full, or until this
Agreement shall be terminated in the manner provided above, whichever is the
last to occur.

 

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. Accounting words and terms not otherwise defined in this
Agreement shall have the meanings assigned to them in accordance with generally
accepted accounting principles as in effect on the date of this Agreement:

 

Advance.  The
word “Advance” means a disbursement of Loan funds made, or to be made, to
Borrower or on Borrower’s behalf on a line of credit or multiple advance basis
under the terms and conditions of this Agreement.

 

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

 

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

 

Collateral.  The
word “Collateral” means all property and assets granted as collateral security
for a Loan, whether real or personal property, whether granted directly or indirectly,
whether granted now or in the future, and whether granted in the form of a
security interest, mortgage, collateral mortgage, deed of trust, assignment,
pledge, crop pledge, chattel mortgage, collateral chattel mortgage, chattel
trust, factor’s lien, equipment trust, conditional sale, trust receipt, lien,
charge, lien or title retention contract, lease or consignment intended as a
security device, or any other security or lien interest whatsoever, whether
created by law, contract, or otherwise.

 

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 8801, 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.

 

4

 

GAAP.  The word “GAAP” means generally accepted
accounting principles.

 

Grantor.  The
word “Grantor” means each and all of the persons or entities granting a
Security Interest in any Collateral for the Loan, including without limitation
all Borrowers granting such a Security
Interest.

 

Guarantor.  The
word “Guarantor” means any guarantor, surety, or accommodation party of any or
all of the Loan.

 

Guaranty.  The
word “Guaranty” means the guaranty from Guarantor 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 Borrower is responsible under this
Agreement or under any of the Related Documents.

 

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

 

Loan.  The
word “Loan” means any and all loans and financial accommodations from Lender to
Borrower whether now or hereafter existing, and however evidenced, including
without limitation those loans and financial accommodations described herein or
described on any exhibit or schedule attached to this Agreement from time
to time.

 

Note.  The
word “Note” means the Note executed by TGC Industries, Inc. in the
principal amount of $3,500,000.00 dated September 16, 2005, together with
all renewals of, extensions of,
modifications of, refinancing of, consolidations of, and substitutions for the
note or credit agreement.

 

Permitted Liens.  The
words “Permitted Liens” mean (1) liens and security interests securing indebtedness
owed by Borrower to Lender; (2) liens for taxes, assessments, or similar
charges either not yet due or being contested in good faith; (3) liens of materialmen,
mechanics, warehousemen, or carriers, or other like liens arising in the
ordinary course of business and securing obligations which are not yet
delinquent; (4) purchase money liens or purchase money security interests upon
or in any property acquired or held by Borrower in the ordinary course of
business to secure indebtedness outstanding on the date of this Agreement or
permitted to be incurred under the paragraph of this Agreement titled “Indebtedness
and Liens”; (5) liens and security interests which, as of the date of this
Agreement, have been disclosed to and approved by the Lender in writing; and (6)
those liens and security interests which in the aggregate constitute an
immaterial and insignificant monetary amount with respect to the net value of
Borrower’s assets.

 

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 end documents, whether now or hereafter existing,
executed in connection with the Loan.

 

Security Agreement.  The
words “Security Agreement” mean and include without limitation any agreements,
promises, covenants, arrangements, understandings or other agreements, whether
created by law, contract, or otherwise, evidencing, governing, representing, or
creating a Security Interest.

 

Security Interest.  The
words “Security Interest” mean, without limitation, any and all types of
collateral security, present and future, whether in the form of a lien, charge,
encumbrance, mortgage, deed of trust, security deed, assignment, pledge, crop
pledge, chattel mortgage, collateral chattel mortgage, chattel trust factor’s
lien, equipment trust, conditional sale, trust receipt, lien or title retention
contract, lease or consignment intended as a security device, or any other
security or lien interest whatsoever whether created by law, contract, or
otherwise.

 

BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS
LOAN AGREEMENT AND BORROWER AGREES TO ITS TERMS. THIS BUSINESS LOAN AGREEMENT
IS DATED SEPTMBER 16, 2005.

 

BORROWER:

 

 

	
  TOC
  INDUSTRIES, INC.

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  By:

  	
  /s/
  Wayne Whitener

  	
   

  	
   

  
	
   

  	
  Wayne
  Whitener, President & CEO of TGC

  Industries, Inc.

  	
   

  

 

 

LENDER:

 

 

SOVEREIGN BANK, N.A.

 

	
  By:

  	
  /s/
  Stephanie Baird Velasquez

  	
   

  	
   

  
	
   

  	
  Stephanie
  Baird Velasquez, Senior Vice President

  	
   

  	
   

  

 

5

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00090-of-00352.parquet"}]]