Document:

Exhibit 10.7

 

COMMERCIAL SECURITY AGREEMENT

 

	
Borrower:
    	
Wayside Technology Group, Inc ; Lifeboat 
   Distribution, Inc. ; Techxtend, Inc. ; and 
   Programmer’s Paradise, Inc.
   1157 Shrewsbury Avenue

Shrewsbury , NJ    07702
    	
Lender:
    	
Citibank, N.A.

3950 Regent Blvd.

Regent South - Second Floor

Irving, TX  75063
    
	
 
    	
 
    
	
Grantor:
    	
Techxtend, Inc.

1157 Shrewsbury Avenue

Shrewsbury, NJ  07702
    

 

THIS COMMERCIAL SECURITY AGREEMENT dated January 4, 2013, is made and executed among Techxtend, Inc.  (“Grantor”); Wayside Technology Group, Inc ; Lifeboat Distribution, Inc. ; Techxtend, Inc. ; and Programmer’s Paradise, Inc.  (“Borrower”); and Ci tibank, N.A. (“Lender”).

 

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

 

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

 

All personal property of every kind and nature, including, without limitation, all accounts (including healthcare insurance receivables), goods (including inventory, equipment, fixtures and any accessions thereto and embedded software), chattel paper (whether electronic, tangible or intangible), documents, instruments (including promissory notes), general intangibles, letter of credit rights (whether or not the letter of credit is evidenced by a writing), supporting obligations, commercial tort claims, investment property (including securities), money, deposit accounts, and other contract rights or rights to the payment of money

 

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

 

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

 

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

 

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

 

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

 

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

 

CROSS-COLLATERALIZATION.  In addition to the Note, this Agreement secures all obligations, debts and liabilities, plus interest thereon, of either Grantor or Borrower to Lender, or any one or more of them, as well as all claims by Lender against Borrower and Grantor or any one or more of them, whether now existing or hereafter arising, whether related or unrelated to the purpose of the Note, whether voluntary or otherwise, whether due or not due, direct or indirect, determined or undetermined, absolute or contingent, liquidated or unliquidated, whether Borrower or Grantor may be liable individually or jointly with others, whether obligated as guarantor, surety, accommodation party or otherwise, and whether recovery upon such amounts may be or hereafter may become barred by any statute of limitations, and whether the obligation to repay such amounts may be or hereafter may become otherwise unenforceable.

 

BORROWER’S WAIVERS AND RESPONSIBILITIES.  Except as otherwise required under this Agreement or by applicable law,  (A)  Borrower agrees that Lender need not tell Borrower about any action or inaction Lender takes in connection with this Agreement;  (B)  Borrower assumes the responsibility for being and keeping informed about the Collateral; and  (C)  Borrower waives any defenses that may arise because of any action or inaction of Lender, including without limitation any failure of Lender to realize upon the Collateral or any delay by Lender in realizing upon the Collateral; and Borrower agrees to remain liable under the Note no matter what action Lender takes or fails to take under this Agreement.

 

GRANTOR’S REPRESENTATIONS AND WARRANTIES.  Grantor warrants that:  (A)  this Agreement is executed at Borrower’s request and not at the request of Lender;  (B)  Grantor has the full right, power and authority to enter into this Agreement and to pledge the Collateral to Lender;  (C)  Grantor has established adequate means of obtaining from Borrower on a continuing basis information about Borrower’s financial condition; and  (D)  Lender has made no representation to Grantor about Borrower or Borrower’s creditworthiness.

 

GRANTOR’S WAIVERS.  Grantor waives all requirements of presentment, protest, demand, and notice of dishonor or non-payment to Borrower or Grantor, or any other party to the Indebtedness or the Collateral.  Lender may do any of the following with respect to any obligation of any Borrower, without first obtaining the consent of Grantor:  (A)  grant any extension of time for any payment,  (B)  grant any renewal,  (C)  permit any modification of payment terms or other terms, or  (D)  exchange or release any Collateral or other security.  No such act or failure to act shall affect Lender’s rights against Grantor or the Collateral.

 

 

RIGHT OF SETOFF.  To the extent permitted by applicable law, and upon the occurrence and during the continuance of any Event of Default, Lender reserves a right of setoff in all Grantor’s accounts with Lender and its subsidiaries and affiliates (whether checking, savings, or some other account).  This includes all accounts Grantor holds jointly with someone else and all accounts Grantor may open in the future.  However, this does not include any IRA or Keogh accounts, or any trust accounts for which setoff would be prohibited by law, and upon the occurrence and during the continuance of any Event of Default.  Grantor authorizes Lender, to the extent permitted by applicable law, to charge or setoff all sums owing on the Indebtedness against any and all such accounts, and, at Lender’s option, to administratively freeze all such accounts to allow Lender to protect Lender’s charge and setoff rights provided in this paragraph

 

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

 

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

 

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

 

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

 

Enforceability of Collateral.  To the extent the Collateral consists of accounts, chattel paper, or general intangibles, as defined by the Uniform Commercial Code, the Collateral is enforceable in accordance with its terms, is genuine, and fully complies with all applicable laws and regulations concerning form, content and manner of preparation and execution, and all persons appearing to be obligated on the Collateral have authority and capacity to contract and are in fact obligated as they appear to be on the Collateral.  There shall be no setoffs or counterclaims against any of the Collateral, and no agreement shall have been made under which any deductions or discounts may be claimed concerning the Collateral except those disclosed to Lender in writing.

