Document:

Exhibit 10.7

 

 

 

CREDIT AGREEMENT

dated as of

September 8,
2006,

among

GEOKINETICS
HOLDINGS, INC.,

as the Borrower

GEOKINETICS INC.

and

THE OTHER GUARANTORS PARTY HERETO,

as Guarantors

THE LENDERS PARTY
HERETO

and

ROYAL BANK OF CANADA,

as Administrative Agent

 

 

 

Table of Contents

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  ARTICLE I

  	
  Definitions

  	
  1

  
	
  SECTION 1.01.

  	
  Defined Terms

  	
  1

  
	
  SECTION 1.02.

  	
  Terms Generally

  	
  21

  
	
  SECTION 1.03.

  	
  Classification of Loans

  	
  21

  
	
  SECTION 1.04.

  	
  Rounding

  	
  21

  
	
  SECTION 1.05.

  	
  References to Agreements and Laws

  	
  21

  
	
  SECTION 1.06.

  	
  Times of Day

  	
  22

  
	
  SECTION 1.07.

  	
  Timing of Payment or Performance

  	
  22

  
	
   

  	
   

  	
   

  
	
  ARTICLE II

  	
  The Credits

  	
  22

  
	
  SECTION 2.01.

  	
  Commitments

  	
  22

  
	
  SECTION 2.02.

  	
  Loans

  	
  22

  
	
  SECTION 2.03.

  	
  Borrowing Procedure

  	
  22

  
	
  SECTION 2.04.

  	
  Evidence of Debt; Repayment of Loans

  	
  23

  
	
  SECTION 2.05.

  	
  Fees

  	
  24

  
	
  SECTION 2.06.

  	
  Interest on Loans

  	
  24

  
	
  SECTION 2.07.

  	
  Default Interest

  	
  24

  
	
  SECTION 2.08.

  	
  Alternate Rate of Interest

  	
  24

  
	
  SECTION 2.09.

  	
  Repayment

  	
  25

  
	
  SECTION 2.10.

  	
  Conversion and Continuation of Borrowings

  	
  25

  
	
  SECTION 2.11.

  	
  Termination of Commitments

  	
  26

  
	
  SECTION 2.12.

  	
  Optional Prepayment

  	
  26

  
	
  SECTION 2.13.

  	
  Mandatory Prepayments

  	
  26

  
	
  SECTION 2.14.

  	
  Reserve Requirements; Change in Circumstances

  	
  27

  
	
  SECTION 2.15.

  	
  Change in Legality

  	
  28

  
	
  SECTION 2.16.

  	
  Indemnity

  	
  29

  
	
  SECTION 2.17.

  	
  Pro Rata Treatment

  	
  29

  
	
  SECTION 2.18.

  	
  Sharing of Setoffs

  	
  29

  
	
  SECTION 2.19.

  	
  Payments

  	
  30

  
	
  SECTION 2.20.

  	
  Taxes

  	
  30

  
				

 

 i
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 2.21.

  	
  Assignment of Commitments Under Certain Circumstances;
  Duty to Mitigate

  	
  33

  
	
   

  	
   

  	
   

  
	
  ARTICLE III

  	
  Representations and Warranties

  	
  34

  
	
  SECTION 3.01.

  	
  Organization; Powers

  	
  34

  
	
  SECTION 3.02.

  	
  Authorization

  	
  34

  
	
  SECTION 3.03.

  	
  Enforceability

  	
  34

  
	
  SECTION 3.04.

  	
  Governmental Approvals

  	
  35

  
	
  SECTION 3.05.

  	
  Financial Statements

  	
  35

  
	
  SECTION 3.06.

  	
  No Material Adverse Change

  	
  35

  
	
  SECTION 3.07.

  	
  Title to Properties; Possession Under Leases

  	
  35

  
	
  SECTION 3.08.

  	
  Subsidiaries

  	
  36

  
	
  SECTION 3.09.

  	
  Litigation; Compliance with Laws

  	
  36

  
	
  SECTION 3.10.

  	
  Agreements

  	
  36

  
	
  SECTION 3.11.

  	
  Federal Reserve Regulations

  	
  36

  
	
  SECTION 3.12.

  	
  Investment Company Act

  	
  37

  
	
  SECTION 3.13.

  	
  Tax Returns

  	
  37

  
	
  SECTION 3.14.

  	
  No Material Misstatements

  	
  37

  
	
  SECTION 3.15.

  	
  Employee Benefit Plans

  	
  37

  
	
  SECTION 3.16.

  	
  Environmental Matters

  	
  37

  
	
  SECTION 3.17.

  	
  Location of Real Property and Leased Premises

  	
  38

  
	
  SECTION 3.18.

  	
  Labor Matters

  	
  38

  
	
  SECTION 3.19.

  	
  Solvency

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE IV

  	
  Conditions of Lending

  	
  39

  
	
   

  	
   

  	
   

  
	
  ARTICLE V

  	
  Affirmative Covenants

  	
  41

  
	
  SECTION 5.01.

  	
  Existence; Compliance with Laws and Contractual
  Obligations; Businesses and Properties

  	
  42

  
	
  SECTION 5.02.

  	
  Insurance

  	
  42

  
	
  SECTION 5.03.

  	
  Taxes

  	
  42

  
	
  SECTION 5.04.

  	
  Financial Statements, Reports, etc

  	
  42

  
	
  SECTION 5.05.

  	
  Litigation and Other Notices

  	
  44

  
				

 

 ii
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 5.06.

  	
  Maintaining Records; Access to Properties and
  Inspections; Maintenance of Ratings

  	
  45

  
	
  SECTION 5.07.

  	
  Additional Guarantors

  	
  45

  
	
  SECTION 5.08.

  	
  Use of Proceeds

  	
  45

  
	
   

  	
   

  	
   

  
	
  ARTICLE VI

  	
  Negative Covenants

  	
  45

  
	
  SECTION 6.01.

  	
  Indebtedness

  	
  45

  
	
  SECTION 6.02.

  	
  Liens

  	
  47

  
	
  SECTION 6.03.

  	
  Sale and Lease-Back Transactions

  	
  49

  
	
  SECTION 6.04.

  	
  Investments, Loans and Advances

  	
  49

  
	
  SECTION 6.05.

  	
  Mergers, Consolidations, and Sales of Assets

  	
  49

  
	
  SECTION 6.06.

  	
  Restricted Payments; Restrictive Agreements

  	
  50

  
	
  SECTION 6.07.

  	
  Transactions with Affiliates

  	
  51

  
	
  SECTION 6.08.

  	
  Change in Nature of Business

  	
  52

  
	
  SECTION 6.09.

  	
  Other Indebtedness and Agreements

  	
  52

  
	
  SECTION 6.10.

  	
  Subsidiaries

  	
  52

  
	
  SECTION 6.11.

  	
  Partnership, etc

  	
  52

  
	
  SECTION 6.12.

  	
  Accounting Changes; Fiscal Year

  	
  52

  
	
  SECTION 6.13.

  	
  Capital Expenditures

  	
  53

  
	
  SECTION 6.14.

  	
  Net Worth

  	
  53

  
	
  SECTION 6.15.

  	
  Fixed Charge Coverage Ratio

  	
  53

  
	
  SECTION 6.16.

  	
  Leverage Ratio

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE VII

  	
  Events of Default

  	
  53

  
	
   

  	
   

  	
   

  
	
  ARTICLE VIII

  	
  Guarantee

  	
  55

  
	
  SECTION 8.01.

  	
  The Guarantee

  	
  55

  
	
  SECTION 8.02.

  	
  Obligations Unconditional

  	
  56

  
	
  SECTION 8.03.

  	
  Reinstatement

  	
  57

  
	
  SECTION 8.04.

  	
  Subrogation; Subordination

  	
  57

  
	
  SECTION 8.05.

  	
  Remedies

  	
  57

  
	
  SECTION 8.06.

  	
  Instrument for the Payment of Money

  	
  58

  
	
  SECTION 8.07.

  	
  Continuing Guarantee

  	
  58

  
				

 

 iii
 

 

 

	
  

  	
   

  	
  Page

  
	
   

  	
   

  	
   

  
	
  SECTION 8.08.

  	
  General Limitation on Guarantee Obligations

  	
  58

  
	
  SECTION 8.09.

  	
  Release of Guarantors

  	
  58

  
	
  SECTION 8.10.

  	
  Right of Contribution

  	
  58

  
	
   

  	
   

  	
   

  
	
  ARTICLE IX

  	
  The Administrative Agent

  	
  59

  
	
  SECTION 9.01.

  	
  Appointment and Authority

  	
  59

  
	
  SECTION 9.02.

  	
  Rights as a Lender

  	
  59

  
	
  SECTION 9.03.

  	
  Exculpatory Provisions

  	
  59

  
	
  SECTION 9.04.

  	
  Reliance by Agent

  	
  59

  
	
  SECTION 9.05.

  	
  Delegation of Duties

  	
  60

  
	
  SECTION 9.06.

  	
  Resignation of Agent

  	
  60

  
	
  SECTION 9.07.

  	
  Non-reliance on Agent and Other Lenders

  	
  60

  
	
   

  	
   

  	
   

  
	
  ARTICLE X

  	
  Miscellaneous

  	
  61

  
	
  SECTION 10.01.

  	
  Notices

  	
  61

  
	
  SECTION 10.02.

  	
  Survival of Agreement

  	
  61

  
	
  SECTION 10.03.

  	
  Binding Effect

  	
  62

  
	
  SECTION 10.04.

  	
  Successors and Assigns

  	
  62

  
	
  SECTION 10.05.

  	
  Expenses; Indemnity

  	
  65

  
	
  SECTION 10.06.

  	
  Right of Setoff

  	
  66

  
	
  SECTION 10.07.

  	
  Applicable Law

  	
  67

  
	
  SECTION 10.08.

  	
  Waivers; Amendment

  	
  67

  
	
  SECTION 10.09.

  	
  Interest Rate Limitation

  	
  67

  
	
  SECTION 10.10.

  	
  Entire Agreement

  	
  68

  
	
  SECTION 10.11.

  	
  WAIVER OF JURY TRIAL

  	
  68

  
	
  SECTION 10.12.

  	
  Severability

  	
  68

  
	
  SECTION 10.13.

  	
  Counterparts

  	
  68

  
	
  SECTION 10.14.

  	
  Headings

  	
  69

  
	
  SECTION 10.15.

  	
  Jurisdiction; Consent to Service of Process

  	
  69

  
	
  SECTION 10.16.

  	
  Confidentiality

  	
  69

  
	
  SECTION 10.17.

  	
  USA PATRIOT Act Notice

  	
  70

  
				

 

 iv
 

 

 

	
  SCHEDULES

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Schedule 1.01(a)

  	
   

  	
  Existing Debt to be Repaid

  	
   

  
	
  Schedule 1.01(b)

  	
  –

  	
  Guarantors

  	
   

  
	
  Schedule 2.01

  	
  –

  	
  Lenders and Commitments

  	
   

  
	
  Schedule 3.08

  	
  –

  	
  Subsidiaries

  	
   

  
	
  Schedule 3.09

  	
   

  	
  Litigation

  	
   

  
	
  Schedule 3.17(a)

  	
  –

  	
  Owned Real Property

  	
   

  
	
  Schedule 3.17(b)

  	
  –

  	
  Leased Real Property

  	
   

  
	
  Schedule 6.01

  	
  –

  	
  Existing Indebtedness

  	
   

  
	
  Schedule 6.02

  	
  –

  	
  Existing Liens

  	
   

  
	
  Schedule 6.04

  	
   

  	
  Existing Investments

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  EXHIBITS

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  Exhibit A

  	
  –

  	
  Form of Assignment and Acceptance

  	
   

  
	
  Exhibit B

  	
  –

  	
  Form of Borrowing Request

  	
   

  
	
  Exhibit C

  	
  –

  	
  Form of Non-Bank Certificate

  	
   

  

 

 v

CREDIT AGREEMENT dated as of September 8, 2006
(this “Agreement”), among
GEOKINETICS HOLDINGS, INC., a Delaware corporation (the “Borrower”),
GEOKINETICS INC., a Delaware corporation (“Parent”),
the GUARANTORS (as defined herein), the LENDERS (as defined herein) and ROYAL
BANK OF CANADA, as administrative agent (in such capacity, “Administrative Agent”).

RECITALS

A.            Pursuant to the Stock Purchase Agreement (such term and
each other capitalized term used but not defined in these recitals having the
meaning set forth in Article I) the Borrower intends to acquire all
of the Equity Interests of Grant Geophysical Inc. and its subsidiaries (the “Acquisition”).(1)

B.            The Borrower has requested the Lenders to extend credit
in the form of Loans on the Closing Date, in an aggregate principal amount not
in excess of $100,000,000.

C.            The Lenders are willing to extend such credit to the
Borrower on the terms and subject to the conditions set forth herein.  Accordingly, the parties hereto agree as
follows:

ARTICLE I

Definitions

SECTION 1.01.           Defined Terms.  As used in this Agreement, the following
terms shall have the meanings specified below:

“ABR”, when
used in reference to any Loan, refers to whether such Loan is bearing interest
at a rate determined by reference to the Alternate Base Rate.

“Acquired Business”
shall mean Grant Geophysical Inc. and its subsidiaries.

“Acquisition”
shall have the meaning assigned to such term in the recitals.

“Adjusted LIBO Rate”
shall mean, with respect to any Eurodollar Loan for any Interest Period, an
interest rate per annum equal to the product of (a) the LIBO Rate in
effect for such Interest Period and (b) Statutory Reserves.

 “Administrative Agent” shall have the
meaning assigned to such term in the preamble.

“Affiliate”
shall mean, when used with respect to a specified person, another person that
directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the person specified; provided, however, that, (a) for purposes of Section 6.07,
the term “Affiliate” shall also include any person that directly or indirectly
owns 10% or more of any class of Equity Interests of the person specified or
that is an officer or 

(1)  Subject to
further review of underlying documentation.

 

director of the person
specified and (b) the term “Affiliate” shall specifically exclude the
Administrative Agent, each Lender, in its capacity as Lender, and any of its
Affiliates and any lender of the Subordinated Debt, in its capacity as lender.

“Agreement”
shall have the meaning assigned to such term in the preamble.

“Alternate Base Rate”
shall mean, for any day, a rate per annum equal to the greater of (a) the
Base Rate in effect on such day and (b) the Federal Funds Effective Rate
in effect on such day plus 1/2 of 1%. 
If the Administrative Agent shall have determined (which determination
shall be conclusive absent manifest error) that it is unable to ascertain the
Federal Funds Effective Rate for any reason, including the inability or failure
of the Administrative Agent to obtain sufficient quotations in accordance with
the terms of the definition thereof, the Alternate Base Rate shall be
determined without regard to clause (b) of the preceding sentence until
the circumstances giving rise to such inability no longer exist.  Any change in the Alternate Base Rate due to
a change in the Base Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Base Rate or the Federal
Funds Effective Rate, as the case may be.

“Applicable Percentage”
shall mean, for any day, (a) with respect to any Eurodollar Loan, (i) on
the Closing Date to, but excluding, December 1, 2006, 5.00% per annum and (ii)
thereafter, the applicable percentage set forth below under the caption “Applicable
Percentage” opposite such period:

	
  Period

  	
   

  	
  Eurodollar Applicable

  Percentage

  	
   

  
	
  December 1, 2006
  through and including February 28, 2007

  	
   

  	
  6.00

  	
  %

  
	
  March 1, 2007
  through and including May 31, 2007

  	
   

  	
  7.00

  	
  %

  
	
  June 1, 2007 and
  thereafter

  	
   

  	
  8.00

  	
  %

  

 

and (b) with respect to any ABR Loan, (i) on the
Closing Date to, but excluding, December 1, 2006, 3.50% per annum and (ii)
thereafter, the applicable percentage set forth below under the caption “Applicable
Percentage” opposite such period:

	
  Period

  	
   

  	
  ABR Applicable

  Percentage

  	
   

  
	
  December 1, 2006
  through and including February 28, 2007

  	
   

  	
  4.50

  	
  %

  
	
  March 1, 2007
  through and including May 31, 2007

  	
   

  	
  5.50

  	
  %

  
	
  June 1, 2007 and
  thereafter

  	
   

  	
  6.50

  	
  %

  

 

 2
 

 

“Asset Sale”
shall mean the sale, transfer or other disposition (by way of merger, casualty,
condemnation or otherwise) by the Parent or any of the Subsidiaries to any
person other than the Parent or any Subsidiary of (a) any Equity Interests
of any of the Subsidiaries or (b) any other assets of the Parent or any of
its Subsidiaries.

“Assignment and Acceptance”
shall mean an assignment and acceptance entered into by a Lender and an
assignee, and accepted by the Administrative Agent, in the form of Exhibit A
or such other form as shall be reasonably approved by the Administrative Agent.

“Base Rate”
shall mean corporate base rate of interest publicly announced by the
Administrative Agent from time to time for borrowings made in the United States
of America in dollars, changing effective on the date specified in each such
announcement of a change in the corporate base rate.  The Base Rate is a reference rate and does
not necessarily represent the lowest or best rate actually available.

“Board”
shall mean the Board of Governors of the Federal Reserve System of the United
States of America.

“Borrower”
shall have the meaning assigned to such term in the preamble.

“Borrowing Request”
shall mean a request by the Borrower in accordance with the terms of Section 2.03
and substantially in the form of Exhibit B, or such other form as
shall be approved by the Administrative Agent.

“Breakage Event”
shall have the meaning assigned to such term in Section
2.14.

“Business Day”
shall mean any day other than a Saturday, Sunday or day on which banks in New
York City are generally authorized or required by law to close; provided, however, that
when used in connection with a Eurodollar Loan (including with respect to all
notices and determinations in connection therewith and any payments of
principal, interest or other amounts thereon), the term “Business
Day” shall also exclude any day on which banks are generally not
open for dealings in dollar deposits in the London interbank market.

“Capital Expenditures”
shall mean, for any period, (a) the aggregate amount of additions to
property, plant and equipment and other capital expenditures of the Parent and
its Subsidiaries that are (or should be) set forth in a consolidated statement
of cash flows of the Parent for such period prepared in accordance with GAAP,
and (b) Capital Lease Obligations or Synthetic Lease Obligations incurred
by the Parent and its consolidated Subsidiaries during such period, but
excluding in each case any such expenditure made to restore, replace or rebuild
property to the condition of such property immediately prior to any damage,
loss, destruction or condemnation 

 3
 

 

of such property, to the extent such expenditure is
made with insurance proceeds, condemnation awards or damage recovery proceeds
relating to any such damage, loss, destruction or condemnation.

“Capital Lease Obligations”
of any person shall mean the obligations of such person to pay rent or other
amounts under any lease of (or other arrangement conveying the right to use)
real or personal property, or a combination thereof, which obligations are
required to be classified and accounted for as capital leases on a balance
sheet of such person under GAAP, and the amount of such obligations shall be
the capitalized amount thereof determined in accordance with GAAP.

“Casualty
Event” shall mean any involuntary loss of title, any involuntary
loss of, damage to or any destruction of, or any condemnation or other taking
(including by any Governmental Authority) of, any property of the Parent or any
of its Subsidiaries.  “Casualty Event”
shall include but not be limited to any taking of all or any part of any real
property of any person or any part thereof, in or by condemnation or other
eminent domain proceedings as required by law, or by reason of the temporary
requisition of the use or occupancy of all or any part of any real property of
any person or any part thereof by any Governmental Authority, civil or
military, or any settlement in lieu thereof.

A “Change in Control”
shall be deemed to have occurred if:

(a)           any “person” or “group” (as such terms
are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934 as
in effect on the date hereof, but excluding any employee benefit plan of such
person and its Subsidiaries, and any person or entity acting in its capacity as
trustee, agent or other fiduciary or administrator of any such plan) shall
become the “beneficial owner” (as defined in Rules 13(d)-3 and 13(d)-5 under
such Act), directly or indirectly, of more than the 35% of outstanding Equity
Interests of the Parent having ordinary voting power;

(b)           a majority of the seats (other than
vacant seats) on the board of directors of the Parent shall at any time be
occupied by persons who were not (i) nominated by the board of directors
of the Parent or (ii) appointed by directors so nominated;

(c)           The Parent at any time ceases to own
100% of the Equity Interests of the Borrower; or

(d)           any change in control (or similar
event, however denominated) with respect to the Parent, the Borrower or any
Subsidiary shall occur under and as defined in the Subordinated Loan Agreement
or in respect of Material Indebtedness of the Parent, the Borrower or any
Subsidiary.

“Change in Law”
shall mean (a) the adoption of any law, rule or regulation after the date of
this Agreement, (b) any change in any law, rule or regulation or in the
interpretation or application thereof by any Governmental Authority after the
date of this Agreement or (c) compliance by any Lender (or, for purposes of Section 2.12,
by any lending office of such Lender or by such Lender’s holding company, if
any) with any request, guideline or directive (whether or not having the force
of law) of any Governmental Authority made or issued after the date of this
Agreement.

 4
 

 

“Charges”
shall have the meaning assigned to such term in Section 10.09.

“Closing Date”
shall mean September 8, 2006.

“Code” shall
mean the Internal Revenue Code of 1986, as amended from time to time, or any
legislation successor thereto.

“Commitment”
shall mean, with respect to each Lender, the commitment of such Lender to make Loans
hereunder as set forth on Schedule 2.01, or in the Assignment and
Acceptance pursuant to which such Lender assumed its Commitment, as applicable,
as the same may be (a) reduced from time to time pursuant to Section 2.09
and (b) reduced or increased from time to time pursuant to assignments by
or to such Lender pursuant to Section 10.04.

“Consolidated”
refers to the consolidation of accounts in accordance with GAAP.

“Consolidated
EBITDA” shall mean, for any period, Consolidated Net Income for
such period plus

(a)           without duplication and to the extent
deducted in determining such Consolidated Net Income, the sum of

(i)            consolidated
interest expense for such period,

(ii)           consolidated
income tax expense for such period,

(iii)          foreign
currency translation gain or loss,

(iv)          all
amounts attributable to depreciation and amortization for such period,

(v)           non-recurring
fees and expenses incurred in connection with the Transactions,

(vi)          any
non-cash charges (other than the write-down of current assets) for such period,

minus (b) without
duplication all cash payments made during such period on account of non-cash
charges added to Consolidated Net Income pursuant to clause (a)(vi)
above in a previous period.

Consolidated EBITDA shall
be calculated on a Pro Forma Basis to give effect to the Acquisition, any
Permitted Acquisition and Asset Sales (other than any dispositions in the
ordinary course of business) consummated at any time on or after the first day
of the respective Test Period as if the Acquisition and each such Permitted
Acquisition had been effected on the first day of such period and as if each
such Asset Sale had been consummated on the day prior to the first day of such
period.

 5
 

 

“Consolidated
Net Income” shall mean, for any period with respect to any person,
the net income or loss of such person for such period determined on a
consolidated basis in accordance with GAAP; provided, that
there shall be excluded (without duplication):

(a)           the
income of any Subsidiary to the extent that the declaration or payment of
dividends or similar distributions by such Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any agreement,
instrument, judgment, decree, statute, rule or governmental regulation
applicable to such Subsidiary,

(b)           the income or loss of any person
accrued prior to the date (i) it becomes a Subsidiary or is merged into or
consolidated with such person or (ii) its assets are acquired by such person or
its Subsidiaries,

(c)           the income or loss in respect of any
Investment in a joint venture (other than a Subsidiary) except to the extent of
the amount of dividends or other distributions actually paid to such person
during such period,

(d)           after-tax gains and losses realized
upon the sale or other disposition of any property that is sold or otherwise
disposed of other than in the ordinary course of business, and

(e)           extraordinary gains, losses or
charges.

“Constituent Documents”
means, with respect to any person, (a) the articles of incorporation,
certificate of incorporation, constitution or certificate of formation (or the
equivalent organizational documents) of such person, (b) the by-laws or
operating agreement (or the equivalent governing documents) of such person and
(c) any document setting forth the manner of election or duties of the
directors or managing members of such person (if any) and the designation,
amount or relative rights, limitations and preferences of any class or series
of such person’s Equity Interests.

“Control”
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of a person, whether through
the ownership of voting securities, by contract or otherwise, and the terms “Controlling” and “Controlled” shall have meanings
correlative thereto.

“Current Assets”
of any Person means all assets of such Person that would, in accordance with
GAAP, be classified as current assets of a company conducting a business the
same as or similar to that of such Person, after deducting adequate reserves in
each case in which a reserve is proper in accordance with GAAP.

“Current Liabilities”
of any Person means all Indebtedness of such Person that by its terms is
payable on demand or matures within one year after the date of determination (excluding
any Indebtedness renewable or extendible, at the option of such Person, to a
date more than one year from such date or arising under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during
a period of more than one year from such date).

 6
 

 

“Debt for Borrowed Money”
of any Person means, at any date of determination, the sum of, without
duplication, (a) all items that, in accordance with GAAP, would be classified
as indebtedness on a consolidated balance sheet of such Person at such date and
(b) Indebtedness of the types described in clauses (h) and (i) (excluding
undrawn amounts in respect thereof) of the definition of “Indebtedness”
hereunder to the extent functioning as indebtedness for borrowed money.

“Default”
shall mean any event or condition which upon notice, lapse of time or both
would constitute an Event of Default.

“Disqualified Stock”
shall mean any Equity Interest that, by its terms (or by the terms of any
security or other Equity Interest into which it is convertible or for which it
is exchangeable), or upon the happening of any event, (a) matures (excluding
any maturity as the result of an optional redemption by the issuer thereof) or
is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise,
or is redeemable at the option of the holder thereof, in whole or in part, or
requires the payment of any cash dividend or any other scheduled payment
constituting a return of capital, in each case at any time on or prior to the
date which is the first anniversary of the Maturity Date, or (b) is convertible
into or exchangeable (unless at the sole option of the issuer thereof) for
(i) Indebtedness or (ii) any Equity Interest referred to in clause
(a) above, in each case at any time prior to the date which is the first
anniversary of the Maturity Date.

“dollars” or
“$” shall mean lawful money of the
United States of America.

“Domestic Subsidiaries”
shall mean all Subsidiaries incorporated or organized under the laws of the
United States of America, any State thereof or the District of Columbia.

“Environmental Laws”
shall mean all applicable Federal, state, local and foreign laws (including
common law), treaties, regulations, rules, ordinances, codes, decrees,
judgments, directives, orders (including consent orders), and agreements having
the force and effect of law in each case, relating to protection of the
environment or natural resources, or to protection of human health and safety
as it relates to Hazardous Materials exposure, the presence or Release of
Hazardous Materials in the environment, or the generation, manufacture,
processing, distribution, use, treatment, storage, transport, recycling or
handling of, or the arrangement for such activities with respect to, Hazardous
Materials.

“Environmental Liability”
shall mean all liabilities, obligations, damages, losses, claims, actions,
suits, judgments, orders, fines, penalties, fees, expenses and costs (including
administrative oversight costs, natural resource damages and remediation
costs), whether contingent or otherwise, arising out of or relating to
(a) compliance or non-compliance with any Environmental Law,
(b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous
Materials, (d) the Release of any Hazardous Materials or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.

“Equity Interests”
shall mean shares of capital stock, partnership interests, membership interests
in a limited liability company, beneficial interests in a trust or other equity
interests in any person.

 7
 

 

“ERISA”
shall mean the Employee Retirement Income Security Act of 1974, as the same may
be amended from time to time.

“ERISA Affiliate” shall mean any
trade or business (whether or not incorporated) that, together with such
Person, is treated as a single employer under Section 414(b) or (c) of the
Code, or solely for purposes of Section 302 of ERISA and Section 412
of the Code, is treated as a single employer under Section 414 of the
Code.

