Document:

Exhibit 10.9

 

CDN.
$17,638,652 CREDIT FACILITIES

 

 

 

 

FIFTH AMENDED AND RESTATED
CREDIT AGREEMENT

 

BETWEEN

 

 

TRACE ENERGY SERVICES LTD., as
Borrower

TRACE ENERGY SERVICES, INC, GEOKINETICS INC., QUANTUM GEOPHYSICAL, INC.

AND GEOPHYSICAL DEVELOPMENT CORPORATION, as Corporate Guarantors

 

AND

 

HSBC BANK CANADA, as Lender

 

 

dated

 

November 30, 2005

 

 

 

 

TABLE OF
CONTENTS

CREDIT
AGREEMENT

 

	
   

  	
   

  	
  Page

  
	
  Article 1
  - INTERPRETATION

  	
  2

  
	
  1.

  	
  Definitions

  	
  2

  
	
  1.2

  	
  Headings

  	
  8

  
	
  1.3

  	
  Number

  	
  8

  
	
  1.4

  	
  Accounting
  Principles

  	
  8

  
	
  1.5

  	
  Per Annum
  Calculations

  	
  9

  
	
  1.6

  	
  Included
  Words; Inclusiveness

  	
  9

  
	
  1.7

  	
  Schedules

  	
  9

  
	
   

  	
   

  	
   

  
	
  Article 2
  - THE CREDIT FACILITIES

  	
  9

  
	
  2.1

  	
  The Credit
  Facilities

  	
  9

  
	
  2.2

  	
  Manner of
  Borrowing

  	
  10

  
	
  2.3

  	
  Purpose

  	
  10

  
	
  2.4

  	
  Nature of
  the Credit Facilities

  	
  10

  
	
  2.5

  	
  Account of
  Record

  	
  11

  
	
   

  	
   

  	
   

  
	
  Article 3
  - CONDITIONS PRECEDENT TO DRAWDOWN

  	
  12

  
	
  3.1

  	
  Lender’s
  Conditions for Drawdown

  	
  12

  
	
  3.2

  	
  Waiver

  	
  13

  
	
   

  	
   

  	
   

  
	
  Article 4
  - SECURITY

  	
  14

  
	
  4.1

  	
  Existing
  Security Documents

  	
  14

  
	
  4.2

  	
  Undertaking
  to Grant Additional Security Documents

  	
  15

  
	
  4.3

  	
  Security
  Effective Notwithstanding Drawdown Date

  	
  15

  
	
  4.4

  	
  Attachment
  of Security

  	
  15

  
	
  4.5

  	
  Extensions,
  Etc.

  	
  16

  
	
  4.6

  	
  No Merger

  	
  16

  
	
   

  	
   

  	
   

  
	
  Article 5
  - PAYMENT OF INTEREST AND FEES

  	
  17

  
	
  5.1

  	
  Interest

  	
  17

  
	
  5.2

  	
  Borrower’s
  Option to Utilize Banker’s Acceptances

  	
  18

  
	
  5.3

  	
  Issuance of
  Guarantees or Letters of Credit

  	
  19

  
	
  5.4

  	
  No Deduction
  etc.

  	
  19

  
	
  5.5

  	
  Interest on
  Overdue Interest, Unpaid Costs and Expenses

  	
  19

  
	
  5.6

  	
  Application
  Fee

  	
  20

  
	
  5.7

  	
  Administration
  Fee

  	
  20

  
	
  5.8

  	
  Additional
  Fee

  	
  20

  
	
   

  	
   

  	
   

  
	
  Article 6
  - REPAYMENT OF LOAN

  	
  21

  
	
  6.1

  	
  Repayment

  	
  21

  
	
  6.2

  	
  Optional
  Repayment of Principal

  	
  21

  
	
   

  	
   

  	
   

  
	
  Article 7
  - PLACE AND APPLICATION OF PAYMENTS

  	
  21

  
	
  7.1

  	
  Place of
  Payment of Principal, Interest and Fees

  	
  21

  

 

 

	
  7.2

  	
  Funds

  	
  22

  
	
  7.3

  	
  Application
  of Payments

  	
  22

  
	
   

  	
   

  	
   

  
	
  Article 8
  - REPRESENTATIONS AND WARRANTIES

  	
  22

  
	
  8.1

  	
  General

  	
  22

  
	
  8.2

  	
  Corporate
  Existence and Power

  	
  23

  
	
  8.3

  	
  Authorization
  and Execution

  	
  23

  
	
  8.4

  	
  No
  Contravention or Resultant Security Interest

  	
  24

  
	
  8.5

  	
  Approvals or
  Consents

  	
  24

  
	
  8.6

  	
  Binding
  Effect

  	
  25

  
	
  8.7

  	
  Litigation

  	
  25

  
	
  8.8

  	
  Defaults and
  Burdensome Provisions

  	
  25

  
	
  8.9

  	
  Certain
  Claims

  	
  26

  
	
  8.10

  	
  Other
  Information

  	
  26

  
	
  8.11

  	
  No
  Omissions; Undisclosed Events

  	
  26

  
	
   

  	
   

  	
   

  
	
  Article 9
  - COVENANTS

  	
  27

  
	
  9.1

  	
  General

  	
  27

  
	
  9.2

  	
  Payment and
  Performance

  	
  27

  
	
  9.3

  	
  Maintenance
  of Corporate Existence and Status

  	
  27

  
	
  9.4

  	
  Compliance
  with Laws and Regulations

  	
  28

  
	
  9.5

  	
  Financial
  Statements

  	
  28

  
	
  9.6

  	
  Compliance
  Certificate

  	
  29

  
	
  9.7

  	
  Other
  Financial Information

  	
  29

  
	
  9.8

  	
  Certain
  Negative Covenants of the Borrower

  	
  29

  
	
  9.9

  	
  Certain
  Negative Covenants of Geokinetics Inc.

  	
  30

  
	
  9.10

  	
  Notice of
  Certain Events

  	
  30

  
	
  9.11

  	
  Employee
  Incentive Plan

  	
  31

  
	
  9.12

  	
  Lender May Perform

  	
  31

  
	
   

  	
   

  	
   

  
	
  Article 10
  - EVENTS OF DEFAULT AND ACCELERATION

  	
  31

  
	
  10.1

  	
  Events of
  Default

  	
  31

  
	
  10.2

  	
  Acceleration
  of Operating Credit Facility Upon Demand

  	
  33

  
	
  10.3

  	
  Acceleration
  of Loan

  	
  34

  
	
  10.4

  	
  Remedies
  Cumulative and Waivers

  	
  34

  
	
   

  	
   

  	
   

  
	
  Article 11
  - COSTS, EXPENSES AND INDEMNIFICATION

  	
  35

  
	
  11.1

  	
  Costs and
  Expenses

  	
  35

  
	
  11.2

  	
  Indemnification
  by the Borrower re Loan

  	
  35

  
	
  11.3

  	
  Indemnification
  by the Loan Parties re Environmental Matters

  	
  36

  
	
   

  	
   

  	
   

  
	
  Article 12
  - GENERAL

  	
  37

  
	
  12.1

  	
  Notice

  	
  37

  
	
  12.2

  	
  Governing
  Law; Attornment

  	
  38

  
	
  12.3

  	
  Obligations
  are Absolute

  	
  38

  
	
  12.4

  	
  Set Off

  	
  39

  
	
  12.5

  	
  Benefit of
  the Agreement

  	
  39

  
	
  12.6

  	
  Assignment

  	
  39

  
	
  12.7

  	
  Severability

  	
  40

  
	
  12.8

  	
  Whole
  Agreement

  	
  40

  

 

2

 

	
  12.9

  	
  Amendments
  and Waivers

  	
  40

  
	
  12.10

  	
  Further
  Assurances

  	
  41

  
	
  12.11

  	
  Time of the
  Essence

  	
  41

  
	
  12.12

  	
  Termination

  	
  41

  
	
  12.13

  	
  Inspection
  of the Mortgaged Property

  	
  41

  
	
  12.14

  	
  Credit
  Reporting

  	
  41

  
	
  12.15

  	
  Counterparts

  	
  42

  
	
  12.16

  	
  Conflicting
  Provisions

  	
  42

  

 

3

 

FIFTH
AMENDED AND RESTATED CREDIT AGREEMENT

 

THIS AGREEMENT is made as of November 30, 2005, between TRACE ENERGY SERVICES LTD. (the “Borrower”), a corporation
incorporated pursuant to the laws of the Province of Alberta, as borrower, TRACE ENERGY SERVICES, INC., a corporation incorporated
pursuant to the laws of the State of Texas, GEOKINETICS
INC., a corporation incorporated pursuant to the laws of Delaware, QUANTUM GEOPHYSICAL, INC., a corporation incorporated
pursuant to the laws of Texas, and GEOPHYSICAL DEVELOPMENT
CORPORATION, a corporation incorporated pursuant to the laws, of
Texas (collectively, but jointly and severally, the “Corporate Guarantors”) and
HSBC BANK CANADA (the “Lender”), a
Canadian chartered bank, as lender.

 

THIS AGREEMENT is an amendment to and a restatement of that certain
fourth amended and restated credit agreement (the “Fourth Amended and Restated
Credit Agreement”) dated as of September 30, 2005, between the Borrower,
Trace Energy Services, Inc. and the Lender.

 

THIS AGREEMENT replaces and supersedes any and all previous credit
agreements and facility letters including, without limitation, the Fourth
Amended and Restated Credit Agreement, as previously amended from time to time.

 

WHEREAS the Borrower has requested the Credit Facilities and the Lender
has agreed to provide the Credit Facilities to the Borrower on the terms and
conditions herein set forth;

 

NOW THEREFORE, the parties hereto agree as follows:

 

 

ARTICLE 1
— INTERPRETATION

 

1.             Definitions

 

In this Agreement, unless something in the subject matter or context is
inconsistent therewith, terms and expressions defined in the description of the
parties hereto shall have those meanings herein and:

 

“Acceptable
Receivables” means the aggregate of Canadian and
United States accounts receivable of the Margin Parties, determined by the
Lender from the most recent financial statements and aged list of accounts
receivable of the Margin Parties, over which the Lender holds a first
assignment or first security interest from customers approved by the Lender
(such approval not to be unreasonably withheld) and which have been outstanding
for not more than 90 days, from which shall be excluded accounts receivable
from affiliated corporations and accounts receivable which are disputed by the
Margin Parties’ customers or are subject to set off or are EDC Acceptable
Receivables;

 

“Adverse
Effect” means any material adverse change in the
ability of the Loan Parties to consummate the transactions contemplated by, or
perform their respective obligations under, the Documents;

 

“Agreement”
means this credit agreement as amended, supplemented, modified or restated from
time to time in accordance with the provisions hereof;

 

“Applicable
Law” means, in relation to any Person, transaction or
event, all applicable provisions, whether now or hereafter in effect, of laws,
statutes, rules, regulations, official directives and orders of all federal,
provincial and municipal governmental bodies (whether administrative, legislative,
executive or otherwise and, in the case of any central bank, fiscal or monetary
authority) and judgments, orders and decrees of all courts, arbitrators,
commissions or bodies exercising similar functions in actions or proceedings in
which the Person in question is a party or by which it is bound or having
application to the transaction or event in question;

 

“Banker’s
Acceptance” means a non-interest bearing depository
bill subject to the Depository and Notes Act
(Canada) or bill of exchange drawn by the Borrower in Canadian Dollars,
accepted by the Lender and issued for value pursuant to this Agreement;

 

“Banking
Day” means a day on which banks are generally open for
the transaction of commercial business in Calgary, Alberta, but does not in any
event include a Saturday or a Sunday or a bank holiday under Applicable Law;

 

“Borrower’s
Counsel” means the firm of Chamberlain, Hrdlicka,
White, Williams and Martin or such other firm of legal counsel as the Loan
Parties may from time to time designate and, where the context so requires,
shall include agents of the Borrower’s Counsel in jurisdictions other than
Alberta;

 

“Canadian
Dollars” and “Cdn. $” mean
the lawful money of Canada;

 

“Certificate
of the Borrower”, “Notice of the Borrower”
and “Request of the Borrower” mean,
respectively, a written certificate, notice or request addressed to the Lender
and signed in the name of the Borrower by an Officer;

 

2

 

“Certificate
of the Corporate Guarantors” means a written
certificate, notice or request addressed to the Lender and signed in the name
of the Corporate Guarantors by an Officer;

 

“Contaminant”
includes, but is not limited to, any pollutants, noise, dangerous substances,
liquid waste, industrial waste, hauled liquid waste, toxic substances,
hazardous wastes, hazardous materials, hazardous substances or contaminants
including any of the foregoing as defined in any Environmental Law now or
hereafter effective;

 

“Credit
Facilities” means collectively the Operating Credit
Facility, the Term Credit Facilities, the Foreign Exchange Credit Facility and
the MasterCard Credit Facility;

 

“Default”
means any of the events specified in Section 10.1, whether or not in
connection therewith there has been fulfilled or has occurred any requirement
of notice or lapse of time or the happening of any further condition or event
for such event to become an “Event of Default”;

 

“Documents”
means this Agreement, the Security Documents, the certificates, directions to
pay and other documents delivered or to be delivered to or for the benefit of
the Lender pursuant hereto or thereto and all amendments, replacements,
substitutions, renewals and supplementals relating thereto and, when used in
relation to any Person, the term “Documents” shall mean and refer to the
Documents executed and delivered by such Person;

 

“Drawdown”
means the advance of funds pursuant to the Term Credit Facilities by the Lender
to the Borrower as contemplated hereby;

 

“Drawdown
Date” means the date on which the Drawdown is made
pursuant to the provisions hereof, which shall be a Banking Day, or, if there
is more than one Drawdown, the date on which the initial Drawdown is made;

 

“Drawdown
Notice” means a Notice of the Borrower in
substantially the form of Schedule 1, duly completed with all information
necessary to effect a Drawdown of the Term Credit Facilities, to be given to
the Lender by the Borrower pursuant to Section 2.2;

 

“EDC
Acceptable Receivables” means the aggregate of
Canadian and United States accounts receivables of the Margin Parties,
determined by the Lender from the most recent financial statements and aged
list of accounts receivable of the Margin Parties, over which the Lender holds
a first assignment or first security interest from customers approved by the
Lender (such approval not to be unreasonably withheld), which have not been
outstanding for more than 90 days and which are insured by Export Development
Corporation, from which shall be excluded accounts receivable from affiliated
corporations and accounts receivable which are disputed by the Margin Parties’
customers or are subject to set off;

 

“Environmental
Law” means any and all applicable international,
federal, provincial, state, municipal or local laws, statutes, regulations,
treaties, orders, judgments, decrees, ordinances, official directives and all
authorizations, relating to the environment, occupational health and safety, or
any Environmental Activity, to which the Loan Parties or the Lender is subject;

 

3

 

“Environmental
Activity” means any past, present or future activity,
event or circumstance in respect of a Contaminant including, without
limitation, its storage, use, holding, collection, purchase, accumulation,
assessment, generation, manufacture, construction, processing, treatment,
stabilization, disposition, handling or transportation, or its Release, escape,
leaching, dispersal or migration into the natural environment, including the
movement through or in the air, soil, surface water or groundwater;

 

Event of
Default” means any of the events specified in Section 10.1
in respect of which any requirement therein stipulated of notice or of lapse of
time or the happening of any further condition or event has occurred or been
fulfilled;

 

“GAAP”
and “generally accepted accounting principles”
mean generally accepted accounting principles as described in Section 1.4;

 

“Interest
Payment Date” means the last day of each and every
month;

 

“Lender’s
Branch” means the branch of the Lender at 407 - 8th
Avenue S.W., Calgary, Alberta T2P 1E5, or such other branch in Calgary,
Alberta, as the Lender may from time to time designate by notice to the
Borrower;

 

“Lender’s
Counsel” means the firm of Fraser Milner Casgrain LLP
or such other firm of legal counsel as the Lender may from time to time
designate and, where the context so requires, shall include agents of the
Lender’s Counsel in jurisdictions other than Alberta;

 

“Loan”
means the Credit Facilities to be made hereunder together with all principal,
interest and fees and other amounts outstanding under any of the Documents from
time to time;

 

“Loan
Parties” means, collectively, but jointly and
severally, the Borrower and the Corporate Guarantors;

 

“Margin
Parties” means, collectively, the Borrower and Trace
Energy Services, Inc.