 

Location of the Collateral.  Except in the ordinary course of Grantor’s business, Grantor agrees to keep the Collateral at Grantor’s address shown above or at such other locations as are acceptable to Lender.  Upon Lender’s request, Grantor will deliver to Lender in form satisfactory to Lender a schedule of real properties and Collateral locations relating to Grantor’s operations, including without limitation the following:  (1)  all real property Grantor owns or is purchasing;  (2)   all real property Grantor is renting or leasing;  (3)  all storage facilities Grantor owns, rents, leases, or uses; and  (4)  all other properties where Collateral is or may be located.

 

Removal of the Collateral.  Except in the ordinary course of Grantor’s business,  Grantor shall not remove the Collateral from its existing location without Lender’s prior written consent(which consent shall not be unreasonably withheld, conditioned or delayed).  Grantor shall, whenever requested, advise Lender of the exact location of the Collateral.

 

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

 

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

 

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

 

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

 

Taxes, Assessments and Liens.  Grantor will pay when due all taxes, assessments and liens upon the Collateral, its use or operation, upon this Agreement, upon any promissory note or notes evidencing the Indebtedness, or upon any of the other Related Documents.  Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender’s interest in the Collateral is not jeopardized in Lender’s sole opinion.  If the Collateral is subjected to a lien which is not discharged within fifteen (15) days, Grantor shall deposit with Lender cash, a sufficient corporate surety bond or other security satisfactory to Lender in an amount adequate to provide for the discharge of the lien plus any interest, costs, reasonable attorneys’ fees or other charges that could accrue as a result of foreclosure or sale of the Collateral.  In any contest Grantor shall defend itself and Lender and shall satisfy any final adverse judgment before enforcement against the Collateral.  Grantor shall name Lender as an additional obligee under any surety bond furnished in the contest proceedings.  Grantor further agrees to furnish Lender with evidence that such taxes, assessments, and governmental and other charges have been paid in full and in a timely manner.  Grantor may withhold any such payment or may elect to contest any lien if Grantor is in good faith conducting an appropriate proceeding to contest the obligation to pay and so long as Lender’s interest in the Collateral is not jeopardized.

 

Compliance with Governmental Requirements.  Grantor shall comply promptly with all laws, ordinances, rules and regulations of all governmental authorities, now or hereafter in effect, applicable to the ownership, production, disposition, or use of the Collateral, including all laws or regulations relating to the undue erosion of highly-erodible land or relating to the conversion of wetlands for the production of an agricultural product or commodity.

 

 

Grantor may contest in good faith any such law, ordinance or regulation and withhold compliance during any proceeding, including appropriate appeals, so long as Lender’s interest in the Collateral, in Lender’s opinion, is not jeopardized.

 

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

 

Maintenance of Casualty Insurance.  Grantor shall procure and maintain all risks insurance, including without limitation fire, theft and liability coverage together with such other insurance as Lender may require with respect to the Collateral, in form, amounts, coverages and basis reasonably acceptable to Lender and issued by a company or companies reasonably acceptable to Lender.  Grantor, upon request of Lender, will deliver to Lender from time to time the policies or certificates of insurance in form satisfactory to Lender, including stipulations that coverages will not be cancelled or diminished without at least ten (10) days’ prior written notice to Lender and not including any disclaimer of the insurer’s liability for failure to give such a notice.  Each insurance policy also shall include an endorsement providing that coverage in favor of Lender will not be impaired in any way by any act, omission or default of Grantor or any other person.  In connection with all policies covering assets in which Lender holds or is offered a security interest, Grantor will provide Lender with such loss payable or other endorsements as Lender may require.  If Grantor at any time fails to obtain or maintain any insurance as required under this Agreement, Lender may (but shall not be obligated to) obtain such insurance as Lender deems appropriate, including if Lender so chooses “single interest insurance,” which will cover only Lender’s interest in the Collateral.

 

Application of Insurance Proceeds.  Grantor shall promptly notify Lender of any loss or damage to the Collateral if the estimated cost of repair or replacement exceeds $25,000.00, whether or not such casualty or loss is covered by insurance.  Lender may make proof of loss if Grantor fails to do so within fifteen (15) days of the casualty.  All proceeds of any insurance on the Collateral, including accrued proceeds thereon, shall be held by Lender as part of the Collateral.  If Lender consents to repair or replacement of the damaged or destroyed Collateral, Lender shall, upon satisfactory proof of expenditure,  pay or reimburse Grantor from the proceeds for the reasonable cost of repair or restoration.  If Lender does not consent to repair or replacement of the Collateral, Lender shall retain a sufficient amount of the proceeds to pay all of the Indebtedness, and shall pay the balance to Grantor.  Any proceeds which have not been disbursed within six (6) months after their receipt and which Grantor has not committed to the repair or restoration of the Collateral shall be used to prepay the Indebtedness.

 

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

 

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

 

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

 

Insurance Requirements. For the avoidance of doubt regarding the requirement in this Agreement that Grantor maintain such insurance as Lender shall require, and except to the extent specific insurance types, coverages or insurers are specified in this Agreement or the Related Documents, Lender requires and Grantor agrees to maintain at all times with financially sound and reputable insurance companies such property damage insurance and casualty insurance with respect to liabilities, losses or damage in respect of the assets and businesses of Grantor as may customarily be carried or maintained under similar circumstances by businesses engaged in the same or similar enterprises, in each case in such amounts, with such deductibles, covering such risks and otherwise on terms and conditions as shall be customary for such businesses.

