Document:

Exhibit 10.1

AVIZA TECHNOLOGY,
INC.

AND

AVIZA, INC.

LOAN AND SECURITY AGREEMENT

This LOAN AND
SECURITY AGREEMENT (this “Agreement”) is entered into as of April
13, 2007, by and among UNITED COMMERCIAL BANK
(“Agent”), the financial institutions named on the signature pages
hereto (each, a “Lender” and collectively, the “Lenders”) and AVIZA TECHNOLOGY, INC., a Delaware Corporation (“ATI”) and AVIZA,
INC., a Delaware Corporation (“AI”) (each
referred to individually as a “Borrower” and collectively, as the “Borrowers”).

RECITALS

Borrowers wish to obtain credit from time to time from
Lenders, and Lenders desire to extend credit to Borrowers.  This Agreement states the terms on which
Lenders will advance credit to Borrowers, and Borrowers will repay the amounts
owing to Agent.

AGREEMENT

The parties agree as follows:

1.                                      DEFINITIONS
AND CONSTRUCTION.

1.1          Definitions.  As
used in this Agreement, the following terms shall have the following
definitions:

“Accounts”
means all presently existing and hereafter arising accounts, contract rights,
and all other forms of obligations owing to a Borrower arising out of the sale
or lease of goods (including, without limitation, the licensing of software and
other technology) or the rendering of services by such Borrower, whether or not
earned by performance, and any and all credit insurance, guaranties, and other
security therefor, as well as all merchandise returned to or reclaimed by a
Borrower and Borrower’s Books relating to any of the foregoing.

“Advance” or “Advances”
means a cash advance or cash advances made, or Letters of Credit issued, under
the Revolving Facility.

“Affiliate”
means, with respect to any Person, any Person that owns or controls directly or
indirectly such Person, any Person that controls or is controlled by or is
under common control with such Person, and each of such Person’s senior executive
officers, directors, and partners.

“Agent
Expenses” means all: 
reasonable costs or expenses (including Agent’s reasonable attorneys’
fees and expenses) incurred in connection with the preparation, negotiation,
administration, and enforcement of the Loan Documents; reasonable Collateral
audit fees; and Agent’s reasonable attorneys’ fees and expenses incurred in
amending, enforcing or defending the Loan Documents (including fees and
expenses of appeal), incurred before, during and after an Insolvency
Proceeding, whether or not suit is brought; provided, however, that attorneys’
fees and attorney’s expenses incurred in the preparation and negotiation of
this Agreement and the other Loan Documents shall not exceed $35,000.

“Borrower’s Books”
means all of a Borrower’s books and records including:  ledgers, records concerning a Borrower’s
assets or liabilities, the Collateral, business operations or financial
condition, in electronic or hard copy format.

“Borrowing Base”
means an amount equal to eighty percent (80%) of Eligible Accounts plus
twenty-five percent (25%) of Domestic Inventory not to exceed $13,000,000 plus
sixty percent (60%) of Retention Accounts not to exceed $13,000,000 on a
consolidated basis.

“Business Day”
means any day that is not a Saturday, Sunday, or other day on which Lenders in
the State of California are authorized or required to close.

“Cash” means
unrestricted cash and cash equivalents.

“Change in Control”
shall mean a transaction in which any “person” or “group” (within the meaning
of Section 13(d) and 14(d)(2) of the Securities Exchange Act of 1934, as
amended) becomes the “beneficial owner” (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended), directly or indirectly, of a
sufficient number of shares of all classes of stock then outstanding of
Borrower ordinarily entitled to vote in the election of directors, empowering
such “person” or “group” to elect a majority of the members of the Board of
Directors of a Borrower, who did not have such power before such transaction.

“Closing
Date” means April 13, 2007, the date of this Agreement on which
Agent and the Lenders have agreed to make Credit Extensions of up to Fifty-Five
Million Dollars ($55,000,000).

 “Code” means the
California Uniform Commercial Code, as amended from time to time.

“Collateral”
means the property described on Exhibit A
attached hereto.

“Contingent
Obligation” means, as applied to any Person, any direct
or indirect liability, contingent or otherwise (without duplication), of that
Person with respect to (i) any indebtedness, lease, dividend, letter of credit
or other obligation of another, including, without limitation, any such
obligation directly or indirectly guaranteed, endorsed, co-made or discounted
or sold with recourse by that Person, or in respect of which that Person is
otherwise directly or indirectly liable; (ii) any obligations with respect to
undrawn letters of credit issued for the account of that Person; and (iii) all
obligations arising under any interest rate, currency or commodity swap
agreement, interest rate cap agreement, interest rate collar agreement, or
other agreement or arrangement designed to protect a Person against fluctuation
in interest rates, currency exchange rates or commodity prices; provided,
however, that the term “Contingent Obligation” shall not include endorsements
for collection or deposit in the ordinary course of business.  The amount of any Contingent Obligation shall
be deemed to be an amount equal to the stated or determined amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof as determined by such Person in good faith; provided, however, that
such amount shall not in any event exceed the maximum amount of the obligations
under the guarantee or other support arrangement.

“Copyrights”
means any and all copyright rights, copyright applications, copyright
registrations and like protections in each work or authorship and derivative
work thereof, whether published or unpublished and whether or not the same also
constitutes a trade secret, now or hereafter existing, created, acquired or
held.

“Credit Commitment”
means the aggregate maximum amount of Credit Extensions that a lender is
obliged to make under this Agreement, as set forth below such Lender’s
signature hereto.

“Credit Extension”
means each Advance, Letter of Credit or any other extension of credit by Agent
or Lenders for the benefit of a Borrower hereunder.

“Current Assets”
means, as of any applicable date, all amounts that should, in accordance with
GAAP, be included as current assets in the consolidated balance sheet of
Borrowers and each Borrower’s Subsidiaries, as at such date.

“Current
Liabilities” means, as of any applicable date, all
amounts that should, in accordance with GAAP, be included as current
liabilities on the consolidated balance sheet of Borrowers and each Borrower’s
Subsidiaries, as at such date, plus, to the extent not already included therein,
all outstanding Obligations under this Agreement, including all Indebtedness
(including without limitation undrawn letters of credit, if any) that is
payable upon demand or within one year from the date of determination thereof.

“Daily Balance”
means the amount of the Obligations owed at the end of a given day.

“Debt
to Tangible Net Worth Ratio” means a ratio of Total Liabilities
minus Subordinated Debt to Tangible Net Worth plus Subordinated Debt.

“Deed of Trust”
means the Deed of Trust and Security Agreement and Fixture Filing with
Assignment of Rents by and between AI, U.F. Service Corporation and Agent,
dated April 13, 2007.

“Domestic
Inventory” means a Borrower’s Inventory located in the United
States.

“Eligible Accounts”
means those Accounts that arise in the ordinary course of a Borrower’s or its
Subsidiaries’ business that comply with all of such Borrower’s representations
and warranties to Agent set forth in Section 5.3.  Unless otherwise agreed to by Agent, Eligible
Accounts shall not include the following:

(a)           Accounts that the
account debtor has failed to pay in full within 90 days of invoice date;

(b)           Accounts with
respect to an account debtor, 50% and more of whose Accounts the account debtor
has failed to pay within 90 days of invoice date;

(c)           Accounts with
respect to an account debtor, including Subsidiaries and Affiliates, whose
total obligations to Borrower exceed 40% (Concentration Limit) of all Accounts;

(d)           Accounts with
respect to which the account debtor does not have its principal place of
business in the United States, except for Eligible Foreign Accounts;

(e)           Accounts with
respect to which a Borrower is liable to the account debtor for goods sold or
services rendered by the account debtor to such Borrower, but only to the
extent of any amounts owing to the account debtor against amounts owed to such
Borrower;

(f)            Accounts with
respect to which goods are placed on consignment, guaranteed sale, sale or
return, sale on approval, bill and hold, demo or promotional, or other terms by
reason of which the payment by the account debtor may be conditional;

(g)           Accounts with
respect to which the account debtor is the United States or any department,
agency, or instrumentality of the United States unless such Accounts have been
assigned in accordance with the Assignments of Claims Act of 1940, as amended;

(h)           Accounts with
respect to which the account debtor is an officer, employee, agent or Affiliate
of a Borrower;

(i)            Accounts that have
not yet been billed to the account debtor or that relate to deposits (such as
good faith deposits) or other property of the account debtor held by a Borrower
for the performance of services or delivery of goods which such Borrower has
not yet performed or delivered;

(j)            Customer deposits
and Accounts not arising out of the ordinary course of trade or business; and

(k)           Other Accounts the
collection of which Agent reasonably determines after inquiry and consultation
with a Borrower to be doubtful.

“Eligible Assignee”
means any Person that is not a competitor of a Borrower.

“Eligible Foreign Accounts”
means Accounts with respect to which the account debtor does not have its
principal place of business in the United States (i) where the account debtor
is publicly traded in their respective region and acceptable to Agent and (ii)
where the Account is backed by foreign credit insurance or letters of credit
reasonably acceptable to Agent.

“Eligible Inventory”
means Inventory which is not of the type listed in the next sentence.  Unless otherwise agreed to by Agent, Eligible
Inventory shall not include the following:

(a)           Packaging materials
and displays;

(b)           Obsolete and
defective goods or products;

(c)           Inventory on
consignment;

(d)           Inventory in
transit without insurance;

(e)           Inventory subject
to a perfected purchase money security interest; and

(f)            Specialized or
custom-made Inventory not sold within sixty (60) days for which Agent
determines no broad market exists.

“Equipment”
means all present and future machinery, equipment, tenant improvements,
furniture, fixtures, vehicles, tools, parts and attachments in which a Borrower
has any interest.

“Equipment Advance”
means a cash advance or cash advances under the Equipment Facility.

“Equipment Advance Maturity
Date” has the meaning assigned in Section 2.1.1.

“Equipment Facility”
means a Credit Extension of up to the lesser of Four Million Dollars
($4,000,000) or 70% of the orderly liquidation value of existing Equipment
located in the United States.

“Equipment Note”
means the promissory note attached hereto as Exhibit E-1.

“ERISA”
means the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereunder.

“Event of Default”
has the meaning assigned in Article 8.

“Event of Default which
continues,” or its like, means an Event of Default, which
is (i) not waived in writing by Agent, (ii) not cured, or (iii) in existence.

“GAAP”
means generally accepted accounting principles as in effect from time to time
in the United States.

“Indebtedness”
means without duplication (a) all indebtedness for borrowed money or the
deferred purchase price of property or services, including without limitation
reimbursement and other obligations with respect to surety bonds and letters of
credit, (b) all obligations evidenced by notes, bonds, debentures or similar
instruments, (c) all capital lease obligations and (d) all Contingent
Obligations.

“Insolvency Proceeding”
means any proceeding commenced by or against any person or entity under any
provision of the United States Bankruptcy Code, as amended, or under any other
Bankruptcy or insolvency law, including assignments for the benefit of
creditors, formal or informal moratoria, compositions, extension generally with
its creditors, or proceedings seeking reorganization, arrangement, or other
relief.

“Intellectual Property”
means all of a Borrower’s right, title, and interest in and to the following
used by one or more Borrowers in the conduct of its business operations and
which is not Inventory and not used to sell or market Inventory held for sale
or delivery to customers:

(a)           Copyrights,
Trademarks and Patents;

(b)           Any and all trade
secrets, and any and all intellectual property rights in computer software and
computer software products now or hereafter existing, created, acquired or
held;

(c)           Any and all design
rights which may be available to a Borrower now or hereafter existing, created,
acquired or held;

(d)           Any and all claims
for damages by way of past, present and future infringement of any of the
rights included above, with the right, but not the obligation, to sue for and
collect such damages for said use or infringement of the intellectual property
rights identified above;

(e)           All licenses or
other rights to use any of the Copyrights, Patents or Trademarks, and all
license fees and royalties arising from such use to the extent permitted by
such license or rights;

(f)            All amendments,
renewals and extensions of any of the Copyrights, Trademarks or Patents; and

(g)           All proceeds and
products of the foregoing, including without limitation all payments under
insurance or any indemnity or warranty payable in respect of any of the
foregoing.

“Interest Period”
means for each Advance, a period beginning on the Business Day an Advance is
made and continuing for a period of one month, provided that the last day of an
Interest Period for an Advance shall be determined in accordance with the
practices of the LIBOR interbank market as from time to time in effect,
provided, further, in all cases such period shall expire not later than the
applicable Maturity Date.

“Inventory”
means all present and future inventory in which a Borrower has any title or
ownership interest, including merchandise, raw materials, parts, supplies,
packing and shipping materials, work in process and finished products intended
for sale or lease or to be furnished under a contract of service, of every kind
and description now or at any time hereafter owned by or in the custody or
possession, actual or constructive, of a Borrower, including such inventory as
is temporarily out of its custody or possession or in transit and including any
returns upon any accounts or other proceeds, including insurance proceeds,
resulting from the sale or disposition of any of the foregoing and any
documents of title representing any of the above, and a Borrower’s Books
relating to any of the foregoing. 
Inventory does not include goods in the possession of a Borrower on
consignment or other similar basis.

“Investment”
means any beneficial ownership of (including stock, partnership interest or
other securities) any Person, or any loan, advance or capital contribution to
any Person.

“IRC” means
the Internal Revenue Code of 1986, as amended, and the regulations thereunder.

“Letter of Credit”
means standby, sight or usance (with or without title) letter of credit or
similar undertaking issued by Agent at a Borrower’s request in accordance with
Section 2.1.3.

“LIBOR Rate”
means the rate of interest per annum (for all Advances, the LIBOR rate for a
calendar month shall be that in effect on the date of the advance and
thereafter on the first business day of each month) equal to the rate of
interest published in The Wall Street Journal as the one-month LIBOR rate.

“Lien”
means any mortgage, lien, deed of trust, charge, pledge, security interest or
other encumbrance.

“Liquidity Ratio”
means the sum of Cash plus eighty percent (80%) of Eligible Accounts net of
Retention Accounts plus twenty-five percent (25%) of Domestic Inventory not to
exceed $13,000,000 plus sixty percent (60%) of Retention Accounts, divided by
the amount outstanding on the Revolving Line.

“Loan Documents”
means, collectively, this Agreement, any note or notes executed by a Borrower,
and any other agreement entered into between a Borrower and Agent in connection
with this Agreement, all as amended or extended from time to time.

“Majority Lenders”
means as of any date of determination, Lenders owed more than 50% of the then
aggregate unpaid principal amount of the Advances, or, if no principal amount
of the Revolving Notes is outstanding, then Lenders having more than 50% of the
Credit Commitments.

“Material Adverse Effect”
means a material adverse effect on (i) the business, operations or condition of
the Borrowers, taken as a whole, (ii) the ability of the Borrowers, taken as a
whole, to repay the Obligations or

otherwise perform their obligations under the Loan
Documents or (iii) the value or priority of Agent’s security interest in the
Collateral for a reason other than the acts or omissions of Agent or the
Lenders.

“Maturity Date”
means the Equipment Advance Maturity Date, the Real Estate Advance Maturity
Date or the Revolving Facility Advance Maturity Date, as applicable.

“Negotiable Collateral”
means all of a Borrower’s present and future letters of credit of which it is a
beneficiary, notes, drafts, instruments, securities, documents of title, and
chattel paper, and Borrower’s Books relating to any of the foregoing.

“Net Income”
means for any fiscal period the amount set forth on the Borrowers’ statement of
income and retained earnings (or equivalent statement) for such period opposite
the line item entitled “Net Income.”

“Obligations”
means all debt, principal, interest, Agent Expenses and other amounts owed to
Lenders or Agent by a Borrower or Borrowers pursuant to this Agreement or any
other Loan Document, whether absolute or contingent, due or to become due, now
existing or hereafter arising, including any interest that accrues after the
commencement of an Insolvency Proceeding and including any debt, liability, or
obligation owing from a Borrower to others that Agent may have obtained by
assignment or otherwise.

“Patents”
means all patents, patent applications and like protections including without
limitation improvements, divisions, continuations, renewals, reissues,
extensions and continuations-in-part of the same.

“Periodic Payments”
means all installments or similar recurring payments that a Borrower may now or
hereafter become obligated to pay to Agent pursuant to the terms and provisions
of any instrument, or agreement now or hereafter in existence between a
Borrower and Agent.

“Permitted Indebtedness”
means

(a)           Indebtedness
existing on the Closing Date and disclosed in the Schedule;

(b)           Indebtedness of a
Borrower in favor of Agent arising under this Agreement or any other Loan
Document;

(c)           Subordinated Debt;

(d)           Indebtedness to
trade creditors incurred in the ordinary course of business;

(e)           Extensions,
refinancings and renewals of any of items (a) through (d), provided that the
principal amount is not increased or the terms modified to impose more
burdensome terms upon a Borrower or its Subsidiaries, as the case may be;

(f)            Indebtedness
incurred in connection with Letters of Credit issued in the ordinary course of
business by Agent; and

(g)           Indebtedness
arising under currency agreements, interest rate agreements, hedging agreements
or other similar agreements entered into in the ordinary course of business.

“Permitted
Investment” means:

(a)           Investments of the
type existing on the Closing Date disclosed in the Schedule;

(b)           Investments of cash
of the type disclosed in the Schedule;

(c)           Investments between
and among the Borrowers and their Subsidiaries;

(d)           Investments in
Subsidiaries solely to the extent necessary to maintain minimum legal
capitalization and sufficient working capital;

(e)           Investments or
increases to existing Permitted Investments not utilizing cash or cash
equivalents;

(f)            Advances of
expenses to employees in the ordinary course of business; and

(g)           other Investments
with Agent’s consent which shall not be unreasonably withheld or delayed.

“Permitted
Liens” means the following:

(a)           Any Liens existing
on the Closing Date and disclosed in the Schedule;

(b)           Liens for taxes,
fees, assessments or other governmental charges or levies incurred in the
ordinary course of business, either not delinquent or being contested in good
faith by appropriate proceedings;

(c)           Liens (i) upon or
in any equipment acquired, leased or held by Borrowers or any Subsidiaries to
secure the purchase price or lease amount of such equipment or indebtedness
incurred solely for the purpose of financing the acquisition of such equipment,
or (ii) existing on such equipment at the time of its acquisition, provided
that the Lien is confined solely to the property so acquired and improvements
thereon, and the proceeds of such equipment;

(d)           Liens incurred in
connection with the extension, renewal or refinancing of the indebtedness
secured by Liens of the type described in clauses (a) through (c) above,
provided that any extension, renewal or replacement Lien shall be limited to
the property encumbered by the existing Lien and the principal amount of the
indebtedness being extended, renewed or refinanced does not increase;

(e)           Liens securing
claims or demands of materialmen, mechanics, carriers, warehousemen, landlords
and other like persons or entities incurred in the ordinary course of business
that are not yet due and payable or being contested in good faith;

(f)            Encumbrances
consisting of zoning restrictions, easements or other restrictions on the use
of real property;

(g)           Good-faith pledges
or deposits made in the ordinary course of business to secure performance of
bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, not in excess of the aggregate amount due thereunder, or to secure
statutory obligations, or surety, appeal, indemnity, performance or other
similar bonds required in the ordinary course of business;

(h)           Liens in favor of
Agent for the benefit of Lenders securing the Obligations of Borrowers
hereunder;

(i)            Liens incurred or
deposits made in the ordinary course of a Borrower’s business in connection
with worker’s compensation, unemployment insurance, social security and other
like laws;

(j)            Purchase money
security interests in Inventory subordinated to the security interest of Agent
on terms reasonably acceptable to Agent; and

(k)           Liens arising from
judgments, decrees or attachments in circumstances not constituting an Event of
Default hereunder.

“Person” means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, institution, public benefit
corporation, firm, joint stock company, estate, entity or governmental agency.

“Pro Rata Share” means each Lender’s pro rata share of the
Obligations, as evidenced by the percentage set forth on the signature pages to
this Agreement.

“Real Estate” means the real property located at 440 Kings Village
Road, Scott Valley, CA 95066.

“Real Estate Facility” means the facility under which a Borrower may
request Agent to issue Real Estate Advances, as specified in Section 2.1.2.

“Real Estate Advance” means Credit Extensions of up to the lesser of
Thirteen Million Dollars ($13,000,000) or 70% of the appraisal value of the
Real Estate.

“Real
Estate Advance Maturity Date” has the meaning assigned in
Section 2.1.2.

“Real Estate Note” means the promissory note attached hereto as Exhibit E-2.

“Reserve Requirement” means, for any Interest Period, the average maximum
rate at which reserves (including any marginal, supplemental or emergency
reserves) are required to be maintained during such Interest Period under
Regulation D against “Eurocurrency liabilities” (as such term is used in
Regulation D) by member banks of the Federal Reserve System.  Without limiting the effect of the foregoing,
the Reserve Requirement shall reflect any other reserves required to be
maintained by Lenders by reason of any Regulatory Change against (i) any
category of liabilities which includes deposits by reference to which the LIBOR
Rate is to be determined or (ii) any category of extensions of credit or other
assets which include Advances.

 “Responsible Officer” means each of the Chief Executive Officer, the
Chief Financial Officer, Vice President, Finance and Vice President, Treasurer
of a Borrower.