 

“Margin
Requirement” means the aggregate of 75% of Acceptable
Receivables and 90% of EDC Acceptable Receivables;

 

“Mortgaged
Property” means, collectively, all undertaking and all
the property and assets of the Loan Parties, real and personal, both present
and future, of whatsoever nature and kind and wheresoever situated, which has
been or will be mortgaged and charged to the Lender pursuant to any of the
Security Documents;

 

“Net Book
Value” means the dollar value of the Margin Parties’
fixed assets (excluding assets leased from HSBC Bank of Canada, Leasing
Division, or others) net of accumulated depreciation as reported on its balance
sheet from time to time, to be determined in accordance with generally accepted
accounting principles;

 

“Operating
Credit Facility” means the demand revolving operating
credit facility provided hereunder in the maximum principal amount of Cdn.
$9,000,000, subject to any change in accordance with the provisions hereof;

 

“Outstandings”
means any amount of the Loan, whether for principal, interest or otherwise, the
payment of which has not been made when due;

 

4

 

“Permitted
Encumbrances” means, as of any particular time and
with respect to any Person, any one or more of the following:

 

(a)           liens
for taxes, rates and assessments not yet due or, if due, the validity of which
is being contested diligently and in good faith by appropriate proceedings by
such Person and where security in the form of cash, a bank draft or a letter of
credit of a Canadian chartered bank, a surety bond of an insurer carrying on
business in Canada acceptable to the Lender or other security satisfactory to
the Lender has been deposited with the Lender or the relevant taxing authority
if such deposit is requested by the Lender, in an amount sufficient to pay such
taxes, rates and assessments and all interest and costs in connection therewith
and liens for the excess of the amount of any past due taxes for which a final
assessment has not been received over the amount of such taxes as estimated and
paid;

 

(b)           the
lien of any judgment rendered, or claim filed, against such Person which is
being contested diligently and in good faith by appropriate proceedings by such
Person, and which does not have a material adverse affect on such Person, its
business or property or in respect of which there shall have been deposited
with the Lender security in the form referred to in paragraph (a) above in
an amount sufficient to pay such judgment or claim;

 

(c)           any
lien arising under legislation dealing with mechanics liens or the privileged
claims of builders or suppliers of material, provided that the lien is being
contested diligently and in good faith by appropriate proceedings if permitted
by the applicable legislation and any required holdback is being maintained in
accordance with such legislation, undetermined or inchoate liens and charges
arising under any such legislation, a claim for which shall not at the time
have been registered against the subject property and of which notice shall not
at the time have been given to such Person, and any lien or charge under any
such legislation which relates to obligations not overdue or delinquent;

 

(d)           any
Security Interest howsoever ranking for which provision has been made by the
deposit with the Lender of security in the form referred to in paragraph (a) above
in an amount sufficient to pay the same and all interest and costs in
connection therewith at maturity;

 

(e)           reservations,
exceptions, limitations, provisos and conditions expressed in any original
grant from the Crown and as set out in the Land Titles Act (Alberta) which do
not materially adversely impair the use of the subject property;

 

(f)            licences,
easements, rights-of-way, servitudes and rights in the nature of easements
(including, without in any way limiting the generality of the foregoing,
licences, easements, rights-of-way, servitudes and rights in the nature of
easements for sidewalks, public ways, sewers, drains, gas, steam and water
mains or electric light and power, or telephone and telegraph conduits, poles,
wires and cable) and other restrictions which in the opinion of the Lender will
not in the aggregate materially and adversely impair the use of the subject
property or in respect to which such Person has made satisfactory arrangements
for relocation so that such use will not in the aggregate be materially and
adversely impaired;

 

5

 

(g)           zoning,
planning, development and building restrictions, by-laws and ordinances,
municipal by-laws and regulations, and restrictive covenants, which will not in
the opinion of the Lender materially impair the use of the subject property for
the purposes for which it is held by such Person;

 

(h)           title
defects or irregularities which are of a minor nature and which in the
aggregate will not materially affect the security granted to the Lender
pursuant to the Security Documents or materially impair the use of the subject
property for the purposes for which it is held by such Person;

 

(i)            Security
Interests securing obligations of such Person under any capital lease (the
categorization as such to be determined in accordance with GAAP) incurred in
the ordinary course of such Person’s business and limited to the property
acquired in the transaction in which the capital lease obligation was incurred;

 

(j)            Security
Interests securing all or any portion of the purchase price of property
purchased by such Person in the ordinary course of its business and to be used
in connection with such business, limited to the property acquired in the
transaction in which the purchase money obligation was incurred;

 

(k)           Security
Interests securing obligations of such Person incurred or assumed in the
ordinary course of such Person’s business in favour of suppliers or other
Persons for the deferred purchase price of goods supplied to such Person,
limited to the property acquired in the transaction in which the supplier
obligation was incurred;

 

(l)            security
to a public utility or other municipality or government or to any statutory or
public authority when required by such utility, municipality, government or
other authority in connection with the operations of such Person which in the
opinion of the Lender will not in the aggregate materially affect the security
for the Loan;

 

(m)          the
right reserved to or vested in any municipality or public authority to condemn,
expropriate or designate a purchaser of such property;

 

(n)           any
statutory liens or charges as contained and set out in any legislation to which
any property is subject and a claim for which shall not at the time have been
registered and of which notice in writing shall not at the time have been given
to such person and which has priority over the Security Interests constituted
by the Security Documents (other than liens of workmen, builders, contractors,
engineers or suppliers of material); and

 

(o)           any
Security Interest consented to in writing by the Lender;

 

“Person”
means an individual, a partnership, a corporation, a trust, a joint venture, an
unincorporated organization, a union, a government or any department or agency
thereof and the heirs, executors, administrators or other legal representatives
of an individual;

 

“Prime
Rate” means the floating annual rate of interest
established and recorded by the Lender from time to time as a reference rate
for the purposes of determining rates of interest it will charge on loans in
Canada denominated in Canadian dollars and which the Lender

 

6

 

acknowledges
was four and three-quarters percent (4.75 %) on November 21, 2005.  A certificate of a Vice-President of the
Lender shall be conclusive evidence of the Prime Rate from time to time;

 

“Release”
includes discharge, spray, inject, inoculate, abandon, deposit, spill, leak,
seep, pour, emit, empty, throw, dump, place and exhaust which might occur in
any manner whatsoever;

 

“Security
Documents” any or all of the following:

 

the agreements, securities, instruments and
assurances heretofore granted to the Lender by the Loan Parties or any other
Person for the purpose of securing the repayment to the Lender of the Loan, or
any portion thereof;

 

the agreements, securities, instruments and
assurances described or contemplated in this Agreement including, without
limitation, in Article 4 hereof; and

 

any other agreements, securities, instruments
or assurances granted by the Loan Parties or any other Person to the Lender
prior, concurrently with or subsequent to the date hereof for the purpose of
securing the repayment to the Lender of the Loan, or any portion thereof;

 

“Security
Interest” means any assignment, mortgage, charge,
pledge, lien, hypothec, encumbrance securing or in effect securing an
obligation or any indebtedness of any Person, conditional sale, title retention
agreement or security interest whatsoever, howsoever created or arising,
whether absolute or contingent, fixed or floating, legal or equitable,
perfected or not;

 

“Term
Credit Facilities” means the Term Credit Facility #1 and the Term Credit Facility #2;

 

“Term
Credit Facility #1” means the term non-revolving
credit facility provided hereunder in the maximum principal amount of Cdn.
$5,621,652, subject to any change in accordance with the provisions hereof;

 

“Term
Credit Facility #2” means the term non-revolving
credit facility provided hereunder in the maximum principal amount of Cdn.
$2,937,500, subject to any change in accordance with the provisions hereof;

 

“U.S. Base
Rate” means
the floating annual rate of interest established and recorded by the Lender
from time to time as a reference rate for the purpose of determining rates of
interest it will charge on loans in Canada denominated in United States Dollars
based on a 360 day year and which the Lender acknowledges was seven and
one-half (7.5 %) on November 21, 2005. 
A certificate of an assistant vice-president, manager or account manager
of the Lender shall be, absent manifest error, conclusive evidence of the U.S.
Base Rate from time to time;

 

“U.S. Base
Rate Loan” means
a drawdown in U.S. Dollars for which the U.S. Base Rate is the reference
interest rate;

 

“U.S.
Dollars” and “U.S.” means the lawful money of United States.

 

7

 

1.2          Headings

 

The division of this Agreement into Articles and Sections and the
insertion of headings are for convenience of reference only and shall not
affect the construction or interpretation of this Agreement.  The terms “this Agreement”, “hereof”, “hereunder”
and similar expressions refer to this Agreement and not to any particular
Article, Section or other portion hereof and include any agreement
supplemental hereto.  Unless something in
the subject matter or context is inconsistent therewith, references herein to
Articles, Sections and Schedules are to Articles and Sections of or Schedules
to this Agreement.

 

1.3          Number

 

Words importing the singular number only shall include the plural and
vice versa, words importing the masculine gender shall include the feminine and
neuter genders and vice versa.

 

1.4          Accounting
Principles

 

Wherever in this Agreement reference is made to generally accepted
accounting principles, such reference shall be deemed to be to the generally
accepted accounting principles in Canada from time to time approved by the
Canadian Institute of Chartered Accountants, or any successor institute,
applicable as at the date on which such calculation is made or required to be
made in accordance with generally accepted accounting principles.  Where the character or amount of any asset or
liability or item of revenue or expense is required to be determined, or any
consolidation or other accounting computation is required to be made for the
purpose of this Agreement or any Document, such determination or calculation
shall (unless the context otherwise requires), to the extent applicable and
except as otherwise specified herein or as otherwise agreed in writing by the
parties, be made in accordance with generally accepted accounting principles
applied on a consistent basis.

 

8

 

1.5          Per
Annum Calculations

 

Unless otherwise stated, wherever in this Agreement reference is made
to a rate of interest “per annum” or a similar expression is used, such
interest shall be calculated using the nominal rate method, and not the
effective rate method, of calculation and on the basis of a calendar year of
365 days or 366 days, as the case may be, unless otherwise specified herein.

 

1.6          Included
Words; Inclusiveness

 

Where any term or expression is defined herein, derivations of such
term or expression shall have a corresponding meaning.  Words and terms denoting inclusiveness (such
as “include” or “includes” or “including”) or particularity (such as “in
particular” or “such as”), whether or not so stated, are not limited by their
context or by the words or phrases which precede or succeed them.

 

1.7          Schedules

 

The following are the Schedules annexed hereto and incorporated by
reference and deemed to be part hereof:

 

Schedule 1
- Drawdown Notice

Schedule 2
- Existing Litigation

 

ARTICLE 2
— THE CREDIT FACILITIES

 

2.1          The
Credit Facilities

 

Subject to the terms and conditions hereof, the Lender shall make the
Credit Facilities available to the Borrower. 
The Credit Facilities shall consist of the following:

 

(a)           a
Cdn. $5,621,652 term non-revolving credit facility (the “Term Credit Facility
#1”);

 

(b)           a
Cdn. $2,937,000 term non-revolving credit facility (the “Term Credit Facility
#2”);

 

(c)           a
Cdn. $9,000,000 demand revolving operating credit facility (the “Operating Credit
Facility”);

 

9

 

(d)           a
USD $500,000 demand revolving foreign exchange credit facility (the “Foreign
Exchange Credit Facility”), as a sublimit of the Operating Credit Facility;

 

(e)           a
Cdn. $80,000 MasterCard credit facility (the “MasterCard Credit Facility”).

 

2.2          Manner
of Borrowing

 

The Borrower has already made Drawdowns under the Term Credit
Facilities which were requested by a Drawdown Notice, and each is fully
advanced.  The Borrower already has access
to advances under the Operating Credit Facility.

 

2.3          Purpose

 

The Credit Facilities were made available as follows:

 

(a)           the
Term Credit Facility #1 was previously used by the Borrower to refinance
previous term indebtedness to the Lender and repatriate or distribute capital
to the shareholder of the Borrower;

 

(b)           the
Term Credit Facility #2 was previously used by the Borrower to assist with the
acquisition of seismic stations;

 

(c)           the
Operating Credit Facility is to be used by the Borrower to assist its
day-to-day working capital and operating requirements, future acquisitions and
for the issuance of bank guarantees and letters of credit;

 

(d)           the
Foreign Exchange Credit Facility is to be used by the Borrower to purchase
foreign exchange contracts for major currencies by the Lender, to a maximum
contract length of one year.

 

2.4          Nature
of the Credit Facilities

 

Outstandings under the Term Credit Facilities and the MasterCard Credit
Facility shall not exceed 60% of the Net Book Value, subject to reduction as
set forth in Section 6.1.

 

The Operating Credit Facility is a revolving credit and, accordingly,
the Borrower may utilize the facility up to a maximum of Cdn. $9,000,000,
subject to the Borrower maintaining the Margin Requirement.  Outstanding balances under the Operating
Credit Facility shall be reduced by daily U.S. Dollars deposits held by the
Borrower when determining whether the Borrower has maintained the Margin
Requirement from time to time provided that the outstanding balance of the
Operating Credit Facility does not exceed Cdn. $9,000,000 at any

 

10

 

time.  The Operating Credit
Facility shall include, as a sublimit, the amount of $1,000,000 U.S. Dollars,
and the Foreign Exchange Credit Facility. 
The amount of Cdn. $1,000,000 shall be available for the issuance of
bank guarantees and letters of credit to a maximum of 365 days.

 

The Borrower shall ensure that the “Foreign Exchange Percentage” (as
hereafter defined) of the aggregate face amount of outstanding forward foreign
exchange contracts under the Foreign Exchange Credit Facility at no time
exceeds the amount of USD $500,000 and at no time places the Borrower in excess
of the Margin Requirement.  All liabilities
of the Lender under any foreign exchange contract shall be fulfilled by the
Borrower as they fall due.  For the
purpose herein, “Foreign Exchange Percentage” means the notional risk
percentage(s) established and recorded by the Lender from time to time based on
the Lender’s assessment of the foreign exchange market.

 

2.5          Account
of Record

 

The Lender shall open and maintain books of account evidencing the Loan
and all other amounts owing by the Loan Parties to the Lender hereunder.  The Lender shall enter in the foregoing
accounts details of all amounts from time to time owing, paid or repaid by the
Loan Parties hereunder.  The information
entered in the foregoing accounts shall, subject to manifest error, constitute
evidence of the obligations of the Loan Parties to the Lender hereunder with
respect to the Loan and all other amounts owing by the Loan Parties to the
Lender hereunder.  After a request by the
Loan Parties the Lender shall promptly advise the Loan Parties of such entries
made in the Lender’s books of account.