 

GRANTOR’S RIGHT TO POSSESSION.  Until default, Grantor may have possession of the tangible personal property and beneficial use of all the Collateral and may use it in any lawful manner not inconsistent with this Agreement or the Related Documents, provided that Grantor’s right to possession and beneficial use shall not apply to any Collateral where possession of the Collateral by Lender is required by law to perfect Lender’s security interest in such Collateral.  If Lender at any time has possession of any Collateral, whether before or after an Event of Default, Lender shall be deemed to have exercised reasonable care in the custody and preservation of the Collateral if Lender takes such action for that purpose as Grantor shall request or as Lender, in Lender’s sole discretion, shall deem appropriate under the circumstances, but failure to honor any request by Grantor shall not of itself be deemed to be a failure to exercise reasonable care.  Lender shall not be required to take any steps necessary to preserve any rights in the Collateral against prior parties, nor to protect, preserve or maintain any security interest given to secure the Indebtedness.

 

LENDER’S EXPENDITURES.  If any action or proceeding is commenced that would materially affect Lender’s interest in the Collateral or if Grantor fails to comply with any provision of this Agreement or any Related Documents, including but not limited to Grantor’s failure to discharge or pay when due any amounts Grantor is required to discharge or pay under this Agreement or any Related Documents, Lender on Grantor’s behalf may (but shall not be obligated to) take any action that Lender deems appropriate, including but not limited to discharging or paying all taxes, liens, security interests, encumbrances and other claims, at any time levied or placed on the Collateral and paying all costs for insuring, maintaining and preserving the Collateral. All such expenditures incurred or paid by Lender for such purposes, with the exception of insurance premiums paid by Lender with respect to motor vehicles, but including the payment of attorneys’ fees and expenses, will then bear interest at the rate charged under the Note from the date incurred or paid by Lender to the date of repayment by Grantor.

 

 

All such expenses will become a part of the Indebtedness and, at Lender’s option, will  (A)  be payable on demand;  (B)  be added to the balance of the Note and be apportioned among and be payable with any installment payments to become due during either  (1)  the term of any applicable insurance policy; or  (2)  the remaining term of the Note; or  (C)  be treated as a balloon payment which will be due and payable at the Note’s maturity.  The Agreement also will secure payment of these amounts.  Such right shall be in addition to all other rights and remedies to which Lender may be entitled upon Default.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Insecurity.  Lender in good faith believes itself insecure.

 

Judgment or Order for Payment of Money. Borrower shall fail to satisfy or comply with any judgment or order for the payment of money, which sum shall not be subject to full, complete and effective insurance coverage, shall be rendered against the Borrower and either (i) enforcement proceedings shall have been commenced by any creditor upon that judgment or order or (ii) there shall be any period of 30 consecutive days during which a stay of enforcement of that judgment or order, by reason of a pending appeal or otherwise, shall not be in effect.

 

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

 

Accelerate Indebtedness.  Lender may declare the entire Indebtedness, including any prepayment fee which Borrower would be required to pay, immediately due and payable, without notice of any kind to Borrower or Grantor.

 

Assemble Collateral.  Lender may require Grantor to deliver to Lender all or any portion of the Collateral and any and all certificates of title and other documents relating to the Collateral.  Lender may require Grantor to assemble the Collateral and make it available to Lender at a place to be designated by Lender.  Lender also shall have full power to enter upon the property of Grantor to take possession of and remove the Collateral.  If the Collateral contains other goods not covered by this Agreement at the time of repossession, Grantor agrees Lender may take such other goods, provided that Lender makes reasonable efforts to return them to Grantor after repossession.

 

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

 

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

 

 

Employment by Lender shall not disqualify a person from serving as a receiver.

 

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

 

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

 

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

 

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

 

JURY WAIVER.  GRANTOR HEREBY WAIVES THE RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM HEREUNDER OR IN CONNECTION HEREWITH TO THE EXTENT PERMITTED BY APPLICABLE LAW.

 

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

 

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

 

Attorneys’ Fees; Expenses.  Grantor agrees to pay upon demand all of Lender’s costs and expenses, including Lender’s reasonable attorneys’ fees and Lender’s legal expenses, incurred in connection with the enforcement of this Agreement.  Lender may hire or pay someone else to help enforce this Agreement, and Grantor shall pay the costs and expenses of such enforcement.  Costs and expenses include Lender’s reasonable attorneys’ fees and legal expenses whether or not there is a lawsuit, including reasonable attorneys’ fees and legal expenses for bankruptcy proceedings (including efforts to modify or vacate any automatic stay or injunction), appeals, and any anticipated post-judgment collection services.  Lender may also recover from Grantor all court, alternative dispute resolution or other collection costs (including, without limitation, fees and charges of collection agencies) actually incurred by Lender.

 

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

 

Governing Law.  With respect to procedural matters related to the perfection and enforcement of Lender’s rights against the Collateral, this Agreement will be governed by federal law applicable to Lender and to the extent not preempted by federal law, the laws of the State of Delaware.  In all other respects, this Agreement will be governed by federal law applicable to Lender and, to the extent not preempted by federal law, the laws of the State of New York without regard to its conflicts of law provisions.   However, if there ever is a question about whether any provision of this Agreement is valid or enforceable, the provision that is questioned will be governed by whichever state or federal law would find the provision to be valid and enforceable.  The loan transaction that is evidenced by the Note and this Agreement has been applied for, considered, approved and made, and all necessary loan documents have been accepted by Lender in the State of New York.