“ERISA Event”
shall mean (a) any “reportable event”, as defined in Section 4043 of
ERISA or the regulations issued thereunder, with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an “accumulated funding deficiency” (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not
waived; (c) the filing pursuant to Section 412(d) of the Code or
Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (d) the incurrence by the
Parent, any of its Subsidiaries or any of its ERISA Affiliates of any liability
under Title IV of ERISA with respect to the termination of any Plan or the
withdrawal or partial withdrawal of the Parent, any of its Subsidiaries or any
of its ERISA Affiliates from any Plan or Multiemployer Plan; (e) the
receipt by the Parent, any of its Subsidiaries or any of its ERISA Affiliates
from the PBGC or a plan administrator of any notice relating to the intention
to terminate any Plan or Plans or to appoint a trustee to administer any Plan;
(f) the adoption of any amendment to a Plan that would require the
provision of security pursuant to Section 401(a)(29) of the Code or
Section 307 of ERISA; (g) the receipt by the Parent, any of its
Subsidiaries or any of its ERISA Affiliates of any notice, or the receipt by
any Multiemployer Plan from the Parent, any of its Subsidiaries or any of its
ERISA Affiliates of any notice, concerning the imposition of Withdrawal
Liability or a determination that a Multiemployer Plan is, or is expected to
be, insolvent or in reorganization, within the meaning of Title IV of ERISA;
(h) the occurrence of a “prohibited transaction” (within the meaning of
Section 4975 of the Code) with respect to which the Parent or any of the
Subsidiaries is a “disqualified person” (within the meaning of
Section 4975 of the Code) or with respect to which the Parent or any such
Subsidiary could otherwise be liable; or (i) any other extraordinary event
or condition with respect to a Plan or Multiemployer Plan (other than
liabilities arising under clauses (a) through (h) above and
any liabilities for routine plan contributions and claims for benefits) that
could result in liability of the Parent or any Subsidiary.

“Eurodollar”,
when used in reference to any Loan, refers to whether such Loan is bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.

“Event of Default”
shall have the meaning assigned to such term in Article VII.

“Excess
Cash Flow” shall mean, for any period,

(a)           the sum of:

(i)            Consolidated Net Income (or loss) of the Parent and its
Subsidiaries for such period plus

(ii)           the aggregate amount of all non cash charges deducted in
arriving at such Consolidated Net Income (or loss) plus

 8
 

 

(iii)          if there was a net increase in Consolidated Current
Liabilities of the Parent and its Subsidiaries during such period, the amount of
such net increase plus

(iv)          if there was a net decrease in Consolidated Current Assets
(excluding cash and Permitted Investments) of the Parent and its Subsidiaries
during such period, the amount of such net decrease less

(b)           the sum of:

(i)            the aggregate amount of all non cash credits included in
arriving at such Consolidated Net Income (or loss) plus

(ii)           if there was a net decrease in Consolidated Current
Liabilities of the Parent and its Subsidiaries during such period, the amount
of such net decrease plus

(iii)          if there was a net increase in Consolidated Current Assets
(excluding cash and Permitted Investments) of the Parent and its Subsidiaries
during such period, the amount of such net increase plus

(iv)          the aggregate amount of Capital Expenditures of the Parent
and its Subsidiaries paid in cash during such period solely to the extent
permitted by this Agreement plus

(v)           the aggregate amount of all regularly required and other
mandatory principal payments of Funded Debt made during such period (other than
pursuant to Section 2.06) plus

(vi)          the aggregate principal amount of all optional prepayments
of Funded Debt (other than Funded Debt that is revolving in nature unless
accompanied by a permanent commitment reduction in a corresponding amount) made
during such period pursuant to Section 2.06(a)  plus

(vii)         the aggregate principal amount of all mandatory prepayments
of Funded Debt made during such period pursuant to Section 2.13 in
respect of Net Cash Proceeds to the extent that such Net Cash Proceeds were
taken into account in calculating such Consolidated Net Income (or loss) for
such period.

“Excluded Taxes”
shall mean, with respect to the Administrative Agent, any Lender or any other
recipient of any payment to be made by or on account of any obligation of the
Borrower hereunder, (a) income or franchise taxes imposed on (or measured
by) its net income by the United States of America, or by the jurisdiction
under the laws of which such recipient is organized or in which its principal
office is located or, in the case of any Lender, in which its applicable
lending office is located, (b) any branch profits taxes imposed by the
United States of America or any similar tax imposed by any other jurisdiction
described in clause (a) above and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under Section 2.21(a)),
any withholding tax that is imposed on amounts payable to such Foreign Lender
at the time such Foreign Lender becomes a party to this Agreement (or designates
a new lending office) or is attributable to such Foreign Lender’s failure to
comply with Section 2.20(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.20(a).

 9
 

 

“Existing Debt”
shall mean Indebtedness listed on Schedule 1.01(a).

“Existing Credit Agreement”
shall mean the Revolving Credit, Term Loan and Security Agreement, dated as of
June 12, 2006, among the Parent, Geophysical Development Corporation,
Quantum Geophysical, Inc., Trace Energy Services Ltd., Trace Energy Services,
Inc., the financial institutions which are a party thereto and PNC Bank,
National Association, as agent.

“Existing Credit Documents”
shall mean the “Other Documents”, as such term is defined in the Existing
Credit Agreement.

“Federal Funds Effective
Rate” shall mean, for any day, a fluctuating rate of interest
per annum equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding Business Day by the Federal
Reserve Bank of New York, or, if such rate is not so published for any day
that is a Business Day, the average of the quotations for the day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.

“Fees” shall
have the meaning assigned to such term in Section 2.05.

“Financial Officer”
of any person shall mean the chief financial officer, principal accounting
officer, treasurer, assistant treasurer or controller of such person.

“Fiscal Year”
shall mean the fiscal year of the Parent and its Subsidiaries ending on
December 31 of each calendar year.

“Fixed Charge Coverage
Ratio” shall mean the
ratio of (a) Consolidated EBITDA minus the sum of (i) all unfinanced
Capital Expenditures made during such period and (ii) all cash taxes paid
during such period to (b) the sum of all Senior Debt Payments during such
period.

“Foreign Lender”
shall mean any Lender that is organized under the laws of a jurisdiction other
than that in which the Borrower is located. 
For purposes of this definition, the United States of America, each
State thereof and the District of Columbia shall be deemed to constitute a
single jurisdiction.

“Foreign Subsidiary”
shall mean any Subsidiary that is not a Domestic Subsidiary.

“Funded Debt”
of any Person means Indebtedness in respect of the Loans, in the case of the
Borrower, and all other Indebtedness of such Person that by its terms matures
more than one year after the date of determination or matures within one year
from such date but is renewable or extendible, at the option of such Person, to
a date more than one year after such date or arises under a revolving credit or
similar agreement that obligates the lender or lenders to extend credit during
a period of more than one year after such date.

“GAAP” shall
mean United States generally accepted accounting principles.

 10
 

 

“Governmental Authority”
shall mean the government of the United States of America or any other nation,
any political subdivision thereof, whether state or local, and any agency, authority,
instrumentality, regulatory body, court, central bank or other entity
exercising executive, legislative, judicial, taxing, regulatory or
administrative powers or functions of or pertaining to government.

“Granting Lender”
shall have the meaning assigned to such term in Section 10.04(i).

“Guarantee”
of or by any person shall mean any obligation, contingent or otherwise, of such
person guaranteeing or having the economic effect of guaranteeing any
Indebtedness or other obligation of any other person (the “primary
obligor”) in any manner, whether directly or indirectly, and
including any obligation of such person, direct or indirect, (a) to
purchase or pay (or advance or supply funds for the purchase or payment of)
such Indebtedness or other obligation or to purchase (or to advance or supply
funds for the purchase of) any security for the payment of such Indebtedness or
other obligation, (b) to purchase or lease (including pursuant to
Synthetic Lease Obligations, if applicable) property, securities or services
for the purpose of assuring the owner of such Indebtedness or other obligation
of the payment of such Indebtedness or other obligation, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay
such Indebtedness or other obligation or (d) as an account party in
respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or other obligation; provided, however, that the term “Guarantee” shall not include
endorsements for collection or deposit in the ordinary course of business or
customary and reasonable indemnity obligations in effect on the Closing Date or
entered into in connection with any acquisition or disposition of assets
permitted under this Agreement.  The
amount of any Guarantee shall be deemed to be an amount equal to the stated or
determinable amount of the primary obligation, or portion thereof, in respect
of which such Guarantee is made or, if not stated or determinable, the maximum
reasonably anticipated liability in respect thereof as determined by the
guaranteeing person in good faith.

“Guaranteed Obligations”
shall have the meaning assigned to such term in Section 8.01.

“Guarantors”
shall mean the Parent and the Subsidiary Guarantors.

“Hazardous Materials”
shall mean any petroleum (including crude oil or fraction thereof) or petroleum
products or byproducts, or any pollutant or contaminant, or any forces, noise,
form of energy, substance, material or waste characterized, defined, or
regulated as hazardous, toxic, explosive, radioactive, dangerous or words of
similar meaning and effect by, or pursuant to, any Environmental Law, or which
require removal, remediation or reporting under any Environmental Law,
including asbestos, or asbestos containing material, radioactive material,
polychlorinated biphenyls.

“Hedging Agreement”
shall mean any agreement with respect to any swap, forward, future, cap,
collar, floor or derivative transaction or option or similar agreement
involving, or settled by reference to, one or more rates, currencies, fuel or
other commodities, equity or debt instruments or securities, or economic,
financial or pricing indices or measures of economic, financial or pricing risk
or value or any similar transaction or any combination of these transactions; provided, however, that
no phantom stock or similar plan providing for payments 

 11
 

 

and on account of
services provided by current or former directors, officers, members of
management, employees or consultants of the Parent or any Subsidiary shall be a
Hedging Agreement.

“Indebtedness”
of any person shall mean, without duplication, (a) all obligations of such
person for borrowed money or with respect to deposits or advances of any kind,
(b) all obligations of such person evidenced by bonds, debentures, notes
or similar instruments, (c) all obligations of such person upon which
interest charges are customarily paid, (d) all obligations of such person
under conditional sale or other title retention agreements relating to property
or assets purchased by such person, (e) all obligations of such person
issued or assumed as the deferred purchase price of property or services
(excluding trade accounts payable and accrued obligations incurred in the ordinary
course of business), (f) all Indebtedness of others secured by any Lien on
property owned or acquired by such person, whether or not the obligations
secured thereby have been assumed, (g) all Guarantees by such person of
Indebtedness of others, (h) all Capital Lease Obligations and Synthetic
Lease Obligations of such person, (i) all obligations of such person as an
account party in respect of letters of credit or letters of guaranty and
(j) all obligations of such person in respect of bankers’ acceptances.  The Indebtedness of any person shall include
the Indebtedness of any other person (including any partnership in which such
person is a general partner) to the extent such person is liable therefor as a
result of such person’s ownership interest in, or other relationship with, such
other person, except to the extent the terms of such Indebtedness provide that
such person is not liable therefor.

“Indemnified Taxes”
shall mean Taxes other than Excluded Taxes and Other Taxes.

“Indemnitee”
shall have the meaning assigned to such term in Section 10.05(b).

“Interest Payment Date”
shall mean (a) with respect to any ABR Loan, the last Business Day of each
March, June, September and December and (b) with respect to any
Eurodollar Loan, the last day of the Interest Period applicable to such Loan
and, in the case of a Eurodollar Loan with an Interest Period of more than
three months’ duration, each day that would have been an Interest Payment Date
had successive Interest Periods of three months’ duration been applicable to
such Loan.

“Interest Period”
shall mean, for each Eurodollar Loan comprising part of the same
borrowing,  the period commencing on the
date of such borrowing and ending on the numerically corresponding day (or, if
there is no numerically corresponding day, on the last day) in the calendar
month that is 1, 2, 3 or 6  months or 9 or 12 months, if agreed
to or available to all of the participating Lenders, as the Borrower may elect;
provided, however,
that if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended to the next succeeding Business Day unless
such next succeeding Business Day would fall in the next calendar month, in
which case such Interest Period shall end on the next preceding Business Day
and provided, further, that whenever the first day of any Interest Period
occurs on a day of an initial calendar month for which there is no numerically
corresponding day in the calendar month that succeeds such initial calendar
month by the numbers of months equal to the number of months in such Interest
Period shall end on the last Business Day of such succeeding calendar
month.  Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period.

 12
 

 

“Investments”
shall have the meaning assigned to such term in Section 6.04.

“IRS”
shall have the meaning assigned to such term in Section 2.20(e).

“Lenders”
shall mean (a) the persons listed on Schedule 2.01 (other than
any such person that has ceased to be a party hereto pursuant to an Assignment
and Acceptance) and (b) any person that has become a party hereto pursuant
to an Assignment and Acceptance.

“Leverage Ratio”
means, at any date of determination, the ratio of (a) Debt for Borrowed Money
(but excluding Subordinated Debt) as of the last day of such Test Period to (b)
Consolidated EBITDA for such Test Period, in each case as determined for the
Parent and its Subsidiaries on a Consolidated basis.

“LIBO Rate”
shall mean for any Interest Period with respect to any Eurodollar Loan:

(a)           the
rate per annum equal to the rate determined by the Administrative Agent to be
the offered rate that appears on the page of the LIBOR 01 screen (or any
successor thereto) that displays an average British Bankers Association
Interest Settlement Rate for deposits in U.S. dollars (for delivery on the
first day of such Interest Period) with a term equivalent to such Interest
Period, determined as of approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period, or

(b)           if
the rate referenced in the preceding subsection (a) does not appear on such
page or service or such page or service shall cease to be available, the rate
per annum equal to the rate determined by the Administrative Agent to be the
offered rate on such other page or other service that displays an average
British Bankers Association Interest Settlement Rate for deposits in dollars
(for delivery on the first day of such Interest Period) with a term equivalent
to such Interest Period, determined as of approximately 11:00 a.m. (London
time) two Business Days prior to the first day of such Interest Period, or

(c)           if
the rates referenced in the preceding subsections (a) and (b) are not
available, the rate per annum determined by the Administrative Agent as the
rate of interest (rounded upward to the next 1/100th of 1%) at which deposits
in dollars for delivery on the first day of such Interest Period in same day
funds in the approximate amount of the Eurodollar Loan being made, continued or
converted by the Administrative Agent and with a term equivalent to such
Interest Period would be offered by the Administrative Agent’s London branch to
major banks in the offshore dollar market at their request at approximately
11:00 a.m. (London time) two Business Days prior to the first day of such
Interest Period.

“Lien” shall
mean, with respect to any asset, (a) any mortgage, deed of trust, lien
(statutory or otherwise), pledge, hypothecation, encumbrance, collateral
assignment, charge or security interest in, on or of such asset, (b) the
interest of a vendor or a lessor under any conditional sale agreement, capital
lease or title retention agreement (or any financing lease having substantially
the same economic effect as any of the foregoing) relating to such asset and
(c) in the case of securities, any purchase option, call or similar right
of a third party with respect to such securities.

 13
 

 

“Loan Documents”
shall mean this Agreement, the promissory notes, if any, executed and delivered
pursuant to Section 2.04(d) and each document executed by a Loan
Party and delivered to the Administrative Agent or any Lender in connection
with or pursuant to any of the foregoing or the Obligations, together with any
modification of any term of any of the foregoing.

“Loan Parties”
shall mean the Parent, the Borrower and the Subsidiary Guarantors.

“Loans”
shall mean the term loans made by the Lenders to the Borrower pursuant to Section 2.01.

“Margin Stock”
shall have the meaning assigned to such term in Regulation U.

“Material Adverse Effect”
shall mean (a) a material adverse effect on the business, assets,
liabilities, operations, prospects or condition (financial or otherwise) or
operating results of the Parent and its Subsidiaries, taken as a whole,
(b) a material impairment of the ability of any Loan Party to perform any
of its obligations under any Loan Document to which it is or will be a party or
(c) a material impairment of any rights of or benefits available to the
Lenders under any Loan Document.

“Material Indebtedness”
shall mean Indebtedness (other than the Loans), or obligations in respect of
one or more Hedging Agreements, of any one or more of the Parent and its
Subsidiaries in an aggregate principal amount exceeding $1,000,000.  For purposes of determining Material
Indebtedness, the “principal amount” of the obligations of the Parent or any
Subsidiary in respect of any Hedging Agreement at any time shall be the maximum
aggregate amount (giving effect to any netting agreements) that the Parent, or
such Subsidiary would be required to pay if such Hedging Agreement were
terminated at such time.

“Maturity Date”
shall mean September 8, 2007.

“Maximum Rate”
shall have the meaning assigned to such term in Section 10.09.

“Moody’s”
shall mean Moody’s Investors Service, Inc., or any successor thereto.

“Multiemployer Plan”
shall mean a multiemployer plan as defined in Section 4001(a)(3) of ERISA.

“Net Cash Proceeds”
shall mean (a) with respect to any Asset Sale, the proceeds thereof in the
form of cash and Permitted Investments (including any such proceeds
subsequently received (as and when received) in respect of noncash
consideration initially received), net of (i) expenses (including
reasonable and customary broker’s fees or commissions, investment banking fees,
consultant fees, legal fees, survey costs, title insurance premiums, and
related search and recording charges, transfer, recording and similar taxes
incurred by the Parent and the Subsidiaries in connection therewith and the
Borrower’s good faith estimate of income taxes paid or payable in connection
with such sale) incurred in connection with such Asset Sale, (ii) amounts
provided as a reserve, in accordance with GAAP, against any liabilities under
any indemnification obligations or purchase price adjustment associated with
such Asset Sale (provided, that to
the extent and at the time any such amounts are released from such reserve,
such amounts shall constitute Net Cash Proceeds), (iii) the principal
amount, premium or 

 14
 

 

penalty, if any, interest
and other amounts on any Indebtedness for borrowed money which is secured by
the asset sold in such Asset Sale and which is repaid (other than any such
Indebtedness assumed or repaid by the purchaser); (b) with respect to any
Casualty Event, the cash insurance proceeds, condemnation awards and other
compensation received in respect thereof, net of all reasonable costs and expenses
incurred in connection with the collection of such proceeds, awards or other
compensation in respect of such Casualty Event; and (c) with respect to
any incurrence of Indebtedness or issuance of any Equity Interests, the cash
proceeds thereof, net of all taxes and customary fees, commissions, costs and
other expenses incurred by the Parent and the Subsidiaries in connection
therewith.

“Net Worth” shall
mean, at a particular date, (a) the aggregate amount of all assets of the
Parent and its consolidated Subsidiaries as may be properly classified as such
in accordance with GAAP consistently applied, less (b) the aggregate amount
of all liabilities of the Parent and its consolidated Subsidiaries.

“Obligations”
shall mean (a) obligations of the Borrower and the other Loan Parties from
time to time arising under or in respect of the due and punctual payment of
(i) the principal of and premium, if any, and interest (including interest
accruing during the pendency of any bankruptcy, insolvency, receivership or
other similar proceeding, regardless of whether allowed or allowable in such
proceeding) on the Loans, when and as due, whether at maturity, by
acceleration, upon one or more dates set for prepayment or otherwise, and
(ii) all other monetary obligations, including fees, costs, expenses and
indemnities, whether primary, secondary, direct, contingent, fixed or otherwise
(including monetary obligations incurred during the pendency of any bankruptcy,
insolvency, receivership or other similar proceeding, regardless of whether
allowed or allowable in such proceeding), of the Borrower and the other Loan
Parties under this Agreement and the other Loan Documents, and (b) the due
and punctual performance of all covenants, agreements, obligations and liabilities
of the Borrower and the other Loan Parties under or pursuant to this Agreement
and the other Loan Documents.

“Other Taxes”
shall mean any and all present or future stamp or documentary taxes or any
other excise or property taxes, charges or similar levies arising from any
payment made under any Loan Document or from the execution, delivery or
enforcement of, or otherwise with respect to, any Loan Document.

“Parent”
shall have the meaning assigned to such term in the preamble.

“Participant Register”
shall have the meaning described to such term in Section 10.04(f).

“PBGC” shall
mean the Pension Benefit Guaranty Corporation referred to and defined in ERISA.

“Permitted Acquisition” shall mean
any acquisition by the Borrower or any Subsidiary of all or substantially all
the assets of, or all the Equity Interests in, a Person or division or line of
business of a Person if, immediately after giving effect thereto, (a) no
Default or Event of Default has occurred and is continuing or would result
therefrom, (b) each Subsidiary formed for purposes of or resulting from
such acquisition shall be a Domestic Subsidiary, (c) all of the Equity
Interests of each Subsidiary formed for the purpose of or resulting from such
acquisition

 15

 

shall be owned directly
by the Borrower or a Subsidiary, (d) the Parent, the Borrower and the
Subsidiaries are in compliance, on a Pro Forma Basis after giving effect to
such acquisition with the covenants contained in Sections 6.14 and 6.15
recomputed as at the last day of the most recently ended fiscal quarter of the
Parent for which financial statements are available, as if such acquisition had
occurred on the first day of each relevant period for testing such compliance
and (e) the Borrower has delivered to each Lender a certificate of a
Responsible Officer to the effect set forth in clauses (a), (b),
(c) and (d) above, together with all relevant financial
information for the Person or assets to be acquired and reasonably detailed
calculations demonstrating satisfaction of the requirement set forth in clause (d)
above.

“Permitted Investments”
shall mean:

(a) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the
United States of America (or by any agency thereof to the extent such
obligations are backed by the full faith and credit of the United States of
America), in each case maturing within one year from the date of acquisition
thereof;

(b) investments in commercial paper maturing
within 270 days from the date of acquisition thereof and having, at such date
of acquisition, the highest credit rating obtainable from S&P or from Moody’s;

(c) investments in certificates of deposit,
banker’s acceptances and time deposits maturing within one year from the date
of acquisition thereof issued or guaranteed by or placed with, and money market
deposit accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States of America or any State
thereof that has a combined capital and surplus and undivided profits of not
less than $500,000,000;

(d) fully collateralized repurchase agreements
with a term of not more than 30 days for securities described in clause (a)
above and entered into with a financial institution satisfying the criteria of clause (c)
above;

(e) investments in “money market funds” within
the meaning of Rule 2a-7 of the Investment Company Act of 1940, as
amended, substantially all of whose assets are invested in investments of the
type described in clauses (a) through (d) above;

(f) investments in so-called “auction rate”
securities rated AAA or higher by S&P or Aaa or higher by Moody’s and which
have a reset date not more than 90 days from the date of acquisition thereof;
and

(g) other short-term investments utilized by
Foreign Subsidiaries in accordance with normal investment practices for cash
management in investments of a type analogous to the foregoing.

“Permitted Refinancing”
shall mean Indebtedness of the Parent or any Subsidiary issued or incurred
(including by means of the extension or renewal of existing Indebtedness) to
refinance, refund, extend, renew or replace existing Indebtedness (“Refinanced Indebtedness”); provided,  that (a) the
principal amount (or, if incurred with original issue discount, the aggregate
accreted value) of such refinancing, refunding, extending, renewing or
replacing Indebtedness 

 16
 

 

(the “New Indebtedness”) is not greater
than the principal amount of such Refinanced Indebtedness, (b) if such
Refinanced Indebtedness is the Subordinated Debt, the Indebtedness arising
under the Existing Credit Agreement or other Indebtedness that is Material
Indebtedness (or a Permitted Refinancing thereof), such New Indebtedness has a
final maturity that is no sooner than the final maturity of, a weighted average
life to maturity that is not earlier than the remaining weighted average life
of, such Refinanced Indebtedness and an interest rate that is not higher than
the interest rate applicable to such Refinanced Indebtedness, (c) if such
Refinanced Indebtedness or any Guarantees thereof are subordinated to the
Obligations, such New Indebtedness and any Guarantees thereof remain so
subordinated on terms no less favorable to the Lenders, (d) the obligors
in respect of such Refinanced Indebtedness immediately prior to such
refinancing, refunding, extending, renewing or replacing are the only obligors
on such New Indebtedness, and (e) if such Refinanced Indebtedness is the
Subordinated Debt, the Indebtedness arising under the Existing Credit Agreement
or other Indebtedness that is Material Indebtedness or (a Permitted Refinancing
thereof), such New Indebtedness contains mandatory redemption (or similar
provisions), covenants and events of default which, taken as a whole, are no
less favorable to the Parent or the applicable Subsidiary and the Lenders than
the mandatory redemption (or similar provisions), covenants and events of
default or Guarantees, if any, in respect of such Refinanced Indebtedness; provided, further, however, that
Permitted Refinancing shall not include (i) Indebtedness of a Subsidiary
that refinances Indebtedness of the Borrower or (ii) Indebtedness of the
Borrower or a Guarantor that refinances, refunds or replaces any other
Indebtedness of a Subsidiary (other than a Subsidiary Guarantor).

“person”
shall mean any natural person, corporation, business trust, joint venture,
association, company, limited liability company, partnership, Governmental
Authority or other entity.

“Plan” shall
mean any employee pension benefit plan as defined in Section 3(2) of ERISA
(other than a Multiemployer Plan) subject to the provisions of Title IV of
ERISA or Section 412 of the Code or Section 307 of ERISA, and in
respect of which the Parent, any of its Subsidiaries or any ERISA Affiliate is
(or, if such plan were terminated, would under Section 4069 of ERISA be
deemed to be) an “employer” as defined in Section 3(5) of ERISA.

“Pro Forma Basis” and “Pro Forma Compliance”
mean, with respect to compliance with any test or covenant hereunder in respect
of any Specified Transactions, the following adjustments in connection
therewith shall be deemed to have occurred as of the first day of the
applicable period of measurement in such test or covenant:  (a) income statement items (whether
positive or negative) attributable to the property or Person subject to such
Specified Transaction, (i) in the case of an Asset Sale of all or
substantially all of the Equity Interests in any Subsidiary or of any division,
product line, or facility used for operations of the Borrower or any of its
Subsidiaries, shall be excluded, and (ii) in the case of a Permitted
Acquisition or investment described in the definition of “Specified Transaction”,
shall be included, (b) any retirement of Indebtedness, and (c) any
Indebtedness incurred or assumed by the Borrower or any of its Subsidiaries in
connection therewith and if such Indebtedness has a floating or formula rate,
shall have an implied rate of interest for the applicable period for purposes
of this definition determined by utilizing the rate which is or would be in
effect with respect to such Indebtedness as at the relevant date of
determination; provided, that, the foregoing pro
forma adjustments may be applied to any such test or covenant solely to the
extent that such adjustments are consistent 

 17
 

 

with the definition of “Consolidated EBITDA” and may take into account
reasonably identifiable and factually supportable cost savings for which the
necessary steps have been implemented or are reasonably expected to be implemented
within 18 months after the closing of the relevant Specified Transaction.

“Register”
shall have the meaning assigned to such term in Section 10.04(d).

“Regulation U”
shall mean Regulation U of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.

“Regulation X”
shall mean Regulation X of the Board as from time to time in effect and
all official rulings and interpretations thereunder or thereof.

“Related Documents”
means the Existing Credit Agreement, the Existing Credit Documents, the
Subordinated Loan Agreement, the Subordinated Loan Documents, the Stock
Purchase Agreement and each other document and instrument executed with respect
thereof.

“Related Fund” shall mean, with respect
to any Lender that is a fund or commingled investment vehicle that invests in
bank loans, any other fund that invests in bank loans and is managed or advised
by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.

“Related Parties”
shall mean, with respect to any specified person, such person’s Affiliates and
the respective directors, officers, employees, agents and advisors of such
person and such person’s Affiliates.

“Release”
shall mean any release, spill, emission, leaking, dumping, injection, pouring,
deposit, disposal, discharge, dispersal, leaching or migration into or through
the environment or within or upon any building, structure, facility or fixture.

“Required Lenders”
shall mean, at any time, (a) if there are three or less Lenders having Loans
and Commitments hereunder, each Lender, (b) if there are four Lenders having
Loans and Commitments hereunder, at least three Lenders or (c) if there are
more than four Lenders, Lenders having Loans and Commitments representing more than
50% of the sum of all Loans outstanding and Commitments at such time.

“Responsible Officer”
of any person shall mean any executive officer or Financial Officer of such
person and any other officer or similar official thereof responsible for the
administration of the obligations of such person in respect of this Agreement.

“Restricted Payment”
shall mean any dividend or other distribution (whether in cash, securities or
other property) with respect to any Equity Interests in the Parent, the
Borrower or any Subsidiary, or any payment (whether in cash, securities or
other property), including any sinking fund or similar deposit, on account of
the purchase, redemption, retirement, acquisition, cancellation or termination
of any Equity Interests in the Parent, the Borrower or any Subsidiary or any
option, warrant or other right to acquire any such Equity Interests in the
Parent, the Borrower or any Subsidiary.