 

11

 

ARTICLE 3
— CONDITIONS PRECEDENT TO DRAWDOWN

 

3.1          Lender’s
Conditions for Drawdown

 

The obligation of a Lender to effect a Drawdown is subject to
satisfaction of the following conditions precedent:

 

(a)           the
Lender shall have received a favourable legal opinion of Lender’s Counsel as to
the validity, binding effect and enforceability of this Agreement and the
Security Documents and the Security Interests constituted thereby and the due
registration thereof and as to such further matters of a legal nature relating
to the Loan Parties, this Agreement or the Security Documents as the Lender may
reasonably request;

 

(b)           the
Lender shall have received, prior to the Drawdown Date, a favourable legal
opinion of the Borrower’s Counsel addressed to the Lender and the Lender’s
Counsel as to (i) the due incorporation and valid and subsisting nature of
the Loan Parties; (ii) the power and authority of the Loan Parties to
execute and deliver and perform their obligations under this Agreement and the
Security Documents referred to in Section 4.2 hereof; (iii) the due
execution and delivery by the Loan Parties of this Agreement and the Security
Documents referred to in Section 4.2 hereof; (iv) the non-violation
of this Agreement and the Security Documents referred to in Section 4.2
hereof with the provision of existing law; (v) this Agreement and the
Security Documents referred to in Section 4.2 hereof not being, to the
best of their knowledge, inconsistent with or constituting a default under
other obligations of the Loan Parties; (vi) this Agreement and the
Security Documents referred to in Section 4.2 hereof not being in conflict
with the Loan Parties’ articles of incorporation, by-laws or corporate
resolutions; and (vii) no legal proceeding against the Loan Parties taking
place, to the best of their knowledge, which might materially adversely affect
their ability to perform their obligations under this Agreement or the Security
Documents referred to in Section 4.2 hereof;

 

(c)           no
Default shall have occurred and be continuing hereunder and no Default shall
occur hereunder as a result of the making of the Drawdown and a Certificate of
the Borrower and a Certificate of the Corporate Guarantor addressed to the
Lender dated the proposed Drawdown Date to that effect shall have been received
by the Lender;

 

(d)           all
representations and warranties herein shall have been true and correct in all
material respects when made and additionally shall be true and correct in all
material respects on and with effect from the Drawdown Date and a Certificate
of the Borrower and a Certificate of the Corporate Guarantor addressed to the
Lender dated the proposed Drawdown Date to those effects shall have been
received by the Lender;

 

(e)           the
Lender shall have received, prior to the initial Drawdown Date, in respect of
each corporate Loan Party (i) a certificate of status and certified true
copies of its

 

12

 

constating documents, each of the foregoing from appropriate
governmental authorities and (ii) certified copies of the by-laws (or
equivalent), and resolutions of its boards of directors or shareholders, as
applicable, authorizing the transactions contemplated hereby and the execution,
delivery and performance of the Documents and such certification shall indicate
that such resolutions are in full force and effect in such form;

 

(f)            all
of the Documents shall be in form and substance satisfactory to the Lender and
Lender’s Counsel;

 

(g)           the
Security Documents shall have been executed and delivered and registered or
filed at all registries or filing offices necessary or of advantage (in the
reasonable opinion of Lender’s Counsel) to preserve and protect the efficacy
and priority thereof;

 

(h)           the
Lender shall have received evidence that the Loan Parties carry all risk
insurance (including extended coverage endorsements) in amounts and from an
insurer acceptable to the Lender on the Mortgaged Property showing the Lender
as first loss payee by way of standard mortgage endorsement, the said policy to
include public liability insurance;

 

(i)            the
Loan Parties shall provide to the Lender a satisfactory equipment list
evidencing the Net Book Value of various equipment, such list to include serial
numbers, if applicable;

 

(j)            the
Borrower shall provide to the Lender a copy of any unanimous shareholder’s
agreement relating to the shareholders of the Borrower;

 

(k)           the
Bank shall be provided with an independent evaluation of fixed assets of the
Loan Parties, in form and content satisfactory to the Lender, indicating a fair
market value of not less than (Cdn.)$13,600,000.  An orderly liquidation value of the fixed
assets of the Loan Parties shall also be provided with the independent
evaluation (both previously provided);

 

(l)            the
Borrower shall provide to the Lender a copy of the Purchase Agreement between
Geokinetics Inc. and SCF Partners related to the purchase and sale of the
Borrower’s shares;

 

(m)          the
Borrower shall provide the Lender with written confirmation satisfactory to the
Lender that Geokinetics Inc. has raised sufficient equity to satisfy the
purchase price to acquire the Borrower’s shares.

 

3.2          Waiver

 

The conditions set forth in Section 3.1 are inserted for the sole
benefit of the Lender and may be waived by the Lender, in whole or in part in
its discretion (with or without terms or conditions), prior to a Drawdown.

 

13

 

ARTICLE 4
— SECURITY

 

4.1          Existing
Security Documents

 

As security for all of the indebtedness, liabilities and obligations of
the Loan Parties to the Lender from time to time, each of the Loan Parties, as
the case may be, confirms and acknowledges that it has previously executed and
delivered to the Lender and shall hereby maintain in effect so long as this
Agreement has not been terminated under Section 12.13, the following:

 

(a)           a
line of credit by way of current account overdraft agreement evidencing
advances under the Operating Credit Facility by the Borrower;

 

(b)           an
agreement for U.S. dollar line of credit by way of account overdraft evidencing
U.S. Dollar advances under the Operating Credit Facility by the Borrower;

 

(c)           promissory
note(s) of the Borrower, evidencing advances under the Term Credit Facilities;

 

(d)           Security
Over Cash, Credit Balances and Deposit Instruments by Customer by the Borrower;

 

(e)           an
agreement for foreign exchange contracts by the Borrower;

 

(f)            a
general security agreement of the Borrower granting a security interest to the
Lender on all of the Borrower’s present and after-acquired personal property
and a floating charge on all other assets and registered specifically, where
required, against serial numbered items (currently registered in Alberta,
British Columbia, Saskatchewan and Texas);

 

(g)           a
general assignment of book debts of the Borrower granting a security interest
to the Lender on all of the Borrower’s book debts (currently registered in
Alberta, British Columbia, Saskatchewan and Texas);

 

(h)           an
unlimited guarantee of Trace Energy Services, Inc. whereby it guarantees
repayment of the Loan to the Lender;

 

(i)            a
general security agreement Trace Energy Services, Inc. granting a security
interest to the Lender on all of its present and after-acquired personal
property and a floating charge on all other assets and registered specifically
where required against serial numbered items (currently registered in Alberta,
British Columbia, Saskatchewan and Texas);

 

(j)            a
general assignment of book debts Trace Energy Services, Inc. granting a
security interest to the Lender on all of its book debts (currently registered
in Alberta, British Columbia, Saskatchewan and Texas);

 

14

 

(k)           a
banker’s acceptance agreement;

 

(l)            an
acknowledgement and confirmation of Trace Energy Services, Inc. that its
unlimited corporate guarantee previously given to the Lender shall extend to
the Credit Facilities.

 

The Security
Interests created by all of the above Security Documents shall (subject always
to Permitted Encumbrances) rank at the time of the Drawdown Date or at the time
of the execution and delivery thereof and in each case at all times thereafter,
as first priority Security Interests, perfected by possession or confirmed
registration, filing or recordation, as applicable.

 

4.2          Undertaking
to Grant Additional Security Documents

 

As security for all the indebtedness, liabilities and obligations of
the Loan Parties to the Lender from time to time, each of the Loan Parties, as
the case may be, shall and hereby covenants to execute and deliver to the
Lender prior to the Drawdown Date and maintain in effect so long as this
Agreement has not been terminated under Section 12.12, the following:

 

(a)           an
unlimited grantee of each of the other Corporate Guarantors whereby it
guarantees repayment of the Loan to the Lender.

 

The Security
Interests created by all of the above Security Documents shall (subject always
to Permitted Encumbrances) rank at the time of the Drawdown Date or at the time
of the execution and delivery thereof and in each case at all times thereafter,
as first priority Security Interests, perfected by possession or confirmed
registration, filing or recordation, as applicable.

 

4.3          Security
Effective Notwithstanding Drawdown Date

 

The Security Interests constituted or required to be created hereby or
by any Security Document shall be effective and continuing whether the monies
hereby or there-by secured or any part thereof shall be advanced before or
after or at the same time as the creation of any such Security Interests or
before or after or upon the date of execution of this Agreement.

 

4.4          Attachment
of Security

 

Each of the Loan Parties acknowledges, covenants and agrees on its own
behalf and with respect to the Security Documents executed by it that:

 

(a)           any
Security Documents issued or granted by it in favour of the Lender prior to the
completion of the execution of this Agreement by all of the parties hereto
shall (i) be conclusively deemed to have been issued or granted in
consideration of, inter alia, the execution of this Agreement by the Lender,
and (ii) constitute valid

 

15

 

and binding security for all the indebtedness, liabilities and
obligations of the Loan Parties under the Credit Facilities or any of the
Documents from time to time, notwithstanding that any of such Documents may
have been executed and (in certain cases) registered, filed or recorded at
certain registries and offices of public record prior to the execution and any
advance of funds hereunder;

 

(b)           the
fact that any of the Security Documents described in Section 4.4(a) were
executed, registered, filed or recorded prior to the completion of the
execution of this Agreement by all of the Loan Parties hereto shall not be
raised or pleaded as a defence or the basis of any counterclaim in any
proceedings relating to the Security Documents (or any portion thereof) or the
enforcement of this Agreement, nor form the basis of any claim or cause of
action by any of the Loan Parties against the Lender or any other Person acting
on its behalf; and

 

(c)           the
Security Interests created in the Security Documents described in Section 4.4(a) attached
forthwith upon the completion of the execution and delivery thereof (except to
the extent they relate to property in which the Loan Parties have no interest
in which case they attach at the time that the Loan Parties, as applicable,
acquire any interest therein) and have at all times secured and shall at all
times secure all the indebtedness, liabilities and obligations of the Borrower
in respect of the Credit Facilities or the Documents from time to time and the
security described in Sections 4.1 and 4.2 will continue at all times to secure
the Outstandings from time to time; and

 

(d)           the
Security Documents described in Sections 4.1 and 4.2 executed and delivered
after execution of this Agreement and the Security Interests created pursuant
thereto shall attach at the time of execution of the relevant Security Document
(except to the extent they relate to property in which the Loan Parties have no
interest in which case they attach at the time that the Loan Parties, as
applicable, acquire any interest therein).

 

4.5          Extensions,
Etc.

 

The Lender may grant extensions, take and give up securities, accept
compositions, grant releases and discharges and otherwise deal with the
Borrower, or any other Persons, sureties, or securities, as the Lender, in its
sole discretion, may see fit, all without prejudice to the liability of any
Loan Party or the Lender’s rights under this Agreement.

 

4.6          No
Merger

 

The taking of any security as provided under this Agreement or any
Security Document shall not operate by way of merger of any of the obligations
of any Loan Party under this Agreement or any Security Document, or of any
Security Interest, guarantee, contract,

 

16

 

promissory note, bill of exchange or security in any other form,
whether or not similar to the foregoing, and no judgment recovered by the
Lender shall operate by way of merger or in any way affect the security
provided for in this Agreement, which shall be in addition to and not in
substitution for any other security now or hereafter held by or behalf of the
Lender whether for the Loan or under any Security Document. For greater
certainty, no judgment recovered by the Lender shall operate by way of merger
or in any way affect the obligation of any Loan Party to pay interest at the
rates, times and compounded as provided in this Agreement.  Without limiting the generality of the
foregoing, the Facility Letter shall not merge in this Agreement or be
superseded or replaced but shall remain in full force and effect; and the terms
and conditions provided in the Facility Letter shall, subject to Section 12.17
hereof, be applicable to the Loan as well as the terms and provisions of this
Agreement.

 

ARTICLE 5
— PAYMENT OF INTEREST AND FEES

 

5.1          Interest

 

The Borrower shall pay interest on the daily balance outstanding on the
Term Credit Facilities and remaining unpaid from time to time both before and
after maturity or default at a rate per annum equal to five-eights of one
percent (5/8 of 1%) per annum above the Prime Rate in effect from time to time,
calculated daily and compounded monthly from the respective dates of such
advances, on the last day of each and every month during the currency of this
Agreement, commencing with the month in which the Drawdown is made and
continuing to and including the date the entire amount of the Term Credit
Facilities have been repaid.  If the
Prime Rate changes and so often as the same occurs during the currency of this
Agreement, the rate of interest charged on the Term Credit Facilities shall
change on the same day and in the same amount as the Prime Rate shall have
changed.

 

17

 

The Borrower shall pay interest on the daily balance outstanding on the
Operating Credit Facility remaining unpaid from time to time both before and
after maturity or default at a rate per annum equal to one-half of one percent
(1/2 of 1%) per annum above the Prime Rate in effect from time to time,
calculated daily and compounded monthly from the respective dates of
borrowings, on the last day of each and every month during the currency of this
Agreement commencing with the month in which the Drawdown is made and
continuing to and including the date the entire amount of the Operating Credit
Facility has been repaid.  If the Prime
Rate changes and so often as the same occurs during the currency of this
Agreement, the rate of interest charged on the Operating Credit Facility shall
change on the same day and in the same amount as the Prime Rate shall have
changed.

 

To the extent that the
Borrower utilizes the Operating Credit Facility in U.S. Dollars, the Borrower
shall pay interest on the daily balance outstanding for such amount at the rate
per annum equal to one-half of one percent (1/2 of 1%) per annum above the U.S.
Base Rate in effect from time to time, calculated daily and compounded monthly
from the respective dates of borrowings on the last day of each and every month
during the currency of this Agreement commencing in the month in which the
initial Drawdown (of U.S. Dollars) is made and continuing to and including the
date the entire amount of the U.S. Dollars borrowed under the Operating Credit
Facility has been repaid.  If the U.S.
Base Rate changes and so often as the same occurs during the currency of this
Agreement, the rate of interest charged on the U.S. Dollar portion on the
Operating Credit Facility shall change on the same day and in the same amount
as the U.S. Base Rate may have changed.

 

5.2          Borrower’s
Option to Utilize Banker’s Acceptances

 

The Borrower shall have the option to borrow by way of Banker’s
Acceptance in relation to the Term Credit Facilities and the Operating Credit
Facility.  A stamping fee of one and

 

18

 

three-quarters (13⁄4%) percent per annum shall be payable at the time of
acceptance of each Banker’s Acceptance under the Operating Credit Facility,
charged on the full amount of the Banker’s Acceptance, calculated over the term
of the Banker’s Acceptance.  A stamping
fee of one and seven-eights (17/8%) percent per annum shall be
payable at the time of acceptance of each Banker’s Acceptance under the Term
Credit Facilities, charged on the full amount of the Banker’s Acceptance,
calculated over the term of the Banker’s Acceptance.  The maximum term of any Banker’s Acceptance
shall be 364 days.