 

Choice of Venue.  If there is a lawsuit, Grantor agrees upon Lender’s request to submit to the jurisdiction of the courts of New York County, State of New York.  Nothing herein shall affect the right of the Lender to bring any action or proceeding against the Grantor or its property in the courts of any other jurisdiction.

 

Joint and Several Liability.  All obligations of Borrower and Grantor under this Agreement shall be joint and several, and all references to Grantor shall mean each and every Grantor, and all references to Borrower shall mean each and every Borrower.  This means that each Borrower and Grantor signing below is responsible for all obligations in this Agreement.  Where any one or more of the parties is a corporation, partnership, limited liability company or similar entity, it is not necessary for Lender to inquire into the powers of any of the officers, directors, partners, members, or other agents acting or purporting to act on the entity’s behalf, and any obligations made or created in reliance upon the professed exercise of such powers shall be guaranteed under this Agreement.

 

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

 

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

 

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

Borrower.  The word “Borrower” means Wayside Technology Group, Inc ; Lifeboat Distribution, Inc. ; Techxtend, Inc. ; and Programmer’s Paradise, Inc.  and includes all co-signers and co-makers signing the Note and all their successors and assigns.

 

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

 

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

 

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

 

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

 

Grantor.  The word “Grantor” means Techxtend, Inc. .

 

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

 

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

 

Indebtedness.  The word “Indebtedness” means all present and future loans, advances, overdrafts, liabilities, obligations, guaranties, covenants, duties and other debts at any time owing by Grantor to Lender, whether evidenced by this Agreement, a promissory note or other instrument, any Related Documents, or any other document or agreement, whether arising from an extension of credit, opening of a letter of credit, banker’s acceptance, loan, overdraft, guaranty, indemnification or otherwise, whether direct or indirect (including, without limitation, those acquired by assignment and any participation by Lender in Grantor’s debts owing to others), absolute or contingent, due or to become due, including, without limitation, all interest, charges, expenses, fees, attorneys’ fees (including attorneys’ fees and expenses incurred in bankruptcy), expert witness fees and expenses, fees and expenses of consultants, audit fees, letter of credit fees, closing fees, facility fees, termination fees, and any other sums chargeable to Grantor under this Agreement, the Note, any Related Documents, or under any other present or future instrument, document or agreement between Grantor and Lender.

 

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

 

Note.  The word “Note” means and includes without limitation Borrower’s promissory note or notes, if any, or any credit agreements or loan agreements, evidencing Borrower’s Indebtedness, as well as any substitute, replacement or refinancing note or notes or credit agreement or loan agreement therefor.

 

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

 

 

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

 

BORROWER AND GRANTOR HAVE READ AND UNDERSTOOD ALL THE PROVISIONS OF THIS COMMERCIAL SECURITY AGREEMENT AND AGREE TO ITS TERMS. THIS AGREEMENT IS DATED JANUARY 4, 2013.

 

THIS AGREEMENT IS DELIVERED UNDER SEAL AND IT IS INTENDED THAT THIS AGREEMENT IS AND SHALL CONSTITUTE AND HAVE THE EFFECT OF A SEALED INSTRUMENT ACCORDING TO LAW.

 

	
GRANTOR:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
TECHXTEND, INC.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Thomas J. Flaherty
    	
 
    
	
Authorized Signer for Techxtend, Inc.
    	
 
    
	
 
    	
 
    
	
(Seal)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
BORROWER:
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
WAYSIDE TECHNOLOGY GROUP, INC
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Thomas J. Flaherty
    	
 
    
	
Authorized Signer for Wayside Technology   Group, Inc
    	
 
    
	
 
    	
 
    
	
(Seal)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
LIFEBOAT DISTRIBUTION, INC.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Thomas J. Flaherty
    	
 
    
	
Authorized Signer for Lifeboat   Distribution, Inc.
    	
 
    
	
 
    	
 
    
	
(Seal)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
TECHXTEND, INC.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Thomas J. Flaherty
    	
 
    
	
Authorized Signer for Techxtend, Inc.
    	
 
    
	
 
    	
 
    
	
(Seal)
    	
 
    
	
 
    	
 
    
	
 
    	
 
    
	
PROGRAMMER’S PARADISE, INC.
    	
 
    
	
 
    	
 
    
	
By:
    	
/s/   Thomas J. Flaherty
    	
 
    
	
Authorized Signer for Programmer’s   Paradise, Inc.
    	
 
    
	
 
    	
 
    
	
(Seal)Exhibit 10.1

 

NOTE: Execution of this Adoption Agreement creates a legal liability of the Employer with significant tax consequences to the Employer and Participants.  Principal Life Insurance Company disclaims all liability for the legal and tax consequences which result from the elections made by the Employer in this Adoption Agreement.

 

	
 
    	
Principal Life Insurance Company, Raleigh, NC 27612
    
	
 
    	
A member of the Principal Financial Group®
    

 

THE EXECUTIVE  NONQUALIFIED “EXCESS” PLAN

 

ADOPTION AGREEMENT

 

THIS AGREEMENT is the adoption by TGC Industries, Inc. (the “Company”) of the Executive Nonqualified Excess Plan (“Plan”).