“Retention Accounts” means the portion of an Eligible Account held by an
account debtor pending its final acceptance of inventory sold to it by a
Borrower.

“Revolving Facility” means the facility under which Borrowers may request
Agent to issue Advances, as specified in Section 2.1.3 hereof.

“Revolving
Facility Advance Maturity Date” has the meaning assigned
in Section 2.1.3.

“Revolving Line” means Credit Extensions of up to Forty-Four Million
Dollars ($44,000,000).

“Revolving Note” means the promissory note attached hereto as Exhibit E-3.

“Schedule” means the Schedule of Exceptions attached hereto.

“Shares” means the shares of capital stock of any
Subsidiaries.

“Subordinated Debt” means any debt incurred by a Borrower that is
subordinated to the debt owing by such Borrower to Agent on terms reasonably
acceptable to Agent (and identified in writing as being such by such Borrower
and Agent).

“Subsidiary” means any corporation, partnership or limited
liability company or joint venture in which (i) any general partnership interest
or (ii) more than 50% of the stock, limited liability company interest or joint
venture of which by the terms thereof ordinary voting power to elect the Board
of Directors, managers or trustees of the entity, at the time as of which any
determination is being made, is owned by a Borrower, either directly or through
an Affiliate.

“Tangible Net Worth” means at any date as of which the amount thereof
shall be determined, the total shareholder equity in a Borrower plus the
principal amount of Subordinated Debt less intangible assets, determined in
accordance with GAAP.

“Total Liabilities” means at any date as of which the amount thereof
shall be determined, all obligations that should, in accordance with GAAP, be
classified as liabilities on the consolidated balance sheet of Borrowers,
including in any event all Indebtedness.

“Trademarks” means any trademark and servicemark rights, whether
registered or not, applications to register and registrations of the same and
like protections, and the entire goodwill of the business of a Borrower
connected with and symbolized by such trademarks.

1.2          Accounting Terms.  All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP and all calculations made hereunder shall be made in accordance
with GAAP.  When used herein, the terms “financial
statements” shall include the notes and schedules thereto

2.                                      LOAN AND TERMS OF PAYMENT.

2.1          Credit Extensions.

Borrowers promise to pay to the order of Lenders, in
lawful money of the United States, the aggregate unpaid principal amount of all
Credit Extensions made by Lenders to Borrowers hereunder.  The Borrowers shall also pay interest on the
unpaid principal amount of such Credit Extensions at rates in accordance with
the terms hereof.

2.1.1       Equipment Advance.

(a)           Advance Amount; Payment.  Subject to
and upon the terms and conditions of this Agreement, Borrowers may request one
advance in an aggregate amount up to the lesser of $4,000,000 or 70% of the
orderly liquidation value of the Borrowers’ Equipment located in the
United States, such amount having been determined in an appraisal satisfactory
to Agent within 30 days prior to the Closing Date.   Beginning May 1, 2007, the Borrowers shall
repay any outstanding Equipment Advance in 36 equal monthly installments
constituting principal plus accrued interest. 
The entire principal balance and all accrued but unpaid interest on such
Equipment Advance shall be due and payable on
the third anniversary of the Closing Date, such date being “Equipment Advance Maturity Date.”

(b)           Borrowing Procedure.  When
a Borrower desires an Equipment Advance,
such Borrower will notify Agent by facsimile
transmission of an advance request in substantially the form of Exhibit B hereto no later than noon Pacific
Time on the Business Day that is three (3) Business Days prior to the Business
Day on which an Advance is made, and include a copy of the invoice for any
Equipment to be financed.  Agent is
authorized to make Advances under this Agreement, based upon instructions
received from a Responsible Officer or a designee of a Responsible Officer.

(c)           Equipment Note.  The Equipment
Advance shall be evidenced by a promissory note in substantially the form of Exhibit E-1 attached hereto.  payable to the order of each Lender and
representing the obligation of a Borrower
to pay the aggregate unpaid principal amount of all Equipment Advances made by
that Lender, with interest thereon as prescribed in Section 2.2.  Each Lender is hereby authorized to record in
its books and records and on any schedule annexed to its Equipment Note, the
date and amount of each Equipment Advance made by that Lender, and the date and
amount of each payment of principal thereof, and any such recordation shall
constitute prima facie evidence of the accuracy of the information so recorded;
provided that failure by any Lender to effect such recordation shall not affect
a Borrower’s obligations hereunder.  Prior to the transfer of an Equipment Note,
the transferring Lender shall record such information on any schedule annexed
to and forming a part of such Equipment Note.

2.1.2       Real Estate Advance.

(a)           Advance Amount; Payment.  Subject to
and upon the terms and conditions of this Agreement, a Borrower may request one advance in a principal amount
up to the lesser of $13,000,000 or 70% of the appraisal value of the Real
Estate.  Beginning May 5, 2007, and on
the fifth day of each of the next 47 months

(the last such day being the “Real Estate Advance Maturity Date”),
Borrower shall repay the Real Estate Advance in equal installments following a
240-month amortization schedule.  The entire principal balance and all accrued
but unpaid interest on the Real Estate Advance shall be due and payable on the
Real Estate Advance Maturity Date.

(b)           Borrowing Procedure.  When
Borrower desires a Real Estate Advance, Borrower will notify Agent by facsimile
transmission of an advance request in substantially the form of Exhibit B hereto no later than noon Pacific
Time on the Business Day that is three (3) Business Days prior to the Business
Day on which an Advance is made.  Agent
is authorized to make Advances under this Agreement, based upon instructions
received from a Responsible Officer or a designee of a Responsible Officer.

(c)           Real Estate Note.  The Real
Estate Advance shall be evidenced by a promissory note in substantially the
form of Exhibit E-2 attached
hereto, payable to the order of each Lender and representing the obligation of
Borrower to pay the aggregate unpaid principal amount of all Real Estate
Advances made by that Lender, with interest thereon as prescribed in Section
2.2.  Each Lender is hereby authorized to
record in its books and records and on any schedule annexed to its Real Estate
Note, the date and amount of each Real Estate Advance made by that Lender, and
the date and amount of each payment of principal thereof, and any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded; provided that failure by any Lender to effect such
recordation shall not affect Borrower’ obligations hereunder.  Prior to the transfer of the Real Estate
Note, the transferring Lender shall record such information on any schedule
annexed to and forming a part of such Real Estate Note.

2.1.3       Advances under the Revolving Facility.

(a)           Advance Amounts.  Subject to
and upon the terms and conditions of this Agreement, Borrowers may request
Advances in an aggregate outstanding amount not to exceed the lesser of the
Revolving Line or the Borrowing Base, in each case minus the aggregate face amount
of outstanding Letters of Credit, including any drawn but unreimbursed Letters
of Credit and each Lender shall make Advances up to its Pro Rata Share of the
requested Advance, provided no Lender shall at any time be required to make
Advances in excess of its Credit Commitment. 
Subject to the terms and conditions of this Agreement, amounts borrowed
pursuant to this Section 2.1.3 may be repaid and reborrowed at any time prior
to the second anniversary of the Closing Date, such date being the “Revolving Facility Advance Maturity Date,”
at which time all Advances under this Section 2.1.3 shall be immediately due
and payable.

(b)           Borrowing Procedure.  Whenever
Borrowers desire an Advance, Borrowers will notify Agent by facsimile
transmission of an advance request in substantially the form of Exhibit B hereto no later than noon Pacific
Time on the Business Day that is three (3) Business Days prior to the Business
Day on which an Advance is made.  Agent
is authorized to make Advances under this Agreement, based upon instructions
received from a Responsible Officer or a designee of a Responsible
Officer.  Agent will credit the amount of
Advances made under this Section 2.1.3 to a Borrower’s deposit account, as
specified by Borrowers.

(c)           Payments.  Borrowers shall pay interest on the aggregate outstanding
principal amount of the Advances on the first day of each month for so long as
any Advances are outstanding.  All
Advances shall be due and payable on the Revolving Facility Advance Maturity
Date.

(d)           Optional Prepayment of the
Advances; Termination.  Borrowers may at any time prepay any
Advance, in whole or in part, without premium or penalty except as provided in Sections 2.8 and 2.9; and may terminate this
Agreement and any other Loan Documents by giving notice of termination to Agent
and the performance or payment in full of all outstanding Obligations
hereunder.

(e)           Lenders Disbursement.   Unless Agent shall have received notice from a Lender prior to the date of
any Advance that such Lender will not make available to Agent such Lender’s Pro
Rata Share of such Advance, Agent may assume that such Lender has made such
portion available to Agent on the date of such Advance in accordance with this
Section and Agent may, in reliance upon such assumption, make available to
Borrowers on such date a corresponding
amount.  If and to the extent that such
Lender shall not have so made such ratable portion available to Agent, such
Lender and Borrowers severally agree to repay to Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
such amount is made

available to Borrowers until the
date such amount is repaid to Agent, at (i) in the case of Borrowers, the
interest rate applicable at the time to such Advance and (ii) in the case of
such Lender, the Federal Funds Rate, as such rate is quoted in The Wall Street
Journal on such date.  If such Lender
shall repay to Agent such corresponding amount, such amount so repaid shall
constitute such Lender’s Pro Rata Share of such Advance for purposes of this
Agreement.  The failure of any Lender to
make available its Pro Rata Share of any Advance shall not relieve any other
Lender of its obligation, if any, hereunder, to make available its Pro Rata
Share of such Advance on the date of such Advance, but no Lender shall be
responsible for the failure of any other Lender to make available its Pro Rata
Share of any Advance on the date of any Advance.

(f)            Revolving Notes.  The Advances made by Lenders
pursuant hereto shall be evidenced by the Revolving Notes in substantially the
form of Exhibit E-3 attached
hereto, payable to the order of each Lender and representing the obligation of
Borrowers to pay the aggregate unpaid principal amount of all Advances made by
that Lender, with interest thereon as prescribed in Section 2.2.  Each Lender is hereby authorized to record in
its books and records and on any schedule annexed to its Revolving Note, the
date and amount of each Advance made by that Lender, and the date and amount of
each payment of principal thereof, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded; provided
that failure by any Lender to effect such recordation shall not affect
Borrowers’ obligations hereunder.  Prior to
the transfer of a Revolving Note, the transferring Lender shall record such
information on any schedule annexed to and forming a part of such Revolving
Note.

2.2          Interest Rates, Payments, and Calculations.

(a)           Interest Rates.  Except as set forth in Section 2.2(b), the
outstanding principal balance of each Credit Extension shall bear interest
(computed daily on the basis of a 360 day year and actual days elapsed), at a
floating rate per annum equal to the LIBOR Rate plus 2.43%; provided, however
that if Borrowers generate a positive net income for fiscal quarters ending
March 31, 2007 and June 30, 2007, then the applicable interest rate shall be
reduced by 0.25%.

(b)           Default Rate.  All Obligations shall bear interest, from and
after the occurrence and during the continuance of an Event of Default, at a
rate equal to three (3) percentage points above the interest rate applicable
immediately prior to the occurrence of an Event of Default.

(c)           Payments.  Any interest not paid when due shall be
compounded by becoming a part of the Obligations, and such interest shall
thereafter accrue interest at the rate then applicable hereunder.  All payments shall be made free and clear of,
and without deduction or withholding for, any present or future taxes or other
charges imposed by any jurisdiction. 
Payments will be made via auto debit from the Borrowers’ account at
Agent.

(d)           Computation. The
applicable rate of interest hereunder shall be increased or decreased effective
as of the day the LIBOR Rate is changed as provided in the definition thereof,
by an amount equal to such change in the LIBOR Rate.

2.3          Overadvances.  If the
aggregate amount of the outstanding Advances exceed the lesser of the Revolving
Line or the Borrowing Base at any time, or if the aggregate Credit Extensions
exceed $55,000,000, Borrowers shall pay
to Agent, in cash, the amount of such excess within two (2) Business Days of
written notice from Agent.

2.4          Crediting Payments.  Prior to the
occurrence of an Event of Default, Agent shall credit a wire transfer of funds,
check or other item of payment to such deposit account or Obligation as
Borrowers specify.  After the occurrence
and continuance of an Event of Default, the receipt by Agent of any wire
transfer of funds, check, or other item of payment shall be immediately applied
to conditionally reduce Obligations, but shall not be considered a payment on
account unless such payment is of immediately available federal funds or unless
and until such check or other item of payment is honored when presented for
payment.  Notwithstanding anything to the
contrary contained herein, any wire transfer or other payment received by Agent
after 12:00 noon Pacific time shall be deemed to have been received by Agent as
of the opening of business on the immediately following Business Day.  Any wire transfer or other payment received
by Agent before 12:00 noon Pacific time shall be deemed to have been

received by Agent as of the opening
of business on such Business Day. 
Whenever any payment to Agent or Lenders under the Loan Documents would
otherwise be due (except by reason of acceleration) on a date that is not a
Business Day, such payment shall instead be due on the next Business Day, and
additional fees or interest, as the case may be, shall accrue and be payable for
the period of such extension.

2.5          Payments Pro Rata.   Except as
provided in Section 2.4, after its receipt of each payment from or on behalf of
Borrowers in respect of any Obligations of the Borrowers hereunder, Agent shall
distribute such payment to Lenders pro rata
based upon their respective shares, if any, of the Obligations with respect to
which such payment was received.

2.6          Sharing of Payments.  If any
Lender shall obtain any payment (whether voluntary, involuntary, through the
exercise of any right of set-off, or otherwise) on account of the Advances
owing to it in excess of its Pro Rata Share of payments on account of the
Advances obtained by all the Lenders, then such Lender shall forthwith purchase
from the other Lenders such participations in the Advances owing to them as
shall be necessary to cause such purchasing Lender to share the excess payment
ratably with each of them; provided, however, that if all or any portion of
such excess payment is thereafter recovered from such purchasing Lender, such
purchase from each Lender shall be rescinded and such Lender shall repay to the
purchasing Lender the purchase price to the extent of such recovery together
with an amount equal to such Lender’s Pro Rata Share (according to the
proportion of (i) the amount of such Lender’s required repayment to (ii) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered.  Borrowers agree that any Lender
so purchasing a participation from another Lender pursuant to this Section or
any other provision of this Agreement may, to the fullest extent permitted by
law, exercise all of its rights of payment (including the right to set-off)
with respect to such participation as fully as if such Lender were the direct
creditor of Borrowers in the amount of such participation.

2.7          Fees.  Borrowers
shall pay to Agent the following:

(a)           Commitment Fee.   On the
Closing Date, a fee of $210,000; and

(b)           Agent Expenses.  On the
Closing Date, all Agent Expenses incurred through the Closing Date, including
reasonable attorneys’ fees and expenses for one counsel to the Agent (up to an
aggregate total of $35,000) and, after the Closing Date, all other Agent
Expenses, including attorneys’ fees and expenses incurred by Agent and Lenders.

2.8          Additional Requirements/Provisions
Regarding Advances.

(a)           Borrowers shall pay
Agent (for the ratable benefit of Agent and Lenders) such amounts as are
actually incurred by Agent or Lenders in connection with making any Advances
resulting from a change in law that imposes any special reserve, deposit or
other material conditions or requirements related to the Advances.  Agent will furnish Borrowers with a statement
setting forth the basis and amount of each request by Agent for compensation
under this Section 2.8.  Borrowers shall
pay to Agent, upon the request of Agent, such amount or amounts as shall be
sufficient (in the sole good faith opinion of Agent) to compensate it for any
loss, costs or expense actually incurred by it as a result of any failure by
Borrowers to borrow an Advance on the date for such borrowing specified in the
relevant notice of borrowing hereunder. 
Agent will notify Borrowers of any event occurring after the date of the
Agreement that will entitle agent to compensation pursuant to this section as
promptly as practicable after it obtains knowledge thereof and determines to
request such compensation.

(b)           If at any time the
amount of the Advances for periods equal to the corresponding Interest Periods
or any other period are not commercially available to Agent in the offshore
currency interbank markets, then Agent shall promptly give notice thereof to
Borrowers, and upon the giving of such notice, Agent’s obligation to make the
Advances shall terminate, unless Agent and Borrowers agree in writing to a
different interest rate applicable to Advances. 
If it shall become unlawful for Agent to continue to fund or maintain
any Advances, upon demand and with as much notice as lawful and/or reasonable
by Agent, Borrowers shall prepay the Advances in full with accrued interest
thereon and all other amounts payable by Borrowers hereunder.

2.9          Additional Costs.  In case any law, regulation, treaty or
official directive or the interpretation or application thereof by any court or
any governmental authority charged with the administration thereof or the
compliance with any guideline or request of any central Agent or other
governmental authority:

(a)           subjects Agent or a
Lender to any tax with respect to payments of principal or interest or any
other amounts payable hereunder by Borrowers or otherwise with respect to the
transactions contemplated hereby (except for taxes on the overall net income of
Agent or such Lender;

(b)           imposes, modifies
or deems applicable any deposit insurance, reserve, special deposit or similar
requirement against assets held by, or deposits in or for the account of, or
loans by, Agent or a Lender; or

(c)           imposes upon Agent
or a Lender any other condition with respect to its performance under this
Agreement,

and the result of any of the foregoing is to increase
the cost to Agent or impose any expense upon Agent with respect to the
Obligations, Agent shall notify Borrowers thereof.  Borrowers agree to pay to Agent the amount of
such increase in cost or additional expense as and when such cost or expense is
incurred or determined, upon presentation by Agent of a statement of the amount
and setting forth Agent’s calculation thereof, all in reasonable detail.

2.10        Term.  This Agreement shall become effective on the
Closing Date and, subject to Section 13.12, shall continue in full force and
effect for so long as any Obligations remain outstanding or Agent has any
obligation to make Credit Extensions under this Agreement.  Notwithstanding the foregoing, Agent shall
have the right to terminate its obligation to make Credit Extensions under this
Agreement immediately upon the occurrence and during the continuance of an
Event of Default.  Notwithstanding
termination, Agent’s Lien on the Collateral shall remain in effect for so long
as any Obligations are outstanding.

3.                                      CONDITIONS
OF LOANS.

3.1          Conditions Precedent to Initial Credit
Extension.  The
obligation of Agent to make the initial Credit Extension is subject to the
condition precedent that Agent shall have received, in form and substance
reasonably satisfactory to Agent, the following:

(a)           this Agreement;

(b)           a legal opinion
from the Borrowers’ counsel;

(c)           a certificate of
the Secretary of each Borrower with respect to incumbency and resolutions
authorizing the execution and delivery of this Agreement in the forms of
Exhibit F-1 and Exhibit F-2 attached hereto;

(d)           a financing
statement (Form UCC-1);

(e)           a Deed of Trust (as
a condition to the Real Estate Advance);

(f)            an appraisal (as a
condition to the Equipment Advance);

(g)           an intellectual
property security agreement;

(h)           an assignment
separate from certificate covering the capital stock of AI;

(i)            an audit of the
Collateral conducted by an auditor satisfactory to Agent, the results of which
shall be reasonably satisfactory to Agent;

(j)            good standing
certificates of each Borrower;

(k)           a Compliance
Certificate in the form of Exhibit C
attached hereto, or other mutually agreeable form of such certificate; and 

(l)            such other
documents, and completion of such other matters, as Agent may reasonably deem
necessary or appropriate.

3.2          Conditions Precedent to all Credit
Extensions.  The
obligation of Agent to make each Credit Extension, including the initial Credit
Extension, is further subject to the following conditions:

(a)           timely receipt by
Agent of the Payment/Advance Form as provided in Section 2.1; 

(b)           the representations
and warranties contained in Section 5 shall be true and correct in all material
respects on and as of the date of such Payment/Advance Form and on the
effective date of each Credit Extension as though made at and as of each such
date, and no Event of Default shall have occurred and be continuing, or would
exist after giving effect to such Credit Extension (provided, however, that
those representations and warranties expressly referring to another date shall
be true, correct and complete in all material respects as of such date).  The making of each Credit Extension shall be
deemed to be a representation and warranty by Borrowers on the date of such
Credit Extension as to the accuracy of the facts referred to in this Section
3.2(b); and

(c)           timely receipt by
Agent of company prepared unaudited consolidated and consolidating balance
sheets and income statements for the most recently ended month in accordance
with Section 6.3 and the delivery of such other documentation specified in
Section 6.3 for the most recently ended month.

4.                                      CREATION
OF SECURITY INTEREST.

4.1          Grant of Security Interest.  Borrowers grant and pledge to Agent a
continuing security interest in all presently existing and hereafter acquired
or arising Collateral in order to secure prompt payment of any and all
Obligations and in order to secure prompt performance by each Borrower of such
Borrower’s covenants and duties under the Loan Documents.  Except as set forth in the Schedule and with
respect to motor vehicles and trailers, such security interest constitutes a
valid, first priority security interest in the presently existing Collateral,
and will constitute a valid, first priority security interest in Collateral
acquired after the date hereof.  