 

5.3          Issuance
of Guarantees or Letters of Credit

 

Upon the issuance of any guarantee or standby letter of credit by the
Lender under the Operating Credit Facility, a fee equal to one and one-quarter
(11⁄4%) per cent per annum shall be paid to the Lender, calculated against the
face amount and over the term of each guarantee or letter of credit.

 

5.4          No
Deduction etc.

 

All interest and fees to be paid hereunder shall accrue from day to day
and shall be paid without allowance or deduction for deemed re-investment or
otherwise howsoever, both before and after maturity and before and after
default and/or judgment, if any, until payment thereof.

 

5.5          Interest
on Overdue Interest, Unpaid Costs and Expenses

 

Notwithstanding any other provision hereof, in the event that any
amount due hereunder (including, without limitation, any interest payment and
unpaid costs and expenses) is not paid when due (whether by acceleration or
otherwise), the Borrower shall and hereby agrees to pay to the Lender interest
on such unpaid amount (including, without limitation, interest on interest), if
and to the fullest extent permitted by Applicable Law, from the date that such
amount is due until the date that such amount is paid in full (but excluding
the date of such

 

19

 

payment if the payment is made before 3:00 p.m. (Calgary time) at
the Lender’s Branch on the date of such payment), and such interest shall
accrue daily, be calculated and compounded on the last Banking Day of each
calendar month and be payable in Canadian Dollars on demand, after as well as
before maturity, Default and judgment, at a rate per annum that is equal to the
same rate(s) charged on the principal relating thereto (or, in the event of
different interest rates on the principal, arrears of interest shall bear
interest at the same rate charged on that portion or those portions of the
principal which relates to the interest in arrears), and arrears in unpaid
costs, expenses and other amount due hereunder shall bear interest at a rate
per annum that is equal to the Prime Rate from time to time plus three percent
(3%) per annum.

 

5.6          Application
Fee

 

The Lender acknowledges receipt from the Borrower of an irrevocable
application fee in the amount of Cdn. $45,000, which sum is the property of the
Lender as consideration for its time, effort and expense incurred in the review
of documents and financial statements. 
The Borrower acknowledges and agrees that determination of such costs is
not feasible and the aforementioned sum represents a reasonable estimate
thereof.

 

5.7          Administration
Fee

 

The Borrower shall pay to the Lender on the last day of each month, an
administration fee of Cdn. $1,000 with respect to the Operating Credit
Facility, such fee to be charged only in those months in which the Operating
Credit Facility is utilized, and shall be debited to the Borrower’s current
account on the last day of the month.

 

5.8          Additional
Fees

 

The Borrower shall pay to the Lender the following:

 

(a)           a
monthly business internet banking fee of Cdn. $50;

 

20

 

(b)           a
fee of 0.25% per annum on the unused portion of the Operating Credit Facility
in excess of $5,000,000 based on the average outstandings for the previous
quarter and paid quarterly in arrears.

 

ARTICLE 6
— REPAYMENT OF LOAN

 

6.1          Repayment

 

The Borrower shall pay the entire unpaid amount of the Operating Credit
Facility on demand by the Lender.  If an
Event of Default has accrued, the Borrower shall pay the entire unpaid amount
of the Term Credit Facilities on demand by the Lender.  Until demanded, accelerated or otherwise, in
which case the unpaid portion of the Loan shall immediately become due and
payable, principal payments on the Term Credit Facility #1 shall be paid in
equal monthly instalments of Cdn. $193,334 on the last day of each month with
full repayment no later than April 30, 2008, and principal repayments on
the Term Credit Facility #2 shall be paid in equal monthly instalments of Cdn.
$62,500 with full repayment no later than September 30, 2009.

 

6.2          Optional
Repayment of Principal

 

Provided there does not exist a Default hereunder, the Borrower may at
any time and from time to time on any Banking Day repay, without bonus or
penalty to the Borrower, the whole or any part of the Loan, provided that the
Borrower shall give notice to the Lender of such prepayment at least one (1) Banking
Day prior to the proposed repayment date.

 

ARTICLE 7
— PLACE AND APPLICATION OF PAYMENTS

 

7.1          Place
of Payment of Principal, Interest and Fees

 

All payments of principal, interest, fees or other amounts to be made
by the Loan Parties to the Lender pursuant to this Agreement shall be made for
value on the day such amount is due hereunder at the Lender’s Branch, provided
the Lender receives funds from the Borrower before 3:00 p.m. (Calgary
time) and if such funds are not received by such time, or if such day is not a
Banking Day, on the Banking Day next following, by deposit or transfer thereof

 

21

 

at the time specified herein to the account of the Lender for such
purpose or to such other place or account as the Lender may from time to time
notify the Borrower.

 

7.2          Funds

 

Each amount advanced, disbursed or paid hereunder shall be advanced,
disbursed or paid, as the case may be, in such form of funds as may from time
to time be customarily used for the settlement of banking transactions in
Canadian Dollars in Calgary, Alberta similar to the banking transactions
required to give effect to the provisions of this Agreement for value on the
day such advance, disbursement or payment is to be made.

 

7.3          Application
of Payments

 

All payments made by the Borrower hereunder shall (unless mutually
agreed among the Loan Parties and the Lender) be applied in the following
order:

 

(a)           to
amounts due hereunder as fees;

 

(b)           to
amounts due hereunder as costs and expenses;

 

(c)           to
amounts due hereunder as interest on overdue amounts;

 

(d)           to
amounts due hereunder as interest; and

 

(e)           to
amounts due hereunder as principal.

 

ARTICLE 8
— REPRESENTATIONS AND WARRANTIES

 

8.1          General

 

The Borrower hereby represents and warrants to the Lender the accuracy
of each of the matters set out in this Article 8 (and the Corporate
Guarantor hereby represents and warrants to the Lender the occurrence of each
of the matters that pertain to it or the Documents that it has executed) and
they acknowledge that the Lender has entered into this Agreement and agreed to
make the Credit Facilities available to the Borrower in full reliance upon these
representations and warranties.  Any
investigations made at any time by or on behalf of the Lender shall not
diminish in any respect whatsoever its right to rely on the representations

 

22

 

and warranties in this Agreement or in any certificates, instruments or
opinions of counsel.  All statements
contained in a Certificate of the Borrower or a Certificate of the Corporate
Guarantor or in any instruments delivered by or on behalf of the Borrower or the
Corporate Guarantor under or pursuant to this Agreement or in connection with
any provision hereof shall constitute representations and warranties made by
the Borrower and the Corporate Guarantor to the Lender under this Agreement.

 

8.2          Corporate
Existence and Power

 

Each of the Loan Parties (a) is and will continue to be a duly
formed and validly existing corporation in good standing under the laws of the
jurisdiction of its incorporation; (b) is and will continue to be duly
qualified and licensed as a foreign or extra-provincial corporation in each
jurisdiction where its assets or the business conducted by it with respect
thereto makes such qualification necessary or of advantage or where it
maintains an office for the conduct of business; and (c) has and will
continue to have all necessary power and authority to own or hold its assets,
to carry on its businesses with respect thereto as now conducted and as
proposed to be conducted, and to execute, deliver and perform its obligations
under this Agreement, the other Documents and all documents referred to herein
or therein to which it is, or is to be, a party.

 

8.3          Authorization
and Execution

 

The execution, delivery and performance of its obligations under this
Agreement and the other Documents to which each of the corporate Loan Parties,
as applicable, is, or is to be, a party and the consummation of the
transactions contemplated hereby or thereby have been duly and validly
authorized by all corporate or other action of each of the corporate Loan
Parties necessary to ensure its and their respective validity and legality.

 

23

 

8.4          No
Contravention or Resultant Security Interest

 

The execution, delivery and performance of this Agreement and the other
Documents to which each of the Loan Parties, as applicable, is, or is to be, a
party and the consummation of the transactions contemplated hereby or thereby
and the enforcement hereof and thereof by the Lender or any trustee or agent
appointed under or pursuant to the terms of any of the Documents do not and
will not (a) conflict with, contravene or result in a breach of or exceed
the limitations or privileges contained in or conferred by, or constitute a
default under or accelerate the time for payment of any indebtedness or
enforcement of any obligation under, any of the terms, conditions or provisions
of (i) the constating documents of the corporate Loan Parties, (ii) any
resolutions of shareholders or directors or consent instruments in lieu
thereof, by-laws, shareholders’ agreements, or articles of the corporate Loan
Parties, or (iii) any agreement or instrument, licence or consent to which
the applicable Loan Party is a party or by which it or any of its assets is
bound or affected; (b) result in or require the creation or imposition of
any Security Interest upon any Loan Party or its respective assets other than
in favour of the Lender; or (c) contravene any provision of Applicable
Law.

 

8.5          Approvals
or Consents

 

Except those which have been obtained or will be obtained prior to the
Drawdown Date and are or will be on the Drawdown Date in full force and effect,
no present authorization, consent, approval, order, licence, permit or other
action by, or filing, registration, declaration or qualification with or before,
or publication or giving of notice to, any Person, and in particular to any
governmental authority or regulatory body or any agency, department or division
of any thereof, is of advantage or required to be obtained, given or made for (a) the
due execution and delivery by the Loan Parties, as applicable, of this
Agreement and the other Documents to which it is or may be a party; (b) the
perfection, protection or ranking of the Security Documents that create a
Security Interest or the Security Interests thereof; (c) the

 

24

 

performance of the terms of this Agreement and the other Documents (d) the
enforcement of this Agreement or any of the other Documents by the Lender or
any agent or trustee appointed under or pursuant to any thereof; or (e) the
consummation of the transactions contemplated by this Agreement and the other
Documents.

 

8.6          Binding
Effect

 

This Agreement and each of the other Documents executed or to be
executed by the Loan Parties, as applicable, constitute, or will at the time of
delivery in each case constitute, the legal, valid and binding obligations of
the Loan Parties, as applicable, enforceable against it or them, respectively,
in accordance with the terms hereof or thereof subject to any qualifications or
limitations contained in the opinions delivered by the Lender’s Counsel or the
Borrower’s Counsel under Section 3.1 hereof.

 

8.7          Litigation

 

(a)           Other
than as set forth in Schedule 2, there are no actions, suits or
proceedings pending, or, to the best of the knowledge, information and belief
of the Loan Parties, threatened in or before any court, arbitrator or
governmental or other public authority, or before any private dispute resolving
body, in Canada or elsewhere which could have a material adverse affect on (i) the
legality, validity, binding effect or enforceability of, or the ability of the
Loan Parties to perform this Agreement, the other Documents or any of the
transactions or obligations contemplated hereby or thereby, or (ii) any of
the Mortgaged Property.

 

(b)           No
order, judgment, writ, injunction, decree, determination or award of any court,
arbitrator, governmental or other public authority or private dispute resolving
body exists with respect to the Loan Parties, which could affect (i) the
legality, validity, binding effect or enforceability of, or the ability of the
Loan Parties as applicable, to perform, this Agreement, the other Documents or
any of the transactions or obligations contemplated hereby or thereby, or (ii) any
of the Mortgaged Property.

 

8.8          Defaults
and Burdensome Provisions

 

(a)           Each
of the Loan Parties is not in material default in the performance or observance
of any of its obligations, covenants or conditions contained in any contract,
agreement or instrument, including any bond, debenture, note, conditional sale
agreement, lease or other document of whatever kind to which it is a party
evidencing or constituting or providing for the issuance, creation, evidencing
or securing of any indebtedness for borrowed money.

 

25

 

(b)           No
Default or Event of Default has occurred and is continuing.

 

(c)           None
of the Loan Parties is aware of any event that has occurred and is continuing
which constitutes, or which with the giving of notice and/or the lapse of time
and/or a relevant determination would constitute a material contravention of or
default under any agreement or instrument by which the Loan Parties or any of
the Mortgaged Property are bound or affected.

 

8.9          Certain
Claims

 

(a)           The
Mortgaged Property is not, and at the time of the Drawdown Date and thereafter
will not be, subject to any Security Interest, other than Permitted
Encumbrances or encumbrances permitted by the terms of the Security Documents.

 

(b)           As
of the date hereof after due inquiry, the Loan Parties are not aware of any
Person enforcing or seeking to enforce or having given notice of its intention
to enforce any Security Interest or any right of first refusal, right of first
purchase or similar right or option relating to any portion of the Mortgaged
Property which Security Interest or right could (on any facts or circumstances)
if enforced, have an Adverse Effect.

 

8.10        Other
Information

 

All information, materials and documents delivered by the Loan Parties
to the Lender in connection with the transactions contemplated by this
Agreement were and will be, as the case may be

 

(a)           complete
and accurate in all material respects as at their respective dates, and as at
date of delivery thereof to the Lender,

 

(b)           if
delivered to the Lender prior to the date hereof, are additionally complete and
accurate (except to the extent superseded by later information, materials or
documents dealing with the same subject-matter) in all material respects on and
as of the date hereof, and

 

(c)           if
delivered to the Lender prior to the Drawdown Date, will be complete and
accurate in all material respects on the initial Drawdown Date, subject to any
changes in the normal and ordinary course of the Borrower’s business.

 

8.11        No
Omissions; Undisclosed Events

 

The Loan Parties have given to the Lender all information necessary to
make any statements contained herein not misleading in light of the
circumstances in which they are given, and there is no fact which materially
adversely affects or, so far as the Loan Parties can (after

 

26

 

diligent inquiry) reasonably foresee, will materially adversely affect
the Mortgaged Property, the Loan Parties’ title thereto, as applicable, or each
Loan Party’s ability to perform its respective obligations under this
Agreement, the other Documents or any document referred to herein or therein to
which it is or is to be a party.

 

ARTICLE 9
— COVENANTS

 

9.1          General

 

The Loan Parties covenant and agree, as applicable, with the Lender as
set forth in this Article 9, each such covenant and agreement to remain in
force and effect until this Agreement has been terminated under Section 12.13
and the Loan Parties have no further indebtedness or liability hereunder or
under any other Documents or, in the case of provisions stated to survive
termination, until the discharge thereof. 
The covenants and agreements set forth in this Article 9 are
without limitation to any covenants, undertakings or agreements elsewhere
contained herein or in any other Documents.

 

9.2          Payment
and Performance

 

The Borrower will punctually pay all amounts falling due hereunder,
whether for principal, fees or interest or otherwise howsoever, as and when the
same fall due and at the places and manner provided herein and the Loan Parties
shall perform all other obligations to be performed under the terms of the
Documents by the applicable Loan Party at the times and places and in the
manner provided for herein or therein.

 

9.3          Maintenance
of Corporate Existence and Status

 

The Loan Parties shall each (a) keep and maintain its corporate
existence, status and authority, and (b) not vary or amend its by-laws or
its instruments of incorporation without the prior written consent of the
Lender (such consent not to be unreasonably withheld or delayed) and unless
such variation or amendment would not be likely to prejudice the rights

 

27

 

of the Lender under any Document or adversely affect, in a material
manner, the ability of each corporate Loan Party to perform its obligations
under any Documents to which it is a party.

 

9.4          Compliance
with Laws and Regulations

 

The Loan Parties shall each duly observe and comply in all respects
with all Applicable Laws, regulations and orders of governmental authorities
relating to any portion of its assets or its ownership thereof or its business
in relation thereto, if non-compliance would result in an Adverse Effect.