 18
 

 

“S&P”
shall mean Standard & Poor’s Ratings Group, Inc. or any successor
thereto.

“Senior Debt Payments”
shall mean and include all cash actually expended by the Parent and its
Subsidiaries to make (a) interest payments on Indebtedness, plus
(b) scheduled principal payments of Indebtedness required to be paid, plus
(c) payments for all fees, commissions and charges set forth herein and
with respect to any Indebtedness, plus (d) capitalized lease payments;
provided that for the first four fiscal quarters ending after the Closing Date,
interest expense shall be determined on an annualized basis.

“Series B Preferred Stock”
means the Series B senior convertible preferred stock, par value $10.00 per
share, of the Parent.

“Solvent”
means, with respect to any person, (a) the consolidated fair value of the
assets of such person and its Subsidiaries, at a fair valuation, will exceed
their consolidated debts and liabilities, subordinated, contingent or
otherwise; (b) the consolidated present fair saleable value of the
property of such person and its Subsidiaries will be greater than the amount
that will be required to pay the probable liability of their consolidated debts
and other liabilities, subordinated, contingent or otherwise, as such debts and
other liabilities become absolute and matured; (c) such person and its
Subsidiaries will be able to pay their consolidated debts and liabilities,
subordinated, contingent or otherwise, as such debts and liabilities become
absolute and matured; and (d) such person and its Subsidiaries, taken as a
whole, will not have unreasonably small capital with which to conduct the
business in which they are engaged.

“SPC” shall
have the meaning assigned to such term in Section 10.04(i).

“Specified Transaction”
means, with respect to any period, any Investment, Asset Sale, incurrence or
repayment of Indebtedness or Restricted Payment that by the terms of this
Agreement requires “Pro Forma Compliance” with a test or covenant hereunder or
requires such test or covenant to be calculated on a “Pro Forma Basis”.

“Statutory Reserves”
shall mean a fraction (expressed as a decimal), the numerator of which is the
number one and the denominator of which is the number one minus the aggregate
of the maximum reserve percentages (including any marginal, special, emergency
or supplemental reserves) expressed as a decimal established by the Board and
any other banking authority, domestic or foreign, to which any Lender
(including any branch, Affiliate, or other fronting office making or holding a
Loan) is subject for Eurocurrency Liabilities (as defined in Regulation D
of the Board).  Eurodollar Loans shall be
deemed to constitute Eurocurrency Liabilities as defined in Regulation D
of the Board) and to be subject to such reserve requirements without benefit of
or credit for proration, exemptions or offsets that may be available from time
to time to any Lender under such Regulation D. Statutory Reserves shall be
adjusted automatically on and as of the effective date of any change in any
reserve percentage.

“Stock Purchase Agreement”
shall mean that certain Stock Purchase Agreement, dated as of September 8,
2006, among the Borrower, Elliott Associates, L.P. and Elliott International,
L.P. in form and substance satisfactory to
the Lenders.

“Subsidiary”
shall mean, with respect to any person (herein referred to as the “parent”), any corporation,
partnership, limited liability company, association or other business entity of

 19
 

 

which securities or other
ownership interests representing more than 50% of the ordinary voting power or
more than 50% of the general partnership interests are, at the time any
determination is being made, owned, Controlled or held by the parent, one or
more subsidiaries of the parent or a combination thereof.

“Subsidiary Guarantor”
shall mean each Subsidiary listed on Schedule 1.01(b) and each
other Subsidiary that is or becomes a party to this Agreement pursuant to Article VIII.

“Subordinated Loan
Agreement” shall mean that certain Senior Subordinated Loan
Agreement, dated as of September 8, 2006, among the Parent and the financial
institutions from time to time party thereto, as lender.

“Subordinated Loan
Documents” shall mean shall mean the “Loan Documents”, as such
term is defined in the Subordinated Loan Agreement.

“Subordinated Debt”
shall mean the Indebtedness incurred pursuant to the Subordinated Loan
Agreement.

“Synthetic Lease Obligations”
shall mean all monetary obligations of a person under (a) a so-called
synthetic, off-balance sheet or tax retention lease or (b) an agreement
for the use or possession of any property (whether real, personal or mixed)
creating obligations which do not appear on the balance sheet of such person,
but which, upon the insolvency or bankruptcy of such person, would be
characterized as Indebtedness of such person (without regard to accounting
treatment).

“Taxes”
shall mean any and all present or future taxes, levies, imposts, duties,
deductions, charges, liabilities or withholdings imposed by any Governmental
Authority.

“Test Period”
shall mean, at any time, the four consecutive fiscal quarters of the Parent
most recently ended (in each case taken as one accounting period) for which
financial statements have been or are required to be delivered pursuant to Section 5.04(a)
or (b).

“Transactions”
shall mean, collectively, (a) the execution, delivery and performance by
the parties thereto of the Stock Purchase Agreement and the consummation of the
transactions contemplated thereby, including the Acquisition and the repayment
of the Existing Debt and the term loan facility under the Existing Credit
Agreement, (b) the execution, delivery and performance by the Loan Parties
of the Loan Documents to which they are a party and the execution, delivery and
performance by the Loan Parties of the Subordinated Loan Agreement (and the “Loan
Documents” as defined therein) and the making of the Loans hereunder and the
borrowings thereunder and use of the proceeds thereof, and (c) the payment
of related fees and expenses.

“Transferred Guarantor”
shall have the meaning assigned to such term in Section 8.09.

“Uniform Commercial Code”
or “UCC” means the Uniform Commercial
Code as in effect in any applicable jurisdiction from time to time.

 20
 

 

“USA PATRIOT Act”
shall mean The Uniting and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001 (Title III of
Pub. L. No. 107-56 (signed into law October 26, 2001)).

“weighted average life to
maturity” means, when applied to any Indebtedness at any date,
the number of years obtained by dividing: 
(i) the sum of the products obtained by multiplying (a) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final maturity, in
respect thereof, by (b) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the making of such payment;
by (ii) the then outstanding principal amount of such Indebtedness.

“Withdrawal Liability”
shall mean liability to a Multiemployer Plan as a result of a complete or
partial withdrawal from such Multiemployer Plan, as such terms are defined in Part I
of Subtitle E of Title IV of ERISA.

SECTION 1.02.           Terms Generally.  The definitions in Section 1.01
shall apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words “include”, “includes” and “including”
shall be deemed to be followed by the phrase “without limitation”. The word “will”
shall be construed to have the same meaning and effect as the word “shall”; and
the words “asset” and “property” shall be construed as having the same meaning
and effect and to refer to any and all tangible and intangible assets and
properties, including cash, securities, accounts and contract rights. The words
“herein”, “hereof” and “hereunder”, and words of similar import, shall be
construed to refer to this Agreement in its entirety and not to any particular
provision of this Agreement unless the context shall otherwise require.  All references herein to Articles, Sections,
Exhibits and Schedules shall be deemed references to Articles and Sections of,
and Exhibits and Schedules to, this Agreement unless the context shall
otherwise require. Except as otherwise expressly provided herein, (a) any
reference in this Agreement to any Loan Document or any other agreement,
instrument or document shall mean such document as amended, restated, amended
and restated, supplemented or otherwise modified from time to time and (b) all
terms of an accounting or financial nature shall be construed in accordance
with GAAP, as in effect from time to time; provided,
however, that if the Borrower
notifies the Administrative Agent that the Borrower wishes to amend any
covenant in Article VI or any related definition to eliminate the
effect of any change in GAAP or the application thereof occurring after the
date of this Agreement on the operation of such covenant (or if the
Administrative Agent notifies the Borrower that the Required Lenders wish to
amend Article VI or any related definition for such purpose), then
the Borrower and the Administrative Agent shall negotiate in good faith to
amend such covenant and related definitions (subject to the approval of the
Required Lenders) to preserve the original intent thereof in light of such
changes in GAAP; provided, that the
Borrower’s compliance with such covenant shall be determined on the basis of
GAAP as applied and in effect immediately before the relevant change in GAAP or
the application thereof became effective, until such covenant is amended.

SECTION 1.03.           Classification of Loans. 
For purposes of this Agreement, Loans may be classified and referred to
by type (e.g., a “Eurodollar Loan”).

 21
 

 

SECTION
1.04.           Rounding.  Any financial ratios required to be
maintained by the Borrower pursuant to this Agreement (or required to be
satisfied in order for a specific action to be permitted under this Agreement)
shall be calculated by dividing the appropriate component by the other
component, carrying the result to one place more than the number of places by
which such ratio is expressed herein and rounding the result up or down to the
nearest number (with a rounding-up if there is no nearest number).

SECTION
1.05.           References to Agreements and Laws.  Unless otherwise expressly provided herein,
(a) references to organization documents, agreements (including the Loan
Documents) and other contractual instruments shall be deemed to include all
subsequent amendments, amendments and restatements, restatements, supplements
and other modifications thereto, but only to the extent that such amendments,
amendments and restatements, restatements, supplements and other modifications
are not prohibited by any Loan Document; and (b) references to any law,
statute, rule or regulation shall include all statutory and regulatory provisions
consolidating, amending, replacing, supplementing or interpreting such Law.

SECTION
1.06.           Times of Day.  Unless otherwise specified, all references
herein to times of day shall be references to Eastern time (daylight or
standard, as applicable).

SECTION
1.07.           Timing of Payment or Performance.  When the payment of any obligation or the
performance of any covenant, duty or obligation is stated to be due or
performance required on a day which is not a Business Day, the date of such
payment or performance shall extend to the immediately succeeding Business Day
and such extension of time shall be reflected in computing interest or fees, as
the case may be; provided, that with respect to any payment of
interest on or principal of Eurodollar Rate Loans, if such extension would
cause any such payment to be made in the next succeeding calendar month, such
payment shall be made on the immediately preceding Business Day.

ARTICLE II

The Credits

SECTION
2.01.           Commitments.  Subject to the terms and conditions herein
set forth, each Lender agrees, severally and not jointly, to make a Loan to the
Borrower on the Closing Date in a principal amount not to exceed its
Commitment.  Amounts paid or prepaid in
respect of Loans may not be reborrowed.

SECTION
2.02.           Loans.  (a) 
Each Loan shall be made as part of a borrowing consisting of Loans made
by the Lenders ratably in accordance with their Commitments; provided, however, that the failure of any
Lender to make any Loan shall not in itself relieve any other Lender of its
obligation to lend hereunder (it being understood, however, that no Lender
shall be responsible for the failure of any other Lender to make any Loan
required to be made by such other Lender).

(b)   Subject to Sections 2.08 and 2.15,
each borrowing shall be comprised entirely of ABR Loans or Eurodollar Loans as
the Borrower may request pursuant to Section 2.03.  Each Lender may at its option make any
Eurodollar Loan by causing any domestic or foreign branch 

 22
 

 

or Affiliate of such Lender to
make such Loan; provided, that
any exercise of such option shall not affect the obligation of the Borrower to
repay such Loan in accordance with the terms of this Agreement.  The Borrower may make only one borrowing
under the Commitment which shall be on the Closing Date.

(c)   Each Lender shall make each Loan to be made
by it hereunder on the proposed date thereof by wire transfer of immediately
available funds to such account designated by the Borrower in the applicable
Borrowing Request as the Borrower may designate not later than 1:00 p.m.,
New York City time.

SECTION
2.03.           Borrowing Procedure.  In order to request a Loan, the Borrower
shall notify the Administrative Agent of such request by telephone (a) in
the case of a Eurodollar Loan, not later than 11:00 a.m., New
York City time, three Business Days before a proposed Loan, and
(b) in the case of an ABR Loan not later than 11:00 a.m., New York
City time, one Business Day before a proposed borrowing.  Each such telephonic Borrowing Request shall
be irrevocable, and shall be confirmed promptly by hand delivery or fax to the
Lenders of a written Borrowing Request and shall specify the following
information: (i) whether such borrowing is to be a Eurodollar Loan or an
ABR loan, (ii) the date of such borrowing (which shall be a Business Day);
(iii) the number and location of the account to which funds are to be
disbursed; (iv) the amount of such borrowing; and (v) if such
borrowing is to be a Eurodollar Loan, the Interest Period with respect thereto;
provided, however, that notwithstanding any contrary
specification in any Borrowing Request, each requested borrowing shall comply
with the requirements set forth in Section 2.02.  If no Interest Period with respect to any
Eurodollar Loan is specified in any such notice, then the Borrower shall be
deemed to have selected an Interest Period of one month’s duration.  The Administrative Agent shall promptly
advise the applicable Lenders of any notice given pursuant to this Section
2.03 (and the contents thereof), and of each Lender’s portion of the
request borrowing.

SECTION
2.04.           Evidence of Debt; Repayment of
Loans.  (a)  The Borrower hereby unconditionally promises
to pay to each Lender the principal amount of each Loan of such Lender on the
Maturity Date.

(b)   Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing the indebtedness of
the Borrower to such Lender resulting from each Loan made by such Lender from
time to time, including the amounts of principal and interest payable and paid
to such Lender from time to time under this Agreement.

(c)   The Administrative Agent
shall maintain accounts in which it will record (i) the amount of each
Loan made hereunder, the type thereof and, if applicable, the Interest Period
applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) the amount of any sum received by the Administrative Agent
hereunder from the Borrower or any Guarantor and each Lender’s share thereof.

(d)   The entries made in the
account maintained pursuant to paragraph (b) and (c) above
shall be prima facie evidence of
the existence and amounts of the obligations therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain such 

 23
 

 

accounts or
any error therein shall not in any manner affect the obligations of the
Borrower to repay the Loans in accordance with the terms of this Agreement.

(e)   Any Lender may request that
Loans made by it hereunder be evidenced by a promissory note.  In such event, the Borrower shall execute and
deliver to such Lender a promissory note payable to such Lender and its
permitted registered assigns in form and substance reasonably acceptable to the
Administrative Agent.  Notwithstanding
any other provision of this Agreement, in the event any Lender shall request
and receive such a promissory note, the interests represented by such note
shall at all times (including after any assignment of all or part of such
interests pursuant to Section 10.04) be represented by one or more
promissory notes payable to the payee named therein or its registered assigns.

SECTION 2.05. 
         Fees.  (a) 
The Borrower agrees to pay the fees set forth below at the times and in
the amounts specified herein (the “Fees”).

(i)  the Fees payable to Royal Bank of Canada (“RBC”), Avista Capital
Partners, L.P. and Avista Capital Partners (Offshore), L.P. (“Avista”), for their own
accounts, in the amounts and at the times separately agreed upon between the
Borrower, Avista and RBC; and

(ii)  on the Closing Date, a funding fee of
$1,000,000 payable to the Lenders,  on a pro rata basis.

(b)   The Fees shall be paid, in
immediately available funds, to the Lenders. 
Once paid, none of the Fees shall be refundable under any circumstances;
provided, however, that in the event the
Borrower shall repay in full the Loans on or before the three-month anniversary
of the Closing Date, each of the Lenders shall refund to the Borrower fifty
percent (50%) of its pro rata portion of the funding fee received by it on the
Closing Date.

SECTION 2.06. 
         Interest on Loans.  (a)  
Subject to the provisions of Section 2.07, the ABR Loans
shall bear interest (computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as the case may be, when the Alternate
Base Rate is determined by reference to the Base Rate and over a year of
360 days at all other times and calculated from and including the date of
such Borrowing to but excluding the date of repayment thereof) at a rate per
annum equal to the Alternate Base Rate plus the Applicable Percentage.

(b)   Subject to the provisions
of Section 2.07, the Eurodollar Loans shall bear interest (computed
on the basis of the actual number of days elapsed over a year of 360 days) at a
rate per annum equal to the Adjusted LIBO Rate for the Interest Period in
effect for such Loan plus the Applicable Percentage.

(c)   Interest on each Loan shall
be payable on the Interest Payment Dates applicable to such Loan except as
otherwise provided in this Agreement. The Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be
determined by the Administrative Agent, and such determination shall be
conclusive absent manifest error.

SECTION 2.07. 
         Default Interest.  Upon the occurrence and during the
continuance of an Event of Default, then, until such defaulted amount shall
have been paid in full, to the 

 24
 

 

extent permitted by law, such overdue amount shall bear interest (including
post-petition interest in any proceeding under any bankruptcy or insolvency
laws), payable on demand, (a) in the case of principal of a Loan, at the
rate otherwise applicable to such Loan pursuant to Section 2.06
plus the Applicable Percentage plus 2.00% per annum and (b) in all other cases,
at a rate per annum (computed on the basis of the actual number of days elapsed
over a year of 365 or 366 days, as the case may be, when determined by
reference to the Base Rate and over a year of 360 days at all other times)
equal to the rate that would be applicable to an ABR Loan plus the Applicable
Percentage plus 2.00% per annum.

SECTION 2.08. 
         Alternate Rate of Interest.  In the event, and on each occasion, that on
the day two Business Days prior to the commencement of any Interest Period for
a Eurodollar Loan the Administrative Agent shall have reasonably determined
that dollar deposits in the principal amounts of the Loans comprising such Loan
are not generally available in the London interbank market, or that the rates
at which dollar deposits are being offered in the London interbank market will
not adequately and fairly reflect the cost to any participating Lender of
making or maintaining its Eurodollar Loan during such Interest Period, or that
reasonable means do not exist for ascertaining the Adjusted LIBO Rate for such
Interest Period, the Administrative Agent shall, as soon as practicable
thereafter, give written or fax notice of such determination to the Borrower.
In the event of any such determination, until the Administrative Agent shall
have advised the Borrower that the circumstances giving rise to such notice no
longer exist, any request by the Borrower for a Eurodollar Loan pursuant to Section 2.03
or 2.10 shall be deemed to be a request for an ABR Loan.  Each determination by the Administrative
Agent under this Section 2.08 shall be conclusive absent manifest
error.

SECTION 2.09. 
         Repayment.  The principal amount of the Loans shall be
due and payable on the Maturity Date, together with accrued and unpaid
interest, unless accelerated sooner pursuant to Article VII.

SECTION 2.10. 
         Conversion and Continuation of
Borrowings.  The Borrower
shall have the right at any time upon prior written or fax notice (or telephone
notice promptly confirmed by written or fax notice) to the Administrative Agent
(a) not later than 11:00 a.m., New York City time, one Business Day
prior to conversion, to convert any Eurodollar Loan into an ABR Loan,
(b) not later than 11:00 a.m., New York City time, three Business Days
prior to conversion or continuation, to convert any ABR Loan into a Eurodollar
Loan or to continue any Eurodollar Loan as a Eurodollar Loan for an additional
Interest Period, and (c) not later than 11:00 a.m., New York City time,
three Business Days prior to conversion, to convert the Interest Period with
respect to any Eurodollar Loan to another permissible Interest Period, subject
in each case to the following:

(i)  each conversion or continuation shall be made
pro rata among the Lenders in accordance with the respective principal amounts
of the Loans comprising the converted or continued Loan;

(ii)  if less than all the outstanding principal
amount of any Loan shall be converted or continued, then each resulting Loan
shall satisfy the limitations specified in Section 2.02(b)
regarding the maximum number of Borrowings of the relevant Type;

 25
 

 

(iii)  each conversion shall be effected by each
Lender and the Administrative Agent by recording for the account of such Lender
the new Loan of such Lender resulting from such conversion and reducing the
Loan (or portion thereof) of such Lender being converted by an equivalent
principal amount; accrued interest on any Eurodollar Loan (or portion thereof)
being converted shall be paid by the Borrower at the time of conversion;

(iv)  if any Eurodollar Loan is converted at a time
other than the end of the Interest Period applicable thereto, the Borrower
shall pay, upon demand, any amounts due to the Lenders pursuant to Section 2.16;

(v)  any Loan maturing or required to be repaid in
less than one month may not be converted into or continued as a Eurodollar
Loan;

(vi)  any Eurodollar Loan that cannot be converted
into or continued as a Eurodollar Loan by reason of the immediately preceding
clause shall be automatically converted at the end of the Interest Period in
effect for such Loan into an ABR Loan; and

(vii)  after the occurrence and during the
continuance of a Default or Event of Default, no outstanding Loan may be
converted into, or continued as, a Eurodollar Loan.

Each notice pursuant to this Section 2.10 shall be
irrevocable and shall refer to this Agreement and specify (i) the identity
and amount of the Borrowing that the Borrower requests be converted or
continued, (ii) whether such Borrowing is to be converted to or continued
as a Eurodollar Loan or an ABR Loan, (iii) if such notice requests a
conversion, the date of such conversion (which shall be a Business Day) and
(iv) if such Borrowing is to be converted to or continued as a Eurodollar
Loan, the Interest Period with respect thereto. If no Interest Period is
specified in any such notice with respect to any conversion to or continuation
as a Eurodollar Loan, the Borrower shall be deemed to have selected an Interest
Period of one month’s duration. The Administrative Agent shall advise the
Lenders of any notice given pursuant to this Section 2.10 and of
each Lender’s portion of any converted or continued Loan. If the Borrower shall
not have given notice in accordance with this Section 2.10 to
continue any Borrowing into a subsequent Interest Period (and shall not
otherwise have given notice in accordance with this Section 2.10 to
convert such borrowing), such borrowing shall, at the end of the Interest
Period applicable thereto (unless repaid pursuant to the terms hereof),
automatically be continued into a Eurodollar Loan with an Interest Period of
one month’s duration.

SECTION 2.11. 
         Termination of Commitments.  The Commitments shall automatically terminate
upon the making of the Loans on the Closing Date.  Notwithstanding the foregoing, the
Commitments shall automatically terminate at 5:00 p.m., New York City
time, on September 8, 2006, if the funding of the Loans shall not have
been made by such time.

SECTION 2.12. 
         Optional Prepayment.  (a) 
The Borrower shall have the right at any time and from time to time to
prepay any Loan, in whole or in part, upon at least five Business Days’ prior
written or fax notice (or telephone notice promptly confirmed by written or fax
notice) in the case of Eurodollar Loans, or prior written or fax notice (or
telephone notice promptly confirmed by written or fax notice) at least one
Business Day prior to the date of prepayment in the case of ABR Loans, to the
Administrative Agent before 11:00 a.m., New York 

 26
 

 

City time; provided,  that each partial prepayment shall be in
an amount that is an integral multiple of $1,000,000 and not less than
$1,000,000.

(b)   Each notice of prepayment
shall specify the prepayment date and the principal amount of each Loan (or
portion thereof) to be prepaid, shall be irrevocable and shall commit the
Borrower to prepay such Loan by the amount stated therein on the date stated
therein; provided, that any such notice delivered
by the Borrower may state that such notice is conditioned upon the
effectiveness of other financing arrangements, in which case, such notice may
be revoked by the Borrower (by notice to the Administrative Agent on or prior
to the specified effective date) if such condition is not satisfied..  All prepayments under this Section 2.12
shall be subject to Section 2.16 but otherwise without premium or
penalty.  All prepayments under this Section 2.12
shall be accompanied by accrued and unpaid interest on the principal amount to
be prepaid to but excluding the date of payment.

SECTION 2.13.           Mandatory Prepayments.  (a)  
The Borrower shall, on the 125th day following the end of each Fiscal
Year, without duplication, prepay an aggregate principal amount of the Loans in
an amount equal to 75% of Excess Cash Flow for such Fiscal Year.  For purposes of determining Excess Cash Flow
for the fiscal year ending December 31, 2006, Excess Cash Flow shall be
determined on a pro-rated basis for the period commencing on the Closing Date
through December 31, 2006, as determined by the Borrower in a manner reasonably
satisfactory to the Administrative Agent; provided
that the Borrower shall not be required to make any portion of such
prepayment to the extent such portion is required to be applied to prepay loans
and/or cash collateralize obligations under the Existing Credit Agreement.

(b)   No later than the fifth
Business Day following the receipt by the Parent or any of its Subsidiaries of
Net Cash Proceeds in respect of (i) any Asset Sale or (ii) a Casualty Event,
the Borrower shall apply an amount equal to 100% of the Net Cash Proceeds
received by the Parent or any of its Subsidiaries with respect thereto to
prepay outstanding Loans in accordance with Section 2.13(d).

(c)   In the event that the
Parent or any of its Subsidiaries shall receive Net Cash Proceeds from (i) the
issuance or sale of Equity Interests (other than issuances of (A) the
Series B Preferred Stock or (B) common Equity Interests of the Parent
upon conversion of the Series B Preferred Stock) or (ii) the issuance or
incurrence of Indebtedness, the Borrower shall, simultaneously with the receipt
of such Net Cash Proceeds, apply an amount equal to 100% of such Net Cash
Proceeds to prepay outstanding Loans in accordance with Section 2.13(d).

(d)   All mandatory prepayments
of outstanding Loans under this Agreement shall be allocated ratably among the
Lenders.  All prepayments under this Section
2.13 shall be subject to Section 2.19.

(e)   The Borrower shall deliver
to the Administrative Agent, at or prior to the time of each prepayment
required under this Section 2.13, (i) a certificate signed by
a Financial Officer of the Borrower setting forth in reasonable detail the
calculation of the amount of such prepayment and (ii) to the extent
practicable, at least five Business Days prior written notice of such
prepayment. Each notice of prepayment shall specify the prepayment date and the
principal amount of each Loan (or portion thereof) to be prepaid.  All prepayments of Loans under this 

 27
 

 

Section 2.13
shall be subject to Section 2.16, but shall otherwise be without
premium or penalty, and shall be accompanied by accrued and unpaid interest on
the principal amount to be prepaid to but excluding the date of payment.

SECTION 2.14. 
         Reserve Requirements; Change in
Circumstances.  (a)  Notwithstanding any other provision of this
Agreement, if any Change in Law shall impose, modify or deem applicable any
reserve, special deposit or similar requirement against assets of, deposits
with or for the account of or credit extended by any Lender (except any such reserve
requirement which is reflected in the Adjusted LIBO Rate) or shall impose on
such Lender or the London interbank market any other condition affecting this
Agreement or Eurodollar Loans made by such Lender, and the result of any of the
foregoing shall be to increase the cost to such Lender of making or maintaining
any Eurodollar Loan or to reduce the amount of any sum received or receivable
by such Lender hereunder (whether of principal, interest or otherwise) by an
amount deemed by such Lender to be material, then the Borrower will pay to such
Lender upon demand such additional amount or amounts as will compensate such
Lender for such additional costs incurred or reduction suffered.

(b)   If any Lender shall have
determined that any Change in Law regarding capital adequacy has or would have
the effect of reducing the rate of return on such Lender’s capital or on the
capital of such Lender’s holding company, if any, as a consequence of this
Agreement or the Loans made to a level below that which such Lender or such
Lender’s holding company could have achieved but for such Change in Law (taking
into consideration such Lender’s policies and the policies of such Lender’s
holding company with respect to capital adequacy) by an amount deemed by such
Lender to be material, then from time to time the Borrower shall pay to such
Lender such additional amount or amounts as will compensate such Lender or such
Lender’s holding company for any such reduction suffered.

(c)   A certificate of a Lender
setting forth the amount or amounts necessary to compensate such Lender or its
holding company, as applicable, as specified in paragraph (a) or (b)
above shall be delivered to the Borrower, shall describe the applicable Change
in Law, the resulting costs incurred or reduction suffered and shall be
conclusive absent manifest error. The Borrower shall pay such Lender the amount
shown as due on any such certificate delivered by it within 10 Business Days
after its receipt of the same.

(d)   Failure or delay on the
part of any Lender to demand compensation for any increased costs or reduction
in amounts received or receivable or reduction in return on capital shall not
constitute a waiver of such Lender’s right to demand such compensation; provided, that the Borrower shall not be under any
obligation to compensate any Lender under paragraph (a) or (b)
above with respect to increased costs or reductions with respect to any period
prior to the date that is 120 days prior to such request; provided, further, that
the foregoing limitation shall not apply to any increased costs or reductions
arising out of the retroactive application of any Change in Law within such
120-day period.  The protection of this
Section shall be available to each Lender regardless of any possible contention
of the invalidity or inapplicability of the Change in Law that shall have
occurred or been imposed.