 

W I T N E S S E T H:

 

WHEREAS, the Company desires to adopt the Plan as an unfunded, nonqualified deferred compensation plan; and

 

WHEREAS, the provisions of the Plan are intended to comply with the requirements of Section 409A of the Code and the regulations thereunder and shall apply to amounts subject to section 409A; and

 

WHEREAS, the Company has been advised by Principal Life Insurance Company to obtain legal and tax advice from its professional advisors before adopting the Plan,

 

NOW, THEREFORE, the Company hereby adopts the Plan in accordance with the terms and conditions set forth in this Adoption Agreement:

 

ARTICLE I

 

Terms used in this Adoption Agreement shall have the same meaning as in the Plan, unless some other meaning is expressly herein set forth. The Employer hereby represents and warrants that the Plan has been adopted by the Employer upon proper authorization and the Employer hereby elects to adopt the Plan for the benefit of its Participants as referred to in the Plan. By the execution of this Adoption Agreement, the Employer hereby agrees to be bound by the terms of the Plan.

 

ARTICLE II

 

The Employer hereby makes the following designations or elections for the purpose of the Plan:

 

	
2.6                          Committee:
    	
The   duties of the Committee set forth in the Plan shall be satisfied by:
    
	
 
    	
 
    
	
XX
    	
(a)
    	
Company
    
	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
The   administrative committee appointed by the Board to serve at the pleasure of   the Board.
    
	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Board.
    
	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Other   (specify):                                                             .
    

 

 

	
2.8                          Compensation:
    	
The   “Compensation” of a Participant shall mean all of a Participant’s:
    
	
 
    	
 
    
	
XX
    	
(a)
    	
Base   salary.
    
	
 
    	
 
    	
 
    
	
XX
    	
(b)
    	
Service   Bonus.
    
	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Performance-Based   Compensation earned in a period of 12 months or more.
    
	
 
    	
 
    	
 
    
	
XX
    	
(d)
    	
Commissions.
    
	
 
    	
 
    	
 
    
	
XX
    	
(e)
    	
Compensation   received as an Independent Contractor reportable on Form 1099.
    
	
 
    	
 
    	
 
    
	
 
    	
(f)
    	
Other:
    
	
 
    
	
2.9                          Crediting Date:
    	
The   Deferred Compensation Account of a Participant shall be credited as follows:
    
	
 
    	
 
    
	
Participant Deferral Credits at the time   designated below:
    
	
 
    	
 
    
	
 
    	
(a)
    	
The   last business day of each Plan Year.
    
	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
The   last business day of each calendar quarter during the Plan Year.
    
	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
The   last business day of each month during the Plan Year.
    
	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
The   last business day of each payroll period during the Plan Year.
    
	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Each   pay day as reported by the Employer.
    
	
 
    	
 
    	
 
    
	
XX
    	
(f)
    	
On any   business day as specified by the Employer.
    
	
 
    	
 
    	
 
    
	
 
    	
(g)
    	
Other:                                                                             .
    
	
 
    	
 
    
	
Employer Credits at the   time designated below:
    
	
 
    	
 
    
	
XX
    	
(a)
    	
On any business day as specified by the Employer.
    
	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
Other:                                                                             .
    
	
 
    	
 
    
	
2.13                   Effective   Date:
    	
 
    
	
 
    	
 
    
	
XX
    	
(a)
    	
This is   a newly-established Plan, and the Effective Date of the Plan is February 1, 2013.
    
	
 
    	
 
    	
 
    
	
 
    	
(b)
    	
This is   an amendment of a plan named                                                dated                                and governing all contributions to the plan through                                        .   The Effective Date of this amended Plan is                         .
    

 

2

 

	
2.20                   Normal   Retirement Age: The Normal Retirement Age of a Participant shall   be: 
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(a)
    	
Age         .
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
The   later of age        or the                    anniversary of the participation commencement date. The participation   commencement date is the first day of the first Plan Year in which the   Participant commenced participation in the Plan.
    
	
 
    	
 
    	
 
    	
 
    
	
XX
    	
(c)
    	
Other: The later of Age 65 or 5 Years of Service from Date of Hire
    
	
 
    	
 
    	
 
    
	
2.23                   Participating   Employer(s): As of the Effective Date, the following Participating   Employer(s) are parties to the Plan:
    

 

	
Name of Employer
    	
 
    	
Address
    	
 
    	
Telephone No.
    	
 
    	
EIN
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
TGC   Industries, Inc.
    	
 
    	
101   E. Park Blvd., Suite 955
    	
 
    	
972-881-1099
    	
 
    	
74-2095844
    
	
 
    	
 
    	
Plano,   TX 75074
    	
 
    	
 
    	
 
    	
 
    

 

	
2.26                   Plan: The name of the Plan is
    
	
 
    
	
TGC Industries, Inc.,   Deferred Compensation Plan.
    