 

9.5          Financial
Statements

 

The Loan Parties shall furnish to the Lender financial statements as
follows, such financial statements to be prepared in accordance with generally
accepted accounting principles on a basis consistent with prior years:

 

(a)           within
120 days after the ends of each fiscal year of the Borrower, audited year end
financial statements for the Borrower, on a consolidated basis, signed by the
directors of the Borrower;

 

(b)           within
120 days after the end of each fiscal year of Geokinetics Inc., audited year
end financial statements for Geokinetics Inc., signed by its directors;

 

(c)           within
120 days after the end of each fiscal year of each Loan Party, non-consolidated
year end financial statements for such Loan Party, prepared on an internal
basis;

 

(d)           within
120 days after the end of each fiscal year of the Borrower, pro forma financial
statements and cash flow forecast and budget for the following fiscal year of
the Borrower, on a consolidated basis;

 

(e)           within
120 days after the end of each fiscal year of the Borrower, a listing of fixed
assets of the Loan Parties with Net Book Value;

 

(f)            within
30 days of each calendar month end, aged listings of accounts receivable and
payable of the Margin Parties;

 

(g)           within
30 days of each quarter end, an internally prepared consolidated income statement
and balance sheet of the Borrower and an internally prepared unconsolidated
income statements and balance sheets of the Loan Parties.

 

28

 

The Borrowers shall apply
depreciation allowance in attendance with GAAP to its quarterly in-house
financial statements to ensure that the Lender is provided with an up-to-date
listing and Net Book Value of the Loan Parties’ fixed assets on an ongoing
basis.

 

9.6          Compliance
Certificate

 

The Borrower shall upon the request of the Lender, within one hundred
and twenty (120) days after the end of each fiscal year, cause to be prepared
and delivered to the Lender a Certificate of the Borrower in respect of the
applicable fiscal year certifying that no Default or Event of Default has
occurred hereunder or, if any Default or Event of Default has occurred,
particulars thereof and an explanation of the steps being taken or proposed to
remedy the same.

 

9.7          Other
Financial Information

 

The Borrower shall furnish to the Lender such other financial and
operating reports and statements and other information on the financial
condition or business or affairs of the Loan Parties as the Lender may
reasonably request from time to time.

 

9.8          Certain
Negative Covenants of the Borrower

 

Without the consent of the Lender, the Borrower shall not:

 

(a)           declare
or pay dividends on any class or kind of its shares, repurchase or redeem any
of its shares or reduce its capital in any way whatsoever;

 

(b)           other
than Permitted Encumbrances, grant or allow any lien, charge, privilege,
hypothec, lease or other encumbrance, whether fixed or floating, to be
registered against or exist on any of the Mortgaged Property save as
specifically provided herein;

 

(c)           become
guarantor or endorser or otherwise become liable upon any note or other
obligation other than in the normal and ordinary course of the Borrower’s
business;

 

(d)           permit
its ratio of consolidated debt to tangible net worth (as determined in
accordance with GAAP) to exceed 2.25:1 during the month of December 2005;
and thereafter, 2.25:1 during the months of January to April annually
and 1.75:1 during the months of May to December annually; where debt
shall include all external liabilities but shall exclude future income taxes
and tangible net worth shall include all share capital and retained earnings,
from which shall be deducted any intangible assets and amounts due from
shareholders;

 

29

 

(e)           amalgamate
with or permit all or substantially all of its assets to be acquired by any
other Person or permit any reorganization or change of control of the Borrower;

 

(f)            permit
its ratio of consolidated current assets to current liabilities to at any time
be less than 1.25:1 (0.90:1 for the period ending December 2005).  For the purpose of this calculation, the
current portion of long term debt shall be excluded from current liabilities;

 

(g)           permit
its ratio of consolidated net cash flow to total debt service to at any time be
less than 1.30:1 (1.15:1 for the period ending December 31, 2005).  Net cash flow will be calculated on a rolling
four quarters basis and total debt service will be calculated using “Net Debt”.  Net debt is defined as total debt less total
cash on hand.  For calculation purposes,
net debt is amortized over a 5 year period.

 

9.9          Certain
Negative Covenants of Geokinetics Inc.

 

Without the consent of the Lender, Geokinetics Inc. shall not:

 

(a)           permit
its ratio of consolidated debt to tangible net worth (as determined in
accordance with GAAP) to exceed 2.00:1; where debt shall include all external
liabilities but shall exclude future income taxes and tangible net worth shall
include all share capital and retained earnings, from which shall be deducted
any intangible assets and amounts due from shareholders;

 

(b)           permit
its ratio of consolidated current assets to current liabilities to at any time
be less than 1.10:1.  For the purpose of
this calculation, the current portion of long term debt shall be excluded from
current liabilities;

 

(c)           permit
its ratio of consolidated net cash flow to total debt service to at any time be
less than 1.30:1 (1.15:1 for the period ending December 31, 2005).  Net cash flow will be calculated on a rolling
four quarters basis and total debt service will be calculated using “Net Debt”.  Net debt is defined as total debt less total
cash on hand.  For calculation purposes,
net debt is amortized over a 5 year period.

 

9.10        Notice
of Certain Events

 

The Loan Parties shall each promptly advise the Lender in writing of:

 

(a)           any
litigation commenced against it or threatened, the final outcome of which is
reasonably likely to have an Adverse Effect;

 

(b)           the
occurrence of any Default or Event of Default;

 

(c)           all
asset dispositions in excess of $500,000, prior to such disposition;

 

(d)           all
asset acquisitions in excess of $2,500,000, prior to such acquisition.

 

30

 

9.11        Employee
Incentive Plan

 

The Loan Parties shall promptly provide to the Lender copies of any
employee incentive, bonus or similar plan in effect from time to time.

 

9.12        Lender
May Perform

 

If any of the Loan Parties shall fail to perform any act which it is
required to perform under any of the Documents the Lender may, in its absolute
but reasonable discretion, perform or cause to be performed such act at the
Loan Parties’ expense, and may pay such money at the Loan Parties’ expense, and
thereupon, without prejudice to the rights of the Lender to damages and other
remedies available at law or in equity hereunder or otherwise, the Loan Parties
shall immediately repay to the Lender all reasonable expenses so incurred and
all amounts so paid by the Lender, together with interest thereon at the rate
payable on overdue interest under Section 5.4 from time to time from and
after the date that the Lender incurs such expense or makes such payment, and
the amount of each such expense and payment, and interest thereon, shall be
secured by the Security Documents.

 

ARTICLE 10
— EVENTS OF DEFAULT AND ACCELERATION

 

10.1        Events
of Default

 

The following events constitute Events of Default hereunder:

 

(a)           if
any Loan Party fails to make any payment of any interest or portion thereof
when due hereunder or under any Document or on demand, if so payable;

 

(b)           if
any Loan Party fails to make any payment, other than interest, when due
hereunder or under any Document or on demand, if so payable;

 

(c)           if
any Loan Party fails to observe or perform any term, covenant or agreement
contained in this Agreement or any other Document including, without
limitation, the Facility Letter (other than those covered by Sections 10.1(a) and
(b)) to which it is a party and such failure is not remedied within ten (10) Banking
Days after notice from the Lender to the Borrower of such failure;

 

(d)           if
any statement, representation or warranty of a Loan Party or any of its
employees or agents, as applicable, set forth in this Agreement, a Document, a

 

31

 

Certificate of the Borrower or a Certificate of the Corporate
Guarantors shall prove to have been untrue or incomplete and may result in an
Adverse Effect;

 

(e)           if
any Loan Party shall (i) institute or commence proceedings to be
adjudicated a bankrupt or insolvent or enter liquidation, or consent to the
filing of a bankruptcy or insolvency proceeding against it; or (ii) file,
institute or commence or otherwise take any proceeding or proposal relating to
reorganization, adjustment, arrangement, composition, compromise, stay of
proceedings, or relief similar to any of the foregoing under any Applicable Law
regarding bankruptcy, insolvency, reorganization or relief of debtors; or (iii) consent
to the filing of any such proceeding; or (iv) consent to the appointment
of a receiver, liquidator or trustee or assignee in bankruptcy, liquidation,
reorganization or insolvency of any Loan Party, or of a substantial part of its
assets; or (v) make an assignment for the benefit of creditors; or (vi) admit
in writing its inability to pay its debts generally as they become due; or (vii) voluntarily
suspend transaction of its usual business; or (viii) generally not be
paying its debts as they come due; or (ix) take any corporate or other
action authorizing or in furtherance of any of the foregoing;

 

(f)            if
(i) in a court having jurisdiction in the premises there shall have been
entered a judgment, decree or order which has not been reversed on appeal and
is not stayed pending the outcome of appeals adjudging any Loan Party a
bankrupt or insolvent, or for the appointment of a receiver, liquidator,
trustee or assignee in bankruptcy or for liquidation, reorganization,
insolvency, compromise, composition, arrangement or other plan of any Loan
Party or a substantial part of its assets or property or for a stay of
proceedings or the winding-up or liquidation of its affairs; or (ii) any
proceeding is filed, instituted or commenced by any Person seeking liquidation,
reorganization or winding-up, adjustment, arrangement, compromise, composition,
stay of proceedings or similar relief of or for any Loan Party under any
Applicable Law regarding bankruptcy, insolvency, reorganization or relief of
debtors except in either such case (aa) if the affected Loan Party has filed an
appeal or objection thereto in the appropriate court or office within the lesser
of the applicable appeal period and five (5) Banking Days of entry thereof
(and, in the case of (i) above, if and for so long as the effects thereof
are stayed and, in the case of (ii) above, unless and until a final
judgment, decree or order is entered, in which case (i) shall, subject to
these exceptions, apply) or filing, institution or commencement thereof, as
applicable, and (bb) for any transaction consented to in writing by the Lender;

 

(g)           if
any proceeding with respect to any Loan Party is commenced under the Companies’
Creditors Arrangement Act or the Bankruptcy and Insolvency Act or similar
legislation or any Loan Party shall seek or take any proceeding or be the
subject of any proceeding relating to a compromise or arrangement with
creditors or claimants (other than any such proceeding in the ordinary course
of business which is by its terms not applicable to the Lender or any Person on
its behalf);

 

(h)           if
any Loan Party is insolvent or makes an unapproved sale of all or substantially
all of its assets;

 

(i)            if
any Loan Party should have its charter revoked or rescinded or its existence in
any way terminated;

 

32

 

(j)            if
the Borrower fails to repay any borrowed money when due or causes or permits
any default to exist or other event under any agreement or instrument relating
to an obligation to repay borrowed money if the effect of such default or
obligation is to accelerate or to permit the acceleration of the maturity of
such borrowed money in an amount in excess of $100,000;

 

(k)           if
an encumbrancer, lienor or any other Person with a Security Interest lawfully
takes possession of any material portion of the assets of any Loan Party;

 

(l)            if
any material provision of a Document is or is declared to be unenforceable,
invalid or illegal in any respect or should fail to provide charges of the
types or priorities herein or therein provided for;

 

(m)          if
a material adverse change in the financial condition of the Borrower or any of
the Corporate Guarantors occurs in the reasonable discretion of the Lender; or

 

(n)           if
the Lender in good faith believes and has reasonable commercial grounds to
believe that any of the Mortgaged Property is or is about to be placed in
jeopardy.

 

10.2        Acceleration
of Operating Credit Facility Upon Demand

 

If the Lender shall demand payment of the Operating Credit Facility,
the entire principal amount of the Operating Credit Facility then outstanding
and all accrued and unpaid interest thereon shall become immediately due and
payable with interest thereon, at the rate or rates determined as herein
provided, to the date of actual payment thereof, all without any other notice,
presentment, protest, demand, notice of dishonour or any other demand
whatsoever, all of which are hereby expressly waived by the Borrower.  In such event the Lender may, in its
discretion, exercise any right or recourse and/or proceed by any action, suit,
remedy or proceeding authorized or permitted by Applicable Law for the recovery
of all of the aforementioned indebtedness, liabilities and obligations of the
Loan Parties to the Lender and proceed to exercise any and all rights hereunder
or under any other Document and no such remedy for the enforcement of the
rights of the Lender shall be exclusive of or dependent on any other remedy but
any one or more of such remedies may from time to time be exercised
independently or in combination.

 

33

 

10.3        Acceleration
of Loan

 

If any Event of Default shall occur (including, without limitation, the
non-payment of any amount of the Operating Credit Facility upon demand by the
Lender), and the Lender shall demand payment thereof,

 

(i)            the
entire principal amount of the Loan then outstanding and all accrued and unpaid
interest thereon, and

 

(ii)           all
other payments due hereunder,

 

shall, at the
option of the Lender, become immediately due and payable with interest thereon,
at the rate or rates determined as herein provided, to the date of actual
payment thereof, all without any other notice, presentment, protest, demand,
notice of dishonour or any other demand whatsoever, all of which are hereby
expressly waived by the Borrower.  In
such event the Lender may, in its discretion, exercise any right or recourse
and/or proceed by any action, suit, remedy or proceeding authorized or
permitted by Applicable Law for the recovery of all the indebtedness,
liabilities and obligations of the Loan Parties to the Lender and proceed to
exercise any and all rights hereunder or under any other Document and no such
remedy for the enforcement of the rights of the Lender shall be exclusive of or
dependent on any other remedy but any one or more of such remedies may from
time to time be exercised independently or in combination.

 

10.4        Remedies
Cumulative and Waivers

 

For greater certainty, it is expressly understood and agreed that the
rights and remedies of the Lender hereunder or under any other Document or
instrument executed pursuant to this Agreement are cumulative and are in
addition to and not in substitution for any rights or remedies provided by law
or by equity; and any single or partial exercise by the Lender of any right or
remedy, or procurement of a judgment in respect of a default or breach of any
term, covenant, condition or matter contained in this Agreement or other
Document or instrument executed pursuant to this Agreement shall not be deemed
to operate as a merger of or be a waiver of or to alter, affect or prejudice
any other right or remedy or other rights or remedies to which the Lender may
be lawfully entitled in respect of such default or breach.  Any waiver by the Lender of the strict
observance, performance or compliance with any term, covenant, condition or
other matter contained herein and any indulgence granted, either

 

34

 

expressly or by course of conduct by the Lender shall be effective only
in the specific instance and for the purpose for which it was given and shall
be deemed not to be a waiver of any rights and remedies of the Lender under
this Agreement or any other Document or instrument executed pursuant to this
Agreement.

 

ARTICLE 11
— COSTS, EXPENSES AND INDEMNIFICATION

 

11.1        Costs
and Expenses

 

(a)           The
Borrower shall pay promptly upon notice from the Lender all reasonable costs
and expenses in connection with preparation, printing, execution and delivery
of this Agreement and the other Documents, whether or not any Drawdown has been
made hereunder, including without limitation, the reasonable fees and
out-of-pocket expenses of Lender’s Counsel on a solicitor and his own client
basis with respect thereto and with respect to advising the Lender as to its
rights and responsibilities under this Agreement and the other Documents.

 

(b)           Except
for ordinary expenses of the Lender relating to the day-to-day administration
of this Agreement, the Borrower further agrees to pay within ten Banking Days
of demand by the Lender all reasonable costs and expenses in connection with
the preservation or enforcement of the rights of the Lender under this
Agreement (including any interpretation of the Documents or the validity and
enforceability thereof in connection with any actual or potential Default or
Event of Default) and other Documents, including, without limitation, all
reasonable costs, fees and out-of-pocket expenses of Lender’s Counsel on a
solicitor and his own client basis and reasonable expenses sustained by the
Lender as a result of any failure by the Borrower to perform or observe any of
its obligations hereunder, together with interest at the Prime Rate plus
one-half of one percent (1⁄2  of 1%) per
annum from and after such tenth Banking Day if such payment is not made by such
time.