SECTION 2.15. 
         Change in Legality.  (a) 
Notwithstanding any other provision of this Agreement, if any
Change in Law shall make it unlawful for any Lender to make or maintain 

 28
 

 

any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written
notice to the Borrower and the Administrative Agent:

(i)  such Lender may declare that Eurodollar Loans
will not thereafter (for the duration of such unlawfulness) be made by such
Lender hereunder (or be continued for additional Interest Periods) and ABR
Loans will not thereafter (for such duration) be converted into Eurodollar
Loans, whereupon any request for a Eurodollar Loan (or to convert an ABR Loan
to a Eurodollar Loan or to continue a Eurodollar Loan for an additional
Interest Period) shall, as to such Lender only, be deemed a request for an ABR
Loan (or a request to continue an ABR Loan as such for an additional Interest
Period or to convert a Eurodollar Loan into an ABR Loan, as the case may be),
unless such declaration shall be subsequently withdrawn; and

(ii)  such Lender may require that all outstanding
Eurodollar Loans made by it be converted to ABR Loans, in which event all such
Eurodollar Loans shall be automatically converted to ABR Loans as of the
effective date of such notice as provided in paragraph (b) below.

In the event any Lender shall exercise its rights
under clause (i) or (ii) above, all payments and prepayments of
principal that would otherwise have been applied to repay the Eurodollar Loans
that would have been made by such Lender or the converted Eurodollar Loans of
such Lender shall instead be applied to repay the ABR Loans made by such Lender
in lieu of, or resulting from the conversion of, such Eurodollar Loans.

(b)   For purposes of this Section 2.15,
a notice to the Borrower by any Lender shall be effective as to each Eurodollar
Loan made by such Lender, if lawful, on the last day of the Interest Period
then applicable to such Eurodollar Loan; in all other cases such notice shall
be effective on the date of receipt by the Borrower.

SECTION 2.16. 
         Indemnity.  The Borrower shall indemnify each Lender
against any loss or expense that such Lender may sustain or incur as a
consequence of (a) any event, other than a default by such Lender in the
performance of its obligations hereunder, which results in (i) such Lender
receiving or being deemed to receive any amount on account of the principal of
any Eurodollar Loan prior to the end of the Interest Period in effect therefor,
(ii) the conversion of any Eurodollar Loan to an ABR Loan, or the
conversion of the Interest Period with respect to any Eurodollar Loan, in each
case other than on the last day of the Interest Period in effect therefor, or
(iii) any Eurodollar Loan to be made by such Lender not being made after
notice of such Loan shall have been given by the Borrower hereunder (any of the
events referred to in this clause (a) being called a “Breakage Event”) or
(b) any default in the making of any payment or prepayment required to be
made hereunder.  In the case of any
Breakage Event, such loss shall include an amount equal to the excess, as
reasonably determined by such Lender, of (i) its cost of obtaining funds
for the Eurodollar Loan that is the subject of such Breakage Event for the
period from the date of such Breakage Event to the last day of the Interest
Period in effect (or that would have been in effect) for such Loan over (ii) the
amount of interest likely to be realized by such Lender in redeploying the
funds released or not utilized by reason of such Breakage Event for such
period. A certificate of any Lender setting forth any amount or amounts 

 29
 

 

which such Lender is entitled to receive pursuant to this Section 2.16
shall be delivered to the Borrower and shall be conclusive absent manifest
error.

SECTION 2.17. 
         Pro Rata Treatment.  Except as required under Section 2.13,
2.14, 2.20 or 2.21, each Loan, each payment or prepayment
of principal of any Loan, each payment of interest on the Loans, each reduction
of the Commitments and each conversion of any Loan to or continuation of any
Loan shall be allocated pro rata among the Lenders in accordance with their
respective applicable Commitments (or, if such Commitments shall have expired
or been terminated, in accordance with the respective principal amounts of
their outstanding Loans).  Each Lender
agrees that in computing such Lender’s portion of any Loan to be made
hereunder, the Administrative Agent may, in its discretion, round each Lender’s
percentage of such Loan to the next highest or lower whole dollar amount.

SECTION 2.18. 
         Sharing of Setoffs.  Each Lender agrees that if it shall, through
the exercise of a right of banker’s lien, setoff or counterclaim against the
Borrower or any other Loan Party, or pursuant to a secured claim under
Section 506 of Title 11 of the United States Code or other security
or interest arising from, or in lieu of, such secured claim, received by such
Lender under any applicable bankruptcy, insolvency or other similar law or
otherwise, or by any other means, obtain payment (voluntary or involuntary) in
respect of any Loan as a result of which the unpaid principal portion of its
Loans shall be proportionately less than the unpaid principal portion of the
Loans of any other Lender, it shall be deemed simultaneously to have purchased
from such other Lender at face value, and shall promptly pay to such other
Lender the purchase price for, a participation in the Loans of such other
Lender, so that the aggregate unpaid principal amount of the Loans held by each
Lender shall be in the same proportion to the aggregate unpaid principal amount
of all Loans then outstanding as the principal amount of its Loans prior to
such exercise of banker’s lien, setoff or counterclaim or other event was to
the principal amount of all Loans outstanding prior to such exercise of banker’s
lien, setoff or counterclaim or other event; provided,
however, that if any such
purchase or purchases or adjustments shall be made pursuant to this Section 2.18
and the payment giving rise thereto shall thereafter be recovered, such
purchase or purchases or adjustments shall be rescinded to the extent of such
recovery and the purchase price or prices or adjustment restored without
interest.  The Borrower expressly
consents to the foregoing arrangements and agrees that any Lender holding a
participation in a Loan deemed to have been so purchased may exercise any and
all rights of banker’s lien, setoff or counterclaim with respect to any and all
moneys owing by the Borrower to such Lender by reason thereof as fully as if
such Lender had made a Loan directly to the Borrower in the amount of such
participation.

SECTION 2.19.           Payments.  (a) 
The Borrower shall make each payment (including principal of or interest
on any Loan or any Fees or other amounts) hereunder and under any other Loan
Document not later than 11:00 a.m., New York City time, on the date when
due in immediately available dollars, without setoff, defense or
counterclaim.  Each such payment shall be
made to the ratable account of the Lenders at the address for payment specified
in the signature page hereto (or such other address as the Lenders may from
time to time specify in accordance with Section 10.01).  All payments hereunder and under the other
Loan Documents shall be made in dollars. 
The Administrative Agent shall distribute any such payments received by
it for the account of any other person to the appropriate recipient promptly
following receipt thereof.

 30

 

(b)   Except as otherwise
expressly provided herein, whenever any payment (including principal of or
interest on any Loan or any Fees or other amounts) hereunder or under any other
Loan Document shall become due, or otherwise would occur, on a day that is not
a Business Day, such payment may be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
interest or Fees, if applicable.

SECTION 2.20. 
         Taxes.  (a) 
Any and all payments by or on account of any obligation of the Borrower
or any other Loan Party hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided, that if any
Indemnified Taxes or Other Taxes are required to be withheld or deducted from
such payments, then (i) the sum payable shall be increased as necessary so
that after making all required deductions or withholdings (including deductions
or withholdings applicable to additional sums payable under this Section) the
Administrative Agent or the Lender (as the case may be) receives an amount
equal to the sum it would have received had no such deductions or withholdings
been made, (ii) the Borrower or such Loan Party shall make such deductions
or withholdings and (iii) the Borrower or such Loan Party shall pay the
full amount deducted or withheld to the relevant Governmental Authority in
accordance with applicable law.

(b)   In addition, the Borrower
shall pay any Other Taxes to the relevant Governmental Authority in accordance
with applicable law.

(c)   The Borrower shall
indemnify the Administrative Agent and each Lender within 30 days after
written demand therefor, for the full amount of any Indemnified Taxes or Other
Taxes paid by the Administrative Agent or such Lender, as the case may be, on
or with respect to any payment by or on account of any obligation of the
Borrower or any other Loan Party hereunder or under any other Loan Document
(including Indemnified Taxes or Other Taxes imposed or asserted on or
attributable to amounts payable under this Section) and any penalties, interest
and reasonable expenses arising therefrom or with respect thereto, whether or
not such Indemnified Taxes or Other Taxes were correctly or legally imposed or
asserted by the relevant Governmental Authority. A certificate as to the amount
of such payment or liability delivered to the Borrower by a Lender or by the
Administrative Agent on behalf of itself or a Lender shall be conclusive absent
manifest error.

(d)   As soon as practicable
after any payment of Indemnified Taxes or Other Taxes by the Borrower or any
other Loan Party to a Governmental Authority, the Borrower shall deliver to the
Administrative Agent the original or a certified copy of a receipt issued by such
Governmental Authority evidencing such payment, a copy of the return reporting
such payment or other evidence of such payment reasonably satisfactory to the
Administrative Agent.

(e)   Any Foreign Lender that is
entitled to an exemption from or reduction of withholding tax under the law of
the jurisdiction in which the Borrower is located, or any treaty to which such
jurisdiction is a party, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), on or prior
to the date a payment is to be made to such Lender under this Agreement or
promptly upon learning that any such documentation expired or became obsolete,
at the reasonable request of the Borrower, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a 

 31
 

 

reduced rate
of withholding; provided, that such Lender is
legally entitled to complete, execute and deliver such documentation. Such
completion, execution or delivery will not be required if, in such Lender’s
judgment, it would materially prejudice the legal position of such Lender.  In addition, each Foreign Lender shall (a)
furnish on or before the date it becomes a party to the Agreement either (i)
two accurate and complete originally executed copies of U.S. Internal Revenue
Service (“IRS”) Form
W-8BEN (or successor form) or (ii) two accurate and complete originally
executed copies of IRS Form W-8ECI (or successor form), certifying, in either
case, to such Foreign Lender’s legal entitlement to an exemption or reduction
from U.S. federal withholding tax with respect to all interest payments
hereunder, and (b) provide a new Form W-8BEN (or successor form) or Form W-8ECI
(or successor form) upon the expiration or obsolescence of any previously
delivered form to reconfirm any complete exemption from, or any entitlement to
a reduction in, U.S. federal withholding tax with respect to any interest
payment hereunder; provided, that
any Foreign Lender that is not a “bank” within the meaning of
Section 881(c)(3)(A) of the Code and is relying on the so-called “portfolio
interest exemption” shall also furnish a “Non-Bank Certificate” in the form of Exhibit C
together with a Form W-8BEN. 
Notwithstanding any other provision of this paragraph, a Foreign Lender
shall not be required to deliver any form pursuant to this paragraph that such
Foreign Lender is not legally able to deliver.

(f)   Any Lender that is a United
States person, as defined in Section 7701(a)(30) of the Code, and is not
an exempt recipient within the meaning of Treasury Regulations
Section 1.6049-4(c) shall deliver to the Borrower (with a copy to the
Administrative Agent) two accurate and complete original signed copies of IRS
Form W-9, or any successor form that such person is entitled to provide at such
time in order to comply with United States back-up withholding requirements.

(g)   Any Foreign Lender, to the
extent it does not act or ceases to act for its own account with respect to any
portion of any sums paid or payable to such Foreign Lender under any of
the  Loan Documents (for example, in the
case of a grant of a participation by such Foreign Lender), shall deliver to
the Administrative Agent on the date when such Foreign Lender ceases to act for
its own account with respect to any portion of any such sums paid or payable,
and at such other times as may be necessary in the determination of the
Administrative Agent (in its reasonable discretion), (A) two duly signed
completed copies of the forms or statements required to be provided by such
Foreign Lender as set forth above in Section 2.20(e), to establish the portion
of any such sums paid or payable with respect to which such Foreign Lender acts
for its own account that is not subject to U.S. withholding tax, and (B) two
duly signed completed copies of IRS Form W-81MY (or any successor thereto),
together with any information such Foreign Lender chooses to transmit with such
form, and any other certificate or statement of exemption required under the
Code, to establish that such Foreign Lender is not acting for its own account
with respect to a portion of any such sums payable to such Lender.

(h)   If the Administrative Agent
or a Lender determines, in its sole discretion, that it has received a refund
of any Indemnified Taxes or Other Taxes as to which it has been indemnified by
the Borrower or with respect to which the Borrower has paid additional amounts
pursuant to this Section, it shall pay to the Borrower an amount equal to such
refund (but only to the extent of indemnity payments made, or additional
amounts paid, by the Borrower under this Section with respect to the
Indemnified Taxes or Other Taxes giving rise to such refund), net of all 

 32
 

 

out-of-pocket
expenses of the Administrative Agent or such Lender, as the case may be, and
without interest (other than any interest paid by the relevant Governmental
Authority with respect to such refund), provided,
that the Borrower, upon the request of the Administrative Agent or
such Lender, agrees to repay the amount paid over to the Borrower (plus any
penalties, interest or other charges imposed by the relevant Governmental
Authority) to the Administrative Agent or such Lender in the event the
Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. This paragraph shall not be construed to require the
Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its taxes that it deems confidential) to the
Borrower or any other person.

(i)   Failure or delay on the
part of any Lender to demand compensation for any Indemnified Taxes or Other
Taxes shall not constitute a waiver of such Lender’s right to demand such
compensation; provided, that the Borrower shall
not be under any obligation to compensate any Lender under paragraph (a),
(b) or (c) above with respect to Indemnified Taxes or Other Taxes
with respect to any period prior to the date that is 120 days prior to
such request; provided, further,
that the foregoing limitation shall not apply to any increased costs or
reductions arising out of the retroactive application of any Indemnified Taxes
or Other Taxes within such 120-day period. 
The protection of this Section shall be available to each Lender
regardless of any possible contention of the invalidity or inapplicability of
the Indemnified Taxes or Other Taxes that shall have occurred or been imposed.

SECTION 2.21. 
         Assignment of Commitments Under
Certain Circumstances; Duty to Mitigate.  (a)  In
the event (i) any Lender delivers a certificate requesting compensation
pursuant to Section 2.14, (ii) any Lender delivers a notice
described in Section 2.15 or (iii) the Borrower is required to
pay any additional amount to any Lender or any Governmental Authority on
account of any Lender pursuant to Section 2.20, the Borrower may,
upon notice to such Lender and the Administrative Agent, require such Lender to
transfer and assign (in accordance with and subject to the restrictions
contained in Section 10.04, other than 10.04(b)(ii)(B)), all of its
interests, rights and obligations under this Agreement to an assignee that
shall assume such assigned obligations (which assignee may be another Lender,
if a Lender accepts such assignment); provided,
that (x) the Borrower shall have received the prior written
consent of the Administrative Agent with regard to the identity of the
assignee, which consent shall not unreasonably be withheld or delayed, and
(y) such assignee (or the Borrower, in the case of amounts then due and
payable by it) shall have paid to the affected Lender in immediately available
funds an amount equal to the sum of the principal of and interest accrued to
the date of such payment on the outstanding Loans of such Lender plus all Fees
and other amounts accrued for the account of such Lender hereunder with respect
thereto (including any amounts under Sections 2.14 and 2.16);
provided, further, that if prior to receipt of
notice of any such transfer and assignment the circumstances or event that
resulted in such Lender’s claim for compensation under Section 2.14,
notice under Section 2.15 or the amounts paid pursuant to Section 2.20,
as the case may be, cease to cause such Lender to suffer increased costs or
reductions in amounts received or receivable or reduction in return on capital,
or cease to have the consequences specified in Section 2.15, or
cease to result in amounts being payable under Section 2.20, as the
case may be (including as a result of any action taken by such Lender pursuant
to paragraph (b) below), or if such Lender shall waive its right to
claim further compensation under Section 2.14 in respect of such
circumstances or event or shall withdraw its notice under Section 2.15
or shall waive its right to further payments under Section 2.20 in
respect of such circumstances or event 

 33
 

 

or shall consent to the proposed amendment, waiver, consent or other
modification, as the case may be, then such Lender shall not thereafter be
required to make any such transfer and assignment hereunder.  Each Lender hereby grants to the
Administrative Agent an irrevocable power of attorney (which power is coupled
with an interest) to execute and deliver, on behalf of such Lender as assignor,
any Assignment and Acceptance necessary to effectuate any assignment of such
Lender’s interests hereunder in respect of the circumstances contemplated by
this Section 2.21(a).

(b)   If (i) any Lender
shall request compensation under Section 2.14, (ii) any Lender
delivers a notice described in Section 2.15 or (iii) the
Borrower is required to pay any additional amount to any Lender or any
Governmental Authority on account of any Lender, pursuant to Section 2.20,
then such Lender shall use reasonable efforts (which shall not require such
Lender to incur an unreimbursed loss or unreimbursed cost or expense or
otherwise take any action inconsistent with its internal policies or legal or
regulatory restrictions or suffer any disadvantage or burden deemed by it to be
significant) (x) to file any certificate or document reasonably requested
by the Borrower or (y) to assign its rights and delegate and transfer its
obligations hereunder to another of its offices, branches or affiliates, if
such filing or assignment would reduce its claims for compensation under Section 2.14
or enable it to withdraw its notice pursuant to Section 2.15 or
would reduce amounts payable pursuant to Section 2.20, as the case
may be, in the future. The Borrower hereby agrees to pay all reasonable
out-of-pocket costs and expenses incurred by any Lender in connection with any
such filing or assignment, delegation and transfer.

ARTICLE III

Representations and Warranties

Each Loan Party represents and warrants (it being
understood that for purposes of the representations and warranties made in the
Loan Documents on the Closing Date, such representations and warranties shall
be construed as though the Transactions have been consummated) to the
Administrative Agent and each of the Lenders that:

SECTION 3.01. 
         Organization; Powers.  The Parent, the Borrower and each of its
Subsidiaries (a) is duly organized or formed, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has
all requisite power and authority to own its property and assets and to carry
on its business as now conducted and as proposed to be conducted, (c) is
qualified to do business in, and is in good standing in, every jurisdiction
where its ownership, lease or operation of properties or the conduct of its
business requires such qualification, except where the failure to so qualify or
be in good standing, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, and (d) has the requisite
power and authority to execute, deliver and perform its obligations under each
of the Loan Documents and each other agreement or instrument contemplated
thereby to which it is a party.

SECTION 3.02. 
         Authorization.  The Transactions to be entered into by each
Loan Party are within such Loan Party’s powers and have been duly authorized by
all necessary action on the party of such Loan Party.  The execution, delivery and performance of
the Loan Documents, including borrowing of Loans and the use of the proceeds
therefrom, (a) have been 

 34
 

 

duly authorized by all requisite corporate or limited liability company
and, if required, stockholder or member action and (b) will not
(i) violate (A) any provision of any applicable law, statute, rule or
regulation, or of the certificate or articles of incorporation or other
constitutive documents or by-laws or operating agreement of any Loan Party,
(B) any applicable order of any Governmental Authority or (C) any
provision of any indenture, agreement or other instrument to which the Parent
or any of its Subsidiaries is a party or by which any of them or any of their
property is bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under, or
give rise to any right to accelerate or to require the prepayment, repurchase
or redemption of any obligation under any such indenture, agreement or other
instrument or (iii) result in the creation or imposition of any Lien upon
or with respect to any property or assets now owned or hereafter acquired by
the Parent, the Borrower or any Subsidiary.

SECTION 3.03. 
         Enforceability.  This Agreement has been duly executed and
delivered by each Loan Party and constitutes, and each other Loan Document when
executed and delivered by each Loan Party thereto will constitute, a legal,
valid and binding obligation of such Loan Party enforceable against such Loan
Party in accordance with its terms, except as may be limited by bankruptcy,
insolvency, fraudulent transfer, reorganization, receivership, moratorium or
similar laws of general applicability relating to or limiting creditors’ rights
generally or by general equity principles.

SECTION 3.04. 
         Governmental Approvals.  No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority
is necessary or will be required in connection with the Loan Documents, except
for such as have been made or obtained and are in full force and effect.

SECTION 3.05. 
         Financial Statements.  (a) 
The Borrower has heretofore furnished to the Administrative Agent and
each Lender the Parent’s consolidated balance sheets and related statements of
income, stockholders’ equity and cash flows (i) as of and for the fiscal
year ended December 31, 2005, audited by and accompanied by the report of
Fitts Roberts & Co., P.C., independent public accountants, and
(ii) as of and for the fiscal quarters ended March 31, 2006 and
June 30, 2006, and each fiscal month ended after June 30, 2006, and at
least 30 days before the Closing Date, each certified by its chief financial
officer.  Such financial statements
present fairly in all material respects the financial condition and results of
operations and cash flows of the Parent and its consolidated subsidiaries as of
such dates and for such periods.  Such
balance sheets and the notes thereto disclose all material liabilities, direct
or contingent, of the Parent and its consolidated subsidiaries as of the dates
thereof.  Such financial statements were
prepared in accordance with GAAP consistently applied throughout the period
covered thereby, except as otherwise noted therein and, subject, in the case of
unaudited financial statements, to year-end audit adjustments and the absence
of footnotes.

(b)   The Borrower has heretofore
delivered to the Administrative Agent and each Lender an unaudited pro forma
consolidated balance sheet and related pro forma statements of income,
stockholders’ equity and cash flows of the Parent as of and for the fiscal year
ended December 31, 2005, the fiscal quarter ended June 30, 2006 and the
twelve month period ended June 30, 2006, prepared giving effect to the
Transactions as if they had occurred, with respect to such balance sheet, on
such date and, with respect to such other financial statements, on the first
day 

 35
 

 

of the
four-fiscal quarter period ending on such date. Such pro forma financial
statements have been prepared in good faith by the Borrower, based on the
assumptions believed by the Borrower on the Closing Date to be reasonable, are
based in all material respects on the information reasonably available to the
Borrower as of the date of delivery thereof, reflect in all material respects
the adjustments required to be made to give effect to the Transactions and
present fairly in all material respects on a pro forma basis the estimated consolidated
financial position of the Borrower and its consolidated Subsidiaries as of such
date and for such period, assuming that the Transactions had actually occurred
at such date or at the beginning of such period, as the case may be.

SECTION 3.06. 
         No Material Adverse Change.  Since December 31, 2005, no event,
change or condition has occurred that (individually or in the aggregate) has
had, or could reasonably be expected to have, a Material Adverse Effect.

SECTION 3.07. 
         Title to Properties; Possession
Under Leases.  (a)  Each of the Parent and the Subsidiaries has
good and indefeasible title in fee simple to, or valid leasehold interests in,
all its material properties and assets (including, without limitation, all of
its intellectual property and licenses). 
Other than minor defects in title that do not materially interfere with
its ability to conduct its business or to utilize such assets for their
intended purposes, all such material properties and assets are free and clear
of Liens.

(b)   None of the Parent, the
Borrower or the Subsidiaries has knowledge of the continuance of any default
under any material lease to which it is a party and, to each of their
knowledge, all such leases are in full force and effect.

(c)   Neither the Parent nor the
Borrower has received any notice of, nor has any knowledge of, any pending or
contemplated condemnation proceeding affecting any material property or any
sale or disposition thereof in lieu of condemnation.

(d)   Immediately following the
consummation of the Transactions, none of the Parent, the Borrower or any of
the Subsidiaries is obligated under any right of first refusal, option or other
contractual right to sell, assign or otherwise dispose of any material property
or any interest therein.

SECTION 3.08. 
         Subsidiaries.  The Parent does not have any Subsidiaries
other than the Borrower and Subsidiaries of the Borrower.  Schedule 3.08 sets forth as of
the Closing Date a list of all Subsidiaries of the Parent and the percentage
ownership interest of the Parent therein. The shares of capital stock or other
ownership interests so indicated on Schedule 3.08 are fully paid
and non-assessable and are owned by the Parent, directly or indirectly, free
and clear of all Liens.

SECTION 3.09. 
         Litigation; Compliance with Laws.  (a) 
There are no actions, suits or proceedings at law or in equity or by or
before any Governmental Authority now pending or, to the knowledge of the
Parent or the Borrower, threatened against the Parent, the Borrower or any
Subsidiary or any business, property or rights of any such person (i) that
purport to affect or pertain to any Loan Document or the Transactions or
(ii) except as set forth on Schedule 3.09, as to which there
is a reasonable possibility of an adverse determination and that, if adversely 

 36
 

 

determined, could reasonably be expected, individually or in the
aggregate, to result in a Material Adverse Effect.

(b)   None of the Parent, the
Borrower or any of the Subsidiaries or any of their respective material
properties is in violation of, nor will the continued operation of their
material properties as currently operated violate, any applicable law, rule or
regulation (including any zoning, building, ordinance, code or approval or any
building permits) or any restrictions of record or agreements affecting the
properties, or is in default with respect to any judgment, writ, injunction,
decree or order of any Governmental Authority.

SECTION 3.10. 
         Agreements.  Other than as could not reasonably be
expected to result in a Material Adverse Effect, none of the Parent, the
Borrower or any of the Subsidiaries is in default under any indenture or other
agreement or instrument evidencing Indebtedness, or any other material
agreement or instrument to which it is a party or by which it or any of its
properties or assets are bound.

SECTION 3.11. 
         Federal Reserve Regulations.  (a) 
None of the Parent, the Borrower or any of the Subsidiaries is engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of buying or carrying Margin Stock.

(b)   No part of the proceeds of
any Loan will be used to purchase or carry any margin stock or to extend credit
to others for the purpose of purchasing or carrying any margin stock in
violation of Regulation U or Regulation X issued by the Board.

SECTION 3.12. 
         Investment Company Act.  None of the Parent, the Borrower or any
Subsidiary is an “investment company” as defined in, or subject to regulation
under, the Investment Company Act of 1940.

SECTION 3.13. 
         Tax Returns.  Each of the Parent, the Borrower and the
Subsidiaries has filed or caused to be filed all Federal, state and other tax
returns required to have been filed by it and has paid, caused to be paid, or
made provisions for the payment of all taxes due and payable by it and all
material assessments received by it, except such taxes and assessments that are
being contested in good faith by appropriate proceedings and for which the
Parent, the Borrower or such Subsidiary, as applicable, shall have set aside on
its books, in accordance with GAAP, adequate reserves.

SECTION 3.14. 
         No Material Misstatements.  The information, reports, financial
statements, exhibits, certificates and schedules (other than projections and
other forward looking information) furnished by or on behalf of the Parent or
the Borrower to the Administrative Agent or the Lenders in connection with the
transactions contemplated hereby or the negotiation of any Loan Document or
included therein or delivered pursuant thereto (taken as a whole) did not and
do not contain any material misstatement of fact or omit to state any material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that to the extent any such
information, report, financial statement, exhibit, certificate or schedule was
based upon or constitutes a forecast or projection, the Parent and the Borrower
represents only that such information was prepared in good faith on the basis
of reasonable assumptions in light of the conditions existing at the time of
delivery of such 

 37
 

 

projections, and represented, at the time of delivery thereof, a
reasonable good faith estimate of future financial performance by the Parent
and the Borrower.

SECTION 3.15. 
         Employee Benefit Plans.  Each of the Parent, the Borrower and their
ERISA Affiliates is in material compliance, with respect to each benefit plan
or arrangement, with the applicable provisions of ERISA and the Code and the
regulations and published interpretations thereunder. No ERISA Event has
occurred or is reasonably expected to occur that, when taken together with all
other such ERISA Events, could reasonably be expected to result in a Material
Adverse Effect. The present value of all benefit liabilities under each Plan
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the last annual valuation date
applicable thereto, exceed the fair market value of the assets of such Plan,
and the present value of all benefit liabilities of all underfunded Plans
(based on the assumptions used for purposes of Statement of Financial
Accounting Standards No. 87) did not, as of the last annual valuation
dates applicable thereto, exceed the fair market value of the assets of all
such underfunded Plans.

SECTION 3.16. 
         Environmental Matters.  (a)  Except
as would not reasonably be expected to result, individually or in the
aggregate, in the Parent, the Borrower, any Subsidiary or the Acquired Business
incurring material Environmental Liabilities:

(i)  the operations of the Parent, the Borrower,
any Subsidiary, and the Acquired Business have not failed to comply with
Environmental Laws, including by obtaining, maintaining and complying with all
permits, licenses or other approvals required under any Environmental Law;

(ii)  none of the Parent, the Borrower, any
Subsidiary, or the Acquired Business is a party to and no real property
currently or, to the knowledge of the Parent or the Borrower, previously owned,
leased, operated or otherwise occupied by the Borrower, any Subsidiary or the
Acquired Business is subject to or the subject of a contractual obligation or a
pending or, to the knowledge of the Parent or the Borrower, threatened claim,
suit, proceeding, demand, investigation, order, notice of violation or notice
of potential liability pursuant to any Environmental Law; and

(iii)  none of the Parent, the Borrower, any
Subsidiary, or the Acquired Business has caused or suffered to occur a release
of Hazardous Materials.