	
 
    	
 
    	
 
    
	
2.28                   Plan Year: The Plan Year shall end each   year on the last day of the month of December.
    
	
 
    	
 
    	
 
    
	
2.30                   Seniority   Date: The date on which a   Participant has:
    
	
 
    	
 
    	
 
    
	
XX
    	
(a)
    	
Attained   age 55.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
Completed        Years of Service from First Date of Service.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(c)
    	
Attained   age      and completed      Years of   Service from First Date of Service.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(d)
    	
Attained   an age as elected by the Participant.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(e)
    	
Not   applicable — distribution elections for Separation from Service are not based   on Seniority Date
    

 

3

 

4.1                          Participant Deferral Credits: Subject to the limitations in Section 4.1 of the Plan, a Participant may elect to have his Compensation (as selected in Section 2.8 of this Adoption Agreement) deferred within the annual limits below by the following percentage or amount as designated in writing to the Committee:

 

	
XX
    	
(a)
    	
Base   salary:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
minimum   deferral:                    %
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
maximum   deferral:   $                    or   80%
    
	
 
    	
 
    	
 
    
	
XX
    	
(b)
    	
Service   Bonus:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
minimum   deferral:                    %
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
maximum   deferral:   $                    or   100%
    
	
 
    	
 
    	
 
    
	
 
    	
(c)
    	
Performance-Based   Compensation:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
minimum   deferral:                    %
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
maximum   deferral:   $                    or                       %
    
	
 
    	
 
    	
 
    
	
XX
    	
(d)
    	
Commissions:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
minimum   deferral:                     %
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
maximum   deferral:   $                    or   100%
    
	
 
    	
 
    	
 
    
	
XX
    	
(e)
    	
Form 1099 Compensation:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
minimum   deferral:                     %
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
maximum   deferral:   $                    or   100%
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(f)
    	
Other:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
minimum   deferral:                     %
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
maximum   deferral:   $                    or                       %
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(g)
    	
Participant deferrals not allowed.
    

 

4

 

	
4.2                          Employer   Credits: Employer Credits will be made in the following   manner:
    
	
 
    	
 
    	
 
    
	
XX
    	
(a)
    	
Employer   Discretionary Credits: The Employer may make discretionary credits to   the Deferred Compensation Account of each Active Participant in an amount   determined as follows:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
XX
    	
(i)
    	
An amount determined each Plan Year by the   Employer.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
(ii)
    	
Other:                                                                                 .
    
	
 
    	
 
    	
 
    	
 
    
	
XX
    	
(b)
    	
Other   Employer Credits: The Employer may make other credits to the   Deferred Compensation Account of each Active Participant in an amount   determined as follows:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
XX
    	
(i)
    	
An amount determined each Plan Year by the   Employer.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(ii)
    	
Other:                                                                                 .
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(c)
    	
Employer   Credits not allowed.
    
	
 
    	
 
    	
 
    	
 
    
	
5.2                          Disability   of a Participant:
    
	
 
    	
 
    	
 
    
	
XX
    	
(a)
    	
A   Participant’s becoming Disabled shall be a Qualifying Distribution Event and the   Deferred Compensation Account shall be paid by the Employer as provided in   Section 7.1.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
A   Participant becoming Disabled shall not be a Qualifying Distribution   Event.
    

 

	
5.3                          Death   of a Participant: If the Participant dies while in Service, the   Employer shall pay a benefit to the Beneficiary in an amount equal to the   vested balance in the Deferred Compensation Account of the Participant   determined as of the date payments to the Beneficiary commence, plus:
    

 

	
 
    	
 
    	
(a)
    	
An   amount to be determined by the Committee.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
Other:                                                                                         .
    
	
 
    	
 
    	
 
    	
 
    
	
XX
    	
(c)
    	
No   additional benefits.
    

 

5

 

	
5.4                          In-Service or   Education Distributions: In-Service and Education   Accounts are permitted under the Plan:
    
	
 
    	
 
    	
 
    
	
XX
    	
(a)
    	
In-Service   Accounts are allowed with respect to:
    
	
 
    	
 
    	
XX
    	
Participant   Deferral Credits only.
    
	
 
    	
 
    	
 
    	
Employer   Credits only.
    
	
 
    	
 
    	
 
    	
Participant   Deferral and Employer Credits.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
In-service   distributions may be made in the following manner:
    
	
 
    	
 
    	
XX
    	
Single   lump sum payment.
    
	
 
    	
 
    	
 
    	
Annual   installments over a term certain not to exceed        years.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Education   Accounts are allowed with respect to:
    
	
 
    	
 
    	
 
    	
Participant   Deferral Credits only.
    
	
 
    	
 
    	
 
    	
Employer   Credits only.
    
	
 
    	
 
    	
 
    	
Participant   Deferral and Employer Credits.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
Education   Accounts distributions may be made in the following manner:
    
	
 
    	
 
    	
 
    	
Single   lump sum payment.
    
	
 
    	
 
    	
 
    	
Annual   installments over a term certain not to exceed        years.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
If   applicable, amounts not vested at the time payments due under this   Section cease will be:
    
	
 
    	
 
    	
 
    	
Forfeited
    
	
 
    	
 
    	
 
    	
Distributed   at Separation from Service if vested at that time
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
No   In-Service or Education Distributions permitted.
    
	
 
    	
 
    	
 
    
	
5.5                          Change in   Control Event:
    
	
 
    	
 
    	
 
    
	
XX
    	
(a)
    	
Participants   may elect upon initial enrollment to have accounts distributed upon a Change   in Control Event.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
A   Change in Control shall not be a Qualifying Distribution Event.
    