 

11.2        Indemnification
by the Borrower re Loan

 

In addition to, and without duplication of, any liability of the
Borrower to the Lender under any other provision hereof, the Borrower shall
indemnify the Lender and hold the Lender harmless against any reasonable loss
or expense incurred by the Lender including, without limitation, any cost or
expense incurred by reason of the liquidation or re-employment in whole or in
part of deposits or other funds required to fund or maintain the Loan, as a
result of:

 

35

 

(a)           any
Event of Default or breach or failure by the Borrower to fulfil any of its
obligations hereunder or to complete the Drawdown or to make any payment,
repayment or prepayment on the date required hereunder or specified by it in
any notice given hereunder;

 

(b)           the
Borrower’s failure to pay any other amount, including without limitation any
interest or fee, due hereunder on its due date;

 

(c)           the
Borrower’s failure to give any notice required to be given by it to the Lender
hereunder; or

 

(d)           the
failure of the Borrower to make any other payment when and as due hereunder.

 

11.3        Indemnification
by the Loan Parties re Environmental Matters

 

The Loan Parties hereby indemnify and hold harmless the Lender against
and from any and all claims, suits, actions, debts, damages, costs, losses,
obligations, judgments, charges and expenses (including reasonable legal fees
on a solicitor and his own client basis), of any nature whatsoever suffered or
incurred by the Lender due to the actions or inactions of the Loan Parties on
account of any Environmental Law, including the assertion of any lien
thereunder, with respect to:

 

(a)           the
Release of a Contaminant affecting any property, the threat of the Release of
any Contaminant affecting any property or the presence of any Contaminant
affecting any property, including any loss of value of property as a result of
any of the foregoing;

 

(b)           any
costs of removal or remedial action incurred by the Government of Canada or any
provincial government or any costs incurred by any other person or damages from
injury to any property, destruction of any property, or loss of natural
resources in relation to any property, including reasonable costs of assessing
such injury, destruction or loss incurred pursuant to any Environmental Law;

 

(c)           liability
for personal injury or property damage arising under any statutory or common
law tort theory including, without limitation, third party, consequential,
indirect damages and damages assessed for the maintenance of a public or
private nuisance or for the carrying on of a dangerous activity at or near any
property;

 

(d)           any
other environmental matter affecting any property within the jurisdiction of
any federal environmental agency, or any provincial or local environmental
agency; and

 

36

 

(e)           all
environmental, health, reclamation and clean up costs and obligations
associated with or pertaining to the abandonment or reclamation of any property
or any wells, facilities, buildings, fixtures or equipment located thereon.

 

The Loan
Parties’ obligations under this Section 11.3 shall arise upon the
discovery of the presence of any Contaminant or upon the creation of an
obligation to abandon, reclaim or clean up any property, whether or not any
federal agency or any provincial or local environmental agency has taken or
threatened any action in connection with the presence of any Contaminant and,
notwithstanding anything contained in this Agreement to the contrary, shall
survive the full repayment of the Loan and the termination of this Agreement.

 

ARTICLE 12
— GENERAL

 

12.1        Notice

 

Any demand, notice or communication to be made or given hereunder shall
be in writing and may be made or given by personal delivery or by transmittal
by telecopy, rapifax or other electronic means of communication addressed to the
respective parties as follows:

 

To the Loan Parties:

 

3815 – 32nd Avenue N.E.

Calgary, Alberta

T1Y 7C1

Attention: 
The President

Telecopy No.: 
(403) 265-1693

 

To the Lender:

 

HSBC Bank Canada

407 - 8th Avenue S.W.

Calgary, Alberta

T2P 1E5

Attention: 
The Manager

Telecopy No.: 
(403) 693-8561

 

with a copy to:

Fraser Milner Casgrain LLP

Fifth Avenue Place

 

37

 

30th Floor, 237 - 4th Avenue S.W.

Calgary, Alberta

T2P 4X7

Attention: 
Mr. Gary J. Cochrane

Telecopy No.: 
(403) 268-3100

 

or to such
other address or telecopy number or rapifax number as any party may from time
to time notify the others in accordance with this Section 12.1.  Any demand, notice or communication made or
given by personal delivery during usual business hours at the place of receipt
on a Banking Day shall be conclusively deemed to have been given on the day of
actual delivery thereof, or, if made or given by personal delivery after usual
business on a Banking Day or by telecopier or other electronic means of
communication on the first Banking Day following the transmittal thereof.

 

12.2        Governing
Law; Attornment

 

(a)           This
Agreement shall be governed by and construed in accordance with the Applicable
Laws prevailing in the Province of Alberta, and not the provisions of laws of
other jurisdictions which may be referred to pursuant to such laws in order to
determine any question.  There shall be
no application of any conflict of laws rules inconsistent with this Section 12.2(a).

 

(b)           The
parties hereto do hereby irrevocably submit and attorn to the non-exclusive
jurisdiction of the Courts of the Province of Alberta for all matters arising
out of or relating to this Agreement, or any other Document, or any of the
transactions contemplated hereby or thereby.

 

12.3        Obligations
are Absolute

 

The obligations of the Loan Parties under this Agreement and the other
Documents shall be absolute and (except as otherwise expressly stated herein)
unconditional irrespective of:

 

(a)           any
lack of genuineness, legality, validity, enforceability or value of any of the
Documents or any other agreements or instruments relating thereto or any
collateral therefor;

 

(b)           any
change in the time, manner or place of payment of, or in any other term of, any
of the Documents, or any amendment or waiver of or any consent to departure
from this Agreement or any other Documents;

 

(c)           any
exchange, release or non-perfection of any of this Agreement or any other
Document or any release or amendment or waiver of or consent to departure from
any undertaking of any Person respecting any of this Agreement or any of the
other Documents;

 

(d)           any
failure to obtain any governmental approvals necessary or appropriate in
connection with this Agreement or any of the other Documents;

 

38

 

(e)           the
existence at any time of any Default or Event of Default; or

 

(f)            any
impossibility or impracticality of performance, or force majeure, any act of
any government or any agency or instrumentality thereof, or any other
circumstance, event or happening whatsoever, whether foreseen or unforeseen and
whether similar or dissimilar to anything referred to above in this Section.

 

This Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment or other performance hereunder is
rescinded or must otherwise be returned or unwound for any reason, all as
though such payment had not been made or such performance had not
occurred.  The obligations of the Loan
Parties under this Agreement shall not be subject to reduction, termination or
other impairment by reason of any set-off, recoupment, counterclaim or defence
or for any other reason.

 

12.4        Set
Off

 

Following an Event of Default which remains unremedied, the Lender may,
without notice to the Borrower, combine, consolidate or merge all or any of its
accounts with, and liabilities to, the Lender and may set off or transfer any
sum standing to the credit of any such accounts in or towards the satisfaction
of any sum due from the Borrower to the Lender under this Agreement, and may do
so notwithstanding that the balances on such accounts and the liabilities may
not be expressed in the same currency and the Lender is hereby authorized to
effect any necessary conversions at such rate of exchange as it reasonably
determines, acting in good faith.

 

12.5        Benefit
of the Agreement

 

This Agreement shall enure to the benefit of and be binding upon the
Loan Parties and the Lender and their respective successors and assigns.

 

12.6        Assignment

 

(a)           The
Lender may, with the prior consent of the Borrower (such consent not to be
unreasonably withheld) at any time and from time to time, sell, assign,
transfer or grant an interest in the Loan to another bank or financial
institution.  The Lender 

 

39

 

shall promptly notify the Borrower of such sale, assignment, transfer
or grant and upon the assignee assuming the obligations of the Lender
hereunder, the Lender shall have no further obligation hereunder with respect
to such interest.  No such sale,
assignment, transfer or grant shall obligate the Borrower to pay any amount
hereunder in addition to any amount the Borrower would have been required to
pay hereunder had such sale, assignment, transfer or grant not taken place.

 

(b)           The
Borrower or any other Loan Party shall not assign its rights or obligations
hereunder without the prior written consent of the Lender, which consent may be
arbitrarily withheld.

 

12.7        Severability

 

Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall not invalidate the remaining provisions hereof and any
such prohibition or unenforceability in any jurisdiction shall not invalidate
or render unenforceable such provision in any other jurisdiction.

 

12.8        Whole
Agreement

 

This Agreement constitutes the whole and entire agreement between the
parties hereto and cancels and supersedes any prior agreements, undertakings,
declarations, commitments, representations, written or oral, in respect thereof,
including the provisions of any term sheet or commitment letter.

 

12.9        Amendments
and Waivers

 

Any provision of this Agreement may be amended only if the Loan Parties
and the Lender so agree in writing and, except as otherwise specifically
provided herein, may be waived only if the Lender so agrees in writing.

 

Any such waiver and any consent by the Lender, under any provision of
this Agreement must be in writing and may be given subject to any conditions
thought fit by the person giving that waiver or consent. Any waiver or consent
shall be effective only in the instance and for the purpose for which it is
given.

 

40

 

12.10      Further
Assurances

 

Each of the Loan Parties and the Lender shall promptly cure any default
by it in the execution and delivery of this Agreement, the Documents or of any
other agreements provided for hereunder to which it is a party.  The Loan Parties, at their expense, shall
each promptly execute and deliver to the Lender, upon request by the Lender,
all such other and further documents, agreements, opinions, certificates and
instruments in compliance with, or accomplishment of, the covenants and
agreements of the Loan Parties hereunder or to make any recording, file any
notice or obtain any consent, all as may be reasonably necessary or appropriate
in connection therewith.

 

12.11      Time
of the Essence

 

Time shall be of the essence with regard to this Agreement.

 

12.12      Termination

 

This Agreement shall be effective as of its date until the full amount
of the Loan and all other amounts outstanding hereunder have been indefeasibly
paid to the Lender.

 

12.13      Inspection
of the Mortgaged Property

 

The Lender shall have the right (on notice to the applicable Loan
Party) to inspect the Mortgaged Property and the Loan Parties’ business at any
reasonable time and, in any event, not less than quarterly.

 

12.14      Credit
Reporting

 

The Loan Parties hereby consent to the Lender obtaining from any credit
reporting agency or from any Person such information as the Lender may require
at any time.  The Loan Parties hereby
further consent to the disclosure at any time of any information concerning
them to any credit grantor or credit reporting agency with whom they, or any one
of them, have financial relations.

 

41

 

12.15      Counterparts

 

This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and all of which taken together shall
be deemed to constitute one and the same instrument, and it shall not be
necessary in making proof of this Agreement to produce or account for more than
one full set of counterparts.

 

12.16      Conflicting
Provisions

 

In case of any conflict or inconsistency between any provision of this
Agreement and any provision of the Security Documents or any other agreement by
the Borrower or the Corporate Guarantor in favour of the Lender, the provision
of this Agreement shall govern and prevail and the conflicting or inconsistent
provision in the Security Document or other agreement shall be deemed to be
amended to be consistent with the provision hereof.

 

IN WITNESS WHEREOF the parties hereto have executed this Agreement as
of the date and year first above written.

 

 

	
   

  	
  TRACE ENERGY SERVICES LTD.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/s

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  TRACE ENERGY SERVICES, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/s

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEOKINETICS INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  

 

42

 

	
   

  	
   

  	
  c/s

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  QUANTUM GEOPHYSICAL, INC.

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/s

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  GEOPHYSICAL DEVELOPMENT CORPORATION

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/s

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  HSBC BANK CANADA

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  

 

43

 

SCHEDULE 1

 

DRAWDOWN
NOTICE

 

TO:                 HSBC
BANK CANADA, as Lender

 

FROM:           TRACE
ENERGY SERVICES LTD., as Borrower

 

DATE:            ,
20      

 

(1)           This
Drawdown Notice is delivered to you pursuant to Section 2.2 of the fifth
amended and restated credit agreement (the “Credit Agreement”) dated as of November <>, 2005. 
All defined terms set forth in this Drawdown Notice shall have the
respective meanings set forth in the Credit Agreement.

 

(2)           We
hereby request a Drawdown as follows:

 

a.             Date
of Drawdown:

 

b.             Amount
of Drawdown:

 

c.             Type
of Loan:

 

(3)           All
of the covenants of the Loan Parties contained in Article 9 of the Credit
Agreement together with all of the conditions precedent to the Drawdown and all
other terms and conditions contained in the Credit Agreement to be complied
with by the Loan Parties have been fully complied with.

 

(4)           No
Default or Event of Default has occurred and is continuing, nor will any
Default or Event of Default occur as a result of the aforementioned Drawdown.

 

	
   

  	
  Yours very truly,

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  TRACE ENERGY SERVICES LTD.

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
  c/s

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
   

  	
  Per:

  	
   

  	
   

  

 

44

 

SCHEDULE 2

 

Litigation

 

1.             Potential claim by bond
provider in Argentina.  The amount of the
potential claim is approximately $130,000 U.S. Dollars.  The Borrower is currently seeking legal
advice in that jurisdiction.

 

45EXHIBIT
10.1

 

EMPLOYMENT
AGREEMENT

 

Employment Agreement, dated as of January 1, 2006, (the “Agreement”),
by and between Donald E. Nigbor (the “Employee”) and Benchmark Electronics,
Inc., a Texas corporation (the “Company”).

 

WITNESSETH:

 

In consideration of the mutual covenants and conditions contained
herein, the parties hereto agree as follows:

 

Section 1.  Employment.  The Company hereby agrees to employ the
Employee, and the Employee hereby accepts employment by the Company, upon the
terms and subject to the conditions hereinafter set forth.  During the term of his employment, the
Employee shall have the title of Chairman.

 

Section 2.  Duties.  In his capacity as Chairman of the Company,
the Employee shall perform such reasonable executive duties as a Chairman would
normally perform or as otherwise specified in the By-laws of the Company, and
such other reasonable executive duties as the Board of Directors of the Company
may from time to time reasonably prescribe with the concurrence of the
Employee.  Except as otherwise provided
herein, except as may otherwise be approved by the Board of Directors of the
Company, and except during vacation periods and reasonable periods due to
sickness, personal injury or other disability, the Employee agrees to devote approximately
twenty (20) hours per week to the performance of his duties to the Company
hereunder, provided that nothing contained herein shall preclude the Employee
from (i) serving on the board of directors of any business or corporation on
which he is serving on the date hereof or, with the consent of the Board of
Directors, serving on the board of directors of any other business or
corporation, (ii) serving on the board of, or working for, any charitable or
community organization, and (iii) pursuing his personal financial and legal
affairs so long as such activities do not materially interfere with the
performance of the Employee’s duties hereunder.

 

Section 3.  Term.  Except as otherwise provided herein, the term
of this Agreement shall be for three (3) years (the “Initial Term”), commencing
on the date of this Agreement.  This
Agreement shall be automatically renewed thereafter for successive one  (1) year terms (each such renewal term, a “Renewal
Term”), unless either party gives to the other written notice of termination no
fewer than ninety (90) days prior to the expiration of any such Renewal Term,
which notice shall expressly refer to this Section 3 of the Agreement and state
that such party

 

1

 

does
not wish to extend this Agreement (any such notice, a “Non-Renewal Notice”).  Any such Non-Renewal Notice given by the
Company shall constitute a termination of the Employee’s employment without
Cause for purposes of this Agreement. 
The Initial Term, as the same may be extended by any Renewal Term, is
referred to herein as the “Employment Term.” 
The provisions of this Agreement shall survive any termination hereof.