4.2          Pledge of Shares.  ATI pledges, assigns and grants to Agent a
security interest in all the capital stock of AI held or owned of record by
ATI, together with all proceeds and substitutions thereof, all cash, stock and
other moneys and property paid thereon, all rights to subscribe for securities
declared or granted in connection therewith, and all other cash and noncash
proceeds of the foregoing, as security for the performance of the Obligations.  On the Closing Date, the certificate or
certificates for the capital stock of AI will be delivered to Agent,
accompanied by an instrument of assignment duly executed in blank by ATI.  To the extent required by the terms and
conditions governing the capital stock of AI, ATI shall cause the books of AI
and any transfer agent to reflect the pledge of the capital stock of AI.  Unless an Event of Default shall have
occurred and be continuing, ATI shall be entitled to exercise any voting rights
with respect to the relevant capital stock of AI and to give consents, waivers
and ratifications in respect thereof, provided that no vote shall be cast or
consent, waiver or ratification given or action taken which would be
inconsistent with any of the terms of this Agreement or which would constitute
or create any violation of any of such terms. 
All such rights to vote and give consents, waivers and ratifications
shall be suspended upon the occurrence and continuance of an Event of Default.

4.3          Delivery of Additional Documentation
Required.  Borrowers
shall from time to time execute and deliver to Agent, at the request of Agent,
all Negotiable Collateral, all financing statements and other documents that
Agent may reasonably request, in form satisfactory to Agent, to perfect and
continue perfected Agent’s security interests in the Collateral and in order to
fully consummate all of the transactions contemplated under the Loan Documents.

4.4          Right to Inspect.  Agent (through any of its officers,
employees, or agents) shall have the right, as a condition to making any Credit
Extensions and thereafter from time to
time, but no more than twice a year (unless an Event of Default has occurred
which is continuing), to inspect the Borrowers’ Books and to make copies
thereof; provided that Agent shall have only one (1) such inspection right if
the Borrowers comply with Section 6.3 and timely delivers to Agent, within the
time periods for delivery set forth in Section 6.3 below, quarterly
consolidated and consolidating financial statements as set forth in Section 6.3
below.

5.                                      REPRESENTATIONS
AND WARRANTIES.

Each Borrower represents and warrants as follows:

5.1          Due Organization and Qualification.
Each Borrower and each Subsidiary is a corporation or other legal entity duly
existing under the laws of its jurisdiction of organization and qualified and
licensed to do business in any jurisdiction in which the conduct of its
business or its ownership of property requires that it be so qualified except
where the failure to be so qualified would not reasonably likely to have a
Material Adverse Effect.

5.2          Due Authorization; No Conflict.  The execution, delivery, and performance of
the Loan Documents are within each Borrower’s powers, have been duly
authorized, and are not in conflict with, and do not constitute a breach of,
any provision contained in each Borrower’s Certificate of Incorporation or
Bylaws, each as amended to date, nor will they constitute an event of default
under any material agreement to which each Borrower is a party or by which each
Borrower is bound.  Each Borrower is not
in default under any agreement to which it is a party or by which it is bound,
except to the extent such default would not reasonably be expected to cause a
Material Adverse Effect.    

5.3          No Prior Encumbrances.  Borrower have good and marketable title to the
Collateral, free and clear of Liens, except for Permitted Liens as determined
to exist from time to time.  

5.4          Shares.  Borrowers have full power and authority to
create a first lien on the Shares and no disability or contractual obligation
exists that would prohibit the Borrowers from pledging the Shares pursuant to
this Agreement.  There are no
subscriptions, warrants, rights of first refusal or other restrictions on
transfer relative to, or options exercisable with respect to the Shares.  The Shares have been and will be duly
authorized and validly issued, and are fully paid and non-assessable.  The Shares are not the subject of any present
or threatened suit, action, arbitration, administrative or other proceeding,
and the Borrowers know of no reasonable grounds for the institution of any such
proceedings.  

5.5          Bona Fide Accounts.  The Accounts are bona fide existing
obligations.  The property giving rise to
such Accounts has been delivered to the account debtor or to the account debtor’s
agent for immediate shipment to and unconditional acceptance by the account
debtor.

5.6          Merchantable Inventory.  All Eligible Inventory is in all material
respects of good and marketable quality, free from all material defects other
than defects at such rate of occurrence as are customary and usual for
information technology and consumer electronic goods and software.

5.7          Intellectual Property.  Borrowers are the sole owners of the
Intellectual Property, except for non-exclusive licenses granted by Borrowers
to its customers or other third parties in the ordinary course of
business.  Each of the Patents is valid
and enforceable, and no part of the Intellectual Property has been judged
invalid or unenforceable, in whole or in part, and except as disclosed in the
Schedule, no claim has been made that any part of the Intellectual Property
violates the rights of any third party. 
Borrowers’ rights as licensees of any individual licensor of
intellectual property do not give rise to more than five percent (5%) of its
gross revenue in any given quarter, including without limitation revenue
derived from the sale, licensing, rendering or disposition of any product or
service.  Except as set forth in the Schedule,
each Borrower is not a party to, or bound by, any agreement that restricts the
grant by Borrowers of a security interest in Borrowers’ rights under such
agreement other than agreements entered into by each Borrower with licencors,
vendors and business partners in the ordinary course of Borrowers’ business. 

5.8          Name; Location of Chief Executive
Office.  Except as
disclosed in the Schedule, Borrowers have not done business under any name
other than those specified on the signature page hereof.  The chief executive office of each Borrower
is located at the address indicated in Section 10 hereof.

5.9          Litigation.  Except as set forth in the Schedule, there
are no actions or proceedings pending by or against Borrowers or any Subsidiary
before any court or administrative agency in which an adverse decision is
reasonably likely to have a Material Adverse Effect.

5.10        No Material Adverse Change in Financial
Statements.  All
consolidated financial statements other than projections related to Borrowers
and any Subsidiary that are delivered by Borrowers to Agent fairly present in
all material respects Borrowers’ consolidated financial condition as of the
date thereof and Borrowers’ consolidated results of operations for the period
then ended.  There has not been a
material adverse change in the consolidated financial condition of Borrowers
since the date of the most recent of such financial statements submitted to
Agent.

5.11        Solvency, Payment of Debts.  Borrowers, taken as a whole, are solvent and
able to pay their debts (including trade debts) as they mature.

5.12        Regulatory Compliance.  Except as disclosed on the Schedule, Borrowers
and each Subsidiary have met the minimum funding requirements of ERISA with
respect to any employee benefit plans subject to ERISA.  No event has occurred resulting from
Borrowers’ failure to comply with ERISA that is reasonably likely to result in
Borrowers’ incurring any liability that is reasonably likely to have a Material
Adverse Effect.  Borrowers are not an “investment
company” or a company “controlled” by an “investment company” within the
meaning of the Investment Company Act of 1940. 
Borrowers are not engaged principally, or as one of the important
activities, in the business of extending credit for the purpose of purchasing
or carrying margin stock (within the meaning of Regulations T and U of the
Board of Governors of the Federal Reserve System).  Borrowers have complied in all material
respects with all the provisions of the Federal Fair Labor Standards Act.  Borrowers have not violated any statutes,
laws, ordinances or rules applicable to it, violation of which is reasonably
likely to have a Material Adverse Effect.

5.13        Environmental Condition.  Except as disclosed in the Schedule, none of
any Borrower’s or any Subsidiary’s properties or assets has ever been used by
such Borrower or any Subsidiary or, to the best of such Borrower’s actual
knowledge, by previous owners or operators, in the disposal of, or to produce,
store, handle, treat, release, or transport, any hazardous waste or hazardous
substance other than in accordance with applicable law; to the best of Borrower’s
actual knowledge, none of Borrower’s properties or assets has ever been
designated or identified in any manner pursuant to any environmental protection
statute as a hazardous waste or hazardous substance disposal site, or a
candidate for closure pursuant to any environmental protection statute; no lien
arising under any environmental protection statute has attached to any revenues
or to any real or personal property owned by any Borrower or any Subsidiary;
and neither any Borrower nor any Subsidiary has received a summons, citation,
written notice, or written directive from the Environmental Protection Agency
or any other federal, state or other governmental agency concerning any action
or omission by any Borrower or any Subsidiary resulting in the releasing, or
otherwise disposing of hazardous waste or hazardous substances into the
environment.  

5.14        Taxes.  Each Borrower and each Subsidiary has filed
or caused to be filed all tax returns required to be filed, and has paid, or
has made adequate provision for the payment of, all taxes reflected therein.

5.15        Subsidiaries.  Borrower does not own any stock, partnership
interest or other equity securities of any Person, except for Permitted Investments.

5.16        Government Consents.  Borrower and each Subsidiary has obtained all
consents, approvals and authorizations of, made all declarations or filings
with, and given all notices to, all governmental authorities that are necessary
for the continued operation of Borrowers’ business as currently conducted
except where the failure to do so is not reasonably likely to have a Material
Adverse Effect.  

5.17        Full Disclosure.  No representation, warranty or other
statement made by Borrowers in any

certificate or written statement furnished to Agent
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements contained in such certificates
or statements not misleading.

6.                                      AFFIRMATIVE
COVENANTS. 

6.1          Good Standing.  Each Borrower shall maintain its and each of
its Subsidiaries’ legal existence in its jurisdiction of organization and
maintain qualification in each jurisdiction in which the failure to so qualify
is reasonably likely to have a Material Adverse Effect.  Each Borrower shall maintain, and shall cause
each of its Subsidiaries to maintain in force all licenses, approvals and
agreements, the loss of which is reasonably likely to have a Material Adverse Effect.

6.2          Government Compliance.  Borrowers shall meet, and shall cause each
Subsidiary to meet, the minimum funding requirements of ERISA with respect to
any employee benefit plans subject to ERISA. 
Borrowers shall comply, and shall cause each Subsidiary to comply, with
all statutes, laws, ordinances and government rules and regulations to which it
is subject, except where the failure to so comply would not reasonably be
likely to cause a Material Adverse Effect.

6.3          Financial Statements, Reports,
Certificates. 
Borrowers shall deliver or make available to Agent the following, in
each case in form and substance reasonably satisfactory to Agent:  (a) as soon as available, but in any event
within forty-five (45) days after the end of each quarter, Borrowers’
consolidated financial statements, prepared in accordance with GAAP,
consistently applied, together with a Compliance Certificate signed by a
Responsible Officer in substantially the form of Exhibit C; and (b) as soon as
available, but in any event within one -hundred twenty (120) days after the end
of Borrowers’ fiscal year, audited consolidated and consolidating financial
statements of Borrowers prepared in accordance with GAAP, consistently applied,
together with an unqualified opinion on such financial statements of an
independent certified public accounting firm reasonably acceptable to
Agent.  Borrowers shall deliver to Agent
the following, in each case in form and substance reasonably satisfactory to
Agent: (c) as soon as available, but in any event within twenty-five (25) days
after the end of each month: (i) a Borrowing Base Certificate signed by a
Responsible Officer in substantially the form of Exhibit D, (ii) an accounts
receivable (net of Retention Accounts) aging report, (ii) an accounts payable
aging report, (iii) a Domestic Inventory report, (iv) a Retention Accounts
report, and (v) backlog report; (d) promptly upon receipt of notice thereof, a
report of any legal actions pending or threatened in writing against either
Borrower or any Subsidiary that is reasonably likely to result in damages or
costs to Borrowers or any Subsidiary of Five Hundred Thousand Dollars
($500,000) or more; (e) promptly, and in any event within five (5) Business
Days after the discovery thereof, a report signed by a Responsible Officer
notifying Agent of an Event of Default or of any material labor dispute,
material tax dispute, substantive material changes in operations or management
characteristics or any event which with the passing of time or the giving of
notice or both could become an Event of Default hereunder; (f) as frequently as
desired by Borrowers subject to Agent’s consent thereto, updates of (i) the
Schedule and (ii) the representations and warranties in Article 5 to reflect
changes since the most recent making of such representations and warranties;
and (g) such budgets, sales projections, operating plans or other financial
information as Agent may reasonably request from time to time.

6.4          Collateral Audits.  At Borrowers’ expense, Agent shall have a
right to audit Borrowers’ Accounts and appraise Collateral through Agent’s
appointed auditor, provided that such audits will be conducted no more often
than once every 12 months when the outstanding balance of the Revolving Line is
less than $15,000,000 and once every 6 months when the outstanding balance of
the Revolving Line is at least $15,000,000, unless an Event of Default has
occurred and is continuing.  For the
avoidance of doubt, all such audits shall be conducted at Borrower’s
expense.  

6.5          Liquidity Ratio.  Borrowers shall maintain, as of the last day
of each month, a Liquidity Ratio equal to or greater than 1.00 to 1.00.

6.6          Debt to Tangible Net Worth Ratio.  Borrowers shall maintain as of the last day
of each month a Debt to Tangible Net Worth Ratio not greater than 4.00 to 1:00.

6.7          Inventory; Returns.  Borrowers shall cause all returns by their
customers and terminations of customer agreements to be on the same basis and
in accordance with the usual customary practices of Borrowers, as

they exist from time to time.  Borrowers shall promptly notify Agent of all
terminations of customer agreements, and of all customer disputes and customer
claims, where the termination, dispute or claim involves more than Two Million
Dollars ($2,000,000).  

6.8          Taxes.  Each Borrower shall make, and shall cause
each Subsidiary to make, due and timely payment or deposit of all material
federal, state, and local taxes, assessments, or contributions required of it
by law, and will execute and deliver to Agent, on written demand, appropriate
certificates attesting to the payment or deposit thereof; and each Borrower
will make, and will cause each Subsidiary to make, timely payment or deposit of
all material tax payments and withholding taxes required of it by applicable
laws, including, but not limited to, those laws concerning F.I.C.A., F.U.T.A.,
state disability, and local, state, and federal income taxes, and will, upon
written request, furnish Agent with proof satisfactory to Agent indicating that
each Borrower or a Subsidiary has made such payments or deposits; provided that
each Borrower or a Subsidiary need not make any payment if the amount or
validity of such payment is contested in good faith by appropriate proceedings
and is appropriately reserved against (to the extent required by GAAP) by
Borrower.

6.9          Insurance.

(a)           Borrowers, at their
expense, shall keep the Collateral insured against loss or damage by fire,
theft, explosion, sprinklers, and all other hazards and risks, and in such
amounts, as ordinarily insured against by other owners in similar businesses
conducted in the locations where Borrowers’ business is conducted on the date
hereof, provided that such amounts shall at all times be greater than or equal
to the net aggregate value of Borrowers’ Domestic Inventory and domestic
Equipment.  Borrowers shall also maintain
insurance relating to Borrowers’ ownership and use of their property, including
the Real Estate, in amounts and of a type that are customary to businesses
similar to Borrowers’.

(b)           All such policies
of insurance shall be in such form, with such companies, and in such amounts as
reasonably satisfactory to Agent.  All
such policies of property insurance shall contain a lender’s loss payable
endorsement, in a form satisfactory to Agent, showing Agent as an additional
loss payee thereof and all liability insurance policies shall show the Agent as
an additional insured, and shall specify that the insurer must give at least
twenty (20) days’ notice to Agent before canceling its policy for any
reason.  Upon Agent’s request, Borrowers
shall deliver to Agent certified copies of such policies of insurance and
evidence of the payments of all premiums therefor.  All proceeds payable under any such policy
shall, at the option of Agent at any time any Obligations are outstanding, be
payable to Agent to be applied on account of the Obligations.

6.10        Primary Depository.  Borrowers shall maintain their principal
operating and investment accounts with Agent. 
Borrowers may maintain accounts with other financial institutions to the
extent necessary to facilitate payments by Borrowers in the ordinary course of
their business to employees, suppliers and service providers, provided Agent
has a first priority security interest in such accounts.    

6.11        Lockbox.  Whenever applicable, Borrowers shall cause
all remittances in the form of cash or checks made by any account debtor in
respect to any Accounts to be made to an account maintained with Agent or a
post office box under Agent’s control (the “Lockbox”).  Whenever applicable, all invoices and other
instructions submitted by Borrowers to an account debtor relating to Account
payments shall designate the Lockbox as the place to which such payments shall
be made.  In connection therewith,
Borrowers shall execute such documents, including without limitation a lockbox
agreement and take such other actions, as Agent requests from time to time to
effect the provisions of this Section 6.11. 

6.12        Further Assurances.  At any time and from time to time, Borrowers
shall execute and deliver such further instruments and take such further action
as may reasonably be requested by Agent to effect the purposes of this
Agreement.

6.13        Deed of Trust.  AI shall abide by the covenants set forth in
the Deed of Trust.

7.                                      NEGATIVE
COVENANTS.   Neither any Borrower nor
any Subsidiary will do any of the following:

7.1          Dispositions.  Convey, sell, lease, transfer or otherwise
dispose of (collectively, a “Transfer”), or permit any of its Subsidiaries to
Transfer, all or any part of its business, assets or property, other than
Transfers in the ordinary course of business.

7.2          Change in Business.  Engage in or suffer a Change of Control,
engage in any business, or permit any of its Subsidiaries to engage in any
business, other than the businesses currently engaged in by Borrowers and any
business substantially similar or related thereto (or incidental thereto).

7.3          Mergers or Acquisitions.  Without the prior written consent of Agent,
which consent shall not be unreasonably withheld, merge or consolidate, or
permit any of its Subsidiaries to merge or consolidate, with or into any other
business organization (other than mergers or consolidations of a Subsidiary
into another Subsidiary or into any Borrower), or acquire, or permit any of its
Subsidiaries to acquire, all or substantially all of the capital stock or
property of another Person except where (i) such transactions do not in the
aggregate exceed $5,000,000 during any fiscal year, (ii) no Event of Default
has occurred, is continuing or would exist after giving effect to such
transactions, (iii) such transactions do not result in a Change in Control, and
(iv) any Borrower is the surviving entity. 

7.4          Indebtedness.  Create, incur, assume, guarantee or be or
remain liable with respect to any Indebtedness, or permit any Subsidiary so to
do, other than Permitted Indebtedness, or prepay any Indebtedness or take any
actions which impose on any Borrower an obligation to prepay any Indebtedness,
except Indebtedness to Agent.

7.5          Encumbrances.  Create, incur, assume or suffer to exist any
Lien with respect to any of its property, or assign or otherwise convey any
right to receive income, including the sale of any Accounts, or permit any of
its Subsidiaries so to do, except for Permitted Liens, or enter into any
agreement with any Person other than Agent that prohibits or otherwise
restricts any Borrower from encumbering any of its property other than
restrictions in equipment leases or equipment financing documents on Liens on
the specific equipment being leased or financed.

7.6          Distributions.  Pay any dividends or make any other
distribution or payment on account of or in redemption, retirement or purchase
of any capital stock, except that any Borrower may repurchase the stock of
employees or former employees pursuant to stock repurchase agreements as long
as an Event of Default does not exist prior to such repurchase or would not
exist after giving effect to such repurchase without the consent of Agent.

7.7          Investments.  Directly or indirectly acquire or own, or
make any Investment in or to any Person, or permit any of its Subsidiaries so
to do, other than Permitted Investments.

7.8          Transactions with Affiliates.  Except as set forth in the Schedule, directly
or indirectly enter into or permit to exist any material transaction with any
Affiliate of Borrower except for transactions that are in the ordinary course
of Borrower’s business, upon fair and reasonable terms that are no less
favorable to any Borrower than would be obtained in an arm’s length transaction
with a non-affiliated Person.

7.9          Subordinated Debt.  Make any payment in respect of any
Subordinated Debt, or permit any of its Subsidiaries to make any such payment,
except in compliance with the terms of such Subordinated Debt, or amend any
provision contained in any documentation relating to the Subordinated Debt
without Agent’s prior written consent.

7.10        Inventory and Equipment.  Store the Eligible Inventory with a bailee,
warehouseman, or similar party (for the avoidance of doubt, such “similar party”
shall not include a landlord) unless Agent has received a pledge of the
warehouse receipt covering such Inventory. 
Except for Inventory sold in the ordinary course of business and except
for such other locations as Borrowers may determine is reasonably necessary for
the conduct of its business, Borrowers shall keep the Eligible Inventory only
at the location set forth in Section 10 hereof, the locations set forth in the
Schedule and such other locations of which Borrowers give Agent prior
notice.  

7.11        Compliance.  Become an “investment company” or be
controlled by an “investment company,” within the meaning of the Investment
Company Act of 1940, or become principally engaged in, or undertake as one of
its important activities, the business of extending credit for the purpose of
purchasing or carrying margin stock, or use the proceeds of any Credit
Extension for such purpose, or fail to meet the minimum funding requirements of
ERISA, permit a Reportable Event or Prohibited Transaction, as defined in
ERISA, to occur, fail to comply in any material respect with the Federal Fair
Labor Standards Act or violate any law or regulation, which violation is
reasonably likely to have a Material Adverse Effect, or a material adverse
effect on the Collateral or the priority of Agent’s Lien on the Collateral, or
permit any of its Subsidiaries to do any of the foregoing.

7.12        Real Estate Covenant.  ATI shall not allow or permit AI to violate
any of the provisions set forth in the Deed of Trust. 