	
 
    	
 
    	
 
    
	
5.6                          Unforeseeable   Emergency Event:
    
	
 
    	
 
    	
 
    
	
XX
    	
(a)
    	
Participants   may apply to have accounts distributed upon an Unforeseeable Emergency event.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(b)
    	
An   Unforeseeable Emergency shall not be a Qualifying Distribution Event
    

 

6

 

	
6.                                 Vesting:  An Active Participant shall be fully vested   in the Employer Credits made to the  Deferred Compensation Account   upon the first to occur of the following events:
    
	
 
    	
 
    	
 
    
	
XX
    	
(a)
    	
Normal   Retirement Age.
    
	
 
    	
 
    	
 
    
	
XX
    	
(b)
    	
Death.
    
	
 
    	
 
    	
 
    
	
XX
    	
(c)
    	
Disability.
    
	
 
    	
 
    	
 
    
	
 
    	
(d)
    	
Change   in Control Event
    
	
 
    	
 
    	
 
    
	
 
    	
(e)
    	
Other:
    
	
 
    	
 
    	
 
    
	
XX
    	
(f)
    	
Satisfaction   of the vesting requirement as specified below:
    
	
 
    	
 
    	
 
    
	
 
    	
XX
    	
Employer   Discretionary Credits:
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(i)
    	
Immediate   100% vesting.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(ii)
    	
100%   vesting after      Years of Service.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(iii)
    	
100%   vesting at age     .
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
XX
    	
(iv)
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Number of Years 
   of Service
    	
 
    	
Vested 
   Percentage
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Less   than
    	
1
    	
 
    	
0
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1
    	
 
    	
20
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
2
    	
 
    	
40
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
3
    	
 
    	
60
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
4
    	
 
    	
80
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
5
    	
 
    	
100
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
6
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
7
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
8
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
9
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
10 or more
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
For   this purpose, Years of Service of a Participant shall be calculated from the   date designated below:
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(1)
    	
First   Day of Service.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(2)
    	
Effective   Date of Plan Participation.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
XX
    	
(3)
    	
Each   Crediting Date. Under this option (3), each Employer Credit shall vest based   on the Years of Service of a Participant from the Crediting Date on which   each Employer Discretionary Credit is made to his or her Deferred Compensation   Account.
    

 

7

 

	
 
    	
 
    	
XX
    	
Other   Employer Credits:
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(i)
    	
Immediate   100% vesting.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
XX
    	
(ii)
    	
100%   vesting after 3 Years of Service.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(iii)
    	
100%   vesting at age     .
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(iv)
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Number of Years 
   of Service
    	
 
    	
Vested 
   Percentage
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
Less   than
    	
1
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
1
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
2
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
3
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
4
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
5
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
6
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
7
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
8
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
9
    	
 
    	
 
    	
%
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    	
10 or   more
    	
 
    	
 
    	
%
    	
 
    

 

	
 
    	
 
    	
 
    	
For this   purpose, Years of Service of a Participant shall be calculated from the date   designated below:
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(1)
    	
First   Day of Service.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
 
    	
(2)
    	
Effective   Date of Plan Participation.
    
	
 
    	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
XX
    	
(3)
    	
Each   Crediting Date. Under this option (3), each Employer Credit shall vest based   on the Years of Service of a Participant from the Crediting Date on which   each Employer Discretionary Credit is made to his or her Deferred   Compensation Account.
    

 

8

 

7.1                          Payment Options: Any benefit payable under the Plan upon a permitted Qualifying Distribution Event may be made to the Participant or his Beneficiary (as applicable) in any of the following payment forms, as selected by the Participant in the Participation Agreement:

 

	
(a)
    	
Separation   from Service prior to Seniority Date, or Separation from Service if Seniority  Date is Not Applicable
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(i)
    	
A lump   sum.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)
    	
Annual   installments over a term certain as elected by the Participant not to exceed          years.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii)
    	
Other:                                                                                               .
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(b)
    	
Separation   from Service on or After Seniority Date, If Applicable
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(i)
    	
A lump   sum.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)
    	
Annual   installments over a term certain as elected by the Participant not to exceed        years.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(iii)
    	
Other: Annual or quarterly installments over a term certain as elected by   the Participant not to exceed 10 years.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(c)
    	
Separation   from Service Upon a Change in Control Event
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(i)
    	
A lump   sum.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)
    	
Annual   installments over a term certain as elected by the Participant not to exceed          years.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(iii)
    	
Other: Annual or quarterly installments over a term certain as elected by   the Participant not to exceed 10 years.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
(d)
    	
Death
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(i)
    	
A lump   sum.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)
    	
Annual   installments over a term certain as elected by the Participant not to exceed          years.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iii)
    	
Other:                                                                                               .
    
	
 
    	
 
    	
 
    	
 
    
	
(e)
    	
Disability
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(i)
    	
A lump   sum.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)
    	
Annual   installments over a term certain as elected by the Participant not to exceed        years.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(iii)
    	
Other:   Annual or quarterly installments over a term certain as elected by the   Participant not to exceed 10 years.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iv)
    	
Not   applicable.
    

 

9

 

	
 
    	
If   applicable, amounts not vested at the time payments due under this Section cease   will be:
    
	
 
    	
 
    	
Forfeited
    
	
 
    	
 
    	
Distributed   at Separation from Service if vested at that time
    
	
 
    	
 
    	
 
    	
 
    
	
(f)
    	
Change   in Control Event
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(i)
    	
A lump   sum.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(ii)
    	
Annual   installments over a term certain as elected by the Participant not to exceed          years.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
XX
    	
(iii)
    	
Other: Annual or quarterly installments over a term certain as elected by   the Participant not to exceed 10 years.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
(iv)
    	
Not   applicable.
    