(b)   None of the Parent, the
Borrower, any Subsidiary, or the Acquired Business knows of any facts,
circumstances of conditions with respect to past or present operations of the
Parent, the Borrower, any Subsidiary, or the Acquired Business, including
receipt of any information request or notice of potential responsibility under
the Comprehensive Environmental Response, Compensation and Liability Act or
similar Environmental Laws, reasonably likely to result, individually or in the
aggregate, in the Parent, the Borrower, any Subsidiary or the Acquired Business
incurring material Environmental Liabilities.

SECTION 3.17. 
         Location of Real Property and Leased
Premises.  (a)  Schedule 3.17(a) lists completely
and correctly as of the Closing Date all real property 

 38
 

 

owned by the Parent, the Borrower and the Subsidiaries and the
addresses thereof.  The Parent, the
Borrower and the Subsidiaries own in fee all the real property set forth on
such schedule.

(b)   Schedule 3.17(b) lists completely and correctly as of the
Closing Date all real property leased by the Parent, the Borrower and the
Subsidiaries and the addresses thereof. Except as otherwise provided on Schedule 3.17(b),
the Parent, the Borrower and the Subsidiaries have valid leasehold interests in
all the real property set forth on such schedule.

SECTION 3.18. 
         Labor Matters.  As of the Closing Date, (a) there are no
strikes, lockouts or slowdowns against the Parent, the Borrower or any
Subsidiary pending or, to the knowledge of the Parent or the Borrower,
threatened, (b) the hours worked by and payments made to employees of the
Parent, the Borrower and the Subsidiaries have not been in violation of the
Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters, (c) all payments due from the
Parent, the Borrower or any Subsidiary, or for which any claim may be made
against the Parent, the Borrower or any Subsidiary, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the Parent, the Borrower or such
Subsidiary and (d) the consummation of the Transactions will not give rise
to any right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which the Parent, the Borrower or
any Subsidiary is bound.

SECTION 3.19. 
         Solvency.  On the Closing Date after giving effect to
the Transactions, the Loan Parties, taken as a whole, are Solvent.

ARTICLE IV

Conditions of Lending

The obligations of the Lenders to make Loans hereunder are subject to
the satisfaction of the following conditions on the Closing Date:

(a)   The Administrative Agent
shall have received a notice of such Loan as required by Section 2.03.

(b)   The representations and
warranties set forth in Article III and in each other Loan Document
shall be true and correct in all material respects on and as of the Closing
Date with the same effect as though made on and as of such date, except to the
extent such representations and warranties expressly relate to an earlier date,
in which case they shall be true and correct in all material respects as of
such earlier date.

(c)   At the time of and
immediately after the making of such Loans, no Default or Event of Default
shall have occurred and be continuing.

(d)   The Administrative Agent
shall have received, on behalf of itself and the Lenders, an opinion of
Chamberlain, Hrdlicka, White & Martin, counsel for the Loan Parties,
(A) dated the Closing Date, (B) addressed to the Administrative Agent
and the Lenders, and (C) in form and substance reasonably satisfactory to
the Administrative Agent and the Lenders.

 39
 

 

(e)   The Administrative Agent
shall have received (i) a copy of the certificate or articles of
incorporation or organization, including all amendments thereto, of each of the
Parent, the Borrower and the Domestic Subsidiaries, certified as of a recent
date by the Secretary of State of the state of its organization, and a
certificate as to the good standing of such Person as of a recent date, from
such Secretary of State; (ii) a certificate of the Secretary or Assistant
Secretary of each the Parent, the Borrower and the Domestic Subsidiaries dated
the Closing Date and certifying (A) that attached thereto is a true and
complete copy of the by-laws or operating (or limited liability company)
agreement of such Person as in effect on the Closing Date and at all times
since a date prior to the date of the resolutions described in clause (B)
below, (B) that attached thereto is a true and complete copy of
resolutions duly adopted by the Board of Directors (or equivalent body) of the
Parent, the Borrower and the Domestic Subsidiaries authorizing the execution,
delivery and performance of the Loan Documents to which such person is a party
and, in the case of the Borrower, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full force
and effect, (C) that the certificate or articles of incorporation or
organization of such Person have not been amended since the date of the last
amendment thereto shown on the certificate of good standing furnished pursuant
to clause (i) above, and (D) as to the incumbency and specimen
signature of each officer executing any Loan Document or any other document
delivered in connection herewith on behalf of such Person; and (iii) a
certificate of another officer as to the incumbency and specimen signature of
the Secretary or Assistant Secretary executing the certificate pursuant to clause (ii)
above.

(f)   The Administrative Agent
shall have received a certificate, dated the Closing Date and signed by a
Financial Officer of the Borrower, confirming compliance with the conditions
precedent set forth in paragraphs (b) and (c) of this Article IV.

(g)   The Administrative Agent
shall have received all Fees and other amounts due and payable on or prior to
the Closing Date, including reimbursement or payment of all out-of-pocket
expenses required to be reimbursed or paid by the Borrower hereunder or under
any other Loan Document.

(h)   The results of the Lenders’
legal, financial, tax and accounting due diligence relating to the Parent, its
Subsidiaries, the Acquired Business and the Transactions shall be satisfactory
to the Lenders.

(i)   The Administrative Agent
shall, have received the results of searches of the Uniform Commercial Code,
United States Patent and Trademark Office and United States Copyright Office,
tax, judgment, bankruptcy and pending lawsuit filings (or equivalent filings)
made with respect to the Parent, the Borrower and its Subsidiaries, together
with copies of the financing statements (or similar documents) disclosed by
such search, and accompanied by evidence satisfactory to the Lenders that the
Liens indicated in any such financing statement (or similar document) would be
permitted under Section 6.02 or have been or will be
contemporaneously released or terminated.

(j)   The Administrative Agent
shall have received evidence satisfactory to it that all insurance required to
be maintained by Section 5.02 is in full force and effect.

 40
 

 

(k)   The Acquisition shall be
consummated substantially simultaneously with the initial funding of Loans on
the Closing Date in accordance with and on the terms described in the Stock
Purchase Agreement, and no provision or condition of the Stock Purchase
Agreement  shall have been waived,
amended, supplemented or otherwise modified in a manner that is adverse in any
material respect to the interests of the Lenders without the prior written
consent of the Administrative Agent.  The
Administrative Agent and the Lenders shall have received copies of the Stock
Purchase Agreement and all certificates, opinions and other documents delivered
thereunder, certified by a Financial Officer as being complete and correct.

(l)   The Subordinated Loan
Agreement shall have been executed and delivered by the parties thereto, the
conditions thereunder shall be satisfied and the Borrower shall have received
gross cash proceeds of not less than $55,000,000 from the borrowing of loans
under the Subordinated Loan Agreement.

(m)   All amounts due or
outstanding with respect of the Existing Debt and the term loan facility under
the Existing Credit Agreement shall have been (or substantially simultaneously
with the initial funding of the Loans on the Closing Date shall be) paid in
full, all commitments (if any) in respect thereof terminated and all guarantees
(if any) thereof and security (if any) therefore discharged and released.  After giving effect to the Transactions, the
Parent and its Subsidiaries shall have outstanding no indebtedness or
Disqualified Stock other than (i) Indebtedness under the Loan Documents, (ii)
Indebtedness listed on Schedule 6.01, (iii) the Subordinated Debt and
(iv) the revolving credit facility under the Existing Credit Agreement.

(n)   The Administrative Agent
shall have been satisfied with the amendment to the Existing Credit Agreement
permitting the transactions contemplated hereunder and a copy of such amendment
shall be certified on behalf of the Parent and the Borrower by a Responsible
Officer.

(o)   The Administrative Agent
shall have received a certificate from the chief financial officer (or officer
with reasonably equivalent responsibilities) of the Parent and the Borrower
certifying that the Parent and its Subsidiaries, on a consolidated basis after
giving effect to the Transactions, are Solvent as of the Closing Date.

(p)   The Lenders shall have
received from the Loan Parties, to the extent requested, all documentation and
other information required by regulatory authorities under applicable “know
your customer” and anti-money laundering rules and regulations, including the
USA PATRIOT Act.

(q)   The Administrative Agent
and the Lenders shall have received audited consolidated balance sheets and related
statements of income, stockholders’ equity and cash flows (i) as of and
for the fiscal year ended December 31, 2005 and (ii) unaudited
consolidated balance sheets and related statements of income, stockholders’
equity and cash flows of the Parent as of and for the fiscal quarters ended
after March 31, 2006 and June 30, 2006, and each fiscal month ended
after June 30, 2006 and at least 30 days prior to the Closing Date, all
certified by one of the Parent’s Financial Officers as fairly presenting in all
material respects the financial condition and results of operations of the
Parent and its consolidated subsidiaries on a consolidated basis in 

 41
 

 

accordance
with GAAP consistently applied, subject, in the case of unaudited financial
statements, to normal year-end audit adjustments and the absence of footnotes.

(r)   The Administrative Agent
and the Lenders shall have received an unaudited pro forma consolidated balance
sheet and related pro forma consolidated statement of income, stockholders’
equity and cash flows of the Parent as of and for the fiscal year ended
December 31, 2005, the fiscal quarter ended June 30, 2006 and the
twelve month period ended June 30, 2006, prepared after giving effect to the
Transactions as if the Transactions had occurred, with respect to such balance
sheet, as of such date and, with respect to such other financial statements, at
the beginning of such period.

(s)   All material governmental
and third party approvals necessary in connection with the Transactions shall
have been obtained and be in full force and effect.

(t)   There shall not be any
pending or threatened litigation or other proceedings (private or governmental)
with respect to any of the Transactions.

ARTICLE V

Affirmative Covenants

Each Loan Party covenants and agrees with each Lender
that until the Commitments have been terminated and the principal of and
interest on each Loan, all Fees and all other expenses or amounts payable under
any Loan Document shall have been paid in full, each Loan Party will, and will cause
each of its Subsidiaries to:

SECTION 5.01. 
         Existence; Compliance with Laws and
Contractual Obligations; Businesses and Properties.  (a)  Do
or cause to be done all things necessary to preserve, renew and keep in full
force and effect its legal existence under the laws of its jurisdiction of
organization, except as otherwise expressly permitted under Section 6.05.

(b)   (i) Do or cause to be
done all things necessary to obtain, preserve, renew, extend and keep in full
force and effect the rights, licenses, permits, franchises, authorizations,
patents, copyrights, trademarks and trade names necessary or desirable to the
conduct of its business, (ii) maintain and operate such business in
substantially the manner in which it is presently conducted and operated,
(iii) comply with (A) applicable laws, rules, regulations and decrees
and orders of any Governmental Authority (including Environmental Laws and
ERISA), whether now in effect or hereafter enacted and (B) the
obligations, covenants and conditions contained in any material indenture,
agreement or other agreement and (iv)  maintain and preserve all property
necessary or desirable to the conduct of such business and keep such property
in good repair, working order and condition and from time to time make, or
cause to be made, all repairs, renewals, additions, improvements and
replacements thereto necessary or desirable to the conduct of its business.

(c)   comply with the obligations
contained in the Securities Purchase Agreement, dated as of September 8, 2006,
between the Parent and the purchasers party thereto, to consummate the sale and
purchase of the Series B Preferred Stock on the latter of (i) October 26, 2006
and (ii) the earlier of (x) the first date upon which Avista is no longer a
Lender hereunder (whether as a 

 42
 

 

result of
prepayment, assignment or otherwise) or (y) the second day following the day in
which Avista provides written notice to the Parent of its desire to consummate
such sale and purchase of the Series B Preferred Stock.

SECTION 5.02. 
         Insurance.  (a) 
Keep its insurable properties adequately insured at all times by
financially sound and reputable insurers to such extent and against such risks,
including fire and other risks insured against by extended coverage, as is
customary with companies in the same or similar businesses operating in the
same or similar locations.

(b)   Deliver original or
certified copies of all such policies to the Administrative Agent promptly upon
request therefor; deliver to the Administrative Agent, prior to the
cancellation, modification or nonrenewal of any such policy of insurance, a
copy of a renewal or replacement policy (or other evidence of renewal of a
policy previously delivered to the Administrative Agent) together with evidence
reasonably satisfactory to the Administrative Agent of payment of the premium
therefor.

SECTION 5.03. 
         Taxes.  Pay and discharge promptly when due all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits or in respect of its property, before the same shall
become delinquent or in default; provided,
however, that such payment and
discharge shall not be required with respect to any such tax, assessment,
charge or levy so long as the validity or amount thereof is (a)  being contested in good faith, (b)  by appropriate proceedings diligently
conducted and (c)  with respect to which
adequate reserves in accordance with GAAP have been established;

SECTION 5.04. 
         Financial Statements, Reports, etc.  In the case of the Parent, furnish to the
Administrative Agent (who will distribute to each Lender):

(a)   within 90 days after
the end of each Fiscal Year, its consolidated balance sheet and related
statements of income, stockholders’ equity and cash flows showing the financial
condition of the Parent and its consolidated Subsidiaries as of the close of
such Fiscal Year and the results of its operations and the operations of such
persons during such year, together with comparative figures for the immediately
preceding Fiscal Year, all in reasonable detail and prepared in accordance with
GAAP, all audited by Fitts Roberts & Co., P.C. or other independent
public accountants of recognized national standing and accompanied by an
opinion of such accountants (which opinion shall be without a “going concern”
or like qualification or exception and without any qualification or exception
as to the scope of such audit) to the effect that such consolidated financial
statements fairly present the financial condition and results of operations of
the Parent and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP;

(b)   within 45 days after
the end of each of the first three fiscal quarters of each Fiscal Year, its
consolidated balance sheet and related statements of income, stockholders’
equity and cash flows showing the financial condition of the Parent and its
consolidated Subsidiaries as of the close of such fiscal quarter and the
results of its operations and the operations of such persons during such fiscal
quarter and the then elapsed portion of the Fiscal Year, and comparative
figures for the same periods in the immediately preceding Fiscal Year, all
certified by one of its Financial Officers as fairly presenting in all material
respects the financial condition and results 

 43
 

 

of operations
of the Parent and its consolidated Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes;

(c)   within 30 days after the
end of each fiscal month in each Fiscal Year, its consolidated balance sheet
and related statements of income, stockholders’ equity and cash flows showing
the financial condition of the Parent and its consolidated Subsidiaries as of
the close of such fiscal month and the results of its operations and the
operations of such persons during such fiscal month and the then elapsed
portion of the Fiscal Year, and comparative figures for the same periods in the
preceding Fiscal Year, all certified by one of its Financial Officers as fairly
presenting in all material respects the financial condition and results of
operation of the Parent and its Subsidiaries on a consolidated basis in
accordance with GAAP, subject to normal year-end audit adjustments and the
absence of footnotes;

(d)   concurrently with any delivery
of financial statements under paragraph (a) or (b) above, a
certificate of a Financial Officer of the Parent (i) certifying that no
Event of Default or Default has occurred or, if such an Event of Default or
Default has occurred, specifying the nature and extent thereof and any
corrective action taken or proposed to be taken with respect thereto and
(ii) setting forth computations in reasonable detail satisfactory to the
Administrative Agent and the Lenders demonstrating compliance with the covenants
contained in Section 6.14 and 6.15; and concurrently with
any delivery of financial statements under paragraph (a) above, a
certificate of the accounting firm certifying that such accounting firm did not
become aware of any Event of Default or Default having occurred or, if such
accounting firm shall have become aware than and Event of Default or Default
has occurred, specifying the nature thereof;

(e)   within 30 days after
the commencement of each Fiscal Year of the Parent, a detailed consolidated
budget for such Fiscal Year (including a projected consolidated balance sheet
and related statements of projected operations and cash flows as of the end of
and for such Fiscal Year and setting forth the material assumptions used for
purposes of preparing such budget) and, promptly when available, any material
revisions of such budget;

(f)   promptly after the same
become publicly available, copies of all periodic filings and other reports,
proxy statements and other materials filed by the Parent or the Borrower with
the Securities and Exchange Commission, or any Governmental Authority
succeeding to any or all of the functions of said Commission, or with any
national securities exchange, or distributed to its shareholders or other
creditors;

(g)   promptly after the request
by any Lender, all documentation and other information that such Lender
reasonably requests in order to comply with its ongoing obligations under
applicable “know your customer” and anti-money laundering rules and
regulations, including the USA PATRIOT Act;

(h)   promptly after the receipt
thereof by the Parent, Borrower or any of its Subsidiaries, a copy of any “management
letter” received by any such person from its certified public accountants and
management’s response thereto;

 44
 

 

(i)   concurrently with the
delivery of the certificate delivered pursuant to clause (a) above
with respect to the end of a Fiscal Year, a certificate of a Financial Officer
of the Borrower setting forth the amount of Capital Expenditures during the
relevant Fiscal Year and the base amount for the next succeeding Fiscal Year;
and

(j)   promptly, from time to
time, such other information regarding the operations, business affairs and
financial condition of the Parent or any Subsidiary, or compliance with the
terms of any Loan Document, as the Administrative Agent or any Lender may
reasonably request.

SECTION 5.05. 
         Litigation and Other Notices.  Promptly upon any Responsible Officer of the
Parent, the Borrower or any Subsidiary becoming aware thereof, furnish to the
Administrative Agent and each Lender written notice of the following:

(a)   (i) the occurrence of any
Event of Default or Default, specifying the nature and extent thereof and the
corrective action (if any) taken or proposed to be taken with respect thereto and
(ii) the occurrence of any “Default” or “Event of Default” under the Existing
Credit Agreement and the Subordinated Loan Agreement;

(b)   the filing or commencement
of, or any written threat or notice of intention of any person to file or
commence, any action, suit or proceeding, whether at law or in equity or by or
before any Governmental Authority, against the Parent, the Borrower or any
Affiliate thereof that could reasonably be expected to result in liability of
the Parent, the Borrower and its Subsidiaries in an aggregate amount exceeding
$500,000;

(c)   the occurrence of any ERISA
Event that, alone or together with any other ERISA Events that have occurred,
has resulted in liability of the Parent, the Borrower and its Subsidiaries in
an aggregate amount exceeding $500,000;

(d)   the receipt by the Parent,
the Borrower, any Subsidiary or the Acquired Business of written notice of
violation of or potential liability under or pursuant to Environmental Laws
that is reasonably expected to result in the Parent, the Borrower, any
Subsidiary or the Acquired Business incurring fines or penalties pursuant to
Environmental Laws in amounts equal to $100,000 or other Environmental
Liabilities in an aggregate amount exceeding $500,000; and

(e)   the occurrence of any other
event that has resulted in, or could reasonably be expected to result in, a
Material Adverse Effect.

SECTION 5.06.           Maintaining Records; Access to
Properties and Inspections; Maintenance of Ratings.  (a) 
Keep proper books of record and account in which full, true and correct
entries in conformity with GAAP are made. 
Permit any representatives designated by the Administrative Agent or any
Lender to visit and inspect the financial records and the properties of the
Parent, the Borrower or the Subsidiaries upon reasonable times and as often as
reasonably requested, and to make extracts from and copies of such financial
records and permit any representatives designated by the Administrative Agent
or any Lender to discuss the affairs, finances and condition of such person
with the officers thereof and independent accountants therefor.

 45

 

SECTION
5.07.           Additional Guarantors.  With respect to any Subsidiary created or
acquired after the Closing Date, promptly (and in any event within 30 days
after such Person becomes a Subsidiary), cause such Subsidiary to executed
a joinder agreement or such comparable documentation to become a Subsidiary
Guarantor.

SECTION
5.08.           Use of Proceeds.  The proceeds of the Loans, together with the
loans under the Subordinated Loan Agreement, shall be used solely to pay the
cash purchase price of the Acquisition, to repay the Existing Debt and the term
loan facility under the Existing Credit Agreement and to pay related fees and
expenses.

ARTICLE VI

Negative Covenants

Each Loan
Party covenants and agrees that, until the Commitments have been terminated and
the principal of and interest on each Loan, all Fees and all other expenses or
amounts payable under any Loan Document have been paid in full, each Loan Party
will not, nor will it cause or permit any of its Subsidiaries to:

SECTION
6.01.           Indebtedness.  Incur, create, assume or permit to exist any
Indebtedness, except:

(a)  Indebtedness
existing on the Closing Date and set forth in Schedule 6.01 and any
Permitted Refinancing thereof;

(b)  Indebtedness
created hereunder and under the other Loan Documents;

(c)  Indebtedness
in respect of loans made under the Subordinated Loan Agreement in an aggregate
principal amount not to exceed $55,000,000 plus the amount of all additional
amounts paid in kind from time to time in accordance with the terms thereof and
any refinancing, substitution, extension, replacement or restructuring of the
foregoing that is not prohibited by the terms hereof;

(d)  intercompany Indebtedness of the Borrower and
its Subsidiaries to extent permitted by Section 6.04;

(e)  Indebtedness
of the Borrower or any Subsidiary incurred to finance the acquisition,
construction or improvement of any asset, and any Permitted Refinancing
thereof; provided, that
(i) such Indebtedness (other than Permitted Refinancing) is incurred in
one or more separate transactions prior to or within 90 days after such
acquisition or the completion of such construction or improvement and
(ii) the aggregate principal amount of Indebtedness permitted by this Section 6.01(e),
when combined with the aggregate principal amount of all Capital Lease
Obligations incurred pursuant to Section 6.01(f), shall not exceed
$2,000,000 at any time outstanding; provided
further that, the aggregate amount of such Indebtedness, together
with all Indebtedness incurred under Sections 6.01(f) and (h)
shall not exceed $12,000,000;

 46
 

 

(f)  Capital
Lease Obligations in an aggregate principal amount, when combined with the
aggregate principal amount of all Indebtedness incurred pursuant to Sections 6.01(e),
not in excess of $2,000,000 at any time outstanding; provided further that, the aggregate amount of such
Indebtedness, together with all Indebtedness incurred under Sections 6.01(e)
and (h) shall not exceed $12,000,000;

(g)  Indebtedness
of (i) any Person that becomes a Guarantor after the Closing Date pursuant
to a Permitted Acquisition or (ii) the Borrower and the Guarantors assumed
in connection with any Permitted Acquisition (so long as such Indebtedness is
not incurred in contemplation of such Permitted Acquisition) and any Permitted
Refinancing in respect of the foregoing; provided,
that (i) such Indebtedness
is unsecured, (ii) both immediately prior and after giving effect thereto,
(1) no Default shall exist or result therefrom and (2) the Borrower
and its Subsidiaries will be in Pro Forma Compliance with the covenants set
forth in Section 6.14 and 6.15;

(h)  Indebtedness
under the Existing Credit Documents and any Permitted Refinancing thereof; provided that, the aggregate amount of
such Indebtedness, together with all Indebtedness incurred under Sections
6.01(e) and (f) shall not exceed $12,000,000;

(i)  Hedging
Agreements permitted pursuant to Section 6.04(d);

(j)  Guarantees by the Borrower or any of their
Subsidiaries of Indebtedness of the Borrower or any other Subsidiary otherwise
permitted hereunder; provided, that
(x) no guarantee by any Subsidiary that is not a Loan Party shall be permitted
unless such Subsidiary shall have also provided a Guarantee of the Obligations
substantially on the terms to the Lenders and (y) if the Indebtedness being
Guaranteed is subordinated to the Obligations, such Guarantee shall be
subordinated to the Guarantee of the Obligations on terms at least as favorable
to the Lenders as those contained in the subordination of such Indebtedness;

(k)  cash management obligations and Indebtedness
incurred by the Borrower or any of its Subsidiaries in respect of netting
services, overdraft protections and similar arrangements in each case in
connection with cash management and deposit accounts; and

(l)  obligations
in respect of surety, stay, customs and appeal bonds, performance bonds,
performance and completion guarantees and other obligations of a like nature
provided by the Borrower or any of its Subsidiaries, in each case in the
ordinary course of business.

SECTION 6.02.           Liens.  Create, incur, assume or permit to exist any
Lien on any property or any income or revenues or rights in respect of any
thereof now owned or hereafter acquired by it, except:

(a)  Liens
on property of the Borrower and the Subsidiaries existing on the Closing Date
and set forth in Schedule 6.02; provided
that (i) the Lien does not extend to any additional property;
and (ii) the modification, refinancing, extension, renewal and 

 47
 

 

replacement thereof of the obligations secured or benefited by such Liens
(if such obligations constitute Indebtedness) is permitted by Section 6.01;

(b)  Liens
securing the obligations of the Parent and its Subsidiaries under the Existing
Credit Documents;

(c)  any Lien existing on any property acquired by
the Borrower or any of its Subsidiaries after the Closing Date (if such Lien
existed prior to the acquisition of such asset) or existing on any property or
assets of any person that becomes a Subsidiary after the Closing Date prior to
the time such person becomes a Subsidiary, as the case may be and any
modification, refinancing, extension, renewal and replacement thereof; provided, that (i) such Lien is not
created in contemplation of or in connection with such acquisition or such
person becoming a Subsidiary, (ii) such Lien does not apply to any other
property or assets of the Borrower or any Subsidiary and (iii) the
Indebtedness secured thereby is permitted by Section 6.01;

(d)  Liens for taxes not yet due and payable so
long as adequate reserves in accordance with GAAP have been established or, to
the extent such taxes are due and payable, the validity or amount thereof is
being contested in good faith by appropriate proceedings diligently conducted
for which adequate reserves in accordance with GAAP have been established;

(e)  carriers’,
warehousemen’s, mechanics’, materialmen’s, repairmen’s, landlords, construction
contractors or other like Liens arising in the ordinary course of business provided that such Liens are for amounts
not yet due and payable or delinquent so long as adequate reserves in
accordance with GAAP have been established or, to the extent such amounts are
so due and payable, such amounts are being contested in good faith by
appropriate proceedings for which adequate reserves in accordance with GAAP have
been established;

(f)  Liens
incurred in the ordinary course of business in compliance with workmen’s
compensation, unemployment insurance and other social security laws or
regulations; provided that such
Liens are for amounts not yet due and payable or delinquent so long as adequate
reserves in accordance with GAAP have been established or, to the extent such
amounts are so due and payable, such amounts are being contested in good faith
by appropriate proceedings for which adequate reserves in accordance with GAAP
have been established;

(g)  deposits
to secure the performance of bids, trade contracts (other than Indebtedness for
borrowed money), leases, statutory obligations, surety, stay, customs and
appeal bonds, performance bonds, performance and completion guarantees and
other obligations of a like nature incurred in the ordinary course of business;

(h)  zoning
restrictions, easements, rights-of-way, restrictions on use of real property
and other similar encumbrances incurred in the ordinary course of business
which, in the aggregate, are not substantial in amount and do not materially
detract from 

 48
 

 

the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Borrower or any of its Subsidiaries;

(i)  purchase money security interests in property
acquired (or, in the case of improvements, constructed) by the Borrower or any
Subsidiary; provided, that
(i) such security interests secure Indebtedness permitted by Section 6.01(e),
(ii) such security interests are incurred, and the Indebtedness secured
thereby is created, within 90 days after such acquisition (or
construction), and (iii) such security interests apply only to the
property acquired and not to any other property or assets of the Borrower or any
Subsidiary;

(j)  judgment
Liens securing judgments not constituting an Event of Default under Article VII;

(k)  any
interest or title of a lessor or sublessor under any lease entered into by the
Borrower or any of its Subsidiaries in the ordinary course of business and
covering only the assets so leased and any Liens of such lessor’s or sublessor’s
interest or title;

(l)  Liens (i) on cash deposits and other
funds maintained with a depositary institution, in each case arising in the
ordinary course of business by virtue of any statutory or common law provision
relating to banker’s liens, (ii) attaching to commodity trading accounts
or other brokerage accounts incurred in the ordinary course of business, (iii)
in favor of a banking institution arising as a matter of law encumbering
deposits (including the right of set-off) and which are within the general
parameters customary in the banking industry, (iv) relating to a pooled deposit
or sweep accounts of the Borrower or any of its Subsidiaries to permit
satisfaction of overdraft or similar obligations incurred in the ordinary
course of business of such person or (v) relating to purchase orders and other
similar agreements entered into in the ordinary course of business; provided that such Liens are
non-consensual and arise by operation of law;

(m)  leases
or subleases granted to any other person in the ordinary course of business;

(n)  Liens arising from precautionary UCC financing
statement filings (or similar filings under applicable Law) regarding leases
entered into by the Borrower or any of its Subsidiaries in the ordinary course
of business; and

(o)  other
Liens securing Indebtedness or other obligations outstanding in an aggregate
principal amount not to exceed $500,000.