8.                                      EVENTS
OF DEFAULT.

Any one or more of the following events shall
constitute an Event of Default by Borrowers under this Agreement:

8.1          Payment Default.  If a Borrower fails to pay (a) any of the
Obligations, when due or (b) Agent Expenses within 30 days of invoice date;

8.2          Covenant Default.  If a Borrower fails to perform any obligation
under Article 6 or violate any of the covenants contained in Article 7 of this
Agreement; or if a Borrower fails or neglects to perform, keep, or observe any
other material term, provision, condition, covenant, or agreement contained in
this Agreement, in any of the Loan Documents, or in any other present or future
agreement between a Borrower and Agent and as to any default under such other
term, provision, condition, covenant or agreement that can be cured, has failed
to cure such default within fifteen (15) Business Days after such Borrower
receives notice thereof or any officer of such Borrower becomes aware thereof;
provided, however, that if the default cannot by its nature be cured within
such period or cannot after diligent attempts by such Borrower be cured within
such period, and such default is likely to be cured within a reasonable time,
then such Borrower shall have an additional reasonable period (which shall not
in any case exceed thirty (30) days) or other longer period of time as agreed
upon by Agent in writing to attempt to cure such default, and within such
reasonable time period the failure to have cured such default shall not be
deemed an Event of Default (provided that no Credit Extensions will be required
to be made during such cure period);

8.3          Material Adverse Effect.  If any circumstance arises that has a Material
Adverse Effect;

8.4          Attachment.  If any material portion of a Borrower’s assets
is attached, seized, subjected to a writ or distress warrant, or is levied
upon, or comes into the possession of any trustee, receiver or person acting in
a similar capacity and such attachment, seizure, writ or distress warrant or
levy has not been removed, discharged or rescinded within thirty (30) days or
in any event not less than five (5) Business Days prior to the date of any
proposed sale thereunder, or if a Borrower is enjoined, restrained, or in any
way prevented by court order from continuing to conduct all or any material
part of its business affairs, or if a material judgment or other claim becomes
a lien or encumbrance upon any material portion of a Borrower’s assets, or if a
notice of lien, levy, or assessment is filed of record with respect to any of a
Borrower’s assets by the United States Government, or any department, agency,
or instrumentality thereof, or by any state, county, municipal, or governmental
agency, and the same is not paid within thirty (30) days after a Borrower
receives notice thereof, provided that none of the foregoing shall constitute
an Event of Default where such action or event is stayed or an adequate bond
has been posted pending a good faith contest by such Borrower (provided that no
Credit Extensions will be required to be made during such cure period);

8.5          Insolvency.  If Borrowers, taken as a whole, become
insolvent, or if an Insolvency Proceeding is commenced by a Borrower, or if an
Insolvency Proceeding is commenced against a Borrower and is not dismissed or
stayed within forty five (45) days (provided that no Credit Extensions will be
made prior to the dismissal of such Insolvency Proceeding);

8.6          Other Agreements.  If there shall occur an event which is an
event of default under any

agreement to which a Borrower is a party with the
effect that a Person shall have the right, whether or not exercised, to
accelerate the maturity of any Indebtedness in an amount in excess of Five
Hundred Thousand Dollars ($500,000); provided, however, that the foregoing
event shall not be an Event of Default under this Loan Agreement if the event
of default under such other agreement is cured within any applicable cure
period;

8.7          Subordinated Debt.  If a Borrower makes any payment on account of
Subordinated Debt, except to the extent such payment is allowed under any
subordination agreement entered into with Agent;

8.8          Judgments.  If a judgment or judgments for the payment of
money in an amount, individually or in the aggregate, of at least Two Million
Dollars ($2,000,000) in excess of available insurance coverage by a third party
insurer neither denying nor reserving the right to deny coverage shall be
rendered against a Borrower and shall remain unsatisfied and unstayed for a
period of thirty (30) days or in any event later than five (5) Business Days
prior to the date of any proposed sale to be held by or on behalf of the
judgment creditor to satisfy any such judgment or judgments (provided that no
Credit Extensions will be made prior to the satisfaction or stay of such
judgment);

8.9          Guaranty.  If any guaranty of all or a portion of the
Obligations (a “Guaranty”) ceases for any reason to be in full force and
effect, other than due to the act or omission of Agent or Lenders or any
guarantor fails to perform any obligation under any Guaranty or a security
agreement securing any Guaranty (collectively, the “Guaranty Documents”), or
any event of default occurs under any Guaranty Document or any guarantor
revokes or purports to revoke a Guaranty, or any material misrepresentation or
material misstatement exists now or hereafter in any warranty or representation
set forth in any Guaranty Document or in any certificate delivered to Lender in
connection with any Guaranty Document, or if any of the circumstances described
in Sections 8.3 through 8.9 occurs with respect to any guarantor; or

8.10        Misrepresentations.  If any material misrepresentation or material
misstatement exists now or hereafter in any warranty or representation set
forth herein or in any certificate delivered to Agent by any Responsible
Officer pursuant to this Agreement or to induce Agent to enter into this
Agreement or any other Loan Document.

9.                                      AGENT’S
RIGHTS AND REMEDIES.

9.1          Rights and Remedies.  Upon the occurrence and during the
continuation of an Event of Default when any Obligations are outstanding, Agent
may, at its election, without notice of its election and without demand, do any
one or more of the following, all of which are authorized by Borrowers:

(a)           Declare all
Obligations, whether evidenced by this Agreement, by any of the other Loan
Documents, or otherwise, immediately due and payable (provided that upon the
occurrence of an Event of Default described in Section 8.5 all Obligations
shall become immediately due and payable without any action by Agent);

(b)           Cease advancing
money or extending credit to or for the benefit of Borrowers under this
Agreement or under any other agreement between a Borrower and Agent;

(c)           Require that
Borrowers (i) deposit cash with Agent in an amount equal to the amount of any
Letters of Credit remaining undrawn, as collateral security for the repayment
of any future drawings under such Letter of Credit, and Borrowers shall
forthwith deposit and pay such amounts, and (ii) pay in advance all Letters of
Credit fees scheduled to be paid or payable over the remaining term of the
Letters of Credit;

(d)           Settle or adjust
disputes and claims directly with account debtors for amounts, upon terms and
in whatever order that Agent reasonably considers advisable;

(e)           Make such payments
and do such acts as Agent reasonably considers necessary or reasonable to
protect its security interest in the Collateral;

(f)            Set off and apply
to the Obligations any and all (i) balances and deposits of Borrowers held by
Agent, or (ii) indebtedness at any time owing to or for the credit or the
account of Borrowers held by Agent;

(g)           Ship, store,
finish, repair, prepare for disposition, and dispose of the Collateral in
accordance with the Code, and apply any proceeds to the Obligations in whatever
manner or order Agent deems appropriate, including without limitation the
application of such proceeds to all costs and expenses incurred in connection
with such disposition;

(h)           Effect the transfer
of any securities included in the Collateral (including but not limited to the
Shares) into the name of Agent and cause new certificates representing such
securities to be issued in the name of Agent or its transferee;  

(i)            Agent may credit
bid and purchase at any public sale; and 

(j)            Any deficiency
that exists after disposition of the Collateral as provided above will be paid
immediately by Borrowers.

9.2          Power of Attorney.  Effective only upon the occurrence and during
the continuance of an Event of Default, Borrowers hereby irrevocably appoint
Agent (and any of Agent’s designated officers, or employees) as each Borrower’s
true and lawful attorney to:  (a) send
requests for verification of Accounts or notify account debtors of Agent’s
security interest in the Accounts; (b) endorse a Borrower’s name on any checks
or other forms of payment or security that may come into Agent’s possession;
(c) sign a Borrower’s name on any invoice or bill of lading relating to any
Account, drafts against account debtors, schedules and assignments of Accounts,
verifications of Accounts, and notices to account debtors; (d) dispose of any
Collateral; (e) make, settle, and adjust all claims under and decisions with
respect to a Borrower’s policies of insurance; (f) settle and adjust disputes
and claims respecting the accounts directly with account debtors, for amounts
and upon terms which Agent determines to be reasonable; (g) file, in its sole
discretion, one or more financing or continuation statements and amendments
thereto, relative to any of the Collateral without the signature of Borrowers
where permitted by law; and (h) dispose of the Collateral to the extent
permitted under the Code; provided Agent may exercise such power of attorney to
sign the name of a Borrower on any of the stock powers described in Section 4
regardless of whether an Event of Default has occurred.  The appointment of Agent as each Borrower’s
attorney in fact, and each and every one of Agent’s rights and powers, being
coupled with an interest, is irrevocable until all of the Obligations have been
fully repaid and performed and Agent’s obligation to provide advances hereunder
is terminated.

9.3          Accounts Collection.  After the occurrence of an Event of Default
that continues, Agent may notify any Person owing funds to Borrower of Agent’s
security interest in such funds and verify the amount of such Account.  Each Borrower shall collect all amounts owing
to such Borrower for Agent, receive in trust all payments as Agent’s trustee,
and immediately deliver such payments to Agent in their original form as
received from the account debtor, with proper endorsements for deposit.

9.4          Right of Set-off.  Subject to Section 2, in addition to any
rights now or hereafter granted under applicable law or otherwise, and not by
way of limitation of any such rights, upon the occurrence and during the
continuation of an Event of Default, each Lender is authorized at any time or
from time to time, without presentment, demand, protest or other notice of any
kind to Borrowers or to any other Person, any such notice being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by
such Lender (including, without limitation, by branches and agencies of such
Lender wherever located) to or for the credit or the account of a Borrower
against and on account of the Obligations and liabilities of a Borrower to such
Lender under this Agreement or under any of the other Loan Documents, and all
other claims of any nature or description arising out of or connected with this
Agreement or any other Loan Document, irrespective of whether or not such
Lender shall have made any demand hereunder and although said Obligations,
liabilities or claims, or any of them, shall be contingent or unmatured.  Notwithstanding the foregoing provisions of
this Section, if at any time the Credit Extensions are secured by real
property, no Lender shall exercise a right of setoff, banker’s lien or
counterclaim or take any court or administrative action to enforce any
provision of the Credit Documents if such action would constitute an “action”
within the meaning of Section 726 of the California Code of Civil Procedure
without obtaining the prior consent of Agent and the other Lender,

and any attempted exercise by any Lender of any such
action without first obtaining such consent shall be null and void.  The provisions of the preceding sentence are
solely for the benefit of the Lenders and no Borrower shall have any rights
therein.

9.5          Agent and Lender Expenses.  If Borrowers fail to pay any amounts or
furnish any required proof of payment due to third persons or entities, as
required under the terms of this Agreement, then Agent may do any or all of the
following after reasonable notice to Borrowers: 
(a) make payment of the same or any part thereof; (b) set up such
reserves under the Revolving Facility as Agent deems necessary to protect Agent
from the exposure created by such failure; or (c) obtain and maintain insurance
policies of the type discussed in Section 6.9 of this Agreement, and take any
action with respect to such policies as Agent deems prudent.  Any amounts so paid or deposited by Agent
shall constitute Agent Expenses, shall be immediately due and payable, and
shall bear interest at the then applicable rate hereinabove provided, and shall
be secured by the Collateral.  Any
payments made by Agent shall not constitute an agreement by Agent to make
similar payments in the future or a waiver by Agent of any Event of Default
under this Agreement.  After the
occurrence of an Event of Default which continues, Borrowers shall reimburse
each Lender, upon demand, for all costs and expenses, including reasonable
attorney’s fees, incurred in connection with any of the Loan Documents.

9.6          Shares.  Each Borrower recognizes that Agent may be
unable to effect a public sale of any or all the Shares, by reason of certain
prohibitions contained in federal securities laws and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof.  Each Borrower acknowledges and agrees that
any such private sale may result in prices and other terms less favorable than
if such sale were a public sale and, notwithstanding such circumstances, agrees
that any such private sale shall be deemed to have been made in a commercially
reasonable manner.  Agent shall be under
no obligation to delay a sale of any of the Shares for the period of time
necessary to permit the issuer thereof to register such securities for public
sale under federal securities laws or under applicable state securities laws,
even if such issuer would agree to do so. 
Upon the occurrence of an Event of Default which continues, Agent shall
have the right to exercise all such rights as a secured party under the
California Uniform Commercial Code as it, in its sole judgment, shall deem
necessary or appropriate, including without limitation the right to liquidate
the Shares and apply the proceeds thereof to reduce the Obligations.  Effective only upon the occurrence and during
the continuance of an Event of Default, each Borrower hereby irrevocably
appoints Agent (and any of Agent’s designated officers, or employees) as such Borrower’s
true and lawful attorney to enforce such Borrower’s rights against any
Subsidiary, including the right to compel any Subsidiary to make payments or
distributions owing to such Borrower.  

9.7          Agent’s Liability for Collateral.  So long as Agent (i) complies with reasonable
banking practices, (ii) is not grossly negligent, or (iii) does not engage in
willful misconduct with respect to the Collateral, Agent shall not in any way
or manner be liable or responsible for: 
(a) the safekeeping of the Collateral; (b) any loss or damage thereto
occurring or arising in any manner or fashion from any cause; (c) any
diminution in the value thereof; or (d) any act or default of any carrier,
warehouseman, bailee, forwarding agency, or other person whomsoever.  All risk of loss, damage or destruction of
the Collateral not consented to by Agent shall be borne by Borrower.  Any surplus remaining after payment in full
of the Obligations from the proceeds of the liquidation of any of the
Collateral, shall be paid to Borrower as provided by law.

9.8          Remedies Cumulative.  Agent’s remedies under this Agreement, the
Loan Documents, and all other agreements shall be cumulative but such remedies
may only be exercised, if at all, following and during the continuation of an
Event of Default.  Agent shall have all
other rights and remedies not inconsistent herewith as provided under the Code,
by law, or in equity.  No exercise by
Agent of one right or remedy shall be deemed an election, and no waiver by
Agent of any Event of Default on a Borrower’s part shall be deemed a continuing
waiver.  No delay by Agent shall
constitute a waiver, election, or acquiescence by it.  No waiver by Agent shall be effective unless
made in a written document signed on behalf of Agent and then shall be
effective only in the specific instance and for the specific purpose for which
it was given.

9.9          Demand; Protest.  Each Borrower waives demand, protest, notice
of protest, notice of default or dishonor, notice of payment and nonpayment,
notice of any default, nonpayment at maturity, release, compromise, settlement,
extension, or renewal of accounts, documents, instruments, chattel paper, and
guarantees at any time held

by Agent on which a Borrower may in any way be liable.

10.                               NOTICES.

Unless otherwise provided in this Agreement, all
notices or demands by any party relating to this Agreement or any other
agreement entered into in connection herewith shall be in writing and (except
for financial statements and other informational documents which may be sent by
first-class mail, postage prepaid) shall be personally delivered or sent by a
recognized overnight delivery service, certified mail, postage prepaid, return
receipt requested, or by facsimile to Borrowers or to Agent, as the case may
be, at its addresses set forth below:

	
  If to Borrower:

  	
   

  	
  Aviza Technology, Inc.

  
	
   

  	
   

  	
  440 Kings
  Village Road

  
	
   

  	
   

  	
  Scotts Valley,
  CA 95066

  
	
   

  	
   

  	
  Attn: Patrick
  O’Connor and John Joy

  
	
   

  	
   

  	
  Fax:
  831-439-6320

  
	
   

  	
   

  	
   

  
	
  If to Agent:

  	
   

  	
  United Commercial Bank

  
	
   

  	
   

  	
  5201 Great
  America Parkway, #300

  
	
   

  	
   

  	
  Santa Clara, CA
  95054-1140

  
	
   

  	
   

  	
  Attn: Yu-Fu Lin

  
	
   

  	
   

  	
  FAX: (408)
  748-1268

  

 

The parties hereto may change the address at which
they are to receive notices hereunder, by notice in writing in the foregoing
manner given to the other.  

11.                               JURY
TRIAL WAIVER, JUDICIAL REFERENCE.

BORROWERS, LENDERS AND AGENT EACH HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREIN, INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS.  EACH PARTY RECOGNIZES AND AGREES THAT THE
FOREGOING WAIVER CONSTITUTES A MATERIAL INDUCEMENT FOR IT TO ENTER INTO THIS
AGREEMENT.  EACH PARTY REPRESENTS AND
WARRANTS THAT IT HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL AND THAT IT
KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION
WITH LEGAL COUNSEL.  IF THIS JURY TRIAL
WAIVER IS NOT ENFORCEABLE THE PARTIES HERETO WILL RESOLVE ALL CLAIMS, DISPUTES
AND OTHER MATTERS BY JUDICIAL REFERENCE UNDER CODE OF CIVIL PROCEDURE SECTION
638 ET SEQ. BEFORE A MUTUALLY ACCEPTABLE REFEREE OR, IF NONE, BY A REFEREE
APPOINTED BY THE PRESIDING JUDGE OF THE CALIFORNIA SUPERIOR COURT FOR SANTA
CLARA COUNTY.

12.                               THE
AGENT.

12.1        Authorization and Action.  Each Lender appoints and authorizes Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to Agent by the terms hereof, together with such
powers as are reasonably incidental thereto. 
As to any matters not expressly provided for by this Agreement
(including enforcement or collection of the Notes), Agent shall not be required
to exercise any discretion or take any action, but shall be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) upon the instructions of the Majority Lenders, and such
instructions shall be binding upon all Lenders and all holders of Notes;
provided, however, that Agent shall not be required to take any action that
exposes Agent to personal liability or that is contrary to this Agreement or
applicable law.  Except as otherwise
provided for in this Agreement, no Lender shall take any action to collect
amounts due hereunder, enforce any obligations of Borrowers or exercise any
remedies against Borrowers arising out of this Agreement without the prior
written consent of Agent.  Agent agrees
to give to each Lender prompt notice of (a) each notice or report given to it
by Borrowers pursuant to the terms of this Agreement (including but not limited
to those set forth in Section 6.3

hereof), and (b) any Event of Default hereunder.  The provisions of this Article 12 are solely
for the benefit of Lenders and Agent and no Borrower has any rights as a third
party beneficiary of any of the provisions hereof. 

12.2        Agent’s Reliance, Etc.  Neither Agent nor any of its directors,
officers, agents or employees shall be liable for any action taken or omitted
to be taken by it or them under or in connection with this Agreement, except
for its or their own gross negligence or willful misconduct.  Without limitation of the generality of the
foregoing, Agent:  (i) may treat the
payee of any Note as the holder thereof until Agent receives written notice of
the assignment or transfer thereof signed by such payee and in form
satisfactory to Agent; (ii) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken in good faith by it in accordance with the
advice of such counsel, accountants or experts; (iii) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement; (iv) shall not have any duty to ascertain or to inquire as to the
performance or observance of any of the terms, covenants or conditions of this
Agreement on the part of Borrowers or to inspect the property (including the
books and records) of Borrowers; (v) shall not be responsible to any Lender for
the due execution, legality, validity, enforceability, genuineness, sufficiency
or value of this Agreement or any other instrument or document furnished
pursuant hereto; and (vi) shall incur no liability under or in respect of this
Agreement by acting upon any notice, consent, certificate or other instrument
or writing believed by it to be genuine and signed or sent by the proper party
or parties.

12.3        Agent and Affiliates.  With respect to its obligations hereunder,
the Advances made by it, and the Note issued to it, Agent shall have the same
rights and powers under this Agreement as any other Lender and may exercise the
same as though it were not Agent; and the term “Lender” or “Lenders” shall,
unless otherwise expressly indicated, include Agent in its individual
capacity.  Agent and its respective
Affiliates may accept deposits from, lend money to, act as trustee under indentures
of, and generally engage in any kind of business with, Borrowers, any
subsidiaries of a Borrower, and any Person who may do business with or own
securities of a Borrower or any subsidiary of a Borrower, all as if Agent were
not Agent, and without any duty to account therefor to Lenders.

12.4        Lender Credit Decision.  Each Lender acknowledges that it has,
independently and without reliance upon Agent or any other Lender and based on
such documents and information as it has deemed appropriate, made its own
credit analysis and decision to enter into this Agreement.  Each Lender also acknowledges that it will,
independently and without reliance upon Agent or any other Lender and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking action under
this Agreement.

12.5        Indemnification.  Lenders shall indemnify Agent (to the extent
not reimbursed by Borrowers), ratably according to the respective principal
amounts of the Notes then held by each of them (or if no Notes are at the time
outstanding or if any Notes are held by Persons who are not Lenders, ratably
according to the respective amounts of their Credit Commitments), from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against
Agent in any way relating to or arising out of this Agreement or any action
taken or omitted by Agent under this Agreement in its capacity as Agent,
provided that no Lender shall be liable for any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting from Agent’s gross negligence or willful
misconduct.  Without limiting the
foregoing, each Lender shall reimburse Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred by
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, to the extent that Agent is not
reimbursed for such expenses by Borrowers. 
Notwithstanding the foregoing, to the extent that both Lenders and
Borrowers have indemnification obligations with respect to any matter, the indemnification
obligations of Borrowers shall be primary and the indemnification obligations
of Lenders shall be secondary with respect to such matter, and if Agent shall
recover any amount from Borrowers with respect to a Borrower’s indemnification
obligation for which the Agent has received any payment from Lenders, Agent
shall return to such contributing Lenders on a pro rata basis any amount in
excess of the amount necessary to fully indemnify Agent

12.6        Successor Agent.  Agent may resign at any time by giving written
notice thereof to Lenders and Borrowers and may be removed at any time with or
without cause by the Majority Lenders. 
Upon any such

resignation or removal, the Majority Lenders shall
have the right to appoint a successor Agent with the prior consent of
Borrowers, which consent shall not be unreasonably withheld or delayed,
provided that such consent of the Borrowers shall not be required at any time
an Event of Default exists and continues. 
If no successor Agent shall have been so appointed by the Majority
Lenders, and shall have accepted such appointment, within thirty (30) days
after the retiring Agent’s giving of notice of resignation or the Majority
Lenders’ removal of the retiring Agent, then the retiring Agent may, on behalf
of the Lenders, appoint a successor Agent, which shall be a commercial Lender
organized under the laws of the United States or of any State thereof and
having a combined capital and surplus of at least One-Hundred Million Dollars
($100,000,000).  Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Agent, and the retiring Agent shall be
discharged from its duties and obligations as Agent under this Agreement.  After any retiring Agent’s resignation or
removal hereunder as Agent, the provisions of this Article 12 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement.