	
 
    	
 
    	
 
    	
 
    
	
 
    	
If   applicable, amounts not vested at the time payments due under this Section cease   will be:
    
	
 
    	
 
    	
Forfeited
    
	
 
    	
 
    	
Distributed   at Separation from Service if vested at that time
    
	
 
    	
 
    	
 
    	
 
    
	
7.4
    	
 
    	
De Minimis Amounts.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
(a)
    	
Notwithstanding   any payment election made by the Participant, the vested balance in the   Deferred Compensation Account of the Participant will be distributed in a   single lump sum payment at the time designated under the Plan if at the time   of a permitted Qualifying Distribution Event that is either a Separation from   Service, death, Disability (if applicable) or Change in Control Event (if applicable)   the vested balance does not exceed $                       .  In addition, the Employer may distribute a   Participant’s vested balance at any time if the balance does not exceed the   limit in Section 402(g)(1)(B) of the Code and results in the termination   of the Participant’s entire interest in the Plan
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
XX
    	
(b)
    	
There   shall be no pre-determined de minimis amount under the Plan; however, the   Employer may distribute a Participant’s vested balance at any time if the   balance does not exceed the limit in Section 402(g)(1)(B) of the   Code and results in the termination of the Participant’s entire interest in   the Plan.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
10.1                   Contractual   Liability: Liability for payments   under the Plan shall be the responsibility of the:
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
XX
    	
(a)
    	
Company.
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
(b)
    	
Employer   or Participating Employer who employed the Participant when amounts were   deferred.
    

 

10

 

14.                          Amendment and Termination of Plan: Notwithstanding any provision in this Adoption  Agreement or the Plan to the contrary, Section 2.5, 9.3, 9.4, 12.2, &16.3,  of the Plan shall be amended to read as provided in attached Exhibit Exhibit A, B, C, & D . Section 2.17, 17.7, 18.1, 18.2, 18.3 & 18.4 are omitted from the plan.

 

	
 
    	
 
    	
XX
    	
There   are no amendments to the Plan.
    

 

17.9                   Construction: The provisions of the Plan shall be construed and enforced according to the laws of the State of Texas, except to the extent that such laws are superseded by ERISA and the applicable provisions of the Code.

 

 

IN WITNESS WHEREOF, this Agreement has been executed as of the day and year stated below.

 

 

	
 
    	
TGC   Industries, Inc.
    
	
 
    	
Name of   Employer
    
	
 
    	
 
    
	
 
    	
By: 
    	
/s/   James K. Brata
    
	
 
    	
Authorized   Person
    
	
 
    	
Date: 
    	
1/2/13
    

 

11

 

Exhibit A

 

2.5                               Change in Control Event” means an event described in Section 409A(a)(2)(A)(v) of the Code (or any successor provision thereto) and the regulations thereunder; provided, that an event shall not constitute a Change in Control event for purposes of this Plan unless it constitutes a “change in control” under the Company’s 2006 Stock Award Plan, as in effect on the Effective Date.

 

Exhibit B

 

9.3                               Indemnification. To the extent not covered by insurance, the Employer shall indemnify the Committee, each Employee, officer, director, and agent of the Employer, and all persons formerly serving in such capacities, against any and all liabilities or expenses, including all legal fees relating thereto, arising in connection with the exercise of their duties and responsibilities with respect to the Plan, provided however that the Employer shall not indemnify any person for liabilities or expenses due to that person’s own gross negligence or willful misconduct. The foregoing right of indemnification shall inure to the benefit of the successors and assigns, and the heirs, executors, administrators and personal representatives of the Committee, or any such  employee, officer or director, and shall be in addition to all other rights to which the Committee, or any such employee, officer or director may be entitled as a matter of law, contract, or otherwise.

 

Exhibit C

 

9.4                               Reliance Upon Information. Neither the Committee nor any employee, officer or director of the Employer to whom the duties of the Committee have been delegated shall be liable for any decision, action, omission, or mistake in judgment in connection with the administration of the Plan, provided that he or she acted in good faith. Without limiting the generality of the foregoing sentence, any decision or action taken by the Committee in reasonable reliance upon information supplied to it by the Board of Directors, the Employer, legal counsel, or the Employer’s independent accountants shall be deemed to have been taken in good faith. The Committee or any such employee, officer or director of the Employer may from time to time consult with counsel who may be counsel to the Employer or other counsel, with respect to its obligations or duties hereunder, or with respect to any action, proceeding or question of law, and shall not be held liable with respect to any action taken or omitted, in good faith, pursuant to the advice of such counsel.

 

Exhibit D

 

12.2                        Plan-Approved Domestic Relations Orders. The Committee shall establish procedures for determining whether an order directed to the Plan is a Plan-Approved Domestic Relations Order. If the Committee determines that an order is a Plan-Approved Domestic Relations Order, the Committee shall cause the payment of amounts pursuant to or segregate a separate account as provided by (and to prevent any payment or act which might be inconsistent with) the Plan-Approved Domestic Relations Order, provided, however, that payment may only be authorized to the extent it would not cause an impermissible change time or form of payment under Section 409A of the Code.

 

12

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