SECTION
6.03.           Sale and Lease-Back Transactions.  Enter into any arrangement, directly or
indirectly, with any person whereby it shall sell or transfer any property,
real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other
property which it intends to use for substantially the same purpose or purposes
as the property being sold or transferred unless (a) the sale or transfer
of such property is permitted by Section 6.05 and (b) any
Capital Lease Obligations, Guarantees or Liens arising in connection therewith
are permitted by Sections 6.01 and 6.02, as applicable.

 49
 

 

SECTION
6.04.           Investments, Loans and Advances.  Purchase, hold or acquire any Equity
Interests or evidences of indebtedness of, make or permit to exist any loans or
advances to, or make or permit to exist any investment in any other person, or
purchase or otherwise acquire all or substantially all the assets or business
of any other person or assets constituting a business unit, line of business or
division of another person (collectively, an “Investment”), except:

(a) (i)  Investments by Borrower and any Subsidiary in
any Domestic Subsidiary of the Borrower shall not exceed $2,000,000 at any time
outstanding and (ii) Investments by Borrower and any Subsidiary in Foreign
Subsidiaries of the Borrower not to exceed $500,000;

(b)  Investment
in assets that were Permitted Investments at the time made;

(c)  Investments received in connection with the
bankruptcy or reorganization of, or settlement of delinquent accounts or other
disputes with, any person, in each case in the ordinary course of business and
upon foreclosure with respect to any secured Investment or other transfer of
title with respect to any secured Investment;

(d)  the Borrower and the Subsidiaries may enter
into Hedging Agreements that are not speculative in nature and are entered into
to hedge or mitigate risks to which the Borrower or a Subsidiary is exposed in
the conduct of its business;

(e)  Permitted Acquisitions;

(f)  Investments existing or contemplated on the
date hereof and set forth on Schedule 6.04 and any modification,
replacement, renewal or extension thereof; provided,
that the amount of the original
Investment is not increased except by the terms of such Investment or as
otherwise permitted by this Section 6.04;

(g)  Investments in the ordinary course consisting
of endorsements for collection or deposit;

(h)  the Acquisition; and

(i)  additional
Investments not to exceed $500,000 at any time outstanding.

SECTION
6.05.           Mergers, Consolidations, and Sales
of Assets.  (a)   Wind up, liquidate or dissolve its affairs
or merge into or consolidate with any other person, or permit any other person
to merge into or consolidate with it, except any Subsidiary may merge or
consolidate into (A) the Borrower in a transaction in which the Borrower
is the surviving corporation or (B) any Subsidiary Guarantor so long as
such Subsidiary Guarantor is the surviving corporation.

(b)   Make any Asset Sale except:

(i)  Asset
Sales of obsolete, used, surplus or worn out property, whether now owned or
hereafter acquired, or of property no longer used or useful in the 

 50
 

 

conduct of business of the Borrower and the Subsidiaries, in each case
in the ordinary course of business;

(ii)  Asset
Sales of inventory in the ordinary course of business;

(iii)  Asset Sales by the Borrower or any of its
Subsidiaries to the Borrower or any of its Subsidiaries (in each case including
any such Asset Sales effected pursuant to a merger, liquidation or
dissolution); provided, that if the transferor
of such property is a Loan Party (x) the transferee thereof must either be the
Borrower or a Subsidiary Guarantor or (y) to the extent such transaction
constitutes an Investment, such transaction is permitted under Section 6.04;

(iv)  Asset Sales of Permitted Investments;

(v)  leases or subleases of property in the
ordinary course of business and which do not materially interfere with the
business of the Borrower and the Subsidiaries; and

(vi)  Asset Sales in the ordinary course of business
consisting of the abandonment of intellectual property rights which, in the
reasonable good faith determination of the Borrower, are not material to the
conduct of the business of the Borrower and the Subsidiaries.

SECTION
6.06.           Restricted Payments; Restrictive
Agreements.  (a)  Declare or make, or agree to declare or make,
directly or indirectly, any Restricted Payment, or incur any obligation
(contingent or otherwise) to do so except:

(i) 
any Subsidiary may declare and make Restricted Payments ratably to its
equity holders;

(ii) 
the Borrower and its Subsidiaries may declare and make Restricted
Payments payable solely in the Equity Interests of such person;

(iii) 
on the Closing Date, the Parent and its Subsidiaries may consummate the
Transaction;

(iv) 
to the extent constituting Restricted Payments, the Borrower and its
Subsidiaries may enter into transactions expressly permitted by Section 6.05
or 6.07; and

(v) 
repurchases of Equity Interests of the Borrower deemed to occur upon
exercise of stock options or warrants if such Equity Interests represent a
portion of the exercise price of such options or warrants;

(b)   Enter into, incur or permit to exist any
agreement or other arrangement that prohibits, restricts or imposes any
condition upon:

(i) 
 the ability of the Borrower or any Subsidiary to create, incur or
permit to exist any Lien upon any of its property or assets to secure the
Obligations, or

 51
 

 

(ii) 
the ability of any Subsidiary to pay dividends or other distributions
with respect to any of its Equity Interests or to make or repay loans or
advances to the Borrower or any other Subsidiary or to Guarantee Indebtedness
of the Borrower or any other Subsidiary; provided, that

(A)          the
foregoing shall not apply to

(1)           restrictions
and conditions imposed by law or by the Existing Credit Agreement, any Loan
Document or the Subordinated Loan Agreement,

(2)           customary
restrictions and conditions contained in agreements relating to an Asset Sale
of a Subsidiary or any property pending such sale, provided
such restrictions and conditions apply only to the Subsidiary or property that
is to be sold,

(3)           restrictions
or conditions imposed by any agreement relating to secured Indebtedness
permitted by this Agreement if such restrictions or conditions apply only to
the property or assets securing such Indebtedness, and

(B)           clause (i)
of the foregoing shall not apply to customary provisions in leases, subleases,
licenses, sublicenses and other contracts restricting the assignment thereof.

SECTION
6.07.           Transactions with Affiliates.  Except for transactions by or among Loan
Parties, sell or transfer any property or assets to, or purchase or acquire any
property or assets from, or otherwise engage in any other transactions with,
any of its Affiliates, except:

(a)  the
Borrower or any Subsidiary may engage in any of the foregoing transactions at
prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary that could be obtained on an arm’s-length transaction with a person
other than an Affiliate;

(b)  Restricted
Payments may be made to the extent provided by Section 6.06; and

(c)  Investments
may be made to the extent provided by Section 6.04.

SECTION
6.08.           Change in Nature of Business.  Engage at any time in any business or
business activity other than the business conducted by it on the Closing Date
(after giving effect to the Transactions) and business activities reasonably
incidental, ancillary or related thereto.

SECTION
6.09.           Other Indebtedness and Agreements.  (a) 
Permit any waiver, supplement, modification, amendment, termination,
release, refinancing or refunding of any Related Document (except for
modifications to the terms of the Subordinated Debt (or any indenture or
agreement in connection therewith)) permitted under Section 6.09(b) and
except to the extent such waiver, supplement, modification, amendment,
termination, release, refinancing 

 52
 

 

or refunding do not materially
affect the rights and privileges of the Borrower or any Subsidiary under such
Related Document and that do not materially affect the interests of the Lenders
under the Loan Documents).

(b)   Change or amend the terms of the
Subordinated Debt (or any indenture or agreement or other material document
entered into in connection therewith) if the effect of such amendment is to (a)
increase the interest rate on the Subordinated Debt, (b) change the dates upon
which payments of principal or interest are due on the Subordinated Debt other
than to extend such dates, (c) change any default or event of default other than
to delete or make less restrictive any default provision therein, or add any
covenant with respect to the Subordinated Debt, (d) change the subordination
provisions of the Subordinated Debt, (e) change the redemption or prepayment
provisions of the Subordinated Debt other than to extend the dates therefor or
to reduce the premiums payable in connection therewith or (f) change or amend
any other term if such change or amendment would materially increase the
obligations of the obligor or confer additional material rights to the holder
of the Subordinated Debt in a manner adverse to the Lenders.

(c)   (i)  Except for regularly
scheduled payments of principal and interest as and when due (to the extent not
prohibited by applicable subordination provisions), make any distribution,
whether in cash, property, securities or a combination thereof, in respect of,
or pay, or offer or commit to pay, or directly or indirectly redeem,
repurchase, retire or otherwise acquire for consideration, or set apart any sum
for the aforesaid purposes, the Subordinated Debt (other than with the
proceeds of any Permitted Refinancing of the foregoing or the conversion of the
Subordinated Debt to Equity Interests).

(d)   Change its capital structure (including in
the terms of its outstanding Equity Interests) or otherwise amend its
Constituent Documents, except for changes and amendments that do not materially
affect the rights and privileges of the Borrower or any Subsidiary of the
Borrower and do not materially affect the interests of the Lenders under the
Loan Documents.

SECTION
6.10.           Subsidiaries.  Directly or indirectly,
establish, create or acquire any new Subsidiary, except in connection with a
Permitted Acquisition.

SECTION
6.11.           Partnership, etc.  Become a general partner in any limited
partnership or permit any of its Subsidiaries to do so except through a special
purpose entity.

SECTION
6.12.           Accounting Changes; Fiscal Year.  Change its (a) accounting treatment and
reporting practices or tax reporting treatment, except as required by GAAP and
disclosed to the Lenders and the Administrative Agent or (b) fiscal year.

SECTION
6.13.           Capital Expenditures.  Permit the aggregate amount of Capital
Expenditures made by the Parent and its Subsidiaries in any fiscal year set
forth below to exceed the amount set forth below for such fiscal year:

	
  Fiscal Year

  	
   

  	
  Amount

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2006

  	
   

  	
  $

  	
  25,000,000

  	
   

  
	
   

  	
   

  	
   

  	
   

  
	
  2007 until Maturity

  	
   

  	
  $

  	
  25,000,000

  	
   

  

 

 53
 

 

SECTION
6.14.           Net Worth.  Maintain at all times a Net Worth in an
amount not less than $30,000,000.

SECTION
6.15.           Fixed Charge Coverage Ratio.  Cause to be maintained as of the end of each
Test Period, a Fixed Charge Coverage Ratio of not less than 1.10 to 1.0.

SECTION
6.16.           Leverage Ratio.  Maintain as at the last day of each Test
Period a Leverage Ratio of not more than 3.25:1.00.

ARTICLE VII

Events of Default

In case of the happening
of any of the following events (“Events of Default”):

(a)  any
representation or warranty made or deemed made in any Loan Document or any representation,
warranty, statement or information contained in any report, certificate,
financial statement or other instrument furnished pursuant to any Loan
Document, shall prove to have been false or misleading in any material respect
when so made, deemed made or furnished;

(b)  default
shall be made in the payment of any principal of any Loan when and as the same
shall become due and payable, whether at the due date thereof or at a date
fixed for prepayment thereof or by acceleration thereof or otherwise;

(c)  default
shall be made in the payment of interest on any Loan or any Fee or other amount
(other than an amount referred to in (b) above) due under any Loan
Document, when and as the same shall become due and payable, and such default
shall continue unremedied for a period of three Business Days;

(d)  default shall be made in the due observance or
performance by the Parent, the Borrower or any Subsidiary of any covenant,
condition or agreement contained in Section 5.01(a), 5.04, 5.05
or 5.07 or in Article VI;

(e)  default
shall be made in the due observance or performance by the Parent, Borrower or
any Subsidiary of any covenant, condition or agreement contained in any Loan
Document (other than those specified in clause (b), (c) or (d)
above) and such default shall continue unremedied for a period of 30 days
after the earlier of (i) written notice thereof from the Administrative
Agent to the Borrower or (ii) the Borrower’s knowledge of such default;

(f)  (i) the Parent, the Borrower or any
Subsidiary shall fail to pay any principal or interest, regardless of amount,
due in respect of any Material Indebtedness, when and as the same shall become
due and payable (after giving effect to an applicable grace period), or
(ii) any other event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (with or without 

 54
 

 

the giving of notice, the lapse of time or both) the holder or holders
of such Material Indebtedness or any trustee or agent on its or their behalf to
cause any Material Indebtedness to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity; provided, that  clause (ii)
shall not apply to secured Material Indebtedness that becomes due as a result
of the voluntary sale or transfer of the property or assets securing such
Material Indebtedness;

(g)  an
involuntary proceeding shall be commenced or an involuntary petition shall be
filed in a court of competent jurisdiction seeking (i) relief in respect
of the Parent, the Borrower or any Subsidiary, or of a substantial part of the
property or assets of the Parent, the Borrower or a Subsidiary, under
Title 11 of the United States Code, as now constituted or hereafter
amended, or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Parent, the
Borrower or any Subsidiary or for a substantial part of the property or assets
of the Parent, the Borrower or a Subsidiary or (iii) the winding-up or
liquidation of the Parent, the Borrower or any Subsidiary; and such proceeding
or petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;

(h)  the Parent, the Borrower or any Subsidiary
shall (i) voluntarily commence any proceeding or file any petition seeking
relief under Title 11 of the United States Code, as now constituted or
hereafter amended, or any other Federal, state or foreign bankruptcy,
insolvency, receivership or similar law, (ii) consent to the institution
of any proceeding or the filing of any petition described in (g) above,
(iii) apply for or consent to the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Parent, the
Borrower or any Subsidiary or for a substantial part of the property or assets
of the Parent, the Borrower or any Subsidiary, (iv) file an answer admitting
the material allegations of a petition filed against it in any such proceeding,
(v) make a general assignment for the benefit of creditors,
(vi) become unable, admit in writing its general inability or fail
generally to pay its debts as they become due or (vii) take any action for
the purpose of effecting any of the foregoing;

(i)  one or more judgments for the payment of money
in an aggregate amount exceeding $1,000,000 (except to the extent fully covered
by insurance pursuant to which the insurer has accepted liability therefore in
writing) shall be rendered against the Parent, the Borrower, any Subsidiary or
any combination thereof and the same shall remain undischarged for a period of
30 consecutive days during which execution shall not be effectively
stayed, or any action shall be legally taken by a judgment creditor to levy
upon assets or properties of the Parent, the Borrower or any Subsidiary to
enforce any such judgment;

(j)  an
ERISA Event shall have occurred that, when taken together with all other ERISA
Events, could reasonably be expected to result in liability of the Parent, the
Borrower and its ERISA Affiliates in an aggregate amount exceeding $1,000,000;

(k)  any Guarantee for any reason shall cease to be
in full force and effect (other than in accordance with its terms), or any
Guarantor shall deny in writing that it has any 

 55
 

 

further liability (other than as a result of the discharge of such
Guarantor in accordance with the terms of the Loan Documents);

(l)  Any Loan Document or any material provisions
thereof shall at any time and for any reason case to be valid and binding on
the Borrower or any Guarantor, or any the Borrower or any Guarantor shall so
claim in writing to any Lender;

(m)  any Change in Control shall occur; or

(n)  the
Borrower or any Guarantor or any creditor of the Borrower or any of its
Subsidiaries shall fail to comply with the terms of any subordination or
intercreditor agreement or any subordination provisions of any note or other
document running to the benefit of the Lenders, or if such document becomes
null and void or any party denies further liability under any such document or
provides notice to that effect;

then, and in every such
event (other than an event with respect to the Borrower described in paragraph (g)
or (h) above), and at any time thereafter during the continuance of such
event, the Administrative Agent may, and at the request of the Required Lenders
shall, by notice to the Borrower, take either or both of the following actions,
at the same or different times:  (i) terminate forthwith the
Commitments and (ii) declare the Loans then outstanding to be forthwith
due and payable in whole or in part, whereupon the principal of the Loans so
declared to be due and payable, together with accrued interest thereon and any
unpaid accrued Fees and all other liabilities of the Borrower accrued hereunder
and under any other Loan Document, shall become forthwith due and payable,
without presentment, demand, protest or any other notice of any kind, all of
which are hereby expressly waived by the Borrower, anything contained herein or
in any other Loan Document to the contrary notwithstanding; and in any event
with respect to the Parent, the Borrower described in paragraph (g)
or (h) above, the Commitments shall automatically terminate and the
principal of the Loans then outstanding, together with accrued interest thereon
and any unpaid accrued Fees and all other liabilities of the Borrower accrued
hereunder and under any other Loan Document, shall automatically become due and
payable, without presentment, demand, protest or any other notice of any kind,
all of which are hereby expressly waived by the Borrower, anything contained
herein or in any other Loan Document to the contrary notwithstanding.

ARTICLE VIII

Guarantee

SECTION
8.01.           The Guarantee.  The Guarantors hereby jointly and severally
guarantee, as a primary obligor and not as a surety to each Lender and their
respective successors and assigns, the prompt payment in full when due (whether
at stated maturity, by required prepayment, declaration, demand, by
acceleration or otherwise) of the principal of and interest (including any
interest, fees, costs or charges that would accrue but for the provisions of
the Title 11 of the United States Code after any bankruptcy or insolvency
petition under Title 11 of the United States Code) on the Loans made by the
Lenders to, and the promissory notes held by each Lender of, Borrower, and all
other Obligations from time to time owing to the Lenders by any Loan Party
under any Loan Document, in each case strictly in accordance with the terms
thereof 

 56
 

 

(such obligations
being herein collectively called the “Guaranteed Obligations”).  The Guarantors hereby jointly and severally
agree that if Borrower or other Guarantor(s) shall fail to pay in full when due
(whether at stated maturity, by acceleration or otherwise) any of the
Guaranteed Obligations, the Guarantors will promptly pay the same in cash,
without any demand or notice whatsoever, and that in the case of any extension
of time of payment or renewal of any of the Guaranteed Obligations, the same
will be promptly paid in full when due (whether at extended maturity, by
acceleration or otherwise) in accordance with the terms of such extension or
renewal.

SECTION
8.02.           Obligations Unconditional.  The obligations of the Guarantors under Section 8.01
shall constitute a guaranty of payment and to the fullest extent permitted by
applicable Law, are absolute, irrevocable and unconditional, joint and several,
irrespective of the value, genuineness, validity, regularity or enforceability
of the Guaranteed Obligations of Borrower under this Agreement, the promissory
notes, if any, or any other agreement or instrument referred to herein or
therein, or any substitution, release or exchange of any other guarantee of or
security for any of the Guaranteed Obligations, and, irrespective of any other
circumstance whatsoever that might otherwise constitute a legal or equitable discharge
or defense of a surety or Guarantor (except for payment in full).  Without limiting the generality of the
foregoing, it is agreed that the occurrence of any one or more of the following
shall not alter or impair the liability of the Guarantors hereunder which shall
remain absolute, irrevocable and unconditional under any and all circumstances
as described above:

(i)  at
any time or from time to time, without notice to the Guarantors, the time for
any performance of or compliance with any of the Guaranteed Obligations shall
be extended, or such performance or compliance shall be waived;

(ii) 
any of the acts mentioned in any of the provisions of this Agreement or
the promissory notes, if any, or any other agreement or instrument referred to
herein or therein shall be done or omitted;

(iii) 
the maturity of any of the Guaranteed Obligations shall be accelerated,
or any of the Guaranteed Obligations shall be amended in any respect, or any
right under the Loan Documents or any other agreement or instrument referred to
herein or therein shall be amended or waived in any respect or any other
guarantee of any of the Guaranteed Obligations or any security therefor shall
be released or exchanged in whole or in part or otherwise dealt with;

(iv) 
the release of any other Guarantor pursuant to Section 8.09.

The Guarantors hereby
expressly waive diligence, presentment, demand of payment, protest and all notices
whatsoever, and any requirement that any Lender exhaust any right, power or
remedy or proceed against the Borrower under this Agreement or the promissory
notes, if any, or any other agreement or instrument referred to herein or
therein, or against any other person under any other guarantee of, or security
for, any of the Guaranteed Obligations. 
The Guarantors waive any and all notice of the creation, renewal, extension,
waiver, termination or accrual of any of the Guaranteed Obligations and notice
of or proof of reliance by any Lender upon this Guarantee or acceptance of this
Guarantee, and the Guaranteed Obligations, and any of them, shall 

 57
 

 

conclusively be deemed to
have been created, contracted or incurred in reliance upon this Guarantee, and
all dealings between the Borrower and the Lenders shall likewise be
conclusively presumed to have been had or consummated in reliance upon this
Guarantee.  This Guarantee shall be construed
as a continuing, absolute, irrevocable and unconditional guarantee of payment
without regard to any right of offset with respect to the Guaranteed
Obligations at any time or from time to time held by the Lenders, and the
obligations and liabilities of the Guarantors hereunder shall not be conditioned
or contingent upon the pursuit by the Lenders or any other person at any time
of any right or remedy against the Borrower or against any other person which
may be or become liable in respect of all or any part of the Guaranteed
Obligations or against any collateral security or guarantee therefor or right
of offset with respect thereto.  This
Guarantee shall remain in full force and effect and be binding in accordance
with and to the extent of its terms upon the Guarantors and the successors and
assigns thereof, and shall inure to the benefit of the Lenders, and their
respective successors and assigns, notwithstanding that from time to time
during the term of this Agreement there may be no Guaranteed Obligations outstanding.

SECTION
8.03.           Reinstatement.  The obligations of the Guarantors under this Article VIII
shall be automatically reinstated if and to the extent that for any reason any
payment by or on behalf of the Borrower or other Loan Party in respect of the
Guaranteed Obligations is rescinded or must be otherwise restored by any holder
of any of the Guaranteed Obligations, whether as a result of any proceedings in
bankruptcy or reorganization or otherwise.

SECTION
8.04.           Subrogation; Subordination.  Each Guarantor hereby agrees that until the
indefeasible payment and satisfaction in full in cash of all Guaranteed
Obligations and the expiration and termination of the Commitments of the
Lenders under this Agreement it shall waive any claim and shall not exercise
any right or remedy, direct or indirect, arising by reason of any performance
by it of its guarantee in Section 8.01, whether by subrogation or
otherwise, against the Borrower or any other Guarantor of any of the Guaranteed
Obligations or any security for any of the Guaranteed Obligations.

SECTION
8.05.           Remedies.  The Guarantors jointly and severally agree
that, as between the Guarantors and the Lenders, the obligations of the
Borrower under this Agreement and the promissory notes, if any, may be declared
to be forthwith due and payable as provided in Article VII (and
shall be deemed to have become automatically due and payable in the
circumstances provided in Article VII) for purposes of Section 8.01,
notwithstanding any stay, injunction or other prohibition preventing such
declaration (or such obligations from becoming automatically due and payable)
as against the Borrower and that, in the event of such declaration (or such
obligations being deemed to have become automatically due and payable), such
obligations (whether or not due and payable by the Borrower) shall forthwith
become due and payable by the Guarantors for purposes of Section 8.01.

SECTION
8.06.           Instrument for the Payment of Money.  Each Guarantor hereby acknowledges that the
guarantee in this Article VIII constitutes an instrument for the
payment of money, and consents and agrees that any Lender, at its sole option,
in the event of a dispute by such Guarantor in the payment of any moneys due
hereunder, shall have the right to bring a motion-action under New York CPLR
Section 3213.

 58
 

 

SECTION
8.07.           Continuing Guarantee.  The guarantee in this Article VIII
is a continuing guarantee of payment, and shall apply to all Guaranteed
Obligations whenever arising.

SECTION
8.08.           General Limitation on Guarantee Obligations.  In any action or proceeding involving any
state corporate, limited partnership or limited liability company law, or any
applicable state, federal or foreign bankruptcy, insolvency, reorganization or
other law affecting the rights of creditors generally, if the obligations of
any Guarantor under Section 8.01 would otherwise be held or
determined to be void, voidable, invalid or unenforceable, or subordinated to
the claims of any other creditors, on account of the amount of its liability
under Section 8.01, then, notwithstanding any other provision to
the contrary, the amount of such liability shall, without any further action by
such Guarantor, any Loan Party or any other person, be automatically limited
and reduced to the highest amount (after giving effect to the right of
contribution established in Section 8.10) that is valid and enforceable
and not subordinated to the claims of other creditors as determined in such
action or proceeding.

SECTION
8.09.           Release of Guarantors.  If, in compliance with the terms and provisions
of the Loan Documents, all or substantially all of the Equity Interests or
property of any Guarantor are sold or otherwise transferred (a “Transferred Guarantor”) to a person
or persons, none of which is the Borrower or a Subsidiary, such Transferred
Guarantor shall, upon the consummation of such sale or transfer, be
automatically released from its obligations under this Agreement, and, so long
as the Borrower shall have provided the Lenders such certifications or
documents as any Lender shall reasonably request, the Lenders shall take such
actions as are necessary to effect each release described in this Section 8.09
in accordance with the terms hereof, so long as the Borrower shall have
provided the Lenders such certifications or documents as any Lender shall
reasonably request in order to demonstrate compliance with this Agreement.

SECTION
8.10.           Right of Contribution.  Each Guarantor
hereby agrees that to the extent that a Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Guarantor shall be
entitled to seek and receive contribution from and against any other Guarantor
hereunder which has not paid its proportionate share of such payment.  Each Guarantor’s right of contribution shall
be subject to the terms and conditions of Section 8.04.  The provisions of this Section 8.10
shall in no respect limit the obligations and liabilities of any Guarantor to
the Lenders, and each Guarantor shall remain liable to the Lenders for the full
amount guaranteed by such Guarantor hereunder.

ARTICLE IX

The Administrative Agent

SECTION
9.01.           Appointment and Authority.  Each
of the Lenders hereby irrevocably appoints Royal Bank of Canada its agent and authorizes the Administrative
Agent to take such actions on its behalf and to exercise such powers as are
delegated to the Administrative Agent by the terms of the Loan Documents,
together with such actions and powers as are reasonably incidental thereto.

 59
 

 

SECTION
9.02.           Rights as a Lender.  The bank serving as the Administrative Agent
hereunder shall have the same rights and powers in its capacity as a Lender as
any other Lender and may exercise the same as though it were not an agent, and
such bank and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of business with the Borrower or any Subsidiary or
other Affiliate thereof as if it were not an agent hereunder.

SECTION
9.03.           Exculpatory Provisions.  The Administrative Agent shall not have any
duties or obligations except those expressly set forth in the Loan
Documents.  Without limiting the
generality of the foregoing, (a) the Administrative Agent shall not be subject
to any fiduciary or other implied duties, regardless of whether a Default or
Event of Default has occurred and is continuing, (b) the Administrative Agent
shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated hereby that the Administrative Agent is instructed in writing to
exercise by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
10.08), and (c) except as expressly set forth in the Loan Documents, the
Administrative Agent shall not have any duty to disclose, nor shall it be
liable for the failure to disclose, any information relating to the Borrower or
any of the Subsidiaries that is communicated to or obtained by the bank serving
as Administrative Agent or any of its Affiliates in any capacity. The
Administrative Agent shall not be liable for any action taken or not taken by
it with the consent or at the request of the Required Lenders (or such other
number or percentage of the Lenders as shall be necessary under the
circumstances as provided in Section 10.08) or in the absence of
its own gross negligence or willful misconduct. The Administrative Agent shall
not be deemed to have knowledge of any Default or Event of Default unless and until
written notice thereof is given to the Administrative Agent by the Borrower or
a Lender, and the Administrative Agent shall not be responsible for or have any
duty to ascertain or inquire into (i) any statement, warranty or
representation made in or in connection with any Loan Document, (ii) the
contents of any certificate, report or other document delivered thereunder or
in connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness
of any Loan Document or any other agreement, instrument or document, or
(v) the satisfaction of any condition set forth in Article IV
or elsewhere in any Loan Document, other than to confirm receipt of items
expressly required to be delivered to the Administrative Agent.