13.                               CO-BORROWERS.  

13.1        Co-Borrowers.  Borrowers are jointly and severally liable
for the Obligations and Agent may proceed against one Borrower to enforce the
Obligations without waiving its right to proceed against the other Borrower.  This Agreement and the Loan Documents are a
primary and original obligation of each Borrower and shall remain in effect
notwithstanding future changes in conditions, including any change of law or
any invalidity or irregularity in the creation or acquisition of any
Obligations or in the execution or delivery of any agreement between Agent and
any Borrower.  Each Borrower shall be
liable for existing and future Obligations as fully as if all of the Advance
was advanced to such Borrower.  Agent may
rely on any certificate or representation made by any Borrower as made on
behalf of, and binding on, all Borrowers. 
Each Borrower appoints each other Borrower as its agent with all
necessary power and authority to give and receive notices, certificates or
demands for and on behalf of both Borrowers, to act as disbursing agent for
receipt of any loans on behalf of each Borrower and to apply to Agent on behalf
of each Borrower for the Advance, any waivers and any consents.  This authorization cannot be revoked, and
Agent need not inquire as to one Borrower’s authority to act for or on behalf
of another Borrower.

13.2        Subrogation and Similar Rights.  Each Borrower irrevocably waives, until all
Obligations are satisfied, all rights that it may have at law or in equity
(including, without limitation, any law subrogating the Borrower to the rights
of Agent under the Loan Documents) to seek contribution, indemnification, or
any other form of reimbursement from any other Borrower, or any other Person
now or hereafter primarily or secondarily liable for any of the Obligations,
for any payment made by the Borrower with respect to the Obligations in
connection with the Loan Documents or otherwise and all rights that it might
have to benefit from, or to participate in, any security for the Obligations as
a result of any payment made by the Borrower with respect to the Obligations in
connection with the Loan Documents or otherwise.  Any agreement providing for indemnification,
reimbursement or any other arrangement prohibited under this Section shall be
subject and subordinate to the rights and Lien of Agent and Lenders under this
Agreement and the other Loan Documents. 
If any payment is made to a Borrower in contravention of this Section,
such Borrower shall hold such payment in trust for Agent and such payment shall
be promptly delivered to Agent for application to the Obligations, whether
matured or unmatured.

13.3        Waivers of Notice.  Each Borrower waives, to the extent permitted
by law, notice of acceptance hereof; notice of the existence, creation or
acquisition of any of the Obligations; notice of an Event of Default except as
set forth herein; notice of the amount of the Obligations outstanding at any
time; notice of any adverse change in the financial condition of any other
Borrower or of any other fact that might increase the Borrower’s risk;
presentment for payment; demand; protest and notice thereof as to any
instrument; and all other notices and demands to which the Borrower would
otherwise be entitled by virtue of being a co-borrower or a surety.  Each Borrower waives any defense arising from
any defense of any other Borrower, or by reason of the cessation from any cause
whatsoever of the liability of any other Borrower.  Agent’s failure at any time to require strict
performance by any Borrower of any provision of the Loan Documents shall not
waive, alter or diminish any right of Agent thereafter to demand strict
compliance and performance therewith. 
Each Borrower also waives any defense arising from any act or omission
of Agent that changes the scope of the Borrower’s risks hereunder.  Each Borrower hereby waives any right to
assert against Agent any defense (legal or equitable), setoff, counterclaim, or
claims that such Borrower individually may now or hereafter have against another
Borrower or any other Person liable to Agent with respect to the Obligations in
any manner or whatsoever.

13.4        Subrogation Defenses.  Until all Obligations are paid in full and
Agent has no further obligation to make Credit Extensions to Borrower, each
Borrower hereby waives any defense based on impairment or destruction of its
subrogation or other rights against any other Borrower and waives all benefits
which might otherwise be available to it under California Civil Code Sections
2809, 2810, 2819, 2839, 2845, 2848, 2849, 2850, 2899, and 3433 and California
Code of Civil Procedure Sections 580a, 580b, 580d and 726, as those statutory
provisions are now in effect and hereafter amended, and under any other similar
statutes now and hereafter in effect.

13.5        Right to Settle, Release.  

(a)           The liability of
Borrowers hereunder shall not be diminished by (i) any agreement, understanding
or representation that any of the Obligations is or was to be guaranteed by
another Person or secured by other property, or (ii) any release or unenforceability,
whether partial or total, of rights, if any, which Agent may now or hereafter
have against any other Person, including another Borrower, or property with
respect to any of the Obligations.

(b)           Without notice to
any given Borrower and without affecting the liability of any given Borrower
hereunder, Agent may (i) compromise, settle, renew, extend the time for
payment, change the manner or terms of payment, discharge the performance of,
decline to enforce, or release all or any of the Obligations with respect to
any other Borrower by written agreement with such other Borrower, (ii) grant
other indulgences to another Borrower in respect of the Obligations, (iii)
modify in any manner any documents relating to the Obligations with respect to
any other Borrower by written agreement with such other Borrower, (iv) release,
surrender or exchange any deposits or other property securing the Obligations,
whether pledged by a Borrower or any other Person, or (v) compromise, settle,
renew, or extend the time for payment, discharge the performance of, decline to
enforce, or release all or any obligations of any guarantor, endorser or other
Person who is now or may hereafter be liable with respect to any of the
Obligations.

13.6        Subordination.  All indebtedness of a Borrower now or
hereafter arising for borrowed money held by another Borrower is subordinated
to the Obligations and the Borrower holding the indebtedness shall take all
actions reasonably requested by Agent to effect, to enforce and to give notice
of such subordination.

14.                               MISCELLANEOUS.

14.1        Amendments.  No amendment or waiver of any provision of
the Loan Documents nor consent to any departure by a Borrower therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Majority Lenders, and then such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which given; provided,
however, that no amendment, waiver or consent shall, unless in writing and
signed by all the Lenders, do any of the following:  (a) waive any of the conditions specified in
Section 3.1, (b) reduce the principal of, or interest on, the Notes or any fees
or other amounts payable hereunder, (c) postpone any date fixed for, or amount
of, any payment of principal of, or interest on, the Notes or any fees or other
amounts payable hereunder, (d) increase the Credit Commitment of any Lender,
(e) change the percentage of the Credit Commitments or of the aggregate unpaid
principal amount of the Notes, that shall be required for the Lenders or any of
them to take any action hereunder, or release any material portion of any
Collateral, (f) amend the definition of “Majority Lenders” set forth in Article
1, or (g) amend this Section 14.1; and provided, further, that no amendment,
waiver or consent shall, unless in writing and signed by Agent in addition to
the Lenders required above to take such action, affect the rights or duties of
Agent under this Agreement or any other Loan Document.  With the consent of the Agent, additional
Lenders may execute this Agreement, and, as a consequence of such additions,
the aggregate Credit Commitments hereunder may be increased.  Upon the concurrence of Agent and Borrowers,
any Lender may be replaced and the Credit Commitments hereunder adjusted
accordingly.

14.2        Notices, Etc.  Except as otherwise set forth in this
Agreement, all notices and other communications provided for hereunder shall be
in writing (including telex or facsimile communication) and mailed or sent by
facsimile or delivered, if to the Borrowers, at the address set forth in
Section 10 hereof; if to any Borrower, at its address set forth on the
signature page hereof; and if to any Lender, or an Agent, at its address set
forth on the signature page hereof; or, as to each party, at such other address
as shall be designated by such party in a written notice to the other
parties.  All such notices and
communications shall be effective three (3) Business Days after deposit in the
U.S. mail, postage prepaid, when sent by facsimile, or when delivered,
respectively.

14.3        Additional Lenders; Assignments;
Participations.

(a)           None of the Loan
Documents nor any rights thereunder may be assigned by Borrowers (other than
assignments between and among Borrowers and assignments to a Subsidiary in
circumstances not otherwise constituting an Event of Default) without the prior
written consent of all the Lenders, which consent may be granted or withheld in
the Lenders’ sole discretion.  Upon prior
written notice to Borrowers, any Lender may assign, from time to time, all or
any portion of its Pro Rata Share of the Credit Commitments and its Note in an
amount not less than the lesser of (i) $5,000,000 or (iii) one hundred percent
(100%) of such Lender’s interest in the Credit Commitments and Note to (i) an
Affiliate of that Lender, without the prior written approval of Agent or
Borrowers, or (ii) any other financial institution acceptable to Agent which is
an Eligible Assignee, provided that an assignee may not assign its interest (A)
to any Person who is not itself an Eligible Assignee and (B) without notice to
Borrowers and the consent of the Agent, and provided further that the parties
to each such assignment shall execute and deliver to Agent and Borrowers an
assignment agreement in a form acceptable to Agent.  Upon (A) such execution and delivery and (B)
except in the case of an assignment pursuant to clause (i) of the preceding
sentence, payment of a fee in the amount of $2,500 to Agent to cover administrative
costs, from and after the effective date of such assignment (x) the assignee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been assigned to it, have the rights and obligations
of a Lender hereunder and (y) the Lender assignor thereunder shall, to the
extent that rights and obligations hereunder have been assigned by it,
relinquish its rights and be released from its obligations under this Agreement
(other than pursuant to Section 14.4(f)), and, in the case of an assignment
covering all or the remaining portion of an assigning Lender’s rights and
obligations under this Agreement, such Lender shall cease to be a party hereto,
subject to its continuing obligations under Section 14.4(f).  The Credit Commitments hereunder shall be
modified to reflect the Credit Commitment of such assignee, and, if any such
assignment occurs while any Notes are outstanding, new Notes shall, upon the
surrender of the assigning Lender’s Notes, be issued to such assignee and to
the assigning Lender as necessary to reflect the new Credit Commitments of the
assigning Lender and of its assignee.

(b)           If, in connection
with any proposed amendment, waiver or consent to any of the provisions of this
Agreement or any other Loan Document as contemplated by Section 14.1, the consent
of the Majority Lenders or the unanimous consent of all Lenders is required but
cannot be obtained for the lack of consent by a Lender, then the Agent shall
have the right, but not the obligation, to cause any such non-accepting or
non-consenting Lender (each, a “Replaced Lender”) to assign (a “Forced
Assignment”) all of the Credit Commitments and other rights and obligations of
the Replaced Lender under the Loan Documents to another Person (which may be a
Lender or any other Person reasonably acceptable to the Borrowers (such Lender
or other Person, a “Replacement Lender”)) identified by the Agent in writing to
the Replaced Lender, provided that such Replacement Lender is willing to
consent to the proposed amendment, waiver or consent.

If a Forced Assignment occurs, the Replaced Lender and
the Replacement Lender shall enter into an Assignment and Acceptance, in form
and substance acceptable to Agent, pursuant to which the Replacement Lender
shall acquire all of the outstanding Credit Commitments of the Replaced Lender
and, in connection therewith, shall pay to the Replaced Lender in respect
thereof an amount equal to the sum of (a) an amount equal to the principal of,
and all accrued interest on, all outstanding Credit Commitments of the Replaced
Lender, and (b) an amount equal to all accrued, but theretofore unpaid, fees,
expenses and other reimbursable costs owing to the Replaced Lender under the
Loan Documents.  Upon (i) the execution
of an Assignment and Acceptance in connection with a Forced Assignment by the
Replaced Lender and the Replacement Lender; (ii) delivery of a copy of such
Assignment and Acceptance to the Agent, together with payment instructions,
addresses and related information with respect to the Replacement Lender; (iii)
the payment to the Replaced Lender by the Replacement Lender of the amounts
referred to in the preceding sentence; (iv) the payment to the Replaced Lender
by the Borrowers of all obligations of the Borrowers due and owing to the
Replaced Lender at such time (other than those specifically described in the
preceding sentence); (v) the payment to the Agent by the Replacement Lender of
a $3,500 processing fee; and (vi) if so requested by the Replacement Lender,
delivery to the Replacement Lender of the appropriate Note or Notes executed by
the Borrowers, the Replacement Lender shall become a Lender hereunder and the
Replaced Lender shall cease to constitute a Lender hereunder, except with
respect to indemnification provisions under this Agreement (including, without
limitation, Section 14.9), which shall survive as to such Replaced Lender with
respect to any liabilities incurred by such Replaced Lender relating to periods
prior to the date such Replaced Lender ceased to be a Lender hereunder.

(c)           Each Lender may
sell, negotiate or grant participations to other parties who are Eligible
Assignees in all or part of the obligations of the Borrowers outstanding under
the Loan Documents, upon notice to the Agent and the Borrowers; provided that
any such sale, negotiation or participation shall be in compliance with the
applicable federal and state securities laws and the other requirements of this
Section 14.3.  No participant shall
constitute a “Lender” under any Loan Document, and Borrowers shall continue to
deal solely and directly with Agent and the Lenders.  No such participant is intended to be a third
party beneficiary of the provisions of this Agreement or the other Loan
Documents, permitted to enforce any of the provisions hereof or thereof.

(d)           Each
Lender may disclose to any proposed assignee or participant any information
relating to Borrowers or any Subsidiary of a Borrower; provided, that prior to
such disclosure such proposed assignee or participant shall have agreed in
writing to keep any such information confidential substantially on the terms of
Section 14.3(f).

(e)           The grant of a
participation interest shall be on such terms as the granting Lender determines
are appropriate, provided only that (i) the holder of such a participation
interest shall not have any of the rights of a Lender under this Agreement,
(ii) the consent of the holder of such a participation interest shall not be
required for amendments or waivers of provisions of the Loan Documents other
than those that (A) extend the term of the Credit Commitments, (B) decrease the
rate of interest or the amount of any fee or any other amount payable to the
Lenders under the Loan Documents, (C) reduce the principal amount payable under
the Loan Documents, or (D) extend the date fixed for the payment of principal or
interest or any other amount payable under the Loan Documents, and (iii) the
holder may not transfer or participate any of its interest without the consent
of the Agent.

(f)            Each Lender
understands that some of the information and documents furnished to it pursuant
to this Agreement may be confidential and each Lender agrees that it will keep
all non-public information, documents and agreements so furnished to it
confidential and will make no disclosure to other Persons of such information
or agreements until it shall have become public, except (i) to the extent
required in connection with matters involving operations under or enforcement
or amendment of the Loan Documents; (ii) to such Lender’s examiners and
auditors or in accordance with such Lender’s obligations under law or
regulations or pursuant to subpoenas or other process to make information
available to governmental agencies and examiners or to others; (iii) to any
corporate parent of any Lender so long as such parent agrees to accept such
information or agreement subject to the restrictions provided in this Section
14.3(f); (iv) to any participant Lender or trust company of any Lender so long
as such participant shares the corporate parent with such Lender and agrees to
keep such information, documents or agreement confidential in accordance with
the restrictions provided in this Section 14.3(f); (v) to Agent or to any other
Lender and their respective counsel and other professional advisors and to its
own counsel and professional advisors so long as such Persons are instructed to
keep such information confidential in accordance with the provisions of this
Section 14.3(f); (vi) to proposed assignees and participants in accordance with
Section 14.3(d); (vii) as Agent or Lender determines appropriate after the
occurrence of an Event of Default; and (viii) with the prior written consent of
the Borrowers.

14.4        Effectiveness; Binding Effect; Governing
Law.  This Agreement
shall become effective when it shall have been executed by the Borrowers, Agent
and each Lender and thereafter shall be binding upon and inure to the benefit
of the Borrowers, the Agent, each Lender and their respective successors and
assigns, except that the Borrowers shall not have the right to assign its
rights hereunder or any interest herein without the prior written consent of
Agent and all the Lenders.  THIS
AGREEMENT AND THE NOTES SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF CALIFORNIA WITHOUT GIVING EFFECT TO ITS CHOICE OF LAW
DOCTRINE.

14.5        Consent to Jurisdiction; Venue; Agent
for Service of Process. 
All judicial proceedings brought against any party to this Agreement
with respect to this Agreement and the Loan Documents may be brought in any
state or federal court of competent jurisdiction in the County of Santa Clara
in the State of California, and by execution and delivery of this Agreement,
each party hereto accepts for itself and in connection with its properties,
generally and unconditionally, the nonexclusive jurisdiction of the aforesaid
courts, and irrevocably agrees to be bound by any judgment rendered thereby in
connection with this Agreement.  Each
party irrevocably waives any right it may have to assert the doctrine of forum
non conveniens or to object to venue to the extent any proceeding is brought in
accordance with this Section.  Each party
designates and appoints its respective Responsible Officer,

from time to time, and such other Persons as may
hereafter be selected by such party irrevocably agreeing in writing to so serve
as its agent to receive on its behalf service of all process in any such
proceedings in any such court, such service being hereby acknowledged by such
party to be effective and binding service in every respect.  A copy of any such process so served shall be
mailed by registered mail to a party at the address provided in Section 10
hereto, except that unless otherwise provided by applicable law, any failure to
mail such copy shall not affect the validity of service of process.  If any agent appointed by a party refuses to
accept service, such party hereby agrees that service upon it by mail shall
constitute sufficient notice.  Nothing
herein shall affect the right to serve process in any other manner permitted by
law or shall limit the right of a party hereto to bring proceedings against
another in courts of any jurisdiction.

14.6        Entire Agreement.  This Agreement with Exhibits and Schedules
and the other Loan Documents embody the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that any
financing statements previously filed for the benefit of Agent and/or any
Lender shall continue to perfect Agent’s security interest in the Collateral.

14.7        Separability of Provisions.  In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein shall not in any way be affected or impaired thereby.

14.8        Obligations Several.  The obligation of each Lender hereunder is
several, and no Lender shall be responsible for the obligation or commitment of
any other Lender hereunder.  Nothing
contained in this Agreement and no action taken by the Lenders pursuant hereto
shall be deemed to constitute the Lenders to be a partnership, an association,
a joint venture or any other kind of entity.

14.9        Indemnification.  Each Borrower shall indemnify, defend, protect
and hold harmless Agent, each Lender and their respective officers, employees,
and agents against:  (a) all obligations,
demands, claims, and liabilities claimed or asserted, in each case, in writing,
by any other party in connection with the transactions evidenced by the Loan
Documents; and (b) all losses or Lender Expenses in any way actually incurred
or paid as a result of or in any way arising out of the transactions between
Agent or such Lender and such Borrower under the Loan Documents (including
without limitation reasonable attorneys fees and expenses), except for losses
or expenses under (a) or (b) above caused by Agent’s or such Lender’s or their
respective officers’, employees’ and agents’ gross negligence or willful
misconduct.

14.10      Time of Essence.  Time is of the essence for the performance of
all obligations set forth in this Agreement.

14.11      Counterparts.  This Agreement may be executed in any number
of counterparts and by different parties on separate counterparts, each of
which, when executed and delivered, shall be deemed to be an original, and all
of which, when taken together, shall constitute but one and the same
Agreement.  Delivery of an executed
counterpart of a signature page of this Agreement by telecopy shall be
effective as delivery of a manually executed counterpart of this
Agreement.  Delivery of manually executed
counterparts of this Agreement shall immediately follow delivery by telecopy.

14.12      Survival.  All covenants, representations and warranties
made in this Agreement shall continue in full force and effect so long as any
Obligations remain outstanding.  The
obligations of Borrowers to indemnify Agent and Lenders with respect to the
expenses, damages, losses, costs and liabilities described in Section 14.9
shall survive until all applicable statute of limitations periods with respect
to actions that may be brought against any of them have run.

IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the date first above written.

	
  

  	
  BORROWERS:

  
	
   

  	
   

  
	
   

  	
  AVIZA TECHNOLOGY, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick C. O’Connor

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief
  Financial Officer

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AVIZA, INC.

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Patrick C. O’Connor

  
	
   

  	
  Title:

  	
  Executive Vice President and Chief
  Financial Officer

  
						

 

 [SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
 

 

	
  

  	
  AGENT:

  
	
   

  	
   

  
	
   

  	
  UNITED COMMERCIAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Yu-Fu Lin

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President and Relationship
  Manager

  
				

 

[LENDER SIGNATURE PAGES FOLLOW]

 [SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
 

 

	
  

  	
  UNITED COMMERCIAL BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  Yu-Fu Lin

  
	
   

  	
   

  
	
   

  	
  Title:

  	
  Vice President and Relationship
  Manager

  
	
   

  	
   

  
	
   

  	
  Pro Rata Share:  45.45%

  
	
   

  	
   

  
	
   

  	
  Credit Commitment:  $25,000,000

  
				

 

 [SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]
 

 

	
  

  	
  EAST WEST BANK

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Kelvin Chan

  
	
   

  	
   

  
	
   

  	
  TITLE:

  	
  First
  Vice President

  
	
   

  	
   

  
	
   

  	
  Pro Rata Share:  36.36%

  
	
   

  	
   

  
	
   

  	
  Credit Commitment:  $20,000,000

  
				

 

 [SIGNATURE PAGE TO LOAN AND SECURITY AGREEMENT]

 

	
  

  	
  LENDER: CHINATRUST BANK
  (U.S.A.)