 

Section 4.  Compensation and
Benefits.  In consideration for the
services of the Employee hereunder, the Company shall compensate the Employee
and perform its other obligations as provided in this Section 4.

 

(a) Base Salary. 
Commencing on date hereof, the Employee shall be entitled to receive,
and the Company shall pay the Employee in equal bi-weekly installments, a base
salary at a rate per annum of Two Hundred Fifty Thousand United States Dollars
($250,000), as increased from time to time by 
the Compensation Committee of the Board of Directors of the Company (the
“Compensation Committee”).  Commencing in
2006 and from time to time at least annually thereafter, the Compensation
Committee shall review and evaluate the annual base salary of the Employee in
accordance with its standard policies and practices for key executive employee
compensation and, in its discretion, may increase the Employee’s annual base
salary commencing on August 1, 2006, and on anniversaries of such date
thereafter.  The amount of such base
salary for each respective annual one (1) year period, including any increases hereafter
approved, is referred to as the “Base Salary” for such respective one year
period.  The Employee’s Base Salary may
not and shall not be decreased or reduced more than ten percent (10%) in any
year, including but not limited to after giving effect to any such increase.

 

(b) Bonus.  During the
Employment Term, the Employee shall be eligible to participate in any annual
fiscal year bonus program that may be provided by the Company for its key
executive employees, subject to its terms and conditions.  The Compensation Committee adopted a formal
bonus plan (the “Executive Bonus Plan”) for eligible senior executive officers,
including the Employee.  The Executive
Bonus Plan provides the Employee with a target bonus opportunity of Fifty
percent (50%) of Base Salary for each calendar year in the Employment Term if
the Company attains specified performance objectives for such year, and an over
achievement bonus opportunity of up to Fifty percent (50%) of Base Salary if
the Company exceeds the foregoing performance objectives by predetermined
amounts.  Such objectives and targets
shall be determined on an annual basis each year during the Employment Term,
and shall be reasonably satisfactory to the Company and the Employee.  All bonuses payable to the Employee under the
Executive Bonus Plan or any other annual bonus plan shall be determined and
paid

 

2

 

 on or prior to March 31 of the year following
the year for which such bonus is payable.

 

(c) Other Long Term Incentive Compensation.  The Employee shall be entitled to participate
in all long-term incentive compensation programs for key executives (if any) at
a level commensurate with his position.

 

(d) Other Benefits. 
During the term of this Agreement, the Employee shall be entitled to
participate in and receive benefits under any and all pension, profit-sharing,
life and other insurance, medical, dental, health and other welfare and fringe
benefit plans and programs, and be provided any and all other perquisites, that
are from time to time made available to executive employees or other employees
of the Company.  The Employee shall also
be entitled to an amount of paid vacation per calendar year, and sick leave and
illness and disability benefits, in accordance with such reasonable Company
policy as may be applicable from time to time to key executive employees.

 

Section 5.  Expenses and Other
Employment-Related Matters.  It is
acknowledged by the parties that the Employee, in connection with the services
to be performed by him pursuant to the terms of this Agreement, will be
required to make payments for travel, entertainment and similar expenses.  The Company shall reimburse the Employee for
all reasonable expenses incurred by the Employee in connection with the performance
of his duties hereunder or otherwise on behalf of the Company.

 

Section 6.  Termination.  The Employee’s employment may terminate prior
to the end of the Employment Term as provided in this Section 6.

 

(a) Death or Disability. 
The Employee’s employment will terminate (x) immediately upon the death
of the Employee during the term of his employment hereunder or (y) at the
option of the Company, upon thirty (30) days’ prior written notice to the
Employee, in the event of the Employee’s disability.  The Employee shall not be deemed disabled
unless, as a result of the Employee’s incapacity due to physical or mental
illness (as determined by a physician selected by the Employer or its insurers
and reasonably acceptable to the Employee or his representative), the Employee
shall have been absent from and unable to perform his duties with the Company
on a full-time bases for one hundred twenty (120) consecutive business
days.   In the event of termination of
the Employee’s employment pursuant to this Section 6(a):

 

(1) The Company shall immediately pay the Employee any portion of the
Employee’s Base Salary accrued but unpaid through the date of such termination
and all payments and reimbursements under Section 5 hereof for

 

3

 

expenses incurred prior to such termination.  Six (6) months after the date of termination,
the Company will make a lump sum cash payment equal to the Employee’s Base
Salary and a prorated annual bonus for the year of termination equal to Fifty
percent (50%) of the amount calculated by dividing the Employee’s annual Base
Salary at the date of such termination by twelve (12) and multiplying the
result by the number of months in the year of such termination that began or
ended prior to the date of such termination. 
If the Company achieves target performance objectives for the entire
year in which such termination occurs that, under the Executive Bonus Plan or
any other then effective bonus plan, would have entitled the Employee to
receive an annual bonus for such year calculated at a percent greater than
Fifty percent (50%) of Base Salary, the Employee or his estate shall be
entitled to receive, at the time such bonus would have normally been payable or
six (6) months after the termination of employment (whichever later occurs), an
additional amount equal to (x) such larger bonus amount divided by twelve (12)
and multiplied by the number of months in the year of such termination that
began or ended prior to the date of such termination minus (y) the amount
previously paid pursuant to the preceding sentence.

 

(2) The Employee shall be entitled to receive all vested benefits under
the Company’s otherwise applicable plans and programs.

 

(b) For Cause.  The
Company may terminate the employee’s employment for Cause (as defined below)
upon written notice by the Company to the Employee, such termination to take
effect on the date determined in accordance with the last paragraph of this
Section 6(b) below to be the termination date for such purpose.  In the event of termination of the Employee’s
employment for Cause pursuant to this Section 6(b):

 

(1) The Company shall immediately pay the Employee (i) any portion of
the Employee’s Base Salary accrued but unpaid through the date of such
termination and (ii) all payments and reimbursement under Section 5 hereof for
expenses incurred prior to such termination.

 

(2) The Employee shall be entitled to receive all vested benefits under
the Company’s otherwise applicable plans and programs.

 

For purposes of this Agreement, the term “Cause” shall mean the
Employee’s (i) gross negligence in the performance of his duties with the
Company, which gross negligence results in a material adverse effect on the
Company, provided that no such gross negligence will constitute “Cause” if it
relates to an action taken or omitted by the Employee in the good faith,
reasonable belief that

 

4

 

such
action or omission was in or not opposed to the best interests of the Company;
(ii) habitual neglect or disregard of his duties with the Company that is
materially and demonstrably injurious to the Company, after written notice from
the Company stating the duties the Employee has failed to perform; (iii)
engaging in conduct or misconduct that materially harms the reputation or
financial position of the Company; (iv) obstruction, impedance, or failure to
materially cooperate with an investigation authorized by the Board, a
self-regulatory organization empowered with self-regulatory responsibilities
under federal or state laws, or a governmental department or agency; or (v)
conviction of a felony, provided that no such conviction will constitute “Cause”
if it relates to an action taken or omitted by the Employee in the good faith,
reasonable belief that such action or omission was in or not opposed to the
best interest of the Company.  The
Employee’s employment may not and shall not be terminated for Cause unless the
(1) Board of Directors provides the Employee with written notice stating the
conduct alleged to give rise to such Cause, (2) the Employee has been given an
opportunity to be heard by the Board, (3) in the case of clause (i) or (ii) of
the definition of Cause, the Employee has been given a reasonable time to cure,
and the Employee has not cured such negligence or failure to the reasonable
satisfaction of the Board, and (4) the Board has approved such termination by
majority vote of the members of the Board of Directors, excluding the Employee.

 

(c) By Company Without Cause. 
The Company may terminate the Employee’s employment at any time for any
reason without Cause.  In the event of
any termination of the Employee’s employment by the Company without Cause:

 

(1) The Company shall pay the Employee severance pay for the Severance
Period (as defined below) at the per annum rate which shall equal one hundred
percent (100%) of his Base Salary at the date of such termination.  The Company shall pay such severance pay in
lump sum six (6) months after the date of such termination.  The Company’s obligation to make such
payments shall be absolute and unconditional. 
Without limiting the foregoing, such payments shall not be subject to
any right of offset or similar right, and the Employee shall have no obligation
of mitigation or similar obligation with respect thereto.

 

(2) The Company shall immediately pay the Employee the portion of the
Employee’s Base Salary accrued but unpaid through the date of such termination
and all payments and reimbursements under Section 5 hereof for expenses
incurred prior to such termination.  Six
(6) months after the date of termination, the Company will pay and a prorated
annual bonus for the year of termination equal to Fifty percent (50%) of the
amount calculated by dividing the Employee’s annual Base Salary at the date of
such termination

 

5

 

by twelve (12) and multiplying the result by the number of months in
the year of such termination that began or ended prior to the date of such
termination.  If the Company achieves
target performance objectives for the entire year in which such termination
occurs that, under the Executive Bonus Plan or any other then effective bonus
plan, would have entitled the Employee to receive an annual bonus for such year
calculated at a percent greater than Fifty percent (50%) of Base Salary, the
Employee (or his estate) shall be entitled to receive, and the Company shall
pay, at the time the bonus would have normally been payable or six (6) months
after the termination of employment (whichever later occurs), an additional
amount equal to (x) such larger bonus amount divided by twelve (12) and
multiplied by the number of months in the year of such termination that began
or ended prior to the date of termination minus (y) the amount previously paid
pursuant to the preceding sentence.

 

(3) The Employee shall be entitled to receive all vested benefits under
the Company’s otherwise applicable plans and programs.

 

(4) Following such termination, the Employee shall be entitled to
continue participation in all medical, dental, health and other welfare
benefits (or receive comparable coverage if such participation is not permitted
under the terms of such plans or if the Board, at its option, determines that
it is in the best interest of the Company to provide such comparable coverage
rather than continued participation in the Company’s plans) until the end of
the Severance Period upon the same terms and conditions that would have applied
if the Employee continued to be employed by the Company, provided that the
benefits referred to in this clause (4) will cease if and to the extent the
Employee becomes eligible for similar benefits by reason of new employment.

 

For purposes of this Agreement, the term “Severance Period” means (i)
if the Employee’s employment is terminated at or prior to the end of the
Initial Term (including but not limited to by the giving of a Non-Renewal
Notice or other notice as provided in Section 3 hereof), a period equal to the
greater of (x) two (2) full years beginning on the date of such termination and
(y) the then remaining portion of the Initial Term and (ii) if the Employee’s
employment is terminated after the end of the Initial Term and prior to the end
of the then-current Renewal Term (including but not limited to by the giving of
any Non-Renewal Notice as provided in Section 3 hereof), a period equal to one
(1) full year beginning on the date of such termination.

 

(d) By Employee for Good Reason. 
The Employee may terminate his employment at any time for Good Reason
(as defined below).  In the event of any
termination of the Employee’s employment by the Employee for Good Reason:

 

6

 

(1) The Company shall pay the Employee severance pay for the Severance
Period (as defined above) at the per annum rate which shall equal one hundred
percent (100%) of his Base Salary at the date of such termination.  The Company shall pay such severance pay in
lump sum six (6) months after the date of such termination.  The Company’s obligation to make such
payments shall be absolute and unconditional. 
Without limiting the foregoing, such payments shall not be subject to
any right of offset or similar right, and the Employee shall have no obligation
of mitigation or similar obligation with respect thereto.

 

(2) The Company shall immediately pay the Employee the portion of the
Employee’s Base Salary accrued but unpaid through the date of such termination
and all payments and reimbursements under Section 5 hereof for expenses
incurred prior to such termination.  Six
(6) months after the date of termination, the Company will pay a prorated
annual bonus for the year of termination equal to Fifty percent (50%) of the
amount calculated by dividing the Employee’s annual Base Salary at the date of
such termination by twelve (12) and multiplying the result by the number of
months in the year of such termination that began or ended prior to the date of
such termination.  If the Company
achieves target performance objectives for the entire year in which such
termination occurs that, under the Executive Bonus Plan or any other then
effective bonus plan, would have entitled the Employee to receive an annual
bonus for such year calculated at a percent greater than Fifty percent (50%) of
Base Salary, the Employee (or his estate) shall be entitled to receive, and the
Company shall pay, at the time the bonus would have normally been payable or
six (6) months after the termination of employment (whichever later occurs), an
additional amount equal to (x) such larger bonus amount divided by twelve (12)
and multiplied by the number of months in the year of such termination that
began or ended prior to the date of termination minus (y) the amount previously
paid pursuant to the preceding sentence.

 

(3) The Employee shall be entitled to receive all vested benefits under
the Company’s otherwise applicable plans and programs.

 

(4) Following such termination, the Employee shall be entitled to
continue participation in all medical, dental, health and other welfare
benefits (or receive comparable coverage if such participation is not permitted
under the terms of such plans or if the Board, at its option, determines that
it is in the best interest of the Company to provide such comparable coverage
rather than continued participation in the Company’s plans) until the end of
the Severance Period upon the same terms and conditions that would have

 

7

 

applied if the Employee continued to be employed by the Company,
provided that the benefits referred to in this clause (4) will cease if and to
the extent the Employee becomes eligible for similar benefits by reason of new
employment.

 

For purposes of this Agreement, “Good Reason” means (A) a material
diminution of the Employee’s duties or responsibilities, (B) a reduction in the
Employee’s Base Salary greater than ten percent (10%), or annual bonus or
long-term incentive compensation opportunity, (C) a Change of Control (as
defined in Section 7 hereof), but only if the Employee terminates his employment
pursuant to this subsection within ninety (90) days after the date of such
Change of Control, or (D) a material breach by the Company of any other
provision of this Agreement that is not cured promptly after written notice to
the Company by the Employee.

 

(e) By Employee Without Good Reason.  The Employee may terminate his employment at
any time without Good Reason upon thirty (30) days’ prior written notice to the
Company.  In the event of any such
termination of the Employee’s employment by the Employee with Good Reason:

 

(1)  The Company shall
immediately pay the Employee (i) any portion of the Employee’s Base Salary
accrued but unpaid through the date of such termination and (ii) all payments
and reimbursements under Section 5 hereof for expenses incurred prior to such
termination.

 

(2) The Employee shall be entitled to receive all vested benefits under
the Company’s otherwise applicable plans and programs.

 

(f) Excise Tax Gross-Up Payment. 
If a Change of Control or other transaction triggers or results in the
imposition upon the Employee of any excise or similar tax under Section 4999 of
the Internal Revenue Code (or any similar or successor provision) pursuant to
the terms of this Agreement or any employee stock option agreement or plan in
which the Employee is a participant, the Company shall pay (or cause any
acquirer in such transaction to pay) any such excise or similar tax and make “gross-up”
payments to the Employee to the extent necessary so that the Employee will
receive the same net after-tax amount he would have received if no excise tax
had been imposed on him.

 

(g) No Penalty, Forfeiture or Liability.  Any termination by the Employee of his
employment with the Company in accordance with the terms hereof shall be
without penalty, forfeiture, or liability arising out of such termination of
any kind or nature.  Notwithstanding any
other provision hereof, any termination of the Employee’s employment on or
after the occurrence of a Change of Control shall be deemed to

 

8

 

be
a termination by the Company without Cause if by the Company.