SECTION
9.04.           Reliance by Agent.  The Administrative Agent shall be entitled to
rely upon, and shall not incur any liability for relying upon, any notice,
request, certificate, consent, statement, instrument, document or other writing
believed by it to be genuine and to have been signed or sent by the proper
person. The Administrative Agent may also rely upon any statement made to it
orally or by telephone and believed by it to have been made by the proper
person, and shall not incur any liability for relying thereon.  The Administrative Agent may consult with
legal counsel (who may be counsel for the Borrower or any Affiliate thereof),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.

SECTION 9.05.           Delegation of Duties.  The Administrative Agent may perform any and
all its duties and exercise its rights and powers by or through any one or more
sub-agents

 60

 

appointed by it.  The Administrative Agent and any such
sub-agent may perform any and all its duties and exercise its rights and powers
by or through their respective Related Parties. 
The exculpatory provisions of the preceding paragraphs shall apply to any
such sub-agent and to the Related Parties of the Administrative Agent and any
such sub-agent, and shall apply to their respective activities in connection
with the syndication of the credit facilities provided for herein as well as
activities as agent.

SECTION
9.06.           Resignation of Agent.  Subject to the appointment and acceptance of
a successor Agent as provided below, the Administrative Agent may resign at any
time by notifying the Lenders and the Borrower. 
Upon receipt of any such notice of resignation of the Administrative
Agent, the Required Lenders shall have the right, in consultation with the
Borrower, to appoint a successor which shall be a commercial banking
institution organized under the laws of the United States or any State or a
United States branch or agency of a commercial banking institution, in each
case having a combined capital and surplus of at least $500,000,000 or which
shall otherwise be reasonably acceptable to the Borrower, such acceptance not
to be unreasonably withheld or delayed. 
Upon the acceptance of its appointment as Administrative Agent hereunder
by a successor, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Administrative Agent, and
the retiring Administrative Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor
Administrative Agent shall be the same as those payable to its predecessor
unless otherwise agreed between the Borrower and such successor. After the
Administrative Agent’s resignation hereunder, the provisions of this Article
and Section 10.05 shall continue in effect for the benefit of such
retiring Administrative Agent, its sub-agents and their respective Related
Parties in respect of any actions taken or omitted to be taken by any of them
while acting as Administrative Agent.

SECTION
9.07.           Non-reliance on Agent and Other
Lenders.  Each Lender
acknowledges that it has, independently and without reliance upon the
Administrative Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. 
Each Lender also acknowledges that it will, independently and without
reliance upon the Administrative Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or
based upon this Agreement or any other Loan Document, any related agreement or
any document furnished hereunder or thereunder.

ARTICLE X

Miscellaneous

SECTION
10.01.         Notices.  Notices and other communications provided for
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by fax, as follows:

(a)   if to the Parent, the Borrower, to it at
Geokinetics Inc., One Riverway, Suite 2100, Houston,
Texas  77056, Attention of:  President (Fax
No. 713-850-7330), cc:  James J. 

 61
 

 

Spring, III, Chamberlain, Hrdlicka,
White, Williams & Martin, 1200 Smith Street, Suite 1400, Houston,
Texas  77002 (Fax No. 713-658-2553);

(b)   if to Royal Bank of Canada as the
Administrative Agent, to Royal Bank Plaza, 200 Bay Street, 12th Floor, South
Tower, Toronto, Attention of: David Wheatley (Fax
No. (416) 842-4023); and

(c)   if to a Lender, to it at its address (or fax
number) set forth on Schedule 2.01 or in the Assignment and
Acceptance pursuant to which such Lender shall have become a party hereto.

All notices and other
communications given to any party hereto in accordance with the provisions of
this Agreement shall be deemed to have been given on the date of receipt if
delivered by hand or overnight courier service or sent by fax or on the date
five Business Days after dispatch by certified or registered mail if mailed, in
each case delivered, sent or mailed (properly addressed) to such party as
provided in this Section 10.01 or in accordance with the latest
unrevoked direction from such party given in accordance with this Section
10.01. As agreed to among the Parent, the Borrower, the Administrative
Agent and the applicable Lenders from time to time in writing, notices and
other communications may also be delivered or furnished by e-mail; provided, that the foregoing shall not apply to notices
pursuant to Article II or to compliance and no Event of Default
certificates delivered pursuant to Section 5.04(d) unless otherwise
agreed by the Administrative Agent; provided, further, that approval of such procedures may be limited to
particular notices or communications. All such notices and other communications
sent to an e-mail address shall be deemed received upon the sender’s receipt of
an acknowledgement from the intended recipient (such as by the “return receipt
requested” function, as available, return e-mail or other written
acknowledgement); provided, that
if not given during the normal business hours of the recipient, such notice or
communication shall be deemed to have been given at the opening of business on
the next Business Day for the recipient.

SECTION
10.02.         Survival of Agreement.  All covenants, agreements, representations
and warranties made by the Loan Parties herein and in the certificates or other
instruments prepared or delivered in connection with or pursuant to this
Agreement or any other Loan Document, shall be considered to have been relied
upon by the Lenders and shall survive the making by the Lenders of the Loans,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any Fee or any other amount payable under this
Agreement or any other Loan Document is outstanding and unpaid and so long as
the Commitments have not been terminated. 
The provisions of Sections 2.14, 2.16, 2.20
and 10.05 shall remain operative and in full force and effect regardless
of the expiration of the term of this Agreement, the consummation of the
transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the invalidity or unenforceability of any term
or provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent or any Lender.

SECTION
10.03.         Binding Effect.  This Agreement shall become effective when it
shall have been executed by the Parent, the Borrower, the Administrative Agent
and the Lenders and when the Administrative Agent and the Lenders shall have
received counterparts hereof which, when taken together, bear the signatures of
each of the other parties hereto.

 62
 

 

SECTION
10.04.         Successors and Assigns.  (a) 
Whenever in this Agreement any of the parties hereto is referred to,
such reference shall be deemed to include the permitted successors and assigns
of such party; and all covenants, promises and agreements by or on behalf of
the Parent, the Borrower, the Administrative Agent, or the Lenders that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and assigns.

(b)   Any Lender may assign to one or more
assignees all or a portion of its interests, rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans at the
time owing to it); provided, however, that (i) the Administrative Agent and the
Borrower must give its prior written consent to such assignment (which consent
shall not be unreasonably withheld or delayed), provided,
that the consent of the Borrower shall
not be required to any such assignment (A) made to a Lender or an
Affiliate or Related Fund of a Lender, or (B) during the continuance of
any Default or Event of Default and (ii) (A) in the case of any
assignment, other than assignments to any Lender or any Affiliate or Related
Fund thereof, the amount of the Commitment or Loans of the assigning Lender
subject to each such assignment (determined as of the date of the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $1,000,000 (or if less, the entire
remaining amount of such Lender’s Commitment or Loans) and shall be in an
amount that is an integral multiple of $1,000,000 (or the entire remaining
amount of such Lender’s Commitment), provided, however, that simultaneous assignments to two or more
Related Funds shall be combined for purposes of determining whether the minimum
assignment requirement is met, and (B) in the case of any assignment to a
Lender or any Affiliate or Related Fund thereof, after giving effect to such
assignment, the aggregate Commitments or Loans of the assigning Lender and its
Affiliates and Related Funds shall be zero or not less than $1,000,000 and the
aggregate Commitments or Loans of the assignee Lenders and their Affiliates and
Related Funds shall be not less than $1,000,000, (iv) the parties to each
such assignment shall execute and deliver to the Administrative Agent an
Assignment and Acceptance (such Assignment and Acceptance to be
(A) electronically executed and delivered to the Administrative Agent via
an electronic settlement system then acceptable to the Administrative Agent
(or, if previously agreed with the Administrative Agent, manually), and
(B) delivered together with a processing and recordation fee of $3,500,
unless waived or reduced by the Administrative Agent in its sole discretion, provided  that only one
such fee shall be payable in connection with simultaneous assignments by or to
two or more Related Funds) and (v) the assignee, if it shall not be a Lender
immediately prior to the assignment, shall deliver to the Administrative Agent
an Administrative Questionnaire.  Upon
acceptance and recording pursuant to paragraph (e) of this Section
10.04, from and after the effective date specified in each Assignment and
Acceptance, (A) the assignee thereunder shall be a party hereto and, to
the extent of the interest assigned by such Assignment and Acceptance, have the
rights and obligations of a Lender under this Agreement and (B) the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of an assigning Lender’s rights and obligations under this
Agreement, such Lender shall cease to be a party hereto but shall continue to
be entitled to the benefits of Sections 2.14, 2.16, 2.20
and 10.05, as well as to any Fees accrued for its account and not yet
paid).

(c)   By executing and delivering an Assignment
and Acceptance, the assigning Lender thereunder and the assignee thereunder
shall be deemed to confirm to and agree with each other 

 63
 

 

and the other parties hereto as
follows:  (i) such assigning Lender warrants that it is the legal
and beneficial owner of the interest being assigned thereby free and clear of
any adverse claim and that its Commitment, and the outstanding balances of its
Loans, in each case without giving effect to assignments thereof which have not
become effective, are as set forth in such Assignment and Acceptance,
(ii) except as set forth in (i) above, such assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with this
Agreement, or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Agreement, any other Loan Document or any other
instrument or document furnished pursuant hereto, or the financial condition of
the Borrower or any Subsidiary or the performance or observance by the Borrower
or any Subsidiary of any of its obligations under this Agreement, any other
Loan Document or any other instrument or document furnished pursuant hereto;
(iii) such assignee represents and warrants that it is legally authorized
to enter into such Assignment and Acceptance; (iv) such assignee confirms
that it has received a copy of this Agreement, together with copies of the most
recent financial statements referred to in Section 3.05(a) or
delivered pursuant to Section 5.04 and such other documents and
information as it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (v) such assignee
will independently and without reliance upon the Administrative Agent, such
assigning Lender or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement;
(vi) such assignee appoints and authorizes the Administrative Agent to
take such action as agent on its behalf and to exercise such powers under this
Agreement as are delegated to the Administrative Agent by the terms hereof,
together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with their
terms all the obligations which by the terms of this Agreement are required to
be performed by it as a Lender.

(d)   The Administrative Agent, acting for this
purpose as an agent of the Borrower, shall maintain at one of its offices in
referred to in Section 10.01 a copy of each Assignment and Acceptance
delivered to it and a register for the recordation of the names and addresses
of the Lenders, and the Commitment of, and principal amount of the Loans owing
to, each Lender pursuant to the terms hereof from time to time (the “Register”).  The entries in the Register shall be
conclusive and the Borrower, the Administrative Agent and the Lenders may treat
each person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding
notice to the contrary.  The Register
shall be available for inspection by the Borrower and any Lender, at any
reasonable time and from time to time upon reasonable prior notice.

(e)   Upon its receipt of, and consent to, a duly
completed Assignment and Acceptance executed by an assigning Lender and an
assignee, an Administrative Questionnaire completed in respect of the assignee
(unless the assignee shall already be a Lender hereunder), the processing and
recordation fee referred to in paragraph (b) above, if applicable,
the written consent of the Administrative Agent and the Borrower to such
assignment (in each case to the extent required pursuant to paragraph (b)
above), any applicable tax forms, and the delivery to the Administrative Agent
of any promissory note (if any) issued pursuant to Section 2.04(e) marked “cancelled”,
the Administrative Agent shall (i) accept such Assignment and Acceptance
and 

 64
 

 

(ii) record the information contained
therein in the Register. No assignment shall be effective unless it has been
recorded in the Register as provided in this paragraph (e).

(f)   Each Lender may without the consent of the
Borrower or the Administrative Agent sell participations to one or more banks
or other persons in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitment and the Loans owing to
it); provided, however,
that (i) such Lender’s obligations under this Agreement shall remain
unchanged, (ii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, (iii) the
participating banks or other persons shall be entitled to the benefit of the
cost protection provisions contained in Sections 2.14, 2.16
and 2.20 to the same extent as if they were Lenders (but, with respect
to any particular participant, to no greater extent than the Lender that sold
the participation to such participant), (iv) such Lender shall maintain a
Register substantially in the form described in Section 10.04(d) (the “Participant Register”), (v)
if such Lender is a Foreign Lender, such Lender shall collect from each
participating bank or other persons, prior to the time such participating bank
or other persons receive payments with respect to such participation, the
appropriate forms, certificates and statements described in Section 2.20 as if
such participating banks or other persons were a Lender under Section
2.20,  and (vi) the Borrower, the
Administrative Agent and the Lenders shall continue to deal solely and directly
with such Lender in connection with such Lender’s rights and obligations under
this Agreement, and such Lender shall retain the sole right to enforce the
obligations of the Borrower relating to the Loans and to approve any amendment,
modification or waiver of any provision of this Agreement (other than
amendments, modifications or waivers decreasing any fees payable to such
participating bank or person hereunder or the amount of principal of or the
rate at which interest is payable on the Loans in which such participating bank
or person has an interest, extending any scheduled principal payment date or
date fixed for the payment of interest on the Loans in which such participating
bank or person has an interest, increasing or extending the Commitments in
which such participating bank or person has an interest or releasing any
Guarantor (other than in connection with the sale of such Guarantor in a
transaction permitted by Section 6.05)).

(g)   Any Lender or participant may, in connection
with any assignment or participation or proposed assignment or participation
pursuant to this Section 10.04, disclose to the assignee or participant
or proposed assignee or participant any information relating to the Borrower
furnished to such Lender by or on behalf of the Borrower; provided
that, prior to any such disclosure of
information designated by the Borrower as confidential, each such assignee or
participant or proposed assignee or participant shall execute an agreement
whereby such assignee or participant shall agree (subject to customary
exceptions) to preserve the confidentiality of such confidential information on
terms no less restrictive than those applicable to the Lenders pursuant to Section
10.16.

(h)   Any Lender may at any time assign all or any
portion of its rights under this Agreement to secure extensions of credit to
such Lender or in support of obligations owed by such Lender; provided  that no such
assignment shall release a Lender from any of its obligations hereunder or
substitute any such assignee for such Lender as a party hereto.

(i)   Notwithstanding anything to the contrary
contained herein, any Lender (a “Granting
Lender”) may grant to a special purpose funding vehicle (an “SPC”), identified as such in 

 65
 

 

writing from time to time by the Granting
Lender to the Administrative Agent and the Borrower, the option to provide to
the Borrower all or any part of any Loan that such Granting Lender would
otherwise be obligated to make to the Borrower pursuant to this Agreement; provided  that (i) nothing
herein shall constitute a commitment by any SPC to make any Loan and
(ii) if an SPC elects not to exercise such option or otherwise fails to
provide all or any part of such Loan, the Granting Lender shall be obligated to
make such Loan pursuant to the terms hereof. 
The making of a Loan by an SPC hereunder shall utilize the Commitment of
the Granting Lender to the same extent, and as if, such Loan were made by such
Granting Lender.  Each party hereto
hereby agrees that no SPC shall be liable for any indemnity or similar payment
obligation under this Agreement (all liability for which shall remain with the
Granting Lender).  In furtherance of the
foregoing, each party hereto hereby agrees (which agreement shall survive the
termination of this Agreement) that, prior to the date that is one year and one
day after the payment in full of all outstanding commercial paper or other
senior indebtedness of any SPC, it will not institute against, or join any
other person in instituting against, such SPC any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings under the laws of the United
States or any State thereof.  In
addition, notwithstanding anything to the contrary contained in this Section 10.04,
any SPC may (i) with notice to, but without the prior written consent of,
the Borrower and the Administrative Agent and without paying any processing fee
therefor, assign all or a portion of its interests in any Loans to the Granting
Lender or to any financial institutions (consented to by the Borrower and
Administrative Agent) providing liquidity and/or credit support to or for the
account of such SPC to support the funding or maintenance of Loans and
(ii) disclose on a confidential basis any non-public information relating
to its Loans to any rating agency, commercial paper dealer or provider of any
surety, guarantee or credit or liquidity enhancement to such SPC.

(j)   The Borrower shall not assign or delegate
any of its rights or duties hereunder without the prior written consent of the
Administrative Agent and each Lender, and any attempted assignment without such
consent shall be null and void.

SECTION
10.05.         Expenses; Indemnity.  (a) 
The Parent and the Borrower agree, jointly and severally, to pay all
out-of-pocket expenses incurred by the Administrative Agent and each Lender in
connection with the preparation and administration of this Agreement and the
other Loan Documents or in connection with any amendments, modifications or
waivers of the provisions hereof or thereof (whether or not the transactions
hereby or thereby contemplated shall be consummated) or incurred by the
Administrative Agent or any Lender in connection with the enforcement or
protection of its rights in connection with this Agreement and the other Loan
Documents or in connection with the Loans made hereunder, including fees,
disbursements and other charges of counsel for the Administrative Agent and the
Lenders, and, in connection with any such enforcement or protection, fees,
disbursements and other charges of counsel as the Administrative Agent or any
Lender determine to be reasonably necessary.

(b)   The Parent and the Borrower agree, jointly
and severally, to indemnify the Administrative Agent, each Lender and each
Related Party of any of the foregoing persons and their successors and assigns
(each such person being called an “Indemnitee”)
against, and to hold each Indemnitee harmless from, any and all costs, expenses
(including reasonable fees, disbursements and other charges of counsel and
liabilities of such Indemnitee arising out of or in connection with
(i) the execution or delivery of this Agreement or any other Loan Document
or 

 66
 

 

any agreement or instrument contemplated
thereby, the performance by the parties thereto of their respective obligations
thereunder or the consummation of the Transactions and the other transactions
contemplated thereby, (ii) the use of the proceeds of the Loans,
(iii) any claim, litigation, investigation or proceeding relating to any
of the foregoing, whether or not any Indemnitee is a party thereto (and
regardless of whether such matter is initiated by a third party or by the Borrower,
any other Loan Party or any of their respective Affiliates), or (iv) any
actual or alleged presence or Release of Hazardous Materials on any property
currently or formerly owned or operated by the Borrower or any of the
Subsidiaries, or any Environmental Liability related in any way to the Borrower
or the Subsidiaries; provided, that
such indemnity shall not, as to any Indemnitee, be available to the extent that
such costs, expenses or liabilities resulted from the gross negligence or
willful misconduct of such Indemnitee (or its Related Parties).

(c)   To the extent permitted by applicable law,
the Loan Parties shall not assert, and each Loan Party hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or the
use of the proceeds thereof.

(d)   The provisions of this Section 10.05
shall survive the expiration of the term of this Agreement, the consummation of
the transactions contemplated hereby, the repayment of any of the Loans, the
expiration of the Commitments, the invalidity or unenforceability of any term
or provision of this Agreement or any other Loan Document, or any investigation
made by or on behalf of the Administrative Agent or any Lender.  All amounts due under this Section 10.05
shall be payable on written demand therefor.

SECTION
10.06.         Right of Setoff.  If an Event of Default shall have occurred
and be continuing, each Lender is hereby authorized at any time and from time
to time, except to the extent prohibited by law, to set off and apply any and
all deposits (general or special, time or demand, provisional or final) at any
time held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower or the Parent against any of and all the
obligations of the Borrower or the Parent now or hereafter existing under this
Agreement and other Loan Documents held by such Lender, irrespective of whether
or not such Lender shall have made any demand under this Agreement or such
other Loan Document and although such obligations may be unmatured.  The rights of each Lender under this Section 10.06
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.

SECTION
10.07.         Applicable Law.  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS
(OTHER THAN AS EXPRESSLY SET FORTH IN OTHER LOAN DOCUMENTS) SHALL BE CONSTRUED
IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.

SECTION
10.08.         Waivers; Amendment.  (a)  No
failure or delay of the Administrative Agent or any Lender in exercising any power
or right hereunder or under any other Loan Document shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or 

 67
 

 

power.  The rights and remedies of the Administrative
Agent and the Lenders hereunder and under the other Loan Documents are
cumulative and are not exclusive of any rights or remedies that they would
otherwise have.  No waiver of any
provision of this Agreement or any other Loan Document or consent to any
departure by the Borrower or any other Loan Party therefrom shall in any event
be effective unless the same shall be permitted by paragraph (b)
below, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. 
No notice or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.

(b)   Neither this Agreement nor any other Loan
Document nor any provision hereof or thereof may be waived, amended or modified
except pursuant to an agreement or agreements in writing entered into by the
Required Lenders and the Loan Parties that are party thereto and are affected
by such waiver, amendment or modification; provided, however, that no such agreement shall (i) decrease the
principal amount of, or extend the maturity of or any scheduled principal
payment date or date for the payment of any interest on any Loan, or waive or
forgive any such payment or any part thereof, or the rate of interest on any
Loan, without the prior written consent of each Lender directly adversely
affected thereby, (ii) increase or extend the Commitment or decrease or
extend the date for payment of any Fees of any Lender without the prior written
consent of such Lender, (iii) amend or modify the pro rata
requirements of Section 2.16, the provisions of Section 10.04(j)
or the provisions of this Section 10.08  or release all or substantially all of the
Guarantors (determined based on the vale of their Guarantees of the
Obligations), without the prior written consent of each
Lender, (iv) modify the protections afforded to an SPC pursuant to
the provisions of Section 10.04(i) without the written consent of such
SPC or (v) reduce the percentage contained in the definition of the term “Required
Lenders” without the prior written consent of each Lender (it being understood
that with the consent of the Required Lenders, additional extensions of credit
pursuant to this Agreement may be included in the determination of the Required
Lenders on substantially the same basis as the Commitments and extensions of
credit thereunder on the date hereof); provided further that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent hereunder or under any other Loan Document without
the prior written consent of the Administrative Agent.

SECTION
10.09.         Interest Rate Limitation.  Notwithstanding anything herein to the
contrary, if at any time the interest rate applicable to any Loan, together
with all fees, charges and other amounts which are treated as interest on such
Loan under applicable law (collectively the “Charges”), shall exceed the maximum
lawful rate (the “Maximum
Rate”) which may be contracted for, charged, taken, received or
reserved by the Lender holding such Loan in accordance with applicable law, the
rate of interest payable in respect of such Loan hereunder, together with all
Charges payable in respect thereof, shall be limited to the Maximum Rate and,
to the extent lawful, the interest and Charges that would have been payable in
respect of such Loan but were not payable as a result of the operation of this Section
10.09 shall be cumulated and the interest and Charges payable to such
Lender in respect of other Loans or periods shall be increased (but not above
the Maximum Rate therefor) until such cumulated amount shall have been received
by such Lender.

SECTION
10.10.         Entire Agreement.  This Agreement and the other Loan Documents
constitute the entire contract between the parties relative to the subject
matter hereof.  

 68
 

 

Any other previous agreement
among the parties with respect to the subject matter hereof is superseded by
this Agreement and the other Loan Documents. 
Nothing in this Agreement or in the other Loan Documents, expressed or
implied, is intended to confer upon any person (other than the parties hereto
and thereto, their respective successors and assigns permitted hereunder and,
to the extent expressly contemplated hereby, the Indemnitees, the Related
Parties of each of the Administrative Agent and the Lenders) any rights,
remedies, obligations or liabilities under or by reason of this Agreement or
the other Loan Documents.

SECTION
10.11.         WAIVER OF JURY TRIAL.  EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.  EACH PARTY HERETO (A) CERTIFIES THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT AND THE OTHER
LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 10.11.

SECTION
10.12.         Severability.  In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby (it being understood that
the invalidity of a particular provision in a particular jurisdiction shall not
in and of itself affect the validity of such provision in any other
jurisdiction).  The parties shall
endeavor in good-faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.

SECTION
10.13.         Counterparts.  This Agreement may be executed in
counterparts (and by different parties hereto on different counterparts), each
of which shall constitute an original but all of which when taken together
shall constitute a single contract, and shall become effective as provided in Section
10.03.  Delivery of an executed
signature page to this Agreement by facsimile transmission shall be as
effective as delivery of a manually signed counterpart of this Agreement.

SECTION
10.14.         Headings.  Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of
this Agreement and are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.

SECTION
10.15.         Jurisdiction; Consent to Service of
Process.  (a)  The Loan Parties hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of any New York State court or Federal court of the United
States of America sitting in New York City, and any appellate court from
any thereof, in any action or proceeding arising out of or relating to this
Agreement or the other Loan Documents, or for recognition or 

 69
 

 

enforcement of any judgment,
and each of the parties hereto hereby irrevocably and unconditionally agrees
that all claims in respect of any such action or proceeding may be heard and
determined in such New York State or, to the extent permitted by law, in
such Federal court.  Each of the parties
hereto agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. 
Nothing in this Agreement shall affect any right that the Administrative
Agent or any Lender may otherwise have to bring any action or proceeding
relating to this Agreement or the other Loan Documents against the Loan Parties
or their respective properties in the courts of any jurisdiction.

(b)   Each Loan Party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
the other Loan Documents in any New York State or Federal court.  Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.

(c)   Each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section
10.01.  Nothing in this Agreement
will affect the right of any party to this Agreement to serve process in any
other manner permitted by law.

SECTION
10.16.         Confidentiality.  Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its
Affiliates’ officers, directors, employees and agents, including accountants,
legal counsel and other advisors (it being understood that the persons to whom
such disclosure is made will be informed of the confidential nature of such
Information and instructed to keep such Information confidential), (b) to
the extent requested by any regulatory authority or quasi-regulatory authority,
(c) to the extent required by applicable laws or regulations or by any
subpoena or similar legal process, (d) in connection with the exercise of
any remedies hereunder or under the other Loan Documents or any suit, action or
proceeding relating to the enforcement of its rights hereunder or thereunder,
(e) subject to an agreement containing provisions substantially the same
as those of this Section 10.16, to (i) any actual or prospective
assignee of or participant in any of its rights or obligations under this
Agreement and the other Loan Documents or (ii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating
to the Borrower, any Subsidiary or any Affiliate thereof or any of their
respective obligations, (f) with the consent of the Borrower or
(g) to the extent such Information becomes publicly available other than
as a result of a breach of this Section 10.16.  For the purposes of this Section, “Information” shall
mean all information received from the Borrower and related to the Borrower or
its business, other than any such information that was available to the
Administrative Agent or any Lender on a nonconfidential basis prior to its
disclosure by the Borrower; provided
that, in the case of Information
received from the Borrower after the date hereof, such information is clearly
identified at the time of delivery as confidential.  Any person required to maintain the
confidentiality of Information as provided in this Section 10.16 shall
be considered to have complied with its obligation to do so if such person has
exercised the same degree of care to maintain the confidentiality of such
Information as such person would accord its own confidential information.

 70
 

 

SECTION
10.17.         USA PATRIOT Act Notice.  Each Lender and the Administrative Agent (for
itself and not on behalf of any Lender) hereby notifies the Parent and the
Borrower that pursuant to the requirements of the USA PATRIOT Act, it is
required to obtain, verify and record information that identifies the Parent
and the Borrower, which information includes the name and address of the Parent
and the Borrower and other information that will allow such Lender or the
Administrative Agent, as applicable, to identify the Parent and the Borrower in
accordance with the USA PATRIOT Act.

[Remainder of this page
intentionally left blank]

 71
 

 

IN WITNESS WHEREOF, the
parties hereto have caused this Agreement to be duly executed by their
respective authorized officers as of the day and year first above written.

	
   

  	
  GEOKINETICS HOLDINGS, INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ David A. Johnson

  
	
   

  	
   

  	
  Name: David A. Johnson

  
	
   

  	
   

  	
  Title: President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  GEOKINETICS INC.

  
	
   

  	
   

  
	
   

  	
   

  	
  by

  
	
   

  	
   

  	
  /s/ David A. Johnson

  
	
   

  	
   

  	
  Name: David A. Johnson

  
	
   

  	
   

  	
  Title: President

  
				

 

 72

 

 

	
   

  	
  AVISTA CAPITAL PARTNERS, L.P., 

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
  by: AVISTA CAPITAL PARTNERS, L.P., 

  
	
   

  	
   

  	
  as its general partner

  
	
   

  	
   

  	
   /s/ Ben
  Silber

  
	
   

  	
   

  	
  Name: Ben Silber

  
	
   

  	
   

  	
  Title: General

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  AVISTA CAPITAL PARTNERS (OFFSHORE), 

  
	
   

  	
  L.P.,

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
  by: AVISTA CAPITAL PARTNERS, L.P., 

  
	
   

  	
   

  	
  as its general partner

  
	
   

  	
   

  	
   /s/ Ben
  Silber

  
	
   

  	
   

  	
  Name: Ben Silber

  
	
   

  	
   

  	
  Title: General Counsel

  
				

 

 

 

	
   

  	
  LEVANT AMERICA S.A., 

  
	
   

  	
  as a Lender

  
	
   

  	
   

  
	
   

  	
   

  	
  /s/ K. H. Hannan, Jr.