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Jane Ho

  
	
   

  	
   

  
	
   

  	
  TITLE:

  	
  Senior Vice President and Team Leader

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  BY:

  	
  /s/ Glenn Murakami

  
	
   

  	
   

  
	
   

  	
  TITLE:

  	
  Senior Vice President

  
	
   

  	
   

  
	
   

  	
  Pro Rata Share: 18.18%

  
	
   

  	
   

  
	
   

  	
  Credit Commitment:  $10,000,000Exhibit
4.1

2006 Stock Awards Plan

of

TGC Industries, Inc.

TABLE OF
CONTENTS

	
  

  	
   

  	
   

  	
   

  	
   

  	
   

  	
  PAGE

  
	
   

  	
   

  	
   

  
	
  ARTICLE 1 PURPOSE

  	
   

  	
  1

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 2 DEFINITIONS

  	
   

  	
   

  
	
   

  	
  2.1

  	
  Award

  	
   

  	
  1

  
	
   

  	
  2.2

  	
  Award Agreement

  	
   

  	
  1

  
	
   

  	
  2.3

  	
  Award Period

  	
   

  	
  1

  
	
   

  	
  2.4

  	
  Board

  	
   

  	
  2

  
	
   

  	
  2.5

  	
  Change in Control

  	
   

  	
  2

  
	
   

  	
  2.6

  	
  Code

  	
   

  	
  2

  
	
   

  	
  2.7

  	
  Committee

  	
   

  	
  2

  
	
   

  	
  2.8

  	
  Common Stock

  	
   

  	
  2

  
	
   

  	
  2.9

  	
  Company

  	
   

  	
  2

  
	
   

  	
  2.10

  	
  Consultant

  	
   

  	
  3

  
	
   

  	
  2.11

  	
  Corporation

  	
   

  	
  3

  
	
   

  	
  2.12

  	
  Date of Grant

  	
   

  	
  3

  
	
   

  	
  2.13

  	
  Employee

  	
   

  	
  3

  
	
   

  	
  2.14

  	
  Fair Market Value

  	
   

  	
  3

  
	
   

  	
  2.15

  	
  Incentive Stock Option

  	
   

  	
  3

  
	
   

  	
  2.16

  	
  Nonqualified Stock Option

  	
   

  	
  3

  
	
   

  	
  2.17

  	
  Option Price

  	
   

  	
  3

  
	
   

  	
  2.18

  	
  Outside Director

  	
   

  	
  3

  
	
   

  	
  2.19

  	
  Participant

  	
   

  	
  3

  
	
   

  	
  2.20

  	
  Plan

  	
   

  	
  3

  
	
   

  	
  2.21

  	
  Performance Goal

  	
   

  	
  4

  
	
   

  	
  2.22

  	
  Reload Stock Option

  	
   

  	
  4

  
	
   

  	
  2.23

  	
  Reporting Participant

  	
   

  	
  4

  
	
   

  	
  2.24

  	
  Restricted Stock

  	
   

  	
  4

  
	
   

  	
  2.25

  	
  Retirement

  	
   

  	
  4

  
	
   

  	
  2.26

  	
  Stock Option

  	
   

  	
  4

  
	
   

  	
  2.27

  	
  Subsidiary

  	
   

  	
  4

  
	
   

  	
  2.28

  	
  Termination of Service

  	
   

  	
  4

  
	
   

  	
  2.29

  	
  Total and Permanent Disability

  	
   

  	
  4

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 3 ADMINISTRATION  

  	
   

  	
  5

  
	
   

  	
  3.1

  	
  General Administration; Establishment of Committee

  	
   

  	
  5

  
	
   

  	
  3.2

  	
  Designation of Participants and Awards

  	
   

  	
  5

  
	
   

  	
  3.3

  	
  Authority of the Committee

  	
   

  	
  5

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 4 ELIGIBILITY  

  	
   

  	
  6

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 5 SHARES SUBJECT TO PLAN  

  	
   

  	
  6

  
	
   

  	
  5.1

  	
  Number Available for Awards

  	
   

  	
  6

  
	
   

  	
  5.2

  	
  Reuse of Shares

  	
   

  	
  7

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 6 GRANT OF AWARDS

  	
   

  	
  7

  
	
   

  	
  6.1

  	
  In General

  	
   

  	
  7

  
	
   

  	
  6.2

  	
  Option Price

  	
   

  	
  8

  
	
   

  	
  6.3

  	
  Maximum ISO Grants

  	
   

  	
  8

  
	
   

  	
  6.4

  	
  Restricted Stock

  	
   

  	
  8

  
	
   

  	
  6.5

  	
  Performance Goals

  	
   

  	
  9

  
												

 

 i
 

 

	
  ARTICLE 7 AWARD PERIOD; VESTING

  	
   

  	
  10

  
	
   

  	
  7.1

  	
  Award Period

  	
   

  	
  10

  
	
   

  	
  7.2

  	
  Vesting

  	
   

  	
  10

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 8 EXERCISE OR CONVERSION OF AWARDS  

  	
   

  	
  11

  
	
   

  	
  8.1

  	
  In General

  	
   

  	
  11

  
	
   

  	
  8.2

  	
  Securities Law and Exchange Restrictions

  	
   

  	
  11

  
	
   

  	
  8.3

  	
  Exercise of Stock Option

  	
   

  	
  11

  
	
   

  	
  8.4

  	
  Disqualifying Disposition of Incentive Stock Option

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 9 AMENDMENT OR DISCONTINUANCE  

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 10 TERM  

  	
   

  	
  13

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 11 CAPITAL ADJUSTMENTS  

  	
   

  	
  14

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 12 RECAPITALIZATION, MERGER, AND
  CONSOLIDATION  

  	
   

  	
  14

  
	
   

  	
  12.1

  	
  No Effect on Company’s Authority

  	
   

  	
  14

  
	
   

  	
  12.2

  	
  Conversion of Awards Where Company Survives

  	
   

  	
  14

  
	
   

  	
  12.3

  	
  Exchange or Cancellation of Awards Where Company
  Does Not Survive

  	
   

  	
  15

  
	
   

  	
  12.4

  	
  Cancellation of Awards

  	
   

  	
  15

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 13 LIQUIDATION OR DISSOLUTION  

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 14 AWARDS IN SUBSTITUTION FOR AWARDS
  GRANTED BY OTHER ENTITIES  

  	
   

  	
  16

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  ARTICLE 15 MISCELLANEOUS PROVISIONS  

  	
   

  	
  16

  
	
   

  	
  15.1

  	
  Investment Intent

  	
   

  	
  16

  
	
   

  	
  15.2

  	
  No Right to Continued Employment

  	
   

  	
  16

  
	
   

  	
  15.3

  	
  Indemnification of Board and Committee

  	
   

  	
  16

  
	
   

  	
  15.4

  	
  Effect of the Plan

  	
   

  	
  17

  
	
   

  	
  15.5

  	
  Compliance With Other Laws and Regulations

  	
   

  	
  17

  
	
   

  	
  15.6

  	
  Tax Requirements

  	
   

  	
  17

  
	
   

  	
  15.7

  	
  Assignability

  	
   

  	
  18

  
	
   

  	
  15.8

  	
  Use of Proceeds

  	
   

  	
  18

  
	
   

  	
  15.9

  	
  Execution of Receipts and Releases

  	
   

  	
  18

  
	
   

  	
  15.10

  	
  Legend

  	
   

  	
  18

  
																

 

 ii

2006 STOCK AWARDS PLAN

OF

TGC
INDUSTRIES, INC.

The
2006 Stock Awards Plan (the “Plan”) of TGC Industries, Inc., a Texas corporation (the
“Company”),
was adopted by the Company’s Board of Directors effective as of March 30, 2006,
subject to approval by the Company’s shareholders.

ARTICLE 1

PURPOSE

The
purpose of the Plan is to attract and retain the services of key employees, key
consultants and outside directors of the Company and its Subsidiaries and to
provide such persons with a proprietary interest in the Company through the
granting of incentive stock options, nonqualified stock options, common stock
and restricted stock, that will

(a)                                  increase
the interest of such persons in the Company’s welfare;

(b)                                 furnish
an incentive to such persons to continue their services for the Company; and

(c)                                  provide
a means through which the Company may attract able persons as Employees,
Consultants, and Outside Directors.

With
respect to Reporting Participants (see definition contained in Article 2), the
Plan and all transactions under the Plan are intended to comply with all
applicable conditions of Rule 16b-3 promulgated under the Securities Exchange
Act of 1934 (the “1934
Act”).  To the extent that
any provision of the Plan or action by the Committee fails to so comply, such
provision or action shall be deemed null and void ab initio
to the extent permitted by law and deemed advisable by the Committee.

ARTICLE 2

DEFINITIONS

For
the purpose of the Plan, unless the context requires otherwise, the following
terms shall have the meanings indicated:

2.1                               “Award” means the
grant of any Incentive Stock Option, Nonqualified Stock Option, Reload Option,
Common Stock or Restricted Stock.

2.2                               “Award Agreement”
means a written agreement between a Participant and the Company which sets out
the terms of the grant of an Award.

2.3                               “Award Period” means
the period set forth in the Award Agreement during which one or more Awards may
be exercised.

 1
 

2.4                               “Board” means the
board of directors of the Company.

2.5                               “Change in Control”
means any of the following, except as otherwise provided herein:  (i) any consolidation, merger, or share
exchange of the Company in which the Company is not the continuing or surviving
corporation or pursuant to which shares of the Company’s Common Stock would be
converted into cash, securities, or other property, other than a consolidation,
merger, or share exchange of the Company in which the holders of the Company’s
Common Stock immediately prior to such transaction have the same proportionate
ownership of Common Stock of the surviving corporation immediately after such
transaction; (ii) any sale, lease, exchange, or other transfer (excluding
transfer by way of pledge or hypothecation) in one transaction or a series of
related transactions, of all or substantially all of the assets of the Company;
(iii) the shareholders of the Company approve any plan or proposal for the
liquidation or dissolution of the Company; (iv) the cessation of control
(by virtue of their not constituting a majority of directors) of the Board by
the individuals (the “Continuing
Directors”) who (x) at the date of this Plan were directors
or (y) become directors after the date of this Plan and whose election or
nomination for election by the Company’s shareholders was approved by a vote of
at least two-thirds of the directors then in office who were directors at the
date of this Plan or whose election or nomination for election was previously
so approved; (v) the acquisition of beneficial ownership (within the
meaning of Rule 13d-3 under the 1934 Act) of an aggregate of 50% or more of the voting power of the
Company’s outstanding voting securities by any person or group (as such term is
used in Rule 13d-5 under the 1934 Act) who beneficially owned less than 50% of the voting power of the Company’s
outstanding voting securities on the date of this Plan; provided, however,
that notwithstanding the foregoing, an acquisition shall not constitute a
Change in Control hereunder if the acquirer is (x) a trustee or other fiduciary
holding securities under an employee benefit plan of the Company and acting in
such capacity, (y) a Subsidiary of the Company or a corporation owned, directly
or indirectly, by the shareholders of the Company in substantially the same
proportions as their ownership of voting securities of the Company or
(z) any other person whose acquisition of shares of voting securities is
approved in advance by a majority of the Continuing Directors; or (vi) in a
Title 11 bankruptcy proceeding, the appointment of a trustee or the conversion
of a case involving the Company to a case under Chapter 7.

Notwithstanding
the foregoing provisions of this Section 2.5, in the event an Award
issued under the Plan is subject to Section 409A of the Code, then, in lieu of
the foregoing definition and to the extent necessary to comply with the
requirements of Section 409A of the Code, the definition of “Change in Control”
for purposes of such Award shall be the definition provided for under Section
409A of the Code and the regulations or other guidance issued thereunder.

2.6                               “Code” means the
Internal Revenue Code of 1986, as amended.

2.7                               “Committee” means the
committee appointed or designated by the Board to administer the Plan in
accordance with Article 3 of this Plan.

2.8                               “Common Stock” means
the common stock, par value $0.01 per share, which the Company is currently
authorized to issue or may in the future be authorized to issue, or any
securities into which or for which the common stock of the Company may be
converted or exchanged, as the case may be, pursuant to the terms of this Plan.

2.9                               “Company” means TGC
Industries, Inc., a Texas corporation, and any successor entity.

 2
 

2.10                        “Consultant” means any
person, who is not an Employee, performing advisory or consulting services for
the Company or a Subsidiary, with or without compensation, provided that bona fide services must be rendered by
such person, and such services shall not be rendered in connection with the
offer or sale of securities in a capital raising transaction.

2.11                        “Corporation” means
any entity that (i) is defined as a corporation under Section 7701 of the Code
and (ii) is the Company or is in an unbroken chain of corporations (other than
the Company) beginning with the Company, if each of the corporations other than
the last corporation in the unbroken chain owns stock possessing a majority of
the total combined voting power of all classes of stock in one of the other
corporations in the chain.  For purposes
of clause (ii) hereof, an entity shall be treated as a “corporation” if it
satisfies the definition of a corporation under Section 7701 of the Code.

2.12                        “Date of Grant” means
the effective date on which an Award is made to a Participant as set forth in
the applicable Award Agreement; provided, however, that solely for purposes of
Section 16 of the 1934 Act and the rules and regulations promulgated
thereunder, the Date of Grant of an Award shall be the date of shareholder approval of the Plan if
such date is later than the effective date of such Award as set forth in the
Award Agreement.

2.13                        “Employee” means
common law employee (as defined in accordance with the Regulations and Revenue
Rulings then applicable under Section 3401(c) of the Code) of the Company or
any Subsidiary of the Company.

2.14                        
“Fair Market Value”
means, if the Common Stock is traded on one or more established markets or
exchanges, the mean of the opening and closing prices of the Common Stock on
the primary market or exchange on which the Common Stock is traded, and if the
Common Stock is not so traded or the Common Stock does not trade on the
relevant date, the value determined in good faith by the Board of Directors
using a reasonable valuation method in accordance with the provisions of
Section 409A of the Code.  For purposes
of valuing Incentive Stock Options, the Fair Market Value of the Common Stock
shall be determined without regard to any restriction other than one which, by
its terms, will never lapse.

2.15                        “Incentive Stock Option”
means an incentive stock option, within the meaning of Section 422 of the Code,
granted pursuant to this Plan.

2.16                        “Nonqualified Stock Option”
means a nonqualified stock option, granted pursuant to this Plan, which is not
an Incentive Stock Option.

2.17                        “Option Price” means
the price which must be paid by a Participant upon exercise of a Stock Option
to purchase a share of Common Stock.

2.18                        “Outside Director” means a director of the Company who
is not an Employee.

2.19                        “Participant” means an
Employee, Consultant, or Outside Director of the Company or a Subsidiary to
whom an Award is granted under this Plan.

2.20                        “Plan” means this 2006
Stock Awards Plan of TGC Industries, Inc., as amended from time to time.

 3
 

2.21                        “Performance Goal”
means any of the goals set forth in Section 6.5 hereof.

2.22                        “Reload Stock Option”
means a Nonqualified Stock Option or an Incentive Stock Option granted pursuant
to Section 8.3(c) hereof.

2.23                        “Reporting Participant”
means a Participant who is subject to the reporting requirements of Section 16
of the 1934 Act.

2.24                        “Restricted Stock”
means shares of Common Stock issued or transferred to a Participant pursuant to
Section 6.4 of this Plan which are subject to restrictions or
limitations set forth in this Plan and in the related Award Agreement.

2.25                        “Retirement” means any
Termination of Service solely due to retirement upon or after attainment of age
sixty-five (65), or permitted early retirement as determined by the Committee.

2.26                        “Stock Option” means a
Nonqualified Stock Option, a Reload
Stock Option, or an Incentive Stock Option.

2.27                        “Subsidiary” means (i)
any corporation in an unbroken chain of corporations beginning with the
Company, if each of the corporations other than the last corporation in the
unbroken chain owns stock possessing a majority of the total combined voting
power of all classes of stock in one of the other corporations in the chain,
(ii) any limited partnership, if the Company or any corporation described
in item (i) above owns a majority of the general partnership interest and
a majority of the limited partnership interests entitled to vote on the removal
and replacement of the general partner, and (iii) any partnership or
limited liability company, if the partners or members thereof are composed only
of the Company, any corporation listed in item (i) above, or any limited
partnership listed in item (ii) above.  “Subsidiaries”
means more than one of any such corporations, limited partnerships,
partnerships or limited liability companies.

2.28                        “Termination of Service”
occurs when a Participant who is (i) an Employee of the Company or any
Subsidiary ceases to serve as an Employee of the Company and its Subsidiaries,
for any reason; (ii) an Outside Director of the Company or a Subsidiary ceases
to serve as a director of the Company and its Subsidiaries for any reason; or
(iii) a Consultant of the Company or a Subsidiary ceases to serve as a
Consultant of the Company and its Subsidiaries for any reason.  Except as may be necessary or desirable to
comply with applicable federal or state law, a “Termination of Service” shall
not be deemed to have occurred when a Participant who is an Employee becomes an
Outside Director or Consultant or vice versa. 
If, however, a Participant who is an Employee and who has an Incentive
Stock Option ceases to be an Employee but does not suffer a Termination of
Service, and if that Participant does not exercise the Incentive Stock Option
within the time required under Section 422 of the Code upon ceasing to be an
Employee, the Incentive Stock Option shall thereafter become a Nonqualified
Stock Option.  Notwithstanding the
foregoing provisions of this Section 2.28, in the event an Award issued
under the Plan is subject to Section 409A of the Code, then, in lieu of the
foregoing definition and to the extent necessary to comply with the
requirements of Section 409A of the Code, the definition of “Termination of
Service” for purposes of such Award shall be the definition of “separation from
service” provided for under Section 409A of the Code and the regulations or
other guidance issued thereunder.

2.29                        “Total and Permanent Disability”
means a Participant is qualified for long-term disability benefits under the
Company’s or Subsidiary’s disability plan or insurance policy; or, if no such
plan or policy is then in existence or if the Participant is not eligible to
participate in such plan

 4
 

or policy, that
the Participant, because of a physical or mental condition resulting from
bodily injury, disease, or mental disorder is unable to perform his or her
duties of employment for a period of six (6) continuous months, as determined
in good faith by the Committee, based upon medical reports or other evidence
satisfactory to the Committee; provided  that, with respect to any
Incentive Stock Option, Total and Permanent Disability shall have the meaning
given it under the rules governing Incentive Stock Options under the Code.
Notwithstanding the foregoing provisions of this Section 2.29, in the
event an Award issued under the Plan is subject to Section 409A of the Code,
then, in lieu of the foregoing definition and to the extent necessary to comply
with the requirements of Section 409A of the Code, the definition of “Total and
Permanent Disability” for purposes of such Award shall be the definition of “disability”
provided for under Section 409A of the Code and the regulations or other
guidance issued thereunder.

ARTICLE 3

ADMINISTRATION

3.1                               General Administration;
Establishment of Committee.  Subject
to the terms of this Article 3, the Plan shall be administered by
the Board or such committee (the “Committee”) of the Board as is designated by
the Board to administer the Plan. The Committee shall consist of between three
and six persons.  Any member of the
Committee may be removed at any time, with or without cause, by resolution of
the Board. Any vacancy occurring in the membership of the Committee may be
filled by appointment by the Board.  At
any time there is no Committee to administer the Plan, any references in this
Plan to the Committee shall be deemed to refer to the Board.

In
the event the Board decides that Awards shall constitute “performance-based
compensation” (within the meaning of Section 162(m) of the Code), membership on
the Committee shall be limited to those members of the Board who are “outside
directors” under Section 162(m) of the Code and “non-employee directors” as
defined in Rule 16b-3 promulgated under the 1934 Act.  The Committee shall select one of its members
to act as its Chairman.  A majority of
the Committee shall constitute a quorum, and the act of a majority of the
members of the Committee present at a meeting at which a quorum is present
shall be the act of the Committee.

3.2                               Designation
of Participants and Awards.  The
Committee or the Board shall determine and designate from time to time the
eligible persons to whom Awards will be granted and shall set forth in each related
Award Agreement, where applicable, the Award Period, the Date of Grant, and
such other terms, provisions, limitations, and performance requirements, as are
approved by the Committee, but not inconsistent with the Plan.  Although the members of the Committee shall
be eligible to receive Awards, all decisions with respect to any Award, and the
terms and conditions thereof, to be granted under the Plan to any member of the
Committee shall be made solely and exclusively by the other members of the
Committee, or if such member is the only member of the Committee, by the Board.