 

Section 7. Change in Control. 
For purposes of this Agreement, (1) the term “Person” means any
corporation, partnership, trust, company, business, firm, association,
organization, individual, governmental instrumentality or entity, or other
person or entity, (2) the term “Voting Stock” shall mean, as to any Person, the
then-outstanding securities of or other interests in such corporation entitled
to vote generally in the election of directors, trustees or similar managers of
such Person, and (3) the term “Change in Control” shall mean:

 

(a) The Company is merged, consolidated or reorganized into or with
another corporation or other Person, or the stockholders of the Company approve
such a merger, consolidation or reorganization, and as a result of such merger,
consolidation or reorganization, the holders of the Voting Stock of the Company
immediately prior to such transaction hold or would hold in the aggregate less
than seventy percent (70%) of the combined voting power of the then-outstanding
Voting Stock of the surviving corporation or Person immediately after such
transaction; or

 

(b) The Company sells or otherwise transfers all or substantially all
of its assets to another corporation or other Person, or the stockholders of
the Company approve such a sale or transfer, and either (x) as a result of such
sale or transfer, the holders of the Voting Stock of the Company immediately
prior to such sale or transfer hold or would hold in the aggregate less than
seventy percent (70%) of the combined voting power of the then-outstanding
Voting Stock of such corporation or Person immediately after such sale or
transfer, or (y) such corporation or Person does not assume all of the Company’s
obligations to the Employee pursuant to an instrument in form and substance
reasonably satisfactory to the Employee; or

 

(c) The Company is liquidated or dissolved, or the stockholders of the
Company approve such a liquidation or dissolution; or

 

(d) Any Person or “group” [as the term “group” is used in Section
13(d)(3) or Section 14(d)(2) of the Securities Exchange Act of 1934, as amended
(the “Exchange Act”)] becomes, or a report is filed on Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report), each as promulgated pursuant
to the Exchange Act, disclosing that any Person or “group” (as the term “group”
is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act) has
become, the beneficial owner (as the term “beneficial owner” is defined under
Rule 13d-3 or any successor rules or regulations promulgated under the Exchange
Act) of securities representing thirty percent (30%) or more of the combined
voting power of the then outstanding Voting Stock of the Company or fifty
percent (50%) or more of the then outstanding shares of Voting Stock of the
Company; or

 

9

 

(e) The Company files a
report or proxy statement with the Securities and Exchange Commission pursuant
to the Exchange Act disclosing in response to Form 8-K or Schedule 14A (or any
successor schedule, form, report or item therein) that a change in control of
the Company has occurred or will occur in the future pursuant to any
then-existing contract or transaction; or

 

(f) If, during any period of
two consecutive years, individuals who at the beginning of any such period
constitute the Directors of the Company cease for any reason to constitute at
least a majority thereof; provided, however, that for purposes of this clause
(f), each Director who is first elected, or first nominated for election by the
Company’s  stockholders, by a vote of at
least two-thirds of the Directors of the Company then still in office who were
Directors of the Company at the beginning of any such period (other than an
election or nomination of any individual whose initial assumption of office is
in connection with an actual or threatened election contest relating to the
election of the Directors of the Company, as such terms are used in Rule 14a-11
or any successor rule or regulation promulgated under the Exchange Act) will be
deemed to have been a Director of the Company at the beginning of such period.

 

Section 8.  Confidential Information.  The Employee recognizes and acknowledges that
certain proprietary, non-public information owned by the Company and its
affiliates, including without limitation proprietary, non-public information
regarding customers, pricing policies, methods of operation, proprietary
computer programs, sales products, profits, costs, markets, key personnel,
technical processes, and trade secrets (hereinafter called “Confidential
Information”), are valuable, special and unique assets of the Company and its
affiliates.  The Employee will not,
during or after his term of employment, without the prior written consent of a
member of the Board believed by the Employee to have been authorized by the
Board for such purpose, knowingly and intentionally disclose any of the
Confidential Information obtained by him while in the employ of the Company to
any person, firm, corporation, association or other entity for any reason or
purpose whatsoever, directly or indirectly (other than to an employee of the
Company of its affiliates, a director of the Company or its affiliates, or a
person to whom disclosure is necessary or appropriate in the Employee’s good
faith judgment in connection with the performance of his duties hereunder or
otherwise on behalf of the Company), unless and until such Confidential
Information becomes publicly available (other than as a consequence of the
breach by the Employee of his confidentiality obligations under this Section
8), and except as may be required (or as the Employee may be advised by counsel
is required) in connection with any judicial, administrative or other
governmental proceeding or inquiry.  In
the event of the termination of his employment, whether voluntary or
involuntary and whether by the Company or the Employee, the Employee will
deliver to the Company and will

 

10

 

not take with him any documents, or any other
reproductions (in whole or in part) of any items, comprising Confidential
Information (except that the Employee may retain his personal address,
telephone and other contact lists and information and any other documents or
reproductions retained upon the advice of counsel).  Notwithstanding any other provision hereof,
the term “Confidential Information” does not include any information that (a)
is or becomes publicly available other than as the result of the breach by the
Employee of his confidentiality obligations under this Section 8, (b) became,
is or becomes available to the Employee on a non-confidential basis from a
source, other than the Company, that to the Employee’s knowledge is not
prohibited from disclosing such information to the Employee by a
confidentiality obligation owed to the Company or (c) was known to the Employee
prior to becoming an officer of the Company. 
The provisions of this Section 8 shall expire and be of no further force
and effect on the third anniversary of the date of termination of the Employee’s
employment with the Company.

 

Section 9.  Non-Competition.  The Company promises that during the term of
this Agreement and before the Company can exercise any right to terminate the
Employee’s employment without cause, the Company shall provide the Employee
with Confidential Information that the Employee did not possess and had not
received prior to the execution of this Agreement.  In exchange for and ancillary to the Company’s
enforceable promise to provide him with that Confidential Information, the
Employee agrees that he will not disclose or make improper use of any of the
Confidential Information.  In order to
enforce that promise by the Employee, he agrees to the provisions of this
Section 9.  Accordingly, during his employment
with the Company pursuant to this Agreement and for a period of two (2) years
thereafter, the Employee will not knowingly and intentionally (i) engage,
directly or indirectly, alone or as a partner, officer, director, employee, or
consultant of any other business organization, in any business activities that
are substantially and directly competitive with the business activities then
conducted by the Company anywhere in the world (the “Designated Industry”),
(ii) divert to any competitor of the Company in the Designated Industry any
customer of the Company or (iii) solicit or encourage any officer, employee, or
consultant of the Company to leave its employ for employment by or with any
competitor of the Company in the Designated Industry.  The parties hereto acknowledge that the
Employee’s non-competition obligations hereunder will not preclude the Employee
from (i) owning less than 5% of the common stock of any publicly traded
corporation or other Persons conducting business activities in the Designated
Industry or (ii) serving as a director of a corporation or other Person engaged
in the manufacturing or electronics industry whose business operations are not
substantially and directly competitive with those of the Company.

 

Section 10.  Arbitration.

 

11

 

(a) Subject Claims;
Initiation of Binding Arbitration. The Company and the Employee agree that
all (i) disputes and claims of any nature that the employee may have against
the Company and any subsidiaries or affiliates and their officers and
employees, including all federal or state statutory, contractual, and common
law claims (including all employment discrimination claims) arising from,
concerning, or relating in any way to our employment relationship, (ii) all
disputes and claims of any nature that the Company may have against the
Employee, or (iii) any dispute among us about the arbitrability of any claims
or controversy will be resolved out of court. 
Any such claims will be submitted exclusively first to mandatory
mediation and, if mediation is unsuccessful, to mandatory arbitration.

 

(b) Arbitration Procedure.  Unless otherwise agreed in writing by the
Company and the Employee, any arbitration proceeding will be held in Houston,
Texas.  The arbitration will be conducted
under the National Rules for the Resolution of Employment Disputes of the
American Arbitration Association (“AAA Rules”). 
The claim will be submitted to a single experienced, neutral employment
arbitrator selected in accordance with the AAA Rules.  The arbitrator shall have full authority to
award or grant all remedies provided by law. 
The arbitrator shall have full authority to permit adequate
discovery.  At the conclusion of the
arbitration proceeding, the arbitrator shall issue a written, reasoned
award.  The award of the arbitration
shall be final and binding.  A judgment
upon the award may be entered and enforced by any court having
jurisdiction.  Each party shall pay the
fees of their respective attorneys, the expenses of their witnesses, and any
other expenses incurred by such party in connection with the arbitration,
provided, however, that the Company shall pay for the fees of the arbitrator
and the administrative and filing fees charged by the AAA.

 

(c) Confidentiality;
Nonjoinder. All information regarding the dispute or claim or mediation or
arbitration proceedings, including the mediation settlement or arbitration
award, will not be disclosed by the Employee or by the Company or any mediator
or arbitrator to any third party without the written consent of the Employee
and the Company.  In no event may an
arbitrator allow any party to join claims of any other employee in a single
arbitration proceeding without consent of the Employee and the Company.  In the event that the dispute or claim
involves a written agreement between the Employee and the Company (including
this Agreement) or a compensation plan, the arbitrator will have no authority
to add to, detract from, or otherwise modify the agreement or plan provisions
other than as expressly set forth in that agreement or plan.  Should this arbitration agreement conflict
with the arbitration provisions of any other agreement that the Employee has
with the Company, the terms of this agreement will govern.

 

12

 

(d) Equitable Relief.  In the event that irreparable injury could
occur during the pendency of a mediation or arbitration proceeding, to restore
or maintain the status quo until the dispute has been resolved by mediation or
arbitration a party may apply to a court of competent jurisdiction to obtain a
temporary or preliminary injunction in aid of mediation and arbitration.

 

(e) Binding Agreement.  Notwithstanding any policy of the Company
permitting it to alter its policies, procedures, and the terms and conditions
of employment, this agreement to arbitrate is binding and cannot be modified or
superseded except by a written agreement signed by an authorized representative
of the Company and the Employee.

 

Section 11.  General.

 

(a) Notices.  All notices and other communications
hereunder will be in writing, and will be deemed to have been duly given if
delivered personally, or three (3) business days after being mailed by
certified mail, return receipt requested, or upon receipt if sent by written
telecommunications, to the relevant address set forth below, or to such other
address as the recipient of such notice or communication will have specified to
the other party hereto in accordance with this Section 11(a):

 

If
to Company, to:

 

Benchmark Electronics, Inc.

3000 Technology Drive

Angleton, Texas 77515

Attn: Corporate Secretary

Fax No.: 979/848-5269

 

If to Employee, to:

 

Donald E. Nigbor

6 Palm Place

Angleton,
Texas 77515

 

(b) Withholding; No
Offset.  All payments required to be
made by the Company under this Agreement to the Employee will be subject to the
withholding of such amounts, if any, relating to federal, state and local taxes
as may be required by law.  No payment
under this Agreement will be subject to offset or reduction attributable to any
amount of obligation the Employee may owe or be liable for to the Company or
any other Person.

 

13

 

(c) Equitable Remedies.  Each of the parties hereto acknowledges and
agrees that upon any breach by the Employee of his obligations under any of
Sections 8 and 9 hereof, the Company will have no adequate remedy at law, and
accordingly will be entitled to specific performance and other appropriate
injunctive and equitable relief.

 

(d) Severability.  If any provision of this Agreement is held to
be illegal, invalid or unenforceable, such provision will be fully severable
and this Agreement will be construed and enforced as if such illegal, invalid,
or unenforceable provision never comprised a part hereof; and the remaining
provisions hereof will remain in full force and effect and will not be affected
by the illegal, invalid, or unenforceable provision or by its severance
herefrom.  Furthermore, in lieu of such
illegal, invalid, or unenforceable provision, there will be added automatically
as part of this Agreement a provision as similar in its terms to such illegal,
invalid, or unenforceable provision as may be possible and be legal, valid, and
enforceable.

 

(e) Waivers.  No delay or omission by either party hereto
in exercising any right, power or privilege hereunder will impair such right,
power or privilege, nor will any single or partial exercise of any such right,
power or privilege preclude any further exercise of any other right, power or
privilege.

 

(f) Counterparts.  This Agreement may be executed in multiple
counterparts, each of which will be deemed an original, and all of which
together will constitute one and the same instrument

 

(g) Captions.  The captions in this Agreement are for
convenience of reference only and will not limit or otherwise affect any of the
terms or provisions hereof.

 

(h) Reference to
Agreement.  Use of the words “herein,”
“hereof”, and “hereto” and the like in this Agreement refer to this Agreement
only as a whole and not to any particular Section, subsection or provision of
this Agreement, unless otherwise noted. 
Any reference to a “Section” or “subsection” shall refer to a Section or
subsection of this Agreement, unless otherwise noted.

 

(i) Successors and
Binding Agreement.  The Company shall
require any successor (whether direct or indirect, by purchase, merger,
consolidation, reorganization or otherwise) to all or substantially all of the
business or assets of the Company, by agreement in form and substance
satisfactory to the Employee, expressly to assume and agree to perform this Agreement
in the same manner and to the same extent the Company would be required to
perform if no such succession had taken place. 
This Agreement shall be binding upon and inure to the

 

14

 

benefit of the Company and any successor to
the Company, including without limitation any Persons acquiring directly or
indirectly all or substantially all of the business or assets of the Company
whether by purchase, merger, consolidation, reorganization, or otherwise ( and
such successor shall thereafter be deemed the “Company” for the purposes of
this Agreement), but shall not otherwise be assignable, transferable, or
delegable by the Company.  Without
limiting the foregoing, the surviving or transferee corporation or other person
in any such transaction (whether by merger, consolidation, reorganization,
transfer of business or assets, or otherwise) shall be subject to the
provisions of Section 7 hereof and shall be deemed to be the Company for
purposes of such provisions, regardless of whether such transaction itself
constituted a Change of Control of the Company.

 

(j) Entire Agreement;
Amendments and Waivers.  This
Agreement contains the entire understanding of the parties, and supersedes all
prior agreements and understandings between them, relating to the subject
matter hereof including that certain Employment Agreement between the parties
dated August 1, 2001.  This Agreement may
not be amended or modified except by a written instrument hereafter signed by
each of the parties hereto, and may not be waived except by a written
instrument hereafter signed by the party granting such waiver.  The Company has not made any promise or
entered into any agreement that is not expressed in this Agreement, and the
Employee is not relying upon any statement or representation of any agent of
the Company.  In executing this
Agreement, the Employee is relying solely on his judgement and has been
represented by the legal counsel of his choice in connection with this
Agreement who has read and explained to the Employee the entire contents of
this Agreement, as well as explained the legal consequences.  No agreements or representation, oral or
otherwise, express or implied, with respect to the subject matter hereof have
been made by either party which are not set forth expressly in this Agreement.

 

(k) Governing Law.  This Agreement and the performance hereof
shall be governed and construed in all respects, including but not limited to
as to validity, interpretation and effect, by the laws of the State of Texas,
without regard to the principles or rules of conflict of laws thereof.

 

15

 

Executed as of the date and
year first above written.

 

Benchmark Electronics, Inc.

 

	
   

  
	
  /s/ Peter G. Dorflinger

  
	
  Peter G. Dorflinger

  
	
  Chairman

  
	
  Compensation Committee of
  the

  
	
  Board of Directors

  
	
   

  
	
  Employee

  
	
   

  
	
   

  
	
  /s/ Donald E. Nigbor

  
	
  Donald E. Nigbor

  
	
   

  

 

 

16

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