  
	
   

  	
   

  	
  Name: K. H. Hannan, Jr.

  
	
   

  	
   

  	
  Title: Attorney-in-Fact

  

 2

 

 

	
   

  	
   

  	
  ROYAL BANK OF CANADA,

  
	
   

  	
   

  	
  as a Lender,

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  	
  /s/ Linda Stevens 

  	
   

  
	
   

  	
   

  	
  Name:  Linda Stevens 

  
	
   

  	
   

  	
  Title:  Authorized Signatory

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  ROYAL BANK OF CANADA,

  
	
   

  	
   

  	
  as a Administrative Agent,

  
	
   

  	
   

  
	
   

  	
  By

  
	
   

  	
   

  	
  /s/ David Wheatley

  	
   

  
	
   

  	
   

  	
  Name:  David Wheatley

  
	
   

  	
   

  	
  Title:  Manager, AgencyExhibit 10.8

CERTIFICATE
OF DESIGNATION OF

SERIES B
SENIOR CONVERTIBLE PREFERRED STOCK

OF

GEOKINETICS
INC.

PURSUANT
TO SECTION 151(g) OF THE

GENERAL
CORPORATION LAW OF THE STATE OF DELAWARE

The undersigned, David A.
Johnson, President and Chief Executive Officer of Geokinetics Inc, a Delaware
corporation (the “Corporation”), does hereby state and certify that the
Board of Directors for the Corporation, by unanimous written consent dated as
of September 6, 2006, duly adopted the following resolution providing for the
issuance of a series of the Corporation’s preferred stock, par value $10.00 per
share (the “Preferred Stock”), and further providing for the
designation, powers, preferences and relative, participating, optional and
other rights, and the qualifications, limitations and restrictions thereof, all
in accordance with the provisions of Section 151(g) of the General Corporation
Law of the State of Delaware:

RESOLVED, that pursuant
to the authority expressly granted to and vested in the Board of Directors of
the Corporation by Article FOURTH of the Corporation’s Certificate of
Incorporation (the “Certificate of Incorporation”), a series of
Preferred Stock of the Corporation be, and hereby is, created out of the
authorized but unissued shares of capital stock of the Corporation and
authorized to be issued, such series to be designated Series B Senior
Convertible Preferred Stock (the “Series B Preferred Stock”), to consist
of 350,000 shares, par value $10.00 per share, of which the powers, preferences
and relative, participating, optional and other rights, and the qualifications,
limitations, and restrictions thereof, shall be, in addition to those set forth
in the Corporation’s Certificate of Incorporation, as follows:

(1)           Series
B Preferred Stock.

(a)           Dividends.

(i)            The
holders of Series B Preferred Stock, prior and in preference to any declaration
or payment of any dividend on any class or series of capital stock of this
Corporation, shall be entitled to receive cumulative dividends at the applicable
Dividend Rate (as defined below).  For
purposes of this Section 1(a)(i), “Dividend Rate” shall mean 8.0% per
annum, compounded quarterly, of the Original Issue Price (defined in Section
1(b)(i) below) for each share of Series B Preferred Stock.  At the option of the Corporation, dividends
payable on shares of Series B Preferred Stock on any quarterly dividend payment
date through and including October 31, 2011, may be paid in additional shares
of Series B Preferred Stock, instead of cash. 
The value of each share of Series B Preferred Stock paid in lieu of cash
shall be equal to the Original Issue Price. 
After October 31, 2011 all dividends shall be paid in cash when, and if
declared. All unpaid dividends on Series B Preferred Stock shall be cumulative
and shall accrue, 

 

compounding annually,
regardless of whether or not the Corporation shall have funds legally available
for the payment of such dividends.

(ii)           After
payment of the dividends provided for in Section 1(a)(i), any additional
dividends or distributions shall be distributed among all holders of Common
Stock, Series B Preferred Stock, and other Preferred Securities, which are
convertible into shares of Common Stock, in proportion to the number of shares
of Common Stock that would be held by each such holder if all shares of Series
B Preferred Stock and other Preferred Securities were converted to Common Stock
at the then-effective conversion rate.

(b)           Liquidation
Preference.

(i)            The
holders of Series B Preferred Stock, in the event of any Liquidation Event (as
defined below), either voluntary or involuntary, shall be entitled to receive,
prior and in preference to the distribution of any proceeds of such Liquidation
Event (the “Proceeds”) to the holders of Common Stock and other
Preferred Securities, an amount per share (the “Liquidation Preference
Amount”) equal to (i) the sum of the Original Issue Price (as defined
below) for Series B Preferred Stock, plus (ii) any accrued but unpaid
dividends, which have been accrued to the date of payment. In case the net
assets of the Corporation legally available therefor are insufficient to permit
the payment upon all outstanding shares of Series B Preferred Stock of the full
preferential amount to which the holders of such shares are entitled, then such
net assets shall be distributed ratably upon outstanding shares of Series B
Preferred Stock in proportion to the full preferential amount to which each
such share is entitled. For purposes hereof, “Original Issue Price”
shall mean $250.00 per share for each share of Series B Preferred Stock (as
adjusted for any stock splits, stock dividends, combinations, subdivisions,
recapitalizations or the like with respect to the Series B Preferred Stock).

(ii)           For
purposes of this Section 1(b), a “Liquidation Event” shall include (A)
the sale, transfer or other disposition of all or substantially all of the
Corporation’s assets, (B) the merger or consolidation of the Corporation with
or into another entity (except a merger or consolidation in which the holders
of capital stock of the Corporation immediately prior to such merger or
consolidation continue to hold at least 50% of the voting power of the capital stock
of the Corporation or the surviving or acquiring entity), (C) the transfer
(whether by merger, consolidation, exchange, reorganization or otherwise), in
one transaction or a series of related transactions, to a person or group of
affiliated persons, of the Corporation’s equity securities if, after such
transfer, such person or group of affiliated persons would hold 50% or more of
the outstanding voting stock of the Corporation (or the surviving or acquiring
entity) or (D) a liquidation, dissolution or winding up of the Corporation;
provided, however, that a transaction shall not constitute a Liquidation Event
if its sole purpose is to change the state of the Corporation’s incorporation
or to create a holding company that will be owned in substantially the same
proportions by the persons who held the Corporation’s securities immediately
prior to such transaction. The treatment of any particular transaction or
series of related transactions as a Liquidation Event hereunder may be waived
by the vote or written consent of the holders of a majority of the outstanding Series
B Preferred Stock (voting on an as converted basis).

(iii)          In
any Liquidation Event, if Proceeds received by the Corporation or its
stockholders are other than cash, their value will be deemed their fair market
value. The 

 2
 

 

determination of such
fair market value shall be made by the Board of Directors of the Corporation or
as otherwise may be set forth in the definitive agreements governing such
Liquidation Event.

(c)           Redemption
Rights.

(i)            If,
at any time after March 31, 2014, the holders of not less than a majority of
the shares of Series B Preferred Stock then outstanding deliver written notice
to the Corporation of such holders’ desire to have the Series B Preferred Stock
redeemed, all outstanding shares of Series B Preferred Stock, if not previously
converted pursuant to Section 1(d), shall be redeemed by the Corporation on a
date which is not more than 90 days after the date on which such written notice
was given to the Corporation by the holders of the Series B Preferred Stock.
Each share of Series B Preferred Stock to be redeemed hereunder shall be
redeemed by payment by the Corporation in cash of the Redemption Price (as
defined below). For purposes hereof, the term “Redemption Price” shall
mean, with respect to each share of Series B Preferred Stock, an amount equal
to the Liquidation Preference Amount.

(ii)           Any
redemption pursuant to Sections 1(c)(i) above shall be preceded by written
notice to each holder of Series B Preferred Stock stating the date fixed for
redemption, the Redemption Price and the place at which holders of Series B
Preferred Stock may obtain payment of the Redemption Price upon surrender of
their respective stock certificates.

(iii)          All
shares of Series B Preferred Stock redeemed, otherwise acquired or returned (as
a result of conversion or otherwise) by the Corporation shall immediately be
canceled and shall not be reissued.

(d)           Conversion.
The holders of the Series B Preferred Stock shall have conversion rights as
follows (the “Conversion Rights”):

(i)            Right
to Convert. Each share of Series B Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of
such share, at the office of the Corporation or any transfer agent for such
stock, into such number of fully paid and nonassessable shares of Common Stock
as is determined by dividing the Liquidation Preference Amount for the Series B
Preferred Stock by the applicable Conversion Price (as defined below) for the Series
B Preferred Stock (the conversion rate for Series B Preferred Stock into Common
Stock is referred to herein as the “Conversion Rate”), determined as
hereafter provided, in effect on the date the certificate is surrendered for
conversion. The “Conversion Price” per share for Series B Preferred
Stock shall initially be $2.50; provided, however, that the Conversion Price
for the Series B Preferred Stock shall be subject to adjustment as set forth in
subsection 1(e)(iv).

(ii)           Corporation
Conversion Election. At the election of the Corporation, each share of Series
B Preferred Stock shall be converted into shares of Common Stock at the
Conversion Rate at the time in effect for Series B Preferred Stock immediately
upon the Corporation’s sale of its Common Stock in an underwritten public
offering pursuant to an effective registration statement under the Securities
Act of 1933, as amended (the “Securities 

 3
 

 

Act”),
covering the offer and sale of Common Stock (A) at a price per share yielding
net proceeds to the Corporation of not less than $3.50 (as adjusted for any
stock splits, stock dividends, combinations, subdivisions or the like), (B)
which results in net proceeds to the Corporation and the selling stockholders,
if any, of not less than $75,000,000, and (C) after which the Common Stock is
listed on the NYSE, AMEX or the NASDAQ National Market (a “Qualified Public
Offering”).

(iii)          Mechanics
of Conversion. Before any holder of Series B Preferred Stock shall be
entitled to voluntarily convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefore, duly
endorsed, at the office of the Corporation or of any transfer agent for the Series
B Preferred Stock, and shall give written notice to the Corporation at its
principal corporate office, of the election to convert the same and shall state
therein the name or names in which the certificate or certificates for shares
of Common Stock are to be issued. The Corporation shall, as soon as practicable
thereafter, issue and deliver at such office to such holder of Series B
Preferred Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder
shall be entitled as aforesaid. Such conversion shall be deemed to have been
made immediately prior to the close of business on the date of such surrender
of the shares of Series B Preferred Stock to be converted, and the person or
persons entitled to receive the shares of Common Stock issuable upon such
conversion shall be treated for all purposes as the record holder or holders of
such shares of Common Stock as of such date. If the conversion is in connection
with an underwritten offering of securities registered pursuant to the
Securities Act of 1933, as amended, the conversion may, at the option of any
holder tendering Series B Preferred Stock for conversion, be conditioned upon
the closing with the underwriters of the sale of securities pursuant to such
offering, in which event the persons entitled to receive the Common Stock upon
conversion of the Series B Preferred Stock shall not be deemed to have
converted such Series B Preferred Stock until immediately prior to the closing
of such sale of securities. If the conversion is in connection with automatic
conversion provisions of subsection 1(d)(ii) above, such conversion shall be
deemed to have been made on the conversion date described in the stockholder
consent approving such conversion, and the persons entitled to receive shares
of Common Stock issuable upon such conversion shall be treated for all purposes
as the record holders of such shares of Common Stock as of such date.

(iv)          Conversion
Price Adjustments of Series B Preferred Stock for Certain Dilutive Issuances,
Splits and Combinations. The Conversion Price of the Series B Preferred
Stock shall be subject to adjustment from time to time as follows:

(A)          Conversion
Price Adjustments.

1.     If the
Corporation shall issue, on or after the date upon which this Certificate of
Designation is accepted for filing by the Secretary of State of the State of
Delaware (the “Filing Date”), any Additional Stock (as defined below)
for a consideration per share less than the Conversion Price applicable to the Series
B Preferred Stock in effect immediately prior to the issuance of such
Additional Stock, and if the aggregate dollar amount of all previous issuances
of Additional Stock since the Filing Date is less than $50,000,000 (determined
by aggregating all previous issuances of Additional Stock made after the Filing
Date) the Conversion Price for the Series B Preferred Stock in effect
immediately prior to 

 4
 

 

each such issuance shall forthwith be adjusted to a price equal to the
per share consideration paid or given for such Additional Stock; provided,
however, if the Corporation shall issue, on or after the Filing Date, any
Additional Stock after the aggregate amount of previous issuances made after
the Filing Date are in excess of $50,000,000 (determined by aggregating all previous
issuances of Additional Stock made after the Filing Date) for a consideration
per share less than the Conversion Price applicable to the Series B Preferred
Stock in effect immediately prior to the issuance of such Additional Stock, the
Conversion Price for the Series B Preferred Stock in effect immediately prior
to each such issuance shall forthwith be adjusted to a price determined by
multiplying such Conversion Price by a fraction, the numerator of which shall
be the number of shares of Common Stock Outstanding (as defined below)
immediately prior to such issuance plus the number of shares of Common Stock
that the aggregate consideration received by the Corporation for such issuance
would purchase at such Conversion Price; and the denominator of which shall be
the number of shares of Common Stock Outstanding (as defined below) immediately
prior to such issuance plus the number of shares of such Additional Stock.  For purposes of this Section 1(d)(iv)(A), the
term “Common Stock Outstanding” shall mean and include the following:
(1) outstanding Common Stock, (2) Common Stock issuable upon exercise of
outstanding stock options, (3) Common Stock issuable upon exercise of
outstanding warrants to purchase Common Stock, (4) Common Stock issuable upon
conversion of the Series B Preferred Stock, and (5) Common Stock issuable upon
the conversion of any other series or class of equity securities issued after
the date hereof which is convertible into shares of Common Stock.  Shares described in (1) through (3) above
shall be included whether vested or invested, whether contingent or
non-contingent and whether exercisable or not yet exercisable.

2.     No adjustment of
the Conversion Price for the Series B Preferred Stock shall be made in an
amount less than one cent per share, provided that any adjustments that are not
required to be made by reason of this sentence shall be carried forward and
shall be either taken into account in any subsequent adjustment made prior to
three (3) years from the date of the event giving rise to the adjustment being
carried forward, or shall be made at the end of three (3) years from the date
of the event giving rise to the adjustment being carried forward. Except to the
limited extent provided for in subsections 1(d)(iv)(A)(5)(c) and (5)(d), no
adjustment of such Conversion Price pursuant to this subsection 1(d)(iv) shall
have the effect of increasing the Conversion Price above the Conversion Price
in effect immediately prior to such adjustment.

3.     In the case of
the issuance of Additional Stock for cash, the consideration shall be deemed to
be the amount of cash paid therefore before deducting any reasonable discounts,
commission or other expenses allowed, paid or incurred by this corporation for
any underwriting or otherwise in connection with the issuance and sale thereof.

4.     In the case of
the issuance of the Additional Stock for a consideration in whole or in part
other than cash, the consideration other than cash shall be deemed to be the
fair market thereof as determined by the Board of Directors irrespective of any
accounting treatment.

5.     In the case of
the issuance of options to purchase or rights to subscribe for Common Stock,
securities by their terms convertible into or exchangeable for Common Stock or 

 5
 

 

options
to purchase or rights to subscribe for such convertible or exchangeable
securities, the following provisions shall apply for purposes of determining
the number of shares of Additional Stock issued and the consideration paid
therefor:

a.             The
aggregate maximum number of shares of Common Stock deliverable upon exercise
(assuming the satisfaction of any conditions to exercisability, including
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in subsections 1(d)(iv)(A)(3) and
(d)(iv)(A)(4)), if any, received by the Corporation upon the issuance of such
options or rights plus the minimum exercise price provided in such options or
rights (without taking into account potential antidilution adjustments) for the
Common Stock covered thereby.

b.             The
aggregate maximum number of shares of Common Stock deliverable upon conversion
or, or in exchange (assuming the satisfaction of any conditions to
convertibility or exchangeability, including, without limitation, the passage
of time, but without taking into account potential antidilution adjustments)
for, any such convertible or exchangeable securities or upon the exercise of
options to purchase or rights to subscribe for such convertible or exchangeable
securities and subsequent conversion or exchange thereof shall be deemed to
have been issued at the time such securities were issued or such options or
rights were issued and for a consideration equal to the consideration, if any,
received by the Corporation for any such securities and related options or
rights (excluding any cash received on account of accrued interest or accrued
dividends), plus the minimum additional consideration, if any, to be received
by the Corporation (without taking into account potential antidilution
adjustments) upon the conversion or exchange of such securities or the exercise
of any related options or rights (the consideration in each case to be
determined in the manner provided in subsections 1(d)(iv)(A)(3) and
1(d)(iv)(A)(4).

c.             In
the event of any change in the number of shares of Common Stock deliverable or
in the consideration payable to the Corporation upon exercise of such options
or rights or upon conversion of or in exchange for such convertible or
exchangeable shares, the Conversion Price of the Series B Preferred Stock, to
the extent in any way affected by or computed using such options, rights or
securities, shall be recomputed to reflect such change, but no further
adjustment shall be made for the actual issuance of Common Stock or any payment
of such consideration upon the exercise of any such options or rights or the
conversion or exchange of such securities.

d.             The
number of shares of Additional Stock deemed issued and the consideration deemed
paid therefor pursuant to subsections 1(d)(iv)(A)(5)(a) and (b) shall be
appropriately adjusted to reflect any change, termination or expiration of the
type described in either subsection 1(d)(iv)(A)(5)(a) or (b).

(B)           “Additional
Stock” shall mean any shares of Common Stock issued (or deemed to have been
issued pursuant to subsection 1(d)(iv)(A)(5)) by the Corporation on or after
the Filing Date other than:

 6
 

 

1.     Shares of Common
Stock issued to employees, directors, officers, consultants and other service
providers for the primary purpose of soliciting or retaining their services
pursuant to plans or agreements approved by this corporation’s Board of
Directors;

2.     Common Stock
issued pursuant to the conversion or exercise of convertible or exercisable
securities outstanding on the Filing Date;

3.     Common Stock or
other securities convertible into shares of Common Stock that are issued with
the approval of the holders of not less than a majority of the then-outstanding
shares of Series B Preferred Stock; and

4.     Common Stock
issued pursuant to the conversion of the Series B Preferred Stock.

(v)           In
the event the Corporation should at any time or from time to time after the
Filing Date fix a record date for the effectuation of a split or subdivision of
the outstanding shares of Common Stock or the determination of holders of
Common Stock entitled to receive a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights convertible
into, or entitling the holder thereof to receive directly or indirectly,
additional shares of Common Stock (hereinafter referred to as “Common Stock
Equivalents”) without payment of any consideration by such holder for the
additional shares of Common Stock or the Common Stock Equivalents (including
the additional shares of Common Stock issuable upon conversion or exercise
thereof), then, as of such record date (or the date of such dividend
distribution, split or subdivision if no record date is fixed), the Conversion
Price of the Series B Preferred Stock shall be appropriately decreased so that
the number of shares of Common Stock issuable on conversion of each share of
such series shall be increased in proportion to such increase of the aggregate
of shares of Common Stock outstanding and those issuable with respect to such
Common Stock Equivalents.

If the number of shares
of Common Stock outstanding at any time after the Filing Date is decreased by a
combination of the outstanding shares of Common Stock, then, following the
record date of such combination, the Conversion Price for the Series B
Preferred Stock shall be appropriately increased so that the number of shares
of Common Stock issuable on conversion of each share of such series shall be
decreased in proportion to such decrease in outstanding shares.

(vi)          Reservation
of Common Stock. The Corporation shall reserve and keep available out of
its authorized but unissued Common Stock that number of shares of Common Stock
as shall from time to time be sufficient to effect the full conversion of all
outstanding shares of Series B Preferred Stock.

(e)           Election
and Removal of Directors by Series B Preferred Stock.  The holders of record of the shares of Series
B Preferred Stock, exclusively and as a separate class, shall be entitled to elect
one (1) director of the Corporation (the “Series B Director”).  Upon the taking of such action, to the extent
necessary to satisfy the provisions of this Subsection, the maximum authorized
number directors shall automatically increase by one (1) (so as to increase the
size of the Board of Directors to six (6)) and the vacancy so created shall be
filled by the person elected pursuant to this Subsection.  At any meeting held for the purpose of
electing the director, the presence in person or by proxy of the holders of a
majority of the shares of Series B 

 7
 

 

Preferred Stock then
outstanding shall constitute a quorum of the Series B Preferred Stock for the
purpose of electing the director by holders of the Series B Preferred
Stock.  A vacancy in said directorship
filled by the holders of Series B Preferred Stock shall be filled only by vote
or written consent in lieu of a meeting of the holders of the Series B
Preferred Stock.  The Series B Director
may be removed, with our without cause, by the holders of Series B Preferred
Stock in the same manner as such director may be elected hereunder.

(f)            Voting
Rights.

(i)            Except
as otherwise expressly provided herein or as required by law, the holders of Series
B Preferred Stock shall be entitled to vote on all matters upon which holders
of Common Stock have the right to vote and, with respect to such right to vote,
shall be entitled to notice of any stockholders’ meeting in accordance with the
Corporation’s Bylaws, and shall be entitled to a number of votes equal to the
number of shares of Common Stock into which such shares of Series B Preferred
Stock could then be converted, at the record date for the determination of
stockholders entitled to vote on such matters or, if no such record date is
established, at the date such vote is taken or any written consent of
stockholders is solicited. Except as otherwise expressly provided herein, or to
the extent class or series voting is otherwise required by law or agreement,
the holders of Series B Preferred Stock or Common Stock shall vote together as
a single class and not as separate classes.

(ii)           So
long as at least 55,000 shares of Series B Preferred Stock remain outstanding,
the Corporation shall not, without first obtaining the approval (by vote or
written consent, as provided by law) of not less than a majority of the
then-outstanding shares of the Series B Preferred Stock, determined on a fully
diluted and as-converted basis:

(A)          Amend
the Corporation’s Certificate of Incorporation or Bylaws in any material
respect (other than an amendment to change the name of the Corporation);

(B)           Declare
or pay any dividend or other distribution upon the Corporation’s capital stock
(except dividends payable solely in shares of Common Stock), or purchase,
redeem, or otherwise acquire any shares of the Corporation’s capital stock,
except for repurchases, at cost, of shares of the capital stock of the
Corporation (pursuant to rights held by the Corporation as of the Filing Date)
held by the Corporation’s consultants, directors, officers or employees;

(C)           Sell,
lease, assign, transfer or otherwise convey or otherwise dispose of all or
substantially all of the assets of the Corporation or any of its subsidiaries,
or effect any consolidation, merger or reorganization involving the Corporation
or any of its subsidiaries, or effect any transaction or series of related
transactions in which the Corporation’s stockholders immediately prior to such
transaction or transactions own immediately after such transaction or
transactions less than 50% of the voting securities of the surviving corporation
or entity (or its parent);

(D)          Reclassify,
reorganize or recapitalize the Corporation’s outstanding capital stock;

 8
 

 

(E)           Create
or issue any class or series of stock or other security of the Corporation on
parity with or having preference over the Series B Preferred Stock or increase
the authorized number of shares of Series B Preferred Stock;

(F)           Effect
any transaction with the management, related parties or other affiliates of the
Corporation, or extend or waive the terms of any such existing transactions,
other than (1) issuances of options, warrants or Common Stock pursuant to an
equity incentive plan or similar arrangement approved by the Board of Directors
or (2) any other transaction with management, related parties or affiliates of
the Corporation on terms approved by a majority of the members of the Board of
Directors who are not, either directly or indirectly, a party to such transaction;
and

(G)           Increase
or decrease the number of directors on the Board of Directors of the
Corporation.

(iii)          So
long as at least 55,000 shares of Series B Preferred Stock remain outstanding,
the holders of the Series B Preferred Stock shall be entitled to nominate and
elect one (1) member of the Corporation’s Board of Directors at each regularly
scheduled meeting of the Corporation’s stockholders which is called for the
purpose of electing members of the Board of Directors.

(g)           Financial
Statements, Reports, etc.  The
Corporation shall furnish to each to each holder of the Series B Preferred
Stock:

(i)            within
90 days after the end of each fiscal year, its consolidated balance sheet
and related statements of income, stockholders’ equity and cash flows showing
the financial condition of the Corporation and its consolidated subsidiaries as
of the close of such fiscal year and the results of its operations and the
operations of such persons during such year, together with comparative figures
for the immediately preceding fiscal year, all in reasonable detail and
prepared in accordance with United States generally accepted accounting
principles (“GAAP”), all audited by UHY
Mann Frankfort Stein & Lipp or other independent public accountants of
recognized national standing and accompanied by an opinion of such accountants
(which opinion shall be without any qualification or exception as to the scope
of such audit) to the effect that such consolidated financial statements fairly
present the financial condition and results of operations of the Corporation
and its consolidated subsidiaries on a consolidated basis in accordance with
GAAP;

(ii)           within
45 days after the end of each of the first three fiscal quarters of each
fiscal year, its consolidated balance sheet and related statements of income,
stockholders’ equity and cash flows showing the financial condition of the Corporation
and its consolidated subsidiaries as of the close of such fiscal quarter and
the results of its operations and the operations of such persons during such
fiscal quarter and the then elapsed portion of the fiscal year, and comparative
figures for the same periods in the immediately preceding fiscal year, all
certified by one of its chief executive officer, chief financial officer, any
vice president, principal accounting officer, treasurer, assistant treasurer or
controller of such person as fairly presenting in all material respects the
financial condition and results of operations of the Corporation and its 

 9
 

 

consolidated subsidiaries
on a consolidated basis in accordance with GAAP, subject to normal year-end audit
adjustments and the absence of footnotes.

(h)           Preemptive
Rights. If the Corporation authorizes the issuance and sale of Additional
Stock (as defined in Section 1(d)(iv)(B)) other than pursuant to an
underwritten public offering registered under the Securities Act or for
non-cash consideration pursuant to a merger or consolidation approved by the
Board of Directors of the Corporation, the Corporation shall first offer in
writing to sell to each holder of Series B Preferred Stock a portion of the
securities being issued equal to the quotient obtained by dividing (A) the
aggregate number of shares of Series B Preferred Stock then owned by such
holder by (B) the aggregate number of shares of Series B Preferred Stock then
outstanding. If all offered securities are not subscribed to by such holder of Series
B Preferred Stock in writing delivered to the Corporation within twenty days
after the date of delivery of the Corporation’s original notice to such holder,
then the Corporation shall offer all of such securities for sale to those other
holders of Series B Preferred Stock that did elect to subscribe for such securities.  If such offer is oversubscribed by such
Series B Preferred Stock holders then the Corporation shall offer such
securities to such Series B Preferred Stockholders pro rata on the basis of the
number of securities previously subscribed to by such holders pursuant to the
formula above.  If the holders of Series
B Preferred Stock do not elect to subscribe for all of such securities in
writing delivered to the Corporation within twenty days after the date of
delivery of the Corporation’s second notice then the Corporation shall be free
to offer such securities to any other person or persons at a price and on terms
determined by the Corporation, provided that such price and terms are no more
favorable to such person or persons than the price and terms on which such
securities were offered to the holders of Series B Preferred Stock. Any
securities not sold by the Corporation within 90 days after the date of the
Corporation’s initial notice to the holders of Series B Preferred Stock
hereunder shall then become subject again to the provisions of this Section 1(h).

[SIGNATURES ON
FOLLOWING PAGE]

 10
 

 

IN WITNESS WHEREOF,
Geokinetics Inc. has caused this Certificate of Designation to its Certificate
of Incorporation to be signed by David A. Johnson, its President and Chief
Executive Officer, this           day
of                 ,
2006.

	
   

  	
  GEOKINETICS INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   /s/ David A. Johnson

  
	
   

  	
  Name:

  	
  David A. Johnson

  
	
   

  	
  Title:

  	
  President and Chief Executive Officer

  
				

 

 11

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00110-of-00352.parquet"}]]