3.3                               Authority of the
Committee.  The Committee, in its
discretion, shall (i) interpret the Plan, (ii) prescribe, amend, and rescind
any rules and regulations necessary or appropriate for the administration of
the Plan, (iii) establish performance goals for an Award and certify the extent
of their achievement, and (iv) make such other determinations or certifications
and take such other action as it deems necessary or advisable in the administration
of the Plan.  Any interpretation,
determination, or other action made or taken by the Committee shall be final,
binding, and conclusive on all interested parties.  The Committee’s discretion set forth herein
shall not be limited

 5
 

by any provision
of the Plan, including any provision which by its terms is applicable
notwithstanding any other provision of the Plan to the contrary.

The
Committee may delegate to officers of the Company, pursuant to a written
delegation, the authority to perform specified functions under the Plan.  Any actions taken by any officers of the
Company pursuant to such written delegation of authority shall be deemed to
have been taken by the Committee.

With
respect to restrictions in the Plan that are based on the requirements of Rule
16b-3 promulgated under the 1934 Act, Section 422 of the Code, Section
162(m) of the Code, the rules of any exchange or inter-dealer quotation system
upon which the Company’s securities are listed or quoted, or any other
applicable law, rule, or restriction (collectively, “applicable law”), to
the extent that any such restrictions are no longer required by applicable law,
the Committee shall have the sole discretion and authority to grant Awards that
are not subject to such mandated restrictions and/or to waive any such mandated
restrictions with respect to outstanding Awards.

ARTICLE 4

ELIGIBILITY

Any
Employee (including an Employee who is also a director or an officer),
Consultant or Outside Director of the Company whose judgment, initiative, and
efforts contributed or may be expected to contribute to the successful
performance of the Company is eligible to participate in the Plan; provided
that only Employees of a corporation shall be eligible to receive Incentive
Stock Options.  The Committee, upon its
own action, may grant, but shall not be required to grant, an Award to any
Employee, Consultant or Outside Director of the Company or any Subsidiary.  Awards may be granted by the Committee at any
time and from time to time to new Participants, or to then Participants, or to
a greater or lesser number of Participants, and may include or exclude previous
Participants, as the Committee shall determine. 
Except as required by this Plan, Awards granted at different times need
not contain similar provisions.  The
Committee’s determinations under the Plan (including without limitation
determinations of which Employees, Consultants or Outside Directors, if any,
are to receive Awards, the form, amount and timing of such Awards, the terms
and provisions of such Awards and the agreements evidencing same) need not be
uniform and may be made by it selectively among Participants who receive, or
are eligible to receive, Awards under the Plan.

ARTICLE 5

SHARES
SUBJECT TO PLAN

5.1                               Number
Available for Awards.  Subject to
adjustment as provided in Articles 11 and 12, the maximum number of
shares of Common Stock that may be delivered pursuant to Awards granted under
the Plan is 1,000,000 shares, 100% of which may be delivered pursuant to
Incentive Stock Options.  Subject to
adjustment pursuant to Articles 11 and 12, no Participant may receive in
any calendar year (i) Stock Options relating to more than 50,000 shares of
Common Stock, or (ii) Common Stock or Restricted Stock relating to more than
30,000 shares of Common Stock; provided, however, that all such Awards to any
Participant during any calendar year shall not exceed an aggregate of more than
80,000 shares of Common Stock.  Shares to
be issued may be made available from authorized but unissued Common Stock, Common
Stock held by the Company in its treasury, or Common Stock purchased by the
Company on the open market or otherwise. During the term of

 6
 

this Plan, the
Company shall at all times reserve and keep available the number of shares of
Common Stock that will be sufficient to satisfy the requirements of this Plan.

5.2                               Reuse
of Shares.  To the extent that any
Award under this Plan is forfeited, expires, or is canceled, in whole or in
part, then the number of shares of Common Stock covered by the Award or stock option
so forfeited, expired, or canceled may again be awarded pursuant to the
provisions of this Plan.  In the event
that previously acquired shares of Common Stock are delivered to the Company in
full or partial payment of the exercise price for the exercise of a Stock
Option granted under this Plan, the number of shares of Common Stock available
for future Awards under this Plan shall be reduced only by the net number of
shares of Common Stock issued upon the exercise of the Stock Option.  Awards that may be satisfied either by the
issuance of shares of Common Stock or by cash or other consideration shall be
counted against the maximum number of shares of Common Stock that may be issued
under this Plan only during the period that the Award is outstanding or to the
extent the Award is ultimately satisfied by the issuance of shares of Common
Stock.  Notwithstanding any provisions of
the Plan to the contrary, only shares forfeited back to the Company, shares
canceled on account of termination, expiration or lapse of an Award, shares
surrendered in payment of the exercise price of an option, or shares withheld
for payment of applicable employment taxes and/or withholding obligations
resulting from the exercise of an option shall again be available for grant of Incentive
Stock Options under the Plan, but shall not increase the maximum  number of shares described in Section 5.1
above as the maximum number of shares of Common Stock that may be delivered
pursuant to Incentive Stock Options.

ARTICLE 6

GRANT OF AWARDS

6.1                               In
General.

(a)                                  The
grant of an Award shall be authorized by the Committee and shall be evidenced
by an Award Agreement setting forth the Award or Awards being granted, the
total number of shares of Common Stock subject to the Award(s), the Option Price
(if applicable), the Award Period, the Date of Grant, and such other terms,
provisions, limitations, and performance objectives, as are approved by the
Committee, but (i) not inconsistent with the Plan and (ii) to the extent an
Award issued under the Plan is subject to Section 409A of the Code, in
compliance with the applicable requirements of Section 409A of the Code and the
regulations or other guidance issued thereunder.  The Company shall execute an Award Agreement
with a Participant after the Committee approves the issuance of an Award.  Any Award granted pursuant to this Plan must
be granted within ten (10) years of the date of adoption of this Plan. The Plan
shall be submitted to the Company’s shareholders  for approval; however, the Committee may grant Awards under
the Plan prior to the time of shareholder  approval.  Any such Award granted prior to such
shareholder  approval shall be made
subject to such shareholder  approval.
The grant of an Award to a Participant shall not be deemed either to entitle
the Participant to, or to disqualify the Participant from, receipt of any other
Award under the Plan.

(b)                                 If
the Committee establishes a purchase price for an Award, the Participant must
accept such Award within a period of thirty (30) days (or such shorter period
as the Committee may specify) after the Date of Grant by executing the
applicable Award Agreement and paying such purchase price (if applicable).

 7
 

6.2                               Option
Price.  The Option Price for any
share of Common Stock which may be purchased under a Nonqualified Stock Option
for any share of Common Stock may be equal to or greater than the Fair Market
Value of the share on the Date of Grant. 
The Option Price for any share of Common Stock which may be purchased under
an Incentive Stock Option must be at least equal to the Fair Market Value of
the share on the Date of Grant; if an Incentive Stock Option is granted to an
Employee who owns or is deemed to own (by reason of the attribution rules of
Section 424(d) of the Code) more than ten percent (10%) of the combined voting
power of all classes of stock of the Company (or any parent or Subsidiary), the
Option Price shall be at least 110% of the Fair Market Value of the Common
Stock on the Date of Grant.

6.3                               Maximum
ISO Grants.  The Committee may not
grant Incentive Stock Options under the Plan to any Employee which would permit
the aggregate Fair Market Value (determined on the Date of Grant) of the Common
Stock with respect to which Incentive Stock Options (under this and any other
plan of the Company and its Subsidiaries) are exercisable for the first time by
such Employee during any calendar year to exceed $100,000.  To the extent any Stock Option granted under
this Plan which is designated as an Incentive Stock Option exceeds this limit
or otherwise fails to qualify as an Incentive Stock Option, such Stock Option
(or any such portion thereof) shall be a Nonqualified Stock Option.  In such case, the Committee shall designate
which stock will be treated as Incentive Stock Option stock by causing the
issuance of a separate stock certificate and identifying such stock as
Incentive Stock Option stock on the Company’s stock transfer records.

6.4                               Restricted
Stock.  If Restricted Stock is
granted to or received by a Participant under an Award, the Committee shall set
forth in the related Award Agreement: (i) the number of shares of Common Stock
awarded, (ii) the price, if any, to be paid by the Participant for such
Restricted Stock and the method of payment of the price, (iii) the time or
times within which such Award may be subject to forfeiture, (iv) specified
Performance Goals of the Company, a Subsidiary, any division thereof or any
group of Employees of the Company, or other criteria, which the Committee
determines must be met in order to remove any restrictions (including vesting)
on such Award, and (v) all other terms, limitations, restrictions, and
conditions of the Restricted Stock, which shall be consistent with this Plan
and to the extent a Restricted Stock granted under the Plan is subject to
Section 409A of the Code, in compliance with the applicable requirements of
Section 409A of the Code and the regulations or other guidance issued
thereunder.  The provisions of Restricted
Stock need not be the same with respect to each Participant.

(a)                                  Legend
on Shares.  Each Participant who is
awarded or receives Restricted Stock shall be issued a stock certificate or
certificates in respect of such shares of Common Stock.  Such certificate(s) shall be registered in
the name of the Participant, and shall bear an appropriate legend referring to
the terms, conditions, and restrictions applicable to such Restricted Stock,
substantially as provided in Section 15.10 of the Plan.

(b)                                  Restrictions
and Conditions.  Shares of Restricted
Stock shall be subject to the following restrictions and conditions:

(i)                                     Subject
to the other provisions of this Plan and the terms of the particular Award
Agreements, during such period as may be determined by the Committee commencing
on the Date of Grant or the date of exercise of an Award (the “Restriction Period”),
the Participant shall not be permitted to sell, transfer, pledge, or assign
shares of Restricted Stock. Except for these limitations, the Committee may, in
its sole discretion, remove any or all of the restrictions on such Restricted
Stock whenever it may determine that, by reason of changes in applicable

 8
 

laws or other changes in circumstances arising after
the date of the Award, such action is appropriate.

(ii)                                  Except
as provided in sub-paragraph (i) above or in the applicable Award Agreement,
the Participant shall have, with respect to his or her Restricted Stock, all of
the rights of a shareholder of
the Company, including the right to vote the shares and the right to receive
any dividends thereon.  Certificates for
shares of Common Stock free of restriction under this Plan shall be delivered
to the Participant promptly after, and only after, the Restriction Period has
expired without forfeiture in respect of such shares of Common Stock or after
any other restrictions imposed on such shares of Common Stock by the applicable
Award Agreement or other agreement have expired.  Certificates for the shares of Common Stock
forfeited under the provisions of the Plan and the applicable Award Agreement shall
be promptly returned to the Company by the forfeiting Participant.  Each Award Agreement shall require that each Participant, in connection with the
issuance of a certificate for Restricted Stock, shall endorse such certificate
in blank or execute a stock power in form satisfactory to the Company in blank
and deliver such certificate and executed stock power to the Company.

(iii)                               The
Restriction Period of Restricted Stock shall commence on the Date of Grant, as
specified in the Award Agreement, and, subject to Article 12 of the
Plan, unless otherwise established by the Committee in the Award Agreement
setting forth the terms of the Restricted Stock, shall expire upon satisfaction
of the conditions set forth in the Award Agreement; such conditions may provide
for vesting based on such Performance Goals as may be determined by the
Committee in its sole discretion.

(iv)                              Except
as otherwise provided in the particular Award Agreement, upon Termination of
Service for any reason during the Restriction Period, the nonvested shares of
Restricted Stock shall be forfeited by the Participant.  In the event a Participant has paid any
consideration to the Company for such forfeited Restricted Stock, the Committee
shall specify in the Award Agreement that either (i) the Company shall be
obligated to, or (ii) the Company may, in its sole discretion, elect to, pay to
the Participant, as soon as practicable after the event causing forfeiture, in
cash, an amount equal to the lesser of the total consideration paid by the
Participant for such forfeited shares or the Fair Market Value of such
forfeited shares as of the date of Termination of Service, as the Committee, in
its sole discretion shall select. Upon any forfeiture, all rights of a
Participant with respect to the forfeited shares of the Restricted Stock shall
cease and terminate without any further obligation on the part of the Company.

6.5                               Performance Goals.  Awards of Common Stock or Restricted
Stock under the Plan may be made subject to the attainment of Performance Goals
relating to one or more business criteria which, where applicable, shall be
within the meaning of Section 162(m) of the Code and consist of one or more or
any combination of the following criteria: cash flow; cost; revenues;  sales; ratio of debt to debt plus equity; net
borrowing, credit quality or debt ratings; profit before tax; economic profit;
earnings before interest and taxes; earnings before interest, taxes,
depreciation and amortization; gross margin; earnings per share (whether on a
pre-tax, after-tax, operational or other basis); operating earnings; capital
expenditures; expenses or expense levels; economic value added; ratio of
operating earnings to capital spending or any other operating ratios; free cash
flow; net profit;

 9
 

net sales; net
asset value per share; the accomplishment of mergers, acquisitions,
dispositions, public offerings or similar extraordinary business transactions;
sales growth; price of the Company’s Common Stock; return on assets, equity, or
shareholders’ equity; market share; inventory levels; inventory turn or
shrinkage; or total return to shareholders (“Performance Criteria”).  Any Performance Criteria may be used to
measure the performance of the Company as a whole or any business unit of the
Company and may be measured relative to a peer group or index.  Any Performance Criteria may include or
exclude (i) extraordinary, unusual, and/or non-recurring items of gain or loss,
(ii) gains or losses on the disposition of a business, (iii) changes in tax or
accounting regulations or laws, or (iv) the effect of a merger or acquisition,
as identified in the Company’s quarterly and annual earnings releases.  In all other respects, Performance Criteria
shall be calculated in accordance with the Company’s financial statements,
under generally accepted accounting principles, or under a methodology
established by the Committee prior to the issuance of an Award which is
consistently applied and identified in the audited financial statements,
including footnotes, or the Management Discussion and Analysis section of the
Company’s annual report.  However, to the
extent Section 162(m) of the Code is applicable, the Committee may not in any
event increase the amount of compensation payable to an individual upon the
attainment of a Performance Goal.

ARTICLE 7

AWARD PERIOD; VESTING

7.1                               Award
Period.  Subject to the other
provisions of this Plan, the Committee may, in its discretion, provide that an
Award may not be exercised in whole or in part for any period or periods of
time or beyond any date specified in the Award Agreement.  Except as provided in the Award Agreement, a
vested Award may be exercised in whole or in part at any time during its
term.  The Award Period for an Award
shall be reduced or terminated upon Termination of Service.  No Award granted under the Plan may be exercised
at any time after the end of its Award Period. 
No portion of any Award may be exercised after the expiration of ten
(10) years from its Date of Grant. 
However, if an Employee owns or is deemed to own (by reason of the
attribution rules of Section 424(d) of the Code) more than ten percent (10%) of
the combined voting power of all classes of stock of the Company (or any parent
or Subsidiary) and an Incentive Stock Option is granted to such Employee, the
term of such Incentive Stock Option (to the extent required by the Code at the
time of grant) shall be no more than five (5) years from the Date of
Grant.  Notwithstanding the foregoing and
unless the applicable Award Agreement provides otherwise, (i) in the event an
Outside Director suffers a Termination of Service, such Outside Director shall
have a period of ninety (90) days following such Termination of Service to
exercise his then unexercised (but vested) Nonqualified Stock Options; and (ii)
in the event an Employee or Consultant suffers a Termination of Service, the
Committee shall have the full power and authority, but shall not be
obligated,  to extend (either at the time
the Award is granted or at any time while the Award remains outstanding) the
period of time for which an Award is to remain exercisable following the
Employee’s or Consultant’s Termination of Service from the period set forth in
the applicable Award Agreement, provided, however, in not event shall the
Committee extend such exercise period if such extension would cause the Award to
be subject to the requirements of Section 409A of the Code.

7.2                               Vesting.  The Committee, in its sole discretion, may
determine that an Award will be immediately vested in whole or in part, or that
all or any portion may not be vested until a date, or dates, subsequent to its
Date of Grant, or until the occurrence of one or more specified events, subject
in any case to the terms of the Plan.  If
the Committee imposes conditions upon vesting, then, subsequent to the Date of
Grant, the Committee may, in its sole discretion, accelerate the date on which
all or any portion of the Award may be vested. 
Notwithstanding the foregoing, (i) upon the

 10
 

effective date of
a Change in Control, all Awards shall be immediately vested, in whole; and (ii)
upon the Participant’s death or Total and Permanent Disability, the portion of
the Participant’s Awards that would have vested had the Participant remained
employed through the vesting date immediately following the date of such death
or Total and Permanent Disability (or, in the event vesting is based upon the
attainment of one or more Performance Goals, the pro-rata portion of the
Participant’s Awards that would have vested had the Participant remained
employed through the vesting date immediately following  the date of such death or Total and Permanent
Disability, or such other date as may be determined by the Committee, in its
sole discretion), shall be immediately vested.

ARTICLE 8

EXERCISE OR CONVERSION OF AWARDS

8.1                               In General.  A vested Award may be exercised or converted,
during its Award Period, subject to limitations and restrictions set forth in
the Award Agreement

8.2                               Securities
Law and Exchange Restrictions.  In no
event may an Award be exercised or shares of Common Stock be issued pursuant to
an Award if a necessary listing or quotation of the shares of Common Stock on a
stock exchange or inter-dealer quotation system or any registration under state
or federal securities laws required under the circumstances has not been
accomplished.

8.3                               Exercise
of Stock Option.

(a)                                  In
General.  If the Committee imposes
conditions upon exercise, then subsequent to the Date of Grant, the Committee
may, in its sole discretion, accelerate the date on which all or any portion of
the Stock Option may be exercised.  No
Stock Option may be exercised  for a
fractional share of Common Stock.  The
granting of a Stock Option shall impose no obligation upon the Participant to
exercise that Stock Option.

(b)                                  Notice
and Payment.  Subject to such
administrative regulations as the Committee may from time to time adopt, a
Stock Option may be exercised by the delivery of written notice to the
Committee setting forth the number of shares of Common Stock with respect to
which the Stock Option is to be exercised and the date of exercise thereof (the
“Exercise Date”)
which shall be at least three (3) days after giving such notice unless an
earlier time shall have been mutually agreed upon.  On the Exercise Date, the Participant shall
deliver to the Company consideration with a value equal to the total Option
Price of the shares to be purchased, payable as provided in the Award
Agreement, which may provide for payment in any one or more of the following
ways:  (a) cash or check, bank draft, or
money order payable to the order of the Company; (b) Common Stock (including
Restricted Stock) owned by the Participant on the Exercise Date, valued at its
Fair Market Value on the Exercise Date, and which the Participant has not
acquired from the Company within six (6) months prior to the Exercise Date (“stock-for-stock
exercise”); (c) with the consent of the Committee, by delivery (including by
FAX) to the Company or its designated agent of an executed irrevocable option
exercise form together with irrevocable instructions from the Participant to a
broker or dealer, reasonably acceptable to the Company, to sell certain of the
shares of Common Stock purchased upon exercise of the Stock Option or to pledge
such shares as collateral for a loan and promptly deliver to the Company the
amount of sale or loan proceeds necessary to pay such purchase price (“cashless
exercise method”);  and/or (d) in any
other form of valid consideration that is acceptable to the Committee in its
sole

 11
 

discretion.  In the event that shares of Restricted Stock
are tendered as consideration for the exercise of a Stock Option, a number of
shares of Common Stock issued upon the exercise of the Stock Option equal to
the number of shares of Restricted Stock used as consideration therefor shall
be subject to the same restrictions and provisions as the Restricted Stock so
tendered.

(c)                                  Reload Stock Options.  In the event that shares of
Common Stock are delivered by a Participant in payment of all or a portion of
the exercise price of a Stock Option as set forth in Section 8.3(b)
above and/or shares of Common Stock are delivered to or withheld by the Company
in satisfaction of the Company’s tax withholding obligations upon exercise in
accordance with Section 15.6 hereof, then, subject to Article 10
hereof, then, if and to the extent authorized by the Committee, such
Participant may be eligible for the grant of a replacement Nonqualified Stock
Option (or if the Participant is exercising an Incentive Stock Option, a
replacement Incentive Stock Option) (in either case, a “Reload Stock Option”), to purchase that number of shares so delivered to or withheld by the
Company, as the case may be, at an option exercise price equal to the Fair
Market Value per share of the Common Stock on the date of exercise of the
original Stock Option (subject to the provisions of the Plan regarding
Incentive Stock Options and, in any event not less than the par value per share
of the Common Stock). The option period for a Reload Stock Option will commence
on its Date of Grant and expire on the expiration date of the original Stock Option
it replaces (subject to the provisions of the Plan regarding Incentive Stock
Options), after which period the Reload Stock Option cannot be exercised.  The Date of Grant of a Reload Stock Option
shall be the date that the Stock Option it replaces is exercised.  A Reload Stock Option cannot be exercised by
the Participant until the later of: (i) the exercise dates specified in the
original Stock Option or (ii) six (6) months after the Date of Grant of the
Reload Stock Option.  It shall be a
condition to the grant of a Reload Stock Option that promptly after its Date of
Grant, a stock option agreement shall be delivered to the Participant and
executed by the Participant and the Company which sets forth the total number
of shares subject to the Reload Stock Option, the option exercise price, the
option period of the Reload Stock Option, and such other terms and provisions
as are consistent with the Plan.

(d)                                  Issuance
of Certificate.  Except as otherwise
provided in Section 6.4 hereof (with respect to shares of Restricted
Stock) or in the applicable Award Agreement, upon payment of all amounts due
from the Participant, the Company shall cause certificates for the Common Stock
then being purchased to be delivered as directed by the Participant (or the
person exercising the Participant’s Stock Option in the event of his death) at
its principal business office promptly after the Exercise Date; provided that
if the Participant has exercised an Incentive Stock Option, the Company may at
its option retain physical possession of the certificate evidencing the shares
acquired upon exercise until the expiration of the holding periods described in
Section 422(a)(1) of the Code. The obligation of the Company to deliver shares
of Common Stock shall, however, be subject to the condition that, if at any
time the Committee determines in its discretion that the listing, registration,
or qualification of the Stock Option or the Common Stock upon any securities
exchange or inter-dealer quotation system or under any state or federal law, or
the consent or approval of any governmental regulatory body, is necessary as a
condition of, or in connection with, the Stock Option or the issuance or
purchase of shares of Common Stock thereunder, the Stock Option may not be
exercised in whole or in part unless such listing, registration, qualification,
consent, or approval shall have been effected or obtained free of any
conditions not reasonably acceptable to the Committee.

 12
 

(e)                                  Failure
to Pay.  Except as may otherwise be
provided in an Award Agreement, if the Participant fails to pay for any of the
Common Stock specified in such notice or fails to accept delivery thereof, that
portion of the Participant’s Stock Option and right to purchase such Common
Stock may be forfeited by the Company.

8.4                               Disqualifying
Disposition of Incentive Stock Option. 
If shares of Common Stock acquired upon exercise of an Incentive Stock
Option are disposed of by a Participant prior to the expiration of either two
(2) years from the Date of Grant of such Stock Option or one (1) year from the
transfer of shares of Common Stock to the Participant pursuant to the exercise
of such Stock Option, or in any other disqualifying disposition within the
meaning of Section 422 of the Code, such Participant shall notify the Company
in writing of the date and terms of such disposition.  A disqualifying disposition by a Participant
shall not affect the status of any other Stock Option granted under the Plan as
an Incentive Stock Option within the meaning of Section 422 of the Code.

ARTICLE 9

AMENDMENT OR DISCONTINUANCE

Subject
to the limitations set forth in this Article 9, the Board may at any
time and from time to time, without the consent of the Participants, alter,
amend, revise, suspend, or discontinue the Plan in whole or in part; provided,
however, that no amendment for which shareholder
approval is required either (i) by any securities exchange or
inter-dealer quotation system on which the Common Stock is listed or traded or
(ii) in  order for the Plan and Awards
awarded under the Plan to continue to comply with Sections 162(m), 421, and 422
of the Code, including any successors to such Sections;  shall be effective unless such amendment
shall be approved by the requisite vote of the shareholders of the Company entitled to vote thereon.  Any such amendment shall, to the extent
deemed necessary or advisable by the Committee, be applicable to any
outstanding Awards theretofore granted under the Plan, notwithstanding any
contrary provisions contained in any Award Agreement.  In the event of any such amendment to the
Plan, the holder of any Award outstanding under the Plan shall, upon request of
the Committee and as a condition to the exercisability thereof, execute a
conforming amendment in the form prescribed by the Committee to any Award
Agreement relating thereto. 
Notwithstanding anything contained in this Plan to the contrary, unless
required by law, no action contemplated or permitted by this Article 9
shall adversely affect any rights of Participants or obligations of the Company
to Participants with respect to any Award theretofore granted under the Plan
without the consent of the affected Participant.

ARTICLE 10

TERM

The Plan shall be effective from the date that
this Plan is approved by the Board. 
Unless sooner terminated by action of the Board, the Plan will terminate
on  March
29, 2016, but Awards granted before that date will continue to be
effective in accordance with their terms and conditions.

 13
 

ARTICLE 11

CAPITAL ADJUSTMENTS

In
the event that the Committee determines that any dividend or other distribution
(whether in the form of cash, Common Stock, other securities, or other
property), recapitalization, stock split, reverse stock split, rights offering,
reorganization, merger, consolidation, split-up, spin-off, split-off,
combination, subdivision, repurchase, or exchange of Common Stock or other
securities of the Company, issuance of warrants or other rights to purchase
Common Stock or other securities of the Company, or other similar corporate
transaction or event affects the Common Stock such that an adjustment is
determined by the Committee to be appropriate to prevent the dilution or
enlargement of the benefits or potential benefits intended to be made available
under the Plan, then the Committee shall, in such manner as it may deem
equitable, adjust any or all of the (i) the number of shares and type of Common
Stock (or the securities or property) which thereafter may be made the subject
of Awards, (ii) the number of shares and type of Common Stock (or other securities
or property) subject to outstanding Awards, (iii) the Option Price of each
outstanding Award, and (iv) the amount, if any, the Company pays for forfeited
shares of Common Stock in accordance with Section 6.4; provided however,
that the number of shares of Common Stock (or other securities or property)
subject to any Award shall always be a whole number.  In lieu of the foregoing, if deemed
appropriate, the Committee may make provision for a cash payment to the holder
of an outstanding Award.  Notwithstanding
the foregoing, no such adjustment or cash payment shall be made or authorized
to the extent that such adjustment or cash payment would cause the Plan or any
Stock Option to violate Section 422 of the Code.  Such adjustments shall be made in accordance
with the rules of any securities exchange, stock market, or stock quotation
system to which the Company is subject.

Upon
the occurrence of any such adjustment or cash payment, the Company shall
provide notice to each affected Participant of its computation of such
adjustment or cash payment which shall be conclusive and shall be binding upon
each such Participant.

ARTICLE 12

RECAPITALIZATION, MERGER, AND
CONSOLIDATION

12.1                        No
Effect on Company’s Authority.  The
existence of this Plan and Awards granted hereunder shall not affect in any way
the right or power of the Company or its shareholders to make or authorize any or all adjustments,
recapitalizations, reorganizations, or other changes in the Company’s capital
structure and its business, or any Change in Control, or any merger or
consolidation of the Company, or any issuance of bonds, debentures, preferred
or preference stocks ranking prior to or otherwise affecting the Common Stock
or the rights thereof (or any rights, options, or warrants to purchase same),
or the dissolution or liquidation of the Company, or any sale or transfer of
all or any part of its assets or business, or any other corporate act or
proceeding, whether of a similar character or otherwise.

12.2                        Conversion
of Awards Where Company Survives. 
Subject to any required action by the shareholders and except as otherwise provided by Section 12.4
hereof or as may be required to comply with Section 409A of the Code and the
regulations or other guidance issued thereunder, if the Company is the
surviving or resulting corporation in any merger, consolidation, or share
exchange, any Award granted hereunder shall pertain to and apply to the
securities or rights (including cash, property, or assets) to which a holder of
the number of shares of Common Stock subject to the Award would have been
entitled.

 14
 

12.3                        Exchange
or Cancellation of Awards Where Company Does Not Survive.  Except as otherwise provided by Section
12.4 hereof or as may be required to comply with Section 409A of the Code
and the regulations or other guidance issued thereunder, in the event of any
merger, consolidation, or share exchange pursuant to which the Company is not
the surviving or resulting corporation, there shall be substituted for each
share of Common Stock subject to the unexercised portions of outstanding
Awards, that number of shares of each class of stock or other securities or
that amount of cash, property, or assets of the surviving, resulting, or
consolidated company which were distributed or distributable to the shareholders of the Company in respect
to each share of Common Stock held by them, such outstanding Awards to be
thereafter exercisable for such stock, securities, cash, or property in
accordance with their terms.

12.4                        Cancellation of Awards.  Notwithstanding the provisions of Sections
12.2 and 12.3 hereof,  and except as
may be required to comply with Section 409A of the Code and the regulations or
other guidance issued thereunder, all Awards granted hereunder may be canceled
by the Company, in its sole discretion, as of the effective date of any Change
in Control, merger, consolidation, or share exchange, or any issuance of bonds,
debentures, preferred or preference stocks ranking prior to or otherwise
affecting the Common Stock or the rights thereof (or any rights, options, or
warrants to purchase same), or of any proposed sale of all or substantially all
of the assets of the Company, or of any dissolution or liquidation of the
Company, by either:

(a)                                  giving
notice to each holder thereof or his or her personal representative of its
intention to cancel those Awards for which the issuance of shares of Common
Stock involved payment by the Participant for such shares and, permitting the
purchase during the thirty (30) day period next preceding such effective date of
any or all of the shares of Common Stock subject to such outstanding Awards,
including in the Board’s discretion some or all of the shares as to which such
Awards would not otherwise be vested and exercisable; or

(b)                                 in
the case of Awards that are either (i) settled only in shares of Common Stock,
or (ii) at the election of the Participant, settled in shares of Common Stock,
paying the holder thereof an amount equal to a reasonable estimate of the
difference between the net amount per share payable in such transaction or as a
result of such transaction, and the price per share of such Award to be paid by
the Participant (hereinafter the “Spread”), multiplied by the number of shares
subject to the Award. In cases where the shares constitute, or would after exercise
constitute, Restricted Stock, the Company, in its discretion may include some
or all of those shares in the calculation of the amount payable hereunder.  In estimating the Spread, appropriate
adjustments to give effect to the existence of the Awards shall be made, such
as deeming the Awards to have been exercised, with the Company receiving the
exercise price payable thereunder, and treating the shares receivable upon
exercise of the Awards as being outstanding in determining the net amount per share.  In cases where the proposed transaction
consists of the acquisition of assets of the Company, the net amount per share
shall be calculated on the basis of the net amount receivable with respect to
shares of Common Stock upon a distribution and liquidation by the Company after
giving effect to expenses and charges (including but not limited to taxes
payable by the Company before such liquidation could be completed).

(c)                                  An
Award that by its terms would be fully vested or exercisable upon a Change in
Control will be considered vested or exercisable for purposes of Section
12.4(a) hereof.

 15
 

ARTICLE
13

LIQUIDATION OR DISSOLUTION

Subject
to Section 12.4 hereof, in case the Company shall, at any time while any
Award under this Plan shall be in force and remain unexpired, (i) sell all
or substantially all of its property, or (ii) dissolve, liquidate, or wind
up its affairs, then each Participant shall be entitled to receive, in lieu of
each share of Common Stock of the Company which such Participant would have been
entitled to receive under the Award, the same kind and amount of any securities
or assets as may be issuable, distributable, or payable upon any such sale,
dissolution, liquidation, or winding up with respect to each share of Common
Stock of the Company. If the Company shall, at any time prior to the expiration
of any Award, make any partial distribution of its assets, in the nature of a
partial liquidation, whether payable in cash or in kind (but excluding the
distribution of a cash dividend payable out of earned surplus and designated as
such), and an adjustment is determined by the Committee to be appropriate to
prevent the dilution of the benefits or potential benefits intended to be made
available under the Plan, then the Committee shall, in such manner as it may
deem equitable, make such adjustment in accordance with the provisions of Article
11 hereof.

ARTICLE 14

AWARDS IN SUBSTITUTION FOR

AWARDS GRANTED BY OTHER ENTITIES

Awards may be granted under the Plan from time
to time in substitution for similar instruments held by employees, consultants
or directors of a corporation, partnership, or limited liability company who
become or are about to become Employees, Consultants or Outside Directors of
the Company or any Subsidiary as a result of a merger or consolidation of the
employing corporation with the Company, the acquisition by the Company of
equity of the employing entity, or any other similar transaction pursuant to
which the Company becomes the successor employer.  The terms and conditions of the substitute
Awards so granted may vary from the terms and conditions set forth in this Plan
to such extent as the Committee at the time of grant may deem appropriate to
conform, in whole or in part, to the provisions of the Awards in substitution
for which they are granted.

ARTICLE 15

MISCELLANEOUS PROVISIONS

15.1                        Investment
Intent.  The Company may
require that there be presented to and filed with it by any Participant under
the Plan, such evidence as it may deem necessary to establish that the Awards
granted or the shares of Common Stock to be purchased or transferred are being
acquired for investment and not with a view to their distribution.

15.2                        No Right to
Continued Employment.  Neither
the Plan nor any Award granted under the Plan shall confer upon any Participant
any right with respect to continuance of employment by the Company or any
Subsidiary.

15.3                        Indemnification
of Board and Committee.  No
member of the Board or the Committee, nor any officer or Employee of the
Company acting on behalf of the Board or the

 16
 

Committee, shall
be personally liable for any action, determination, or interpretation taken or
made in good faith with respect to the Plan, and all members of the Board and
the Committee, each officer of the Company, and each Employee of the Company
acting on behalf of the Board or the Committee shall, to the extent permitted
by law, be fully indemnified and protected by the Company in respect of any
such action, determination, or interpretation.

15.4                        Effect
of the Plan.  Neither the adoption of
this Plan nor any action of the Board or the Committee shall be deemed to give
any person any right to be granted an Award or any other rights except as may
be evidenced by an Award Agreement, or any amendment thereto, duly authorized
by the Committee and executed on behalf of the Company, and then only to the
extent and upon the terms and conditions expressly set forth therein.

15.5                        Compliance
With Other Laws and Regulations. 
Notwithstanding anything contained herein to the contrary, the Company
shall not be required to sell or issue shares of Common Stock under any Award
if the issuance thereof would constitute a violation by the Participant or the
Company of any provisions of any law or regulation of any governmental
authority or any national securities exchange or inter-dealer quotation system
or other forum in which shares of Common Stock are quoted or traded (including
without limitation Section 16 of the 1934 Act and Section 162(m) of the Code);
and, as a condition of any sale or issuance of shares of Common Stock under an
Award, the Committee may require such agreements or undertakings, if any, as
the Committee may deem necessary or advisable to assure compliance with any
such law or regulation.  The Plan, the
grant and exercise of Awards hereunder, and the obligation of the Company to
sell and deliver shares of Common Stock, shall be subject to all applicable
federal and state laws, rules, and regulations and to such approvals by any
government or regulatory agency as may be required.

15.6                        Tax Requirements.  The Company or, if applicable, any Subsidiary
(for purposes of this Section 15.6, the term “Company” shall be
deemed to include any applicable Subsidiary), shall have the right to deduct
from all amounts paid in cash or other form in connection with the Plan, any
Federal, state, local, or other taxes required by law to be withheld in
connection with an Award granted under this Plan.  The Company may, in its sole discretion, also
require the Participant receiving shares of Common Stock issued under the Plan
to pay the Company the amount of any taxes that the Company is required to
withhold in connection with the Participant’s income arising with respect to
the Award.  Such payments shall be
required to be made when requested by Company and may be required to be made
prior to the delivery of any certificate representing shares of Common
Stock.  Such payment may be made (i) by
the delivery of cash to the Company in an amount that equals or exceeds (to
avoid the issuance of fractional shares under (iii) below) the required tax
withholding obligations of the Company; (ii) if the Company, in its sole
discretion, so consents in writing, the actual delivery by the exercising
Participant to the Company of shares of Common Stock that the Participant has
not acquired from the Company within six (6) months prior to the date of
exercise, which shares so delivered have an aggregate Fair Market Value that
equals or exceeds (to avoid the issuance of fractional shares under (iii)
below) the required tax withholding payment; (iii) if the Company, in its sole
discretion, so consents in writing, the Company’s withholding of a number of
shares to be delivered upon the exercise of the Stock Option, which shares so
withheld have an aggregate Fair Market Value that equals (but does not exceed)
the required tax withholding payment; or (iv) any combination of (i), (ii), or
(iii).  The Company may, in its sole
discretion, withhold any such taxes from any other cash remuneration otherwise paid
by the Company to the Participant.  The
Committee may in the Award Agreement impose any additional tax requirements or
provisions that the Committee deems necessary or desirable.

 17
 

15.7                        Assignability.  Incentive Stock Options may not be
transferred, assigned, pledged, hypothecated, or otherwise conveyed or
encumbered other than by will or the laws of descent and distribution and may
be exercised during the lifetime of the Participant only by the Participant or
the Participant’s legally authorized representative, and each Award Agreement
in respect of an Incentive Stock Option shall so provide. The designation by a
Participant of a beneficiary will not constitute a transfer of a Stock
Option.  The Committee may waive or
modify any limitation contained in the preceding sentences of this Section 15.7
that is not required for compliance with Section 422 of the Code.

Except
as otherwise provided herein, Nonqualified Stock Options may not be
transferred, assigned, pledged, hypothecated, or otherwise conveyed or
encumbered other than by will or the laws of descent and distribution.  The Committee may, in its discretion,
authorize all or a portion of a Nonqualified Stock Option to be granted to a
Participant on terms which permit transfer by such Participant to (i) the
spouse (or former spouse), children, or grandchildren of the Participant (“Immediate Family Members”),
(ii) a trust or trusts for the exclusive benefit of such Immediate Family
Members, (iii) a partnership in which the only partners are (1) such
Immediate Family Members and/or (2) entities which are controlled by Immediate
Family Members, (iv) an entity exempt from federal income tax pursuant to
Section 501(c)(3) of the Code or any successor provision, or (v) a split
interest trust or pooled income fund described in Section 2522(c)(2) of the
Code or any successor provision, provided that (x) there shall be
no consideration for any such transfer, (y) the Award Agreement pursuant
to which such Nonqualified Stock Option is granted must be approved by the
Committee and must expressly provide for transferability in a manner consistent
with this Section, and (z) subsequent transfers of transferred
Nonqualified Stock Options shall be prohibited except those by will or the laws
of descent and distribution.

Following
any transfer, any such Nonqualified Stock Option shall continue to be subject
to the same terms and conditions as were applicable immediately prior to
transfer, provided that for purposes of Articles 8, 9, 11, 13 and 15
hereof the term “Participant” shall be deemed to include the transferee.  The events of Termination of Service shall
continue to be applied with respect to the original Participant, following
which the Nonqualified Stock Options shall be exercisable or convertible by the
transferee only to the extent and for the periods specified in the Award
Agreement.  The Committee and the Company
shall have no obligation to inform any transferee of a Nonqualified Stock
Option of any expiration, termination, lapse, or acceleration of such Stock
Option.  The Company shall have no
obligation to register with any federal or state securities commission or
agency any Common Stock issuable or issued under a Nonqualified Stock Option
that has been transferred by a Participant under this Section 15.7.

15.8                        Use
of Proceeds.  Proceeds from the sale
of shares of Common Stock pursuant to Awards granted under this Plan shall
constitute general funds of the Company.

15.9                        Execution
of Receipts and Releases.  Any payment of cash or any issuance or
transfer of Common Stock to a Participant, or his or her legal representative,
heir, legatee, or distributee, shall, to the extent thereof, be in full
satisfaction of all claims of such persons hereunder.  The Committee may require any Participant,
legal representative, heir, legatee, or distributee, as a condition precedent
to such payment, issuance, or transfer, to execute a release and receipt
therfor in such form as the Committee may determine, in its sole discretion.

15.10                 Legend.  Each certificate representing shares of
Restricted Stock issued to a Participant shall bear the following legend, or a
similar legend deemed by the Company to constitute

 18
 

an appropriate
notice of the provisions hereof (any such certificate not having such legend
shall be surrendered upon demand by the Company and so endorsed):

On the face of the certificate:

“Transfer of this stock
is restricted in accordance with conditions printed on the reverse of this
certificate.”

On the reverse:

“The shares of stock evidenced by this
certificate are subject to, and transferable only in accordance with, that
certain 2006 Stock Awards Plan of TGC Industries, Inc., a copy of which is on
file at the principal office of the Company in Plano, Texas.  No transfer or pledge of the shares evidenced
hereby may be made except in accordance with and subject to the provisions of
said Plan.  By acceptance of this
certificate, any holder, transferee, or pledgee hereof agrees to be bound by
all of the provisions of said Plan.”

The
following legend shall be inserted on a certificate evidencing Common Stock
issued under the Plan if the shares were not issued in a transaction registered
under the applicable federal and state securities laws:

“Shares of stock
represented by this certificate have been acquired by the holder for investment
and not for resale, transfer, or distribution, have been issued pursuant to
exemptions from the registration requirements of applicable state and federal
securities laws, and may not be offered for sale, sold, or transferred other
than pursuant to effective registration under such laws, or in transactions
otherwise in compliance with such laws, and upon evidence satisfactory to the
Company of compliance with such laws, as to which the Company may rely upon an
opinion of counsel satisfactory to the Company.”

A copy of this Plan shall be kept on file
in the principal office of the Company in Plano, Texas.

 19
 

IN
WITNESS WHEREOF, the Company has caused this instrument to be executed as
of  March 30, 2006, by its President and
Secretary pursuant to prior action taken by the Board.

	
   

  	
  TGC INDUSTRIES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Wayne A.
  Whitener

  
	
   

  	
   

  	
  Wayne A. Whitener, President

  
	
   

  	
   

  
	
   

  	
   

  
	
  Attest:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  
	
  /s/

  	
  Kenneth W.
  Uselton

  	
   

  
	
   

  	
  Kenneth W. Uselton, Secretary

  	
   

  

 

 20

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